Achieves Strong Cash Flow and Disciplined Capital Allocation
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, 2024. All results in this release reflect continuing operations only unless otherwise noted.
|
Fourth Quarter Summary |
|
Fiscal Year Summary |
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|
Q4 FY24 |
|
Q4 FY23 |
|
Change |
|
FY24 |
|
FY23 |
|
Change |
||||||||
|
(in thousands, except percentages and per share data) |
||||||||||||||||||
Select reported measures: |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net sales |
$ |
746,113 |
|
|
$ |
947,149 |
|
|
-21.2% |
|
$ |
3,259,809 |
|
|
$ |
3,787,721 |
|
|
-13.9% |
Gross profit |
$ |
97,315 |
|
|
$ |
108,659 |
|
|
-10.4% |
|
$ |
399,052 |
|
|
$ |
449,239 |
|
|
-11.2% |
Gross profit margin % |
|
13.04 |
% |
|
|
11.47 |
% |
|
157bp |
|
|
12.24 |
% |
|
|
11.86 |
% |
|
38bp |
Operating income |
$ |
21,871 |
|
|
$ |
27,289 |
|
|
-19.9% |
|
$ |
90,324 |
|
|
$ |
135,886 |
|
|
-33.5% |
GAAP net income |
$ |
16,097 |
|
|
$ |
17,095 |
|
|
-5.8% |
|
$ |
77,060 |
|
|
$ |
88,092 |
|
|
-12.5% |
GAAP diluted EPS |
$ |
0.64 |
|
|
$ |
0.68 |
|
|
-5.9% |
|
$ |
3.06 |
|
|
$ |
3.47 |
|
|
-11.8% |
Operating cash flow |
$ |
54,738 |
|
|
$ |
(15,261 |
) |
|
n/m |
|
$ |
371,647 |
|
|
$ |
(35,769 |
) |
|
n/m |
Select Non-GAAP measures*: |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA |
$ |
34,181 |
|
|
$ |
40,199 |
|
|
-15.0% |
|
$ |
140,654 |
|
|
$ |
179,943 |
|
|
-21.8% |
Adjusted EBITDA margin % |
|
4.58 |
% |
|
|
4.24 |
% |
|
34bp |
|
|
4.31 |
% |
|
|
4.75 |
% |
|
-44bp |
Non-GAAP net income |
$ |
19,921 |
|
|
$ |
19,213 |
|
|
3.7% |
|
$ |
77,670 |
|
|
$ |
97,688 |
|
|
-20.5% |
Non-GAAP diluted EPS |
$ |
0.80 |
|
|
$ |
0.76 |
|
|
5.3% |
|
$ |
3.08 |
|
|
$ |
3.85 |
|
|
-20.0% |
Free cash flow |
$ |
53,468 |
|
|
$ |
(18,692 |
) |
|
n/m |
|
$ |
363,092 |
|
|
$ |
(45,748 |
) |
|
n/m |
n/m - not meaningful |
|
|
|
|
|
|
|
|
|
|
|
||||||||
* Represents non-GAAP financial measures. For more information and a reconciliation to the most directly comparable GAAP financial measure, see "Non-GAAP Financial Information" below as well as the accompanying Supplementary Information. |
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"Our results for the year reflect a soft demand environment; however, we delivered strong margins and robust cash flow," said Mike Baur, Chair and CEO, ScanSource, Inc. "We are executing well on our capital allocation plan to invest in strategic acquisitions and share repurchases. Earlier this month, we announced two acquisitions of higher margin, recurring revenue businesses and are excited to welcome the Resourcive and Advantix teams to ScanSource."
Quarterly Results
Net sales for the fourth quarter of fiscal year 2024 totaled $746.1 million, down 21.2% year-over-year. Specialty Technology Solutions net sales for the fourth quarter decreased 13.7% year-over-year to $484.7 million from softer demand in a more cautious technology spending environment. Modern Communications & Cloud net sales for the fourth quarter decreased 32.2% year-over-year to $261.4 million from lower sales volumes in communications hardware and Cisco products. Intelisys net sales for the fourth quarter increased 6.2% year-over-year.
Gross profit for the fourth quarter of fiscal year 2024 decreased 10.4% year-over-year to $97.3 million with a gross profit margin of 13.04% versus 11.47% in the prior-year quarter. The gross profit margin reflects a higher contribution of Intelisys revenue in our overall revenue mix, which is recorded on a net basis and therefore contributes to a higher gross profit margin.
For the fourth quarter of fiscal year 2024, operating income was $21.9 million compared to $27.3 million in the prior-year quarter. Fourth quarter fiscal year 2024 non-GAAP operating income decreased to $26.0 million, down from $32.8 million for the prior-year quarter.
On a GAAP basis, net income for the fourth quarter of fiscal year 2024 totaled $16.1 million, or $0.64 per diluted share, compared to net income of $17.1 million, or $0.68 per diluted share, for the prior-year quarter. Fourth quarter fiscal year 2024 non-GAAP net income totaled $19.9 million, or $0.80 per diluted share, up from $19.2 million, or $0.76 per diluted share, for the prior-year quarter. Interest expense for the quarter decreased to $2.1 million, down from $5.6 million for the prior-year quarter, reflecting lower borrowings.
On a non-GAAP basis, adjusted EBITDA for the fourth quarter of fiscal year 2024 decreased 15.0% to $34.2 million, or 4.58% of net sales, compared to $40.2 million, or 4.24% of net sales, for the prior-year quarter.
