ScanSource Reports Record Quarterly Sales

Contact: Mary Gentry
Title: Vice President, Treasurer and Investor Relations
Phone: 864.286.4892
Location: Greenville, SC - Worldwide Headquarters
Date: Tuesday, February 06, 2018

ScanSource, Inc. (NASDAQ: SCSC), a leading global provider of technology products and solutions, today announced financial results for the second quarter ended December 31, 2017.

 

Quarter ended December 31,

 

2017

 

2016

 

Change

 

(in millions, except per share data)

Net sales

$

1,032.2

 

 

$

904.8

 

 

14

%

Operating income

22.3

 

 

23.3

 

 

(4

)%

Non-GAAP operating income(1)

34.7

 

 

29.6

 

 

18

%

GAAP net income

8.0

 

 

23.0

 

 

(65

)%

Non-GAAP net income(1)

23.0

 

 

19.1

 

 

21

%

GAAP diluted EPS

$

0.31

 

 

$

0.91

 

 

(66

)%

Non-GAAP diluted EPS(1)

$

0.90

 

 

$

0.75

 

 

20

%

 

 

 

 

 

 

(1) Non-GAAP results exclude amortization of intangible assets related to acquisitions, change in fair value of contingent consideration, tax reform charges, acquisition costs and other non-GAAP adjustments. A reconciliation of non-GAAP financial information to GAAP financial information is presented in the Supplementary Information (Unaudited) below.

 

“Second quarter showed strong growth and improved profitability,” said Mike Baur, CEO, ScanSource, Inc.  “Our quarterly sales exceeded $1 billion for the first time with organic sales growth of 10%.  We are executing our strategic plan to deepen customer relationships and grow profitably.”

For the second quarter of fiscal year 2018, net sales increased 14% to $1.032 billion, driven by strength in the Worldwide Barcode, Networking and Security segment, including higher big deals in North America.  Organic sales growth, which excludes the impact from foreign currency translation and a recent acquisition, was 10%.  Operating income totaled $22.3 million, reflecting a decline of 4% from increased expense for the change in fair value of contingent consideration and higher intangible amortization.  Non-GAAP operating income increased 18% to $34.7 million, driven by operating leverage from higher sales volumes and the addition of the POS Portal acquisition.

On a GAAP basis, net income for the quarter totaled $8.0 million, or $0.31 per diluted share, and included current quarter tax reform charges of $6.7 million. Non-GAAP net income increased to $23.0 million, or $0.90 per diluted share, including a $0.07 per share benefit from U.S. tax reform lower rates.

U.S. Tax Reform

On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (the “Tax Act”).  The Tax Act reduces the corporate federal tax rate on U.S. earnings from 35% to 21% effective January 1, 2018 and provides for a one-time charge for certain foreign earnings.  Since ScanSource has a June 30th fiscal year-end, the lower tax rate is expected to result in a blended U.S. statutory federal rate of approximately 28% for the fiscal year ending June 30, 2018.  As a result of the Tax Act and tax reform laws enacted in Belgium, ScanSource recognized a one-time tax charge of approximately $6.7 million in the December quarter from the estimated impact of the inclusion of foreign earnings and revaluation of deferred tax assets and liabilities. Excluding these tax charges, the effective tax rate for the quarter and six months ended December 31, 2017 would have been 28% and 29.8%, respectively.

Forecast for Next Quarter

For the third quarter of fiscal year 2018, ScanSource expects net sales to range from $860 million to $920 million, diluted earnings per share to range from $0.44 to $0.50 per share, and non-GAAP diluted earnings per share to range from $0.67 to $0.73 per share. Non-GAAP diluted earnings per share exclude amortization of intangible assets, change in fair value of contingent consideration and acquisition costs. This forecast assumes a 30% effective tax rate for the quarter.

Webcast Details and CFO Commentary

At approximately 4:15 p.m. ET, a CFO commentary, as a supplement to our press release and conference call, will be available on ScanSource's website, www.scansource.com (Investor Relations section). ScanSource will present additional information about its financial results and outlook in a conference call today, February 6, 2018 at 5:00 p.m. ET.  A webcast of the call will be available for all interested parties and can be assessed at www.scansource.com (Investor Relations section).  The webcast will be available for replay for 60 days.


