ScanSource, Inc. (SCSC) Q4 2025 Earnings Conference Call Transcript
Net sales for Q4 Grew almost 9% year-over-year. Reasons for growth include broad-based hardware growth in North America, led by double-digit growth in mobility and barcode, physical security, and managed connectivity. Additionally, large deals pulled in late in the quarter contributed $30 million to $40 million of revenue.
Adjusted EBITDA for Q4 Grew 13% year-over-year. This reflects strong profitability and operational efficiency.
Non-GAAP net income for Q4 Grew 17% year-over-year. This indicates improved financial performance.
Non-GAAP earnings per share (EPS) for Q4 Grew 27.5% year-over-year to $1.02. This reflects strong earnings growth.
Specialty Technology Solutions segment net sales Increased 9% year-over-year and 16% quarter-over-quarter. Growth was driven by broad-based hardware growth in North America, including double-digit growth in mobility and barcode, physical security, and managed connectivity.
Specialty Technology Solutions segment gross profit Grew 8% year-over-year, reflecting a higher mix of hardware for the quarter.
Specialty Technology Solutions segment adjusted EBITDA margin Increased by 35 basis points to 3.6%. This reflects improved operational efficiency.
Intelisys & Advisory segment net sales and gross profits Increased 1% year-over-year, including the positive contribution from the Resourcive acquisition.
Intelisys & Advisory segment adjusted EBITDA Declined 4% year-over-year due to increasing investments in SG&A to drive future billings growth and expand technical capabilities in emerging technologies like AI.
Annual end-user billing for Intelisys Increased 4.5% year-over-year, bringing annualized net billings to approximately $2.8 billion. Growth was driven by double-digit growth in CX, including UCaaS, CCaaS, and AI-enabled CX solutions.
Full year net sales Totaled just over $3 billion, a year-over-year decline of 6.7%. The decline reflects tough market conditions.
Full year gross profits Increased 2.4% year-over-year to $408.6 million. This reflects improved margins and operational efficiency.
Full year adjusted EBITDA Increased 2.8% year-over-year to $144.7 million. This reflects improved profitability.
Full year gross profit margins Increased by 120 basis points year-over-year to 13.4%. This reflects a higher concentration of netted down revenues.
Full year adjusted EBITDA margins Increased by 45 basis points year-over-year to 4.76%. This reflects improved operational efficiency.
Recurring revenues as a percentage of consolidated gross profits Increased to 32.8% from 27.5% last year. This reflects a higher contribution from recurring revenue streams.
Non-GAAP net income for the year Increased 9.6% year-over-year to $85.1 million. This reflects improved financial performance.
Full year free cash flow Increased to $104 million, representing a 122% conversion of non-GAAP net income. This reflects strong cash generation.
Non-GAAP EPS for the year Increased by 15.9% year-over-year to $3.57. This reflects strong earnings growth.
Cash at the end of Q4 $126 million. This reflects a strong cash position.
Net debt leverage ratio at the end of Q4 Approximately 0 on a trailing 12-month adjusted EBITDA basis. This reflects a strong balance sheet.
Adjusted ROIC for Q4 14.9%. This reflects strong returns on invested capital.
Full year adjusted ROIC 13.6%. This reflects strong returns on invested capital.
Share repurchases for the year Totaled $107 million. This reflects capital returned to shareholders.
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ScanSource Q2 2026 Earnings Call Insights
- Financial Performance Overview: ScanSource reported a 3% year-over-year increase in net sales and a 1% rise in gross profit for Q2, but unexpected expenses negatively impacted EBITDA margins, indicating pressure on profitability.
- Strategic Shift: The company launched a unified communications sales team aimed at integrating hardware and cloud services to strengthen partner relationships and expand market share in a rapidly evolving tech ecosystem.
- Outlook Adjustment: Management revised full-year revenue expectations to a range of $3.0 billion to $3.1 billion, with adjusted EBITDA projected between $140 million and $150 million, reflecting uncertainty regarding the timing of large deals.
- Market Challenges: The Brazilian market experienced a 9% organic decline, attributed to market conditions, while management emphasized the need to monitor high period expenses and the slowdown in large deals impacting business growth.
ScanSource Q2 Earnings Miss Expectations
- Earnings Performance: ScanSource reported a Q2 non-GAAP EPS of $0.80, missing expectations by $0.21, indicating a decline in profitability that may affect investor confidence.
- Revenue Growth Weakness: The second quarter revenue of $766.51 million, up 2.5% year-over-year, fell short of market expectations by $15.95 million, reflecting challenges from increased competition and weak demand.
- Recurring Revenue Growth: Despite the overall revenue miss, ScanSource's recurring revenue increased by 15.9% year-over-year, indicating sustained demand for its products and services, which may provide stability for future revenues.
