SCANSOURCE, INC.

Previous 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.

Current wording

The macroeconomic environment, including the economic impacts of growth outlook, inflationary pressures, tariffs and evolving geopolitical conflicts and trade relationships, continues to create significant uncertainty and may adversely affect our financial condition and results of operations. In 2026, the U.S. Supreme Court invalidated the tariffs imposed under the International Emergency Economic Powers Act (IEEPA); however, certain other tariffs remain in effect and the current administration has indicated that it will continue seeking to implement tariffs through other statutory authorities. Further, the ongoing conflict with Iran and geopolitical tensions has resulted in volatility in the global energy and commodity markets and increased uncertainty in the macroeconomic environment. 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 or other factors. 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 and six months ended December 31, 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 nine months ended March 31, 2026 and 2025:

Previous 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.

Current wording

The Specialty Technology Solutions segment consists of sales to channel partners primarily in the United States and Brazil. For the quarter ended March 31, 2026, net sales increased $62.3 million, or 9.2%, compared to the prior-year period. Excluding the impact of acquisitions and the impact of foreign exchange rate fluctuations, adjusted net sales increased$54.1 million, or 8.0%, for the quarter ended March 31, 2026. The increase for the quarter is primarily a result of growth across most technologies in North America. For the nine months ended March 31, 2026, net sales increased $43.7 million, or 2.0%, compared to the prior-year period. Excluding the impact from acquisitions and the impact from foreign exchange rate fluctuations, adjusted net sales increased $24.4 million, or 1.1%, for the nine months ended March 31, 2026, compared to the prior-year period. The increase innet sales for the nine months ended March 31, 2026 is primarily due to growth across most technologies in North America.

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 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.

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 ended March 31, 2026, net sales decreased $0.4 million, or 1.5%, compared to the prior-year period. The decrease in net sales for the quarter ended March 31, 2026 primarily reflects lower Resourcive sales. For the nine months ended March 31, 2026, net sales increased $1.3 million, or 1.7%, compared to the prior-year periods. The increase in net sales for the nine months ended March 31, 2026 primarily reflects higher Intelisys sales. Excluding the impact of acquisitions, adjusted net sales increased $0.5 million, or 0.7%, for the nine months ended March 31, 2026. Quarterly annualized net billings for Intelisys totaled approximately $2.88 billion.

Previous 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.

Current wording

(b) Countries outside of the United States and Brazil represent less than 5.0% of net sales for the quarters and nine months ended March 31, 2026 and 2025.

Previous wording

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

Current wording

The following table summarizes our gross profit for the quarters and nine months ended March 31, 2026 and 2025:

Previous 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%.

Current wording

For the quarter ended March 31, 2026, gross profit dollars for the Specialty Technology Solutions segment increased $7.4 million, or 10.0%, compared to the prior-year quarter. Higher sales volumes, after considering cost of goods sold, increased gross profit by $6.8 million, and favorable supplier recognition program increased gross profit by $0.6 million. Gross profit margin increased slightly over the prior-year quarter to 11.0%.

Previous wording

For thesix months ended December 31, 2025, gross profit dollars increased$5.9 million, or 3.8%, compared to the prior-year period. Favorable sales mix and supplier program recognition positively impacted gross profit by $10.6 million. Higher freight costs and lower sales volume, after considering cost of goods sold, reduced gross profit by $4.7 million for thesix months. Gross profit margin increased 54 basis points over the prior-year quarter to 11.1%.

Current wording

For thenine months ended March 31, 2026, gross profit dollars increased$13.3 million, or 5.8%, compared to the prior-year period. Favorable supplier program recognition and sales mix increased gross profit by $8.7 million, and higher sales volumes, after considering cost of goods sold, increased gross profit by $4.7 million. Gross profit margin increased 39 basis points over the prior-year period to 11.1%.

Previous 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%.

Current wording

For the quarter ended March 31, 2026, gross profit dollars for the Intelisys & Advisory segment decreased $0.5 million, or 1.9%, compared to the prior-year quarter. Lower sales volumes, decreased gross profit for the quarter. Gross profit margin decreased 46 basis points compared to the prior-year quarter to 98.8%.

