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ScanSource Reports Fourth Quarter and Full-Year Results

GREENVILLE, S.C.--(BUSINESS WIRE)--

Strategic Initiatives Underway to Enhance Value to Sales Channel and Suppliers

ScanSource, Inc. (SCSC), a leading provider of technology products and solutions, today announced financial results for the fourth quarter and fiscal year ended June 30, 2019.

 

 

Quarter ended June 30,

 

Fiscal year ended June 30,

 

2019

 

2018

 

Change

 

2019

 

2018

 

Change

 

(in millions, except per share data)

 

(in millions, except per share data)

Net sales

$

960.8

 

 

$

993.9

 

 

(3

)%

 

$

3,873

 

 

$

3,846

 

 

1

%

Operating income

20.0

 

 

19.8

 

 

1

%

 

90.0

 

 

67.6

 

 

33

%

Non-GAAP operating income(1)

29.4

 

 

30.8

 

 

(4

)%

 

128.5

 

 

124.0

 

 

4

%

GAAP net income

11.6

 

 

10.4

 

 

11

%

 

57.6

 

 

33.2

 

 

74

%

Non-GAAP net income(1)

18.3

 

 

19.9

 

 

(8

)%

 

86.4

 

 

79.8

 

 

8

%

GAAP diluted EPS

$

0.45

 

 

$

0.40

 

 

13

%

 

$

2.24

 

 

$

1.29

 

 

74

%

Non-GAAP diluted EPS(1)

$

0.71

 

 

$

0.77

 

 

(8

)%

 

$

3.36

 

 

$

3.11

 

 

8

%

 

 

 

 

 

 

 

 

 

 

 

 

(1) Non-GAAP results exclude amortization of intangible assets related to acquisitions, change in fair value of contingent consideration and other non-GAAP items. A reconciliation of non-GAAP financial information to GAAP financial information is presented in the Supplementary Information (Unaudited) below.

 

“While we did not finish our fiscal year as strongly as we started, we delivered record net sales of $3.9 billion for fiscal year 2019,” said Mike Baur, Chairman and CEO, ScanSource, Inc. “In North America, we are executing on our strategic initiatives to offer technology solutions, services and recurring revenue as One ScanSource. Earlier today, we announced plans to divest of certain businesses outside of the United States, Canada and Brazil to align our investments with higher-growth, higher-margin businesses.”

Quarterly Results

Net sales for the fourth quarter of fiscal year 2019 decreased 3% year-over-year to $960.8 million. Organic sales, which exclude the impact of foreign currency translation and recent acquisitions, decreased 2% year-over-year, primarily in the Worldwide Barcode, Security and Networking segment. Operating income increased 1% to $20.0 million year-over-year. Non-GAAP operating income decreased 4% to $29.4 million, primarily from lower sales volumes.

On a GAAP basis, net income for the fourth quarter of fiscal year 2019 totaled $11.6 million, or $0.45 per diluted share, compared with net income of $10.4 million, or $0.40 per diluted share, for the prior-year quarter. Non-GAAP net income totaled $18.3 million, or $0.71 per diluted share, compared to $19.9 million, or $0.77 per diluted share, for the prior-year quarter.

Full-Year Results

For fiscal year 2019, net sales increased 1% to $3.9 billion. Organic sales for fiscal year 2019 increased 2% year-over-year, driven by 9% sales growth in the Worldwide Communications and Services segment. Operating income increased 33% to $90.0 million, largely from decreased expense for the change in fair value of contingent consideration. Non-GAAP operating income increased 4% to $128.5 million, driven by higher gross profit and higher margins.

On a GAAP basis, net income for fiscal year 2019 totaled $57.6 million, or $2.24 per diluted share, compared to net income of $33.2 million, or $1.29 per diluted share, for the prior-year. Non-GAAP net income increased 8% to $86.4 million, or $3.36 per diluted share, compared to $79.8 million, or $3.11 per diluted share, for the prior-year.

