ScanSource Reports Second Quarter Results

Rhea-AI Summary

ScanSource, Inc. (NASDAQ: SCSC) reported a 12.5% decrease in net sales for the second quarter ended December 31, 2023. The company's Q2 FY24 net sales were $884.8 million, with a 12.6% decrease in gross profit. Operating income also declined by 32.0%, while GAAP net income and diluted EPS showed an increase of 27.2% and 27.7% respectively. Adjusted EBITDA decreased by 21.2%, and non-GAAP net income and diluted EPS also declined by 19.9% and 19.8% respectively. Despite challenges in industry demand cycles, Intelisys recurring revenue growth and net billings increased, but the company lowered its net sales and adjusted EBITDA outlook for the full fiscal year ending June 30, 2024.

Positive

• 27.2% increase in GAAP net income for Q2 FY24 compared to Q2 FY23
• 27.7% increase in GAAP diluted EPS for Q2 FY24 compared to Q2 FY23
• Intelisys net billings increased to approximately $2.64 billion annualized
• Intelisys net sales for the second quarter increased 7.5%
• Interest expense for the quarter decreased to $3.4 million, down from $5.1 million for the prior-year quarter
• ScanSource generated $156.8 million of operating cash flow and $151.9 million of free cash flow in the first six months of fiscal year 2024

Negative

• 12.5% decrease in net sales for Q2 FY24 compared to Q2 FY23
• 12.6% decrease in gross profit for Q2 FY24 compared to Q2 FY23
• 32.0% decrease in operating income for Q2 FY24 compared to Q2 FY23
• 21.2% decrease in adjusted EBITDA for Q2 FY24 compared to Q2 FY23
• 19.9% decrease in non-GAAP net income for Q2 FY24 compared to Q2 FY23
• 19.8% decrease in non-GAAP diluted EPS for Q2 FY24 compared to Q2 FY23
• Lowered net sales and adjusted EBITDA outlook for the full fiscal year ending June 30, 2024

Insights

Financial Analyst

The reported decrease in net sales of 12.5% for ScanSource, Inc. indicates a downturn in business performance relative to the same quarter in the previous year. This contraction could be attributed to softer demand across several product categories, including barcode, mobility and point of sale technologies. However, the growth in networking and Cisco products partially offsets these declines. The reported 27.2% increase in GAAP net income and a 27.7% rise in GAAP diluted EPS are notable, reflecting improved profitability despite the sales decline.

From a financial perspective, the significant improvement in operating cash flow from a negative in the prior year to a positive $63.2 million is a strong indicator of the company's enhanced cash management. Moreover, the reduction in interest expense due to lower borrowings is a positive sign of debt management, potentially improving the company's leverage ratios and interest coverage. Investors might view the updated financial outlook with caution as the company has revised its net sales and adjusted EBITDA expectations downward, which could suggest a more conservative outlook for the fiscal year.

Market Research Analyst

Looking at the industry context, ScanSource's performance reflects broader market trends where technology distributors are facing fluctuating demand cycles. The growth in Intelisys net billings, which is indicative of the company's recurring revenue stream, suggests a strategic shift towards more stable revenue sources. This shift could be a response to the volatility in hardware sales and might represent a longer-term strategic advantage for the company.

The decrease in Specialty Technology Solutions sales is consistent with industry reports of softening demand in traditional tech sectors, while the growth in networking aligns with the increasing need for robust digital infrastructure. The company's ability to navigate these industry demand cycles will be critical in maintaining its market position and ensuring long-term growth.

Economist

The financial results of ScanSource demonstrate the company's exposure to macroeconomic factors such as demand cycles in the technology sector. The reported decrease in gross profit and operating income could be symptomatic of wider economic pressures, including potential shifts in consumer and business spending patterns. The resilience shown in generating positive cash flow is a crucial aspect for the company's financial health, especially in an environment where liquidity is paramount.

Additionally, the downward revision in net sales and adjusted EBITDA forecasts may reflect an anticipation of continued economic headwinds or sector-specific challenges. Investors and stakeholders should consider these factors when assessing the company's future performance, as well as the broader economic indicators that may influence the technology distribution market.

Achieves Strong Q2 Cash Flow and Intelisys Growth

GREENVILLE, S.C.--(BUSINESS WIRE)-- ScanSource, Inc. (NASDAQ: SCSC), a leading hybrid distributor connecting devices to the cloud, today announced financial results for the second quarter ended December 31, 2023.

