EX-99.2 3 scscinfographic_q3fy23.htm EX-99.2 scscinfographic_q3fy23
Fiscal Third Quarter 2023 Earnings Throughout fiscal year 2023, our team has delivered results ahead of expectations. Our strong results for the quarter demonstrate how our diversified portfolio of technologies is driving our hybrid distribution success.” Mike Baur Chairman and CEO, ScanSource, Inc. Key Q3 Highlights 5% Net Sales Growth and 5% Gross Profit Growth Confidence in our Hybrid Distribution Strategy Delivered Results Ahead of Expectations Net Sales +5% Y/Y $886M 5% Net Sales Growth and Positive Operating Cash Flow +$55M © ScanSource 2022 Consolidated Specialty Technology Solutions Segment Gross Profit +5% Y/Y $112M, 12.6% margin Modern Communications & Cloud Segment STS, Net Sales +12% Y/Y $566M MC&C, Net Sales -7% Y/Y $320M STS, Gross Profit +7% Y/Y $58M, 10.2% margin MC&C, Gross Profit +3% Y/Y $54M, 16.9% 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 third quarter fiscal year 2023 news release issued on May 9, 2023, which accompanies this presentation and is available at www.scansource.com in the Investor Relations section. Third Quarter Metrics Reflect Operational Excellence Focused Execution of Value Creation Strategy Solid Financial Foundation for Growth Fiscal Year 2023 Outlook updated as of May 9, 2023 (replaces previously provided guidance) $0.83 per share -9% Y/Y GAAP Diluted EPS $0.96 per share -8% Y/Y Non-GAAP Diluted EPS* Higher interest expense in Q3 FY23 $45.7M Q3 +3% Y/Y $178.4M TTM Adjusted EBITDA* TTM all-time Company record $55M Q3 $(99)M TTM Operating Cash Flow 14.6% Adjusted ROIC* $10.7M share repurchases in Q3 5.16% Adjusted EBITDA Margin* 1.5x net debt* to TTM adjusted EBITDA* Target range: 1x to 2x 3/31/23 Working Capital $781M $12M Q/Q improvement Paid for inventory days of 22.7 70 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% (unchanged from 6.5%) Net Sales Growth At Least $182M (up from $176M) +9% 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, supply chain challenges, 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, credit risks involving our larger customers and suppliers, 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. 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 EBITDA margin, net debt, 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) Q3 FY23 Q2 FY23 Q1 FY23 Q4 FY22 Q3 FY22 Q/Q Y/Y Select reported GAAP measures: Net sales $ 885,519 $ 1,011,241 $ 943,813 $ 962,283 $ 845,990 (12)% 5% Gross profit $ 111,762 $ 115,334 $ 113,485 $ 110,792 $ 106,508 (3)% 5% Gross profit margin % 12.6 % 11.4 % 12.0 % 11.5 % 12.6 % 122 bp 3 bp SG&A expenses $ 70,669 $ 69,074 $ 71,593 $ 75,905 $ 66,522 2% 6% Operating income $ 34,279 $ 39,432 $ 34,888 $ 27,424 $ 32,917 (13)% 4% Operating income % 3.87 % 3.90 % 3.70 % 2.85 % 3.89 % (3) bp (2) bp Net income $ 21,221 $ 25,734 $ 24,042 $ 19,947 $ 23,526 (18)% (10)% Diluted EPS $ 0.83 $ 1.01 $ 0.94 $ 0.78 $ 0.91 (18)% (9)% Select reported Non-GAAP measures: (a) Non-GAAP operating income $ 38,449 $ 40,724 $ 39,129 $ 31,864 $ 37,374 (6)% 3% Non-GAAP operating income % 4.34 % 4.03 % 4.15 % 3.31 % 4.42 % 32 bp (8) bp Non-GAAP net income $ 24,330 $ 26,941 $ 27,203 $ 23,266 $ 26,879 (10)% (9)% Non-GAAP diluted EPS $ 0.96 $ 1.06 $ 1.07 $ 0.91 $ 1.04 (9)% (8)% Adjusted EBITDA $ 45,656 $ 48,815 $ 45,275 $ 38,672 $ 44,115 (6)% 3% Adjusted EBITDA % 5.16 % 4.83 % 4.80 % 4.02 % 5.21 % 33 bp (6) bp Adjusted ROIC 14.6 % 15.6 % 15.6 % 14.9 % 18.0 % (100) bp (340) bp Operating cash flow (QTR) $ 54,837 $ (26,885) $ (48,459) $ (78,684) $ 29,707 *nm 85% Operating cash flow (TTM) $ (99,191) $ (124,321) $ (115,855) $ (124,355) $ 15,674 *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 Q3 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 4 May 9, 2023


