ScanSource CEO Mike Baur Says It's All Going According To Plan On Earnings Night

ScanSource reported Thursday that revenue from its core bar-coding business was down more than 7 percent in its third quarter, but sales from the company's rapidly growing communications and services operations surged by more than 50 percent.

For its fiscal third quarter ended March 31, ScanSource reported sales of $763.2 million, up nearly 12 percent from $683.0 million from the same quarter one year before. But the distributor's net income for the quarter was down almost 24 percent to $12.9 million from $16.9 million one year ago.

"We’ve got a plan to grow our business, and we believe we executed against that very well in the quarter," CEO Mike Baur told CRN in a phone interview.

[Related: Check It Out: ScanSource Prepping Partners For Big Opportunities In Point-Of-Sales Space]

But the results fell short of Wall Street analysts' expectations. Forecasts had put expected revenue for the quarter at $808.1 million, which ScanSource missed by $45 million. The company's earnings per share for the quarter, $0.52, was 4 cents less than what analysts had counted on.

Baur noted during the call with Wall Street analysts that ScanSource's bar-coding business saw significant delays in big deals, causing that division of the company to fall more than 7 percent year-over-year in revenue from $455.8 million to $422.1 million. He said volatility in currency exchange rates caused some delays in bar-coding deals in Europe and in Brazil, but he expects those deals to come through in the June quarter.

"Overall, very solid quarter," Baur said in the interview. "[I] wish we wouldn't have missed some of the big deals in the quarter ... some of the big deals in our bar-code business were light, but we believe we'll pick those up in the June quarter."

The drop in revenue from ScanSource's bar-coding business was more than offset by the growth in its communications and services division, which grew by over 50 percent year-over-year with $341.1 million in revenue, up $227.2 million from last year.

Baur said this was due, in large part, to the recent acquisitions of Brazilian distributor Network1, and European video solutions business Imago, boosting ScanSource's international revenue.

"Our networking and wireless business is just doing fantastic," he told CRN. "We’ve been seeing that growth happen over the last three or four quarters as well. It's very strong. Those products are sold primarily today in our communications segment, but we also sell some of those wireless network electronics in our bar-code and POS segment as well. They're a very strong product segment for ScanSource."

Going forward, Baur said he expects the strong performance of ScanSource's networking and wireless business to continue. He also sees a big opportunity in its recently announced distribution deal with Mitel, and continues to invest in other growth areas such as 3-D printing and chip-and-pin technology in the POS space.

PUBLISHED MAY 1, 2015