Try our mobile app

Published: 2021-08-24 00:00:00 ET
<<<  go to SCSC company page
HTTP/1.1 200 OK HTTP/1.1 200 OK X-Crawlera-Slave: 181.214.114.209:3128 X-Crawlera-Version: 1.60.1 accept-ranges: bytes content-type: text/html last-modified: Tue, 24 Aug 2021 20:12:50 GMT server: AmazonS3 x-amz-id-2: zdC/4iRcEDq3SZUhY4DhX9ugSRqK4foQP5BOVE5CDeBUSs+rAj3MXw3BUY14LwAD3eHI85Ku99A= x-amz-meta-mode: 33188 x-amz-meta-s3cmd-attrs: uid:504/gname:fitrprnt/uname:fitrprnt/gid:504/mode:33184/mtime:1629835962/atime:1629835962/md5:fe8cc5767b2dea8290970b7f0bc184b0/ctime:1629835967 x-amz-replication-status: COMPLETED x-amz-request-id: 10MZAW3S0MGXS97J x-amz-version-id: GARaw6TJGq7FFZ_5LqhM5A1Xo5OFtt7G x-content-type-options: nosniff x-frame-options: SAMEORIGIN x-xss-protection: 1; mode=block x-akamai-transformed: 9 27839 0 pmb=mTOE,2 expires: Fri, 07 Apr 2023 05:30:45 GMT cache-control: max-age=0, no-cache, no-store pragma: no-cache date: Fri, 07 Apr 2023 05:30:45 GMT vary: Accept-Encoding akamai-x-true-ttl: -1 strict-transport-security: max-age=31536000 ; includeSubDomains ; preload set-cookie: ak_bmsc=1C30D4B42C14B7D334E154FC389A4981~000000000000000000000000000000~YAAQj6g4F0RjrFeHAQAAVxoyWhN2WAa70Q449BlWx2hVF3R+QTcGNTcT2qmp2ciDzL1jF0/wqlYrp7hfCJuPApxy4Damx8kr1uTkSmAVlN5Rro786a86UY+9wU41uDT4/1akKs31YOh8Xmnp27eywHLsggS9+MYs6gtjLn5ieEWTfnitvX6+wSxWR4DEOF6aYOsqDL617bU/ZB7konV1WMrm3gEQzycFuyaK7misr2JA5cB1vg9VfNp6js98c4oFxykCGdB+B3S5JX79QNRfBy3AN/0QfVl0AsKGA7Hx98xmA2sAU33CpNwdQ9LaD8MtnC4mICcBl/9+xYHs7k0j0uZhy3xPSY3iMmVwfviJjh1ejUUNzXTjU6RgKbGOEATofrRKfcJDhDwQ; Domain=.sec.gov; Path=/; Expires=Fri, 07 Apr 2023 07:30:45 GMT; Max-Age=7200; HttpOnly set-cookie: bm_mi=1CB6EBF697F892883381A3EA17C02CC3~YAAQj6g4F0VjrFeHAQAAVxoyWhOfLNkrnbYOUz/bb0JUdrQGHfybdnf2upQJMKjB7KrRSRS2qkNrRLITIdRLCPTqNdKGEd6K0hBIGK36ozcZqrjEyuW+k9j1mkTQ2L7e4BR7StLXdfFClBaHD3pVQMOS9kfVBEEgE1SqOqU0/X9ZNmDGwKkdltY/m4TRCrcTJzfiZ3nyr6JzmGSQjnEqZBR5FLK39rP84MayHQHFJ4HdrbDrZwyiTcMNrtin6y3jo70h8nXZ5n49HE9KRVLegAR1ecW3pmumc8qYt91DHkm6O2xLm3VRvi+ulf9zmQB7K+wjxSL7/nEGbk4jWEFdCoLiEDkaxKFSUbt6zLjmfgdPEFqEat8T2ElkIO9CjQjFkMazbs0CVhE2UUHBIniekYN/zxXgPQ==~1; Domain=.sec.gov; Path=/; Expires=Fri, 07 Apr 2023 05:30:45 GMT; Max-Age=0; Secure Transfer-Encoding: chunked Proxy-Connection: close Connection: close EX-99.1 2 a2021-q4exhibit9916302021.htm EX-99.1 Document