Full-Year Results
For fiscal year 2024, net sales decreased 13.9% to $3.3 billion. Fiscal year 2024 net sales in the Specialty Technology Solutions segment decreased 14.3% to $2.0 billion from softer demand in a more cautious technology spending environment. Fiscal year 2024 net sales in the Modern Communications & Cloud segment decreased 13.4% year-over-year to $1.3 billion from lower sales volumes in communications hardware and Cisco products. The fiscal year 2024 net billings attributable to Intelisys increased to approximately $2.67 billion, and Intelisys net sales for fiscal 2024 increased 6.6% over the prior year.
Gross profit for fiscal year 2024 totaled $399.1 million, down 11.2% year-over-year. The decrease is primarily due to lower sales volume compared to the prior year. Gross profit margin increased to 12.2%, up from 11.9% in the prior year. The gross profit margin reflects a higher contribution of Intelisys revenue in our overall revenue mix, which is recorded on a net basis and therefore contributes to a higher gross profit margin.
For the fiscal year ended June 30, 2024, operating income decreased to $90.3 million from $135.9 million in the prior year. Fiscal year 2024 non-GAAP operating income decreased to $110.4 million down from $151.1 million for the prior year.
On a GAAP basis, net income for the fiscal year ended June 30, 2024 totaled $77.1 million, or $3.06 per diluted share, compared to net income of $88.1 million, or $3.47 per diluted share for the prior year. Fiscal year 2024 non-GAAP net income totaled $77.7 million, or $3.08 per diluted share, compared to $97.7 million, or $3.85 per diluted share for the prior year. Interest expense decreased to $13.0 million, down from $19.8 million for the prior year, reflecting lower borrowings.
Adjusted EBITDA for the fiscal year ended June 30, 2024 decreased to $140.7 million, or 4.31% of net sales, compared to $179.9 million, or 4.75% of net sales, for the prior year.
ScanSource generated $371.6 million of operating cash flow and $363.1 million of free cash flow (non-GAAP) for fiscal year 2024.
Acquisition of Resourcive
On August 8, 2024, ScanSource announced the acquisition of Resourcive, a leading technology advisor. Founded in 2001 in Pelham, NY, Resourcive delivers strategic IT sourcing solutions to the mid-market and enterprise, advising clients on value creation strategies that are enabled by technology. Starting with the acquisition of Resourcive, ScanSource is creating the advisory channel model of the future. This business is separate from ScanSource’s Intelisys business, the industry’s leading technology services distributor. The acquisition closed on August 8, 2024, and the terms of the agreement were not disclosed.
Acquisition of Advantix
On August 15, 2024, ScanSource announced the acquisition of Advantix, a VAR-focused, managed connectivity experience provider specializing in wireless enablement solutions. Founded in 2001 in Frisco, Texas, Advantix allows hardware VARs to expand their mobility solutions and build their recurring revenue business. The Advantix acquisition is the launching point for ScanSource’s new Integrated Solutions Group (ISG). The ISG is focused on developing solutions and services that provide hardware VARs the opportunity to wrap additional value around their hardware offerings. The acquisition closed on August 15, 2024, and the terms of the agreement were not disclosed.
Annual Financial Outlook for Fiscal Year 2025
The following guidance is based on ScanSource's current expectations for the full fiscal year ended June 30, 2025.
|
|
FY25 Annual Outlook |
|
|
Net sales |
|
$3.1 billion to $3.5 billion |
|
|
Adjusted EBITDA (non-GAAP) |
|
$140 million to $160 million |
|
|
Free cash flow (non-GAAP) |
|
At least $70 million |
|
Adjusted EBITDA is a non-GAAP measure, which excludes estimates for amortization of intangible assets, depreciation expense, and non-cash shared-based compensation expense. Free cash flow is a non-GAAP measure, which excludes the effect of estimated capital expenditures from estimated operating cash flow. 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. ScanSource does not provide a reconciliation for its non-GAAP outlook on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort.
Webcast Details and Earnings Infographic
At approximately 8:45 a.m. ET today, an Earnings Infographic, as a supplement to this press release and the earnings 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 27, 2024, at 10:30 a.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 ScanSource's FY25 annual outlook, which involve risks and uncertainties, many of which are beyond ScanSource's control. No undue reliance should be placed on such statements, as any number of factors could cause actual results to differ materially from anticipated or forecasted results, including, but not limited to, the following factors, which are neither presented in order of importance nor weighted: macroeconomic conditions, including potential prolonged economic weakness, inflation, the failure to manage and implement ScanSource's growth strategy, credit risks involving ScanSource's larger customers and suppliers, changes in interest and exchange rates and regulatory regimes impacting ScanSource's international operations, risk to the business from a cyberattack, a failure of IT systems, failure to hire and retain quality employees, loss of ScanSource's major customers, relationships with key suppliers and customers or a termination or a modification of the terms under which it operates with these key suppliers and customers, changes in ScanSource's operating strategy, and other factors set forth in the "Risk Factors" contained in ScanSource's annual report on Form 10-K for the year ended June 30, 2024. Except as may be required by law, ScanSource expressly disclaims any obligation to update these forward-looking statements to reflect events or circumstances after the date of this press release or otherwise.
Non-GAAP Financial Information
In addition to disclosing results that are determined in accordance with United States Generally Accepted Accounting Principles ("GAAP"), ScanSource 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 items such as amortization of intangible assets related to acquisitions, acquisition and divestiture costs, gain on sale of business, and restructuring costs and include other non-GAAP adjustments.
