CLEARWATER, Fla., Nov. 27, 2017 /PRNewswire/ -- Tech Data (NASDAQ: TECD) (the "Company") today announced its financial results for the third quarter ended October 31, 2017.


 Third quarter ended October 31,

Nine months ended October 31,

($ in millions,
except per share amounts)

2017

2016

Y/Y
Change

2017

2016

Y/Y
Change

Net Sales

$9,135.7

$6,490.3

41%

$25,682.5

$18,807.4

37%








Operating income (GAAP)

$79.6

$62.9

27%

$258.2

$188.8

37%

Operating margin (GAAP)

0.87%

0.97%

-10 bps

1.01%

1.00%

1 bps








Operating income (Non-GAAP)

$135.7

$81.1

67%

$386.8

$216.8

78%

Operating margin (Non-GAAP)

1.49%

1.25%

24 bps

1.51%

1.15%

36 bps








Net income (GAAP)

$37.3

$36.5

2%

$115.4

$116.3

-1%

Net income (Non-GAAP)

$76.7

$50.9

51%

$213.5

$138.2

54%








EPS - diluted (GAAP)

$0.97

$1.03

-6%

$3.03

$3.29

-8%

EPS - diluted (Non-GAAP)

$2.00

$1.44

39%

$5.60

$3.91

43%


A reconciliation of GAAP to non-GAAP financial measures is presented in the financial tables of this press release.

This information is also available on the Investor Relations section of Tech Data's website at www.techdata.com/investor.

 

Financial Highlights for the Third Quarter Ended October 31, 2017:

  • Net sales were $9.1 billion, an increase of 41 percent compared to the prior-year quarter. The increase in net sales is primarily due to the addition of the Technology Solutions business acquired from Avnet, Inc. on February 27, 2017 ("Technology Solutions"). On a constant currency basis, net sales increased 37 percent.
    • Americas: Net sales were $4.0 billion (44 percent of worldwide net sales), an increase of 53 percent compared to the prior-year quarter. The increase in net sales is primarily attributed to the addition of Technology Solutions. On a constant currency basis, net sales increased 52 percent.  
    • Europe: Net sales were $4.8 billion (53 percent of worldwide net sales), an increase of 25 percent compared to the prior-year quarter. The increase in net sales is primarily attributed to the addition of Technology Solutions. On a constant currency basis, net sales increased 19 percent.
    • Asia Pacific: Net sales were $0.3 billion (3 percent of worldwide net sales). Asia Pacific net sales are attributed to the addition of Technology Solutions.
  • Gross profit was $526.1 million, an increase of $210.2 million, or 67 percent compared to the prior-year quarter. As a percentage of net sales, gross profit was 5.76 percent compared to 4.87 percent in the prior-year quarter. The increase in gross profit and gross margin percentage is primarily attributable to the addition of Technology Solutions.  
  • Selling, general and administrative expenses ("SG&A") were $416.8 million, or 4.56 percent of net sales, compared to $240.0 million, or 3.70 percent of net sales in the prior-year quarter. Non-GAAP SG&A was $390.4 million, an increase of $155.7 million, or 66 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP SG&A was 4.27 percent, compared to 3.62 percent in the prior-year quarter. The increase in both dollars and percentage of net sales, on a GAAP and non-GAAP basis, is primarily attributable to the addition of Technology Solutions.
  • Worldwide operating income was $79.6 million, or 0.87 percent of net sales compared to $62.9 million or 0.97 percent of net sales in the prior-year quarter. Non-GAAP operating income was $135.7 million, an increase of $54.6 million, or 67 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP operating income was 1.49 percent, an improvement of 24 basis points over the prior-year quarter.
    • Americas: Operating income was $55.6 million, or 1.39 percent of net sales, compared to $32.4 million, or 1.24 percent of net sales in the prior-year quarter. Non-GAAP operating income was $85.5 million, an increase of $43.1 million, or 101 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP operating income was 2.14 percent, an improvement of 52 basis points over the prior-year quarter.
    • Europe: Operating income was $29.9 million, or 0.62 percent of net sales, compared to $34.0 million, or 0.88 percent of net sales in the prior-year quarter. Non-GAAP operating income was $53.4 million, an increase of $11.2 million, or 26 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP operating income was 1.10 percent compared to 1.09 percent in the prior-year quarter.
    • Asia Pacific: Operating income was $2.4 million, or 0.82 percent of net sales. Non-GAAP operating income was $3.9 million, or 1.32 percent of net sales.
    • Stock-based compensation expense was $8.3 million, an increase of $4.8 million, compared to the prior-year quarter. This includes $1.2 million of acquisition and integration-related stock compensation expense. These expenses are excluded from the regional operating results and presented as a separate line item in the company's segment reporting (see the GAAP to non-GAAP reconciliation in the financial tables of this press release).
  • Net income was $37.3 million, compared to $36.5 million in the prior-year quarter. Non-GAAP net income was $76.7 million, an increase of $25.8 million, or 51 percent, compared to the prior-year quarter.
  • Earnings per share on a diluted basis ("EPS") were $0.97, compared to $1.03 in the prior year quarter. Non-GAAP EPS was $2.00, an increase of $0.56, or 39 percent compared to the prior-year quarter.
  • Net cash generated by operations during the quarter was $70 million.
  • Return on invested capital for the trailing twelve months was 9 percent, compared to 13 percent in the prior year period. The adjusted return on invested capital for the trailing twelve months was 12 percent, compared to 14 percent in the prior year period.

