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ScanSource Reports Fourth Quarter and Full-year Results

ScanSource, Inc. (NASDAQ: SCSC), a leading hybrid distributor connecting devices to the cloud, today announced financial results for the fourth quarter ended June 30, 2023.

 

Fourth Quarter Summary

 

Fiscal Year Summary

 

Q4 FY23

 

Q4 FY22

 

Change

 

FY23

 

FY22

 

Change

 

(in thousands, except per share data)

Select reported measures:

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

947,149

 

 

$

962,283

 

 

-1.6

%

 

$

3,787,721

 

 

$

3,529,935

 

 

7.3

%

Gross profit

$

108,659

 

 

$

110,792

 

 

-1.9

%

 

$

449,239

 

 

$

426,524

 

 

5.3

%

Gross profit margin %

 

11.47

%

 

 

11.51

%

 

-4bp

 

 

11.86

%

 

 

12.08

%

 

-22bp

Operating income

$

27,289

 

 

$

27,424

 

 

-0.5

%

 

$

135,886

 

 

$

122,167

 

 

11.2

%

GAAP net income

$

17,095

 

 

$

19,947

 

 

-14.3

%

 

$

88,092

 

 

$

88,698

 

 

-0.7

%

GAAP diluted EPS

$

0.68

 

 

$

0.78

 

 

-12.8

%

 

$

3.47

 

 

$

3.44

 

 

0.9

%

Select Non-GAAP measures:

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

40,199

 

 

$

38,672

 

 

3.9

%

 

$

179,943

 

 

$

166,723

 

 

7.9

%

Adjusted EBITDA margin %

 

4.24

%

 

 

4.02

%

 

22bp

 

 

4.75

%

 

 

4.72

%

 

3bp

Non-GAAP net income

$

19,213

 

 

$

23,266

 

 

-17.4

%

 

$

97,688

 

 

$

102,140

 

 

-4.4

%

Non-GAAP diluted EPS

$

0.76

 

 

$

0.91

 

 

-16.5

%

 

$

3.85

 

 

$

3.97

 

 

-3.0

%

“As we enter our new fiscal year, strong free cash flow and focus on Intelisys are keys to our success,” said Mike Baur, Chairman and CEO, ScanSource, Inc. “Now that the supply chain challenges are behind us, we are normalizing our working capital to meet our margin expectations and market demand.”

Quarterly Results

Net sales for the fourth quarter of fiscal year 2023 totaled $947.1 million, down 1.6% year-over-year. Fourth quarter fiscal year 2023 sales and execution reinforce the resilience of ScanSource’s business amid a cyberattack that impacted the Company’s core systems for its hardware business. Specialty Technology Solutions net sales for the fourth quarter decreased 3.3% year-over-year to $561.5 million. Strength in networking and security partially offset the lost sales from the cyberattack and a slowdown in mobility and barcoding. Modern Communications & Cloud net sales for the fourth quarter increased 1.0% year-over-year to $385.6 million, led by growth in Cisco products. Intelisys net billings increased to approximately $2.47 billion annualized, and Intelisys net sales for fourth quarter increased 8% year-over-year.

Gross profit for the fourth quarter of fiscal year 2023 decreased 1.9% year-over-year to $108.7 million. Gross profit margin for the fourth quarter was 11.47% versus 11.51% in the prior-year quarter.

For the fourth quarter of fiscal year 2023, operating income was $27.3 million compared to $27.4 million in the prior-year quarter. Fourth quarter fiscal year 2023 non-GAAP operating income increased to $32.8 million for a 3.46% non-GAAP operating income margin, up from $31.9 million for the prior-year quarter.

On a GAAP basis, net income for the fourth quarter of fiscal year 2023 totaled $17.1 million, or $0.68 per diluted share, compared to net income of $19.9 million, or $0.78 per diluted share, for the prior-year quarter. Fourth quarter fiscal year 2023 non-GAAP net income totaled $19.2 million, or $0.76 per diluted share, down from $23.3 million, or $0.91 per diluted share, for the prior-year quarter. Interest expense increased to $5.6 million, up significantly from $1.9 million for the prior-year quarter, reflecting higher interest rates and higher borrowings.

Adjusted EBITDA for the fourth quarter of fiscal year 2023 increased 3.9% to $40.2 million, or 4.24% of net sales, compared to $38.7 million, or 4.02% of net sales, for the prior-year quarter.

