All right. Thanks everybody for joining. Hopefully you are well-fed and happy after lunch. My name is Adam Tindle, and this is part of my supply chain coverage here at Raymond James. Very happy to have the team here from ScanSource. Mike and I are going to do a fireside chat. Mike Baur, Chairman and CEO of ScanSource, and of course, Mary Gentry, here as well. So again, you know, format here is going to be fireside chat, just open-ended. If anybody does have questions throughout, please feel free to throw in and raise your hand. But with that, Mike, why don't we start? Again, thanks for being here. Sure. You know, ScanSource is a company that, you know, we've followed for a long time at Raymond James, obviously, but has gone through a lot of evolution, especially here more recently. So those that are maybe revisiting the story or maybe have heard the name in the past and taking another look, if you could just take us through some of the history and the evolution of the company in particular would be great. Great, Adam. Thanks, thanks for having us today. Yeah, the transformation of the company started in 2016, but before that, going back, you know, 30 + years, we were a typical technology hardware distributor, trying to figure out how do you live off of single-digit margins and satisfying suppliers and our channel partners. And we did. We thought a pretty good job of creating value more than just inventory and price. And so we had many years where we would get challenged at conferences like this about maintaining 10% gross margins. And now. Oh, I remember that. It was always about, hey, when, what will happen, Mike, when another player comes in? Anyway, so we were able to keep those double-digit 10% margins for a long time. Oh, because they, for context, they were operating off of about half the program, 6% or so. And we thought they were going to commoditize that. Of course. And you were wrong. Fair. Along the way, we also felt like we could do better in some cases. We figured out that we're working with primarily the difference in what ScanSource has done for a long time in tech distribution versus the larger, what they used to call themselves broadline distributors, is we were very narrowly focused on subsets of the channel. We were working with point of sale VARs, who were not important to Tech Data, Ingram, SYNNEX at the time. We would work with telecom VARs. We would pick these channels that were very segmented, and they wanted a distributor like us that really understood not only the world they sold into, the end user communities like retail, like this telecom channel, but also they wanted to know how do they work with the suppliers well. And so we became the first, for many of these companies, the first distributor with the suppliers. First distributor, we had to explain what two-tier was, why we deserve a margin. We had to explain why we weren't going to get disintermediated one day, why we bring value to the suppliers and value to the channel. So we then, in 2016, we were at this really inflection point about how do we sell more to our partner community because the end users were starting, the same end users were selling retail products or mobility products or communications or security products, were buying other cloud-type products. And we were not in the cloud in 2016 in any way at all. None of our suppliers had a cloud strategy, even though we had the biggest telecom suppliers out there, the Avayas of the world, the Mitels, the ShoreTels, and they were all saying they were going to do a cloud strategy. Well, we all know what happened, and so we hung in there, but meanwhile, in 2016, we found there was this whole discrete channel of partners called agents, and we didn't know who they were, but these were former telecom companies selling to end users again. So it's a channel deal, but they don't sell. They basically advise or recommend, and then the supplier bills the end user. So it's recurring revenue. You get paid a commission, both the distributor and the sales partner, and the commission is not one time, like we thought it was over years. So as long as the end user was still buying that Comcast circuit, that Verizon data plan, the channel got paid and the distributors got paid. And so we found this really cool, adjacent market with about 4,000 or so partners that we could sell to that were not VARs. They didn't even like the word VAR. They didn't want to be called that. They didn't want to be called a customer either. They wanted to be called a partner. So we had to learn a whole new lingo. So in 2016, so now coming up on 10 years, we had this very unique additional channel that we added. We added to our offers. And we left this business, I would say, alone. We acquired it in 2016. We paid a multiple at the time. That was much, much, much higher than we were traditionally buying distributors for, but that's because it was recurring revenue at high EBITDA margins, very light working capital, where we got the money and paid it out to the channel, we didn't have any accounts receivable, no inventory, so this was like, you know, a gift that we found, and then it was, how do we, how do we add that to what we're doing, and so now, nine and a half years later, we've finally found ways to start having our VAR channel sell our recurring revenue products, and we're just now starting to figure out, can we get agents to also want to sell hardware? Because the idea that we're talking about now is called convergence. At least we're calling it convergence, where the end user's buying hardware still today, mobile