GREENVILLE, S.C.--(BUSINESS WIRE)--ScanSource, Inc. (NASDAQ: SCSC), a leading hybrid distributor connecting devices to the cloud, today announced financial results for the fourth quarter and fiscal year ended June 30, 2022. All results in this release reflect continuing operations only unless otherwise noted.
| Fourth Quarter Summary |
| Fiscal Year Summary | ||||||||||||||||||
| Q4 FY22 |
| Q4 FY21 |
| Change |
| FY22 |
| FY21 |
| Change | ||||||||||
| (in thousands, except per share data) | ||||||||||||||||||||
Select reported measures: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Net sales | $ | 962,283 |
|
| $ | 852,694 |
|
| 12.9 | % |
| $ | 3,529,935 |
|
| $ | 3,150,806 |
|
| 12.0 | % |
Gross profit | $ | 110,792 |
|
| $ | 95,778 |
|
| 15.7 | % |
| $ | 426,524 |
|
| $ | 350,716 |
|
| 21.6 | % |
Gross profit margin % |
| 11.51 | % |
|
| 11.23 | % |
| 28bp |
|
| 12.08 | % |
|
| 11.13 | % |
| 95bp | ||
Operating income | $ | 27,424 |
|
| $ | 23,283 |
|
| 17.8 | % |
| $ | 122,167 |
|
| $ | 61,483 |
|
| 98.7 | % |
GAAP net income | $ | 19,947 |
|
| $ | 20,657 |
|
| -3.4 | % |
| $ | 88,698 |
|
| $ | 45,389 |
|
| 95.4 | % |
GAAP diluted EPS | $ | 0.78 |
|
| $ | 0.80 |
|
| -2.5 | % |
| $ | 3.44 |
|
| $ | 1.78 |
|
| 93.3 | % |
Select Non-GAAP measures: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Adjusted EBITDA | $ | 38,672 |
|
| $ | 35,299 |
|
| 9.6 | % |
| $ | 166,723 |
|
| $ | 117,949 |
|
| 41.4 | % |
Adjusted EBITDA margin % |
| 4.02 | % |
|
| 4.14 | % |
| -12bp |
|
| 4.72 | % |
|
| 3.74 | % |
| 98bp | ||
Non-GAAP net income | $ | 23,266 |
|
| $ | 24,522 |
|
| -5.1 | % |
| $ | 102,140 |
|
| $ | 69,868 |
|
| 46.2 | % |
Non-GAAP diluted EPS | $ | 0.91 |
|
| $ | 0.96 |
|
| -5.2 | % |
| $ | 3.97 |
|
| $ | 2.74 |
|
| 44.9 | % |
"Our exceptional fiscal year 2022 results demonstrate the success of the new ScanSource and faster growth of our recurring revenue," said Mike Baur, Chairman and CEO, ScanSource, Inc. "Our hybrid distribution strategy of devices and digital is winning, as evidenced by our 12% net sales growth. We exceeded our full-year 2022 outlook for net sales growth and achieved record adjusted EBITDA."
Quarterly Results
Net sales for the fourth quarter of fiscal year 2022 totaled $962.3 million, up 12.9% year-over-year, or 12.2% year-over-year for organic growth, with strong demand in both segments. Fourth quarter fiscal year 2022 net sales in the Specialty Technology Solutions segment increased 12.6% year-over-year, or 12.4% year-over-year for organic growth, to $580.6 million, driven by broad-based demand across technologies and execution by our people. Fourth quarter fiscal year 2022 net sales in Modern Communications & Cloud increased 13.2% year-over-year, or 11.9% year-over-year for organic growth, to $381.7 million, primarily due to increased demand across our communications solutions.
Gross profit for the fourth quarter of fiscal year 2022 totaled $110.8 million, up 15.7% year-over-year. The increase is primarily due to higher sales volume and higher vendor program recognition compared to the prior-year quarter. Gross profit margin increased to 11.51% for the fourth quarter of fiscal year 2022, up from 11.23% in the prior-year quarter.
For the fourth quarter of fiscal year 2022, operating income increased to $27.4 million from $23.3 million in the prior-year quarter. Fourth quarter fiscal year 2022 non-GAAP operating income increased to $31.9 million for a 3.31% non-GAAP operating income margin, compared to $28.4 million and a 3.33% non-GAAP operating margin for the prior-year quarter.
