ScanSource, Inc. (NASDAQ:SCSC) Q3 2024 Earnings Conference Call May 7, 2024 10:30 AM ET

Company Participants

Mary Gentry - Senior Vice President, Treasurer and Investor Relations
Mike Baur - Chair and Chief Executive Officer
Steve Jones - Senior Executive Vice President, Chief Financial Officer
Tony Sorrentino - President for Specialty Technology

Conference Call Participants

Greg Burns - Sidoti
Keith Housum - Northcoast Research
Michael Latimore - Northland Capital Markets

Operator

Welcome to the ScanSource Quarterly Earnings Conference Call. All lines have been placed in a listen-only mode until the question-and-answer session. Today's call is being recorded. If anyone has any objections, you may now disconnect.

I would like to turn the call over to Mary Gentry, Senior Vice President, Treasurer and Investor Relations. Ma'am, you may begin.

Mary Gentry

Good morning and thank you for joining us. Our call will include prepared remarks from Mike Baur, our Chair and CEO; and Steve Jones, our Chief Financial Officer. Tony Sorrentino, our President for Specialty Technology, is also joining us. We will review our operating results for the quarter and then take your questions. We've posted an earnings infographic that accompanies our comments and webcast in the Investor Relations section of our website.

As you know, certain statements in our press release, infographic and on this call are forward-looking statements and subject to risks and uncertainties that could cause actual results to differ materially from expectations. These risks and uncertainties include the factors identified in our earnings release and in our Form 10-K for the year ended June 30, 2023. Forward-looking statements represent our views only as of today and ScanSource disclaims any duty to update these statements, except as required by law. During our call, we will discuss both GAAP and non-GAAP results and have provided reconciliations on our website and in our Form 8-K.

I'll now turn the call over to Mike.

Mike Baur

Thanks, Mary. Thanks, everyone, for joining us today. In the third quarter, our people responded well in a challenging demand environment. However, we were surprised at our lower-than-expected net sales for our hardware business. Third quarter net sales declined 15% due to lower demand from our channel partners across our portfolio of technologies. Our strong margins and robust free cash flow reflect the strength of our business fundamentals.

We operate in highly specialized technology markets with value-added profit margins because of our expertise. ScanSource benefits from this deep knowledge of our sales and supplier services teams, specific value-added tools and working capital investment that is countercyclical with sales volumes. With our hybrid distribution strategy, we are committed to helping our channel partners execute on the expanded opportunity to sell devices and recurring revenues.