- Annual Financial Outlook Adjustment: ScanSource revised its fiscal year 2026 net sales and adjusted EBITDA expectations, projecting net sales between $3.0 billion and $3.1 billion, below the consensus of $3.14 billion, reflecting a cautious outlook on future market conditions.
ScanSource (SCSC) to Release Q2 FY2026 Results on February 5, 2026
- Earnings Release Schedule: ScanSource plans to release its second quarter fiscal year 2026 results on February 5, 2026, at approximately 8:30 a.m. ET, reflecting the company's commitment to transparency.
- Conference Call Arrangement: On the same day, ScanSource management will host a conference call at 10:30 a.m. ET to discuss the financial results, enhancing communication with investors.
- Webcast Access: Investors can access the earnings call via a live webcast on ScanSource's Investor Relations website, demonstrating the company's modernization and convenience in information dissemination.
- Company Background: Founded in 1992 and headquartered in Greenville, South Carolina, ScanSource focuses on distributing complex technologies and has been recognized as one of the Best Places to Work in South Carolina for 2025, highlighting its strong reputation in the industry.
Considering a Growth Stock? Here Are 3 Reasons Why ScanSource (SCSC) is a Strong Option
Growth Stocks Overview: Growth stocks are appealing due to their potential for above-average financial growth, but they come with higher volatility and risk, making it challenging to identify the best options.
ScanSource Recommendation: ScanSource (SCSC) is highlighted as a strong growth stock, boasting a favorable Growth Score and a Zacks Rank of #2, indicating its potential for outperforming the market.
Key Growth Metrics: The company shows promising earnings growth, with a projected EPS increase of 15.5% this year, and an asset utilization ratio of 1.73, significantly higher than the industry average, indicating efficient sales generation.
Positive Earnings Trends: Recent upward revisions in earnings estimates for ScanSource further support its growth potential, making it a solid choice for growth investors looking for outperformers.
Zacks.com Spotlights El Pollo Loco, OppFi, Edison, ScanSource, and Zions Bancorporation
Bargain Stocks Highlighted: The article discusses five stocks with attractive EV-to-EBITDA ratios, including El Pollo Loco Holdings, OppFi Inc., Edison International, ScanSource, Inc., and Zions Bancorporation, which are considered undervalued based on this metric.
EV-to-EBITDA vs. P/E Ratio: EV-to-EBITDA is presented as a superior valuation metric compared to the traditional price-to-earnings (P/E) ratio, as it accounts for a company's total value and is less susceptible to manipulation, making it useful for evaluating firms with negative net earnings.
Growth Projections: Each highlighted stock has promising earnings growth projections for 2025, with OppFi Inc. expected to grow by 65.3%, followed by Edison International at 23.7%, and Zions Bancorporation at 19%.
Investment Tools and Resources: The article promotes Zacks Investment Research's tools, such as the Research Wizard, which helps investors screen stocks and develop investment strategies, emphasizing the importance of combining multiple valuation metrics for better decision-making.
Validea's Leading IT Stocks Inspired by Benjamin Graham - November 14, 2025
Top Rated IT Stocks: ScanSource Inc. (SCSC) and Vishay Intertechnology Inc. (VSH) are highlighted as top-rated small-cap value stocks in the IT sector, both receiving a rating of 71% based on Benjamin Graham's value investing strategy, which emphasizes low P/B and P/E ratios, low debt, and solid long-term earnings growth.
ScanSource Inc. Overview: ScanSource operates as a hybrid distributor in the Computer Hardware industry, providing solutions across various segments including mobility, security, networking, and cloud services, aimed at accelerating growth for channel partners.
Vishay Intertechnology Inc. Overview: Vishay specializes in manufacturing discrete semiconductors and passive electronic components for diverse markets such as automotive, industrial, and medical, offering a wide range of products including MOSFETs and diodes.
About Benjamin Graham and Validea: Benjamin Graham, known as the "Father of Value Investing," significantly influenced the investment world and mentored notable investors like Warren Buffett. Validea is an investment research service that analyzes stocks based on the strategies of legendary investors, including Graham.
ScanSource Q2 2026 Earnings Call Insights
- Financial Performance Overview: ScanSource reported a 3% year-over-year increase in net sales and a 1% rise in gross profit for Q2, but unexpected expenses negatively impacted EBITDA margins, indicating pressure on profitability.
- Strategic Shift: The company launched a unified communications sales team aimed at integrating hardware and cloud services to strengthen partner relationships and expand market share in a rapidly evolving tech ecosystem.
- Outlook Adjustment: Management revised full-year revenue expectations to a range of $3.0 billion to $3.1 billion, with adjusted EBITDA projected between $140 million and $150 million, reflecting uncertainty regarding the timing of large deals.
