ScanSource, Inc. (NASDAQ: SCSC), a leading global provider of technology
products and solutions, today announced financial results for the third
quarter ended March 31, 2019.
| Quarter ended March 31, | |||||||||||
| 2019 | 2018 | Change | |||||||||
| (in millions, except per share data) | |||||||||||
| Net sales | $ | 893.4 | $ | 895.6 | (0.3 | )% | |||||
| Operating income | 18.8 | 17.9 | 5 | % | |||||||
| Non-GAAP operating income(1) | 29.7 | 27.8 | 7 | % | |||||||
| GAAP net income | 11.7 | 10.6 | 10 | % | |||||||
| Non-GAAP net income(1) | 19.8 | 17.5 | 13 | % | |||||||
| GAAP diluted EPS | $ | 0.45 | $ | 0.42 | 7 | % | |||||
| Non-GAAP diluted EPS(1) | $ | 0.77 | $ | 0.68 | 13 | % | |||||
|
(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. |
|||||||||||
“We are pleased to continue to grow profits faster than sales, despite
sales below our forecast due to a lower volume of big deals,” said Mike
Baur, Chairman and CEO, ScanSource, Inc. “We are executing on our
strategic plan to drive growth at higher-value margins with more
recurring revenues for our sales partners.”
Quarterly Results
For the third quarter of fiscal year 2019, net sales totaled $893.4
million, which are 0.3% lower than the prior year quarter. Organic
sales, which exclude the impact of foreign currency translation and
recent acquisitions, grew 2% year-over-year with growth in both
worldwide segments. Operating income increased to $18.8 million, and
non-GAAP operating income increased 7% to $29.7 million, driven by
higher gross profit and operating margins.
On a GAAP basis, net income for the third quarter of fiscal year 2019
totaled $11.7 million, or $0.45 per diluted share, compared with net
income of $10.6 million, or $0.42 per diluted share, for the prior year
quarter. Non-GAAP net income for the third quarter of fiscal year 2019
increased 13% to $19.8 million, or $0.77 per diluted share, compared to
$17.5 million, or $0.68 per diluted share, for the prior year quarter.
Forecast for Next Quarter
For the fourth quarter of fiscal year 2019, ScanSource expects net sales
to range from $970 million to $1.03 billion, diluted earnings per share
to range from $0.56 to $0.62 per share and non-GAAP diluted earnings per
share to range from $0.80 to $0.86 per share. Non-GAAP diluted earnings
per share exclude amortization of intangible assets related to
acquisitions, change in fair value of contingent consideration and other
non-GAAP items.
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, May 9, 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, 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 provide due both to competitor and
customer action, 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 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 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. (NASDAQ: SCSC) is a leading global provider of
technology products and solutions, focusing on point-of-sale (POS),
payments, barcode, physical security, unified communications and
collaboration and telecom and cloud services. ScanSource’s teams provide
value-added solutions and operate from two segments: Worldwide Barcode,
Networking & Security, which includes POS Portal, and Worldwide
Communications & Services, which includes Intelisys and Canpango.
ScanSource is committed to helping its customers choose, configure and
deliver the industry’s best solutions across almost every vertical
market in North America, Latin America and Europe. Founded in 1992 and
headquartered in Greenville, South Carolina, ScanSource was named one of
the 2018 Best Places to Work in South Carolina and on FORTUNE
magazine’s 2019 List of World’s Most Admired Companies. ScanSource ranks
#653 on the Fortune 1000. For more information, visit www.scansource.com.
