ScanSource Delivers Strong Third Quarter Profits

Third Quarter Profitability Reflects Consistent Execution

ScanSource, Inc. (NASDAQ: SCSC), a leading provider of technology products and solutions, today announced financial results for the third quarter ended March 31, 2021. All results in this release reflect continuing operations only unless otherwise noted.

Third Quarter Summary:

  • Net sales: $729.9 million, down 2% year-over-year, or flat year-over-year for organic growth
  • Gross profit: $88.1 million, up 4% year-over-year
  • GAAP operating income of $19.4 million, up 87% year-over-year, for a 2.66% operating income margin
  • Non-GAAP operating income of $25.1 million, up 70% year-over-year, for a 3.45% non-GAAP operating income margin
  • Net income from continuing operations of $13.8 million
  • GAAP diluted EPS of $0.54 per share; non-GAAP diluted EPS of $0.71 per share
  • Return on invested capital increased to 13.6% for the quarter

"We are very pleased with the excellent execution from ScanSource employees worldwide," said Mike Baur, Chairman and CEO, ScanSource, Inc. "We are focused on driving gross profit growth, gaining operating leverage on our SG&A, and shifting to more recurring revenue. We are committed to helping our channel partners accelerate their digital transformation."

Quarterly Results

Net sales for the third quarter of fiscal year 2021 totaled $729.9 million, down 2% year-over-year, or flat year-over-year for organic growth. During the quarter, the Company saw continued progress in recovering from the sales impact of the COVID-19 pandemic in North America and Brazil. For the Intelisys master agency business, net sales increased 12% year-over-year for the third quarter of fiscal year 2021.

For the third quarter of fiscal year 2021, operating income increased to $19.4 million from $10.4 million for the prior-year quarter, and non-GAAP operating income increased to $25.1 million from $14.8 million for the prior-year quarter. 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 decreased $4.9 million year-over-year, and the Company continued to realize the planned quarterly impact of the expense reduction plan.

On a GAAP basis, net income for the third quarter of fiscal year 2021 totaled $13.8 million, or $0.54 per diluted share, compared to net income of $5.7 million, or $0.23 per diluted share, for the prior-year quarter. Non-GAAP net income totaled $18.2 million, or $0.71 per diluted share, compared to $9.2 million, or $0.36 per diluted share, for the prior-year quarter.

At March 31, 2021, ScanSource had cash and cash equivalents of $49.3 million and total debt of $198.9 million. The Company used $60.3 million of operating cash flow in the third quarter of fiscal year 2021 and generated $129.4 million for the trailing 12-month period.

COVID-19 Update

The Company's 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 continue to work 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 continue to experience 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, May 10, 2021, 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 regarding 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 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 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.

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)

 

March 31, 2021

 

June 30, 2020*

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

49,321

 

 

$

29,485

 

Accounts receivable, less allowance of $21,180 at March 31, 2021

and $21,906 at March 31, 2020

509,404

 

 

443,185

 

Inventories

459,652

 

 

454,885

 

Prepaid expenses and other current assets

99,424

 

 

94,681

 

Current assets held for sale

 

 

181,231

 

Total current assets

1,117,801

 

 

1,203,467

 

Property and equipment, net

45,316

 

 

55,641

 

Goodwill

217,093

 

 

214,288

 

Identifiable intangible assets, net

109,172

 

 

121,547

 

Deferred income taxes

24,405

 

 

24,630

 

Other non-current assets

68,835

 

 

72,521

 

Total assets

$

1,582,622

 

 

$

1,692,094

 

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

521,552

 

 

$

454,240

 

Accrued expenses and other current liabilities

87,969

 

 

76,686

 

Current portion of contingent consideration

 

 

46,334

 

Income taxes payable

5,333

 

 

5,886

 

Current portion of long-term debt

7,843

 

 

7,839

 

Current liabilities held for sale

 

 

128,022

 

Total current liabilities

622,697

 

 

719,007

 

Deferred income taxes

4,309

 

 

3,884

 

Long-term debt, net of current portion

137,206

 

 

143,175

 

Borrowings under revolving credit facility

53,802

 

 

67,714

 

Other long-term liabilities

74,033

 

 

80,068

 

