ScanSource Reports Third Quarter Results

Announces new $100M share purchase authorization

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

ScanSource, Inc. (NASDAQ: SCSC), a leading hybrid distributor connecting devices to the cloud, today announced financial results for the third quarter ended March 31, 2024.

 

Third Quarter Summary

 

Q3 FY24

 

Q3 FY23

 

Change

 

(in thousands, except percentages and per share data)

Select reported measures:

 

 

 

 

 

Net sales

$

752,599

 

 

$

885,519

 

 

-15.0%

Gross profit

$

94,481

 

 

$

111,762

 

 

-15.5%

Gross profit margin %

 

12.55

%

 

 

12.62

%

 

-7bp

Operating income

$

17,542

 

 

$

34,279

 

 

-48.8%

GAAP net income

$

12,806

 

 

$

21,221

 

 

-39.7%

GAAP diluted EPS

$

0.50

 

 

$

0.83

 

 

-39.8%

Operating cash flow

$

160,152

 

 

$

54,837

 

 

n/m

Select Non-GAAP measures*:

 

 

 

 

 

Adjusted EBITDA

$

33,095

 

 

$

45,656

 

 

-27.5%

Adjusted EBITDA margin %

 

4.40

%

 

 

5.16

%

 

-76bp

Non-GAAP net income

$

17,461

 

 

$

24,330

 

 

-28.2%

Non-GAAP diluted EPS

$

0.69

 

 

$

0.96

 

 

-28.1%

Free cash flow

$

157,732

 

 

$

52,551

 

 

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 Supplemental Information.

“While hardware sales were lower than we expected, our resilient business model delivered strong margins and robust free cash flow,” said Mike Baur, Chair and CEO, ScanSource, Inc. “Our strong balance sheet gives us the capacity and flexibility to execute our disciplined capital allocation plans.”

Quarterly Results

Net sales for the third quarter of fiscal year 2024 totaled $752.6 million, down 15.0% year-over-year. Specialty Technology Solutions net sales for the third quarter decreased 14.5% year-over-year to $483.7 million from softer demand across technologies within the segment. Modern Communications & Cloud net sales for the third quarter decreased 15.9% year-over-year to $268.9 million from lower sales volumes in communications hardware and Cisco products. Net billings for Intelisys increased to approximately $2.68 billion annualized, and Intelisys net sales for the third quarter increased 4.0%.

Gross profit for the third quarter of fiscal year 2024 decreased 15.5% year-over-year to $94.5 million with a gross profit margin of 12.55% versus 12.62% in the prior-year quarter and 11.39% in the second quarter of fiscal year 2024. The gross profit margin reflects a higher percentage of Intelisys revenue in our overall revenue mix, which is recorded on a net basis and therefore contributes to higher gross profit margin.

For the third quarter of fiscal year 2024, operating income was $17.5 million compared to $34.3 million in the prior-year quarter. Third quarter fiscal year 2024 non-GAAP operating income decreased to $25.3 million down from $38.4 million for the prior-year quarter.

On a GAAP basis, net income for the third quarter of fiscal year 2024 totaled $12.8 million, or $0.50 per diluted share, compared to net income of $21.2 million, or $0.83 per diluted share, for the prior-year quarter. Third quarter fiscal year 2024 non-GAAP net income totaled $17.5 million, or $0.69 per diluted share, down from $24.3 million, or $0.96 per diluted share, for the prior-year quarter. Interest expense for the quarter decreased to $2.0 million, down from $5.7 million for the prior-year quarter, reflecting lower borrowings.

On a non-GAAP basis, adjusted EBITDA for the third quarter of fiscal year 2024 decreased 27.5% to $33.1 million, or 4.40% of net sales, compared to $45.7 million, or 5.16% of net sales, for the prior-year quarter.

ScanSource generated $316.9 million of operating cash flow and $309.6 million of free cash flow (non-GAAP) in the first nine months of fiscal year 2024.

