- Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

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 morning, us. for Good

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

call and operating factors will filed limited year We in Any that the Please and let put earnings Form our in that questions. update not as to release earnings we webcast in of those as statements. are expectations, required as of results date. We changes views today the uncertainties the an our for representing quarter Relations take our reflect forward-looking to posted this our press such and XX-K statements and represent results to duty could subsequent any or for uncertainties and by accompanies views are XXXX, earnings should as These upon from statements. with that results today you forward-looking the as statements and website. to, Investor info-graphic subject me certain the in actual infographic actual in remind disclaims your in out are XX, differ ScanSource statements any then comments only of These review the and ScanSource's our SEC. our to forward-looking statements except June relied section identified materially include, be risks law. on release risks ended not cause but

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

Michael Baur

are ago, basis. the XX-month and and a on events Intelisys, up three, recurring multiple a in started we performance. our we spite Brazil macro revenue, was is exceptional to With us of transformation our Thanks, earnings a needs three enabled journey. opened us capital sales share. call of This partners. device and today. investments fiscal are thanks, to With from line record will The our distribution record business growth XX% result agents our the for build everyone, to to discuss per working XXXX revenue into on revenue highlight that to model top number strong success recurring quarters. business us leading ability from over our distributor have quarters, the we XX% the recurring distribution capital double-digit of now areas years and company making to to market strong profits achieve a in X They've position revenue scalability of one, that to today. delivering market working our meet in demand two, on Mary, Intelisys performance and started of channel approximately our from gross ScanSource. transformed business our cloud through hybrid John the supplier a joining started consistent like relationships our Number in last sales I our year of over of and the consistent We flexibility rates. strength, first leverage contributed net We our turn trailing and profitability and and with demand catalyst Brazil customer X In six I'd our EPS. growth. I'm in incredibly in stream. growth above the Intelisys Intelisys. new region; gives net our proven we of our and SG&A. five across proven now of delivered have the in technologies return Number their performance coupled growth trusted recurring the proud difference for team and The route

John Eldh

Mike. Thank you,

For quarter and net while ScanSource execution and event QX, XX% by we delivered for ongoing October, XX% another largest highlighted In the we navigating QX history sales with team technologies, outstanding chain our demand by strong our growth. our growth attendees. Connect, our X,XXX early challenges. gross in and profit partners Channel supply hosted was in-person over

hybrid communities first time and together discuss agent accelerate we growth the For they to VAR brought across our can opportunities. how ever,

and our built deep and relationships, Our trust common heartfelt What for to partners messaging success goals enthusiasm of hybrid driving critical marketing our and designing, with was value send for incredible growth. and created evident thank you these relationships the importance want resonated very solutions event. producing team I how events our growth. also and and to and customer well a mutual on are and our architecting this to is out

performance QX outstanding and Our strategy capabilities demonstrates are hybrid success how growth. and enabling partner our

execute digital helping to opportunity and partners to committed device sell solutions. the expanded are on We

their me example from many this and incremental to continuing, subscription including customer recurring UCaaS driving of times, strengths, largest environment revenues. our second challenges and customers. our suppliers. business sometimes million referral capabilities, our from enterprise our our demand to how have the to hybrid of The solutions VARs partners our existing doubled communications capabilities, solutions for execution their extensive continuing for and service our CX our including who consist various are multiple Innovative that and is or practice, $XX large position revenue a suppliers. stream like We strongest this CCaaS hybrid and of our are to our more and largest business lead added across ScanSource. winning and plays services cloud chain enterprise the An Let million and business. our value business products an give but hardware strategy $XX We're supply brought on-prem technical These solutions bringing customer to as seeing capabilities multiple out program, the we engineering the hybrid you all ScanSource. won add Through cloud of business professional looking hardware RFP.

to Our but strategic balance by are advantage supply is our when pay available use us allow deliveries, secure customers of to can partial product that complete. shipments we our taking sheet

me sales little segment, for our product availability Solutions solutions. mission-critical our Let devices, and We POS detail XX% video payment you for systems our In partners terminals, growth. grew mobile QX our results more and self-checkout and Specialty technologies business first Technology about including deploy the computing, year-over-year. surveillance and tell in a hardware quarter. Robust enable our demand fueled help

