Press release

ScanSource Delivers Strong Fourth Quarter Sales and Profitability Growth

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Sponsored by Businesswire

ScanSource, Inc. (NASDAQ: SCSC), a leading provider of technology products and solutions, today announced financial results for the fourth quarter and fiscal year ended June 30, 2021. All results in this release reflect continuing operations only unless otherwise noted.

Fourth Quarter Summary:

  • Net sales: $852.7 million, up 34% year-over-year
  • Gross profit: $95.8 million, up 29% year-over-year
  • GAAP operating income of $23.3 million for a 2.73% operating income margin
  • Non-GAAP operating income of $28.4 million, up 245% year-over-year, for a 3.33% non-GAAP operating

    income margin
  • Net income from continuing operations of $20.7 million
  • GAAP diluted EPS of $0.80 per share; non-GAAP diluted EPS of $0.96 per share
  • Generated strong operating cash flow of $61.3 million for the quarter and $116.8 million for the fiscal year
  • Return on invested capital increased to 14.9% for the quarter

“Our employees delivered strong fourth quarter net sales and profitability growth with operational excellence across our business,” said Mike Baur, Chairman and CEO, ScanSource, Inc. “Our momentum and execution strengthen our confidence in our hybrid distribution strategy accelerating our growth across hardware, software, connectivity, and cloud. ScanSource is uniquely positioned to enable the growth opportunities ahead for our channel partners and suppliers.”

Quarterly Results

Net sales for the fourth quarter of fiscal year 2021 totaled $852.7 million, up 34.0% year-over-year, or 33.7% year-over-year for organic growth. This reflects broad-based growth across our technologies in both operating segments in all geographies.

For the fourth quarter of fiscal year 2021, operating income increased to $23.3 million from $(113.4) million for the prior-year quarter, which included goodwill and asset impairment charges of $120.5 million. Fourth quarter fiscal year 2021 non-GAAP operating income increased to $28.4 million for a 3.33% non-GAAP operating income margin, up from $8.2 million for the prior-year quarter.

On a GAAP basis, net income for the fourth quarter of fiscal year 2021 totaled $20.7 million, or $0.80 per diluted share, compared to net loss of $(108.9) million, or $(4.29) per diluted share, for the prior-year quarter. Fourth quarter non-GAAP net income totaled $24.5 million, or $0.96 per diluted share, which includes a $0.19 benefit from discrete tax items. These results compare to fourth quarter fiscal year 2020 non-GAAP net income of $4.9 million, or $0.19 per diluted share.

Full-Year Results

For fiscal year 2021, net sales increased 3.4% to $3.2 billion, or a 5.5% year-over-year increase on an organic basis. During the year, the Company saw continued progress in recovering from the sales impact of the COVID-19 pandemic. For the Intelisys business, fiscal year 2021 net sales increased 13.1% year-over-year. Fiscal year 2021 GAAP operating income increased to $61.5 million, and non-GAAP operating income increased to $93.1 million, up 18.0% year-over-year. In 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.

On a GAAP basis, net income for fiscal year 2021 totaled $45.4 million, or $1.78 per diluted share. Non-GAAP net income increased to $69.9 million, or $2.74 per diluted share, compared to $52.0 million, or $2.05 per diluted share, for the fiscal year 2020.

Share Repurchase Authorization

ScanSource also announced a new $100 million authorization by its Board of Directors to repurchase shares of the Company’s common stock.

“In setting our capital allocation priorities, our top priority is reinvestment in the growth of our business and driving value creation for our shareholders,” said Steve Jones, Chief Financial Officer, ScanSource, Inc. “Our repurchase authorization reflects our confidence in ScanSource’s business and the strength of our long-term operating cash flow generation.”

Repurchases may be made in the open market or through privately negotiated transactions, and ScanSource may enter into Rule 10b5-1 plans to facilitate repurchases. This share repurchase authorization does not obligate ScanSource to purchase any particular amount of common stock, and it may be suspended at any time at the Company’s discretion. The authorization does not have any time limit.

