ScanSource, Inc. (NASDAQ:SCSC), the leading international value-added
distributor of specialty technology products, today announced financial
results for the third quarter fiscal year 2014 for the period ended
March 31, 2014.
|
Quarter ended March 31, 2014:
|
|
Net sales
|
$683.0
|
|
million
|
|
Net income
|
$16.9
|
|
million
|
|
Diluted EPS
|
$0.59
|
|
per share
|
"We had excellent bottom line results for the quarter, including
double-digit growth in operating income and earnings per share," said
Mike Baur, CEO, ScanSource, Inc. "Sales for our Worldwide Barcode &
Security segment increased 4% year-over-year, driven by strong
performance from Brazil and Europe. However, our Worldwide
Communications & Services segment had a weaker than expected sales
quarter."
For the quarter ended March 31, 2014, net sales totaled $683.0 million,
which are unchanged from net sales for the prior year quarter. Operating
income for the quarter ended March 31, 2014 increased to $25.7 million
from $20.8 million in the prior year quarter. The effective tax rate
increased to 34.8% in the current quarter from 34% in the prior year
quarter. Net income for the quarter ended March 31, 2014 increased to
$16.9 million, or $0.59 per diluted share, compared with net income of
$14.0 million, or $0.50 per diluted share, for the prior year quarter.
Forecast for Next Quarter
The Company announced its current expectations for the fourth quarter
fiscal year 2014. ScanSource expects net sales for the quarter ending
June 30, 2014 to range from $715 million to $745 million and diluted
earnings per share to range from $0.55 to $0.58 per share.
Webcast Details
ScanSource will present additional information about its financial
results and outlook in a conference call with presentation slides today,
May 1, 2014, at 5:00 p.m. (ET). A webcast of the call and accompanying
presentation 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; costs
and delays in connection with the Company's new ERP system and the costs
associated with the litigation of the prior ERP system project; 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 and the
Company's quarterly report on Form 10-Q for the quarter ended December
31, 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 in allocating
capital under the Company's control to generate returns. Management
believes this metric balances the Company's operating results with asset
and liability management, is not impacted by capitalization decisions
and is considered to have a strong correlation with shareholder value
creation. In addition, it is easily computed, communicated and
understood. ROIC also provides management a measure of the Company's
profitability on a basis more comparable to historical or future periods.
ROIC assists management in comparing the Company's performance over
various reporting periods on a consistent basis because it removes from
operating results the impact of items that do not reflect core operating
performance. 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. 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 Supplementary 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.
|
ScanSource, Inc. and Subsidiaries
|
|
Condensed Consolidated Balance Sheets (Unaudited)
|
|
(in thousands)
|
|
|
|
March 31, 2014
|
|
June 30, 2013*
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
183,562
|
|
|
$
|
148,164
|
|
|
Accounts receivable, less allowance of
|
|
419,889
|
|
|
435,028
|
|
|
$26,825 at March 31, 2014
|
|
|
|
|
|
|
|
$25,479 at June 30, 2013
|
|
|
|
|
|
|
|
Inventories
|
|
479,871
|
|
|
402,307
|
|
|
Prepaid expenses and other current assets
|
|
41,947
|
|
|
40,105
|
|
|
Deferred income taxes
|
|
15,876
|
|
|
16,456
|
|
|
Total current assets
|
|
1,141,145
|
|
|
1,042,060
|
|
|
Property and equipment, net
|
|
25,674
|
|
|
20,203
|
|
|
Goodwill
|
|
32,143
|
|
|
31,795
|
|
|
Other non-current assets, including net identifiable intangible
assets
|
|
53,412
|
|
|
70,125
|
|
|
Total assets
|
|
$
|
1,252,374
|
|
|
$
|
1,164,183
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Current portion of contingent consideration
|
|
$
|
5,718
|
|
|
$
|
3,732
|
|
|
Accounts payable
|
|
375,892
|
|
|
362,271
|
|
|
Accrued expenses and other current liabilities
|
|
62,756
|
|
|
59,983
|
|
|
Income taxes payable
|
|
2,289
|
|
|
1,696
|
|
|
Total current liabilities
|
|
446,655
|
|
|
427,682
|
|
|
Deferred income taxes
|
|
192
|
|
|
205
|
|
|
Long-term debt
|
|
5,429
|
|
|
5,429
|
|
|
Long-term portion of contingent consideration
|
|
5,018
|
|
|
8,813
|
|
|
Other long-term liabilities
|
|
22,294
|
|
|
26,098
|
|
|
Total liabilities
|
|
479,588
|
|
|
468,227
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
Common stock
|
|
166,509
|
|
|
149,821
|
|
|
Retained earnings
|
|
623,791
|
|
|
569,107
|
|
|
Accumulated other comprehensive income (loss)
|
|
(17,514
|
)
|
|
(22,972
|
)
|
|
Total shareholders' equity
|
|
772,786
|
|
|
695,956
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
1,252,374
|
|
|
$
|
1,164,183
|
|
|
* Derived from audited financial statements.
