Forward-looking statements are included in the "Risk Factors," "Legal Proceedings," "Management’s Discussion and Analysis of Financial Condition and Results of Operations," and "Quantitative and Qualitative Disclosures About Market Risk" sections and elsewhere herein. Words such as "expects," "anticipates," "believes," "intends," "plans," "hopes," "forecasts," "seeks," "estimates," "goals," "projects," "strategy," "future," "likely," "may," "should," and variations of such words and similar expressions generally identify such forward-looking statements. Any forward-looking statement made by us in this Form 10-Q is based only on information currently available to us and speaks only as of the date on which it is made. Except as may be required by law, we expressly disclaim any obligation to update these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q. Actual results could differ materially from those anticipated in these forward-looking statements as a result of a number of factors including, but not limited to the following factors, which are neither presented in order of importance nor weighted: ~~the impact of the COVID-19 pandemic,~~ macroeconomic conditions, including potential prolonged economic weakness, inflation and supply chain challenges, the failure to manage and implement the Company's organic growth strategy, credit risks involving the Company's larger customers and suppliers, changes in interest and exchange rates and regulatory regimes impacting the Company's international operations, risk to the Company's business from a cyber-security attack, a failure of the Company's IT systems, failure to hire and retain quality employees, loss of the Company's major customers, ~~termination of~~relationships with the Company's ~~relationship with~~ key suppliers and sales partners or a termination or a significant modification of the terms under which it operates with ~~a key supplier,~~such suppliers and sales partners, changes in the Company's operating strategy and other factors set forth in "Risk Factors" contained in our Annual Report on Form 10-K for the year ended June 30, 2022.


		December 31, 2022		June 30, 2022			March 31, 2023		June 30, 2022
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	66,445	$	37,987	Cash and cash equivalents	$	37,374	$	37,987
Accounts receivable, less allowance of $13,353 at December 31, 2022 and $16,806 at June 30, 2022		779,562		729,442
Accounts receivable, less allowance of $14,236 at March 31, 2023 and $16,806 at June 30, 2022						Accounts receivable, less allowance of $14,236 at March 31, 2023 and $16,806 at June 30, 2022	684,458		729,442
Inventories	Inventories	761,936		614,814		Inventories	752,763		614,814
Prepaid expenses and other current assets	Prepaid expenses and other current assets	111,119		141,562		Prepaid expenses and other current assets	102,946		141,562

Total current assets	Total current assets	1,719,062		1,523,805		Total current assets	1,577,541		1,523,805
Property and equipment, net	Property and equipment, net	36,593		37,477		Property and equipment, net	36,486		37,477
Goodwill	Goodwill	214,367		214,435		Goodwill	215,326		214,435
Identifiable intangible assets, net	Identifiable intangible assets, net	75,950		84,427		Identifiable intangible assets, net	72,192		84,427
Deferred income taxes	Deferred income taxes	14,751		15,668		Deferred income taxes	14,300		15,668
Other non-current assets	Other non-current assets	69,806		61,616		Other non-current assets	64,537		61,616

Total assets	Total assets	$	2,130,529	$	1,937,428	Total assets	$	1,980,382	$	1,937,428
Liabilities and Shareholders’ Equity	Liabilities and Shareholders’ Equity					Liabilities and Shareholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	748,662	$	714,177	Accounts payable	$	656,688	$	714,177
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	76,985		88,455		Accrued expenses and other current liabilities	77,045		88,455

Income taxes payable	Income taxes payable	6,049		34		Income taxes payable	4,441		34

Current portion of long-term debt	Current portion of long-term debt	5,040		11,598		Current portion of long-term debt	5,977		11,598

Total current liabilities	Total current liabilities	836,736		814,264		Total current liabilities	744,151		814,264
Deferred income taxes	Deferred income taxes	3,132		3,144		Deferred income taxes	3,202		3,144
Long-term debt, net of current portion	Long-term debt, net of current portion	147,756		123,733		Long-term debt, net of current portion	145,881		123,733
Borrowings under revolving credit facility	Borrowings under revolving credit facility	230,000		135,839		Borrowings under revolving credit facility	159,194		135,839

Other long-term liabilities	Other long-term liabilities	50,519		53,920		Other long-term liabilities	49,059		53,920

Total liabilities	Total liabilities	1,268,143		1,130,900		Total liabilities	1,101,487		1,130,900
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies
Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:
Preferred stock, no par value; 3,000,000 shares authorized, none issued	Preferred stock, no par value; 3,000,000 shares authorized, none issued	—		—		Preferred stock, no par value; 3,000,000 shares authorized, none issued	—		—
Common stock, no par value; 45,000,000 shares authorized, 25,343,014 and 25,187,351 shares issued and outstanding at December 31, 2022 and June 30, 2022, respectively		68,313		64,297
Common stock, no par value; 45,000,000 shares authorized, 25,007,396 and 25,187,351 shares issued and outstanding at March 31, 2023 and June 30, 2022, respectively						Common stock, no par value; 45,000,000 shares authorized, 25,007,396 and 25,187,351 shares issued and outstanding at March 31, 2023 and June 30, 2022, respectively	60,475		64,297
Retained earnings	Retained earnings	896,645		846,869		Retained earnings	917,866		846,869
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(102,572)		(104,638)		Accumulated other comprehensive loss	(99,446)		(104,638)
Total shareholders’ equity	Total shareholders’ equity	862,386		806,528		Total shareholders’ equity	878,895		806,528
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	2,130,529	$	1,937,428	Total liabilities and shareholders’ equity	$	1,980,382	$	1,937,428
											June 30, 2022 amounts are derived from audited consolidated financial statements.
See accompanying notes to these condensed consolidated financial statements.	See accompanying notes to these condensed consolidated financial statements.					See accompanying notes to these condensed consolidated financial statements.


		Quarter ended				Six months ended					Quarter ended				Nine months ended
		December 31,				December 31,					March 31,				March 31,
		2022		2021		2022		2021			2023		2022		2023		2022
Net sales	Net sales	$	1,011,241	$	864,079	$	1,955,054	$	1,721,662	Net sales	$	885,519	$	845,990	$	2,840,573	$	2,567,652
Cost of goods sold	Cost of goods sold	895,907		756,426		1,726,236		1,512,437		Cost of goods sold	773,757		739,482		2,499,992		2,251,920
Gross profit	Gross profit	115,334		107,653		228,818		209,225		Gross profit	111,762		106,508		340,581		315,732
Selling, general and administrative expenses	Selling, general and administrative expenses	69,074		69,161		140,667		133,016		Selling, general and administrative expenses	70,669		66,522		211,337		199,538
Depreciation expense	Depreciation expense	2,678		2,547		5,441		5,427		Depreciation expense	2,644		2,612		8,085		8,039
Intangible amortization expense	Intangible amortization expense	4,150		4,447		8,391		8,956		Intangible amortization expense	4,170		4,457		12,561		13,413

Operating income	Operating income	39,432		31,498		74,319		61,826		Operating income	34,279		32,917		108,598		94,742
Interest expense	Interest expense	5,060		1,493		8,507		3,153		Interest expense	5,715		1,483		14,223		4,637
Interest income	Interest income	(2,027)		(947)		(3,618)		(1,973)		Interest income	(1,710)		(1,000)		(5,327)		(2,973)
Other expense, net	Other expense, net	207		543		955		807		Other expense, net	361		(136)		1,314		668
Income before income taxes	Income before income taxes	36,192		30,409		68,475		59,839		Income before income taxes	29,913		32,570		98,388		92,410
Provision for income taxes	Provision for income taxes	10,458		7,257		18,699		14,614		Provision for income taxes	8,692		9,044		27,391		23,659
Net income from continuing operations	Net income from continuing operations	25,734		23,152		49,776		45,225		Net income from continuing operations	21,221		23,526		70,997		68,751
Net income from discontinued operations	Net income from discontinued operations	—		100		—		100		Net income from discontinued operations	—		—		—		100
Net income	Net income	$	25,734	$	23,252	$	49,776	$	45,325	Net income	$	21,221	$	23,526	$	70,997	$	68,851

Per share data:	Per share data:									Per share data:
Net income from continuing operations per common share, basic	Net income from continuing operations per common share, basic	$	1.02	$	0.91	$	1.97	$	1.77	Net income from continuing operations per common share, basic	$	0.84	$	0.92	$	2.81	$	2.69
Net income from discontinued operations per common share, basic	Net income from discontinued operations per common share, basic	—		—		—		—		Net income from discontinued operations per common share, basic	—		—		—		—
Net income per common share, basic	Net income per common share, basic	$	1.02	$	0.91	$	1.97	$	1.77	Net income per common share, basic	$	0.84	$	0.92	$	2.81	$	2.69
Weighted-average shares outstanding, basic	Weighted-average shares outstanding, basic	25,287		25,585		25,244		25,549		Weighted-average shares outstanding, basic	25,196		25,635		25,228		25,577

Net income from continuing operations per common share, diluted	Net income from continuing operations per common share, diluted	$	1.01	$	0.89	$	1.96	$	1.75	Net income from continuing operations per common share, diluted	$	0.83	$	0.91	$	2.79	$	2.66
Net income from discontinued operations per common share, diluted	Net income from discontinued operations per common share, diluted	—		—		—		—		Net income from discontinued operations per common share, diluted	—		—		—		—
Net income per common share, diluted	Net income per common share, diluted	$	1.01	$	0.90	$	1.96	$	1.76	Net income per common share, diluted	$	0.83	$	0.91	$	2.79	$	2.67
Weighted-average shares outstanding, diluted	Weighted-average shares outstanding, diluted	25,502		25,895		25,454		25,806		Weighted-average shares outstanding, diluted	25,439		25,853		25,436		25,812


		Quarter ended				Six months ended					Quarter ended				Nine months ended
		December 31,				December 31,					March 31,				March 31,
		2022		2021		2022		2021			2023		2022		2023		2022
Net income	Net income	$	25,734	$	23,252	$	49,776	$	45,325	Net income	$	21,221	$	23,526	$	70,997	$	68,851
Unrealized gain on hedged transaction, net of tax		3		1,172		1,882		1,585
Unrealized (loss) gain on hedged transaction, net of tax										Unrealized (loss) gain on hedged transaction, net of tax	(1,165)		3,144		718		4,730
Foreign currency translation adjustment	Foreign currency translation adjustment	7,401		(2,759)		184		(13,906)		Foreign currency translation adjustment	4,291		17,186		4,474		3,279
Comprehensive income	Comprehensive income	$	33,138	$	21,665	$	51,842	$	33,004	Comprehensive income	$	24,347	$	43,856	$	76,189	$	76,860


		Common Stock (Shares)	Common Stock (Amount)		Retained Earnings		Accumulated Other Comprehensive Loss		Total			Common Stock (Shares)	Common Stock (Amount)		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance at June 30, 2022	Balance at June 30, 2022	25,187,351	$	64,297	$	846,869	$	(104,638)	$	806,528	Balance at June 30, 2022	25,187,351	$	64,297	$	846,869	$	(104,638)	$	806,528
Net income	Net income	—	—		24,042		—		24,042		Net income	—	—		24,042		—		24,042
Unrealized gain on hedged transaction, net of tax	Unrealized gain on hedged transaction, net of tax	—	—		—		1,879		1,879		Unrealized gain on hedged transaction, net of tax	—	—		—		1,879		1,879
Foreign currency translation adjustment	Foreign currency translation adjustment	—	—		—		(7,217)		(7,217)		Foreign currency translation adjustment	—	—		—		(7,217)		(7,217)
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	38,551	(586)		—		—		(586)		Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	38,551	(586)		—		—		(586)

Share-based compensation	Share-based compensation	—	2,358		—		—		2,358		Share-based compensation	—	2,358		—		—		2,358

Balance at September 30, 2022	Balance at September 30, 2022	25,225,902	$	66,069	$	870,911	$	(109,976)	$	827,004	Balance at September 30, 2022	25,225,902	$	66,069	$	870,911	$	(109,976)	$	827,004
Net income	Net income	—	—		25,734		—		25,734		Net income	—	—		25,734		—		25,734
Unrealized gain on hedged transaction, net of tax	Unrealized gain on hedged transaction, net of tax	—	—		—		3		3		Unrealized gain on hedged transaction, net of tax	—	—		—		3		3
Foreign currency translation adjustment	Foreign currency translation adjustment	—	—		—		7,401		7,401		Foreign currency translation adjustment	—	—		—		7,401		7,401
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	117,112	(1,112)		—		—		(1,112)		Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	117,112	(1,112)		—		—		(1,112)

Share-based compensation	Share-based compensation	—	3,356		—		—		3,356		Share-based compensation	—	3,356		—		—		3,356

Balance at December 31, 2022	Balance at December 31, 2022	25,343,014	$	68,313	$	896,645	$	(102,572)	$	862,386	Balance at December 31, 2022	25,343,014	$	68,313	$	896,645	$	(102,572)	$	862,386

Net income											Net income	—	—		21,221		—		21,221
Unrealized loss on hedged transaction, net of tax											Unrealized loss on hedged transaction, net of tax	—	—		—		(1,165)		(1,165)
Foreign currency translation adjustment											Foreign currency translation adjustment	—	—		—		4,291		4,291
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes											Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	20,851	118		—		—		118
Common stock repurchased											Common stock repurchased	(356,469)	(10,906)		—		—		(10,906)
Share-based compensation											Share-based compensation	—	2,950		—		—		2,950
Balance at March 31, 2023											Balance at March 31, 2023	25,007,396	$	60,475	$	917,866	$	(99,446)	$	878,895

See accompanying notes to these condensed consolidated financial statements.	See accompanying notes to these condensed consolidated financial statements.										See accompanying notes to these condensed consolidated financial statements.


		Common Stock (Shares)	Common Stock (Amount)		Retained Earnings		Accumulated Other Comprehensive Loss		Total			Common Stock (Shares)	Common Stock (Amount)		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Balance at June 30, 2021	Balance at June 30, 2021	25,499,465	$	71,253	$	758,071	$	(98,133)	$	731,191	Balance at June 30, 2021	25,499,465	$	71,253	$	758,071	$	(98,133)	$	731,191
Net income	Net income	—	—		22,073		—		22,073		Net income	—	—		22,073		—		22,073
Unrealized gain on hedged transaction, net of tax	Unrealized gain on hedged transaction, net of tax	—	—		—		413		413		Unrealized gain on hedged transaction, net of tax	—	—		—		413		413
Foreign currency translation adjustment	Foreign currency translation adjustment	—	—		—		(11,147)		(11,147)		Foreign currency translation adjustment	—	—		—		(11,147)		(11,147)
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	29,086	994		—		—		994		Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	29,086	994		—		—		994

Share-based compensation	Share-based compensation	—	2,570		—		—		2,570		Share-based compensation	—	2,570		—		—		2,570
Balance at September 30, 2021	Balance at September 30, 2021	25,528,551	$	74,817	$	780,144	$	(108,867)	$	746,094	Balance at September 30, 2021	25,528,551	$	74,817	$	780,144	$	(108,867)	$	746,094
Net income	Net income	—	—		23,252		—		23,252		Net income	—	—		23,252		—		23,252
Unrealized gain on hedged transaction, net of tax	Unrealized gain on hedged transaction, net of tax	—	—		—		1,172		1,172		Unrealized gain on hedged transaction, net of tax	—	—		—		1,172		1,172
Foreign currency translation adjustment	Foreign currency translation adjustment	—	—		—		(2,759)		(2,759)		Foreign currency translation adjustment	—	—		—		(2,759)		(2,759)

Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	134,897	(2,513)		—		—		(2,513)		Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	134,897	(2,513)		—		—		(2,513)
Common stock repurchased	Common stock repurchased	(5,903)	(183)		—		—		(183)		Common stock repurchased	(5,903)	(183)		—		—		(183)
Share-based compensation	Share-based compensation	—	3,462		—		—		3,462		Share-based compensation	—	3,462		—		—		3,462
Balance at December 31, 2021	Balance at December 31, 2021	25,657,545	$	75,583	$	803,396	$	(110,454)	$	768,525	Balance at December 31, 2021	25,657,545	$	75,583	$	803,396	$	(110,454)	$	768,525

Net income											Net income	—	—		23,526		—		23,526
Unrealized gain on hedged transaction, net of tax											Unrealized gain on hedged transaction, net of tax	—	—		—		3,144		3,144
Foreign currency translation adjustment											Foreign currency translation adjustment	—	—		—		17,186		17,186
Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes											Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes	46,549	383		—		—		383
Common stock repurchased											Common stock repurchased	(274,852)	(8,886)		—		—		(8,886)
Share-based compensation											Share-based compensation	—	2,776		—		—		2,776
Balance at March 31, 2022											Balance at March 31, 2022	25,429,242	$	69,856	$	826,922	$	(90,124)	$	806,654

See accompanying notes to these condensed consolidated financial statements.	See accompanying notes to these condensed consolidated financial statements.										See accompanying notes to these condensed consolidated financial statements.