 
Specialty Technology Solutions, 5-Quarter Financial Summary ($ in thousands) Q3 FY23 Q2 FY23 Q1 FY23 Q4 FY22 Q3 FY22 Q/Q Y/Y Net sales $ 565,652 $ 627,548 $ 576,329 $ 580,619 $ 503,072 (10)% 12% Gross profit $ 57,664 $ 56,732 $ 58,404 $ 53,994 $ 54,021 2% 7% Gross profit margin % 10.2 % 9.0 % 10.1 % 9.3 % 10.7 % 115 bp (54) bp GAAP operating income $ 19,811 $ 19,682 $ 21,852 $ 15,408 $ 20,623 1% (4)% GAAP operating income % 3.50 % 3.14 % 3.79 % 2.65 % 4.10 % 37 bp (60) bp Add: Intangible amortization expense $ 1,266 $ 1,266 $ 1,341 $ 1,491 $ 1,491 —% (15)% Non-GAAP operating income $ 21,077 $ 20,948 $ 23,193 $ 16,899 $ 22,114 1% (5)% Non-GAAP operating income % 3.73 % 3.34 % 4.02 % 2.91 % 4.40 % 39 bp (67) bp Reconciliation of Operating Income to Adjusted EBITDA GAAP operating income $ 19,811 $ 19,682 $ 21,852 $ 15,408 $ 20,623 1% (4)% Plus: Depreciation expense 1,862 1,873 1,941 2,089 1,833 (1)% 2% Intangible amortization expense 1,266 1,266 1,341 1,491 1,491 —% (15)% Interest income 354 194 321 325 265 82% 34% Other income/(expense), net (54) 71 (125) (141) 165 *nm *nm EBITDA 23,239 23,086 25,330 19,172 24,377 1% (5)% Adjustments: Share-based compensation expense 1,867 2,203 1,556 1,710 1,659 (15)% 13% Adjusted EBITDA (non-GAAP) $ 25,106 $ 25,289 $ 26,886 $ 20,882 $ 26,036 (1)% (4)% Adjusted EBITDA (non-GAAP) % 4.44 % 4.03 % 4.67 % 3.60 % 5.18 % 41 bp (74) bp *nm - percentages are not meaningful ScanSource, Inc. Earnings Infographic Q3 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 5 May 9, 2023


 
Modern Communications & Cloud, 5-Quarter Financial Summary ($ in thousands) Q3 FY23 Q2 FY23 Q1 FY23 Q4 FY22 Q3 FY22 Q/Q Y/Y Net sales $ 319,867 $ 383,693 $ 367,484 $ 381,664 $ 342,918 (17)% (7)% Gross profit $ 54,098 $ 58,602 $ 55,081 $ 56,798 $ 52,487 (8)% 3% Gross profit margin % 16.9 % 15.3 % 15.0 % 14.9 % 15.3 % 160 bp 160 bp GAAP operating income $ 14,468 $ 19,750 $ 13,036 $ 12,016 $ 12,294 (27)% 18% GAAP operating income % 4.52 % 5.15 % 3.55 % 3.15 % 3.59 % (63) bp 93 bp Add: Intangible amortization expense $ 2,904 $ 2,884 $ 2,900 $ 2,949 $ 2,966 1% (2)% Add: Tax recovery(a) $ — $ (2,858) $ — $ — $ — *nm *nm Non-GAAP operating income $ 17,372 $ 19,776 $ 15,936 $ 14,965 $ 15,260 (12)% 14% Non-GAAP operating income % 5.43 % 5.15 % 4.34 % 3.92 % 4.45 % 20 bp 90 bp Reconciliation of Operating Income to Adjusted EBITDA GAAP operating income $ 14,468 $ 19,750 $ 13,036 $ 12,016 $ 12,294 (27)% 18% Plus: Depreciation expense 1,042 1,034 1,046 1,172 1,015 1% 3% Intangible amortization expense 2,904 2,884 2,900 2,949 2,966 1% (2)% Interest income 1,356 1,834 1,269 1,035 735 (26)% 84% Other income/(expense), net (307) (280) (623) (542) (28) *nm *nm EBITDA 19,463 25,222 17,628 16,630 16,982 (23)% 15% Adjustments: Share-based compensation expense 1,087 1,161 760 1,162 1,098 (6)% (1)% Tax recovery(a) — (2,858) — — — *nm *nm Adjusted EBITDA (non-GAAP) $ 20,550 $ 23,525 $ 18,388 $ 17,792 $ 18,080 (13)% 14% Adjusted EBITDA (non-GAAP) % 6.42 % 6.13 % 5.00 % 4.66 % 5.27 % 29 bp 115 bp (a) Recovery of prior period withholding taxes in Brazil *nm - percentages are not meaningful ScanSource, Inc. Earnings Infographic Q3 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 6 May 9, 2023