| ScanSource, Inc. and Subsidiaries | ||||||||
| Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
| (in thousands) | ||||||||
| March 31, 2019 | June 30, 2018* | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 20,400 | $ | 25,530 | ||||
|
Accounts receivable, less allowance of $43,124 at March 31, 2019 and $45,561 at June 30, 2018 |
632,539 | 678,940 | ||||||
| Inventories | 760,711 | 595,948 | ||||||
| Prepaid expenses and other current assets | 52,544 | 61,744 | ||||||
| Total current assets | 1,466,194 | 1,362,162 | ||||||
| Property and equipment, net | 71,282 | 73,042 | ||||||
| Goodwill | 319,042 | 298,174 | ||||||
| Identifiable intangible assets, net | 133,014 | 136,806 | ||||||
| Deferred income taxes | 20,660 | 22,199 | ||||||
| Other non-current assets | 51,963 | 52,912 | ||||||
| Total assets | $ | 2,062,155 | $ | 1,945,295 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 585,121 | $ | 562,564 | ||||
| Accrued expenses and other current liabilities | 86,910 | 90,873 | ||||||
| Current portion of contingent consideration | 39,445 | 42,975 | ||||||
| Income taxes payable | 1,664 | 13,348 | ||||||
| Current portion of long-term debt | 335 | 551 | ||||||
| Total current liabilities | 713,475 | 710,311 | ||||||
| Deferred income taxes | 1,607 | 1,769 | ||||||
| Long-term debt, net of current portion | 4,764 | 4,878 | ||||||
| Borrowings under revolving credit facility | 342,573 | 244,000 | ||||||
| Long-term portion of contingent consideration | 34,814 | 65,258 | ||||||
| Other long-term liabilities | 53,859 | 52,703 | ||||||
| Total liabilities | 1,151,092 | 1,078,919 | ||||||
| Shareholders’ equity: | ||||||||
| Common stock | 72,903 | 68,220 | ||||||
| Retained earnings | 928,352 | 882,333 | ||||||
| Accumulated other comprehensive income (loss) | (90,192 | ) | (84,177 | ) | ||||
| Total shareholders’ equity | 911,063 | 866,376 | ||||||
| Total liabilities and shareholders’ equity | $ | 2,062,155 | $ | 1,945,295 | ||||
|
* 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, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net sales | $ | 893,357 | $ | 895,637 | $ | 2,912,278 | $ | 2,852,408 | ||||||||
| Cost of goods sold | 783,342 | 791,749 | 2,569,570 | 2,529,632 | ||||||||||||
| Gross profit | 110,015 | 103,888 | 342,708 | 322,776 | ||||||||||||
| Selling, general and administrative expenses | 77,688 | 72,691 | 236,569 | 220,642 | ||||||||||||
| Depreciation expense | 3,417 | 3,352 | 9,954 | 10,059 | ||||||||||||
| Intangible amortization expense | 5,005 | 5,103 | 14,708 | 15,600 | ||||||||||||
| Change in fair value of contingent consideration | 5,101 | 4,801 | 11,535 | 28,595 | ||||||||||||
| Operating income | 18,804 | 17,941 | 69,942 | 47,880 | ||||||||||||
| Interest expense | 3,670 | 2,784 | 9,415 | 6,655 | ||||||||||||
| Interest income | (682 | ) | (887 | ) | (1,397 | ) | (2,349 | ) | ||||||||
| Other expense, net | 21 | 252 | 254 | 691 | ||||||||||||
| Income before income taxes | 15,795 | 15,792 | 61,670 | 42,883 | ||||||||||||
| Provision for income taxes | 4,080 | 5,143 | 15,651 | 20,118 | ||||||||||||
| Net income | $ | 11,715 | $ | 10,649 | $ | 46,019 | $ | 22,765 | ||||||||
| Per share data: | ||||||||||||||||
| Net income per common share, basic | $ | 0.46 | $ | 0.42 | $ | 1.79 | $ | 0.89 | ||||||||
| Weighted-average shares outstanding, basic | 25,704 | 25,572 | 25,647 | 25,503 | ||||||||||||
| Net income per common share, diluted | $ | 0.45 | $ | 0.42 | $ | 1.79 | $ | 0.89 | ||||||||
| Weighted-average shares outstanding, diluted | 25,762 | 25,606 | 25,755 | 25,607 | ||||||||||||
| ScanSource, Inc. and Subsidiaries | |||||||||||
| Supplementary Information (Unaudited) | |||||||||||
| Net Sales by Segment: | |||||||||||
| Quarter ended March 31, | |||||||||||
| 2019 | 2018 | % Change | |||||||||
| Worldwide Barcode, Networking & Security: | (in thousands) | ||||||||||