Previous wording

For thesix months ended December 31, 2025, gross profit dollars increased$1.1 million, or 2.4%, compared to the prior-year period. Higher sales volume primarily attributable to Intelisys sales growth increased gross profit for the six months by $1.6 million. The increase in gross profit was partially offset by less favorable sales mix of $0.5 million due to a higher mix of services. Gross profit margin decreased 108 basis points over the prior-year quarter to 98.1%.

Current wording

For thenine months ended March 31, 2026, gross profit dollars increased$0.6 million, or 0.9%, compared to the prior-year period. Higher sales volume primarily attributable to Intelisys sales growth increased gross profit for the nine months ended March 31, 2026 by $1.3 million. The increase in gross profit was partially offset by a less favorable sales mix of $0.7 million due to a higher mix of services. Gross profit margin decreased 86 basis points over the prior-year period to 98.3%.

Previous wording

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

Current wording

The following table summarizes our operating expenses for the quarters and nine months ended March 31, 2026 and 2025:

Previous 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.

Current wording

Selling, general and administrative expenses (“SG&A”) increased by $8.4 million, or 12.0%, and$16.1 million, or 7.5%, for the quarter andnine months ended March 31, 2026, respectively, compared to the prior-year periods. The increase for the quarter andnine months ended March 31, 2026 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 nine months ended March 31, 2026.

Previous 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.

Current wording

The decrease in depreciation expense of$0.8 million and$3.6 million during thequarter andnine months ended March 31, 2026, respectively, islargely due to certain ERP software assets being fully depreciated in the previous fiscal year.

Previous 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.

Current wording

Restructuring and other charges of$5.4 million were incurred in thenine months ended March 31, 2025. 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 $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.

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 $0.4 million and $2.0 million in thequarter and nine months ended March 31, 2026, respectively. The expense from changes in fair value of contingent consideration for the quarter and nine months ended March 31, 2026 is largely due to the recurring amortization of the unrecognized fair value discount.

Previous wording

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

Current wording

The following table summarizes our operating income for the quarters and nine months ended March 31, 2026 and 2025:

Previous 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.

Current wording

For the Specialty Technology Solutions segment, operating income increased $0.8 million, or 5.9%, and $1.4 million, or 3.1%, for the quarter and nine months ended March 31, 2026, respectively, compared to the prior-year periods. Operating margin was 2.0% and 2.1% for the quarter and nine months ended March 31, 2026, respectively. The increase in operating income for the quarter and nine months ended March 31, 2026 is primarily due to higher gross profits.

Previous 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.

Current wording

For the quarter and nine months ended March 31, 2026, Corporate operating losses of $0.2 million and $1.1 million, respectively, primarily represents acquisition-related costs. For the quarter and nine months ended March 31, 2025, Corporate operating losses of $0.3 million and $7.9 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 and six months ended December 31, 2025 and 2024:

Current wording

The following table summarizes our total other (income) expense for the quarters and nine months ended March 31, 2026 and 2025:

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 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.

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 nine months ended March 31, 2026 compared to the prior-year periods, primarily from lower average borrowings on our term loan credit facility and lower interest rates.

Previous wording

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

Current wording

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

Previous 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.

Current wording

Other net income decreased for the quarter ended March 31, 2026 compared to the prior-year quarter, due to a $0.8 million insurance recovery in connection with the cybersecurity attack that occurred in fiscal year 2023. Other net income decreased for the nine months ended March 31, 2026 due to a larger insurance recovery of $6.4 million related to the cybersecurity attack recognized in the prior year period.

Previous 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.

Current wording

For the quarter and nine months ended March 31, 2026, income tax expense was $7.2 million and $17.2 million, respectively, reflecting an effective tax rate of 29.8% and 24.4%, respectively. In comparison, for the quarter and nine months ended March 31, 2025, income tax expense was $6.8 million and $15.4 million, respectively, reflecting an effective tax rate of 28.0% and 23.1%, respectively. We expect the effective tax rate, excluding discrete items, for fiscal year 2026 to be approximately 27.9% to 28.2%. See Note 13 - Income Taxes to the Notes to Consolidated Financial Statements for further discussion.

