EX-99.2 3 scscinfographic_q2fy23.htm EX-99.2 scscinfographic_q2fy23
Fiscal Second Quarter 2023 Earnings The ScanSource team executed exceptionally well, delivering 17% net sales growth and record profitability for the quarter. This exceptional performance is a result of strong demand and operating leverage in our hardware and Intelisys businesses.” Mike Baur Chairman and CEO, ScanSource, Inc. Key Highlights 17% Net Sales Growth and 7% Gross Profit Growth Winning with our Hybrid Distribution Strategy; Raises Full Year Outlook Gained Operating Leverage on SG&A Expenses Net Sales +17% Y/Y $1.011B Q2 Net Sales Top $1B; Record Sales for Continuing Operations © ScanSource 2022 Consolidated Specialty Technology Solutions Segment Gross Profit +7% Y/Y $115.3M, 11.4% margin Modern Communications & Cloud Segment STS, Net Sales +26% Y/Y $627.5M MC&C, Net Sales +5% Y/Y $383.7M STS, Gross Profit +9% Y/Y $56.7M, 9.0% margin MC&C, Gross Profit +5% Y/Y $58.6M, 15.3% margin Exhibit 99.2


 
* Non‐GAAP measure; adjusted ROIC represents return on invested capital For further financial data, non‐GAAP financial disclosures and cautionary language regarding forward‐looking  statements, please refer to the following pages and ScanSource’s second quarter fiscal year 2023 news release issued  on February 7, 2023, which accompanies this presentation and is available at www.scansource.com in the Investor  Relations section. Second Quarter Metrics Reflect Operational Excellence Focused Execution of Value Creation Strategy Solid Financial Foundation for Growth Fiscal Year 2023 Outlook updated as of February 7, 2023 (replaces previously provided guidance) $1.01 per share +13% Y/Y GAAP Diluted EPS All-time Company record $1.06 per share +4% Y/Y Non-GAAP Diluted EPS* $48.8M +15% Y/Y Adjusted EBITDA* All-time Company record $(124)M TTM Operating Cash Flow Working capital for growth 15.6% Adjusted ROIC* No Q2 share repurchases 4.83% Adjusted EBITDA Margin* 1.8x net debt to TTM adjusted EBITDA Target range: 1x to 2x 5.0x inventory turns Paid for inventory days of 10.9 69 days sales outstanding A repositioned company – Innovative hybrid distributor Attractive financial profile Delivering long-term sustainable growth Differentiated market position © ScanSource 2022 At Least 6.5% (up from 5.5%) Net Sales Growth At Least $176M (up from $174M) +6% Y/Y Adjusted EBITDA* 2 Building on specialized technologies


 
Forward-Looking Statements This Earnings Infographic and supporting materials contain certain comments that are “forward- looking” statements, including statements about our FY23 outlook, growth opportunities and our operating strategies that involve plans, strategies, economic performance and trends, projections, expectations, costs or beliefs about future events and other statements that are not descriptions of historical facts. Forward-looking information is inherently subject to 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 failure to hire and retain quality employees, risk to our business from a cyber-security attack, the failure to manage and implement our organic growth strategy, economic weakness and inflation, a failure of our IT systems, a failure to acquire new businesses, changes in interest and exchange rates and regulatory regimes impacting our international operations, loss of our major customers, termination of our relationship with key suppliers or a significant modification of the terms under which we operate with a key supplier, changes in our operating strategy, and other factors set forth in the “Risk Factors” contained in our annual report on Form 10-K for the year ended June 30, 2022, and subsequent reports on Form 10-Q, filed with the Securities and Exchange Commission (“SEC”). Although ScanSource believes the expectations in its forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement. ScanSource disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by law. 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 measures, including non-GAAP operating income, non-GAAP operating income margin, non-GAAP net income, non-GAAP diluted EPS, non-GAAP net sales, non-GAAP SG&A expenses, adjusted EBITDA, adjusted ROIC and net sales less impacts from foreign currency translation and acquisitions (organic growth). A reconciliation of the Company's non-GAAP financial information to GAAP financial information is provided in the following supporting materials and in the Company’s Form 8-K, filed with the SEC, with the quarterly earnings press release for the period indicated. 3


