News Column

Tech Data Corporation Reports Fiscal 2015 Second Quarter Results

August 26, 2014

CLEARWATER, Fla., Aug. 26, 2014 (GLOBE NEWSWIRE) -- Tech Data Corporation (Nasdaq:TECD) (the "Company") today announced its financial results for the second quarter ended July 31, 2014.

     
  Three Months ended July 31,Six Months ended July 31,
($ in millions, except per share amounts)2014201320142013
Net Sales$ 6,841.8$ 6,327.5$ 13,570.0$ 12,475.2
         
Operating income (GAAP)$ 67,710$ 29,859$ 99,206$ 65,890
Operating margin (GAAP) 0.99% 0.47% 0.73% 0.53%
         
Operating income (Non-GAAP)$ 74,283$ 48,027$ 125,449$ 94,300
Operating margin (Non-GAAP) 1.09% 0.76% 0.92% 0.76%
         
Net income (GAAP)$ 39,328$ 14,695$ 52,795$ 32,455
Net income (Non-GAAP)$ 42,883$ 27,851$ 70,536$ 52,952
         
EPS - diluted (GAAP)$ 1.03$ 0.38$ 1.38$ 0.85
EPS - diluted (Non-GAAP)$ 1.12$ 0.73$ 1.84$ 1.39


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 Second Quarter Ended July 31, 2014:

• Net Sales were $6.8 billion, an increase of 8 percent from $6.3 billion in the prior-year quarter. Excluding the positive impact of the strengthening of certain foreign currencies against the U.S. dollar, consolidated net sales increased approximately 6 percent from the prior-year quarter. • The Americas: Net sales were $2.7 billion (approximately 40 percent of worldwide net sales), an increase of 4 percent from the prior-year quarter.•Europe: Net sales were $4.1 billion (approximately 60 percent of worldwide net sales), an increase of 11 percent (an increase of 7 percent in euros), from the prior-year quarter.• Gross profit was $351.4 million, or 5.14 percent of net sales, compared to $315.8 million, or 4.99 percent of net sales in the prior-year quarter.• Selling, general and administrative expenses ("SG&A") were $284.5 million, or 4.16 percent of net sales, compared to $275.0 million, or 4.35 percent of net sales in the prior-year quarter. Non-GAAP SG&A was $277.1 million, or 4.05 percent of net sales, compared to $267.8 million, or 4.23 percent of net sales in the prior-year quarter.• Worldwide operating income was $67.7 million, or 0.99 percent of net sales compared to $29.9 million or 0.47 percent of net sales in the prior-year quarter. Non-GAAP operating income was $74.3 million, or 1.09 percent of net sales, compared to $48.0 million, or 0.76 percent of net sales in the prior-year quarter. • The Americas: Operating income was $38.9 million, or 1.43 percent of net sales, compared to $32.0 million, or 1.22 percent of net sales in the prior-year quarter. Non-GAAP operating income was $39.2 million, or 1.44 percent of net sales, compared to $35.0 million, or 1.33 percent of net sales in the prior-year quarter.•Europe: Operating income was $32.7 million, or 0.79 percent of net sales, compared to $0.1 million in the prior-year quarter. Non-GAAP operating income was $38.9 million, or 0.95 percent of net sales, compared to $15.3 million, or 0.41 percent of net sales in the prior-year quarter.• Stock-based compensation expense was $3.9 million, compared to $2.2 million in the prior-year quarter. These expenses 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 $39.3 million, or $1.03 per diluted share, compared to $14.7 million, or $0.38 per diluted share in the prior-year quarter. Non-GAAP net income was $42.9 million, or $1.12 per diluted share, compared to $27.9 million or $0.73 per diluted share in the prior-year quarter.• Net cash used in operations was $46 million in the quarter. For the first six months of fiscal 2015, cash provided by operations was $50 million.• Return on invested capital on a non-GAAP basis for the trailing twelve months was 11 percent.

"I am pleased to report that Tech Data delivered an outstanding second quarter in fiscal 2015," said Robert M. Dutkowsky, chief executive officer. "Both regions responded to a vibrant PC market with strong sales execution, as well as solid margin, cost and balance sheet management. The second quarter and first-half market opportunities exceeded our expectations and we responded, demonstrating that our diversified customer and vendor portfolio, combined with superior execution capabilities, enable Tech Data to meet the demands of an ever-changing IT market and deliver strong results for our shareholders."

