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ScanSource (SCSC) Q1 Earnings Miss Estimates, Decline Y/Y
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ScanSource, Inc. (SCSC - Free Report) reported adjusted earnings of 74 cents per share in first-quarter fiscal 2024 (ended Sep 30, 2023), missing the Zacks Consensus Estimate of earnings of 92 cents per share. The bottom line slumped 31% from the prior-year quarter’s earnings of $1.07 per share. Results were impacted by soft demand in barcode, mobility and point of sale as well as lower sales volumes in communications hardware. Elevated interest expenses also hurt earnings in the quarter.
On a reported basis, the company delivered earnings of 61 cents per share compared with the prior-year quarter’s earnings of 94 cents per share.
The company reported net sales of $876 million in the reported quarter, down 7.2% from the year-ago quarter’s levels. The top line missed the Zacks Consensus Estimate of $929 million.
Net sales in the United States and Canada were down 8% to $791 million. International sales rose 1% to $85 million.
ScanSource, Inc. Price, Consensus and EPS Surprise
Specialty Technology Solutions’ revenues fell 12% to $510 million in first-quarter fiscal 2024, as weak demand in barcode, mobility and point of sale was partially offset by growth in networking and security.
Sales at Modern Communications & Cloud dipped 0.2% year over year to $367 million in the reported quarter. Low sales volumes in communications hardware were partially offset by growth in Cisco products. Intelisys net sales for the first quarter, however, increased 8.8%.
Operational Update
The cost of sales amounted to $770 million in the fiscal first quarter, down 7% from the year-ago quarter’s levels. The gross profit totaled $106.5 million, down 6% from the year-ago quarter’s $113.5 million. The gross margin was 12.2% during the reported quarter compared with 12% in the first quarter of fiscal 2023.
Selling, general and administrative expenses increased 5% year over year to $75 million. The adjusted operating profit was $28.5 million in the quarter under review in comparison with the prior-year quarter’s $39.1 million. The adjusted operating margin was 3.2% compared with 4.1% reported in the prior year’s quarter.
Adjusted EBITDA was down 23% year over year to $35 million. Adjusted EBITDA margin was 4% in the quarter under discussion compared with 4.8% in the year-ago quarter.
Financial Condition
The company reported cash and cash equivalents of $42.6 million as of Sep 30, 2023, in comparison with $36 million as of Jun 30, 2023. The company generated around $94 million in cash from operating activities in the fiscal first quarter against a usage of $48 million in the year-ago quarter. The company’s long-term debt was $142 million as of Sep 30, 2023, down from $144 million as of Jun 30, 2023.
Fiscal 2024 Outlook
ScanSource expects net sales growth to be least $3.8 billion in fiscal 2024. The company had earlier projected net sales growth of at least 3%. SCSC had reported sales of $3.78 billion in fiscal 2023.
Adjusted EBITDA is now projected to be at least $170 million. SCSC had previously stated that it expected EBITDA of at least $180 million. The company expects a free cash flow of at least $200 million, higher than the previous guidance of at least $150 million.
Price Performance
ScanSource's shares have lost 3.6% in the past year against the industry’s growth of 11.8%.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
ScanSource currently carries a Zacks Rank #3 (Hold).
Alamo has an average trailing four-quarter earnings surprise of 19.8%. The Zacks Consensus Estimate for ALG’s fiscal 2023 earnings is pegged at $11.59 per share, which indicates year-over-year growth of 34.5%. The consensus estimate for 2023 earnings has moved 4% north in the past 60 days. Its shares have gained 19% in the last year.
The Zacks Consensus Estimate for Flowserve’s fiscal 2023 earnings per share is pinned at $2.01, indicating growth of 83% from the prior-year actual. Earnings estimates have moved 2% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 27.3%. FLS shares have gained 17% in the past year.
A. O. Smith has an average trailing four-quarter earnings surprise of 14%. The Zacks Consensus Estimate for AOS’ 2023 earnings is pegged at $3.75 per share. The estimate projects year-over-year growth of 19.4%. Earnings estimates have gone up 4.5% in the past 60 days. AOS shares have gained 22% in the last year.
