August 25, 2016

Tech Data Corporation Reports Second Quarter Fiscal Year 2017 Results

CLEARWATER, Fla., Aug. 25, 2016 (GLOBE NEWSWIRE) -- Tech Data Corporation (NASDAQ:TECD) (the "Company") today announced its financial results for the second quarter ended July 31, 2016.

  Second quarter ended July 31,Six months ended July 31,
($ in millions,
except per share amounts)
 2016  2015  2016  2015 
Net Sales$6,353.7 $6,580.4 $12,317.1 $12,467.6 
     
Operating income (GAAP)$73.4 $106.2 $125.9 $188.2 
Operating margin (GAAP) 1.15% 1.61% 1.02% 1.51%
     
Operating income (Non-GAAP)  $78.1 $81.2 $135.7 $131.4 
Operating margin (Non-GAAP) 1.23% 1.23% 1.10% 1.05%
     
Net income (GAAP)$46.4 $76.4 $79.8 $127.7 
Net income (Non-GAAP)$50.3 $52.5 $87.3 $82.1 
     
EPS - diluted (GAAP)$1.31 $2.09 $2.26 $3.47 
EPS - diluted (Non-GAAP)$1.42 $1.43 $2.47 $2.23 

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 Second Quarter Ended July 31, 2016:

  • Net sales were $6.4 billion, a decrease of 3 percent compared to the prior-year quarter. On a constant currency basis, net sales declined 2 percent.
    • The Americas: Net sales were $2.7 billion (42 percent of worldwide net sales), a decline of 3 percent compared to the prior-year quarter. On a constant currency basis, net sales declined 2 percent.
    • Europe: Net sales were $3.7 billion (58 percent of worldwide net sales), a decrease of 4 percent compared to the prior-year quarter. On a constant currency basis, net sales declined 2 percent.
       
  • Gross profit was $316.5 million, a decrease of $8.8 million, or 3 percent, compared to the prior-year quarter. As a percentage of net sales, gross profit was 4.98 percent, an improvement of 4 basis points.
     
  • Selling, general and administrative expenses ("SG&A") were $243.8 million, or 3.84 percent of net sales, compared to $250.1 million, or 3.80 percent of net sales in the prior-year quarter. Non-GAAP SG&A was $238.4 million, a decrease of $5.8 million, or 2 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP SG&A was 3.75 percent, compared to 3.71 percent in the prior-year quarter.
     
  • Worldwide operating income was $73.4 million, or 1.15 percent of net sales compared to $106.2 million or 1.61 percent of net sales in the prior-year quarter. Operating income for the prior-year quarter included $21.5 million of gains related to LCD settlement agreements, net of attorney fees and expenses. Non-GAAP operating income was $78.1 million, a decrease of $3.1 million, or 4 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP operating income was 1.23 percent, consistent with the prior-year quarter.
    • The Americas: Operating income was $41.2 million, or 1.54 percent of net sales, compared to $60.8 million, or 2.21 percent of net sales in the prior-year quarter. Operating income for the prior-year quarter included the aforementioned LCD settlement gains. Non-GAAP operating income was $38.8 million, a decrease of $1.2 million, or 3 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP operating income was 1.45 percent, compared to 1.46 percent in the prior-year quarter.
    • Europe: Operating income was $35.9 million, or 0.98 percent of net sales, compared to $49.4 million, or 1.29 percent of net sales in the prior-year quarter. Non-GAAP operating income was $43.1 million, a  decrease of $2.0 million or approximately 4 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP operating income was 1.17 percent, compared to 1.18 percent in the prior-year quarter.
    • Stock-based compensation expense was $3.8 million, compared to $4.0 million in the prior-year quarter. These expenses are excluded from the regional non-GAAP 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 $46.4 million, compared to $76.4 million in the prior-year quarter. Net income for the prior-year quarter included the aforementioned LCD settlement gains, net of taxes. Non-GAAP net income was $50.3 million, a decrease of $2.2 million, or 4 percent, compared to the prior-year quarter.
     
  • Earnings per share on a diluted basis ("EPS") were $1.31, compared to $2.09 in the prior year quarter. Earnings per share for the prior-year quarter included the aforementioned LCD settlement gains, net of taxes. Non-GAAP EPS was $1.42, compared to $1.43 in the prior-year quarter.
     
  • Net cash used by operations during the quarter was $91 million.
     
  • Return on invested capital on a non-GAAP basis for the trailing twelve months was 14 percent compared to 12 percent in the prior year.

