SCANSOURCE, INC.

Previous wording

ScanSource is a leading technology distributor connecting devices to the cloud and accelerating growth for channel sales partners across hardware, SaaS, connectivity and cloud. We provide technology solutions and services from approximately 500 leading suppliers of mobility and barcode, POS, payment terminals, physical security, networking, communications, connectivity and cloud services to our approximately 25,000 channel sales partners located primarily in the United States and Brazil.

Current wording

ScanSource is a leading technology distributor uniquely positioned to address complex, converging technologies and to accelerate growth for channel sales partners across hardware, SaaS, connectivity and cloud. We provide technology solutions and services from approximately 500 leading suppliers of mobility and barcode, POS, payment terminals, physical security, networking, communications, connectivity and cloud services to our approximately 25,000 channel sales partners located primarily in the United States and Brazil.

Previous wording

The macroeconomic environment, including the economic impacts of growth outlook, inflation, tariffs and shifting relations between the U.S. and other countries, continues to create significant uncertainty and may adversely affect our financial condition and results of operations. In 2025, the U.S. announced a variety of additional tariffs on goods from multiple nations and trading blocks and has been targeted with reciprocal tariffs and other retaliatory actions in response. Negotiations and the state of international trade policy and relations continue to evolve. We are mindful of the potential impact these conditions could have on our channel sales partners, suppliers and end-user demand and 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 expect to pass any price increases from our suppliers resulting from tariffs to our channel sales partners. We are also mitigating risks through strategic planning and maintaining financial flexibility, but we cannot predict the outcome of our mitigation strategies or the ultimate impact of tariffs and the global macroeconomic environment on our financial condition or results of operations.

Current wording

The macroeconomic environment, including the economic impacts of growth outlook, inflationary pressures, tariffs and evolving geopolitical and trade relationships, continues to create significant uncertainty and may adversely affect our financial condition and results of operations. In 2025, the U.S. announced a variety of additional tariffs on goods from multiple nations and trading blocks, prompting reciprocal tariffs and other retaliatory actions in response. International trade policy and diplomatic dynamics continue to shift, and the full implications remain uncertain. We remain mindful of the potential impact these conditions could have on our channel sales partners, suppliers and end-user demand. 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 expect to pass through to our channel sales partners any supplier price increases resulting from tariffs. We are also mitigating related risks through strategic planning and maintaining financial flexibility, however we cannot predict the effectiveness of our mitigation strategies or the ultimate impact of tariffs and the global macroeconomic environment on our financial condition or results of operations.

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, 2025 and 2024:

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, 2025 and 2024:

Previous wording

(a) A reconciliation of non-GAAP net sales in constant currency, excluding divestitures and acquisitions, is presented at the end of Results of Operations, under Non-GAAP Financial Information.

Current wording

(a) A reconciliation of non-GAAP net sales in constant currency, excluding acquisitions, is presented at the end of Results of Operations, under Non-GAAP Financial Information.

Previous wording

The Specialty Technology Solutions segment consists of sales to channel partners primarily in the United States and Brazil. For the quarter ended September 30, 2025, net sales decreased $36.9 million, or 4.9%, compared to the prior-year period. Excluding the impact from foreign exchange rate fluctuations and the impact of acquisitions, adjusted net sales decreased$41.6 million, or 5.6%, compared to the prior-year period. For the quarter ended September 30, 2025, net sales decreased primarily due to lower large deals.

Current wording

The Specialty Technology Solutions segment consists of sales to channel partners primarily in the United States and Brazil. For the quarter ended December 31, 2025, net sales increased $18.3 million, or 2.5%, compared to the prior-year period. Excluding the impact of acquisitions and the impact of foreign exchange rate fluctuations, adjusted net sales increased$11.8 million, or 1.6%, for the quarter ended December 31, 2025. The increase for the quarter is primarily a result of growth in North America. For the six months ended December 31, 2025, net sales decreased $18.6 million, or 1.3%, compared to the prior-year period. Excluding the impact from acquisitions and the impact from foreign exchange rate fluctuations, adjusted net sales decreased $29.8 million, or 2.0%, for the six months ended December 31, 2025, compared to the prior-year period. The decrease innet sales for the six months is primarily due to lower large deals.