 
Consolidated, 5-Quarter Financial Summary - for continuing operations ($ in thousands, except per share data) Q2 FY23 Q1 FY23 Q4 FY22 Q3 FY22 Q2 FY22 Q/Q Y/Y Select reported GAAP measures: Net sales $ 1,011,241 $ 943,813 $ 962,283 $ 845,990 $ 864,079 7% 17% Gross profit $ 115,334 $ 113,485 $ 110,792 $ 106,508 $ 107,653 2% 7% Gross profit margin % 11.4 % 12.0 % 11.5 % 12.6 % 12.5 % (62) bp (105) bp SG&A expenses $ 69,074 $ 71,593 $ 75,905 $ 66,522 $ 69,161 (4)% —% Operating income $ 39,432 $ 34,888 $ 27,424 $ 32,917 $ 31,498 13% 25% Operating income % 3.90 % 3.70 % 2.85 % 3.89 % 3.65 % 20 bp 25 bp Net income $ 25,734 $ 24,042 $ 19,947 $ 23,526 $ 23,152 7% 11% Diluted EPS $ 1.01 $ 0.94 $ 0.78 $ 0.91 $ 0.89 7% 13% Select reported Non-GAAP measures: (a) Non-GAAP operating income $ 40,724 $ 39,129 $ 31,864 $ 37,374 $ 35,892 4% 13% Non-GAAP operating income % 4.03 % 4.15 % 3.31 % 4.42 % 4.15 % (12) bp (13) bp Non-GAAP net income $ 26,941 $ 27,203 $ 23,266 $ 26,879 $ 26,446 (1)% 2% Non-GAAP diluted EPS $ 1.06 $ 1.07 $ 0.91 $ 1.04 $ 1.02 (1)% 4% Adjusted EBITDA $ 48,815 $ 45,275 $ 38,672 $ 44,115 $ 42,542 8% 15% Adjusted EBITDA % 4.83 % 4.80 % 4.02 % 5.21 % 4.92 % 3 bp (10) bp Adjusted ROIC 15.6 % 15.6 % 14.9 % 18.0 % 17.6 % — bp (200) bp Operating cash flow (QTR) $ (26,885) $ (48,459) $ (78,684) $ 29,707 $ (18,419) *nm *nm Operating cash flow (TTM) $ (124,321) $ (115,855) $ (124,355) $ 15,674 $ (74,285) *nm *nm (a) See pages 11 through 12 for the calculation of non-GAAP measures and reconciliations to GAAP measures. *nm - percentages are not meaningful ScanSource, Inc. Earnings Infographic Q2 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 4 February 7, 2023


 
Specialty Technology Solutions, 5-Quarter Financial Summary ($ in thousands) Q2 FY23 Q1 FY23 Q4 FY22 Q3 FY22 Q2 FY22 Q/Q Y/Y Net sales $ 627,548 $ 576,329 $ 580,619 $ 503,072 $ 496,920 9% 26% Gross profit $ 56,732 $ 58,404 $ 53,994 $ 54,021 $ 52,048 (3)% 9% Gross profit margin % 9.0 % 10.1 % 9.3 % 10.7 % 10.5 % (109) bp (143) bp GAAP operating income $ 19,682 $ 21,852 $ 15,408 $ 20,623 $ 16,551 (10)% 19% GAAP operating income % 3.14 % 3.79 % 2.65 % 4.10 % 3.33 % (66) bp (20) bp Add: Intangible amortization expense $ 1,266 $ 1,341 $ 1,491 $ 1,491 $ 1,491 (6)% (15)% Non-GAAP operating income $ 20,948 $ 23,193 $ 16,899 $ 22,114 $ 18,042 (10)% 16% Non-GAAP operating income % 3.34 % 4.02 % 2.91 % 4.40 % 3.63 % (69) bp (29) bp Reconciliation of Operating Income to Adjusted EBITDA GAAP operating income $ 19,682 $ 21,852 $ 15,408 $ 20,623 $ 16,551 (10)% 19% Plus: Depreciation expense 1,873 1,941 2,089 1,833 1,867 (4)% —% Intangible amortization expense 1,266 1,341 1,491 1,491 1,491 (6)% (15)% Interest income 194 321 325 265 299 (40)% (35)% Other income/(expense), net 71 (125) (141) 165 (169) *nm *nm EBITDA 23,086 25,330 19,172 24,377 20,039 (9)% 15% Adjustments: Share-based compensation expense 2,203 1,556 1,710 1,659 2,038 42% 8% Adjusted EBITDA (non-GAAP) $ 25,289 $ 26,886 $ 20,882 $ 26,036 $ 22,077 (6)% 15% Adjusted EBITDA (non-GAAP) % 4.03 % 4.67 % 3.60 % 5.18 % 4.44 % (64) bp (41) bp *nm - percentages are not meaningful ScanSource, Inc. Earnings Infographic Q2 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 5 February 7, 2023


