Net Sales of $757 Million with 19%
Quarter-Over-Quarter Growth
ScanSource, Inc. (NASDAQ: SCSC), a leading provider of
technology products and solutions, today announced financial
results for the first quarter ended September 30, 2020. All results
in this release reflect continuing operations only unless otherwise
noted.
First Quarter Summary:
- Net sales: $757.3 million, down 10% year-over-year (down 7%
year-over-year for organic growth)
- 19% quarter-over-quarter growth for net sales (up from $636.5
million for fourth quarter of fiscal year 2020)
- Gross profit: $80.8 million, down 18% year-over-year
- GAAP operating income of $1.6 million; non-GAAP operating
income of $15.8 million
- Net loss from continuing operations of $(0.1) million, which
includes restructuring and other charges of $8.3 million
- GAAP diluted EPS of $(0.01) per share; non-GAAP diluted EPS of
$0.42 per share
- Generated strong operating cash flow of $71.2 million during
the quarter
“I am incredibly proud of the ScanSource team and our strong
execution in an unprecedented operating environment,” said Mike
Baur, Chairman and CEO, ScanSource, Inc. “Our sales grew 19%
quarter-over-quarter with broad-based growth across our
technologies in North America and Brazil. ScanSource is uniquely
positioned to help channel partners drive growth by providing
customers with industry-leading endpoints and cloud solutions.”
Quarterly Results
Net sales totaled $757.3 million for the first quarter of fiscal
year 2021, down 10% year-over-year, or down 7% year-over-year for
organic growth. The year-over-year reduction in net sales is
primarily due to the impact of the COVID-19 pandemic. For the
Intelisys master agency business, net sales increased 11%
year-over-year for the first quarter of fiscal year 2021.
ScanSource delivered 19% sequential quarter growth from the June
quarter, driven primarily by growth across key technologies in
North America and Brazil.
For the first quarter of fiscal year 2021, operating income
decreased to $1.6 million, and non-GAAP operating income decreased
to $15.8 million. 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 reflect a partial quarter impact for the expense
reduction plan, and the Company is on track to achieve the $30
million in cost savings. In the first quarter of fiscal year 2021,
the Company recorded restructuring charges of $8.3 million.
On a GAAP basis, net loss for the first quarter of fiscal year
2021 totaled $(0.1) million, or $(0.01) per diluted share, compared
to net income of $12.3 million, or $0.48 per diluted share, for the
prior-year quarter. Non-GAAP net income totaled $10.7 million, or
$0.42 per diluted share, compared to $18.5 million, or $0.72 per
diluted share, for the prior-year quarter.
At September 30, 2020, ScanSource had cash and cash equivalents
of $55.6 million and total debt of $168.7 million for continuing
and discontinued operations. The Company generated $71.2 million of
operating cash flow in the first quarter of fiscal year 2021 and
$225.6 million for the trailing 12-month period.
Discontinued Operations
On August 20, 2019, ScanSource announced plans to divest its
products distribution businesses outside of the United States,
Canada and Brazil (the “Divestitures”). ScanSource continues to
operate 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. The
Divestitures are classified as assets held for sale and
discontinued operations in our financial statements. On October 30,
2020, ScanSource completed the sale of 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.
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. Most of our 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.