Annual Financial Outlook for Fiscal Year 2022

The following statements are based on ScanSource’s current expectation for the full fiscal year ended June 30, 2022.

 

 

FY22 Annual Outlook

Net sales growth, year-over-year

 

At least 5.5%

Adjusted EBITDA (non-GAAP)

 

At least $135 million

Adjusted EBITDA is a non-GAAP measure, which excludes estimates for amortization of intangible assets, depreciation expense, and non-cash share-based compensation expense (effective with the first quarter of fiscal year 2022). For comparison, fiscal year 2021 Adjusted EBITDA, excluding share-based compensation totaled $118 million. ScanSource’s outlook does not include the potential impact of any business combinations, asset acquisitions, divestitures, strategic investments, or other significant transactions that may be completed after the date hereof. These statements are forward-looking, and actual results may differ materially.

Webcast Details and 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, August 24, 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 Company’s FY22 outlook, capital allocation plans, growth opportunities and 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, failure to hire and retain quality employees, risk to the Company’s business from a cyber-security attack, the failure to manage and implement the Company’s organic growth strategy, 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, a failure of the Company’s IT systems, a failure to acquire new businesses, changes in interest and exchange rates and regulatory regimes impacting the Company’s international operations, credit risks involving the Company’s larger customers and suppliers, loss of the Company’s major customers, termination of the Company’s relationship with key suppliers or a significant modification of the terms under which it operates with a key supplier, changes in the Company’s operating strategy, and other factors set forth in the “Risk Factors” contained in the Company’s annual report on Form 10-K for the year ended June 30, 2021, 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, restructuring costs, and other non-GAAP adjustments. These year-over-year metrics include the translation impact of changes in foreign currency exchange rates. Non-GAAP metrics are useful in assessing and understanding the Company’s operating performance, especially when comparing results with previous periods or forecasting performance for future periods.

Adjusted earnings before interest expense, income taxes, depreciation, and amortization (“Adjusted EBITDA”): Adjusted EBITDA starts with net income and adds back interest expense, income tax expense, depreciation expense, amortization of intangible assets, changes in fair value of contingent considerations, and other non-GAAP adjustments, including acquisition and divestiture costs, impairment charges, and restructuring costs. Effective with the first quarter of fiscal year 2022, non-cash share-based compensation expense will also be added back in calculating Adjusted EBITDA. Since Adjusted EBITDA excludes some non-cash costs of investing in our business and people, management believes that Adjusted EBITDA shows the profitability from our business operations more clearly.

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. 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 2021 Best Places to Work in South Carolina and on FORTUNE magazine’s 2021 List of World’s Most Admired Companies. ScanSource ranks #655 on the Fortune 1000. For more information, visit www.scansource.com.

ScanSource, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands)

 

June 30, 2021

 

June 30, 2020*

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

62,718

 

 

$

29,485

 

Accounts receivable, less allowance of $19,341 at June 30, 2021

and $21,906 at June 30, 2020

568,984

 

 

443,185

 

Inventories

470,081

 

 

454,885

 

Prepaid expenses and other current assets

117,860

 

 

94,681

 

Current assets held for sale

 

 

181,231

 

Total current assets

1,219,643

 

 

1,203,467

 

Property and equipment, net

42,836

 

 

55,641

 

Goodwill

218,877

 

 

214,288

 

Identifiable intangible assets, net

104,860

 

 

121,547

 

Deferred income taxes

21,853

 

 

24,630

 

Other non-current assets

63,615

 

 

72,521

 

Total assets

$

1,671,684

 

 

$

1,692,094

 

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

634,805

 

 

$

454,240

 

Accrued expenses and other current liabilities

87,790

 

 

76,686

 

Current portion of contingent consideration

 

 

46,334

 

Income taxes payable

2,501

 

 

5,886

 

Current portion of long-term debt

7,843

 

 

7,839

 

Current liabilities held for sale

 

 

128,022

 

Total current liabilities

732,939

 

 

719,007

 

Deferred income taxes

3,954

 

 

3,884

 

