SCANSOURCE INC
For the period ended Dec 31, 2024. Filed Jan 30, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2024 · Filed Jan 30, 2025
SCSC$42.78-5.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0000918965-24-000040
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-01-30.
0000918965-25-000010
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 83 previous paragraphs and 88 current paragraphs.
49 unchanged; 30 reworded; 9 added; 4 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 15 previous and 18 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
For the six months ended December 31, 2024, net sales increased $1.9 million, or 4.1%, compared to the prior-year period. Excluding the impact from foreign exchange rate fluctuations and the impact of acquisitions, adjusted net sales decreased $0.4 million, or 0.9% for the six months ended December 31, 2024.
Current report
The increase in net sales for the quarter and six months ended December 31, 2024 reflects the addition of an acquisition. The slight decrease in adjusted net sales for the quarter and six months is primarily due to lower Intelisys net sales. Quarterly net billings for Intelisys increased 5.0% over the prior-year quarter to bring annualized net billings to approximately $2.77 billion.
Current report
For the quarter ended December 31, 2024, gross profit dollars for the Specialty Technology Solutions segment increased $0.2 million, or 0.2%, compared to the prior-year quarter. A more favorable sales mix positively impacted gross profit by $12.6 million, offsetting lower sales volumes of $12.4 million. Gross profit margin increased 175 basis points over the prior-year quarter to 10.8%.
Current report
For the quarter ended December 31, 2024, gross profit dollars for the Intelisys & Advisory segment increased $0.8 million, or 3.5%, compared to the prior-year quarter. Higher sales volume, largely due to the impact of our Advisory business, increased gross profit for the quarter. Gross profit margin decreased 56 basis points compared to the prior-year quarter to 98.9%, reflecting the addition of professional services to the sale mix.
Current report
For the six months ended December 31, 2024, gross profit dollars increased $1.7 million, or 3.8%, compared to the prior-year period. Higher sales volume, largely due to the recent Resourcive acquisition, increased gross profit for the six-month period. Gross profit margin decreased 29 basis points compared to the prior-year six-month period to 99.2%, reflecting the addition of professional services to the sales mix.
Current report
The increase in amortization expense of $1.0 million and$1.1 million during thequarter and six months ended December 31, 2024, respectively, is largely due to intangible assets acquired in our recent acquisitions of Advantix and Resourcive.
Current report
We present changes in fair value of the contingent consideration owed to the former shareholders of businesses that we acquire as a separate line item in operating expenses. We recorded a fair value adjustment expense of $1.1 million in thequarter ended December 31, 2024. The expense from change in fair value of contingent consideration for the quarter and six months is largely due to therecurring amortization of the unrecognized fair value discount.
Current report
For the Intelisys & Advisory segment, operating income decreased $1.8 million, or 22.2%, and $2.1 million, or 13.9%, respectively, for the quarter and six months ended December 31, 2024, respectively, compared to the prior-year periods. Operating margin decreased to 26.6% and 27.1% for the quarter and six months ended December 31, 2024, respectively. The decrease in the quarter and six-month comparative periods is primarily driven by higher employee costs and expense related to the change in fair value of contingent consideration.
Current report
For the quarter and six months ended December 31, 2024, Corporate operating losses of $2.1 million and $7.6 million, respectively, represent restructuring, acquisition-related costs and a legal settlement incurred in December 2024.
Removed paragraphs (4)
Previous report
For the quarter ended September 30, 2024, gross profit dollars for the Intelisys & Advisory segment increased $0.9 million, or 4.1%, compared to the prior-year quarter. Higher sales volume increased gross profit dollars by $0.9 million. Gross profit margin remained consistent at 99.5%.
Previous report
For the Intelisys & Advisory segment, operating income decreased $0.2 million, or 3.5%, for the quarter ended September 30, 2024 compared to the prior-year period. Operating margin decreased to 27.5% from 29.7% for the quarter ended September 30, 2024 primarily driven by higher employee expenses for the quarter.