		Six months ended					Nine months ended
		December 31,					March 31,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	49,776	$	45,325	Net income	$	70,997	$	68,851
Net income from discontinued operations	Net income from discontinued operations	—		100		Net income from discontinued operations	—		100
Net income from continuing operations	Net income from continuing operations	49,776		45,225		Net income from continuing operations	70,997		68,751
Adjustments to reconcile net income to net cash used in operating activities:	Adjustments to reconcile net income to net cash used in operating activities:					Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	14,285		14,879		Depreciation and amortization	21,359		22,184
Amortization of debt issue costs	Amortization of debt issue costs	385		209		Amortization of debt issue costs	481		313
Provision for doubtful accounts	Provision for doubtful accounts	33		921		Provision for doubtful accounts	1,852		156
Share-based compensation	Share-based compensation	5,679		6,032		Share-based compensation	8,633		8,792

Deferred income taxes	Deferred income taxes	932		(109)		Deferred income taxes	1,409		1,995

Finance lease interest	Finance lease interest	24		26		Finance lease interest	31		32
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(49,541)		(54,370)		Accounts receivable	46,652		(67,404)
Inventories	Inventories	(146,826)		(95,531)		Inventories	(136,257)		(118,349)
Prepaid expenses and other assets	Prepaid expenses and other assets	30,487		(11,236)		Prepaid expenses and other assets	39,178		(15,002)
Other non-current assets	Other non-current assets	(7,168)		(1,561)		Other non-current assets	(1,772)		(2,791)
Accounts payable	Accounts payable	33,820		25,444		Accounts payable	(60,717)		67,535
Accrued expenses and other liabilities	Accrued expenses and other liabilities	(13,268)		(5,130)		Accrued expenses and other liabilities	(16,780)		(12,745)
Income taxes payable	Income taxes payable	6,036		(177)		Income taxes payable	4,426		862
Net cash used in operating activities	Net cash used in operating activities	(75,346)		(75,378)		Net cash used in operating activities	(20,508)		(45,671)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(4,262)		(2,645)		Capital expenditures	(6,549)		(3,326)

Proceeds from the sale of discontinued operations	Proceeds from the sale of discontinued operations	—		3,125		Proceeds from the sale of discontinued operations	—		3,125

Net cash (used in) provided by investing activities		(4,262)		480
Net cash used in investing activities						Net cash used in investing activities	(6,549)		(201)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Borrowings on revolving credit, net of expenses	Borrowings on revolving credit, net of expenses	1,232,058		1,115,161		Borrowings on revolving credit, net of expenses	1,871,909		1,597,270
Repayments on revolving credit, net of expenses	Repayments on revolving credit, net of expenses	(1,137,897)		(1,057,376)		Repayments on revolving credit, net of expenses	(1,848,554)		(1,552,976)
Borrowings (repayments) on long-term debt, net	Borrowings (repayments) on long-term debt, net	17,465		(4,093)		Borrowings (repayments) on long-term debt, net	16,527		(5,968)
Repayments on finance lease obligation	Repayments on finance lease obligation	(492)		(624)		Repayments on finance lease obligation	(612)		(932)
Debt issuance costs	Debt issuance costs	(1,407)		—		Debt issuance costs	(1,407)		—

Exercise of stock options	Exercise of stock options	634		1,114		Exercise of stock options	853		1,592
Taxes paid on settlement of equity awards	Taxes paid on settlement of equity awards	(2,332)		(2,634)		Taxes paid on settlement of equity awards	(2,433)		(2,729)
Common stock repurchased	Common stock repurchased	—		(183)		Common stock repurchased	(10,718)		(8,527)

Net cash provided by financing activities	Net cash provided by financing activities	108,029		51,365		Net cash provided by financing activities	25,565		27,730
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	37		(5,062)		Effect of exchange rate changes on cash and cash equivalents	879		(1,037)
Increase (decrease) in cash and cash equivalents		28,458		(28,595)
Decrease in cash and cash equivalents						Decrease in cash and cash equivalents	(613)		(19,179)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	37,987		62,718		Cash and cash equivalents at beginning of period	37,987		62,718
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	66,445	$	34,123	Cash and cash equivalents at end of period	$	37,374	$	43,539

See accompanying notes to these condensed consolidated financial statements.	See accompanying notes to these condensed consolidated financial statements.					See accompanying notes to these condensed consolidated financial statements.

ScanSource, Inc. (together with its subsidiaries referred to as “the Company” or “ScanSource”) is a leading hybrid distributor connecting devices to the cloud and accelerating growth for partners across hardware, Software as a Service ("SaaS"), connectivity and cloud. The Company brings technology solutions and services from the world’s leading suppliers of mobility and barcode, point-of-sale ("POS"), payments, physical security, unified communications and collaboration, telecom and cloud services to market. The Company operates in the United States, Canada, Brazil and the UK. The Company's two operating segments, Specialty Technology Solutions and Modern Communications & Cloud, are based on ~~technology.~~technology type and are generally related to technology devices and communication, connectivity and cloud services, respectively.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared by the Company’s management in accordance with United States generally accepted accounting principles ("U.S. GAAP") for interim financial information and applicable rules and regulations of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. The unaudited condensed consolidated financial statements included herein contain all adjustments (consisting of normal recurring and non-recurring adjustments) that are, in the opinion of management, necessary to present fairly the financial position at ~~December~~March 31, ~~2022~~2023 and June 30, 2022, the results of operations for the quarters and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021,~~2022, the statements of comprehensive income for the quarters and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021,~~2022, the statements of shareholders' equity for the quarters and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021~~2022 and the statements of cash flows for the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021.~~2022. The results of operations for the quarters and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 are not necessarily indicative of the results to be expected for a full year. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2022. Unless otherwise indicated, disclosures provided in the Notes pertain to continuing operations only.

There have been no material changes to the Company’s significant accounting policies for the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 from the policies described in the notes to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2022. For a discussion of the Company’s significant accounting policies, please see the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

The Company considers all highly-liquid investments with original maturities of three months or less, when purchased, to be cash equivalents. The Company maintains zero-balance disbursement accounts at various financial institutions at which the Company does not maintain significant depository relationships. Due to the terms of the agreements governing these accounts, the Company generally does not have the right to offset outstanding checks written from these accounts against cash on hand, and the respective institutions are not legally obligated to honor the checks until sufficient funds are transferred to fund the checks. As a result, checks released but not yet cleared from these accounts in the amounts of ~~$8.9~~$7.4 million and $18.0 million are included in accounts payable on the condensed consolidated balance sheets at ~~December~~March 31, ~~2022~~2023 and June 30, 2022, respectively.

The Company presents depreciation expense and intangible amortization expense on the Condensed Consolidated Income Statements. The Company's depreciation expense related to selling, general and administrative costs totaled ~~$2.7~~$2.6 million and ~~$5.4~~$8.1 million for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~$2.5~~$2.6 million and ~~$5.4~~$8.0 million for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2021.~~2022. Depreciation expense reported as part of cost of goods sold on the Condensed Consolidated Income Statements totaled ~~$0.2~~$0.3 million and ~~$0.5~~$0.7 million for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021.~~$0.2 million and $0.7 million for the quarter and nine months ended March 31, 2022. The Company's intangible amortization expense reported on the Condensed Consolidated Income Statements relates to selling, general and administrative costs, not the cost of selling goods. Intangible amortization expense totaled $4.2 million and ~~$8.4~~$12.6 million for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~$4.4~~$4.5 million and ~~$9.0~~$13.4 million for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2021.~~2022.

Management determines the estimate of the allowance for doubtful accounts receivable by considering a number of factors, including: (i) historical experience, (ii) aging of the accounts receivable, (iii) specific information obtained by the Company on the financial condition and the current creditworthiness of its customers, (iv) the current economic and country-specific environment and (v) reasonable and supportable forecasts about collectability. Expected credit losses are estimated on a pool basis when similar risk characteristics exist using an age-based reserve model. Receivables that do not share risk characteristics are evaluated on an individual basis. Estimates of expected credit losses on trade receivables over the contractual life are recorded at inception and adjusted over the contractual life.

In determining the appropriate amount of revenue to recognize, the Company applies the following five-step model: (i) identify contracts with customers; (ii) identify performance obligations in the contracts; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations per the contracts; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company recognizes revenue as control of products and services are transferred to customers, which is generally at the point of shipment. The Company delivers products to customers in several ways, including: (i) shipment from a Company warehouse, (ii) drop-shipment directly from the supplier, or (iii) electronic delivery for non-physical products.

The Company is the agent for third-party service contracts, including product warranties and supplier-hosted software. These service contracts are sold separately from the products, and the Company often serves as the agent for the contract on behalf of the original equipment manufacturer. The Company's responsibility is to arrange for the provision of the specified service by the original equipment manufacturer, and the Company does not control the specified service before it is transferred to the customer. Because the Company acts as an agent, revenue is recognized net of cost at the time of sale. The Intelisys business operates under an agency model.

For certain transactions, products are sold with a right of return and may also provide other rebates or incentives, which are accounted for as variable consideration. The Company estimates a returns allowance based on historical experience and reduces revenue accordingly. The Company estimates the amount of variable consideration for rebates and incentives by using the expected value to be given to the customer and reduces the revenue by those estimated amounts. These estimates are reviewed and updated as necessary at the end of each reporting period.


		Quarter ended December 31, 2022						Quarter ended March 31, 2023
		Specialty Technology Solutions		Modern Communications & Cloud		Total				Specialty Technology Solutions		Modern Communications & Cloud		Total
				(in thousands)								(in thousands)
Revenue by product/service	Revenue by product/service								Revenue by product/service
Hardware, software and cloud (excluding Intelisys)	Hardware, software and cloud (excluding Intelisys)	$	627,548	$	363,743	$	991,291		Hardware, software and cloud (excluding Intelisys)	$	565,652	$	299,803	$	865,455
Intelisys connectivity and cloud	Intelisys connectivity and cloud	—		19,950		19,950			Intelisys connectivity and cloud	—		20,064		20,064
		$	627,548	$	383,693	$	1,011,241			$	565,652	$	319,867	$	885,519

		Six months ended December 31, 2022						Nine months ended March 31, 2023
		Specialty Technology Solutions		Modern Communications & Cloud		Total				Specialty Technology Solutions		Modern Communications & Cloud		Total
				(in thousands)								(in thousands)
Revenue by product/service:	Revenue by product/service:								Revenue by product/service:
Hardware, software and cloud (excluding Intelisys)	Hardware, software and cloud (excluding Intelisys)	$	1,203,878	$	712,373	$	1,916,251		Hardware, software and cloud (excluding Intelisys)	$	1,769,530	$	1,012,176	$	2,781,706
Intelisys connectivity and cloud	Intelisys connectivity and cloud	—		38,803		38,803			Intelisys connectivity and cloud	—		58,867		58,867
		$	1,203,878	$	751,176	$	1,955,054			$	1,769,530	$	1,071,043	$	2,840,573


		Quarter ended December 31, 2021						Quarter ended March 31, 2022
		Specialty Technology Solutions		Modern Communications & Cloud		Total				Specialty Technology Solutions		Modern Communications & Cloud		Total
				(in thousands)								(in thousands)
Revenue by product/service	Revenue by product/service								Revenue by product/service
Hardware, software and cloud (excluding Intelisys)	Hardware, software and cloud (excluding Intelisys)	$	496,920	$	348,893	$	845,813		Hardware, software and cloud (excluding Intelisys)	$	503,072	$	323,684	$	826,756
Intelisys connectivity and cloud	Intelisys connectivity and cloud	—		18,266		18,266			Intelisys connectivity and cloud	—		19,234		19,234
		$	496,920	$	367,159	$	864,079			$	503,072	$	342,918	$	845,990

		Six months ended December 31, 2021						Nine months ended March 31, 2022
		Specialty Technology Solutions		Modern Communications & Cloud		Total				Specialty Technology Solutions		Modern Communications & Cloud		Total
				(in thousands)								(in thousands)
Revenue by product/service:	Revenue by product/service:								Revenue by product/service:
Hardware, software and cloud (excluding Intelisys)	Hardware, software and cloud (excluding Intelisys)	$	998,630	$	687,142	$	1,685,772		Hardware, software and cloud (excluding Intelisys)	$	1,501,702	$	1,010,825	$	2,512,527
Intelisys connectivity and cloud	Intelisys connectivity and cloud	—		35,890		35,890			Intelisys connectivity and cloud	—		55,125		55,125
		$	998,630	$	723,032	$	1,721,662			$	1,501,702	$	1,065,950	$	2,567,652


		Quarter ended				Six months ended					Quarter ended				Nine months ended
		December 31,				December 31,					March 31,				March 31,
		2022		2021		2022		2021			2023		2022		2023		2022
		(in thousands, except per share data)									(in thousands, except per share data)
Numerator:	Numerator:									Numerator:
Net income from continuing operations	Net income from continuing operations	$	25,734	$	23,152	$	49,776	$	45,225	Net income from continuing operations	$	21,221	$	23,526	$	70,997	$	68,751
Net income from discontinued operations	Net income from discontinued operations	—		100		—		100		Net income from discontinued operations	—		—		—		100
Net income	Net income	$	25,734	$	23,252	$	49,776	$	45,325	Net income	$	21,221	$	23,526	$	70,997	$	68,851
Denominator:	Denominator:									Denominator:
Weighted-average shares, basic	Weighted-average shares, basic	25,287		25,585		25,244		25,549		Weighted-average shares, basic	25,196		25,635		25,228		25,577
Dilutive effect of share-based payments	Dilutive effect of share-based payments	215		310		210		257		Dilutive effect of share-based payments	243		218		208		235
Weighted-average shares, diluted	Weighted-average shares, diluted	25,502		25,895		25,454		25,806		Weighted-average shares, diluted	25,439		25,853		25,436		25,812

Net income from continuing operations per common share, basic	Net income from continuing operations per common share, basic	$	1.02	$	0.91	$	1.97	$	1.77	Net income from continuing operations per common share, basic	$	0.84	$	0.92	$	2.81	$	2.69
Net loss from discontinued operations per common share, basic		—		—		—		—
Net income from discontinued operations per common share, basic										Net income from discontinued operations per common share, basic	—		—		—		—
Net income per common share, basic	Net income per common share, basic	$	1.02	$	0.91	$	1.97	$	1.77	Net income per common share, basic	$	0.84	$	0.92	$	2.81	$	2.69

Net income from continuing operations per common share, diluted	Net income from continuing operations per common share, diluted	$	1.01	$	0.89	$	1.96	$	1.75	Net income from continuing operations per common share, diluted	$	0.83	$	0.91	$	2.79	$	2.66
Net loss from discontinued operations per common share, diluted		—		—		—		—
Net income from discontinued operations per common share, diluted										Net income from discontinued operations per common share, diluted	—		—		—		—
Net income per common share, diluted	Net income per common share, diluted	$	1.01	$	0.90	$	1.96	$	1.76	Net income per common share, diluted	$	0.83	$	0.91	$	2.79	$	2.67

For the ~~quarters~~quarter and ~~six~~nine months ended ~~December~~March 31, 2023, weighted-average shares outstanding excluded from the computation of diluted earnings per share because their effect would be anti-dilutive were 779,688 and 1,152,714, respectively. For the quarter and nine months ended March 31, 2022, weighted-average shares outstanding excluded from the computation of diluted earnings per share because their effect would be anti-dilutive were ~~847,651~~1,004,992 and 1,268,455, respectively. For the quarters and six months ended December 31, 2021, weighted-average shares outstanding excluded from the computation of diluted earnings per share because their effect would be anti-dilutive were 847,484 and 1,149,352,969,871, respectively.


