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ScanSource CEO Discusses F4Q2010 Results - Earnings Call Transcript

This afternoon the company released results for fourth quarter and full year period ended June 30, 2010. I will start our discussion by providing overall sales and operating results for the fourth quarter. Later in the call, Mike will comment specifically on the quarterly results and outlook for each of our business units.

For the quarter ended June 30, 2010 the company generated worldwide net sales of $582.3 million, which represents a 32% increase in sales over the comparative prior year quarter, and a 17% increase over the quarter ended March 31, 2010. Included in the quarter’s sales results are revenues from ScanSource Communications Germany, formerly known as Algol Europe, which was acquired November 30, 2009.

Our net sales for the quarter hit a new record for the company and as well exceeded our expectations as we experienced good demand in all geographies. In fact, even without the revenue of ScanSource Communications Germany, the company still would have achieved record quarterly revenues.

On a geographic basis, sales originating from our North American distribution segment increased 28% in comparison with the prior year quarter. Our international segment grew 49% and when measured in local currency grew 62%.

Within our product lines, we experienced a 30% increase in worldwide sales in our POS bar coding and security product categories over the prior year quarter. These product categories represent 60% of our total sales for the current quarter with the remaining 40% of our total sales originating from communications products. Our communications businesses experienced an increase of 35% in comparison to the prior year quarter.

The company’s consolidated gross margin percentage was 9.8% for the quarter ended June 30, 2010, which was lower than the prior year quarter gross margin of 12.1%. We noted last year that a more normalized margin would have been 10.8%. Sequentially, gross margin decreased from the previously reported 11% primarily due to more big deals in the higher mix of lower margin products lines.

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