Total liabilities

892,047

 

 

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, 25,466,365 and 25,361,298 shares issued and outstanding at March 31, 2021 and June 30, 2020, respectively

68,895

 

 

63,765

 

Retained earnings

734,361

 

 

747,276

 

Accumulated other comprehensive loss

(112,681

)

 

(132,795

)

Total shareholders’ equity

690,575

 

 

678,246

 

Total liabilities and shareholders’ equity

$

1,582,622

 

 

$

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

March 31,

 

Nine months ended

March 31,

 

2021

 

2020

 

2021

 

2020

Net sales

$

729,873

 

 

$

744,584

 

 

$

2,298,111

 

 

$

2,411,285

 

Cost of goods sold

641,757

 

 

660,006

 

 

2,043,172

 

 

2,129,862

 

Gross profit

88,116

 

 

84,578

 

 

254,939

 

 

281,423

 

Selling, general and administrative expenses

60,099

 

 

64,971

 

 

182,681

 

 

201,344

 

Depreciation expense

3,141

 

 

3,268

 

 

9,634

 

 

9,729

 

Intangible amortization expense

4,880

 

 

5,159

 

 

14,595

 

 

15,007

 

Restructuring and other charges

560

 

 

169

 

 

9,312

 

 

604

 

Change in fair value of contingent consideration

 

 

618

 

 

516

 

 

6,266

 

Operating income

19,436

 

 

10,393

 

 

38,201

 

 

48,473

 

Interest expense

1,576

 

 

3,098

 

 

5,285

 

 

9,727

 

Interest income

(745

)

 

(1,080

)

 

(1,756

)

 

(2,627

)

Other expense (income), net

(302

)

 

(137

)

 

183

 

 

198

 

Income before income taxes

18,907

 

 

8,512

 

 

34,489

 

 

41,175

 

Provision for income taxes

5,121

 

 

2,797

 

 

9,757

 

 

11,542

 

Net income from continuing operations

13,786

 

 

5,715

 

 

24,732

 

 

29,633

 

Net loss from discontinued operations

(688

)

 

(4,002

)

 

(37,647

)

 

(5,025

)

Net (loss) income

$

13,098

 

 

$

1,713

 

 

$

(12,915

)

 

$

24,608

 

Per share data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income from continuing operations per common share, basic

$

0.54

 

 

$

0.23

 

 

$

0.97

 

 

$

1.17

 

Net loss from discontinued operations per common share, basic

(0.03

)

 

(0.16

)

 

(1.48

)

 

(0.20

)

Net (loss) income per common share, basic

$

0.51

 

 

$

0.07

 

 

$

(0.51

)

 

$

0.97

 

Weighted-average shares outstanding, basic

25,455

 

 

25,346

 

 

25,404

 

 

25,386

 

 

 

 

 

 

 

 

 

Net income from continuing operations per common share, diluted

$

0.54

 

 

$

0.23

 

 

$

0.97

 

 

$

1.16

 

Net loss from discontinued operations per common share, diluted

(0.03

)

 

(0.16

)

 

(1.48

)

 

(0.20

)

Net (loss) income per common share, diluted

$

0.51

 

 

$

0.07

 

 

$

(0.51

)

 

$

0.97

 

Weighted-average shares outstanding, diluted

25,572

 

 

25,363

 

 

25,484

 

 

25,444

 

ScanSource, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

 

 

 

 

 

 

Nine months ended March 31,

 

 

2021

 

2020

Cash flows from operating activities:

 

 

 

 

Net (loss) income

 

$

(12,915

)

 

$

24,608

 

Net loss from discontinued operations

 

(37,647

)

 

(5,025

)

Net income from continuing operations

 

24,732

 

 

29,633

 

Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:

 

 

 

 

Depreciation and amortization

 

25,417

 

 

26,585

 

Amortization of debt issue costs

 

313

 

 

313

 

Provision for doubtful accounts

 

226

 

 

1,399

 

Share-based compensation

 

5,711

 

 

4,053

 

Deferred income taxes

 

(26

)

 

(1,479

)

Change in fair value of contingent consideration

 

516

 

 

6,266

 

Contingent consideration payments excess

 

(5,457

)

 

(3,050

)