devices, security cameras, whatever, and they're adding connectivity, and we believe that the end user would like to buy all that if they can from a single partner. That's the idea. Well, and that's going to bridge into the next question. You talked about the convergence of hardware, software, and services. This would then maybe just elaborate on how that convergence is shaping your strategic direction. Yeah, what we're learning is that we have to become much more knowledgeable about what the end users want to do when they acquire technology. And when we say we believe they want to deal in this world of convergence, it's the reality that the hardware is always connected to the internet, to some circuit somewhere. And so the more we've spent time talking to our partners about what do their customers want to buy or what do you sell them, it's clear that many of our partners aren't aware that there are other partners in that end user account. So we're spending a lot of our time understanding how do we enable these different partner types to sell what we're calling, again, this converged solution. And I hate the word solution, but the idea is how do we sell more to the same end user that a partner, whether you're a VAR and agent, already have a relationship with. And we, we just, and we've migrated, we in this industry of agents have migrated from the word agent a few years ago to trusted advisor. And we migrated from master agent, which was the old distributor model in this new world of Intelisys and to something called a TSD, which is a technology services distributor. So anyway, people keep making stuff up to make it seem like we're doing more and we're more valuable. Some of it's just, just because that's what people want to hear. The reality is we're still a distributor of hardware and software services and connectivity, which is really the point of all this, Adam, is we believe we can put it all together for our channel, and then our channel is still going to sell that to the end user. And maybe just talk about how that's changed the competitive environment as you've gotten into this kind of converged different type of solution. Who are the main competitors that you run into and what's the competitive advantage for ScanSource? What's fascinating is it's generally two partners or more, and we may only be working with one of them. And so they may be a partner that's buying from a distributor of hardware, or it could be one of our Intelisys competitors. And we have not been working close enough to understand what products does the end user buy that you're not selling. So we're really having to ask our channel partners, hey, talk to your end users. And what we'd like to do, what we'd like to create, and we talked about this a year and a half ago, is we'd like to arm our channel partners with a tool. There's technology out there now that lets a partner, with the end user's permission, look at their entire installed network and every device that's on the network, all the software, all the SaaS products on the network, how many Microsoft licenses do they have? Because almost all of these partners and the end users have to know this today because of the way it works. And so if you can start as a channel partner understanding everything that's being sold into your end user and you're a trusted advisor, which is the term of art, trusted advisor, although we're changing it to technology architects, but trusted advisor, we think the customer will say, "Sure, I'll buy that from you. I'm already buying the rest of this. I didn't know you could provide that." So we're doing a big education of this is possible. We can help you if you don't know how to make the introduction into the account. We can help you with what we're calling advanced technology support engineers. So we can have our people go to an end user with our channel partner to help them. Interesting. This will be because I want to tie this into the financial profile and what this means for the stock, and you know, as investors sort of think about ScanSource in terms of an Excel model, so this would be more of a Steve question, but I know you'll do a good job with it, and shout out to Steve if he's listening. You do have two segments that have very different sales models, margin profiles, and working capital requirements. Maybe we'll just kind of start by outlining the segments, what they are, you know, and then, you know, sort of the financial profiles, and how they complement each other. Sure. A year and a year and some change ago, we decided to more clearly explain our business with new segments. And before that, there were both hardware segments that had some Intelisys in them if they were in communications. And we found that our story was harder to understand for investors. And frankly, it was intentional on our part not to, not to not give investors what they wanted, but we didn't want our competitors to know what we were doing. And so we decided a year and a half ago, so we've now gone through a whole fiscal year of having a segment that we call specialty hardware or specialty technologies, which has some recurring revenue in it, but it's recurring revenue aligned with and sold with the hardware generally from the same suppliers. And so that business unit has traditional hardware margins, gross margins that are similar to what we used to have. We have EBITDA margins that are in the 3%-4% range. So people will understand that. On the Intelisys side, however, we've now got this Intelisys plus what we call Advisory. We'll talk about that in a minute, this Resourcive