Exhibit 99.1

FOR IMMEDIATE RELEASE
Contact:  
Steve Jones Mary M. Gentry
Senior EVP, Chief Financial Officer- or -SVP, Treasurer and Investor Relations
ScanSource, Inc. ScanSource, Inc.
(864) 286-4302 (864) 286-4892

SCANSOURCE DELIVERS STRONG FOURTH QUARTER SALES AND PROFITABILITY GROWTH

Outstanding execution of growth opportunities; quarterly net sales up 34% year-over-year
Initiates annual financial outlook for FY22
Announces new $100 million share repurchase authorization

GREENVILLE, SC -- August 24, 2021 -- ScanSource, Inc. (NASDAQ: SCSC), a leading provider of technology products and solutions, today announced financial results for the fourth quarter and fiscal year ended June 30, 2021. All results in this release reflect continuing operations only unless otherwise noted.

Fourth Quarter Summary:

•Net sales: $852.7 million, up 34% year-over-year
•Gross profit: $95.8 million, up 29% year-over-year
•GAAP operating income of $23.3 million for a 2.73% operating income margin
•Non-GAAP operating income of $28.4 million, up 245% year-over-year, for a 3.33% non-GAAP operating
income margin
•Net income from continuing operations of $20.7 million
•GAAP diluted EPS of $0.80 per share; non-GAAP diluted EPS of $0.96 per share
•Generated strong operating cash flow of $61.3 million for the quarter and $116.8 million for the fiscal year
•Return on invested capital increased to 14.9% for the quarter
“Our employees delivered strong fourth quarter net sales and profitability growth with operational excellence across our business,” said Mike Baur, Chairman and CEO, ScanSource, Inc. “Our momentum and execution strengthen our confidence in our hybrid distribution strategy accelerating our growth across hardware, software, connectivity, and cloud. ScanSource is uniquely positioned to enable the growth opportunities ahead for our channel partners and suppliers.”

Quarterly Results
Net sales for the fourth quarter of fiscal year 2021 totaled $852.7 million, up 34.0% year-over-year, or 33.7% year-over-year for organic growth. This reflects broad-based growth across our technologies in both operating segments in all geographies.

For the fourth quarter of fiscal year 2021, operating income increased to $23.3 million from $(113.4) million for the prior-year quarter, which included goodwill and asset impairment charges of $120.5 million. Fourth quarter fiscal year 2021 non-GAAP operating income increased to $28.4 million for a 3.33% non-GAAP operating income margin, up from $8.2 million for the prior-year quarter.

On a GAAP basis, net income for the fourth quarter of fiscal year 2021 totaled $20.7 million, or $0.80 per diluted share, compared to net loss of $(108.9) million, or $(4.29) per diluted share, for the prior-year quarter. Fourth quarter non-GAAP net income totaled $24.5 million, or $0.96 per diluted share, which includes a $0.19 benefit from discrete tax items. These results compare to fourth quarter fiscal year 2020 non-GAAP net income of $4.9 million, or $0.19 per diluted share.

1

Exhibit 99.1

Full-Year Results

For fiscal year 2021, net sales increased 3.4% to $3.2 billion, or a 5.5% year-over-year increase on an organic basis. During the year, the Company saw continued progress in recovering from the sales impact of the COVID-19 pandemic. For the Intelisys business, fiscal year 2021 net sales increased 13.1% year-over-year. Fiscal year 2021 GAAP operating income increased to $61.5 million, and non-GAAP operating income increased to $93.1 million, up 18.0% year-over-year. In 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.
On a GAAP basis, net income for fiscal year 2021 totaled $45.4 million, or $1.78 per diluted share. Non-GAAP net income increased to $69.9 million, or $2.74 per diluted share, compared to $52.0 million, or $2.05 per diluted share, for the fiscal year 2020.

Share Repurchase Authorization

ScanSource also announced a new $100 million authorization by its Board of Directors to repurchase shares of the Company's common stock.

"In setting our capital allocation priorities, our top priority is reinvestment in the growth of our business and driving value creation for our shareholders," said Steve Jones, Chief Financial Officer, ScanSource, Inc. "Our repurchase authorization reflects our confidence in ScanSource's business and the strength of our long-term operating cash flow generation."

Repurchases may be made in the open market or through privately negotiated transactions, and ScanSource may enter into Rule 10b5-1 plans to facilitate repurchases. This share repurchase authorization does not obligate ScanSource to purchase any particular amount of common stock, and it may be suspended at any time at the Company's discretion. The authorization does not have any time limit.

