Exhibit 99.1
ScanSource Reports Results For Second Quarter 2012
FOR IMMEDIATE RELEASE
| Contact: | Richard P. Cleys | or | Mary Gentry | |||||||
| CFO | Director, Investor Relations | |||||||||
| ScanSource, Inc. | ScanSource, Inc. | |||||||||
| (864) 286-4358 | (864) 286-4892 |
SCANSOURCE REPORTS RECORD QUARTERLY SALES
Record results drive excellent net income.
GREENVILLE, SC – January 26, 2012 — ScanSource, Inc. (NASDAQ:SCSC), the leading international distributor of AIDC (automatic identification and data capture), point of sale, communications, and physical security products for the reseller market, today announced complete financial results for its second quarter ended December 31, 2011.
Quarter ended December 31, 2011:
Net sales | $ | 782.7 million | ||
Net income | $ | 21.4 million | ||
Diluted EPS | $ | 0.77 per share |
“Our excellent quarterly results were led by record sales in each of our POS/Barcoding business units in all geographies,” said Mike Baur, CEO, ScanSource, Inc. “In addition, we achieved record sales results in our ScanSource Communications business unit in North America.”
For the quarter ended December 31, 2011, net sales increased 14.5% to $782.7 million compared to $683.6 million in the prior year quarter. Operating income decreased by 4.3% to $32.1 million from $33.5 million in the same period last year. Net income decreased 1.2% to $21.4 million for the quarter ended December 31, 2011 versus $21.6 million in the prior year. The effective tax rate for the quarter decreased to 34.7% in the current quarter from 35.7% in the prior year quarter. Diluted earnings per share decreased 3.8% to $0.77 in the current quarter compared to $0.80 in the prior year quarter.
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ScanSource Reports Results For Second Quarter 2012
As previously disclosed, the prior year quarter ending December 31, 2010 included the favorable impact of proceeds from a legal settlement against a former service provider representing reimbursement of expenses. The $3.1 million recovery ($2.0 million after tax or $0.07 per diluted share) was recorded as a reduction of selling, general and administrative expenses in the December 2010 quarter. The December 2011 quarter EPS of $0.77 includes a $0.02 benefit for the change in fair value of contingent consideration.
Outlook for Next Quarter
The Company announced its current expectations for the third quarter of fiscal 2012. ScanSource expects that net revenues for the quarter ending March 31, 2012 could range from $700 million to $720 million, and diluted earnings per share could be in the range of $0.52 to $0.55 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 30 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
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ScanSource Reports Results For Second Quarter 2012
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 quarter ended September 30, 2011 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 the following table.
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ScanSource Reports Results For Second Quarter 2012
About ScanSource, Inc.
ScanSource, Inc. (NASDAQ: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 and converged communications equipment; and ScanSource Security in North America offers physical security solutions. Founded in 1992, the company ranks #839 on the Fortune 1000. For more information, call the toll-free sales telephone number at 800.944.2432 or visit www.scansourceinc.com.
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ScanSource Reports Results For Second Quarter 2012
ScanSource, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
| December 31, | June 30, | |||||||
| 2011 | 2011* | |||||||
| Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 42,593 | $ | 28,747 | ||||
Accounts receivable, less allowance of | 491,587 | 462,102 | ||||||
Inventories | 516,659 | 467,350 | ||||||
Prepaid expenses and other assets | 41,658 | 35,421 | ||||||
Deferred income taxes | 15,207 | 15,894 | ||||||
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Total current assets | 1,107,704 | 1,009,514 | ||||||
Property and equipment, net | 41,853 | 36,819 | ||||||
Goodwill | 54,612 | 59,090 | ||||||
Other assets, including identifiable intangible assets | 66,785 | 76,765 | ||||||
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Total assets | $ | 1,270,954 | $ | 1,182,188 | ||||
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| Liabilities and Shareholders’ Equity | ||||||||
Current liabilities: | ||||||||
Short-term borrowings | $ | 670 | $ | 3,164 | ||||
Current portion of contingent consideration | 6,703 | 2,398 | ||||||
Accounts payable | 433,388 | 406,453 | ||||||
Accrued expenses and other liabilities | 65,356 | 60,157 | ||||||
Income taxes payable | 1,827 | 5,175 | ||||||
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Total current liabilities | 507,944 | 477,347 | ||||||
Long-term debt | 5,429 | 30,429 | ||||||
Borrowings under revolving credit facility | 94,978 | 26,513 | ||||||
Long-term portion of contingent consideration | 13,299 | 21,396 | ||||||
Other long-term liabilities | 33,201 | 39,109 | ||||||
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Total liabilities | 654,851 | 594,794 | ||||||
