ScanSource, Inc. (NASDAQ: SCSC), a leading provider of
technology products and solutions, today announced financial
results for the fourth quarter and fiscal year ended June 30, 2020.
All results in this release reflect continuing operations only
unless otherwise noted.
Fourth Quarter Summary:
- Net sales: $636.5 million, down 22% year-over-year
- Gross profit: $74.1 million, down 23% year-over-year
- GAAP operating loss of $(113.4) million; non-GAAP operating
income of $8.2 million
- Net loss from continuing operations of $(108.9) million, which
includes non-cash goodwill and asset impairment charges of $120.5
million
- GAAP and non-GAAP diluted EPS of $(4.29) and $0.19 per share,
respectively
- Classified divestitures of products distribution business
outside of the United States, Canada and Brazil ("Divestitures") as
assets held for sale at June 30, 2020 and reported as discontinued
operations in the financial results
- Generated strong operating cash flow of $74.0 million during
the quarter
"While the COVID-19 pandemic had a significant impact on our
quarterly financial results, I am proud of how our teams have
executed and the value we deliver to our suppliers and customers,"
said Mike Baur, Chairman and CEO, ScanSource, Inc. "We've taken the
necessary actions to strengthen our balance sheet, improve our cost
structure, and continue to drive investments in our higher-margin,
VAR cloud platform and agency business."
Quarterly Results
Net sales totaled $636.5 million for the fourth quarter of
fiscal year 2020, down 22% year-over-year, or down 19% for organic
growth. The reduction in net sales is primarily due to the impact
of the COVID-19 pandemic, which resulted in lower demand from
customers. For the Intelisys master agency business, net sales
increased 15% year-over-year for the fourth quarter of fiscal year
2020.
For the fourth quarter of fiscal year 2020, operating income
decreased to $(113.4) million, and non-GAAP operating income
decreased to $8.2 million. As of the annual goodwill impairment
test date of April 30th, the Company’s revenue projections were
lowered, primarily as a result of the COVID-19 pandemic. As a
result, the Company recognized pre-tax, non-cash goodwill and asset
impairment charges of $120.5 million. This accounting adjustment
does not involve any cash outflow.
On a GAAP basis, net income for the fourth quarter of fiscal
year 2020 totaled $(108.9) million, or $(4.29) per diluted share,
compared to net income of $16.0 million, or $0.62 per diluted
share, for the prior-year quarter. Non-GAAP net income totaled $4.9
million, or $0.19 per diluted share, compared to $19.3 million, or
$0.75 per diluted share, for the prior-year quarter.
At June 30, 2020, ScanSource had cash and cash equivalents of
$29.5 million and total debt of $218.7 million for continuing
operations. Borrowings for discontinued operations totaled $28.2
million. In the fourth quarter of fiscal year 2020, the Company
generated $74.0 million of operating cash flow.
Full Year Results
For fiscal year 2020, net sales decreased 6% to $3.0 billion, or
a 5% year-over-year decrease on an organic basis. Fiscal year 2020
GAAP operating income decreased to $(65.0) million, largely from
the non-cash goodwill and asset impairment charges, and non-GAAP
operating income decreased to $78.9 million.
On a GAAP basis, net income for fiscal year 2020 totaled $(79.2)
million, or $(3.12) per diluted share, compared to net income of
$64.9 million, or $2.52 per diluted share for the prior year.
Non-GAAP net income totaled $52.0 million, or $2.05 per diluted
share, compared to $87.7 million, or $3.41 per diluted share for
the prior year.
Discontinued Operations
On August 20, 2019, ScanSource announced plans to divest its
products distribution businesses outside of the United States,
Canada and Brazil. ScanSource continues to operate in its digital
distribution business in these geographies. These plans are part of
a strategic portfolio repositioning to align investments with
higher-growth, higher-margin businesses. On July 23, 2020,
ScanSource signed an agreement to sell its products distribution
business located in Mexico, Colombia, Chile, Peru and its
Miami-based export operations to Intcomex. The Company is actively
working on sales opportunities for its divestitures in Europe and
the UK.
At June 30, 2020, the Divestitures were classified as assets
held for sale and recorded as discontinued operations. Net loss
from discontinued operations for the fourth quarter of fiscal year
2020 includes a $88.9 million non-cash loss on held for sale
classification to establish a valuation allowance and $13.7 million
for non-cash impairment charges.
