Yahoo Finance ScanSource (SCSC) Q2 Earnings and Sales Beat Estimates
ScanSource, Inc. SCSC reported adjusted earnings of $1.06 per share for second-quarter fiscal 2023 (ended Dec 31, 2022), beating the Zacks Consensus Estimate of $1.04. The bottom line rose 4% from the prior-year quarter’s earnings of $1.02 per share driven by strong demand and operating leverage in the hardware and Intelisys businesses.
On a reported basis, the company delivered earnings of $1.01 per share compared with the prior-year quarter’s 89 cents per share.
The company reported net sales of $1,011 million in the reported quarter, up 17% from the year-ago quarter. The upside was driven by solid growth in its segments as well as across all regions. The top line surpassed the Zacks Consensus Estimate of $929 million.
ScanSource, Inc. Price, Consensus and EPS Surprise
ScanSource, Inc. price-consensus-eps-surprise-chart | ScanSource, Inc. Quote
Net sales in the United States and Canada were up 17.5% to $909 million. International sales rose 12.8% to $102 million.
Specialty Technology Solutions’ revenues increased 26% to $626 million in second-quarter fiscal 2023, courtesy of broad-based demand across technologies.
Sales at Modern Communications & Cloud were $379 million in the reported quarter, up 3% year over year.
Operational Update
The cost of sales amounted to $896 million in the fiscal second quarter, up 18% from the year-ago quarter. The gross profit totaled $115 million, up 7% from the year-ago quarter’s $108 million due to higher sales volume. The gross margin came in at 11.4% during the reported quarter compared with the prior-year quarter’s 12.5%.
Selling, general and administrative expenses remained flat at $69 million compared with last-year quarter. The adjusted operating profit was $40.7 million compared with the prior-year quarter’s $35.9 million. The adjusted operating margin was 4.0%, down from 4.2% in the prior-year quarter. Adjusted EBITDA was up 14.7% year over year to $49 million.
Financial Condition
The company reported cash and cash equivalents of $66 million as of Dec 31, 2022 compared with $38 million as of Jun 30, 2022. The company utilized $75 million of cash in operating activities in the first half of fiscal 2023, flat compared with the prior-year comparable period. The company’s long-term debt was $148 million at the end of the second quarter of fiscal 2023, up from $124 million at the end of fiscal 2022.
Outlook
Backed by the upbeat second-quarter fiscal 2023 results, ScanSource expects net sales growth of at least 6.5% in fiscal 2023, higher than 5.5% growth projected earlier. Adjusted EBITDA is projected to be at least $176 million. SCSC had earlier projected adjusted EBITDA of at least $174 million.
Share Price Performance
Image Source: Zacks Investment Research
ScanSource's shares have declined 3.1% in the past year compared with the industry’s 2.1% rise.
Zacks Rank and Stocks to Consider
ScanSource currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the Industrial Products sector are O-I Glass, Inc. OI, Tenaris TS and Deere & Company DE. OI and TS sport a Zacks Rank #1 (Strong Buy) at present and DE has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
O-I Glass has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for OI’s 2022 earnings is pegged at $2.51 per share. This indicates a 15.7% increase from the prior-year reported figure. The consensus estimate for 2022 earnings has been unchanged in the past 60 days. OI’s shares gained 66.9% in the last year.
Tenaris has an average trailing four-quarter earnings surprise of 20.9%. The Zacks Consensus Estimate for TS’ 2022 earnings is pegged at $4.38 per share. This indicates a 134.2% increase from the prior-year reported figure. The consensus estimate for 2022 earnings has moved north by 2.1% in the past 60 days. Its shares gained 36.9% in the last year.
The Zacks Consensus Estimate for Deere & Company’s fiscal 2023 earnings per share is pegged at $28.01, suggesting an increase of 19.6% from that reported in the last year. The consensus estimate for fiscal 2023 earnings has moved 2.7% upward in the last 60 days. DE has a trailing four-quarter average earnings surprise of 7.1%. Its shares gained 11.7% in the last year.
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