Finance lease interest

 

96

 

 

64

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

Accounts receivable

 

(68,654

)

 

(85

)

Inventories

 

(5,907

)

 

(7,446

)

Prepaid expenses and other assets

 

(1,641

)

 

(10,977

)

Other non-current assets

 

2,846

 

 

(1,029

)

Accounts payable

 

69,609

 

 

55,378

 

Accrued expenses and other liabilities

 

8,434

 

 

13,233

 

Income taxes payable

 

(793

)

 

(4,775

)

Net cash provided by operating activities of continuing operations

 

55,422

 

 

108,083

 

Cash flows from investing activities of continuing operations:

 

 

 

 

Capital expenditures

 

(2,283

)

 

(6,575

)

Cash paid for business acquisitions, net of cash acquired

 

 

 

(48,915

)

Proceeds from the sale of net assets of discontinued operations

 

34,356

 

 

 

Net cash provided by (used in) investing activities of continuing operations

 

32,073

 

 

(55,490

)

Cash flows from financing activities of continuing operations:

 

 

 

 

Borrowings on revolving credit, net of expenses

 

1,486,464

 

 

1,608,472

 

Repayments on revolving credit, net of expenses

 

(1,500,375

)

 

(1,650,862

)

Borrowings on long-term debt, net

 

(5,964

)

 

(3,147

)

Repayments of finance lease obligations

 

(974

)

 

(660

)

Contingent consideration payments

 

(41,393

)

 

(35,481

)

Exercise of stock options

 

439

 

 

754

 

Taxes paid on settlement of equity awards

 

(1,036

)

 

(1,354

)

Repurchase of common stock

 

 

 

(6,077

)

Net cash used in financing activities of continuing operations

 

(62,839

)

 

(88,355

)

 

 

 

 

 

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

 

21,704

 

 

42,000

 

Net cash flows used in investing activities of discontinued operations

 

(58

)

 

(48

)

Net cash flows (used in) provided by financing activities of discontinued operations

 

(29,494

)

 

6,739

 

Net cash flows provided by discontinued operations

 

(7,848

)

 

48,691

 

Effect of exchange rate changes on cash and cash equivalents

 

(1,942

)

 

(2,151

)

Increase in cash and cash equivalents

 

14,866

 

 

10,778

 

Consolidated cash and cash equivalents at beginning of period

 

34,455

 

 

23,818

 

Consolidated cash and cash equivalents at end of period

 

49,321

 

 

34,596

 

Cash and cash equivalents of discontinued operations

 

 

 

4,838

 

Cash and cash equivalents of continuing operations

 

$

49,321

 

 

$

29,758

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

(in thousands, except percentages)

 

 

 

 

Non-GAAP Financial Information:

 

Quarter ended March 31,

 

2021

 

2020

Return on invested capital ratio (ROIC), annualized (a)

 

13.6

%

 

 

6.0

%

 

 

 

 

Reconciliation of net income to EBITDA:

 

 

 

Net income from continuing operations (GAAP)

$

13,786

 

 

$

5,715

 

Plus: Interest expense

1,576

 

 

3,098

 

Plus: Income taxes

5,121

 

 

2,797

 

Plus: Depreciation and amortization

8,358

 

 

8,987

 

EBITDA (non-GAAP)

28,841

 

 

20,597

 

Plus: Change in fair value of contingent consideration

 

 

618

 

Plus: Acquisition and divestiture costs(b)

272

 

 

780

 

Plus: Restructuring costs

349

 

 

169

 

Plus: Tax recovery

 

 

(2,320

)

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

$

29,462

 

 

$

19,844

 

 

 

 

 

Invested Capital Calculations:

 

 

 

Equity – beginning of the quarter (c)

$

682,139

 

 

$

927,580

 

Equity – end of the quarter (c)

690,575

 

 

897,678

 

Plus: Change in fair value of contingent consideration, net of tax

 

 

467

 

Plus: Acquisition and divestiture costs(b)

272

 

 

780

 

Plus: Restructuring, net of tax

 

264

 

 

125

 

Plus: Tax recovery, net of tax

 

 

(1,754

)

Plus: Net loss from discontinued operations

688

 

 

4,002

 

Average equity

686,969

 

 

914,439

 

Average funded debt (d)

191,996

 

 

405,533

 

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

$

878,965

 

 

$

1,319,972

 

 

 

 

 

(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 90 days in the current quarter and 91 days in the prior-year quarter.