Acquisition of intY

On July 1, 2019, ScanSource announced the acquisition of intY and its award-winning CASCADE cloud services distribution platform. As an additional element of ScanSource’s cloud and digital strategy, intY’s CASCADE solution provides ScanSource channel partners with another route-to-market to enable key strategic cloud services, including Microsoft, Symantec, and Acronis. Founded in 1997 and based in Bristol, UK, intY has 65 employees. The acquisition closed on July 1, 2019, and the terms of the agreement were not disclosed.

Plan to Divest Certain Businesses Outside of US, Canada and Brazil

Earlier today, ScanSource announced plans to divest certain businesses outside of the United States, Canada and Brazil (the “Planned Divestitures”). ScanSource will continue to operate and invest in its digital distribution business in these geographies, including its recent acquisitions of intY, Canpango and Intelisys Global. These plans are part of a strategic portfolio repositioning to align investments with higher-growth, higher-margin businesses. The Planned Divestitures, comprised of physical product businesses in Europe, UK, Mexico, Colombia, Chile, Peru and the Miami-based export operations, had net sales of $623 million for fiscal year 2019 and at June 30, 2019 had working capital of $205 million.

Forecast for Next Quarter

ScanSource is providing the forecast for next quarter, excluding the Planned Divestitures. For the first quarter of fiscal year 2020, ScanSource expects GAAP net sales to range from $970 million to $1.03 billion and non-GAAP net sales excluding the Planned Divestitures to range from $830 million to $890 million. For the first quarter of fiscal year 2020, ScanSource expects diluted earnings per share to range from $0.47 to $0.52 and non-GAAP diluted earnings per share to range from $0.70 to $0.75. Non-GAAP diluted earnings per share exclude operating results for the Planned Divestitures, amortization of intangible assets related to acquisitions and change in fair value of contingent consideration.

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 and outlook in a conference call today, August 20, 2019, at 5:00 p.m. ET. A webcast of the call will be available for all interested parties and can be assessed 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 the forecast of sales and earnings per share for next quarter and plans to divest certain businesses outside of the US, Canada and Brazil, that 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, changes in interest and exchange rates and regulatory regimes impacting the Company's international operations, the impact of tax reform laws, the failure of acquisitions to meet the Company's expectations, the failure to manage and implement the Company's organic growth strategy, credit risks involving the Company's larger customers and vendors, termination of the Company's relationship with key vendors or a significant modification of the terms under which it operates with a key vendor, the decline in demand for the products and services that the Company provides, reduced prices for the products and services that the Company provides due both to competitor and customer action, the Company's ability to find a buyer for the Planned Divestitures on acceptable terms or to otherwise dispose of the operations, 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, 2018, 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: 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.

Non-GAAP operating income, non-GAAP pre-tax income, non-GAAP net income and non-GAAP diluted earnings per share: To evaluate current period performance on a more consistent basis with prior periods, the Company discloses 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, change in the fair value of contingent consideration, acquisition costs, restructuring costs and other non-GAAP adjustments. Non-GAAP operating income, non-GAAP pre-tax income, non-GAAP net income, and non-GAAP diluted EPS measures are useful in assessing and understanding the Company's operating performance, especially when comparing results with previous periods or forecasting performance for future periods.

Return on invested capital ("ROIC"): Management uses ROIC as a performance measurement to assess efficiency in allocating capital under the Company's control to generate returns. Management believes this metric balances the Company's operating results with asset and liability management, is not impacted by capitalization decisions and correlates with shareholder value creation. In addition, it is easily computed, communicated and understood. ROIC also provides management a measure of the Company's profitability on a basis more comparable to historical or future periods.

ROIC assists management in comparing the Company's performance over various reporting periods on a consistent basis because it removes from operating results the impact of items that do not reflect core operating performance. ROIC is calculated as adjusted EBITDA over invested capital. Adjusted earnings before interest expense, income taxes, depreciation and amortization ("Adjusted EBITDA") excludes the change in fair value of contingent consideration and acquisition costs, in addition to other non-GAAP adjustments. 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. (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 2019 Best Places to Work in South Carolina and on FORTUNE magazine’s 2019 List of World’s Most Admired Companies. ScanSource ranks #643 on the Fortune 1000. For more information, visit www.scansource.com.