On a GAAP basis, net income for the fourth quarter of fiscal year 2022 totaled $19.9 million, or $0.78 per diluted share, compared to net income of $20.7 million, or $0.80 per diluted share, for the prior-year quarter. Fourth quarter fiscal year 2022 non-GAAP net income totaled $23.3 million, or $0.91 per diluted share. These results compare to fourth quarter fiscal year 2021 non-GAAP net income of $24.5 million, or $0.96 per diluted share, which includes a $0.19 benefit from discrete tax items.
Adjusted EBITDA for the fourth quarter of fiscal year 2022 increased 9.6% to $38.7 million, or 4.02% of net sales, compared to $35.3 million, or 4.14%, of net sales in the prior-year quarter. Adjusted return on invested capital totaled 14.9% for fourth quarter fiscal year 2022, compared to 16.0% in the prior-year quarter, primarily from increased average invested capital for the current year quarter.
Full-Year Results
For fiscal year 2022, net sales increased 12.0% to $3.5 billion, or a 11.8% year-over-year increase on an organic basis. Fiscal year 2022 net sales in the Specialty Technology Solutions segment increased 14.7% year-over-year, or 14.6% year-over-year for organic growth, to $2.1 billion, driven by broad-based demand across technologies and execution by our people. Fiscal year 2022 net sales in the Modern Communications & Cloud segment increased 8.4% year-over-year, or 7.9% year-over-year for organic growth, to $1.4 billion, primarily due to increased demand across our communications solutions.
Gross profit for the fiscal year 2022 totaled $426.5 million, up 21.6% year-over-year. The increase is primarily due to higher sales volume and higher vendor program recognition compared to the prior year. Gross profit margin increased to 12.1%, up from 11.1% in the prior-year.
For the fiscal year ended June 30, 2022, operating income increased to $122.2 million from $61.5 million in the prior-year. Fiscal year 2022 non-GAAP operating income increased to $140.1 million for a 4.0% non-GAAP operating margin, up from $93.1 million and a 3.0% non-GAAP operating margin for the prior-year.
On a GAAP basis, net income for the fiscal year ended June 30, 2022 totaled $88.7 million, or $3.44 per diluted share, compared to net income of $45.4 million, or $1.78 per diluted share for the prior-year. Fiscal year 2022 non-GAAP net income totaled $102.1 million, or $3.97 per diluted share, compared to $69.9 million, or $2.74 per diluted share for the prior-year.
Adjusted EBITDA for the fiscal year ended June 30, 2022 increased to $166.7 million, or 4.7% of net sales, compared to $117.9 million, or 3.7% of net sales for the prior-year, primarily due to higher gross profits. Adjusted return on invested capital increased to 17.0% for the fiscal year, compared to 12.6% the prior year, driven by higher profitability.
Annual Financial Outlook for Fiscal Year 2023
The following guidance is based on ScanSource's current expectations for the full fiscal year ended June 30, 2023.
|
| FY23 Annual Outlook |
Net sales growth, year-over-year |
| At least 5.5% |
Adjusted EBITDA (non-GAAP) |
| At least $174 million |
Adjusted EBITDA is a non-GAAP measure, which excludes estimates for amortization of intangible assets, depreciation expense, and non-cash share-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.
Webcast Details and Earnings Infographic
At approximately 4:15 p.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 23, 2022, 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 FY23 outlook, which involve risks and uncertainties. Any number of factors could cause actual results to differ materially from anticipated results, including, but not limited to, failure to hire and retain quality employees, risk to the Company's business from a cyber-security attack, supply chain challenges, the failure to manage and implement the Company's organic growth strategy, economic weakness and inflation, a failure of the Company's IT systems, a failure to acquire new businesses, changes in interest and exchange rates and regulatory regimes impacting the Company's international operations, credit risks involving the Company's larger customers and suppliers, 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, 2022, filed with the Securities and Exchange Commission. Except as may be required by law, the Company expressly disclaims any obligation to update these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
Non-GAAP Financial Information
In addition to disclosing results that are determined in accordance with United States Generally Accepted Accounting Principles ("GAAP"), the Company also discloses certain non-GAAP financial measures, which are summarized below. Non-GAAP financial measures are used to understand and evaluate performance, including comparisons from period to period. Non-GAAP results exclude amortization of intangible assets related to acquisitions, change in fair value of contingent consideration, acquisition costs, restructuring costs and other non-GAAP adjustments.
Net sales on a constant currency basis, excluding acquisitions (organic growth): The Company discloses the percentage change in net sales excluding the translation impact from changes in foreign currency exchange rates between reporting periods and excluding the net sales from acquisitions prior to the first full year from the acquisition date. This measure enhances the comparability between periods to help analyze underlying trends on an organic basis.