"We are pleased to report Q3 results that were in line with our expectations and that continue to highlight the enhanced earnings power and cash flow profile of the new Tech Data," said Robert M. Dutkowsky, chairman and chief executive officer. "For the first time in Tech Data's history, quarterly sales surpassed $9 billion, and through pricing discipline and strong cost controls, we delivered solid non-GAAP earnings per share. In addition, we generated $70 million of cash from operations, paid down $350 million of our debt, reflecting our strong commitment to deleverage the company, and earned an adjusted return on invested capital for the trailing twelve-month period well in excess of our weighted average cost of capital. We continue on our path to building the IT distributor of the future, one with breadth, specialized skills and extensive capabilities to help our customers and vendor partners capitalize on growth opportunities across the computing continuum."

Business Outlook

  • For the quarter ending January 31, 2018, the Company anticipates worldwide net sales to be in the range of $10.25 billion to $10.80 billion.
  • For the quarter ending January 31, 2018, the Company anticipates EPS to be in the range of $2.39 to $2.69 and non-GAAP EPS to be in the range of $3.35 to $3.65.
  • This guidance assumes weighted average diluted shares outstanding of 38.5 million and an effective tax rate in the range of 29 percent to 31 percent.
  • This guidance also assumes an average U.S. dollar to euro exchange rate of $1.18 to €1.00.

Webcast Details

Tech Data will hold a conference call today at 5:00 p.m. (ET) to discuss its financial results for the third quarter ended October 31, 2017. A webcast of the call, including supplemental schedules, will be available to all interested parties and can be obtained at www.techdata.com/investor. The webcast will be available for replay for three months.

Non-GAAP Financial Information

The non-GAAP financial information contained in this release is included with the intention of providing investors a more complete understanding of the Company's operational results and trends, but should only be used in conjunction with results reported in accordance with Generally Accepted Accounting Principles ("GAAP"). Certain non-GAAP measures presented in this release or other releases, presentations and similar documents issued by the Company include sales, income or expense items as adjusted for the impact of changes in foreign currencies (referred to as "constant currency"), non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP earnings per diluted share and Adjusted Return on Invested Capital. Certain non-GAAP measures also exclude acquisition-related intangible assets amortization expense, benefits associated with legal settlements, acquisition, integration and restructuring  expenses, value-added tax assessments and acquisition-related financing expenses. A detailed reconciliation of the adjustments between results calculated using GAAP and non-GAAP in this release is contained in the attached financial schedules. This information can also be obtained from the Company's Investor Relations website at www.techdata.com/investor.

Forward-Looking Statements 

Certain statements in this communication may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements, including statements regarding Tech Data's plans, objectives, expectations and intentions, which may relate to the Technology Solutions business, Tech Data's financial results and estimates and/or business prospects, involve a number of risks and uncertainties and actual results could differ materially from those projected. These forward looking statements are based on current expectations, estimates, forecasts, and projections about the operating environment, economies and markets in which Tech Data operates and the beliefs and assumptions of our management. Words such as "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," variations of such words, and similar expressions are intended to identify such forward looking statements. In addition, any statements that refer to projections of Tech Data's future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances, are forward looking statements. These forward looking statements are only predictions and are subject to risks, uncertainties, and assumptions. Therefore, actual results may differ materially and adversely from those expressed in any forward looking statements.