Safe Harbor Statement

This press release, including the forecast of sales and earnings per share for next quarter, contains “forward-looking” statements that involve risks and uncertainties.  Any number of factors could cause actual results to differ materially from anticipated or forecasted results, including, but not limited to, changes in interest and exchange rates and regulatory regimes impacting our international operations, the impact of tax reform laws, the failure of acquisitions to meet our expectations, the failure to manage and implement our organic growth strategy, credit risks involving our larger customers and vendors, termination of our relationship with key vendors or a significant modification of the terms under which we operate with a key vendor, the decline in demand for the products and services that we provide, reduced prices for the products and services that we provide due both to competitor and customer actions, and other factors set forth in the "Risk Factors" contained in our annual report on Form 10-K for the year ended June 30, 2017, 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 certain non-GAAP financial measures, which are summarized below.  Non-GAAP financial measures are used to understand and evaluate performance, including comparisons from period to period. Non-GAAP results exclude amortization of intangible assets related to acquisitions, change in fair value of contingent consideration, acquisition costs and other non-GAAP adjustments.

Net sales on a constant currency basis, excluding acquisitions:  The Company discloses the percentage change in net sales excluding the translation impact from changes in foreign currency exchange rates between reporting periods and excluding the net sales from acquisitions prior to the first full year from the acquisition date.  This measure enhances the comparability between periods to help analyze underlying trends on an organic basis.

Non-GAAP operating income, non-GAAP pre-tax income, non-GAAP net income and non-GAAP diluted earnings per share: To evaluate current period performance on a more consistent basis with prior periods, the Company discloses non-GAAP operating income, non-GAAP pre-tax income, non-GAAP net income and non-GAAP diluted earnings per share (non-GAAP diluted "EPS"). These non-GAAP results exclude amortization of intangible assets related to acquisitions, change in the fair value of contingent consideration, acquisition costs and other non-GAAP adjustments. Non-GAAP operating income, non-GAAP net income, and non-GAAP diluted EPS measures are useful in assessing and understanding the Company's operating performance, especially when comparing results with previous periods or forecasting performance for future periods.

Return on invested capital ("ROIC"): Management uses ROIC as a performance measurement to assess efficiency in allocating capital under the Company's control to generate returns. Management believes this metric balances the Company's operating results with asset and liability management, is not impacted by capitalization decisions and correlates with shareholder value creation. In addition, it is easily computed, communicated and understood. ROIC also provides management a measure of the Company's profitability on a basis more comparable to historical or future periods.

ROIC assists management in comparing the Company's performance over various reporting periods on a consistent basis because it removes from operating results the impact of items that do not reflect core operating performance. ROIC is calculated as adjusted EBITDA over invested capital.  Adjusted earnings before interest expense, income taxes, depreciation and amortization ("Adjusted EBITDA") excludes the change in fair value of contingent consideration and acquisition costs, in addition to other non-GAAP adjustments. Invested capital is defined as average equity plus average daily funded interest-bearing debt for the period. Management believes the calculation of ROIC provides useful information to investors and is an additional relevant comparison of the Company's performance during the year.

These non-GAAP financial measures have limitations as analytical tools, and the non-GAAP financial measures that the Company reports may not be comparable to similarly titled amounts reported by other companies. Analysis of results and outlook on a non-GAAP basis should be considered in addition to, and not in substitution for or as superior to, measurements of financial performance prepared in accordance with GAAP. A reconciliation of the Company's non-GAAP financial information to GAAP is set forth in the Supplementary Information (Unaudited) below.

About ScanSource, Inc.

ScanSource, Inc. (NASDAQ: SCSC) is a leading global provider of technology products and solutions, focusing on point-of-sale (POS), payments, barcode, physical security, unified communications and collaboration, cloud and telecom services. ScanSource's teams provide value-added solutions and operate from two segments: Worldwide Barcode, Networking & Security, which includes POS Portal, and Worldwide Communications & Services, which includes Intelisys. ScanSource is committed to helping its customers choose, configure and deliver the industry's best solutions across almost every vertical market in North America, Latin America and Europe. Founded in 1992 and headquartered in Greenville, South Carolina, ScanSource was named one of the 2017 Best Places to Work in South Carolina and on FORTUNE magazine's 2018 List of World's Most Admired Companies. ScanSource ranks #647 on the Fortune 1000. For more information, visit www.scansource.com.

