27/08/2024 | Press release | Distributed by Public on 27/08/2024 12:31
Fourth Quarter Summary | Fiscal Year Summary | |||||||||
Q4 FY24 | Q4 FY23 | Change | FY24 | FY23 | Change | |||||
(in thousands, except percentages and per share data) | ||||||||||
Select reported measures:
|
||||||||||
Net sales | $ | 746,113 | $ | 947,149 | -21.2% | $ | 3,259,809 | $ | 3,787,721 | -13.9% |
Gross profit | $ | 97,315 | $ | 108,659 | -10.4% | $ | 399,052 | $ | 449,239 | -11.2% |
Gross profit margin % | 13.04 | % | 11.47 | % | 157bp | 12.24 | % | 11.86 | % | 38bp |
Operating income | $ | 21,871 | $ | 27,289 | -19.9% | $ | 90,324 | $ | 135,886 | -33.5% |
GAAP net income | $ | 16,097 | $ | 17,095 | -5.8% | $ | 77,060 | $ | 88,092 | -12.5% |
GAAP diluted EPS | $ | 0.64 | $ | 0.68 | -5.9% | $ | 3.06 | $ | 3.47 | -11.8% |
Operating cash flow | $ | 54,738 | $ | (15,261) | n/m | $ | 371,647 | $ | (35,769) | n/m |
Select Non-GAAP measures*:
|
||||||||||
Adjusted EBITDA | $ | 34,181 | $ | 40,199 | -15.0% | $ | 140,654 | $ | 179,943 | -21.8% |
Adjusted EBITDA margin % | 4.58 | % | 4.24 | % | 34bp | 4.31 | % | 4.75 | % | -44bp |
Non-GAAP net income | $ | 19,921 | $ | 19,213 | 3.7% | $ | 77,670 | $ | 97,688 | -20.5% |
Non-GAAP diluted EPS | $ | 0.80 | $ | 0.76 | 5.3% | $ | 3.08 | $ | 3.85 | -20.0% |
Free cash flow | $ | 53,468 | $ | (18,692) | n/m | $ | 363,092 | $ | (45,748) | n/m |
n/m - not meaningful | ||||||||||
* Represents non-GAAP financial measures. For more information and a reconciliation to the most directly comparable GAAP financial measure, see "Non-GAAP Financial Information" below as well as the accompanying Supplementary Information.
|
FY25 Annual Outlook | |
Net sales | $3.1 billion to $3.5 billion |
Adjusted EBITDA (non-GAAP) | $140 million to $160 million |
Free cash flow (non-GAAP) | At least $70 million |
ScanSource, Inc. and Subsidiaries | ||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||
(in thousands, except share data) | ||||
June 30, 2024* | June 30, 2023* | |||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ | 185,460 | $ | 36,178 |
Accounts receivable, less allowance of $20,684 at June 30, 2024
and $15,480 at June 30, 2023
|
581,523 | 753,236 | ||
Inventories | 512,634 | 757,574 | ||
Prepaid expenses and other current assets | 125,082 | 110,087 | ||
Total current assets | 1,404,699 | 1,657,075 | ||
Property and equipment, net | 33,501 | 37,379 | ||
Goodwill | 206,301 | 216,706 | ||
Identifiable intangible assets, net | 37,634 | 68,495 | ||
Deferred income taxes | 19,902 | 17,764 | ||
Other non-current assets | 76,995 | 70,750 | ||
Total assets | $ | 1,779,032 | $ | 2,068,169 |
Liabilities and Shareholders' Equity | ||||
Current liabilities: | ||||
Accounts payable | $ | 587,984 | $ | 691,119 |
Accrued expenses and other current liabilities | 65,616 | 78,892 | ||
Income taxes payable | 7,895 | 9,875 | ||
Current portion of long-term debt | 7,857 | 6,915 | ||
Total current liabilities | 669,352 | 786,801 | ||
Deferred income taxes | - | 3,816 | ||