Annual Financial Outlook for Fiscal Year 2022

The following statements are based on ScanSource's current expectation for the full fiscal year ended June 30, 2022.

FY22 Annual Outlook
Net sales growth, year-over-yearAt least 5.5%
Adjusted EBITDA (non-GAAP)At least $135 million

Adjusted EBITDA is a non-GAAP measure, which excludes estimates for amortization of intangible assets, depreciation expense, and non-cash share-based compensation expense (effective with the first quarter of fiscal year 2022). For comparison, fiscal year 2021 Adjusted EBITDA, excluding share-based compensation totaled $118 million. ScanSource’s outlook does not include the potential impact of any business combinations, asset acquisitions, divestitures, strategic investments, or other significant transactions that may be completed after the date hereof. These statements are forward-looking, and actual results may differ materially.

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, August 24, 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 regarding the Company's FY22 outlook, capital allocation plans, growth opportunities and 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, failure to hire and retain quality employees, risk to the Company's business from a cyber-security attack, the failure to manage and implement the Company's organic growth strategy, 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, a failure of the Company's IT systems, a
2

failure to acquire new businesses, changes in interest and exchange rates and regulatory regimes impacting the Company's international operations, credit risks involving the Company's larger customers and suppliers, 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, 2021, 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 (organic growth): 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, restructuring costs, 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.

Adjusted earnings before interest expense, income taxes, depreciation, and amortization (“Adjusted EBITDA”): Adjusted EBITDA starts with net income and adds back interest expense, income tax expense, depreciation expense, amortization of intangible assets, changes in fair value of contingent considerations, and other non-GAAP adjustments, including acquisition and divestiture costs, impairment charges, and restructuring costs. Effective with the first quarter of fiscal year 2022, non-cash share-based compensation expense will also be added back in calculating Adjusted EBITDA. Since Adjusted EBITDA excludes some non-cash costs of investing in our business and people, management believes that Adjusted EBITDA shows the profitability from our business operations more clearly.

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. 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
3

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 2021 Best Places to Work in South Carolina and on FORTUNE magazine’s 2021 List of World’s Most Admired Companies. ScanSource ranks #655 on the Fortune 1000. For more information, visit www.scansource.com.
4
ScanSource Delivers Strong Fourth Quarter Sales and Profitability Growth
ScanSource, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
June 30, 2021June 30, 2020*
Assets
Current assets:
Cash and cash equivalents$62,718 $29,485 
Accounts receivable, less allowance of $19,341 at June 30, 2021
and $21,906 at June 30, 2020
568,984 443,185 
Inventories470,081 454,885 
Prepaid expenses and other current assets117,860 94,681 
Current assets held for sale— 181,231 
Total current assets1,219,643 1,203,467 
Property and equipment, net42,836 55,641 
Goodwill218,877 214,288 
Identifiable intangible assets, net104,860 121,547 
Deferred income taxes21,853 24,630 
Other non-current assets63,615 72,521 
Total assets$1,671,684 $1,692,094 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable$634,805 $454,240 
Accrued expenses and other current liabilities87,790 76,686 
Current portion of contingent consideration— 46,334 
Income taxes payable2,501 5,886 
Current portion of long-term debt7,843 7,839 
Current liabilities held for sale— 128,022 
Total current liabilities732,939 719,007 
Deferred income taxes3,954 3,884 
Long-term debt, net of current portion135,331 143,175 
Borrowings under revolving credit facility— 67,714 
Other long-term liabilities68,269 80,068 
Total liabilities940,493 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, 25,499,465 and 25,361,298 shares issued and outstanding at June 30, 2021 and June 30, 2020, respectively
71,253 63,765 
Retained earnings758,071 747,276 
Accumulated other comprehensive loss(98,133)(132,795)
Total shareholders’ equity731,191 678,246 
Total liabilities and shareholders’ equity$1,671,684 $1,692,094 
*Derived from audited financial statements.
5
ScanSource Delivers Strong Fourth Quarter Sales and Profitability Growth
ScanSource, Inc. and Subsidiaries
Condensed Consolidated Income Statements (Unaudited)
(in thousands, except per share data)
 Quarter ended June 30,Fiscal year ended June 30,
 2021202020212020
Net sales$852,694 $636,450 $3,150,806 $3,047,734 
Cost of goods sold756,916 562,303 2,800,090 2,692,165 
Gross profit95,778 74,147 350,716 355,569 
Selling, general and administrative expenses64,758 58,192 247,438 259,535 
Depreciation expense2,898 3,304 12,533 13,033 
Intangible amortization expense4,893 4,946 19,488 19,953 
Restructuring and other charges(54)— 9,258 604 
Impairment charges— 120,470 — 120,470 
Change in fair value of contingent consideration— 674 516 6,941 
Operating income (loss)23,283 (113,439)61,483 (64,967)
Interest expense1,643 2,497 6,929 12,224 
Interest income(1,341)(3,199)(3,097)(5,826)
Other expense (income), net(65)213 116 411 
Income before income taxes23,046 (112,950)57,535 (71,776)
Provision for income taxes2,389 (4,091)12,146 7,451 
Net income (loss) from continuing operations20,657 (108,859)45,389 (79,227)
Net income (loss) from discontinued operations3,053 (108,403)(34,594)(113,427)
Net income (loss)$23,710 $(217,262)$10,795 $(192,654)
Per share data:
Net income (loss) from continuing operations per common share, basic$0.81 $(4.29)$1.79 $(3.12)
Net income (loss) from discontinued operations per common share, basic0.12 (4.28)(1.36)(4.47)
Net income (loss) per common share, basic$0.93 $(8.57)$0.42 $(7.59)
Weighted-average shares outstanding, basic25,482 25,353 25,423 25,378 
Net income (loss) from continuing operations per common share, diluted$0.80 $(4.29)$1.78 $(3.12)
Net income (loss) from discontinued operations per common share, diluted0.12 (4.28)(1.36)(4.47)
Net income (loss) per common share, diluted$0.92 $(8.57)$0.42 $(7.59)
Weighted-average shares outstanding, diluted25,664 25,353 25,518 25,378 












