ScanSource, Inc. (NASDAQ: SCSC), a leading provider of
technology products and solutions, today announced financial
results for the third quarter ended March 31, 2020.
Quarter ended March
31,
2020
2019
Change
(in millions, except per share
data)
Net sales
$
872.5
$
893.4
(2
)%
Non-GAAP net sales, excluding Planned
Divestitures(1)
744.6
752.8
(1
)%
Operating income
6.3
18.8
(66
)%
Non-GAAP operating income(1)
(2)
14.8
30.6
(52
)%
Net income
1.7
11.7
(85
)%
Non-GAAP net income(1) (2)
9.3
20.6
(55
)%
Diluted EPS
$
0.07
$
0.45
(84
)%
Non-GAAP diluted EPS(1) (2)
$
0.37
$
0.80
(54
)%
(1) A reconciliation of non-GAAP financial
information to GAAP financial information is presented in the
Supplementary Information (Unaudited) below.
(2) Non-GAAP results exclude amortization
of intangible assets related to acquisitions, change in fair value
of contingent consideration, the impact of Planned Divestitures and
other non-GAAP items. A reconciliation of non-GAAP to GAAP
financial information is presented below.
“In March, companies around the world, including ours,
immediately shifted to work-from-home,” said Mike Baur, Chairman
and CEO, ScanSource, Inc. “I am proud of how our ScanSource
employees made the transition to work-from-home and delivered the
same level of customer service. During the quarter, we saw an
accelerated decline in our sales of premise-based communications
products. However, we had a significant increase in sales of
headsets, cameras, speakers, keyboards, displays, back-up power
supplies, IP desk phones, and connectivity to support remote
workers. Overall, we are pleased with our results delivering on our
sales expectations.”
Quarterly Results
Net sales were $872.5 million for the third quarter of fiscal
year 2020, down 2% year-over-year, principally from the negative
impact of foreign currency translation. Excluding the foreign
currency translation and net sales from the Planned Divestitures
and acquisitions, organic net sales growth for third quarter of
fiscal year 2020 totaled 0.5%. Net sales grew across most of
ScanSource’s diversified technologies in North America and Brazil.
In addition, the sales growth reflected accelerated growth for
work-from-home solutions from the immediate move to remote
workforces in March.
Operating income for the third quarter decreased to $6.3 million
year-over-year, and non-GAAP operating income decreased to $14.8
million from the prior-year quarter. This decrease includes a $4.5
million expense for inventory charges following the conversion to a
new inventory management system. This charge increased cost of
goods sold, which lowered gross profit for the third quarter of
fiscal year 2020.
On a GAAP basis, net income for the third quarter of fiscal year
2020 totaled $1.7 million, or $0.07 per diluted share, compared to
net income of $11.7 million, or $0.45 per diluted share, for the
prior-year quarter. Non-GAAP net income totaled $9.3 million, or
$0.37 per diluted share, compared to $20.6 million, or $0.80 per
diluted share, for the prior-year quarter.
As of March 31, 2020, ScanSource had cash and cash equivalents
of $35 million and total debt of $321 million. In the third quarter
of fiscal year 2020, the Company generated $32 million of operating
cash flow.
Plan to Divest Certain Businesses Outside of US, Canada and
Brazil
On August 20, 2019, ScanSource announced plans to divest its
physical products distribution businesses outside of the United
States, Canada and Brazil. ScanSource continues to operate and
invest in its digital distribution business in these geographies.
These plans are part of a strategic portfolio repositioning to
align investments with higher-growth, higher-margin businesses. The
Company has identified potential buyers for these businesses and is
in due diligence and purchase agreement negotiations. There can be
no assurance that this sale process will result in a transaction or
regarding the timing of any transaction. 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 $127.9 million for the third quarter of fiscal year
2020 and at March 31, 2020 had working capital of $155.5
million.
COVID-19 Update
Our top priority during the COVID-19 Pandemic is protecting the
health and safety of our employees. We have implemented travel
restrictions and moved quickly to transition our employees, where
possible, to a fully remote working environment. Nearly all
office-based employees around the world are working remotely. We
have taken a number of measures to ensure our teams feel secure in
their jobs and have the flexibility and resources they need to stay
safe and healthy. We expect higher costs from these safety measures
to protect our employees. We are continuing to provide the high
level of customer service our partners expect from us.
Update on Forecasts
Given the uncertainties related to the COVID-19 pandemic and the
changing economic environment, we are not providing our
expectations for net sales or earnings per share for the fourth
quarter of fiscal year 2020.