	Second Quarter Summary
	Q2 FY24				Q2 FY23				Change
	(in thousands, except per share data)
Select reported measures:
Net sales	$	884,792			$	1,011,241			-12.5%
Gross profit	$	100,748			$	115,334			-12.6%
Gross profit margin %		11.39	%			11.41	%		-2bp
Operating income	$	26,826			$	39,432			-32.0%
GAAP net income	$	32,726			$	25,734			27.2%
GAAP diluted EPS	$	1.29			$	1.01			27.7%
Operating cash flow	$	63,224			$	(26,885	)		n/m
Select Non-GAAP measures:
Adjusted EBITDA	$	38,459			$	48,815			-21.2%
Adjusted EBITDA margin %		4.35	%			4.83	%		-48bp
Non-GAAP net income	$	21,587			$	26,941			-19.9%
Non-GAAP diluted EPS	$	0.85			$	1.06			-19.8%
Free cash flow	$	60,675			$	(29,389	)		n/m
n/m - not meaningful

“Strong cash flow and Intelisys recurring revenue growth are the highlights for our second quarter results,” said Mike Baur, Chair and CEO, ScanSource, Inc. “Our teams are navigating well through the challenging industry demand cycles.”

Quarterly Results

Net sales for the second quarter of fiscal year 2024 totaled $884.8 million, down 12.5% year-over-year. Specialty Technology Solutions net sales for the second quarter decreased 17.0% year-over-year to $520.7 million. Soft demand in barcode, mobility and point of sale was partially offset by growth in networking. Modern Communications & Cloud net sales for the second quarter decreased 5.1% year-over-year to $364.1 million due to lower sales volumes in communications hardware, partially offset by growth in Cisco products. Intelisys net billings increased to approximately $2.64 billion annualized, and Intelisys net sales for the second quarter increased 7.5%.

Gross profit for the second quarter of fiscal year 2024 decreased 12.6% year-over-year to $100.7 million. Gross profit margin for the second quarter was 11.39%, compared to 11.41% for the prior-year quarter.

For the second quarter of fiscal year 2024, operating income was $26.8 million compared to $39.4 million in the prior-year quarter. Second quarter fiscal year 2024 non-GAAP operating income decreased to $30.6 million down from $40.7 million for the prior-year quarter.

On a GAAP basis, net income for the second quarter of fiscal year 2024 totaled $32.7 million, or $1.29 per diluted share, compared to net income of $25.7 million, or $1.01 per diluted share, for the prior-year quarter. Second quarter fiscal year 2024 non-GAAP net income totaled $21.6 million, or $0.85 per diluted share, down from $26.9 million, or $1.06 per diluted share, for the prior-year quarter. Interest expense for the quarter decreased to $3.4 million, down from $5.1 million for the prior-year quarter, reflecting lower borrowings.

Adjusted EBITDA for the second quarter of fiscal year 2024 decreased 21.2% to $38.5 million, or 4.35% of net sales, compared to $48.8 million, or 4.83% of net sales, for the prior-year quarter.

ScanSource generated $156.8 million of operating cash flow and $151.9 million of free cash flow in the first six months of fiscal year 2024.

Updated Annual Financial Outlook for Fiscal Year 2024

ScanSource updates its expectations for net sales and adjusted EBITDA for the full fiscal year ending June 30, 2024 and replaces previously provided guidance:

		FY24 Annual Outlook		Prior FY24 Annual Outlook
Net sales		At least $3.5 billion		At least $3.8 billion
Adjusted EBITDA (Non-GAAP)		At least $155 million		At least $170 million
Free cash flow		At least $200 million		At least $200 million

Adjusted EBITDA is a non-GAAP measure, which excludes estimates for amortization of intangible assets, depreciation expense, and non-cash shared-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 8:45 a.m. ET today, an Earnings Infographic, as a supplement to this press release and the earnings 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, February 6, 2024, at 10:30 a.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 ScanSource's FY24 outlook, which 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, the following factors, which are neither presented in order of importance nor weighted: macroeconomic conditions, including potential prolonged economic weakness, inflation, the failure to manage and implement ScanSource's organic growth strategy, credit risks involving ScanSource's larger customers and suppliers, changes in interest and exchange rates and regulatory regimes impacting ScanSource's international operations, economic weakness and inflation, risk to the business from a cyberattack, a failure of IT systems, failure to hire and retain quality employees, loss of ScanSource's major customers, relationships with key suppliers and customers or a termination or a modification of the terms under which it operates with these key suppliers, changes in ScanSource's operating strategy, and other factors set forth in the "Risk Factors" contained in ScanSource's annual report on Form 10-K for the year ended June 30, 2023. Except as may be required by law, ScanSource 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"), ScanSource 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, acquisition and divestiture costs, gain on sale of business, restructuring costs and other non-GAAP adjustments.