"Our teams executed well in Q2, capitalizing on pockets of demand and gaining market share in both North America and Europe despite facing a weaker-than-expected IT spending environment," said Robert M. Dutkowsky, chief executive officer. "Although sales came in below our expectations, our focus on profitable revenue, excellent vendor management, and disciplined cost controls, enabled us to deliver solid non-GAAP earnings per share. Through the first half of our fiscal year, we grew non-GAAP earnings per share by 11 percent, generated $185 million in cash flow from operations and earned a return on invested capital of 14 percent - a 150 basis points improvement over the prior year. Our first half performance highlights the diversity of our end-to-end portfolio of IT solutions, the flexibility of our model to adapt to the realities of the market, and our focus on gaining profitable market share -  all of which enable Tech Data to deliver differentiated value to our customers, vendor partners and shareholders."  

Business Outlook

  • For the quarter ending October 31, 2016, the Company anticipates worldwide net sales to be in the range of $6.25 billion to $6.45 billion. This guidance assumes year-over-year constant currency net sales growth of flat to low-single-digits in both regions, and an average U.S. dollar to euro exchange rate of $1.10 to €1.00. 
     
  • For the quarter ending October 31, 2016, the Company anticipates non-GAAP EPS to be in the range of $1.20 to $1.30.
     
  • This guidance assumes weighted average diluted shares outstanding of 35.5 million and an effective tax rate in the range of 29 percent to 31 percent.

Webcast Details

Tech Data will hold a conference call today at 9:00 a.m. (ET) to discuss its financial results for the second quarter ended July 31, 2016. 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") and the impact of the exit of certain country operations. Certain non-GAAP measures also exclude acquisition-related intangible assets amortization expense, benefits associated with legal settlements, value-added tax assessment matters, a loss on disposal of subsidiaries, and restatement and remediation related 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 

This press release includes "forward-looking statements" within the meaning of the federal securities laws and regulations, including those regarding the Company's business outlook. These statements are subject to risks and uncertainties, including the risks identified in the Company's most recent Annual Report on Form 10-K filed March 24, 2016. A number of important factors could cause actual events and results to differ materially from those contained in or implied by the forward-looking statements. Forward-looking statements reflect management's analysis as of the filing date of this press release. The Company does not undertake to update or revise these statements to reflect subsequent developments.

About Tech Data

Tech Data Corporation is one of the world's largest wholesale distributors of technology products, services and solutions. Its advanced logistics capabilities and value added services enable 105,000 resellers to efficiently and cost effectively support the diverse technology needs of end users in more than 100 countries. Tech Data generated $26.4 billion in net sales for the fiscal year ended January 31, 2016. It is ranked No. 108 on the Fortune 500® and one of Fortune's "World's Most Admired Companies." To learn more, visit www.techdata.com, or follow us on Facebook and Twitter

Contacts:

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

Arleen Quiñones, 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 Six months ended 
  July 31, July 31, 
   2016   2015   2016   2015  
          
Net sales $6,353,739  $6,580,393  $12,317,101  $12,467,622  
Cost of products sold  6,037,289   6,255,114   11,702,040   11,850,454  
Gross profit  316,450   325,279   615,061   617,168  
Operating expenses:         
Selling, general and administrative expenses  243,763   250,134   490,259   498,596  
LCD settlements and other, net  (1,717)  (21,527)  (2,160)  (60,038) 
Value added tax assessments  1,049   (9,563)  1,049   (9,563) 
   243,095   219,044   489,148   428,995  
Operating income  73,355   106,235   125,913   188,173  
Interest expense  6,288   (3,320)  11,889   2,402  
Other (income) expense , net  (1,230)  51   (2,264)  212  
Income before income taxes  68,297   109,504   116,288   185,559  
Provision for income taxes  21,903   33,092   36,521   57,870  
Net income $46,394  $76,412  $79,767  $127,689  
          
Earnings per share:         
Basic $1.32  $2.09  $2.27  $3.48  
Diluted $1.31  $2.09  $2.26  $3.47  
Weighted average common shares outstanding:         
Basic  35,207   36,506   35,167   36,661  
Diluted  35,378   36,615   35,373   36,829  
          

TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except par value and share amounts)

