ScanSource Reports Third Quarter Results Solid Performance Led by North America Business Wire GREENVILLE, S.C. -- April 25, 2013 ScanSource, Inc. (NASDAQ:SCSC), the leading international value-added distributor of specialty technology products, today announced complete financial results for its third quarter ended March 31, 2013. Quarter ended March 31, 2013: Net sales $683.0 million Net income $14.0 million Diluted EPS $0.50 per share “Our North American business units, led by our Communications unit, drove solid quarterly results,” said Mike Baur, CEO, ScanSource, Inc. “However, our International operating performance was disappointing. As a result, we've taken actions to restructure our overall European business for profitable growth. We are lowering our annualized costs by $3.1 million by reducing headcount in our Communications business in Europe and by moving certain back office functions from Brussels to ScanSource headquarters in Greenville, South Carolina.” For the quarter ended March 31, 2013, net sales decreased 3.5% to $683.0 million, compared with $707.9 million for the quarter ended March 31, 2012. Excluding the translation impact of foreign currencies, net sales decreased 3.0% year-over-year. Operating income decreased to $20.8 million from $21.5 million in the comparable prior year quarter. The effective tax rate increased to 34.0% in the current quarter from 32.3% in the prior year quarter. Net income for the quarter ended March 31, 2013 was $14.0 million, or $0.50 per diluted share, compared with net income of $14.8 million, or $0.53 per diluted share, for the prior year quarter. Selling, general and administrative expenses for the quarter ended March 31, 2013 included $1.2 million pre-tax ($0.8 million after tax, or $0.03 per diluted share) in restructuring costs associated with the Company's business in Europe. The restructuring included the elimination of positions to set the cost structure in line with current operations. Forecast for Next Quarter The Company announced its current expectations for the fourth quarter of fiscal 2013. ScanSource expects that net sales for the quarter ending June 30, 2013 could range from $715 million to $735 million, and diluted earnings per share could be in the range of $0.58 to $0.60 per share. Webcast Details ScanSource will present additional information about its financial results and outlook on a conference call today, April 25, 2013, at 5:00 p.m. (ET). A webcast of the call will be available for all interested parties and can be accessed at www.scansourceinc.com (Investor Relations section). The webcast will be available for replay for 60 days. Safe Harbor Statement This press release contains comments that are “forward-looking” statements that involve risks and uncertainties; these statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Any number of important factors could cause actual results to differ materially from anticipated or forecasted results, including, but not limited to, expanded operations in emerging markets, such as Brazil, that expose us to greater political and economic volatility than our operations in established markets; additional costs and delays in connection with our new ERP system and associated litigation; costs and efficiencies expected to be associated with the Company's pan-European strategy and macroeconomic circumstances that could impact the strategy and business independent of the new structure created by the Company; our ability to forecast volatility in earnings resulting from the quarterly revaluation of the Company's earnout obligation to the sellers of CDC; and macroeconomic circumstances that could impact our business, such as currency fluctuations, credit market conditions, and an economic downturn. For more information concerning factors that could cause actual results to differ from anticipated results, see the Company's annual report on Form 10-K for the year ended June 30, 2012 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 non-GAAP measures. Management uses return on invested capital (“ROIC”), a non-GAAP measure, as a performance measurement because management believes that this metric best balances the Company's operating results with its asset and liability management. The Company's Board of Directors uses ROIC in evaluating management performance and setting management compensation. The Company also discloses the percentage change in net sales excluding the impact of foreign currency exchange rates to better assess the changes from prior periods. Analysis of results and outlook on a non-GAAP basis should be used as a complement to, and in conjunction with, data presented in accordance with GAAP. A reconciliation of the Company's non-GAAP financial information to GAAP is set forth in the following Supplemental Information table. About ScanSource, Inc. ScanSource, Inc. (NASDAQ: SCSC) is the leading international distributor of specialty technology products, operating from dedicated business units in North America, Latin America and Europe. ScanSource POS & Barcode delivers AIDC (automatic identification and data capture) and POS (point-of-sale) solutions; Catalyst Telecom and ScanSource Communications provide voice, video, data and converged