6
ScanSource Delivers Strong Fourth Quarter Sales and Profitability Growth
ScanSource, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Quarter ended June 30,Fiscal year ended June 30,
2021202020212020
Cash flows from operating activities:
Net income (loss)$23,710 $(217,262)$10,795 $(192,654)
Net income (loss) from discontinued operations3,053 (108,403)(34,594)(113,427)
Net income (loss) from continuing operations20,657 (108,859)45,389 (79,227)
Adjustments to reconcile net income (loss) to net cash provided by operating activities of continuing operations:
Depreciation and amortization8,090 8,743 33,507 35,328 
Amortization of debt issue costs104 104 417 417 
Provision for doubtful accounts112 222 338 1,621 
Share-based compensation2,328 1,425 8,039 5,478 
Impairment charges— 120,470 — 120,470 
Deferred income taxes2,941 (10,714)2,916 (12,193)
Change in fair value of contingent consideration— 674 516 6,941 
Contingent consideration payments excess— — (5,457)(3,050)
Finance lease interest23 21 119 85 
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable(50,204)57,562 (118,859)57,477 
Inventories(6,394)93,623 (12,301)86,177 
Prepaid expenses and other assets(17,111)(2,903)(18,753)(13,880)
Other non-current assets7,102 (12,534)9,948 (13,563)
Accounts payable105,511 (76,224)175,120 (20,846)
Accrued expenses and other liabilities(8,928)(1,992)(493)11,239 
Income taxes payable(2,886)4,334 (3,679)(441)
Net cash provided by operating activities of continuing operations61,345 73,952 116,767 182,033 
Cash flows from investing activities of continuing operations:
Capital expenditures(80)188 (2,363)(6,387)
Cash paid for business acquisitions, net of cash acquired— — — (48,921)
Cash received for business disposal— — 34,356 — 
Net cash (used in) provided by investing activities of continuing operations(80)188 31,993 (55,308)
Cash flows from financing activities of continuing operations:
Borrowings on revolving credit, net of expenses395,215 477,446 1,881,679 2,085,918 
Repayments on revolving credit, net of expenses(449,017)(539,732)(1,949,392)(2,190,595)
Borrowings on long-term debt, net(1,875)(938)(7,839)(4,085)
Repayments of finance lease obligations(320)(1,105)(1,294)(1,765)
Contingent consideration payments— — (41,393)(35,482)
Exercise of stock options12 — 451 754 
Taxes paid on settlement of equity awards— — (1,036)(1,353)
Repurchase of common stock— — — (6,078)
Net cash used in financing activities of continuing operations(55,985)(64,329)(118,824)(152,686)
7
ScanSource Delivers Strong Fourth Quarter Sales and Profitability Growth
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 operations2,469 2,235 24,173 44,238 
Net cash flows used in investing activities of discontinued operations— (35)(58)(77)
Net cash flows used in financing activities of discontinued operations— (10,663)(29,494)(3,921)
Net cash flows provided by (used in) discontinued operations2,469 (8,463)(5,379)40,240 
Effect of exchange rate changes on cash and cash equivalents5,648 (1,489)3,706 (3,642)
Increase (decrease) in cash and cash equivalents13,397 (141)28,263 10,637 
Consolidated cash and cash equivalents at beginning of period49,321 34,596 34,455 23,818 
Consolidated cash and cash equivalents at end of period62,718 34,455 62,718 34,455 
Cash and cash equivalents of discontinued operations— — — 4,970 
Cash and cash equivalents of continuing operations$62,718 $34,455 $62,718 $29,485 
8
ScanSource Delivers Strong Fourth Quarter Sales and Profitability Growth


ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
(in thousands, except percentages)
Non-GAAP Financial Information:
Quarter ended June 30,Fiscal year ended June 30,
2021202020212020
Return on invested capital ratio (ROIC), annualized (a)
14.9 %4.0 %11.8 %7.5 %
Reconciliation of net income to EBITDA:
Net income (loss) from continuing operations (GAAP)$20,657$(108,859)$45,389$(79,227)
Plus: Interest expense1,6432,4976,92912,224
Plus: Income taxes2,389(4,091)12,1467,451
Plus: Depreciation and amortization8,0908,74333,50735,328
EBITDA (non-GAAP)32,779(101,710)97,971(24,224)
Plus: Change in fair value of contingent consideration—6745166,941
Plus: Acquisition and divestiture costs(b)
2461,3112,3764,000
Plus: Restructuring costs(54)—9,047604
Plus: Impairment charges—120,470—120,470
Plus: Tax recovery—(8,424)—(10,744)
Adjusted EBITDA (numerator for ROIC) (non-GAAP)$32,971$12,321$109,910$97,047
Invested Capital Calculations:
Equity – beginning of the quarter (c)
$690,575$897,678$678,246$914,129
Equity – end of the quarter (c)
731,191678,246731,191678,246
Plus: Change in fair value of contingent consideration, net of tax—5103905,247
Plus: Acquisition and divestiture costs(b)
2071,3112,3374,000
Plus: Restructuring, net(40)—6,840449
Plus: Impact of discontinued operations, net(3,053)108,40334,594113,427
Plus: Impairment charges, net—114,398—114,398
Plus: Tax recovery, net—(6,247)—(8,001)
Average equity709,440897,150726,799910,948
Average funded debt (d)
177,074337,973202,869390,709
Invested capital (denominator for ROIC) (non-GAAP)$886,514$1,235,123$929,668$1,301,657
(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 91 days in the current and prior-year quarter.
(b) Acquisition and divestiture costs are generally nondeductible for tax purposes.
(c) In the quarter ending June 30, 2020, the Company recorded impairment charges of $120.5 million. Impairment charges, net of tax reduced equity by $114.4 million.
(d) 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.
9
ScanSource Delivers Strong Fourth Quarter Sales and Profitability Growth
ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
Net Sales by Segment:
Quarter ended June 30,
20212020% Change
Worldwide Barcode, Networking & Security:(in thousands)
Net sales, reported$597,943 $447,812 33.5 %
Foreign exchange impact (a)
(447)— 
Non-GAAP net sales, constant currency$597,496 $447,812 33.4 %
Worldwide Communications & Services:
Net sales, reported$254,751 $188,638 35.0 %
Foreign exchange impact (a)
(1,224)— 
Non-GAAP net sales, constant currency$253,527 $188,638 34.4 %
Consolidated:
Net sales, reported$852,694 $636,450 34.0 %
Foreign exchange impact (a)
(1,671)— 
Non-GAAP net sales, constant currency$851,023 $636,450 33.7 %
(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 quarter ended June 30, 2021 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2020.
ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
Net Sales by Segment:
Fiscal year ended June 30,
20212020% Change
Worldwide Barcode, Networking & Security:(in thousands)
Net sales, reported$2,175,141 $2,093,217 3.9 %
Foreign exchange impact (a)
19,311 — 
Non-GAAP net sales, constant currency$2,194,452 $2,093,217 4.8 %
Worldwide Communications & Services:
Net sales, reported$975,665 $954,517 2.2 %
Foreign exchange impact (a)
46,470 — 
Non-GAAP net sales, constant currency$1,022,135 $954,517 7.1 %
Consolidated:
Net sales, reported$3,150,806 $3,047,734 3.4 %
Foreign exchange impact (a)
65,781 — 
Non-GAAP net sales, constant currency$3,216,587 $3,047,734 5.5 %
(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 fiscal year ended June 30, 2021 into U.S. dollars using the average foreign exchange rates for the fiscal year ended June 30, 2020.
10
ScanSource Delivers Strong Fourth Quarter Sales and Profitability Growth
ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
Net Sales by Geography:
Quarter ended June 30,
20212020% Change
United States and Canada:(in thousands)
Net sales, as reported$771,403 $581,619 32.6 %
International:
Net sales, reported$81,291 $54,831 48.3 %
Foreign exchange impact(a)
(1,671)— 
Non-GAAP net sales, constant currency$79,620 $54,831 45.2 %
Consolidated:
Net sales, reported$852,694 $636,450 34.0 %
Foreign exchange impact(a)
(1,671)— 
Non-GAAP net sales, constant currency$851,023 $636,450 33.7 %
(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 quarter ended June 30, 2021 into U.S. dollars using the average foreign exchange rates for the quarter ended June 30, 2020.

