Slide 1: Q3 FY16 Financial Results Conference Call
Q3 FY16 FINANCIAL RESULTS CONFERENCE CALL May 10, 2016 at 5:00 pm ET
Slide 2: Safe Harbor
SAFE HARBOR This presentation may contain certain comments, which are Although ScanSource believes the expectations in its “forward-looking” statements that involve plans, strategies, forward-looking statements are reasonable, it cannot economic performance and trends, projections, expectations, gua
Slide 3: Highlights – Q3 FY16
HIGHLIGHTS – Q3 FY16 Net sales of $798 million, up 5% Y/Y, and non-GAAP diluted EPS of $0.64*, up 23% Y/Y Net sales below our expected range; EPS within our expected range Missed expected net sales range primarily due to lower volume of big deals, which resulted in higher than expected gross p
Slide 4: Highlights – Q3 FY16
HIGHLIGHTS – Q3 FY16 Q3 FY16 Q3 FY15 Change In millions, except EPS Net sales $798.4 $763.2 5% Gross profit 84.5 80.0 6% Gross profit margin % (of net sales) 10.6% 10.5% 10 bps Operating income 21.6 21.5 1% Non-GAAP operating income * 25.3 24.2 5% GAAP net income 14.0 12.9 8% Non-GAAP net income * 1
Slide 5: Sales Growth Summary
SALES GROWTH SUMMARY THIRD QTR: Q3 FY16 – Y/Y % CHANGE Constant Organic Reported Currency Growth* WW Barcode & Security 10.3% 12.6% -0.6% WW Comms. & Services -5.2% -0.8% -0.8% Consolidated 4.6% 7.7% -0.7% NINE MONTHS: Q3 FY16 YTD – Y/Y % CHANGE Constant Organic Reported Currency Growth* WW Barcode
Slide 6: WW Barcode & Security
WW BARCODE & SECURITY Net Sales, $ in millions Up 10% Q3 FY16 Q3 FY15 Organic Growth, -0.6% $ in millions $533 Net sales $532.5 $482.8 $483 Acqs. & FX Gross profit $46.6 $41.2 Gross margin 8.8% 8.5% Operating income $11.4 $10.1 Operating income % 2.1% 2.1% Non-GAAP operating income $12.4 $10.7 Non-G
Slide 7: WW Communications & Services
WW COMMUNICATIONS & SERVICES Net Sales, $ in millions Down 5% Q3 FY16 Q3 FY15 $ in millions Organic Growth, -0.8% Net sales $265.9 $280.4 $280 $266 Gross profit $37.9 $38.8 Gross margin 14.2% 13.8% Operating income $10.3 $11.7 Operating income % 3.9% 4.2% Non-GAAP operating income $12.9 $13.5 Non-GA
Slide 8: Working Capital Measures
WORKING CAPITAL MEASURES $ in millions Q3 FY16 Q2 FY16 Q3 FY15 Accounts receivable (Q/E) $522.7 $588.4 $487.1 Days sales outstanding in receivables 59 53 57 Inventory (Q/E) $568.2 $604.1 $485.6 Inventory turns 4.9 6.0 5.4 Accounts payable (Q/E) $431.9 $512.0 $392.4 Paid for inventory days 17.2 9.3 1
Slide 9: Cash Flow and Balance Sheet Highlights
CASH FLOW AND BALANCE SHEET HIGHLIGHTS Q3 FY16 Q2 FY16 Q3 FY15 $ in millions Return on invested capital (QTR)* 12.3% 17.5% 12.1% Return on invested capital (YTD)* 14.5% 15.9% 14.5% Operating cash flow, trailing 12-months $72.7 $44.7 $42.2 Cash and cash equivalents (Q/E) $40.8 $39.4 $93.6 Debt (Q/E)
Slide 10: Q4 FY16 Outlook
Q4 FY16 OUTLOOK* For the quarter ending June 30, 2016, excluding amortization of intangible assets, change in fair value of contingent consideration, and acquisition costs: Net Sales Range from $900 million to $950 million Non-GAAP Diluted Range from $0.70 to $0.74 per share Earnings Per Share *
Slide 11: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Operating Income, Net Income & EPS ($ in thousands) Quarter Ended March 31, 2016 Operating Pre-tax Net Diluted Income income income EPS GAAP measure $ 21,647 $ 21,353 $ 14,042 $ 0.54 Adjustment: Amortization of intangible assets 2,507 2,507 1,703 0.07 Change
Slide 12: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Highlights by Segment – Y/Y Quarter Ended March 31, 2016 ($ in thousands) WW Barcode WW Comms. & Security & Services Corporate Consolidated Net sales $ 532,534 $ 265,870 $ - $ 798,404 GAAP operating income $ 11,375 $ 10,301 $ (29) $ 21,647 Adjustments: Amorti
Slide 13: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Return on Invested Capital ($ in thousands) Q3 FY16 Q2 FY16 Q3 FY15 Return on invested capital (ROIC), annualized (a) 12.3% 17.5% 12.1% Reconciliation of Net Income to EBITDA Net income - GAAP $ 14,042 $ 20,656 $ 12,943 Plus: Income taxes 7,311 10,976 6,878 P
Slide 14: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Net Sales, Constant Currency and Excluding Acquisitions - QTR ($ in thousands) WW Barcode & WW Comms. Security & Services Consolidated For the quarter ended March 31, 2016: Q3 FY16 net sales, as reported $ 532,534 $ 265,870 $ 798,404 Foreign exchange negative
Slide 15: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Net Sales, Constant Currency and Excluding Acquisitions - YTD ($ in thousands) WW Barcode & WW Comms. Security & Services Consolidated For the nine months ended March 31, 2016: Q3 FY16 YTD net sales, as reported $ 1,795,733 $ 867,021 $ 2,662,754 Foreign excha