Long-term debt, net of current portion

135,331

 

 

143,175

 

Borrowings under revolving credit facility

 

 

67,714

 

Other long-term liabilities

68,269

 

 

80,068

 

Total liabilities

940,493

 

 

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, 25,499,465 and 25,361,298 shares issued and outstanding at June 30, 2021 and June 30, 2020, respectively

71,253

 

 

63,765

 

Retained earnings

758,071

 

 

747,276

 

Accumulated other comprehensive loss

(98,133)

 

 

(132,795)

 

Total shareholders’ equity

731,191

 

 

678,246

 

Total liabilities and shareholders’ equity

$

1,671,684

 

 

$

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 June 30,

 

Fiscal year ended June 30,

 

2021

 

2020

 

2021

 

2020

Net sales

$

852,694

 

 

$

636,450

 

 

$

3,150,806

 

 

$

3,047,734

 

Cost of goods sold

756,916

 

 

562,303

 

 

2,800,090

 

 

2,692,165

 

Gross profit

95,778

 

 

74,147

 

 

350,716

 

 

355,569

 

Selling, general and administrative expenses

64,758

 

 

58,192

 

 

247,438

 

 

259,535

 

Depreciation expense

2,898

 

 

3,304

 

 

12,533

 

 

13,033

 

Intangible amortization expense

4,893

 

 

4,946

 

 

19,488

 

 

19,953

 

Restructuring and other charges

(54)

 

 

 

 

9,258

 

 

604

 

Impairment charges

 

 

120,470

 

 

 

 

120,470

 

Change in fair value of contingent consideration

 

 

674

 

 

516

 

 

6,941

 

Operating income (loss)

23,283

 

 

(113,439)

 

 

61,483

 

 

(64,967)

 

Interest expense

1,643

 

 

2,497

 

 

6,929

 

 

12,224

 

Interest income

(1,341)

 

 

(3,199)

 

 

(3,097)

 

 

(5,826)

 

Other expense (income), net

(65)

 

 

213

 

 

116

 

 

411

 

Income before income taxes

23,046

 

 

(112,950)

 

 

57,535

 

 

(71,776)

 

Provision for income taxes

2,389

 

 

(4,091)

 

 

12,146

 

 

7,451

 

Net income (loss) from continuing operations

20,657

 

 

(108,859)

 

 

45,389

 

 

(79,227)

 

Net income (loss) from discontinued operations

3,053

 

 

(108,403)

 

 

(34,594)

 

 

(113,427)

 

Net income (loss)

$

23,710

 

 

$

(217,262)

 

 

$

10,795

 

 

$

(192,654)

 

Per share data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations per common share, basic

$

0.81

 

 

$

(4.29)

 

 

$

1.79

 

 

$

(3.12)

 

Net income (loss) from discontinued operations per common share, basic

0.12

 

 

(4.28)

 

 

(1.36)

 

 

(4.47)

 

Net income (loss) per common share, basic

$

0.93

 

 

$

(8.57)

 

 

$

0.42

 

 

$

(7.59)

 

Weighted-average shares outstanding, basic

25,482

 

 

25,353

 

 

25,423

 

 

25,378

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations per common share, diluted

$

0.80

 

 

$

(4.29)

 

 

$

1.78

 

 

$

(3.12)

 

Net income (loss) from discontinued operations per common share, diluted

0.12

 

 

(4.28)

 

 

(1.36)

 

 

(4.47)

 

Net income (loss) per common share, diluted

$

0.92

 

 

$

(8.57)

 

 

$

0.42

 

 

$

(7.59)

 

Weighted-average shares outstanding, diluted

25,664

 

 

25,353

 

 

25,518

 

 

25,378

 

ScanSource, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

Quarter ended June 30,

 

Fiscal year ended June 30,

 

2021

 

2020

 

2021

 

2020

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income (loss)

$

23,710

 

 

$

(217,262)

 

 

$

10,795

 

 

$

(192,654)

 

Net income (loss) from discontinued operations

3,053

 

 

(108,403)

 

 

(34,594)

