ScanSource Reports Fourth Quarter and Fiscal Year 2022 Results

Rhea-AI Summary

ScanSource reported strong financial results for Q4 and FY22, with net sales of $962.3 million, up 12.9% year-over-year, and net income of $19.9 million, slightly down by 3.4%. For FY22, net sales reached $3.53 billion, increasing 12%, and GAAP diluted EPS rose to $3.44, a 93.3% increase. The company expects FY23 net sales growth of at least 5.5% and adjusted EBITDA of at least $174 million. Overall, the results reflect strong demand and improved profitability.

Positive

• Q4 net sales increased 12.9% to $962.3 million.
• FY22 net sales grew 12% to $3.53 billion.
• Q4 gross profit increased 15.7% to $110.8 million.
• FY22 GAAP net income increased 95.4% to $88.7 million.
• Adjusted EBITDA for FY22 rose 41.4% to $166.7 million.
• Guidance for FY23 indicates net sales growth of at least 5.5%.

Negative

• Q4 GAAP net income slightly decreased by 3.4% year-over-year.
• Q4 non-GAAP net income declined 5.1% year-over-year.

Strong Demand and Outstanding Execution by our Team

GREENVILLE, S.C.--(BUSINESS WIRE)-- ScanSource, Inc. (NASDAQ: SCSC), a leading hybrid distributor connecting devices to the cloud, today announced financial results for the fourth quarter and fiscal year ended June 30, 2022. All results in this release reflect continuing operations only unless otherwise noted.

	Fourth Quarter Summary											Fiscal Year Summary
	Q4 FY22				Q4 FY21				Change			FY22				FY21				Change
	(in thousands, except per share data)
Select reported measures:
Net sales	$	962,283			$	852,694			12.9	%		$	3,529,935			$	3,150,806			12.0	%
Gross profit	$	110,792			$	95,778			15.7	%		$	426,524			$	350,716			21.6	%
Gross profit margin %		11.51	%			11.23	%		28bp				12.08	%			11.13	%		95bp
Operating income	$	27,424			$	23,283			17.8	%		$	122,167			$	61,483			98.7	%
GAAP net income	$	19,947			$	20,657			-3.4	%		$	88,698			$	45,389			95.4	%
GAAP diluted EPS	$	0.78			$	0.80			-2.5	%		$	3.44			$	1.78			93.3	%
Select Non-GAAP measures:
Adjusted EBITDA	$	38,672			$	35,299			9.6	%		$	166,723			$	117,949			41.4	%
Adjusted EBITDA margin %		4.02	%			4.14	%		-12bp				4.72	%			3.74	%		98bp
Non-GAAP net income	$	23,266			$	24,522			-5.1	%		$	102,140			$	69,868			46.2	%
Non-GAAP diluted EPS	$	0.91			$	0.96			-5.2	%		$	3.97			$	2.74			44.9	%

"Our exceptional fiscal year 2022 results demonstrate the success of the new ScanSource and faster growth of our recurring revenue," said Mike Baur, Chairman and CEO, ScanSource, Inc. "Our hybrid distribution strategy of devices and digital is winning, as evidenced by our 12% net sales growth. We exceeded our full-year 2022 outlook for net sales growth and achieved record adjusted EBITDA."

Quarterly Results

Net sales for the fourth quarter of fiscal year 2022 totaled $962.3 million, up 12.9% year-over-year, or 12.2% year-over-year for organic growth, with strong demand in both segments. Fourth quarter fiscal year 2022 net sales in the Specialty Technology Solutions segment increased 12.6% year-over-year, or 12.4% year-over-year for organic growth, to $580.6 million, driven by broad-based demand across technologies and execution by our people. Fourth quarter fiscal year 2022 net sales in Modern Communications & Cloud increased 13.2% year-over-year, or 11.9% year-over-year for organic growth, to $381.7 million, primarily due to increased demand across our communications solutions.

Gross profit for the fourth quarter of fiscal year 2022 totaled $110.8 million, up 15.7% year-over-year. The increase is primarily due to higher sales volume and higher vendor program recognition compared to the prior-year quarter. Gross profit margin increased to 11.51% for the fourth quarter of fiscal year 2022, up from 11.23% in the prior-year quarter.