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,
November 9, 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 the Company's operations and financial
condition and the potential prolonged economic weakness brought on
by COVID-19, the Company's ability to complete the Divestitures on
acceptable terms or otherwise dispose of the operations, 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 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. 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)
September 30, 2020
June 30, 2020*
Assets
Current assets:
Cash and cash equivalents
$
49,889
$
29,485
Accounts receivable, less allowance of
$21,981 at September 30, 2020 and $21,906 at September 30, 2019
509,779
443,185
Inventories
423,088
454,885
Prepaid expenses and other current
assets
92,216
94,681
Current assets held for sale
176,903
181,231
Total current assets
1,251,875
1,203,467
Property and equipment, net
52,264
55,641
Goodwill
215,170
214,288
Identifiable intangible assets, net
117,492
121,547
Deferred income taxes
24,366
24,630
Other non-current assets
72,177
72,521
Total assets
$
1,733,344
$
1,692,094
Liabilities and
Shareholders’ Equity
Current liabilities:
Accounts payable
$
544,856
$
454,240
Accrued expenses and other current
liabilities
84,537
76,686
Current portion of contingent
consideration
46,850
46,334
Income taxes payable
1,820
5,886
Current portion of long-term debt
7,843
7,839
Current liabilities held for sale
152,259
128,022
Total current liabilities
838,165
719,007
Deferred income taxes
4,029
3,884
Long-term debt, net of current portion
140,956
143,175
Borrowings under revolving credit
facility
—
67,714
Other long-term liabilities
78,967
80,068
Total liabilities
1,062,117
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, 25,361,298 and 25,361,298 shares issued and
outstanding at September 30, 2020 and June 30, 2020,
respectively
64,945
63,765
Retained earnings
735,457
747,276
Accumulated other comprehensive loss
(129,175
)
(132,795
)
Total shareholders’ equity
671,227
678,246
Total liabilities and shareholders’
equity
$
1,733,344
$
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 September
30,
2020
2019
Net sales
$
757,342
$
842,701
Cost of goods sold
676,563
744,176
Gross profit
80,779
98,525
Selling, general and administrative
expenses
62,112
68,532
Depreciation expense
3,396
3,301
Intangible amortization expense
4,853
4,538
Restructuring and other charges
8,268
169
Change in fair value of contingent
consideration
516
2,472
Operating income
1,634
19,513
Interest expense
1,913
3,317
Interest income
(481
)
(807
)
Other expense (income), net
364
374
(Loss) income before income taxes
(162
)
16,629
Provision for income taxes
(47
)
4,338
Net (loss) income from continuing
operations
(115
)
12,291
Net loss from discontinued operations
(11,704
)
(761
)
Net (loss) income
$
(11,819
)
$
11,530
Per share data:
Net (loss) income from continuing
operations per common share, basic
$
(0.01
)
$
0.48
Net loss from discontinued operations per
common share, basic
(0.46
)
(0.03
)
Net (loss) income per common share,
basic
$
(0.47
)
$
0.45
Weighted-average shares outstanding,
basic
25,361
25,539
Net (loss) income from continuing
operations per common share, diluted
$
(0.01
)
$
0.48
Net loss from discontinued operations per
common share, diluted
(0.46
)
(0.03
)
Net (loss) income per common share,
diluted
$
(0.47
)
$
0.45
Weighted-average shares outstanding,
diluted
25,361
25,617
ScanSource, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows (Unaudited)
(in thousands)
Quarter ended September
30,
2020
2019
Cash flows from operating activities:
Net (loss) income
$
(11,819
)
$
11,530
Net loss from discontinued operations
(11,704
)
(761
)
Net (loss) income from continuing
operations
(115
)
12,291
Adjustments to reconcile net income to net
cash (used in) provided by operating activities of continuing
operations:
Depreciation and amortization
8,710
8,518
Amortization of debt issue costs
104
104
Provision for doubtful accounts
(8
)
1,225
Share-based compensation
1,168
1,241
Deferred income taxes
139
56
Change in fair value of contingent
consideration
516
2,472
Finance lease interest
37
22
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
(68,726
)
(48,844
)
Inventories
31,155
(49,276
)
Prepaid expenses and other assets
2,369
306
Other non-current assets
(274
)
(7,516
)
Accounts payable
92,419
94,587
Accrued expenses and other liabilities
7,827
10,063
Income taxes payable
(4,096
)
2,381
Net cash provided by operating activities
of continuing operations
71,225
27,630
Cash flows from investing activities of
continuing operations:
Capital expenditures
(748
)
(939
)
Cash paid for business acquisitions, net
of cash acquired
—
(49,080
)
Net cash used in investing activities of
continuing operations
(748
)
(50,019
)