		December 31, 2022		June 30, 2022			March 31, 2023		June 30, 2022
		(in thousands)					(in thousands)
Foreign currency translation adjustment	Foreign currency translation adjustment	$	(105,715)	$	(105,899)	Foreign currency translation adjustment	$	(101,425)	$	(105,899)
Unrealized gain on hedged transaction, net of tax	Unrealized gain on hedged transaction, net of tax	3,143		1,261		Unrealized gain on hedged transaction, net of tax	1,979		1,261
Accumulated other comprehensive loss	Accumulated other comprehensive loss	$	(102,572)	$	(104,638)	Accumulated other comprehensive loss	$	(99,446)	$	(104,638)


		Specialty Technology Solutions		Modern Communications & Cloud		Total			Specialty Technology Solutions		Modern Communications & Cloud		Total
		(in thousands)							(in thousands)
Balance at June 30, 2022	Balance at June 30, 2022	$	16,370	$	198,065	$	214,435	Balance at June 30, 2022	$	16,370	$	198,065	$	214,435
Foreign currency translation adjustment	Foreign currency translation adjustment	—		(68)		(68)		Foreign currency translation adjustment	—		891		891
Balance at December 31, 2022		$	16,370	$	197,997	$	214,367
Balance at March 31, 2023								Balance at March 31, 2023	$	16,370	$	198,956	$	215,326


		December 31, 2022		June 30, 2022			March 31, 2023		June 30, 2022
		(in thousands)					(in thousands)

Current portion of long-term debt	Current portion of long-term debt	$	5,040	$	11,598	Current portion of long-term debt	$	5,977	$	11,598
Mississippi revenue bond, net of current portion	Mississippi revenue bond, net of current portion	3,381		3,733		Mississippi revenue bond, net of current portion	3,381		3,733
Senior secured term loan facility, net of current portion	Senior secured term loan facility, net of current portion	144,375		120,000		Senior secured term loan facility, net of current portion	142,500		120,000
Borrowings under revolving credit facility	Borrowings under revolving credit facility	230,000		135,839		Borrowings under revolving credit facility	159,194		135,839
Total debt	Total debt	$	382,796	$	271,170	Total debt	$	311,052	$	271,170

The Company has a multi-currency senior secured credit facility (as amended, the "Amended Credit Agreement") with JPMorgan Chase Bank N.A., as administrative agent, and a syndicate of banks ~~(as amended,~~(collectively the ~~“Amended Credit Agreement”~~"Lenders"). On September 28, 2022, ~~ScanSource, Inc.~~the Company amended and restated the Amended Credit Agreement, which includes (i) a five-year, $350 million multicurrency senior secured revolving credit facility and (ii) a five-year $150 million senior secured term loan facility. The Amended Credit Agreement extended the credit facility maturity date to September 28, 2027. In addition, pursuant to an “accordion feature,” the Company may increase its borrowings up to an additional $250 million, subject to obtaining additional credit commitments from the lenders participating in the increase. The Amended Credit Agreement allows for the issuance of up to $50 million for letters of credit. Borrowings under the Amended Credit Agreement are guaranteed by substantially all of the domestic assets of the Company and its domestic subsidiaries. Under the terms of the revolving credit facility, the payment of cash dividends is restricted. The Company incurred debt issuance costs of $1.4 million in connection with the amendment and restatement of the Amended Credit Agreement. These costs were capitalized to other non-current assets on the Condensed Consolidated Balance Sheets and added to the unamortized debt issuance costs from the previous credit facility.

Loans denominated in U.S. dollars, other than swingline loans, ~~shall~~ bear interest at a rate per annum equal to, at the Company’s option, (i) the adjusted ~~Term SOFR~~term Secured Overnight Financing Rate ("SOFR") or adjusted daily simple SOFR plus an additional margin ranging from 1.00% to 1.75%, depending upon the Company’s ratio of (A) total consolidated debt less up to $30 million of unrestricted domestic cash to (B) trailing four-quarter consolidated EBITDA measured as of the end of the most recent year or quarter, as applicable, for which financial statements have been delivered to the Lenders (the “leverage ratio”); or (ii) the alternate base rate plus an additional margin ranging from 0% to 0.75%, depending upon the Company’s leverage ratio, plus, if applicable, certain mandatory costs. All swingline loans denominated in U.S. dollars ~~shall~~ bear interest based upon the adjusted daily simple SOFR ~~floating daily,~~ plus an additional margin ranging from 1.00% to 1.75%, depending upon the Company's leverage ratio, or such other rate as the Company and the applicable swingline lender may agree. The adjusted term SOFR and adjusted daily simple SOFR include a fixed credit adjustment of 0.10% over the applicable SOFR reference rate. Loans denominated in foreign currencies ~~shall~~ bear interest at a rate per annum equal to the applicable benchmark rate set forth in the ~~New~~Amended Credit Agreement plus an additional margin ranging from 1.00% to 1.75%, depending upon the Company’s leverage ratio plus, if applicable, certain mandatory costs.

During the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, the Company's borrowings under the credit facility were U.S. dollar loans. The spread in effect as of ~~December~~March 31, ~~2022~~2023 was 1.50%, plus a 0.10% credit spread adjustment for SOFR-based loans and 0.50% for alternate base rate loans. The commitment fee rate in effect at ~~December~~March 31, ~~2022~~2023 was 0.25%. The Amended Credit Agreement includes customary representations, warranties and affirmative and negative covenants, including financial covenants. Specifically, the Company’s Leverage Ratio must be less than or equal to 3.50 to 1.00 at all times. In addition, the Company’s Interest Coverage Ratio (as such term is defined in the Amended Credit Agreement) must be at least 3.00 to 1.00 at the end of each fiscal quarter. In the event of a default, customary remedies are available to the lenders, including acceleration and increased interest rates. The Company was in compliance with all covenants under the credit facility at ~~December~~March 31, ~~2022.~~2023.

On August 1, 2007, the Company entered into an agreement with the State of Mississippi to provide financing for the acquisition and installation of certain equipment to be utilized at the Company’s Southaven, Mississippi warehouse, through the issuance of an industrial development revenue bond. The bond matures on September 1, ~~2032 and accrues~~2032. The bond accrued interest at the 30-day LIBOR rate plus a spread of 0.85%, until March 31, 2023. An April 1, 2023 amendment changed the benchmark interest rate from LIBOR to SOFR. Effective April 1, 2023, the bond accrues interest at the one-month term SOFR plus an adjustment of 0.10% plus a spread of 0.85%. The terms of the bond allow for payment of interest only for the first 10 years of the ~~agreement, and then, starting~~agreement. Starting on September 1, 2018 through 2032, principal and interest payments are due until the maturity date or the redemption of the bond. The agreement also provides the bondholder with a put option, exercisable only within 180 days of each fifth anniversary of the agreement, requiring the Company to pay back the bonds at 100% of the principal amount outstanding. At ~~December~~March 31, ~~2022,~~2023, the Company was in compliance with all covenants under this bond. The interest rates at ~~December~~March 31, ~~2022~~2023 and June 30, 2022 were ~~4.97%~~5.52% and 1.97%, respectively.

The Company's results of operations could be materially impacted by significant changes in foreign currency exchange rates and interest rates. In an effort to manage the exposure to these risks, the Company periodically enters into various derivative instruments. The Company's accounting policies for these instruments are based on whether the instruments are designated as hedge or non-hedge instruments in accordance with U.S. GAAP. The Company records all derivatives on the Condensed Consolidated Balance Sheet at fair value. Derivatives that are not designated as hedging instruments or the ineffective portions of cash flow hedges are adjusted to fair value through earnings in other income and expense.

Foreign Currency Derivatives – The Company conducts a portion of its business internationally in a variety of foreign currencies and is exposed to market risk for changes in foreign currency exchange rates. The Company attempts to hedge transaction exposures with natural offsets to the fullest extent possible and once these opportunities have been exhausted the Company uses currency options and forward contracts or other hedging instruments with third parties. These contracts will periodically hedge the exchange of various currencies, including the U.S. dollar, Brazilian real, euro, British pound and Canadian dollar.

The Company had contracts outstanding for purposes of managing cash flows with notional amounts of ~~$47.4~~$37.9 million and $34.5 million for the exchange of foreign currencies at ~~December~~March 31, ~~2022~~2023 and June 30, 2022, respectively. To date, the Company has chosen not to designate these derivatives as hedging instruments, and accordingly, these instruments are adjusted to fair value through earnings in other income and expense. Summarized financial information related to these derivative contracts and changes in the underlying value of the foreign currency exposures included in the Condensed Consolidated Income Statements for the quarters and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021~~2022 are as follows:

Quarter ended Six months ended
December 31, December 31,
2022 2021 2022 2021
(in thousands)
Net foreign exchange derivative contract losses (gains) $ 871 $ (523) $ 1,309 $ (2,175)
Net foreign currency transactional and re-measurement (gains) losses (524) 1,003 (39) 3,141
Net foreign currency exchange losses $ 347 $ 480 $ 1,270 $ 966


	Quarter ended				Nine months ended
	March 31,				March 31,
	2023		2022		2023		2022
	(in thousands)
Net foreign exchange derivative contract losses	$	564	$	3,464	$	1,873	$	1,289
Net foreign currency transactional and re-measurement gains	(59)		(3,206)		(98)		(66)
Net foreign currency exchange losses	$	505	$	258	$	1,775	$	1,223

Net foreign currency exchange gains and losses consist of foreign currency transactional and functional currency re-measurements, offset by net foreign currency exchange contract gains and losses and are included in other income and expense. Foreign exchange gains and losses are generated as the result of fluctuations in the value of the U.S. dollar versus the Brazilian real, the U.S. dollar versus the euro, the British pound versus the euro, and the Canadian dollar versus the U.S. ~~dollar..~~dollar.

~~agreement is~~These interest rate swap agreements are designated as a cash flow ~~hedge~~hedges to hedge the variable rate interest payments on the revolving credit facility. Interest rate differentials paid or received under the swap ~~agreement~~agreements are recognized as adjustments to interest expense. To the extent the ~~swap is~~swaps are effective in offsetting the variability of the hedged cash flows, changes in the fair value of the ~~swap~~swaps are not included in current earnings but are reported as other comprehensive income (loss). There was no ineffective portion to be recorded as an adjustment to earnings for the quarters and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021.~~2022.

Quarter ended Six months ended
December 31, December 31,
2022 2021 2022 2021
(in thousands)
Net interest (income) expense recognized as a result of interest rate swap $ (345) $ 579 $ (313) $ 1,157
Unrealized gain in fair value of interest rate swap 349 999 2,849 983
Net increase in accumulated other comprehensive income 4 1,578 2,536 2,140
Income tax effect 1 406 652 555
Net increase in accumulated other comprehensive income, net of tax $ 3 $ 1,172 $ 1,884 $ 1,585


	Quarter ended				Nine months ended
	March 31,				March 31,
	2023		2022		2023		2022
	(in thousands)
Net interest (income) expense recognized as a result of interest rate swap	$	(556)	$	532	$	(869)	$	1,689
Unrealized (loss) gain in fair value of interest rate swap	(1,013)		3,675		1,837		4,658
Net (decrease) increase in accumulated other comprehensive income	(1,569)		4,207		968		6,347
Income tax effect	(404)		1,063		250		1,617
Net (decrease) increase in accumulated other comprehensive income, net of tax	$	(1,165)	$	3,144	$	718	$	4,730

December 31, 2022

June 30, 2022

March 31, 2023

June 30, 2022

Balance Sheet Location

Fair Value of
Derivatives
Designated
as Hedge Instruments

Fair Value of
Derivatives
Not Designated as Hedge Instruments

Fair Value of
Derivatives
Designated
as Hedge Instruments

Fair Value of
Derivatives
Not Designated as Hedge Instruments

Balance Sheet Location

Fair Value of
Derivatives
Designated
as Hedge Instruments

Fair Value of
Derivatives
Not Designated as Hedge Instruments

Fair Value of
Derivatives
Designated
as Hedge Instruments

Fair Value of
Derivatives
Not Designated as Hedge Instruments

(in thousands)

Derivative assets:

Interest rate swap agreement

Other non-current assets

$4,223

—

$1,686

—

Interest rate swap agreement

Other non-current assets

$2,654

—

$1,686

—

Derivative liabilities:

Foreign exchange contracts

Accrued expenses and other current liabilities

—

Foreign exchange contracts

Accrued expenses and other current liabilities

—

$24

—

Foreign currency hedge

Accrued expenses and other current liabilities

$281

—

$93

—

Foreign currency hedge

Accrued expenses and other current liabilities

$230

—

$93

—

The assets and liabilities maintained by the Company that are required to be measured at fair value on a recurring basis include deferred compensation plan investments, forward foreign currency exchange contracts, foreign currency hedge agreements and interest rate swap agreements. The carrying value of debt is considered to approximate fair value, as the Company’s debt instruments are indexed to a variable rate using the market approach (Level 2).


		Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)				Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)
		(in thousands)						(in thousands)
Assets:	Assets:								Assets:
Deferred compensation plan investments, current and non-current portion	Deferred compensation plan investments, current and non-current portion	$	27,387	$	27,387	$	—		Deferred compensation plan investments, current and non-current portion	$	27,226	$	27,226	$	—

Interest rate swap agreement	Interest rate swap agreement	4,223		—		4,223			Interest rate swap agreement	2,654		—		2,654

Total assets at fair value	Total assets at fair value	$	31,610	$	27,387	$	4,223		Total assets at fair value	$	29,880	$	27,226	$	2,654
Liabilities:	Liabilities:								Liabilities:
Deferred compensation plan investments, current and non-current portion	Deferred compensation plan investments, current and non-current portion	$	27,387	$	27,387	$	—		Deferred compensation plan investments, current and non-current portion	$	27,226	$	27,226	$	—
Forward foreign currency exchange contracts	Forward foreign currency exchange contracts	9		—		9			Forward foreign currency exchange contracts	24		—		24
Foreign currency hedge	Foreign currency hedge	281		—		281			Foreign currency hedge	230		230		230

Total liabilities at fair value	Total liabilities at fair value	$	27,677	$	27,387	$	290		Total liabilities at fair value	$	27,480	$	27,456	$	254


	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)
	(in thousands)
Assets:
Deferred compensation plan investments, current and non-current portion	$	25,178	$	25,178	$	—


Interest rate swap agreement	1,686		—		1,686
Total assets at fair value	$	26,864	$	25,178	$	1,686
Liabilities:
Deferred compensation plan investments, current and non-current portion	$	25,178	$	25,178	$	—
Forward foreign currency exchange contracts	5		—		5
Foreign currency hedge	93		—		93
Total liabilities at fair value	$	25,276	$	25,178	$	98

The investments in the deferred compensation plan are held in a "rabbi trust" and include mutual funds and cash equivalents for payment of non-qualified benefits for certain retired, terminated and active employees. These investments are recorded to prepaid expenses and other current assets or other non-current assets depending on their corresponding, anticipated distribution dates to recipients, which are reported in accrued expenses and other current liabilities or other long-term liabilities, respectively.