Full-Year Results

For fiscal year 2023, net sales increased 7.3% to $3.8 billion, or a 7.2% year-over-year increase on an organic basis. Fiscal year 2023 net sales in the Specialty Technology Solutions segment increased 11.9% to $2.3 billion, led by growth in networking, security, and barcoding. Fiscal year 2023 net sales in the Modern Communications & Cloud segment increased 0.6% year-over-year to $1.5 billion led by growth in Cisco products.

Gross profit for the fiscal year 2023 totaled $449.2 million, up 5.3% year-over-year. The increase is primarily due to higher sales volume compared to the prior year. Gross profit margin decreased to 11.9%, down from 12.1% in the prior year.

For the fiscal year ended June 30, 2023, operating income increased to $135.9 million from $122.2 million in the prior year. Fiscal year 2023 non-GAAP operating income increased to $151.1 million for a 3.99% non-GAAP operating income margin, up from $140.1 million for the prior year.

On a GAAP basis, net income for the fiscal year ended June 30, 2023 totaled $88.1 million, or $3.47 per diluted share, compared to net income of $88.7 million, or $3.44 per diluted share for the prior year. Fiscal year 2023 non-GAAP net income totaled $97.7 million, or $3.85 per diluted share, compared to $102.1 million, or $3.97 per diluted share for the prior year. Interest expense increased to $19.8 million, up significantly from $6.5 million for the prior year, reflecting higher interest rates and higher borrowings.

Adjusted EBITDA for the fiscal year ended June 30, 2023 increased to $179.9 million, or 4.75% of net sales, compared to $166.7 million, or 4.72%, of net sales for the prior-year.

Annual Financial Outlook for Fiscal Year 2024

The following guidance is based on ScanSource's current expectations for the full fiscal year ended June 30, 2024.

 

 

FY24 Annual Outlook

Net sales growth, year-over-year

 

At least 3%

Adjusted EBITDA (Non-GAAP)

 

At least $180 million

Free cash flow

 

At least $150 million

Adjusted EBITDA is a non-GAAP measure, which excludes estimates for amortization of intangible assets, depreciation expense, and non-cash shared-based compensation expense. ScanSource’s outlook does not include the potential impact of any business combinations, asset acquisitions, divestitures, strategic investments, or other significant transactions that may be completed after the date hereof. These statements are forward-looking, and actual results may differ materially.

Fourth Quarter Cyberattack

On May 14, 2023, ScanSource discovered it was subject to a cyberattack that impacted some of its systems. Upon detection, the Company immediately launched its incident response plan. Thanks to the exceptional work of ScanSource’s employees, in conjunction with external cybersecurity experts, the Company’s core systems were restored, and operations resumed on May 26, 2023.

Webcast Details and Earnings Infographic

At approximately 8:45 a.m. ET today, an Earnings Infographic, 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 and business in a conference call today, August 22, 2023, at 10:30 a.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 the Company's FY24 outlook, which involve risks and uncertainties. Any number of factors could cause actual results to differ materially from anticipated or forecasted results, including, but not limited to, the following factors, which are neither presented in order of importance nor weighted: macroeconomic conditions, including potential prolonged economic weakness, inflation, 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, economic weakness and inflation, risk to our business from a cyberattack, a failure of our IT systems, failure to hire and retain quality employees, loss of the Company's major customers, relationships with our key suppliers and customers or a termination or a modification of the terms under which it operates with these key suppliers, 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, 2023. 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.

Additional Non-GAAP Metrics: To evaluate current period performance on a more consistent basis with prior periods, the Company discloses non-GAAP SG&A expenses, non-GAAP operating income, non-GAAP operating income margin, 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, restructuring costs, 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.

Adjusted earnings before interest expense, income taxes, depreciation, and amortization (“Adjusted EBITDA”): Adjusted EBITDA starts with net income and adds back interest expense, income tax expense, depreciation expense, amortization of intangible assets, changes in fair value of contingent considerations, and other non-GAAP adjustments, including acquisition and divestiture costs, impairment charges, restructuring costs, cyberattack restoration costs, tax recovery, and non-cash share-based compensation expense. Since Adjusted EBITDA excludes some non-cash costs of investing in our business and people, management believes that Adjusted EBITDA shows the profitability from our business operations more clearly. The presentation for Adjusted EBITDA for all periods presented has been recast to reflect this change to enhance comparability between periods. The Adjusted EBITDA margin is calculated as Adjusted EBITDA as a percentage of net sales.