 

 

(113,427)

 

Net income (loss) from continuing operations

20,657

 

 

(108,859)

 

 

45,389

 

 

(79,227)

 

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

 

 

 

 

 

 

 

Depreciation and amortization

8,090

 

 

8,743

 

 

33,507

 

 

35,328

 

Amortization of debt issue costs

104

 

 

104

 

 

417

 

 

417

 

Provision for doubtful accounts

112

 

 

222

 

 

338

 

 

1,621

 

Share-based compensation

2,328

 

 

1,425

 

 

8,039

 

 

5,478

 

Impairment charges

 

 

120,470

 

 

 

 

120,470

 

Deferred income taxes

2,941

 

 

(10,714)

 

 

2,916

 

 

(12,193)

 

Change in fair value of contingent consideration

 

 

674

 

 

516

 

 

6,941

 

Contingent consideration payments excess

 

 

 

 

(5,457)

 

 

(3,050)

 

Finance lease interest

23

 

 

21

 

 

119

 

 

85

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

Accounts receivable

(50,204)

 

 

57,562

 

 

(118,859)

 

 

57,477

 

Inventories

(6,394)

 

 

93,623

 

 

(12,301)

 

 

86,177

 

Prepaid expenses and other assets

(17,111)

 

 

(2,903)

 

 

(18,753)

 

 

(13,880)

 

Other non-current assets

7,102

 

 

(12,534)

 

 

9,948

 

 

(13,563)

 

Accounts payable

105,511

 

 

(76,224)

 

 

175,120

 

 

(20,846)

 

Accrued expenses and other liabilities

(8,928)

 

 

(1,992)

 

 

(493)

 

 

11,239

 

Income taxes payable

(2,886)

 

 

4,334

 

 

(3,679)

 

 

(441)

 

Net cash provided by operating activities of continuing operations

61,345

 

 

73,952

 

 

116,767

 

 

182,033

 

Cash flows from investing activities of continuing operations:

 

 

 

 

 

 

 

Capital expenditures

(80)

 

 

188

 

 

(2,363)

 

 

(6,387)

 

Cash paid for business acquisitions, net of cash acquired

 

 

 

 

 

 

(48,921)

 

Cash received for business disposal

 

 

 

 

34,356

 

 

 

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

(80)

 

 

188

 

 

31,993

 

 

(55,308)

 

Cash flows from financing activities of continuing operations:

 

 

 

 

 

 

 

Borrowings on revolving credit, net of expenses

395,215

 

 

477,446

 

 

1,881,679

 

 

2,085,918

 

Repayments on revolving credit, net of expenses

(449,017)

 

 

(539,732)

 

 

(1,949,392)

 

 

(2,190,595)

 

Borrowings on long-term debt, net

(1,875)

 

 

(938)

 

 

(7,839)

 

 

(4,085)

 

Repayments of finance lease obligations

(320)

 

 

(1,105)

 

 

(1,294)

 

 

(1,765)

 

Contingent consideration payments

 

 

 

 

(41,393)

 

 

(35,482)

 

Exercise of stock options

12

 

 

 

 

451

 

 

754

 

Taxes paid on settlement of equity awards

 

 

 

 

(1,036)

 

 

(1,353)

 

Repurchase of common stock

 

 

 

 

 

 

(6,078)

 

Net cash used in financing activities of continuing operations

(55,985)

 

 

(64,329)

 

 

(118,824)

 

 

(152,686)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ScanSource, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited), continued

(in thousands)

 

 

 

 

 

 

 

 

Cash flows from discontinued operations:

 

 

 

 

 

 

 

Net cash flows provided by operating activities of discontinued operations

2,469

 

 

2,235

 

 

24,173

 

 

44,238

 

Net cash flows used in investing activities of discontinued operations

 

 

(35)

 

 

(58)

 

 

(77)

 

Net cash flows used in financing activities of discontinued operations

 

 

(10,663)

 

 

(29,494)

 

 

(3,921)

 

Net cash flows provided by (used in) discontinued operations

2,469

 

