Business
ScanSource Initiates $30 Million Expense Reduction Plan
Reports preliminary fourth quarter fiscal year 2020 net sales Hosts investor conference call today, 7/23/20, at 5:00 pm ET GREENVILLE, S.C.--(BUSINESS
About this update from Scansource, Inc.
[{"type":"text","content":"\n\nReports preliminary fourth quarter fiscal year 2020 net sales\n\n\nHosts investor conference call today, 7/23/20, at 5:00 pm ET\n\n\n GREENVILLE, S.C.--(BUSINESS WIRE)--\nScanSource, Inc. (Nasdaq: SCSC), a leading provider of technology products and solutions, today announced actions to address the business impacts of the COVID-19 pandemic and prepare for the next phase of growth.\n\n\nThese actions include a $30 million expense reduction plan designed to better align the cost structure for its wholesale distribution business with lower sales volumes as a result of the COVID-19 pandemic. As part of the plan, ScanSource will continue to invest in its higher growth agency business, Intelisys. Strong growth for the Intelisys business has continued, even with the COVID-19 pandemic.\n\n\nThe expense reduction plan includes (i) 10% to 25% salary reductions for the Executive team through December 31, 2020, (ii) elimination of cash retainers for the Board of Directors through December 31, 2020, (iii) cost savings measures related to discretionary SG&A expenses, (iv) a reduction in workforce in North America, excluding the Intelisys business and (v) the wind-down of the Canpango professional services business.\n\n\n“Taking these measures, most of all letting go valued and dedicated members of our team, is very difficult,” said Mike Baur, Chairman and CEO, ScanSource, Inc. “We are incredibly grateful to these employees for their service to ScanSource, and deeply appreciate their loyalty and hard work to move ScanSource forward.”\n\n\nThese actions are expected to reduce the Company’s annualized SG&A cost base by approximately $30 million. In the first quarter of fiscal year 2021, the Company anticipates recording an estimated pre-tax cash charge of approximately $8 to $9 million, consisting of severance and related employee benefits. The Company expects to complete substantially all of the workforce reduction of approximately 200 positions by the end of the September 2020 quarter.\n\n\nWind-Down of the Canpango Professional Services Business\nScanSource has initiated actions to close Canpango, its Salesforce implementation and consulting business. In August 2018, ScanSource acquired Canpango to help partners build out their customer relationship management capabilities as part of a CCaaS solution. There has been limited adoption by Sc...