Net sales on a constant currency basis excluding acquisitions and divestitures to calculate organic growth ("non-GAAP net sales"): ScanSource 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 and divestitures prior to the first full year from the transaction date. This measure enhances the comparability between periods to help analyze underlying trends on an organic basis.
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, gain/loss on sale of business, restructuring costs, cyberattack restoration costs, tax recovery, and non-cash share-based compensation expense. Since Adjusted EBITDA excludes some non-cash costs of investing in ScanSource’s business and people, management believes that Adjusted EBITDA shows the profitability from the 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. The Adjusted EBITDA margin is calculated as Adjusted EBITDA as a percentage of net sales.
Adjusted return on invested capital ("Adjusted ROIC"): Adjusted ROIC assists management in comparing ScanSource'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 Adjusted ROIC provides useful information to investors and is an additional relevant comparison of its 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 ScanSource's performance during the year.
Free cash flow: ScanSource presents free cash flow as it is a measure used by management to measure our business. ScanSource believes this measure provides more information regarding liquidity and capital resources. Free cash flow is defined as cash flows from operating activities less capital expenditures.
Net debt: Net debt includes total balance sheet debt less cash and cash equivalents. ScanSource believes this measure is useful in assessing its borrowing capacity.
Additional Non-GAAP Metrics: To evaluate current period performance on a more consistent basis with prior periods, ScanSource discloses non-GAAP SG&A expenses, non-GAAP operating income, non-GAAP pre-tax income, non-GAAP net income, and non-GAAP diluted earnings per share (non-GAAP diluted EPS). These non-GAAP results exclude amortization of intangible assets related to acquisitions, acquisition and divestiture costs, gain on sale of business, restructuring costs, and other non-GAAP adjustments. These metrics include the translation impact of changes in foreign currency exchange rates. Non-GAAP metrics are useful in assessing and understanding ScanSource's performance especially when comparing results with previous periods or forecasting performance for future periods.
These non-GAAP financial measures have limitations as analytical tools, and the non-GAAP financial measures that ScanSource 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 ScanSource'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 customers across hardware, software as a service (SaaS), connectivity and cloud. ScanSource enables customers to deliver solutions for their end users to address changing 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 mobility and barcode, point-of-sale (POS), payments, networking, 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 2024 Best Places to Work in South Carolina and on FORTUNE magazine’s 2024 List of World’s Most Admired Companies. ScanSource ranks #817 on the Fortune 1000. For more information, visit www.scansource.com.
ScanSource, Inc. and Subsidiaries |
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Condensed Consolidated Balance Sheets (Unaudited) |
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(in thousands, except share data) |
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|
June 30, 2024* |
|
June 30, 2023* |
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
185,460 |
|
|
$ |
36,178 |
|
Accounts receivable, less allowance of $20,684 at June 30, 2024 and $15,480 at June 30, 2023 |
|
581,523 |
|
|
|
753,236 |
|
Inventories |
|
512,634 |
|
|
|
757,574 |
|
Prepaid expenses and other current assets |
|
125,082 |
|
|
|
110,087 |
|
Total current assets |
|
1,404,699 |
|
|
|
1,657,075 |
|
Property and equipment, net |
|
33,501 |
|
|
|
37,379 |
|
Goodwill |
|
206,301 |
|
|
|
216,706 |
|
Identifiable intangible assets, net |
