ScanSource Delivers a Strong Second Quarter – Business Wire

scansource-delivers-a-strong-second-quarter-–-business-wire

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GREENVILLE, S.C.–(BUSINESS WIRE)–ScanSource, Inc. (NASDAQ: SCSC), a leading provider of technology products and solutions, today announced financial results for the second quarter ended December 31, 2020. All results in this release reflect continuing operations only unless otherwise noted.

Second Quarter Summary:

  • Net sales: $810.9 million, down 2% year-over-year (up 2% year-over-year for organic growth)
  • 7% quarter-over-quarter growth for net sales (up from $757.3 million for first quarter of fiscal year 2021)
  • Gross profit: $86.0 million, down 12% year-over-year
  • GAAP operating income of $17.1 million; non-GAAP operating income of $23.8 million
  • Net income from continuing operations of $11.1 million
  • GAAP diluted EPS of $0.43 per share; non-GAAP diluted EPS of $0.65 per share
  • Generated strong operating cash flow of $44.4 million during the quarter and $215.0 million for the trailing 12-month period
  • Return on invested capital increased to 12.4% for the quarter

“Our employees across the company delivered results that exceeded our expectations, even as we are still recovering from the sales impact of the COVID-19 pandemic,” said Mike Baur, Chairman and CEO, ScanSource, Inc. “Strong growth drove higher net sales and operating leverage on our SG&A. We are delighted to welcome Steve Jones, our new CFO, to the ScanSource family, as his background is a great fit with our focus on recurring revenue.”

Quarterly Results

Net sales totaled $810.9 million for the second quarter of fiscal year 2021, down 2% year-over-year, or up 2% year-over-year for organic growth. The year-over-year reduction in net sales is primarily due to the impact of the COVID-19 pandemic. During the quarter, we saw continued progress in recovering from the sales impact of the COVID-19 pandemic in North America and Brazil. For the Intelisys master agency business, net sales increased 15% year-over-year for the second quarter of fiscal year 2021. ScanSource delivered 7% sequential quarter growth from the September quarter.

For the second quarter of fiscal year 2021, operating income decreased to $17.1 million from $18.6 million for the prior-year quarter, and non-GAAP operating income decreased to $23.8 million from $28.5 million for the prior-year quarter. At the end of July 2020, the Company implemented a $30 million annualized expense reduction program to address the business impacts of the COVID-19 pandemic and prepare for the next phase of growth. Selling, general and administrative expenses for the quarter decreased $7.4 million, and the Company realized the planned quarterly impact of the expense reduction plan.

On a GAAP basis, net income for the second quarter of fiscal year 2021 totaled $11.1 million, or $0.43 per diluted share, compared to net income of $11.6 million, or $0.46 per diluted share, for the prior-year quarter. Non-GAAP net income totaled $16.5 million, or $0.65 per diluted share, compared to $19.4 million, or $0.77 per diluted share, for the prior-year quarter.

At December 31, 2020, ScanSource had cash and cash equivalents of $67.2 million and total debt of $151.9 million. The Company generated $44.4 million of operating cash flow in the second quarter of fiscal year 2021 and $215.0 million for the trailing 12-month period.

Discontinued Operations

On August 20, 2019, ScanSource announced plans to divest its products distribution businesses outside of the United States, Canada and Brazil (the “Divestitures”), as part of a strategic portfolio repositioning to align investments with higher-growth, higher-margin businesses. ScanSource completed the divestitures with the sales of the products distribution business located in Mexico, Colombia, Chile, Peru, and Miami-based export operations on October 30, 2020 and the sale of the Europe and UK products distribution business on November 12, 2020.

COVID-19 Update

Our top priority during the COVID-19 pandemic is protecting the health and safety of our employees. We implemented travel restrictions and transitioned our employees, where possible, to a remote working environment. Most of our office-based employees around the world are working remotely. We have taken a number of measures to ensure our teams have the flexibility and resources they need to stay safe and healthy. We are experiencing higher costs from these safety measures to protect our employees. We are continuing to provide the high level of customer service our partners expect from us.