Previous wording

The Intelisys & Advisory segment consists of sales and services to both channel partners (Intelisys) and end users (Advisory) in the United States. For thequarter ended September 30, 2025, net sales increased $0.9 million, or 4.0%, compared to the prior-year period. The increase in net sales reflects the addition of an acquisition. Excluding the impact from foreign exchange rate fluctuations and the impact of acquisitions, adjusted net sales increased $0.2 million, or 0.7% for the quarter ended September 30, 2025. The increase in net sales for the quarter ended September 30, 2025 reflects Intelisys net sales growth. Quarterly net billings for Intelisys increased 1.7% over the prior-year quarter to bring annualized net billings to approximately$2.78 billion.

Current wording

The Intelisys & Advisory segment consists of sales and services to both channel partners (Intelisys) and end users (Advisory) in the United States. For the quarter and six months ended December 31, 2025, net sales increased $0.8 million, or 3.1%, and $1.7 million, or 3.5%, respectively, compared to the prior-year periods. The increase in net sales reflects Intelisys organic net sales growth. Excluding the impact from foreign exchange rate fluctuations and the impact of acquisitions, adjusted net sales increased $0.8 million, or 3.1%, and $0.9 million, or 1.9%, for the quarter and six months ended December 31, 2025, respectively. The increase in net sales for the quarter and six months ended December 31, 2025 reflects Intelisys organic net sales growth. Quarterly net billings for Intelisys increased 2.5% over the prior-year quarter to bring annualized net billings to approximately $2.85 billion.

Previous wording

(b) Countries outside of the United States and Brazil represent less than 5.0% of net sales for the quarters ended September 30, 2025 and 2024.

Current wording

(b) Countries outside of the United States and Brazil represent less than 5.0% of net sales for the quarters and six months ended December 31, 2025 and 2024.

Previous wording

The following table summarizes our gross profit for the quarters ended September 30, 2025 and 2024:

Current wording

The following table summarizes our gross profit for the quarters and six months ended December 31, 2025 and 2024:

Previous wording

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), supplier program recognition (consisting of volume rebates, inventory price changes and purchase discounts) and freight costs. Increases in supplier 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.

Current wording

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), supplier program recognition (consisting of volume rebates, inventory price changes and purchase discounts) and freight costs. Increases in supplier program recognition decrease cost of goods sold, thereby increasing gross profit. Gross profit margin in our Intelisys & Advisory segment reflects a higher contribution of recurring revenue which is recorded on a net basis.

Previous wording

For the quarter ended September 30, 2025, gross profit dollars for the Specialty Technology Solutions segment increased $5.4 million, or 6.9%, compared to the prior-year quarter. Favorable supplier program recognition and sales mix positively impacted gross profit by $9.2 million. Lower sales volume, after considering cost of goods sold, reduced gross profit by $3.8 million for the quarter. Gross profit margin increased 130 basis points over the prior-year quarter to 11.7%.

Current wording

For the quarter ended December 31, 2025, gross profit dollars for the Specialty Technology Solutions segment increased $0.5 million, or 0.6%, compared to the prior-year quarter. Higher sales volumes, after considering cost of goods sold, and favorable supplier recognition program, impacted gross profit by $2.6 million. Higher freight costs reduced gross profit by $2.1 million for the quarter. Gross profit margin decreased 20 basis points over the prior-year quarter to 10.5%.

Previous wording

For the quarter ended September 30, 2025, gross profit dollars for the Intelisys & Advisory segment increased $0.4 million, or 1.8%, compared to the prior-year quarter. Higher sales volume, largely due to the impact of our Resourcive acquisition, increased gross profit for the quarter. Gross profit margin decreased 211 basis points compared to the prior-year quarter to 97.4%, reflecting the addition of professional services to the sales mix.