Adjusted return on invested capital ("Adjusted ROIC"): Adjusted 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 Adjusted ROIC provides useful information to investors and is an additional relevant comparison of our performance. Adjusted ROIC is calculated as Adjusted EBITDA over invested capital. Invested capital is defined as average equity plus average daily funded interest-bearing debt for the period. Management believes the calculation of Adjusted ROIC provides useful information to investors and is an additional relevant comparison of the Company's performance during the year.

Free cash flow: We present free cash flow as we believe this measure provides more information regarding our liquidity and capital resources. Free cash flow is defined as cash flows from operating activities less capital expenditures.

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 a leading hybrid distributor connecting devices to the cloud and accelerating growth for customers across hardware, SaaS, connectivity and cloud. ScanSource enables customers to deliver solutions for their end users to address changing buying and consumption patterns. ScanSource sells through multiple, specialized routes-to-market with hardware, SaaS, connectivity and cloud 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. Founded in 1992 and headquartered in Greenville, South Carolina, ScanSource was named one of the 2023 Best Places to Work in South Carolina and on FORTUNE magazine’s 2023 List of World’s Most Admired Companies. ScanSource ranks #773 on the Fortune 1000. For more information, visit www.scansource.com.

ScanSource, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands)

 

June 30, 2023

 

June 30, 2022*

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

36,178

 

 

$

37,987

 

Accounts receivable, less allowance of $15,480 at June 30, 2023 and $16,806 at June 30, 2022

 

753,236

 

 

 

729,442

 

Inventories

 

757,574

 

 

 

614,814

 

Prepaid expenses and other current assets

 

110,087

 

 

 

141,562

 

Total current assets

 

1,657,075

 

 

 

1,523,805

 

Property and equipment, net

 

37,379

 

 

 

37,477

 

Goodwill

 

216,706

 

 

 

214,435

 

Identifiable intangible assets, net

 

68,495

 

 

 

84,427

 

Deferred income taxes

 

17,764

 

 

 

15,668

 

Other non-current assets

 

70,750

 

 

 

61,616

 

Total assets

$

2,068,169

 

 

$

1,937,428

 

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

691,119

 

 

$

714,177

 

Accrued expenses and other current liabilities

 

78,892

 

 

 

88,455

 

Income taxes payable

 

9,875

 

 

 

34

 

Current portion of long-term debt

 

6,915

 

 

 

11,598

 

Total current liabilities

 

786,801

 

 

 

814,264

 

Deferred income taxes

 

3,816

 

 

 

3,144

 

Long-term debt, net of current portion

 

144,006

 

 

 

123,733

 

Borrowings under revolving credit facility

 

178,980

 

 

 

135,839

 

Other long-term liabilities

 

49,268

 

 

 

53,920

 

Total liabilities

 

1,162,871

 

 

 

1,130,900

 

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, 24,844,203 and 25,187,351 shares issued and outstanding at June 30, 2023 and June 30, 2022, respectively

 

58,241

 

 

 

64,297

 

Retained earnings

 

936,678

 

 

 

846,869

 

Accumulated other comprehensive loss

 

(89,621

)

 

 

(104,638

)

Total shareholders’ equity

 

905,298

 

 

 

806,528

 

Total liabilities and shareholders’ equity

$

2,068,169

 

 

$

1,937,428

 

 

*Derived from audited financial statements.

 

ScanSource, Inc. and Subsidiaries

Condensed Consolidated Income Statements (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

Quarter ended June 30,

 

Fiscal year ended June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net sales

$

947,149

 

 

$

962,283

 

 

$

3,787,721

 

 

$

3,529,935

 

Cost of goods sold

 

838,490

 

 

 

851,491

 

 

 

3,338,482

 

 

 

3,103,411

 

Gross profit

 

108,659

 

 

 

110,792

 

 

 

449,239

 

 

 

426,524

 

Selling, general and administrative expenses

 

74,358

 

 

 

75,905

 

 

 

285,695

 

 

 

275,442

 

Depreciation expense

 

2,827

 

 

 

3,023

 

 

 

10,912

 

 

 

11,062

 

Intangible amortization expense

 

4,185

 

 

 

4,440

 

 

 

16,746

 

 

 

17,853

 

Operating income

 

27,289

 

 