 

(8,463)

 

 

(5,379)

 

 

40,240

 

Effect of exchange rate changes on cash and cash equivalents

5,648

 

 

(1,489)

 

 

3,706

 

 

(3,642)

 

Increase (decrease) in cash and cash equivalents

13,397

 

 

(141)

 

 

28,263

 

 

10,637

 

Consolidated cash and cash equivalents at beginning of period

49,321

 

 

34,596

 

 

34,455

 

 

23,818

 

Consolidated cash and cash equivalents at end of period

62,718

 

 

34,455

 

 

62,718

 

 

34,455

 

Cash and cash equivalents of discontinued operations

 

 

 

 

 

 

4,970

 

Cash and cash equivalents of continuing operations

$

62,718

 

 

$

34,455

 

 

$

62,718

 

 

$

29,485

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

(in thousands, except percentages)

 

 

 

 

 

 

 

 

Non-GAAP Financial Information:

 

 

 

 

Quarter ended June 30,

 

Fiscal year ended June 30,

 

2021

 

2020

 

2021

 

2020

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

14.9

%

 

4.0

%

 

11.8

%

 

7.5

%

 

 

 

 

 

 

 

 

Reconciliation of net income to EBITDA:

 

 

 

 

 

 

 

Net income (loss) from continuing operations (GAAP)

$

20,657

 

 

$

(108,859

)

 

$

45,389

 

 

$

(79,227

)

Plus: Interest expense

1,643

 

 

2,497

 

 

6,929

 

 

12,224

 

Plus: Income taxes

2,389

 

 

(4,091

)

 

12,146

 

 

7,451

 

Plus: Depreciation and amortization

8,090

 

 

8,743

 

 

33,507

 

 

35,328

 

EBITDA (non-GAAP)

32,779

 

 

(101,710

)

 

97,971

 

 

(24,224

)

Plus: Change in fair value of contingent consideration

 

 

674

 

 

516

 

 

6,941

 

Plus: Acquisition and divestiture costs(b)

246

 

 

1,311

 

 

2,376

 

 

4,000

 

Plus: Restructuring costs

(54

)

 

 

 

9,047

 

 

604

 

Plus: Impairment charges

 

 

120,470

 

 

 

 

120,470

 

Plus: Tax recovery

 

 

(8,424

)

 

 

 

(10,744

)

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

$

32,971

 

 

$

12,321

 

 

$

109,910

 

 

$

97,047

 

 

 

 

 

 

 

 

 

Invested Capital Calculations:

 

 

 

 

 

 

 

Equity – beginning of the quarter (c)

$

690,575

 

 

$

897,678

 

 

$

678,246

 

 

$

914,129

 

Equity – end of the quarter (c)

731,191

 

 

678,246

 

 

731,191

 

 

678,246

 

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

 

 

510

 

 

390

 

 

5,247

 

Plus: Acquisition and divestiture costs(b)

207

 

 

1,311

 

 

2,337

 

 

4,000

 

Plus: Restructuring, net

(40

)

 

 

 

6,840

 

 

449

 

Plus: Impact of discontinued operations, net

(3,053

)

 

108,403

 

 

34,594

 

 

113,427

 

Plus: Impairment charges, net

 

 

114,398

 

 

 

 

114,398

 

Plus: Tax recovery, net

 

 

(6,247

)

 

 

 

(8,001

)

Average equity

709,440

 

 

897,150

 

 

726,799

 

 

910,948

 

Average funded debt (d)

177,074

 

 

337,973

 

 

202,869

 

 

390,709

 

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

$

886,514

 

 

$

1,235,123

 

 

$

929,668

 

 

$

1,301,657

 

 

 

 

 

 

 

 

 

(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 91 days in the current and 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 June 30,

 

 

 

2021

 

2020

 

% Change

Worldwide Barcode, Networking & Security:

(in thousands)

 

 

Net sales, reported

$

597,943

 

 

$

447,812

 

 

33.5

%

Foreign exchange impact (a)

(447)

 

 

 

 

 