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
Net Sales by Geography:
Fiscal year ended June 30,
20212020% Change
United States and Canada:(in thousands)
Net sales, as reported$2,840,731 $2,755,134 3.1 %
International:
Net sales, reported$310,075 $292,600 6.0 %
Foreign exchange impact(a)
65,781 — 
Non-GAAP net sales, constant currency$375,856 $292,600 28.5 %
Consolidated:
Net sales, reported$3,150,806 $3,047,734 3.4 %
Foreign exchange impact(a)
65,781 — 
Non-GAAP net sales, constant currency$3,216,587 $3,047,734 5.5 %
(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 fiscal year ended June 30, 2021 into U.S. dollars using the average foreign exchange rates for the fiscal year ended June 30, 2020.

11
ScanSource Delivers Strong Fourth Quarter Sales and Profitability Growth
Quarter ended June 30, 2021
GAAP MeasureIntangible amortization expenseChange in fair value of contingent considerationAcquisition, divestiture, and restructuring costs(a)Tax recovery, netImpairment chargesNon-GAAP measure
(in thousands, except per share data)
Net sales$852,694 $— $— $— $— $— $852,694 
Gross profit95,778 — — — — — 95,778 
Operating income23,283 4,893 — 192 — — 28,368 
Other expense, net237 — — — — — 237 
Pre-tax income23,046 4,893 — 192 — — 28,131 
Net income from continuing operations20,657 3,698 — 167 — — 24,522 
Diluted EPS from continuing operations$0.80 $0.14 $— $0.01 $— $— $0.96 
(a) Acquisition and divestiture costs totaled $0.2 million for the quarter ended June 30, 2021 and are generally nondeductible for tax purposes. Restructuring costs totaled $(0.1) million for the quarter ended June 30, 2021.
Quarter ended June 30, 2020
GAAP MeasureIntangible amortization expenseChange in fair value of contingent considerationAcquisition, divestiture, and restructuring costs(a)Tax recovery, netImpairment chargesNon-GAAP measure
(in thousands, except per share data)
Net sales$636,450 $— $— $— $— $— $636,450 
Gross profit74,147 — — — — — 74,147 
Operating (loss) income(113,439)4,946 674 1,311 (5,743)120,470 8,219 
Other expense, net(489)— — — 2,681 — 2,192 
Pre-tax (loss) income(112,950)4,946 674 1,311 (8,424)120,470 6,027 
Net (loss) income from continuing operations(108,859)3,744 510 1,311 (6,247)114,398 4,857 
Diluted EPS from continuing operations$(4.29)$0.15 $0.02 $0.05 $(0.25)$4.51 $0.19 
(a) Acquisition and divestiture costs totaled xx for the quarter ended June 30, 2020 and are generally nondeductible for tax purposes.
12
ScanSource Delivers Strong Fourth Quarter Sales and Profitability Growth
Year ended June 30, 2021
Reported GAAP MeasureIntangible amortization expenseChange in fair value of contingent considerationAcquisition, divestiture, and restructuring costs(a)Tax recovery, netImpairment chargesNon-GAAP measure
(in thousands, except per share data)
Net sales$3,150,806 $— $— $— $— $— $3,150,806 
Gross profit350,716 — — — — — 350,716 
Operating income61,483 19,488 516 11,634 — — 93,121 
Other expense, net3,948 — — — — — 3,948 
Pre-tax income57,535 19,488 516 11,634 — — 89,173 
Net income from continuing operations45,389 14,753 390 9,336 — — 69,868 
Diluted EPS from continuing operations$1.78 $0.58 $0.02 $0.36 $— $— $2.74 