COVID-19 Update
Our 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. Nearly all office-based employees
around the world are working 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 are experiencing 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.
Initiated Expense Reduction Plan
In July 2020, ScanSource initiated a $30 million annualized
expense reduction plan to address the business impacts of the
COVID-19 pandemic and prepare for the next phase of growth.
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,
August 31, 2020, 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 the Company's Divestitures and 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 our operations and financial condition,
the Company's ability to complete the Divestitures on acceptable
terms or to otherwise dispose of the operations, changes in
interest and exchange rates and regulatory regimes impacting the
Company's international operations, the impact of tax reform laws,
the failure of acquisitions to meet the Company's expectations, the
failure to manage and implement the Company's organic growth
strategy, credit risks involving the Company's larger customers and
suppliers, termination of the Company's relationship with key
suppliers or a significant modification of the terms under which it
operates with a key supplier, the decline in demand for the
products and services that the Company provides, reduced prices for
the products and services that the Company provides due both to
competitor and customer action, 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 Divestitures
and acquisitions: 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 Divestitures, as well as 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. 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"): Management uses ROIC as a
performance measurement to assess efficiency in allocating capital
under the Company's control to generate returns. Management
believes this metric balances the Company's operating results with
asset and liability management, is not impacted by capitalization
decisions and correlates with shareholder value creation. In
addition, it is easily computed, communicated and understood. ROIC
also provides management a measure of the Company's profitability
on a basis more comparable to historical or future periods.
ROIC assists management in comparing the Company's performance
over various reporting periods on a consistent basis because it
removes from operating results the impact of items that do not
reflect core operating 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)
June 30, 2020
June 30, 2019
Assets
Current assets:
Cash and cash equivalents
$
29,485
$
19,305
Accounts receivable, less allowance of
$21,906 at June 30, 2020 and $27,521 at June 30, 2019
443,185
523,424
Inventories
454,885
554,080
Prepaid expenses and other current
assets
94,681
83,753
Current assets held for sale
181,231
296,753
Total current assets
1,203,467
1,477,315
Property and equipment, net
55,641
60,570
Goodwill
214,288
310,715
Identifiable intangible assets, net
121,547
121,214
Deferred income taxes
24,630
15,447
Other non-current assets
72,521
52,921
Non-current assets held for sale
—
29,079
Total assets
$
1,692,094
$
2,067,261
Liabilities and
Shareholders’ Equity
Current liabilities:
Accounts payable
$
454,240
$
488,291
Accrued expenses and other current
liabilities
76,686
64,629
Current portion of contingent
consideration
46,334
38,393
Income taxes payable
5,886
3,956
Short-term borrowings
—
—
Current portion of long-term debt
7,839
4,085
Current liabilities held for sale
128,022
101,532
Total current liabilities
719,007
700,886
Deferred income taxes
3,884
—
Long-term debt, net of current portion
143,175
151,014
Borrowings under revolving credit
facility
67,714
172,390
Long-term portion of contingent
consideration
—
39,532
Other long-term liabilities
80,068
57,153
Long-term liabilities held for sale
—
32,157
Total liabilities
1,013,848
1,153,132