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 in a conference call today,
May 11, 2020, at 5:00 p.m. ET. A webcast of the call will be
available for all interested parties and can be accessed 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 Company's Planned Divestitures and the impact of the
COVID-19 pandemic, which involve risks and uncertainties. Any
number of factors could cause actual results to differ materially
from anticipated results, including, but not limited to, the impact
of the COVID-19 pandemic on our operations and financial condition,
the Company's ability to complete the Planned Divestitures on
acceptable terms or to otherwise dispose of the operations, 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
suppliers, termination of the Company's relationship with key
suppliers or a significant modification of the terms under which it
operates with a key supplier, 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, 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, 2019 and quarterly report on Form 10-Q for the
quarter ended March 31, 2020, 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 Planned
Divestitures and 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 Planned Divestitures, as well as
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.
Income Statement Non-GAAP Metrics: To evaluate current period
performance on a more consistent basis with prior periods, the
Company discloses non-GAAP net sales, non-GAAP gross profit,
non-GAAP operating income, non-GAAP other expense, net, non-GAAP
pre-tax income, non-GAAP net income and non-GAAP diluted earnings
per share (non-GAAP diluted "EPS"). Non-GAAP results exclude
amortization of intangible assets related to acquisitions, changes
in fair value of contingent consideration, acquisition and
divestiture costs, impact of Planned Divestitures and other
non-GAAP adjustments. Non-GAAP metrics 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, 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. (NASDAQ: 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 Best Places to Work in
South Carolina and on FORTUNE magazine’s 2020 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)
March 31, 2020
June 30, 2019*
Assets
Current assets:
Cash and cash equivalents
$
34,596
$
23,818
Accounts receivable, less allowance of
$34,119 at March 31, 2020 and $38,849 at June 30, 2019
618,758
654,983
Inventories
666,458
697,343
Prepaid expenses and other current
assets
116,221
101,171
Total current assets
1,436,033
1,477,315
Property and equipment, net
60,891
63,363
Goodwill
338,358
319,538
Identifiable intangible assets, net
133,228
127,939
Deferred income taxes
23,635
24,724
Other non-current assets
81,656
54,382
Total assets
$
2,073,801
$
2,067,261
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable
$
608,417
$
558,101
Accrued expenses and other current
liabilities
108,086
91,407
Current portion of contingent
consideration
45,660
38,393
Income taxes payable
989
4,310
Short-term borrowings
143
4,590
Current portion of long-term debt
6,901
4,085
Total current liabilities
770,196
700,886
Deferred income taxes
1,077
1,395
Long-term debt, net of current portion
145,050
151,014
Borrowings under revolving credit
facility
168,502
200,817
Long-term portion of contingent
consideration
—
39,532
Other long-term liabilities
91,298
59,488
Total liabilities
1,176,123
1,153,132
Shareholders' equity:
Common stock
62,314
64,287
Retained earnings
964,538
939,930
Accumulated other comprehensive income
(loss)
(129,174
)
(90,088
)
Total shareholders' equity
897,678
914,129
Total liabilities and shareholders'
equity
$
2,073,801
$
2,067,261
*
Derived from audited financial
statements.
ScanSource, Inc. and
Subsidiaries
Condensed Consolidated Income
Statements (Unaudited)
(in thousands, except per
share data)
Quarter ended March
31,
Nine months ended March
31,
2020
2019
2020
2019
Net sales
$
872,483
$
893,357
$
2,850,812
$
2,912,278
Cost of goods sold
777,674
783,342
2,530,020
2,569,570
Gross profit
94,809
110,015
320,792
342,708
Selling, general and administrative
expenses
78,923
77,688
244,557
236,569
Depreciation expense
3,493
3,417
10,500
9,954
Intangible amortization expense
5,486
5,005
16,079
14,708
Change in fair value of contingent
consideration
618
5,101
6,266
11,535
Operating income
6,289
18,804
43,390
69,942
Interest expense
3,421
3,670
10,964
9,415
Interest income
(1,080
)
(682
)
(2,629
)
(1,397
)
Other expense, net
296
21
102
254
Income before income taxes
3,652
15,795
34,953
61,670
Provision for income taxes
1,939
4,080
10,345
15,651
Net income
$
1,713
$