company we acquired. But over here, it's almost all recurring revenue with some professional services thrown in. And think about it as very low contributor to the top line. This is a 100% netted down revenue margin business with some slight margins lower because of professional services. But this business is a recurring revenue that has very high gross margins, almost 100%, and EBITDA margins between 30%-40%. So much different profile. And again, we didn't give, before last year, we didn't give this kind of detail on the EBITDA. So we believe that that's been kind of hidden within our overall consolidated metrics before last year. We wanted investors to really understand this is a very, very different picture. When you look at the consolidated view now and you see our EBITDA margins that have now gone to 4%-5% and try to figure out why, you got to look at that Intelisys Advisory segment as really the contributor. It's now 25% or so of our gross profits dollars. And we believe looking at gross profit dollars and the growth of gross profit dollars going forward is really the best metric to see, are we growing successfully with this model. Yeah, and I think that's been consistent. We actually had insight earlier. They were talking about gross profits. So I think that's, you know, kind of becoming universal across the channel, which makes a lot of sense with the net revenue. I guess the last part of that question was how they complement each other. And I'm asking that because, you know, those are different financial profiles. And, you know, I'm sure an investor could take a look at that and maybe at some point in time, depending on where the stock is in valuation, argue, hey, there's, you know, still some hidden value to unlock here, right? You know, might make sense to split these up at some point, right? So maybe just talk about how they complement each other and then the idea of, you know, being together versus separate. Yeah, we, of course, have been looking at that ourselves for so long, and we've been trying to make sure we understand why an end user would want to buy these things together. And we believe that's where you've got to look at is the end users of these devices are also buying this other, whatever you want to call it, this connectivity, this SaaS, they're buying it. And it just hasn't been sold by a single distributor or single partner. So we're kind of a unique distributor in this case. So none of our Intelisys competitors sell hardware. And we have very few and very little of the hardware distributors selling the recurring revenue the way we do it, the way the, and remember the big difference is the supplier's billing the end user, paying a commission. That's not the typical distribution model where the distributor takes title, the partner takes title, the partner invoices the end user, they have to collect the AR. So that's a vastly different business model, which means for us, there's almost no working capital deployed. It's a very predictable, predictable revenue stream, which means we know in that Intelisys business model, we can more accurately tell our investors how much we think we're going to do in that business because when you sell it and then it's billed by a supplier, it may take six months to nine months before the invoice is actually paid by the end user until it comes back to the channel. So there's a big time gap from an order being sold, unlike in distribution, where we would sell it, bill it, and have revenue immediately and then collect the AR. This Intelisys business is six to nine months out there, sometimes longer, and so that's just a different dynamic. What we believe though is the VARs that are selling in this new model love it because they don't have the working capital. They don't have the accounts receivable. They love the model, but they're having to learn how do they pay their salespeople. If you, the compensation issues for a channel partner, how do you pay a sales rep who's used to selling hardware, again, on a transaction business, one-time sale generates a gross margin of 20%, and the sales guy gets X% of that. Now it's having to be paid ratably over a three-year time period. So it's a much different financial model just for paying salespeople in the channel. We've been educating our channel on that. We now have hundreds and hundreds of VARs that have made the move. We're still challenged to find these Intelisys agents that will agree to sell hardware. We think that's the next place for us to go, and we think that's where growth could really come from this, so we're going to, we're going to experiment. We're taking our communication, we call it Communication Sales Team. They've been selling Avaya, Mitel, and ShoreTel, and then they've been given a lead to one of our Intelisys salespeople to sell the RingCentral or the Five9 or Genesys or any of those. We're going to have the same sales team sell both starting next year, and so we're going to, we're going to pioneer it within ScanSource to say, can we have one sales team sell both? And then we can show our partners, we're going to start with this communication business because we think that's the right thing to do. How do you think that impacts productivity metrics of the salespeople? We really think the productivity will be better because this Intelisys sales team today, they really don't know how to sell the hardware piece. We think the hardware guy selling the Intelisys is much easier. So we think the productivity will go up. We really think what'll happen too is we're going to sell more. We think this is going to be a