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 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, 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, and restructuring costs. Effective with the first quarter of fiscal year 2022, non-cash share-based compensation expense is also added back in calculating Adjusted EBITDA. 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.
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.
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 partners across hardware, SaaS, connectivity and cloud. ScanSource enables partners to deliver solutions for their customers to address changing end-user 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 2022 Best Places to Work in South Carolina and on FORTUNE magazine's 2022 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, 2022 |
| June 30, 2021* | ||||
Assets |
|
|
| ||||
Current assets: |
|
|
| ||||
Cash and cash equivalents | $ | 37,987 |
|
| $ | 62,718 |
|
Accounts receivable, less allowance of $16,806 at June 30, 2022 and $19,341 at June 30, 2021 |
| 729,442 |
|
|
| 568,984 |
|
Inventories |
| 614,814 |
|
|
| 470,081 |
|
Prepaid expenses and other current assets |
| 141,562 |
|
|
| 117,860 |
|
Total current assets |
| 1,523,805 |
|
|
| 1,219,643 |
|
Property and equipment, net |
| 37,477 |
|
|
| 42,836 |
|
Goodwill |
| 214,435 |
|
|
| 218,877 |
|
Identifiable intangible assets, net |
| 84,427 |
|
|
| 104,860 |
|
Deferred income taxes |
| 15,668 |
|
|
| 21,853 |
|
Other non-current assets |
| 61,616 |
|
|
| 63,615 |
|
Total assets | $ | 1,937,428 |
|
| $ | 1,671,684 |
|
Liabilities and Shareholders' Equity |
|
|
| ||||
Current liabilities: |
|
|
| ||||
Accounts payable | $ | 714,177 |
|
| $ | 634,805 |
|
Accrued expenses and other current liabilities |
| 88,455 |
|
|
| 87,790 |
|
Income taxes payable |
| 34 |
|
|
| 2,501 |
|
Current portion of long-term debt |
| 11,598 |
|
|
| 7,843 |
|
Total current liabilities |
| 814,264 |
|
|
| 732,939 |
|
Deferred income taxes |
| 3,144 |
|
|
| 3,954 |
|
Long-term debt, net of current portion |
| 123,733 |
|
|
| 135,331 |
|
Borrowings under revolving credit facility |
| 135,839 |
|
|
| — |
|
Other long-term liabilities |
| 53,920 |
|
|
| 68,269 |
|
Total liabilities |
| 1,130,900 |
|
|
| 940,493 |
|
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, 25,187,351 and 25,499,465 shares issued and outstanding at June 30, 2022 and June 30, 2021, respectively |
| 64,297 |
|
|
| 71,253 |
|
Retained earnings |
| 846,869 |
|
|
| 758,071 |
|
Accumulated other comprehensive loss |
| (104,638 | ) |
|
| (98,133 | ) |
Total shareholders' equity |
| 806,528 |
|
|
| 731,191 |
|
Total liabilities and shareholders' equity | $ | 1,937,428 |
|
| $ | 1,671,684 |
|
*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, | ||||||||||||
|
| 2022 |
|
|
| 2021 |
|
|
| 2022 |
|
|
| 2021 |
|
Net sales | $ | 962,283 |
|
| $ | 852,694 |
|
| $ | 3,529,935 |
|
| $ | 3,150,806 |
|
Cost of goods sold |
| 851,491 |
|
|
| 756,916 |
|
|
| 3,103,411 |
|
|
| 2,800,090 |
|
Gross profit |
| 110,792 |
|
|
| 95,778 |
|
|
| 426,524 |
|
|
| 350,716 |
|
Selling, general and administrative expenses |
| 75,905 |
|
|
| 64,758 |
|
|
| 275,442 |
|
|
| 247,438 |
|
Depreciation expense |
| 3,023 |
|
|
| 2,898 |
|
|
| 11,062 |
|
|