Long-term debt, net of current portion | 136,149 | 144,006 | ||
Borrowings under revolving credit facility | 50 | 178,980 | ||
Other long-term liabilities | 49,226 | 49,268 | ||
Total liabilities | 854,777 | 1,162,871 | ||
Commitments and contingencies | ||||
Shareholders' equity: | ||||
Preferred stock, no par value; 3,000,000 shares authorized, none issued
|
- | - | ||
Common stock, no par value; 45,000,000 shares authorized, 24,243,848 and 24,844,203 shares issued and outstanding at June 30, 2024 and June 30, 2023, respectively
|
26,370 | 58,241 | ||
Retained earnings | 1,013,738 | 936,678 | ||
Accumulated other comprehensive loss | (115,853) | (89,621) | ||
Total shareholders' equity | 924,255 | 905,298 | ||
Total liabilities and shareholders' equity | $ | 1,779,032 | $ | 2,068,169 |
ScanSource, Inc. and Subsidiaries | ||||||||
Condensed Consolidated Income Statements (Unaudited) | ||||||||
(in thousands, except per share data) | ||||||||
Quarter ended June 30, 2024 | Fiscal Year Ended June 30, | |||||||
2024 | 2023 | 2024* | 2023* | |||||
Net sales | $ | 746,113 | $ | 947,149 | $ | 3,259,809 | $ | 3,787,721 |
Cost of goods sold | 648,798 | 838,490 | 2,860,757 | 3,338,482 | ||||
Gross profit | 97,315 | 108,659 | 399,052 | 449,239 | ||||
Selling, general and administrative expenses | 68,498 | 74,358 | 277,428 | 285,695 | ||||
Depreciation expense | 2,770 | 2,827 | 11,219 | 10,912 | ||||
Intangible amortization expense | 3,741 | 4,185 | 15,723 | 16,746 | ||||
Restructuring and other charges | 435 | - | 4,358 | - | ||||
Operating income | 21,871 | 27,289 | 90,324 | 135,886 | ||||
Interest expense | 2,084 | 5,564 | 13,031 | 19,786 | ||||
Interest income | (3,285) | (2,085) | (9,381) | (7,414) | ||||
Loss (gain) on sale of business | 378 | - | (14,155) | - | ||||
Other expense, net | (3) | 348 | 988 | 1,664 | ||||
Income before income taxes | 22,697 | 23,462 | 99,841 | 121,850 | ||||
Provision for income taxes | 6,600 | 6,367 | 22,781 | 33,758 | ||||
Net income from continuing operations | 16,097 | 17,095 | 77,060 | 88,092 | ||||
Net income from discontinued operations | - | 1,717 | - | 1,717 | ||||
Net income | $ | 16,097 | $ | 18,812 | $ | 77,060 | $ | 89,809 |
Per share data: | ||||||||
Net income from continuing operations per common share, basic | $ | 0.66 | $ | 0.69 | $ | 3.10 | $ | 3.50 |
Net income from discontinued operations per common share, basic | - | 0.07 | - | 0.07 | ||||
Net income per common share, basic | $ | 0.66 | $ | 0.76 | $ | 3.10 | $ | 3.57 |
Weighted-average shares outstanding, basic | 24,524 | 24,883 | 24,868 | 25,142 | ||||
Net income from continuing operations per common share, diluted | $ | 0.64 | $ | 0.68 | $ | 3.06 | $ | 3.47 |
Net income from discontinued operations per common share, diluted | - | 0.07 | - | 0.07 | ||||
Net income per common share, diluted | $ | 0.64 | $ | 0.75 | $ | 3.06 | $ | 3.54 |
Weighted-average shares outstanding, diluted | 25,046 | 25,139 | 25,222 | 25,362 | ||||
*Derived from audited financial statements.