driver of revenue. We think that now the end user is going to hear the total solution, this convergence idea from someone who's been working with them. We have partners who have been with us for 10 and 15 years, 20 years selling hardware for phone systems. And we now will have a team that can also sell all the UCaaS, all the CCaaS, all the advanced technologies they want. To do that though, we got to have our own engineers on board who can help create these solutions. Interesting. I want to bridge into some macro and kind of spending commentary. Obviously, you're a scaled distributor with access to a lot of different markets and verticals and products. So, just curious what you're experiencing from an overall demand perspective over the past few quarters? Yeah, I think we've been, frankly, disappointed, and part of it is because at least what we believe has happened is the large orders that we typically talk about on our quarters have been much, much smaller, and we believe the orders are now being broken up into smaller chunks, and we believe, again, this is all just from what we can see, is that the IT budgets, a lot of it being deployed, as we all know, with AI projects, that they're unwilling to take these long, multi-month or multi-year rollouts of hardware. So we think that has gone to where they're only buying what they need for maybe the next quarter, so we think it's chopped these large projects into much smaller pieces, so for us, we've seen that for the last two and a half, three quarters. We expect that will change. But again, with all the stories we're all reading and hearing about with the budgets for AI, I think that's putting some squeeze on the large deals. We don't believe there's a lack of ROI for these projects. And by the way, the end user still wants the same discount, even if they only take a fourth of the rollout now. They still want the same price, same discount. And so that eventually, you know, becomes a challenge too. But we've seen our gross margins for hardware go up as our investors have because these large deals have become fewer in number at the same time. One of the trends, and this will be off script, but just something that we've been hearing at the conference is the vendors themselves dealing with rising cost of memory and now exploring price increases in a bigger way. Maybe to speak to, you know, is that something that ScanSource sees? What does, you know, price increases mean for the business model? Wouldn't be the first time, obviously, you've seen that. For investors who are gearing up for that. Price increases have been a factor now for a couple of years because of the tariffs. We have seen it generally help the channel. Typically, the channel makes more money. And the distributors, especially if we're already buying inventory at the lower price, sell at the higher price. We actually have seen an increase in margins. What I worry about is the impact on demand. I do think keep raising prices, it's going to have an impact on demand. And I think all of our manufacturers are nervous about that because we've seen significant price increases. In my 33 years doing this, I've never seen a period of time where the prices go up, not down. I mean, we're used to prices going down on a regular basis, not going up. I do think it's going to be challenging. I think most manufacturers have been able to pass through most of the price increases to the channel, and the channel has passed them 100% through to the end user, which means at some point end users will slow down their buying. And we are certainly aware that that could happen. We're not hearing that yet, but that's our concern. Okay. Have you thought about that from like a working capital standpoint? You know, does it make sense to you talk about, you know, selling through lower cost inventory? Is that something that has been top of mind for ScanSource? Yes. I think managing inventory, we've become so much better at it since COVID, since the supply chain crisis. We have gotten much more of this cash culture at ScanSource. We are buying the inventory for what we really believe we need, not based on a price change coming or based on a manufacturer offering us additional incentives for whatever reason. We've just become much more of, let's get our inventories to where we have what we need. And then we'll, if we miss, if we miss some on the price increases, we're okay with that. Back in the day, you were one of the folks that were telling us, hey, Mike, there's this trade-off, you know, are you guys getting paid enough? You know, and even where we are today financially with a very strong balance sheet, as investors can see, we have the ability to buy all the inventory we would want to buy. We're buying what we believe we need to sell. Okay. Perfect. Yeah. We're going to talk about financial metrics here in a second, but just wrapping up on the macro. I think as investors are starting to, you know, go to calendar year, and I know your fiscal year is a little different, but calendar year end in 2025, and they are contemplating 2026 from an overall technology spending standpoint. What technology trends support a growth outlook as we enter 2026? You know, we've got a couple of areas in our business that we continue to talk about on our investor calls, our physical security business. So again, think IP-enabled cameras. There's cameras everywhere. We all know that. We're in New York City. My gosh, even as we all know, they chase, track the license plates to get their fees if you travel between 60th and whatever that is. I mean, that's amazing. So