Updated Annual Financial Outlook for Fiscal Year 2024

ScanSource updates its expectations for the full fiscal year ending June 30, 2024 and replaces previously provided guidance:

 

 

FY24 Annual Outlook

 

Prior FY24 Annual Outlook

Net sales

 

At least $3.3 billion

 

At least $3.5 billion

Adjusted EBITDA (non-GAAP)

 

At least $140 million

 

At least $155 million

Free cash flow (non-GAAP)

 

At least $275 million

 

At least $200 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. 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.

Share Repurchase Authorization

ScanSource announced a new $100 million authorization by its Board of Directors to purchase shares of the Company's common stock. This supplements the existing authorization of which approximately $45 million remained outstanding as of March 31, 2024.

Repurchases may be made at management's discretion through open market or privately negotiated transactions, including pursuant to one or more Rule 10b5-1 trading plans to facilitate. 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.

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, May 7, 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 FY24 outlook, which involve risks and uncertainties. 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 organic 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, economic weakness and inflation, 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, 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, 2023. 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 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"), 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 amortization of intangible assets related to acquisitions, acquisition and divestiture costs, gain on sale of business, restructuring costs and 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.

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 operating income margin, and non-GAAP diluted earnings per share (non-GAAP diluted EPS). 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 year-over-year metrics include the translation impact of changes in foreign currency exchange rates. Non-GAAP metrics are useful in assessing and understanding ScanSource'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, gain 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. We believe this measure provides more information regarding liquidity and capital resources. Free cash flow is defined as cash flows from operating activities less capital expenditures.

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 2023 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

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share data)

 

March 31, 2024

 

June 30, 2023*

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

159,050

 

 

$

36,178

 

Accounts receivable, less allowance of $19,566 at March 31, 2024

and $15,480 at June 30, 2023

 

589,847

 

 

 

753,236

 

Inventories

 

529,163

 

 

 

757,574

 

Prepaid expenses and other current assets

 

138,100

 

 

 

110,087

 

Total current assets

 

1,416,160

 

 

 

1,657,075

 

Property and equipment, net

 

35,594

 

 

 

37,379

 

Goodwill

 

207,616

 

 

 

216,706

 

Identifiable intangible assets, net

 

41,510

 

 

 

68,495

 

Deferred income taxes

 

19,231

 

 

 

17,764

 

Other non-current assets

 

62,877

 

 

 

70,750

 

Total assets

$

1,782,988

 

 

$

2,068,169

 

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

555,733

 

 

$

691,119

 

Accrued expenses and other current liabilities

 

74,664

 

 

 

78,892

 

Income taxes payable

 

4,792

 

 

 

9,875

 

Current portion of long-term debt

 

7,857

 

 

 

6,915

 

Total current liabilities

 

643,046

 

 

 

786,801

 

Deferred income taxes

 

 

 

 

3,816

 

Long-term debt, net of current portion

 

138,024

 

 

 

144,006

 

Borrowings under revolving credit facility

 

 

 

 

178,980

 

Other long-term liabilities

 

57,867

 

 

 

49,268

 

Total liabilities

 

838,937

 

 

 

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, 24,708,808 and 24,844,203 shares issued and outstanding at March 31, 2024 and June 30, 2023, respectively

 

46,426

 

 

 

58,241

 

Retained earnings

 

997,642

 

 

 

936,678

 

Accumulated other comprehensive loss

 

(100,017

)

 

 

(89,621

)

Total shareholders’ equity

 

944,051

 

 

 

905,298

 

Total liabilities and shareholders’ equity

$

1,782,988

 

 

$

2,068,169

 

 

*Derived from audited financial statements.