|
ScanSource, Inc. and Subsidiaries | ||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||
(in thousands) | ||||||||
Quarter ended June 30, | Fiscal Year Ended June 30, | |||||||
2024 | 2023 | 2024* | 2023* | |||||
Cash flows from operating activities: | ||||||||
Net income | $ | 16,097 | $ | 17,095 | $ | 77,060 | $ | 88,092 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Gain on sale of business | 378 | - | (14,155) | - | ||||
Depreciation and amortization | 6,792 | 7,256 | 28,009 | 28,614 | ||||
Amortization of debt issue costs | 96 | 96 | 386 | 577 | ||||
Provision for doubtful accounts | 2,454 | 933 | 8,317 | 2,785 | ||||
Share-based compensation | 1,808 | 2,586 | 9,537 | 11,219 | ||||
Deferred income taxes | (907) | (2,905) | (2,472) | (1,496) | ||||
Finance lease interest | 30 | 12 | 101 | 44 | ||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||
Accounts receivable | (5,510) | (64,020) | 138,264 | (17,368) | ||||
Inventories | 12,279 | (2,057) | 239,157 | (138,313) | ||||
Prepaid expenses and other assets | 10,359 | (6,526) | (17,804) | 32,653 | ||||
Other non-current assets | (16,711) | (5,810) | (10,689) | (7,582) | ||||
Accounts payable | 39,693 | 30,061 | (78,167) | (30,656) | ||||
Accrued expenses and other liabilities | (15,210) | 2,587 | (3,872) | (14,195) | ||||
Income taxes payable | 3,090 | 5,431 | (2,025) | 9,857 | ||||
Net cash provided by (used in) operating activities | 54,738 | (15,261) | 371,647 | (35,769) | ||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (1,270) | (3,431) | (8,555) | (9,979) | ||||
Proceeds from sale of business, net of cash transferred | (378) | 1,717 | 17,600 | 1,717 | ||||
Net cash provided by (used in) investing activities | (1,648) | (1,714) | 9,045 | (8,262) | ||||
Cash flows from financing activities: | ||||||||
Borrowings on revolving credit, net of expenses | 16,813 | 627,257 | 1,259,728 | 2,499,166 | ||||
Repayments on revolving credit, net of expenses | (16,763) | (607,470) | (1,438,658) | (2,456,025) | ||||
Repayments on long-term debt, net | (1,875) | (938) | (6,915) | 15,590 | ||||
Borrowings (repayments) on finance lease obligation | (379) | 23 | (964) | (589) | ||||
Debt issuance costs | - | - | - | (1,407) | ||||
Exercise of stock options | 186 | 57 | 4,813 | 910 | ||||
Taxes paid on settlement of equity awards | (81) | (30) | (2,876) | (2,463) | ||||
Common stock repurchased | (21,727) | (4,933) | (42,895) | (15,651) | ||||
Net cash (used in) provided by financing activities | (23,826) | 13,966 | (227,767) | 39,531 | ||||
Effect of exchange rate changes on cash and cash equivalents | (2,854) | 1,813 | (3,643) | 2,691 | ||||
Increase in cash and cash equivalents | 26,410 | (1,196) | 149,282 | (1,809) | ||||
Cash and cash equivalents at beginning of period | 159,050 | 37,374 | 36,178 | 37,987 | ||||
Cash and cash equivalents at period end | $ | 185,460 | $ | 36,178 | $ | 185,460 | $ | 36,178 |
ScanSource, Inc. and Subsidiaries | ||||||||
Supplementary Information (Unaudited) | ||||||||
(in thousands, except percentages) | ||||||||
Non-GAAP Financial Information: | ||||||||
Quarter ended June 30, | Fiscal Year Ended June 30, | |||||||
2024 | 2023 | 2024 | 2023 | |||||
Adjusted return on invested capital ratio (Adjusted ROIC), annualized(a)
|
12.7 | % | 12.9 | % | 12.4 | % | 14.6 | % |
