ScanSource, Inc. SCSC reported adjusted earnings of 85 cents per share in second-quarter fiscal 2024 (ended Dec 31, 2023), missing the Zacks Consensus Estimate of 99 cents. The bottom line declined 20% from the year-ago quarter’s earnings of $1.06 per share. Results were impacted by soft demand in barcode, mobility and point of sale as well as lower sales volumes in communications hardware.

On a reported basis, the company delivered earnings of $1.29 per share compared with the year-ago quarter’s earnings of $1.01 per share.

The company reported net sales of $885 million in the reported quarter, down 12.5% from the year-ago quarter’s levels. The top line missed the Zacks Consensus Estimate of $953 million.

Net sales in the United States and Canada were down 12.5% year over year to $795 million. International sales declined 17% to $82.6 million.

ScanSource, Inc. Price, Consensus and EPS Surprise

 

ScanSource, Inc. price-consensus-eps-surprise-chart | ScanSource, Inc. Quote

 

Specialty Technology Solutions’ revenues fell 17% to $521 million in second-quarter fiscal 2024, as weak demand in barcode, mobility and point of sale was partially offset by growth in networking.

Sales at Modern Communications & Cloud dipped 5% year over year to $364 million in the reported quarter. Low sales volumes in communications hardware were partially offset by growth in Cisco products. Intelisys net sales for the second quarter, however, increased 7.5%.

Operational Update

The cost of sales amounted to $784 million in the fiscal second quarter, down 12.5% from the year-ago quarter’s levels. The gross profit totaled $100.7 million, down 13% from the year-ago quarter’s $115.3 million. The gross margin was 11.4% during the reported quarter, flat compared with the second quarter of fiscal 2024.

Selling, general and administrative expenses decreased 3% year over year to $67 million. The adjusted operating profit was $30.6 million in the quarter under review in comparison with the year-ago quarter’s $40.7 million. The adjusted operating margin was 3.5% compared with 4.0% reported in the year-ago quarter.

Adjusted EBITDA was down 21% year over year to $38 million. Adjusted EBITDA margin was 4.3% in the quarter under discussion compared with 4.8% in the year-ago quarter.

Cash Position & Balance Sheet

The company reported cash and cash equivalents of $45 million as of Dec 31, 2023, in comparison with $36 million as of Jun 30, 2023. The company generated around $157 million in cash from operating activities in the first half of fiscal 2024 against a usage of $75 million in the year-ago comparable period. The company’s long-term debt was $140 million as of Dec 31, 2023, down from $144 million as of Jun 30, 2023.