For the fourth quarter of fiscal year 2022, operating income increased to $27.4 million from $23.3 million in the prior-year quarter. Fourth quarter fiscal year 2022 non-GAAP operating income increased to $31.9 million for a 3.31% non-GAAP operating income margin, compared to $28.4 million and a 3.33% non-GAAP operating margin for the prior-year quarter.

On a GAAP basis, net income for the fourth quarter of fiscal year 2022 totaled $19.9 million, or $0.78 per diluted share, compared to net income of $20.7 million, or $0.80 per diluted share, for the prior-year quarter. Fourth quarter fiscal year 2022 non-GAAP net income totaled $23.3 million, or $0.91 per diluted share. These results compare to fourth quarter fiscal year 2021 non-GAAP net income of $24.5 million, or $0.96 per diluted share, which includes a $0.19 benefit from discrete tax items.

Adjusted EBITDA for the fourth quarter of fiscal year 2022 increased 9.6% to $38.7 million, or 4.02% of net sales, compared to $35.3 million, or 4.14%, of net sales in the prior-year quarter. Adjusted return on invested capital totaled 14.9% for fourth quarter fiscal year 2022, compared to 16.0% in the prior-year quarter, primarily from increased average invested capital for the current year quarter.

Full-Year Results

For fiscal year 2022, net sales increased 12.0% to $3.5 billion, or a 11.8% year-over-year increase on an organic basis. Fiscal year 2022 net sales in the Specialty Technology Solutions segment increased 14.7% year-over-year, or 14.6% year-over-year for organic growth, to $2.1 billion, driven by broad-based demand across technologies and execution by our people. Fiscal year 2022 net sales in the Modern Communications & Cloud segment increased 8.4% year-over-year, or 7.9% year-over-year for organic growth, to $1.4 billion, primarily due to increased demand across our communications solutions.

Gross profit for the fiscal year 2022 totaled $426.5 million, up 21.6% year-over-year. The increase is primarily due to higher sales volume and higher vendor program recognition compared to the prior year. Gross profit margin increased to 12.1%, up from 11.1% in the prior-year.

For the fiscal year ended June 30, 2022, operating income increased to $122.2 million from $61.5 million in the prior-year. Fiscal year 2022 non-GAAP operating income increased to $140.1 million for a 4.0% non-GAAP operating margin, up from $93.1 million and a 3.0% non-GAAP operating margin for the prior-year.

On a GAAP basis, net income for the fiscal year ended June 30, 2022 totaled $88.7 million, or $3.44 per diluted share, compared to net income of $45.4 million, or $1.78 per diluted share for the prior-year. Fiscal year 2022 non-GAAP net income totaled $102.1 million, or $3.97 per diluted share, compared to $69.9 million, or $2.74 per diluted share for the prior-year.

Adjusted EBITDA for the fiscal year ended June 30, 2022 increased to $166.7 million, or 4.7% of net sales, compared to $117.9 million, or 3.7% of net sales for the prior-year, primarily due to higher gross profits. Adjusted return on invested capital increased to 17.0% for the fiscal year, compared to 12.6% the prior year, driven by higher profitability.

Annual Financial Outlook for Fiscal Year 2023

The following guidance is based on ScanSource's current expectations for the full fiscal year ended June 30, 2023.

		FY23 Annual Outlook
Net sales growth, year-over-year		At least 5.5%
Adjusted EBITDA (non-GAAP)		At least $174 million

Adjusted EBITDA is a non-GAAP measure, which excludes estimates for amortization of intangible assets, depreciation expense, and non-cash share-based compensation expense. ScanSource’s outlook does not include the potential impact of any business combinations, asset acquisitions, divestitures, strategic investments, or other significant transactions that may be completed after the date hereof. These statements are forward-looking, and actual results may differ materially.

Webcast Details and Earnings Infographic

At approximately 4:15 p.m. ET today, an Earnings Infographic, as a supplement to this press release and the Company's 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 business in a conference call today, August 23, 2022, at 5:00 p.m. ET. A webcast of the call will be available for all interested parties and can be accessed at www.scansource.com (Investor Relations section). The webcast will be available for replay for 60 days.

