ScanSource, Inc. (NASDAQ:SCSC), the leading international value-added
distributor of specialty technology products, today announced complete
financial results for its first quarter ended September 30, 2013.
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Quarter ended September 30, 2013:
|
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Net sales
|
|
|
|
|
$731.9 million
|
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Net income
|
|
|
|
|
$19.4 million
|
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Diluted EPS
|
|
|
|
|
$0.69 per share
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“Our quarterly sales results were led by solid year-over-year growth for
our North America Communications and Security business units,” said Mike
Baur, CEO, ScanSource, Inc. “Our teams executed well in a slower growth
environment, especially internationally where Europe and Brazil achieved
better operating results than a year ago.”
For the quarter ended September 30, 2013, net sales totaled $731.9
million. This represents a 2.7% increase from the prior quarter’s sales
of $712.7 million and a slight decrease from net sales of $733.6 million
for the quarter ended September 30, 2012. Operating income increased
7.7% to $28.2 million from $26.2 million in the comparable prior year
quarter. Net income for the quarter ended September 30, 2013 was $19.4
million, or $0.69 per diluted share, compared with net income of $17.6
million, or $0.63 per diluted share, for the prior year quarter.
Forecast for Next Quarter and Sales Release Update
The Company announced its current expectations for the second quarter of
fiscal 2014. ScanSource expects that net sales for the quarter ending
December 31, 2013 could range from $740 million to $760 million, and
diluted earnings per share could be in the range of $0.62 to $0.64 per
share. Starting with the quarter ending December 31, 2013, the Company
will no longer provide a sales release in the first week following the
quarter end.
Webcast Details
ScanSource will present additional information about its financial
results and outlook in a conference call with presentation slides today,
October 24, 2013, at 5:00 p.m. (ET). A webcast of the call and
accompanying presentations slides 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 comments that are “forward-looking”
statements that involve risks and uncertainties; these statements are
subject to the safe harbor created by the Private Securities Litigation
Reform Act of 1995. Any number of important factors could cause actual
results to differ materially from anticipated or forecasted results,
including, but not limited to, expanded operations in emerging markets,
such as Brazil, that expose the Company to greater political and
economic volatility than its operations in established markets;
additional costs and delays in connection with the Company's new
ERP system and associated litigation; the ability to forecast volatility
in earnings resulting from the quarterly revaluation of the Company's
earnout obligation to the sellers of CDC; and macroeconomic
circumstances that could impact the business, such as currency
fluctuations, credit market conditions, and an economic downturn. For
more information concerning factors that could cause actual results to
differ from anticipated results, see the Company's annual report on Form
10-K for the year ended June 30, 2013 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, including
net sales excluding the translation impact of foreign currencies and
return on invested capital ("ROIC"). Non-GAAP financial measures are
used to better understand and evaluate performance, including
comparisons from period to period, as described below.
Net sales excluding the translation impact of foreign currencies:
The Company discusses the percentage change in net sales excluding the
translation impact from changes in foreign currency exchange rates
between reporting periods. This measure enhances comparability between
periods to help analyze underlying trends.
Return on invested capital ("ROIC"): Management uses
ROIC as a performance measurement to assess efficiency at allocating
capital under the Company's control to generate returns. Management
believes this metric balances the Company's operating results with asset
and liability management, excludes the results of capitalization
decisions, is easily computed and understood, and is considered to have
a strong correlation with shareholder value creation. ROIC also provides
management a measure of the Company's profitability on a basis more
comparable to historical or future periods. In addition, the Company's
Board of Directors uses ROIC in evaluating business and management
performance. Certain management incentive compensation targets are set
and measured relative to ROIC.
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 following Supplemental Information tables.
About ScanSource, Inc.
ScanSource, Inc. (NASDAQ: SCSC) is the leading international distributor
of specialty technology products, focusing on point-of-sale (POS) and
barcode, communications and physical security solutions. ScanSource's
teams provide value-added services and operate from two technology
segments, Worldwide Barcode & Security and Worldwide Communications &
Services. ScanSource is committed to helping its reseller customers
choose, configure, and deliver the industry's best products across
almost every vertical market in North America, Latin America and Europe.
Founded in 1992, the Company ranks #711 on the Fortune 1000. For more
information, visit www.scansource.com.