Net sales on a constant currency basis excluding acquisitions and divestitures (organic growth): ScanSource 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 and divestitures prior to the first full year from the transaction 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, ScanSource discloses non-GAAP SG&A expenses, non-GAAP operating income, non-GAAP operating income margin, and non-GAAP diluted earnings per share (non-GAAP diluted EPS). Non-GAAP results exclude amortization of intangible assets related to acquisitions, acquisition and divestiture costs, gain on sale of business, 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 ScanSource'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, gain on sale of business, restructuring costs, cyberattack restoration costs, tax recovery, and non-cash share-based compensation expense. Since Adjusted EBITDA excludes some non-cash costs of investing in ScanSource’s business and people, management believes that Adjusted EBITDA shows the profitability from the 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. The Adjusted EBITDA margin is calculated as Adjusted EBITDA as a percentage of net sales.

Adjusted return on invested capital ("Adjusted ROIC"): Adjusted ROIC assists management in comparing ScanSource'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. Management believes the calculation of Adjusted ROIC provides useful information to investors and is an additional relevant comparison of its 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 ScanSource's performance during the year.

Free cash flow: ScanSource presents free cash flow as it believes this measure provides more information regarding liquidity and capital resources. Free cash flow is defined as cash flows from operating activities less capital expenditures.

These non-GAAP financial measures have limitations as analytical tools, and the non-GAAP financial measures that ScanSource 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 ScanSource'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 customers across hardware, software as a service ("SaaS"), connectivity and cloud. ScanSource enables customers to deliver solutions for their end users to address changing 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 mobility and barcode, point-of-sale (POS), payments, networking, 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 2023 Best Places to Work in South Carolina and on FORTUNE magazine’s 2024 List of World’s Most Admired Companies. ScanSource ranks #817 on the Fortune 1000. For more information, visit www.scansource.com.

ScanSource, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
	December 31, 2023				June 30, 2023*
Assets
Current assets:
Cash and cash equivalents	$	44,987			$	36,178
Accounts receivable, less allowance of $19,243 at December 31, 2023 and $15,480 at June 30, 2023		662,799				753,236
Inventories		575,137				757,574
Prepaid expenses and other current assets		122,272				110,087
Total current assets		1,405,195				1,657,075
Property and equipment, net		36,546				37,379
Goodwill		208,214				216,706
Identifiable intangible assets, net		45,313				68,495
Deferred income taxes		19,478				17,764
Other non-current assets		66,059				70,750
Total assets	$	1,780,805			$	2,068,169
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	540,642			$	691,119
Accrued expenses and other current liabilities		58,460				78,892
Income taxes payable		3,653				9,875
Current portion of long-term debt		7,857				6,915
Total current liabilities		610,612				786,801
Deferred income taxes		—				3,816
Long-term debt, net of current portion		139,899				144,006
Borrowings under revolving credit facility		20,878				178,980
Other long-term liabilities		55,815				49,268
Total liabilities		827,204				1,162,871
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, 25,154,469 and 24,844,203 shares issued and outstanding at December 31, 2023 and June 30, 2023, respectively		63,983				58,241
Retained earnings		984,836				936,678
Accumulated other comprehensive loss		(95,218	)			(89,621	)
Total shareholders’ equity		953,601				905,298
Total liabilities and shareholders’ equity	$	1,780,805			$	2,068,169
*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,
		2023				2022				2023				2022
Net sales	$	884,792			$	1,011,241			$	1,761,098			$	1,955,054
Cost of goods sold		784,044				895,907				1,553,842				1,726,236
Gross profit		100,748				115,334				207,256				228,818
Selling, general and administrative expenses		66,921				69,074				142,356				140,667
Depreciation expense		2,964				2,678				5,759				5,441
Intangible amortization expense		4,037				4,150				8,230				8,391
Operating income		26,826				39,432				50,911				74,319
Interest expense		3,359				5,060				8,945				8,507
Interest income		(2,119	)			(2,027	)			(3,444	)			(3,618	)
Gain on sale of business		(14,533	)			—				(14,533	)			—
Other expense, net		73				207				750				955
Income before income taxes		40,046				36,192				59,193				68,475
Provision for income taxes		7,320				10,458				11,035				18,699
Net income	$	32,726			$	25,734			$	48,158			$	49,776
Per share data:
Net income per common share, basic	$	1.31			$	1.02			$	1.93			$	1.97
Weighted-average shares outstanding, basic		25,035				25,287				24,961				25,244
Net income per common share, diluted	$	1.29			$	1.01			$	1.91			$	1.96
Weighted-average shares outstanding, diluted		25,334				25,502				25,235				25,454