Safe Harbor Statement

This press release contains “forward-looking” statements, including the Company's FY23 outlook, which involve risks and uncertainties. Any number of factors could cause actual results to differ materially from anticipated results, including, but not limited to, failure to hire and retain quality employees, risk to the Company's business from a cyber-security attack, supply chain challenges, the failure to manage and implement the Company's organic growth strategy, economic weakness and inflation, a failure of the Company's IT systems, a failure to acquire new businesses, changes in interest and exchange rates and regulatory regimes impacting the Company's international operations, credit risks involving the Company's larger customers and suppliers, loss of the Company's major customers, termination of the Company's relationship with key suppliers or a significant modification of the terms under which it operates with a key supplier, changes in the Company's operating strategy, and other factors set forth in the "Risk Factors" contained in the Company's annual report on Form 10-K for the year ended June 30, 2022, 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, restructuring costs and other non-GAAP adjustments.

Net sales on a constant currency basis, excluding acquisitions (organic growth): 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.

Additional Non-GAAP Metrics: To evaluate current period performance on a more consistent basis with prior periods, the Company discloses non-GAAP SG&A expenses, non-GAAP operating income, non-GAAP net income and non-GAAP diluted earnings per share (non-GAAP diluted "EPS"). Non-GAAP results exclude amortization of intangible assets related to acquisitions, changes in fair value of contingent consideration, acquisition and divestiture costs, impairment charges, restructuring costs, and other non-GAAP adjustments. These year-over-year metrics include the translation impact of changes in foreign currency exchange rates. Non-GAAP metrics are useful in assessing and understanding the Company's operating performance, especially when comparing results with previous periods or forecasting performance for future periods.

Adjusted earnings before interest expense, income taxes, depreciation, and amortization (“Adjusted EBITDA”): Adjusted EBITDA starts with net income and adds back interest expense, income tax expense, depreciation expense, amortization of intangible assets, changes in fair value of contingent considerations, and other non-GAAP adjustments, including acquisition and divestiture costs, impairment charges, and restructuring costs. Effective with the first quarter of fiscal year 2022, non-cash share-based compensation expense is also added back in calculating Adjusted EBITDA. Since Adjusted EBITDA excludes some non-cash costs of investing in our business and people, management believes that Adjusted EBITDA shows the profitability from our business operations more clearly. The presentation for Adjusted EBITDA for all periods presented has been recast to reflect this change to enhance comparability between periods.

Adjusted return on invested capital ("Adjusted ROIC"): Adjusted ROIC assists management in comparing the Company's performance over various reporting periods on a consistent basis because it removes from our operating results the impact of items that do not reflect our core operating performance. We believe the calculation of Adjusted ROIC provides useful information to investors and is an additional relevant comparison of our performance. Adjusted ROIC is calculated as Adjusted EBITDA over invested capital. Invested capital is defined as average equity plus average daily funded interest-bearing debt for the period. Management believes the calculation of Adjusted 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 hybrid distributor connecting devices to the cloud and accelerating growth for partners across hardware, SaaS, connectivity and cloud. ScanSource enables partners to deliver solutions for their customers to address changing end-user buying and consumption patterns. ScanSource sells through multiple, specialized routes-to-market with hardware, SaaS, connectivity and cloud services offerings from the world’s leading suppliers of point-of-sale (POS), payments, barcode, physical security, unified communications and collaboration, telecom and cloud services. Founded in 1992 and headquartered in Greenville, South Carolina, ScanSource was named one of the 2022 Best Places to Work in South Carolina and on FORTUNE magazine’s 2022 List of World’s Most Admired Companies. ScanSource ranks #773 on the Fortune 1000. For more information, visit www.scansource.com.

