The following is a summary of the ScanSource, Inc. (SCSC) Q4 2024 Earnings Call Transcript:

Financial Performance:

• For the quarter, the business delivered strong gross profit margins, adjusted EBITDA margins, and free cash flow of $53 million.

• In the Specialty Technology Solutions segment, net sales declined 14% year-on-year, while gross profit declined 10% year-on-year.

• In the Modern Communication & Cloud segment, net sales declined 32% year-on-year, while Intelisys' net sales grew 6% year-on-year. Q4 end user billings for Intelisys increased 9% year-on-year and totaled $2.67 billion in FY '24.

• FY '24 non-GAAP EPS is $3.08, compared to $3.85 last year. Free cash flow for the year was $363 million.

• For FY '25, the company expects net sales to be between $3.1 billion and $3.5 billion, with adjusted EBITDA ranging between $140 million and $160 million.

Business Progress:

• The company hosted 800 attendees at their Partner First conference, emphasizing the accelerated adoption of their hybrid distribution strategy.

• Key personnel changes included Ken Mills joining as President of Intelisys to lead the next growth phase focusing on advanced technologies like AI and private 5G.

• Announced the creation of the Integrated Solutions Group which will provide specialty technology VARs with new solutions.

• Closed the acquisition of Advantix, a connectivity provider for 5G mobility solutions.

• Announced plans to continue leveraging the balance sheet for growth opportunities as part of the strategic plan.

Opportunities:

• The company sees an opportunity in expanding its total addressable market through partner segmentation and offering a custom set of services to its fastest-growing partners.

• The Integrated Solutions Group aims to create better value propositions and help specialty technology VARs deliver more with their hardware, linking to further growth.

Risks:

• Acknowledged that the challenging demand environment for their technologies in both segments may persist, particularly in the first half of FY '25.

• Discussed the difficulty of predicting top-line growth due to various cycles in their diversified technology portfolio.

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