|
37,634 |
|
|
|
68,495 |
|
Deferred income taxes |
|
19,902 |
|
|
|
17,764 |
|
Other non-current assets |
|
76,995 |
|
|
|
70,750 |
|
Total assets |
$ |
1,779,032 |
|
|
$ |
2,068,169 |
|
Liabilities and Shareholders’ Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
587,984 |
|
|
$ |
691,119 |
|
Accrued expenses and other current liabilities |
|
65,616 |
|
|
|
78,892 |
|
Income taxes payable |
|
7,895 |
|
|
|
9,875 |
|
Current portion of long-term debt |
|
7,857 |
|
|
|
6,915 |
|
Total current liabilities |
|
669,352 |
|
|
|
786,801 |
|
Deferred income taxes |
|
— |
|
|
|
3,816 |
|
Long-term debt, net of current portion |
|
136,149 |
|
|
|
144,006 |
|
Borrowings under revolving credit facility |
|
50 |
|
|
|
178,980 |
|
Other long-term liabilities |
|
49,226 |
|
|
|
49,268 |
|
Total liabilities |
|
854,777 |
|
|
|
1,162,871 |
|
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, 24,243,848 and 24,844,203 shares issued and outstanding at June 30, 2024 and June 30, 2023, respectively |
|
26,370 |
|
|
|
58,241 |
|
Retained earnings |
|
1,013,738 |
|
|
|
936,678 |
|
Accumulated other comprehensive loss |
|
(115,853 |
) |
|
|
(89,621 |
) |
Total shareholders’ equity |
|
924,255 |
|
|
|
905,298 |
|
Total liabilities and shareholders’ equity |
$ |
1,779,032 |
|
|
$ |
2,068,169 |
|
*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, except per share data) |
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|
|
|
|
|
|
|
|
||||||||
|
Quarter ended June 30, 2024 |
|
Fiscal Year Ended June 30, |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
2024* |
|
2023* |
||||
Net sales |
$ |
746,113 |
|
|
$ |
947,149 |
|
|
$ |
3,259,809 |
|
|
$ |
3,787,721 |
|
Cost of goods sold |
|
648,798 |
|
|
|
838,490 |
|
|
|
2,860,757 |
|
|
|
3,338,482 |
|
Gross profit |
|
97,315 |
|
|
|
108,659 |
|
|
|
399,052 |
|
|
|
449,239 |
|
Selling, general and administrative expenses |
|
68,498 |
|
|
|
74,358 |
|
|
|
277,428 |
|
|
|
285,695 |
|
Depreciation expense |
|
2,770 |
|
|
|
2,827 |
|
|
|
11,219 |
|
|
|
10,912 |
|
Intangible amortization expense |
|
3,741 |
|
|
|
4,185 |
|
|
|
15,723 |
|
|
|
16,746 |
|
Restructuring and other charges |
|
435 |
|
|
|
— |
|
|
|
4,358 |
|
|
|
— |
|
Operating income |
|
21,871 |
|
|
|
27,289 |
|
|
|
90,324 |
|
|
|
135,886 |
|
Interest expense |
|
2,084 |
|
|
|
5,564 |
|
|
|
13,031 |
|
|
|
19,786 |
|
Interest income |
|
(3,285 |
) |
|
|
(2,085 |
) |
|
|
(9,381 |
) |
|
|
(7,414 |
) |
Loss (gain) on sale of business |
|
378 |
|
|
|
— |
|
|
|
(14,155 |
) |
|
|
— |
|
Other expense, net |
|
(3 |
) |
|
|
348 |
|
|
|
988 |
|
|
|
1,664 |
|
Income before income taxes |
|
22,697 |
|
|
|
23,462 |
|
|
|
99,841 |
|
|
|
121,850 |
|
Provision for income taxes |
|
6,600 |
|
|
|
6,367 |
|
|
|
22,781 |
|
|
|
33,758 |
|
Net income from continuing operations |
|
16,097 |
|
|
|
17,095 |
|
|
|
77,060 |
|
|
|
88,092 |
|
Net income from discontinued operations |
|
— |
|
|
|
1,717 |
|
|
|
— |
|
|
|
1,717 |
|
Net income |
$ |
16,097 |
|
|
$ |
18,812 |
|
|
$ |
77,060 |
|
|
$ |
89,809 |
|
|
|
|
|
|
|
|
|
||||||||
Per share data: |
|
|
|
|
|
|
|
||||||||
Net income from continuing operations per common share, basic |
$ |
0.66 |
|
|
$ |
0.69 |
|
|
$ |
3.10 |
|
|
$ |
3.50 |
|
Net income from discontinued operations per common share, basic |
|
— |
|
|
|
0.07 |
|
|
|
— |
|
|
|
0.07 |
|
Net income per common share, basic |
$ |
0.66 |
|
|
$ |
0.76 |
|
|
$ |
3.10 |
|
|
$ |
3.57 |
|
Weighted-average shares outstanding, basic |
|
24,524 |
|
|
|
24,883 |
|
|
|
24,868 |
|
|
|
25,142 |
|
|
|
|
|
|
|
|
|
||||||||
Net income from continuing operations per common share, diluted |
$ |
0.64 |
|
|
$ |
0.68 |
|
|
$ |
3.06 |
|
|
$ |
3.47 |
|
Net income from discontinued operations per common share, diluted |
|
— |
|
|
|
0.07 |
|
|
|
— |
|
|
|
0.07 |
|
Net income per common share, diluted |
$ |
0.64 |
|
|
$ |
0.75 |
|
|
$ |
3.06 |
|
|
$ |
3.54 |
|
Weighted-average shares outstanding, diluted |
|
25,046 |
|
|
|
25,139 |
|
|
|
25,222 |
|
|
|
25,362 |
|
|
|
|
|
|
|
|
|
||||||||
*Derived from audited financial statements. |
|
|
|
|
|
|
|
