Third Quarter Profitability Reflects Consistent Execution
ScanSource, Inc. (NASDAQ: SCSC), a leading provider of technology products and solutions, today announced financial results for the third quarter ended March 31, 2021. All results in this release reflect continuing operations only unless otherwise noted.
Third Quarter Summary:
- Net sales: $729.9 million, down 2% year-over-year, or flat year-over-year for organic growth
- Gross profit: $88.1 million, up 4% year-over-year
- GAAP operating income of $19.4 million, up 87% year-over-year, for a 2.66% operating income margin
- Non-GAAP operating income of $25.1 million, up 70% year-over-year, for a 3.45% non-GAAP operating income margin
- Net income from continuing operations of $13.8 million
- GAAP diluted EPS of $0.54 per share; non-GAAP diluted EPS of $0.71 per share
- Return on invested capital increased to 13.6% for the quarter
"We are very pleased with the excellent execution from ScanSource employees worldwide," said Mike Baur, Chairman and CEO, ScanSource, Inc. "We are focused on driving gross profit growth, gaining operating leverage on our SG&A, and shifting to more recurring revenue. We are committed to helping our channel partners accelerate their digital transformation."
Quarterly Results
Net sales for the third quarter of fiscal year 2021 totaled $729.9 million, down 2% year-over-year, or flat year-over-year for organic growth. During the quarter, the Company saw continued progress in recovering from the sales impact of the COVID-19 pandemic in North America and Brazil. For the Intelisys master agency business, net sales increased 12% year-over-year for the third quarter of fiscal year 2021.
For the third quarter of fiscal year 2021, operating income increased to $19.4 million from $10.4 million for the prior-year quarter, and non-GAAP operating income increased to $25.1 million from $14.8 million for the prior-year quarter. At the end of July 2020, the Company implemented a $30 million annualized expense reduction program to address the business impacts of the COVID-19 pandemic and prepare for the next phase of growth. Selling, general and administrative expenses for the quarter decreased $4.9 million year-over-year, and the Company continued to realize the planned quarterly impact of the expense reduction plan.
On a GAAP basis, net income for the third quarter of fiscal year 2021 totaled $13.8 million, or $0.54 per diluted share, compared to net income of $5.7 million, or $0.23 per diluted share, for the prior-year quarter. Non-GAAP net income totaled $18.2 million, or $0.71 per diluted share, compared to $9.2 million, or $0.36 per diluted share, for the prior-year quarter.
At March 31, 2021, ScanSource had cash and cash equivalents of $49.3 million and total debt of $198.9 million. The Company used $60.3 million of operating cash flow in the third quarter of fiscal year 2021 and generated $129.4 million for the trailing 12-month period.
COVID-19 Update
The Company's top priority during the COVID-19 pandemic is protecting the health and safety of our employees. We implemented travel restrictions and transitioned our employees, where possible, to a remote working environment. Most of our office-based employees around the world continue to work remotely. We have taken a number of measures to ensure our teams have the flexibility and resources they need to stay safe and healthy. We continue to experience higher costs from these safety measures to protect our employees. We are continuing to provide the high level of customer service our partners expect from us.
Webcast Details and CFO Commentary
At approximately 4:15 p.m. ET today, a CFO commentary, as a supplement to this press release and the Company's conference call, will be available on ScanSource's website, www.scansource.com (Investor Relations section). ScanSource will present additional information about its financial results in a conference call today, May 10, 2021, at 5:00 p.m. ET. A webcast of the call will be available for all interested parties and can be accessed at www.scansource.com (Investor Relations section). The webcast will be available for replay for 60 days.
Safe Harbor Statement
This press release contains “forward-looking” statements, including regarding the impact of the COVID-19 pandemic, which involve risks and uncertainties. Any number of factors could cause actual results to differ materially from anticipated results, including, but not limited to, the impact of the COVID-19 pandemic on the Company's operations and financial condition and the potential prolonged economic weakness brought on by COVID-19, the failure to manage and implement the Company's organic growth strategy, credit risks involving the Company's larger customers and suppliers, changes in interest and exchange rates and regulatory regimes impacting the Company's international operations, risk to the Company's business from a cyber-security attack, a failure of the Company's IT systems, failure to hire and retain quality employees, loss of the Company's major customers, termination of the Company's relationship with key suppliers or a significant modification of the terms under which it operates with a key supplier, changes in the Company's operating strategy, and other factors set forth in the "Risk Factors" contained in the Company's annual report on Form 10-K for the year ended June 30, 2020, filed with the Securities and Exchange Commission. Except as may be required by law, the Company expressly disclaims any obligation to update these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
Non-GAAP Financial Information
In addition to disclosing results that are determined in accordance with United States Generally Accepted Accounting Principles ("GAAP"), the Company also discloses certain non-GAAP financial measures, which are summarized below. Non-GAAP financial measures are used to understand and evaluate performance, including comparisons from period to period. Non-GAAP results exclude amortization of intangible assets related to acquisitions, change in fair value of contingent consideration, acquisition costs, restructuring costs and other non-GAAP adjustments.