 


ScanSource, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands)

 

 

December 31, 2017

 

June 30, 2017*

Assets

 

 

 

 

Currentassets:

 

 

 

 

Cashandcashequivalents

 

$

35,435

 

 

$

56,094

 

Accounts receivable, less allowance of $47,264 at December 31, 2017 and $44,434 at June30, 2017

 

717,336

 

 

637,293

 

Inventories

 

581,802

 

 

531,314

 

Prepaidexpensesandothercurrent assets

 

76,667

 

 

56,322

 

Totalcurrentassets

 

1,411,240

 

 

1,281,023

 

Propertyandequipment,net

 

76,626

 

 

56,566

 

Goodwill

 

302,912

 

 

200,881

 

Net identifiableintangibleassets

 

148,443

 

 

101,513

 

Deferred income taxes

 

11,794

 

 

29,491

 

Othernon-current assets

 

54,267

 

 

48,829

 

Totalassets

 

$

2,005,282

 

 

$

1,718,303

 

 

 

 

 

 

LiabilitiesandShareholders'Equity

 

 

 

 

Currentliabilities:

 

 

 

 

Current portion of long-term debt

 

$

104

 

 

$

 

Accounts payable

 

515,302

 

 

513,155

 

Accruedexpensesandothercurrent liabilities

 

97,597

 

 

104,715

 

Current portion of contingent consideration

 

38,629

 

 

30,675

 

Incometaxespayable

 

5,086

 

 

7,730

 

Totalcurrentliabilities

 

656,718

 

 

656,275

 

Deferred income taxes

 

11,110

 

 

2,008

 

Long-termdebt

 

5,325

 

 

5,429

 

Borrowingsunderrevolvingcreditfacility

 

355,503

 

 

91,871

 

Long-term portion of contingent consideration

 

58,402

 

 

83,361

 

Otherlong-termliabilities

 

57,437

 

 

42,214

 

Totalliabilities

 

1,144,495

 

 

881,158

 

Shareholders' equity:

 

 

 

 

Common stock

 

64,896

 

 

61,169

 

Retainedearnings

 

861,296

 

 

849,180

 

Accumulatedothercomprehensiveincome (loss)

 

(65,405

)

 

(73,204

)

Totalshareholders'equity

 

860,787

 

 

837,145

 

Totalliabilitiesandshareholders'equity

 

$

2,005,282

 

 

$

1,718,303

 

 

*

Derived from audited financial statements.

 

ScanSource, Inc. and Subsidiaries

Condensed Consolidated Income Statements (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

Quarter ended December 31,

 

Six months ended December 31,

 

 

2017

 

2016

 

2017

 

2016

Netsales

 

$

1,032,212

 

 

$

904,792

 

 

$

1,956,771

 

 

$

1,837,357

 

Costofgoodssold

 

919,241

 

 

806,258

 

 

1,737,883

 

 

1,647,289

 

Grossprofit

 

112,971

 

 

98,534

 

 

218,888

 

 

190,068

 

Selling,generalandadministrativeexpenses

 

74,763

 

 

66,880

 

 

147,950

 

 

130,145

 

Depreciation expense

 

3,467

 

 

2,423

 

 

6,707

 

 

4,492

 

Intangible amortization expense

 

5,487

 

 

4,165

 

 

10,498

 

 

7,320

 

Change in fair value of contingent consideration

 

6,913

 

 

1,791

 

 

23,794

 

 

1,961

 

Operatingincome

 

22,341

 

 

23,275

 

 

29,939

 

 

46,150

 

Interestexpense

 

2,285

 

 

912

 

 

3,870

 

 

1,501

 

Interestincome

 

(580

)

 

(892

)

 

(1,462

)

 

(1,908

)

Other (income) expense,net

 

326

 

 

(12,526

)

 

441

 

 

(11,948

)

Income beforeincometaxes

 

20,310

 

 

35,781

 

 

27,090

 

 

58,505

 

Provisionforincometaxes

 

12,341

 

 

12,745

 

 

14,974

 

 

20,653

 

Netincome

 

$

7,969

 

 

$

23,036

 

 

$

12,116

 

 

$

37,852

 

Persharedata:

 

 

 

 

 

 

 

 

Netincomepercommonshare,basic

 

$

0.31

 

 

$

0.92

 

 

$

0.48

 

 

$

1.49

 

Weighted-averagesharesoutstanding,basic

 

25,506

 

 

25,146

 

 

25,470

 

 

25,334

 

 

 

 

 

 

 

 

 

 

Netincomepercommonshare,diluted

 

$

0.31

 

 

$

0.91

 

 

$

0.47

 

 

$

1.48

 

Weighted-averagesharesoutstanding,diluted

 