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, 25,361,298 and 25,408,397 shares issued and
outstanding at June 30, 2020 and June 30, 2019, respectively
63,765
64,287
Retained earnings
747,276
939,930
Accumulated other comprehensive loss
(132,795
)
(90,088
)
Total shareholders’ equity
678,246
914,129
Total liabilities and shareholders’
equity
$
1,692,094
$
2,067,261
ScanSource, Inc. and
Subsidiaries
Condensed Consolidated Income
Statements (Unaudited)
(in thousands, except per
share data)
Quarter ended June 30,
Fiscal year ended June
30,
2020
2019
2020
2019
Net sales
$
636,450
$
811,432
$
3,047,734
$
3,249,799
Cost of goods sold
562,303
714,789
2,692,165
2,856,996
Gross profit
74,147
96,643
355,569
392,803
Selling, general and administrative
expenses
58,192
62,923
260,139
252,948
Depreciation expense
3,304
2,952
13,033
12,028
Intangible amortization expense
4,946
4,542
19,953
17,893
Impairment charges
120,470
—
120,470
—
Change in fair value of contingent
consideration
674
3,666
6,941
15,200
Operating (loss) income
(113,439
)
22,560
(64,967
)
94,734
Interest expense
2,497
3,851
12,224
13,162
Interest income
(3,199
)
(446
)
(5,826
)
(1,818
)
Other expense (income), net
213
22
411
(247
)
(Loss) Income before income taxes
(112,950
)
19,133
(71,776
)
83,637
Provision for income taxes
(4,091
)
3,137
7,451
18,778
Net (loss) income from continuing
operations
(108,859
)
15,996
(79,227
)
64,859
Net loss from discontinued operations
(108,403
)
(4,418
)
(113,427
)
(7,262
)
Net (loss) income
$
(217,262
)
$
11,578
$
(192,654
)
$
57,597
Per share data:
Net (loss) income from continuing
operations per common share, basic
$
(4.29
)
$
0.62
$
(3.12
)
$
2.53
Net loss from discontinued operations per
common share, basic
(4.28
)
(0.17
)
(4.47
)
(0.28
)
Net (loss) income per common share,
basic
$
(8.57
)
$
0.45
$
(7.59
)
$
2.25
Weighted-average shares outstanding,
basic
25,353
25,627
25,378
25,642
Net (loss) income from continuing
operations per common share, diluted
$
(4.29
)
$
0.62
$
(3.12
)
$
2.52
Net loss from discontinued operations per
common share, diluted
(4.28
)
(0.17
)
(4.47
)
(0.28
)
Net (loss) income per common share,
diluted
$
(8.57
)
$
0.45
$
(7.59
)
$
2.24
Weighted-average shares outstanding,
diluted
25,353
25,691
25,378
25,734
ScanSource, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows (Unaudited)
(in thousands)
Quarter ended June 30,
Fiscal year ended June
30,
2020
2019
2020
2019
Cash flows from operating activities:
Net (loss) income
$
(217,262
)
$
11,578
$
(192,654
)
$
57,597
Net loss from discontinued operations
(108,403
)
(4,418
)
(113,427
)
(7,262
)
Net (loss) income from continuing
operations
(108,859
)
15,996
(79,227
)
64,859
Adjustments to reconcile net income to net
cash (used in) provided by operating activities of continuing
operations:
Depreciation and amortization
8,743
8,321
35,328
33,652
Provision for doubtful accounts
222
(1,197
)
1,621
1,712
Share-based compensation
1,425
1,210
5,478
6,045
Impairment charges
120,470
—
120,470
—
Deferred income taxes
(10,714
)
(3,698
)
(12,193
)
(2,757
)
Change in fair value of contingent
consideration
674
3,666
6,941
15,200
Contingent consideration payments
excess
—
—
(3,050
)
(10,190
)
Other
125
98
502
350
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
57,562
(38,060
)
57,477
(5,490
)
Inventories
93,623
61,948
86,177
(85,862
)
Prepaid expenses and other assets
(2,903
)
(14,657
)
(13,880
)
(10,091
)
Other non-current assets
(12,534
)
(2,545
)
(13,563
)
(2,438
)
Accounts payable
(76,224
)
(5,622
)
(20,846
)
16,134
Accrued expenses and other liabilities
(1,992
)
6,118
11,239
2,377
Income taxes payable
4,334
2,873
(441
)
(7,469
)
Net cash provided by operating activities
of continuing operations
73,952
34,451
182,033
16,032
Cash flows from investing activities of
continuing operations:
Capital expenditures
188
4,093
(6,387
)
(5,797
)
Cash paid for business acquisitions, net
of cash acquired
—
—
(48,921
)
(32,161
)
Net cash used in investing activities of
continuing operations