ScanSource, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
	Six months ended December 31,
		2023				2022
Cash flows from operating activities:
Net income	$	48,158			$	49,776
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Gain on sale of business		(14,533	)			—
Depreciation and amortization		14,475				14,285
Amortization of debt issue costs		193				385
Provision for doubtful accounts		4,472				33
Share-based compensation		5,340				5,679
Deferred income taxes		(1,703	)			932
Finance lease interest		46				24
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		75,579				(49,541	)
Inventories		182,168				(146,826	)
Prepaid expenses and other assets		(11,576	)			30,487
Other non-current assets		3,208				(7,168	)
Accounts payable		(135,138	)			33,820
Accrued expenses and other liabilities		(7,678	)			(13,268	)
Income taxes payable		(6,254	)			6,036
Net cash provided by (used in) operating activities		156,757				(75,346	)
Cash flows from investing activities:
Capital expenditures		(4,865	)			(4,262	)
Proceeds from sale of business, net of cash transferred		17,978				—
Net cash provided by (used in) investing activities		13,113				(4,262	)
Cash flows from financing activities:
Borrowings on revolving credit, net of expenses		1,134,629				1,232,058
Repayments on revolving credit, net of expenses		(1,292,729	)			(1,137,897	)
Repayments on long-term debt, net		(3,165	)			(1,407	)
Borrowings (repayments) on finance lease obligation		(442	)			17,465
Debt issuance costs		—				(492	)
Exercise of stock options		4,309				634
Taxes paid on settlement of equity awards		(2,657	)			(2,332	)
Common stock repurchased		(1,251	)			—
Net cash (used in) provided by financing activities		(161,306	)			108,029
Effect of exchange rate changes on cash and cash equivalents		245				37
Increase in cash and cash equivalents		8,809				28,458
Cash and cash equivalents at beginning of period		36,178				37,987
Cash and cash equivalents at period end		44,987			$	66,445

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
(in thousands, except percentages)
Non-GAAP Financial Information:
	Quarter ended December 31,
		2023				2022
Adjusted return on invested capital ratio (Adjusted ROIC), annualized(a)		13.2	%			15.6	%
Reconciliation of Net Income to Adjusted EBITDA:
Net income (GAAP)	$	32,726			$	25,734
Plus: Interest expense		3,359				5,060
Plus: Income taxes		7,320				10,458
Plus: Depreciation and amortization		7,258				7,057
EBITDA (non-GAAP)		50,663				48,309
Plus: Tax recovery		(1,386	)			(2,858	)
Plus: Share-based compensation		2,571				3,364
Plus: Acquisition and divestiture costs		703				—
Plus: Cyberattack restoration costs		441				—
Plus: Gain on sale of business		(14,533	)			—
Adjusted EBITDA (numerator for Adjusted ROIC) (non-GAAP)	$	38,459			$	48,815
Invested Capital Calculations:
Equity – beginning of the quarter	$	915,253			$	827,004
Equity – end of the quarter		953,601				862,386
Plus: Share-based compensation, net		1,919				2,496
Plus: Cyberattack restoration costs, net		329				—
Plus: Divestiture costs		703				—
Plus: Tax recovery, net		(640	)			(1,886	)
Plus: Gain on sale of business		(14,533	)			—
Average equity		928,316				845,000
Average funded debt (b)		227,688				392,853
Invested capital (denominator for Adjusted ROIC) (non-GAAP)	$	1,156,004			$	1,237,853
(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 92 days in the current and prior-year quarter.
(b) Average funded debt is calculated as the average daily amounts outstanding on short-term and long-term interest-bearing debt.

