ScanSource Reports Second Quarter ResultsScanSource, Inc. (NASDAQ:SCSC), the leading international value-added distributor of specialty technology products, today announced complete financial results for its second quarter ended December 31, 2012.
Quarter ended December 31, 2012:
Net sales - $747.7 million
GAAP net income - $16.4 million
Adjusted net income(1) - $17.8 million
GAAP diluted EPS - $0.59 per share
Adjusted diluted EPS(1) - $0.64 per share
(1)A reconciliation of non-GAAP financial information
to GAAP financial information is presented in the
following Supplementary Information table.
“Our sales teams delivered results within our planned range, including record quarterly sales for POS & Barcode and Security products worldwide,” said Mike Baur, CEO, ScanSource, Inc. “In addition, our North America Communications team achieved record sales results for the quarter.”
For the quarter ended December 31, 2012, net sales decreased 4.5% to $747.7 million, compared with $782.7 million for the quarter ended December 31, 2011. Excluding the translation impact of foreign currencies, net sales decreased 3.1% year-over-year. Operating income decreased to $24.4 million from $32.1 million in the comparable prior year quarter. The effective tax rate decreased to 34.0% in the current quarter from 34.7% in the prior year quarter. Net income for the quarter ended December 31, 2012 was $16.4 million, or $0.59 per diluted share, compared with net income of $21.4 million, or $0.77 per diluted share, for the prior year quarter.
Selling, general and administrative expenses for the quarter ended December 31, 2012 included $2.1 million pre-tax ($1.4 million after-tax) in one-time costs associated with the Company's attaining compliance with local Belgian tax matters. These costs include the replacement of certain personnel in the Company's Belgian office and related severance costs, as well as tax accruals and professional fees. Excluding the one-time costs associated with personnel replacement in the Company's local Belgian office, including related tax compliance and professional fees, adjusted net income for the quarter ended December 31, 2012 totaled $17.8 million, or $0.64 per diluted share.
Forecast for Next Quarter
The Company announced its current expectations for the third quarter of fiscal 2013. ScanSource expects that net sales for the quarter ending March 31, 2013 could range from $675 million to $695 million, and diluted earnings per share could be in the range of $0.48 to $0.50 per share.
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 60 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 one-time costs associated with tax compliance and personnel replacement in the Company's local Belgian office; expanded operations in emerging markets, such as Brazil, that expose us to greater political and economic volatility than our operations in established markets; additional costs and delays in connection with the implementation of our new ERP system and associated litigation; our ability to forecast volatility in earnings resulting from the quarterly revaluation of the Company's earnout obligation to the sellers of CDC; 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, 2012 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 non-GAAP measures. To evaluate current period performance on a clearer and more consistent basis with prior periods, the Company discloses adjusted net income and adjusted diluted earnings per share, which exclude one-time costs associated with tax compliance and personnel replacement in the Company's local Belgian office. Management uses return on invested capital (“ROIC”), a non-GAAP measure, as a performance measurement because management believes that this metric best balances the Company's operating results with its asset and liability management. The Company's Board of Directors uses ROIC in evaluating management performance and setting management compensation. The Company also discloses the percentage change in net sales excluding the impact of foreign currency exchange rates to better assess the changes from prior periods.
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 Supplemental Information table.
About ScanSource, Inc.
ScanSource, Inc. (NASDAQ: SCSC) is the leading international distributor of specialty technology products, operating from dedicated business units in North America, Latin America and Europe. ScanSource POS & Barcode delivers AIDC (automatic identification and data capture) and POS (point-of-sale) solutions; Catalyst Telecom and ScanSource Communications provide voice, video, data and converged communications equipment; ScanSource Security offers physical security solutions; and ScanSource Services Group delivers value-added support programs and services. Founded in 1992, the company ranks #760 on the Fortune 1000. For more information, call the toll-free sales telephone number at 800.944.2432 or visit www.scansourceinc.com.