11,715
$
24,608
$
46,019
Per share data:
Net income per common share, basic
$
0.07
$
0.46
$
0.97
$
1.79
Weighted-average shares outstanding,
basic
25,346
25,704
25,386
25,647
Net income per common share, diluted
$
0.07
$
0.45
$
0.97
$
1.79
Weighted-average shares outstanding,
diluted
25,363
25,762
25,444
25,755
ScanSource, Inc. and
Subsidiaries
Supplementary Information
(Unaudited)
Net Sales by Segment:
Quarter ended March
31,
2020
2019
% Change
Worldwide Barcode, Networking &
Security:
(in thousands)
Net sales, reported
$
583,642
$
596,913
(2.2
)%
Planned Divestitures
(94,424
)
(100,170
)
Non-GAAP net sales, excluding Planned
Divestitures
489,218
496,743
(1.5
)%
Foreign exchange impact (a)
3,590
—
Non-GAAP net sales, constant currency
excluding Planned Divestitures and acquisitions
$
492,808
$
496,743
(0.8
)%
Worldwide Communications &
Services:
Net sales, reported
$
288,841
$
296,444
(2.6
)%
Planned Divestitures
(33,451
)
(40,341
)
Non-GAAP net sales, excluding Planned
Divestitures
255,390
256,103
(0.3
)%
Foreign exchange impact (a)
9,738
—
Less: Acquisitions(b)
(1,677
)
—
Non-GAAP net sales, constant currency
excluding Planned Divestitures and acquisitions
$
263,451
$
256,103
2.9
%
Consolidated:
Net sales, reported
$
872,483
$
893,357
(2.3
)%
Planned Divestitures
(127,875
)
(140,511
)
Non-GAAP net sales, excluding Planned
Divestitures
744,608
752,846
(1.1
)%
Foreign exchange impact (a)
13,328
—
Less: Acquisitions(b)
(1,677
)
—
Non-GAAP net sales, constant currency
excluding Planned Divestitures and acquisitions
$
756,259
$
752,846
0.5
%
(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 March 31, 2020 into U.S. dollars using the average
foreign exchange rates for the quarter ended March 31, 2019.
(b) Reflects a revenue recognition change
to a net basis for the intY acquisition.
ScanSource, Inc. and
Subsidiaries
Supplementary Information
(Unaudited)
Net Sales by Segment:
Nine months ended March
31,
2020
2019
% Change
Worldwide Barcode, Networking &
Security:
(in thousands)
Net sales, as reported
$
1,967,670
$
1,953,664
0.7
%
Planned Divestitures
(322,264
)
(340,862
)
Non-GAAP net sales, excluding Planned
Divestitures
1,645,406
1,612,802
2.0
%
Foreign exchange impact (a)
5,484
—
Non-GAAP net sales, constant currency
excluding Planned Divestitures and acquisitions
$
1,650,890
$
1,612,802
2.4
%
Worldwide Communications &
Services:
Net sales, as reported
$
883,142
$
958,614
(7.9
)%
Planned Divestitures
(116,893
)
(132,905
)
Non-GAAP net sales, excluding Planned
Divestitures
766,249
825,709
(7.2
)%
Foreign exchange impact (a)
15,169
—
Less: Acquisitions(b)
(7,767
)
(1,062
)
Non-GAAP net sales, constant currency
excluding Planned Divestitures and acquisitions
$
773,651
$
824,647
(6.2
)%
Consolidated:
Net sales, as reported
$
2,850,812
$
2,912,278
(2.1
)%
Planned Divestitures
(439,157
)
(473,767
)
Non-GAAP net sales, excluding Planned
Divestitures
2,411,655
2,438,511
(1.1
)%
Foreign exchange impact (a)
20,653
—
Less: Acquisitions(b)
(7,767
)
(1,062
)
Non-GAAP net sales, constant currency
excluding Planned Divestitures and acquisitions
$
2,424,541
$
2,437,449
(0.5
)%
(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
nine months ended March 31, 2020 into U.S. dollars using the
average foreign exchange rates for the nine months ended March 31,
2019.
(b) Reflects a revenue recognition change
to a net basis for the intY acquisition.
ScanSource, Inc. and
Subsidiaries
Supplementary Information
(Unaudited)
Net Sales by Geography:
Quarter ended March
31,
2020
2019
% Change
United States and Canada:
(in thousands)
Net sales, as reported
$
670,175
$
672,155
(0.3
)%
Less: Acquisitions(b)
(141
)
—
Non-GAAP net sales, excluding
acquisitions
$
670,034
$
672,155
(0.3
)%
International:
Net sales, as reported
$
202,308
$
221,202
(8.5
)%
Planned Divestitures
(127,875
)
(140,511
)
Non-GAAP net sales, excluding Planned
Divestitures
74,433
80,691
(7.8
)%
Foreign exchange impact(a)
13,328
—
Less: Acquisitions(b)
(1,536
)
—
Non-GAAP net sales, constant currency
excluding Planned Divestitures and acquisitions
$
86,225
$
80,691
6.9
%
Consolidated:
Net sales, as reported
$
872,483
$
893,357
(2.3
)%
Planned Divestitures
(127,875
)
(140,511
)
Non-GAAP net sales, excluding Planned
Divestitures
744,608
752,846
(1.1
)%
Foreign exchange impact(a)
13,328
—
Less: Acquisitions (b)
(1,677
)
—
Non-GAAP net sales, constant currency
excluding Planned Divestitures and acquisitions
$
756,259
$
752,846
0.5
%
(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 March 31, 2020 into U.S. dollars using the average
foreign exchange rates for the quarter ended March 31, 2019.