- Market Challenges: The Brazilian market experienced a 9% organic decline, attributed to market conditions, while management emphasized the need to monitor high period expenses and the slowdown in large deals impacting business growth.
ScanSource Q2 Earnings Miss Expectations
- Earnings Performance: ScanSource reported a Q2 non-GAAP EPS of $0.80, missing expectations by $0.21, indicating a decline in profitability that may affect investor confidence.
- Revenue Growth Weakness: The second quarter revenue of $766.51 million, up 2.5% year-over-year, fell short of market expectations by $15.95 million, reflecting challenges from increased competition and weak demand.
- Recurring Revenue Growth: Despite the overall revenue miss, ScanSource's recurring revenue increased by 15.9% year-over-year, indicating sustained demand for its products and services, which may provide stability for future revenues.
- Annual Financial Outlook Adjustment: ScanSource revised its fiscal year 2026 net sales and adjusted EBITDA expectations, projecting net sales between $3.0 billion and $3.1 billion, below the consensus of $3.14 billion, reflecting a cautious outlook on future market conditions.
ScanSource (SCSC) to Release Q2 FY2026 Results on February 5, 2026
- Earnings Release Schedule: ScanSource plans to release its second quarter fiscal year 2026 results on February 5, 2026, at approximately 8:30 a.m. ET, reflecting the company's commitment to transparency.
- Conference Call Arrangement: On the same day, ScanSource management will host a conference call at 10:30 a.m. ET to discuss the financial results, enhancing communication with investors.
- Webcast Access: Investors can access the earnings call via a live webcast on ScanSource's Investor Relations website, demonstrating the company's modernization and convenience in information dissemination.
- Company Background: Founded in 1992 and headquartered in Greenville, South Carolina, ScanSource focuses on distributing complex technologies and has been recognized as one of the Best Places to Work in South Carolina for 2025, highlighting its strong reputation in the industry.
Considering a Growth Stock? Here Are 3 Reasons Why ScanSource (SCSC) is a Strong Option
Growth Stocks Overview: Growth stocks are appealing due to their potential for above-average financial growth, but they come with higher volatility and risk, making it challenging to identify the best options.
ScanSource Recommendation: ScanSource (SCSC) is highlighted as a strong growth stock, boasting a favorable Growth Score and a Zacks Rank of #2, indicating its potential for outperforming the market.
Key Growth Metrics: The company shows promising earnings growth, with a projected EPS increase of 15.5% this year, and an asset utilization ratio of 1.73, significantly higher than the industry average, indicating efficient sales generation.
Positive Earnings Trends: Recent upward revisions in earnings estimates for ScanSource further support its growth potential, making it a solid choice for growth investors looking for outperformers.
Zacks.com Spotlights El Pollo Loco, OppFi, Edison, ScanSource, and Zions Bancorporation
Bargain Stocks Highlighted: The article discusses five stocks with attractive EV-to-EBITDA ratios, including El Pollo Loco Holdings, OppFi Inc., Edison International, ScanSource, Inc., and Zions Bancorporation, which are considered undervalued based on this metric.
EV-to-EBITDA vs. P/E Ratio: EV-to-EBITDA is presented as a superior valuation metric compared to the traditional price-to-earnings (P/E) ratio, as it accounts for a company's total value and is less susceptible to manipulation, making it useful for evaluating firms with negative net earnings.
Growth Projections: Each highlighted stock has promising earnings growth projections for 2025, with OppFi Inc. expected to grow by 65.3%, followed by Edison International at 23.7%, and Zions Bancorporation at 19%.
Investment Tools and Resources: The article promotes Zacks Investment Research's tools, such as the Research Wizard, which helps investors screen stocks and develop investment strategies, emphasizing the importance of combining multiple valuation metrics for better decision-making.
Validea's Leading IT Stocks Inspired by Benjamin Graham - November 14, 2025
Top Rated IT Stocks: ScanSource Inc. (SCSC) and Vishay Intertechnology Inc. (VSH) are highlighted as top-rated small-cap value stocks in the IT sector, both receiving a rating of 71% based on Benjamin Graham's value investing strategy, which emphasizes low P/B and P/E ratios, low debt, and solid long-term earnings growth.
ScanSource Inc. Overview: ScanSource operates as a hybrid distributor in the Computer Hardware industry, providing solutions across various segments including mobility, security, networking, and cloud services, aimed at accelerating growth for channel partners.
Vishay Intertechnology Inc. Overview: Vishay specializes in manufacturing discrete semiconductors and passive electronic components for diverse markets such as automotive, industrial, and medical, offering a wide range of products including MOSFETs and diodes.
About Benjamin Graham and Validea: Benjamin Graham, known as the "Father of Value Investing," significantly influenced the investment world and mentored notable investors like Warren Buffett. Validea is an investment research service that analyzes stocks based on the strategies of legendary investors, including Graham.