Webcast Details and CFO Commentary

At approximately 4: 15 p.m. ET today, a CFO commentary, 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 in a conference call today, February 2, 2021, 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 impact of the COVID-19 pandemic, which involve risks and uncertainties. Any number of factors could cause actual results to differ materially from anticipated results, including, but not limited to, the impact of the COVID-19 pandemic on the Company’s operations and financial condition and the potential prolonged economic weakness brought on by COVID-19, the failure to manage and implement the Company’s organic growth strategy, credit risks involving the Company’s larger customers and suppliers, changes in interest and exchange rates and regulatory regimes impacting the Company’s international operations, risk to the Company’s business from a cyber-security attack, a failure of the Company’s IT systems, failure to hire and retain quality employees, 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, 2020, 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: 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.

Income Statement Non-GAAP Metrics: To evaluate current period performance on a more consistent basis with prior periods, the Company discloses non-GAAP net sales, non-GAAP gross profit, non-GAAP operating income, non-GAAP other expense, net, non-GAAP pre-tax 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 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.

Return on invested capital (“ROIC”): 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 ROIC provides useful information to investors and is an additional relevant comparison of our performance. ROIC is calculated as adjusted EBITDA over invested capital. Adjusted earnings before interest expense, income taxes, depreciation and amortization (“Adjusted EBITDA”) excludes the change in fair value of contingent consideration, in addition to other non-GAAP adjustments. Invested capital is defined as average equity plus average daily funded interest-bearing debt for the period. Management believes the calculation of 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 at the center of the technology solution delivery channel, connecting businesses and providing solutions for their complex needs. ScanSource sells through multiple, specialized routes-to-market with digital, physical and 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. ScanSource enables its sales partners to create, deliver and manage solutions for end-customers across almost every vertical market. Founded in 1992 and headquartered in Greenville, South Carolina, ScanSource was named one of the Best Places to Work in South Carolina and on FORTUNE magazine’s 2020 List of World’s Most Admired Companies. ScanSource ranks #654 on the Fortune 1000. For more information, visit www.scansource.com.

ScanSource, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands)

December 31, 2020

June 30, 2020*

Assets

Current assets:

Cash and cash equivalents

$

67,187

$

29,485

Accounts receivable, less allowance of $21,805 at December 31, 2020 and $21,906 at December 31, 2019

534,583

443,185

Inventories

421,003

454,885

Prepaid expenses and other current assets

96,358

94,681

Current assets held for sale

181,231

Total current assets

1,119,131

1,203,467

Property and equipment, net

48,183

55,641

Goodwill

217,956

214,288

Identifiable intangible assets, net

114,208

121,547

Deferred income taxes

25,619

24,630

Other non-current assets

72,022

72,521

Total assets

$

1,597,119

$

1,692,094

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

$

589,292

$

454,240

Accrued expenses and other current liabilities

91,592

76,686

Current portion of contingent consideration

46,334

Income taxes payable

859

5,886

Current portion of long-term debt

7,843

7,839

Current liabilities held for sale

128,022

Total current liabilities

689,586

719,007

Deferred income taxes

4,273

3,884

Long-term debt, net of current portion

139,081

143,175

Borrowings under revolving credit facility

5,000

67,714

Other long-term liabilities

77,040

80,068

Total liabilities

914,980

1,013,848

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, 25,451,640 and 25,361,298 shares issued and outstanding at December 31, 2020 and June 30, 2020, respectively

65,924

63,765

Retained earnings

721,263

747,276

Accumulated other comprehensive loss

(105,048

)

(132,795

)

Total shareholders’ equity

682,139

678,246

Total liabilities and shareholders’ equity

$

1,597,119

$

1,692,094

 

*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,

2020

2019

2020

2019

Net sales

$

810,897

$

823,999

$

1,568,238

$

1,666,700

Cost of goods sold

724,854

725,680

1,401,415

1,469,856

Gross profit

86,043

98,319

166,823

196,844

Selling, general and administrative expenses

60,470

67,840

122,580

136,371

Depreciation expense

3,097

3,161

6,494

6,462

Intangible amortization expense

4,862

5,310

9,716

9,848

Restructuring and other charges

484

266

8,753

435

Change in fair value of contingent consideration

3,176

516

5,649

Operating income

17,130

18,566

18,764

38,079

Interest expense

1,796

3,312

3,709

6,629

Interest income

(531

)

(740

)

(1,011

)

(1,548

)

Other expense (income), net

121

(39

)

484

336

Income before income taxes

15,744

16,033

15,582

32,662

Provision for income taxes

4,683

4,407

4,636

8,745

Net income from continuing operations

11,061

11,626

10,946

23,917

Net loss from discontinued operations

(25,255

)