|
|
ScanSource, Inc. and Subsidiaries
|
|
Condensed Consolidated Income Statements (Unaudited)
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
March 31,
|
|
Nine months ended
March 31,
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
|
2013
|
|
Net sales
|
|
$
|
682,998
|
|
|
$
|
682,965
|
|
|
$
|
2,155,520
|
|
|
$
|
2,164,286
|
|
|
Cost of goods sold
|
|
609,647
|
|
|
614,133
|
|
|
1,928,414
|
|
|
1,947,063
|
|
|
Gross profit
|
|
73,351
|
|
|
68,832
|
|
|
227,106
|
|
|
217,223
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
46,705
|
|
|
47,937
|
|
|
143,541
|
|
|
144,392
|
|
|
Change in fair value of contingent consideration
|
|
981
|
|
|
100
|
|
|
2,218
|
|
|
1,396
|
|
|
Operating income
|
|
25,665
|
|
|
20,795
|
|
|
81,347
|
|
|
71,435
|
|
|
Other expense (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
217
|
|
|
102
|
|
|
698
|
|
|
356
|
|
|
Interest income
|
|
(545
|
)
|
|
(483
|
)
|
|
(1,644
|
)
|
|
(1,648
|
)
|
|
Other, net
|
|
13
|
|
|
(4
|
)
|
|
65
|
|
|
34
|
|
|
Income before income taxes
|
|
25,980
|
|
|
21,180
|
|
|
82,228
|
|
|
72,693
|
|
|
Provision for income taxes
|
|
9,031
|
|
|
7,202
|
|
|
27,544
|
|
|
24,716
|
|
|
Net income
|
|
$
|
16,949
|
|
|
$
|
13,978
|
|
|
$
|
54,684
|
|
|
$
|
47,977
|
|
|
Per share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding, basic
|
|
28,502
|
|
|
27,847
|
|
|
28,275
|
|
|
27,725
|
|
|
Net income per common share, basic
|
|
$
|
0.59
|
|
|
$
|
0.50
|
|
|
$
|
1.93
|
|
|
$
|
1.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding, diluted
|
|
28,730
|
|
|
28,024
|
|
|
28,548
|
|
|
27,960
|
|
|
Net income per common share, diluted
|
|
$
|
0.59
|
|
|
$
|
0.50
|
|
|
$
|
1.92
|
|
|
$
|
1.72
|
|
|
ScanSource, Inc. and Subsidiaries
|
|
Supplementary Information (Unaudited)
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Segment:
|
|
|
|
|
|
|
|
|
|
Quarter ended March 31,
|
|
|
|
|
Non-GAAP % Change
|
|
|
2014
|
|
|
2013
|
|
|
% Change
|
|
Excluding FX(a)
|
|
Worldwide Barcode & Security
|
$
|
455,822
|
|
|
$
|
438,191
|
|
|
4.0
|
%
|
|
4.8
|
%
|
|
Worldwide Communications & Services
|
227,176
|
|
|
244,774
|
|
|
(7.2
|
)%
|
|
(7.4
|
)%
|
|
Consolidated
|
$
|
682,998
|
|
|
$
|
682,965
|
|
|
—
|
%
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended March 31,
|
|
|
|
|
Non-GAAP % Change
|
|
|
2014
|
|
|
2013
|
|
|
% Change
|
|
Excluding FX(a)
|
|
Worldwide Barcode & Security
|
$
|
1,382,672
|
|
|
$
|
1,383,453
|
|
|
(0.1
|
)%
|
|
0.1
|
%
|
|
Worldwide Communications & Services
|
772,848
|
|
|
780,833
|
|
|
(1.0
|
)%
|
|
(1.3
|
)%
|
|
Consolidated
|
$
|
2,155,520
|
|
|
$
|
2,164,286
|
|
|
(0.4
|
)%
|
|
(0.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Geographic Segment:
|
|
|
|
|
|
|
|
|
|
Quarter ended March 31,
|
|
|
|
|
Non-GAAP % Change
|
|
|
2014
|
|
|
2013
|
|
|
% Change
|
|
Excluding FX(b)
|
|
North American (U.S. and Canada)
|
$
|
498,773
|
|
|
$
|
508,394
|
|
|
(1.9
|
)%
|
|
(1.9
|
)%
|
|
International
|
184,225
|
|
|
174,571
|
|
|
5.5
|
%
|
|
7.3
|
%
|
|
Consolidated
|
$
|
682,998
|
|
|
$
|
