SCANSOURCE, INC. (SCSC): Results of Operations and Financial Condition
SCANSOURCE, INC. (SCSC) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 FOR IMMEDIATE RELEASE Contact: Steve Jones Mary M. Gentry Senior EVP, Chief Financial Officer SVP, Finance and Treasurer ScanSource, Inc. ScanSource, Inc. (864) 286-4302 (864) 286-4892 SCANSOURCE DELIVERS STRONG FOURTH QUARTER AND FULL-YEAR RESULTS Hardware Demand Dr
How this was made
The 30-second read
Why it matters
The earnings beat and acquisition provide a clear catalyst for short‑term price appreciation, but integration risk remains.
Market read
First‑report earnings and M&A news for a mid‑cap tech distributor, offering actionable trading insight.
What to watch
Potential antitrust review and cash drain from the $220.5M purchase may affect short-term liquidity.
SCANSOURCE DELIVERS STRONG FOURTH QUARTER AND FULL-YEAR RESULTS
Fourth-quarter net sales grew 17.3% year-over-year, GAAP diluted EPS grew 40.9%, and non-GAAP diluted EPS grew 43.1%. Both operating income and adjusted EBITDA increased, while fiscal 2027 guidance calls for 6% to 10% net sales growth and $158 million to $165 million of adjusted EBITDA, excluding the pending MicroAge acquisition.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales, fourth quarterGAAP | $953,109 (in thousands) | – | 17.3% |
| Non-GAAP net sales, fourth quarternon-GAAP | $944,864 (in thousands) | – | 16.2% |
| Products and services net sales, fourth quarterother | $911,640 (in thousands) | – | 17.4% |
| Recurring revenue, fourth quarterother | $41,469 (in thousands) | – | 13.5% |
| Gross profit, fourth quarterGAAP | $119,849 (in thousands) | – | 14.0% |
| Gross profit margin, fourth quarterGAAP | 12.6% | – | -35bp |
| Percentage of gross profit from recurring revenue, fourth quarterother | 31.5% | – | – |
| Selling, general and administrative expenses, fourth quarterGAAP | $81,722 (in thousands) | – | – |
| Operating income, fourth quarterGAAP | $31,737 (in thousands) | – | 18.5% |
| Operating income, fourth quarternon-GAAP | $37,858 (in thousands) | – | – |
| Net income, fourth quarterGAAP | $25,618 (in thousands) | – | 27.5% |
| Diluted EPS, fourth quarterGAAP | $1.24 | – | 40.9% |
| Net income, fourth quarternon-GAAP | $30,280 (in thousands) | – | 29.8% |
| Diluted EPS, fourth quarternon-GAAP | $1.46 | – | 43.1% |
| Adjusted EBITDA, fourth quarternon-GAAP | $46,148 (in thousands) | – | 19.4% |
| Adjusted EBITDA margin, fourth quarternon-GAAP | 4.84% | – | 9bp |
| Adjusted ROIC, annualized, fourth quarternon-GAAP | 18.2% | – | – |
| Operating cash flow, fourth quarterGAAP | $(2,272) (in thousands) | – | – |
| Free cash flow, fourth quarternon-GAAP | $(4,789) (in thousands) | – | – |
| Net sales, fiscal yearGAAP | $3,226,062 (in thousands) | – | 6.1% |
| Non-GAAP net sales, fiscal yearnon-GAAP | $3,193,582 (in thousands) | – | 5.2% |
| Products and services net sales, fiscal yearother | $3,064,853 (in thousands) | – | 5.9% |
| Recurring revenue, fiscal yearother | $161,209 (in thousands) | – | 10.6% |
| Gross profit, fiscal yearGAAP | $437,355 (in thousands) | – | 7.0% |
| Gross profit margin, fiscal yearGAAP | 13.6% | – | 20bp |
| Percentage of gross profit from recurring revenue, fiscal yearother | 33.7% | – | – |
| Selling, general and administrative expenses, fiscal yearGAAP | $313,176 (in thousands) | – | – |
| Operating income, fiscal yearGAAP | $98,627 (in thousands) | – | 15.8% |
| Operating income, fiscal yearnon-GAAP | $119,702 (in thousands) | – | – |
| Net income, fiscal yearGAAP | $78,873 (in thousands) | – | 10.2% |
| Diluted EPS, fiscal yearGAAP | $3.64 | – | 21.3% |
| Net income, fiscal yearnon-GAAP | $91,945 (in thousands) | – | 8.0% |
| Diluted EPS, fiscal yearnon-GAAP | $4.24 | – | 18.8% |
| Adjusted EBITDA, fiscal yearnon-GAAP | $151,548 (in thousands) | – | 4.8% |
| Adjusted EBITDA margin, fiscal yearnon-GAAP | 4.70% | – | -6bp |