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ScanSource, Inc. and Subsidiaries |
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Condensed Consolidated Statements of Cash Flows (Unaudited) |
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(in thousands) |
|||||||||||||||
|
Quarter ended June 30, |
|
Fiscal Year Ended June 30, |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
2024* |
|
2023* |
||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
||||||||
Net income |
$ |
16,097 |
|
|
$ |
17,095 |
|
|
$ |
77,060 |
|
|
$ |
88,092 |
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
||||||||
Gain on sale of business |
|
378 |
|
|
|
— |
|
|
|
(14,155 |
) |
|
|
— |
|
Depreciation and amortization |
|
6,792 |
|
|
|
7,256 |
|
|
|
28,009 |
|
|
|
28,614 |
|
Amortization of debt issue costs |
|
96 |
|
|
|
96 |
|
|
|
386 |
|
|
|
577 |
|
Provision for doubtful accounts |
|
2,454 |
|
|
|
933 |
|
|
|
8,317 |
|
|
|
2,785 |
|
Share-based compensation |
|
1,808 |
|
|
|
2,586 |
|
|
|
9,537 |
|
|
|
11,219 |
|
Deferred income taxes |
|
(907 |
) |
|
|
(2,905 |
) |
|
|
(2,472 |
) |
|
|
(1,496 |
) |
Finance lease interest |
|
30 |
|
|
|
12 |
|
|
|
101 |
|
|
|
44 |
|
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
||||||||
Accounts receivable |
|
(5,510 |
) |
|
|
(64,020 |
) |
|
|
138,264 |
|
|
|
(17,368 |
) |
Inventories |
|
12,279 |
|
|
|
(2,057 |
) |
|
|
239,157 |
|
|
|
(138,313 |
) |
Prepaid expenses and other assets |
|
10,359 |
|
|
|
(6,526 |
) |
|
|
(17,804 |
) |
|
|
32,653 |
|
Other non-current assets |
|
(16,711 |
) |
|
|
(5,810 |
) |
|
|
(10,689 |
) |
|
|
(7,582 |
) |
Accounts payable |
|
39,693 |
|
|
|
30,061 |
|
|
|
(78,167 |
) |
|
|
(30,656 |
) |
Accrued expenses and other liabilities |
|
(15,210 |
) |
|
|
2,587 |
|
|
|
(3,872 |
) |
|
|
(14,195 |
) |
Income taxes payable |
|
3,090 |
|
|
|
5,431 |
|
|
|
(2,025 |
) |
|
|
9,857 |
|
Net cash provided by (used in) operating activities |
|
54,738 |
|
|
|
(15,261 |
) |
|
|
371,647 |
|
|
|
(35,769 |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
|
||||||||
Capital expenditures |
|
(1,270 |
) |
|
|
(3,431 |
) |
|
|
(8,555 |
) |
|
|
(9,979 |
) |
Proceeds from sale of business, net of cash transferred |
|
(378 |
) |
|
|
1,717 |
|
|
|
17,600 |
|
|
|
1,717 |
|
Net cash provided by (used in) investing activities |
|
(1,648 |
) |
|
|
(1,714 |
) |
|
|
9,045 |
|
|
|
(8,262 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
||||||||
Borrowings on revolving credit, net of expenses |
|
16,813 |
|
|
|
627,257 |
|
|
|
1,259,728 |
|
|
|
2,499,166 |
|
Repayments on revolving credit, net of expenses |
|
(16,763 |
) |
|
|
(607,470 |
) |
|
|
(1,438,658 |
) |
|
|
(2,456,025 |
) |
Repayments on long-term debt, net |
|
(1,875 |
) |
|
|
(938 |
) |
|
|
(6,915 |
) |
|
|
15,590 |
|
Borrowings (repayments) on finance lease obligation |
|
(379 |
) |
|
|
23 |
|
|
|
(964 |
) |
|
|
(589 |
) |
Debt issuance costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,407 |
) |
Exercise of stock options |
|
186 |
|
|
|
57 |
|
|
|
4,813 |
|
|
|
910 |
|
Taxes paid on settlement of equity awards |
|
(81 |
) |
|
|
(30 |
) |
|
|
(2,876 |
) |
|
|
(2,463 |
) |
Common stock repurchased |
|
(21,727 |
) |
|
|
(4,933 |
) |
|
|
(42,895 |
) |
|
|
(15,651 |
) |
Net cash (used in) provided by financing activities |
|
(23,826 |
) |
|
|
13,966 |
|
|
|
(227,767 |
) |
|
|
39,531 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
(2,854 |
) |
|
|
1,813 |
|
|
|
(3,643 |
) |
|
|
2,691 |
|
Increase in cash and cash equivalents |
|
26,410 |
|
|
|
(1,196 |
) |
|
|
149,282 |
|
|
|
(1,809 |
) |
Cash and cash equivalents at beginning of period |
|
159,050 |
|
|
|
37,374 |
|
|
|
36,178 |
|
|
|
37,987 |
|
Cash and cash equivalents at period end |
$ |
185,460 |
|
|
$ |
36,178 |
|
|
$ |
185,460 |
|
|
$ |
36,178 |
|
*Derived from audited financial statements. |
|||||||||||||||
ScanSource, Inc. and Subsidiaries |
|||||||||||||||
Supplementary Information (Unaudited) |
|||||||||||||||
(in thousands, except percentages) |
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
Non-GAAP Financial Information: |
|
|
|
||||||||||||
|
Quarter ended June 30, |
|
