SCSC - Earnings call transcript Q4 2021

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Operator

Welcome to the ScanSource quarterly earnings conference call. All lines have been placed in a listen-only mode until the question-and-answer session. Today's call is being recorded. [Operator Instructions]. I would now like to turn the call over to Mary Gentry, Senior Vice President, Treasurer and Investor Relations. begin. may you Ma'am,

Mary Gentry

thank joining and you afternoon, us. for Good

Officer. today Baur, our our me Chief Revenue on and Mike call the Financial our Jones, Eldh, Joining Chairman are CEO; and Steve Officer; Chief John

fiscal We will review accompanies a then our operating Relations results our posted comments your We commentary in website. year the section quarter questions. Investor for take CFO and the our and that and webcast of

year commentary and we me to you ScanSource's CFO release certain upon factors and statements. duty in forward-looking statements include, in risks that of could subject press this our earnings statements June remind date. cause any ended to to our XX, on out These for as XXXX, results only forward-looking ScanSource statements reflect or except any those should statements. such update identified views the actual but law. be and actual Let XX-K as that required and put These in and from uncertainties in filed Any changes views to represent are uncertainties disclaims as are today not the representing today our expectations, call not are results to, release Form by SEC. the the subsequent statements with forward-looking as materially risks as of relied differ and limited

over between provided filed also X-K. our press we Mike. on call, amounts our our can have reconciliations have our will the the During now these and turn been found and CFO and discuss website be GAAP reconciliations call I'll and Form results to in both These release. in with commentary non-GAAP

Mike Baur

our I've our us everyone, fiscal strategic thanks, plan. quarter with driving strong for consistent you and shared Each momentum our today. in and Mary, Thanks, joining of execution year,

sales our For of we sales our million back topped quarter Throughout quarter, year, sales fourth achieved we $XXX fiscal volumes levels. built and sales our pre-COVID outstanding growth. the profitability our and fourth

the achievement non-GAAP by net our employees For the and excellence a of fourth EPS drove year-over-year XX% growth of $X.XX. operational quarter, sales

demonstrated model hybrid distribution During year winning XXXX, the ScanSource has fiscal in that marketplace. our is

sales, and solutions that channel the of hybrid Our technology end-user allow engineering marketing professionals customers. demands team meet to talented of partners our create

few our capitalize accelerate expertise, their transformation marketplace of on We opportunity. massive partners fast-growing cloud; exciting end-user delivering to our sales is specialized X, the channel everything-as-a-service; digital a enabling the customers and minutes, are which uniquely to of John, both an to Due is subscription-based to innovative many describe channel, value positioned across different to and shift our are ScanSource partners supplier ways models. some markets. in will and to world

share for expertise. market specialized competitors, new while that require gaining from are opportunities our creating We demand

the we are 'XX, for transition from of COVID during FY prepared As opportunities on we ahead. business the our impacts business

highly immensely the ahead. make motivated Our will as and talented professionals year team a difference of we tackle

FY successes to achieved our people were now call will new Our customers gained well. relationships the John turn I 'XX with strengthened performance. business longstanding in and their over discuss customers to as because our

John Eldh

an to results. of finish impressive Thanks, strong Mike. QX year was a improving

sales team Our our across ScanSource's and sales as second and sales history. QX. by achieved XX-year business in quarterly the evidenced excited energy momentum the year-over-year we growth the highest XX% continued profitability by performance I'm broad-based growth delivered in and

wallet increasing customers. big adding customers in strength by fueled was deals, share and share existing with growth new our taking Our from competitors,

operational results supply-constrained employees environment. business excellence reflected challenging fourth throughout we Our quarter the a navigated our as and by

solutions to strong XX% especially are and increased quarter-over-quarter, and shortages, and With computing Security proved partner market supplier labor demand worker led year-over-year XX% net in to partner customers demand, In experiences outstanding teams increase our expectations. productivity. by ability end exceed segment, & our increased continued Barcode, Our delivered Networking implementing sales and mobile mobility.