For additional information with respect to risks and other factors which could occur, see Tech Data's Annual Report on Form 10-K for the year ended January 31, 2017, including Part I, Item 1A, "Risk Factors" therein, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other securities filings with the Securities and Exchange Commission (the "SEC") that are available at the SEC's website at www.sec.gov and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Many of these factors are beyond Tech Data's control. Unless otherwise required by applicable securities laws, Tech Data disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Tech Data undertakes no duty to update any forward looking statements contained herein to reflect actual results or changes in Tech Data's expectations.

About Tech Data  

Tech Data connects the world with the power of technology. Our end-to-end portfolio of products, services and solutions, highly specialized skills, and expertise in next-generation technologies enable channel partners to bring to market the products and solutions the world needs to connect, grow and advance. Tech Data is ranked No. 107 on the Fortune 500® and has been named one of Fortune's World's Most Admired Companies for eight straight years. To find out more, visit www.techdata.com or follow us on TwitterLinkedIn, and Facebook.

Contacts:

Charles V. Dannewitz, Executive Vice President,Chief Financial Officer
727-532-8028 (chuck.dannewitz@techdata.com)

Arleen Quiñones, Corporate Vice President, Investor Relations and Corporate Communications
727-532-8866 (arleen.quinones@techdata.com

 

TECH DATA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)





Three months ended


Nine months ended

October 31,


October 31,


2017


2016


2017


2016









Net sales

$9,135,728


$6,490,265


$25,682,482


$18,807,366

Cost of products sold

8,609,647


6,174,426


24,183,722


17,876,466

Gross profit

526,081


315,839


1,498,760


930,900

Operating expenses:








Selling, general and administrative expenses

416,766


239,952


1,179,996


730,211

Acquisition, integration and restructuring expenses

29,748


13,015


101,931


14,997

LCD settlements and other, net

-


-


(41,343)


(4,142)

Value added tax assessments

-


-


-


1,049


446,514


252,967


1,240,584


742,115

Operating income 

79,567


62,872


258,176


188,785

Interest expense 

25,925


9,475


85,205


21,364

Other (income) expense, net 

(1,243)


1,747


(1,374)


(517)

Income before income taxes

54,885


51,650


174,345


167,938

Provision for income taxes

17,617


15,144


58,964


51,665

Net income

$      37,268


$      36,506


$      115,381


$      116,273









Earnings per share:








   Basic

$           0.98


$           1.04


$             3.05


$             3.30

   Diluted

$           0.97


$           1.03


$             3.03


$             3.29

Weighted average common shares outstanding:








   Basic

38,186


35,218


37,877


35,184

   Diluted

38,433


35,449


38,105


35,393

 

 

TECH DATA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(In thousands, except par value and share amounts)





October 31,


January 31,


2017


2017

ASSETS

(unaudited)



Current assets:




Cash and cash equivalents

$         562,645


$      2,125,591

Accounts receivable, net

4,816,963


3,047,927

Inventories

2,862,199


2,118,902

Prepaid expenses and other assets

237,873


119,906

Total current assets

8,479,680


7,412,326

Property and equipment, net

273,568


74,239

Goodwill

842,223


199,021

Intangible assets, net

1,117,025


130,676

Other assets, net

247,357


115,604

    Total assets

$    10,959,853


$      7,931,866





LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable

$      5,464,759


$      3,844,532

Accrued expenses and other liabilities

706,319


493,199

Revolving credit loans and current maturities of long-term debt, net

113,422


373,123

Total current liabilities

6,284,500


4,710,854

Long-term debt, less current maturities

1,806,456


989,924

Other long-term liabilities

145,074


61,200

Total liabilities

$      8,236,030


$      5,761,978

Shareholders' equity:




Common stock, par value $0.0015; 200,000,000 shares authorized; 59,245,585
shares issued at October 31, 2017 and January 31, 2017

$                  89


$                  89

Additional paid-in capital

819,157


686,042

Treasury stock, at cost (21,092,348 and 24,018,983 shares at  October 31,
2017 and January 31, 2017)

(940,497)


(1,070,994)

Retained earnings

2,744,674


2,629,293

Accumulated other comprehensive income (loss)

100,400


(74,542)

      Total shareholders' equity

2,723,823


2,169,888

      Total liabilities and shareholders' equity

$    10,959,853


$      7,931,866

 

 

TECH DATA CORPORATION AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

(In thousands)





 Three months ended October 31, 2017


 Americas[1]


 Europe[1]


 APAC[1]