Derivative instruments, such as foreign currency forward contracts, are measured using the market approach on a recurring basis considering foreign currency spot rates and forward rates quoted by banks or foreign currency dealers and interest rates quoted by banks (Level 2). Fair values of interest rate swaps are measured using standard valuation models with inputs that can be derived from observable market transactions, including ~~LIBOR~~SOFR spot and forward rates (Level 2). Foreign currency contracts and interest rate swap agreements are classified in the Condensed Consolidated Balance Sheets as prepaid expenses and other non-current assets or accrued expenses and other long-term liabilities, depending on the respective instruments' favorable or unfavorable positions. See Note 8 - Derivatives and Hedging Activities.

The Specialty Technology Solutions segment includes the Company’s business in mobility and barcode, POS, payments, security and networking technologies. Mobility and barcode solutions include mobile computing, barcode scanners and imagers, radio frequency identification devices, barcode printing and related services. POS and payments solutions include POS systems, integrated POS software platforms, self-service kiosks including self-checkout, payment terminals and mobile payment devices. Security solutions include video surveillance and analytics, video management software and access control. Networking solutions include switching, routing and wireless products and software. The Company has business operations within this segment in the United States, Canada and Brazil.

The Modern Communications & Cloud segment includes the Company’s business in communications and collaboration, connectivity and cloud services. Communications and collaboration solutions, delivered in the cloud, on-premise or hybrid, include voice, video, integration of communication platforms and contact center solutions. The Intelisys connectivity and cloud marketplace offers telecom, cable, Unified Communications as a Service (“UCaaS”), Contact Center as a Service (“CCaaS”), Infrastructure as a Service, Software-Defined Wide-Area Network and other cloud services. This segment includes SaaS and subscription services, which the Company offers using digital tools and platforms. The Company has business operations within this segment in the United States, Canada, Brazil and the UK.


		Quarter ended				Six months ended					Quarter ended				Nine months ended
		December 31,				December 31,					March 31,				March 31,
		2022		2021		2022		2021			2023		2022		2023		2022
		(in thousands)									(in thousands)
Sales:	Sales:									Sales:
Specialty Technology Solutions	Specialty Technology Solutions	$	627,548	$	496,920	$	1,203,878	$	998,630	Specialty Technology Solutions	$	565,652	$	503,072	$	1,769,530	$	1,501,702
Modern Communications & Cloud	Modern Communications & Cloud	383,693		367,159		751,176		723,032		Modern Communications & Cloud	319,867		342,918		1,071,043		1,065,950
		$	1,011,241	$	864,079	$	1,955,054	$	1,721,662		$	885,519	$	845,990	$	2,840,573	$	2,567,652
Depreciation and amortization:	Depreciation and amortization:									Depreciation and amortization:
Specialty Technology Solutions	Specialty Technology Solutions	$	2,758	$	2,897	$	5,462	$	5,867	Specialty Technology Solutions	$	2,638	$	2,874	$	8,099	$	8,741
Modern Communications & Cloud	Modern Communications & Cloud	3,738		3,613		7,385		7,574		Modern Communications & Cloud	3,717		3,738		11,102		11,312
Corporate	Corporate	561		719		1,438		1,438		Corporate	719		693		2,158		2,131
		$	7,057	$	7,229	$	14,285	$	14,879		$	7,074	$	7,305	$	21,359	$	22,184
Operating income (loss):	Operating income (loss):									Operating income (loss):
Specialty Technology Solutions	Specialty Technology Solutions	$	19,682	$	16,551	$	41,534	$	30,655	Specialty Technology Solutions	$	19,811	$	20,623	$	61,345	$	51,278
Modern Communications & Cloud	Modern Communications & Cloud	19,750		14,894		32,785		31,201		Modern Communications & Cloud	14,468		12,294		47,253		43,494
Corporate	Corporate	—		53		—		(30)		Corporate	—		—		—		(30)
		$	39,432	$	31,498	$	74,319	$	61,826		$	34,279	$	32,917	$	108,598	$	94,742
Capital expenditures:	Capital expenditures:									Capital expenditures:
Specialty Technology Solutions	Specialty Technology Solutions	$	(524)	$	(318)	$	(1,026)	$	(435)	Specialty Technology Solutions	$	(520)	$	(62)	$	(1,546)	$	(496)
Modern Communications & Cloud	Modern Communications & Cloud	(1,980)		(1,236)		(3,236)		(2,210)		Modern Communications & Cloud	(1,766)		(620)		(5,003)		(2,830)

		$	(2,504)	$	(1,554)	$	(4,262)	$	(2,645)		$	(2,286)	$	(682)	$	(6,549)	$	(3,326)
Sales by Geography Category:	Sales by Geography Category:									Sales by Geography Category:
United States and Canada	United States and Canada	$	911,033	$	774,301	$	1,772,637	$	1,546,215	United States and Canada	$	811,963	$	766,035	$	2,584,598	$	2,312,250
International	International	102,020		90,419		186,294		178,231		International	76,722		81,461		263,017		259,693
Less intercompany sales	Less intercompany sales	(1,812)		(641)		(3,877)		(2,784)		Less intercompany sales	(3,166)		(1,506)		(7,042)		(4,291)
		$	1,011,241	$	864,079	$	1,955,054	$	1,721,662		$	885,519	$	845,990	$	2,840,573	$	2,567,652


		December 31, 2022		June 30, 2022			March 31, 2023		June 30, 2022
		(in thousands)					(in thousands)
Assets:	Assets:					Assets:
Specialty Technology Solutions	Specialty Technology Solutions	$	1,181,810	$	1,030,538	Specialty Technology Solutions	$	1,077,363	$	1,030,538
Modern Communications & Cloud	Modern Communications & Cloud	948,719		906,890		Modern Communications & Cloud	903,019		906,890
Corporate	Corporate	—		—		Corporate	—		—

		$	2,130,529	$	1,937,428		$	1,980,382	$	1,937,428
Property and equipment, net by Geography Category:	Property and equipment, net by Geography Category:					Property and equipment, net by Geography Category:
United States and Canada	United States and Canada	$	29,590	$	32,715	United States and Canada	$	28,120	$	32,715
International	International	7,003		4,762		International	8,366		4,762
		$	36,593	$	37,477		$	36,486	$	37,477

In accordance with Accounting Standards Codification ("ASC") 842, at contract inception the Company determines if a contract contains a lease by assessing whether the contract contains an identified asset and whether the Company has the ability to control the asset. The Company also determines if the lease meets the classification criteria for an operating lease versus a finance lease under ASC 842. Substantially all of the Company's leases are operating leases for real estate, warehouse and office equipment ranging in duration from 1 year to 10 years. The Company has elected not to record short-term operating

leases with an initial term of 12 months or less on the Condensed Consolidated Balance Sheets. Operating leases are recorded as other non-current assets, accrued expenses and other current liabilities and other long-term liabilities on the Condensed Consolidated Balance Sheets. The Company has finance leases for information technology equipment expiring through fiscal year 2027. Finance leases are recorded as property and equipment, net, accrued expenses and other current liabilities and other long-term liabilities on the Condensed Consolidated Balance Sheets. The gross amount of the balances recorded related to finance leases is immaterial to the condensed consolidated financial statements at ~~December~~March 31, ~~2022~~2023 and the consolidated financial statements at June 30, 2022.

Operating lease right-of-use assets and lease liabilities are recognized at the commencement date based on the net present value of future minimum lease payments over the lease term. The Company generally is not able to determine the rate implicit in its leases and has elected to apply an incremental borrowing rate as the discount rate for the present value determination, which is based on the Company's cost of borrowings for the relevant terms of each lease and geographical economic factors. Certain operating lease agreements contain options to extend or terminate the lease. The lease term used is adjusted for these options when the Company is reasonably certain it will exercise the option. Operating lease expense is recognized on a straight-line basis over the lease term. Variable lease payments not based on a rate or index, such as costs for common area maintenance, are expensed as incurred. Further, the Company has elected the practical expedient to recognize all lease and non-lease components as a single lease component, where applicable.


			December 31, 2022		June 30, 2022				March 31, 2023		June 30, 2022
Operating leases	Operating leases	Balance Sheet location	(in thousands)				Operating leases	Balance Sheet location	(in thousands)
Operating lease right-of-use assets	Operating lease right-of-use assets	Other non-current assets	$	14,247	$	16,217	Operating lease right-of-use assets	Other non-current assets	$	13,541	$	16,217
Current operating lease liabilities	Current operating lease liabilities	Accrued expenses and other current liabilities	$	4,541	$	4,499	Current operating lease liabilities	Accrued expenses and other current liabilities	$	4,474	$	4,499
Long-term operating lease liabilities	Long-term operating lease liabilities	Other long-term liabilities	$	10,880	$	13,085	Long-term operating lease liabilities	Other long-term liabilities	$	10,284	$	13,085


		Quarter ended December 31,				Six months ended December 31,					Quarter ended March 31,				Nine months ended March 31,
		2022		2021		2022		2021			2023		2022		2023		2022
		(in thousands)									(in thousands)
Operating lease cost	Operating lease cost	$	1,291	$	1,268	$	2,577	$	2,512	Operating lease cost	$	1,319	$	1,366	$	3,896	$	3,877
Variable lease cost	Variable lease cost	419		328		763		650		Variable lease cost	396		317		1,158		966
		$	1,710	$	1,596	$	3,340	$	3,162		$	1,715	$	1,683	$	5,054	$	4,843


		Six months ended						Nine months ended
		December 31,						March 31,
			2022		2021				2023		2022
		(in thousands)						(in thousands)
Cash paid for amounts in the measurement of lease liabilities	Cash paid for amounts in the measurement of lease liabilities		$	2,697	$	2,652	Cash paid for amounts in the measurement of lease liabilities		$	4,054	$	4,082
Right-of-use assets obtained in exchange for lease obligations	Right-of-use assets obtained in exchange for lease obligations		286		1,782		Right-of-use assets obtained in exchange for lease obligations		746		2,313


		Operating leases			Operating leases
		(in thousands)			(in thousands)
2023	2023	$	2,663	2023	$	1,371
2024	2024	4,546		2024	4,699
2025	2025	3,417		2025	3,569
2026	2026	2,878		2026	3,030
2027	2027	2,597		2027	2,673
Thereafter	Thereafter	632		Thereafter	632
Total future payments	Total future payments	16,733		Total future payments	15,974
Less: amounts representing interest	Less: amounts representing interest	1,312		Less: amounts representing interest	1,216
Present value of lease payments	Present value of lease payments	$	15,421	Present value of lease payments	$	14,758

During the Company's due diligence for the Network1 acquisition, several pre-acquisition contingencies were identified regarding various Brazilian federal and state tax exposures. The Company recorded indemnification receivables that are reported gross of the pre-acquisition contingency liabilities as the funds were escrowed as part of the acquisition. The amount available after the impact of foreign currency translation for future pre-acquisition contingency settlements or to be released to the sellers was ~~$3.0~~$3.2 million and $4.1 million at ~~December~~March 31, ~~2022~~2023 and June 30, 2022, respectively.


		December 31, 2022		June 30, 2022			March 31, 2023		June 30, 2022
		Network1					Network1
		(in thousands)					(in thousands)
Assets	Assets					Assets
Prepaid expenses and other current assets	Prepaid expenses and other current assets	$	15	$	15	Prepaid expenses and other current assets	$	15	$	15
Other non-current assets	Other non-current assets	$	3,833	$	3,818	Other non-current assets	$	3,833	$	3,818
Liabilities	Liabilities					Liabilities
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	$	15	$	15	Accrued expenses and other current liabilities	$	15	$	15
Other long-term liabilities	Other long-term liabilities	$	3,833	$	3,818	Other long-term liabilities	$	3,833	$	3,818

Income taxes for the quarters and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021~~2022 have been included in the accompanying condensed consolidated financial statements using an estimated annual effective tax rate. In addition to applying the estimated annual effective tax rate to pre-tax income, the Company includes certain items treated as discrete events to arrive at an estimated overall tax provision. During the quarter ended ~~December~~March 31, ~~2022,~~2023, there were no material discrete items. For the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, a discrete net tax benefit of $0.7 million was recorded, which is primarily attributable to a notional interest deduction on the net equity of the Company's Brazilian subsidiary.

The Company’s effective tax rate of ~~28.9%~~29.1% and ~~27.3%~~27.8% for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023 differs from the current federal statutory rate of 21% primarily as a result of income derived from tax jurisdictions with varying income tax rates, nondeductible expenses and state income taxes. The Company's effective tax rate was ~~23.9%~~27.8% and ~~24.4%~~25.6% for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2021.~~2022.

As of ~~December~~March 31, ~~2022,~~2023, the Company is not permanently reinvested with respect to all earnings generated by foreign operations. The Company has determined that there is no material deferred tax liability for federal, state and withholding tax related to undistributed earnings. During the quarter ended ~~December~~March 31, ~~2022,~~2023, foreign subsidiaries ~~repatriated~~did not repatriate any cash ~~of $9.1 million~~ to the United States. There is no certainty to the timing of any future distributions of such earnings to the U.S. in whole or in part.

The Company had approximately $1.2 million and $1.1 million of total gross unrecognized tax benefits at ~~December~~March 31, ~~2022~~2023 and June 30, 2022. Of this total at ~~December~~March 31, ~~2022,~~2023, approximately $0.9 million represents the amount of unrecognized tax benefits that are permanent in nature and, if recognized, would affect the annual effective tax rate. The Company does not believe that the total amount of unrecognized tax benefits will significantly increase or decrease within twelve months of the reporting date.

The Company conducts business globally and one or more of its subsidiaries files income tax returns in the U.S. federal, various state, local and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities in countries and states in which it operates. With certain exceptions, the Company is no longer subject to federal, state and local or non-U.S. income tax examinations by tax authorities for the years before June 30, 2017.

On August 20, 2019, the Company announced plans to divest the product distribution businesses in Europe, the UK, Mexico, Colombia, Chile, Peru and the Miami-based export operations ("Divestitures") as these businesses were performing below management's expectations. The Company continues to operate its digital business in these countries. Management determined that the Company did not have sufficient scale in these markets to maximize the value-added model for product distribution, leading the Company to focus and invest in its higher-growth, higher-margin businesses. Results from the Divestitures were included within each reportable segment, which includes the Specialty Technology Solutions and Modern Communications & Cloud segments.

ScanSource is a leading hybrid distributor connecting devices to the cloud and accelerating growth for partners across hardware, SaaS, connectivity and cloud. We provide technology solutions and services from more than 500 leading suppliers of mobility and barcode, POS and payments, physical security and networking, communications and collaboration, connectivity and cloud services to our approximately 30,000 sales partners located in the United States, Canada, Brazil, the UK and Europe.