Previous report
For the quarter ended September 30, 2024, Corporate incurred an operating loss of $5.5 million which represents restructuring and acquisition-related costs.
Previous report
(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 September 30, 2024 into U.S. dollars using the average foreign exchange rates for the quarter ended September 30, 2023.
Reworded paragraphs (30)
Previous wording
ScanSource is a leading hybrid distributor connecting devices to the cloud and accelerating growth for customers and sales partners across hardware, SaaS, connectivity and cloud. We provide technology solutions and services from leading suppliers of mobility, barcode, POS, payments, physical security, networking, unified communications, collaboration, connectivity and cloud services to customers and sales partners located primarily in the United States, Canada and Brazil.
Current wording
ScanSource is a leading hybrid distributor connecting devices to the cloud and accelerating growth for customers and channel partners across hardware, software as a service ("SaaS"), and connectivity and cloud services. ScanSource uses multiple sales models to offer hybrid distribution solutions from leading suppliers of specialty technologies and connectivity and cloud services. The Company operates primarily in the United States, Canada and Brazil.
Previous wording
We offer hardware, SaaS, connectivity and cloud services from leading technology suppliers to customers and sales partners enabling solutions for end users' needs and challenges. 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.
Current wording
We offer hardware, SaaS, and connectivity and cloud services from leading technology suppliers to customers and channel partners enabling solutions for users' needs and challenges. 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.
Previous wording
On August 8, 2024, we completed the acquisition of Resourcive, a leading technology advisor. Resourcive delivers strategic IT sourcing solutions to mid-market and enterprise businesses, advising clients on value creation strategies that are enabled by technology.
Current wording
On August 8, 2024, we completed the acquisition of substantially all of the assets of Secure Path Networks, LLC doing business as Resourcive ("Resourcive"), a leading technology advisor. Resourcive delivers strategic IT sourcing solutions to mid-market and enterprise businesses, advising clients on value creation strategies that are enabled by technology.
Previous wording
On August 15, 2024, we completed the acquisition of Advantix, a VAR-focused, managed connectivity experience provider specializing in wireless enablement solutions.
Current wording
On August 15, 2024, we completed the acquisition of substantially all of the assets of Advantix Solutions Group, Inc. ("Advantix"), a managed connectivity experience provider specializing in wireless enablement solutions.
Previous wording
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 customers, 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 customers that solve end users’ challenges. ScanSource enables customers to deliver solutions for their end users to address changing buying and consumption patterns. Our solutions may include a combination of offerings from multiple suppliers or give our customers access to additional services. As a trusted adviser to our customers, we provide solutions through our strong understanding of end user needs. We have plans to expand our investments in the agency channel in the near term.
Current wording
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 customers, suppliers and employees through operational excellence. Our hybrid distribution strategy utilizes multiple sales models to offer hardware, SaaS, and connectivity and cloud services from leading technology suppliers to customers that solve end-users’ challenges. ScanSource enables customers to deliver solutions for their end-users to address changing buying and consumption patterns. Our solutions may include a combination of offerings from multiple suppliers or give our customers access to additional services. As a trusted adviser to our customers, we provide solutions through our strong understanding of end-user needs. We have plans to continuing expanding our investments in the agency channel in the near term.
Previous wording
We have two reportable segments, which are based on sales channels. The following tables summarize our net sales results by operating segment and by geographic location for the quarters ended September 30, 2024 and 2023:
Current wording
We have two reportable segments, which are based on sales channels. The following tables summarize our net sales results by operating segment and by geographic location for the quarters and six months ended December 31, 2024 and 2023:
Previous wording
The Specialty Technology Solutions segment consists of sales to customers primarily in the United States, Canada and Brazil through value-added resellers. For the quarter ended September 30, 2024, net sales decreased $101.7 million, or 11.9%, compared to the prior-year period. Excluding the foreign exchange positive impact and sales from divestitures and acquisitions, adjusted net sales decreased$94.2 million, or 11.1%, for the quarter ended September 30, 2024, compared to the prior-year period. The decrease in net sales and adjusted net sales for the quarter is primarily due to continued soft demand in a more cautious technology spending environment.