 Stock
Compensation
Expense


 Consolidated

Net Sales

$   3,997,159


$ 4,841,961


$    296,608




$     9,135,728

GAAP operating income[1]

$        55,551


$      29,909


$        2,432


$            (8,325)


$          79,567

Acquisition, integration and
restructuring expenses

14,149


14,128


287


1,184


29,748

Acquisition-related intangible
assets amortization expense

15,816


9,362


1,207




26,385

Total non-GAAP operating income
adjustments

$        29,965


$      23,490


$        1,494


$              1,184


$          56,133

Non-GAAP operating income

$        85,516


$      53,399


$        3,926


$            (7,141)


$        135,700

GAAP operating margin

1.39%


0.62%


0.82%




0.87%

Non-GAAP operating margin

2.14%


1.10%


1.32%




1.49%

[1]   GAAP operating income does not include stock compensation expense at the regional level.

 

 


Three months ended October 31, 2016


 Americas[1]


 Europe[1]


 Stock
Compensation
Expense


 Consolidated

Net Sales

$   2,614,347


$ 3,875,918




$     6,490,265

GAAP operating income[1]

$        32,414


$      34,008


$            (3,550)


$          62,872

Acquisition, integration and
restructuring expenses

9,456


3,559




13,015

Acquisition-related intangible assets
amortization expense

580


4,663




5,243

Total non-GAAP operating income
adjustments

$        10,036


$        8,222




$          18,258

Non-GAAP operating income

$        42,450


$      42,230


$            (3,550)


$          81,130

GAAP operating margin

1.24%


0.88%




0.97%

Non-GAAP operating margin

1.62%


1.09%




1.25%

[1]   GAAP operating income does not include stock compensation expense at the regional level.

 

 

TECH DATA CORPORATION AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

(In thousands)





Nine months ended October 31, 2017


Americas[1]


Europe[1]


APAC[1]


Stock
Compensation
Expense


Consolidated

Net Sales

$ 11,658,471


$ 13,250,935


$    773,076




$   25,682,482

GAAP operating income[1]

$      194,426


$        73,172


$      11,795


$          (21,217)


$        258,176

LCD settlements and other, net

(42,659)


1,316


-




(41,343)

Acquisition, integration and
restructuring expenses

58,573


40,385


431


2,542


101,931

Acquisition-related intangible
assets amortization expense

38,330


26,075


3,584




67,989

Total non-GAAP operating income
adjustments

$        54,244


$        67,776


$        4,015


$              2,542


$        128,577

Non-GAAP operating income

$      248,670


$      140,948


$      15,810


$          (18,675)


$        386,753

GAAP operating margin

1.67%


0.55%


1.53%




1.01%

Non-GAAP operating margin

2.13%


1.06%


2.05%




1.51%

[1]   GAAP operating income does not include stock compensation expense at the regional level.

 

 


Nine months ended October 31, 2016


Americas[1]


Europe[1]


Stock
Compensation
Expense


Consolidated

Net Sales

$     7,677,237


$      11,130,129




$   18,807,366

GAAP operating income[1]

$        104,930


$             94,875


$           (11,020)


$        188,785

Value added tax assessments

(407)


1,456




1,049

Acquisition, integration and
restructuring expenses

10,502


4,495




14,997

Acquisition-related intangible
assets amortization expense

1,740


14,356




16,096

LCD settlements and other, net

(4,142)


-




(4,142)

Total non-GAAP operating income
adjustments

$            7,693


$             20,307




$          28,000

Non-GAAP operating income

$        112,623


$           115,182


$           (11,020)


$        216,785

GAAP operating margin

1.37%


0.85%




1.00%

Non-GAAP operating margin

1.47%


1.03%




1.15%

[1]   GAAP operating income does not include stock compensation expense at the regional level.

 

 

Selling, general and administrative expenses ("SG&A")

Three months ended October 31,

2017


2016

Net Sales

$           9,135,728


$           6,490,265

GAAP SG&A

416,766


239,952

Acquisition-related intangible assets amortization expense

(26,385)


(5,243)

Non-GAAP SG&A

$              390,381


$              234,709





GAAP SG&A percentage of net sales

4.56%


3.70%

Non- GAAP SG&A percentage of net sales

4.27%


3.62%










Nine months ended October 31,


2017


2016

Net Sales

$        25,682,482


$        18,807,366

GAAP SG&A

1,179,996


730,211

Acquisition-related intangible assets amortization expense

(67,989)