Non-GAAP net sales, constant currency

$

597,496

 

 

$

447,812

 

 

33.4

%

 

 

 

 

 

 

Worldwide Communications & Services:

 

 

 

 

 

Net sales, reported

$

254,751

 

 

$

188,638

 

 

35.0

%

Foreign exchange impact (a)

(1,224)

 

 

 

 

 

Non-GAAP net sales, constant currency

$

253,527

 

 

$

188,638

 

 

34.4

%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, reported

$

852,694

 

 

$

636,450

 

 

34.0

%

Foreign exchange impact (a)

(1,671)

 

 

 

 

 

Non-GAAP net sales, constant currency

$

851,023

 

 

$

636,450

 

 

33.7

%

 

 

 

 

 

 

(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, 2021 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2020.

 

 

 

 

 

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

Net Sales by Segment:

 

 

 

 

Fiscal year ended June 30,

 

 

 

2021

 

2020

 

% Change

Worldwide Barcode, Networking & Security:

(in thousands)

 

 

Net sales, reported

$

2,175,141

 

 

$

2,093,217

 

 

3.9

%

Foreign exchange impact (a)

19,311

 

 

 

 

 

Non-GAAP net sales, constant currency

$

2,194,452

 

 

$

2,093,217

 

 

4.8

%

 

 

 

 

 

 

Worldwide Communications & Services:

 

 

 

 

 

Net sales, reported

$

975,665

 

 

$

954,517

 

 

2.2

%

Foreign exchange impact (a)

46,470

 

 

 

 

 

Non-GAAP net sales, constant currency

$

1,022,135

 

 

$

954,517

 

 

7.1

%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, reported

$

3,150,806

 

 

$

3,047,734

 

 

3.4

%

Foreign exchange impact (a)

65,781

 

 

 

 

 

Non-GAAP net sales, constant currency

$

3,216,587

 

 

$

3,047,734

 

 

5.5

%

 

 

 

 

 

 

(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 fiscal year ended June 30, 2021 into U.S. dollars using the average foreign exchange rates for the fiscal year ended June 30, 2020.

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

 

 

Net Sales by Geography:

 

 

 

 

Quarter ended June 30,

 

 

 

2021

 

2020

 

% Change

United States and Canada:

(in thousands)

 

 

Net sales, as reported

$

771,403

 

 

$

581,619

 

 

32.6

%

 

 

 

 

 

 

International:

 

 

 

 

 

Net sales, reported

$

81,291

 

 

$

54,831

 

 

48.3

%

Foreign exchange impact(a)

(1,671)

 

 

 

 

 

Non-GAAP net sales, constant currency

$

79,620

 

 

$

54,831

 

 

45.2

%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, reported

$

852,694

 

 

$

636,450

 

 

34.0

%

Foreign exchange impact(a)

(1,671)

 

 

 

 

 

Non-GAAP net sales, constant currency

$

851,023

 

 

$

636,450

 

 

33.7

%

 

 

 

 

 

 

(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, 2021 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2020.

 

 

 

 

 

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

 

 

Net Sales by Geography:

 

 

 

 

Fiscal year ended June 30,

 

 

 

2021

 

2020

 

% Change

United States and Canada:

(in thousands)

 

 

Net sales, as reported

$

2,840,731

 

 

$

2,755,134

 

 

3.1

%

 

 

 

 

 

 

International:

 

 

 

 

 

Net sales, reported

$

310,075

 

 

$

292,600

 

 

6.0

%

Foreign exchange impact(a)

65,781

 

 

 

 

 

Non-GAAP net sales, constant currency

$

375,856

 

 

$

292,600

 

 

28.5

%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, reported

$

3,150,806

 

 

$

3,047,734

 

 

3.4

%

Foreign exchange impact(a)

65,781

 

 

 

 

 

Non-GAAP net sales, constant currency

$

3,216,587

 

 

$

3,047,734

 

 

5.5

%

 

 

 

 

 

 

(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 fiscal year ended June 30, 2021 into U.S. dollars using the average foreign exchange rates for the fiscal year ended June 30, 2020.

