Slide 1: Q1 FY18 Financial Results Conference Call
Q1 FY18 FINANCIAL RESULTS CONFERENCE CALL November 6, 2017 at 5:00 pm ET
Slide 2: Safe Harbor and Non-GAAP
SAFE HARBOR AND NON-GAAP Safe Harbor Statement Although ScanSource believes the expectations in its forward- looking statements are reasonable, it cannot guarantee future This presentation contains certain comments that are “forward- results, levels of activity, performance or achievement. looking”
Slide 3: Highlights
HIGHLIGHTS • Net sales of $925 million, below range from lower big deals in North America Results vs. • GAAP EPS of $0.16, below range from change in fair value of contingent consideration Expectations • Non-GAAP EPS of $0.76, within range and up 12% Y/Y from higher margins • Higher gross profit mar
Slide 4: FY18 Key Opportunities for Growth
FY18 KEY OPPORTUNITIES FOR GROWTH Mobile computing Video surveillance POS Portal Communications channel opportunity Intelisys Network1 4
Slide 5: Highlights – Q1 FY18
HIGHLIGHTS – Q1 FY18 Y/Y Q1 FY18 Q4 FY17 Q1 FY17 Change $ in millions, except EPS Net sales $924.6 $917.3 $932.6 -1% Gross profit 105.9 100.9 91.5 +16% Gross profit margin % (of net sales) 11.5% 11.0% 9.8% +164 bps Operating income 7.6 22.1 22.9 -67% Non-GAAP operating income 30.6 27.8 26.7 +15% GAA
Slide 6: WW Barcode, Networking & Security
WW BARCODE, NETWORKING & SECURITY Net Sales, $ in millions Y/Y Growth (1)% Q1 FY18 Q4 FY17 Q1 FY17 Y/Y Organic Growth (4)% $ in millions $700 Net sales $620.3 $619.2 $627.2 $627 $619 $620 $594 Gross profit $57.5 $51.7 $49.3 $600 $549 Gross margin 9.3% 8.3% 7.9% $500 Operating income $14.0 $13.0 $13.
Slide 7: WW Communications & Services
WW COMMUNICATIONS & SERVICES Net Sales, $ in millions Y/Y Growth (0.4)% Q1 FY18 Q4 FY17 Q1 FY17 Y/Y Organic Growth (3)% $ in millions $400 Net sales $304.2 $298.0 $305.4 $305 $311 $304 $298 Gross profit $48.5 $49.2 $42.3 $300 $265 Gross margin 15.9% 16.5% 13.8% $200 Operating income $(6.3) $9.5 $9.9
Slide 8: Working Capital Measures
WORKING CAPITAL MEASURES $ in millions Q1 FY18 Q4 FY17 Q1 FY17 Accounts receivable (Q/E) $661.4 $637.3 $637.8 Days sales outstanding in receivables* 63 61 59 Inventory (Q/E) $597.3 $531.3 $567.3 Inventory turns* 5.8 6.2 6.0 Accounts payable (Q/E) $534.9 $513.2 $533.0 Paid for inventory days* 10.1 4.
Slide 9: Cash Flow and Balance Sheet Highlights
CASH FLOW AND BALANCE SHEET HIGHLIGHTS Q1 FY18 Q4 FY17 Q1 FY17 $ in millions Adjusted EBITDA (QTR) $35.2 $31.0 $29.2 Adjusted ROIC (QTR)* 13.0% 13.2% 13.1% Operating cash flow (QTR) $(37.4) $10.8 $6.3 Operating cash flow, trailing 12-months $51.2 $94.9 $116.2 Cash and cash equivalents (Q/E) $23.6 $5
Slide 10: Q2 FY18 Outlook
Q2 FY18 OUTLOOK* For the quarter ending December 31, 2017, excluding amortization of intangible assets, change in fair value of contingent consideration, and acquisition costs: Net Sales Range from $950 million to $1.01 billion GAAP Range from $0.54 to $0.60 per share Diluted EPS Non-GAAP Rang
Slide 11: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Operating Income, Pre-Tax Income, Net Income & EPS – QTR ($ in thousands) Quarter Ended September 30, 2017 Operating Pre-tax Net Diluted Income income income EPS GAAP measure $ 7,598 $ 6,780 $ 4,147 $ 0.16 Adjustments: Amortization of intangible assets 5,011
Slide 12: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Net Sales, Constant Currency and Excluding Acquisitions (Organic Growth) – QTR ($ in thousands) WW Barcode, WW Comms. NW & Security & Services Consolidated For the quarter ended September 30, 2017: Q1 FY18 net sales, as reported $ 620,329 $ 304,230 $ 924,559
Slide 13: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Highlights by Segment – QTR Quarter Ended September 30, 2017 ($ in thousands) WW Barcode, NW & WW Comms. Security & Services Corporate Consolidated Net sales $ 620,329 $ 304,230 $ - $ 924,559 $ GAAP operating income $ 14,035 (6,265) $ (172) $ 7,598 Adjustment
Slide 14: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Highlights by Segment – QTR Quarter Ended September 30, 2016 (a) ($ in thousands) WW Barcode, NW & WW Comms. Security & Services Corporate Consolidated Net sales $ 627,210 $ 305,356 $ - $ 932,566 GAAP operating income $ 13,423 $ 9,950 $ (498) $ 22,875 Adjustm
Slide 15: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Adjusted Return on Invested Capital ($ in thousands) Q1 FY18 Q4 FY17 Q3 FY17 Q2 FY17 Q1 FY17 Adjusted return on invested capital (ROIC), annualized (a) 13.0% 13.2% 12.6% 13.8% 13.1% Reconciliation of Net Income to Adjusted EBITDA Net income - GAAP $ 4,147 $ 1
Slide 16: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Forecasted Range for EPS – Q2 FY18 Outlook ($ in thousands) Forecast for Quarter ending December 31, 2017 Range Low Range High GAAP diluted EPS $ 0.54 $ 0.60 Adjustments: Amortization of intangible assets 0.14 0.14 Change in fair value of contingent considera