| 12,533 |
|
Intangible amortization expense |
| 4,440 |
|
|
| 4,893 |
|
|
| 17,853 |
|
|
| 19,488 |
|
Restructuring and other charges |
| — |
|
|
| (54 | ) |
|
| — |
|
|
| 9,258 |
|
Change in fair value of contingent consideration |
| — |
|
|
| — |
|
|
| — |
|
|
| 516 |
|
Operating income |
| 27,424 |
|
|
| 23,283 |
|
|
| 122,167 |
|
|
| 61,483 |
|
Interest expense |
| 1,886 |
|
|
| 1,643 |
|
|
| 6,523 |
|
|
| 6,929 |
|
Interest income |
| (1,360 | ) |
|
| (1,341 | ) |
|
| (4,333 | ) |
|
| (3,097 | ) |
Other (income) expense, net |
| 684 |
|
|
| (65 | ) |
|
| 1,354 |
|
|
| 116 |
|
Income before income taxes |
| 26,214 |
|
|
| 23,046 |
|
|
| 118,623 |
|
|
| 57,535 |
|
Provision for income taxes |
| 6,267 |
|
|
| 2,389 |
|
|
| 29,925 |
|
|
| 12,146 |
|
Net income from continuing operations |
| 19,947 |
|
|
| 20,657 |
|
|
| 88,698 |
|
|
| 45,389 |
|
Net income (loss) from discontinued operations |
| — |
|
|
| 3,053 |
|
|
| 100 |
|
|
| (34,594 | ) |
Net income | $ | 19,947 |
|
| $ | 23,710 |
|
| $ | 88,798 |
|
| $ | 10,795 |
|
|
|
|
|
|
|
|
| ||||||||
Per share data: |
|
|
|
|
|
|
| ||||||||
Net income from continuing operations per common share, basic | $ | 0.79 |
|
| $ | 0.81 |
|
| $ | 3.48 |
|
| $ | 1.79 |
|
Net income (loss) from discontinued operations per common share, basic |
| — |
|
|
| 0.12 |
|
|
| — |
|
|
| (1.36 | ) |
Net income per common share, basic | $ | 0.79 |
|
| $ | 0.93 |
|
| $ | 3.48 |
|
| $ | 0.42 |
|
Weighted-average shares outstanding, basic |
| 25,286 |
|
|
| 25,482 |
|
|
| 25,504 |
|
|
| 25,423 |
|
|
|
|
|
|
|
|
| ||||||||
Net income from continuing operations per common share, diluted | $ | 0.78 |
|
| $ | 0.80 |
|
| $ | 3.44 |
|
| $ | 1.78 |
|
Net income (loss) from discontinued operations per common share, diluted |
| — |
|
|
| 0.12 |
|
|
| — |
|
|
| (1.36 | ) |
Net income per common share, diluted | $ | 0.78 |
|
| $ | 0.92 |
|
| $ | 3.45 |
|
| $ | 0.42 |
|
Weighted-average shares outstanding, diluted |
| 25,584 |
|
|
| 25,664 |
|
|
| 25,758 |
|
|
| 25,518 |
|
ScanSource, Inc. and Subsidiaries | |||||||||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||||||||||
(in thousands) | |||||||||||||||
| Quarter ended June 30, |
| Fiscal year ended June 30, | ||||||||||||
|
| 2022 |
|
|
| 2021 |
|
|
| 2022 |
|
|
| 2021 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
| ||||||||
Net income | $ | 19,947 |
|
| $ | 23,710 |
|
| $ | 88,798 |
|
| $ | 10,795 |
|
Net income (loss) from discontinued operations |
| — |
|
|
| 3,053 |
|
|
| 100 |
|
|
| (34,594 | ) |
Net income from continuing operations |
| 19,947 |
|
|
| 20,657 |
|
|
| 88,698 |
|
|
| 45,389 |
|
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations: |
|
|
|
|
|
|
| ||||||||
Depreciation and amortization |
| 7,701 |
|
|
| 8,090 |
|
|
| 29,884 |
|
|
| 33,507 |
|
Amortization of debt issue costs |
| 104 |
|
|
| 104 |
|
|
| 417 |
|
|
| 417 |
|
Provision for doubtful accounts |
| 1,357 |
|
|
| 112 |
|
|
| 1,514 |
|
|
| 338 |
|
Share-based compensation |
| 2,872 |
|
|
| 2,328 |
|
|
| 11,663 |
|
|
| 8,039 |
|
Deferred income taxes |
| 3,742 |
|
|
| 2,941 |
|
|
| 5,737 |
|
|
| 2,916 |
|
Change in fair value of contingent consideration |
| — |
|
|
| — |
|
|
| — |
|
|
| 516 |
|
Contingent consideration payments excess |
| — |
|
|
| — |
|
|
| — |
|
|