 

 

Quarter ended June 30, 2021

 

GAAP Measure

 

Intangible amortization expense

 

Change in fair value of contingent consideration

 

Acquisition, divestiture, and restructuring costs(a)

 

Tax recovery, net

 

Impairment charges

 

Non-GAAP measure

 

(in thousands, except per share data)

Net sales

$

852,694

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

852,694

 

Gross profit

95,778

 

 

 

 

 

 

 

 

 

 

 

 

95,778

 

Operating income

23,283

 

 

4,893

 

 

 

 

192

 

 

 

 

 

 

28,368

 

Other expense, net

237

 

 

 

 

 

 

 

 

 

 

 

 

237

 

Pre-tax income

23,046

 

 

4,893

 

 

 

 

192

 

 

 

 

 

 

28,131

 

Net income from continuing operations

20,657

 

 

3,698

 

 

 

 

167

 

 

 

 

 

 

24,522

 

Diluted EPS from continuing operations

$

0.80

 

 

$

0.14

 

 

$

 

 

$

0.01

 

 

$

 

 

$

 

 

$

0.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Acquisition and divestiture costs totaled $0.2 million for the quarter ended June 30, 2021 and are generally nondeductible for tax purposes. Restructuring costs totaled $(0.1) million for the quarter ended June 30, 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended June 30, 2020

 

GAAP Measure

 

Intangible amortization expense

 

Change in fair value of contingent consideration

 

Acquisition, divestiture, and restructuring costs(a)

 

Tax recovery, net

 

Impairment charges

 

Non-GAAP measure

 

(in thousands, except per share data)

Net sales

$

636,450

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

636,450

 

Gross profit

74,147

 

 

 

 

 

 

 

 

 

 

 

 

74,147

 

Operating (loss) income

(113,439)

 

 

4,946

 

 

674

 

 

1,311

 

 

(5,743)

 

 

120,470

 

 

8,219

 

Other expense, net

(489)

 

 

 

 

 

 

 

 

2,681

 

 

 

 

2,192

 

Pre-tax (loss) income

(112,950)

 

 

4,946

 

 

674

 

 

1,311

 

 

(8,424)

 

 

120,470

 

 

6,027

 

Net (loss) income from continuing operations

(108,859)

 

 

3,744

 

 

510

 

 

1,311

 

 

(6,247)

 

 

114,398

 

 

4,857

 

Diluted EPS from continuing operations

$

(4.29)

 

 

$

0.15

 

 

$

0.02

 

 

$

0.05

 

 

$

(0.25)

 

 

$

4.51

 

 

$

0.19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Acquisition and divestiture costs totaled xx for the quarter ended June 30, 2020 and are generally nondeductible for tax purposes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended June 30, 2021

 

Reported GAAP Measure

 

Intangible amortization expense

 

Change in fair value of contingent consideration

 

Acquisition, divestiture, and restructuring costs(a)

 

Tax recovery, net

 

Impairment charges

 

Non-GAAP measure

 

(in thousands, except per share data)

Net sales

$

3,150,806

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

3,150,806

 

Gross profit

350,716

 

 

 

 

 

 

 

 

 

 

 

 

350,716

 

Operating income

61,483

 

 

19,488

 

 

516

 

 

11,634

 

 

 

 

 

 

93,121

 

Other expense, net

3,948

 

 

 

 

 

 

 

 

 

 

 

 

3,948

 

Pre-tax income

57,535

 

 

19,488

 

 

516

 

 

11,634

 

 

 

 

 

 

89,173

 

Net income from continuing operations

45,389

 

 

14,753

 

 

390

 

 

9,336

 

 

 

 

 

 

69,868

 

Diluted EPS from continuing operations

$

1.78

 

 

$

0.58

 

 

$

0.02

 

 

$

0.36

 

 

$

 

 

$

 

 

$

2.74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Acquisition and divestiture costs totaled $2.4 million for the fiscal year ended June 30, 2021 and are generally nondeductible for tax purposes. Restructuring costs totaled $9.3 million for the fiscal year ended June 30, 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended June 30, 2020