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ScanSource (SCSC) Q1 Earnings Miss Estimates, Decline Y/Y
ScanSource, Inc. (SCSC - Free Report) reported adjusted earnings of 74 cents per share in first-quarter fiscal 2024 (ended Sep 30, 2023), missing the Zacks Consensus Estimate of earnings of 92 cents per share. The bottom line slumped 31% from the prior-year quarter’s earnings of $1.07 per share. Results were impacted by soft demand in barcode, mobility and point of sale as well as lower sales volumes in communications hardware. Elevated interest expenses also hurt earnings in the quarter.
On a reported basis, the company delivered earnings of 61 cents per share compared with the prior-year quarter’s earnings of 94 cents per share.
The company reported net sales of $876 million in the reported quarter, down 7.2% from the year-ago quarter’s levels. The top line missed the Zacks Consensus Estimate of $929 million.
Net sales in the United States and Canada were down 8% to $791 million. International sales rose 1% to $85 million.
ScanSource, Inc. Price, Consensus and EPS Surprise
ScanSource, Inc. price-consensus-eps-surprise-chart | ScanSource, Inc. Quote
Specialty Technology Solutions’ revenues fell 12% to $510 million in first-quarter fiscal 2024, as weak demand in barcode, mobility and point of sale was partially offset by growth in networking and security.
Sales at Modern Communications & Cloud dipped 0.2% year over year to $367 million in the reported quarter. Low sales volumes in communications hardware were partially offset by growth in Cisco products. Intelisys net sales for the first quarter, however, increased 8.8%.
Operational Update
The cost of sales amounted to $770 million in the fiscal first quarter, down 7% from the year-ago quarter’s levels. The gross profit totaled $106.5 million, down 6% from the year-ago quarter’s $113.5 million. The gross margin was 12.2% during the reported quarter compared with 12% in the first quarter of fiscal 2023.
Selling, general and administrative expenses increased 5% year over year to $75 million. The adjusted operating profit was $28.5 million in the quarter under review in comparison with the prior-year quarter’s $39.1 million. The adjusted operating margin was 3.2% compared with 4.1% reported in the prior year’s quarter.
Adjusted EBITDA was down 23% year over year to $35 million. Adjusted EBITDA margin was 4% in the quarter under discussion compared with 4.8% in the year-ago quarter.
Financial Condition
The company reported cash and cash equivalents of $42.6 million as of Sep 30, 2023, in comparison with $36 million as of Jun 30, 2023. The company generated around $94 million in cash from operating activities in the fiscal first quarter against a usage of $48 million in the year-ago quarter. The company’s long-term debt was $142 million as of Sep 30, 2023, down from $144 million as of Jun 30, 2023.
Fiscal 2024 Outlook
ScanSource expects net sales growth to be least $3.8 billion in fiscal 2024. The company had earlier projected net sales growth of at least 3%. SCSC had reported sales of $3.78 billion in fiscal 2023.
Adjusted EBITDA is now projected to be at least $170 million. SCSC had previously stated that it expected EBITDA of at least $180 million. The company expects a free cash flow of at least $200 million, higher than the previous guidance of at least $150 million.
Price Performance
ScanSource's shares have lost 3.6% in the past year against the industry’s growth of 11.8%.
Image Source: Zacks Investment Research
Zacks Rank and Stocks to Consider
ScanSource currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space are Alamo Group (ALG - Free Report) , Flowserve (FLS - Free Report) and A. O. Smith (AOS - Free Report) . ALG and FLS sport a Zacks Rank #1 (Strong Buy) at present and AOS has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alamo has an average trailing four-quarter earnings surprise of 19.8%. The Zacks Consensus Estimate for ALG’s fiscal 2023 earnings is pegged at $11.59 per share, which indicates year-over-year growth of 34.5%. The consensus estimate for 2023 earnings has moved 4% north in the past 60 days. Its shares have gained 19% in the last year.
The Zacks Consensus Estimate for Flowserve’s fiscal 2023 earnings per share is pinned at $2.01, indicating growth of 83% from the prior-year actual. Earnings estimates have moved 2% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 27.3%. FLS shares have gained 17% in the past year.
A. O. Smith has an average trailing four-quarter earnings surprise of 14%. The Zacks Consensus Estimate for AOS’ 2023 earnings is pegged at $3.75 per share. The estimate projects year-over-year growth of 19.4%. Earnings estimates have gone up 4.5% in the past 60 days. AOS shares have gained 22% in the last year.