Net sales on a constant currency basis, excluding acquisitions (organic growth): The Company discloses the percentage change in net sales excluding the translation impact from changes in foreign currency exchange rates between reporting periods and excluding the net sales from acquisitions prior to the first full year from the acquisition date. This measure enhances the comparability between periods to help analyze underlying trends on an organic basis.
Income Statement Non-GAAP Metrics: To evaluate current period performance on a more consistent basis with prior periods, the Company discloses non-GAAP net sales, non-GAAP gross profit, non-GAAP operating income, non-GAAP other expense, net, non-GAAP pre-tax income, non-GAAP net income and non-GAAP diluted earnings per share (non-GAAP diluted "EPS"). Non-GAAP results exclude amortization of intangible assets related to acquisitions, changes in fair value of contingent consideration, acquisition and divestiture costs, impairment charges and other non-GAAP adjustments. These year-over-year metrics include the translation impact of changes in foreign currency exchange rates. Non-GAAP metrics are useful in assessing and understanding the Company's operating performance, especially when comparing results with previous periods or forecasting performance for future periods.
Return on invested capital ("ROIC"): ROIC assists management in comparing the Company's performance over various reporting periods on a consistent basis because it removes from our operating results the impact of items that do not reflect our core operating performance. We believe the calculation of ROIC provides useful information to investors and is an additional relevant comparison of our performance. ROIC is calculated as adjusted EBITDA over invested capital. Adjusted earnings before interest expense, income taxes, depreciation and amortization ("Adjusted EBITDA") excludes the change in fair value of contingent consideration, in addition to other non-GAAP adjustments. Invested capital is defined as average equity plus average daily funded interest-bearing debt for the period. Management believes the calculation of ROIC provides useful information to investors and is an additional relevant comparison of the Company's performance during the year.
These non-GAAP financial measures have limitations as analytical tools, and the non-GAAP financial measures that the Company reports may not be comparable to similarly titled amounts reported by other companies. Analysis of results and outlook on a non-GAAP basis should be considered in addition to, and not in substitution for or as superior to, measurements of financial performance prepared in accordance with GAAP. A reconciliation of the Company's non-GAAP financial information to GAAP is set forth in the Supplementary Information (Unaudited) below.
About ScanSource, Inc.
ScanSource, Inc. (NASDAQ: SCSC) is at the center of the technology solution delivery channel, connecting businesses and providing solutions for their complex needs. ScanSource sells through multiple, specialized routes-to-market with digital, physical and services offerings from the world’s leading suppliers of point-of-sale (POS), payments, barcode, physical security, unified communications and collaboration, telecom and cloud services. ScanSource enables its sales partners to create, deliver and manage solutions for end-customers across almost every vertical market. Founded in 1992 and headquartered in Greenville, South Carolina, ScanSource was named one of the Best Places to Work in South Carolina and on FORTUNE magazine’s 2020 List of World’s Most Admired Companies. ScanSource ranks #654 on the Fortune 1000. For more information, visit www.scansource.com.
ScanSource, Inc. and Subsidiaries |
|||||||
Condensed Consolidated Balance Sheets (Unaudited) |
|||||||
(in thousands) |
|||||||
|
March 31, 2021 |
|
June 30, 2020* |
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