 
Modern Communications & Cloud, 5-Quarter Financial Summary ($ in thousands) Q2 FY23 Q1 FY23 Q4 FY22 Q3 FY22 Q2 FY22 Q/Q Y/Y Net sales $ 383,693 $ 367,484 $ 381,664 $ 342,918 $ 367,159 4% 5% Gross profit $ 58,602 $ 55,081 $ 56,798 $ 52,487 $ 55,605 6% 5% Gross profit margin % 15.3 % 15.0 % 14.9 % 15.3 % 15.1 % 30 bp 20 bp GAAP operating income $ 19,750 $ 13,036 $ 12,016 $ 12,294 $ 14,894 52% 33% GAAP operating income % 5.15 % 3.55 % 3.15 % 3.59 % 4.06 % 160 bp 109 bp Add: Intangible amortization expense $ 2,884 $ 2,900 $ 2,949 $ 2,966 $ 2,956 (1)% (2)% Add: Tax recovery(a) $ (2,858) $ — $ — $ — $ — *nm *nm Non-GAAP operating income $ 19,776 $ 15,936 $ 14,965 $ 15,260 $ 17,850 24% 11% Non-GAAP operating income % 5.15 % 4.34 % 3.92 % 4.45 % 4.86 % 90 bp 30 bp Reconciliation of Operating Income to Adjusted EBITDA GAAP operating income $ 19,750 $ 13,036 $ 12,016 $ 12,294 $ 14,894 52% 33% Plus: Depreciation expense 1,034 1,046 1,172 1,015 916 (1)% 13% Intangible amortization expense 2,884 2,900 2,948 2,966 2,955 (1)% (2)% Interest income 1,834 1,269 1,035 735 648 45% 183% Other income/(expense), net (280) (623) (542) (28) (374) *nm *nm EBITDA 25,222 17,628 16,629 16,982 19,039 43% 32% Adjustments: Share-based compensation expense 1,161 760 1,162 1,098 1,426 53% (19)% Tax recovery(a) (2,858) — — — — *nm *nm Adjusted EBITDA (non-GAAP) $ 23,525 $ 18,388 $ 17,791 $ 18,080 $ 20,465 28% 15% Adjusted EBITDA (non-GAAP) % 6.13 % 5.00 % 4.66 % 5.27 % 5.57 % 113 bp 56 bp (a) Recovery of prior period withholding taxes in Brazil. *nm - percentages are not meaningful ScanSource, Inc. Earnings Infographic Q2 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 6 February 7, 2023


 
Net Sales, Constant Currency (Organic Growth) - QTR ($ in thousands) Net Sales by Segment: Q2 FY23 Q2 FY22 % Change Specialty Technology Solutions: Net sales, as reported $ 627,548 $ 496,920 26.3 % Foreign exchange impact (a) (1,120) — Net sales, constant currency (non-GAAP) $ 626,428 $ 496,920 26.1 % Modern Communications & Cloud: Net sales, as reported $ 383,693 $ 367,159 4.5 % Foreign exchange impact (a) (4,497) — Net sales, constant currency (non-GAAP) $ 379,196 $ 367,159 3.3 % Consolidated: Net sales, as reported $ 1,011,241 $ 864,079 17.0 % Foreign exchange impact (a) (5,617) — Net sales, constant currency (non-GAAP) $ 1,005,624 $ 864,079 16.4 % Net Sales by Geography: Q2 FY23 Q2 FY22 % Change United States and Canada: Net sales, as reported $ 909,221 $ 773,660 17.5 % International: Net sales, as reported $ 102,020 $ 90,419 12.8 % Foreign exchange impact (a) (5,617) — Net sales, constant currency (non-GAAP) $ 96,403 $ 90,419 6.6 % Consolidated: Net sales, as reported $ 1,011,241 $ 864,079 17.0 % Foreign exchange impact (a) (5,617) — Net sales, constant currency (non-GAAP) $ 1,005,624 $ 864,079 16.4 % (a) Year-over-year sales growth excluding the translation impact of changes in foreign currency rates. Calculated by translating net sales for the quarter ended December 31, 2022 into U.S. dollars using the weighted-average foreign exchange rates for the quarter ended December 31, 2021. ScanSource, Inc. Earnings Infographic Q2 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 7 February 7, 2023


