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ScanSource, Inc. (SCSC), the leading international value-added
distributor of specialty technology products, today announced complete
financial results for its fourth quarter and fiscal year ended June 30,
2012.
Quarter ended June 30, 2012: Fiscal Year ended June 30, 2012:
Net sales $ 754.5 million Net sales $ 3,015.3 million
Net income $ 19.8 million Net income $ 74.3 million
Diluted EPS $ 0.71 per share Diluted EPS $ 2.68 per share
"We achieved record quarterly sales for our North America Communications
and Security business units," said Mike Baur, CEO, ScanSource, Inc.
"These results contributed to stronger performance in North America,
where each of our business units had positive sequential quarter growth.
Our international segment was weaker, particularly in our European
businesses. Certain international markets, such as our Brazil business
unit, had strong year-over-year sales growth as measured in the local
currency."
For the quarter ended June 30, 2012, net sales increased 2.7% to $754.5
million, compared with $734.9 million for the quarter ended June 30,
2011. Operating income decreased 3.2% to $28.3 million from $29.2
million in the comparable prior year quarter. The effective tax rate
decreased to 30.9% in the current quarter from 31.7% in the prior year
quarter. Net income for the quarter ended June 30, 2012 was $19.8
million, or $0.71 per diluted share, compared with net income of $19.7
million, or $0.71 per diluted share, for the prior year quarter. The
June 2012 quarter EPS of $0.71 includes a $0.03 benefit for the change
in the fair value of contingent consideration for the Brazilian
acquisition earn-out.
For fiscal year ended June 30, 2012, net sales increased $349 million,
or 13.1%, to $3.0 billion from $2.7 billion for the prior year ended
June 30, 2011. Fiscal year operating income increased 0.4% to $113.5
million from $113.1 million for the prior year. The effective tax rate
for the year was 33.2%, compared with 34.3% for the prior fiscal year.
Net income for fiscal year 2012 was $74.3 million, or $2.68 per diluted
share, compared with net income of $73.5 million, or $2.70 per diluted
share, for the prior fiscal year. The change in fair value of contingent
consideration had no impact on the fiscal year 2012 EPS of $2.68.
Forecast for Next Quarter
The Company announced its current expectations for the first quarter of
fiscal 2013. ScanSource expects that net sales for the quarter ending
September 30, 2012 could range from $740 million to $760 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 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, factors affecting our expanded operations
in emerging markets, such as Brazil, that expose us to greater political
and economic volatility than our operations in established markets; the
results of purchase accounting; macroeconomic circumstances that could
impact our business, such as currency fluctuations; continued adverse
capital and 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, 2011 and Form 10-Q for the quarters ended
September 30, 2011, December 31, 2011, and March 31, 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 return on invested capital ("ROIC"), a non-GAAP
measure. Management uses ROIC as a performance measurement because it
believes that this metric best balances the Company’s operating results
with its asset and liability management. It excludes the results of
capitalization decisions, is easily computed and understood, and drives
changes in shareholder value. In addition, the Company’s Board of
Directors uses this non-GAAP measure in evaluating management
performance and setting management compensation. 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 a following table.
About ScanSource, Inc.
ScanSource, Inc. (SCSC) is the leading international distributor
of specialty technology products, consisting of seven sales units in
North America, Latin America and Europe. ScanSource POS and Barcoding in
North America, Latin America and Europe delivers AIDC and POS solutions;
Catalyst Telecom in the U.S. and ScanSource Communications in North
America and Europe, provide voice, video, data and converged
communications equipment; and ScanSource Security in North America
offers physical security solutions. 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)
June 30, 2012 June 30, 2011*
-------------------- ------------------
Assets
Current assets:
Cash and cash equivalents $ 29,173 $ 28,747
Accounts receivable, less allowance of 470,808 462,102
$27,349 at June 30, 2012
$26,562 at June 30, 2011
Inventories 475,479 467,350
Prepaid expenses and other assets 41,846 35,421
Deferred income taxes 14,624 15,894
------------------ ------------------
Total current assets 1,031,930 1,009,514
Property and equipment, net 48,785 36,819
Goodwill 53,885 59,090
Other assets, including identifiable intangible assets 67,206 76,765
------------------ ------------------
Total assets $ 1,201,806 $ 1,182,188
======= ========= ======= =========
Liabilities and Shareholders’ Equity
Current liabilities:
Short-term borrowings $ 4,268 $ 3,164
Current portion of contingent consideration 4,976 2,398
Accounts payable 419,683 406,453
Accrued expenses and other liabilities 67,776 60,157
Income taxes payable 1,698 5,175
------------------ ------------------
Total current liabilities 498,401 477,347
Long-term debt 5,429 30,429
Borrowings under revolving credit facility -- 26,513
Long-term portion of contingent consideration 11,677 21,396
Other long-term liabilities 33,988 39,109
------------------ ------------------
Total liabilities 549,495 594,794
------------------ ------------------
Shareholders’ equity:
Common stock 139,557 123,608
Retained earnings 534,445 460,157
Accumulated other comprehensive income (loss) (21,691 ) 3,629
------------------- ------------------
Total shareholders’ equity 652,311 587,394
------------------ ------------------
Total liabilities and shareholders’ equity $ 1,201,806 $ 1,182,188
======= ========= ======= =========
* Derived from audited financial statements at June 30, 2011.