(b) Reflects a revenue recognition change
to a net basis for the intY acquisition.
ScanSource, Inc. and
Subsidiaries
Supplementary Information
(Unaudited)
Net Sales by Geography:
Nine months ended March
31,
2020
2019
% Change
United States and Canada:
(in thousands)
Net sales, as reported
$
2,173,516
$
2,189,567
(0.7
)%
Less: Acquisitions(b)
(3,623
)
(1,062
)
Net sales, excluding acquisitions
$
2,169,893
$
2,188,505
(0.9
)%
International:
Net sales, as reported
$
677,296
$
722,711
(6.3
)%
Planned Divestitures
(439,157
)
(473,767
)
Non-GAAP net sales, excluding Planned
Divestitures
238,139
248,944
(4.3
)%
Foreign exchange impact(a)
20,653
—
Less: Acquisitions(b)
(4,144
)
—
Non-GAAP net sales, constant currency
excluding Planned Divestitures and acquisitions
$
254,648
$
248,944
2.3
%
Consolidated:
Net sales, as reported
$
2,850,812
$
2,912,278
(2.1
)%
Planned Divestitures
(439,157
)
(473,767
)
Non-GAAP net sales, excluding Planned
Divestitures
2,411,655
2,438,511
(1.1
)%
Foreign exchange impact(a)
20,653
—
Less: Acquisitions(b)
(7,767
)
(1,062
)
Non-GAAP net sales, constant currency
excluding Planned Divestitures and acquisitions
$
2,424,541
$
2,437,449
(0.5
)%
(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
nine months ended March 31, 2020 into U.S. dollars using the
average foreign exchange rates for the nine months ended March 31,
2019.
(b) Reflects a revenue recognition change
to a net basis for the intY acquisition.
ScanSource, Inc. and
Subsidiaries
Supplementary Information
(Unaudited)
Non-GAAP Financial Information:
Quarter ended March 31,
2020
Reported GAAP measure
Intangible amortization
expense
Change in fair value of
contingent consideration
Acquisition, divestiture and
restructuring costs(a)
Tax recovery, net
Impact of Planned
Divestitures
Non-GAAP measure
in thousands, except per share
data
Net sales
$
872,483
$
—
$
—
$
—
$
—
$
(127,875
)
$
744,608
Gross profit
94,809
—
—
—
—
(10,206
)
84,603
Operating income
6,289
5,486
618
935
(1,529
)
3,020
14,819
Other expense, net
2,637
—
—
—
—
(759
)
1,878
Pre-tax income
3,652
5,486
618
935
—
4,571
15,262
Net income
1,713
4,171
467
894
(1,224
)
3,248
9,269
Diluted EPS
$
0.07
$
0.16
$
0.02
$
0.04
$
(0.05
)
$
0.13
$
0.37
Quarter ended March 31,
2019
Reported GAAP measure
Intangible amortization
expense
Change in fair value of
contingent consideration
Acquisition, divestiture and
restructuring costs(b)
Tax recovery, net
Impact of Planned
Divestitures
Non-GAAP measure
in thousands, except per share
data
Net sales
$
893,357
$
—
$
—
$
—
$
—
$
(140,511
)
$
752,846
Gross profit
110,015
—
—
—
—
(14,208
)
95,807
Operating income
18,804
5,005
5,101
814
—
898
30,622
Other expense, net
3,009
—
—
—
—
(257
)
2,752
Pre-tax income
15,795
5,005
5,101
814
—
1,155
27,870
Net income
11,715
3,789
3,619
665
—
846
20,634
Diluted EPS
$
0.45
$
0.15
$
0.14
$
0.03
$
—
$
0.03
$
0.80
(a) Acquisition and divestiture costs
totaled $0.8 million for the quarter ended March 31, 2020 and are
generally nondeductible for tax purposes. Restructuring costs
totaled $0.1 million for the quarter ended March 31, 2020.