all of the technology and surveillance and video and all of the technology that keeps happening there, that's a huge growth area for our business. And then our overall networking business, as we call it, including we're excited about the HP finally closing on the Juniper deal. We think that's upside for us. We met recently with the HP team, which is the old Aruba team that we know very well. And we think, again, our everything we sell is connected to the network. And so we've got all of our sales team, all of our salespeople at ScanSource can sell networking. So that's another just huge growth. And of course, you got a new Wi-Fi standard every year, which is great. Again, we love to have Wi-Fi 6, 7, and 8. All that's going to be upside in the macro. Yeah. It'll be interesting because this year has been very focused on devices and PCs, which is not a category that you really focus on. So if we shift maybe away from that and towards network or another area, obviously that'd be beneficial. Agreed. Yep. Let's just dive into financial metrics here for a sec. Just would love to hear some of the key financial metrics that management is focused on and particularly how those have evolved over the years. We put out a new three-year group of metrics. Really the key one for us right now is gross profit dollar growth we talked about earlier: 5%-6% growth, three-year goals. We really believe that's important. We really believe having EBITDA targets where we can get our EBITDA margins growing. We believe that's important to the company. We believe we're in this new for us cash flow culture where we're making sure we are generating cash flow. We've got metrics around that in our three-year goals. We've even kind of went away from it for a little while. We've again reemphasized ROIC. We believe again this return metric is something that you can hold us accountable to. We really have this combination of we need the gross profit dollar growth to be the symbol for how we're doing in the markets we're in. By the way, one of the things that we think we need to do a better job of is identifying, and we're still trying to get some help on this, identifying the size of the TAMs that we now believe we're entering with some of our new solutions. We believe our TAM has grown, but we haven't been able to communicate that as well as we'd like. We've got a few charts in our current investor presentation. I would suggest everybody go take a look at it. Our ability to grow our TAM will drive our gross profit dollar growth. And so we're going to be spending a lot more time talking about that with investors: where are some of the areas we can grow beyond networking, beyond security in the Intelisys world. That means advanced technologies, signing new, new suppliers like Sophos, Trustifi. We just signed a deal with Square. And so we've got lots of new suppliers coming to us, including through our new business unit we call a Launch Point, where we're trying to find suppliers who are new to the channel. So we really think that's going to change the profile of our business if we can bring in these new suppliers. Good. And on those KPIs, obviously you talked about cash flow, cash culture. Talk about capital allocation priorities more broadly and how you'll use the cash generated by the business this year and optimal capital structure as well. Probably more of a Steve question, but I know you can. Yeah. Well, we have tried to be clear that we're still repurchasing shares and we're doing M&A. We announced an acquisition last quarter, small one, DataXoom, another product that lets us put SIM cards into mobile devices and sell network data. And by the way, the AT&Ts, Verizons, T-Mobile, they love it. They don't have enough channels that sell just data. So this isn't voice. These are mobile devices, you know, like the Zebra mobile devices, the Honeywell mobile devices that, where someone needs connectivity either all the time or some of the time. And it's recurring revenue. And so every time, every month that partner will get a commission and we will as well. So we love that business model for us. So I really think when we look at our business, we've got a lot of good things happening. I really think M&A is one that we haven't been able to really talk enough about yet, but we do have a pipeline. We're not talking about something that's massive transformational, but we are looking at incremental that will help us drive revenue. Got it. Well, we're wrapping up here, I guess, we've covered a lot of topics and the transformation and stuff. If we were to try to boil it down to investors who may be revisiting the story here and on the webcast, what, what would be the key message that you want to leave with investors as they think about ScanSource? It's been fascinating for me to see all the private equity investments in the Intelisys channel. And I don't think that gets enough attention because there are investors just flocking into that space, and which makes our stock and our Intelisys business look like quite a deal because we believe there's going to be additional investments made at 15-18 times EBITDA in the Intelisys community at large. And so we really believe that's the part that we're not seeing yet, that investors aren't seeing the value we have with the contribution margin we're making from Intelisys. We think it's very undervalued. Exciting times ahead and a good, good opportunity to buy your stock since it's so undervalued, right? I didn't have to throw that in there. Mary knows. Thank you. We'll leave it there. Thanks, Mike. Thanks, Adam. Appreciate it.