Current wording

For the quarter ended December 31, 2025, gross profit dollars for the Intelisys & Advisory segment increased $0.7 million, or 3.0%, compared to the prior-year quarter. Higher sales volume primarily attributable to Intelisys increased gross profit for the quarter. Gross profit margin decreased 8 basis points compared to the prior-year quarter to 98.8%.

Previous wording

The following table summarizes our operating expenses for the quarters ended September 30, 2025 and 2024:

Current wording

The following table summarizes our operating expenses for the quarters and six months ended December 31, 2025 and 2024:

Previous wording

Selling, general and administrative expenses (“SG&A”) increased by $3.6 million, or 5.0%, for the quarter ended September 30, 2025, compared to the prior-year period. The increase for the quarter is primarily attributable to increased costs for employee-related expenses and costs related to acquisitions.

Current wording

Selling, general and administrative expenses (“SG&A”) increased by $4.2 million, or 5.7%, and$7.8 million, or 5.3%, for the quarter andsix months ended December 31, 2025, respectively, compared to the prior-year periods. The increase for the quarter and six-month period ended December 31, 2025 is primarily attributable to increased costs for employee-related expenses and costs related to acquisitions. SG&A includes customer specific bad debt expenses in Brazil for the quarter and six months ended December 31, 2025.

Previous wording

The decrease in depreciation expense of$1.3 million during thequarter ended September 30, 2025, islargely due to certain ERP software assets being fully depreciated in the previous fiscal year.

Current wording

The decrease in depreciation expense of$1.5 million and$2.7 million during thequarter andsix months ended December 31, 2025, respectively, islargely due to certain ERP software assets being fully depreciated in the previous fiscal year.

Previous wording

Restructuring and other charges of $5.1 million were incurred in thequarter ended September 30, 2024. Restructuring and other charges relate to employee separation and benefit costs in connection with our expense reduction and restructuring plans implemented during the current and prior fiscal year.

Current wording

Restructuring and other charges of$0.3 million and $5.4 million were incurred in thequarter and six months ended December 31, 2024. Restructuring and other charges relate to employee separation and benefit costs in connection with our expense reduction and restructuring plans implemented during the prior fiscal year.

Previous wording

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 $0.3 million in thequarter ended September 30, 2025. The expense from changes in fair value of contingent consideration for thequarter is largely due to the recurring amortization of the unrecognized fair value discount.

Current wording

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 $1.2 million and $1.5 million in thequarter and six months ended December 31, 2025, respectively. The expense from changes in fair value of contingent consideration for thequarter andsix months ended December 31, 2025 is largely due to the recurring amortization of the unrecognized fair value discount as well as the addition of a new acquisition in the quarter.

Previous wording

The following table summarizes our operating income for the quarters ended September 30, 2025 and 2024:

Current wording

The following table summarizes our operating income for the quarters and six months ended December 31, 2025 and 2024:

Previous wording

For the Specialty Technology Solutions segment, operating income increased $3.6 million, or 21.7%, for the quarter ended September 30, 2025, compared to the prior-year periods. Operating margin was 2.8% and 2.2%for thequarters ended September 30, 2025 and September 30, 2024, respectively. The increase in operating income for thequarter is primarily due to higher gross profits for the quarter.

Current wording

For the Intelisys & Advisory segment, operating income increased $1.1 million, or 16.7%, and $0.5 million, or 3.7%, respectively, for the quarter and six months ended December 31, 2025, respectively, compared to the prior-year periods. Operating margin increased to 30.1% for the quarter ended December 31, 2025 and remained consistent at 27.1% for the six months ended December 31, 2025. The increase in operating income for the quarter comparative period is primarily driven by higher by sales volume.

Previous wording

For the quarter ended September 30, 2025, Corporate operating losses of $0.3 million represents acquisition-related costs.