25,648

 

 

25,285

 

 

25,612

 

 

25,490

 

 

 

 

 

ScanSource, Inc. and Subsidiaries

 

Supplementary Information (Unaudited)

 

 

 

 

 

 

Net Sales by Segment:

 

 

 

 

 

Quarter ended December 31,

 

 

 

 

2017

 

2016(a)

 

% Change

 

Worldwide Barcode, Networking & Security:

(in thousands)

 

 

 

Net sales, as reported

$

719,786

 

 

$

593,833

 

 

21.2

%

 

Foreign exchange impact (b)

(9,669

)

 

 

 

 

 

Net sales, constant currency (non-GAAP)

710,117

 

 

593,833

 

 

19.6

%

 

Less: Acquisitions

(19,706

)

 

 

 

 

 

Net sales, constant currency excluding acquisitions (non-GAAP)

$

690,411

 

 

$

593,833

 

 

16.3

%

 

 

 

 

 

 

 

 

Worldwide Communications & Services:

 

 

 

 

 

 

Net sales, as reported

$

312,426

 

 

$

310,959

 

 

0.5

%

 

Foreign exchange impact (b)

(4,162

)

 

 

 

 

 

Net sales, constant currency (non-GAAP)

308,264

 

 

310,959

 

 

(0.9

)%

 

Less: Acquisitions

 

 

 

 

 

 

Net sales, constant currency excluding acquisitions (non-GAAP)

$

308,264

 

 

$

310,959

 

 

(0.9

)%

 

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

Net sales, as reported

$

1,032,212

 

 

$

904,792

 

 

14.1

%

 

Foreign exchange impact (b)

(13,831

)

 

 

 

 

 

Net sales, constant currency (non-GAAP)

1,018,381

 

 

904,792

 

 

12.6

%

 

Less: Acquisitions

(19,706

)

 

 

 

 

 

Net sales, constant currency excluding acquisitions (non-GAAP)

$

998,675

 

 

$

904,792

 

 

10.4

%

 

 

 

 

 

 

 

 

(a) Reflects reclassification between segments for certain geographies to provide comparable financial information.

(b) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended December 31, 2017 into U.S. dollars using the average foreign exchange rates for the quarter ended December 31, 2016.

 

 

 

 

 

 

 

 

ScanSource, Inc. and Subsidiaries

 

Supplementary Information (Unaudited)

 

 

 

 

 

 

Net Sales by Segment:

 

 

 

 

 

Six months ended December 31,

 

 

 

Worldwide Barcode, Networking & Security:

2017 (a)

 

2016 (a)

 

% Change

 

 

(in thousands)

 

 

 

Net sales, as reported

$

1,340,114

 

 

$

1,221,043

 

 

9.8

%

 

Foreign exchange impact (b)

(15,293

)

 

 

 

 

 

Net sales, constant currency

1,324,821

 

 

1,221,043

 

 

8.5

%

 

Less: Acquisitions

(34,259

)

 

 

 

 

 

Net sales, constant currency excluding acquisitions

$

1,290,562

 

 

$

1,221,043

 

 

5.7

%

 

 

 

 

 

 

 

 

Worldwide Communications & Services:

 

 

 

 

 

 

Net sales, as reported

$

616,657

 

 

$

616,314

 

 

0.1

%

 

Foreign exchange impact (b)

(6,576

)

 

 

 

 

 

Net sales, constant currency

610,081

 

 

616,314

 

 

(1.0

)%

 

Less: Acquisitions

(9,750

)

 

(2,863

)

 

 

 

Net sales, constant currency excluding acquisitions

$

600,331

 

 

$

613,451

 

 

(2.1

)%

 

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

Net sales, as reported

$

1,956,771

 

 

$

1,837,357

 

 

6.5

%

 

Foreign exchange impact (b)

(21,869

)

 

 

 

 

 

Net sales, constant currency

1,934,902

 

 

1,837,357

 

 

5.3

%

 

Less: Acquisitions

(44,009

)

 

(2,863

)

 

 

 

Net sales, constant currency excluding acquisitions

$

1,890,893

 

 

$

1,834,494

 

 

3.1

%

 

 

 

 

 

 

 

 

(a) Reflects reclassification between segments for certain geographies to provide comparable financial information.

(b) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the six months ended December 31, 2017 into U.S. dollars using the average foreign exchange rates for the six months ended December 31, 2016.