| (5,457 | ) |
Finance lease interest |
| 1 |
|
|
| 23 |
|
|
| 34 |
|
|
| 119 |
|
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
| ||||||||
Accounts receivable |
| (98,535 | ) |
|
| (50,204 | ) |
|
| (165,939 | ) |
|
| (118,859 | ) |
Inventories |
| (27,613 | ) |
|
| (6,394 | ) |
|
| (145,962 | ) |
|
| (12,301 | ) |
Prepaid expenses and other assets |
| (12,369 | ) |
|
| (17,111 | ) |
|
| (27,371 | ) |
|
| (18,753 | ) |
Other non-current assets |
| 3,914 |
|
|
| 7,102 |
|
|
| 1,123 |
|
|
| 9,948 |
|
Accounts payable |
| 15,434 |
|
|
| 105,511 |
|
|
| 82,969 |
|
|
| 175,120 |
|
Accrued expenses and other liabilities |
| 7,876 |
|
|
| (8,928 | ) |
|
| (4,869 | ) |
|
| (493 | ) |
Income taxes payable |
| (3,115 | ) |
|
| (2,886 | ) |
|
| (2,252 | ) |
|
| (3,679 | ) |
Net cash (used in) provided by operating activities of continuing operations |
| (78,684 | ) |
|
| 61,345 |
|
|
| (124,354 | ) |
|
| 116,767 |
|
Cash flows from investing activities of continuing operations: |
|
|
|
|
|
|
| ||||||||
Capital expenditures |
| (3,523 | ) |
|
| (80 | ) |
|
| (6,849 | ) |
|
| (2,363 | ) |
Cash received for business disposal |
| — |
|
|
| — |
|
|
| 3,125 |
|
|
| 34,356 |
|
Net cash (used in) provided by investing activities of continuing operations |
| (3,523 | ) |
|
| (80 | ) |
|
| (3,724 | ) |
|
| 31,993 |
|
Cash flows from financing activities of continuing operations: |
|
|
|
|
|
|
| ||||||||
Borrowings on revolving credit, net of expenses |
| 572,139 |
|
|
| 395,215 |
|
|
| 2,166,409 |
|
|
| 1,881,679 |
|
Repayments on revolving credit, net of expenses |
| (480,593 | ) |
|
| (449,017 | ) |
|
| (2,030,569 | ) |
|
| (1,949,392 | ) |
Repayments on long-term debt, net |
| (1,875 | ) |
|
| (1,875 | ) |
|
| (7,843 | ) |
|
| (7,839 | ) |
Repayments of finance lease obligations |
| (306 | ) |
|
| (320 | ) |
|
| (1,238 | ) |
|
| (1,294 | ) |
Contingent consideration payments |
| — |
|
|
| — |
|
|
| — |
|
|
| (41,393 | ) |
Exercise of stock options |
| 712 |
|
|
| 12 |
|
|
| 2,304 |
|
|
| 451 |
|
Taxes paid on settlement of equity awards |
| (26 | ) |
|
| — |
|
|
| (2,754 | ) |
|
| (1,036 | ) |
Common stock repurchased |
| (9,676 | ) |
|
| — |
|
|
| (18,203 | ) |
|
| — |
|
Net cash provided by (used in) financing activities of continuing operations |
| 80,375 |
|
|
| (55,985 | ) |
|
| 108,106 |
|
|
| (118,824 | ) |
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
| ||||||||
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 |
| — |
|
|
| 2,469 |
|
|
| — |
|
|
| 24,173 |
|
Net cash flows used in investing activities of discontinued operations |
| — |
|
|
| — |
|
|
| — |
|
|
| (58 | ) |
Net cash flows used in financing activities of discontinued operations |
| — |
|
|
| — |
|
|
| — |
|
|
| (29,494 | ) |
Net cash flows used in discontinued operations |
| — |
|
|
| 2,469 |
|
|
| — |
|
|
| (5,379 | ) |
Effect of exchange rate changes on cash and cash equivalents |
| (3,720 | ) |
|
| 5,648 |
|
|
| (4,759 | ) |
|
| 3,706 |
|
(Decrease) Increase in cash and cash equivalents |
| (5,552 | ) |
|
| 13,397 |
|
|
| (24,731 | ) |
|
| 28,263 |
|
Consolidated cash and cash equivalents at beginning of period |
| 43,539 |
|
|
| 49,321 |
|
|
| 62,718 |
|
|
| 34,455 |
|
Consolidated cash and cash equivalents at end of period |
| 37,987 |
|
|
| 62,718 |
|
|