Current wording

For the quarter and six months ended December 31, 2025, Corporate operating losses of $0.6 million and $0.9 million, respectively, primarily represents acquisition-related costs. 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.

Previous wording

The following table summarizes our total other (income) expense for the quarters ended September 30, 2025 and 2024:

Current wording

The following table summarizes our total other (income) expense for the quarters and six months ended December 31, 2025 and 2024:

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, 2025 compared to the prior-year period, primarily from lower average borrowings on our multi-currency revolving credit facility and lower interest rates.

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, 2025 compared to the prior-year periods, primarily from lower average borrowings on our multi-currency revolving credit facility and lower interest rates.

Previous wording

Interest income increased for the quarter ended September 30, 2025 primarily from higher interest income in Brazil.

Current wording

Interest income increased for the quarter and six months ended December 31, 2025 primarily from higher interest income in Brazil.

Previous wording

Other net income decreased for the quarter ended September 30, 2025, as we recognized a $5.1 million gain in the prior-year period related to an insurance recovery in connection with the cybersecurity attack in fiscal year 2023.

Current wording

Other net income increased for the quarter ended December 31, 2025, due to a $0.8 million insurance recovery in connection with the cybersecurity attack in fiscal year 2023. Other net income decreased for the six months ended December 31, 2025 due to a larger insurance recovery of $5.4 million related to the cybersecurity attack recognized in the prior year period.

Previous wording

For the quarter ended September 30, 2025, income tax expense was $7.1 million reflecting an effective tax rate of 26.4%. In comparison, for the quarter ended September 30, 2024, income tax expense was $6.0 million reflecting an effective tax rate of 26.1%. We expect the effective tax rate, excluding discrete items, for fiscal year 2026 to be approximately 27.2% to 28.2%. 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, 2025, income tax expense was $2.9 million and $10.0 million reflecting an effective tax rate of 15.1% and 21.6%, respectively. In comparison, for the quarter and six months ended December 31, 2024, income tax expense was $2.7 million and $8.6 million reflecting an effective tax rate of 13.5% and 20.3%, respectively. We expect the effective tax rate, excluding discrete items, for fiscal year 2026 to be approximately 27.2% to 28.2%. See Note 13 - Income Taxes to the Notes to Consolidated Financial Statements for further discussion.

Previous wording

(a) Acquisition and divestiture costs are generally non-deductible for tax purposes.

Current wording

(a) Acquisition costs are generally non-deductible for tax purposes.

Previous wording

(a) Acquisition and divestiture costs are generally non-deductible for tax purposes.

Current wording

(a) Acquisition costs are generally non-deductible for tax purposes.

Previous wording

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 or divestitures prior to the first full year of operations from the acquisition or divestiture 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 and divestitures. Below we show organic growth by providing a non-GAAP reconciliation of net sales in constant currency excluding acquisitions and divestitures:

Current wording

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.

Previous wording

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 volume increases, our net investment in working capital increases, which typically results in decreased cash flow from operating activities. Conversely, when sales volume decreases, our net investment in working capital typically decreases, which typically results in increased cash flow from operating activities.

Current wording

Our primary sources of liquidity are cash flows from operations and borrowings under our $400 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 volume increases, our net investment in working capital increases, which typically results in decreased cash flow from operating activities. Conversely, when sales volume decreases, our net investment in working capital typically decreases, which typically results in increased cash flow from operating activities.

Previous wording

Our cash and cash equivalents balance totaled $124.9 million at September 30, 2025, compared to $126.2 million at June 30, 2025, including $43.2 million and $46.3 million held outside of the United States at September 30, 2025 and June 30, 2025, respectively. Checks released but not yet cleared in the amount of $0.1 million are included in accounts payable at September 30, 2025 and June 30, 2025.

Current wording

Our cash and cash equivalents balance totaled $83.5 million at December 31, 2025, compared to $126.2 million at June 30, 2025, including $31.1 million and $46.3 million held outside of the United States at December 31, 2025 and June 30, 2025, respectively. Checks released but not yet cleared in the amount of $0.2 million and $0.1 million are included in accounts payable at December 31, 2025 and June 30, 2025, respectively.

