Click here to close now.


News Feed Item

ScanSource Reports Second Quarter Results

ScanSource, Inc. (NASDAQ:SCSC), the leading international value-added distributor of specialty technology products, today announced financial results for its second quarter in fiscal year 2014, for the period ended December 31, 2013.

                      Quarter ended December 31, 2013:

Net sales


$740.6 million

Net income

$18.3 million

Diluted EPS

$0.64 per share

"Year-over-year growth for both of our communications business units in North America drove strong operating performance," said Mike Baur, CEO, ScanSource, Inc. "Our worldwide POS and barcode business units showed improved market demand, and quarterly revenues for Brazil were an all-time record."

For the quarter ended December 31, 2013, net sales totaled $740.6 million. This represents a 1.2% increase from the prior quarter’s sales of $731.9 million and a 0.9% decrease from net sales of $747.7 million for the quarter ended December 31, 2012. Operating income totaled $27.5 million, compared with $24.4 million in the prior year quarter. Net income for the quarter ended December 31, 2013 totaled $18.3 million, or $0.64 per diluted share, compared with net income of $16.4 million, or $0.59 per diluted share, for the prior year quarter. Excluding expenses associated with Belgian tax compliance and personnel replacement costs, adjusted net income for the quarter ended December 31, 2012 totaled $17.8 million, or $0.64 per diluted share.

Forecast for Next Quarter

The Company announced its current expectations for the third quarter of fiscal year 2014. ScanSource expects that net sales for the quarter ending March 31, 2014 could range from $700 million to $720 million, and diluted earnings per share could be in the range of $0.53 to $0.55 per share.

Webcast Details

ScanSource will present additional information about its financial results and outlook in a conference call with presentation slides today, January 30, 2014, at 5:00 p.m. (ET). A webcast of the call and accompanying presentations slides will be available for all interested parties and can be accessed at (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 the Company to greater political and economic volatility than its operations in established markets; costs and delays in connection with the Company's new ERP system and the costs associated with the litigation of the prior ERP system project; the 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 the 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, 2013 and the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2013, 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, including net sales excluding the translation impact of foreign currencies and return on invested capital ("ROIC"). Non-GAAP financial measures are used to better understand and evaluate performance, including comparisons from period to period, as described below.

Net sales excluding the translation impact of foreign currencies: The Company discusses the percentage change in net sales excluding the translation impact from changes in foreign currency exchange rates between reporting periods. This measure enhances comparability between periods to help analyze underlying trends.

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, excludes the results of capitalization decisions, is easily computed and understood, and is considered to have a strong correlation with shareholder value creation. ROIC also provides management a measure of the Company's profitability on a basis more comparable to historical or future periods. In addition, the Company's Board of Directors uses ROIC in evaluating business and management performance. Certain management incentive compensation targets are set and measured relative to ROIC.

Adjusted net income and adjusted EPS: To evaluate current period performance on a clearer and more consistent basis with prior periods, the Company discloses adjusted net income and adjusted diluted earnings per share, which exclude costs associated with tax compliance and personnel replacement in the Company's Belgian office for the quarter ended December 31, 2012. Management believes that these historical items are outside of the Company's normal operating expenses. Adjusted net income and adjusted EPS are useful in better assessing and understanding the Company's operating performance, especially when comparing results with previous periods or forecasting performance for future periods.

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 following Supplementary Information tables.

About ScanSource, Inc.

ScanSource, Inc. (NASDAQ: SCSC) is the leading international distributor of specialty technology products, focusing on point-of-sale (POS) and barcode, communications and physical security solutions. ScanSource's teams provide value-added services and operate from two technology segments, Worldwide Barcode & Security and Worldwide Communications & Services. ScanSource is committed to helping its reseller customers choose, configure, and deliver the industry's best products across almost every vertical market in North America, Latin America and Europe. Founded in 1992, the Company ranks #711 on the Fortune 1000. For more information, visit