| Net sales, as reported | $ | 596,913 | $ | 604,322 | (1.2 | )% | |||||
| Foreign exchange impact (a) | 10,802 | — | |||||||||
| Net sales, constant currency (non-GAAP) | 607,715 | 604,322 | 0.6 | % | |||||||
| Less: Acquisitions | — | — | |||||||||
| Net sales, constant currency excluding acquisitions (non-GAAP) | $ | 607,715 | $ | 604,322 | 0.6 | % | |||||
| Worldwide Communications & Services: | |||||||||||
| Net sales, as reported | $ | 296,444 | $ | 291,315 | 1.8 | % | |||||
| Foreign exchange impact (a) | 11,945 | — | |||||||||
| Net sales, constant currency (non-GAAP) | 308,389 | 291,315 | 5.9 | % | |||||||
| Less: Acquisitions | (2,423 | ) | — | ||||||||
| Net sales, constant currency excluding acquisitions (non-GAAP) | $ | 305,966 | $ | 291,315 | 5.0 | % | |||||
| Consolidated: | |||||||||||
| Net sales, as reported | $ | 893,357 | $ | 895,637 | (0.3 | )% | |||||
| Foreign exchange impact (a) | 22,747 | — | |||||||||
| Net sales, constant currency (non-GAAP) | 916,104 | 895,637 | 2.3 | % | |||||||
| Less: Acquisitions | (2,423 | ) | — | ||||||||
| Net sales, constant currency excluding acquisitions (non-GAAP) | $ | 913,681 | $ | 895,637 | 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 March 31, 2019 into U.S. dollars using the average foreign exchange rates for the quarter ended March 31, 2018. |
|||||||||||
| ScanSource, Inc. and Subsidiaries | |||||||||||
| Supplementary Information (Unaudited) | |||||||||||
| Net Sales by Segment: | |||||||||||
| Nine months ended March 31, | |||||||||||
| Worldwide Barcode, Networking & Security: | 2019 | 2018 | % Change | ||||||||
| (in thousands) | |||||||||||
| Net sales, as reported | $ | 1,953,664 | $ | 1,944,436 | 0.5 | % | |||||
| Foreign exchange impact (a) | 26,119 | — | |||||||||
| Net sales, constant currency | 1,979,783 | 1,944,436 | 1.8 | % | |||||||
| Less: Acquisitions | (23,465 | ) | (14,553 | ) | |||||||
| Net sales, constant currency excluding acquisitions | $ | 1,956,318 | $ | 1,929,883 | 1.4 | % | |||||
| Worldwide Communications & Services: | |||||||||||
| Net sales, as reported | $ | 958,614 | $ | 907,972 | 5.6 | % | |||||
| Foreign exchange impact (a) | 38,166 | — | |||||||||
| Net sales, constant currency | 996,780 | 907,972 | 9.8 | % | |||||||
| Less: Acquisitions | (5,219 | ) | — | ||||||||
| Net sales, constant currency excluding acquisitions | $ | 991,561 | $ | 907,972 | 9.2 | % | |||||
| Consolidated: | |||||||||||
| Net sales, as reported | $ | 2,912,278 | $ | 2,852,408 | 2.1 | % | |||||
| Foreign exchange impact (a) | 64,285 | — | |||||||||
| Net sales, constant currency | 2,976,563 | 2,852,408 | 4.4 | % | |||||||
| Less: Acquisitions | (28,684 | ) | (14,553 | ) | |||||||
| Net sales, constant currency excluding acquisitions | $ | 2,947,879 | $ | 2,837,855 | 3.9 | % | |||||
|
(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, 2019 into U.S. dollars using the average foreign exchange rates for the nine months ended March 31, 2018. |
|||||||||||
| ScanSource, Inc. and Subsidiaries | |||||||||||
| Supplementary Information (Unaudited) | |||||||||||
| Net Sales by Geography: | |||||||||||
| Quarter ended March 31, | |||||||||||
| 2019 | 2018 | % Change | |||||||||
| United States and Canada: | (in thousands) | ||||||||||
| Net sales, as reported | $ | 672,155 | $ | 653,537 | 2.8 | % | |||||
| Less: Acquisitions | (2,423 | ) | — | ||||||||
| Net sales, excluding acquisitions(non-GAAP) | $ | 669,732 | $ | 653,537 | 2.5 | % | |||||
| International: | |||||||||||
| Net sales, as reported | $ | 221,202 | $ | 242,100 | (8.6 | )% | |||||
| Foreign exchange impact (a) | 22,747 | — | |||||||||
| Net sales, constant currency (non-GAAP) | 243,949 | 242,100 | 0.8 | % | |||||||
| Less: Acquisitions | — | — | |||||||||
| Net sales, constant currency excluding acquisitions (non-GAAP) | $ | 243,949 | $ | 242,100 | 0.8 | % | |||||