Business Outlook

For the third quarter ending October 31, 2014, the Company expects year-over-year low to mid single-digit sales growth in the Americas and mid to high single-digit sales growth in Europe, in euros. The Company also expects the gross margin percentage to be more in line with first-quarter levels, a non-GAAP effective tax rate of 31 to 33 percent and the average U.S. dollar to euro currency exchange rate to be $1.34 to €1.00. For fiscal 2015, the Company expects a non-GAAP effective tax rate of 31 to 33 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, 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, and restatement-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)
 
  Three months ended Six months ended
 July 31,July 31,
  2014 2013 2014 2013
  (unaudited) (unaudited) (unaudited) (unaudited)
Net sales  $ 6,841,809  $ 6,327,476  $ 13,569,960  $ 12,475,233
Cost of products sold  6,490,437  6,011,636  12,883,260  11,836,979
Gross profit  351,372  315,840  686,700  638,254
Operating expenses:        
Selling, general and administrative expenses  284,513  275,018  576,109  558,378
Restatement and remediation-related expenses  5,378  10,963  17,614  13,986
Value added tax assessment  (6,229) 0  (6,229) 0
   283,662  285,981  587,494  572,364
Operating income  67,710  29,859  99,206  65,890
Interest expense  7,388  6,219  14,148  13,317
Other expense (income), net  616  654  1,067  (1,510)
Income before income taxes  59,706  22,986  83,991  54,083
Provision for income taxes  20,378  8,291  31,196  21,628
Net income  $ 39,328  $ 14,695  $ 52,795  $ 32,455
         
Net income per share:        
Basic  $ 1.03  $ 0.39  $ 1.38  $ 0.85
Diluted  $ 1.03  $ 0.38  $ 1.38  $ 0.85
Weighted average common shares outstanding:      
Basic 38,244 38,043 38,191 37,976
Diluted 38,368 38,180 38,342 38,177
 
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except par value and share amounts)
 
 July 31,January 31,
  2014 2014
ASSETS (unaudited)  
Current assets:    
Cash and cash equivalents  $ 611,528  $ 570,101
Accounts receivable, less allowances of $57,132 and $58,754  2,996,350  3,215,729
Inventories  2,193,927  2,450,782
Prepaid expenses and other assets  185,524  232,423
Total current assets  5,987,329  6,469,035
Property and equipment, net  69,582  77,631
Other assets, net  602,533  623,000
Total assets  $ 6,659,444  $ 7,169,666
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities:    
Accounts payable  $ 3,466,013  $ 3,959,410
Accrued expenses and other liabilities  542,270  614,697
Revolving credit loans and current maturities of long-term debt, net  48,609  43,481
Total current liabilities  4,056,892  4,617,588
Long-term debt, less current maturities  353,922  354,121
Other long-term liabilities  95,737  99,346
Total liabilities  $ 4,506,551  $ 5,071,055
Shareholders' equity:    
Common stock, par value $0.0015; 200,000,000 shares authorized; 59,245,585 shares issued at July 31, 2014 and January 31, 2014  $ 89  $ 89
Additional paid-in capital  670,340  675,597
Treasury Stock, at cost (20,995,426 and 21,177,130 shares at July 31, 2014 and January 31, 2014)  (887,257)  (894,936)
Retained earnings  2,046,085  1,993,290
Accumulated other comprehensive income  323,636  324,571
Total shareholders' equity  2,152,893  2,098,611
Total liabilities and shareholders' equity  $ 6,659,444  $ 7,169,666
 
TECH DATA CORPORATION AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
   
 Q2 FY15 - Three months ended July 31, 2014
  Americas(1)  Europe(1)  Stock

Compensation

Expense 
 Consolidated 
Net Sales $ 2,722,191  $ 4,119,618   $ 6,841,809
GAAP operating income(1)  $ 38,854  $ 32,725  $ (3,869)  $ 67,710
Restatement and remediation-related expenses  190  5,188    5,378
Value added tax assessment  --   (6,229)    (6,229)
Acquisition-related amortization of intangibles  170  7,254    7,424
Total non-GAAP operating income adjustments  $ 360  $ 6,213    $ 6,573
Non-GAAP operating income $ 39,214  $ 38,938  $ (3,869) $ 74,283
GAAP operating margin1.43%0.79%  0.99%
Non-GAAP operating margin1.44%0.95%  1.09%
 
(1) GAAP operating income does not include stock compensation expense at the regional level.
   
 Q2 FY14 - Three months ended July 31, 2013
  Americas(1)  Europe(1)  Stock

Compensation

Expense 
 Consolidated 
Net Sales $ 2,624,546  $ 3,702,930   $ 6,327,476
GAAP operating income(1)  $ 31,988  $ 98  $ (2,227)  $ 29,859
Restatement and remediation-related expenses  3,006  7,957    10,963
Value added tax assessment  --   --     -- 
Acquisition-related amortization of intangibles  --   7,205    7,205
Total non-GAAP operating income adjustments  $ 3,006  $ 15,162    $ 18,168
Non-GAAP operating income $ 34,994  $ 15,260  $ (2,227) $ 48,027
GAAP operating margin1.22%0.00%  0.47%
Non-GAAP operating margin1.33%0.41%  0.76%
 