ScanSource, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
  December 31, 2013   June 30, 2013*
Current assets:
Cash and cash equivalents $ 157,130 $ 148,164
Accounts receivable, less allowance of 438,358 435,028
$29,545 at December 31, 2013
$25,479 at June 30, 2013
Inventories 467,202 402,307
Prepaid expenses and other current assets 40,731 40,105
Deferred income taxes 16,815   16,456  
Total current assets 1,120,236 1,042,060
Property and equipment, net 18,890 20,203
Goodwill 31,994 31,795
Other non-current assets, including identifiable intangible assets 67,182   70,125  
Total assets $ 1,238,302   $ 1,164,183  
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of contingent consideration $ 5,229 $ 3,732
Accounts payable 383,996 362,271
Accrued expenses and other current liabilities 59,705 59,983
Income taxes payable 2,137   1,696  
Total current liabilities 451,067 427,682
Deferred income taxes 201 205
Long-term debt 5,429 5,429
Long-term portion of contingent consideration 4,318 8,813
Other long-term liabilities 25,841   26,098  
Total liabilities 486,856 468,227
Shareholders' equity:
Common stock 163,680 149,821
Retained earnings 606,842 569,107
Accumulated other comprehensive income (loss) (19,076 ) (22,972 )
Total shareholders' equity 751,446   695,956  
Total liabilities and shareholders' equity $ 1,238,302   $ 1,164,183  
* Derived from audited financial statements.
ScanSource, Inc. and Subsidiaries
Condensed Consolidated Income Statements (Unaudited)
(in thousands)
Quarter ended