 
Net Sales, Constant Currency (Organic Growth) - QTR ($ in thousands) Net Sales by Segment: Q3 FY23 Q3 FY22 % Change Specialty Technology Solutions: Net sales, as reported $ 565,652 $ 503,072 12.4 % Foreign exchange impact (a) 61 — Net sales, constant currency (non-GAAP) $ 565,713 $ 503,072 12.5 % Modern Communications & Cloud: Net sales, as reported $ 319,867 $ 342,918 (6.7) % Foreign exchange impact (a) 363 — Net sales, constant currency (non-GAAP) $ 320,230 $ 342,918 (6.6) % Consolidated: Net sales, as reported $ 885,519 $ 845,990 4.7 % Foreign exchange impact (a) 424 — Net sales, constant currency (non-GAAP) $ 885,943 $ 845,990 4.7 % Net Sales by Geography: Q3 FY23 Q3 FY22 % Change United States and Canada: Net sales, as reported $ 808,797 $ 764,529 5.8 % International: Net sales, as reported $ 76,722 $ 81,461 (5.8) % Foreign exchange impact (a) 424 — Net sales, constant currency (non-GAAP) $ 77,146 $ 81,461 (5.3) % Consolidated: Net sales, as reported $ 885,519 $ 845,990 4.7 % Foreign exchange impact (a) 424 — Net sales, constant currency (non-GAAP) $ 885,943 $ 845,990 4.7 % (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 March 31, 2023 into U.S. dollars using the weighted-average foreign exchange rates for the quarter ended March 31, 2022. ScanSource, Inc. Earnings Infographic Q3 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 7 May 9, 2023


 
Average Adjusted Return on Invested Capital - QTR ($ in thousands) Q3 FY23 Q2 FY23 Q1 FY23 Q4 FY22 Q3 FY22 Adjusted return on invested capital (ROIC), annualized (a) 14.6 % 15.6 % 15.6 % 14.9 % 18.0 % Reconciliation of Net Income to Adjusted EBITDA Net income from continuing operations - GAAP $ 21,221 $ 25,734 $ 24,042 $ 19,947 $ 23,526 Plus: Interest expense 5,715 5,060 3,448 1,886 1,483 Income taxes 8,692 10,458 8,241 6,267 9,044 Depreciation and amortization 7,074 7,057 7,228 7,700 7,305 EBITDA 42,702 48,309 42,959 35,800 41,358 Adjustments: Tax recovery (b) — (2,858) — — — Share-based compensation 2,954 3,364 2,316 2,872 2,757 Adjusted EBITDA (numerator for Adjusted ROIC) (non-GAAP) $ 45,656 $ 48,815 $ 45,275 $ 38,672 $ 44,115 Invested Capital Calculation Equity - beginning of the quarter $ 862,386 $ 827,004 $ 806,528 $ 806,654 $ 768,525 Equity - end of quarter 878,895 862,386 827,004 806,528 806,654 Adjustments: Tax recovery, net — (1,886) — — — Share-based compensation, net 2,191 2,496 1,718 2,134 2,063 Average equity 871,736 845,000 817,625 807,658 788,621 Average funded debt (c) 398,318 392,853 336,428 233,445 205,073 Invested capital (denominator for Adjusted ROIC) (non-GAAP) $ 1,270,054 $ 1,237,853 $ 1,154,053 $ 1,041,103 $ 993,694 (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 Q3 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 8 May 9, 2023