     
  July 31, January 31,
   2016   2016 
ASSETS (unaudited)  
Current assets:    
Cash and cash equivalents $697,047  $531,169 
Accounts receivable, less allowances of $43,550 and $45,875  2,706,079   2,995,114 
Inventories  2,145,070   2,117,384 
Prepaid expenses and other assets  116,454   178,394 
Total current assets  5,664,650   5,822,061 
Property and equipment, net  72,138   66,028 
Goodwill  206,040   204,114 
Intangible assets, net  147,277   159,386 
Other assets, net  113,353   106,699 
Total assets $6,203,458  $6,358,288 
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities:    
Accounts payable $3,240,578  $3,427,580 
Accrued expenses and other liabilities  415,177   487,003 
Revolving credit loans and current maturities of long-term debt, net  12,939   18,063 
Total current liabilities  3,668,694   3,932,646 
Long-term debt, less current maturities  349,025   348,608 
Other long-term liabilities  77,593   71,279 
Total liabilities $4,095,312  $4,352,533 
Shareholders' equity:    
Common stock, par value $0.0015; 200,000,000 shares authorized; 59,245,585 shares issued at July 31, 2016 and January 31, 2016 $89  $89 
Additional paid-in capital  679,976   682,227 
Treasury stock, at cost (24,031,690 and 24,163,402 shares at July 31, 2016 and January 31, 2016)  (1,071,561)  (1,077,434)
Retained earnings  2,513,965   2,434,198 
Accumulated other comprehensive loss  (14,323)  (33,325)
Total shareholders' equity  2,108,146   2,005,755 
Total liabilities and shareholders' equity $6,203,458  $6,358,288 
     

TECH DATA CORPORATION AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(In thousands)

  
  Q2 FY17 - Three months ended July 31, 2016 
   Americas⁽¹⁾   Europe⁽¹⁾    Stock
Compensation
Expense
 
  Consolidated  
Net Sales $   2,674,886   $  3,678,853      $   6,353,739   
GAAP operating income⁽¹⁾ $41,241  $35,927   $(3,813) $73,355  
Value added tax assessments  (407)  1,456      1,049  
Acquisition-related amortization of intangibles  580   4,828      5,408  
LCD settlements and other, net  (2,653)  936      (1,717) 
Total non-GAAP operating income adjustments $(2,480) $7,220     $4,740  
Non-GAAP operating income $   38,761   $   43,147    $   (3,813) $   78,095   
GAAP operating margin  1.54%  0.98%     1.15% 
Non-GAAP operating margin  1.45%  1.17%     1.23% 
  
⁽¹⁾  GAAP operating income does not include stock compensation expense at the regional level. 
           

 

  Q2 FY16 - Three months ended July 31, 2015 
   Americas⁽¹⁾   Europe⁽¹⁾    Stock
Compensation
Expense
 
  Consolidated  
Net Sales $   2,745,429   $  3,834,964      $   6,580,393   
GAAP operating income⁽¹⁾ $60,752  $49,443   $(3,960) $106,235  
Restatement and remediation related expenses  146   18      164  
Value added tax assessments  -   (9,563)     (9,563) 
Loss on disposal of subsidiaries  154   -      154  
Acquisition-related amortization of intangibles  445   5,262      5,707  
LCD settlements and other, net  (21,527)  -      (21,527) 
Total non-GAAP operating income adjustments $(20,782) $(4,283)    $(25,065) 
Non-GAAP operating income $   39,970   $   45,160    $   (3,960) $   81,170   
GAAP operating margin  2.21%  1.29%     1.61% 
Non-GAAP operating margin  1.46%  1.18%     1.23% 
  
⁽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)

  
  Q2 FY17 - Six months ended July 31, 2016 
   Americas⁽¹⁾   Europe⁽¹⁾    Stock
Compensation
Expense
 
  Consolidated  
Net Sales $   5,062,890   $  7,254,211      $   12,317,101   
GAAP operating income⁽¹⁾ $72,516  $60,867   $(7,470) $125,913  
Value added tax assessments  (407)  1,456      1,049  
Acquisition-related amortization of intangibles  1,160   9,693      10,853  
LCD settlements and other, net  (3,096)  936      (2,160) 
Total non-GAAP operating income adjustments $(2,343) $12,085     $9,742  
Non-GAAP operating income $   70,173   $   72,952    $   (7,470) $   135,655   
GAAP operating margin  1.43%  0.84%     1.02% 
Non-GAAP operating margin  1.39%  1.01%     1.10% 
  
⁽¹⁾  GAAP operating income does not include stock compensation expense at the regional level. 
           

