ScanSource Q4 Adj Profit Tops Estimate, Guides Q1 EPS Below View

(RTTNews) - Specialty technology products distributor ScanSource, Inc. (SCSC) reported Thursday a profit for the fourth quarter compared to a loss last year, which was weighed down by hefty impairment charges. Adjusted earnings per share topped analysts' expectations by a penny. The company also provided earnings forecast for the first quarter, below Street view.

The Greenville, South Carolina-based company reported net income of $27.11 million or $0.94 per share for the fourth quarter, compared to a net loss of $13.32 million or $0.48 per share in the prior-year quarter.

Results for the latest quarter include $0.34 per share of legal recovery relating to a previously disclosed ERP litigation, net of attorney fees, while the year-ago quarter included $0.65 per share of non-cash impairment charges related to former Microsoft Dynamics AX ERP software project and $0.54 per share of goodwill impairment.

Excluding items, adjusted net income for the quarter was $17.35 million or $0.60 per share, compared to $19.90 million or $0.71 per share in the year-ago quarter.

On average, three analysts polled by Thomson Reuters expected the company to report earnings of $0.59 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 6.4 percent to $758.11 million from $712.68 million in the same quarter last year. Wall Street analysts had a consensus revenue estimate of $740.03 million for the quarter. Excluding foreign exchange impact, sales grew 6.1 percent.

Worldwide barcode & security net sales grew 10.3 percent to $490.51 million, while worldwide communications & services net sales edged down 0.1 percent to $267.61 million from the year-ago quarter.

Net sales in North America (U.S. and Canada) grew 7.5 percent to $577.69 million, and international net sales increased 3.0 percent to $180.43 million in the prior-year quarter.

The company also announced a $120 million authorization by its Board of Directors to repurchase shares of common stock over three years.

Looking ahead to the first quarter of fiscal 2015, ScanSource expects adjusted earnings in a range of $0.59 to $0.61 per share, on projected net sales between $750 million and $770 million. Street is currently looking for earnings of $0.66 per share for the first quarter on revenues of $756.99 million.

Separately, ScanSource agreed to acquire Imago Group plc, Europe's leading value-added distributor of video and voice communications equipment and services, in an-all cash deal valued at about 24.5 million British Pounds or $41 million, plus earnout payments over the next two years. The deal will see ScanSource acquiring Imago's operations in the U.K., France, and their recently acquired business in Germany.

Upon closure of the deal, ScanSource is expected to operate Imago as a separate business unit as part of the ScanSource video, voice and data strategy in Europe.

The deal is currently expected to be accretive to earnings per share and ROIC in the first year after closing, excluding one-time acquisition costs. The proposed deal is expected to close by September 30, 2014.

SCSC closed Thursday's regular trading session at $39.26, up $0.97 or 2.53% on a volume of 91,384 shares.