Previous wording

(a)The annualized EBITDA amount is divided by days in the quarter times 365 days per year, or 366 days for leap year. There were 92 days in the current and in the prior-year quarter.

Current wording

(a)The annualized EBITDA amount is divided by days in the quarter times 365 days per year, or 366 days for leap year. There were 90 days in the current and in the prior-year quarter.

Previous wording

(c)The annualized adjusted EBITDA amount is divided by days in the quarter times 365 days per year, or 366 days for a leap year. There were 92 days in the current quarter and the prior-year quarter.

Current wording

(c)The annualized adjusted EBITDA amount is divided by days in the quarter times 365 days per year, or 366 days for a leap year. There were 90 days in the current quarter and the prior-year quarter.

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 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.

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. Below we show organic growth by providing a non-GAAP reconciliation of net sales in constant currency excluding acquisitions:

Previous 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.

Current wording

Our cash and cash equivalents balance totaled $120.3 million at March 31, 2026, compared to $126.2 million at June 30, 2025, including $33.8 million and $46.3 million held outside of the United States at March 31, 2026 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 March 31, 2026 and June 30, 2025, respectively.

Previous 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.

Current wording

Our net investment in working capital, defined as accounts receivable plus inventories less accounts payable, decreased $52.3 million to $468.4 million at March 31, 2026 from $520.7 million at June 30, 2025, as a result of an increase in accounts payable and a decrease in accounts receivable. Our netinvestment 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 $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.

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 $125.4 million and $104.7 million for the nine months ended March 31, 2026 and March 31, 2025, respectively. Cash provided by operating activities for the nine months ended March 31, 2026 is primarily attributable to net income and changes in working capital balances. Compared to March 31, 2025, accounts payable and accounts receivable increased 19.6% and 11.7%, respectively.

Previous 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.

Current wording

The number of days sales outstanding ("DSO") was 74 days at March 31, 2026, compared to 70 days at June 30, 2025 and 72 days at March 31, 2025. Inventory turned 5.4 times during the quarter ended March 31, 2026, compared to 5.9 times during the quarter ended June 30, 2025 and 5.0 times in the prior-year quarter ended March 31, 2025.

Previous 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.

Current wording

Cash used in investing activities for the nine months ended March 31, 2026 was $25.0 million, compared to cash used in investing activities of $59.9 million in the prior-year period. Cash used in investing activities for the nine months ended March 31, 2026 represents cash paid for acquisitions and capital expenditures. Cash used in investing activities for the nine months ended March 31, 2025 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 $8.0 million to $12.0 million, primarily for IT and warehouse investments.

Current wording

Management expects capital expenditures for fiscal year 2026 to range from $8.0 million to $10.0 million, primarily for IT and warehouse investments.

Previous 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.

Current wording

For the nine months ended March 31, 2026 and March 31, 2025, cash used in financing activities totaled $107.0 million and $83.4 million, respectively. Cash used in financing activities for the nine months ended March 31, 2026 represents common stock repurchases and repayments on long-term debt. Cash used in financing activities for the nine months ended March 31, 2025 is primarily attributable to common stock repurchases.

Previous 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.

Current wording

During the quarter and nine months ended March 31, 2026, 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 March 31, 2026 was 1.00% for SOFR-based loans and 0.00% for alternate base rate loans. The commitment fee rate in effect at March 31, 2026 was 0.15%. The effective interest rates for the term loan were 4.67% and 5.43% as of March 31, 2026 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 March 31, 2026.

Previous 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.

Current wording

The average daily outstanding balance on the revolving credit facility, excluding the term loan facility, was $1.2 million and $0.3 million during the nine-month periods ended March 31, 2026 and 2025, respectively. There was $400.0 million and $350.0 million available for additional borrowings as of March 31, 2026 and June 30, 2025, respectively. The effective interest rates for the revolving line of credit were 4.65% and 5.46% as of March 31, 2026 and June 30, 2025, respectively. There were no letters of credit issued under the multi-currency revolving credit facility as of March 31, 2026 and June 30, 2025.