Previous wording

Our net investment in working capital, defined as accounts receivable plus inventories less accounts payable, increased $12.1 million to $532.8 million at September 30, 2025 from $520.7 million at June 30, 2025, primarily from decreases in accounts payable and increases in inventories, partially offset by lower accounts receivable as a result of lower sales volume. Our net investment in working capital is affected by several factors such as fluctuations in sales volume, net income, timing of collections from channel sales partners, 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 $1.7 million to $519.0 million at December 31, 2025 from $520.7 million at June 30, 2025, primarily from a decrease in accounts receivable, partially offset by an increase in inventories and a decrease in accounts payable. Our net investment in working capital is affected by several factors such as fluctuations in sales volume, net income, timing of collections from channel sales partners, 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 $23.2 million and $44.8 million for the three months ended September 30, 2025 and September 30, 2024, respectively. Cash provided by operating activities for the three months ended September 30, 2025 is primarily attributable to net income and changes in working capital balances. Compared to September 30, 2024, accounts receivable and accounts payable decreased 1.8% and 8.5% respectively, while inventory increased 0.3%.

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 $54.1 million and $38.6 million for the six months ended December 31, 2025 and December 31, 2024, respectively. Cash provided by operating activities for the six months ended December 31, 2025 is primarily attributable to net income and changes in working capital balances. Compared to December 31, 2024, accounts payable and accounts receivable increased 10.8% and 10.3%, respectively.

Previous wording

The number of days sales outstanding ("DSO") was 68 days at September 30, 2025, compared to 70 days at June 30, 2025 and 66 days at September 30, 2024. Inventory turned 5.1 times during the quarter ended September 30, 2025, compared to 5.9 times during the quarter ended June 30, 2025 and 5.3 times in the prior-year quarter ended September 30, 2024.

Current wording

The number of days sales outstanding ("DSO") was 71 days at December 31, 2025, compared to 70 days at June 30, 2025 and 66 days at December 31, 2024. Inventory turned 5.3 times during the quarter ended December 31, 2025, compared to 5.9 times during the quarter ended June 30, 2025 and 5.2 times in the prior-year quarter ended December 31, 2024.

Previous wording

Cash used in investing activities for the three months ended September 30, 2025 was $2.4 million, compared to cash used by investing activities of $59.2 million in the prior-year period. Cash used in investing activities for the three months ended September 30, 2025 is due to capital expenditures. Cash used by investing activities for the three months ended September 30, 2024 represents cash paid for acquisitions and capital expenditures.

Current wording

Cash used in investing activities for the six months ended December 31, 2025 was $22.7 million, compared to cash used in investing activities of $58.5 million in the prior-year period. Cash used in investing activities for the six months ended December 31, 2025 represents cash paid for acquisitions and capital expenditures. Cash used in investing activities for the six months ended December 31, 2024 represents cash paid for acquisitions and capital expenditures offset by cash received for disposal of business.

Previous wording

Management expects capital expenditures for fiscal year 2026 to range from $10.0 million to $15.0 million, primarily for IT and warehouse investments.

Current wording

Management expects capital expenditures for fiscal year 2026 to range from $8.0 million to $12.0 million, primarily for IT and warehouse investments.

Previous wording

For the three months ended September 30, 2025 and September 30, 2024, cash used in financing activities totaled $23.0 million and $26.6 million, respectively. Cash used in financing activities for the three months ended September 30, 2025 and September 30, 2024 is primarily attributable to common stock repurchases.

Current wording

For the six months ended December 31, 2025 and December 31, 2024, cash used in financing activities totaled $73.3 million and $52.4 million, respectively. Cash used in financing activities for the six months ended December 31, 2025 represents repayments on long-term debt and common stock repurchases. Cash used in financing activities for the six months ended December 31, 2024 is primarily attributable to common stock repurchases.