We sell hardware, SaaS, connectivity and cloud solutions and services through channel partners to end-customers. We operate distribution facilities that support our United States and Canada business in Mississippi, California and Kentucky. Brazil distribution facilities are located in the Brazilian states of Paraná, Espirito Santo and Santa Catarina. We provide some of our digital products, which include SaaS and subscriptions, through our digital tools and platforms.

The macroeconomic environment, including the economic impacts of supply chain constraints, rising interest rates and inflation continues to create significant uncertainty and may adversely affect our consolidated results of operations. We are actively monitoring changes to the global macroeconomic environment and assessing the potential impacts these challenges may have on our financial condition, results of operations and liquidity. We are also mindful of the potential impact these conditions could have on our customers and suppliers.

Our strategy is to drive sustainable, profitable growth by orchestrating hybrid technology solutions through a growing ecosystem of partners by leveraging our people, processes and tools. Our goal is to provide exceptional experiences for our partners, suppliers and employees through operational excellence. Our hybrid distribution strategy relies on a channel sales model to offer hardware, SaaS, connectivity and cloud services from leading technology suppliers to sales partners that solve end-customers’ challenges. ScanSource enables sales partners to deliver solutions for their customers to address changing end-customer buying and consumption patterns. Our solutions may include a combination of offerings from multiple suppliers or give our sales partners access to additional services. As a trusted adviser to our sales partners, we provide customized solutions through our strong understanding of end-customer needs.


		Quarter ended December 31,								% Change, Constant Currency, Excluding Divestitures and Acquisitions (a)			Quarter ended March 31,								% Change, Constant Currency, Excluding Divestitures and Acquisitions (a)
Net Sales by Segment:	Net Sales by Segment:	2022		2021		$ Change		% Change				Net Sales by Segment:	2023		2022		$ Change		% Change
		(in thousands)											(in thousands)
Specialty Technology Solutions	Specialty Technology Solutions	$	627,548	$	496,920	$	130,628	26.3	%	26.1	%	Specialty Technology Solutions	$	565,652	$	503,072	$	62,580	12.4	%	12.5	%
Modern Communications & Cloud	Modern Communications & Cloud	383,693		367,159		16,534		4.5	%	3.3	%	Modern Communications & Cloud	319,867		342,918		(23,051)		(6.7)	%	(6.6)	%
Total net sales	Total net sales	$	1,011,241	$	864,079	$	147,162	17.0	%	16.4	%	Total net sales	$	885,519	$	845,990	$	39,529	4.7	%	4.7	%

		Six months ended December 31,								% Change, Constant Currency, Excluding Planned Divestitures and Acquisitions (a)			Nine months ended March 31,								% Change, Constant Currency, Excluding Planned Divestitures and Acquisitions (a)
		2022		2021		$ Change		% Change					2023		2022		$ Change		% Change
		(in thousands)											(in thousands)
Specialty Technology Solutions	Specialty Technology Solutions	$	1,203,878	$	998,630	$	205,248	20.6	%	20.4	%	Specialty Technology Solutions	$	1,769,530	$	1,501,702	$	267,828	17.8	%	17.8	%
Modern Communications & Cloud	Modern Communications & Cloud	751,176		723,032		28,144		3.9	%	3.4	%	Modern Communications & Cloud	1,071,043		1,065,950		5,093		0.5	%	0.1	%
Total net sales	Total net sales	$	1,955,054	$	1,721,662	$	233,392	13.6	%	13.3	%	Total net sales	$	2,840,573	$	2,567,652	$	272,921	10.6	%	10.4	%

The Specialty Technology Solutions segment consists of sales to customers in North America and Brazil. For the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, net sales for the Specialty Technology Solutions segment increased ~~$130.6~~$62.6 million, or ~~26.3%~~12.4%, and ~~$205.2~~$267.8 million, or ~~20.6%~~17.8%, respectively, compared to the prior-year periods. Excluding the foreign exchange positive impact, adjusted net sales increased ~~$129.5~~$62.6 million, or ~~26.1%~~12.5% for the quarter ended ~~December~~March 31, ~~2022~~2023 and ~~$204.2~~$266.8 million, or ~~20.4%~~17.8%, for the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, compared to the prior-year periods. The increase in net sales and adjusted net sales for the quarter and ~~six~~nine month periods is primarily due to strong growth ~~across~~in key technologies in North America.

The Modern Communications & Cloud segment consists of sales to customers in North America, Brazil and the UK. For the quarter ended March 31, 2023, net sales for the Modern Communications & Cloud segment decreased $23.1 million, or 6.7%, compared to the prior-year period. Excluding the foreign exchange negative impact, adjusted net sales decreased $22.7 million, or 6.6%, for the quarter ended March 31, 2023, compared to the prior-year period. The decrease in net sales and ~~six~~adjusted net sales for the quarter is primarily due to lower sales volumes in our communications hardware, partially offset by increased networking sales.

For the nine months ended ~~December~~March 31, ~~2022,~~2023, net sales for the Modern Communications & Cloud segment increased ~~$16.5~~$5.1 million, or ~~4.5%~~0.5%, ~~and $28.1 million, or 3.9%, respectively,~~ compared to the prior-year ~~periods.~~period. Excluding the foreign exchange positive impact, adjusted net sales increased ~~$12.0~~$1.5 million, or ~~3.3%~~0.1%, for the ~~quarter ended December 31, 2022 and $24.3 million, or 3.4%, for the six~~nine months ended ~~December~~March 31, ~~2022,~~2023, compared to the prior-year ~~periods. The increase in net sales and adjusted net sales for the quarter and six month periods is primarily due to increased demand for our Cisco products and growth in Brazil.~~period. For our Intelisys business, net sales for the ~~second~~third quarter and ~~six~~nine month period of fiscal year 2023 increased ~~9.2%~~4.3% and ~~8.1%~~6.8%, respectively, year-over-year.


		Quarter ended December 31,								% Change, Constant Currency, Excluding Divestitures and Acquisitions (a)			Quarter ended March 31,								% Change, Constant Currency, Excluding Divestitures and Acquisitions (a)
Net Sales by Geography:	Net Sales by Geography:	2022		2021		$ Change		% Change				Net Sales by Geography:	2023		2022		$ Change		% Change
		(in thousands)											(in thousands)
United States and Canada	United States and Canada	$	909,221	$	773,660	$	135,561	17.5	%	17.5	%	United States and Canada	$	808,797	$	764,529	$	44,268	5.8	%	5.8	%
International	International	102,020		90,419		11,601		12.8	%	6.6	%	International	76,722		81,461		(4,739)		(5.8)	%	(5.3)	%
Total net sales	Total net sales	$	1,011,241	$	864,079	$	147,162	17.0	%	16.4	%	Total net sales	$	885,519	$	845,990	$	39,529	4.7	%	4.7	%

		Six months ended December 31,								% Change, Constant Currency, Excluding Planned Divestitures and Acquisitions (a)			Nine months ended March 31,								% Change, Constant Currency, Excluding Planned Divestitures and Acquisitions (a)
		2022		2021		$ Change		% Change					2023		2022		$ Change		% Change
		(in thousands)											(in thousands)
United States and Canada	United States and Canada	$	1,768,760	$	1,543,431	$	225,329	14.6	%	14.6	%	United States and Canada	$	2,577,556	$	2,307,959	$	269,597	11.7	%	11.7	%
International	International	186,294		178,231		8,063		4.5	%	1.7	%	International	263,017		259,693		3,324		1.3	%	(0.5)	%
Total net sales	Total net sales	$	1,955,054	$	1,721,662	$	233,392	13.6	%	13.3	%	Total net sales	$	2,840,573	$	2,567,652	$	272,921	10.6	%	10.4	%


		Quarter ended December 31,								% of Net Sales December 31,					Quarter ended March 31,								% of Net Sales March 31,
		2022		2021		$ Change		% Change		2022		2021			2023		2022		$ Change		% Change		2023		2022
		(in thousands)													(in thousands)
Specialty Technology Solutions	Specialty Technology Solutions	$	56,732	$	52,048	$	4,684	9.0	%	9.0	%	10.5	%	Specialty Technology Solutions	$	57,664	$	54,021	$	3,643	6.7	%	10.2	%	10.7	%
Modern Communications & Cloud	Modern Communications & Cloud	58,602		55,605		2,997		5.4	%	15.3	%	15.1	%	Modern Communications & Cloud	54,098		52,487		1,611		3.1	%	16.9	%	15.3	%
Gross profit	Gross profit	$	115,334	$	107,653	$	7,681	7.1	%	11.4	%	12.5	%	Gross profit	$	111,762	$	106,508	$	5,254	4.9	%	12.6	%	12.6	%

		Six months ended December 31,								% of Net Sales December 31,					Nine months ended March 31,								% of Net Sales March 31,
		2022		2021		$ Change		% Change		2022		2021			2023		2022		$ Change		% Change		2023		2022
		(in thousands)													(in thousands)
Specialty Technology Solutions	Specialty Technology Solutions	$	115,135	$	97,742	$	17,393	17.8	%	9.6	%	9.8	%	Specialty Technology Solutions	$	172,800	$	151,763	$	21,037	13.9	%	9.8	%	10.1	%
Modern Communications & Cloud	Modern Communications & Cloud	113,683		111,483		2,200		2.0	%	15.1	%	15.4	%	Modern Communications & Cloud	167,781		163,969		3,812		2.3	%	15.7	%	15.4	%
Gross profit	Gross profit	$	228,818	$	209,225	$	19,593	9.4	%	11.7	%	12.2	%	Gross profit	$	340,581	$	315,732	$	24,849	7.9	%	12.0	%	12.3	%

Our gross profit is primarily affected by sales volume and gross margin mix. Gross margin mix is impacted by multiple factors, which include sales mix (proportion of sales of higher margin products or services relative to total sales), vendor program recognition (consisting of volume rebates, inventory price changes and purchase discounts) and freight costs. Increases in vendor program recognition decrease cost of goods sold, thereby increasing gross profit. Net sales derived from our Intelisys business contribute 100% to our gross profit dollars and margin as they have no associated cost of goods sold.

For the quarter ended ~~December~~March 31, ~~2022,~~2023, gross profit dollars for the Specialty Technology Solutions segment increased ~~$4.7~~$3.6 million, or ~~9.0%~~6.7%. Gross profit margin decreased 54 basis points over the prior-year to 10.2%. Higher sales volume, after considering the associated cost of goods sold, contributed ~~$13.7~~$6.7 million to the growth of gross profit dollars. Gross margin mix ~~negatively impacted~~reduced gross profit by ~~$9.0~~$3.1 million, largely from a less favorable sales mix and decreased vendor program recognition. ~~For the quarter ended December 31, 2022, the gross profit margin decreased 143 basis points over the prior-year to 9.0%.~~

For the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, the Specialty Technology Solutions segment achieved gross profit growth of ~~$17.4~~$21.0 million, or ~~17.8%~~13.9%. Gross profit margin decreased 34 basis points over the prior-year to 9.8%. Increases in sales volume, after considering the associated cost of goods sold, contributed ~~$20.1~~$27.1 million to the growth of gross profit dollars. Gross margin mix ~~negatively impacted~~reduced gross profit by ~~$2.7~~$6.0 million, primarily from increased freight ~~costs. For the six months ended December 31, 2022, the gross profit margin decreased 22 basis points over the prior year to 9.6%.~~costs and lower vendor program recognition.

For the quarter ended ~~December~~March 31, ~~2022,~~2023, gross profit dollars for the Modern Communications & Cloud segment ~~gross profit~~ increased ~~by $3.0~~$1.6 million, or ~~5.4%~~3.1%. ~~Higher~~Gross profit margin increased 161 basis points over the prior-year to 16.9%. Lower sales volume, after considering the associated cost of goods sold, ~~positively contributed $2.5 million to~~reduced gross profit ~~dollars.~~dollars by $3.6 million. Gross margin mix ~~positively impacted~~increased gross profit by ~~$0.5~~$5.1 million, largely driven by a more favorable sales mix. ~~For the quarter ended December 31, 2022, the gross profit margin increased 13 basis points over the prior year to 15.3%.~~

For the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, the Modern Communications & Cloud segment achieved gross profit growth of ~~$2.2~~$3.8 million, or ~~2.0%~~2.3%. Gross profit margin increased 28 basis points over the prior-year to 15.7%. Increases in sales volume, after considering the associated cost of goods sold, contributed ~~$4.3~~$0.7 million to the growth of gross profit dollars. Gross margin mix ~~negatively impacted~~increased gross profit by ~~$2.1~~$3.1 million, primarily from ~~increased freight costs. For the six months ended December 31, 2022, the gross profit margin decreased 28 basis points over the prior year to 15.1%.~~a more favorable sales mix.


		Quarter ended December 31,								% of Net Sales December 31,					Quarter ended March 31,								% of Net Sales March 31,
		2022		2021		$ Change		% Change		2022		2021			2023		2022		$ Change		% Change		2023		2022
		(in thousands)													(in thousands)
Selling, general and administrative expenses	Selling, general and administrative expenses	$	69,074	$	69,161	$	(87)	(0.1)	%	6.8	%	8.0	%	Selling, general and administrative expenses	$	70,669	$	66,522	$	4,147	6.2	%	8.0	%	7.9	%
Depreciation expense	Depreciation expense	2,678		2,547		131		5.1	%	0.3	%	0.3	%	Depreciation expense	2,644		2,612		32		1.2	%	0.3	%	0.3	%
Intangible amortization expense	Intangible amortization expense	4,150		4,447		(297)		(6.7)	%	0.4	%	0.5	%	Intangible amortization expense	4,170		4,457		(287)		(6.4)	%	0.5	%	0.5	%

Operating expenses	Operating expenses	$	75,902	$	76,155	$	(253)	(0.3)	%	7.5	%	8.8	%	Operating expenses	$	77,483	$	73,591	$	3,892	5.3	%	8.8	%	8.7	%

		Six months ended December 31,								% of Net Sales December 31,					Nine months ended March 31,								% of Net Sales March 31,
		2022		2021		$ Change		% Change		2022		2021			2023		2022		$ Change		% Change		2023		2022
		(in thousands)													(in thousands)
Selling, general and administrative expenses	Selling, general and administrative expenses	$	140,667	$	133,016	$	7,651	5.8	%	7.2	%	7.7	%	Selling, general and administrative expenses	$	211,337	$	199,538	$	11,799	5.9	%	7.4	%	7.8	%
Depreciation expense	Depreciation expense	5,441		5,427		14		0.3	%	0.3	%	0.3	%	Depreciation expense	8,085		8,039		46		0.6	%	0.3	%	0.3	%
Intangible amortization expense	Intangible amortization expense	8,391		8,956		(565)		(6.3)	%	0.4	%	0.5	%	Intangible amortization expense	12,561		13,413		(852)		(6.4)	%	0.4	%	0.5	%

Operating expenses	Operating expenses	$	154,499	$	147,399	$	7,100	4.8	%	7.9	%	8.6	%	Operating expenses	$	231,983	$	220,990	$	10,993	5.0	%	8.2	%	8.6	%

Selling, general and administrative expenses ("SG&A") ~~decreased~~increased by ~~less than $0.1~~$4.1 million, or 6.2%, for the quarter ended ~~December~~March 31, ~~2022,~~2023, compared to the prior-year period. The ~~decrease~~increase for the quarter ended ~~December~~March 31, ~~2022~~2023 is primarily attributable to higher bad debt expense, which increased year-over-year primarily due to a large bad debt recovery ~~of prior period withholding taxes~~ in ~~Brazil, which reduced SG&A by $2.9 million, partially offset by~~the prior-year quarter, and higher employee costs.


