SCSC - Earnings call transcript Q2 2022

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Operator

Welcome to the ScanSource Quarterly Earnings Conference Call. All lines are placed in a listen-only mode until the question-and-answer session. Today's call is being recorded. If anyone has any objections, you may disconnect at this time. 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

then We will review and that questions. operating our results webcast infographic in posted earnings our Relations take section website. quarter an of for We accompanies your the our and comments the Investor

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

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

Michael Baur

us everyone for today. Mary, Thanks, thanks, joining and

strategy. the second hybrid our quarter performance strength of Our outstanding underscores distribution

from for of profitability top delivered technologies X.X% demand quarter expectations. adjusted sales month the partners record growth the and EPS non-GAAP EBITDA and across ahead margin line quarter, period. drove and the Strong for our of channel XX our X.X% and trailing For growth we net

We worldwide excellence supply delivered by are employees operational proud our ongoing the challenges. while of the chain

business and to our are model ability in execute. We confident

our our XXXX million. fiscal and distribution accelerate of year partners As is growth result, and of foundation providing of and $XXX least innovative and at we expect are in added raising by sales a now suppliers full to growth at least The offers. X% adjusted net helping year EBITDA plus meet requirements strategy hybrid services, user sales other technologies across hardware value SaaS outlook

how we sustainable Our business operate profitability. and hybrid growth guides, distribution strategy for our

will promotion President our our two to the addition financial the of am Eldh John I for businesses, announce SaaS Inc. believe outstanding positioned team the world-class built that In have John next ScanSource to at cloud digital we his today and on growth of ScanSource. results, successful profitable a device to of sustainable has of us us background growth trajectory. to pleased phase leading leadership years and drive John a growth John lead

call including and will As communicate over our suppliers John. President, to the now I'll message and and John performance. drive sales to hybrid to strategy partners, business Congratulations, distribution stakeholders, our key investors. growth our turn you discuss champion employees, this

John Eldh

thank past The opportunity Thanks me. team you in truly and also humbled and I'm belief and two Mike. years want been by have entire the amazing. with and ScanSource excited to trust for working this your you

as we chapter for of and architect bright ScanSource. the forward next growth is to future I Our look together working

with drove and across at how is sales challenges. and our impressive XX% employees the team delivered As profits. margin segments. Strong quarter, expansion, top increase navigating our both net demand I'm X.X% results technologies year-over-year for supply in in executing growth line and gross successfully of year-over-year our with growth delighted chain

reflect results deals. large and from projects quarter enterprise strong growth second Our

customer and in the challenges deep supply manage supplier we excellence us these environment. heightened challenges enabled chain While today's successfully operational supply constrained and our specialization, navigate relationships experience and quarter, to differentiators

for use is balance differentiator to our investments. ability our sheet inventory strategic Another

Our hardware across teams a buying hardware, a take and var of distribution I'd a delivery customers for business healthcare to trust in services. us software along out collaboration with ScanSource with to sales work to the our how suppliers care share video, and cloud the experience. SaaS, we enabling UCAS of friction cloud like take to dedicated of solution recent win and subscription. partners example, with and connectivity In their that our enabled design of market, [ph] communication the example the strategy included this large enabled is hybrid and voice

eCommerce increased year-over-year profit incentives increased users pricing, the example massive sales With of demand team plus customer solutions, In our margin. technology inventory great This with increase delivery segment, with strong awareness, and higher how Our initiatives solution. maximize a fueled and implement expand specialty are XX.X% and which segment channel by and and for continued with requirements deals demand the big mobile in computing solutions gains. our increase increased market partners assisted supplier acceleration technical retailers more and to improve drove enable partners. solution demand, hardware increases specifications, the automation customers productivity. SaaS. net profits, X% to working sales implementing shortages experience. mobile end sell gross technology favorable refresh supplier mix is are caused labor year-over-year centers, gross to sales sales COVID-XX, distribution increased driving by worker design, A and to of sales we our To XX% market program our and partners address Digital are in the with total product share

services. including purchases. solutions checkout, plus hardware retailers had its customer are from partners fulfillment year sales higher self year omnichannel point growth double also for for has to of navigate a business, Our preferences, buying strong storefront profile adopt The sale team pickup, portal curbside and helping pod over which digit selling margin online