December 31,

Six months ended

December 31,

2013 2012 2013 2012
Net sales $ 740,618 $ 747,716 $ 1,472,522 $ 1,481,320
Cost of goods sold 663,362   673,365   1,318,767   1,332,930  
Gross profit 77,256 74,351 153,755 148,390
Operating expenses:
Selling, general and administrative expenses 49,296 49,393 96,836 96,454
Change in fair value of contingent consideration 499   533   1,237   1,296  
Operating income 27,461 24,425 55,682 50,640
Other expense (income):
Interest expense 235 130 482 254
Interest income (525 ) (532 ) (1,099 ) (1,166 )
Other, net (58 ) 53   51   39  
Income before income taxes 27,809 24,774 56,248 51,513
Provision for income taxes 9,511   8,417   18,513   17,514  
Net income $ 18,298   $ 16,357   $ 37,735   $ 33,999  
Per share data:
Weighted-average shares outstanding, basic 28,293   27,713   28,164   27,665  
Net income per common share, basic $ 0.65   $ 0.59   $ 1.34   $ 1.23  
Weighted-average shares outstanding, diluted 28,597   27,958   28,434   27,928  
Net income per common share, diluted $ 0.64   $ 0.59   $ 1.33   $ 1.22  
ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
(in thousands)
Net Sales by Segment:
Quarter ended December 31, Non-GAAP % Change
2013   2012 % Change Excluding FX(a)
Worldwide Barcode & Security $ 476,206 $ 489,075 (2.6 )% (2.7 )%
Worldwide Communications & Services 264,412   258,641   2.2 % 1.9 %
Consolidated $ 740,618   $ 747,716   (0.9 )% (1.1 )%
Six months ended December 31, Non-GAAP % Change
2013 2012 % Change Excluding FX(a)
Worldwide Barcode & Security $ 926,850 $ 945,262 (1.9 )% (2.0 )%
Worldwide Communications & Services 545,672   536,058   1.8 % 1.5 %
Consolidated $ 1,472,522   $ 1,481,320   (0.6 )% (0.7 )%
Net Sales by Geographic Segment:
Quarter ended December 31, Non-GAAP % Change
2013 2012 % Change Excluding FX(b)
North American (U.S. and Canada) $ 545,089 $ 547,987 (0.5 )% (0.5 )%
International 195,529   199,729   (2.1 )% (2.7 )%
Consolidated $ 740,618   $ 747,716   (0.9 )% (1.1 )%
Six months ended December 31, Non-GAAP % Change
2013 2012 % Change Excluding FX(b)
North American (U.S. and Canada) $ 1,103,429 $ 1,093,799 0.9 % 0.9 %
International 369,093   387,521   (4.8 )% (5.3 )%
Consolidated $ 1,472,522   $ 1,481,320   (0.6 )% (0.7 )%
(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 and six months ended December 31, 2013 into U.S. dollars using the weighted average foreign exchange rates for the quarter ended and six months ended December 31, 2012, respectively. Worldwide Barcode & Security net sales excluding the translation impact of foreign currencies for the quarter ended and six months ended December 31, 2013, as adjusted, totaled $475.8 million and $926.5 million, respectively. Worldwide Communications & Services net sales excluding the translation impact of foreign currencies for the quarter ended and six months ended December 31, 2013, as adjusted, totaled $263.6 million and $543.9 million.
(b)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 and six months ended December 31, 2013 into U.S. dollars using the weighted average foreign exchange rates for the quarter ended and six months ended December 31, 2012, respectively. International net sales excluding the translation impact of foreign currencies for the quarter ended and six months ended December 31, 2013, as adjusted, totaled $194.3 million and $367.0 million, respectively.
Non-GAAP Financial Information:          
Quarter ended December 31, 2013 Quarter ended December 31, 2012
Pre-tax income Net Income Diluted EPS Pre-tax Income Net Income Diluted EPS
GAAP Measure $ 27,809 $ 18,298 $ 0.64 $ 24,774 $ 16,357 $ 0.59
Non-GAAP Adjustment(a)       2,121   1,400   0.05
Non-GAAP Measure $ 27,809   $ 18,298   $ 0.64   $ 26,895   $ 17,757   $ 0.64
Quarter ended December 31,
2013 2012
Return on invested capital (ROIC), annualized (b) 15.9 % 15.2 %
Reconciliation of Net Income to EBITDA
Net income - GAAP $ 18,298 $ 16,357
Plus: Income taxes 9,511 8,417
Plus: Interest expense 235 130
Plus: Depreciation and amortization (c) 1,778   2,275  
EBITDA (numerator for ROIC) (non-GAAP) $ 29,822   $ 27,179  
Invested Capital Calculation
Equity - beginning of quarter $ 723,748 $ 676,136
Equity - end of quarter 751,446   696,960  
Average equity 737,597 686,548
Average funded debt (d) 5,429   23,850  
Invested capital (denominator for ROIC) (non-GAAP) $ 743,026   $ 710,398  
(a) Expenses associated with Belgian tax compliance and personnel replacement costs, including related professional fees.
(b) Calculated as net income plus interest expense, income taxes, depreciation and amortization (EBITDA), annualized and divided by invested capital for the period.
(c) Depreciation and amortization for the quarter ended December 31, 2012 includes debt issuance costs of $0.1 million.
(d) Average funded debt is calculated as the average daily amounts outstanding on our short-term and long-term interest-bearing debt.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
In the midst of the widespread popularity and adoption of cloud computing, it seems like everything is being offered “as a Service” these days: Infrastructure? Check. Platform? You bet. Software? Absolutely. Toaster? It’s only a matter of time. With service providers positioning vastly differing offerings under a generic “cloud” umbrella, it’s all too easy to get confused about what’s actually being offered. In his session at 16th Cloud Expo, Kevin Hazard, Director of Digital Content for SoftL...
Agile, which started in the development organization, has gradually expanded into other areas downstream - namely IT and Operations. Teams – then teams of teams – have streamlined processes, improved feedback loops and driven a much faster pace into IT departments which have had profound effects on the entire organization. In his session at DevOps Summit, Anders Wallgren, Chief Technology Officer of Electric Cloud, will discuss how DevOps and Continuous Delivery have emerged to help connect dev...