| 37,987 |
|
|
| 62,718 |
|
Cash and cash equivalents of discontinued operations |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Cash and cash equivalents of continuing operations | $ | 37,987 |
|
| $ | 62,718 |
|
| $ | 37,987 |
|
| $ | 62,718 |
|
ScanSource, Inc. and Subsidiaries | |||||||||||||||
Supplementary Information (Unaudited) | |||||||||||||||
(in thousands, except percentages) | |||||||||||||||
|
|
|
|
|
|
|
| ||||||||
Non-GAAP Financial Information: |
|
|
| ||||||||||||
| Quarter ended June 30, |
| Fiscal year ended June 30, | ||||||||||||
|
| 2022 |
|
|
| 2021 |
|
|
| 2022 |
|
|
| 2021 |
|
Adjusted return on invested capital ratio (Adjusted ROIC), annualized(a) |
| 14.9 | % |
|
| 16.0 | % |
|
| 17.0 | % |
|
| 12.6 | % |
|
|
|
|
|
|
|
| ||||||||
Reconciliation of Net Income to Adjusted EBITDA: |
|
|
|
|
|
|
| ||||||||
Net income from continuing operations (GAAP) | $ | 19,947 |
|
| $ | 20,657 |
|
| $ | 88,698 |
|
| $ | 45,389 |
|
Plus: Interest expense |
| 1,886 |
|
|
| 1,643 |
|
|
| 6,523 |
|
|
| 6,929 |
|
Plus: Income taxes |
| 6,267 |
|
|
| 2,389 |
|
|
| 29,925 |
|
|
| 12,146 |
|
Plus: Depreciation and amortization |
| 7,700 |
|
|
| 8,090 |
|
|
| 29,884 |
|
|
| 33,507 |
|
EBITDA (non-GAAP) |
| 35,800 |
|
|
| 32,779 |
|
|
| 155,030 |
|
|
| 97,971 |
|
Plus: Share-based compensation |
| 2,872 |
|
|
| 2,328 |
|
|
| 11,663 |
|
|
| 8,039 |
|
Plus: Acquisition and divestiture costs(b) |
| — |
|
|
| 246 |
|
|
| 30 |
|
|
| 2,376 |
|
Plus: Restructuring costs |
| — |
|
|
| (54 | ) |
|
| — |
|
|
| 9,047 |
|
Adjusted EBITDA (numerator for Adjusted ROIC) (non-GAAP) | $ | 38,672 |
|
| $ | 35,299 |
|
| $ | 166,723 |
|
| $ | 117,949 |
|
|
|
|
|
|
|
|
| ||||||||
Invested Capital Calculations: |
|
|
|
|
|
|
| ||||||||
Equity - beginning of the quarter | $ | 806,654 |
|
| $ | 690,575 |
|
| $ | 731,191 |
|
| $ | 678,246 |
|
Equity - end of the quarter |
| 806,528 |
|
|
| 731,191 |
|
|
| 806,528 |
|
|
| 731,191 |
|
Plus: Share-based compensation, net |
| 2,134 |
|
|
| 1,912 |
|
|
|
|
| ||||
Plus: Acquisition and divestiture costs(b) |
| — |
|
|
| 207 |
|
|
| 30 |
|
|
| 2,337 |
|
Plus: Restructuring, net |
| — |
|
|
| (40 | ) |
|
| — |
|
|
| 6,840 |
|
Plus: Discontinued operations net (income) loss |
| — |
|
|
| (3,053 | ) |
|
| (100 | ) |
|
| 34,594 |
|
Average equity |
| 807,658 |
|
|
| 710,396 |
|
|
| 773,179 |
|
|
| 729,825 |
|
Average funded debt (c) |
| 233,445 |
|
|
| 177,074 |
|
|
| 209,114 |
|
|
| 202,869 |
|
Invested capital (denominator for Adjusted ROIC) (non-GAAP) | $ | 1,041,103 |
|
| $ | 887,470 |
|
| $ | 982,293 |
|
| $ | 932,694 |
|
(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 90 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 June 30, |
|
| ||||||
|
| 2022 |
|
|
| 2021 |
| % Change | |
Specialty Technology Solutions: | (in thousands) |
|
| ||||||
Net sales, reported | $ | 580,619 |
|
| $ | 515,445 |
| 12.6 | % |
Foreign exchange impact (a) |
| (1,338 | ) |
|
| — |
|
| |
Non-GAAP net sales, constant currency | $ | 579,281 |
|
| $ | 515,445 |
| 12.4 | % |
|
|
|
|
|
| ||||
Modern Communications & Cloud: |
|
|
|
|
| ||||
Net sales, reported | $ | 381,664 |
|
| $ | 337,249 |
| 13.2 | % |
Foreign exchange impact (a) |
| (4,447 | ) |
|
| — |
|
| |
Non-GAAP net sales, constant currency | $ | 377,217 |
|