Cash flows from financing activities of
continuing operations:
Borrowings on revolving credit, net of
expenses
477,381
476,171
Repayments on revolving credit, net of
expenses
(545,095
)
(515,772
)
Borrowings on long-term debt, net
(2,214
)
(1,272
)
Repayments of finance lease
obligations
(327
)
(391
)
Taxes paid on settlement of equity
awards
—
(12
)
Repurchase of common stock
—
(6,077
)
Net cash used in financing activities of
continuing operations
(70,255
)
(47,353
)
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
31,853
19,370
Net cash flows used in investing
activities of discontinued operations
(36
)
(1
)
Net cash flows (used in) provided by
financing activities of discontinued operations
(9,488
)
52,861
Net cash flows provided by discontinued
operations
22,329
72,230
Effect of exchange rate changes on cash
and cash equivalents
(1,439
)
(429
)
Increase in cash and cash equivalents
21,112
2,059
Consolidated cash and cash equivalents at
beginning of period
34,455
23,818
Consolidated cash and cash equivalents at
end of period
55,567
25,877
Cash and cash equivalents of discontinued
operations
5,678
1,526
Cash and cash equivalents of continuing
operations
$
49,889
$
24,351
ScanSource, Inc. and
Subsidiaries
Supplementary Information
(Unaudited)
(in thousands, except
percentages)
Non-GAAP Financial Information:
Quarter ended September
30,
2020
2019
Return on invested capital ratio (ROIC),
annualized (a)
8.4
%
9.6
%
Reconciliation of net income to
EBITDA:
Net (loss) income from continuing
operations (GAAP)
$
(115
)
$
12,291
Plus: Interest expense
1,913
3,317
Plus: Income taxes
(47
)
4,338
Plus: Depreciation and amortization
8,710
8,518
EBITDA (non-GAAP)
10,461
28,464
Plus: Change in fair value of contingent
consideration
516
2,472
Plus: Acquisition and divestiture
costs(b)
498
757
Plus: Restructuring costs
8,268
169
Adjusted EBITDA (numerator for ROIC)
(non-GAAP)
$
19,743
$
31,862
Invested Capital Calculations:
Equity – beginning of the period
$
678,246
$
914,129
Equity – end of the period
671,227
905,751
Plus: Change in fair value of contingent
consideration, net of tax
390
1,869
Plus: Acquisition and divestiture
costs(b)
498
757
Plus: Restructuring, net of tax
6,250
128
Plus: Discontinued operations net loss
11,704
761
Average equity
684,158
911,698
Average funded debt(c)
243,268
407,306
Invested capital (denominator for ROIC)
(non-GAAP)
$
927,426
$
1,319,004
(a) The annualized EBITDA amount is
divided by days in the quarter times 365 days per year, or 366 days
for leap year. There were 92 days in the current and prior-year
quarter.
(b) Acquisition and divestiture costs are
generally nondeductible for tax purposes.
(c) 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 September
30,
2020
2019
% Change
Worldwide Barcode, Networking &
Security:
(in thousands)
Non-GAAP net sales, including
Divestitures
$
638,385
$
697,791
(8.5
)%
Divestitures
(114,808
)
(116,604
)
Net sales, reported
523,577
581,187
(9.9
)%
Foreign exchange impact (a)
7,724
—
Non-GAAP net sales, constant currency
excluding Divestitures
$
531,301
$
581,187
(8.6
)%
Worldwide Communications &
Services:
Non-GAAP net sales, including
Divestitures
$
264,005
$
300,627
(12.2
)%
Divestitures
(30,240
)
(39,113
)
Net sales, reported
233,765
261,514
(10.6
)%
Foreign exchange impact (a)
17,440
—
Non-GAAP net sales, constant currency
excluding Divestitures
$
251,205
$
261,514
(3.9
)%
Consolidated:
Non-GAAP net sales, including
Divestitures
$
902,390
$
998,418
(9.6
)%
Divestitures
(145,048
)
(155,717
)
Net sales, reported
757,342
842,701
(10.1
)%
Foreign exchange impact (a)
25,164
—
Non-GAAP net sales, constant currency
excluding Divestitures
$
782,506
$
842,701
(7.1
)%
(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 September 30, 2020 into U.S. dollars using the
average foreign exchange rates for the quarter ended September 30,
2019.
ScanSource, Inc. and
Subsidiaries
Supplementary Information
(Unaudited)
Net Sales by Geography:
Quarter ended September
30,
2020
2019
% Change
United States and Canada:
(in thousands)
Net sales, as reported
$
683,603
$
768,508
(11.0
)%
International:
Non-GAAP net sales, including
Divestitures
$
218,787
$
229,910
(4.8
)%
Divestitures
(145,048
)
(155,717
)
Net sales, reported
73,739
74,193
(0.6
)%
Foreign exchange impact(a)
25,164
—
Non-GAAP net sales, constant currency
excluding Divestitures
$
98,903
$
74,193
33.3
%
Consolidated:
Non-GAAP net sales, including
Divestitures
$
902,390
$
998,418
(9.6
)%
Divestitures
(145,048
)
(155,717
)
Net sales, reported
757,342
842,701
(10.1
)%
Foreign exchange impact(a)
25,164
—
Non-GAAP net sales, constant currency
excluding Divestitures
$
782,506
$
842,701
(7.1
)%
(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 September 30, 2020 into U.S. dollars using the
average foreign exchange rates for the quarter ended September 30,
2019.