Today air travel is a minefield of delays, hassles and customer disappointment. Airlines struggle to revitalize the experience. GE and M2Mi will demonstrate practical examples of how IoT solutions are helping airlines bring back personalization, reduce trip time and improve reliability. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Dr. Sarah Cooper, M2Mi’s VP Business Development and Engineering, will explore the IoT cloud-based platform technologies drivi...
Containers are changing the security landscape for software development and deployment. As with any security solutions, security approaches that work for developers, operations personnel and security professionals is a requirement. In his session at DevOps Summit, Kevin Gilpin, CTO and Co-Founder of Conjur, will discuss various security considerations for container-based infrastructure and related DevOps workflows.
It is one thing to build single industrial IoT applications, but what will it take to build the Smart Cities and truly society-changing applications of the future? The technology won’t be the problem, it will be the number of parties that need to work together and be aligned in their motivation to succeed. In his session at @ThingsExpo, Jason Mondanaro, Director, Product Management at Metanga, discussed how you can plan to cooperate, partner, and form lasting all-star teams to change the world...
Overgrown applications have given way to modular applications, driven by the need to break larger problems into smaller problems. Similarly large monolithic development processes have been forced to be broken into smaller agile development cycles. Looking at trends in software development, microservices architectures meet the same demands. Additional benefits of microservices architectures are compartmentalization and a limited impact of service failure versus a complete software malfunction. ...
Internet of Things (IoT) will be a hybrid ecosystem of diverse devices and sensors collaborating with operational and enterprise systems to create the next big application. In their session at @ThingsExpo, Bramh Gupta, founder and CEO of, and Fred Yatzeck, principal architect leading product development at, discussed how choosing the right middleware and integration strategy from the get-go will enable IoT solution developers to adapt and grow with the industry, while at th...
Internet of Things is moving from being a hype to a reality. Experts estimate that internet connected cars will grow to 152 million, while over 100 million internet connected wireless light bulbs and lamps will be operational by 2020. These and many other intriguing statistics highlight the importance of Internet powered devices and how market penetration is going to multiply many times over in the next few years.
Containers have changed the mind of IT in DevOps. They enable developers to work with dev, test, stage and production environments identically. Containers provide the right abstraction for microservices and many cloud platforms have integrated them into deployment pipelines. DevOps and Containers together help companies to achieve their business goals faster and more effectively. In his session at DevOps Summit, Ruslan Synytsky, CEO and Co-founder of Jelastic, reviewed the current landscape of...
Malicious agents are moving faster than the speed of business. Even more worrisome, most companies are relying on legacy approaches to security that are no longer capable of meeting current threats. In the modern cloud, threat diversity is rapidly expanding, necessitating more sophisticated security protocols than those used in the past or in desktop environments. Yet companies are falling for cloud security myths that were truths at one time but have evolved out of existence.
The cloud has transformed how we think about software quality. Instead of preventing failures, we must focus on automatic recovery from failure. In other words, resilience trumps traditional quality measures. Continuous delivery models further squeeze traditional notions of quality. Remember the venerable project management Iron Triangle? Among time, scope, and cost, you can only fix two or quality will suffer. Only in today's DevOps world, continuous testing, integration, and deployment upend...
The time is ripe for high speed resilient software defined storage solutions with unlimited scalability. ISS has been working with the leading open source projects and developed a commercial high performance solution that is able to grow forever without performance limitations. In his session at Cloud Expo, Alex Gorbachev, President of Intelligent Systems Services Inc., shared foundation principles of Ceph architecture, as well as the design to deliver this storage to traditional SAN storage co...
To many people, IoT is a buzzword whose value is not understood. Many people think IoT is all about wearables and home automation. In his session at @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, discussed some incredible game-changing use cases and how they are transforming industries like agriculture, manufacturing, health care, and smart cities. He will discuss cool technologies like smart dust, robotics, smart labels, and much more. Prepare...
"We provide a web application framework for building really sophisticated web applications that run on a browser without any installation need so we get used for biotech, defense, and banking applications," noted Charles Kendrick, CTO and Chief Architect at Isomorphic Software, in this interview at @DevOpsSummit (, held June 9-11, 2015, at the Javits Center in New York
The Internet of Things is not only adding billions of sensors and billions of terabytes to the Internet. It is also forcing a fundamental change in the way we envision Information Technology. For the first time, more data is being created by devices at the edge of the Internet rather than from centralized systems. What does this mean for today's IT professional? In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists addressed this very serious issue of pro...