| $ | 337,249 |
| 11.9 | % |
|
|
|
|
|
| ||||
Consolidated: |
|
|
|
|
| ||||
Net sales, reported | $ | 962,283 |
|
| $ | 852,694 |
| 12.9 | % |
Foreign exchange impact (a) |
| (5,785 | ) |
|
| — |
|
| |
Non-GAAP net sales, constant currency | $ | 956,498 |
|
| $ | 852,694 |
| 12.2 | % |
(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 quarter ended June 30, 2022 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2021. | |||||||||
ScanSource, Inc. and Subsidiaries | |||||||||
Supplementary Information (Unaudited) | |||||||||
|
|
|
| ||||||
Net Sales by Segment: |
|
|
| ||||||
| Fiscal year ended June 30, |
|
| ||||||
|
| 2022 |
|
|
| 2021 |
| % Change | |
Specialty Technology Solutions | (in thousands) |
|
| ||||||
Net sales, reported | $ | 2,082,321 |
|
| $ | 1,815,933 |
| 14.7 | % |
Foreign exchange impact (a) |
| (1,710 | ) |
|
| — |
|
| |
Non-GAAP net sales, constant currency | $ | 2,080,611 |
|
| $ | 1,815,933 |
| 14.6 | % |
|
|
|
|
|
| ||||
Modern Communications & Cloud |
|
|
|
|
| ||||
Net sales, reported | $ | 1,447,614 |
|
| $ | 1,334,873 |
| 8.4 | % |
Foreign exchange impact (a) |
| (7,115 | ) |
|
| — |
|
| |
Non-GAAP net sales, constant currency | $ | 1,440,499 |
|
| $ | 1,334,873 |
| 7.9 | % |
|
|
|
|
|
| ||||
Consolidated: |
|
|
|
|
| ||||
Net sales, reported | $ | 3,529,935 |
|
| $ | 3,150,806 |
| 12.0 | % |
Foreign exchange impact (a) |
| (8,825 | ) |
|
| — |
|
| |
Non-GAAP net sales, constant currency | $ | 3,521,110 |
|
| $ | 3,150,806 |
| 11.8 | % |
(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, 2022 into U.S. dollars using the average foreign exchange rates for the fiscal year ended June 30, 2021. | |||||||||
ScanSource, Inc. and Subsidiaries | |||||||||
Supplementary Information (Unaudited) | |||||||||
|
|
|
|
|
| ||||
Net Sales by Geography: |
|
|
| ||||||
| Quarter ended June 30, |
|
| ||||||
|
| 2022 |
|
|
| 2021 |
| % Change | |
United States and Canada: | (in thousands) |
|
| ||||||
Net sales, as reported | $ | 865,737 |
|
| $ | 771,403 |
| 12.2 | % |
|
|
|
|
|
| ||||
International: |
|
|
|
|
| ||||
Net sales, reported | $ | 96,546 |
|
| $ | 81,291 |
| 18.8 | % |
Foreign exchange impact(a) |
| (5,785 | ) |
|
| — |
|
| |
Non-GAAP net sales, constant currency | $ | 90,761 |
|
| $ | 81,291 |
| 11.6 | % |
|
|
|
|
|
| ||||
Consolidated: |
|
|
|
|
| ||||
Net sales, reported | $ | 962,283 |
|
| $ | 852,694 |
| 12.9 | % |
Foreign exchange impact(a) |
| (5,785 | ) |
|
| — |
|
| |
Non-GAAP net sales, constant currency | $ | 956,498 |
|
| $ | 852,694 |
| 12.2 | % |
(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 quarter ended June 30, 2022 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2021. | |||||
ScanSource, Inc. and Subsidiaries | |||||||||
Supplementary Information (Unaudited) | |||||||||
|
|
|
|
|
| ||||
Net Sales by Geography: |
|
|
| ||||||
| Fiscal year ended June 30, |
|
| ||||||
|
| 2022 |
|
|
| 2021 |
| % Change | |
United States and Canada: | (in thousands) |
|
| ||||||
Net sales, as reported | $ | 3,173,694 |
|
| $ | 2,840,731 |
| 11.7 | % |
|
|
|
|
|
| ||||
International: |
|
|
|
|
| ||||
Net sales, reported | $ | 356,241 |
|
| $ | 310,075 |
| 14.9 | % |
Foreign exchange impact(a) |
| (8,825 | ) |
|
| — |
|
| |
Non-GAAP net sales, constant currency | $ | 347,416 |
|