Zebra, areas, Cloud continue with had We to strong X% sales by led Honeywell, Toshiba and Hanwha. growth. We growth delivered see growth in net Communications these & Cisco. incredible NCR, and segment demand Modern

Our year-over-year grew large enterprise led Cisco projects. close sales QX net to XX% by

enterprise, for work Our key growth are areas that including enable CCaaS. and UCaaS technologies of remote the

continues our over CCaaS part And Intelisys As XX% business, year-over-year. the our business of lead led RingCentral, agency UCaaS grew business our XX% Intelisys space. grew and in and Zoom. XxX to by

Intelisys, our large Intelisys strength and with XXXX, our enablement fiscal by our of For capabilities. and we the of relationships industry-leading year I and the growth trust credibility and expect driven so proud double-digit events partners team, and our our sales am in foster net suppliers. part technical for year-over-year we

this the us businesses. critical expected growth able years, Brazil, success for profitability. scale to business Because across leadership last mass, has X the its In to growth over business. excellence thought their achieved we've Our net and self-fund partners to achieving achieved while we been across look drive and operational its

areas mitigate example importation government from operational controls Brazil and an Brazil received to the excellence recognition of team's As certification business the in our of ability anticorruption. risk, unit and our and

In Brazil. and loyalty Lastly, our send their to people all as Year ScanSource thank once and dedication throughout about and we you plan. our massive again QX suppliers excited sustainable, the I partners Cisco out named was in trust our summary, our of profitable and for of growth ongoing strategic Distributor QX to are trajectory execute ScanSource. on for the we want a their to our commitment and to results

you Now over who I'll take results. Steve, our call financial the through turn will to

Stephen Jones

John. Thank you,

sales delivered with XX% profitability. QX, top line year-over-year strong record growth $XXX million, For we and up net of

performance. EBITDA $XX.X allowed records and ScanSource, demand. strong X% take revenue QX to of the EPS net quarter million Intelisys $X.XX all-time of financial capital for as diluted are highlight us in achieved ROIC increased Our and adjusted strong advantage We investments non-GAAP for our working consistent, year-on-year. of company XX.X%

partner However, on Intelisys. supplier Intelisys to timing. we earlier, had double-digit for were we net due lower growth commissions sales, commission for growth, earn while which the year, the net expect are John sales as ongoing said double-digit year-over-year full rebates And

up gross includes This margin. from a profits sales, $XXX supplier increases. XX% gross grew with price million, faster XX% year-over-year than Our profit benefits to

market winning hybrid and strengthens our strategy is Our financial the distribution results. in

and year-over-year, close of profit million is Our margins. gross QX XX% revenue to $XX.X recurring that XXX% business grew

are profits gross our of businesses. XX% approximately our period, XX-month trailing the For from recurring

from $X.X year-over-year. expense primarily to of support areas. investments increases Our $XX.X increase This our quarter people to non-GAAP million XX% SG&A for increased costs and high-growth or wage is headcount the attributed million higher

QX and $XX.X represents of EBITDA $X.XX grew X% non-GAAP million. interest EBITDA X% $X.X X.X% a expense of year-over-year and adjusted rate EPS year-over-year growth a Our million of margin. QX adjusted includes

interest higher year-over-year and higher both in higher rates drive Our growth reflects working interest and expense rates that profitability. our helped capital the investments

the to sheet flow. balance turning cash Now and

make a and payers. days, increased both driven and using increase QX. and accounts in it's environment, Our investment operating working terms, is We time-based support can adjusted To believe AR higher the a by as and higher sales to our need of investment, XX.X% technologies with the for higher strong XX-month used we our inventory strong range. QX capital when balance We a typical the XX temporary, and million, period. ROIC cash our targeted basis and We receivable higher collared demand partners higher $XX trailing than in year-over-year demand strong in Year-over-year think strong DSO the across $XXX like environment. $XXX invest we to working we sheet to we our customers on right quarter enables demand capital million accounts support did receivable the deliver us million for project-specific suppliers support XX% good a to suppliers. and the of extended increased our levels are

AR rollouts availability support and long partial to Our shipments. investments project due