 
Net Debt and Adjusted EBITDA Metrics ($ in thousands) Q3 FY23 Q2 FY23 Q1 FY23 Q4 FY22 Q3 FY22 Consolidated debt (Q/E) $ 311,052 $ 382,796 $ 326,435 $ 271,170 $ 181,500 Less: Consolidated cash and cash equivalents (Q/E) (37,374) (66,445) (40,472) (37,987) (43,539) Net debt (Q/E) $ 273,678 $ 316,351 $ 285,963 $ 233,183 $ 137,961 Reconciliation of Net Income to Adjusted EBITDA Net income from continuing operations - GAAP $ 21,221 $ 25,734 $ 24,042 $ 19,947 $ 23,526 Plus: Interest expense 5,715 5,060 3,448 1,886 1,483 Income taxes 8,692 10,458 8,241 6,267 9,044 Depreciation and amortization 7,074 7,057 7,228 7,700 7,305 EBITDA 42,702 48,309 42,959 35,800 41,358 Adjustments: Tax recovery (a) — (2,858) — — — Share-based compensation 2,954 3,364 2,316 2,872 2,757 Adjusted EBITDA (non-GAAP) $ 45,656 $ 48,815 $ 45,275 $ 38,672 $ 44,115 Adjusted EBITDA, TTM (b) $ 178,418 $ 176,877 $ 170,604 $ 166,723 $ 163,350 Net Debt / Adjusted EBITDA, TTM (b) 1.5 x 1.8 x 1.7 x 1.4 x 0.8 x (a) Recovery of prior period withholding taxes in Brazil (b) Adjusted EBITDA for the trailing 12-month period ScanSource, Inc. Earnings Infographic Q3 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 9 May 9, 2023


 
Working Capital, 5-Quarter Summary ($ in thousands) Q3 FY23 Q2 FY23 Q1 FY23 Q4 FY22 Q3 FY22 Accounts Receivable (Q/E) $ 684,458 $ 779,562 $ 744,946 $ 729,442 $ 642,384 Days sales outstanding in receivables 70 69 71 68 69 Inventory (Q/E) $ 752,763 $ 761,936 $ 675,798 $ 614,814 $ 591,396 Inventory turns 4.1 5.0 5.1 5.6 5.1 Accounts payable (Q/E) $ 656,688 $ 748,662 $ 710,919 $ 714,177 $ 706,359 Paid for inventory days* 22.7 10.9 7.2 (0.8) (2.9) Working Capital (Q/E) (AR+INV-AP) $ 780,533 $ 792,836 $ 709,825 $ 630,079 $ 527,421 Cash conversion cycle 93 80 78 67 66 *Paid for inventory days represent Q/E inventory days less Q/E accounts payable days ScanSource, Inc. Earnings Infographic Q3 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 10 May 9, 2023


 
Operating Income, Net Income & EPS - QTR ($ in thousands) Quarter ended March 31, 2023 Reported GAAP measure Intangible amortization expense Tax recovery, net Non-GAAP measure SG&A expenses $70,669 — — $70,669 Operating income 34,279 4,170 — 38,449 Net income 21,221 3,109 — 24,330 Diluted EPS $0.83 $0.12 — $0.96 ($ in thousands) Quarter ended December 31, 2022 Reported GAAP measure Intangible amortization expense 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 ScanSource, Inc. Earnings Infographic Q3 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 11 May 9, 2023


 
Operating Income, Net Income & EPS - QTR, continued ($ in thousands) Quarter ended September 30, 2022 Reported GAAP measure Intangible amortization expense 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 — $1.07 ($ in thousands) Quarter ended June 30, 2022 Reported GAAP measure Intangible amortization expense 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, 2021 Reported GAAP measure Intangible amortization expense 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 ScanSource, Inc. Earnings Infographic Q3 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 12 May 9, 2023


 
FY23 Annual Financial Outlook Reconciliation FY23 Outlook GAAP, operating income At least $140 million Intangible amortization $17 million Depreciation expense $12 million Share-based compensation expense $12 million Interest income and other income (expense), net $4 million Tax recovery $(3) million Adjusted EBITDA (non-GAAP) At least $182 million ScanSource, Inc. Earnings Infographic Q3 FY2023 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 13 May 9, 2023