 

27,424

 

 

 

135,886

 

 

 

122,167

 

Interest expense

 

5,564

 

 

 

1,886

 

 

 

19,786

 

 

 

6,523

 

Interest income

 

(2,085

)

 

 

(1,360

)

 

 

(7,414

)

 

 

(4,333

)

Other expense, net

 

348

 

 

 

684

 

 

 

1,664

 

 

 

1,354

 

Income before income taxes

 

23,462

 

 

 

26,214

 

 

 

121,850

 

 

 

118,623

 

Provision for income taxes

 

6,367

 

 

 

6,267

 

 

 

33,758

 

 

 

29,925

 

Net income from continuing operations

 

17,095

 

 

 

19,947

 

 

 

88,092

 

 

 

88,698

 

Net income from discontinued operations

 

1,717

 

 

 

 

 

 

1,717

 

 

 

100

 

Net income

$

18,812

 

 

$

19,947

 

 

$

89,809

 

 

$

88,798

 

 

 

 

 

 

 

 

 

Per share data:

 

 

 

 

 

 

 

Net income from continuing operations per common share, basic

$

0.69

 

 

$

0.79

 

 

$

3.50

 

 

$

3.48

 

Net income from discontinued operations per common share, basic

 

0.07

 

 

 

 

 

 

0.07

 

 

 

 

Net income per common share, basic

$

0.76

 

 

$

0.79

 

 

$

3.57

 

 

$

3.48

 

Weighted-average shares outstanding, basic

 

24,883

 

 

 

25,286

 

 

 

25,142

 

 

 

25,504

 

 

 

 

 

 

 

 

 

Net income from continuing operations per common share, diluted

$

0.68

 

 

$

0.78

 

 

$

3.47

 

 

$

3.44

 

Net income from discontinued operations per common share, diluted

 

0.07

 

 

 

 

 

 

0.07

 

 

 

 

Net income per common share, diluted

$

0.75

 

 

$

0.78

 

 

$

3.54

 

 

$

3.45

 

Weighted-average shares outstanding, diluted

 

25,139

 

 

 

25,584

 

 

 

25,362

 

 

 

25,758

 

ScanSource, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

Quarter ended June 30,

 

Fiscal year ended June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

18,812

 

 

$

19,947

 

 

$

89,809

 

 

$

88,798

 

Net income (loss) from discontinued operations

 

1,717

 

 

 

 

 

 

1,717

 

 

 

100

 

Net income from continuing operations

 

17,095

 

 

 

19,947

 

 

 

88,092

 

 

 

88,698

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

7,256

 

 

 

7,701

 

 

 

28,614

 

 

 

29,884

 

Amortization of debt issue costs

 

96

 

 

 

104

 

 

 

577

 

 

 

417

 

Provision for doubtful accounts

 

933

 

 

 

1,357

 

 

 

2,785

 

 

 

1,514

 

Share-based compensation

 

2,586

 

 

 

2,872

 

 

 

11,219

 

 

 

11,663

 

Deferred income taxes

 

(2,905

)

 

 

3,742

 

 

 

(1,496

)

 

 

5,737

 

Finance lease interest

 

12

 

 

 

1

 

 

 

44

 

 

 

34

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

Accounts receivable

 

(64,020

)

 

 

(98,535

)

 

 

(17,368

)

 

 

(165,939

)

Inventories

 

(2,057

)

 

 

(27,613

)

 

 

(138,313

)

 

 

(145,962

)

Prepaid expenses and other assets

 

(6,526

)

 

 

(12,369

)

 

 

32,653

 

 

 

(27,371

)

Other non-current assets

 

(5,810

)

 

 

3,914

 

 

 

(7,582

)

 

 

1,123

 

Accounts payable

 

30,061

 

 

 

15,434

 

 

 

(30,656

)

 

 

82,969

 

Accrued expenses and other liabilities

 

2,587

 

 

 

7,876

 

 

 

(14,195

)

 

 

(4,869

)

Income taxes payable

 

5,431

 

 

 

(3,115

)

 

 

9,857

 

 

 

(2,252

)

Net cash used in operating activities

 

(15,261

)

 

 

(78,684

)

 

 

(35,769

)

 

 

(124,354

)

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

(3,431

)

 

 

(3,523

)

 

 

(9,979

)

 

 

(6,849

)

Cash received for business disposal

 

1,717

 

 

 

 