Quarter ended September 30,
2020
GAAP Measure
Intangible amortization
expense
Change in fair value of
contingent consideration
Acquisition and divestiture
costs
Restructuring costs
Non-GAAP measure
(in thousands, except per
share data)
Net sales
$
757,342
$
—
$
—
$
—
$
—
$
757,342
Gross profit
80,779
—
—
—
—
80,779
Operating income
1,634
4,853
516
498
8,268
15,769
Other expense, net
1,796
—
—
—
—
1,796
Pre-tax (loss) income
(162
)
4,853
516
498
8,268
13,973
Net (loss) income from continuing
operations
(115
)
3,675
390
498
6,250
10,698
Diluted EPS from continuing operations
$
(0.01
)
$
0.14
$
0.02
$
0.02
$
0.25
$
0.42
Quarter ended September 30,
2019
GAAP Measure
Intangible amortization
expense
Change in fair value of
contingent consideration
Acquisition and divestiture
costs
Restructuring costs
Non-GAAP measure
(in thousands, except per
share data)
Net sales
$
842,701
$
—
$
—
$
—
$
—
$
842,701
Gross profit
98,525
—
—
—
—
98,525
Operating income
19,513
4,538
2,472
757
169
27,449
Other expense, net
2,884
—
—
—
—
2,884
Pre-tax income
16,629
4,538
2,472
757
169
24,565
Net income from continuing operations
12,291
3,406
1,869
757
128
18,451
Diluted EPS from continuing operations
$
0.48
$
0.13
$
0.07
$
0.03
$
0.01
$
0.72
ScanSource, Inc. and
Subsidiaries
Supplementary Information
(Unaudited)
Discontinued Operations - Financial
Results:
Quarter ended September
30,
2020
2019
(in thousands)
Net sales
$
145,049
$
155,716
Cost of goods sold
134,534
142,142
Gross profit
10,515
13,574
Selling, general and administrative
expenses
10,913
13,810
Depreciation expense
201
248
Intangible amortization expense
—
424
Operating loss
(599
)
(908
)
Interest expense, net
125
483
Loss on held for sale classification
10,686
—
Other expense, net
291
(343
)
Loss from discontinued operations before
taxes
(11,701
)
(1,048
)
Income tax expense
3
(287
)
Net loss from discontinued operations
$
(11,704
)
$
(761
)
ScanSource, Inc. and
Subsidiaries
Supplementary Information
(Unaudited)
Discontinued Operations - Assets and
Liabilities:
September 30, 2020
June 30, 2020
(in thousands)
Assets
Current assets:
Cash and cash equivalents
$
5,678
$
4,970
Accounts receivable, net
130,553
117,200
Inventories, net
95,560
106,779
Prepaid expenses and other current
assets
27,465
23,808
Total current assets
259,256
252,757
Property and equipment, net
1,724
1,833
Deferred income taxes
9,633
9,349
Other non-current assets
5,899
6,215
Total assets, before valuation
allowance
276,512
270,154
Less: valuation allowance
(99,609
)
(88,923
)
Total assets, net of valuation allowance
(a)
$
176,903
$
181,231
Liabilities
Current liabilities:
Accounts payable
$
84,657
$
56,098
Accrued expenses and other current
liabilities
15,834
14,815
Other taxes payable
23,136
20,378
Short-term borrowings
—
3,524
Income tax payable
1,338
1,085
Total current liabilities
124,965
95,900
Borrowings under revolving credit
facility
19,932
24,704
Other long-term liabilities
7,362
7,418
Total liabilities(1)
$
152,259
$
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 September 30, 2020 and June 30, 2020, as the
discontinued operations are expected to be disposed by June 30,
2021.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201109006074/en/
Gerald Lyons Senior 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)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
ScanSource (NASDAQ:SCSC)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024