SCSC ScanSource Inc

ScanSource, Inc. (NASDAQ:SCSC), the leading international distributor of AIDC (automatic identification and data capture), point of sale, communications, and physical security products for the reseller market, today announced complete financial results for its third quarter ended March 31, 2011.

Quarter ended March 31, 2011:

 

Net sales

$613 million

Net income

$16.5 million

Diluted EPS

$0.60 per share

“The ScanSource team delivered excellent bottom line results despite lower than expected revenues,” said Mike Baur, CEO, ScanSource, Inc. “All of our geographies experienced stronger demand compared to last year, although we closed fewer large deals. A favorable combination of customer mix and product mix led to higher gross margins and very good earnings per share.”

For the quarter ended March 31, 2011, net sales increased 24% to $613.5 million compared to $496.1 million for the quarter ended March 31, 2010. Operating income increased by 34% to $25.5 million from $19.0 million in the comparable prior year quarter. Net income increased 38% to $16.5 million for the quarter ended March 31, 2011 versus $12.0 million for the quarter ended March 31, 2010. The effective tax rate for the quarter decreased to 34% in the current quarter from 36.5% in the prior year quarter. Diluted earnings per share increased 33% to $0.60 in the current quarter compared to $0.45 in the prior year quarter.

Forecast for Next Quarter

The Company announced its revenue forecast for the fourth quarter of fiscal 2011. ScanSource expects that net revenues for the quarter ending June 2011 could range from $700 million to $720 million. This forecast includes two and a half months of revenues from the Company’s new Brazilian subsidiary, CDC Brasil, S.A., which was acquired on April 15, 2011. Previously, the Company had disclosed the trailing 12 months revenues of CDC Brasil, S.A. as of December 31, 2010 of R$246 million (approximately $140.4 million).

Safe Harbor Statement

This press release contains comments that are “forward looking” statements that involve risks and uncertainties; these statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Any number of important factors could cause actual results to differ materially from anticipated or forecasted results, including, but not limited to, factors affecting our expanded operations in emerging markets, such as Brazil, that expose us to greater political and economic volatility than our operations in established markets, the results of purchase accounting, macroeconomic circumstances that could impact our business, such as currency fluctuations, continued adverse capital and credit market conditions and a continued economic downturn. For more information concerning factors that could cause actual results to differ from anticipated or forecasted results, see the Company’s annual report on Form 10-K for the year ended June 30, 2010 filed with the Securities and Exchange Commission.

About ScanSource, Inc.

ScanSource, Inc. (NASDAQ:SCSC) is the leading international distributor of specialty technology products, consisting of seven sales units in North America, Latin America and Europe. ScanSource POS and Barcoding in North America, Latin America and Europe delivers AIDC and POS solutions; Catalyst Telecom in the U.S. and ScanSource Communications in North America and Europe, provide voice, video and converged communications equipment; and ScanSource Security in North America offers physical security solutions. Founded in 1992, the company ranks #881 on the Fortune 1000. For more information, call the toll-free sales telephone number at 800.944.2432 or visit www.scansourceinc.com.

    ScanSource, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) (in thousands)   March 31, June 30, 2011 2010 * Assets Current assets: Cash and cash equivalents $ 31,181 $ 34,605 Accounts receivable, less allowance of 383,634 357,749 $21,613 at March 31, 2011 $21,907 at June 30, 2010 Inventories 401,237 346,610 Prepaid expenses and other assets 28,801 16,762 Deferred income taxes   12,148   12,066   Total current assets 857,001 767,792   Property and equipment, net 31,320 23,528 Goodwill 34,467 33,785 Other assets, including identifiable intangible assets   42,667   34,645   Total assets $ 965,455 $ 859,750     Liabilities and Shareholders' Equity Current liabilities: Current portion of long-term debt $ - $ - Short-term borrowings 1,999 - Accounts payable 291,298 287,864 Accrued expenses and other liabilities 49,237 35,027 Income taxes payable   7,290   7,948   Total current liabilities 349,824 330,839   Long-term debt 30,429 30,429 Borrowings under revolving credit facility 2,115 - Other long-term liabilities   21,015   11,631   Total liabilities   403,383   372,899     Shareholders' equity: Common stock 119,999 111,951 Retained earnings 440,496 386,634 Accumulated other comprehensive loss   1,577   (11,734 ) Total shareholders' equity   562,072   486,851   Total liabilities and shareholders' equity $ 965,455 $ 859,750     * Derived from audited financial statements at June 30, 2010.   ScanSource, Inc. and Subsidiaries Condensed Consolidated Income Statements (Unaudited) (in thousands, except per share information)         Quarter ended Nine months ended March 31, March 31, 2011 2010 2011 2010   Net sales $ 613,466 $ 496,102 $ 1,931,641 $ 1,532,637 Cost of goods sold   547,637     441,711     1,731,704     1,370,532   Gross profit   65,829     54,391     199,937     162,105     Operating expenses: Selling, general and administrative expenses   40,349     35,414     116,071     107,312   Operating income 25,480 18,977 83,866 54,793   Other expense (income): Interest expense 429 377 1,182 1,107 Interest income (313 ) (474 ) (918 ) (1,159 ) Other, net   300     156     492     99   Income before income taxes 25,064 18,918 83,110 54,746 Provision for income taxes   8,530     6,904     29,248     19,982   Net income $ 16,534   $ 12,014   $ 53,862   $ 34,764     Per share data: Net income per common share, basic $ 0.61   $ 0.45   $ 2.01   $ 1.31   Weighted-average shares outstanding, basic   26,938     26,608     26,811     26,583     Net income per common share, diluted $ 0.60   $ 0.45   $ 1.98   $ 1.30   Weighted-average shares outstanding, diluted   27,413     26,884     27,182     26,844