communications equipment; ScanSource Security offers physical security solutions; and ScanSource Services Group delivers value-added support programs and services. Founded in 1992, the company ranks #760 on the Fortune 1000. For more information, call the toll-free sales telephone number at 800.944.2432 or visit www.scansourceinc.com. ScanSource, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) (in thousands) March 31, 2013 June 30, 2012* Assets Current assets: Cash and cash equivalents $ 93,905 $ 29,173 Accounts receivable, less allowance 431,264 470,808 of $30,996 at March 31, 2013 $27,349 at June 30, 2012 Inventories 407,093 475,479 Prepaid expenses and other current 42,041 41,846 assets Deferred income taxes 14,687 14,624 Total current assets 988,990 1,031,930 Property and equipment, net 49,008 48,785 Goodwill 53,743 53,885 Other non-current assets, including 66,698 67,206 identifiable intangible assets Total assets $ 1,158,439 $ 1,201,806 Liabilities and Shareholders' Equity Current liabilities: Short-term borrowings $ — $ 4,268 Accounts payable 325,658 419,683 Accrued expenses and other current 68,169 67,776 liabilities Current portion of contingent 4,524 4,976 consideration Income taxes payable 2,699 1,698 Total current liabilities 401,050 498,401 Deferred income taxes 2,879 — Long-term debt 5,429 5,429 Long-term portion of contingent 8,797 11,677 consideration Other long-term liabilities 30,372 33,988 Total liabilities 448,527 549,495 Shareholders' equity: Common stock 146,975 139,557 Retained earnings 582,421 534,445 Accumulated other comprehensive (19,484 ) (21,691 ) income (loss) Total shareholders' equity 709,912 652,311 Total liabilities and shareholders' $ 1,158,439 $ 1,201,806 equity * Derived from audited financial statements. ScanSource, Inc. and Subsidiaries Condensed Consolidated Income Statements (Unaudited) (in thousands, except per share data) Quarter ended Nine months ended March 31, March 31, 2013 2012 2013 2012 Net sales $ 682,965 $ 707,883 $ 2,164,286 $ 2,260,827 Cost of goods 614,133 638,615 1,947,063 2,032,630 sold Gross profit 68,832 69,268 217,223 228,197 Operating expenses: Selling, general and 47,937 46,711 144,392 141,753 administrative expenses Change in fair value of 100 1,072 1,396 1,244 contingent consideration Operating income 20,795 21,485 71,435 85,200 Other expense (income): Interest expense 102 254 356 1,490 Interest income (483 ) (780 ) (1,648 ) (2,233 ) Other, net (4 ) 206 34 3,363 Income before 21,180 21,805 72,693 82,580 income taxes Provision for 7,202 7,049 24,716 28,077 income taxes Net income $ 13,978 $ 14,756 $ 47,977 $ 54,503 Per share data: Weighted-average shares 27,847 27,489 27,725 27,290 outstanding, basic Net income per common share, $ 0.50 $ 0.54 $ 1.73 $ 2.00 basic Weighted-average shares 28,024 27,926 27,960 27,709 outstanding, diluted Net income per common share, $ 0.50 $ 0.53 $ 1.72 $ 1.97 diluted ScanSource, Inc. and Subsidiaries Supplementary Information (Unaudited) (in thousands) Net Sales by Geographic Segment: Non-GAAP Quarter ended March 31, % Change 2013 2012 % Change Excluding FX^(a) North American (U.S. and $ 508,394 $ 529,845 (4.0 )% (4.0 )% Canada) International 174,571 178,038 (1.9 )% 0.1 % Consolidated $ 682,965 $ 707,883 (3.5 )% (3.0 )% Non-GAAP Nine months ended March 31, % Change 2013 2012 % Change Excluding FX^(a) North American (U.S. and $ 1,602,193 $ 1,666,240 (3.8 )% (3.8 )% Canada) International 562,093 594,587 (5.5 )% 0.9 % Consolidated $ 2,164,286 $ 2,260,827 (4.3 )% (2.6 )% Notes: (a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter and nine months ended March 31, 2013 into U.S. dollars using the weighted average foreign exchange rates for the quarter and nine months ended March 31, 2013, respectively. International net sales excluding the translation impact of foreign currencies for the quarter and nine months ended March 31, 2013, as adjusted, totaled $178.1 million and $599.8 million, respectively. ScanSource, Inc. and Subsidiaries Supplementary Information (Unaudited) (in thousands, except per share data) Non-GAAP Financial Information: Quarter ended March 31, 2013 2012 Return on invested capital (ROIC), 13.3% 13.5% annualized ^(a) Reconciliation of EBITDA to Net Income Net income (GAAP) $ 13,978 $ 14,756 Plus: Income taxes 7,202 7,049 Plus: Interest expense 102 254 Plus: Depreciation and 2,274 2,754 amortization EBITDA (numerator for $ 23,556 $ 24,813 ROIC) Invested Capital Calculation Equity - beginning of $ 696,960 $ 616,103 quarter Equity - end of quarter 709,912 642,450 Average equity 703,436 629,277 Average funded debt ^(b) 15,675 111,247 Invested capital $ 719,111 $ 740,524 (denominator for ROIC) Notes: (a) Calculated as net income plus interest expense, income taxes, depreciation and amortization (EBITDA), annualized and divided by invested capital for the period. (b) Average funded debt is calculated as the daily average amounts outstanding on our short-term and long-term interest-bearing debt. Contact: ScanSource, Inc. Charles A. Mathis, 864-286-4975 Chief Financial Officer or Mary M. Gentry, 864-286-4892 Treasurer and Director, Investor Relations
ScanSource Reports Third Quarter Results
Press spacebar to pause and continue. Press esc to stop.