CLEARWATER, Fla., Nov. 25, 2014 (GLOBE NEWSWIRE) -- Tech Data Corporation (Nasdaq:TECD) (the "Company") today announced its financial results for the third quarter ended October 31, 2014.
| Three Months ended October 31, | Nine Months ended October 31, | |||
|
($ in millions, except per share amounts) |
2014 | 2013 | 2014 | 2013 |
| Net Sales | $6,761.2 | $6,373.6 | $20,331.1 | $18,848.8 |
| Operating income (GAAP) | $66.7 | $63.9 | $166.0 | $129.8 |
| Operating margin (GAAP) | 0.99% | 1.00% | 0.82% | 0.69% |
| Operating income (Non-GAAP) | $70.8 | $63.4 | $196.3 | $157.7 |
| Operating margin (Non-GAAP) | 1.05% | 0.99% | 0.97% | 0.84% |
| Net income (GAAP) | $41.7 | $37.7 | $94.5 | $70.2 |
| Net income (Non-GAAP) | $45.3 | $39.6 | $115.8 | $92.6 |
| EPS - diluted (GAAP) | $1.09 | $0.99 | $2.46 | $1.84 |
| EPS - diluted (Non-GAAP) | $1.18 | $1.04 | $3.02 | $2.42 |
| 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. | ||||
Financial Highlights for the Third Quarter Ended October 31, 2014:
-
Net sales were $6.8 billion, an increase of 6 percent from the prior-year quarter. Excluding the negative impact of the weakening of certain foreign currencies against the U.S. dollar, consolidated net sales increased approximately 9 percent from the prior-year quarter.
- The Americas: Net sales were $2.6 billion (approximately 39 percent of worldwide net sales), an increase of 3 percent from the prior-year quarter.
- Europe: Net sales were $4.1 billion (approximately 61 percent of worldwide net sales), an increase of 8 percent (an increase of 13 percent in euros) from the prior-year quarter.
- Gross profit was $335.0 million, or 4.95 percent of net sales, compared to $326.1 million, or 5.12 percent of net sales in the prior-year quarter.
- Selling, general and administrative expenses ("SG&A") were $271.2 million, or 4.01 percent of net sales, compared to $270.1 million, or 4.24 percent of net sales in the prior-year quarter. Non-GAAP SG&A was $264.2 million, or 3.91 percent of net sales, compared to $262.7 million, or 4.12 percent of net sales in the prior-year quarter.
-
Worldwide operating income was $66.7 million, or 0.99 percent of net sales, compared to $63.9 million or 1.00 percent of net sales in the prior-year quarter. Non-GAAP operating income was $70.8 million, or 1.05 percent of net sales, compared to $63.4 million, or 0.99 percent of net sales in the prior-year quarter.
- The Americas: Operating income was $42.2 million, or 1.60 percent of net sales, compared to $53.3 million, or 2.07 percent of net sales in the prior-year quarter. Non-GAAP operating income was $38.2 million, or 1.44 percent of net sales, compared to $33.7 million, or 1.31 percent of net sales in the prior-year quarter.
- Europe: Operating income was $28.4 million, or 0.69 percent of net sales, compared to $12.2 million, or 0.32 percent in the prior-year quarter. Non-GAAP operating income was $36.5 million, or 0.89 percent of net sales, compared to $31.3 million, or 0.82 percent of net sales in the prior-year quarter.
- Stock-based compensation expense was $3.9 million, compared to $1.6 million in the prior-year quarter. These expenses are not included in the regional segment reported results, but are 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 $41.7 million, or $1.09 per diluted share, compared to $37.7 million, or $0.99 per diluted share in the prior-year quarter. Non-GAAP net income was $45.3 million, or $1.18 per diluted share, compared to $39.6 million or $1.04 per diluted share in the prior-year quarter.
- Net cash used in operations was $108 million in the quarter. For the first nine months of fiscal 2015, cash used in operations was $58 million.
- Return on invested capital on a non-GAAP basis for the trailing twelve months was 11 percent.
"Continuing our positive momentum, Tech Data delivered another strong performance in the third quarter," said Robert M. Dutkowsky, chief executive officer. "As we have said throughout the year, fiscal year 2015 is a market and operationally-focused year for Tech Data. This dual focus, combined with our broad product and customer portfolio, have enabled us to capitalize on current market opportunities, improve our operating performance and grow non-GAAP earnings by 25 percent during the last nine months, while earning a return on invested capital of 11 percent for the trailing twelve month period. Tech Data's capabilities and strategic position in the IT ecosystem are stronger today than ever, and we are pleased with the trajectory of our business as we enter our final quarter of fiscal 2015."