 

 

1,717

 

 

 

3,125

 

Net cash used in investing activities

 

(1,714

)

 

 

(3,523

)

 

 

(8,262

)

 

 

(3,724

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Borrowings on revolving credit, net of expenses

 

627,257

 

 

 

569,139

 

 

 

2,499,166

 

 

 

2,166,409

 

Repayments on revolving credit, net of expenses

 

(607,470

)

 

 

(477,593

)

 

 

(2,456,025

)

 

 

(2,030,569

)

Borrowings (repayments) on long-term debt, net

 

(938

)

 

 

(1,875

)

 

 

15,590

 

 

 

(7,843

)

Repayments on finance lease obligation

 

23

 

 

 

(306

)

 

 

(589

)

 

 

(1,238

)

Debt issuance costs

 

 

 

 

 

 

 

(1,407

)

 

 

 

Exercise of stock options

 

57

 

 

 

712

 

 

 

910

 

 

 

2,304

 

Taxes paid on settlement of equity awards

 

(30

)

 

 

(26

)

 

 

(2,463

)

 

 

(2,754

)

Common stock repurchased

 

(4,933

)

 

 

(9,676

)

 

 

(15,651

)

 

 

(18,203

)

Net cash provided by financing activities

 

13,966

 

 

 

80,375

 

 

 

39,531

 

 

 

108,106

 

Effect of exchange rate changes on cash and cash equivalents

 

1,813

 

 

 

(3,721

)

 

 

2,691

 

 

 

(4,759

)

Decrease in cash and cash equivalents

 

(1,196

)

 

 

(5,553

)

 

 

(1,809

)

 

 

(24,731

)

Cash and cash equivalents at beginning of period

 

37,374

 

 

 

43,539

 

 

 

37,987

 

 

 

62,718

 

Cash and cash equivalents at period end

$

36,178

 

 

$

37,986

 

 

$

36,178

 

 

$

37,987

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

(in thousands, except percentages)

 

 

 

 

 

 

 

 

Non-GAAP Financial Information:

 

 

 

 

Quarter ended June 30,

 

Fiscal year ended June 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Adjusted return on invested capital ratio (Adjusted ROIC), annualized(a)

 

12.9

%

 

 

14.9

%

 

 

14.6

%

 

 

17.0

%

 

 

 

 

 

 

 

 

Reconciliation of Net Income to Adjusted EBITDA:

 

 

 

 

 

 

 

Net income (GAAP)

$

17,095

 

 

$

19,947

 

 

$

88,092

 

 

$

88,698

 

Plus: Interest expense

 

5,564

 

 

 

1,886

 

 

 

19,786

 

 

 

6,523

 

Plus: Income taxes

 

6,367

 

 

 

6,267

 

 

 

33,758

 

 

 

29,925

 

Plus: Depreciation and amortization

 

7,255

 

 

 

7,700

 

 

 

28,614

 

 

 

29,884

 

EBITDA (non-GAAP)

 

36,281

 

 

 

35,800

 

 

 

170,250

 

 

 

155,030

 

Plus: Share-based compensation

 

2,586

 

 

 

2,872

 

 

 

11,219

 

 

 

11,663

 

Plus: Tax recovery

 

(128

)

 

 

 

 

 

(2,986

)

 

 

 

Plus: Cyberattack restoration costs

 

1,460

 

 

 

 

 

 

1,460

 

 

 

 

Plus: Acquisition and divestiture costs

 

 

 

 

 

 

 

 

 

 

30

 

Adjusted EBITDA (numerator for Adjusted ROIC) (non-GAAP)

$

40,199

 

 

$

38,672

 

 

$

179,943

 

 

$

166,723

 

 

 

 

 

 

 

 

 

Invested Capital Calculations:

 

 

 

 

 

 

 

Equity – beginning of the quarter

$

878,895

 

 

$

806,654

 

 

$

806,528

 

 

$

731,191

 

Equity – end of the quarter

 

905,298

 

 

 

806,528

 

 

 

905,298

 

 

 

806,528

 

Plus: Share-based compensation, net

 

1,921

 

 

 

2,134

 

 

 

8,326

 

 

 

8,709

 

Plus: Cyberattack restoration costs

 

1,092

 

 

 

 

 

 

1,092

 

 

 

 

Plus: Divestiture costs

 

 

 

 

 

 

 

 

 

 

30

 