ScanSource, Inc. and Subsidiaries

Condensed Consolidated Income Statements (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

Quarter ended March 31, 2024

 

Nine months ended March 31,

 

2024

 

2023

 

2024

 

2023

Net sales

$

752,599

 

 

$

885,519

 

 

$

2,513,696

 

 

$

2,840,573

 

Cost of goods sold

 

658,118

 

 

 

773,757

 

 

 

2,211,958

 

 

 

2,499,992

 

Gross profit

 

94,481

 

 

 

111,762

 

 

 

301,738

 

 

 

340,581

 

Selling, general and administrative expenses

 

66,574

 

 

 

70,669

 

 

 

208,930

 

 

 

211,337

 

Depreciation expense

 

2,690

 

 

 

2,644

 

 

 

8,449

 

 

 

8,085

 

Intangible amortization expense

 

3,752

 

 

 

4,170

 

 

 

11,982

 

 

 

12,561

 

Restructuring and other charges

 

3,923

 

 

 

 

 

 

3,923

 

 

 

 

Operating income

 

17,542

 

 

 

34,279

 

 

 

68,454

 

 

 

108,598

 

Interest expense

 

2,001

 

 

 

5,715

 

 

 

10,947

 

 

 

14,223

 

Interest income

 

(2,652

)

 

 

(1,710

)

 

 

(6,096

)

 

 

(5,327

)

Gain on sale of business

 

 

 

 

 

 

 

(14,533

)

 

 

 

Other expense, net

 

241

 

 

 

361

 

 

 

991

 

 

 

1,314

 

Income before income taxes

 

17,952

 

 

 

29,913

 

 

 

77,145

 

 

 

98,388

 

Provision for income taxes

 

5,146

 

 

 

8,692

 

 

 

16,181

 

 

 

27,391

 

Net income

$

12,806

 

 

$

21,221

 

 

$

60,964

 

 

$

70,997

 

 

 

 

 

 

 

 

 

Per share data:

 

 

 

 

 

 

 

Net income per common share, basic

$

0.51

 

 

$

0.84

 

 

$

2.44

 

 

$

2.81

 

Weighted-average shares outstanding, basic

 

25,025

 

 

 

25,196

 

 

 

24,982

 

 

 

25,228

 

 

 

 

 

 

 

 

 

Net income per common share, diluted

$

0.50

 

 

$

0.83

 

 

$

2.41

 

 

$

2.79

 

Weighted-average shares outstanding, diluted

 

25,437

 

 

 

25,439

 

 

 

25,291

 

 

 

25,436

 

ScanSource, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

Nine months ended March 31,

 

2024

 

2023

Cash flows from operating activities:

 

 

 

Net income

$

60,964

 

 

$

70,997

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

Gain on sale of business

 

(14,533

)

 

 

 

Depreciation and amortization

 

21,217

 

 

 

21,359

 

Amortization of debt issue costs

 

289

 

 

 

481

 

Provision for doubtful accounts

 

5,863

 

 

 

1,852

 

Share-based compensation

 

7,729

 

 

 

8,633

 

Deferred income taxes

 

(1,565

)

 

 

1,409

 

Finance lease interest

 

70

 

 

 

31

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

Accounts receivable

 

143,774

 

 

 

46,652

 

Inventories

 

226,878

 

 

 

(136,257

)

Prepaid expenses and other assets

 

(28,163

)

 

 

39,178

 

Other non-current assets

 

6,022

 

 

 

(1,772

)

Accounts payable

 

(117,860

)

 

 

(60,717

)

Accrued expenses and other liabilities

 

11,338

 

 

 

(16,780

)

Income taxes payable

 

(5,115

)

 

 

4,426

 

Net cash provided by (used in) operating activities

 

316,908

 

 

 

(20,508

)

Cash flows from investing activities:

 

 

 

Capital expenditures

 

(7,285

)

 

 

(6,549

)

Proceeds from sale of business, net of cash transferred

 

17,978

 

 

 

 

Net cash provided by (used in) investing activities

 

10,693

 

 

 

(6,549

)

Cash flows from financing activities:

 

 

 

Borrowings on revolving credit, net of expenses

 

1,242,915

 

 

 

1,871,909

 

Repayments on revolving credit, net of expenses

 

(1,421,895

)

 

 

(1,848,554

)

Repayments on long-term debt, net

 

(5,040

)

 

 

16,527

 

Borrowings (repayments) on finance lease obligation

 

(585

)

 

 

(612

)

Debt issuance costs

 

 

 

 

(1,407

)

Exercise of stock options

 