Current wording
The Specialty Technology Solutions segment consists of sales to customers primarily in the United States, Canada and Brazil through value-added resellers. For the quarter and six months ended December 31, 2024, net sales decreased $138.2 million, or 16.0%, and $239.9 million, or 14.0%, respectively, compared to the prior-year period. Excluding the impact from foreign exchange rate fluctuations and the impact of divestitures and acquisitions, adjusted net sales decreased$132.7 million, or 15.4%, and $226.9 million, or 13.3%, for the quarter and six months ended December 31, 2024, respectively, compared to the prior-year periods. The decrease in net sales and adjusted net sales for the quarter is primarily due to lower large deals and continued soft demand in a more cautious technology spending environment.
Previous wording
The Intelisys & Advisory segment consists of sales to sales partners primarily in the United States through technology services distributors and technology advisors. For the quarter ended September 30, 2024, net sales increased $0.9 million, or 4.1%, compared to the prior-year period. Excluding the foreign exchange positive impact and sales from acquisitions, adjusted net sales increased $0.3 million, or 1.5%, for the quarter ended September 30, 2024, compared to the prior-year period. The increase in net sales and adjusted net sales for the quarter is primarily due to higher Intelisys sales. Quarterly net billings for Intelisys increased 6% over the prior-year quarter to bring annualized net billings to approximately $2.74 billion.
Current wording
The Intelisys & Advisory segment consists of sales to channel partners primarily in the United States through technology services distributors and technology advisors. For the quarter ended December 31, 2024, net sales increased $0.9 million, or 4.0% compared to the prior-year period. Excluding the impact from foreign exchange rate fluctuations and the impact of acquisitions, adjusted net sales decreased $0.7 million, or 3.2%.
Previous wording
(b) Countries outside of Brazil represent $0.1 million, or 0.2% of sales, for the quarter ended September 30, 2024 and $2.4 million, or 2.8% of sales, for the quarter ended September 30, 2023.
Current wording
(b) Countries outside of Brazil represent $0.1 million, or 0.2% of sales, and $0.2 million, or 0.2% of sales, for the quarter and six months ended December 31, 2024, respectively. Countries outside of Brazil represent $1.8 million, or 2.0% of sales, and $4.2 million, or 2.4% of sales, for the quarter and six months ended December 31, 2023, respectively.
Previous wording
The following table summarizes our gross profit for the quarters ended September 30, 2024 and 2023:
Current wording
The following table summarizes our gross profit for the quarters and six months ended December 31, 2024 and 2023:
Previous wording
For the quarter ended September 30, 2024, gross profit dollars for the Specialty Technology Solutions segment declined $5.8 million, or 6.9%, compared to the prior-year quarter. Lower sales volume, after considering the associated cost of goods sold, reduced gross profit dollars by $9.2 million. Gross profit margin increased 45 basis points over the prior year quarter to 10.4%. Gross margin mix positively impacted gross profit by $3.4 million largely due to higher vendor program recognition and favorable sales mix.
Current wording
For the six months ended December 31, 2024, gross profit dollars decreased$5.6 million, or 3.5%, compared to the prior-year period. Lower sales volume, after considering the associated cost of goods sold, reduced gross profit dollars by $22.6 million. Gross profit margin increased 115 basis points year-over-year to 10.6%. Gross margin mix positively impacted gross profit by $17.0 million largely due to favorable sales mix and higher vendor program recognition.
Previous wording
The following table summarizes our operating expenses for the quarters ended September 30, 2024 and 2023:
Current wording
The following table summarizes our operating expenses for the quarters and six months ended December 31, 2024 and 2023:
Previous wording
Selling, general and administrative expenses (“SG&A”) decreased by $3.7 million, or 4.9%, for the quarter ended September 30, 2024, compared to the prior-year period. The decrease for the quarter ended September 30, 2024 is primarily attributable to lower employee costs and reduced customer specific bad debt expenses in the United States and Canada.