49,321 |
|
|
$ |
29,485 |
|
Accounts receivable, less allowance of $21,180 at March 31, 2021 and $21,906 at March 31, 2020 |
509,404 |
|
|
443,185 |
|
||
Inventories |
459,652 |
|
|
454,885 |
|
||
Prepaid expenses and other current assets |
99,424 |
|
|
94,681 |
|
||
Current assets held for sale |
— |
|
|
181,231 |
|
||
Total current assets |
1,117,801 |
|
|
1,203,467 |
|
||
Property and equipment, net |
45,316 |
|
|
55,641 |
|
||
Goodwill |
217,093 |
|
|
214,288 |
|
||
Identifiable intangible assets, net |
109,172 |
|
|
121,547 |
|
||
Deferred income taxes |
24,405 |
|
|
24,630 |
|
||
Other non-current assets |
68,835 |
|
|
72,521 |
|
||
Total assets |
$ |
1,582,622 |
|
|
$ |
1,692,094 |
|
Liabilities and Shareholders’ Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
521,552 |
|
|
$ |
454,240 |
|
Accrued expenses and other current liabilities |
87,969 |
|
|
76,686 |
|
||
Current portion of contingent consideration |
— |
|
|
46,334 |
|
||
Income taxes payable |
5,333 |
|
|
5,886 |
|
||
Current portion of long-term debt |
7,843 |
|
|
7,839 |
|
||
Current liabilities held for sale |
— |
|
|
128,022 |
|
||
Total current liabilities |
622,697 |
|
|
719,007 |
|
||
Deferred income taxes |
4,309 |
|
|
3,884 |
|
||
Long-term debt, net of current portion |
137,206 |
|
|
143,175 |
|
||
Borrowings under revolving credit facility |
53,802 |
|
|
67,714 |
|
||
Other long-term liabilities |
74,033 |
|
|
80,068 |
|
||
Total liabilities |
892,047 |
|
|
1,013,848 |
|
||
Commitments and contingencies |
|
|
|
||||
Shareholders’ equity: |
|
|
|
||||
Preferred stock, no par value; 3,000,000 shares authorized, none issued |
— |
|
|
— |
|
||
Common stock, no par value; 45,000,000 shares authorized, 25,466,365 and 25,361,298 shares issued and outstanding at March 31, 2021 and June 30, 2020, respectively |
68,895 |
|
|
63,765 |
|
||
Retained earnings |
734,361 |
|
|
747,276 |
|
||
Accumulated other comprehensive loss |
(112,681 |
) |
|
(132,795 |
) |
||
Total shareholders’ equity |
690,575 |
|
|
678,246 |
|
||
Total liabilities and shareholders’ equity |
$ |
1,582,622 |
|
|
$ |
1,692,094 |
|
*Derived from audited financial statements. |
|||||||
ScanSource, Inc. and Subsidiaries |
|||||||||||||||
Condensed Consolidated Income Statements (Unaudited) |
|||||||||||||||
(in thousands, except per share data) |
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Quarter ended
|
|
Nine months ended
|
||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Net sales |
$ |
729,873 |
|
|
$ |
744,584 |
|
|
$ |
2,298,111 |
|
|
$ |
2,411,285 |
|
Cost of goods sold |
641,757 |
|
|
660,006 |
|
|
2,043,172 |
|
|
2,129,862 |
|
||||
Gross profit |
88,116 |
|
|
84,578 |
|
|
254,939 |
|
|
281,423 |
|
||||
Selling, general and administrative expenses |
60,099 |
|
|
64,971 |
|
|
182,681 |
|
|
201,344 |
|
||||
Depreciation expense |
3,141 |
|
|
3,268 |
|
|
9,634 |
|
|
9,729 |
|
||||
Intangible amortization expense |
4,880 |
|
|
5,159 |
|
|
14,595 |
|
|
15,007 |
|
||||
Restructuring and other charges |
560 |
|
|
169 |
|
|
9,312 |
|
|
604 |
|
||||
Change in fair value of contingent consideration |
— |
|
|
618 |
|
|
516 |
|
|
6,266 |
|
||||
Operating income |
19,436 |
|
|
10,393 |
|
|
38,201 |
|
|
48,473 |
|
||||
Interest expense |
1,576 |
|
|
3,098 |
|
|
5,285 |
|
|
9,727 |
|
||||
Interest income |
(745 |
) |
|
(1,080 |
) |
|
(1,756 |
) |
|
(2,627 |
) |
||||
Other expense (income), net |
(302 |
) |
|
(137 |
) |
|
183 |
|
|
198 |
|
||||
Income before income taxes |
18,907 |
|
|
8,512 |
|
|
34,489 |
|
|
41,175 |
|
||||
Provision for income taxes |
5,121 |
|
|
2,797 |
|
|
9,757 |
|
|
11,542 |
|
||||
Net income from continuing operations |
13,786 |
|
|
5,715 |
|
|
24,732 |
|
|
29,633 |
|
||||
Net loss from discontinued operations |
(688 |
) |
|
(4,002 |
) |
|
(37,647 |
) |
|
(5,025 |
) |
||||
Net (loss) income |
$ |
13,098 |
|
|
$ |
1,713 |
|
|
$ |
(12,915 |
) |
|
$ |
24,608 |
|
Per share data: |