(b) Acquisition and divestiture costs
totaled $0.2 million for the quarter ended March 31, 2019 and are
generally nondeductible for tax purposes. Restructuring costs
totaled $0.6 million for the quarter ended March 31, 2019.
Nine months ended March 31,
2020
Reported GAAP measure
Intangible amortization
expense
Change in fair value of
contingent consideration
Acquisition, divestiture and
restructuring costs(a)
Tax recovery, net
Impact of Planned
Divestitures
Non-GAAP measure
(in thousands, except per
share data)
Net sales
$
2,850,812
$
—
$
—
$
—
$
—
$
(439,157
)
$
2,411,655
Gross profit
320,792
—
—
—
—
(39,073
)
281,719
Operating income
43,390
16,079
6,266
3,503
(1,529
)
3,156
70,865
Other expense, net
8,437
—
—
—
—
(1,137
)
7,300
Pre-tax income
34,953
16,079
6,266
3,503
$
—
5,085
65,886
Net income
24,608
12,206
4,737
3,308
(1,224
)
3,571
47,206
Diluted EPS
$
0.97
$
0.48
$
0.19
$
0.13
$
(0.05
)
$
0.14
$
1.86
Nine months ended March 31,
2019
Reported GAAP measure
Intangible amortization
expense
Change in fair value of
contingent consideration
Acquisition, divestiture and
restructuring costs(b)
Tax recovery, net
Impact of Planned
Divestitures
Non-GAAP Measure
(in thousands, except per
share data)
Net sales
$
2,912,278
$
—
$
—
$
—
$
—
$
(473,767
)
$
2,438,511
Gross profit
342,708
—
—
—
—
(46,404
)
296,304
Operating income
69,942
14,708
11,535
2,907
—
(1,253
)
97,839
Other expense, net
8,272
—
—
—
—
(603
)
7,669
Pre-tax income
61,670
14,708
11,535
2,907
—
(650
)
90,170
Net income
46,019
11,154
8,514
2,386
—
150
68,223
Diluted EPS
$
1.79
$
0.43
$
0.33
$
0.09
$
—
$
0.01
$
2.65
(a) Acquisition and divestiture costs
totaled $2.7 million for the nine months ended March 31, 2020 and
are generally nondeductible for tax purposes. Restructuring costs
totaled $0.8 million for the nine months ended March 31, 2020.
(b) Acquisition and divestiture costs
totaled $1.0 million for the nine months ended March 31, 2019 and
are generally nondeductible for tax purposes. Restructuring costs
totaled $1.9 million for the nine months ended March 31, 2019.
ScanSource, Inc. and
Subsidiaries
Supplementary Information
(Unaudited)
(in thousands, except
percentages)
Non-GAAP Financial Information:
Quarter ended March
31,
2020
2019
Return on invested capital ratio (ROIC),
annualized (a)
6.1
%
11.4
%
Reconciliation of
net income to EBITDA:
Net income (GAAP)
$
1,713
$
11,715
Plus: Interest expense
3,421
3,670
Plus: Income taxes
1,939
4,080
Plus: Depreciation and amortization
9,539
9,363
EBITDA (non-GAAP)
16,612
28,828
Plus: Change in fair value of contingent
consideration
618
5,101
Plus: Tax recovery, net
(1,529
)
—
Plus: Acquisition and divestiture
costs
780
222
Plus: Restructuring costs
155
456
Plus: Impact of Planned Divestitures
3,231
854
Adjusted EBITDA (numerator for ROIC)
(non-GAAP)
$
19,867
$
35,461
Invested Capital
Calculation
Equity – beginning of the quarter
$
927,580
$
899,503
Equity – end of the quarter
897,678
911,063
Plus: Change in fair value of contingent
consideration, net of tax
467
3,619
Plus: Acquisition and divestiture
costs
780
222
Plus: Restructuring, net of tax
114
334
Plus: Tax recovery, net
(1,224
)
—
Plus: Impact of Planned Divestitures, net
of tax
3,248
1,181
Average equity
914,322
907,961
Average funded debt(b)
405,533
357,443
Invested capital (denominator for ROIC)
(non-GAAP)
$
1,319,855
$
1,265,404
(a) Calculated as earnings before 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) Average funded debt is calculated as
the average daily amounts outstanding on short-term and long-term
interest-bearing debt.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200511005894/en/
Contact: Gerald Lyons Executive Vice President, Chief
Financial Officer ScanSource, Inc. (864) 286-4854
- or -
Mary M. Gentry Vice President, Treasurer and Investor Relations
ScanSource, Inc. (864) 286-4892
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