(16,096)

Non-GAAP SG&A

$           1,112,007


$              714,115





GAAP SG&A percentage of net sales

4.59%


3.88%

Non- GAAP SG&A percentage of net sales

4.33%


3.80%

 

 


Three months ended October 31,


2017


2016


Net Income

Diluted EPS


Net Income

Diluted EPS

GAAP Results

$37,268

$0.97


$36,506

$1.03

Acquisition, integration and restructuring
expenses

29,748

0.77


13,015

0.37

Acquisition-related intangible assets
amortization expense

26,385

0.69


5,243

0.15

Acquisition-related financing expenses

-

-


3,414

0.10

Income tax effect of the above adjustments

(16,652)

(0.43)


(7,277)

(0.21)

Non-GAAP results

$76,749

$2.00


$50,901

$1.44








Nine months ended October 31,


2017


2016


Net Income

Diluted EPS


Net Income

Diluted EPS

GAAP Results

$115,381

$3.03


$116,273

$3.29

LCD settlements and other, net

(41,020)

(1.08)


(4,142)

(0.12)

Value added tax assessments

-

-


1,386

0.04

Acquisition, integration and restructuring
expenses

101,931

2.68


14,997

0.42

Acquisition-related intangible assets
amortization expense

67,989

1.78


16,096

0.45

Acquisition-related financing expenses

8,807

0.23


3,414

0.10

Income tax effect of the above adjustments

(39,548)

(1.04)


(9,788)

(0.27)

Non-GAAP results

$213,540

$5.60


$138,236

$3.91

 

 

Return on Invested Capital (ROIC)



Twelve months ended October 31,

TTM Net Operating Profit After Tax (NOPAT)*:

2017


2016

Operating income

$                 361,293


$              333,987

Income taxes on operating income[1]

(94,679)


(100,045)

NOPAT 

$                 266,614


$              233,942





Average Invested Capital:




Short-term debt (5-qtr average)

$                 360,705


$                86,220

Long-term debt (5-qtr average)

1,279,729


278,970

Shareholders' Equity (5-qtr average)

2,439,925


2,061,796

Total average capital

4,080,359


2,426,986

Less: Cash (5-qtr average)

(1,054,922)


(666,295)

Average invested capital less average cash

$              3,025,437


$          1,760,691

ROIC 

9%


13%





* Trailing Twelve Months is abbreviated as TTM.




[1] Income taxes on operating income was calculated using the trailing 12 months effective tax rate during the respective periods. 

 

 

Adjusted Return on Invested Capital (ROIC)



Twelve months ended October 31,

TTM Net Operating Profit After Tax (NOPAT), as adjusted *:

2017


2016

Non-GAAP operating income[1]

$                 508,902


$              333,593

Income taxes on non-GAAP operating income[2]

(151,859)


(95,174)

NOPAT, as adjusted

$                 357,043


$              238,419





Average Invested Capital, as adjusted:




Short-term debt (5-qtr average)

$                 360,705


$                86,220

Long-term debt (5-qtr average)

1,279,729


278,970

Shareholders' Equity (5-qtr average)

2,439,925


2,061,796

Tax effected impact of non-GAAP adjustments[3]

50,441


(13,338)

Total average capital, as adjusted

4,130,800


2,413,648

Less: Cash (5-qtr average)

(1,054,922)


(666,295)

Average invested capital less average cash

$              3,075,878


$          1,747,353

Adjusted ROIC 

12%


14%


* Trailing Twelve Months is abbreviated as TTM.

[1] Represents operating income as adjusted to exclude acquisition, integration and restructuring expenses, LCD settlements and other, net, value added tax assessments and acquisition-related intangible assets amortization expense


[2] Income taxes on non-GAAP operating income was calculated using the trailing 12 months effective tax rate adjusted for the impact of non-GAAP adjustments during the respective periods.


[3] Represents the 5 quarter average of the year-to-date impact of non-GAAP adjustments.

 

 

Guidance Reconciliation



Three months ended January 31, 2018


Low end of
guidance range


High end of
guidance range

Earnings per share - diluted 

$2.39


$2.69

Acquisition, integration and restructuring expenses

0.84


0.84

Acquisition-related intangible assets amortization expense

0.61


0.61

Income tax effect of the above adjustments

(0.49)


(0.49)

Non-GAAP earnings per share - diluted 

$3.35


$3.65

 

 

 

 

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SOURCE Tech Data Corporation


Source: Tech Data Corporation