 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

 

 

 

Net Sales by Geography:

 

 

 

 

 

Quarter ended December 31,

 

 

 

 

2017

 

2016

 

% Change

 

United States and Canada:

(in thousands)

 

 

 

Net sales, as reported

$

755,312

 

 

$

667,818

 

 

13.1

%

 

Less: Acquisitions

(19,706

)

 

 

 

 

 

Net sales, excluding acquisitions (non-GAAP)

$

735,606

 

 

$

667,818

 

 

10.2

%

 

 

 

 

 

 

 

 

International:

 

 

 

 

 

 

Net sales, as reported

$

276,900

 

 

$

236,974

 

 

16.8

%

 

Foreign exchange impact (a)

(13,831

)

 

 

 

 

 

Net sales, constant currency (non-GAAP)

263,069

 

 

236,974

 

 

11.0

%

 

Less: Acquisitions

 

 

 

 

 

 

Net sales, constant currency excluding acquisitions (non-GAAP)

$

263,069

 

 

$

236,974

 

 

11.0

%

 

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

Net sales, as reported

$

1,032,212

 

 

$

904,792

 

 

14.1

%

 

Foreign exchange impact (a)

(13,831

)

 

 

 

 

 

Net sales, constant currency (non-GAAP)

1,018,381

 

 

904,792

 

 

12.6

%

 

Less: Acquisitions

(19,706

)

 

 

 

 

 

Net sales, constant currency excluding acquisitions (non-GAAP)

$

998,675

 

 

$

904,792

 

 

10.4

%

 

 

 

 

 

 

 

 

(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended December 31, 2017 into U.S. dollars using the average foreign exchange rates for the quarter ended December 31, 2016.

 

 

 

 

 

 

 

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

 

 

 

Net Sales by Geography:

 

 

 

 

 

Six months ended December 31,

 

 

 

 

2017

 

2016

 

% Change

 

United States and Canada:

(in thousands)

 

 

 

Net sales, as reported

$

1,441,982

 

 

$

1,377,627

 

 

4.7

%

 

Less: Acquisitions

(44,009

)

 

(2,863

)

 

 

 

Net sales, excluding acquisitions

$

1,397,973

 

 

$

1,374,764

 

 

1.7

%

 

 

 

 

 

 

 

 

International:

 

 

 

 

 

 

Net sales, as reported

$

514,789

 

 

$

459,730

 

 

12.0

%

 

Foreign exchange impact (a)

(21,869

)

 

 

 

 

 

Net sales, constant currency

492,920

 

 

459,730

 

 

7.2

%

 

Less: Acquisitions

 

 

 

 

 

 

Net sales, constant currency excluding acquisitions

$

492,920

 

 

$

459,730

 

 

7.2

%

 

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

Net sales, as reported

$

1,956,771

 

 

$

1,837,357

 

 

6.5

%

 

Foreign exchange impact (a)

(21,869

)

 

 

 

 

 

Net sales, constant currency

1,934,902

 

 

1,837,357

 

 

5.3

%

 

Less: Acquisitions

(44,009

)

 

(2,863

)

 

 

 

Net sales, constant currency excluding acquisitions

$

1,890,893

 

 

$

1,834,494

 

 

3.1

%

 

 

 

 

 

 

 

 

(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the six months ended December 31, 2017 into U.S. dollars using the average foreign exchange rates for the six months ended December 31, 2016.


 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

Non-GAAP Financial Information:

 

 

 

Quarter ended December 31, 2017

 

Operating income

 

Pre-tax income

 

Net income

 

Diluted EPS

GAAP measure

$

22,341

 

 

$

20,310

 

 

$

7,969

 

 

$

0.31

 

Adjustments:

 

 

 

 

 

 

 

Amortization of intangible assets

5,487

 

 

5,487

 

 

3,648

 

 

0.14

 

Change in fair value of contingent consideration

6,913

 

 

6,913

 

 

4,742

 

 

0.18

 

Tax reform charges (a)

 

 

 

 

6,689

 

 

0.26

 

Non-GAAP measure

$

34,741

 

 

$

32,710

 

 

$

23,048

 

 

$

0.90

 

 

 

 

 

 

 

 

 

 

Quarter ended December 31, 2016

 

Operating income

 

Pre-tax income

 

Net income

 

Diluted EPS

GAAP measure

$

23,275

 

 

$

35,781

 

 

$

23,036

 

 

$

0.91

 

Adjustments:

 

 

 

 

 

 

 

