ScanSource, Inc.

This quarter, we made changes to our reported segments, now Specialty Technology Solutions and Modern Communications and Cloud, to align with our go-to-market strategy. Both of the new segments include hardware, services, and recurring revenue opportunities. This enables us to follow end-user consumption patterns for all of our technologies. The foundation of our hybrid distribution strategy is helping suppliers and sales partners accelerate growth across innovative technologies by providing hardware plus services, software, or other recurring offers. We connect devices to the cloud and are enabling our channel partners to meet end-user demand in the exciting and fast-growing digital world. I want to now turn the call over to John to discuss our business performance.

Thanks, Mike. I'm very proud of our Q1 performance. We delivered impressive results with 13% year-on-year net sales growth and 25% year-on-year gross profit growth. We saw momentum across our business, given our power to combine hardware, software, connectivity, and cloud service offerings. This combination of capabilities is enabling us to deliver differentiated value to our partners and suppliers while accelerating growth opportunities across the channel, resulting in expanded margins across both segments. Our sales and supplier services teams' deep knowledge, trust, and specialty technology expertise provide us a competitive advantage in the marketplace. A big differentiator for our business is our focus on specialized technologies. This specialization brings us much closer to our suppliers and in many cases makes us their largest or second largest customer. Our suppliers trust us to take care of their business and their customers and work to accommodate our inventory requirements. Our first quarter results reflected strong demands driven by digital acceleration and technology refresh initiatives. We saw double-digit growth across large deals and run-rate business. As end-user buying and consumption patterns change, ScanSource enables partners to win and sell the technology stack by leveraging our hybrid distribution strategy. A recent example of a hybrid solution included Cloud Voice, connectivity, and SD-WAN controllers for a multi-brand retailer looking to consolidate suppliers across 1,000-plus sites while connecting, securing, and maintaining business continuity. ScanSource orchestrated this solution, which resulted in a 500K end-user MRR deal, highlighting our differentiated distribution capabilities. In our specialty technology solutions segment, net sales increased 23 percent year-on-year, fueled by strong demand, increases in big deals, and market share gains. Our segment gross profit grew 32 percent year-on-year. A more favorable sales mix, increased supplier sales incentives, and price performance drove higher profit margins. With increased demand, and continued labor shortages, end customers are implementing mobile computing solutions to increase automation and worker productivity. Retailers are adopting our solutions to reduce friction across the buying experience, including self-checkout, curbside pickup, and storefront fulfillment for online purchases. Key to our hybrid distribution growth strategy is expanding use cases, for attaching higher value services to hardware. Example use cases include key injection for payment devices, wireless connectivity with mobile computers, and integrated hardware deployments. These use cases demonstrate ScanSource's unique value proposition and enhance our margin profile. For our modern communications and cloud segment, net sales increased 2% year on year. while gross profits increased 21% year-on-year, reflecting accelerated cloud and subscription adoption. The hybrid work model, considered by many as the new normal, is providing significant opportunities for our partners across UCAS, CCAS, cloud-enabled endpoints, and connectivity. Hybrid work environments are transforming the way we work. According to Frost and Sullivan Research, pre-2020, only 10% of meeting spaces qualified as huddle rooms. By 2024, approximately 75% of all video meetings will take place in huddle rooms. This expected growth is creating tremendous opportunity for our sales partners to update and refresh collaboration technologies in conference and huddle rooms, enabling hybrid work. Included in this segment is Intellisys, and we achieved 13% year-on-year net sales growth and exceeded $2 billion in end-user ARR, annual recurring revenue, or billings by suppliers to end users. This marks our 21st quarter in a row of double-digit growth with Intellisys. We are adding additional headcount ahead of revenue to accelerate our growth opportunity. We are encouraged by the continued adoption of the agency model by the VAR community, as witnessed by 23% year-on-year growth in new supplier billings through VARs. These VARs now represent 56% of Intellisys sales partners, up from 30% at the time of acquisition five years ago. Our team in Brazil continues to deliver consistent performance on top-line revenue and profitability, along with strong financial discipline. During the quarter, we experienced strength in big deals with double-digit growth across data center, digital workplace, and cybersecurity solutions. In addition to our success across hardware, our business in Brazil continues to build outstanding momentum across SaaS and digital solutions. In summary, we are leading the way in hybrid distribution, accelerating the future of technology for our partners and suppliers across hardware, software, connectivity, and cloud services. I'm very excited about our Q1 performance, the strength and momentum of our business, and the opportunities that lay ahead. I'd like to thank our employees for all their outstanding efforts in the quarter and our suppliers and customers for their continued commitment to ScanSource. Now, I'll turn it over to Steve, who will take you through our financial results.

Thanks, John. Our strong first quarter results demonstrates our team's successful execution of our strategic plan. It was an outstanding quarter for delivering growth and higher returns. Our business is built on top-line growth, and we realized operational leverage in Q1 in our bottom-line results. Non-GAAP EPS for the quarter was 99 cents and represents the fifth consecutive quarter of improvement. As Mike noted in his opening statements, we made changes to our reporting segments to align technologies with our go-to-market strategy. Our new segments better reflect how we manage the business today and in the future. In the first quarter, we achieved strong top-line growth, up 13% year-over-year, and expanded our margins. Our gross profit margins increased to 11.8%, adjusted EBITDA margins increased to 4.83%, and non-GAAP operating income margin increased to 4.07%. In both segments, gross profit, adjusted EBITDA, and non-GAAP operating income grew faster than sales, demonstrating our increasing operating leverage. Q1 net sales of $857 million reflects strong demand from our customers. Our gross profits grew 25% year-over-year to $101 million. Favorable sales mix and higher supplier sales incentives contributed to our gross profit margin of 11.8%, an increase from 10.7% in the prior year's quarter. Our non-GAAP SG&A expense for the quarter of $63.5 million increased $1.9 million, or 3% year-over-year, which includes investment in strategic headcount for Intellisys, Brazil, and other growth areas, including IT investments to expand our capabilities. We are shifting to adjusted EBITDA as our key profitability metrics. First quarter adjusted EBITDA, which now excludes share-based compensation, totaled $41.4 million, up 98% year-over-year, Our first quarter income tax rate of 25% reflects an increase in forecasted tax-exempt income, primarily from Brazil. For fiscal year 2022, we estimate the effective tax rate excluding discrete items to range from 24.5% to 25.5%. Now turning to the balance sheet and cash flow. Negative operating cash flow of $57 million for the quarter and $11 million for the trailing 12 months reflects working capital investment to support our sales growth. Year over year, working capital increased $93 million, a 24% year over year increase. Q1 DSO came in at 62 days, in line with our expected range. Our Q1 inventory turns of 6.3 times were up modestly from our typical range. On September 30th, 2021, we had cash and cash equivalents of $55 million and debt of $197 million. Our balance sheet remains strong. From a net debt leverage perspective, we ended Q1 at approximately one time trailing 12-month adjusted EBITDA, demonstrating our financial flexibility to support growth opportunities and create long-term value. During the quarter, we had no repurchases under our $100 million share repurchase authorization. And finally, First quarter fiscal year 2022 return on invested capital increased to 17.5%, the highest quarterly ROIC in over five years. Our Q1 ROIC includes the change in our adjusted EBITDA calculation to exclude share-based compensation. With our Q4 earnings announcement in August, we provided an annual outlook for the first time. We are reaffirming our full-year outlook. For fiscal year 2022, we expect our year-over-year net sales growth to be at least 5.5%, and we expect adjusted EBITDA to be at least $135 million. We'll now open it up for questions.