Plus: Discontinued operations net income

 

(1,717

)

 

 

 

 

 

(1,717

)

 

 

(100

)

Plus: Tax recovery, net

 

(2,100

)

 

 

 

 

 

(3,985

)

 

 

 

Average equity

 

891,695

 

 

 

807,658

 

 

 

857,771

 

 

 

773,179

 

Average funded debt (b)

 

361,792

 

 

 

233,445

 

 

 

372,235

 

 

 

209,114

 

Invested capital (denominator for Adjusted ROIC) (non-GAAP)

$

1,253,487

 

 

$

1,041,103

 

 

$

1,230,006

 

 

$

982,293

 

 

 

 

 

 

 

 

 

(a) The annualized adjusted EBITDA amount is divided by days in the quarter times 365 days per year, or 366 days for leap year. There were 91 days in the current and prior-year quarter.

(b) Average funded debt 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 June 30,

 

 

 

2023

 

2022

 

% Change

Specialty Technology Solutions:

(in thousands)

 

 

Net sales, reported

$

561,501

 

$

580,619

 

(3.3

)%

Foreign exchange impact (a)

 

76

 

 

 

 

Non-GAAP net sales, constant currency

$

561,577

 

$

580,619

 

(3.3

)%

 

 

 

 

 

 

Modern Communications & Cloud:

 

 

 

 

 

Net sales, reported

$

385,648

 

$

381,664

 

1.0

%

Foreign exchange impact (a)

 

139

 

 

 

 

Non-GAAP net sales, constant currency

$

385,787

 

$

381,664

 

1.1

%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, reported

$

947,149

 

$

962,283

 

(1.6

)%

Foreign exchange impact (a)

 

215

 

 

 

 

Non-GAAP net sales, constant currency

$

947,364

 

$

962,283

 

(1.6

)%

 

 

 

 

 

 

(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 June 30, 2023 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2022.

 

 

 

 

 

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

Net Sales by Segment:

 

 

 

 

Fiscal year ended June 30,

 

 

 

2023

 

2022

 

% Change

Specialty Technology Solutions

(in thousands)

 

 

Net sales, reported

$

2,331,030

 

 

$

2,082,321

 

11.9

%

Foreign exchange impact (a)

 

(923

)

 

 

 

 

Non-GAAP net sales, constant currency

$

2,330,107

 

 

$

2,082,321

 

11.9

%

 

 

 

 

 

 

Modern Communications & Cloud

 

 

 

 

 

Net sales, reported

$

1,456,691

 

 

$

1,447,614

 

0.6

%

Foreign exchange impact (a)

 

(3,492

)

 

 

 

 

Non-GAAP net sales, constant currency

$

1,453,199

 

 

$

1,447,614

 

0.4

%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, reported

$

3,787,721

 

 

$

3,529,935

 

7.3

%

Foreign exchange impact (a)

 

(4,415

)

 

 

 

 

Non-GAAP net sales, constant currency

$

3,783,306

 

 

$

3,529,935

 

7.2

%

 

 

 

 

 

 

(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 fiscal year ended June 30, 2023 into U.S. dollars using the average foreign exchange rates for the fiscal year ended June 30, 2022.

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

 

 

Net Sales by Geography:

 

 

 

 

Quarter ended June 30,

 

 

 

2023

 

2022

 

% Change

United States and Canada:

(in thousands)

 

 

Net sales, as reported

$

854,521

 

$

865,736

 

(1.3

)%

 

 

 

 

 

 

International:

 

 

 

 

 

Net sales, reported

$

92,628

 

$

96,547

 

(4.1

)%

Foreign exchange impact(a)

 

215

 

 

 

 

Non-GAAP net sales, constant currency

$

92,843

 

$

96,547

 

(3.8

)%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, reported

$

947,149

 

$

962,283

 

(1.6

)%

Foreign exchange impact(a)

 

215

 

 

 

 

Non-GAAP net sales, constant currency

$

947,364

 

$

962,283

 

(1.6

)%

 

 

 

 

 

 

(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 June 30, 2023 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2022.