188
4,093
(55,308
)
(37,958
)
Cash flows from financing activities of
continuing operations:
Borrowings on revolving credit, net of
expenses
477,446
458,522
2,085,918
2,061,090
Repayments on revolving credit, net of
expenses
(539,732
)
(611,877
)
(2,190,595
)
(2,132,702
)
Borrowings on long-term debt, net
(938
)
150,000
(4,085
)
149,670
Repayments of finance lease
obligations
(1,105
)
(166
)
(1,765
)
(662
)
Debt issuance costs
—
(1,096
)
—
(1,096
)
Contingent consideration payments
—
—
(35,482
)
(35,606
)
Exercise of stock options
—
—
754
1,509
Taxes paid on settlement of equity
awards
—
—
(1,353
)
(1,406
)
Repurchase of common stock
—
(9,176
)
(6,078
)
(9,483
)
Net cash (used in) provided by financing
activities of continuing operations
(64,329
)
(13,793
)
(152,686
)
31,314
ScanSource, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows (Unaudited), continued
(in thousands)
Cash flows from discontinued
operations:
Net cash flows provided by (used in)
operating activities of discontinued operations
2,235
(37,031
)
44,238
(43,159
)
Net cash flows (used in) provided by
investing activities of discontinued operations
(35
)
(330
)
(77
)
(1,416
)
Net cash flows (used in) provided by
financing activities of discontinued operations
(10,663
)
15,748
(3,921
)
32,917
Net cash flows provided by (used in)
discontinued operations
(8,463
)
(21,613
)
40,240
(11,658
)
Effect of exchange rate changes on cash
and cash equivalents
(1,489
)
280
(3,642
)
558
Increase (decrease) in cash and cash
equivalents
(141
)
3,418
10,637
(1,712
)
Consolidated cash and cash equivalents at
beginning of period
34,596
20,400
23,818
25,530
Consolidated cash and cash equivalents at
end of period
34,455
23,818
34,455
23,818
Cash and cash equivalents of discontinued
operations
4,970
4,513
4,970
4,513
Cash and cash equivalents of continuing
operations
$
29,485
$
19,305
$
29,485
$
19,305
ScanSource, Inc. and
Subsidiaries
Supplementary Information
(Unaudited)
(in thousands, except
percentages)
Non-GAAP Financial Information:
Quarter ended June 30,
Fiscal year ended June
30,
2020
2019
2020
2019
Return on invested capital ratio (ROIC),
annualized (a)
4.0
%
11.2
%
7.5
%
12.1
%
Reconciliation of net income to
EBITDA:
Net (loss) income from continuing
operations (GAAP)
$
(108,859
)
$
15,996
$
(79,227
)
$
64,859
Plus: Interest expense
2,497
3,851
12,224
13,162
Plus: Income taxes
(4,091
)
3,137
7,451
18,778
Plus: Depreciation and amortization
8,743
8,321
35,328
33,652
EBITDA (non-GAAP)
(101,710
)
31,305
(24,224
)
130,451
Plus: Change in fair value of contingent
consideration
674
3,666
6,941
15,200
Plus: Acquisition and divestiture
costs
1,311
230
4,000
1,218
Plus: Restructuring costs
—
—
604
—
Plus: Impairment charges
120,470
—
120,470
—
Plus: Tax reform and settlement, includes
interest income
(8,424
)
—
(10,744
)
—
Adjusted EBITDA (numerator for ROIC)
(non-GAAP)
$
12,321
$
35,201
$
97,047
$
146,869
Invested Capital
Calculation
Equity – beginning of the period
$
897,678
$
911,063
$
914,129
$
866,376
Equity – end of the period
678,246
914,129
678,246
914,129
Plus: Change in fair value of contingent
consideration, net of tax
510
2,780
5,247
11,294
Plus: Acquisition and divestiture
costs
1,311
230
4,000
1,218
Plus: Restructuring, net of tax
—
—
449
—
Plus: Impairment charges, net
114,398
—
114,398
—
Plus: Tax recovery, net
(6,247
)
(3,110
)
(8,001
)
(3,110
)
Plus: Impact of discontinued operations,
net of tax
98,794
(16,557
)
98,794
(16,557
)
Average equity
892,345
904,268
903,631
886,675
Average funded debt(b)
337,973
355,932
390,709
329,473
Invested capital (denominator for ROIC)
(non-GAAP)
$
1,230,318
$
1,260,200
$
1,294,340
$
1,216,148
(a) Calculated as earnings before interest
expense, income taxes, depreciation and amortization (EBITDA), plus
change in fair value of contingent consideration and other
adjustments, annualized and divided by invested capital for the
period. Invested capital is defined as average equity plus average
daily funded interest-bearing debt for the period.