(260

)

(36,959

)

(1,021

)

Net (loss) income

$

(14,194

)

$

11,366

$

(26,013

)

$

22,896

Per share data:

Net income from continuing operations per common share, basic

$

0.44

$

0.46

$

0.43

$

0.94

Net loss from discontinued operations per common share, basic

(1.00

)

(0.01

)

(1.46

)

(0.04

)

Net (loss) income per common share, basic

$

(0.56

)

$

0.45

$

(1.03

)

$

0.90

Weighted-average shares outstanding, basic

25,395

25,274

25,378

25,407

Net income from continuing operations per common share, diluted

$

0.43

$

0.46

$

0.43

$

0.94

Net loss from discontinued operations per common share, diluted

(0.99

)

(0.01

)

(1.45

)

(0.04

)

Net (loss) income per common share, diluted

$

(0.56

)

$

0.45

$

(1.02

)

$

0.90

Weighted-average shares outstanding, diluted

25,475

25,358

25,458

25,488

 

ScanSource, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

Six months ended December 31,

2020

2019

Cash flows from operating activities:

Net (loss) income

$

(26,013

)

$

22,896

Net loss from discontinued operations

(36,959

)

(1,021

)

Net income from continuing operations

10,946

23,917

Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:

Depreciation and amortization

17,059

17,599

Amortization of debt issue costs

209

209

Provision for doubtful accounts

(180

)

1,101

Share-based compensation

3,174

2,817

Deferred income taxes

(694

)

(344

)

Change in fair value of contingent consideration

516

5,649

Contingent consideration payments excess

(5,457

)

(3,050

)

Finance lease interest

70

39

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

(86,683

)

8,101

Inventories

35,124

(69,384

)

Prepaid expenses and other assets

2,256

(1,748

)

Other non-current assets

1,328

(8,972

)

Accounts payable

132,074

97,962

Accrued expenses and other liabilities

11,150

12,094

Income taxes payable

(5,218

)

(3,256

)

Net cash provided by operating activities of continuing operations

115,674

82,734

Cash flows from investing activities of continuing operations:

Capital expenditures

(1,454

)

(2,732

)

Cash paid for business acquisitions, net of cash acquired

(48,930

)

Proceeds from the sale of net assets of discontinued operations

34,356

Net cash provided by (used in) investing activities of continuing operations

32,902

(51,662

)

Cash flows from financing activities of continuing operations:

Borrowings on revolving credit, net of expenses

959,848

1,022,403

Repayments on revolving credit, net of expenses

(1,022,561

)

(1,066,890

)

Borrowings on long-term debt, net

(4,089

)

(2,210

)

Repayments of finance lease obligations

(652

)

(1,115

)

Contingent consideration payments

(41,393

)

(35,481

)

Exercise of stock options

720

Taxes paid on settlement of equity awards

(1,036

)

(1,354

)

Repurchase of common stock

(6,077

)

Net cash used in financing activities of continuing operations

(109,883

)

(90,004

)

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

21,704

35,326

Net cash flows used in investing activities of discontinued operations

(58

)

(8

)

Net cash flows (used in) provided by financing activities of discontinued operations

(29,494

)

42,057

Net cash flows provided by discontinued operations

(7,848

)

77,375

Effect of exchange rate changes on cash and cash equivalents

1,887

(256

)

Increase in cash and cash equivalents

32,732

18,187

Consolidated cash and cash equivalents at beginning of period

34,455

23,818

Consolidated cash and cash equivalents at end of period

67,187

42,005

Cash and cash equivalents of discontinued operations

3,232

Cash and cash equivalents of continuing operations

$

67,187

$

38,773

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

(in thousands, except percentages)

Non-GAAP Financial Information:

Quarter ended December 31,

2020

2019

Return on invested capital ratio (ROIC), annualized (a)

12.4

%

9.9

%

Reconciliation of net income to EBITDA:

Net income from continuing operations (GAAP)

$

11,061

$

11,626

Plus: Interest expense

1,796

3,312

Plus: Income taxes

4,683

4,407

Plus: Depreciation and amortization

8,349

9,081

EBITDA (non-GAAP)

25,889

28,426

Plus: Change in fair value of contingent consideration

3,176

Plus: Acquisition and divestiture costs(b)