Reconciliation of Net Income to Adjusted EBITDA: | ||||||||
Net income (GAAP) | $ | 16,097 | $ | 17,095 | $ | 77,060 | $ | 88,092 |
Plus: Interest expense | 2,084 | 5,564 | 13,031 | 19,786 | ||||
Plus: Income taxes | 6,600 | 6,367 | 22,781 | 33,758 | ||||
Plus: Depreciation and amortization | 6,792 | 7,255 | 28,009 | 28,614 | ||||
EBITDA (non-GAAP) | 31,573 | 36,281 | 140,881 | 170,250 | ||||
Plus: Tax recovery (b)
|
(657) | (128) | (2,558) | (2,986) | ||||
Plus: Share-based compensation | 1,808 | 2,586 | 9,537 | 11,219 | ||||
Plus: Cyberattack restoration costs | 141 | 1,460 | 874 | 1,460 | ||||
Plus: Acquisition and divestiture costs | 503 | - | 1,717 | - | ||||
Plus: Restructuring costs | 435 | - | 4,358 | - | ||||
Plus: Gain on sale of business | 378 | - | (14,155) | - | ||||
Adjusted EBITDA (numerator for Adjusted ROIC) (non-GAAP) | $ | 34,181 | $ | 40,199 | $ | 140,654 | $ | 179,943 |
Invested Capital Calculations: | ||||||||
Equity - beginning of the period | $ | 944,053 | $ | 878,895 | $ | 905,298 | $ | 806,528 |
Equity - end of the period | 924,255 | 905,298 | 924,255 | 905,298 | ||||
Plus: Share-based compensation, net | 1,350 | 1,921 | 7,120 | 8,326 | ||||
Plus: Cyberattack restoration costs, net | 106 | 1,092 | 655 | 1,092 | ||||
Plus: Acquisition and divestiture costs | 503 | - | 1,717 | - | ||||
Plus: Restructuring, net of tax | 327 | - | 3,262 | - | ||||
Plus: Discontinued operations net income | - | (1,717) | - | (1,717) | ||||
Plus: Tax recovery, net | (278) | (2,100) | (2,566) | (3,985) | ||||
Plus: Gain on sale of business | 378 | - | (14,155) | - | ||||
Average equity | 935,347 | 891,695 | 912,793 | 857,771 | ||||
Average funded debt (c)
|
146,121 | 361,792 | 220,528 | 372,235 | ||||
Invested capital (denominator for Adjusted ROIC) (non-GAAP) | $ | 1,081,468 | $ | 1,253,487 | $ | 1,133,321 | $ | 1,230,006 |
(a) The annualized adjusted EBITDA amount is divided by days in the quarter times 365 days per year, or 366 days for leap year. There were 91 days in the current and prior-year quarter.
|
||||||||
(b) Recovery of prior period withholding taxes in Brazil.
|
||||||||
(c) Average funded debt is calculated as the average daily amounts outstanding on short-term and long-term interest-bearing debt.
|
ScanSource, Inc. and Subsidiaries | ||||||
Supplementary Information (Unaudited) | ||||||
Net Sales by Segment: | ||||||
Quarter ended June 30, | ||||||
2024 | 2023 | % Change | ||||
Specialty Technology Solutions: | (in thousands) | |||||
Net sales, reported | $ | 484,710 | $ | 561,501 | (13.7) | % |
Foreign exchange impact (a)
|
1,099 | - | ||||
Non-GAAP net sales | $ | 485,809 | $ | 561,501 | (13.5) | % |
Modern Communications & Cloud: | ||||||
Net sales, reported | $ | 261,403 | $ | 385,648 | (32.2) | % |
Foreign exchange impact (a)
|
3,635 | - | ||||
Less: Divestitures | - | (2,403) | ||||
Non-GAAP net sales | $ | 265,038 | $ | 383,245 | (30.8) | % |
Consolidated: | ||||||
Net sales, reported | $ | 746,113 | $ | 947,149 | (21.2) | % |
Foreign exchange impact (a)
|
4,734 | - | ||||
Less: Divestitures | - | (2,403) | ||||
Non-GAAP net sales | $ | 750,847 | $ | 944,746 | (20.5) | % |
(a)Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended June 30, 2024 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2023.