(b) 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 June 30,
2020
2019
% Change
Worldwide Barcode, Networking &
Security:
(in thousands)
Non-GAAP net sales, including
Divestitures
$
543,996
$
636,172
(14.5
)%
Planned Divestitures
(96,184
)
(107,079
)
Net sales, reported
447,812
529,093
(15.4
)%
Foreign exchange impact (a)
4,911
—
Non-GAAP net sales, constant currency
excluding Divestitures
$
452,723
$
529,093
(14.4
)%
Worldwide Communications &
Services:
Non-GAAP net sales, including
Divestitures
$
214,422
$
324,661
(34.0
)%
Planned Divestitures
(25,784
)
(42,322
)
Net sales, reported
188,638
282,339
(33.2
)%
Foreign exchange impact (a)
14,674
—
Less: Acquisitions
(1,567
)
—
Non-GAAP net sales, constant currency
excluding Divestitures and acquisitions
$
201,745
$
282,339
(28.5
)%
Consolidated:
Non-GAAP net sales, including
Divestitures
$
758,418
$
960,833
(21.1
)%
Planned Divestitures
(121,968
)
(149,401
)
Net sales, reported
636,450
811,432
(21.6
)%
Foreign exchange impact (a)
19,585
—
Less: Acquisitions
(1,567
)
—
Non-GAAP net sales, constant currency
excluding Divestitures and acquisitions
$
654,468
$
811,432
(19.3
)%
(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, 2020 into U.S. dollars using the average
foreign exchange rates for the quarter ended June 30, 2019.
ScanSource, Inc. and
Subsidiaries
Supplementary Information
(Unaudited)
Net Sales by Segment:
Fiscal year ended June
30,
2020
2019
% Change
Worldwide Barcode, Networking &
Security:
(in thousands)
Non-GAAP net sales, including
Divestitures
$
2,511,666
$
2,589,837
(3.0
)%
Planned Divestitures
(418,449
)
(447,941
)
Net sales, reported
2,093,217
2,141,896
(2.3
)%
Foreign exchange impact (a)
10,395
—
Non-GAAP net sales, constant currency
excluding Divestitures
$
2,103,612
$
2,141,896
(1.8
)%
Worldwide Communications &
Services:
Non-GAAP net sales, including
Divestitures
$
1,097,564
$
1,283,274
(14.5
)%
Planned Divestitures
(143,047
)
(175,371
)
Net sales, reported
954,517
1,107,903
(13.8
)%
Foreign exchange impact (a)
29,829
—
Less: Acquisitions
(9,122
)
(1,026
)
Non-GAAP net sales, constant currency
excluding Divestitures and acquisitions
$
975,224
$
1,106,877
(11.9
)%
Consolidated:
Non-GAAP net sales, including
Divestitures
$
3,609,230
$
3,873,111
(6.8
)%
Planned Divestitures
(561,496
)
(623,312
)
Net sales, reported
3,047,734
3,249,799
(6.2
)%
Foreign exchange impact (a)
40,224
—
Less: Acquisitions
(9,122
)
(1,026
)
Non-GAAP net sales, constant currency
excluding Divestitures and acquisitions
$
3,078,836
$
3,248,773
(5.2
)%
(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, 2020 into U.S. dollars using the average
foreign exchange rates for the fiscal year ended June 30, 2019.
ScanSource, Inc. and
Subsidiaries
Supplementary Information
(Unaudited)
Net Sales by Geography:
Quarter ended June 30,
2020
2019
% Change
United States and Canada:
(in thousands)
Net sales, as reported
$
581,619
$
728,212
(20.1
)%
Less: Acquisitions
(131
)
—
Non-GAAP net sales, excluding
acquisitions
$
581,488
$
728,212
(20.1
)%
International:
Non-GAAP net sales, including
Divestitures
$
176,799
$
232,621
(24.0
)%
Divestitures
(121,968
)
(149,401
)
Net sales, reported
54,831
83,220
(34.1
)%
Foreign exchange impact(a)
19,585
—
Less: Acquisitions
(1,436
)
—
Non-GAAP net sales, constant currency
excluding Divestitures and acquisitions
$
72,980
$
83,220
(12.3
)%
Consolidated:
Non-GAAP net sales, including
Divestitures
$
758,418
$
960,833
(21.1
)%
Divestitures
(121,968
)
(149,401
)
Net sales, reported
636,450
811,432
(21.6
)%
Foreign exchange impact(a)
19,585
—
Less: Acquisitions
(1,567
)
—
Non-GAAP net sales, constant currency
excluding Divestitures and acquisitions
$
654,468
$
811,432
(19.3
)%
(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, 2020 into U.S. dollars using the average
foreign exchange rates for the quarter ended June 30, 2019.
