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ScanSource (SCSC) Q1 Earnings & Sales Beat Estimates, Up Y/Y
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ScanSource, Inc. (SCSC - Free Report) reported first-quarter fiscal 2022 (ended Sep 30, 2021) adjusted earnings of 99 cents per share, which beat the Zacks Consensus Estimate of 75 cents. The bottom line improved 136% from the prior year quarter’s earnings of 42 cents, courtesy of strong demand and operating leverage.
On a reported basis, the company delivered earnings of 86 cents per share against the prior-year quarter’s loss of 1 cent per share.
The company reported net sales of $857 million in the reported quarter, up 13% from the year-ago quarter, driven by strong demand. The top line surpassed the Zacks Consensus Estimate of $802 million. Excluding foreign exchange impact, net sales were around $855 million in the quarter under review.
Net sales in the United States and Canada were up 12.6% to $769 million, while international sales climbed 13% to $88 million.
ScanSource, Inc. Price, Consensus and EPS Surprise
Cost of sales amounted to $757 million in first-quarter 2022, up 11.7% from the year-ago quarter. The adjusted gross profit totaled $101 million, reflecting an improvement of 25% over the year-ago quarter’s $81 million. The gross margin came in at 11.8% during the reported quarter compared with the prior-year quarter’s 10.7%. The 110 basis point expansion was attributable to a higher margin sales mix and increased vendor program recognition from rising sales.
Selling, general and administrative expenses flared up 22.3%, year over year to $148 million. The adjusted operating profit was $34.9 million compared with the prior-year quarter’s $15.8 million. The adjusted operating margin was 4.1% compared with the prior-year quarter’s 2.1%. Adjusted EBITDA climbed 98% year over year to $41.4 million, on account of higher gross profits and operating leverage.
Segment Performance
Effective from the first quarter of fiscal year 2022, the company renamed its operating segments and aligned technologies with its hybrid distribution strategy across hardware, software, connectivity and cloud. The segments are — Specialty Technology Solutions (earlier known as Worldwide Barcode, Networking & Security) and Modern Communications & Cloud (previously Worldwide Communications & Services).
Specialty Technology Solutions’ revenues increased to around $502 million in first-quarter 2022 from the year-ago quarter’s $409 million, courtesy of broad-based growth across technologies. Operating earnings amounted to $14 million, highlighting a whopping improvement of 737% from $1.7 million in the last-year quarter.
Sales at Modern Communications & Cloud were $356 million in the reported quarter, up 2% year over year, reflecting the shift to cloud and subscriptions. Operating earnings grew 87% year over year to $16.3 million.
Financial Condition
The company reported cash and cash equivalents of $55.5 million as of Sep 30, 2021 compared with $63 million at the end of Jun 30, 2021. The company reported a cash outflow from operating activities of $57 million in the first quarter of 2022 compared with an inflow of $71 million in the prior-year quarter. The company’s total -term debt was $141 million at the end of the first quarter of 2022, down from $143 million at the fiscal 2021 end.
Outlook
For fiscal 2022, the company expects net sales growth of at least 5.5%. Adjusted EBITDA is projected to be higher than $135 million.
Share Price Performance
Image Source: Zacks Investment Research
ScanSource's shares have gained 44.7% over the past year against the industry’s decline of 21.2%.
Zacks Rank and Stocks to Consider
ScanSource currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector include Casella Waste Systems, Inc. (CWST - Free Report) , Encore Wire Corporation and Heritage-Crystal Clean, Inc. . All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Casella Waste has an anticipated earnings growth rate of 3.4% for fiscal 2021. The company’s shares have increased 45% in a year.
Encore Wire has an estimated earnings growth rate of 491% for the current fiscal. Over a year’s time, the company’s shares have surged a whopping 181%.
Heritage-Crystal Clean has a projected earnings growth rate of 553% for the current year. The stock has appreciated around 64% in the past year.
