ScanSource(US:SCSC)2021-08-24 20:16Financial Performance - Net sales for the fiscal year ended June 30, 2021, totaled $3.15 billion[16] - Net sales for the fiscal year ended June 30, 2021, were $3,150.8 million, an increase from $3,047.7 million in 2020[151] - Total net sales for the fiscal year ended June 30, 2021, were reported at $3,150,806 thousand, representing a 3.4% increase from $3,047,734 thousand in 2020[206] - Gross profit for the fiscal year 2021 was $350.7 million, compared to $355.6 million in 2020, reflecting a decrease of approximately 0.2%[151] - Operating income for 2021 was $61.5 million, a significant recovery from an operating loss of $65.0 million in 2020[151] - Net income for the fiscal year 2021 was $10.8 million, a turnaround from a net loss of $192.7 million in 2020[151] - Total assets as of June 30, 2021, were $1,671.7 million, a slight decrease from $1,692.1 million in 2020[152] - Total debt decreased to $143.2 million in 2021 from $218.7 million in 2020, indicating improved financial leverage[152] - Operating income for the consolidated entity was $61,483 thousand, a significant recovery from a loss of $64,967 thousand in the previous year[210] - Diluted EPS from continuing operations for the fiscal year ended June 30, 2021, was $2.74, compared to a diluted loss per share of $3.12 in the previous year, reflecting a strong turnaround[211] Sales and Market Presence - The company serves approximately 30,000 sales partners across various industries, with no single customer accounting for more than 6% of total net sales[27] - The company serves approximately 30,000 customers across the United States, Canada, Brazil, and the UK, providing solutions from around 500 technology suppliers[154] - Cisco and Zebra each constituted more than 10% of net sales for the fiscal year ended June 30, 2021[36] - The Worldwide Barcode, Networking & Security segment reported net sales of $2,175.1 million, up 3.9% from $2,093.2 million in the previous year[174] - The Worldwide Communications & Services segment saw net sales increase by 2.2% to $975.7 million from $954.5 million in 2020[175] Strategic Focus and Growth - The company aims to grow profitable sales in higher-margin and adjacent markets, considering strategic acquisitions and alliances[20] - The company’s growth strategy includes acquisitions, which involve risks such as unexpected costs and the challenge of integrating new businesses effectively[84] - The company completed the divestiture of its operations in Latin America (excluding Brazil) and distribution operations in Europe, aiming to focus on higher-margin opportunities in the U.S., Canada, and Brazil for long-term value creation[77] - The company finalized the sale of its Latin American businesses outside of Brazil on October 30, 2020, and the sale of its Europe and UK products distribution businesses on November 12, 2020[164] Employee and Operational Insights - The company employs approximately 2,200 employees, with 1,500 located in the United States and 700 internationally[47] - The company focuses on employee development through programs like the ScanSource Leadership Institute, which trains selected leaders for senior management roles[50] - The company has implemented a comprehensive Diversity & Inclusion (D&I) program, appointing its first Chief Diversity Officer to enhance workforce representation and community relations[48] - The company offers an average of 80% coverage of employee healthcare premiums and provides various benefits at no cost, including life and disability insurance[51] - The company has adopted a work-from-home policy during the COVID-19 pandemic, maintaining high productivity levels among its largely remote workforce[52] Risks and Challenges - The COVID-19 pandemic has significantly impacted the business, with net sales declines most pronounced in Q4 FY 2020, although recovery was noted throughout FY 2021[78] - The company faces heightened credit risk due to longer payment terms extended to customers, which may increase credit losses, particularly as customers experience negative economic impacts from COVID-19[88][91] - Economic weakness and geopolitical uncertainty may lead to reduced demand for products, resulting in decreased sales, margins, and earnings, potentially impairing assets and increasing financing costs[86] - Customer consolidation may lead to changes in relationships and could negatively impact revenues, especially if major customers shutter their businesses due to economic impacts from COVID-19[99] - Product supply shortages, particularly in computer chips, may adversely affect sales volumes and product availability[105] - Supplier consolidation is reducing alternative sources, increasing vulnerability to supply issues and affecting business relationships[106] Financial Management and Accounting - Interest expense decreased by 43.3% to $6.9 million for the fiscal year ended June 30, 2021, down from $12.2 million in 2020, primarily due to reduced borrowings[191] - Income tax expense for continuing operations was $12.1 million for the fiscal year ended June 30, 2021, with an effective tax rate of 21.1%, compared to $7.5 million and an effective tax rate of (10.4)% in 2020[194] - The expected effective tax rate for fiscal year 2022 is projected to be approximately 25.0% to 26.0%[195] - The company reported a pre-tax income of $89.2 million for the fiscal year ended June 30, 2021, compared to a pre-tax loss of $71.8 million in the previous year[211] - Management's estimates for allowances for uncollectible accounts receivable and inventory reserves are based on historical experience and reasonable assumptions[213]