$XXX challenges collared of slower our technologies. down. X.Xx, current inventory supply our million, receivables to and is health to strong. than demand increased to for QX availability back slowed our The inventory a turns Year-over-year we ease, XX% our year-over-year environment, chain In range. strong capitalizing typical As overall would on come payment DSO is expect very portfolio increase key and our terms

enabled capital working X double-digit growth have investments Our us last the in quarters. sales X of achieve to

is with cash and cash of mitigate equivalents inventory protection protection On price current, debt stock and our risk. $XX we Our of $XXX and obsolescence downside suppliers and had XXXX, to September million. we rotation, have XX, million

we perspective, leverage Our balance From debt sheet QX X.Xx strong. remains at adjusted EBITDA. approximately XX-month ended net a trailing

no with $XXX credit share During in $XXX It September quarter, repurchases September strong facility the and our we share facility XX, we September amended a the million group extended XXXX. with committed had new pricing facilities opportune growth. for under complete million On favorable authorization. repurchase to maturity XX, new an time date of banking was a our and

Our our and amended to our website. available near-term the in that and growth quarter, opportunity investor on latest provides last we support flexibility our facility presentation credit us goals with financial are included midterm introduced our

least Finally, growth we adjusted for at are and X.X% full at million of year outlook sales $XXX net for our year-over-year EBITDA. least reaffirming XXXX

half first growth of than second We the half 'XX FY expect of the in see we the year. faster in

our about half use free we in cash half. generate the of the As think expect flow second we year first in and cash the flows, cash to

capital expect QX. QX We our expect to and expense quarter working investments through continue to interest increased to in be similar December

estimate fiscal to excluding effective we year XX.X%. items, XX.X% the from tax our range For XXXX, discrete to rate,

up our how now FY are our are I'll hybrid questions. on pleased We and it with distribution start for we very executing strategy. 'XX to open

Operator

Our first of the from from comes question Burns Instructions] [Operator Greg line Sidoti.

Gregory Burns

the business. in just Modern the more little sales I side net to wanted dig growth bit Communications of a the on on

Were the you to X% what called out of market get driving It sales total from in that market X%. a of from growth? CCaaS that you and other Cisco. UCaaS the the to we're is some offsets than there as growth that? well Given net lot the Like saw areas growing what kind faster as feels Intelisys the like

John Eldh

suppliers And saw for is on your was year-on-year business, XX% saw of yes, in that a driven that this Thanks quarter. decrease comms primarily on-prem about and the X Greg, by we we question. John. actually the

Gregory Burns

-- how much of How And now that business of that that what left? is much is on-prem?

Stephen Jones

guess that tail on-prem one Greg, have that, on our at and we we wondering tail bottoms out We're long try when always on a to long still but business. a in that the still communications. it's

Gregory Burns

made up are of Modern that make up? Communications percent -- does What still

Stephen Jones

as over question, and comms to don't a looking we -- I Greg. together. hardware good That's at switched

less total Sorry, the Greg, XX% It's of than thanks for that, Mary. segment.

Gregory Burns

in than of revenue Perfect. a the would the And profit. for? then grow is faster how mix the issue? Because Is the typically, expect just to decline that gross on given I business gross that Intelisys side profit accounted

Stephen Jones

Yes, is for has Cisco in us, typically the It has Greg, really lower this that Steve again. of segment. margin is Jones and seen incredible growth. Cisco a that mix

And so back it to really mix. comes

Gregory Burns

during then what And performed the you're driving Or payment specific of But like and the Because that secular terminal remote the driving upgrade that trends, on need well I for that market side a pandemic that business there is is trends there? -- Technology demand? continuing? in business, there drivers seeing the cycles. just like demand are computing know demand is given the

John Eldh

Yes, Greg, were wasn't Modern for But and are in both But enabling the worker Comms collaboration. to sure segments. we're if be it continues And foremost, growing remember, continuing self-checkout. and to large POS all first and markets. return if work, yes, you physical That's exactly absolutely piece. we automation security, I enabling be to talking playing about first guess, and mobility, payments, just and continue were you talking I on and side, us, the about or then productivity -- Comm office remote Modern strong