		Quarter ended December 31,								% of Net Sales December 31,					Quarter ended March 31,								% of Net Sales March 31,
		2022		2021		$ Change		% Change		2022		2021			2023		2022		$ Change		% Change		2023		2022
		(in thousands)													(in thousands)
Specialty Technology Solutions	Specialty Technology Solutions	$	19,682	$	16,551	$	3,131	18.9	%	3.1	%	3.3	%	Specialty Technology Solutions	$	19,811	$	20,623	$	(812)	(3.9)	%	3.5	%	4.1	%
Modern Communications & Cloud	Modern Communications & Cloud	19,750		14,894		4,856		32.6	%	5.1	%	4.1	%	Modern Communications & Cloud	14,468		12,294		2,174		17.7	%	4.5	%	3.6	%
Corporate	Corporate	—		53		(53)		nm*		nm*		nm*		Corporate	—		—		—		nm*		nm*		nm*
Operating income	Operating income	$	39,432	$	31,498	$	7,934	25.2	%	3.9	%	3.6	%	Operating income	$	34,279	$	32,917	$	1,362	4.1	%	3.9	%	3.9	%

		Six months ended December 31,								% of Net Sales December 31,					Nine months ended March 31,								% of Net Sales March 31,
		2022		2021		$ Change		% Change		2022		2021			2023		2022		$ Change		% Change		2023		2022
		(in thousands)													(in thousands)
Specialty Technology Solutions	Specialty Technology Solutions	$	41,534	$	30,655	$	10,879	35.5	%	3.5	%	3.1	%	Specialty Technology Solutions	$	61,345	$	51,278	$	10,067	19.6	%	3.5	%	3.4	%
Modern Communications & Cloud	Modern Communications & Cloud	32,785		31,201		1,584		5.1	%	4.4	%	4.3	%	Modern Communications & Cloud	47,253		43,494		3,759		8.6	%	4.4	%	4.1	%
Corporate	Corporate	—		(30)		30		nm*		nm*		nm*		Corporate	—		(30)		30		nm*		nm*		nm*
Operating income	Operating income	$	74,319	$	61,826	$	12,493	20.2	%	3.8	%	3.6	%	Operating income	$	108,598	$	94,742	$	13,856	14.6	%	3.8	%	3.7	%

For the Specialty Technology Solutions segment, operating income ~~increased $3.1~~decreased $0.8 million, ~~and $10.9 million~~or 3.9% for the quarter ~~and six months~~ ended ~~December~~March 31, ~~2022, respectively,~~2023 compared to the prior-year period. Operating margin decreased to ~~3.1%~~3.5% for the quarter ended ~~December~~March 31, ~~2022.~~ 2023. The decrease in operating income and margin for the quarter is primarily due to higher bad debt expense, which increased year-over-year primarily due to a large bad debt recovery in the prior-year quarter.

For the Modern Communications & Cloud segment, operating income increased ~~$4.9~~$2.2 million and ~~$1.6~~$3.8 million for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, respectively, compared to the prior-year period. Operating margin increased to ~~5.1%~~4.5% and 4.4% for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, respectively. The increase in operating income and margin for the quarter and ~~six~~nine month period is primarily due to higher gross ~~profits and a $2.9 million recovery of prior period withholding taxes in Brazil.~~profits.


		Quarter ended December 31,								% of Net Sales December 31,					Quarter ended March 31,								% of Net Sales March 31,
		2022		2021		$ Change		% Change		2022		2021			2023		2022		$ Change		% Change		2023		2022
		(in thousands)													(in thousands)
Interest expense	Interest expense	$	5,060	$	1,493	$	3,567	238.9	%	0.5	%	0.2	%	Interest expense	$	5,715	$	1,483	$	4,232	285.4	%	0.6	%	0.2	%
Interest income	Interest income	(2,027)		(947)		(1,080)		114.0	%	(0.2)	%	(0.1)	%	Interest income	(1,710)		(1,000)		(710)		71.0	%	(0.2)	%	(0.1)	%
Net foreign exchange losses	Net foreign exchange losses	347		480		(133)		(27.7)	%	0.0	%	0.1	%	Net foreign exchange losses	505		258		247		95.7	%	0.1	%	0.0	%
Other, net	Other, net	(140)		63		(203)		(322.2)	%	(0.0)	%	0.0	%	Other, net	(144)		(394)		250		(63.5)	%	(0.0)	%	(0.0)	%
Total other expense, net	Total other expense, net	$	3,240	$	1,089	$	2,151	197.5	%	0.3	%	0.1	%	Total other expense, net	$	4,366	$	347	$	4,019	1,158.2	%	0.5	%	0.0	%

		Six months ended December 31,								% of Net Sales December 31,					Nine months ended March 31,								% of Net Sales March 31,
		2022		2021		$ Change		% Change		2022		2021			2023		2022		$ Change		% Change		2023		2022
		(in thousands)													(in thousands)
Interest expense	Interest expense	$	8,507	$	3,153	$	5,354	169.8	%	0.4	%	0.2	%	Interest expense	$	14,223	$	4,637	$	9,586	206.7	%	0.5	%	0.2	%
Interest income	Interest income	(3,618)		(1,973)		(1,645)		83.4	%	(0.2)	%	(0.1)	%	Interest income	(5,327)		(2,973)		(2,354)		79.2	%	(0.2)	%	(0.1)	%
Net foreign exchange losses	Net foreign exchange losses	1,270		966		304		31.5	%	0.1	%	0.1	%	Net foreign exchange losses	1,775		1,223		552		45.1	%	0.1	%	0.0	%
Other, net	Other, net	(315)		(159)		(156)		98.1	%	(0.0)	%	(0.0)	%	Other, net	(461)		(555)		94		(16.9)	%	(0.0)	%	(0.0)	%
Total other expense, net	Total other expense, net	$	5,844	$	1,987	$	3,857	194.1	%	0.3	%	0.1	%	Total other expense, net	$	10,210	$	2,332	$	7,878	337.8	%	0.4	%	0.1	%

Interest expense consists primarily of interest incurred on borrowings, non-utilization fees charged on the revolving credit facility and amortization of debt issuance costs. Interest expense increased for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 compared to the prior-year periods, primarily from higher ~~borrowings~~interest rates and ~~increases in interest rates~~higher average borrowings on our multi-currency revolving credit facility.

Net foreign exchange gains and losses consist of foreign currency transactional and functional currency re-measurements, offset by net foreign ~~currency~~ exchange ~~contract~~forward contracts gains and losses. Foreign exchange gains and losses are generated as the result of fluctuations in the value of the U.S. dollar versus the Brazilian real, the ~~U.S.~~Canadian dollar versus the U.S. dollar, the euro versus the U.S. dollar, and the British pound ~~versus the euro, and the Canadian dollar~~ versus the U.S. dollar. We partially offset foreign currency exposure with the use of foreign exchange ~~forward~~ contracts to hedge against these exposures. The costs associated with foreign exchange forward contracts are included in the net foreign exchange losses.

For the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, income tax expense was ~~$10.5~~$8.7 million and ~~$18.7~~$27.4 million reflecting an effective tax rate of ~~28.9%~~29.1% and ~~27.3%~~27.8%, respectively. In comparison, for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2021,~~2022, income tax expense was ~~$7.3~~$9.0 million and ~~$14.6~~$23.7 million, reflecting an effective tax rate of ~~23.9%~~27.8% and ~~24.4%~~25.6%, respectively. The increase in the effective tax rate for the quarter and ~~six~~nine months is primarily due to a decrease in forecasted tax exempt income and a decrease in creditable foreign taxes compared to the prior-year quarter. We expect the effective tax rate for fiscal year 2023 to be approximately ~~27.0%~~27.4% to ~~28.0%~~28.4%. See Note 13 - Income Taxes to the Notes to Consolidated Financial Statements for further discussion.

In addition to disclosing results that are determined in accordance with United States generally accepted accounting principles ("US GAAP" or "GAAP"), we also disclose certain non-GAAP financial measures. These measures include non-GAAP operating income; non-GAAP pre-tax income; non-GAAP net income; non-GAAP EPS; adjusted earnings before interest expense, income taxes, depreciation, and amortization ("adjusted EBITDA"); adjusted return on invested capital ("adjusted ROIC"); and constant currency. Constant currency is a measure that excludes the translation exchange impact from changes in

Adjusted EBITDA starts with net income and adds back interest expense, income tax expense, depreciation expense, amortization of intangible assets, share-based compensation expense, changes in fair value of contingent consideration, and other non-GAAP adjustments. Since adjusted EBITDA excludes some non-cash costs of investing in our business and people, we believe that adjusted EBITDA shows the profitability from our business operations more clearly.


		Quarter ended December 31,					Quarter ended March 31,
		2022		2021					2023		2022
		(in thousands)					(in thousands)
Reconciliation of net income to adjusted EBITDA:	Reconciliation of net income to adjusted EBITDA:					Reconciliation of net income to adjusted EBITDA:
Net income (GAAP)	Net income (GAAP)	$	25,734	$	23,152			Net income (GAAP)	$	21,221	$	23,526
Plus: Interest expense	Plus: Interest expense	5,060		1,493				Plus: Interest expense	5,715		1,483
Plus: Income taxes	Plus: Income taxes	10,458		7,257				Plus: Income taxes	8,692		9,044
Plus: Depreciation and amortization	Plus: Depreciation and amortization	7,057		7,229				Plus: Depreciation and amortization	7,074		7,305
EBITDA (non-GAAP)	EBITDA (non-GAAP)	48,309		39,131				EBITDA (non-GAAP)	42,702		41,358

Plus: Tax recovery (a)		(2,858)		—

Plus: Share-based compensation	Plus: Share-based compensation	3,364		3,464				Plus: Share-based compensation	2,954		2,757
Plus: Acquisition and divestiture costs (b)		—		(53)

Adjusted EBITDA (numerator for adjusted ROIC) (non-GAAP)	Adjusted EBITDA (numerator for adjusted ROIC) (non-GAAP)	$	48,815	$	42,542			Adjusted EBITDA (numerator for adjusted ROIC) (non-GAAP)	$	45,656	$	44,115


		Quarter ended December 31,					Quarter ended March 31,
		2022		2021					2023		2022
		(in thousands)					(in thousands)
Invested capital calculations:	Invested capital calculations:					Invested capital calculations:
Equity – beginning of the quarter	Equity – beginning of the quarter	$	827,004	$	746,094			Equity – beginning of the quarter	$	862,386	$	768,525
Equity – end of the quarter	Equity – end of the quarter	862,386		768,525				Equity – end of the quarter	878,895		806,654

Plus: Share-based compensation, net	Plus: Share-based compensation, net	2,496		2,590				Plus: Share-based compensation, net	2,191		2,063
Plus: Acquisition and divestiture costs (b)		—		(53)

Plus: Tax recovery, net		(1,886)		—
Plus: Discontinued operations net loss		—		(100)

Average equity	Average equity	845,000		758,528				Average equity	871,736		788,621
Average funded debt ~~(c)~~(a)	Average funded debt ~~(c)~~(a)	392,853		200,708				Average funded debt ~~(c)~~(a)	398,318		205,073
Invested capital (denominator for adjusted ROIC) (non-GAAP)	Invested capital (denominator for adjusted ROIC) (non-GAAP)	$	1,237,853	$	959,236			Invested capital (denominator for adjusted ROIC) (non-GAAP)	$	1,270,054	$	993,694

We make references to "constant currency," a non-GAAP performance measure that excludes the foreign exchange rate impact from fluctuations in the average foreign exchange rates between reporting periods. Constant currency is calculated by translating current period results from currencies other than the U.S. dollar into U.S. dollars using the comparable average foreign exchange rates from the prior year period. We also exclude the impact of acquisitions prior to the first full year of operations from the acquisition date in order to show net sales results on an organic basis. This information is provided to analyze underlying trends without the translation impact of fluctuations in foreign currency rates and the impact of acquisitions. Below we show organic growth by providing a non-GAAP reconciliation of net sales in constant currency, excluding acquisitions:


Net Sales by Segment:	Net Sales by Segment:									Net Sales by Segment:
		Quarter ended December 31,									Quarter ended March 31,
		2022		2021		$ Change		% Change			2023		2022		$ Change		% Change
Specialty Technology Solutions:	Specialty Technology Solutions:	(in thousands)								Specialty Technology Solutions:	(in thousands)

Net sales, reported	Net sales, reported	$	627,548	$	496,920	$	130,628	26.3	%	Net sales, reported	$	565,652	$	503,072	$	62,580	12.4	%
Foreign exchange impact (a)	Foreign exchange impact (a)	(1,120)		—						Foreign exchange impact (a)	61		—

Non-GAAP net sales, constant currency	Non-GAAP net sales, constant currency	$	626,428	$	496,920	$	129,508	26.1	%	Non-GAAP net sales, constant currency	$	565,713	$	503,072	$	62,641	12.5	%

Modern Communications & Cloud:	Modern Communications & Cloud:									Modern Communications & Cloud:

Net sales, reported	Net sales, reported	$	383,693	$	367,159	$	16,534	4.5	%	Net sales, reported	$	319,867	$	342,918	$	(23,051)	(6.7)	%
Foreign exchange impact (a)	Foreign exchange impact (a)	(4,497)		—						Foreign exchange impact (a)	363		—

Non-GAAP net sales, constant currency	Non-GAAP net sales, constant currency	$	379,196	$	367,159	$	12,037	3.3	%	Non-GAAP net sales, constant currency	$	320,230	$	342,918	$	(22,688)	(6.6)	%

Consolidated:	Consolidated:									Consolidated:

Net sales, reported	Net sales, reported	$	1,011,241	$	864,079	$	147,162	17.0	%	Net sales, reported	$	885,519	$	845,990	$	39,529	4.7	%
Foreign exchange impact (a)	Foreign exchange impact (a)	(5,617)		—						Foreign exchange impact (a)	424		—

Non-GAAP net sales, constant currency	Non-GAAP net sales, constant currency	$	1,005,624	$	864,079	$	141,545	16.4	%	Non-GAAP net sales, constant currency	$	885,943	$	845,990	$	39,953	4.7	%


Net Sales by Segment:	Net Sales by Segment:									Net Sales by Segment:
		Six months ended December 31,									Nine months ended March 31,
		2022		2021		$ Change		% Change			2023		2022		$ Change		% Change
Specialty Technology Solutions	Specialty Technology Solutions	(in thousands)								Specialty Technology Solutions	(in thousands)
Net sales, reported	Net sales, reported	$	1,203,878	$	998,630	$	205,248	20.6	%	Net sales, reported	$	1,769,530	$	1,501,702	$	267,828	17.8	%
Foreign exchange impact (a)	Foreign exchange impact (a)	(1,060)		—						Foreign exchange impact (a)	(999)		—

Non-GAAP net sales, constant currency	Non-GAAP net sales, constant currency	$	1,202,818	$	998,630	$	204,188	20.4	%	Non-GAAP net sales, constant currency	$	1,768,531	$	1,501,702	$	266,829	17.8	%

Modern Communications & Cloud	Modern Communications & Cloud									Modern Communications & Cloud
Net sales, reported	Net sales, reported	$	751,176	$	723,032	$	28,144	3.9	%	Net sales, reported	$	1,071,043	$	1,065,950	$	5,093	0.5	%
Foreign exchange impact (a)	Foreign exchange impact (a)	(3,884)		—						Foreign exchange impact (a)	(3,631)		—

Non-GAAP net sales, constant currency	Non-GAAP net sales, constant currency	$	747,292	$	723,032	$	24,260	3.4	%	Non-GAAP net sales, constant currency	$	1,067,412	$	1,065,950	$	1,462	0.1	%

Consolidated:	Consolidated:									Consolidated:
Net sales, reported	Net sales, reported	$	1,955,054	$	1,721,662	$	233,392	13.6	%	Net sales, reported	$	2,840,573	$	2,567,652	$	272,921	10.6	%
Foreign exchange impact (a)	Foreign exchange impact (a)	(4,944)		—						Foreign exchange impact (a)	(4,630)		—

Non-GAAP net sales, constant currency	Non-GAAP net sales, constant currency	$	1,950,110	$	1,721,662	$	228,448	13.3	%	Non-GAAP net sales, constant currency	$	2,835,943	$	2,567,652	$	268,291	10.4	%

(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the six months ended December 31, 2022 into U.S. dollars using the average foreign exchange rates for the six months ended December 31, 2021.
(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the nine months ended March 31, 2023 into U.S. dollars using the average foreign exchange rates for the nine months ended March 31, 2022.										(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the nine months ended March 31, 2023 into U.S. dollars using the average foreign exchange rates for the nine months ended March 31, 2022.


