ScanSource, Inc. (SCSC) has reported an 11.52 percent rise in profit for the quarter ended Dec. 31, 2016. The company has earned $23.04 million, or $0.91 a share in the quarter, compared with $20.66 million, or $0.77 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $19.06 million, or $0.75 a share compared with $23.69 million or $0.88 a share, a year ago.
Revenue during the quarter dropped 8.93 percent to $904.79 million from $993.52 million in the previous year period. Gross margin for the quarter expanded 76 basis points over the previous year period to 10.89 percent. Total expenses were 97.43 percent of quarterly revenues, up from 96.79 percent for the same period last year. That has resulted in a contraction of 63 basis points in operating margin to 2.57 percent.
Operating income for the quarter was $23.28 million, compared with $31.85 million in the previous year period.
However, the adjusted operating income for the quarter stood at $29.57 million compared to $36.27 million in the prior year period. At the same time, adjusted operating margin contracted 38 basis points in the quarter to 3.27 percent from 3.65 percent in the last year period.
"We are pleased to deliver strong bottom-line results, despite top-line growth challenges," said Mike Baur, chief executive officer, ScanSource, Inc. "Our core business achieved better than expected profitability from higher gross margins. In addition, the recurring revenues and higher margins from our successful Intelisys acquisition led to these strong results."
For the third-quarter, ScanSource, Inc. forecasts revenue to be in the range of $800 million to $860 million. It expects diluted earnings per share to be in the range of $0.42 to $0.49. It expects diluted earnings per share to be in the range of $0.62 to $0.69 on an adjusted basis, for the same period.
Working capital declines
ScanSource, Inc. has witnessed a decline in the working capital over the last year. It stood at $621.37 million as at Dec. 31, 2016, down 9.60 percent or $66.01 million from $687.38 million on Dec. 31, 2015. Current ratio was at 1.99 as on Dec. 31, 2016, down from 2.10 on Dec. 31, 2015.
Cash conversion cycle (CCC) has decreased to 34 days for the quarter from 63 days for the last year period. Days sales outstanding went up to 61 days for the quarter compared with 54 days for the same period last year.
Days inventory outstanding has decreased to 29 days for the quarter compared with 61 days for the previous year period. At the same time, days payable outstanding went up to 57 days for the quarter from 53 for the same period last year.
Debt moves up
ScanSource, Inc. has witnessed an increase in total debt over the last one year. It stood at $141.67 million as on Dec. 31, 2016, up 23.06 percent or $26.54 million from $115.12 million on Dec. 31, 2015. Total debt was 8.43 percent of total assets as on Dec. 31, 2016, compared with 7.43 percent on Dec. 31, 2015. Debt to equity ratio was at 0.18 as on Dec. 31, 2016, up from 0.15 as on Dec. 31, 2015. Interest coverage ratio deteriorated to 25.52 for the quarter from 44.93 for the same period last year.
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