Slide 1: Investor Presentation
Investor Presentation November 2024
Slide 2: Safe Harbor and Non-GAAP
SAFE HARBOR AND NON-GAAP Safe Harbor Statement Non-GAAP Financial Information This presentation contains “forward-looking” statements, including our FY25 outlook, mid- In addition to disclosing results that are determined in accordance with United States term goals, market growth rates, growth oppor
Slide 3: ScanSource – A Transformed Company
ScanSource – A Transformed Company To: Innovative hybrid distributor Expand technology offerings in From: A traditional increasingly digital world hardware distributor Intelisys, leading technology services distributor of connectivity and cloud Fast-growing recurring revenue Specialty device distrib
Slide 4: Leading Hybrid Distributor. Expanding Value for Partners.
AGENDA Leading Hybrid Distributor. Expanding Value for Partners. 1 2 3 4 5 Hybrid distribution Diverse ecosystem Differentiated Attractive financial Deliver sustainable accelerates of partners and market position profile drives free long-term profitable recurring revenue technologies cash flow growt
Slide 5: ScanSource At-a-Glance – Leading Hybrid Distributor
ScanSource At-a-Glance – Leading Hybrid Distributor Specialty Technology Channel Partners Technology Suppliers Total Employees Distributor Market Leader ~25,000 ~500 ~2,300 Specialty Technologies Two Operating Segments Sales by Geography United States & Canada Based on Sales Model Mobility and Secur
Slide 6: Clear Evidence of a Transformed Business Model
Clear Evidence of a Transformed Business Model Fast-Growing Expanding Recurring Revenue Gross Profit Margin ($M) $111 +259 bps 15% 11.7% 12.2% CAGR 9.7% $48 $0 FY16 FY18 FY24 FY16 FY18 FY24 % of Gross Profit 0% 13% 28% Recurring revenue chart reflects gross profit from recurring revenues. Recurring
Slide 7: Our Mission
OUR MISSION Drive sustainable profitable growth by orchestrating hybrid technology solutions through a rapidly growing ecosystem of suppliers and channel partners leveraging our people, processes, and tools. 7
Slide 8: Leading Hybrid Distributor. Expanding Value for Partners.
AGENDA Leading Hybrid Distributor. Expanding Value for Partners. 1 2 3 4 5 Hybrid distribution Diverse ecosystem Differentiated Attractive financial Deliver sustainable accelerates of partners and market position profile drives free long-term profitable recurring revenue technologies cash flow growt
Slide 9: Building on Specialty Technologies with Recurring Revenue Opportunities in Both Segments
Building on Specialty Technologies with Recurring Revenue Opportunities in Both Segments Mobility Security and Point of Sale (POS) Communications Connectivity Cloud and Barcode Networking and Payments and Collaboration Services SUPPLIERS INCLUDE 9
Slide 10: Key Technology Trends for Sustainable Profitable Growth
Key Technology Trends for Sustainable Profitable Growth Shift in buying/consumption preferences to cloud and SaaS/subscriptions More complex technology solutions as devices, software and services are bundled together Connected devices enable digitization, automation, and worker productivity Investme
Slide 11: ScanSource Plays a Pivotal Role Accelerating Growth for Partners
S P E C I A LT Y T E C H N O L O G Y S O L U T I O N S ScanSource Plays a Pivotal Role Accelerating Growth for Partners TECHNOLOGY SUPPLIERS ScanSource Value Proposition for Suppliers Expand reach at Multiple routes to Lower customer Recruit, train new Manage channel “Exceptional customer variable c
Slide 12: Proven Success with Agency Model for Connectivity and Cloud
INTELISYS & ADVISORY Proven Success with Agency Model for Connectivity and Cloud • Revenues recognized on a net basis (net sales ≈ gross profit) • Very low working capital requirements and no inventories Agency Sales Model: Agent sells to End Customer • Intelisys, leading technology services distrib
Slide 13: Leading Hybrid Distributor. Expanding Value for Partners.
AGENDA Leading Hybrid Distributor. Expanding Value for Partners. 1 2 3 4 5 Hybrid distribution Diverse ecosystem Differentiated Attractive financial Deliver sustainable accelerates of partners and market position profile drives free long-term profitable recurring revenue technologies cash flow growt
Slide 14: A Differentiated Market Position
A Differentiated Market Position 1 Pivotal position at intersection of powerful industry trends 2 Unmatched hybrid distribution capabilities 3 Focused on complex, niche markets More routes to market, enable channel partners Powerful value proposition 4 to build hybrid capabilities 14
Slide 15: Positioned to Capitalize on Powerful Technology Distribution Trends
D I F F E R E N T I AT O R # 1 ScanSource is Positioned in a Pivotal Position to Capitalize on Powerful Technology Distribution Trends Suppliers Seeking New Pivotal Channel Partners Need Routes to Market Position Expanded Capabilities (~500) (~25,000) • Need distributors • Hardware + who can support
Slide 16: Unmatched Hybrid Distribution Capabilities
D I F F E R E N T I AT O R # 2 Unmatched Hybrid Distribution Capabilities Competitors Broadline Speciality Capability Agency IT IT Portfolio in Specialty Technologies: • Hardware • Agency model for selling cloud services Multiple, specialized routes to market Deep specialization Orchestrate hybrid s
Slide 17: Focused on Complex, Niche Markets
D I F F E R E N T I AT O R # 3 Focused on Complex, Niche Markets Key Capabilities Advantages Scale of a Market Leader Deep customer and supplier relationships – #1 or #2 for our key suppliers Delivery Model for Hybrid Distribution Agency model makes it easy for Well-positioned channel partners to se
Slide 18: Our Hybrid Distribution Orchestrates the Best End Customer Solutions
D I F F E R E N T I AT O R # 4 Our Hybrid Distribution Orchestrates the Best End Customer Solutions Broad Range of Solutions More Routes to Market Subscription and Services Value-added reseller as-a-Service (XaaS) Hardware Agent Independent sales End Financing options organization Customers Professi
Slide 19: Leading Hybrid Distributor. Expanding Value for Partners.