1,359

1,151

Plus: Restructuring costs

484

266

Adjusted EBITDA (numerator for ROIC) (non-GAAP)

$

27,732

$

33,019

Invested Capital Calculations:

Equity – beginning of the period

$

671,227

$

905,751

Equity – end of the period

682,139

927,580

Plus: Change in fair value of contingent consideration, net of tax

2,401

Plus: Acquisition and divestiture costs(b)

1,359

1,151

Plus: Restructuring, net of tax

366

196

Plus: Discontinued operations net loss

25,255

260

Average equity

690,173

918,670

Average funded debt(c)

198,620

411,614

Invested capital (denominator for ROIC) (non-GAAP)

$

888,793

$

1,330,284

(a) The annualized 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) 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 December 31,

2020

2019

% Change

Worldwide Barcode, Networking & Security:

(in thousands)

Net sales, reported

$

551,394

$

575,001

(4.1

)%

Foreign exchange impact (a)

7,903

Non-GAAP net sales, constant currency

$

559,297

$

575,001

(2.7

)%

Worldwide Communications & Services:

Net sales, reported

$

259,503

$

248,998

4.2

%

Foreign exchange impact (a)

19,882

Non-GAAP net sales, constant currency

$

279,385

$

248,998

12.2

%

Consolidated:

Net sales, reported

$

810,897

$

823,999

(1.6

)%

Foreign exchange impact (a)

27,785

Non-GAAP net sales, constant currency

$

838,682

$

823,999

1.8

%

(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 quarter ended December 31, 2020 into U.S. dollars using the average foreign exchange rates for the quarter ended December 31, 2019.

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

Net Sales by Segment:

Six months ended December 31,

2020

2019

% Change

Worldwide Barcode, Networking & Security:

(in thousands)

Net sales, reported

$

1,074,970

$

1,156,188

(7.0

)%

Foreign exchange impact (a)

15,626

Non-GAAP net sales, constant currency

$

1,090,596

$

1,156,188

(5.7

)%

Worldwide Communications & Services:

Net sales, reported

$

493,268

$

510,512

(3.4

)%

Foreign exchange impact (a)

37,321

Non-GAAP net sales, constant currency

$

530,589

$

510,512

3.9

%

Consolidated:

Net sales, reported

$

1,568,238

$

1,666,700

(5.9

)%

Foreign exchange impact (a)

52,947

Non-GAAP net sales, constant currency

$

1,621,185

$

1,666,700

(2.7

)%

(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 six months ended December 31, 2020 into U.S. dollars using the average foreign exchange rates for the six months ended December 31, 2019.

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

Net Sales by Geography:

Quarter ended December 31,

2020

2019

% Change

United States and Canada:

(in thousands)

Net sales, as reported

$

720,004

$

734,832

(2.0

)%

International:

Net sales, reported

$

90,893

$

89,167

1.9

%

Foreign exchange impact(a)

27,785

Non-GAAP net sales, constant currency

$

118,678

$

89,167

33.1

%

Consolidated:

Net sales, reported

$

810,897

$

823,999

(1.6

)%

Foreign exchange impact(a)

27,785

Non-GAAP net sales, constant currency

$

838,682

$

823,999

1.8

%

(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 quarter ended December 31, 2020 into U.S. dollars using the average foreign exchange rates for the quarter ended December 31, 2019.

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

Net Sales by Geography:

Six months ended December 31,

2020

2019

% Change

United States and Canada:

(in thousands)

Net sales, as reported

$

1,403,607

$

1,503,343

(6.6

)%

International:

Net sales, reported

$

164,631

$

163,357

0.8

%

Foreign exchange impact(a)

52,947

Non-GAAP net sales, constant currency

$

217,578

$

163,357

33.2

%

Consolidated:

Net sales, reported

$

1,568,238

$

1,666,700

(5.9

)%

Foreign exchange impact(a)

52,947

Non-GAAP net sales, constant currency

$

1,621,185

$

1,666,700

(2.7

)%

(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 six months ended December 31, 2020 into U.S. dollars using the average foreign exchange rates for the six months ended December 31, 2019.