Fiscal Year Ended June 30, |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Adjusted return on invested capital ratio (Adjusted ROIC), annualized(a) |
|
12.7 |
% |
|
|
12.9 |
% |
|
|
12.4 |
% |
|
|
14.6 |
% |
|
|
|
|
|
|
|
|
||||||||
Reconciliation of Net Income to Adjusted EBITDA: |
|
|
|
|
|
|
|
||||||||
Net income (GAAP) |
$ |
16,097 |
|
|
$ |
17,095 |
|
|
$ |
77,060 |
|
|
$ |
88,092 |
|
Plus: Interest expense |
|
2,084 |
|
|
|
5,564 |
|
|
|
13,031 |
|
|
|
19,786 |
|
Plus: Income taxes |
|
6,600 |
|
|
|
6,367 |
|
|
|
22,781 |
|
|
|
33,758 |
|
Plus: Depreciation and amortization |
|
6,792 |
|
|
|
7,255 |
|
|
|
28,009 |
|
|
|
28,614 |
|
EBITDA (non-GAAP) |
|
31,573 |
|
|
|
36,281 |
|
|
|
140,881 |
|
|
|
170,250 |
|
Plus: Tax recovery (b) |
|
(657 |
) |
|
|
(128 |
) |
|
|
(2,558 |
) |
|
|
(2,986 |
) |
Plus: Share-based compensation |
|
1,808 |
|
|
|
2,586 |
|
|
|
9,537 |
|
|
|
11,219 |
|
Plus: Cyberattack restoration costs |
|
141 |
|
|
|
1,460 |
|
|
|
874 |
|
|
|
1,460 |
|
Plus: Acquisition and divestiture costs |
|
503 |
|
|
|
— |
|
|
|
1,717 |
|
|
|
— |
|
Plus: Restructuring costs |
|
435 |
|
|
|
— |
|
|
|
4,358 |
|
|
|
— |
|
Plus: Gain on sale of business |
|
378 |
|
|
|
— |
|
|
|
(14,155 |
) |
|
|
— |
|
Adjusted EBITDA (numerator for Adjusted ROIC) (non-GAAP) |
$ |
34,181 |
|
|
$ |
40,199 |
|
|
$ |
140,654 |
|
|
$ |
179,943 |
|
|
|
|
|
|
|
|
|
||||||||
Invested Capital Calculations: |
|
|
|
|
|
|
|
||||||||
Equity – beginning of the period |
$ |
944,053 |
|
|
$ |
878,895 |
|
|
$ |
905,298 |
|
|
$ |
806,528 |
|
Equity – end of the period |
|
924,255 |
|
|
|
905,298 |
|
|
|
924,255 |
|
|
|
905,298 |
|
Plus: Share-based compensation, net |
|
1,350 |
|
|
|
1,921 |
|
|
|
7,120 |
|
|
|
8,326 |
|
Plus: Cyberattack restoration costs, net |
|
106 |
|
|
|
1,092 |
|
|
|
655 |
|
|
|
1,092 |
|
Plus: Acquisition and divestiture costs |
|
503 |
|
|
|
— |
|
|
|
1,717 |
|
|
|
— |
|
Plus: Restructuring, net of tax |
|
327 |
|
|
|
— |
|
|
|
3,262 |
|
|
|
— |
|
Plus: Discontinued operations net income |
|
— |
|
|
|
(1,717 |
) |
|
|
— |
|
|
|
(1,717 |
) |
Plus: Tax recovery, net |
|
(278 |
) |
|
|
(2,100 |
) |
|
|
(2,566 |
) |
|
|
(3,985 |
) |
Plus: Gain on sale of business |
|
378 |
|
|
|
— |
|
|
|
(14,155 |
) |
|
|
— |
|
Average equity |
|
935,347 |
|
|
|
891,695 |
|
|
|
912,793 |
|
|
|
857,771 |
|
Average funded debt (c) |
|
146,121 |
|
|
|
361,792 |
|
|
|
220,528 |
|
|
|
372,235 |
|
Invested capital (denominator for Adjusted ROIC) (non-GAAP) |
$ |
1,081,468 |
|
|
$ |
1,253,487 |
|
|
$ |
1,133,321 |
|
|
$ |
1,230,006 |
|
|
|
|
|
|
|
|
|
||||||||
(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 91 days in the current and prior-year quarter. |
|||||||||||||||
(b) Recovery of prior period withholding taxes in Brazil. |
|||||||||||||||
(c) Average funded debt 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, |
|
|
||||||
|
2024 |
|
2023 |
|
% Change |
||||
Specialty Technology Solutions: |
(in thousands) |
|
|
||||||
Net sales, reported |
$ |
484,710 |
|
$ |
561,501 |
|
|
(13.7 |
)% |
Foreign exchange impact (a) |
|
1,099 |
|
|
— |
|
|
|
|
Non-GAAP net sales |
$ |
485,809 |
|
$ |
561,501 |
|
|
(13.5 |
)% |
|
|
|
|
|
|
||||
Modern Communications & Cloud: |
|
|
|
|
|
||||
Net sales, reported |
$ |
261,403 |
|
$ |
385,648 |
|
|
(32.2 |
)% |
Foreign exchange impact (a) |
|
3,635 |
|
|
— |
|
|
|
|
Less: Divestitures |
|
— |
|
|
(2,403 |
) |
|
|
|
Non-GAAP net sales |
$ |
265,038 |
|
$ |
383,245 |
|
|
(30.8 |
)% |
|
|
|
|
|
|
||||
Consolidated: |
|
|
|
|
|
||||
Net sales, reported |
$ |
746,113 |
|
$ |
947,149 |
|
|
(21.2 |
)% |
Foreign exchange impact (a) |
|
4,734 |
|
|
— |
|
|
|
|
Less: Divestitures |
|
— |
|
|
(2,403 |
) |
|
|
|
Non-GAAP net sales |
$ |
750,847 |
|
$ |
944,746 |
|
|
(20.5 |
)% |
|
|
|
|
|
|
||||
(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, 2024 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2023. |
|||||||||
ScanSource, Inc. and Subsidiaries |
||||||||||
Supplementary Information (Unaudited) |
||||||||||
|
|
|
|
|
|
|||||
Net Sales by Segment: |
|
|
|
|
|
|||||
|
Fiscal year ended June 30, |
|
|
|||||||
|
|
2024 |
|
|
|
2023 |
|
|
% Change |
|
Specialty Technology Solutions: |