accelerated With Street, more hardware, rebounded from ramping Services grew We payments XX% the has margin-rich higher table. Communications the complex saw profile which business, and pay and at we our curbside margin well. services around XX% reopening from of offerings support & Within year-over-year demand to net segment, pickup Main quarter-over-quarter. our sales a innovative and

XX% is sales in cloud-enabled This industry leader endpoints This in crossed our by and ARR, and are the Intelisys in growth and invest our grew annual $XXX double-digit a it Unified business, Center Communications revenue. is continue proving our users. million In to for achieving UK years a into suppliers UCaaS, we Year-over-year, and billings and Communications XX%. in XX.X% for ago recurring revenue. communications. Contact the Brazil outpaced in opportunities growth The across solutions. end America, as significant in For the was hybrid the work when premise-based Unified year-over-year XXth acquired CCaaS, double-digit shift quarter marks SaaS we the as Impressively, business, This cloud-enabled North to row quarter people business, cloud, growth. $X connectivity trends our office achieved number X a up Service by our to we Intelisys, accelerated Service Intelisys. another of endpoints mark from ahead the decline record of billion growth. grew Overall, remote

we on the cloud. leadership uniquely Given this communications, positioned position are capitalize in premise-based technology and shift our to to heritage

take across on-premise strong recurring cybersecurity including and both share on financial Brazil discipline. double-digit through solutions. year, increased X,XXX in top revenue strong businesses their growth profitability of our QX, We and our quarter advantage big workplace in mobility, digital our performance consistent and communication strength subscription market experienced Each and VARs barcode line revenue. with enabling to deals fiscal delivered has to team opportunities, transform cloud of are and We

to success and on outstanding a and acquisitions through our across patterns. on SaaS hardware, consumption in our capabilities organically expanding We've Brazil addition We're these to our user partners buying enable and build to to end-user to In across continues meet requirements. cloud technology end identify address our journey and been solutions. business momentum

in suppliers we understand future for partners of the partners and and in impactful ScanSource most with technologies expertise the industry's to and Around strategy sales hybrid hardware, ever-changing cloud. most leader our enable to our their our requirements go-to-market technology success end-user the Fundamental this programs distribution, challenges. of services accelerating of we've connectivity knowledge developed suppliers, success. preferences. our solve of is a across some market buying With specialized in complex we've to our to software, markets. suppliers are these, built look and deep, hybrid alignment our to help As partner distribution, Because

UC, for relationship announced our an in and As we with unlock growth help revenue to channel. across cloud recurring June, in expanded our them Intelisys Cisco, new example, opportunities

was the channels, of strategy. A scale we veteran also a supporter on and for and hardware lead Tony America channel in out joined services our a the of we also an summary, uncovering is commitment, who hardware for of to John our channel John massive partner on partner business President success, Intelisys. business, Tony part employees us for and want unprecedented and I'm and DeLozier, all success our in focused and partners a to including President new a cloud joint commitment and as hardware age. channels our needed to marketing longtime of skills, of events our few thrive we've of digital in lay In and talent send lead made. John XXX their ScanSource QX growth channel hosted a our As veteran bring opportunities our for in new we expert to excited thank and promoted and Sorrentino, North and will strength is of distribution collective you our help I we our the XX-year announced opportunities success, key and that of growth. partners the accelerate to technologies, expert and The in weeks the opportunities distribution August, services of cloud In ScanSource services this ahead. that about expertise changes supplier laser-focused to us leadership loyalty success. phase all dedication will in and later, world. distribution hybrid growth. excited to are our performance, merging and momentum and experience the FY 'XX, business about next XX-year enabling today's In Hardware and

will Steve the you take through results. financial Now

Steve Jones

John. Thanks,

quarter fourth our demonstrate team's of strong successful results Our plan. execution our strategic

growth have to line drive and We of chain challenges. in top midst the supply our proven industry-wide COVID ability

and Our geographies. growth fourth quarter that net segments and increased across XX% year-over-year sales million of significant XX% $XXX technology was our broad-based It's quarter-over-quarter. this