Current wording
Selling, general and administrative expenses (“SG&A”) increased by $7.0 million, or 10.5%, and $3.3 million, or 2.3% for thequarter and six months ended December 31, 2024, respectively compared to the prior-year periods. The increase for the quarter ended and six-month period is primarily attributable to increased customer specific bad debt expense in the United States and Canada, as well as higher costs related to recent acquisitions.
Previous wording
Restructuring and other charges incurred of $5.1 million during the quarter ended September 30, 2024 related to employee separation and benefit costs in connection with our expense reduction and restructuring plans implemented in September 2024.
Current wording
Restructuring and other charges incurred of $0.3 million and $5.4 million during thequarter and six months ended December 31, 2024, respectively, related to employee separation and benefit costs in connection with our expense reduction and restructuring plans implemented during the current fiscal year.
Previous wording
The following table summarizes our operating income for the quarters ended September 30, 2024 and 2023:
Current wording
The following table summarizes our operating income for the quarters and six months ended December 31, 2024 and 2023:
Previous wording
For the Specialty Technology Solutions segment, operating income decreased $0.9 million, or 5.1%, for the quarter ended September 30, 2024, compared to the prior-year period. Operating margin remained at 2.2% for the quarters ended September 30, 2024 and September 30, 2023. The decrease in operating income for the quarter is primarily due to lower gross profits.
Current wording
For the Specialty Technology Solutions segment, operating income decreased $5.6 million, or 28.5%, and $6.5 million, or 17.5%, respectively, for the quarter and six months ended December 31, 2024, respectively, compared to the prior-year periods. Operating margin was at 1.9% and 2.1% for the quarter and six months ended December 31, 2024, respectively. The decrease in operating income for the quarter is primarily due to higher bad debt expense. The decrease in operating income for the six month period is primarily due to lower gross profits from lower sales volumes.
Previous wording
The following table summarizes our total other (income) expense for the quarters ended September 30, 2024 and 2023:
Current wording
The following table summarizes our total other (income) expense for the quarters and six months ended December 31, 2024 and 2023:
Previous wording
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 decreased for the quarter ended September 30, 2024 compared to the prior-year period, primarily from lower average borrowings on our multi-currency revolving credit facility.
Current wording
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 decreased for the quarter and six months ended December 31, 2024 compared to the prior-year periods, primarily from lower average borrowings on our multi-currency revolving credit facility.
Previous wording
Interest income increased for the quarter ended September 30, 2024 primarily from interest earned on higher cash balances in the United States.
Current wording
Interest income increased for the quarter and six months ended December 31, 2024 primarily from interest earned on higher cash balances in the United States.
Previous wording
For the three months ended September 30, 2024, we recognized a $5.1 million gain as a result of an insurance recovery in connection with the cybersecurity attack in the fourth quarter of fiscal year 2023.
Current wording
For the quarter and six months ended December 31, 2024, we recognized a gain of $0.3 million and $5.4 million, respectively primarily as a result of an insurance recovery in connection with the cybersecurity attack in the fourth quarter of fiscal year 2023.
Previous wording
For the quarter ended September 30, 2024, income tax expense was $6.0 million reflecting an effective tax rate of 26.1%. In comparison, for the quarter ended September 30, 2023, income tax expense was $3.7 million reflecting an effective tax rate of 19.4%. The increase in the effective tax rate for the quarter is primarily due to a decrease in non-taxable income and discrete items. We expect the effective tax rate, excluding discrete items, for fiscal year 2025 to be approximately 28.9% to 29.9%. See Note 13 - Income Taxes to the Notes to Consolidated Financial Statements for further discussion.