(b) Acquisition and divestiture costs are generally nondeductible for tax purposes.

(c) In the quarter ending June 30, 2020, the Company recorded impairment charges of $120.5 million. Impairment charges, net of tax reduced equity by $114.4 million.

(d) 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 March 31,

 

 

 

2021

 

2020

 

% Change

Worldwide Barcode, Networking & Security:

(in thousands)

 

 

Net sales, reported

$

502,227

 

 

$

489,218

 

 

2.7

%

Foreign exchange impact (a)

4,132

 

 

 

 

 

Non-GAAP net sales, constant currency

$

506,359

 

 

$

489,218

 

 

3.5

%

 

 

 

 

 

 

Worldwide Communications & Services:

 

 

 

 

 

Net sales, reported

$

227,646

 

 

$

255,366

 

 

(10.9)

%

Foreign exchange impact (a)

10,476

 

 

 

 

 

Non-GAAP net sales, constant currency

$

238,122

 

 

$

255,366

 

 

(6.8)

%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, reported

$

729,873

 

 

$

744,584

 

 

(2.0)

%

Foreign exchange impact (a)

14,608

 

 

 

 

 

Non-GAAP net sales, constant currency

$

744,481

 

 

$

744,584

 

 

%

 

 

 

 

 

 

(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 March 31, 2021 into U.S. dollars using the average foreign exchange rates for the quarter ended March 31, 2020.

 

 

 

 

 

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

Net Sales by Segment:

 

 

 

 

Nine months ended March 31,

 

 

 

2021

 

2020

 

% Change

Worldwide Barcode, Networking & Security:

(in thousands)

 

 

Net sales, reported

$

1,577,197

 

 

$

1,645,406

 

 

(4.1

)%

Foreign exchange impact (a)

19,758

 

 

 

 

 

Non-GAAP net sales, constant currency

$

1,596,955

 

 

$

1,645,406

 

 

(2.9

)%

 

 

 

 

 

 

Worldwide Communications & Services:

 

 

 

 

 

Net sales, reported

$

720,914

 

 

$

765,879

 

 

(5.9

)%

Foreign exchange impact (a)

47,694

 

 

 

 

 

Non-GAAP net sales, constant currency

$

768,608

 

 

$

765,879

 

 

0.4

%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, reported

$

2,298,111

 

 

$

2,411,285

 

 

(4.7

)%

Foreign exchange impact (a)

67,452

 

 

 

 

 

Non-GAAP net sales, constant currency

$

2,365,563

 

 

$

2,411,285

 

 

(1.9

)%

 

 

 

 

 

 

(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 nine months ended March 31, 2021 into U.S. dollars using the average foreign exchange rates for the nine months ended March 31, 2020.

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

 

 

Net Sales by Geography:

 

 

 

 

Quarter ended March 31,

 

 

 

2021

 

2020

 

% Change

United States and Canada:

(in thousands)

 

 

Net sales, as reported

$

665,720

 

 

$

670,175

 

 

(0.7)

%

 

 

 

 

 

 

International:

 

 

 

 

 

Net sales, reported

$

64,153

 

 

$

74,409

 

 

(13.8)

%

Foreign exchange impact(a)

14,608

 

 

 

 

 

Non-GAAP net sales, constant currency

$

78,761

 

 

$

74,409

 

 

5.8

%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, reported

$

729,873

 

 

$

744,584

 

 

(2.0)

%

Foreign exchange impact(a)

14,608

 

 

 

 

 

Non-GAAP net sales, constant currency

$

744,481

 

 

$

744,584

 

 

%

 

 

 

 

 

 

(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 March 31, 2021 into U.S. dollars using the average foreign exchange rates for the quarter ended March 31, 2020.