profits grew of margin profit compared contributed year's million. to Sales to for prior to a large mix, XX.X% gross $XX XX% deals year-over-year including gross XX.X% quarter. Our

growth which each million of improved our improved areas. includes quarter the quarter of for the million non-GAAP expense for the Intelisys X% and EPS for was our other quarter SG&A strategic non-GAAP year. $X.XX or EPS in and headcount fiscal $X.XX year-over-year, investments increased Our for Non-GAAP and -- of quarter $X.X $XX.X

quarter benefit Brazil fourth includes to income or operations, tax $X.X Our items tax primarily related share. of discrete international per from $X.XX our diluted a million

estimate XXXX, reflecting geographic tax to the XX% rate tax items effective we Brazil's For from fiscal XX%, mix. year range and to

with and Year-over-year, investment we turning the cash $XX Now $XXX flow capital balance of year operating million. million quarter to the for reduced We for $XX flow. quarter sheet improvement our cash in XX% had and the DSO by days strong of working sheet. an a days, strengthened and in year previous line year-over-year XX QX our expected of range. and came and balance XX million, decline at the from

cash typical debt navigate On cash XXXX, Our and supply $XXX QX are faster inventory $XX than of million equivalents we million. chain as and turns through we June range of XX, industry-wide of X.Xx constraints. had our

trailing Our EBITDA. X.Xx net leverage totaled approximately adjusted XX-month

remains capital flow back capital outlook. finally, now we our confidence our in of a X the annual share quarterly opportunities value, new to turn call closing the fourth XX.X%, strength for authorization years. for growth ScanSource's would announcing Mike increased I generation. and While ROIC 'XX, FY business repurchase And our long-term over drive million reflecting comments on to invested to over $XXX in top investing the like to and the our in cash priority are return highest long-term allocation quarter

Mike Baur

he was earlier a a In service you acquisition. Intelisys Charlie the and for of well-deserved longtime to to is today, ScanSource the we Mathis instrumental of From the resulted of in release Directors. CFO, This Reilly, a strategy Jack as for of Charlie thank Charlie. and and years announced appointment to Steve. to our back in our XXXX press crafting director, XXXX, Jack the XX retirement that served Thanks, company welcome Board

'XX always we our for explaining hardware more In the opportunity to distribution FY creation have quarterly increasingly ScanSource. or exit such ahead are backlog. valuation financial bookings we guidance, without and momentum, the business growth that limited visibility As were works investors provided and we with confident we our past, of with

hybrid time. a annual attach and where we to for However, decided have to rate with our we recurring model, of business the hardware change and sales, outlook year, each our the an first to provide growing more the in our revenue have services software

For last This compares million. X.X%, XXXX, of expect year EBITDA sales year-over-year fiscal and $XXX to to least be million. we least be at adjusted we expect at our growth net $XXX to year

we pleased in Board's repurchase million $XXX confidence announce reflects plan. our Finally, our share that the continued to strategic are authorization

questions. We will now open it up for

Operator

Instructions]. [Operator

from question Our Northcoast comes Research. Housum first Keith of

Keith Housum

supply in that Question overall inventory for and talk supply terms year, in the any look quality on have equal levels your constraints to quarter? into the the the were last insight you on you you first kind Can market. levels. inventory you of we're seems of levels surprising constraints which as the Inventory based to of chain roughly the seeing

John Eldh

to thanks Keith, question. your hear for Yes. your voice. Good

I to we've doing I services able think navigate over be supplier continue with that -- for it an to I pleased believe what quarters. really environment with really forward. the had our moving work have head to supply say the to it we've the And we'll past and to was We have inventory do three dealing teams what I managed past quarters, that outstanding chain, of and the navigate job the and hand our I sales and well to to environment. two, would think relates purchasing the it over environment I'm as our to look, done several

Keith Housum

Great.

Now would your you impacted by to that obtain were inability any say product? your sales

John Eldh

Not really, nothing that negligible if anything.