is year are year year with opportunities users. communications connectivity. new user many considered profit sold partners continued net $X over recurring and revenue year cloud team in work by for in the gross by by end increased or by positioned revenue the with our annual modern achieved momentum and growth sales XX.X% providing exceeded end to well We're growing adoption in serve and encouraged two gross on-prem model of encouraged Intelisys our SaaS supplier, also cloud remote we a In our double being billion norm endpoints over X% on The profit cloud communications significant is digits and recurring margin. UCaaS, XX% CCaaS, For XX% by sales segment year subscription The billings increased partners VARs. We're segment enabled and globally. net sales, solutions. ARR, market, both the year

power leadership We've partners calling across more energy planned and breakout already amped. partners, in high select role held enablement of a highlight line-up summit networking our engage here face and event partners. these panel road group in-person During in understanding discussions. in the over series, country XX the the industry These our our topics, for are we Intelisys supplier educational held face was growth show Greenville, South plays pack of continue also Carolina. of with quarter, plans and which growth thought through them to for strategic events, a our hundred demonstrate our sales a regional, We technology great I'm shared about sales excited two interactive with success. events advance

consistent Brazil team revenue top Our metrics. in continues performance profitability across to and deliver line

in the During big gains strength share experience quarter, suppliers. traction market and we deals, with new

execution outstanding to in to encouraged of fiscal hardware, build momentum continues across we business as the In Brazil our our first into our digital solutions. half second I'm year our XXXX. in head addition SaaS and success half by

at a quarter, and partners who across and our heartfelt I'd for our SaaS employees for to and for and exceed continued I'd customers source. hardware, their the We centers scam of expectation. in out suppliers cloud like worldwide, our also leading the way future all shout thank and distribution, thank to are their every our outstanding and accelerating services. in hybrid day suppliers trust efforts of distribution our up connectivity, employees technology like customer the loyalty our show with to

Steve Now, financial take will through the results. you

Stephen Jones

Thanks, John.

demonstrate quarter highest of to was the and revenues growth results expanding recurring in It five continue working quarter see mix sales ROIC the our growth successful team's as demand. plan. of for result services. years, capital we value-added balance outstanding our quarter, and margins future strategic second the delivering We our support the achieved and XX.X% our meet to of investment line our strong benefit top an for Our execution

X% on line As Mike our In segments. confidence EBITDA achieve the to organic strong momentum and margins remarks, the year basis performance and growth our sales in opening and X.X% noted in 'XX expectations. we gives top our or growth raise year us over up FY quarter, strong expanded second an his both

operating margins to increased margin profit X.XX%. XX.X% margins EBITDA X.XX% our to increased gross non-GAAP Our income adjusted, increased and to

Our million customer QX net across restrict sales of -- reflects $XXX our technologies. demand strong

benefit quarter, the saw During price supplier from we increases. modest

and Our million. incentives contributed year gross supplier dollars. XX% mix profit profits higher gross grew over our sales to Favorable sales year to $XXX higher

XX.X% margins QX up quarter. from Our XX.X% increased the to in prior year's

$XX.X year. SG&A investments XX% growth expand quarter year areas, and Our Intelisys for IT This $XX.X million for increased or as of strategic to our investment million Brazil headcount well over non-GAAP expense as includes the other in capabilities.

as in scale our enhance part investments business strategy. to growth Our focus to is IT our ability of our

share excludes compensation totalled the year, million $XX.X profit adjusted Higher reflecting drove expansion. which margins Second quarter XX% gross over based X.XX% adjusted year margin margin. EBITDA EBITDA up of QX

of tax increase second income rate Our primarily income, tax forecasted in XX% Brazil. from an quarter reflects exempt

tax XXXX, effective year estimate rate, XX.X% we to fiscal For to excluding items between the XX.X%. discreet range

the cash flow. to sheet balance turning and Now

increased in a terms year came capital quarter cash range XX support investment trailing DSO of operating typical XX to period. Year year million over sales increased due our longer million $XX used days, for to million $XX month working growth. capital selected large working the up increase. our deals. year, Our expected the at We and from $XXX on XX% QX for over as modestly

to QX typical and challenges. X.X ongoing cash $XXX cash supply inventory manage line with and in of chain terms million. and the times future were Our we December debt demand of of had range higher XX, On reflect million our inventory XXXX, and levels $XX meet equivalent

flexibility net EBITDA and support remains growth a we From leverage financial times to create sheet month our approximately XX opportunities X.X trailing value. adjusted long demonstrating QX debt balance perspective, at strong. Our term ended

quarter, the purchase we million purchases share our $XXX,XXX authorization. had During under $XXX share December approximately

over it now Second $X.X up is all-time trailing EPS for month record year an non-GAAP increased QX our also EPS of $X.XX per and is share high. We'll a With our a open two results, record XX non-GAAP quarter XX% of questions. year, high.