ScanSource, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
	June 30, 2022				June 30, 2021*
Assets
Current assets:
Cash and cash equivalents	$	37,987			$	62,718
Accounts receivable, less allowance of $16,806 at June 30, 2022 and $19,341 at June 30, 2021		729,442				568,984
Inventories		614,814				470,081
Prepaid expenses and other current assets		141,562				117,860
Total current assets		1,523,805				1,219,643
Property and equipment, net		37,477				42,836
Goodwill		214,435				218,877
Identifiable intangible assets, net		84,427				104,860
Deferred income taxes		15,668				21,853
Other non-current assets		61,616				63,615
Total assets	$	1,937,428			$	1,671,684
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	714,177			$	634,805
Accrued expenses and other current liabilities		88,455				87,790
Income taxes payable		34				2,501
Current portion of long-term debt		11,598				7,843
Total current liabilities		814,264				732,939
Deferred income taxes		3,144				3,954
Long-term debt, net of current portion		123,733				135,331
Borrowings under revolving credit facility		135,839				—
Other long-term liabilities		53,920				68,269
Total liabilities		1,130,900				940,493
Commitments and contingencies
Shareholders’ equity:
Preferred stock, no par value; 3,000,000 shares authorized, none issued		—				—
Common stock, no par value; 45,000,000 shares authorized, 25,187,351 and 25,499,465 shares issued and outstanding at June 30, 2022 and June 30, 2021, respectively		64,297				71,253
Retained earnings		846,869				758,071
Accumulated other comprehensive loss		(104,638	)			(98,133	)
Total shareholders’ equity		806,528				731,191
Total liabilities and shareholders’ equity	$	1,937,428			$	1,671,684
*Derived from audited financial statements.

ScanSource, Inc. and Subsidiaries
Condensed Consolidated Income Statements (Unaudited)
(in thousands, except per share data)
	Quarter ended June 30,								Fiscal year ended June 30,
		2022				2021				2022				2021
Net sales	$	962,283			$	852,694			$	3,529,935			$	3,150,806
Cost of goods sold		851,491				756,916				3,103,411				2,800,090
Gross profit		110,792				95,778				426,524				350,716
Selling, general and administrative expenses		75,905				64,758				275,442				247,438
Depreciation expense		3,023				2,898				11,062				12,533
Intangible amortization expense		4,440				4,893				17,853				19,488
Restructuring and other charges		—				(54	)			—				9,258
Change in fair value of contingent consideration		—				—				—				516
Operating income		27,424				23,283				122,167				61,483
Interest expense		1,886				1,643				6,523				6,929
Interest income		(1,360	)			(1,341	)			(4,333	)			(3,097	)
Other (income) expense, net		684				(65	)			1,354				116
Income before income taxes		26,214				23,046				118,623				57,535
Provision for income taxes		6,267				2,389				29,925				12,146
Net income from continuing operations		19,947				20,657				88,698				45,389
Net income (loss) from discontinued operations		—				3,053				100				(34,594	)
Net income	$	19,947			$	23,710			$	88,798			$	10,795
Per share data:
Net income from continuing operations per common share, basic	$	0.79			$	0.81			$	3.48			$	1.79
Net income (loss) from discontinued operations per common share, basic		—				0.12				—				(1.36	)
Net income per common share, basic	$	0.79			$	0.93			$	3.48			$	0.42
Weighted-average shares outstanding, basic		25,286				25,482				25,504				25,423
Net income from continuing operations per common share, diluted	$	0.78			$	0.80			$	3.44			$	1.78
Net income (loss) from discontinued operations per common share, diluted		—				0.12				—				(1.36	)
Net income per common share, diluted	$	0.78			$	0.92			$	3.45			$	0.42
Weighted-average shares outstanding, diluted		25,584				25,664				25,758				25,518

