ScanSource, Inc. (NASDAQ:SCSC) Q2 2018 Earnings Conference Call - Preliminary Transcript

Feb 06, 2018 • 05:00 pm ET

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ScanSource, Inc. (NASDAQ:SCSC) Q2 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Welcome to the ScanSource Quarterly Earnings Conference Call. All lines have been placed in a listen-only mode until the question-and-answer session. Today' call is being recorded. If anyone has any objections you may disconnect at this time.

I would now like to turn the call over to Mary Gentry, Vice President, Treasurer and Investor Relations. Ma'am, you may begin.

Executive
Mary Gentry

Thank you and welcome to ScanSource's earnings conference call for the quarter ended December 31st, 2017. With me today are Mike Baur, our CEO; and Gerry Lyons, our CFO. We want to welcome Matt Dean, our new General Counsel, who is also joining us on the call. We will review our operating results for the quarter and then take your questions.

We've changed our supplemental financial information this quarter and provided a CFO commentary instead of presentation slides to accompany our comments and webcast. The CFO commentary is posted in the Investor Relations section of our website.

Certain statements made on this call, including our expectations for sales and earnings for our third quarter 2018 will be forward looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to, those factors identified in the earnings release that we put out today and in ScanSource's Form 10-K for the year ended June 30th, 2017, as filed with the SEC.

Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. ScanSource disclaims any duty to update any forward-looking statements to reflect like actual results or changes in expectations, except as required by law.

We will be discussing both GAAP and non-GAAP results during our call and have provided reconciliations between these amounts in the CFO commentary and in our press release. These reconciliations can also be found on our website and have been filed with our Form 8-K.

Mike Baur will now begin our discussion with an overview of our results.

Executive
Mike Baur

Thanks Mary and thank you for joining us today. We reported outstanding results for our second quarter highlighted by record quarterly net sales, 10% organic sales growth, and higher profitability. Both net sales and non-GAAP EPS exceeded the high end of our forecast range, and our quarterly net sales surpassed $1 billion for the first time.

Our net sales for the quarter increased 14% year-over-year, driven by strength in our worldwide barcode security and networking segment, including higher big deals in North America from customers in our federal business and the areas of mobile computing, POS systems, and physical security. The higher big deals include large federal deals that closed during the quarter that we originally expected to close in the September quarter.

Our international business also contributed strong sales growth, up 17% year-over-year, driven by excellent results from our point of sale and barcode customers in Europe and in our Network1 customers winning new business in cybersecurity