 

Reported GAAP Measure

 

Intangible amortization expense

 

Change in fair value of contingent consideration

 

Acquisition, divestiture, and restructuring costs

 

Tax recovery, net

 

Impairment charges

 

Non-GAAP measure

 

(in thousands, except per share data)

Net sales

$

3,047,734

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

3,047,734

 

Gross profit

355,569

 

 

 

 

 

 

 

 

 

 

 

 

355,569

 

Operating (loss) income

(64,967)

 

 

19,953

 

 

6,941

 

 

4,604

 

 

(8,063)

 

 

120,470

 

 

78,938

 

Other expense, net

6,809

 

 

 

 

 

 

 

 

2,681

 

 

 

 

9,490

 

Pre-tax (loss) income

(71,776)

 

 

19,953

 

 

6,941

 

 

4,604

 

 

(10,744)

 

 

120,470

 

 

69,448

 

Net (loss) income from continuing operations

(79,227)

 

 

15,091

 

 

5,247

 

 

4,449

 

 

(8,001)

 

 

114,398

 

 

51,957

 

Diluted EPS from continuing operations

$

(3.12)

 

 

$

0.59

 

 

$

0.21

 

 

$

0.18

 

 

$

(0.32)

 

 

$

4.51

 

 

$

2.05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Acquisition and divestiture costs totaled $4.0 million for the fiscal year ended June 30, 2020 and are generally nondeductible for tax purposes. Restructuring costs totaled $0.6 million for the fiscal year ended June 30, 2020.

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

 

 

 

 

Discontinued Operations – Financial Results:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended June 30,

 

Fiscal year ended June 30,

 

2021

 

2020

 

2021

 

2020

 

(in thousands)

Net sales

$

 

 

$

121,969

 

 

$

213,373

 

 

$

561,496

 

Cost of goods sold

 

 

112,846

 

 

198,512

 

 

513,003

 

Gross profit

 

 

9,123

 

 

14,861

 

 

48,493

 

Selling, general and administrative expenses

 

 

11,337

 

 

17,291

 

 

53,946

 

Depreciation expense

 

 

205

 

 

 

 

975

 

Intangible amortization expense

 

 

330

 

 

 

 

1,403

 

Operating loss

 

 

(16,496)

 

 

(2,430)

 

 

(21,578)

 

Interest expense, net

 

 

163

 

 

394

 

 

1,399

 

Loss on disposal group

101

 

 

88,923

 

 

34,597

 

 

88,923

 

Other expense, net

 

 

1,221

 

 

310

 

 

1,124

 

Loss from discontinued operations before taxes

(101)

 

 

(106,803)

 

 

(37,731)

 

 

(113,024)

 

Income tax (benefit) expense

(3,154)

 

 

1,600

 

 

(3,137)

 

 

403

 

Net income (loss) from discontinued operations

$

3,053

 

 

$

(108,403)

 

 

$

(34,594)

 

 

$

(113,427)

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

Discontinued Operations – Assets and Liabilities:

 

 

 

 

 

 

 

 

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

ScanSource, Inc. and Subsidiaries

Supplementary Forward-Looking Information (Unaudited)

 

Annual Financial Outlook for Fiscal Year 2022:

 

 

 

 

 

 

 

 

 

 

FY22 Outlook

 

GAAP, Operating Income

 

At least $92 million

Intangible amortization

 

$18 million

Depreciation expense

 

$14 million

Share-based compensation expense

 

$11 million

Adjusted EBITDA (non-GAAP)

 

At least $135 million

 

 

 

 

 

 

 

 

 

 

Fiscal Year 2021 Adjusted EBITDA, excluding Share-Based Compensation Expense:

 

 

 

 

 

 

 

 

FY21

 

Adjusted EBITDA, as reported (non-GAAP)

 

$109.9 million

Add: Share-based compensation expense

 

$8.0 million

Adjusted EBITDA, excluding share-based compensation expense

 

$117.9 million