(a) Acquisition and divestiture costs totaled $2.4 million for the fiscal year ended June 30, 2021 and are generally nondeductible for tax purposes. Restructuring costs totaled $9.3 million for the fiscal year ended June 30, 2021.
Year ended June 30, 2020
Reported GAAP MeasureIntangible amortization expenseChange in fair value of contingent considerationAcquisition, divestiture, and restructuring costsTax recovery, netImpairment chargesNon-GAAP measure
(in thousands, except per share data)
Net sales$3,047,734 $— $— $— $— $— $3,047,734 
Gross profit355,569 — — — — — 355,569 
Operating (loss) income(64,967)19,953 6,941 4,604 (8,063)120,470 78,938 
Other expense, net6,809 — — — 2,681 — 9,490 
Pre-tax (loss) income(71,776)19,953 6,941 4,604 (10,744)120,470 69,448 
Net (loss) income from continuing operations(79,227)15,091 5,247 4,449 (8,001)114,398 51,957 
Diluted EPS from continuing operations$(3.12)$0.59 $0.21 $0.18 $(0.32)$4.51 $2.05 
(a) Acquisition and divestiture costs totaled $4.0 million for the fiscal year ended June 30, 2020 and are generally nondeductible for tax purposes. Restructuring costs totaled $0.6 million for the fiscal year ended June 30, 2020.
13
ScanSource Delivers Strong Fourth Quarter Sales and Profitability Growth

ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
Discontinued Operations - Financial Results:
Quarter ended June 30,Fiscal year ended June 30,
2021202020212020
(in thousands)
Net sales$— $121,969 $213,373 $561,496 
Cost of goods sold— 112,846 198,512 513,003 
Gross profit— 9,123 14,861 48,493 
Selling, general and administrative expenses— 11,337 17,291 53,946 
Depreciation expense— 205 — 975 
Intangible amortization expense— 330 — 1,403 
Operating loss— (16,496)(2,430)(21,578)
Interest expense, net— 163 394 1,399 
Loss on disposal group101 88,923 34,597 88,923 
Other expense, net— 1,221 310 1,124 
Loss from discontinued operations before taxes(101)(106,803)(37,731)(113,024)
Income tax (benefit) expense(3,154)1,600 (3,137)403 
Net income (loss) from discontinued operations$3,053 $(108,403)$(34,594)$(113,427)
14
ScanSource Delivers Strong Fourth Quarter Sales and Profitability Growth
ScanSource, Inc. and Subsidiaries
Supplementary Information (Unaudited)
Discontinued Operations - Assets and Liabilities:
June 30, 2021June 30, 2020
(in thousands)
Assets
Current assets:
Cash and cash equivalents$— $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 June 30, 2020. The discontinued operations were disposed of during the quarter ended December 31, 2020.



15
ScanSource Delivers Strong Fourth Quarter Sales and Profitability Growth
ScanSource, Inc. and Subsidiaries
Supplementary Forward-Looking Information (Unaudited)
Annual Financial Outlook for Fiscal Year 2022:
FY22 Outlook
GAAP, Operating IncomeAt least $92 million
Intangible amortization$18 million
Depreciation expense$14 million
Share-based compensation expense$11 million
Adjusted EBITDA (non-GAAP)At least $135 million
Fiscal Year 2021 Adjusted EBITDA, excluding Share-Based Compensation Expense:
FY21
Adjusted EBITDA, as reported (non-GAAP)$109.9 million
Add: Share-based compensation expense$8.0 million
Adjusted EBITDA, excluding share-based compensation expense$117.9 million
16