| Adjusted ROIC, fiscal yearnon-GAAP | 14.7% | – | – |
| Operating cash flow, fiscal yearGAAP | $123,131 (in thousands) | – | – |
| Free cash flow, fiscal yearnon-GAAP | $113,845 (in thousands) | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Specialty Technology Solutions, fourth quarterDriven by broad-based growth in North America. | $927,179 (in thousands) | – | 17.6% |
| Intelisys & Advisory, fourth quarterPrimarily from higher Resourcive sales. | $25,930 (in thousands) | – | 7.2% |
| Specialty Technology Solutions, fiscal yearPrimarily due to growth across most technologies in North America. | $3,124,932 (in thousands) | – | 6.2% |
| Intelisys & Advisory, fiscal yearReflecting higher Intelisys sales and full-year results for the Resourcive acquisition. | $101,130 (in thousands) | – | 3.1% |
Fiscal year ended June 30, 2027 outlook
- RevenueNet sales growth, Y/Y: 6% to 10%
- NoteAdjusted EBITDA (non-GAAP): $158 million to $165 million
- NoteFree cash flow (non-GAAP): At least $85 million
- NoteFiscal year 2027 guidance excludes the pending acquisition of MicroAge and related purchase accounting impacts.
Capital returns
- Common stock repurchased: $97,900 (in thousands) for fiscal year 2026.
- Share repurchases of $97.9 million for fiscal year 2026.
What drove it
- Fourth-quarter hardware demand drove 17% net sales growth.
- Specialty Technology Solutions growth was broad-based in North America.
- Fourth-quarter Intelisys & Advisory growth was primarily from higher Resourcive sales.
- Fiscal-year gross profit margin benefited from a higher contribution of recurring revenue, which is netted-down revenue, in the overall revenue mix and higher vendor program recognition.
- Recurring revenue represented primarily agency commissions, managed connectivity, SaaS, subscriptions, and hardware rentals.
- The MicroAge acquisition is expected to add higher-margin technology solutions capabilities and expand reach in cloud, cybersecurity, data center and AI.
Concerns
- Fourth-quarter gross profit margin was 12.6%, versus 12.9% in the prior-year quarter.
- Fiscal-year adjusted EBITDA margin was 4.70%, versus 4.76% in the prior year.
- Brazil fourth-quarter reported net sales declined 21.6% year-over-year to $53,515 (in thousands), and fiscal-year reported net sales declined 5.6% to $226,604 (in thousands).
- Fourth-quarter GAAP operating cash flow was $(2,272) (in thousands) and free cash flow was $(4,789) (in thousands).
- The MicroAge transaction remains subject to regulatory approval and other customary closing conditions.
What to watch
- Delivery against fiscal 2027 net sales growth guidance of 6% to 10% and adjusted EBITDA guidance of $158 million to $165 million.
- Whether gross margin and adjusted EBITDA margin improve as recurring revenue and vendor program recognition contribute to mix.
- The planned closing of the $220.5 million all-cash MicroAge acquisition in the quarter ending September 30, 2026.
- MicroAge integration and the expected addition of higher-margin technology solutions and services capabilities.
- Brazil sales trends and the impact of foreign exchange rates.
- Fiscal 2027 free cash flow performance against guidance of at least $85 million.
Balance sheet and cash flow
- Cash and cash equivalents were $88.4 million as of June 30, 2026, compared with $126.2 million as of June 30, 2025.
- Total debt was $101.4 million as of June 30, 2026.
- Accounts receivable were $769,750 (in thousands) at June 30, 2026, compared with $635,521 (in thousands) at June 30, 2025.
- Inventories were $522,350 (in thousands) at June 30, 2026, compared with $483,815 (in thousands) at June 30, 2025.
- Fiscal year 2026 operating cash flow was $123.1 million, compared with $112.3 million for fiscal year 2025.
- Fiscal year 2026 free cash flow was $113.8 million, compared with $104.1 million for fiscal year 2025.