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income from continuing operations per common share, basic |
$ |
0.54 |
|
|
$ |
0.23 |
|
|
$ |
0.97 |
|
|
$ |
1.17 |
|
Net loss from discontinued operations per common share, basic |
(0.03 |
) |
|
(0.16 |
) |
|
(1.48 |
) |
|
(0.20 |
) |
||||
Net (loss) income per common share, basic |
$ |
0.51 |
|
|
$ |
0.07 |
|
|
$ |
(0.51 |
) |
|
$ |
0.97 |
|
Weighted-average shares outstanding, basic |
25,455 |
|
|
25,346 |
|
|
25,404 |
|
|
25,386 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income from continuing operations per common share, diluted |
$ |
0.54 |
|
|
$ |
0.23 |
|
|
$ |
0.97 |
|
|
$ |
1.16 |
|
Net loss from discontinued operations per common share, diluted |
(0.03 |
) |
|
(0.16 |
) |
|
(1.48 |
) |
|
(0.20 |
) |
||||
Net (loss) income per common share, diluted |
$ |
0.51 |
|
|
$ |
0.07 |
|
|
$ |
(0.51 |
) |
|
$ |
0.97 |
|
Weighted-average shares outstanding, diluted |
25,572 |
|
|
25,363 |
|
|
25,484 |
|
|
25,444 |
|
||||
ScanSource, Inc. and Subsidiaries |
||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) |
||||||||
(in thousands) |
||||||||
|
|
|
|
|
||||
|
|
Nine months ended March 31, |
||||||
|
|
2021 |
|
2020 |
||||
Cash flows from operating activities: |
|
|
|
|
||||
Net (loss) income |
|
$ |
(12,915 |
) |
|
$ |
24,608 |
|
Net loss from discontinued operations |
|
(37,647 |
) |
|
(5,025 |
) |
||
Net income from continuing operations |
|
24,732 |
|
|
29,633 |
|
||
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations: |
|
|
|
|
||||
Depreciation and amortization |
|
25,417 |
|
|
26,585 |
|
||
Amortization of debt issue costs |
|
313 |
|
|
313 |
|
||
Provision for doubtful accounts |
|
226 |
|
|
1,399 |
|
||
Share-based compensation |
|
5,711 |
|
|
4,053 |
|
||
Deferred income taxes |
|
(26 |
) |
|
(1,479 |
) |
||
Change in fair value of contingent consideration |
|
516 |
|
|
6,266 |
|
||
Contingent consideration payments excess |
|
(5,457 |
) |
|
(3,050 |
) |
||
Finance lease interest |
|
96 |
|
|
64 |
|
||
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
|
||||
Accounts receivable |
|
(68,654 |
) |
|
(85 |
) |
||
Inventories |
|
(5,907 |
) |
|
(7,446 |
) |
||
Prepaid expenses and other assets |
|
(1,641 |
) |
|
(10,977 |
) |
||
Other non-current assets |
|
2,846 |
|
|
(1,029 |
) |
||
Accounts payable |
|
69,609 |
|
|
55,378 |
|
||
Accrued expenses and other liabilities |
|
8,434 |
|
|
13,233 |
|
||
Income taxes payable |
|
(793 |
) |
|
(4,775 |
) |
||
Net cash provided by operating activities of continuing operations |
|
55,422 |
|
|
108,083 |
|
||
Cash flows from investing activities of continuing operations: |
|
|
|
|
||||
Capital expenditures |
|
(2,283 |
) |
|
(6,575 |
) |
||
Cash paid for business acquisitions, net of cash acquired |
|
— |
|
|
(48,915 |
) |
||
Proceeds from the sale of net assets of discontinued operations |
|
34,356 |
|
|
— |
|
||
Net cash provided by (used in) investing activities of continuing operations |
|
32,073 |
|
|
(55,490 |
) |
||
Cash flows from financing activities of continuing operations: |
|
|
|
|
||||
Borrowings on revolving credit, net of expenses |
|
1,486,464 |
|
|
1,608,472 |
|
||
Repayments on revolving credit, net of expenses |
|
(1,500,375 |
) |
|
(1,650,862 |
) |
||
Borrowings on long-term debt, net |
|
(5,964 |
) |
|
(3,147 |
) |
||
Repayments of finance lease obligations |
|
(974 |
) |
|
(660 |
) |
||
Contingent consideration payments |
|
(41,393 |
) |
|
(35,481 |
) |
||
Exercise of stock options |
|
439 |
|
|
754 |
|
||
Taxes paid on settlement of equity awards |
|
(1,036 |
) |
|
(1,354 |
) |
||
Repurchase of common stock |
|
— |
|
|
(6,077 |
) |
||
Net cash used in financing activities of continuing operations |
|
(62,839 |
) |
|
(88,355 |
) |
||
|
|
|
|
|
||||
ScanSource, Inc. and Subsidiaries |
||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited), continued |
||||||||
(in thousands) |
||||||||
|
|
|
|
|
||||
Cash flows from discontinued operations: |
|
|
|
|
||||