 
Average Adjusted Return on Invested Capital - QTR ($ in thousands) Q2 FY23 Q1 FY23 Q4 FY22 Q3 FY22 Q2 FY22 Adjusted return on invested capital (ROIC), annualized (a) 15.6 % 15.6 % 14.9 % 18.0 % 17.6 % Reconciliation of Net Income to Adjusted EBITDA Net income from continuing operations - GAAP $ 25,734 $ 24,042 $ 19,947 $ 23,526 $ 23,152 Plus: Interest expense 5,060 3,448 1,886 1,483 1,493 Income taxes 10,458 8,241 6,267 9,044 7,257 Depreciation and amortization 7,057 7,228 7,700 7,305 7,229 EBITDA 48,309 42,959 35,800 41,358 39,131 Adjustments: Tax recovery (b) (2,858) — — — — Acquisition and divestiture costs — — — — (53) Share-based compensation 3,364 2,316 2,872 2,757 3,464 Adjusted EBITDA (numerator for Adjusted ROIC) (non-GAAP) $ 48,815 $ 45,275 $ 38,672 $ 44,115 $ 42,542 Invested Capital Calculation Equity - beginning of the quarter $ 827,004 $ 806,528 $ 806,654 $ 768,525 $ 746,094 Equity - end of quarter 862,386 827,004 806,528 806,654 768,525 Adjustments: Tax recovery, net (1,886) — — — — Share-based compensation, net 2,496 1,718 2,134 2,063 2,590 Acquisition and divestiture costs — — — — (53) Discontinued operations net income — — — — (100) Average equity 845,000 817,625 807,658 788,621 758,528 Average funded debt (c) 392,853 336,428 233,445 205,073 200,708 Invested capital (denominator for Adjusted ROIC) (non-GAAP) $ 1,237,853 $ 1,154,053 $ 1,041,103 $ 993,694 $ 959,236 (a) Calculated as net income plus interest expense, income taxes, depreciation and amortization (EBITDA), annualized divided by invested capital for the period. Adjusted EBITDA reflects other adjustments for non-GAAP measures. (b) Recovery of prior period withholding taxes in Brazil. (c) Average funded debt is calculated as the daily average amounts outstanding on our short-term and long-term interest-bearing debt. ScanSource, Inc. Earnings Infographic Q2 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 8 February 7, 2023


 
Net Debt and Adjusted EBITDA Metrics ($ in thousands) Q2 FY23 Q1 FY23 Q4 FY22 Q3 FY22 Q2 FY22 Consolidated debt (Q/E) $ 382,796 $ 326,435 $ 271,170 $ 181,500 $ 196,866 Less: Consolidated cash and cash equivalents (Q/E) (66,445) (40,472) (37,987) (43,539) (34,123) Net debt (Q/E) $ 316,351 $ 285,963 $ 233,183 $ 137,961 $ 162,743 Reconciliation of Net Income to Adjusted EBITDA Net income from continuing operations - GAAP $ 25,734 $ 24,042 $ 19,947 $ 23,526 $ 23,152 Plus: Interest expense 5,060 3,448 1,886 1,483 1,493 Income taxes 10,458 8,241 6,267 9,044 7,257 Depreciation and amortization 7,057 7,228 7,700 7,305 7,229 EBITDA 48,309 42,959 35,800 41,358 39,131 Adjustments: Tax recovery (a) (2,858) — — — — Acquisition and divestiture costs — — — — (53) Share-based compensation 3,364 2,316 2,872 2,757 3,464 Adjusted EBITDA (non-GAAP) $ 48,815 $ 45,275 $ 38,672 $ 44,115 $ 42,542 Adjusted EBITDA, TTM (b) $ 176,877 $ 170,604 $ 166,723 $ 163,350 $ 151,234 Net Debt / Adjusted EBITDA, TTM (b) 1.8x 1.7x 1.4x 0.8x 1.1x (a) Recovery of prior period withholding taxes in Brazil. (b) Adjusted EBITDA for the trailing 12-month period. ScanSource, Inc. Earnings Infographic Q2 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 9 February 7, 2023