 

  Q2 FY16 - Six months ended July 31, 2015 
   Americas⁽¹⁾   Europe⁽¹⁾    Stock
Compensation
Expense
 
  Consolidated  
Net Sales $   5,084,689   $  7,382,933      $   12,467,622   
GAAP operating income⁽¹⁾ $123,111  $72,840   $(7,778) $188,173  
Restatement and remediation related expenses  184   598      782  
Value added tax assessments  -   (9,563)     (9,563) 
Loss on disposal of subsidiaries  517   -      517  
Acquisition-related amortization of intangibles  615   10,872      11,487  
LCD settlements and other, net  (60,038)  -      (60,038) 
Total non-GAAP operating income adjustments $(58,722) $1,907     $(56,815) 
Non-GAAP operating income $   64,389   $   74,747    $   (7,778) $   131,358   
GAAP operating margin  2.42%  0.99%     1.51% 
Non-GAAP operating margin  1.27%  1.01%     1.05% 
  
⁽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, except per share amounts)

       
Selling, general and administrative expenses ("SG&A") Three months ended July 31,  
   2016   2015   
Net Sales $   6,353,739   $   6,580,393    
GAAP SG&A  243,763   250,134   
Acquisition-related amortization of intangibles  (5,408)  (5,707)  
Restatement and remediation related expenses  -   (164)  
Loss on disposal of subsidiaries  -   (154)  
Non-GAAP SG&A $   238,355   $   244,109    
       
GAAP SG&A percentage of net sales  3.84%  3.80%  
Non- GAAP SG&A percentage of net sales  3.75%  3.71%  
       
       
  Six months ended July 31,  
   2016   2015   
Net Sales $   12,317,101   $   12,467,622    
GAAP SG&A  490,259   498,596   
Acquisition-related amortization of intangibles  (10,853)  (11,487)  
Restatement and remediation related expenses  -   (782)  
Loss on disposal of subsidiaries  -   (517)  
Non-GAAP SG&A $   479,406   $   485,810    
       
GAAP SG&A percentage of net sales  3.98%  4.00%  
Non- GAAP SG&A percentage of net sales  3.89%  3.90%  
       


  Three months ended July 31,  
   2016   2015  
   Net Income  Diluted EPS   Net Income  Diluted EPS  
GAAP Results $46,394 $1.31  $76,412 $2.09  
LCD settlements and other, net  (1,717) (0.05)  (21,527) (0.59) 
Value-added tax assessments  1,386  0.04   (18,559) (0.51) 
Restatement and remediation related expenses  -  -   164  -  
Loss on disposal of subsidiaries  -  -   154  -  
Acquisition-related intangible assets amortization expense  5,408  0.15   5,707  0.16  
Income tax effect of the above adjustments  (1,178) (0.03)  10,144  0.28  
Non-GAAP results $50,293 $1.42  $52,495 $1.43  
        
  Six months ended July 31,  
   2016   2015  
  Net IncomeDiluted EPS Net IncomeDiluted EPS 
GAAP Results $79,767 $2.26  $127,689 $3.47  
LCD settlements and other, net  (2,160) (0.06)  (60,038) (1.63) 
Value-added tax assessments  1,386  0.04   (18,559) (0.50) 
Restatement and remediation related expenses  -  -   782  0.02  
Loss on disposal of subsidiaries  -  -   517  0.01  
Acquisition-related intangible assets amortization expense  10,853  0.30   11,487  0.31  
Income tax effect of the above adjustments  (2,511) (0.07)  20,196  0.55  
Non-GAAP results $87,335 $2.47  $82,074 $2.23  
        

TECH DATA CORPORATION AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(In thousands)

Return on Invested Capital (ROIC) 

  
  Twelve months ended 
  July 31, 2016 
TTM Non-GAAP Net Operating Profit After Tax (NOPAT)*:   
Non-GAAP Operating Income $323,366  
Non-GAAP effective tax rate  28.3% 
Non-GAAP NOPAT (Non-GAAP operating income x (1 - non-GAAP effective tax rate)) $231,847  
    
Average Invested Capital:   
Short-term debt (5-qtr average) $16,796  
Long-term debt (5-qtr average)  349,316  
Non-GAAP Shareholders' Equity (5-qtr average)  2,009,233  
Total average capital  2,375,345  
Less: Cash (5-qtr average)  (669,836) 
Average invested capital less average cash $1,705,509  
ROIC   14% 
    
* Trailing Twelve Months is abbreviated as TTM.
   
    


Close window | Back to top

Copyright 2017 Tech Data Corporation