 

ScanSource, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands)

 

 

June 30, 2019

 

June 30, 2018

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

23,818

 

 

$

25,530

 

Accounts receivable, less allowance of $38,849 at June 30, 2019 and $45,561 at June 30, 2018

 

654,983

 

 

646,086

 

Inventories

 

697,343

 

 

595,948

 

Prepaid expenses and other current assets

 

101,171

 

 

94,598

 

Total current assets

 

1,477,315

 

 

1,362,162

 

Property and equipment, net

 

63,363

 

 

73,042

 

Goodwill

 

319,538

 

 

298,174

 

Identifiable intangible assets, net

 

127,939

 

 

136,806

 

Deferred income taxes

 

24,724

 

 

22,199

 

Other non-current assets

 

54,382

 

 

52,912

 

Total assets

 

$

2,067,261

 

 

$

1,945,295

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

558,101

 

 

$

562,564

 

Accrued expenses and other current liabilities

 

91,407

 

 

90,873

 

Current portion of contingent consideration

 

38,393

 

 

42,975

 

Income taxes payable

 

4,310

 

 

13,348

 

Short-term borrowings

 

4,590

 

 

 

Current portion of long-term debt

 

4,085

 

 

551

 

Total current liabilities

 

700,886

 

 

710,311

 

Deferred income taxes

 

1,395

 

 

1,769

 

Long-term debt, net of current portion

 

151,014

 

 

4,878

 

Borrowings under revolving credit facility

 

200,817

 

 

244,000

 

Long-term portion of contingent consideration

 

39,532

 

 

65,258

 

Other long-term liabilities

 

59,488

 

 

52,703

 

Total liabilities

 

1,153,132

 

 

1,078,919

 

Shareholders' equity:

 

 

 

 

Common stock

 

64,287

 

 

68,220

 

Retained earnings

 

939,930

 

 

882,333

 

Accumulated other comprehensive income (loss)

 

(90,088

)

 

(84,177

)

Total shareholders' equity

 

914,129

 

 

866,376

 

Total liabilities and shareholders' equity

 

$

2,067,261

 

 

$

1,945,295

 

 
 

ScanSource, Inc. and Subsidiaries

Condensed Consolidated Income Statements (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

Quarter ended June 30,

 

Fiscal year ended June 30,

 

 

2019

 

2018

 

2019

 

2018

Net sales

 

$

960,833

 

 

$

993,852

 

 

$

3,873,111

 

 

$

3,846,260

 

Cost of goods sold

 

850,969

 

 

880,503

 

 

3,420,539

 

 

3,410,135

 

Gross profit

 

109,864

 

 

113,349

 

 

452,572

 

 

436,125

 

Selling, general and administrative expenses

 

77,952

 

 

76,834

 

 

314,521

 

 

297,475

 

Depreciation expense

 

3,201

 

 

3,252

 

 

13,155

 

 

13,311

 

Intangible amortization expense

 

5,024

 

 

5,056

 

 

19,732

 

 

20,657

 

Change in fair value of contingent consideration

 

3,665

 

 

8,448

 

 

15,200

 

 

37,043

 

Operating income

 

20,022

 

 

19,759

 

 

89,964

 

 

67,639

 

Interest expense

 

3,966

 

 

2,494

 

 

13,382

 

 

9,149

 

Interest income

 

(447

)

 

(1,365

)

 

(1,843

)

 

(3,713

)

Other expense, net

 

265

 

 

587

 

 

517

 

 

1,278

 

Income before income taxes

 

16,238

 

 

18,043

 

 

77,908

 

 

60,925

 

Provision for income taxes

 

4,660

 

 