(in thousands) |
|
|
|||||||
Net sales, reported |
$ |
1,998,636 |
|
|
$ |
2,331,030 |
|
|
(14.3 |
)% |
Foreign exchange impact (a) |
|
(1,341 |
) |
|
|
— |
|
|
|
|
Non-GAAP net sales |
$ |
1,997,295 |
|
|
$ |
2,331,030 |
|
|
(14.3 |
)% |
|
|
|
|
|
|
|||||
Modern Communications & Cloud: |
|
|
|
|
|
|||||
Net sales, reported |
$ |
1,261,173 |
|
|
$ |
1,456,691 |
|
|
(13.4 |
)% |
Foreign exchange impact (a) |
|
(8,542 |
) |
|
|
— |
|
|
|
|
Less: Divestitures |
|
(3,747 |
) |
|
|
(9,140 |
) |
|
|
|
Non-GAAP net sales |
$ |
1,248,884 |
|
|
$ |
1,447,551 |
|
|
(13.7 |
)% |
|
|
|
|
|
|
|||||
Consolidated: |
|
|
|
|
|
|||||
Net sales, reported |
$ |
3,259,809 |
|
|
$ |
3,787,721 |
|
|
(13.9 |
)% |
Foreign exchange impact (a) |
|
(9,883 |
) |
|
|
— |
|
|
|
|
Less: Divestitures |
|
(3,747 |
) |
|
|
(9,140 |
) |
|
|
|
Non-GAAP net sales |
$ |
3,246,179 |
|
|
$ |
3,778,581 |
|
|
(14.1 |
)% |
|
|
|
|
|
|
|||||
(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the fiscal year ended June 30, 2024 into U.S. dollars using the average foreign exchange rates for the fiscal year ended June 30, 2023. |
||||||||||
ScanSource, Inc. and Subsidiaries |
|||||||||
Supplementary Information (Unaudited) |
|||||||||
|
|
|
|
|
|
||||
Net Sales by Geography: |
|
|
|
||||||
|
Quarter ended June 30, |
|
|
||||||
|
2024 |
|
2023 |
|
% Change |
||||
United States and Canada: |
(in thousands) |
|
|
||||||
Net sales, as reported |
$ |
663,542 |
|
$ |
854,521 |
|
|
(22.3 |
)% |
|
|
|
|
|
|
||||
International: |
|
|
|
|
|
||||
Net sales, reported |
$ |
82,571 |
|
$ |
92,628 |
|
|
(10.9 |
)% |
Foreign exchange impact(a) |
|
4,734 |
|
|
— |
|
|
|
|
Less: Divestitures |
|
— |
|
|
(2,403 |
) |
|
|
|
Non-GAAP net sales |
$ |
87,305 |
|
$ |
90,225 |
|
|
(3.2 |
)% |
|
|
|
|
|
|
||||
Consolidated: |
|
|
|
|
|
||||
Net sales, reported |
$ |
746,113 |
|
$ |
947,149 |
|
|
(21.2 |
)% |
Foreign exchange impact(a) |
|
4,734 |
|
|
— |
|
|
|
|
Less: Divestitures |
|
— |
|
|
(2,403 |
) |
|
|
|
Non-GAAP net sales |
$ |
750,847 |
|
$ |
944,746 |
|
|
(20.5 |
)% |
|
|
|
|
|
|
||||
(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, 2024 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2023. |
|||||||||
ScanSource, Inc. and Subsidiaries |
||||||||||
Supplementary Information (Unaudited) |
||||||||||
|
|
|
|
|
|
|||||
Net Sales by Geography: |
|
|
|
|||||||
|
Fiscal year ended June 30, |
|
|
|||||||
|
|
2024 |
|
|
|
2023 |
|
|
% Change |
|
United States and Canada: |
(in thousands) |
|
|
|||||||
Net sales, as reported |
$ |
2,921,172 |
|
|
$ |
3,432,074 |
|
|
(14.9 |
)% |
|
|
|
|
|
|
|||||
International: |
|
|
|
|
|
|||||
Net sales, reported |
$ |
338,637 |
|
|
$ |
355,647 |
|
|
(4.8 |
)% |
Foreign exchange impact(a) |
|
(9,883 |
) |
|
|
— |
|
|
|
|
Less: Divestitures |
|
(3,747 |
) |
|
|
(9,140 |
) |
|
|
|
Non-GAAP net sales |
$ |
325,007 |
|
|
|
346,507 |
|
|
(6.2 |
)% |
|
|
|
|
|
|
|||||
Consolidated: |
|
|
|
|
|
|||||
Net sales, reported |
$ |
3,259,809 |
|
|
$ |
3,787,721 |
|
|
(13.9 |
)% |
Foreign exchange impact(a) |
|
(9,883 |
) |
|
|
— |
|
|
|
|
Less: Divestitures |
|
(3,747 |
) |
|
|
(9,140 |
) |
|
|
|
Non-GAAP net sales |
$ |
3,246,179 |
|
|
$ |
3,778,581 |
|
|
(14.1 |
)% |
|
|
|
|
|
|
|||||
(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the fiscal year ended June 30, 2024 into U.S. dollars using the average foreign exchange rates for the fiscal year ended June 30, 2023. |
||||||||||
ScanSource, Inc. and Subsidiaries |
|||||||||||||||
Supplementary Information (Unaudited) |
|||||||||||||||
(in thousands) |
|||||||||||||||
Free Cash Flow: |
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
||||||||
|
Quarter ended June 30, |
|
Fiscal year ended June 30, |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
GAAP operating cash flow |
$ |
54,738 |
|
|
$ |
(15,261 |
) |
|
$ |
371,647 |
|
|
$ |
(35,769 |
) |
Less: Capital Expenditures |
|
(1,270 |
) |
|
|
(3,431 |
) |
|
|
(8,555 |
) |
|
|
(9,979 |
) |
Free cash flow (non-GAAP) |
$ |
53,468 |
|
|
$ |
(18,692 |
) |
|
$ |
363,092 |
|
|
$ |
(45,748 |
) |
|
|
|
|
|
|
|
|
||||||||
ScanSource, Inc. and Subsidiaries |
||||||||||||||||