| Consolidated: | |||||||||||
| Net sales, as reported | $ | 893,357 | $ | 895,637 | (0.3 | )% | |||||
| Foreign exchange impact (a) | 22,747 | — | |||||||||
| Net sales, constant currency (non-GAAP) | 916,104 | 895,637 | 2.3 | % | |||||||
| Less: Acquisitions | (2,423 | ) | — | ||||||||
| Net sales, constant currency excluding acquisitions (non-GAAP) | $ | 913,681 | $ | 895,637 | 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 March 31, 2019 into U.S. dollars using the average foreign exchange rates for the quarter ended March 31, 2018. |
|||||||||||
| ScanSource, Inc. and Subsidiaries | |||||||||||
| Supplementary Information (Unaudited) | |||||||||||
| Net Sales by Geography: | |||||||||||
| Nine months ended March 31, | |||||||||||
| 2019 | 2018 | % Change | |||||||||
| United States and Canada: | (in thousands) | ||||||||||
| Net sales, as reported | $ | 2,189,567 | $ | 2,095,519 | 4.5 | % | |||||
| Less: Acquisitions | (28,684 | ) | (14,553 | ) | |||||||
| Net sales, excluding acquisitions | $ | 2,160,883 | $ | 2,080,966 | 3.8 | % | |||||
| International: | |||||||||||
| Net sales, as reported | $ | 722,711 | $ | 756,889 | (4.5 | )% | |||||
| Foreign exchange impact (a) | 64,285 | — | |||||||||
| Net sales, constant currency | 786,996 | 756,889 | 4.0 | % | |||||||
| Less: Acquisitions | — | — | |||||||||
| Net sales, constant currency excluding acquisitions | $ | 786,996 | $ | 756,889 | 4.0 | % | |||||
| Consolidated: | |||||||||||
| Net sales, as reported | $ | 2,912,278 | $ | 2,852,408 | 2.1 | % | |||||
| Foreign exchange impact (a) | 64,285 | — | |||||||||
| Net sales, constant currency | 2,976,563 | 2,852,408 | 4.4 | % | |||||||
| Less: Acquisitions | (28,684 | ) | (14,553 | ) | |||||||
| Net sales, constant currency excluding acquisitions | $ | 2,947,879 | $ | 2,837,855 | 3.9 | % | |||||
|
(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, 2019 into U.S. dollars using the average foreign exchange rates for the nine months ended March 31, 2018. |
|||||||||||
| ScanSource, Inc. and Subsidiaries | |||||||||||||||
| Supplementary Information (Unaudited) | |||||||||||||||
| (in thousands, except per share data) | |||||||||||||||
| Non-GAAP Financial Information: | |||||||||||||||
| Quarter ended March 31, 2019 | |||||||||||||||
|
Operating |
Pre-tax |
Net |
Diluted |
||||||||||||
| GAAP measure | $ | 18,804 | $ | 15,795 | $ | 11,715 | $ | 0.45 | |||||||
| Adjustments: | |||||||||||||||
| Amortization of intangible assets | 5,005 | 5,005 | 3,789 | 0.15 | |||||||||||
| Change in fair value of contingent consideration | 5,101 | 5,101 | 3,619 | 0.14 | |||||||||||
| Acquisition costs (a) | 222 | 222 | 222 | 0.01 | |||||||||||
| Restructuring costs | 592 | 592 | 443 | 0.02 | |||||||||||
| Non-GAAP measure | $ | 29,724 | $ | 26,715 | $ | 19,788 | $ | 0.77 | |||||||
| Quarter ended March 31, 2018 | |||||||||||||||
|
Operating |
Pre-tax |
Net |
Diluted |
||||||||||||
| GAAP measure | $ | 17,941 | $ | 15,792 | $ | 10,649 | $ | 0.42 | |||||||
| Adjustments: | |||||||||||||||
| Amortization of intangible assets | 5,103 | 5,103 | 3,590 | 0.14 | |||||||||||
| Change in fair value of contingent consideration | 4,801 | 4,801 | 3,272 | 0.12 | |||||||||||
| Non-GAAP measure | $ | 27,845 | $ | 25,696 | $ | 17,511 | $ | 0.68 | |||||||
|
(a) Acquisition costs are non-deductible for tax purposes. |
|||||||||||||||
| ScanSource, Inc. and Subsidiaries | |||||||||||||||
| Supplementary Information (Unaudited) | |||||||||||||||
| (in thousands, except per share data) | |||||||||||||||
| Non-GAAP Financial Information: | |||||||||||||||
| Nine months ended March 31, 2019 | |||||||||||||||
|
Operating |
Pre-tax |
Net |
Diluted |
||||||||||||
| GAAP measure | $ | 69,942 | $ | 61,670 | $ | 46,019 | $ | 1.79 | |||||||
| Adjustments: | |||||||||||||||
| Amortization of intangible assets | 14,708 | 14,708 | 11,154 | 0.43 | |||||||||||