Net cash flows provided by operating activities of discontinued operations |
|
21,704 |
|
|
42,000 |
|
||
Net cash flows used in investing activities of discontinued operations |
|
(58 |
) |
|
(48 |
) |
||
Net cash flows (used in) provided by financing activities of discontinued operations |
|
(29,494 |
) |
|
6,739 |
|
||
Net cash flows provided by discontinued operations |
|
(7,848 |
) |
|
48,691 |
|
||
Effect of exchange rate changes on cash and cash equivalents |
|
(1,942 |
) |
|
(2,151 |
) |
||
Increase in cash and cash equivalents |
|
14,866 |
|
|
10,778 |
|
||
Consolidated cash and cash equivalents at beginning of period |
|
34,455 |
|
|
23,818 |
|
||
Consolidated cash and cash equivalents at end of period |
|
49,321 |
|
|
34,596 |
|
||
Cash and cash equivalents of discontinued operations |
|
— |
|
|
4,838 |
|
||
Cash and cash equivalents of continuing operations |
|
$ |
49,321 |
|
|
$ |
29,758 |
|
ScanSource, Inc. and Subsidiaries |
|||||||
Supplementary Information (Unaudited) |
|||||||
(in thousands, except percentages) |
|||||||
|
|
|
|
||||
Non-GAAP Financial Information: |
|||||||
|
Quarter ended March 31, |
||||||
|
2021 |
|
2020 |
||||
Return on invested capital ratio (ROIC), annualized (a) |
|
13.6 |
% |
|
|
6.0 |
% |
|
|
|
|
||||
Reconciliation of net income to EBITDA: |
|
|
|
||||
Net income from continuing operations (GAAP) |
$ |
13,786 |
|
|
$ |
5,715 |
|
Plus: Interest expense |
1,576 |
|
|
3,098 |
|
||
Plus: Income taxes |
5,121 |
|
|
2,797 |
|
||
Plus: Depreciation and amortization |
8,358 |
|
|
8,987 |
|
||
EBITDA (non-GAAP) |
28,841 |
|
|
20,597 |
|
||
Plus: Change in fair value of contingent consideration |
— |
|
|
618 |
|
||
Plus: Acquisition and divestiture costs(b) |
272 |
|
|
780 |
|
||
Plus: Restructuring costs |
349 |
|
|
169 |
|
||
Plus: Tax recovery |
— |
|
|
(2,320 |
) |
||
Adjusted EBITDA (numerator for ROIC) (non-GAAP) |
$ |
29,462 |
|
|
$ |
19,844 |
|
|
|
|
|
||||
Invested Capital Calculations: |
|
|
|
||||
Equity – beginning of the quarter (c) |
$ |
682,139 |
|
|
$ |
927,580 |
|
Equity – end of the quarter (c) |
690,575 |
|
|
897,678 |
|
||
Plus: Change in fair value of contingent consideration, net of tax |
— |
|
|
467 |
|
||
Plus: Acquisition and divestiture costs(b) |
272 |
|
|
780 |
|
||
Plus: Restructuring, net of tax
|
264 |
|
|
125 |
|
||
Plus: Tax recovery, net of tax |
— |
|
|
(1,754 |
) |
||
Plus: Net loss from discontinued operations |
688 |
|
|
4,002 |
|
||
Average equity |
686,969 |
|
|
914,439 |
|
||
Average funded debt (d) |
191,996 |
|
|
405,533 |
|
||
Invested capital (denominator for ROIC) (non-GAAP) |
$ |
878,965 |
|
|
$ |
1,319,972 |
|
|
|
|
|
||||
(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 quarter and 91 days in the prior-year quarter. |
|||||||
(b) Acquisition and divestiture costs are generally nondeductible for tax purposes. |
|||||||
(c) In the quarter ending June 30, 2020, the Company recorded impairment charges of $120.5 million. Impairment charges, net of tax reduced equity by $114.4 million. |
|||||||
(d) Average funded debt, which includes both continuing and discontinued operations, is calculated as the average daily amounts outstanding on short-term and long-term interest-bearing debt. |
|||||||
ScanSource, Inc. and Subsidiaries |
||||||||||
Supplementary Information (Unaudited) |
||||||||||
|
|
|
|
|||||||
Net Sales by Segment: |
|
|
|
|||||||
|
Quarter ended March 31, |
|
|
|||||||
|
2021 |
|
2020 |
|
% Change |
|||||
Worldwide Barcode, Networking & Security: |
(in thousands) |
|
|
|||||||
Net sales, reported |
$ |
502,227 |
|
|
$ |
489,218 |
|
|
2.7 |
% |
Foreign exchange impact (a) |
4,132 |
|
|
— |
|
|
|
|||
Non-GAAP net sales, constant currency |
$ |
506,359 |
|
|
$ |
489,218 |
|
|
3.5 |
% |
|
|
|
|
|
|
|||||
Worldwide Communications & Services: |
|
|
|
|
|
|||||
Net sales, reported |
$ |
227,646 |
|
|
$ |
255,366 |
|
|
(10.9) |
% |
Foreign exchange impact (a) |
10,476 |
|
|
— |
|
|
|
|||
Non-GAAP net sales, constant currency |
