Slide 1: Q4 and FY16 Financial Results Conference Call
Q4 AND FY16 FINANCIAL RESULTS CONFERENCE CALL August 29, 2016 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 This presentation contains certain comments that are forward-looking statements are reasonable, it cannot “forward-looking” statements, including sales, GAAP diluted guarantee future results, levels o
Slide 3: Highlights
HIGHLIGHTS • Net sales of $877 million, up 2%, from acquisition of KBZ • Disappointing finish to FY16 with net sales and EPS below expectations 4Q16 • GAAP EPS of $0.50; Non-GAAP EPS of $0.51*, below expected range principally from lower sales volume (-6% Y/Y organic) and lower gross profit margin (
Slide 4: Acquisition of Intelisys
ACQUISITION OF INTELISYS ABOUT INTELISYS TRANSACTION Industry-leading technology services distributor of business $83.6 4 years telecommunications and cloud services EBITDA MILLION EARN-OUT EARN-OUT High-growth, recurring revenue model for the channel; two-tier INITIAL PURCHASE PERIOD BASED ON s
Slide 5: Actual vs. Forecast
ACTUAL VS. FORECAST NET SALES WW Barcode WW Communications $ in millions Consolidated & Security & Services Actual, Q4 FY16 $585.6 $291.9 $877.5 Forecast*, Q4 FY16 $631.9 $293.1 $925.0 GROSS MARGIN % WW Barcode WW Communications Consolidated & Security & Services Actual, Q4 FY16 8.1% 12.1% 9.4% Fore
Slide 6: Highlights – Q4 FY16
HIGHLIGHTS – Q4 FY16 Q4 FY16 Q4 FY15 Change In millions, except EPS Net sales $877.5 $856.7 2% Gross profit 82.8 91.3 -9% Gross profit margin % (of net sales) 9.4% 10.7% -123 bps Operating income 18.9 25.0 -24% Non-GAAP operating income 18.9 28.6 -34% GAAP net income 12.9 16.4 -21% Non-GAAP net inco
Slide 7: Sales Growth Summary
SALES GROWTH SUMMARY FOURTH QTR: Q4 FY16 – Y/Y % CHANGE Constant Organic Reported Currency Growth* WW Barcode & Security 5.4% 5.9% -8.4% WW Comms. & Services -3.1% -1.5% -1.5% Consolidated 2.4% 3.3% -6.0% FULL YEAR: FY16 – Y/Y % CHANGE Constant Organic Reported Currency Growth* WW Barcode & Security
Slide 8: WW Barcode & Security
WW BARCODE & SECURITY Net Sales, $ in millions Up 5% Q4 FY16 Q4 FY15 Organic Growth, -8% $ in millions $586 Net sales $585.6 $555.4 $555 Acqs. & FX Gross profit $47.4 $47.3 Gross margin 8.1% 8.5% Operating income $8.8 $12.2 Operating income % 1.5% 2.2% Non-GAAP operating income $9.9 $13.4 Non-GAAP o
Slide 9: WW Communications & Services
WW COMMUNICATIONS & SERVICES Net Sales, $ in millions Down 3% Q4 FY16 Q4 FY15 $ in millions Organic Growth, -2% $301 Net sales $291.9 $301.3 $292 Gross profit $35.4 $44.1 Gross margin 12.1% 14.6% Operating income $10.7 $13.0 Operating income % 3.7% 4.3% Non-GAAP operating income $8.9 $15.2 Non-GAAP
Slide 10: Highlights – FY16
HIGHLIGHTS – FY16 FY16 FY15 Change In millions, except EPS Net sales $3,540.2 $3,218.6 10% Gross profit 355.4 327.1 9% Gross profit margin % (of net sales) 10.0% 10.2% -12 bps Operating income 96.9 101.4 -4% Non-GAAP operating income 108.9 114.0 -5% GAAP net income 63.6 65.4 -3% Non-GAAP net income
Slide 11: WW Barcode & Security
WW BARCODE & SECURITY Net Sales, $ in millions Up 12% FY16 FY15 Organic Growth, +1% $ in millions $2,381 Net sales $2,381.3 $2,134.1 $2,134 Acqs. & FX Gross profit $199.7 $177.8 Gross margin 8.4% 8.3% Operating income $53.0 $49.0 Operating income % 2.2% 2.3% Non-GAAP operating income $56.9 $52.7 Non
Slide 12: WW Communications & Services
WW COMMUNICATIONS & SERVICES Net Sales, $ in millions Up 7% FY16 FY15 $ in millions Organic Growth, -2% $1,159 Net sales $1,158.9 $1,084.5 $1,084 Acqs. & FX Gross profit $155.7 $149.3 Gross margin 13.4% 13.8% Operating income $44.7 $55.6 Operating income % 3.9% 5.1% Non-GAAP operating income $51.9 $