Business Outlook
For the fourth quarter ending January 31, 2015, the Company expects year-over-year low single-digit sales growth in both regions in local currency. The Company also expects a non-GAAP effective tax rate of 27 to 29 percent, and the average U.S. dollar to euro currency exchange rate to be $1.27 to €1.00.
Webcast Details
Tech Data will hold a conference call today at 9:00 a.m. (ET) to discuss its financial results for the third quarter ended October 31, 2014. 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"). Non-GAAP measures presented in this release or other releases, presentations and similar documents issued by the Company exclude acquisition-related intangible assets amortization expense, a benefit associated with a LCD settlement, a benefit related to a decrease in the accrual for a value added tax assessment 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 April 9, 2014. 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 115,000 resellers to efficiently and cost effectively support the diverse technology needs of end users in more than 100 countries. Tech Data generated $26.8 billion in net sales for the fiscal year ended January 31, 2014. It is ranked No. 111 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.
| 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, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Net sales | $ 6,761,181 | $ 6,373,564 | $ 20,331,141 | $ 18,848,797 |
| Cost of products sold | 6,426,196 | 6,047,488 | 19,309,456 | 17,884,467 |
| Gross profit | 334,985 | 326,076 | 1,021,685 | 964,330 |
| Operating expenses: | ||||
| Selling, general and administrative expenses | 271,235 | 270,131 | 847,344 | 828,509 |
| Restatement and remediation-related expenses | 2,064 | 14,979 | 19,678 | 28,965 |
| LCD settlements | (5,059) | (22,914) | (5,059) | (22,914) |
| Value added tax assessment | -- | -- | (6,229) | -- |
| 268,240 | 262,196 | 855,734 | 834,560 | |
| Operating income | 66,745 | 63,880 | 165,951 | 129,770 |
| Interest expense | 6,491 | 6,134 | 20,639 | 19,451 |
| Other expense (income), net | (225) | (410) | 842 | (1,920) |
| Income before income taxes | 60,479 | 58,156 | 144,470 | 112,239 |
| Provision for income taxes | 18,779 | 20,440 | 49,975 | 42,068 |
| Net income | $ 41,700 | $ 37,716 | $ 94,495 | $ 70,171 |
| Net income per share: | ||||
| Basic | $ 1.09 | $ 0.99 | $ 2.47 | $ 1.85 |
| Diluted | $ 1.09 | $ 0.99 | $ 2.46 | $ 1.84 |
| Weighted average common shares outstanding: | ||||
| Basic | 38,253 | 38,060 | 38,212 | 38,004 |
| Diluted | 38,433 | 38,228 | 38,376 | 38,206 |
| TECH DATA CORPORATION AND SUBSIDIARIES | ||
| CONSOLIDATED BALANCE SHEET | ||
| (In thousands, except par value and share amounts) | ||
| October 31, | January 31, | |
| 2014 | 2014 | |
| ASSETS | (unaudited) | |
| Current assets: | ||
| Cash and cash equivalents | $ 465,738 | $ 570,101 |
| Accounts receivable, less allowances of $55,378 and $58,754 | 3,064,553 | 3,215,729 |
| Inventories | 2,321,088 | 2,450,782 |
| Prepaid expenses and other assets | 190,704 | 232,423 |
| Total current assets | 6,042,083 | 6,469,035 |
| Property and equipment, net | 66,103 | 77,631 |
| Other assets, net | 557,055 | 623,000 |
| Total assets | $ 6,665,241 | $ 7,169,666 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 3,530,956 | $ 3,959,410 |
| Accrued expenses and other liabilities | 555,944 | 614,697 |
| Revolving credit loans and current maturities of long-term debt, net | 46,463 | 43,481 |