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Shareholders’ equity: | ||||||||
Common stock | 130,722 | 123,608 | ||||||
Retained earnings | 499,903 | 460,157 | ||||||
Accumulated other comprehensive loss | (14,522 | ) | 3,629 | |||||
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Total shareholders’ equity | 616,103 | 587,394 | ||||||
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Total liabilities and shareholders’ equity | $ | 1,270,954 | $ | 1,182,188 | ||||
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| * | June 30, 2011 results are derived from audited consolidated financial statements. |
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ScanSource Reports Results For Second Quarter 2012
ScanSource, Inc. and Subsidiaries
Condensed Consolidated Income Statements (Unaudited)
(in thousands, except per share information)
| Quarter ended December 31, | Six months ended December 31, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Net sales | $ | 782,684 | $ | 683,644 | $ | 1,552,943 | $ | 1,318,175 | ||||||||
Cost of goods sold | 702,845 | 613,018 | 1,394,013 | 1,184,068 | ||||||||||||
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Gross profit | 79,839 | 70,626 | 158,930 | 134,107 | ||||||||||||
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Operating expenses: | ||||||||||||||||
Selling, general and administrative expenses | 48,474 | 37,088 | 95,043 | 75,721 | ||||||||||||
Change in fair value of contingent consideration | (722 | ) | — | 172 | — | |||||||||||
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Operating income | 32,087 | 33,538 | 63,715 | 58,386 | ||||||||||||
Other expense (income): | ||||||||||||||||
Interest expense | 749 | 388 | 1,236 | 754 | ||||||||||||
Interest income | (1,002 | ) | (306 | ) | (1,452 | ) | (605 | ) | ||||||||
Other, net | (374 | ) | (182 | ) | 3,157 | 191 | ||||||||||
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Income before income taxes | 32,714 | 33,638 | 60,774 | 58,046 | ||||||||||||
Provision for income taxes | 11,347 | 12,017 | 21,028 | 20,718 | ||||||||||||
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Net income | $ | 21,367 | $ | 21,621 | $ | 39,746 | $ | 37,328 | ||||||||
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Per share data: | ||||||||||||||||
Net income per common share, basic | $ | 0.78 | $ | 0.81 | $ | 1.46 | $ | 1.40 | ||||||||
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Weighted-average shares outstanding, basic | 27,244 | 26,786 | 27,191 | 26,749 | ||||||||||||
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Net income per common share, diluted | $ | 0.77 | $ | 0.80 | $ | 1.44 | $ | 1.38 | ||||||||
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Weighted-average shares outstanding, diluted | 27,674 | 27,160 | 27,604 | 27,068 | ||||||||||||
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ScanSource Reports Results For Second Quarter 2012
ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
(in thousands)
Net Sales by Geographic Segment:
Quarter ended December 31, | ||||||||||||
| 2011 | 2010 | % Change | ||||||||||
North American (a) | $ | 562,923 | $ | 522,875 | 7.7 | % | ||||||
International | 219,761 | 160,769 | 36.7 | % | ||||||||
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Consolidated | $ | 782,684 | 683,644 | 14.5 | % | |||||||
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Six months ended December 31, | ||||||||||||
| 2011 | 2010 | % Change | ||||||||||
North American (a) | $ | 1,136,395 | $ | 1,017,200 | 11.7 | % | ||||||
International | 416,548 | 300,975 | 38.4 | % | ||||||||
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Consolidated | $ | 1,552,943 | $ | 1,318,175 | 17.8 | % | ||||||
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Non-GAAP Financial Information:
| Quarter ended December 31, | ||||||||
| 2011 | 2010 | |||||||
Return on invested capital (ROIC), annualized (b) | 19.8 | % | 25.0 | % | ||||
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Reconciliation of EBITDA to Net Income | ||||||||
Net income - GAAP | $ | 21,367 | $ | 21,621 | ||||
Plus: Income taxes | 11,347 | 12,017 | ||||||
Plus: Interest expense | 749 | 388 | ||||||
Plus: Depreciation and amortization | 2,258 | 1,446 | ||||||
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EBITDA (numerator for ROIC) | $ | 35,721 | $ | 35,472 | ||||
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Invested Capital Calculation | ||||||||
Equity - beginning of the quarter | $ | 597,658 | $ | 513,646 | ||||
Equity - end of quarter | 616,103 | 535,649 | ||||||
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Average equity | 606,881 | 524,648 | ||||||
Average funded debt (c) | 109,303 | 38,213 | ||||||
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Invested capital (denominator for ROIC) | $ | 716,184 | $ | 562,861 | ||||
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Notes:
| (a) | Includes the United States and Canada |
| (b) | Calculated as net income plus income taxes, interest expense, depreciation and amortization (EBITDA), annualized and divided by invested capital |
| (c) | Daily average interest-bearing debt |
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