Supplementary Information (Unaudited) |
||||||||||||||||
(in thousands, except per share data) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Information: |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended June 30, 2024 |
|||||||||||||||
|
|
GAAP
|
|
Intangible
|
|
Acquisition
|
|
Restructuring
|
|
Tax recovery |
|
Cyberattack
|
|
Gain on sale
|
|
Non-GAAP
|
|
(in thousands, except per share data) |
|||||||||||||||
SG&A expenses |
|
$68,498 |
|
$— |
|
$(503) |
|
$(435) |
|
$657 |
|
$(141) |
|
$— |
|
$68,076 |
Operating income |
|
21,871 |
|
3,741 |
|
503 |
|
435 |
|
(657) |
|
141 |
|
— |
|
26,034 |
Pre-tax income |
|
22,697 |
|
3,741 |
|
503 |
|
435 |
|
(657) |
|
141 |
|
378 |
|
27,238 |
Net income |
|
16,097 |
|
2,788 |
|
503 |
|
327 |
|
(278) |
|
106 |
|
378 |
|
19,921 |
Diluted EPS |
|
$0.64 |
|
$0.11 |
|
$0.02 |
|
$0.01 |
|
$(0.01) |
|
$— |
|
$0.02 |
|
$0.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended June 30, 2023 |
|||||||||||||||
|
|
GAAP
|
|
Intangible
|
|
Acquisition
|
|
Restructuring
|
|
Tax recovery |
|
Cyberattack
|
|
Gain on sale
|
|
Non-GAAP
|
|
(in thousands, except per share data) |
|||||||||||||||
SG&A expense |
|
$74,358 |
|
$— |
|
$— |
|
$— |
|
$128 |
|
$(1,460) |
|
$— |
|
$73,026 |
Operating income |
|
27,289 |
|
4,185 |
|
— |
|
— |
|
(128) |
|
1,460 |
|
— |
|
32,806 |
Pre-tax income |
|
23,462 |
|
4,185 |
|
— |
|
— |
|
(128) |
|
1,460 |
|
— |
|
28,979 |
Net income |
|
17,095 |
|
3,126 |
|
— |
|
— |
|
(2,100) |
|
1,092 |
|
— |
|
19,213 |
Diluted EPS |
|
$0.68 |
|
$0.12 |
|
$— |
|
$— |
|
$(0.08) |
|
$0.04 |
|
$— |
|
$0.76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Acquisition and divestiture costs for the fiscal year ended June 30, 2024 are generally nondeductible for tax purposes. (b) Reflects adjustment to the gain on the sale of the UK-based intY business. |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ScanSource, Inc. and Subsidiaries |
||||||||||||||||
Supplementary Information (Unaudited) |
||||||||||||||||
(in thousands, except per share data) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Information: |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended June 30, 2024 |
|||||||||||||||
|
|
GAAP
|
|
Intangible
|
|
Acquisition
|
|
Restructuring
|
|
Tax recovery |
|
Cyberattack
|
|
Gain on sale
|
|
Non-GAAP
|
|
(in thousands, except per share data) |
|||||||||||||||
SG&A expenses |
|
$277,428 |
|
$— |
|
$(1,717) |
|
$— |
|
$2,558 |
|
$(874) |
|
$— |
|
$277,395 |
Operating income |
|
90,324 |
|
15,723 |
|
1,717 |
|
4,358 |
|
(2,558) |
|
874 |
|
— |
|
110,438 |
Pre-tax income |
|
99,841 |
|
15,723 |
|
1,717 |
|
4,358 |
|
(2,558) |
|
874 |
|
(14,155) |
|
105,800 |
Net income |
|
77,060 |
|
11,697 |
|
1,717 |
|
3,262 |
|
(2,566) |
|
655 |
|
(14,155) |
|
77,670 |
Diluted EPS |
|
$3.06 |
|
$0.46 |
|
$0.07 |
|
$0.13 |
|
$(0.10) |
|
$0.03 |
|
$(0.56) |
|
$3.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended June 30, 2023 |
|||||||||||||||
|
|
GAAP
|
|
Intangible
|
|
Acquisition
|
|
Restructuring
|
|
Tax recovery |
|
Cyberattack
|
|
Gain on sale
|
|
Non-GAAP
|
|
(in thousands, except per share data) |
|||||||||||||||
SG&A expense |
|
$285,695 |
|
$— |
|
$— |
|
$— |
|
$2,986 |
|
$(1,460) |
|
$— |
|
$287,221 |
Operating income |
|
135,886 |
|
16,746 |
|
— |
|
— |
|
(2,986) |
|
1,460 |
|
— |
|
151,106 |
Pre-tax income |
|
121,850 |
|
16,746 |
|
— |
|
— |
|
(2,986) |
|
1,460 |
|
— |
|
137,070 |
Net income |
|
88,092 |
|
12,489 |
|
— |
|
— |
|
(3,985) |
|
1,092 |
|
— |
|
97,688 |
Diluted EPS |
|
$3.47 |
|
$0.49 |
|
$— |
|
$— |
|
$(0.16) |
|
$0.04 |
|
$— |
|
$3.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Acquisition and divestiture costs for the fiscal year ended June 30, 2024 are generally nondeductible for tax purposes. (b) Reflects gain on the sale of the UK-based intY business. This transaction resulted in a capital loss for tax purposes. The Company did not record a tax provision on the capital loss since there were no offsetting capital gains. |
||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240827350261/en/
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