ScanSource, Inc. and
Subsidiaries
Supplementary Information
(Unaudited)
Net Sales by Geography:
Fiscal year ended June
30,
2020
2019
% Change
United States and Canada:
(in thousands)
Net sales, as reported
$
2,755,134
$
2,917,780
(5.6
)%
Less: Acquisitions
(3,542
)
(1,062
)
Net sales, excluding acquisitions
$
2,751,592
$
2,916,718
(5.7
)%
International:
Non-GAAP net sales, including
Divestitures
$
854,096
$
955,331
(10.6
)%
Divestitures
(561,496
)
(623,312
)
Net sales, reported
292,600
332,019
(11.9
)%
Foreign exchange impact(a)
40,224
—
Less: Acquisitions
(5,580
)
36
Non-GAAP net sales, constant currency
excluding Divestitures and acquisitions
$
327,244
$
332,055
(1.4
)%
Consolidated:
Non-GAAP net sales, including
Divestitures
$
3,609,230
$
3,873,111
(6.8
)%
Divestitures
(561,496
)
(623,312
)
Net sales, reported
3,047,734
3,249,799
(6.2
)%
Foreign exchange impact(a)
40,224
—
Less: Acquisitions
(9,122
)
(1,026
)
Non-GAAP net sales, constant currency
excluding Divestitures and acquisitions
$
3,078,836
$
3,248,773
(5.2
)%
(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, 2020 into U.S. dollars using the average
foreign exchange rates for the fiscal year ended June 30, 2019.
Quarter ended June 30,
2020
Reported GAAP Measure
Intangible amortization
expense
Change in fair value of
contingent consideration
Acquisition, divestiture and
restructuring costs(a)
Tax recovery, net
Impairment charges
Non-GAAP measure
Net sales
$
636,450
$
—
$
—
$
—
$
—
$
—
$
636,450
Gross profit
74,147
—
—
—
—
—
74,147
Operating (loss) income
(113,439)
4,946
674
1,311
(5,743)
120,470
8,219
Other expense, net
(489)
—
—
—
2,681
—
2,192
Pre-tax income
(112,950)
4,946
674
1,311
(8,424)
120,470
6,027
Net (loss) income from continuing
operations
(108,859)
3,744
510
1,311
(6,247)
114,398
4,857
Diluted EPS from continuing operations
$
(4.29)
$
0.15
$
0.02
$
0.05
$
(0.25)
$
4.51
$
0.19
(a) Acquisition and divestiture costs
totaled $1.3 million for the quarter ended June 30, 2020 and are
generally nondeductible for tax purposes.
Quarter ended June 30,
2019
Reported GAAP Measure
Intangible amortization
expense
Change in fair value of
contingent consideration
Acquisition, divestiture and
restructuring costs(a)
Tax recovery, net
Impairment charges
Non-GAAP measure
Net sales
$
811,432
$
—
$
—
$
—
$
—
$
—
$
811,432
Gross profit
96,643
—
—
—
—
—
96,643
Operating income
22,560
4,542
3,666
230
—
—
30,998
Other expense, net
3,427
—
—
—
—
—
3,427
Pre-tax income
19,133
4,542
3,666
230
—
—
27,571
Net income from continuing operations
15,996
3,418
2,780
230
(3,110)
—
19,314
Diluted EPS from continuing operations
$
0.62
$
0.13
$
0.11
$
0.01
$
(0.12)
$
—
$
0.75
(a) Acquisition and divestiture costs
totaled $0.2 million for the quarter ended June 30, 2019 and are
generally nondeductible for tax purposes.
