EX-99.2 3 scansourceearningsinfogr.htm EX-99.2 scansourceearningsinfogr
Fiscal Third Quarter 2022 Earnings Strong demand and outstanding execution by our people drove the achievement of 16% net sales growth and exceptional profitability. Our people are making a tremendous difference for our customers and partners in a challenging supply environment.” Mike Baur Chairman and CEO, ScanSource, Inc. Key Highlights 16% Net Sales Growth and 21% Gross Profit Growth Hybrid Distribution Strategy Enables Sustainable Growth Exceeds Expectations and Raises Full Year Outlook Net Sales +16% Y/Y $846.0M Strong Demand and Outstanding Execution Drove Exceptional Q3 Profitability © ScanSource 2022 Consolidated Specialty Technology Solutions Segment Gross Profit +21% Y/Y $106.5M, 12.6% margin Modern Communications & Cloud Segment STS, Net Sales +15% Y/Y $503.1M MC&C, Net Sales +17% Y/Y $342.9M STS, Gross Profit +39% Y/Y $54.0M, 10.7% margin MC&C, Gross Profit +7% Y/Y $52.5M, 15.3% margin Exhibit 99.2


 
* Non‐GAAP measure TTM represents trailing 12‐months; 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 fiscal year 2022 third quarter news release issued on  May 10, 2022, 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 2022 Outlook updated as of May 10, 2022 (replaces previously provided guidance) $0.91 per share, Q3 $3.46 per share, TTM GAAP Diluted EPS TTM all-time Company record $1.04 per share, Q3 +46% Y/Y $4.01 per share, TTM Non-GAAP Diluted EPS* Q3 and TTM all-time Company record $44.1M Q3 +38% Y/Y $163.4M TTM Adjusted EBITDA* Q3 and TTM all-time Company record $15.7M TTM Operating Cash Flow As expected, working capital for growth 18.0% Adjusted ROIC* Q3 share repurchases, $8.3M 5.21% Adjusted EBITDA Margin* 0.8x net debt to TTM adjusted EBITDA Target range: 1x to 2x 5.1x inventory turns 5-qtr range: 5.1x to 6.5x Paid for inventory days of (2.9) 5-qtr range: (9.4) to 2.2 69 days sales outstanding 5-qtr range: 60 to 69 Leader in Hybrid Distribution Deep Partnerships Margin Expansion Attractive Return Potential Digital Growth Opportunities © ScanSource 2022 At Least 10% (up from 7%) Net Sales Growth At Least $165M (up from $148 million) +40% Y/Y Adjusted EBITDA* 2