ScanSource, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
	Quarter ended June 30,								Fiscal year ended June 30,
		2022				2021				2022				2021
Cash flows from operating activities:
Net income	$	19,947			$	23,710			$	88,798			$	10,795
Net income (loss) from discontinued operations		—				3,053				100				(34,594	)
Net income from continuing operations		19,947				20,657				88,698				45,389
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
Depreciation and amortization		7,701				8,090				29,884				33,507
Amortization of debt issue costs		104				104				417				417
Provision for doubtful accounts		1,357				112				1,514				338
Share-based compensation		2,872				2,328				11,663				8,039
Deferred income taxes		3,742				2,941				5,737				2,916
Change in fair value of contingent consideration		—				—				—				516
Contingent consideration payments excess		—				—				—				(5,457	)
Finance lease interest		1				23				34				119
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(98,535	)			(50,204	)			(165,939	)			(118,859	)
Inventories		(27,613	)			(6,394	)			(145,962	)			(12,301	)
Prepaid expenses and other assets		(12,369	)			(17,111	)			(27,371	)			(18,753	)
Other non-current assets		3,914				7,102				1,123				9,948
Accounts payable		15,434				105,511				82,969				175,120
Accrued expenses and other liabilities		7,876				(8,928	)			(4,869	)			(493	)
Income taxes payable		(3,115	)			(2,886	)			(2,252	)			(3,679	)
Net cash (used in) provided by operating activities of continuing operations		(78,684	)			61,345				(124,354	)			116,767
Cash flows from investing activities of continuing operations:
Capital expenditures		(3,523	)			(80	)			(6,849	)			(2,363	)
Cash received for business disposal		—				—				3,125				34,356
Net cash (used in) provided by investing activities of continuing operations		(3,523	)			(80	)			(3,724	)			31,993
Cash flows from financing activities of continuing operations:
Borrowings on revolving credit, net of expenses		572,139				395,215				2,166,409				1,881,679
Repayments on revolving credit, net of expenses		(480,593	)			(449,017	)			(2,030,569	)			(1,949,392	)
Repayments on long-term debt, net		(1,875	)			(1,875	)			(7,843	)			(7,839	)
Repayments of finance lease obligations		(306	)			(320	)			(1,238	)			(1,294	)
Contingent consideration payments		—				—				—				(41,393	)
Exercise of stock options		712				12				2,304				451
Taxes paid on settlement of equity awards		(26	)			—				(2,754	)			(1,036	)
Common stock repurchased		(9,676	)			—				(18,203	)			—
Net cash provided by (used in) financing activities of continuing operations		80,375				(55,985	)			108,106				(118,824	)
ScanSource, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited), continued
(in thousands)
Cash flows from discontinued operations:
Net cash flows provided by operating activities of discontinued operations		—				2,469				—				24,173
Net cash flows used in investing activities of discontinued operations		—				—				—				(58	)
Net cash flows used in financing activities of discontinued operations		—				—				—				(29,494	)
Net cash flows used in discontinued operations		—				2,469				—				(5,379	)
Effect of exchange rate changes on cash and cash equivalents		(3,720	)			5,648				(4,759	)			3,706
(Decrease) Increase in cash and cash equivalents		(5,552	)			13,397				(24,731	)			28,263
Consolidated cash and cash equivalents at beginning of period		43,539				49,321				62,718				34,455
Consolidated cash and cash equivalents at end of period		37,987				62,718				37,987				62,718
Cash and cash equivalents of discontinued operations		—				—				—				—
Cash and cash equivalents of continuing operations	$	37,987			$	62,718			$	37,987			$	62,718

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
(in thousands, except percentages)
Non-GAAP Financial Information:
	Quarter ended June 30,								Fiscal year ended June 30,
		2022				2021				2022				2021
Adjusted return on invested capital ratio (Adjusted ROIC), annualized(a)		14.9	%			16.0	%			17.0	%			12.6	%
Reconciliation of Net Income to Adjusted EBITDA:
Net income from continuing operations (GAAP)	$	19,947			$	20,657			$	88,698			$	45,389
Plus: Interest expense		1,886				1,643				6,523				6,929
Plus: Income taxes		6,267				2,389				29,925				12,146
Plus: Depreciation and amortization		7,700				8,090				29,884				33,507
EBITDA (non-GAAP)		35,800				32,779				155,030				97,971
Plus: Share-based compensation		2,872				2,328				11,663				8,039
Plus: Acquisition and divestiture costs(b)		—				246				30				2,376
Plus: Restructuring costs		—				(54	)			—				9,047
Adjusted EBITDA (numerator for Adjusted ROIC) (non-GAAP)	$	38,672			$	35,299			$	166,723			$	117,949
Invested Capital Calculations:
Equity – beginning of the quarter	$	806,654			$	690,575			$	731,191			$	678,246
Equity – end of the quarter		806,528				731,191				806,528				731,191
Plus: Share-based compensation, net		2,134				1,912
Plus: Acquisition and divestiture costs(b)		—				207				30				2,337
Plus: Restructuring, net		—				(40	)			—				6,840
Plus: Discontinued operations net (income) loss		—				(3,053	)			(100	)			34,594
Average equity		807,658				710,396				773,179				729,825
Average funded debt (c)		233,445				177,074				209,114				202,869
Invested capital (denominator for Adjusted ROIC) (non-GAAP)	$	1,041,103			$	887,470			$	982,293			$	932,694

