SCSC earnings analysis
What we found in SCSC's 10-K: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
ScanSource exited fiscal 2026 with improving growth and profitability: revenue rose 6.1%, operating margin expanded to 3.1%, and diluted EPS increased 21% to $3.64. Growth was led by U.S. Specialty Technology Solutions and rising recurring revenue, while Brazil and broader international sales continued to decline. Strong operating cash generation and substantial buybacks support the outlook, but the pending $220.5 million MicroAge acquisition, tariff uncertainty and the Specialty segment’s limited goodwill valuation cushion create meaningful execution and downside risks.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Broad technology and recurring-revenue platform
- ScanSource describes its strategy as orchestrating complex, converging solutions across hardware, SaaS, connectivity and cloud through approximately 500 suppliers and approximately 25,000 channel sales partners. Recurring revenue increased to $161.2 million in fiscal 2026 from $145.7 million in fiscal 2025 and $110.6 million in fiscal 2024.
- Revenue and earnings inflected higher
- Fiscal 2026 revenue was $3.226 billion, up 6.1% from $3.041 billion in fiscal 2025, after declining from $3.260 billion in fiscal 2024. Operating margin improved to 3.1% from 2.8% in both fiscal 2025 and 2024, while diluted EPS rose to $3.64 from $3.00 and $3.06, respectively.
- Specialty segment led expansion
- Specialty Technology Solutions drove growth, with revenue up 6.2% to $3.125 billion and operating income up 12.2% to $74.1 million; its operating margin increased to 2.4% from 2.2%. Intelisys net billings reached approximately $2.88 billion, up 3.2%, supporting the higher-margin Intelisys & Advisory model.
- U.S. growth offset international decline
- U.S. revenue increased 7.1% to $2.999 billion, while international revenue declined 5.6% to $226.6 million; international revenue declined 12.7% on a constant-currency basis. Brazil revenue was $227.4 million versus $240.1 million in fiscal 2025 and $338.6 million in fiscal 2024.
- Cash generation improved despite working capital
- Operating cash flow increased to $123.1 million from $112.3 million in fiscal 2025, although working-capital investment rose by $18.1 million to $538.8 million and cash declined to $88.4 million from $126.2 million. Capital expenditures were $9.3 million and acquisition spending was $18.2 million.
- Aggressive buybacks and debt reduction
- The company repurchased 2,420,668 shares for $97.5 million in fiscal 2026, leaving approximately $120.8 million under its authorization, and reduced term-loan debt to $98.8 million from $128.3 million. It paid no dividends, consistent with its history and credit-facility restrictions.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Tariffs could pressure demand and margins
- The filing identifies a materially changed tariff and geopolitical environment: additional tariffs remain after the Supreme Court invalidated IEEPA tariffs, and the company expects to pass supplier price increases to channel partners, which may reduce demand. The company says it has incurred and expects to continue incurring tariff-related costs but cannot predict the ultimate impact.
- Large acquisition adds funding risk
- On August 20, 2026, the company announced a pending all-cash MicroAge acquisition for $220.5 million, expected to be funded with borrowings under its credit facility and to close by September 30, 2026. The transaction adds execution and leverage risk: the company had only $88.4 million of cash at June 30, 2026 and $101.4 million of debt, while its credit agreement requires leverage of no more than 3.50-to-1.00 and interest coverage of at least 3.00-to-1.00.
- Thin Specialty goodwill cushion
- Goodwill impairment sensitivity has increased for Specialty Technology Solutions: its $173.9 million goodwill balance had estimated fair value only 2% above carrying value at the annual test, compared with more than 100% excess fair value for Intelisys & Advisory. A deterioration in growth, margins, working capital or discount rates could therefore trigger a material non-cash impairment.
- Key supplier concentration
- Supplier concentration remains material: products supplied by Cisco and Zebra each represented more than 10% of net sales in fiscal 2026, 2025 and 2024. Supplier agreements generally permit termination without cause on 30 to 120 days’ notice, and reduced rebates, supply interruptions or changed terms could compress the company’s narrow margins.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $3.64
- Gross margin
- 13.6%
- Operating margin
- 3.1%
- Segment
- Specialty Technology Solutions: $3.125 billion revenue, up 6.2% year over year; $337.6 million gross profit and $74.1 million operating income.
- Segment
- Intelisys & Advisory: $101.1 million revenue, up 3.1%; $99.7 million gross profit and $28.6 million operating income.
What they said about what is next.
The 10-K provides no revenue or EPS guidance. Management expects fiscal 2027 capital expenditures of $8.0 million to $12.0 million, primarily for IT and warehouse investments. Annual sales, EBITDA and free-cash-flow outlook was provided separately in the August 20, 2026 earnings release rather than in this 10-K.
The filing reads better than the one before it.
What came before.
- 10-Q · May 7, 2026
- ScanSource reported Q3 FY26 net sales of $766.8 million and diluted EPS of $0.78, both surpassing consensus estimates of $722.3 million and $0.92 respectively. The Specialty Technology Solutions segment experienced a…
- 10-Q · February 5, 2026
- ScanSource reported quarterly revenue of $766.5M and diluted EPS of $0.75 for the quarter ended December 31, 2025. Revenue was up slightly year-over-year (+$19.0M) but operating income and margins showed modest…
- 10-Q · November 6, 2025
- ScanSource reported revenue of $739.65M for the quarter ended September 30, 2025, down from $775.58M a year earlier and down sequentially from the prior quarter's $813M; however gross margin and operating income…
- 10-K · August 21, 2025
- ScanSource positions itself as a specialty technology distributor focused on hardware, SaaS, connectivity and cloud services delivered through two sales models (Specialty Technology Solutions and Intelisys & Advisory).…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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