7,655

 

 

20,311

 

 

27,772

 

Net income

 

$

11,578

 

 

$

10,388

 

 

$

57,597

 

 

$

33,153

 

Per share data:

 

 

 

 

 

 

 

 

Net income per common share, basic

 

$

0.45

 

 

$

0.41

 

 

$

2.25

 

 

$

1.30

 

Weighted-average shares outstanding, basic

 

25,627

 

 

25,577

 

 

25,642

 

 

25,522

 

 

 

 

 

 

 

 

 

 

Net income per common share, diluted

 

$

0.45

 

 

$

0.40

 

 

$

2.24

 

 

$

1.29

 

Weighted-average shares outstanding, diluted

 

25,691

 

 

25,675

 

 

25,734

 

 

25,624

 

 
 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

Net Sales by Segment:

 

 

 

 

Quarter ended June 30,

 

 

 

2019

 

2018

 

% Change

Worldwide Barcode, Networking & Security:

(in thousands)

 

 

Net sales, as reported

$

636,172

 

 

$

684,552

 

 

(7.1

)%

Foreign exchange impact (a)

7,199

 

 

 

 

 

Net sales, constant currency (non-GAAP)

643,371

 

 

684,552

 

 

(6.0

)%

Less: Acquisitions

 

 

 

 

 

Net sales, constant currency excluding acquisitions (non-GAAP)

$

643,371

 

 

$

684,552

 

 

(6.0

)%

 

 

 

 

 

 

Worldwide Communications & Services:

 

 

 

 

 

Net sales, as reported

$

324,661

 

 

$

309,300

 

 

5.0

%

Foreign exchange impact (a)

7,489

 

 

 

 

 

Net sales, constant currency (non-GAAP)

332,150

 

 

309,300

 

 

7.4

%

Less: Acquisitions

(2,042

)

 

 

 

 

Net sales, constant currency excluding acquisitions (non-GAAP)

$

330,108

 

 

$

309,300

 

 

6.7

%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, as reported

$

960,833

 

 

$

993,852

 

 

(3.3

)%

Foreign exchange impact (a)

14,688

 

 

 

 

 

Net sales, constant currency (non-GAAP)

975,521

 

 

993,852

 

 

(1.8

)%

Less: Acquisitions

(2,042

)

 

 

 

 

Net sales, constant currency excluding acquisitions (non-GAAP)

$

973,479

 

 

$

993,852

 

 

(2.0

)%

 

 

 

 

 

 

(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, 2019 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2018.

 

 

 

 

 

 

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

Net Sales by Segment:

 

 

 

 

Fiscal year ended June 30,

 

 

Worldwide Barcode, Networking & Security:

2019

 

2018

 

% Change

 

(in thousands)

 

 

Net sales, as reported

$

2,589,837

 

 

$

2,628,988

 

 

(1.5

)%

Foreign exchange impact (a)

33,318

 

 

 

 

 

Net sales, constant currency

2,623,155

 

 

2,628,988

 

 

(0.2

)%

Less: Acquisitions

(23,465

)

 

(14,553

)

 

 

Net sales, constant currency excluding acquisitions

$

2,599,690

 

 

$

2,614,435

 

 

(0.6

)%

 

 

 

 

 

 

Worldwide Communications & Services:

 

 

 

 

 

Net sales, as reported

$

1,283,274

 

 

$

1,217,272

 

 

5.4

%

Foreign exchange impact (a)

45,655

 

 

 

 

 

Net sales, constant currency

1,328,929

 

 

1,217,272

 

 

9.2

%

Less: Acquisitions

(7,261

)

 

 

 

 

Net sales, constant currency excluding acquisitions

$

1,321,668

 

 

$

1,217,272

 

 

8.6

%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, as reported

$

3,873,111

 

 

$

3,846,260

 

 

0.7

%

Foreign exchange impact (a)

78,973

 

 

 

 

 

Net sales, constant currency

3,952,084

 

 

3,846,260

 

 

2.8

%

Less: Acquisitions

(30,726

)

 

(14,553

)

 

 

Net sales, constant currency excluding acquisitions

$

3,921,358

 

 

$

3,831,707

 

 

2.3

%

 

 

 

 

 

 

(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 year ended June 30, 2019 into U.S. dollars using the average foreign exchange rates for the year ended June 30, 2018.