| Change in fair value of contingent consideration | 11,535 | 11,535 | 8,514 | 0.33 | |||||||||||
| Acquisition costs (a) | 988 | 988 | 988 | 0.04 | |||||||||||
| Restructuring costs | 1,920 | 1,920 | 1,399 | 0.05 | |||||||||||
| Non-GAAP measure | $ | 99,093 | $ | 90,821 | $ | 68,074 | $ | 2.64 | |||||||
| Nine months ended March 31, 2018 | |||||||||||||||
|
Operating |
Pre-tax |
Net |
Diluted |
||||||||||||
| GAAP measure | $ | 47,880 | $ | 42,883 | $ | 22,765 | $ | 0.89 | |||||||
| Adjustments: | |||||||||||||||
| Amortization of intangible assets | 15,600 | 15,600 | 10,500 | 0.41 | |||||||||||
| Change in fair value of contingent consideration | 28,595 | 28,595 | 19,018 | 0.74 | |||||||||||
| Acquisition costs (a) | 172 | 172 | 172 | 0.01 | |||||||||||
| Legal settlement, net of attorney fees | 952 | 952 | 771 | 0.03 | |||||||||||
| Tax reform charges | — | — | 6,689 | 0.26 | |||||||||||
| Non-GAAP measure | $ | 93,199 | $ | 88,202 | $ | 59,915 | $ | 2.34 | |||||||
| (a) Acquisition costs are non-deductible for tax purposes. | |||||||||||||||
| ScanSource, Inc. and Subsidiaries | ||||||||||||||||
| Supplementary Information (Unaudited) | ||||||||||||||||
| (in thousands, except percentages) | ||||||||||||||||
| Non-GAAP Financial Information: | ||||||||||||||||
|
Quarter ended |
Nine months ended |
|||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Return on invested capital (ROIC), annualized (a) | 11.1 | % | 11.2 | % | 12.4 | % | 12.4 | % | ||||||||
|
Reconciliation of Net Income to Adjusted |
||||||||||||||||
| Net income (GAAP) | $ | 11,715 | $ | 10,649 | $ | 46,019 | $ | 22,765 | ||||||||
| Plus: Interest expense | 3,670 | 2,784 | 9,415 | 6,655 | ||||||||||||
| Plus: Income taxes | 4,080 | 5,143 | 15,651 | 20,118 | ||||||||||||
| Plus: Depreciation and amortization (b) | 9,363 | 9,438 | 27,565 | 28,204 | ||||||||||||
| EBITDA (non-GAAP) | 28,828 | 28,014 | 98,650 | 77,742 | ||||||||||||
| Adjustments: | ||||||||||||||||
| Change in fair value of contingent consideration | 5,101 | 4,801 | 11,535 | 28,595 | ||||||||||||
| Acquisition costs | 222 | — | 988 | 172 | ||||||||||||
| Restructuring costs (b) | 456 | — | 1,784 | — | ||||||||||||
| Legal settlement, net of attorney fees | — | — | — | 952 | ||||||||||||
| Adjusted EBITDA (numerator for ROIC) (non-GAAP) | $ | 34,607 | $ | 32,815 | $ | 112,957 | $ | 107,461 | ||||||||
|
Invested Capital Calculation |
||||||||||||||||
| Equity – beginning of the quarter | $ | 899,503 | $ | 860,787 | $ | 866,376 | $ | 837,145 | ||||||||
| Equity – end of the quarter | 911,063 | 877,796 | 911,063 | 877,796 | ||||||||||||
| Adjustments: | ||||||||||||||||
| Change in fair value of contingent consideration, net of tax | 3,619 | 3,272 | 8,514 | 19,018 | ||||||||||||
| Acquisition costs | 222 | — | 988 | 172 | ||||||||||||
| Restructuring costs, net of tax (b) | 334 | — | 1,289 | — | ||||||||||||
| Legal settlement, net of attorney fees, net of tax | — | — | — | 771 | ||||||||||||
| Tax reform charges | — | — | 6,689 | |||||||||||||
| Average equity | 907,371 | 870,928 | 894,115 | 870,796 | ||||||||||||
| Average funded debt (c) | 357,443 | 315,872 | 320,686 | 283,819 | ||||||||||||
| Invested capital (denominator for ROIC) (non-GAAP) | $ | 1,264,814 | $ | 1,186,800 | $ | 1,214,801 | $ | 1,154,615 | ||||||||
|
(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) | |||||||
|
Non-GAAP Financial Information: |
|||||||
|
Forecast for Quarter |
|||||||
| Range Low | Range High | ||||||
| GAAP diluted EPS | $ | 0.56 | $ | 0.62 | |||
| Adjustments: | |||||||
| Amortization of intangible assets | 0.15 | 0.15 | |||||
| Change in fair value of contingent consideration | 0.08 | 0.08 | |||||
| Restructuring costs | 0.01 | 0.01 | |||||
| Non-GAAP diluted EPS | $ | 0.80 | $ | 0.86 | |||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190509005916/en/