 

 

 

 

 

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

 

 

Net Sales by Geography:

 

 

 

 

Fiscal year ended June 30,

 

 

 

2023

 

2022

 

% Change

United States and Canada:

(in thousands)

 

 

Net sales, as reported

$

3,432,074

 

 

$

3,173,694

 

8.1

%

 

 

 

 

 

 

International:

 

 

 

 

 

Net sales, reported

$

355,647

 

 

$

356,241

 

(0.2

)%

Foreign exchange impact(a)

 

(4,415

)

 

 

 

 

Non-GAAP net sales, constant currency

$

351,232

 

 

$

356,241

 

(1.4

)%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, reported

$

3,787,721

 

 

$

3,529,935

 

7.3

%

Foreign exchange impact(a)

 

(4,415

)

 

 

 

 

Non-GAAP net sales, constant currency

$

3,783,306

 

 

$

3,529,935

 

7.2

%

 

 

 

 

 

 

(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 fiscal year ended June 30, 2023 into U.S. dollars using the average foreign exchange rates for the fiscal year ended June 30, 2022.

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Information:

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended June 30, 2023

 

 

GAAP Measure

 

Intangible amortization

expense

 

Tax recovery

 

Cyberattack restoration

costs

 

Non-GAAP measure

 

(in thousands, except per share data)

SG&A expenses

 

$74,358

 

 

$128

 

$(1,460)

 

$73,026

Operating income

 

27,289

 

4,185

 

(128)

 

1,460

 

32,806

Operating income margin

 

2.88%

 

0.44%

 

(0.01)%

 

0.15%

 

3.46%

Net income

 

17,095

 

3,126

 

(2,100)

 

1,092

 

19,213

Diluted EPS

 

$0.68

 

$0.12

 

$(0.08)

 

$0.04

 

$0.76

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended June 30, 2022

 

 

GAAP Measure

 

Intangible amortization

expense

 

Tax recovery

 

Cyberattack restoration

costs

 

Non-GAAP measure

 

(in thousands, except per share data)

SG&A expense

 

$75,905

 

 

 

 

$75,905

Operating income

 

27,424

 

4,440

 

 

 

31,864

Operating income margin

 

2.85%

 

0.46%

 

—%

 

—%

 

3.31%

Net income

 

19,947

 

3,319

 

 

 

23,266

Diluted EPS

 

$0.78

 

$0.13

 

 

 

$0.91

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended June 30, 2023

 

Reported GAAP

measure

 

Intangible

amortization

expense

 

Acquisition,

divestiture and

restructuring costs

Tax recovery, net

 

Cyberattack

restoration costs

 

Non-GAAP measure

 

(in thousands, except per share data)

SG&A expenses

$285,695

 

 

$2,986

 

$(1,460)

 

$287,221

Operating income

135,886

 

16,746

 

(2,986)

 

1,460

 

151,106

Operating income margin

3.59%

 

0.44%

 

—%

(0.08)%

 

0.04%

 

3.99%

Net income

88,092

 

12,489

 

(3,985)

 

1,092

 

97,688

Diluted EPS

$3.47

 

$0.49

 

$(0.16)

 

$0.04

 

$3.85

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended June 30, 2022

 

Reported GAAP

measure

 

Intangible

amortization

expense

 

Acquisition,

divestiture and

restructuring

costs(a)

Tax recovery, net

 

Cyberattack

restoration costs

 

Non-GAAP measure

 

(in thousands, except per share data)

SG&A expenses

$275,442

 

 

$(30)

 

 

$275,412

Operating income

122,167

 

17,853

 

30

 

 

140,050

Operating income margin

3.46%

 

0.51%

 

—%

—%

 

—%

 

3.97%

Net income

88,698

 

13,412

 

30

 

 

102,140

Diluted EPS

$3.44

 

$0.52

 

 

 

$3.97

(a) Divestiture costs totaled less than $0.1 million for the fiscal year ended June 30, 2022 and are generally nondeductible for tax purposes.

Annual Financial Outlook for Fiscal Year 2024:

 

FY 24 Outlook

GAAP operating income

At least $134 million

Intangible amortization

$17 million

Depreciation expense

$12 million

Share-based compensation expense

$12 million

Interest income and income (expense), net

$5 million

Adjusted EBITDA (non-GAAP)

At least $180 million

 

 

GAAP operating cash flow

At least $160 million

Less: Capital expenditures

$10 million

Free cash flow

At least $150 million

 

Contacts

Steve Jones

Senior EVP, Chief Financial Officer

ScanSource, Inc.

(864) 286-4302

Mary M. Gentry

SVP, Treasurer and Investor Relations

ScanSource, Inc.

(864) 286-4892

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