Previous wording

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 borrowing limits 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 subsidiaries and secured by substantially all of our domestic assets. 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.

Current wording

On December 18, 2025, the Company entered into a credit agreement (the “New Credit Agreement”) with PNC Bank, National Association, as administrative agent (“PNC”), and the other lenders party thereto (the “Lenders”), providing for (i) a five-year, $400 million multicurrency senior secured revolving credit facility and (ii) a five-year $100 million senior secured term loan facility (the “New Credit Facilities”). In addition, pursuant to an “accordion feature,” the Company may increase its borrowings by up to the greater of $250 million or 150% of the Company’s EBITDA calculated on a Pro Forma Basis (each as defined in the New Credit Agreement), subject to obtaining additional credit commitments from the Lenders participating in the increase. The New Credit Agreement allows for issuance of up to $50 million for letters of credit. Borrowings under the New Credit Agreement are secured by substantially all of the 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 New 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.

Previous wording

Loans denominated in U.S. dollars, other than swingline loans, bear interest at a rate per annum equal to, at our option, (i) the adjusted 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 bear interest based upon the adjusted daily simple SOFR 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 bear interest at a rate per annum equal to the applicable benchmark rate set forth in the 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.

Current wording

Loans denominated in U.S. dollars, other than swingline loans, bear interest at a rate per annum equal to, at the Company’s option, (i) the Term Secured Overnight Financing Rate ("SOFR") or 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 its 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 base rate plus an additional margin ranging from 0% to 0.75%, depending upon the Company’s leverage ratio. All swingline loans denominated in U.S. dollars bear interest based upon the 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. Loans denominated in foreign currencies bear interest at a rate per annum equal to the applicable benchmark rate set forth in the New Credit Agreement plus an additional margin ranging from 1.00% to 1.75%, depending upon the Company’s leverage ratio. A commitment fee is payable on the unused amount of commitments under the revolving credit facility. The commitment fee ranges from 0.15% to 0.30%, depending on the Company’s leverage ratio.

Previous wording

During the quarter ended September 30, 2025, our borrowings under the Amended Credit Agreement were U.S. dollar loans. The spread in effect as of September 30, 2025 was 1.00% for SOFR-based loans and 0.00% for alternate base rate loans. The commitment fee rate in effect at September 30, 2025 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, 2025.

Current wording

During the quarter and six months ended December 31, 2025, all of the Company's borrowings under New Credit Agreement and Prior Credit Agreement were U.S. dollar loans. The spread in effect as of December 31, 2025 was 1.00% for SOFR-based loans and 0.00% for alternate base rate loans. The commitment fee rate in effect at December 31, 2025 was 0.15%. The effective interest rates for the term loan were 4.72% and 5.43% as of December 31, 2025 and June 30, 2025, respectively. The New 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. In addition, the Company’s Interest Coverage Ratio (as such term is defined in the New 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 New Credit Agreement at December 31, 2025.

Previous wording

The average daily outstanding balance on the revolving credit facility, excluding the term loan facility, during the three month periods ended September 30, 2025 and 2024 was $1.1 millionand $0.1 million, respectively. There was $350.0 million available for additional borrowings as of September 30, 2025 and June 30, 2025, respectively. The effective interest rates for the revolving line of credit were 5.28% and 5.46% as of September 30, 2025 and June 30, 2025, respectively. There were no letters of credit issued under the multi-currency revolving credit facility at September 30, 2025 or June 30, 2025. 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, 2025, 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, was $1.7 million and $0.3 million during the six month periods ended December 31, 2025 and 2024, respectively. There was $400.0 million and $350.0 million available for additional borrowings as of December 31, 2025 and June 30, 2025, respectively. The effective interest rates for the revolving line of credit were 4.76% and 5.46% as of December 31, 2025 and June 30, 2025, respectively. There were no letters of credit issued under the multi-currency revolving credit facility as of December 31, 2025 and June 30, 2025.