| Total current liabilities | 4,133,363 | 4,617,588 |
| Long-term debt, less current maturities | 353,549 | 354,121 |
| Other long-term liabilities | 92,626 | 99,346 |
| Total liabilities | $ 4,579,538 | $ 5,071,055 |
| Shareholders' equity: | ||
| Common stock, par value $0.0015; 200,000,000 shares authorized; 59,245,585 shares issued at October 31, 2014 and January 31, 2014 | $ 89 | $ 89 |
| Additional paid-in capital | 674,044 | 675,597 |
| Treasury Stock, at cost (20,990,734 and 21,177,130 shares at October 31, 2014 and January 31, 2014) | (887,059) | (894,936) |
| Retained earnings | 2,087,785 | 1,993,290 |
| Accumulated other comprehensive income | 210,844 | 324,571 |
| Total shareholders' equity | 2,085,703 | 2,098,611 |
| Total liabilities and shareholders' equity | $ 6,665,241 | $ 7,169,666 |
| TECH DATA CORPORATION AND SUBSIDIARIES | ||||
| GAAP TO NON-GAAP RECONCILIATION | ||||
| (In thousands) | ||||
| Q3 FY15 - Three months ended October 31, 2014 | ||||
| Americas(¹) | Europe(1) |
Stock Compensation Expense |
Consolidated | |
| Net Sales | $ 2,644,085 | $ 4,117,096 | $ 6,761,181 | |
| GAAP operating income(1) | $ 42,194 | $ 28,407 | $ (3,856) | $ 66,745 |
| Restatement and remediation-related expenses | 877 | 1,187 | 2,064 | |
| LCD settlements | (5,059) | -- | (5,059) | |
| Value added tax assessment | -- | -- | -- | |
| Acquisition-related amortization of intangibles | 170 | 6,883 | 7,053 | |
| Total non-GAAP operating income adjustments | $ (4,012) | $ 8,070 | $ 4,058 | |
| Non-GAAP operating income | $ 38,182 | $ 36,477 | $ (3,856) | $ 70,803 |
| GAAP operating margin | 1.60% | 0.69% | 0.99% | |
| Non-GAAP operating margin | 1.44% | 0.89% | 1.05% | |
| (1) GAAP operating income does not include stock compensation expense at the regional level. | ||||
| Q3 FY14 - Three months ended October 31, 2013 | ||||
| Americas(1) | Europe(1) |
Stock Compensation Expense |
Consolidated | |
| Net Sales | $ 2,571,750 | $ 3,801,814 | $ 6,373,564 | |
| GAAP operating income(1) | $ 53,297 | $ 12,214 | $ (1,631) | $ 63,880 |
| Restatement and remediation-related expenses | 3,331 | 11,648 | 14,979 | |
| LCD settlements | (22,914) | -- | (22,914) | |
| Acquisition-related amortization of intangibles | -- | 7,407 | 7,407 | |
| Total non-GAAP operating income adjustments | $ (19,583) | $ 19,055 | $ (528) | |
| Non-GAAP operating income | $ 33,714 | $ 31,269 | $ (1,631) | $ 63,352 |
| GAAP operating margin | 2.07% | 0.32% | 1.00% | |
| Non-GAAP operating margin | 1.31% | 0.82% | 0.99% | |
| (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) | ||||
| Nine months ended October 31, 2014 | ||||
| Americas(1) | Europe(1) |
Stock Compensation Expense |
Consolidated | |
| Net Sales | $ 7,842,547 | $ 12,488,594 | $ 20,331,141 | |
| GAAP operating income(1) | $ 107,331 | $ 68,318 | $ (9,698) | $ 165,951 |
| Restatement and remediation-related expenses | 3,937 | 15,741 | 19,678 | |
| LCD settlements | (5,059) | -- | (5,059) | |
| Value added tax assessment | -- | (6,229) | (6,229) | |
| Acquisition-related amortization of intangibles | 510 | 21,401 | 21,911 | |
| Total non-GAAP operating income adjustments | $ (612) | $ 30,913 | $ 30,301 | |
| Non-GAAP operating income | $ 106,719 | $ 99,231 | $ (9,698) | $ 196,252 |
| GAAP operating margin | 1.37% | 0.55% | 0.82% | |
| Non-GAAP operating margin | 1.36% | 0.79% | 0.97% | |
| (1) GAAP operating income does not include stock compensation expense at the regional level. | ||||