682,965
|
|
|
—
|
%
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended March 31,
|
|
|
|
|
Non-GAAP % Change
|
|
|
2014
|
|
|
2013
|
|
|
% Change
|
|
Excluding FX(b)
|
|
North American (U.S. and Canada)
|
$
|
1,602,202
|
|
|
$
|
1,602,193
|
|
|
—
|
%
|
|
—
|
%
|
|
International
|
553,318
|
|
|
562,093
|
|
|
(1.6
|
)%
|
|
(1.5
|
)%
|
|
Consolidated
|
$
|
2,155,520
|
|
|
$
|
2,164,286
|
|
|
(0.4
|
)%
|
|
(0.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 and nine months
ended March 31, 2014 into U.S. dollars using the weighted average
foreign exchange rates for the quarter ended and nine months ended
March 31, 2013, respectively. Worldwide Barcode & Security net sales
excluding the translation impact of foreign currencies for the
quarter ended and nine months ended March 31, 2014, as adjusted,
totaled $459.4 million and $1.4 billion, respectively. Worldwide
Communications & Services net sales excluding the translation impact
of foreign currencies for the quarter ended and nine months ended
March 31, 2014, as adjusted, totaled $226.7 million and $770.6
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 and nine months
ended March 31, 2014 into U.S. dollars using the weighted average
foreign exchange rates for the quarter ended and nine months ended
March 31, 2013, respectively. International net sales excluding the
translation impact of foreign currencies for the quarter ended and
nine months ended March 31, 2014, as adjusted, totaled $187.3
million and $553.8 million, respectively.
|
|
ScanSource, Inc. and Subsidiaries
|
|
Supplementary Information (Unaudited)
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Information:
|
|
|
|
|
|
|
|
Quarter ended March 31,
|
|
|
2014
|
|
2013
|
|
|
Return on invested capital (ROIC), annualized (a)
|
14.8
|
%
|
|
13.3
|
%
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income to EBITDA
|
|
|
|
|
|
|
Net income - GAAP
|
$
|
16,949
|
|
|
$
|
13,978
|
|
|
Plus: Income taxes
|
9,031
|
|
|
7,202
|
|
|
Plus: Interest expense
|
217
|
|
|
102
|
|
|
Plus: Depreciation and amortization (b)
|
1,743
|
|
|
2,274
|
|
|
EBITDA (numerator for ROIC) (non-GAAP)
|
$
|
27,940
|
|
|
$
|
23,556
|
|
|
|
|
|
|
|
|
|
Invested Capital Calculation
|
|
|
|
|
|
|
Equity - beginning of quarter
|
$
|
751,446
|
|
|
$
|
696,960
|
|
|
Equity - end of quarter
|
772,786
|
|
|
709,912
|
|
|
Average equity
|
762,116
|
|
|
703,436
|
|
|
Average funded debt (c)
|
5,429
|
|
|
15,675
|
|
|
Invested capital (denominator for ROIC) (non-GAAP)
|
$
|
767,545
|
|
|
$
|
719,111
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
|
|
|
|
(a) Calculated as net income plus interest expense, income taxes,
depreciation and amortization (EBITDA), annualized and divided by
invested capital for the period.
|
|
(b) Depreciation and amortization for the quarter ended March 31,
2013 includes debt issuance costs of $0.1 million.
|
|
(c) Average funded debt is calculated as the average daily amounts
outstanding on short-term and long-term interest-bearing debt.
|
Copyright Business Wire 2014