ScanSource, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
Quarter ended Year ended
June 30, June 30,
2012 2011* 2012 2011*
--------------- --------------- ------------------ ------------------
Net sales $ 754,470 $ 734,891 $ 3,015,296 $ 2,666,531
Cost of goods sold 680,643 660,520 2,713,272 2,392,224
------------ ------------ --------------- ---------------
Gross profit 73,827 74,371 302,024 274,307
------------ ------------ --------------- ---------------
Operating expenses:
Selling, general and administrative expenses 46,634 45,256 188,388 161,326
Change in fair value of contingent consideration (1,123 ) (128 ) 120 (128 )
-------------- -------------- --------------- -----------------
Operating income 28,316 29,243 113,516 113,109
Other expense (income):
Interest expense 150 541 1,639 1,723
Interest income (653 ) (294 ) (2,886 ) (1,212 )
Other, net 188 220 3,552 712
------------ ------------ --------------- ---------------
Income before income taxes 28,631 28,776 111,211 111,886
Provision for income taxes 8,846 9,115 36,923 38,363
------------ ------------ --------------- ---------------
Net income $ 19,785 $ 19,661 $ 74,288 $ 73,523
=== ======= === ======= ==== ========= ==== =========
Per share data:
Net income per common share, basic $ 0.72 $ 0.73 $ 2.72 $ 2.74
=== ======= === ======= ==== ========= ==== =========
Weighted-average shares outstanding, basic 27,579 27,056 27,362 26,872
============ ============ =============== ===============
Net income per common share, diluted $ 0.71 $ 0.71 $ 2.68 $ 2.70
=== ======= === ======= ==== ========= ==== =========
Weighted-average shares outstanding, diluted 27,886 27,515 27,751 27,246
============ ============ =============== ===============
* Derived from audited financial statements at June 30, 2011
ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
(in thousands)
Net Sales by Geographic Segment: Quarter ended June 30,
2012 2011 % Change
------------------ ------------------ ----------
North American (U.S. and Canada) $ 570,219 $ 543,422 4.9 %
International 184,251 191,469 (3.8 )%
-------------- -------------- ---- ----
Consolidated $ 754,470 $ 734,891 2.7 %
=== ========= === =========
Year ended June 30,
2012 2011 % Change
------------------ ------------------ ----------
North American (U.S. and Canada) $ 2,236,459 $ 2,022,668 10.6 %
International 778,837 643,863 21.0 %
-------------- -------------- ---- ----
Consolidated $ 3,015,296 $ 2,666,531 13.1 %
=== ========= === =========
Non-GAAP Financial Information: Quarter ended June 30,
2012 2011
------------------ ------------------
Return on invested capital (ROIC), annualized (a) 18.2 % 19.9 %
================= =================
Reconciliation of EBITDA to Net Income
-------------------------------------------------
Net income - GAAP $ 19,785 $ 19,661
Plus: Income taxes 8,846 9,115
Plus: Interest expense 150 541
Plus: Depreciation and amortization 2,328 2,312
-------------- --------------
EBITDA (numerator for ROIC) $ 31,109 $ 31,629
=== ========= === =========
Invested Capital Calculation
-------------------------------------------------
Equity - beginning of quarter $ 642,450 $ 562,071
Equity - end of quarter 652,311 587,394
-------------- --------------
Average equity 647,381 574,733
Average funded debt (b) 41,324 61,310
-------------- --------------
Invested capital (denominator for ROIC) $ 688,705 $ 636,043
=== ========= === =========
Year ended June 30,
2012 2011
------------------ ------------------
Return on invested capital (ROIC) (a) 17.2 % 20.6 %
------------------------------------------------- ============ === ============ ===
Reconciliation of EBITDA to Net Income
-------------------------------------------------
Net income - GAAP $ 74,288 $ 73,523
Plus: Income taxes 36,923 38,363
Plus: Interest expense 1,639 1,723
Plus: Depreciation and amortization 9,922 6,662
-------------- --------------
EBITDA (numerator for ROIC) $ 122,772 $ 120,271
=== ========= === =========
Invested Capital Calculation
-------------------------------------------------
Equity - beginning of year $ 587,394 $ 486,851
Equity - end of year 652,311 587,394
-------------- --------------
Average equity 619,853 537,123
Average funded debt (b) 92,125 46,186
-------------- --------------
Invested capital (denominator for ROIC) $ 711,978 $ 583,309
=== ========= === =========
Notes:
(a) Calculated as net income plus income taxes, interest expense,
depreciation and amortization (EBITDA), annualized and divided by
invested capital for the period
(b) Daily average interest-bearing debt
SOURCE: ScanSource, Inc.
ScanSource, Inc.
Richard P. Cleys
Chief Financial Officer
864-286-4358
or
Mary M. Gentry
Treasurer and Director, Investor Relations
864-286-4892
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