| Nine months ended October 31, 2013 | ||||
| Americas(1) | Europe(1) |
Stock Compensation Expense |
Consolidated | |
| Net Sales | $ 7,489,078 | $ 11,359,719 | $ 18,848,797 | |
| GAAP operating income(1) | $ 112,516 | $ 24,203 | $ (6,949) | $ 129,770 |
| Restatement and remediation-related expenses | 8,097 | 20,868 | 28,965 | |
| LCD settlements | (22,914) | -- | (22,914) | |
| Value added tax assessment | -- | -- | -- | |
| Acquisition-related amortization of intangibles | -- | 21,831 | 21,831 | |
| Total non-GAAP operating income adjustments | $ (14,817) | $ 42,699 | $ 27,882 | |
| Non-GAAP operating income | $ 97,699 | $ 66,902 | $ (6,949) | $ 157,652 |
| GAAP operating margin | 1.50% | 0.21% | 0.69% | |
| Non-GAAP operating margin | 1.30% | 0.59% | 0.84% | |
| (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 | Nine months ended | ||
| October 31, 2014 | October 31, 2013 | October 31, 2014 | October 31, 2013 | |
| Net Sales | $ 6,761,181 | $ 6,373,564 | $ 20,331,141 | $ 18,848,797 |
| GAAP SG&A | 271,235 | 270,131 | 847,344 | 828,509 |
| Acquisition-related amortization of intangibles | (7,053) | (7,407) | (21,911) | (21,831) |
| Non-GAAP SG&A | $ 264,182 | $ 262,724 | $ 825,433 | $ 806,678 |
| GAAP SG&A percentage of net sales | 4.01% | 4.24% | 4.17% | 4.40% |
| Non- GAAP SG&A percentage of net sales | 3.91% | 4.12% | 4.06% | 4.28% |
| Three months ended | ||||||
| October 31, 2014 | October 31, 2013 | |||||
|
Operating Income |
Net Income |
Diluted EPS |
Operating Income |
Net Income |
Diluted EPS |
|
| GAAP results | $ 66,745 | $ 41,700 | $ 1.09 | $ 63,880 | $ 37,716 | $ 0.99 |
| Restatement and remediation-related expenses | 2,064 | 1,585 | 0.04 | 14,979 | 10,710 | 0.28 |
| LCD settlements | (5,059) | (3,162) | (0.08) | (22,914) | (14,207) | (0.37) |
| Value added tax assessment | -- | -- | -- | -- | -- | -- |
| Acquisition-related amortization of intangibles | 7,053 | 5,181 | 0.13 | 7,407 | 5,418 | 0.14 |
| Non-GAAP results | $ 70,803 | $ 45,304 | $ 1.18 | $ 63,352 | $ 39,637 | $ 1.04 |
| Nine months ended | ||||||
| October 31, 2014 | October 31, 2013 | |||||
|
Operating Income |
Net Income |
Diluted EPS |
Operating Income |
Net Income |
Diluted EPS |
|
| GAAP results | $ 165,951 | $ 94,495 | $ 2.46 | $ 129,770 | $ 70,171 | $ 1.84 |
| Restatement and remediation-related expenses | 19,678 | 14,670 | 0.38 | 28,965 | 20,657 | 0.54 |
| LCD settlements | (5,059) | (3,160) | (0.08) | (22,914) | (14,207) | (0.37) |
| Value added tax assessment | (6,229) | (6,229) | (0.16) | -- | -- | -- |
| Acquisition-related amortization of intangibles | 21,911 | 16,064 | 0.42 | 21,831 | 15,968 | 0.41 |
| Non-GAAP results | $ 196,252 | $ 115,840 | $ 3.02 | $ 157,652 | $ 92,589 | $ 2.42 |
| Return on Invested Capital (ROIC) | ||
| (In thousands) | ||
| Twelve months ended | ||
| October 31, 2014 | ||
| TTM Non-GAAP Net Operating Profit After Tax (NOPAT)*: | ||
| Non-GAAP Operating Income | $ 313,536 | |
| Non-GAAP effective tax rate | 31.8% | |
| Non-GAAP NOPAT | $ 213,845 | |
| Average Invested Capital: | ||
| Short-term debt (5-qtr average) | $ 46,913 | |
| Long-term debt (5-qtr average) | 354,001 | |
| Non-GAAP Shareholders' Equity (5-qtr average) | 2,107,163 | |
| Total average capital | 2,508,076 | |
| Less: Cash (5-qtr average) | (558,805) | |
| Average invested capital less average cash | $ 1,949,271 | |
| ROIC | 11% | |
| * Trailing Twelve Months is abbreviated as TTM. | ||