Yahoo Finance ScanSource (SCSC) Q3 Earnings Beat Estimates, Shares Gain
Shares of ScanSource, Inc. SCSC have gained 8% since the company reported better-than-expected third-quarter fiscal 2023 (ended Mar 31, 2023) results and it raised the EBITDA guidance for fiscal 2023 on May 9, 2023. Adjusted earnings for the quarter under review were 96 cents per share, which surpassed the Zacks Consensus Estimate of earnings of 91 cents. The bottom line, however, declined 7.7% from the prior-year quarter’s earnings of $1.04 per share.
On a reported basis, the company delivered earnings of 83 cents per share compared with the prior-year quarter’s 91 cents.
The company reported net sales of $886 million in the reported quarter, up 4.7% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $881 million.
Net sales in the United States and Canada were up 5.8% to $809 million. International sales declined 5.8% to $77 million.
Specialty Technology Solutions’ revenues increased 12% to $566 million in third-quarter fiscal 2023, courtesy of growth in networking, security and barcoding.
Sales at Modern Communications & Cloud were $320 million in the reported quarter, down 7% year over year. Weak sales volumes in communications hardware due to business shift to the cloud offset strength in networking.
ScanSource, Inc. Price, Consensus and EPS Surprise
ScanSource, Inc. price-consensus-eps-surprise-chart | ScanSource, Inc. Quote
Operational Update
The cost of sales amounted to $774 million in the fiscal third quarter, up 5% from the year-ago quarter. The gross profit totaled $112 million, up 5% from the year-ago quarter due to higher sales volume. The gross margin was 12.6% in the reported quarter, flat with the prior-year quarter.
Selling, general and administrative expenses rose 6% year over year to $71 million. The adjusted operating profit was $38.4 million compared with the prior-year quarter’s $37.4 million. The adjusted operating margin was 4.3%, down from 4.4% in the prior-year quarter. Adjusted EBITDA was up 3.5% year over year to $45.7 million.
Financial Condition
The company reported cash and cash equivalents of $37.4 million as of Mar 31, 2023, compared with $38 million as of Jun 30, 2022. The company utilized $20.5 million of cash in operating activities in the first nine months of fiscal 2023 compared with $45.7 million in the prior-year period. The company’s long-term debt was $146 million at the end of the third quarter of fiscal 2023, up from $124 million at the end of fiscal 2022.
Outlook
ScanSource expects net sales growth of 6.5% for fiscal 2023. Backed by the performance so far in fiscal 2023, the company has raised its guidance for adjusted EBITDA, which is projected to be $182 million. SCSC had earlier projected adjusted EBITDA of $176 million.
Price Performance
ScanSource's shares have declined 27.1% in the past year against the industry’s 13.2% growth.
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 Industrial Products sector are Worthington Industries, Inc. WOR, AptarGroup, Inc. ATR and OI Glass Inc. OI. WOR and ATR sport a Zacks Rank #1 (Strong Buy) at present, and OI has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Worthington Industries has an average trailing four-quarter earnings surprise of 27.5%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $4.93 per share. The consensus estimate for 2023 earnings has moved north by 17.7% in the past 60 days. Its shares gained 28% in the last year.
AptarGroup has an average trailing four-quarter earnings surprise of 6.4%. The Zacks Consensus Estimate for ATR’s 2023 earnings is pegged at $4.04 per share. The consensus estimate for 2023 earnings has moved 5% north in the past 60 days. ATR’s shares gained 11.5% in the last year.
The Zacks Consensus Estimate for OI Glass’ 2023 earnings per share is pegged at $2.59. The consensus estimate for 2023 earnings rose 0.8% in the last 60 days. OI has a trailing four-quarter average earnings surprise of 16.5%. Its shares soared 51% in the last year.
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