Net Sales by Geography:	Net Sales by Geography:									Net Sales by Geography:
		Quarter ended December 31,									Quarter ended March 31,
		2022		2021		$ Change		% Change			2023		2022		$ Change		% Change
United States and Canada:	United States and Canada:	(in thousands)								United States and Canada:	(in thousands)
Net sales, as reported	Net sales, as reported	$	909,221	$	773,660	$	135,561	17.5	%	Net sales, as reported	$	808,797	$	764,529	$	44,268	5.8	%

International:	International:									International:
Net sales, reported	Net sales, reported	$	102,020	$	90,419	$	11,601	12.8	%	Net sales, reported	$	76,722	$	81,461	$	(4,739)	(5.8)	%
Foreign exchange impact (a)	Foreign exchange impact (a)	(5,617)		—						Foreign exchange impact (a)	424		—

Non-GAAP net sales, constant currency	Non-GAAP net sales, constant currency	$	96,403	$	90,419	$	5,984	6.6	%	Non-GAAP net sales, constant currency	$	77,146	$	81,461	$	(4,315)	(5.3)	%

Consolidated:	Consolidated:									Consolidated:
Net sales, reported	Net sales, reported	$	1,011,241	$	864,079	$	147,162	17.0	%	Net sales, reported	$	885,519	$	845,990	$	39,529	4.7	%
Foreign exchange impact (a)	Foreign exchange impact (a)	(5,617)		—						Foreign exchange impact (a)	424		—

Non-GAAP net sales, constant currency	Non-GAAP net sales, constant currency	$	1,005,624	$	864,079	$	141,545	16.4	%	Non-GAAP net sales, constant currency	$	885,943	$	845,990	$	39,953	4.7	%

(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended December 31, 2022 into U.S. dollars using the average foreign exchange rates for the quarter ended December 31, 2021.
(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended March 31, 2023 into U.S. dollars using the average foreign exchange rates for the quarter ended March 31, 2022.										(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended March 31, 2023 into U.S. dollars using the average foreign exchange rates for the quarter ended March 31, 2022.

		Six months ended December 31,									Nine months ended March 31,
		2022		2021		$ Change		% Change			2023		2022		$ Change		% Change
United States and Canada:	United States and Canada:	(in thousands)								United States and Canada:	(in thousands)
Net sales, as reported	Net sales, as reported	$	1,768,760	$	1,543,431	$	225,329	14.6	%	Net sales, as reported	$	2,577,556	$	2,307,959	$	269,597	11.7	%

International:	International:									International:
Net sales, reported	Net sales, reported	$	186,294	$	178,231	$	8,063	4.5	%	Net sales, reported	$	263,017	$	259,693	$	3,324	1.3	%
Foreign exchange impact (a)	Foreign exchange impact (a)	(4,944)		—						Foreign exchange impact (a)	(4,630)		—

Non-GAAP net sales, constant currency	Non-GAAP net sales, constant currency	$	181,350	$	178,231	$	3,119	1.7	%	Non-GAAP net sales, constant currency	$	258,387	$	259,693	$	(1,306)	(0.5)	%

Consolidated:	Consolidated:									Consolidated:
Net sales, reported	Net sales, reported	$	1,955,054	$	1,721,662	$	233,392	13.6	%	Net sales, reported	$	2,840,573	$	2,567,652	$	272,921	10.6	%
Foreign exchange impact (a)	Foreign exchange impact (a)	(4,944)		—						Foreign exchange impact (a)	(4,630)		—

Non-GAAP net sales, constant currency	Non-GAAP net sales, constant currency	$	1,950,110	$	1,721,662	$	228,448	13.3	%	Non-GAAP net sales, constant currency	$	2,835,943	$	2,567,652	$	268,291	10.4	%

(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the six months ended December 31, 2022 into U.S. dollars using the average foreign exchange rates for the six months ended December 31, 2021.
(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the nine months ended March 31, 2023 into U.S. dollars using the average foreign exchange rates for the nine months ended March 31, 2022.										(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the nine months ended March 31, 2023 into U.S. dollars using the average foreign exchange rates for the nine months ended March 31, 2022.


Operating Income by Segment:	Operating Income by Segment:													Operating Income by Segment:
		Quarter ended December 31,								% of Net Sales December 31,					Quarter ended March 31,								% of Net Sales March 31,
		2022		2021		$ Change		% Change		2022		2021			2023		2022		$ Change		% Change		2023		2022
Specialty Technology Solutions:	Specialty Technology Solutions:	(in thousands)												Specialty Technology Solutions:	(in thousands)
GAAP operating income	GAAP operating income	$	19,682	$	16,551	$	3,131	18.9	%	3.1	%	3.3	%	GAAP operating income	$	19,811	$	20,623	$	(812)	(3.9)	%	3.5	%	4.1	%
Adjustments:	Adjustments:													Adjustments:
Amortization of intangible assets	Amortization of intangible assets	1,266		1,491		(225)								Amortization of intangible assets	1,266		1,491		(225)

Non-GAAP operating income	Non-GAAP operating income	$	20,948	$	18,042	$	2,906	16.1	%	3.3	%	3.6	%	Non-GAAP operating income	$	21,077	$	22,114	$	(1,037)	(4.7)	%	3.7	%	4.4	%

Modern Communications & Cloud:	Modern Communications & Cloud:													Modern Communications & Cloud:
GAAP operating income	GAAP operating income	$	19,750	$	14,894	$	4,856	32.6	%	5.1	%	4.1	%	GAAP operating income	$	14,468	$	12,294	$	2,174	17.7	%	4.5	%	3.6	%
Adjustments:	Adjustments:													Adjustments:
Amortization of intangible assets	Amortization of intangible assets	2,884		2,956		(72)								Amortization of intangible assets	2,904		2,966		(62)

Tax recovery (a)		(2,858)		—		(2,858)

Non-GAAP operating income	Non-GAAP operating income	$	19,776	$	17,850	$	1,926	10.8	%	5.2	%	4.9	%	Non-GAAP operating income	$	17,372	$	15,260	$	2,112	13.8	%	5.4	%	4.5	%

Corporate:	Corporate:													Corporate:
GAAP operating loss	GAAP operating loss	$	—	$	53	$	(53)	nm*		nm*		nm*		GAAP operating loss	$	—	$	—	$	—	nm*		nm*		nm*
Adjustments:	Adjustments:													Adjustments:
Acquisition and divestiture costs	Acquisition and divestiture costs	—		(53)		53								Acquisition and divestiture costs	—		—		—

Non-GAAP operating income	Non-GAAP operating income	$	—	$	—	$	—	nm*		nm*		nm*		Non-GAAP operating income	$	—	$	—	$	—	nm*		nm*		nm*

Consolidated:	Consolidated:													Consolidated:
GAAP operating income	GAAP operating income	$	39,432	$	31,498	$	7,934	25.2	%	3.9	%	3.6	%	GAAP operating income	$	34,279	$	32,917	$	1,362	4.1	%	3.9	%	3.9	%
Adjustments:	Adjustments:													Adjustments:
Amortization of intangible assets	Amortization of intangible assets	4,150		4,447		(297)								Amortization of intangible assets	4,170		4,457		(287)

Tax recovery (a)		(2,858)		—		(2,858)
Acquisition and divestiture costs		—		(53)		53

Non-GAAP operating income	Non-GAAP operating income	$	40,724	$	35,892	$	4,832	13.5	%	4.0	%	4.2	%	Non-GAAP operating income	$	38,449	$	37,374	$	1,075	2.9	%	4.3	%	4.4	%


Operating Income by Segment:	Operating Income by Segment:													Operating Income by Segment:
		Six months ended December 31,								% of Net Sales December 31,					Nine months ended March 31,								% of Net Sales March 31,
		2022		2021		$ Change		% Change		2022		2021			2023		2022		$ Change		% Change		2023		2022
Specialty Technology Solutions:	Specialty Technology Solutions:	(in thousands)												Specialty Technology Solutions:	(in thousands)
GAAP operating income	GAAP operating income	$	41,534	$	30,655	$	10,879	35.5	%	3.5	%	3.1	%	GAAP operating income	$	61,345	$	51,278	$	10,067	19.6	%	3.5	%	3.4	%
Adjustments:	Adjustments:													Adjustments:
Amortization of intangible assets	Amortization of intangible assets	2,608		3,023		(415)								Amortization of intangible assets	3,874		4,514		(640)

Non-GAAP operating income	Non-GAAP operating income	$	44,142	$	33,678	$	10,464	31.1	%	3.7	%	3.4	%	Non-GAAP operating income	$	65,219	$	55,792	$	9,427	16.9	%	3.7	%	3.7	%

Modern Communications & Cloud:	Modern Communications & Cloud:													Modern Communications & Cloud:
GAAP operating income	GAAP operating income	$	32,785	$	31,201	$	1,584	5.1	%	4.4	%	4.3	%	GAAP operating income	$	47,253	$	43,494	$	3,759	8.6	%	4.4	%	4.1	%
Adjustments:	Adjustments:													Adjustments:
Amortization of intangible assets	Amortization of intangible assets	5,783		5,933		(150)								Amortization of intangible assets	8,687		8,899		(212)

Tax recovery (a)	Tax recovery (a)	(2,858)		—		(2,858)								Tax recovery (a)	(2,858)		—		(2,858)

Non-GAAP operating income	Non-GAAP operating income	$	35,710	$	37,134	$	(1,424)	(3.8)	%	4.8	%	5.1	%	Non-GAAP operating income	$	53,082	$	52,393	$	689	1.3	%	5.0	%	4.9	%

Corporate:	Corporate:													Corporate:
GAAP operating loss	GAAP operating loss	$	—	$	(30)	$	30	nm*		nm*		nm*		GAAP operating loss	$	—	$	(30)	$	30	nm*		nm*		nm*
Adjustments:	Adjustments:													Adjustments:
Acquisition and divestiture costs	Acquisition and divestiture costs	—		30		(30)								Acquisition and divestiture costs	—		30		(30)

Non-GAAP operating income	Non-GAAP operating income	$	—	$	—	$	—	nm*		nm*		nm*		Non-GAAP operating income	$	—	$	—	$	—	nm*		nm*		nm*

Consolidated:	Consolidated:													Consolidated:
GAAP operating income	GAAP operating income	$	74,319	$	61,826	$	12,493	20.2	%	3.8	%	3.6	%	GAAP operating income	$	108,598	$	94,742	$	13,856	14.6	%	3.8	%	3.7	%
Adjustments:	Adjustments:													Adjustments:
Amortization of intangible assets	Amortization of intangible assets	8,391		8,956		(565)								Amortization of intangible assets	12,561		13,413		(852)

Tax recovery (a)	Tax recovery (a)	(2,858)		—		(2,858)								Tax recovery (a)	(2,858)		—		(2,858)
Acquisition and divestiture costs	Acquisition and divestiture costs	—		30		(30)								Acquisition and divestiture costs	—		30		(30)

Non-GAAP operating income	Non-GAAP operating income	79,852		70,812		$	9,040	12.8	%	4.1	%	4.1	%	Non-GAAP operating income	$	118,301	$	108,185	$	10,116	9.4	%	4.2	%	4.2	%

To evaluate current period performance on a more consistent basis with prior periods, we disclose non-GAAP SG&A expenses, non-GAAP operating income, non-GAAP pre-tax income, non-GAAP net income and non-GAAP diluted earnings per share. Non-GAAP results exclude amortization of intangible assets related to acquisitions, changes in fair value of contingent consideration, acquisition and divestiture costs, restructuring costs, impact of Divestitures and other non-GAAP adjustments. These year-over-year metrics include the translation impact of changes in foreign currency exchange rates. These metrics are useful in assessing and understanding our operating performance, especially when comparing results with previous periods or forecasting performance for future periods. Below we provide a non-GAAP reconciliation of the aforementioned metrics adjusted for the costs and charges mentioned above:

Quarter ended December 31, 2022
GAAP Measure Intangible amortization expense Acquisition and divestiture costs
Tax recovery(a)
Non-GAAP measure
(in thousands, except per share data)
SG&A expenses $ 69,074 $ — $ — $ 2,858 $ 71,932
Operating income 39,432 4,150 — (2,858) 40,724
Pre-tax income 36,192 4,150 — (2,858) 37,484
Net income 25,734 3,093 — (1,886) 26,941
Diluted EPS $ 1.01 $ 0.12 $ — $ (0.07) $ 1.06
Quarter ended December 31, 2021
GAAP Measure Intangible amortization expense Acquisition and divestiture costs Tax recovery Non-GAAP measure
(in thousands, except per share data)
SG&A expenses $ 69,161 $ — $ 53 $ — $ 69,214
Operating income 31,498 4,447 (53) — 35,892
Pre-tax income 30,409 4,447 (53) — 34,803
Net income 23,152 3,347 (53) — 26,446
Diluted EPS $ 0.89 $ 0.13 $ — $ — $ 1.02
~~(a)Recovery of prior period withholding taxes in Brazil~~


	Quarter ended March 31, 2023
	GAAP Measure		Intangible amortization expense		Acquisition and divestiture costs		Tax recovery		Non-GAAP measure
	(in thousands, except per share data)
SG&A expenses	$	70,669	$	—	$	—	$	—	$	70,669
Operating income	34,279		4,170		—		—		38,449
Pre-tax income	29,913		4,170		—		—		34,083
Net income	21,221		3,109		—		—		24,330
Diluted EPS	$	0.83	$	0.12	$	—	$	—	$	0.96

	Quarter ended March 31, 2022
	GAAP Measure		Intangible amortization expense		Acquisition and divestiture costs		Tax recovery		Non-GAAP measure
	(in thousands, except per share data)
SG&A expenses	$	66,522	$	—	$	—	$	—	$	66,522
Operating income	32,917		4,457		—		—		37,374
Pre-tax income	32,570		4,457		—		—		37,027
Net income	23,526		3,353		—		—		26,879
Diluted EPS	$	0.91	$	0.13	$	—	$	—	$	1.04


		Six months ended December 31, 2022								Nine months ended March 31, 2023
		GAAP Measure		Intangible amortization expense		Acquisition and divestiture costs		Tax recovery(a)			Non-GAAP measure			GAAP Measure		Intangible amortization expense		Acquisition and divestiture costs		Tax recovery(a)		Non-GAAP measure
		(in thousands, except per share data)								(in thousands, except per share data)
SG&A expenses	SG&A expenses	$	140,667	$	—	$	—	$	2,858		$	143,525	SG&A expenses	$	211,337	$	—	$	—	$	2,858	$	214,195
Operating income	Operating income	74,319		8,391		—		(2,858)			79,852		Operating income	108,598		12,561		—		(2,858)		118,301
Pre-tax income	Pre-tax income	68,475		8,391		—		(2,858)			74,008		Pre-tax income	98,388		12,561		—		(2,858)		108,091
Net income	Net income	49,776		6,254		—		(1,886)			54,144		Net income	70,997		9,363		—		(1,886)		78,474
Diluted EPS	Diluted EPS	$	1.96	$	0.25	$	—	$	(0.07)		$	2.13	Diluted EPS	$	2.79	$	0.37	$	—	$	(0.07)	$	3.09

		Six months ended December 31, 2021								Nine months ended March 31, 2022
		GAAP Measure		Intangible amortization expense		Acquisition and divestiture costs		Tax recovery			Non-GAAP measure			GAAP Measure		Intangible amortization expense		Acquisition and divestiture costs		Tax recovery		Non-GAAP measure
		(in thousands, except per share data)								(in thousands, except per share data)
SG&A expenses	SG&A expenses	$	133,016	$	—	$	(30)	$	—		$	132,986	SG&A expenses	$	199,538	$	—	$	(30)	$	—	$	199,508
Operating income	Operating income	61,826		8,956		30		—			70,812		Operating income	94,742		13,413		30		—		108,185
Pre-tax income	Pre-tax income	59,839		8,956		30		—			68,825		Pre-tax income	92,410		13,413		30		—		105,853
Net income	Net income	45,225		6,740		30		—			51,995		Net income	68,751		10,094		30		—		78,875
Diluted EPS	Diluted EPS	$	1.75	$	0.26	$	—	$	—		$	2.01	Diluted EPS	$	2.66	$	0.39	$	—	$	—	$	3.06

Our primary sources of liquidity are cash flows from operations and borrowings under our $350 million revolving credit facility. Our business requires significant investment in working capital, particularly accounts receivable and inventory, partially financed through our accounts payable to vendors, cash generated from operations and revolving lines of credit. In general, as our sales volumes increase, our net investment in working capital increases, which typically results in decreased cash flow from operating activities. Conversely, when sales volumes decrease, our net investment in working capital typically decreases, which typically results in increased cash flow from operating activities.