AGENDA Leading Hybrid Distributor. Expanding Value for Partners. 1 2 3 4 5 Hybrid distribution Diverse ecosystem Differentiated Attractive financial Deliver sustainable accelerates of partners and market position profile drives free long-term profitable recurring revenue technologies cash flow growt
Slide 20: Attractive Financial Profile Drives Free Cash Flow
Attractive Financial Profile Drives Free Cash Flow 1. Sustainable profitable growth 2. Margin expansion opportunity – fast-growing recurring revenue – adj. EBITDA margin* mid-term goal (4.5% to 5%) 4. Strong balance sheet 3. Free cash flow generation – disciplined capital allocation – building a cas
Slide 21: Strong Balance Sheet and Disciplined Capital Allocation
A CLOSER LOOK Strong Balance Sheet and Disciplined Capital Allocation Priorities Key Metrics Q1 FY25 – Q/E Disciplined Share Net leverage ratio* 0.0x M&A Repurchases • Fund growth of high • $95M remaining (as Cash and cash equivalents $145M margin, recurring of 9/30/24) on revenue businesses Board-a
Slide 22: Executing Capital Allocation Plan – August 2024 Acquisitions
A CLOSER LOOK Executing Capital Allocation Plan – August 2024 Acquisitions M&A theme: High margin, recurring revenue businesses that are working capital light • Technology advisor delivering strategic • Connectivity provider of 5G for mobility IT sourcing solutions solutions • Start of advisory chan
Slide 23: Leading Hybrid Distributor. Expanding Value for Partners.
AGENDA Leading Hybrid Distributor. Expanding Value for Partners. 1 2 3 4 5 Hybrid distribution Diverse ecosystem Differentiated Attractive financial Deliver sustainable accelerates of partners and market position profile drives free long-term profitable recurring revenue technologies cash flow growt
Slide 24: Multiple Profitable Growth Drivers Going Forward
Multiple Profitable Growth Drivers Going Forward 1. Grow hybrid offerings across all routes to market 2. Broaden technology portfolio 3. Enter new markets, target new customer needs 4. Digital expansion 5. Build technology capabilities 24
Slide 25: Evolving to Higher Value-Added Solutions
A CLOSER LOOK Evolving to Higher Value-Added Solutions 3 2 Hardware PLUS Layer of Services 1 Cloud Services Hardware-Centric Sales Cloud* Cloud Compute H A R D W A R E Barcode Managed Services Connectivity Value Point-of-Sale (POS) IaaS Added Payments IoT / Wireless Communications Services Managed S
Slide 26: Clear Mid-Term Goals
Clear Mid-Term Goals Recurring Revenue as % of Gross Profits Adj. ROIC* Adj. EBITDA Margin* Building to Net Sales Growth per year Mid 30%+** Teens 4.5%-5% 5%-7.5% * Non-GAAP measure; see “Non-GAAP Financial Information” for information on forward-looking financial data not presented in accordance wi
Slide 27: Leading Hybrid Distributor. Expanding Value for Partners.
AGENDA Leading Hybrid Distributor. Expanding Value for Partners. 1 2 3 4 5 Hybrid distribution Diverse ecosystem Differentiated Attractive financial Deliver sustainable accelerates of partners and market position profile drives free long-term profitable recurring revenue technologies cash flow growt
Slide 28: Appendix
a yy scansource Appendix 28
Slide 29: New Segment Reporting
NEW SEGMENT REPORTING Previous Operating Segments New Operating Segments By TECHNOLOGY By SALES MODEL Agency Sales Model Intelisys & • Intelisys Advisory • Technology Advisors/Resourcive Modern • Channel Exchange (formerly intY US) Communications • RPM & Cloud Wholesale Sales Model Specialty • ScanS
Slide 30: Working Capital, 8-Quarter Summary
Working Capital, 8-Quarter Summary ($ in thousands) Q1 FY25 Q4 FY24 Q3 FY24 Q2 FY24 Q1 FY24 Q4 FY23 Q3 FY23 Q2 FY23 Accounts receivable (Q/E) $567,127 $581,523 $589,847 $662,799 $691,669 $753,236 $684,458 $779,562 Days sales outstanding in receivables 66 71 71 68 71 72 70 69 Inventory (Q/E) $504,078
Slide 31: Non-GAAP Financial Information – Net Leverage Ratio
Non-GAAP Financial Information – Net Leverage Ratio ($ in thousands) Q1 FY25 Q4 FY24 Q3 FY24 Q2 FY24 Q1 FY24 Consolidated debt (Q/E) $143,649 $144,056 $145,881 $168,834 $248,108 Less: Consolidated cash and cash equivalents (Q/E) (145,044) (185,460) (159,050) (44,987) (42,647) Net debt (Q/E) $ (1,395