4,626

 

 

 

853

 

Taxes paid on settlement of equity awards

 

(2,794

)

 

 

(2,433

)

Common stock repurchased

 

(21,168

)

 

 

(10,718

)

Net cash (used in) provided by financing activities

 

(203,941

)

 

 

25,565

 

Effect of exchange rate changes on cash and cash equivalents

 

(788

)

 

 

879

 

Increase in cash and cash equivalents

 

122,872

 

 

 

(613

)

Cash and cash equivalents at beginning of period

 

36,178

 

 

 

37,987

 

Cash and cash equivalents at period end

$

159,050

 

 

$

37,374

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

(in thousands, except percentages)

 

 

 

 

Non-GAAP Financial Information:

 

Quarter ended March 31,

 

2024

 

2023

Adjusted return on invested capital ratio (Adjusted ROIC), annualized(a)

 

12.1

%

 

 

14.6

%

 

 

 

 

Reconciliation of Net Income to Adjusted EBITDA:

 

 

 

Net income (GAAP)

$

12,806

 

 

$

21,221

 

Plus: Interest expense

 

2,001

 

 

 

5,715

 

Plus: Income taxes

 

5,146

 

 

 

8,692

 

Plus: Depreciation and amortization

 

6,742

 

 

 

7,074

 

EBITDA (non-GAAP)

 

26,695

 

 

 

42,702

 

Plus: Tax recovery

 

(515

)

 

 

 

Plus: Share-based compensation

 

2,388

 

 

 

2,954

 

Plus: Cyberattack restoration costs

 

93

 

 

 

 

Plus: Acquisition and divestiture costs

 

511

 

 

 

 

Plus: Restructuring costs

 

3,923

 

 

 

 

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

$

33,095

 

 

$

45,656

 

 

 

 

 

Invested Capital Calculations:

 

 

 

Equity – beginning of the quarter

$

953,601

 

 

$

862,386

 

Equity – end of the quarter

 

944,051

 

 

 

878,895

 

Plus: Share-based compensation, net

 

1,784

 

 

 

2,191

 

Plus: Cyberattack restoration costs, net

 

69

 

 

 

 

Plus: Divestiture costs

 

511

 

 

 

 

Plus: Restructuring, net

 

2,935

 

 

 

 

Plus: Tax recovery, net

 

(1,648

)

 

 

 

Average equity

 

950,652

 

 

 

871,736

 

Average funded debt (b)

 

153,131

 

 

 

398,318

 

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

$

1,103,783

 

 

$

1,270,054

 

 

 

 

 

(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 90 days in the prior-year quarter.

(b) Average funded debt is calculated as the average daily amounts outstanding on short-term and long-term interest-bearing debt.

 

Quarter ended March 31,

 

Nine months ended March 31,

 

2024

 

2023

 

2024

 

2023

GAAP operating cash flow

$

160,152

 

 

$

54,837

 

 

$

316,908

 

 

$

(20,508

)

Less: Capital Expenditures

 

(2,420

)

 

 

(2,286

)

 

 

(7,285

)

 

 

(6,549

)

Free cash flow (non-GAAP)

$

157,732

 

 

$

52,551

 

 

$

309,623

 

 

$

(27,057

)

 

 

 

 

 

 

 

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

Net Sales by Segment:

 

 

 

 

Quarter ended March 31,

 

 

 

2024

 

2023

 

% Change

Specialty Technology Solutions:

(in thousands)

 

 

Net sales, reported

$

483,704

 

 

 

565,652

 

 

(14.5

)%

Foreign exchange impact (a)

 

(620

)

 

 

 

 

 

Non-GAAP net sales

$

483,084

 

 

$

565,652

 

 

(14.6

)%

 

 

 

 

 

 

Modern Communications & Cloud:

 

 

 

 

 

Net sales, reported

$

268,895

 

 

$

319,867

 

 

(15.9

)%

Foreign exchange impact (a)

 

(3,177

)

 

 

 

 

 

Less: Divestitures

 

 

 

 

(2,530

)

 

 

Non-GAAP net sales

$

265,718

 

 

$

317,337

 

 

(16.3

)%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, reported

$

752,599

 

 

$

885,519

 

 

(15.0

)%

Foreign exchange impact (a)

 

(3,797

)

 

 

 

 

 

Less: Divestitures

 

 

 

 

(2,530

)

 

 

Non-GAAP net sales

$

748,802

 

 

$

882,989

 

 

(15.2

)%

 

 

 

 

 

 

(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended March 31, 2024 into U.S. dollars using the average foreign exchange rates for the quarter ended March 31, 2023.