| $ | 310,075 |
| 12.0 | % |
|
|
|
|
|
| ||||
Consolidated: |
|
|
|
|
| ||||
Net sales, reported | $ | 3,529,935 |
|
| $ | 3,150,806 |
| 12.0 | % |
Foreign exchange impact(a) |
| (8,825 | ) |
|
| — |
|
| |
Non-GAAP net sales, constant currency | $ | 3,521,110 |
|
| $ | 3,150,806 |
| 11.8 | % |
(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, 2022 into U.S. dollars using the average foreign exchange rates for the fiscal year ended June 30, 2021. | |||||||||
Quarter ended June 30, 2022 | |||||||||||||||||
| GAAP Measure |
| Intangible amortization expense |
|
| Acquisition and divestiture costs |
| Restructuring costs |
| Non-GAAP measure | |||||||
| (in thousands, except per share data) | ||||||||||||||||
SG&A expenses | $ | 75,905 |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | 75,905 |
Operating income |
| 27,424 |
|
| 4,440 |
|
|
| — |
|
|
| — |
|
|
| 31,864 |
Net income |
| 19,947 |
|
| 3,319 |
|
|
| — |
|
|
| — |
|
|
| 23,266 |
Diluted EPS | $ | 0.78 |
| $ | 0.13 |
|
| $ | — |
|
| $ | — |
|
| $ | 0.91 |
|
|
|
|
|
|
|
|
|
|
| |||||||
| Quarter ended June 30, 2021 | ||||||||||||||||
| GAAP Measure |
| Intangible amortization expense |
|
| Acquisition and divestiture costs |
| Restructuring costs |
| Non-GAAP measure | |||||||
| (in thousands, except per share data) | ||||||||||||||||
SG&A expense | $ | 64,758 |
| $ | — |
|
| $ | (246 | ) |
| $ | — |
|
| $ | 64,512 |
Operating income |
| 23,283 |
|
| 4,893 |
|
|
| 246 |
|
|
| (54 | ) |
|
| 28,368 |
Net income |
| 20,657 |
|
| 3,698 |
|
|
| 207 |
|
|
| (40 | ) |
|
| 24,522 |
Diluted EPS | $ | 0.80 |
| $ | 0.14 |
|
| $ | 0.01 |
|
| $ | — |
|
| $ | 0.96 |
|
|
|
|
|
|
|
|
|
|
| |||||||
| Year ended June 30, 2022 | |||||||||||||||||
| Reported 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) | |||||||||||||||||
SG&A expense | $ | 275,442 |
| $ | — |
| $ | — |
| $ | (30 | ) |
| $ | — |
| $ | 275,412 |
Operating income |
| 122,167 |
|
| 17,853 |
|
| — |
|
| 30 |
|
|
| — |
|
| 140,050 |
Net income |
| 88,698 |
|
| 13,412 |
|
| — |
|
| 30 |
|
|
| — |
|
| 102,140 |
Diluted EPS | $ | 3.44 |
| $ | 0.52 |
| $ | — |
| $ | — |
|
| $ | — |
| $ | 3.97 |
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||
| Year ended June 30, 2021 | |||||||||||||||||
| Reported 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) | |||||||||||||||||
SG&A expense | $ | 247,438 |
| $ | — |
| $ | — |
| $ | (2,376 | ) |
| $ | — |
| $ | 245,062 |
Operating income |
| 61,483 |
|
| 19,488 |
|
| 516 |
|
| 2,376 |
|
|
| 9,258 |
|
| 93,121 |
Net income |
| 45,389 |
|
| 14,753 |
|
| 390 |
|
| 2,337 |
|
|
| 6,999 |
|
| 69,868 |
Diluted EPS | $ | 1.78 |
| $ | 0.58 |
| $ | 0.02 |
| $ | 0.09 |
|
| $ | 0.27 |
| $ | 2.74 |
|
|
|
|
|
|
|
|
|
|
|
| |||||||
ScanSource, Inc. and Subsidiaries | ||||
Supplementary Forward-Looking Information (Unaudited) | ||||
|
|
|
|
|
Annual Financial Outlook for Fiscal Year 2023: |
|
| ||
|
|
|
|
|
|
|
| FY23 Outlook |
|
GAAP, Operating income |
| At least $132 million | ||
Intangible amortization |
| $17 million | ||
Depreciation expense |
| $12 million | ||
Share-based compensation expense |
| $12 million | ||
Interest income and other income (expense), net |
|
| $1 million |
|
Adjusted EBITDA (non-GAAP) |
| At least $174 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