Our cash and cash equivalents balance totaled ~~$66.4~~$37.4 million at ~~December~~March 31, ~~2022,~~2023, compared to $38.0 million at June 30, 2022, including ~~$44.3~~$31.4 million and $35.0 million held outside of the United States at ~~December~~March 31, ~~2022~~2023 and June 30, 2022, respectively. Checks released but not yet cleared in the amounts of ~~$8.9~~$7.4 million and $18.0 million are included in accounts payable at ~~December~~March 31, ~~2022~~2023 and June 30, 2022, respectively.

Our net investment in working capital increased ~~$172.8~~$123.8 million to ~~$882.3~~$833.4 million at ~~December~~March 31, ~~2022~~2023 from $709.5 million at June 30, 2022, primarily from increases in inventory and decreases in accounts ~~receivable and inventory.~~payable. Our net investment in working capital is affected by several factors such as fluctuations in sales volume, net income, timing of collections from customers, increases and decreases to inventory levels and payments to vendors. For the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, our working capital investment increased to support our ~~13.6%~~10.6% year-over-year net sales growth.

Net cash used in operating activities was ~~$75.3~~$20.5 million for the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, compared to ~~$75.4~~$45.7 million used in operating activities in the prior-year period. Cash used in operating activities for the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 is attributable to ~~increases~~a 22% increase in inventory and an 8% decrease in accounts ~~receivable, which increased 24% and 7%, respectively,~~payable compared to the beginning of the ~~six~~nine month period. Cash used in operating activities for the ~~six~~nine months ended ~~December~~March 31, ~~2021~~2022 is primarily attributable to increases in inventory and accounts receivable, which increased ~~20%~~26% and 8%13%, respectively, compared to the beginning of the ~~six~~nine month period.

The number of days sales outstanding ("DSO") was 6970 days at ~~December~~March 31, ~~2022,~~2023, compared to 68 days at June 30, 2022 and 6469 days at ~~December~~March 31, ~~2021.~~2022. The increase in DSO for the quarter ended ~~December~~March 31, ~~2022~~2023 is primarily due to increased net receivables, driven by ~~project specific~~ customer terms and timing of sales near the end of the reporting period. Inventory turned ~~5.0~~4.1 times during the quarter ended ~~December~~March 31, ~~2022,~~2023, compared to ~~5.1~~5.0 times for previous quarter ended ~~September 30,~~December 31, 2022 and ~~5.7~~5.1 times in the prior-year quarter ended ~~December~~March 31, ~~2021.~~2022. The decrease in inventory turns for the quarter ended ~~December~~March 31, ~~2022~~2023 is primarily due to increased ~~average~~ inventory.

Cash used in investing activities for the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 was ~~$4.3~~$6.5 million, compared to ~~$0.5~~$0.2 million ~~provided by~~used in investing activities in the prior-year period. Cash used in investing activities for the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 represents capital expenditures, primarily for IT investments. Cash provided by investing activities for the ~~six~~nine months ended ~~December~~March 31, ~~2021~~2022 represents proceeds from the sale of our discontinued operations, partially offset by capital expenditures.

We have a multi-currency senior secured credit facility with JPMorgan Chase Bank N.A., as administrative agent, and a syndicate of banks (as amended, the “Amended Credit Agreement”). On September 28, 2022, we amended and restated our Amended Credit Agreement, which includes (i) a five-year, $350 million multicurrency senior secured revolving credit facility and (ii) a five-year $150 million senior secured term loan facility. The Amended Credit Agreement extended the credit facility maturity date to September 28, 2027. In addition, pursuant to an “accordion feature,” we may increase our borrowings up to an additional $250 million, subject to obtaining additional credit commitments from the lenders participating in the increase. The Amended Credit Agreement allows for the issuance of up to $50 million for letters of credit. Borrowings under the Amended Credit Agreement are guaranteed by substantially all of our domestic assets and our domestic subsidiaries. Under the terms of the revolving credit facility, the payment of cash dividends is restricted. We incurred debt issuance costs of $1.4 million in connection with the amendment and restatement of the Amended Credit Agreement. These costs were capitalized to other non-current assets on the Condensed Consolidated Balance Sheets and added to the unamortized debt issuance costs from the previous credit facility.

Loans denominated in U.S. dollars, other than swingline loans, ~~shall~~ bear interest at a rate per annum equal to, at our option, (i) the adjusted ~~Term~~term SOFR or adjusted daily simple SOFR plus an additional margin ranging from 1.00% to 1.75%, depending upon our ratio of (A) total consolidated debt less up to $30 million of unrestricted domestic cash to (B) trailing four-quarter consolidated EBITDA measured as of the end of the most recent year or quarter, as applicable, for which financial statements have been delivered to the Lenders (the “leverage ratio”); or (ii) the alternate base rate plus an additional margin ranging from 0% to 0.75%, depending upon our leverage ratio, plus, if applicable, certain mandatory costs. All swingline loans denominated in U.S. dollars ~~shall~~ bear interest based upon the adjusted daily simple SOFR ~~floating daily,~~ plus an additional margin ranging from 1.00% to 1.75%, depending upon our leverage ratio, or such other rate as agreed upon with the applicable swingline lender. The adjusted term SOFR and adjusted daily simple SOFR include a fixed credit adjustment of 0.10% over the applicable SOFR reference rate. Loans denominated in foreign currencies ~~shall~~ bear interest at a rate per annum equal to the applicable benchmark rate set forth in the ~~New~~Amended Credit Agreement plus an additional margin ranging from 1.00% to 1.75%, depending upon our leverage ratio plus, if applicable, certain mandatory costs.

During the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, our borrowings under the credit facility were U.S. dollar loans. The spread in effect as of ~~December~~March 31, ~~2022~~2023 was 1.50% for LIBOR and SOFR-based loans and 0.50% for alternate base rate loans. The commitment fee rate in effect at ~~December~~March 31, ~~2022~~2023 was 0.25%. The Amended Credit Agreement includes customary representations, warranties and affirmative and negative covenants, including financial covenants. Specifically, our Leverage Ratio must be less than or equal to 3.50 to 1.00 at all times. In addition, our Interest Coverage Ratio (as such term is defined in the Amended Credit Agreement) must be at least 3.00 to 1.00 at the end of each fiscal quarter. In the event of a default, customary remedies are available to the lenders, including acceleration and increased interest rates. We were in compliance with all covenants under the credit facility at ~~December~~March 31, ~~2022.~~2023.

The average daily outstanding balance on the revolving credit facility, excluding the term loan facility, during the ~~six~~nine month periods ended ~~December~~March 31, 2023 and 2022 ~~and 2021~~ was ~~$219.5~~$227.2 million and ~~$57.1~~$60.0 million, respectively. There was ~~$120.0~~$190.8 million and $214.2 million available for additional borrowings as of ~~December~~March 31, ~~2022~~2023 and June 30, 2022, respectively. There were no letters of credit issued under the multi-currency revolving credit facility at ~~December~~March 31, ~~2022~~2023 or June 30, 2022. Availability to use this borrowing capacity depends upon, among other things, the levels of our Leverage Ratio and Interest Coverage Ratio, which, in turn, will depend upon (1) our Credit Facility Net Debt relative to our Credit Facility EBITDA and (2) Credit Facility EBITDA relative to total interest expense, respectively. As a result, our availability will increase if EBITDA increases (subject to the limit of the facility) and decrease if EBITDA decreases. While we were in compliance with the financial covenants contained in the Credit Facility as of ~~December~~March 31, ~~2022,~~2023, and currently expect to continue to maintain such compliance, should we encounter difficulties, our historical relationship with our Credit Facility lending group has been strong and we anticipate their continued support of our long-term business.

We believe that our existing sources of liquidity, including cash resources and cash provided by operating activities, supplemented as necessary with funds under our credit agreements, will provide sufficient resources to meet our present and future working capital and cash requirements for at least the next twelve months. We also believe that our longer-term working capital, planned expenditures and other general funding requirements will be satisfied through cash flows from operations and, to the extent necessary, from our borrowing facilities.

Critical accounting policies are those that are important to our financial condition and require management's most difficult, subjective or complex judgments. Different amounts would be reported under different operating conditions or under alternative assumptions. See Management's Discussion and Analysis of Financial Condition and Results from Operations in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 for a complete discussion.

An evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") of the effectiveness of our disclosure controls and procedures at ~~December~~March 31, ~~2022.~~2023. Based on that evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures are effective at ~~December~~March 31, ~~2022.~~2023. During the quarter ended ~~December~~March 31, ~~2022,~~2023, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

The Company ~~and our subsidiaries are,~~is, from time to time, ~~parties~~party to lawsuits arising out of operations. Although there can be no assurance, based upon information known to us, we believe that any liability resulting from an adverse determination of such lawsuits would not have a material adverse effect on our financial condition or results of operations. For a description of our material legal proceedings, see Note 12 - Commitments and Contingencies in the notes to the condensed consolidated financial statements, which is incorporated herein by reference.

We regularly maintain cash balances at banks and other financial institutions that would exceed any applicable Federal Deposit Insurance Corporation (“FDIC”) insurance limits. Should events, including limited liquidity, defaults, non-performance or other adverse developments occur with respect to the banks or other financial institutions that hold our funds, or that affect financial institutions or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, our liquidity may be adversely affected.

If any banks or financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our operations may be negatively impacted, including our ability to access cash, cash equivalents or investments. In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources and could have a material adverse effect on our business, financial condition or results of operations.

Period
Total number of shares purchased (1)
Average price paid per share Total number of shares purchased as part of the publicly announced plan or program Approximate dollar value of shares that may yet be purchased under the plan or program
October 1 - 31, 2022 2,177 $ 26.41 — $ 81,814,854
November 1 - 30, 2022 52,230 $ 32.05 — $ 81,814,854
December 1 - 31, 2022 134 $ 30.70 — $ 81,814,854
Total 54,541 —


Period	Total number of shares purchased (1)	Average price paid per share	Total number of shares purchased as part of the publicly announced plan or program	Approximate dollar value of shares that may yet be purchased under the plan or program









January 1 - 31, 2023	—	—	—	$ 81,814,854
February 1 - 28, 2023	267,202	$ 31.03	267,202	$ 73,523,576
March 1 - 31, 2023	92,449	$ 29.37	89,267	$ 70,901,804
Total	359,651		356,469


Exhibit Number			Description

10.1			Amendment No. 18 to Cisco Nonexclusive Value Added Distributor Agreement

10.2			Amendment No. 19 to Cisco Nonexclusive Value Added Distributor Agreement

31.1			Certification of the Chief Executive Officer, Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification of the Chief Financial Officer, Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1			Certification of the Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2			Certification of the Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101			The following materials from our Quarterly Report on Form 10-Q for the quarter ended ~~December~~March 31, ~~2022,~~2023, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets at ~~December~~March 31, ~~2022~~2023 and June 30, 2022; (ii) the Condensed Consolidated Income Statements for the quarters and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021;~~2022; (iii) the Condensed Consolidated Statements of Comprehensive (Loss) Income for the quarters and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021;~~2022; (iv) the Condensed Consolidated Statements of Shareholder's Equity at ~~December~~March 31, ~~2022~~2023 and ~~2021;~~2022; (v) the Condensed Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021;~~2022; and (vi) the Notes to the Condensed Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL

104			Cover page Inline XBRL File (Included in Exhibit 101)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class:	Trading Symbol:	Name of exchange on which registered:
Common stock, no par value	SCSC	NASDAQ Global Select Market


Class						Outstanding at ~~February~~May 1, 2023
Common Stock, no par value per share						~~25,349,304~~24,899,757 shares


		Page #
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	5
	Condensed Consolidated Balance Sheets (unaudited) at ~~December~~March 31, ~~2022~~2023 and June 30, 2022	5
	Condensed Consolidated Income Statements (unaudited) for the Quarters and ~~Six~~Nine Months Ended ~~December~~March 31, ~~2022~~2023 and ~~2021~~202 2	6
	Condensed Consolidated Statements of Comprehensive Income (unaudited) for the Quarters and ~~Six~~Nine Months Ended ~~December~~March 31, ~~2022~~2023 and ~~2021~~202 2	7
	Condensed Consolidated Statements of Shareholders' Equity (unaudited) for the Quarters and ~~Six~~Nine Months Ended ~~December~~March 31, ~~2022~~2023 and ~~2021~~202 2	8
	Condensed Consolidated Statements of Cash Flows (unaudited) for the ~~Six~~Nine Months Ended ~~December~~Ma rch 31, ~~2022~~2023 and ~~2021~~202 2	10
	Notes to Condensed Consolidated Financial Statements (unaudited)	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	43

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 6.	Exhibits	4546

SIGNATURES		4647


	Net Identifiable Intangible Assets
	(in thousands)
Balance at June 30, 2022	$	84,427
Amortization expense	~~(8,391)~~(12,561)
Foreign currency translation adjustment	~~(86)~~326
Balance at ~~December~~March 31, ~~2022~~2023	$	~~75,950~~72,192


	~~December~~March 31, ~~2022~~2023
Weighted-average remaining lease term	~~3.96~~3.80 years
Weighted-average discount rate	~~3.98~~4.30	%


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	June 30, 2022		Amounts Charged to Expense		Write-offs		Other (1)		December 31, 2022
	(in thousands)
Trade accounts and current notes receivable allowance	$	16,806	$	33	$	(2,842)	$	(644)	$	13,353


		ScanSource, Inc.

Date:	~~February 7,~~May 9, 2023	/s/ MICHAEL L. BAUR
		Michael L. Baur
		Chairman and Chief Executive Officer (Principal Executive Officer)


Date:	~~February 7,~~May 9, 2023	/s/ STEVE JONES
		Steve Jones
		Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer)