ScanSource, Inc.

Welcome to the ScanSource quarterly earnings conference call. All lines have been placed in a listen-only mode until the question and answer session. Today's call is being recorded. If anyone has any objections, you may disconnect at this time. I would now like to turn the call over to Mary Gentry, Senior Vice President, Treasurer, and Investor Relations. Ma'am, you may begin.

Good morning, and thank you for joining us. Joining me on the call today are Mike Bauer, our Chairman and CEO of and Steve Jones, our Chief Financial Officer. John Eld, our President, is under the weather and not able to join us today. We will review our operating results for the quarter and then take your questions. We posted an earnings infographic that accompanies our comments and webcasts in the Investor Relations section of our website. Let me remind you that certain statements in our press release, in the earnings infographic, and on this call are forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to, those factors identified in the earnings release we put out today and in scan sources Form 10-K for the year ended June 30, 2022, as filed with the SEC. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. ScanSource disclaims any duty to update any forward-looking statements to reflect actual results or changes in expectations, except as required by law. During our call, we will discuss both GAAP and non-GAAP results and have provided reconciliations between these amounts in the earnings infographics and in our press release. These reconciliations can be found on our website and have been filed with our Form 8K today. I'll now turn the call over to Mike.

Thanks, Mary, and thanks, everyone, for joining us today. Throughout fiscal year 23, our team has delivered results ahead of expectations, and Q3 is no exception. This quarter, we delivered 5% net sales growth, strong gross and adjusted EBITDA margins, and positive operating cash flow. Our diversified portfolio of products and services strategy is working. Our channel customers trust us, to broaden their technology offerings to meet the demand of end customers in this increasingly digital world. In addition, we give our channel customers the opportunity to build a successful stream of recurring revenue that will result in a more profitable and sustainable business. Since John is not able to join us today, I'll provide the business performance update for him. For Q3, both net sales and gross profit increased 5% year over year. We were able to meet customer demand with our strong inventory positions. As we enter Q4, we are seeing supply lead times return to normal levels for most of the products we sell, enabling us to be more efficient with our inventory levels. In our specialty technology solution segment, Q3 net sales increased 12% year-over-year, fueled by networking, security, and barcoding. and our Q3 segment gross profit increased 7%. We had strong sales growth in devices that enable productivity, automation, and the customer experience. This quarter's growth drivers included data networking, barcode scanners and printers, and physical security. Our sales team was recently named Aruba's North America Distributor of the Year. This recognition demonstrates our specialized expertise in this space, and successful engagement with the Aruba team to execute growth strategies. Moving on to our modern communications and cloud segment. Q3 net sales decreased 7% year over year, while gross profit increased 3% year over year. Strength in networking was offset by lower sales volumes in communications hardware as business shifts to the cloud. We had double-digit growth in our Cisco sales, led by networking, growth in our federal business, and the fast-growing cybersecurity business. We are well-positioned for growth with our cloud offerings, including UC as a service, UCaaS, and contact center as a service, CCaaS. As part of our Intellisys business, UCaaS billings grew 22%, and our CCaaS billings grew 56%. While our cloud communication business continues to grow, our on-premise communications business continues to decline. For Q3, on-premise represented only 10% of the total segment sales, but less than 4% of total consolidated net sales for the company. Intellisys continues to be a leader in the agency space. Our Q3 end user billings increased 9% year over year, and now exceed $2.4 billion annualized. Q3 Intellis' net sales increased 4% year over year. Our strong results for this quarter demonstrate how our diversified portfolio of technologies is driving our hybrid distribution success. Now, I'll turn the call over to Steve, who will take you through our financial results. Thanks, Mike.