The following is a summary of the ScanSource, Inc. (SCSC) Q3 2024 Earnings Call Transcript:

Financial Performance:

• ScanSource reported a 15% decline in Q3 net sales due to lower demand across their technology portfolio.

• Despite this, strong margins and substantial free cash flow of $158 million were reported.

• The hardware business witnessed a significant revenue drop, particularly in networking products such as Cisco.

• Earnings for Intelisys, the company's recurring revenue business, grew 4% YoY, generating $2.68 billion in end user billings.

• The company projects net sales of at least $3.3 billion and adjusted EBITDA of at least $140 million for FY 2024.

• They have increased their free cash flow outlook to at least $275 million.

Business Progress:

• Amid challenging demand, the company is prioritizing strong free cash flow and focusing on Intelisys for FY 2024.

• The company plans to expand investments in talent, training, and tools to drive growth and increase its value.

• ScanSource is also exploring the acquisition of contracts, agencies, and necessary digital tools to manage supplier and end-user contracts.

• A workforce reduction plan has been implemented to align resources with strategic plans, leading to potential annualized savings of approximately $10 million.

• The company is developing a new 'channel model of the future'.

• Despite macro-environmental uncertainties, ScanSource sees growth opportunities in the physical security, barcode, and mobility businesses.

• A surge in interest in AI application in contact center operations has been reported.

• Pricing pressure is expected due to industry consolidation, particularly in the UCaaS and CCaaS market.

• The formation of a new entity is underway, anticipated to enhance understanding of end-users' needs, improve decision-making, and potentially expedite deal closures.

More details: ScanSource IR

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