(a) The annualized adjusted EBITDA amount is divided by days in the quarter times 365 days per year, or 366 days for leap year. There were 90 days in the current and prior-year quarter.

(b) Acquisition and divestiture costs are generally nondeductible for tax purposes.

(c) Average funded debt, which includes both continuing and discontinued operations, is calculated as the average daily amounts outstanding on short-term and long-term interest-bearing debt.

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
Net Sales by Segment:
	Quarter ended June 30,
		2022				2021		% Change
Specialty Technology Solutions:	(in thousands)
Net sales, reported	$	580,619			$	515,445		12.6	%
Foreign exchange impact (a)		(1,338	)			—
Non-GAAP net sales, constant currency	$	579,281			$	515,445		12.4	%
Modern Communications & Cloud:
Net sales, reported	$	381,664			$	337,249		13.2	%
Foreign exchange impact (a)		(4,447	)			—
Non-GAAP net sales, constant currency	$	377,217			$	337,249		11.9	%
Consolidated:
Net sales, reported	$	962,283			$	852,694		12.9	%
Foreign exchange impact (a)		(5,785	)			—
Non-GAAP net sales, constant currency	$	956,498			$	852,694		12.2	%

(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 June 30, 2022 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2021.

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
Net Sales by Segment:
	Fiscal year ended June 30,
		2022				2021		% Change
Specialty Technology Solutions	(in thousands)
Net sales, reported	$	2,082,321			$	1,815,933		14.7	%
Foreign exchange impact (a)		(1,710	)			—
Non-GAAP net sales, constant currency	$	2,080,611			$	1,815,933		14.6	%
Modern Communications & Cloud
Net sales, reported	$	1,447,614			$	1,334,873		8.4	%
Foreign exchange impact (a)		(7,115	)			—
Non-GAAP net sales, constant currency	$	1,440,499			$	1,334,873		7.9	%
Consolidated:
Net sales, reported	$	3,529,935			$	3,150,806		12.0	%
Foreign exchange impact (a)		(8,825	)			—
Non-GAAP net sales, constant currency	$	3,521,110			$	3,150,806		11.8	%

(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 fiscal year ended June 30, 2022 into U.S. dollars using the average foreign exchange rates for the fiscal year ended June 30, 2021.

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
Net Sales by Geography:
	Quarter ended June 30,
		2022				2021		% Change
United States and Canada:	(in thousands)
Net sales, as reported	$	865,737			$	771,403		12.2	%
International:
Net sales, reported	$	96,546			$	81,291		18.8	%
Foreign exchange impact(a)		(5,785	)			—
Non-GAAP net sales, constant currency	$	90,761			$	81,291		11.6	%
Consolidated:
Net sales, reported	$	962,283			$	852,694		12.9	%
Foreign exchange impact(a)		(5,785	)			—
Non-GAAP net sales, constant currency	$	956,498			$	852,694		12.2	%

(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 June 30, 2022 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2021.