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ScanSource, Inc. and Subsidiaries
|
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Condensed Consolidated Balance Sheets (Unaudited)
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(in thousands)
|
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|
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|
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|
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September 30, 2013
|
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June 30, 2013*
|
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Assets
|
|
|
|
|
|
|
|
|
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Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
$
|
193,769
|
|
|
$
|
148,164
|
|
|
Accounts receivable, less allowance of
|
|
|
|
|
|
443,256
|
|
|
435,028
|
|
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$27,966 at September 30, 2013
|
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|
|
|
|
|
|
|
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$25,479 at June 30, 2013
|
|
|
|
|
|
|
|
|
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Inventories
|
|
|
|
|
|
433,109
|
|
|
402,307
|
|
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Prepaid expenses and other current assets
|
|
|
|
|
|
43,023
|
|
|
40,105
|
|
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Deferred income taxes
|
|
|
|
|
|
15,522
|
|
|
16,456
|
|
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Total current assets
|
|
|
|
|
|
1,128,679
|
|
|
1,042,060
|
|
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Property and equipment, net
|
|
|
|
|
|
19,545
|
|
|
20,203
|
|
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Goodwill
|
|
|
|
|
|
32,044
|
|
|
31,795
|
|
|
Other non-current assets, including identifiable intangible assets
|
|
|
|
|
|
71,589
|
|
|
70,125
|
|
|
Total assets
|
|
|
|
|
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$
|
1,251,857
|
|
|
$
|
1,164,183
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|
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Liabilities and Shareholders' Equity
|
|
|
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|
|
|
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Current liabilities:
|
|
|
|
|
|
|
|
|
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Current portion of contingent consideration
|
|
|
|
|
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$
|
5,453
|
|
|
$
|
3,732
|
|
|
Accounts payable
|
|
|
|
|
|
417,103
|
|
|
362,271
|
|
|
Accrued expenses and other current liabilities
|
|
|
|
|
|
57,967
|
|
|
59,983
|
|
|
Income taxes payable
|
|
|
|
|
|
10,730
|
|
|
1,696
|
|
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Total current liabilities
|
|
|
|
|
|
491,253
|
|
|
427,682
|
|
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Deferred income taxes
|
|
|
|
|
|
698
|
|
|
205
|
|
|
Long-term debt
|
|
|
|
|
|
5,429
|
|
|
5,429
|
|
|
Long-term portion of contingent consideration
|
|
|
|
|
|
4,053
|
|
|
8,813
|
|
|
Other long-term liabilities
|
|
|
|
|
|
26,676
|
|
|
26,098
|
|
|
Total liabilities
|
|
|
|
|
|
528,109
|
|
|
468,227
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
|
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Common stock
|
|
|
|
|
|
153,905
|
|
|
149,821
|
|
|
Retained earnings
|
|
|
|
|
|
588,544
|
|
|
569,107
|
|
|
Accumulated other comprehensive income (loss)
|
|
|
|
|
|
(18,701
|
)
|
|
(22,972
|
)
|
|
Total shareholders' equity
|
|
|
|
|
|
723,748
|
|
|
695,956
|
|
|
Total liabilities and shareholders' equity
|
|
|
|
|
|
$
|
1,251,857
|
|
|
$
|
1,164,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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* Derived from audited financial statements.
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ScanSource, Inc. and Subsidiaries
|
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Condensed Consolidated Income Statements (Unaudited)
|
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(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
September 30,
|
|
|
|
|
|
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2013
|
|
2012
|
|
Net sales
|
|
|
|
|
$
|
|
731,904
|
|
|
$
|
|
733,605
|
|
|
Cost of goods sold
|
|
|
|
|
655,405
|
|
|
659,565
|
|
|
Gross profit
|
|
|
|
|
76,499
|
|
|
74,040
|
|
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Operating expenses:
|
|
|
|
|
|
|
|
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Selling, general and administrative expenses
|
|
|
|
|
