ScanSource Notches Record Sales On Eve Of Electronic Payment Liability Shift

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ScanSource recorded its highest-ever quarter of revenue, thanks to overwhelming interest in its payment-processing hardware, networking and wireless offerings.

The Greenville, S.C.-based distributor said sales for the quarter ended June 30 increased 18 percent, to $856.7 million, after factoring out changes in foreign-currency exchange rates. This clobbered Seeking Alpha projections of $822.1 million.

Non-GAAP earnings climbed 5 percent, from $18.2 million last year to $19 million this year, or 66 cents per share, besting Seeking Alpha estimates of 58 cents per share.

[Related: ScanSource To Buy $225M Cisco Videoconferencing Distributor]

"We executed our plan to grow our business very well," ScanSource CEO Mike Baur said during the earnings call Thursday.

Roughly half of ScanSource's sales growth can be attributed to its August 2014 acquisitions of Brazilian distributor Network1 and U.K.-based voice, video and data company Imago Group, the distributor reported.

But even after excluding those acquisitions, ScanSource posted organic sales growth of 9.2 percent on a constant currency basis, fueled by high demand for payment terminals, physical security and networking products.

Bar-code and physical security revenue climbed 7 percent on a constant currency basis, to $490 million, with sales of payment-processing hardware more than doubling from this time last year.

As of Oct. 15, end-user businesses -- rather than credit card issuers -- will be held responsible for any fraud that results from credit or debit transactions on systems that do not use chip and PIN EMV (EuroPay, MasterCard and Visa) technology.

And the switch to EMV-compliant terminals is still in its infancy, with Baur telling CRN that many small retailers ultimately won't end up migrating until summer or fall 2016.

ScanSource's physical security business delivered 11 percent sales growth on a constant currency basis off the strength of its wireless and network assessments practices. The distributor also bolstered this division by launching a cabling and connectivity practice in May.

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