|
ScanSource, Inc. and Subsidiaries | ||||||
Supplementary Information (Unaudited) | ||||||
Net Sales by Segment: | ||||||
Fiscal year ended June 30, | ||||||
2024 | 2023 | % Change | ||||
Specialty Technology Solutions: | (in thousands) | |||||
Net sales, reported | $ | 1,998,636 | $ | 2,331,030 | (14.3) | % |
Foreign exchange impact (a)
|
(1,341) | - | ||||
Non-GAAP net sales | $ | 1,997,295 | $ | 2,331,030 | (14.3) | % |
Modern Communications & Cloud: | ||||||
Net sales, reported | $ | 1,261,173 | $ | 1,456,691 | (13.4) | % |
Foreign exchange impact (a)
|
(8,542) | - | ||||
Less: Divestitures | (3,747) | (9,140) | ||||
Non-GAAP net sales | $ | 1,248,884 | $ | 1,447,551 | (13.7) | % |
Consolidated: | ||||||
Net sales, reported | $ | 3,259,809 | $ | 3,787,721 | (13.9) | % |
Foreign exchange impact (a)
|
(9,883) | - | ||||
Less: Divestitures | (3,747) | (9,140) | ||||
Non-GAAP net sales | $ | 3,246,179 | $ | 3,778,581 | (14.1) | % |
(a)Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the fiscal year ended June 30, 2024 into U.S. dollars using the average foreign exchange rates for the fiscal year ended June 30, 2023.
|
ScanSource, Inc. and Subsidiaries | ||||||
Supplementary Information (Unaudited) | ||||||
Net Sales by Geography: | ||||||
Quarter ended June 30, | ||||||
2024 | 2023 | % Change | ||||
United States and Canada: | (in thousands) | |||||
Net sales, as reported | $ | 663,542 | $ | 854,521 | (22.3) | % |
International: | ||||||
Net sales, reported | $ | 82,571 | $ | 92,628 | (10.9) | % |
Foreign exchange impact(a)
|
4,734 | - | ||||
Less: Divestitures | - | (2,403) | ||||
Non-GAAP net sales | $ | 87,305 | $ | 90,225 | (3.2) | % |
Consolidated: | ||||||
Net sales, reported | $ | 746,113 | $ | 947,149 | (21.2) | % |
Foreign exchange impact(a)
|
4,734 | - | ||||
Less: Divestitures | - | (2,403) | ||||
Non-GAAP net sales | $ | 750,847 | $ | 944,746 | (20.5) | % |
(a)Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended June 30, 2024 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2023.
|
ScanSource, Inc. and Subsidiaries | ||||||
Supplementary Information (Unaudited) | ||||||
Net Sales by Geography: | ||||||
Fiscal year ended June 30, | ||||||
2024 | 2023 | % Change | ||||
United States and Canada: | (in thousands) | |||||
Net sales, as reported | $ | 2,921,172 | $ | 3,432,074 | (14.9) | % |
International: | ||||||
Net sales, reported | $ | 338,637 | $ | 355,647 | (4.8) | % |
Foreign exchange impact(a)
|
(9,883) | - | ||||
Less: Divestitures | (3,747) | (9,140) | ||||
Non-GAAP net sales | $ | 325,007 | 346,507 | (6.2) | % | |
Consolidated: | ||||||
Net sales, reported | $ | 3,259,809 | $ | 3,787,721 | (13.9) | % |
Foreign exchange impact(a)
|
(9,883) | - | ||||
Less: Divestitures | (3,747) | (9,140) | ||||
Non-GAAP net sales | $ | 3,246,179 | $ | 3,778,581 | (14.1) | % |
(a)Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the fiscal year ended June 30, 2024 into U.S. dollars using the average foreign exchange rates for the fiscal year ended June 30, 2023.