47,540
|
|
|
47,061
|
|
|
Change in fair value of contingent consideration
|
|
|
|
|
738
|
|
|
764
|
|
|
Operating income
|
|
|
|
|
28,221
|
|
|
26,215
|
|
|
Other expense (income):
|
|
|
|
|
|
|
|
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Interest expense
|
|
|
|
|
247
|
|
|
124
|
|
|
Interest income
|
|
|
|
|
(574
|
)
|
|
(633
|
)
|
|
Other, net
|
|
|
|
|
109
|
|
|
(15
|
)
|
|
Income before income taxes
|
|
|
|
|
28,439
|
|
|
26,739
|
|
|
Provision for income taxes
|
|
|
|
|
9,002
|
|
|
9,097
|
|
|
Net income
|
|
|
|
|
$
|
|
19,437
|
|
|
$
|
|
17,642
|
|
|
Per share data:
|
|
|
|
|
|
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Weighted-average shares outstanding, basic
|
|
|
|
|
28,034
|
|
|
27,618
|
|
|
Net income per common share, basic
|
|
|
|
|
$
|
|
0.69
|
|
|
$
|
|
0.64
|
|
|
|
|
|
|
|
|
|
|
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Weighted-average shares outstanding, diluted
|
|
|
|
|
28,257
|
|
|
27,901
|
|
|
Net income per common share, diluted
|
|
|
|
|
$
|
|
0.69
|
|
|
$
|
|
0.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ScanSource, Inc. and Subsidiaries
|
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Supplementary Information (Unaudited)
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(in thousands)
|
|
|
|
|
|
|
|
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Net Sales by Segment:
|
|
|
|
|
Non-GAAP
|
|
|
Quarter ended September 30,
|
|
|
|
% Change
|
|
|
2013
|
|
2012
|
|
% Change
|
|
Excluding FX(a) |
|
Worldwide Barcode & Security
|
$
|
450,644
|
|
|
$
|
456,187
|
|
|
(1.2
|
)%
|
|
(1.2
|
)%
|
|
Worldwide Communications & Services
|
281,260
|
|
|
277,418
|
|
|
1.4
|
%
|
|
1.0
|
%
|
|
Consolidated
|
$
|
731,904
|
|
|
$
|
733,605
|
|
|
(0.2
|
)%
|
|
(0.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Geographic Segment:
|
|
|
|
|
Non-GAAP
|
|
|
Quarter ended September 30,
|
|
|
|
% Change
|
|
|
2013
|
|
2012
|
|
% Change
|
|
Excluding FX(b) |
|
North American (U.S. and Canada)
|
$
|
558,340
|
|
|
$
|
545,813
|
|
|
2.3
|
%
|
|
2.3
|
%
|
|
International
|
173,564
|
|
|
187,792
|
|
|
(7.6
|
)%
|
|
(8.1
|
)%
|
|
Consolidated
|
$
|
731,904
|
|
|
$
|
733,605
|
|
|
(0.2
|
)%
|
|
(0.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Information:
|
Quarter ended September 30,
|
|
|
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
Return on invested capital (ROIC), annualized (c) |
16.9
|
%
|
|
17.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income to EBITDA
|
|
|
|
|
|
|
|
|
Net income - GAAP
|
$
|
19,437
|
|
|
$
|
17,642
|
|
|
|
|
|
|
Plus: Income taxes
|
9,002
|
|
|
9,097
|
|
|
|
|
|
|
Plus: Interest expense
|
247
|
|
|
124
|
|
|
|
|
|
|
Plus: Depreciation and amortization
|
1,869
|
|
|
2,314
|
|
|
|
|
|
|
EBITDA (numerator for ROIC) (non-GAAP)
|
$
|
30,555
|
|
|
$
|
29,177
|
|
|
|
|
|
|
(a) Depreciation & amortization for the quarter ended September 30,
2012 includes debt issue costs of $0.1 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Invested Capital Calculation
|
|
|
|
|
|
|
|
|
Equity - beginning of quarter
|
$
|
695,956
|
|
|
$
|
652,311
|
|
|
|
|
|
|
Equity - end of quarter
|
723,748
|
|
|
676,136
|
|
|
|
|
|
|
Average equity
|
709,852
|
|
|
664,224
|
|
|
|
|
|
|
Average funded debt (d) |
5,429
|
|
|
16,563
|
|
|
|
|
|
|
Invested capital (denominator for ROIC) (non-GAAP)
|
$
|
715,281
|
|
|
$
|
680,787
|
|
|
|
|
|
Notes:
(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, 2013 into U.S. dollars using the weighted average foreign exchange
rates for the quarter ended September 30, 2012. Worldwide Barcode &
Security net sales excluding the translation impact of foreign
currencies for the quarter September 30, 2013, as adjusted, totaled
$450.8 million. Worldwide Communications & Services net sales excluding
the translation impact of foreign currencies for the quarter ended
September 30, 2013, as adjusted, totaled $280.2 million.
(b)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, 2013 into U.S. dollars
using the weighted average foreign exchange rates for the quarter ended
September 30, 2012. International net sales excluding the translation
impact of foreign currencies for the quarter ended September 30, 2013,
as adjusted, totaled $172.6 million.
(c) Calculated as net income plus interest expense, income taxes,
depreciation and amortization (EBITDA), annualized and divided by
invested capital for the period.
(d) Average funded debt is calculated as the daily average amounts
outstanding on our short-term and long-term interest-bearing debt.
Copyright Business Wire 2013