Operator

Tindle comes instructions] question the of Thank line first from our James. And you. [Operator Raymond Adam with

open. ahead. Go line Your Please. is

UnidentifiedAnalyst

let my start quarter. add please Last they're -- baked Hello, on this Steven. to into we're Mike. can we the forecast that Mike, John end let congratulations. the on large the you for wondering me add to domestic by reseller versus please And and see the the in see heard of is This from a supply Catherine constraints year? commenting same of of and Adam my today light. night, the some is December you're starting your for signs if state starting

Michael Baur

that's that I'll if okay. let John answer

UnidentifiedAnalyst

problem. No

John Eldh

and thanks four ago. and change yes, Hey, thanks two fantastic our a times job half. we quarter. have your to and managing overall We think year supply the the team's doing our not to question environment continue yeah, factored for expect times through the a for from navigating challenges of seen chain than chain lead see congratulations. is lead into and second times and last longer supply the Have And extended the much

UnidentifiedAnalyst

so have And the been Steve, one increases has what Thank but for customer quarters, you you. vendor over actually few implementing then which partners been to a ScanSource response this number in perfect. mentioned the the Okay, price benefited past quarter, of far?

Stephen Jones

perspective, a lot communicated. our to customer lot don't we channel expected visibility well haven't of we a impact and Well, of a partners. seen have customer was from it's from end It

from really perspective. haven't a an impact seen much So we of customer

Operator

Research. you. of our And Northcoast the Housum comes question next Keith line from Thank with

please. open, is Go line ahead. Your

Keith Housum

John, guys, quarters, throw that out impact of the out I'll thought again, decide who Well congratulations sales who for once has I'll several but Hey issue to terms and obviously in afternoon well. guys constraints wants now deserved. did supply guys. for been your I'll answer Good there any quarter? how the much And as my let us it, you

John Eldh

our the second that and Yeah, push congratulations. question. Keith, the thanks into some out that the for we're for characterize best to also deals think how thanks half some we factored And seeing we supply see impact, the I chain guide. And, did saw we way is

Keith Housum

year? Got and that deliver is continue is is this is you. constantly going asked terms release time the right calendar I your And is your rest able know this you people thinking now? of thinking, in are through the but to partially it of times and or your visibility before, on lead fluctuating to How

Michael Baur

even fluid And First back of said my of earlier, are helped last that point deliver results what key this team I and supply to say that's the I environment we're as think kind navigating all, comments, through and would us the prepared it I ongoing chain definitely and of proud of quarter. the year. strong and would of that character well, differentiators and quarter extremely to challenges end the we that's one our we we would I see such

Keith Housum

vendor's that we're to of that a might there lot this the one be whenever hear the is the concern of ends glut is then, you. risk Got things inventory. of And chain supply starting

in Some I doesn't stuck an industry you channel have impact at I the the the guys happen of make you on might and efforts, end to guess, can are guess the that sure that day? are sales, taking address,

John Eldh

one. take me that let Well,

sheet. which we're looking we're at levels too our inventory the constantly way we've this, our you far our ROIC. we're levels, to been able that really watching don't balance managing we're, and to So Keith, we've the that. gone so steady fairly We're of inventory And keep health our inventory. out leveraging remarkably in back as We get speaks see as our through

Operator

no showing would over conference for I Jones any I'm Mr. back further to and Thank remarks. like questions Steve you. the further turn And to

Stephen Jones

thank And Well to like thank we'd us. joining you. everyone for

results XX, XXXX. Tuesday, expect next quarter We call on to conference our discuss XX hold May to March

Operator

This call. Thank conference concludes participating. for today's you

You great day. may now disconnect. Everyone, have a

ScanSource (SCSC) 9 Feb 222022 Q2 Earnings call transcript