 
 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

 

 

Net Sales by Geography:

 

 

 

 

Quarter ended June 30,

 

 

 

2019

 

2018

 

% Change

United States and Canada:

(in thousands)

 

 

Net sales, as reported

$

728,213

 

 

$

751,678

 

 

(3.1

)%

Less: Acquisitions

(2,042

)

 

 

 

 

Net sales, excluding acquisitions (non-GAAP)

$

726,171

 

 

$

751,678

 

 

(3.4

)%

 

 

 

 

 

 

International:

 

 

 

 

 

Net sales, as reported

$

232,620

 

 

$

242,174

 

 

(3.9

)%

Foreign exchange impact (a)

14,688

 

 

 

 

 

Net sales, constant currency (non-GAAP)

247,308

 

 

242,174

 

 

2.1

%

Less: Acquisitions

 

 

 

 

 

Net sales, constant currency excluding acquisitions (non-GAAP)

$

247,308

 

 

$

242,174

 

 

2.1

%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, as reported

$

960,833

 

 

$

993,852

 

 

(3.3

)%

Foreign exchange impact (a)

14,688

 

 

 

 

 

Net sales, constant currency (non-GAAP)

975,521

 

 

993,852

 

 

(1.8

)%

Less: Acquisitions

(2,042

)

 

 

 

 

Net sales, constant currency excluding acquisitions (non-GAAP)

$

973,479

 

 

$

993,852

 

 

(2.0

)%

 

 

 

 

 

 

(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, 2019 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2018.

 

 

 

 

 

 

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

 

 

Net Sales by Geography:

 

 

 

 

Fiscal year ended June 30,

 

 

 

2019

 

2018

 

% Change

United States and Canada:

(in thousands)

 

 

Net sales, as reported

$

2,917,780

 

 

$

2,847,197

 

 

2.5

%

Less: Acquisitions

(30,726

)

 

(14,553

)

 

 

Net sales, excluding acquisitions

$

2,887,054

 

 

$

2,832,644

 

 

1.9

%

 

 

 

 

 

 

International:

 

 

 

 

 

Net sales, as reported

$

955,331

 

 

$

999,063

 

 

(4.4

)%

Foreign exchange impact (a)

78,973

 

 

 

 

 

Net sales, constant currency

1,034,304

 

 

999,063

 

 

3.5

%

Less: Acquisitions

 

 

 

 

 

Net sales, constant currency excluding acquisitions

$

1,034,304

 

 

$

999,063

 

 

3.5

%

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

Net sales, as reported

$

3,873,111

 

 

$

3,846,260

 

 

0.7

%

Foreign exchange impact (a)

78,973

 

 

 

 

 

Net sales, constant currency

3,952,084

 

 

3,846,260

 

 

2.8

%

Less: Acquisitions

(30,726

)

 

(14,553

)

 

 

Net sales, constant currency excluding acquisitions

$

3,921,358

 

 

$

3,831,707

 

 

2.3

%

 

 

 

 

 

 

(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 year ended June 30, 2019 into U.S. dollars using the average foreign exchange rates for the year ended June 30, 2018.

