ScanSource NASDAQ: SCSC reported a strong fiscal fourth quarter and full-year 2026, citing improving demand across its technologies, the return of larger deals and growth in recurring revenue. The company also announced a definitive agreement to acquire MicroAge, a move management said would expand its technology offerings, services capabilities and reach into end-user markets.
Chairman and Chief Executive Officer Mike Baur said fourth-quarter sales increased 17% year over year, while full-year sales rose 6%. He attributed the performance to execution by the company’s sales, engineering, financial services and operations teams, as well as demand from channel partners for technologies including physical security, mobility, networking, customer experience, cloud compute and connectivity.
“Our business has returned to growth, and we believe we’re at the beginning of a stronger growth trajectory,” Baur said.
Fourth-Quarter and Full-Year Results
Chief Financial Officer Steve Jones said fourth-quarter net sales and gross profit posted mid-teen year-over-year growth. Non-GAAP earnings per share rose 43% to a company record of $1.46.
For fiscal 2026, product net sales increased 5.9%, while recurring revenue increased 10.6%. Consolidated gross profit rose 7%, at the high end of the company’s stated range, and recurring revenue accounted for 34% of consolidated gross profit.
- Free cash flow totaled $114 million for the year, representing 124% conversion of non-GAAP net income.
- ScanSource ended the fourth quarter with $88 million in cash and a net debt leverage ratio of approximately zero times trailing 12-month adjusted EBITDA.
- Fourth-quarter share repurchases totaled $27 million, bringing full-year repurchases to $98 million.
- As of June 30, 2026, approximately $121 million remained under the company’s share repurchase authorization.
- Adjusted return on invested capital was 18.2% in the fourth quarter and 14.7% for the full year.
In the Specialty Technology Solutions segment, fourth-quarter net sales rose 18% year over year, driven by broad-based hardware growth in North America. Gross profit increased 16% to $94 million, while adjusted EBITDA climbed 28% to $36.7 million. The segment’s adjusted EBITDA margin was 3.96%.
For the full year, Specialty Technology Solutions revenue rose 6% to $3.12 billion and gross profit increased 8.4% to $338 million. Approximately 15% of the segment’s gross profit came from recurring revenue.
In the Intelisys & Advisory segment, fourth-quarter net sales increased 7% and gross profit rose 8%. Adjusted EBITDA was $9.4 million, producing an adjusted EBITDA margin of 36.4%. Full-year segment revenue increased 3.1% to $101 million, while Intelisys net billings reached approximately $2.88 billion.
MicroAge Acquisition
Management said the planned MicroAge acquisition, expected to close by the end of ScanSource’s fiscal first quarter, would add exposure to cloud, cybersecurity, data center and artificial intelligence technologies. Baur also said MicroAge would bring service capabilities including cloud migration and management, cybersecurity services, AI data center implementation and AI solutions development.
Baur characterized MicroAge as a company with a traditional hardware-reseller heritage that has expanded into managed and professional services. He said ScanSource sees an opportunity to scale those capabilities and make them available to its existing channel partners.
The company did not provide detailed financial information on MicroAge during the call, saying it would discuss the business further after the transaction closes and update its outlook during its fiscal first-quarter earnings report.
Addressing potential channel conflict, Baur said ScanSource believes the risk is low and intends to prioritize existing channel partners where appropriate. He noted that MicroAge serves roughly 2,500 end users and said many midmarket and enterprise customers work with multiple technology partners.
Management said discussions with certain partners and vendors ahead of the announcement were encouraging. Baur said partners were interested in gaining access to cybersecurity, data center and other services that many smaller solution providers cannot independently deliver.
Fiscal 2027 Outlook
ScanSource issued fiscal 2027 guidance excluding any contribution from MicroAge. The company expects organic revenue growth of 6% to 10%, adjusted EBITDA of $158 million to $165 million, and an adjusted EBITDA margin of 4.6% to 4.65%. It expects to generate at least $85 million in free cash flow and forecasts an effective income tax rate of 27.5% to 28.5%.
Jones said the company expects the first half of fiscal 2027 to show stronger year-over-year percentage growth than the second half because of more challenging comparisons later in the year, particularly following the strong fourth quarter.
Management said the outlook assumes continued demand strength and normal lead times, with no anticipated supply disruption. Jones said the company saw strong demand and the return of large deals during the second half of fiscal 2026.
During the question-and-answer session, Baur said physical security remained a strong category throughout the year, but demand in the second half was broad-based. He also said the company benefited from broad price increases across technologies, although he described the majority of growth as demand-driven.
ScanSource also recently added Juniper networking products through Hewlett Packard Enterprise. Baur said Juniper supply constraints are likely to limit the near-term benefit, with the offering expected to develop gradually during the first half of fiscal 2027 and potentially reach fuller availability in the second half.
In Brazil, Baur said revenue conditions remained disappointing, though the business has remained profitable. He said the company made structural and headcount changes to preserve profitability in response to market demand.
About ScanSource (NASDAQ:SCSC)
ScanSource, Inc is a global provider of technology products and solutions designed to help businesses enhance operational efficiency and customer engagement. The company specializes in the distribution of point-of-sale (POS) systems, barcode and data capture devices, networking and communications equipment, and value-added software and cloud services. By combining hardware, software and professional services, ScanSource supports channel partners in delivering end-to-end solutions across multiple industries, including retail, hospitality, healthcare and logistics.
Founded in 1992 and headquartered in Greenville, South Carolina, ScanSource has built a broad international footprint, serving customers throughout North, Central and South America as well as Europe, the Middle East and Africa.
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