- Capital expenditures were $9,286 (in thousands) for fiscal year 2026, compared with $8,286 (in thousands) for fiscal year 2025.
- Cash paid for business acquisitions, net of cash acquired, was $18,220 (in thousands) for fiscal year 2026.
Analysis
ScanSource closed fiscal 2026 with a strong fourth quarter. Net sales rose 17.3% year-over-year to $953.1 million, while non-GAAP net sales increased 16.2%. Product and services sales increased 17.4%, recurring revenue increased 13.5%, and Specialty Technology Solutions sales increased 17.6%, driven by broad-based growth in North America. Intelisys & Advisory grew 7.2%, primarily from higher Resourcive sales.
Profit growth exceeded reported sales growth in the quarter. GAAP operating income increased 18.5% to $31.7 million, GAAP net income increased 27.5% to $25.6 million, and GAAP diluted EPS increased 40.9% to $1.24. Non-GAAP diluted EPS rose 43.1% to $1.46, while adjusted EBITDA increased 19.4% to $46.1 million and its margin increased 9bp to 4.84%. The principal margin counterpoint was gross profit margin, which declined 35bp year-over-year to 12.6%, while recurring revenue accounted for 31.5% of gross profit compared with 31.6% a year earlier.
For the full year, net sales increased 6.1% to $3.23 billion and gross profit increased 7.0% to $437.4 million. Full-year gross profit margin expanded 20bp to 13.6%, which the company attributed to a higher recurring-revenue contribution to mix and higher vendor program recognition. Full-year recurring revenue increased 10.6%, faster than products and services growth of 5.9%, and recurring revenue's share of gross profit rose to 33.7% from 32.8%. However, adjusted EBITDA margin was 4.70%, down 6bp from 4.76% in fiscal 2025.
Cash generation was positive for the year, with $123.1 million of operating cash flow and $113.8 million of free cash flow, despite negative fourth-quarter operating cash flow and free cash flow. The company repurchased $97.9 million of common stock during fiscal 2026. At June 30, it held $88.4 million of cash and cash equivalents and had total debt of $101.4 million. Accounts receivable and inventories were both higher than at June 30, 2025.
Fiscal 2027 outlook calls for 6% to 10% year-over-year net sales growth, adjusted EBITDA of $158 million to $165 million, and free cash flow of at least $85 million. Guidance excludes the pending MicroAge acquisition and related purchase accounting impacts. The $220.5 million all-cash acquisition is expected to close in the quarter ending September 30, 2026, subject to approvals and customary conditions, and management expects it to add higher-margin capabilities in cloud, cybersecurity, data center and AI.
Management, verbatim
I’m proud of our team’s excellent fourth quarter performance, with 17% sales growth and even stronger EPS growth. We're also excited about our agreement to acquire MicroAge, which we believe will accelerate growth, expand margins, and adds new services capabilities.
Mike Baur, Chair and CEO, ScanSource, Inc.
Not in the filing
stated, not guessed- Previous-quarter financial results and sequential comparisons
- Prior fiscal-year outlook needed to compare actual results with prior guidance
- Fiscal 2027 gross margin guidance
- Fiscal 2027 operating expense guidance
- Fiscal 2027 tax-rate guidance
- Dividend information
- GAAP net income and GAAP EPS guidance for fiscal 2027
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
ScanSource, a Nasdaq‑listed technology distributor, released its FY26 earnings and disclosed a strategic acquisition of MicroAge.
Ticker impact
ScanSource reported Q4 FY26 results with 17% sales growth, 27% EPS increase and announced a $220.5M cash acquisition of MicroAge.
Potential 5-8% upside in the next 1-2 weeks as investors price higher margins and growth from the MicroAge deal.
Both earnings beat and a sizable cash acquisition are fresh, material information disclosed for the first time in an 8‑K.
Market effects
Tech distribution sector may see renewed buying as ScanSource's growth signals demand for hardware and services.
U.S. market participants focused on technology distributors could react positively.
Limited to U.S. and North American tech distribution space.
Counterpoint
Acquisition integration risk and higher leverage could pressure the stock if execution falls short.
Key entities
- CompanyScanSource, Inc.
NASDAQ: SCSC, technology distributor reporting FY26 results.
- CompanyMicroAge
IT solutions integrator being acquired for $220.5M in cash.