Operator

Research. next Keith from question [Operator of Instructions] Housum from our Northcoast line the And comes

Keith Housum

little the specialty a on bit side. more focusing Just

of your year, obviously, earlier for guys the success, fourth you barcode were from some of Some pretty seeing as you are having cautious have ideas obviously, and the that vendors mentioned the you them. where rest but some guidance largest quarter investors strength about

visibility excitement's guys So, your where there? for your next little perhaps can coming quarter more a speak from some about and you the bit of

John Eldh

and Thanks what had barcode a about we Keith, for strong And we're look, yes, it's John. in was happening question. mobility. quarter, the -- had we excited and

we and We As with transitions us, QX were suppliers some center of we referenced, enthusiasm continuing that at inventory feel good challenges mobility able through I to guess, some to QX, there you saw importantly, the work had And know, our demand. flows our another, of strong but their one distribution Channel was and we one to barcode about ScanSource and and from big most in that just know, we you incredible had as deals. conference amongst I for strength partners Connect that. event

Keith Housum

Cisco, And speaking your sales a Cisco did that that bit -- coming grew in now back Communications to your question I XX% has before segment? -- about right understand Modern

Stephen Jones

Keith, is revenues is of and Cloud. Communication that where a our lot That's correct. Steve. sit Modern That's in Cisco this

Keith Housum

we lot that, long as the offsetting challenges? how And But a continue, is guess, Obviously, obviously, from an as see have in growth that that of confidence investor sustainable is concern I beneficial it's standpoint that can the there? the loss on-prem the business. growth guess, something investors on-prem is I

Stephen Jones

us, to opportunity we're Yes, Keith. good believe in space. of the that We take strong advantage very for business position a that's and so, we a believe in

Michael Baur

Keith, it's Mike.

relationships we've Brazil, got the is again think Just the suggests We that that resist. the with choices. they growing other I that just of that the fact and Cisco can't of the were customers records that evidence so I combination achieving appreciates. year And prefer distributor have much because services we're right us the we're Cisco in Cisco

but the we're believe so by And best Cisco distributor, we're biggest you as the not far. know, we

Keith Housum

Maybe color achieving chain challenges you understanding how to equipment, reseller equipment, growing success guys with any you more provide can having especially Meraki products? and or your having the growth. networking by on their you easing guys is that My access base are is is supply are Cisco

John Eldh

the we're horn Yes, going around here.

Now you're me, back to Keith.

QX, I think to very were any in the able supply with -- deal we well. chain constraints

you inventory As own did some we a of in centers, lot took but drop-ship. know, distribution our

was customers We technologies seeing projects together move short as to from the are of what enterprise days also trying COVID put early and lot large of just term. a

about And bringing thing we're towards new a longer, so last more that Cisco partners. is ton excited moving on enterprise they're Now we're the I sustainable projects. think of

quarter. XX-plus think this brought past we on I over partners

fact So we've we're hard. us prefers. to I coming like they're Mike mere is who Cisco said, that And working that a been think testament the

Keith Housum

Since drew -- guess one we how added, I you XX many And what how more of you out question. baseline are that to? is kind comparing

John Eldh

question? other Any

Stephen Jones

Yes. What's Keith, we our for don't baseline that's Cisco? So Yes. something disclose. that

Keith Housum

you is that terms on in brought partners, XX guess, partners but I revenue, sorry, Or I'm already? partners. based on new of several even compared on not Is No, to larger? that hundred based

Stephen Jones

a we base, are is Again, really disclose of XX that's say, at that look terms the on X We in to Yes. in that's something to quarter. when our not bit quite a just we that bring number. saying Keith, overall

Operator

today's does any question-and-answer Jones back conclude to program [Operator I'd hand This for session Instructions] like program. the of further the to remarks. Steve

Stephen Jones

you joining you, Thank Yes. thank us and today. for

hold expect XX approximately next X at Tuesday, quarterly a.m. results We February to December to XX:XX discuss on call conference our

Operator

participation today's the Thank for ladies program. you, and in This does gentlemen, your conclude conference.

You may now day. Good disconnect.

ScanSource (SCSC) 12 Nov 222023 Q1 Earnings call transcript