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ScanSource (SCSC) Q1 Earnings & Sales Beat Estimates, Up Y/Y
ScanSource, Inc. (SCSC - Free Report) reported first-quarter fiscal 2022 (ended Sep 30, 2021) adjusted earnings of 99 cents per share, which beat the Zacks Consensus Estimate of 75 cents. The bottom line improved 136% from the prior year quarter’s earnings of 42 cents, courtesy of strong demand and operating leverage.
On a reported basis, the company delivered earnings of 86 cents per share against the prior-year quarter’s loss of 1 cent per share.
The company reported net sales of $857 million in the reported quarter, up 13% from the year-ago quarter, driven by strong demand. The top line surpassed the Zacks Consensus Estimate of $802 million. Excluding foreign exchange impact, net sales were around $855 million in the quarter under review.
Net sales in the United States and Canada were up 12.6% to $769 million, while international sales climbed 13% to $88 million.
ScanSource, Inc. Price, Consensus and EPS Surprise
ScanSource, Inc. price-consensus-eps-surprise-chart | ScanSource, Inc. Quote
Operational Update
Cost of sales amounted to $757 million in first-quarter 2022, up 11.7% from the year-ago quarter. The adjusted gross profit totaled $101 million, reflecting an improvement of 25% over the year-ago quarter’s $81 million. The gross margin came in at 11.8% during the reported quarter compared with the prior-year quarter’s 10.7%. The 110 basis point expansion was attributable to a higher margin sales mix and increased vendor program recognition from rising sales.
Selling, general and administrative expenses flared up 22.3%, year over year to $148 million. The adjusted operating profit was $34.9 million compared with the prior-year quarter’s $15.8 million. The adjusted operating margin was 4.1% compared with the prior-year quarter’s 2.1%. Adjusted EBITDA climbed 98% year over year to $41.4 million, on account of higher gross profits and operating leverage.
Segment Performance
Effective from the first quarter of fiscal year 2022, the company renamed its operating segments and aligned technologies with its hybrid distribution strategy across hardware, software, connectivity and cloud. The segments are — Specialty Technology Solutions (earlier known as Worldwide Barcode, Networking & Security) and Modern Communications & Cloud (previously Worldwide Communications & Services).
Specialty Technology Solutions’ revenues increased to around $502 million in first-quarter 2022 from the year-ago quarter’s $409 million, courtesy of broad-based growth across technologies. Operating earnings amounted to $14 million, highlighting a whopping improvement of 737% from $1.7 million in the last-year quarter.
Sales at Modern Communications & Cloud were $356 million in the reported quarter, up 2% year over year, reflecting the shift to cloud and subscriptions. Operating earnings grew 87% year over year to $16.3 million.
Financial Condition
The company reported cash and cash equivalents of $55.5 million as of Sep 30, 2021 compared with $63 million at the end of Jun 30, 2021. The company reported a cash outflow from operating activities of $57 million in the first quarter of 2022 compared with an inflow of $71 million in the prior-year quarter. The company’s total -term debt was $141 million at the end of the first quarter of 2022, down from $143 million at the fiscal 2021 end.
Outlook
For fiscal 2022, the company expects net sales growth of at least 5.5%. Adjusted EBITDA is projected to be higher than $135 million.
Share Price Performance
ScanSource's shares have gained 44.7% over the past year against the industry’s decline of 21.2%.
Zacks Rank and Stocks to Consider
ScanSource currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector include Casella Waste Systems, Inc. (CWST - Free Report) , Encore Wire Corporation and Heritage-Crystal Clean, Inc. . All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Casella Waste has an anticipated earnings growth rate of 3.4% for fiscal 2021. The company’s shares have increased 45% in a year.
Encore Wire has an estimated earnings growth rate of 491% for the current fiscal. Over a year’s time, the company’s shares have surged a whopping 181%.
Heritage-Crystal Clean has a projected earnings growth rate of 553% for the current year. The stock has appreciated around 64% in the past year.