 
Forward-Looking Statements This Earnings Infographic and supporting materials contain certain comments that are “forward- looking” statements, including statements about our FY22 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, impact of the COVID-19 pandemic on our operations and financial condition and the potential prolonged economic weakness brought on by COVID-19, a failure of our IT systems, credit risks involving our larger customers and suppliers, 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, 2021, 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) Q3 FY22 Q2 FY22 Q1 FY22 Q4 FY21 Q3 FY21 Q/Q Y/Y Select reported GAAP measures: Net sales $ 845,990 $ 864,351 $ 857,311 $ 852,694 $ 729,873 (2)% 16% Gross profit $ 106,508 $ 107,925 $ 101,300 $ 95,778 $ 88,116 (1)% 21% Gross profit margin % 12.6 % 12.5 % 11.8 % 11.2 % 12.1 % 10 bp 52 bp SG&A expenses $ 66,522 $ 69,433 $ 63,582 $ 64,758 $ 60,099 (4)% 11% Operating income $ 32,917 $ 31,498 $ 30,328 $ 23,283 $ 19,436 5% 69% Operating income % 3.89 % 3.64 % 3.54 % 2.73 % 2.66 % 25 bp 123 bp Net income $ 23,526 $ 23,152 $ 22,073 $ 20,657 $ 13,786 2% 71% Diluted EPS $ 0.91 $ 0.89 $ 0.86 $ 0.80 $ 0.54 2% 69% Select reported Non-GAAP measures: (a) Non-GAAP operating income $ 37,374 $ 35,892 $ 34,921 $ 28,368 $ 25,148 4% 49% Non-GAAP operating income % 4.42 % 4.15 % 4.07 % 3.33 % 3.45 % 27 bp 97 bp Non-GAAP net income $ 26,879 $ 26,446 $ 25,550 $ 24,522 $ 18,178 2% 48% Non-GAAP diluted EPS $ 1.04 $ 1.02 $ 0.99 $ 0.96 $ 0.71 2% 46% Adjusted EBITDA $ 44,115 $ 42,542 $ 41,394 $ 35,299 $ 31,999 4% 38% Adjusted EBITDA % 5.21 % 4.92 % 4.83 % 4.14 % 4.38 % 29 bp 83 bp Adjusted ROIC 18.0 % 17.6 % 17.5 % 16.0 % 14.7 % 40 bp 330 bp Operating cash flow (QTR) $ 29,707 $ (18,419) $ (56,959) $ 61,345 $ (60,252) 261% (149)% Operating cash flow (TTM) $ 15,674 $ (74,285) $ (11,417) $ 116,767 $ 129,375 (121)% (88)% (a) See pages 11 through 12 for the calculation of non-GAAP measures and reconciliations to GAAP measures. ScanSource, Inc. Earnings Infographic Q3 FY2022 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 4 May 10, 2022


 
Specialty Technology Solutions, 5-Quarter Financial Summary ($ in thousands) Q3 FY22 Q2 FY22 Q1 FY22 Q4 FY21 Q3 FY21 Q/Q Y/Y Net sales $ 503,072 $ 496,920 $ 501,711 $ 515,445 $ 436,462 1% 15% Gross profit $ 54,021 $ 52,048 $ 45,694 $ 46,554 $ 39,002 4% 39% Gross profit margin % 10.7 % 10.5 % 9.1 % 9.0 % 8.9 % 26 bp 180 bp GAAP operating income $ 20,623 $ 16,551 $ 14,104 $ 12,011 $ 8,713 25% 137% GAAP operating income % 4.10 % 3.33 % 2.81 % 2.33 % 2.00 % 77 bp 210 bp Add: Intangible amortization expense $ 1,491 $ 1,491 $ 1,531 $ 1,610 $ 1,610 —% (7)% Non-GAAP operating income $ 22,114 $ 18,042 $ 15,635 $ 13,621 $ 10,323 23% 114% Non-GAAP operating income % 4.40 % 3.63 % 3.12 % 2.64 % 2.37 % 77 bp 203 bp Reconciliation of Operating Income to Adjusted EBITDA GAAP operating income $ 20,623 $ 16,551 $ 14,104 $ 12,011 $ 8,713 25% 137% Plus: Depreciation expense 1,833 1,867 1,868 1,967 2,000 (2)% (8)% Intangible amortization expense 1,491 1,491 1,531 1,610 1,610 —% (7)% Interest income 265 299 305 965 517 (11)% (49)% Other income/(expense), net 165 (169) 13 (10) 111 *nm *nm EBITDA 24,377 20,039 17,821 16,543 12,951 22% 88% Adjustments: Share-based compensation expense 1,659 2,038 1,398 1,325 1,376 (19)% 21% Adjusted EBITDA (non-GAAP) $ 26,036 $ 22,077 $ 19,219 $ 17,868 $ 14,327 18% 82% Adjusted EBITDA (non-GAAP) % 5.18 % 4.44 % 3.83 % 3.47 % 3.28 % 73 bp 189 bp *nm - percentages are not meaningful ScanSource, Inc. Earnings Infographic Q3 FY2022 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 5 May 10, 2022