	Quarter ended December 31,								Six months ended December 31,
		2023				2022				2023				2022
GAAP operating cash flow	$	63,224			$	(26,885	)		$	156,757			$	(75,346	)
Less: Capital Expenditures		(2,549	)			(2,504	)			(4,865	)			(4,262	)
Free cash flow (non-GAAP)	$	60,675			$	(29,389	)		$	151,892			$	(79,608	)

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
Net Sales by Segment:
	Quarter ended December 31,
		2023				2022			% Change
Specialty Technology Solutions:	(in thousands)
Net sales, reported	$	520,651				627,548			(17.0	)%
Foreign exchange impact (a)		(886	)			—
Non-GAAP net sales	$	519,765			$	627,548			(17.2	)%
Modern Communications & Cloud:
Net sales, reported	$	364,141			$	383,693			(5.1	)%
Foreign exchange impact (a)		(4,323	)			—
Less: Divestitures	$	(1,628	)		$	(2,170	)
Non-GAAP net sales	$	358,190			$	381,523			(6.1	)%
Consolidated:
Net sales, reported	$	884,792			$	1,011,241			(12.5	)%
Foreign exchange impact (a)		(5,209	)			—
Less: Divestitures	$	(1,628	)		$	(2,170	)
Non-GAAP net sales	$	877,955			$	1,009,071			(13.0	)%
(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, 2023 into U.S. dollars using the average foreign exchange rates for the quarter ended December 31, 2022.

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
Net Sales by Geography:
	Quarter ended December 31,
		2023				2022			% Change
United States and Canada:	(in thousands)
Net sales, as reported	$	795,382			$	909,221			(12.5	)%
International:
Net sales, reported	$	89,410			$	102,020			(12.4	)%
Foreign exchange impact(a)		(5,209	)			—
Less: Divestitures		(1,628	)			(2,170	)
Non-GAAP net sales	$	82,573			$	99,850			(17.3	)%
Consolidated:
Net sales, reported	$	884,792			$	1,011,241			(12.5	)%
Foreign exchange impact(a)		(5,209	)			—
Less: Divestitures		(1,628	)			(2,170	)
Non-GAAP net sales	$	877,955			$	1,009,071			(13.0	)%
(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, 2023 into U.S. dollars using the average foreign exchange rates for the quarter ended December 31, 2022.

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
(in thousands, except per share data)
Non-GAAP Financial Information:
	Quarter ended December 31, 2023
		GAAP Measure		Intangible amortization expense		Divestiture costs		Tax recovery		Cyberattack restoration costs		Gain on sale of business(a)		Non-GAAP measure
	(in thousands, except per share data)
SG&A expenses		$66,921		—		$(703)		$1,386		$(441)		—		$67,163
Operating income		26,826		4,037		703		(1,386)		441		—		30,621
Pre-tax income		40,046		4,037		703		(1,386)		441		(14,533)		29,308
Net income		32,726		3,002		703		(640)		329		(14,533)		21,587
Diluted EPS		$1.29		$0.12		$0.03		$(0.03)		$0.01		$(0.57)		$0.85
	Quarter ended December 31, 2022
		GAAP Measure		Intangible amortization expense		Divestiture costs		Tax recovery		Cyberattack restoration costs		Gain on sale of business(a)		Non-GAAP measure
	(in thousands, except per share data)
SG&A expense		$69,074		—		—		$2,858		—		—		$71,932
Operating income		39,432		4,150		—		(2,858)		—		—		40,724
Pre-tax income		36,192		4,150		—		(2,858)		—		—		37,484
Net income		25,734		3,093		—		(1,886)		—		—		26,941
Diluted EPS		$1.01		$0.12		—		$(0.07)		—		—		$1.06
(a) Reflects gain on the sale of the UK-based intY business. This transaction resulted in a capital loss for tax purposes. ScanSource did not record a tax provision on the capital loss since there were no offsetting capital gains.

Annual Financial Outlook for Fiscal Year 2024:

	FY 24 Outlook
GAAP operating income	At least $111 million
Intangible amortization	$17 million
Depreciation expense	$12 million
Share-based compensation expense	$11 million
Interest income and income (expense), net	$4 million
Adjusted EBITDA (non-GAAP)	At least $155 million

GAAP operating cash flow	At least $210 million
Less: Capital expenditures	$10 million
Free cash flow (non-GAAP)	At least $200 million

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240206017497/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 is the ticker symbol for ScanSource, Inc.?

The ticker symbol for ScanSource, Inc. is SCSC.

What was the change in net sales for Q2 FY24 compared to Q2 FY23?

The net sales for Q2 FY24 decreased by 12.5% compared to Q2 FY23.

How did the gross profit change for Q2 FY24 compared to Q2 FY23?

The gross profit for Q2 FY24 decreased by 12.6% compared to Q2 FY23.

What was the percentage change in operating income for Q2 FY24 compared to Q2 FY23?

The operating income for Q2 FY24 decreased by 32.0% compared to Q2 FY23.

What is the outlook for net sales and adjusted EBITDA for the full fiscal year ending June 30, 2024?

The updated outlook for net sales and adjusted EBITDA for the full fiscal year ending June 30, 2024, is lower than previously provided guidance.