$ |
238,122 |
|
|
$ |
255,366 |
|
|
(6.8) |
% |
|
|
|
|
|
|
|||||
Consolidated: |
|
|
|
|
|
|||||
Net sales, reported |
$ |
729,873 |
|
|
$ |
744,584 |
|
|
(2.0) |
% |
Foreign exchange impact (a) |
14,608 |
|
|
— |
|
|
|
|||
Non-GAAP net sales, constant currency |
$ |
744,481 |
|
|
$ |
744,584 |
|
|
— |
% |
|
|
|
|
|
|
|||||
(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 March 31, 2021 into U.S. dollars using the average foreign exchange rates for the quarter ended March 31, 2020. |
||||||||||
|
|
|
|
|
|
|||||
ScanSource, Inc. and Subsidiaries |
||||||||||
Supplementary Information (Unaudited) |
||||||||||
|
|
|
|
|||||||
Net Sales by Segment: |
|
|
|
|||||||
|
Nine months ended March 31, |
|
|
|||||||
|
2021 |
|
2020 |
|
% Change |
|||||
Worldwide Barcode, Networking & Security: |
(in thousands) |
|
|
|||||||
Net sales, reported |
$ |
1,577,197 |
|
|
$ |
1,645,406 |
|
|
(4.1 |
)% |
Foreign exchange impact (a) |
19,758 |
|
|
— |
|
|
|
|||
Non-GAAP net sales, constant currency |
$ |
1,596,955 |
|
|
$ |
1,645,406 |
|
|
(2.9 |
)% |
|
|
|
|
|
|
|||||
Worldwide Communications & Services: |
|
|
|
|
|
|||||
Net sales, reported |
$ |
720,914 |
|
|
$ |
765,879 |
|
|
(5.9 |
)% |
Foreign exchange impact (a) |
47,694 |
|
|
— |
|
|
|
|||
Non-GAAP net sales, constant currency |
$ |
768,608 |
|
|
$ |
765,879 |
|
|
0.4 |
% |
|
|
|
|
|
|
|||||
Consolidated: |
|
|
|
|
|
|||||
Net sales, reported |
$ |
2,298,111 |
|
|
$ |
2,411,285 |
|
|
(4.7 |
)% |
Foreign exchange impact (a) |
67,452 |
|
|
— |
|
|
|
|||
Non-GAAP net sales, constant currency |
$ |
2,365,563 |
|
|
$ |
2,411,285 |
|
|
(1.9 |
)% |
|
|
|
|
|
|
|||||
(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 nine months ended March 31, 2021 into U.S. dollars using the average foreign exchange rates for the nine months ended March 31, 2020. |
||||||||||
ScanSource, Inc. and Subsidiaries |
||||||||||
Supplementary Information (Unaudited) |
||||||||||
|
|
|
|
|
|
|||||
Net Sales by Geography: |
|
|
|
|||||||
|
Quarter ended March 31, |
|
|
|||||||
|
2021 |
|
2020 |
|
% Change |
|||||
United States and Canada: |
(in thousands) |
|
|
|||||||
Net sales, as reported |
$ |
665,720 |
|
|
$ |
670,175 |
|
|
(0.7) |
% |
|
|
|
|
|
|
|||||
International: |
|
|
|
|
|
|||||
Net sales, reported |
$ |
64,153 |
|
|
$ |
74,409 |
|
|
(13.8) |
% |
Foreign exchange impact(a) |
14,608 |
|
|
— |
|
|
|
|||
Non-GAAP net sales, constant currency |
$ |
78,761 |
|
|
$ |
74,409 |
|
|
5.8 |
% |
|
|
|
|
|
|
|||||
Consolidated: |
|
|
|
|
|
|||||
Net sales, reported |
$ |
729,873 |
|
|
$ |
744,584 |
|
|
(2.0) |
% |
Foreign exchange impact(a) |
14,608 |
|
|
— |
|
|
|
|||
Non-GAAP net sales, constant currency |
$ |
744,481 |
|
|
$ |
744,584 |
|
|
— |
% |
|
|
|
|
|
|
|||||
(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 March 31, 2021 into U.S. dollars using the average foreign exchange rates for the quarter ended March 31, 2020. |
||||||||||
ScanSource, Inc. and Subsidiaries |
||||||||||
Supplementary Information (Unaudited) |
||||||||||
|
|
|
|
|
|
|||||
Net Sales by Geography: |
|
|
|
|||||||
|
Nine months ended March 31, |
|
|
|||||||
|
2021 |
|
2020 |
|
% Change |
|||||
United States and Canada: |
(in thousands) |
|
|
|||||||
Net sales, as reported |
$ |
2,069,327 |
|
|
$ |
2,173,515 |
|
|
(4.8 |
)% |
|
|
|
|
|
|
|||||
International: |
|
|
|
|
|
|||||
Net sales, reported |
$ |
228,784 |
|
|
$ |
237,770 |
|
|
(3.8 |
)% |
Foreign exchange impact(a) |
67,452 |
|
|
— |
|
|
|
|||
Non-GAAP net sales, constant currency |
$ |
296,236 |
|
|
$ |
237,770 |
|
|
24.6 |
% |
|
|
|
|
|
|
|||||
Consolidated: |
|
|
|
|
|
|||||
Net sales, reported |
$ |
2,298,111 |
|
|
$ |
2,411,285 |
|
|
(4.7 |
)% |
Foreign exchange impact(a) |
67,452 |
|
|
— |
|
|
|
|||
Non-GAAP net sales, constant currency |
$ |
2,365,563 |
|
|
$ |
2,411,285 |
|
|
(1.9 |
)% |
|
|
|
|
|
|
|||||
(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 nine months ended March 31, 2021 into U.S. dollars using the average foreign exchange rates for the nine months ended March 31, 2020. |
