ScanSource, Inc. has recently released its 10-K report, providing a comprehensive overview of its financial performance and operations. The company, incorporated in 1992 and headquartered in Greenville, South Carolina, operates through two segments: Specialty Technology Solutions and Modern Communications & Cloud. It distributes technology products and solutions in the United States, Canada, and internationally, serving various industries such as manufacturing, retail, hospitality, and government.
In the 10-K report, ScanSource outlined its strategic initiatives, including a cost reduction and restructuring program executed in January 2024 to align its cost structure with demand expectations in the hardware business. This program resulted in approximately $10.0 million in annualized savings in selling, general and administrative expenses. Additionally, the company completed the sale of its UK-based intY business in December 2023, retaining its CASCADE cloud services distribution platform.
The report also highlighted the company's focus on driving sustainable, profitable growth through a hybrid distribution strategy, offering hardware, SaaS, connectivity, and cloud services from leading technology suppliers to solve end users' challenges.
In terms of financial performance, ScanSource reported a decrease in net sales for the fiscal year ended June 30, 2024, compared to the prior year. The Specialty Technology Solutions segment saw a decrease of $332.4 million (14.3%), while the Modern Communications & Cloud segment experienced a decrease of $195.5 million (13.4%). The company attributed these declines to softer demand in a more cautious technology spending environment and lower sales volumes in communications hardware and Cisco products.
The gross profit for the fiscal year ended June 30, 2024, also decreased, primarily impacted by lower sales volumes and unfavorable vendor program recognition. Operating income for both segments decreased, with the Specialty Technology Solutions segment experiencing a significant decline of 40.9%.
ScanSource's total other (income) expense for the fiscal year ended June 30, 2024, saw a significant decrease of $23.6 million compared to the prior year, primarily due to a gain on the sale of the UK-based intY business.
Furthermore, the company reported an income tax expense of $22.8 million for the fiscal year ended June 30, 2024, reflecting an effective tax rate of 22.8%, lower than the 27.7% effective tax rate in the prior year. ScanSource also provided insights into the potential impact of the OECD's Pillar Two Model Rules, which define global minimum tax rules and contemplate a global minimum tax rate of 15%.
Following these announcements, the company's shares moved -2.2%, and are now trading at a price of $47.81. For more information, read the company's full 10-K submission here.