Year ended June 30,
2020
Reported GAAP Measure
Intangible amortization
expense
Change in fair value of
contingent consideration
Acquisition, divestiture and
restructuring costs(a)
Tax recovery, net
Impairment charges
Non-GAAP measure
Net sales
$
3,047,734
$
—
$
—
$
—
$
—
$
—
$
3,047,734
Gross profit
355,569
—
—
—
—
—
355,569
Operating (loss) income
(64,967)
19,953
6,941
4,604
(8,063)
120,470
78,938
Other expense, net
6,809
—
—
—
2,681
—
9,490
Pre-tax income
(71,776)
19,953
6,941
4,604
(10,744)
120,470
69,448
Net (loss) income from continuing
operations
(79,227)
15,091
5,247
4,449
(8,001)
114,398
51,957
Diluted EPS from continuing operations
$
(3.12)
$
0.59
$
0.21
$
0.18
$
(0.32)
$
4.51
$
2.05
(a) Acquisition and divestiture costs
totaled $4.0 million for the fiscal year ended June 30, 2020 and
are generally nondeductible for tax purposes. Restructuring costs
totaled $0.6 million for the fiscal year ended June 30, 2020
Year ended June 30,
2019
Reported GAAP Measure
Intangible amortization
expense
Change in fair value of
contingent consideration
Acquisition, divestiture and
restructuring costs(a)
Tax recovery, net
Impairment charges
Non-GAAP measure
Net sales
$
3,249,799
$
—
$
—
$
—
$
—
$
—
$
3,249,799
Gross profit
392,803
—
—
—
—
—
392,803
Operating income
94,734
17,893
15,200
1,218
—
—
129,045
Other expense, net
11,097
—
—
—
—
—
11,097
Pre-tax income
83,637
17,893
15,200
1,218
—
—
117,948
Net income from continuing operations
64,859
13,484
11,294
1,218
(3,110)
—
87,745
Diluted EPS from continuing operations
$
2.52
$
0.52
$
0.44
$
0.05
$
(0.12)
$
—
$
3.41
(a) Acquisition and divestiture costs
totaled $1.2 million for the fiscal year ended June 30, 2019 and
are generally nondeductible for tax purposes.
ScanSource, Inc. and
Subsidiaries
Supplementary Information
(Unaudited)
Discontinued Operations - Financial
Results:
Quarter ended June 30,
Fiscal year ended June
30,
2020
2019
2020
2019
(in thousands)
Net sales
$
121,969
$
149,401
$
561,496
$
623,312
Cost of goods sold
112,846
136,180
513,003
563,543
Gross profit
9,123
13,221
48,493
59,769
Selling, general and administrative
expenses
11,337
15,028
53,946
61,574
Depreciation expense
205
249
975
1,127
Intangible amortization expense
330
483
1,403
1,839
Impairment charges
13,747
—
13,747
—
Operating loss
(16,496)
(2,539)
(21,578)
(4,771)
Interest expense, net
163
114
1,399
195
Loss on held for sale classification
88,923
—
88,923
—
Other expense, net
1,221
241
1,124
763
Loss from discontinued operations before
taxes
(106,803)
(2,894)
(113,024)
(5,729)
Income tax expense
1,600
1,524
403
1,533
Net loss from discontinued operations
$
(108,403)
$
(4,418)
$
(113,427)
$
(7,262)
ScanSource, Inc. and
Subsidiaries
Supplementary Information
(Unaudited)
Discontinued Operations - Assets and
Liabilities:
June 30, 2020
June 30, 2019
(in thousands)
Assets
Current assets:
Cash and cash equivalents
$
4,970
$
4,513
Accounts receivable, net
117,200
131,560
Inventories, net
106,779
143,263
Prepaid expenses and other current
assets
23,808
17,417
Total current assets
252,757
296,753
Property and equipment, net
1,833
2,793
Goodwill
—
8,823
Identifiable intangible assets, net
—
6,726
Deferred income taxes
9,349
9,277
Other non-current assets
6,215
1,460
Total assets, before valuation
allowance
270,154
325,832
Less: valuation allowance
(88,923
)
—
Total assets, net of valuation allowance
(a)
$
181,231
$
325,832
Liabilities
Current liabilities:
Accounts payable
$
56,098
$
69,810
Accrued expenses and other current
liabilities
14,815
14,763
Other taxes payable
20,378
12,018
Short-term borrowings
3,524
4,590
Income tax payable
1,085
351
Total current liabilities
95,900
101,532
Borrowings under revolving credit
facility
24,704
28,427
Other long-term liabilities
7,418
3,730
Total liabilities(1)
$
128,022
$
133,689
(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 June 30, 2020, as the discontinued operations are
expected to be disposed within twelve months of that date. The
assets and liabilities of discontinued operations are classified in
their respective current and long-term classifications,
respectively, in the Company's consolidated balance sheet as of
June 30, 2019 in accordance with the nature and underlying
classification of such assets and liabilities.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200831005715/en/
Gerald Lyons Executive Vice President, Chief Financial Officer
ScanSource, Inc. (864) 286-4854
- or -
Mary M. Gentry Vice President, Treasurer and Investor Relations
ScanSource, Inc. (864) 286-4892
ScanSource (NASDAQ:SCSC)
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