ScanSource, Inc.

Welcome to the ScanSource Quarterly Earnings Conference Call. All lines have been placed in the 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, Finance and Treasurer. Ma'am, you may begin.

Good morning, and thank you for joining us. Our call will include prepared remarks from Mike Bauer, our chair and CEO, and Steve Jones, our chief financial officer. 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. As you know, certain statements in our press release, infographic, and on this call are forward-looking statements and subject to risks and uncertainties that could cause actual results to differ materially from expectations. These risks and uncertainties include the factors identified in our earnings release and in our Form 10-K for the year ended June 30, 2024. Forward-looking statements represent our views only as of today, and ScanSource disclaims any duty to update these statements except as required by law. During our call, we will discuss both GAAP and non-GAAP results and have provided reconciliations on our website and in our Form 8-K. I'll now turn the call over to Mike.

Thanks, Mary, and thanks everyone for joining us today. Our business performed well this quarter. Each of our segments achieved year over year gross profit growth and higher EBITDA margins. As a reminder, we announced new segments in Q1. As part of that change, we expanded the roles and responsibilities for our business presidents beyond sales, marketing, and operations to include strategy, acquisitions, and setting the priorities for IT and finance. This supports our plan to increase our pace and accelerate profitable growth. Our four business presidents are experienced technology leaders who understand the growth opportunities ahead in each of their markets. To capitalize on these growth opportunities, they are building new, innovative programs and services, like our recent AI Masterclass, which is an educational opportunity for our Intellisys channel partners to learn about emerging trends and actionable strategies around AI, cloud, security, CX, and wireless. Hardware demand improved this quarter, along with the return of large deals. We performed better than our seasonal trend for March quarter, with sales declining 6% quarter over quarter. This quarter, most of our technologies in North America grew year over year, including mobility and barcode, networking, physical security, payment terminals, and wireless connectivity. While the tariff policies remain fluid, we are passing through any price increases from our suppliers to our customers with minimal impact on our margins. We see momentum building in our business and opportunities to accelerate channel growth for emerging innovative technologies. Last August, we created our integrated solutions group, ISG, to provide high margin products and services for channel partners to wrap additional value around their hardware offerings. We launched this group with our acquisition of Advantix. And in Q3, growth in wireless connectivity solutions with our channel partners continued. As an example, Advantix's multi-carrier smart SIM solution secured a win for a channel partner with a large utility company by delivering uninterrupted cellular data coverage for WAN-enabled tablets in their route delivery fleet. Like Advantix, our POS portal payments business delivers high margin, value-added services for our channel partners that support mission-critical payment solutions. Our POS Portal solutions are designed to provide high-value deployment and lifecycle services on behalf of our financial partners across their merchant networks. POS Portal's offerings include comprehensive hardware and software integration, hot swap replacement, full lifecycle management, and customized end-to-end deployment solutions. Building on our success with Advantix and POS Portal We see similar opportunities for identifying emerging innovative technology growth companies that may not be utilizing the channel successfully today. Our integrated solutions group will be launching a new business development team this quarter. This team will provide company specific channel programs, sales expertise, and market building capabilities. to propel emerging companies into scalable go-to-market success. We believe this new program will attract many new suppliers who want to work with the channel but don't fit the traditional technology distribution model. A recent example of a company that fits this model provides an AI-powered guest engagement platform designed for stadiums and other event venues. Opportunities with companies like this will serve as a catalyst for incremental growth across our business. We will be announcing more details on the innovative program during Q4. At Intellisys, we are developing growth opportunities by attracting new suppliers that want to engage with our channel of trusted advisors. During the past year, we added nine suppliers as part of our strategy to enhance our cyber and AI offerings. Two of the suppliers participated in our recent AI masterclass, where we launched our AIMC framework to teach advisors how to take customers from an AI idea to execution of a solution. Other ways we are adding value to our channel is by equipping our sales partners with AI certifications offered through our Intellisys University, providing customized training on AI consultations, and we're providing cybersecurity training at our regional events. We believe value-added investments like these will differentiate Intellisys from our competitors. Our vision for Resources, our advisory business acquired last August, is to build the channel model of the future and drive more value by simplifying the complexity of technology choices for end customers. Resources has expertise and capabilities in cyber, CX, and networks. Our team provides project management and practice leaders to assist customers in deploying complex technologies. As a recent example of a significant win, we advised and recommended a solution for an enterprise customer who wanted to transform their existing contact center by adding the latest AI-enabled capabilities. This enterprise customer win reinforces the value of the trusted advisor channel. In Brazil, Our team is experienced in navigating macro uncertainties over the years, while still achieving profitability and managing working capital efficiently. Our business in Brazil is well diversified, both from the supplier base and our customer base. With our strong market position, we believe we are prepared for growth when demand improves. Now looking ahead, we are focused on driving profitable growth. organically and through attractive acquisitions in both segments. Our team's success with our recent acquisitions of Resourcive and Advantix gives us the confidence to make strategic acquisitions a higher capital allocation priority. I'll now turn the call over to Steve to take you through our financial results and outlook for fiscal year 2025. Thanks, Mike.