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
Net Sales by Geography:
	Fiscal year ended June 30,
		2022				2021		% Change
United States and Canada:	(in thousands)
Net sales, as reported	$	3,173,694			$	2,840,731		11.7	%
International:
Net sales, reported	$	356,241			$	310,075		14.9	%
Foreign exchange impact(a)		(8,825	)			—
Non-GAAP net sales, constant currency	$	347,416			$	310,075		12.0	%
Consolidated:
Net sales, reported	$	3,529,935			$	3,150,806		12.0	%
Foreign exchange impact(a)		(8,825	)			—
Non-GAAP net sales, constant currency	$	3,521,110			$	3,150,806		11.8	%

(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 fiscal year ended June 30, 2022 into U.S. dollars using the average foreign exchange rates for the fiscal year ended June 30, 2021.

	Quarter ended June 30, 2022
	GAAP Measure			Intangible amortization expense				Acquisition and divestiture costs				Restructuring costs				Non-GAAP measure
	(in thousands, except per share data)
SG&A expenses	$	75,905		$	—			$	—			$	—			$	75,905
Operating income		27,424			4,440				—				—				31,864
Net income		19,947			3,319				—				—				23,266
Diluted EPS	$	0.78		$	0.13			$	—			$	—			$	0.91
	Quarter ended June 30, 2021
	GAAP Measure			Intangible amortization expense				Acquisition and divestiture costs				Restructuring costs				Non-GAAP measure
	(in thousands, except per share data)
SG&A expense	$	64,758		$	—			$	(246	)		$	—			$	64,512
Operating income		23,283			4,893				246				(54	)			28,368
Net income		20,657			3,698				207				(40	)			24,522
Diluted EPS	$	0.80		$	0.14			$	0.01			$	—			$	0.96

	Year ended June 30, 2022
	Reported GAAP Measure			Intangible amortization expense			Change in fair value of contingent consideration			Acquisition and divestiture costs				Restructuring costs			Non-GAAP measure
	(in thousands, except per share data)
SG&A expense	$	275,442		$	—		$	—		$	(30	)		$	—		$	275,412
Operating income		122,167			17,853			—			30				—			140,050
Net income		88,698			13,412			—			30				—			102,140
Diluted EPS	$	3.44		$	0.52		$	—		$	—			$	—		$	3.97
	Year ended June 30, 2021
	Reported GAAP Measure			Intangible amortization expense			Change in fair value of contingent consideration			Acquisition and divestiture costs				Restructuring costs			Non-GAAP measure
	(in thousands, except per share data)
SG&A expense	$	247,438		$	—		$	—		$	(2,376	)		$	—		$	245,062
Operating income		61,483			19,488			516			2,376				9,258			93,121
Net income		45,389			14,753			390			2,337				6,999			69,868
Diluted EPS	$	1.78		$	0.58		$	0.02		$	0.09			$	0.27		$	2.74

ScanSource, Inc. and Subsidiaries
Supplementary Forward-Looking Information (Unaudited)
Annual Financial Outlook for Fiscal Year 2023:
			FY23 Outlook
GAAP, Operating income		At least $132 million
Intangible amortization		$17 million
Depreciation expense		$12 million
Share-based compensation expense		$12 million
Interest income and other income (expense), net			$1 million
Adjusted EBITDA (non-GAAP)		At least $174 million

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220823005785/en/

Steve Jones

Senior EVP, Chief Financial Officer

ScanSource, Inc.

(864) 286-4302

Mary M. Gentry

SVP, Treasurer and Investor Relations

ScanSource, Inc.

(864) 286-4892

Source: ScanSource, Inc.

FAQ

What were ScanSource's earnings for Q4 FY22?

ScanSource reported Q4 FY22 net sales of $962.3 million and GAAP net income of $19.9 million.

How did ScanSource perform in FY22 compared to FY21?

In FY22, ScanSource's net sales increased by 12% to $3.53 billion, and GAAP net income rose 95.4% to $88.7 million.

What is ScanSource's guidance for FY23?

ScanSource expects at least 5.5% net sales growth and adjusted EBITDA of at least $174 million for FY23.

What was the adjusted EBITDA for ScanSource in FY22?

ScanSource's adjusted EBITDA for FY22 was $166.7 million, up 41.4% from the previous year.

How did ScanSource's gross profit margin change in FY22?

ScanSource's gross profit margin increased to 12.1% in FY22, up from 11.1% in FY21.