 
Modern Communications & Cloud, 5-Quarter Financial Summary ($ in thousands) Q3 FY22 Q2 FY22 Q1 FY22 Q4 FY21 Q3 FY21 Q/Q Y/Y Net sales $ 342,918 $ 367,431 $ 355,600 $ 337,249 $ 293,411 (7)% 17% Gross profit $ 52,487 $ 55,877 $ 55,606 $ 49,224 $ 49,114 (6)% 7% Gross profit margin % 15.3 % 15.2 % 15.6 % 14.6 % 16.7 % 10 bp (143) bp GAAP operating income $ 12,294 $ 14,894 $ 16,307 $ 11,466 $ 11,555 (17)% 6% GAAP operating income % 3.59 % 4.05 % 4.59 % 3.40 % 3.94 % (47) bp (35) bp Add: Intangible amortization expense $ 2,966 $ 2,956 $ 2,978 $ 3,283 $ 3,270 —% (9)% Non-GAAP operating income $ 15,260 $ 17,850 $ 19,285 $ 14,749 $ 14,825 (15)% 3% Non-GAAP operating income % 4.45 % 4.86 % 5.42 % 4.37 % 5.05 % (41) bp (60) bp Reconciliation of Operating Income to Adjusted EBITDA GAAP operating income $ 12,294 $ 14,894 $ 16,307 $ 11,466 $ 11,555 (17)% 6% Plus: Depreciation expense 1,015 916 1,273 1,231 1,478 11% (31)% Intangible amortization expense 2,966 2,955 2,978 3,283 3,270 —% (9)% Interest income 735 648 721 376 228 13% 222% Other income/(expense), net (28) (374) (276) 77 192 *nm *nm EBITDA 16,982 19,039 21,003 16,433 16,723 (11)% 2% Adjustments: Share-based compensation expense 1,098 1,426 1,173 1,003 1,160 (23)% (5)% Adjusted EBITDA (non-GAAP) $ 18,080 $ 20,465 $ 22,176 $ 17,436 $ 17,883 (12)% 1% Adjusted EBITDA (non-GAAP) % 5.27 % 5.57 % 6.24 % 5.17 % 6.09 % (30) bp (82) bp *nm - percentages are not meaningful ScanSource, Inc. Earnings Infographic Q3 FY2022 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 6 May 10, 2022


 
Net Sales, Constant Currency (Organic Growth) - QTR Net Sales by Segment: ($ In thousands) Q3 FY22 Q3 FY21 % Change Specialty Technology Solutions: Net sales, as reported $ 503,072 $ 436,462 15.3 % Foreign exchange impact (a) (915) — Net sales, constant currency (non-GAAP) $ 502,157 $ 436,462 15.1 % Modern Communications & Cloud: Net sales, as reported $ 342,918 $ 293,411 16.9 % Foreign exchange impact (a) (2,660) — Net sales, constant currency (non-GAAP) $ 340,258 $ 293,411 16.0 % Consolidated: Net sales, as reported $ 845,990 $ 729,873 15.9 % Foreign exchange impact (a) (3,575) — Net sales, constant currency (non-GAAP) $ 842,415 $ 729,873 15.4 % Net Sales by Geography: ($ in thousands) Q3 FY22 Q3 FY21 % Change United States and Canada: Net sales, as reported $ 764,529 $ 665,720 14.8 % International: Net sales, as reported $ 81,461 $ 64,153 27.0 % Foreign exchange impact (a) (3,575) — Net sales, constant currency (non-GAAP) $ 77,886 $ 64,153 21.4 % Consolidated: Net sales, as reported $ 845,990 $ 729,873 15.9 % Foreign exchange impact (a) (3,575) — Net sales, constant currency (non-GAAP) $ 842,415 $ 729,873 15.4 % (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 March 31, 2022 into U.S. dollars using the weighted-average foreign exchange rates for the quarter ended March 31, 2021. ScanSource, Inc. Earnings Infographic Q3 FY2022 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 7 May 10, 2022