(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)
   
 Six months ended July 31, 2014
  Americas(1)  Europe(1)  Stock

Compensation

Expense 
 Consolidated 
Net Sales $ 5,198,462  $ 8,371,498   $ 13,569,960
GAAP operating income(1)  $ 65,137  $ 39,911  $ (5,842)  $ 99,206
Restatement and remediation-related expenses  3,060  14,554    17,614
Value added tax assessment  --   (6,229)    (6,229)
Acquisition-related amortization of intangibles  340  14,518    14,858
Total non-GAAP operating income adjustments  $ 3,400  $ 22,843    $ 26,243
Non-GAAP operating income $ 68,537  $ 62,754  $ (5,842) $ 125,449
GAAP operating margin1.25%0.48%  0.73%
Non-GAAP operating margin1.32%0.75%  0.92%
 
(1) GAAP operating income does not include stock compensation expense at the regional level.
   
 Six months ended July 31, 2013
  Americas(1)  Europe(1)  Stock

Compensation

Expense 
 Consolidated 
Net Sales $ 4,917,328  $ 7,557,905   $ 12,475,233
GAAP operating income(1)  $ 59,219  $ 11,989  $ (5,318)  $ 65,890
Restatement and remediation-related expenses  4,766  9,220    13,986
Value added tax assessment  --   --     -- 
Acquisition-related amortization of intangibles  --   14,424    14,424
Total non-GAAP operating income adjustments  $ 4,766  $ 23,644    $ 28,410
Non-GAAP operating income $ 63,985  $ 35,633  $ (5,318) $ 94,300
GAAP operating margin1.20%0.16%  0.53%
Non-GAAP operating margin1.30%0.47%  0.76%
         
(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 endedSix months ended
 July 31, 2014July 31, 2013July 31, 2014July 31, 2013
Net Sales  $ 6,841,809  $ 6,327,476  $ 13,569,960  $ 12,475,233
GAAP SG&A  284,513  275,018  576,109  558,378
Acquisition-related amortization of intangibles  (7,424)  (7,205)  (14,858)  (14,424)
Non-GAAP SG&A $ 277,089  $ 267,813  $ 561,251  $ 543,954
         
GAAP SG&A percentage of net sales4.16%4.35%4.25%4.48%
Non- GAAP SG&A percentage of net sales4.05%4.23%4.14%4.36%
   
 Three months ended
 July 31, 2014July 31, 2013
 Operating Income Net Income  Diluted EPS Operating Income Net Income  Diluted EPS 
GAAP results  $ 67,710  $ 39,328  $ 1.03  $ 29,859  $ 14,695  $ 0.38
Restatement and remediation-related expenses  5,378  4,328  0.11  10,963  7,886  0.21
Value added tax assessment  (6,229)  (6,229)  (0.16)  --   --   -- 
Acquisition-related amortization of intangibles  7,424  5,456  0.14  7,205  5,270  0.14
Non-GAAP results $ 74,283  $ 42,883  $ 1.12  $ 48,027  $ 27,851  $ 0.73
   
 Six months ended
 July 31, 2014July 31, 2013
 Operating Income Net Income  Diluted EPS Operating Income Net Income  Diluted EPS 
GAAP results  $ 99,206  $ 52,795  $ 1.38  $ 65,890  $ 32,455  $ 0.85
Restatement and remediation-related expenses  17,614  13,087  0.34  13,986  9,947  0.26
Value added tax assessment  (6,229)  (6,229)  (0.16)  --   --   -- 
Acquisition-related amortization of intangibles  14,858  10,883  0.28  14,424  10,550  0.28
Non-GAAP results $ 125,449  $ 70,536  $ 1.84  $ 94,300  $ 52,952  $ 1.39
 
Return on Invested Capital (ROIC)
(In thousands)
   
 Twelve months ended
 July 31, 2014
Non-GAAP Net Operating Profit After Tax (NOPAT):  
Non-GAAP Operating Income  $ 306,083
Non-GAAP effective tax rate 32.1%
Non-GAAP NOPAT  $ 207,804
   
Average Invested Capital:  
Short-term debt (5-qtr average)  $ 45,868
Long-term debt (5-qtr average)  354,128
Non-GAAP Shareholders' Equity (5-qtr average)  2,071,795
Total average capital  2,471,791
Less: Cash (5-qtr average)  (583,025)
Average invested capital less average cash  $ 1,888,766
ROIC11%

CONTACT: Jeffery P. Howells, Executive Vice President and Chief Financial Officer 727-538-7825 (jeff.howells@techdata.com) or Arleen Quinones, Vice President, Investor Relations and Corporate Communications 727-532-8866 (arleen.quinones@techdata.com)



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Source: Tech Data Corporation


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