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

 

 

Net Sales by Geography:

 

 

 

 

Nine months ended March 31,

 

 

 

2021

 

2020

 

% Change

United States and Canada:

(in thousands)

 

 

Net sales, as reported

$

2,069,327

 

 

$

2,173,515

 

 

(4.8

)%

 

 

 

 

 

 

International:

 

 

 

 

 

Net sales, reported

$

228,784

 

 

$

237,770

 

 

(3.8

)%

Foreign exchange impact(a)

67,452

 

 

 

 

 

Non-GAAP net sales, constant currency

$

296,236

 

 

$

237,770

 

 

24.6

%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, reported

$

2,298,111

 

 

$

2,411,285

 

 

(4.7

)%

Foreign exchange impact(a)

67,452

 

 

 

 

 

Non-GAAP net sales, constant currency

$

2,365,563

 

 

$

2,411,285

 

 

(1.9

)%

 

 

 

 

 

 

(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 nine months ended March 31, 2021 into U.S. dollars using the average foreign exchange rates for the nine months ended March 31, 2020.

 

Quarter ended March 31, 2021

 

GAAP Measure

 

Intangible

amortization

expense

 

Change in fair

value of

contingent

consideration

 

Acquisition and

divestiture costs

 

Restructuring

costs

 

Tax recovery,

net

 

Non-GAAP

measure

 

(in thousands, except per share data)

Net sales

$

729,873

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

729,873

 

Gross profit

88,116

 

 

 

 

 

 

 

 

 

 

 

 

88,116

 

Operating income

19,436

 

 

4,880

 

 

 

 

272

 

 

560

 

 

 

 

25,148

 

Other expense, net

529

 

 

 

 

 

 

 

 

 

 

 

 

529

 

Pre-tax income

18,907

 

 

4,880

 

 

 

 

272

 

 

560

 

 

 

 

24,619

 

Net income from continuing operations

13,786

 

 

3,697

 

 

 

 

272

 

 

423

 

 

 

 

18,178

 

Diluted EPS from continuing operations

$

0.54

 

 

$

0.14

 

 

$

 

 

$

0.01

 

 

$

0.02

 

 

$

 

 

$

0.71

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended March 31, 2020

 

GAAP Measure

 

Intangible

amortization

expense

 

Change in fair

value of

contingent

consideration

 

Acquisition and

divestiture costs

 

Restructuring

costs

 

Tax recovery,

net

 

Non-GAAP

measure

 

(in thousands, except per share data)

Net sales

$

744,584

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

744,584

 

Gross profit

84,578

 

 

 

 

 

 

 

 

 

 

 

 

84,578

 

Operating income

10,393

 

 

5,159

 

 

618

 

 

780

 

 

169

 

 

(2,320

)

 

14,799

 

Other expense, net

1,881

 

 

 

 

 

 

 

 

 

 

 

 

1,881

 

Pre-tax income

8,512

 

 

5,159

 

 

618

 

 

780

 

 

169

 

 

(2,320

)

 

12,918

 

Net income from continuing operations

5,715

 

 

3,909

 

 

467

 

 

780

 

 

125

 

 

(1,754

)

 

9,242

 

Diluted EPS from continuing operations

$

0.23

 

 

$

0.15

 

 

$

0.02

 

 

$

0.03

 

 

$

 

 

$

(0.07

)

 

$

0.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended March 31, 2021

 

Reported GAAP Measure

 

Intangible amortization expense

 

Change in fair value of contingent consideration

 

Acquisition and divestiture costs

 

Restructuring costs

 

Tax recovery, net

 

Non-GAAP measure

 

(in thousands, except per share data)

Net sales

$

2,298,111

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

2,298,111

 

Gross profit

254,939

 

 

 

 

 

 

 

 

 

 

 

 

254,939

 

Operating income

38,201

 

 

14,595

 

 

516

 

 

2,130

 

 

9,312

 

 

 

 

64,754

 

Other expense, net

3,712

 

 

 

 

 

 

 

 

 

 

 

 

3,712

 

Pre-tax income

34,489

 

 

14,595

 

 

516

 

 

2,130

 

 

9,312

 

 

 

 

61,042

 

Net income from continuing operations

24,732

 

 

11,055

 

 

390

 

 

2,130

 

 

7,040

 

 

 

 

45,347

 

Diluted EPS from continuing operations

$

0.97

 

 

$

0.43

 

 

$

0.02

 