Current wording
For the quarter and six months ended December 31, 2024, income tax expense was $2.7 million and $8.6 million, respectively, reflecting an effective tax rate of 13.5% and 20.3%. In comparison, for the quarter and six months ended December 31, 2023, income tax expense was $7.3 million and $11.0 million reflecting an effective tax rate of 18.3% and 18.6%, respectively. The decrease in the effective tax rate for the quarter is primarily due to discrete items. We expect the effective tax rate, excluding discrete items, for fiscal year 2025 to be approximately 28.5% to 29.5%. See Note 13 - Income Taxes to the Notes to Consolidated Financial Statements for further discussion.
Previous wording
Our cash and cash equivalents balance totaled $145.0 million at September 30, 2024, compared to $185.5 million at June 30, 2024, including $32.6 million and $20.0 million held outside of the United States at September 30, 2024 and June 30, 2024, respectively. Checks released but not yet cleared in the amount of $0.3 million and $5.9 million are included in accounts payable at September 30, 2024 and June 30, 2024, respectively.
Current wording
Our cash and cash equivalents balance totaled $110.5 million at December 31, 2024, compared to $185.5 million at June 30, 2024, including $26.0 million and $20.0 million held outside of the United States at December 31, 2024 and June 30, 2024, respectively. Checks released but not yet cleared in the amount of $0.1 million and $5.9 million are included in accounts payable at December 31, 2024 and June 30, 2024, respectively.
Previous wording
Our net investment in working capital, defined as accounts receivable plus inventories less accounts payable, decreased $13.6 million to $492.5 million at September 30, 2024 from $506.2 million at June 30, 2024, primarily from decreases in inventory and accounts receivable, partially offset by lower accounts payable, as a result of lower sales volume reflecting the results of our multi-quarter working capital improvement plan. 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.
Current wording
Our net investment in working capital, defined as accounts receivable plus inventories less accounts payable, decreased $14.5 million to $520.7 million at December 31, 2024 from $506.2 million at June 30, 2024, primarily from decreases in inventory and accounts receivable, partially offset by lower accounts payable, as a result of lower sales volume reflecting the results of our focus on working capital efficiency improvements. 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.
Previous wording
Operating cash flows are subject to variability period over period as a result of the timing of payments related to accounts receivable, accounts payable, and other working capital items. Net cash provided by operating activities was $44.8 million and $93.5 million for the three months ended September 30, 2024 and September 30, 2023, respectively. Cash provided by operating activities for the three months ended September 30, 2024 is primarily attributable to net income adjusted for non-cash items plus reductions in accounts receivable and inventory partially offset by a reduction in accounts payable. Compared to September 30, 2023, accounts receivable and inventory decreased 18.0% and 23.2% respectively, while accounts payable decreased 6.3%.
Current wording
Operating cash flows are subject to variability period over period as a result of the timing of payments related to accounts receivable, accounts payable, and other working capital items. Net cash provided by operating activities was $38.6 million and $156.8 million for the six months ended December 31, 2024 and December 31, 2023, respectively. Cash provided by operating activities for the six months ended December 31, 2024 is primarily attributable to net income adjusted for non-cash items plus reductions in accounts receivable and inventory partially offset by a reduction in accounts payable. Compared to December 31, 2023, accounts receivable and inventory decreased 17.2% and 14.5% respectively, while accounts payable decreased 3.7%.
Previous wording
The number of days sales outstanding ("DSO") was 66 days at September 30, 2024, compared to 71 days at June 30, 2024 and 71 days at September 30, 2023. Inventory turned 5.3 times during the quarter ended September 30, 2024, compared to 5.0 times during the quarter ended June 30, 2024 and 4.4 times in the prior-year quarter ended September 30, 2023.
Current wording
The number of days sales outstanding ("DSO") was 66 days at December 31, 2024, compared to 71 days at June 30, 2024 and 68 days at December 31, 2023. Inventory turned 5.2 times during the quarter ended December 31, 2024, compared to 5.0 times during the quarter ended June 30, 2024 and 5.1 times in the prior-year quarter ended December 31, 2023.