 
 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

Non-GAAP Financial Information:

 

 

 

Quarter ended June 30, 2019

 

Operating
income

 

Pre-tax
income

 

Net
income

 

Diluted
EPS

GAAP measure

$

20,022

 

 

$

16,238

 

 

$

11,578

 

 

$

0.45

 

Adjustments:

 

 

 

 

 

 

 

Amortization of intangible assets

5,024

 

 

5,024

 

 

3,802

 

 

0.15

 

Change in fair value of contingent consideration

3,665

 

 

3,665

 

 

2,780

 

 

0.11

 

Acquisition costs (a)

230

 

 

230

 

 

230

 

 

0.01

 

Restructuring costs

483

 

 

483

 

 

342

 

 

0.01

 

Tax recovery, net

 

 

 

 

(387

)

 

(0.02

)

Non-GAAP measure

$

29,424

 

 

$

25,640

 

 

$

18,345

 

 

$

0.71

 

 

 

 

 

 

 

 

 

 

Quarter ended June 30, 2018

 

Operating
income

 

Pre-tax
income

 

Net
income

 

Diluted
EPS

GAAP measure

$

19,759

 

 

$

18,043

 

 

$

10,388

 

 

$

0.40

 

Adjustments:

 

 

 

 

 

 

 

Amortization of intangible assets

5,056

 

 

5,056

 

 

3,521

 

 

0.14

 

Change in fair value of contingent consideration

8,448

 

 

8,448

 

 

5,679

 

 

0.22

 

Tax recovery and related interest income

(2,466

)

 

(3,119

)

 

(2,058

)

 

(0.08

)

Tax reform charges

 

 

 

 

2,345

 

 

0.09

 

Non-GAAP measure

$

30,797

 

 

$

28,428

 

 

$

19,875

 

 

$

0.77

 

 

 

 

 

 

 

 

 

(a) Acquisition costs are generally non-deductible for tax purposes.

 
 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

Non-GAAP Financial Information:

 

 

 

Fiscal year ended June 30, 2019

 

Operating
income

 

Pre-tax
income

 

Net
income

 

Diluted
EPS

GAAP measure

$

89,964

 

 

$

77,908

 

 

$

57,597

 

 

$

2.24

 

Adjustments:

 

 

 

 

 

 

 

Amortization of intangible assets

19,732

 

 

19,732

 

 

14,956

 

 

0.58

 

Change in fair value of contingent consideration

15,200

 

 

15,200

 

 

11,294

 

 

0.44

 

Acquisition costs (a)

1,218

 

 

1,218

 

 

1,218

 

 

0.05

 

Restructuring costs

2,402

 

 

2,402

 

 

1,740

 

 

0.07

 

Tax recovery, net

 

 

 

 

(387

)

 

(0.02

)

Non-GAAP measure

$

128,516

 

 

$

116,460

 

 

$

86,418

 

 

$

3.36

 

 

 

 

 

 

 

 

 

 

Fiscal year ended June 30, 2018

 

Operating
income

 

Pre-tax
income

 

Net
income

 

Diluted
EPS

GAAP measure

$

67,639

 

 

$

60,925

 

 

$

33,153

 

 

$

1.29

 

Adjustments:

 

 

 

 

 

 

 

Amortization of intangible assets

20,657

 

 

20,657

 

 

14,021

 

 

0.55

 

Change in fair value of contingent consideration

37,043

 

 

37,043

 

 

24,697

 

 

0.96

 

Acquisition costs (a)

172

 

 

172

 

 

172

 

 

0.01

 

Legal settlement, net of attorney fees

952

 

 

952

 

 

771

 

 

0.03

 

Tax recovery and related interest income

(2,466

)

 

(3,119

)

 

(2,058

)

 

(0.08

)

Tax reform charges

 

 

 

 

9,034

 

 

0.35

 

Non-GAAP measure

$

123,997

 

 

$

116,630

 

 

$

79,790

 

 

$

3.11

 

(a) Acquisition costs are generally non-deductible for tax purposes.

