ScanSource, Inc. reported its financial results for the quarter ended September 30, 2024, revealing a decline in net sales and operating income compared to the same period in the previous year. Net sales for the quarter were $775.6 million, a decrease of 10.7% from $876.3 million in Q3 2023. The Specialty Technology Solutions segment experienced an 11.1% drop in net sales, contributing $752.3 million, while the Intelisys & Advisory segment saw a slight increase of 1.5%, reaching $23.3 million.
Gross profit for the quarter was $101.6 million, down from $106.5 million in the prior year, reflecting a 4.6% decrease. The operating income also fell significantly to $17.6 million from $24.1 million, marking a 26.8% decline. The effective tax rate increased to 26.1% from 19.4% in the previous year, attributed to a decrease in non-taxable income.
Despite the decline in sales and operating income, ScanSource reported a net income of $17.0 million for Q3 2024, up from $15.4 million in Q3 2023. This increase was supported by a discrete net tax benefit of $0.8 million and a $5.1 million gain from an insurance recovery related to a prior cybersecurity incident.
The company’s cash and cash equivalents decreased to $145.0 million from $185.5 million at the end of the previous quarter. Net cash provided by operating activities also fell to $44.8 million, down from $93.5 million in the same quarter last year. Cash used in investing activities surged to $59.2 million, compared to $2.3 million in Q3 2023, primarily due to recent acquisitions.
In August 2024, ScanSource completed the acquisition of Resourcive for approximately $56.8 million and also acquired Advantix, which is included in the Specialty Technology Solutions segment. Both acquisitions involved future earnout payments and contingent consideration liabilities. The company also executed cost reduction and restructuring programs expected to yield annualized savings of approximately $10.5 million in selling, general, and administrative expenses.
As of September 30, 2024, total assets increased slightly to $1.79 billion from $1.78 billion at the end of June 2024, while total liabilities rose to $865.6 million from $854.8 million. The company maintained a leverage ratio compliant with its credit facility covenants, with available borrowings of $350 million under its revolving credit facility.
About SCANSOURCE, INC.
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