 
Working Capital, 5-Quarter Summary ($ in thousands) Q2 FY23 Q1 FY23 Q4 FY22 Q3 FY22 Q2 FY22 Accounts Receivable (Q/E) $ 779,562 $ 744,946 $ 729,442 $ 642,384 $ 613,186 Days sales outstanding in receivables 69 71 68 69 64 Inventory (Q/E) $ 761,936 $ 675,798 $ 614,814 $ 591,396 $ 562,397 Inventory turns 5.0 5.1 5.6 5.1 5.7 Accounts payable (Q/E) $ 748,662 $ 710,919 $ 714,177 $ 706,359 $ 653,190 Paid for inventory days* 10.9 7.2 (0.8) (2.9) (0.5) Working Capital (Q/E) (AR+INV-AP) $ 792,836 $ 709,825 $ 630,079 $ 527,421 $ 522,393 Cash conversion cycle 80 78 67 66 64 *Paid for inventory days represent Q/E inventory days less Q/E accounts payable days ScanSource, Inc. Earnings Infographic Q2 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 10 February 7, 2023


 
Operating Income, Net Income & EPS - QTR ($ in thousands) Quarter ended December 31, 2022 Reported GAAP measure Intangible amortization expense Acquisition, divestiture and restructuring costs Tax recovery, net (a) Non-GAAP measure SG&A expenses $69,074 — — $2,858 $71,932 Operating income 39,432 4,150 — (2,858) 40,724 Net income 25,734 3,093 — (1,886) 26,941 Diluted EPS $1.01 $0.12 — $(0.07) $1.06 (a) Recovery of prior period withholding taxes in Brazil. ($ in thousands) Quarter ended September 30, 2022 Reported GAAP measure Intangible amortization expense Acquisition, divestiture and restructuring cost Tax recovery, net Non-GAAP measure SG&A expenses $71,593 — — — $71,593 Operating income 34,888 4,241 — — 39,129 Net income 24,042 3,161 — — 27,203 Diluted EPS $0.94 $0.12 — — $1.07 ScanSource, Inc. Earnings Infographic Q2 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 11 February 7, 2023


 
Operating Income, Net Income & EPS - QTR, continued ($ in thousands) Quarter ended June 30, 2022 Reported GAAP measure Intangible amortization expense Acquisition, divestiture and restructuring costs Tax recovery, net Non-GAAP measure 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 — — $0.91 ($ in thousands) Quarter ended March 31, 2022 Reported GAAP measure Intangible amortization expense Acquisition, divestiture and restructuring costs Tax recovery, net Non-GAAP measure SG&A expenses $66,522 — — — $66,522 Operating income 32,917 4,457 — — 37,374 Net income 23,526 3,353 — — 26,879 Diluted EPS $0.91 $0.13 — — $1.04 ($ in thousands) Quarter ended December 31, 2021 Reported GAAP measure Intangible amortization expense Acquisition, divestiture and restructuring costs(a) Tax recovery, net Non-GAAP measure SG&A expenses $69,161 — $53 — $69,214 Operating income 31,498 4,447 (53) — 35,892 Net income 23,152 3,347 (53) — 26,446 Diluted EPS $0.89 $0.13 — — $1.02 (a) Acquisition and divestiture costs totaled less than $(0.1) million for the quarter ended December 31, 2021 and are generally nondeductible for tax purposes. ScanSource, Inc. Earnings Infographic Q2 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 12 February 7, 2023


 
FY23 Annual Financial Outlook Reconciliation FY23 Outlook GAAP, operating income At least $135 million Intangible amortization $17 million Depreciation expense $12 million Share-based compensation expense $12 million Interest income and other income (expense), net $3 million Tax recovery $(3) million Adjusted EBITDA (non-GAAP) At least $176 million ScanSource, Inc. Earnings Infographic Q2 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 13 February 7, 2023