ScanSource Reports Third Quarter Earnings
ScanSource, Inc. (NASDAQ:SCSC), the leading international value-added distributor of specialty technology products, today announced complete financial results for its third quarter ended March 31, 2013.Net sales$683.0 million
Net income$14.0 million
Diluted EPS$0.50 per share
“Our North American business units, led by our Communications unit, drove solid quarterly results,” said Mike Baur, CEO, ScanSource, Inc. “However, our International operating performance was disappointing. As a result, we've taken actions to restructure our overall European business for profitable growth. We are lowering our annualized costs by $3.1 million by reducing headcount in our Communications business in Europe and by moving certain back office functions from Brussels to ScanSource headquarters in Greenville, South Carolina.”
For the quarter ended March 31, 2013, net sales decreased 3.5% to $683.0 million, compared with $707.9 million for the quarter ended March 31, 2012. Excluding the translation impact of foreign currencies, net sales decreased 3.0% year-over-year. Operating income decreased to $20.8 million from $21.5 million in the comparable prior year quarter. The effective tax rate increased to 34.0% in the current quarter from 32.3% in the prior year quarter. Net income for the quarter ended March 31, 2013 was $14.0 million, or $0.50 per diluted share, compared with net income of $14.8 million, or $0.53 per diluted share, for the prior year quarter.
Selling, general and administrative expenses for the quarter ended March 31, 2013 included $1.2 million pre-tax ($0.8 million after tax, or $0.03 per diluted share) in restructuring costs associated with the Company's business in Europe. The restructuring included the elimination of positions to set the cost structure in line with current operations.
Forecast for Next Quarter
The Company announced its current expectations for the fourth quarter of fiscal 2013. ScanSource expects that net sales for the quarter ending June 30, 2013 could range from $715 million to $735 million, and diluted earnings per share could be in the range of $0.58 to $0.60 per share.
Webcast DetailsScanSource will present additional information about its financial results and outlook on a conference call today, April 25, 2013, 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, 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 our new ERP system and associated litigation; costs and efficiencies expected to be associated with the Company's pan-European strategy and macroeconomic circumstances that could impact the strategy and business independent of the new structure created by the Company; our ability to forecast volatility in earnings resulting from the quarterly revaluation of the Company's earnout obligation to the sellers of CDC; and macroeconomic circumstances that could impact our business, such as currency fluctuations, 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. 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.