 
Average Adjusted Return on Invested Capital - QTR ($ in thousands) Q3 FY22 Q2 FY22 Q1 FY22 Q4 FY21 Q3 FY21 Adjusted return on invested capital (ROIC), annualized (a) 18.0 % 17.6 % 17.5 % 16.0 % 14.7 % Reconciliation of Net Income to Adjusted EBITDA Net income from continuing operations - GAAP $ 23,526 $ 23,152 $ 22,073 $ 20,657 $ 13,786 Plus: Interest expense 1,483 1,493 1,660 1,643 1,576 Income taxes 9,044 7,257 7,358 2,389 5,121 Depreciation and amortization 7,305 7,229 7,650 8,090 8,358 EBITDA 41,358 39,131 38,741 32,779 28,841 Adjustments: Acquisition and divestiture costs — (53) 83 246 272 Restructuring costs — — — (54) 349 Share-based compensation 2,757 3,464 2,570 2,328 2,537 Adjusted EBITDA (numerator for Adjusted ROIC) (non-GAAP) $ 44,115 $ 42,542 $ 41,394 $ 35,299 $ 31,999 Invested Capital Calculation Equity - beginning of the quarter $ 768,525 $ 746,094 $ 731,191 $ 690,575 $ 682,139 Equity - end of quarter 806,654 768,525 746,094 731,191 690,575 Adjustments: Share-based compensation, net 2,063 2,590 1,922 1,752 1,912 Acquisition and divestiture costs — (53) 83 207 272 Restructuring, net of tax — — — (40) 264 Discontinued operations net (income) loss — (100) — (3,053) 688 Average equity 788,621 758,528 739,645 710,316 687,925 Average funded debt (b) 205,073 200,708 197,406 177,074 191,996 Invested capital (denominator for Adjusted ROIC) (non-GAAP) $ 993,694 $ 959,236 $ 937,051 $ 887,390 $ 879,921 (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) Average funded debt, which includes both continuing and discontinued operations, is calculated as the daily average amounts outstanding on our short-term and long-term interest-bearing debt. ScanSource, Inc. Earnings Infographic Q3 FY2022 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 8 May 10, 2022


 
Net Debt and Adjusted EBITDA Metrics ($ in thousands) Q3 FY22 Q2 FY22 Q1 FY22 Q4 FY21 Q3 FY21 Consolidated debt (Q/E) $ 181,500 $ 196,866 $ 197,356 $ 143,174 $ 198,851 Less: Consolidated cash and cash equivalents (Q/E) (43,539) (34,123) (55,491) (62,718) (49,321) Net debt (Q/E) $ 137,961 $ 162,743 $ 141,865 $ 80,456 $ 149,530 Reconciliation of Net Income to Adjusted EBITDA Net income from continuing operations - GAAP $ 23,526 $ 23,152 $ 22,073 $ 20,657 $ 13,786 Plus: Interest expense 1,483 1,493 1,660 1,643 1,576 Income taxes 9,044 7,257 7,358 2,389 5,121 Depreciation and amortization 7,305 7,229 7,650 8,090 8,358 EBITDA 41,358 39,131 38,741 32,779 28,841 Adjustments: Acquisition and divestiture costs — (53) 83 246 272 Restructuring costs — — — (54) 349 Share-based compensation 2,757 3,464 2,570 2,328 2,537 Adjusted EBITDA (non-GAAP) $ 44,115 $ 42,542 $ 41,394 $ 35,299 $ 31,999 Adjusted EBITDA, TTM (a) $ 163,350 $ 151,234 $ 138,431 $ 117,948 $ 96,605 Net Debt / Adjusted EBITDA, TTM (a) 0.8x 1.1x 1.0x 0.7x 1.5x (a) Adjusted EBITDA for the trailing 12-month period ScanSource, Inc. Earnings Infographic Q3 FY2022 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 9 May 10, 2022