Slide 13: Working Capital Measures
WORKING CAPITAL MEASURES $ in millions Q4 FY16 Q3 FY16 Q4 FY15 Accounts receivable (Q/E) $559.6 $522.7 $522.5 Days sales outstanding in receivables 57 59 55 Inventory (Q/E) $558.6 $568.2 $553.1 Inventory turns 5.6 4.9 5.9 Accounts payable (Q/E) $471.5 $431.9 $501.3 Paid for inventory days 9.9 17.2 6
Slide 14: Cash Flow and Balance Sheet Highlights
CASH FLOW AND BALANCE SHEET HIGHLIGHTS Q4 FY16 Q3 FY16 Q4 FY15 $ in millions Adjusted return on invested capital (QTR)* 10.1% 12.3% 15.2% Adjusted return on invested capital (YTD)* 13.3% 14.5% 14.6% Operating cash flow, trailing 12-months $52.2 $72.7 $75.5 Cash and cash equivalents (Q/E) $61.4 $40.8
Slide 15: Q1 FY17 Outlook
Q1 FY17 OUTLOOK* For the quarter ending September 30, 2016, excluding amortization of intangible assets, change in fair value of contingent consideration, and acquisition costs; excludes results for the Intelisys acquisition: Net Sales Range from $875 million to $925 million GAAP Range from $0.4
Slide 16: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Operating Income, Pre-Tax Income, Net Income & EPS – QTR ($ in thousands) Quarter Ended June 30, 2016 Operating Pre-tax Net Diluted Income income income EPS GAAP measure $ 18,938 $ 18,603 $ 12,925 $ 0.50 Adjustments: Amortization of intangible assets 2,591 2,
Slide 17: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Operating Income, Pre-Tax Income, Net Income & EPS – Full Year ($ in thousands) Year Ended June 30, 2016 Operating Pre-tax Net Diluted Income income income EPS GAAP measure $ 96,877 $ 96,010 $ 63,619 $ 2.38 Adjustments: Amortization of intangible assets 9,828
Slide 18: 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 June 30, 2016: Q4 FY16 net sales, as reported $ 585,599 $ 291,874 $ 877,473 Foreign exchange negative
Slide 19: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Net Sales, Constant Currency and Excluding Acquisitions – Full Year ($ in thousands) WW Barcode WW Comms. & Security & Services Consolidated For the year ended June 30, 2016: FY16 net sales, as reported $ 2,381,331 $ 1,158,895 $ 3,540,226 Foreign exchange neg
Slide 20: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Highlights by Segment – Y/Y for Quarter Quarter Ended June 30, 2016 ($ in thousands) WW Barcode WW Comms. & Security & Services Corporate Consolidated Net sales $ 585,599 $ 291,874 $ - $ 877,473 GAAP operating income $ 8,827 $ 10,664 $ (553) $ 18,938 Adjustme
Slide 21: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Highlights by Segment – Y/Y for Full Year Year Ended June 30, 2016 ($ in thousands) WW Barcode WW Comms. & Security & Services Corporate Consolidated Net sales $ 2,381,331 $ 1,158,895 $ - $ 3,540,226 GAAP operating income $ 53,015 $ 44,725 $ (863) $ 96,877 Ad
Slide 22: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Adjusted Return on Invested Capital ($ in thousands) Q4 FY16 Q3 FY16 Q4 FY15 Adjusted return on invested capital (ROIC), annualized (a) 10.1% 12.3% 15.2% Reconciliation of Net Income to EBITDA Net income - GAAP $ 12,925 $ 14,042 $ 16,447 Plus: Income taxes 5,
Slide 23: Appendix: Non-GAAP Financial Information
APPENDIX: NON-GAAP FINANCIAL INFORMATION Forecasted Range for EPS – Q1FY17 Outlook ($ in thousands) Forecast for Quarter ended September 30, 2016 Range Low Range High GAAP diluted EPS $ 0.49 $ 0.57 Adjustments: Amortization of intangible assets 0.07 0.07 Change in fair value of contingent considerat