Keith Housum

the have you guys that you issues issued in increased, the ability guys your And of because quarter you. of you I why to confidence Would if you then forecast that as my was didn’t memory correct. think were probably second XXXX, for have guidance. guys I provide say is -- you guidance guess, Got you one citing

Mike Baur

growth we last making Keith, forward. the can bigger for really understand sure and driving having and advantage that time it's lot the going part And the was Mike. a become certainly quarters, what it of of Yes, stickier believe is spent revenues, we we our a over recurring past. transaction quarters business last a of the software we've few in attachment recurring to makes services, our significant than hardware revenue gotten X now

efficiently, so is dramatically our your you their his we what has both that going over year organization what to So past our better develop time enabling also we secondly, relationship planned more they're last team then lot have where to And are really about question. importantly, And customers this years but that more X.X to spending to I years, remember, believe X us business a a sales inventory have purchases, more areas. we John really grow, transactional the do us and back year if talking restructured to changed more And think relationship the ago. this done in strategic basis, a confidence.

confidence hard believe believe have And because update annual way, that's doesn't seasonality and by will we was customers outlook. going be in perfectly in is gives knowledge business. our have we attempt longer-term will see a just for outlook, providing which, ever show at that first a still for way really better me We But mean this business. record quarterly can some confidence. our I to coming to always just what what us big the more quarterly, our a thing have still And the this This so done. before. change of It our still we we're will a than in our lot be think

Operator

Chris question Company. next comes & from Our McGinnis Sidoti of

Chris McGinnis

that get more? that you bit driving that? into And dive it you the Is Can little share Can sustainable? just market to on supply? you ability about? touch Is what's offering or gains the talked a just the

John Eldh

really Yes, the an Chris, many market large the across the of for digital. impact sustainable. this digital Yes, are point ignition that as question. to first gains, Thanks we was of people's And they for path you absolutely the all of in I growing COVID business. think and is all, John. share play do initiatives, markets, transformation kind know,

to great. because of some in But X.X are tighter, than really, execute we yes, big part, and partners so better so I Mike talked inventory, share. the driving we and years, wins building deep, of aligned able relationships the And more to some we're organization more had things with were about that, had think, too, that We relationships really in large took our drove is reorganization and sales we deals, which joint we success. the both sales driving suppliers and meaningful some our

feel 'XX good pretty we're we excited, about So and

Chris McGinnis

a come some about think Great. the give seeing last that ago, was And if business? you having X growth Has level of I it quarter, remember, from talked you don't maybe you're quarters POS Portal issues I in that And that can market. back?

John Eldh

greatly my shut down. excited in reopen, of that Street. are we -- impacted Main to to Main days attach by remarks we saw with be our And our our services it as the we were Obviously, me volumes continue heard about increase. you actually, and early we revenues, levels. because -- And COVID, in But Street of talk now to we're pre-COVID back rate We prepared began reopening business. Yes. the

business we the about excited for very drives around we're that is if services margins remember, so due And you that hardware. business. that business to wrap a And us higher that

back we're we so excited open, in are that and there. is business Main definitely And Street

Chris McGinnis

question, last on authorization. just the just then And share new

look there relatively at do the the and soon? is for to sheet on maybe strength when -- the balance Or just of M&A that cash you opportunities active expect be flow? you You

Steve Jones

this Jones. is Yes. Thanks question. Chris, for Steve the

value I our that going So growth, organic be would both to M&A opportunities, say around is to that our first and long-term look always priority those would and opportunities. for be creation in

top that be our So priority. would

Operator

I'd like closing for at this to questions further any back turn no call showing remarks. Baur the Mike I'm Instructions]. time. [Operator over to

Mike Baur

for Great. today. joining Thank you us

hold on discuss quarterly X, call to Tuesday, XXXX. expect results September our November We next to conference XX

Operator

for conference. does this you gentlemen, today's and conclude Ladies you. Thank Thank all participating.

You all a great disconnect. day. may Have

ScanSource (SCSC) 24 Aug 212021 Q4 Earnings call transcript