 
Working Capital, 5-Quarter Summary ($ in thousands) Q3 FY22 Q2 FY22 Q1 FY22 Q4 FY21 Q3 FY21 Accounts Receivable (Q/E) $ 642,384 $ 613,186 $ 589,532 $ 568,984 $ 509,404 Days sales outstanding in receivables 69 64 62 60 63 Inventory (Q/E) $ 591,396 $ 562,397 $ 493,541 $ 470,081 $ 459,652 Inventory turns 5.1 5.7 6.3 6.5 5.8 Accounts payable (Q/E) $ 706,359 $ 653,190 $ 602,229 $ 634,805 $ 521,552 Paid for inventory days* (2.9) (0.5) (3.2) (9.4) 2.2 Working Capital (Q/E) (AR+INV-AP) $ 527,421 $ 522,393 $ 480,844 $ 404,260 $ 447,504 Cash conversion cycle 66 64 59 51 65 *Paid for inventory days represent Q/E inventory days less Q/E accounts payable days ScanSource, Inc. Earnings Infographic Q3 FY2022 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 10 May 10, 2022


 
Operating Income, Net Income & EPS - QTR ($ in thousands) Quarter ended March 31, 2022 Reported GAAP measure Intangible amortization expense Acquisition, divestiture and restructuring costs 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 Diluted EPS, trailing 12-month (TTM) $ 3.46 $ 0.53 $ 0.01 $ 4.01 ($ in thousands) Quarter ended December 31, 2021 Reported GAAP measure Intangible amortization expense Acquisition, divestiture and restructuring costs(a) Non-GAAP measure SG&A expenses $ 69,433 $ — $ 53 $ 69,486 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 Q3 FY2022 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 11 May 10, 2022


 
Operating Income, Net Income & EPS - QTR, continued ($ in thousands) Quarter ended September 30, 2021 Reported GAAP measure Intangible amortization expense Acquisition, divestiture and restructuring costs(a) Non-GAAP measure SG&A expenses $ 63,582 $ — $ (83) $ 63,499 Operating income 30,328 4,510 83 34,921 Net income 22,073 3,394 83 25,550 Diluted EPS $ 0.86 $ 0.13 $ — $ 0.99 (a) Acquisition and divestiture costs totaled $0.1 million for the quarter ended September 30, 2021 and are generally nondeductible for tax purposes. ($ in thousands) Quarter ended June 30, 2021 Reported GAAP measure Intangible amortization expense Acquisition, divestiture and restructuring costs(a) Non-GAAP measure SG&A expenses $ 64,758 $ — $ (246) $ 64,512 Operating income 23,283 4,893 192 28,368 Net income 20,657 3,698 167 24,522 Diluted EPS $ 0.80 $ 0.14 $ 0.01 $ 0.96 (a) Acquisition and divestiture costs totaled $0.2 million for the quarter ended June 30, 2021 and are generally nondeductible for tax purposes. Restructuring costs totaled $0.1 million for the quarter ended June 30, 2021. ($ in thousands) Quarter ended March 31, 2021 Reported GAAP measure Intangible amortization expense Acquisition, divestiture and restructuring costs(a) Non-GAAP measure SG&A expenses $ 60,099 $ — $ (272) $ 59,827 Operating income 19,436 4,880 832 25,148 Net income 13,786 3,697 695 18,178 Diluted EPS $ 0.54 $ 0.14 $ 0.03 $ 0.71 (a) Acquisition and divestiture costs totaled $0.3 million for the quarter ended March 31, 2021 and are generally nondeductible for tax purposes. Restructuring costs totaled $0.6 million for the quarter ended March 31, 2021. ScanSource, Inc. Earnings Infographic Q3 FY2022 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 12 May 10, 2022


 
FY22 Annual Financial Outlook Reconciliation FY22 Outlook GAAP, operating income At least $122 million Intangible amortization $18 million Depreciation expense $12 million Share-based compensation expense $11 million Interest income and other income (expense), net $2 million Adjusted EBITDA (non-GAAP) At least $165 million ScanSource, Inc. Earnings Infographic Q3 FY2022 SUPPORTING MATERIALS AND RECONCILIATIONS FOR NON-GAAP FINANCIAL INFORMATION scansource.com 13 May 10, 2022