Amortization of intangible assets

4,165

 

 

4,165

 

 

2,740

 

 

0.11

 

Change in fair value of contingent consideration

1,791

 

 

1,791

 

 

1,000

 

 

0.04

 

Acquisition costs (b)

335

 

 

335

 

 

335

 

 

0.01

 

Legal settlement, net of attorney fees

$

 

 

$

(12,777

)

 

$

(8,047

)

 

$

(0.32

)

Non-GAAP measure

$

29,566

 

 

$

29,295

 

 

$

19,064

 

 

$

0.75

 

 

 

 

 

 

 

 

 

(a) As a result of tax reform laws enacted in the United States and Belgium, we recognized a one-time charge of $6.7 million in the three months ended December 31, 2017 from the estimated impact of the inclusion of foreign earnings and revaluation of deferred tax assets and liabilities.

(b) Acquisition costs are non-deductible for tax purposes.

 

 

 

 

 

 

 

 


ScanSource, Inc. and Subsidiaries

 

Supplementary Information (Unaudited)

 

(in thousands, except percentages)

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Information:

 

 

 

 

 

 

Quarter ended December 31,

 

Six months ended December 31,

 

 

 

2017

 

2016

 

2017

 

2016

 

Return on invested capital (ROIC), annualized (a)

 

13.3

%

 

13.8

%

 

13.1

%

 

13.4

%

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net Income to Adjusted EBITDA

 

 

 

 

 

 

 

 

 

Net income - GAAP

 

$

7,969

 

 

$

23,036

 

 

$

12,116

 

 

$

37,852

 

 

Plus: Interest expense

 

2,285

 

 

912

 

 

3,870

 

 

1,501

 

 

Plus: Income taxes

 

12,341

 

 

12,745

 

 

14,974

 

 

20,653

 

 

Plus: Depreciation and amortization

 

9,901

 

 

6,588

 

 

18,766

 

 

11,812

 

 

EBITDA

 

32,496

 

 

43,281

 

 

49,726

 

 

71,818

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

Change in fair value of contingent consideration

 

6,913

 

 

1,791

 

 

23,794

 

 

1,961

 

 

Acquisition costs

 

 

 

335

 

 

172

 

 

833

 

 

Legal settlement, net of attorney fees

 

 

 

(12,777

)

 

952

 

 

(12,777

)

 

Adjusted EBITDA (numerator for ROIC) (non-GAAP)

 

$

39,409

 

 

$

32,630

 

 

$

74,644

 

 

$

61,835

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Invested Capital Calculation

 

 

 

 

 

 

 

 

 

Equity - beginning of quarter

 

$

852,976

 

 

$

773,161

 

 

$

837,145

 

 

$

774,496

 

 

Equity - end of quarter

 

860,787

 

 

787,536

 

 

860,787

 

 

787,536

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

Change in fair value of contingent consideration, net of tax

 

4,742

 

 

1,000

 

 

11,005

 

 

1,046

 

 

Acquisition costs, net of tax

 

 

 

335

 

 

172

 

 

833

 

 

Legal settlement, net of attorney fees, net of tax

 

 

 

(8,047

)

 

 

 

(8,047

)

 

Tax reform charges

 

6,689

 

 

 

 

 

 

 

 

Average equity

 

862,597

 

 

776,993

 

 

854,555

 

 

777,932

 

 

Average funded debt (b)

 

311,327

 

 

162,483

 

 

207,838

 

 

135,101

 

 

Invested capital (denominator for ROIC) (non-GAAP)

 

$

1,173,924

 

 

$

939,476

 

 

$

1,062,393

 

 

$

913,033

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Calculated as net income plus interest expense, income taxes, depreciation and amortization (EBITDA), plus change in fair value of contingent consideration and other adjustments, annualized and divided by invested capital for the period. Invested capital is defined as average equity plus average daily funded interest-bearing debt for the period.

 

(b) Average funded debt is calculated as the average daily amounts outstanding on short-term and long-term interest-bearing debt.

 

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

 

 

 

 

Non-GAAP Financial Information:

 

Forecast for Quarter ending March 31, 2018

 

Range Low

 

Range High

GAAP diluted EPS

$

0.44

 

 

$

0.50

 

Adjustments:

 

 

 

Amortization of intangible assets

0.14

 

 

0.14

 

Change in fair value of contingent consideration

0.09

 

 

0.09

 

Non-GAAP diluted EPS

$

0.67

 

 

$

0.73