||||||||||
|
Quarter ended March 31, 2021 |
||||||||||||||||||||||||||
|
GAAP Measure |
|
Intangible
|
|
Change in fair
|
|
Acquisition and
|
|
Restructuring
|
|
Tax recovery,
|
|
Non-GAAP
|
||||||||||||||
|
(in thousands, except per share data) |
||||||||||||||||||||||||||
Net sales |
$ |
729,873 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
729,873 |
|
Gross profit |
88,116 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
88,116 |
|
|||||||
Operating income |
19,436 |
|
|
4,880 |
|
|
— |
|
|
272 |
|
|
560 |
|
|
— |
|
|
25,148 |
|
|||||||
Other expense, net |
529 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
529 |
|
|||||||
Pre-tax income |
18,907 |
|
|
4,880 |
|
|
— |
|
|
272 |
|
|
560 |
|
|
— |
|
|
24,619 |
|
|||||||
Net income from continuing operations |
13,786 |
|
|
3,697 |
|
|
— |
|
|
272 |
|
|
423 |
|
|
— |
|
|
18,178 |
|
|||||||
Diluted EPS from continuing operations |
$ |
0.54 |
|
|
$ |
0.14 |
|
|
$ |
— |
|
|
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
— |
|
|
$ |
0.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Quarter ended March 31, 2020 |
||||||||||||||||||||||||||
|
GAAP Measure |
|
Intangible
|
|
Change in fair
|
|
Acquisition and
|
|
Restructuring
|
|
Tax recovery,
|
|
Non-GAAP
|
||||||||||||||
|
(in thousands, except per share data) |
||||||||||||||||||||||||||
Net sales |
$ |
744,584 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
744,584 |
|
Gross profit |
84,578 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
84,578 |
|
|||||||
Operating income |
10,393 |
|
|
5,159 |
|
|
618 |
|
|
780 |
|
|
169 |
|
|
(2,320 |
) |
|
14,799 |
|
|||||||
Other expense, net |
1,881 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,881 |
|
|||||||
Pre-tax income |
8,512 |
|
|
5,159 |
|
|
618 |
|
|
780 |
|
|
169 |
|
|
(2,320 |
) |
|
12,918 |
|
|||||||
Net income from continuing operations |
5,715 |
|
|
3,909 |
|
|
467 |
|
|
780 |
|
|
125 |
|
|
(1,754 |
) |
|
9,242 |
|
|||||||
Diluted EPS from continuing operations |
$ |
0.23 |
|
|
$ |
0.15 |
|
|
$ |
0.02 |
|
|
$ |
0.03 |
|
|
$ |
— |
|
|
$ |
(0.07 |
) |
|
$ |
0.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Nine months ended March 31, 2021 |
||||||||||||||||||||||||||
|
Reported GAAP Measure |
|
Intangible amortization expense |
|
Change in fair value of contingent consideration |
|
Acquisition and divestiture costs |
|
Restructuring costs |
|
Tax recovery, net |
|
Non-GAAP measure |
||||||||||||||
|
(in thousands, except per share data) |
||||||||||||||||||||||||||
Net sales |
$ |
2,298,111 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,298,111 |
|
Gross profit |
254,939 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
254,939 |
|
|||||||
Operating income |
38,201 |
|
|
14,595 |
|
|
516 |
|
|
2,130 |
|
|
9,312 |
|
|
— |
|
|
64,754 |
|
|||||||
Other expense, net |
3,712 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3,712 |
|
|||||||
Pre-tax income |
34,489 |
|
|
14,595 |
|
|
516 |
|
|
2,130 |
|
|
9,312 |
|
|
— |
|
|
61,042 |
|
|||||||
Net income from continuing operations |
24,732 |
|
|
11,055 |
|
|
390 |
|
|
2,130 |
|
|
7,040 |
|
|
— |
|
|
45,347 |
|
|||||||
Diluted EPS from continuing operations |
$ |
0.97 |
|
|
$ |
0.43 |
|
|
$ |
0.02 |
|
|
$ |
0.08 |
|
|
$ |
0.28 |
|
|
$ |
— |
|
|
$ |
1.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Nine months ended March 31, 2020 |
||||||||||||||||||||||||||
|
Reported GAAP Measure |
|
Intangible amortization expense |
|
Change in fair value of contingent consideration |
|
Acquisition and divestiture costs |
|
Restructuring costs |
|
Tax recovery, net |
|
Non-GAAP measure |
||||||||||||||
|
(in thousands, except per share data) |
||||||||||||||||||||||||||
Net sales |
$ |
2,411,285 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,411,285 |
|
Gross profit |
281,423 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
281,423 |
|
|||||||