 

$

0.08

 

 

$

0.28

 

 

$

 

 

$

1.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended March 31, 2020

 

Reported GAAP Measure

 

Intangible amortization expense

 

Change in fair value of contingent consideration

 

Acquisition and divestiture costs

 

Restructuring costs

 

Tax recovery, net

 

Non-GAAP measure

 

(in thousands, except per share data)

Net sales

$

2,411,285

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

2,411,285

 

Gross profit

281,423

 

 

 

 

 

 

 

 

 

 

 

 

281,423

 

Operating income

48,473

 

 

15,007

 

 

6,266

 

 

2,689

 

 

604

 

 

(2,320

)

 

70,719

 

Other expense, net

7,298

 

 

 

 

 

 

 

 

 

 

 

 

7,298

 

Pre-tax income

41,175

 

 

15,007

 

 

6,266

 

 

2,689

 

 

604

 

 

(2,320

)

 

63,421

 

Net income from continuing operations

29,633

 

 

11,347

 

 

4,737

 

 

2,689

 

 

449

 

 

(1,754

)

 

47,101

 

Diluted EPS from continuing operations

$

1.16

 

 

$

0.45

 

 

$

0.19

 

 

$

0.11

 

 

$

0.02

 

 

$

(0.07

)

 

$

1.85

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

 

 

 

 

Discontinued Operations - Financial Results:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended

March 31,

 

Nine months ended

March 31,

 

2021

 

2020

 

2021

 

2020

 

(in thousands)

Net sales

$

 

 

$

127,899

 

 

$

213,373

 

 

$

439,527

 

Cost of goods sold

 

 

117,669

 

 

198,512

 

 

400,158

 

Gross profit

 

 

10,230

 

 

14,861

 

 

39,369

 

Selling, general and administrative expenses

 

 

13,782

 

 

17,291

 

 

42,607

 

Depreciation expense

 

 

225

 

 

 

 

771

 

Intangible amortization expense

 

 

327

 

 

 

 

1,073

 

Operating loss

 

 

(4,104

)

 

(2,430

)

 

(5,082

)

Interest expense, net

 

 

323

 

 

394

 

 

1,236

 

Loss on disposal group

688

 

 

 

 

34,496

 

 

 

Other expense, net

 

 

433

 

 

310

 

 

(96

)

Loss from discontinued operations before taxes

(688

)

 

(4,860

)

 

(37,630

)

 

(6,222

)

Income tax expense

 

 

(858

)

 

17

 

 

(1,197

)

Net loss from discontinued operations

$

(688

)

 

$

(4,002

)

 

$

(37,647

)

 

$

(5,025

)

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

Discontinued Operations - Assets and Liabilities:

 

 

 

 

 

 

 

 

March 31, 2021

 

June 30, 2020

 

(in thousands)

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

 

 

$

4,970

 

Accounts receivable, net

 

 

117,200

 

Inventories, net

 

 

106,779

 

Prepaid expenses and other current assets

 

 

23,808

 

Total current assets

 

 

252,757

 

Property and equipment, net

 

 

1,833

 

Deferred income taxes

 

 

9,349

 

Other non-current assets

 

 

6,215

 

Total assets, before valuation allowance

 

 

270,154

 

Less: valuation allowance

 

 

(88,923

)

Total assets, net of valuation allowance (a)

$

 

 

$

181,231

 

Liabilities

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

 

 

$

56,098

 

Accrued expenses and other current liabilities

 

 

14,815

 

Other taxes payable

 

 

20,378

 

Short-term borrowings

 

 

3,524

 

Income tax payable

 

 

1,085

 

Total current liabilities

 

 

95,900

 

Borrowings under revolving credit facility

 

 

24,704

 

Other long-term liabilities

 

 

7,418

 

Total liabilities(1)

$

 

 

$

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 March 31, 2021 and June 30, 2020. The discontinued operations were disposed of during the quarter ended December 31, 2020.

 

Contacts

Steve Jones

Senior Executive Vice President, Chief Financial Officer

ScanSource, Inc.

(864) 286-4302

- or -

Mary M. Gentry

Vice President, Treasurer and Investor Relations

ScanSource, Inc.

(864) 286-4892

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