Previous wording
Cash used in investing activities for the three months ended September 30, 2024 was $59.2 million, compared to $2.3 million used in investing activities in the prior-year period. Cash used in investing activities for the three months ended September 30, 2024 is largely due to cash paid for acquisitions and capital expenditures. Cash used in investing activities for the three months ended September 30, 2023 represents capital expenditures.
Current wording
Cash used in investing activities for the six months ended December 31, 2024 was $58.5 million, compared to cash provided by investing activities of $13.1 million in the prior-year period. Cash used in investing activities for the six months ended December 31, 2024 is largely due to cash paid for acquisitions and capital expenditures. Cash provided by investing activities for the six months ended December 31, 2023 represents the proceeds from the sale of business offset by capital expenditures.
Previous wording
Management expects capital expenditures for fiscal year 2025 to range from $10.0 million to $15.0 million, prim arily for IT investments.
Current wording
Management expects capital expenditures for fiscal year 2025 to range from $8.0 million to $12.0 million, prim arily for IT investments.
Previous wording
For the three months ended September 30, 2024 and September 30, 2023, cash used in financing activities totaled $26.6 million and $83.5 million, respectively. Cash used in financing activities for the three months ended September 30, 2024 is primarily attributable to common stock repurchases in the quarter. Cash used in financing activities for the three months ended September 30, 2023 is primarily attributable to net borrowings on the revolving credit facility.
Current wording
For the six months ended December 31, 2024 and December 31, 2023, cash used in financing activities totaled $52.4 million and $161.3 million, respectively. Cash used in financing activities for the six months ended December 31, 2024 is primarily attributable to common stock repurchases in the six months. Cash used in financing activities for the six months ended December 31, 2023 is primarily attributable to repayments of borrowings on the revolving credit facility.
Previous wording
During the quarter ended September 30, 2024, our borrowings under the Amended Credit Agreement were U.S. dollar loans. The spread in effect as of September 30, 2024 was 1.00% for SOFR-based loans and 0.00% for alternate base rate loans. The commitment fee rate in effect at September 30, 2024 was 0.15%. 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 September 30, 2024.
Current wording
During the quarter and six months ended December 31, 2024, our borrowings under the Amended Credit Agreement were U.S. dollar loans. The spread in effect as of December 31, 2024 was 1.00% for SOFR-based loans and 0.00% for alternate base rate loans. The commitment fee rate in effect at December 31, 2024 was 0.15%. 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 31, 2024.
Previous wording
The average daily outstanding balance on the revolving credit facility, excluding the term loan facility, during the quarters ended September 30, 2024 and 2023 was $144.0 millionand $200.9 million, respectively. There was $350.0 million and $349.9 million available for additional borrowings as of September 30, 2024 and June 30, 2024, respectively. The effective interest rates for the revolving line of credit were 5.95% and 6.44% as of September 30, 2024 and June 30, 2024, respectively. There were no letters of credit issued under the multi-currency revolving credit facility at September 30, 2024 or June 30, 2024. 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 Amended Credit Agreement as of September 30, 2024, and currently expect to continue to maintain such compliance, should we encounter difficulties, our historical relationship with our Amended Credit Agreement lending group has been strong and we anticipate their continued support of our long-term business.
Current wording
The average daily outstanding balance on the revolving credit facility, excluding the term loan facility, during the six month periods ended December 31, 2024 and 2023 was $0.3 millionand $138.7 million, respectively. There was $350.0 million and $349.9 million available for additional borrowings as of December 31, 2024 and June 30, 2024, respectively. The effective interest rates for the revolving line of credit were 5.63% and 6.44% as of December 31, 2024 and June 30, 2024, respectively. There were no letters of credit issued under the multi-currency revolving credit facility at December 31, 2024 or June 30, 2024. 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 Amended Credit Agreement as of December 31, 2024, and currently expect to continue to maintain such compliance, should we encounter difficulties, our historical relationship with our Amended Credit Agreement lending group has been strong and we anticipate their continued support of our long-term business.