Operating income |
48,473 |
|
|
15,007 |
|
|
6,266 |
|
|
2,689 |
|
|
604 |
|
|
(2,320 |
) |
|
70,719 |
|
|||||||
Other expense, net |
7,298 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
7,298 |
|
|||||||
Pre-tax income |
41,175 |
|
|
15,007 |
|
|
6,266 |
|
|
2,689 |
|
|
604 |
|
|
(2,320 |
) |
|
63,421 |
|
|||||||
Net income from continuing operations |
29,633 |
|
|
11,347 |
|
|
4,737 |
|
|
2,689 |
|
|
449 |
|
|
(1,754 |
) |
|
47,101 |
|
|||||||
Diluted EPS from continuing operations |
$ |
1.16 |
|
|
$ |
0.45 |
|
|
$ |
0.19 |
|
|
$ |
0.11 |
|
|
$ |
0.02 |
|
|
$ |
(0.07 |
) |
|
$ |
1.85 |
|
ScanSource, Inc. and Subsidiaries |
|||||||||||||||
Supplementary Information (Unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
Discontinued Operations - Financial Results: |
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
Quarter ended
|
|
Nine months ended
|
||||||||||||
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
|
(in thousands) |
||||||||||||||
Net sales |
$ |
— |
|
|
$ |
127,899 |
|
|
$ |
213,373 |
|
|
$ |
439,527 |
|
Cost of goods sold |
— |
|
|
117,669 |
|
|
198,512 |
|
|
400,158 |
|
||||
Gross profit |
— |
|
|
10,230 |
|
|
14,861 |
|
|
39,369 |
|
||||
Selling, general and administrative expenses |
— |
|
|
13,782 |
|
|
17,291 |
|
|
42,607 |
|
||||
Depreciation expense |
— |
|
|
225 |
|
|
— |
|
|
771 |
|
||||
Intangible amortization expense |
— |
|
|
327 |
|
|
— |
|
|
1,073 |
|
||||
Operating loss |
— |
|
|
(4,104 |
) |
|
(2,430 |
) |
|
(5,082 |
) |
||||
Interest expense, net |
— |
|
|
323 |
|
|
394 |
|
|
1,236 |
|
||||
Loss on disposal group |
688 |
|
|
— |
|
|
34,496 |
|
|
— |
|
||||
Other expense, net |
— |
|
|
433 |
|
|
310 |
|
|
(96 |
) |
||||
Loss from discontinued operations before taxes |
(688 |
) |
|
(4,860 |
) |
|
(37,630 |
) |
|
(6,222 |
) |
||||
Income tax expense |
— |
|
|
(858 |
) |
|
17 |
|
|
(1,197 |
) |
||||
Net loss from discontinued operations |
$ |
(688 |
) |
|
$ |
(4,002 |
) |
|
$ |
(37,647 |
) |
|
$ |
(5,025 |
) |
ScanSource, Inc. and Subsidiaries |
|||||||
Supplementary Information (Unaudited) |
|||||||
|
|
|
|
||||
Discontinued Operations - Assets and Liabilities: |
|
|
|
||||
|
|
|
|
||||
|
March 31, 2021 |
|
June 30, 2020 |
||||
|
(in thousands) |
||||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
— |
|
|
$ |
4,970 |
|
Accounts receivable, net |
— |
|
|
117,200 |
|
||
Inventories, net |
— |
|
|
106,779 |
|
||
Prepaid expenses and other current assets |
— |
|
|
23,808 |
|
||
Total current assets |
— |
|
|
252,757 |
|
||
Property and equipment, net |
— |
|
|
1,833 |
|
||
Deferred income taxes |
— |
|
|
9,349 |
|
||
Other non-current assets |
— |
|
|
6,215 |
|
||
Total assets, before valuation allowance |
— |
|
|
270,154 |
|
||
Less: valuation allowance |
— |
|
|
(88,923 |
) |
||
Total assets, net of valuation allowance (a) |
$ |
— |
|
|
$ |
181,231 |
|
Liabilities |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
— |
|
|
$ |
56,098 |
|
Accrued expenses and other current liabilities |
— |
|
|
14,815 |
|
||
Other taxes payable |
— |
|
|
20,378 |
|
||
Short-term borrowings |
— |
|
|
3,524 |
|
||
Income tax payable |
— |
|
|
1,085 |
|
||
Total current liabilities |
— |
|
|
95,900 |
|
||
Borrowings under revolving credit facility |
— |
|
|
24,704 |
|
||
Other long-term liabilities |
— |
|
|
7,418 |
|
||
Total liabilities(1) |
$ |
— |
|
|
$ |
128,022 |
|
|
|
|
|
||||
(a) Total assets and liabilities of discontinued operations are classified in current assets and liabilities, respectively, in the Company's consolidated balance sheet as of March 31, 2021 and June 30, 2020. The discontinued operations were disposed of during the quarter ended December 31, 2020. |
|||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20210510005893/en/
Contacts
Steve Jones
Senior Executive Vice President, Chief Financial Officer
ScanSource, Inc.
(864) 286-4302
- or -
Mary M. Gentry
Vice President, Treasurer and Investor Relations
ScanSource, Inc.
(864) 286-4892