Quarter ended December 31, 2020

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)

Net sales

$

810,897

$

$

$

$

$

810,897

Gross profit

86,043

86,043

Operating income

17,130

4,862

1,360

484

23,836

Other expense, net

1,386

1,386

Pre-tax income

15,744

4,862

1,360

484

22,450

Net income from continuing operations

11,061

3,682

1,360

366

16,469

Diluted EPS from continuing operations

$

0.43

$

0.15

$

$

0.06

$

0.01

$

0.65

Quarter ended December 31, 2019

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)

Net sales

$

823,999

$

$

$

$

$

823,999

Gross profit

98,319

98,319

Operating income

18,566

5,310

3,176

1,151

266

28,469

Other expense, net

2,533

2,533

Pre-tax income

16,033

5,310

3,176

1,151

266

25,936

Net income from continuing operations

11,626

4,032

2,401

1,151

196

19,406

Diluted EPS from continuing operations

$

0.46

$

0.16

$

0.09

$

0.05

$

0.01

$

0.77

Six months ended December 31, 2020

Reported GAAP


Measure

Intangible


amortization


expense

Change in fair


value of


contingent


consideration

Acquisition and


divestiture costs

Restructuring


costs

Non-GAAP


measure

Net sales

$

1,568,238

$

$

$

$

$

1,568,238

Gross profit

166,823

166,823

Operating income

18,764

9,716

516

1,857

8,753

39,606

Other expense, net

3,182

3,182

Pre-tax income

15,582

9,716

516

1,857

8,753

36,424

Net income from continuing operations

10,946

7,357

390

1,857

6,617

27,167

Diluted EPS from continuing operations

$

0.43

$

0.29

$

0.02

$

0.07

$

0.26

$

1.07

Six months ended December 31, 2019

Reported GAAP


Measure

Intangible


amortization


expense

Change in fair


value of


contingent


consideration

Acquisition and


divestiture costs

Restructuring


costs

Non-GAAP


measure

Net sales

$

1,666,700

$

$

$

$

$

1,666,700

Gross profit

196,844

196,844

Operating income

38,079

9,848

5,649

1,909

435

55,920

Other expense, net

5,417

5,417

Pre-tax income

32,662

9,848

5,649

1,909

435

50,503

Net income from continuing operations

23,917

7,438

4,270

1,909

324

37,858

Diluted EPS from continuing operations

$

0.94

$

0.29

$

0.17

$

0.07

$

0.01

$

1.48

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

Discontinued Operations – Financial Results:

Quarter ended


December 31,

Six months ended


December 31,

2020

2019

2020

2019

(in thousands)

Net sales

$

68,323

$

155,912

$

213,373

$

311,628

Cost of goods sold

63,977

140,347

198,512

282,489

Gross profit

4,346

15,565

14,861

29,139

Selling, general and administrative expenses

6,378

15,016

17,291

28,825

Depreciation expense

298

546

Intangible amortization expense

321

746

Operating loss

(2,032

)

(70

)

(2,430

)

(978

)

Interest expense, net

269

430

394

913

Loss on disposal group

23,122

33,808

Other expense, net

(181

)

(188

)

310

(531

)

Loss from discontinued operations before taxes

(25,242

)

(312

)

(36,942

)

(1,360

)

Income tax expense

13

(52

)

17

(339

)

Net loss from discontinued operations

$

(25,255

)

$

(260

)

$

(36,959

)

$

(1,021

)

 

ScanSource, Inc. and Subsidiaries

Supplementary Information (Unaudited)

Discontinued Operations – Assets and Liabilities:

December 31, 2020

June 30, 2020

(in thousands)

Assets

Current assets:

Cash and cash equivalents

$

$

4,970

Accounts receivable, net

117,200

Inventories, net

106,779

Prepaid expenses and other current assets

23,808

Total current assets

252,757

Property and equipment, net

1,833

Deferred income taxes

9,349

Other non-current assets

6,215

Total assets, before valuation allowance

270,154

Less: valuation allowance

(88,923

)

Total assets, net of valuation allowance (a)

$

$

181,231

Liabilities

Current liabilities:

Accounts payable

$

$

56,098

Accrued expenses and other current liabilities

14,815

Other taxes payable

20,378

Short-term borrowings

3,524

Income tax payable

1,085

Total current liabilities

95,900

Borrowings under revolving credit facility

24,704

Other long-term liabilities

7,418

Total liabilities(1)

$

$

128,022

(a) Total assets and liabilities of discontinued operations are classified in current assets and liabilities, respectively, in the Company’s consolidated balance sheet as of December 31, 2020 and June 30, 2020. The discontinued operations were disposed of during the quarter ended December 31, 2020.

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