 
 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

(in thousands, except percentages)

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Information:

 

 

 

 

 

Quarter ended June 30,

 

Fiscal year ended June 30,

 

 

2019

 

2018

 

2019

 

2018

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

 

10.6

%

 

12.5

%

 

12.0

%

 

12.5

%

 

 

 

 

 

 

 

 

 

Reconciliation of Net Income to Adjusted EBITDA

 

 

 

 

 

 

 

 

Net income (GAAP)

 

$

11,578

 

 

$

10,388

 

 

$

57,597

 

 

$

33,153

 

Plus: Interest expense

 

3,966

 

 

2,494

 

 

13,382

 

 

9,149

 

Plus: Income taxes

 

4,660

 

 

7,655

 

 

20,311

 

 

27,772

 

Plus: Depreciation and amortization (b)

 

9,053

 

 

9,291

 

 

36,619

 

 

37,495

 

EBITDA (non-GAAP)

 

29,257

 

 

29,828

 

 

127,909

 

 

107,569

 

Adjustments:

 

 

 

 

 

 

 

 

Change in fair value of contingent consideration

 

3,665

 

 

8,448

 

 

15,200

 

 

37,043

 

Acquisition costs

 

230

 

 

 

 

1,218

 

 

172

 

Restructuring costs (b)

 

483

 

 

 

 

2,267

 

 

 

Tax recovery and related interest income

 

 

 

(3,119

)

 

 

 

(3,119

)

Legal settlement, net of attorney fees

 

 

 

 

 

 

 

952

 

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

 

$

33,635

 

 

$

35,157

 

 

$

146,594

 

 

$

142,617

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Invested Capital Calculation

 

 

 

 

 

 

 

 

Equity - beginning of the quarter

 

$

911,063

 

 

$

877,796

 

 

$

866,376

 

 

$

837,145

 

Equity - end of the quarter

 

914,129

 

 

866,376

 

 

914,129

 

 

866,376

 

Adjustments:

 

 

 

 

 

 

 

 

Change in fair value of contingent consideration, net of tax

 

2,780

 

 

5,679

 

 

11,294

 

 

24,697

 

Acquisition costs

 

230

 

 

 

 

1,218

 

 

172

 

Restructuring costs, net of tax (b)

 

342

 

 

 

 

1,631

 

 

 

Tax recovery and related interest income, net of tax

 

(387

)

 

(2,058

)

 

(387

)

 

(2,058

)

Tax reform charges

 

 

 

2,345

 

 

 

 

9,034

 

Legal settlement, net of attorney fees, net of tax

 

 

 

 

 

 

 

771

 

Average equity

 

914,079

 

 

875,069

 

 

897,131

 

 

868,069

 

Average funded debt (c)

 

355,932

 

 

253,393

 

 

329,473

 

 

276,233

 

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

 

$

1,270,011

 

 

$

1,128,462

 

 

$

1,226,604

 

 

$

1,144,302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Calculated as net income plus interest expense, income taxes, depreciation and amortization (EBITDA), plus change in fair value of contingent consideration and other adjustments, annualized and divided by invested capital for the period. Invested capital is defined as average equity plus average daily funded interest-bearing debt for the period.

(b) Accelerated depreciation expense on certain European facilities in connection with restructuring in the third quarter of fiscal 2019 are classified as depreciation expense above rather that restructuring costs.

(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)

(in thousands, except per share data)

 

 

Non-GAAP Financial Information:

 

Forecast for Quarter ending
September 30, 2019

 

Range Low

 

Range High

GAAP net sales, reported

$

970,000

 

 

$

1,030,000

 

Adjustments:

 

 

 

Net sales for planned divestitures

(140,000

)

 

(140,000

)

Non-GAAP net sales, excluding planned divestitures

$

830,000

 

 

$

890,000

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted EPS

$

0.47

 

 

$

0.52

 

Adjustments:

 

 

 

Amortization of intangible assets

0.13

 

 

0.13

 

Change in fair value of contingent consideration

0.05

 

 

0.05

 

Results of planned divestitures (a)

0.05

 

 

0.05

 

Non-GAAP diluted EPS

$

0.70

 

 

$

0.75

 

 

 

 

 

(a) Reflects operating results for planned divestitures and does not include any non-cash charges from write-downs or costs associated with a sale or liquidation of the businesses and their assets.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20190820005701/en/