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

 

 

Net Sales by Geography:

 

 

 

 

Quarter ended March 31,

 

 

 

2024

 

2023

 

% Change

United States and Canada:

(in thousands)

 

 

Net sales, as reported

$

671,246

 

 

$

808,797

 

 

(17.0

)%

 

 

 

 

 

 

International:

 

 

 

 

 

Net sales, reported

$

81,353

 

 

$

76,722

 

 

6.0

%

Foreign exchange impact(a)

 

(3,797

)

 

 

 

 

 

Less: Divestitures

 

 

 

 

(2,530

)

 

 

Non-GAAP net sales

$

77,556

 

 

$

74,192

 

 

4.5

%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, reported

$

752,599

 

 

$

885,519

 

 

(15.0

)%

Foreign exchange impact(a)

 

(3,797

)

 

 

 

 

 

Less: Divestitures

 

 

 

 

(2,530

)

 

 

Non-GAAP net sales

$

748,802

 

 

$

882,989

 

 

(15.2

)%

 

 

 

 

 

 

(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended March 31, 2024 into U.S. dollars using the average foreign exchange rates for the quarter ended March 31, 2023.

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended March 31, 2024

 

 

GAAP Measure

 

Intangible amortization expense

 

Acquisition & divestiture costs

 

Restructuring costs

 

Tax recovery

 

Cyberattack restoration costs

 

Non-GAAP measure

 

(in thousands, except per share data)

SG&A expenses

 

$66,574

 

$—

 

$(511)

 

$(3,923)

 

$515

 

$(93)

 

$62,562

Operating income

 

17,542

 

3,752

 

511

 

3,923

 

(515)

 

93

 

25,306

Pre-tax income

 

17,952

 

3,752

 

511

 

3,923

 

(515)

 

93

 

25,716

Net income

 

12,806

 

2,788

 

511

 

2,935

 

(1,648)

 

69

 

17,461

Diluted EPS

 

$0.50

 

$0.11

 

$0.02

 

$0.12

 

$(0.06)

 

$—

 

$0.69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended March 31, 2023

 

 

GAAP Measure

 

Intangible amortization expense

 

Acquisition & divestiture costs

 

Restructuring costs

 

Tax recovery

 

Cyberattack restoration costs

 

Non-GAAP measure

 

(in thousands, except per share data)

SG&A expense

 

$70,669

 

$—

 

$—

 

$—

 

$—

 

$—

 

$70,669

Operating income

 

34,279

 

4,170

 

 

 

 

 

38,449

Pre-tax income

 

29,913

 

4,170

 

 

 

 

 

34,083

Net income

 

21,221

 

3,109

 

 

 

 

 

24,330

Diluted EPS

 

$0.83

 

$0.12

 

$—

 

$—

 

$—

 

$—

 

$0.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Reflects gain on the sale of the UK-based intY business. This transaction resulted in a capital loss for tax purposes. ScanSource did not record a tax provision on the capital loss since there were no offsetting capital gains.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual Financial Outlook for Fiscal Year 2024:

 

FY 24 Outlook

GAAP operating income

At least $96 million

Intangible amortization

$16 million

Depreciation expense

$12 million

Share-based compensation expense

$10 million

Interest income and income (expense), net

$6 million

Adjusted EBITDA (non-GAAP)

At least $140 million

 

 

GAAP operating cash flow

At least $285 million

Less: Capital expenditures

$10 million

Free cash flow (non-GAAP)

At least $275 million

 

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