|
ScanSource, Inc. and Subsidiaries | ||||||||
Supplementary Information (Unaudited) | ||||||||
(in thousands) | ||||||||
Free Cash Flow: | ||||||||
Quarter ended June 30, | Fiscal year ended June 30, | |||||||
2024 | 2023 | 2024 | 2023 | |||||
GAAP operating cash flow | $ | 54,738 | $ | (15,261) | $ | 371,647 | $ | (35,769) |
Less: Capital Expenditures | (1,270) | (3,431) | (8,555) | (9,979) | ||||
Free cash flow (non-GAAP) | $ | 53,468 | $ | (18,692) | $ | 363,092 | $ | (45,748) |
ScanSource, Inc. and Subsidiaries | ||||||||
Supplementary Information (Unaudited) | ||||||||
(in thousands, except per share data) | ||||||||
Non-GAAP Financial Information: | ||||||||
Quarter ended June 30, 2024 | ||||||||
GAAP Measure | Intangible amortization expense |
Acquisition & divestiture costs (a)
|
Restructuring costs | Tax recovery | Cyberattack restoration costs |
Gain on sale of business (b)
|
Non-GAAP measure | |
(in thousands, except per share data) | ||||||||
SG&A expenses | $68,498 | $- | $(503) | $(435) | $657 | $(141) | $- | $68,076 |
Operating income | 21,871 | 3,741 | 503 | 435 | (657) | 141 | - | 26,034 |
Pre-tax income | 22,697 | 3,741 | 503 | 435 | (657) | 141 | 378 | 27,238 |
Net income | 16,097 | 2,788 | 503 | 327 | (278) | 106 | 378 | 19,921 |
Diluted EPS | $0.64 | $0.11 | $0.02 | $0.01 | $(0.01) | $- | $0.02 | $0.80 |
Quarter ended June 30, 2023 | ||||||||
GAAP Measure | Intangible amortization expense | Acquisition & divestiture costs | Restructuring costs | Tax recovery | Cyberattack restoration costs |
Gain on sale of business
|
Non-GAAP measure | |
(in thousands, except per share data) | ||||||||
SG&A expense | $74,358 | $- | $- | $- | $128 | $(1,460) | $- | $73,026 |
Operating income | 27,289 | 4,185 | - | - | (128) | 1,460 | - | 32,806 |
Pre-tax income | 23,462 | 4,185 | - | - | (128) | 1,460 | - | 28,979 |
Net income | 17,095 | 3,126 | - | - | (2,100) | 1,092 | - | 19,213 |
Diluted EPS | $0.68 | $0.12 | $- | $- | $(0.08) | $0.04 | $- | $0.76 |
ScanSource, Inc. and Subsidiaries | ||||||||
Supplementary Information (Unaudited) | ||||||||
(in thousands, except per share data) | ||||||||
Non-GAAP Financial Information: | ||||||||
Year ended June 30, 2024 | ||||||||
GAAP Measure | Intangible amortization expense |
Acquisition & divestiture costs (a)
|
Restructuring costs | Tax recovery | Cyberattack restoration costs |
Gain on sale of business (b)
|
Non-GAAP measure | |
(in thousands, except per share data) | ||||||||
SG&A expenses | $277,428 | $- | $(1,717) | $- | $2,558 | $(874) | $- | $277,395 |
Operating income | 90,324 | 15,723 | 1,717 | 4,358 | (2,558) | 874 | - | 110,438 |
Pre-tax income | 99,841 | 15,723 | 1,717 | 4,358 | (2,558) | 874 | (14,155) | 105,800 |
Net income | 77,060 | 11,697 | 1,717 | 3,262 | (2,566) | 655 | (14,155) | 77,670 |
Diluted EPS | $3.06 | $0.46 | $0.07 | $0.13 | $(0.10) | $0.03 | $(0.56) | $3.08 |
Year ended June 30, 2023 | ||||||||
GAAP Measure | Intangible amortization expense | Acquisition & divestiture costs | Restructuring costs | Tax recovery | Cyberattack restoration costs |
Gain on sale of business
|
Non-GAAP measure | |
(in thousands, except per share data) | ||||||||
SG&A expense | $285,695 | $- | $- | $- | $2,986 | $(1,460) | $- | $287,221 |
Operating income | 135,886 | 16,746 | - | - | (2,986) | 1,460 | - | 151,106 |
Pre-tax income | 121,850 | 16,746 | - | - | (2,986) | 1,460 | - | 137,070 |
Net income | 88,092 | 12,489 | - | - | (3,985) | 1,092 | - | 97,688 |
Diluted EPS | $3.47 | $0.49 | $- | $- | $(0.16) | $0.04 | $- | $3.85 |