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TECH DATA CORPORATION REPORTS FOURTH QUARTER AND FISCAL YEAR 2017 RESULTS


CLEARWATER, Fla, 8. März 2017:

Tech Data Corporation (NASDAQ: TECD) (the “Company”) today announced its financial results for the fourth quarter and fiscal year ended January 31, 2017.

 

 Fourth quarter ended January 31,

Fiscal year ended January 31,

($ in millions,

except per share amounts)

2017 

    2016

   Y/Y        Change

2017 

 2016

  Y/Y Change

 

Net Sales

$7,427.5

$7,483.6

-1%

$26,234.9

$26,379.8

-1%

 

 

 

 

 

 

 

 

 

Operating income (GAAP)

$103.1

$145.2

-29%

$291.9

$401.4

-27%

 

Operating margin (GAAP)

1.39%

1.94%

-55 bps

1.11%

1.52%

-41 bps   

 

 

 

 

 

 

 

 

 

Operating income (Non-GAAP)

$122.1

$116.8

5%

$338.9

$319.1

 6%

 

Operating margin (Non-GAAP)

1.64%

1.56%

8 bps

1.29%

1.21%

 8 bps

 

 

 

 

 

 

 

 

 

Net income (GAAP)

$78.8

$96.1

-18%

$195.1

$265.7

-27%

 

Net income (Non-GAAP)

$87.0

$80.9

 8%

$225.2

$208.2

   8%

 

 

 

 

 

 

 

 

 

EPS - diluted (GAAP)

$2.22

$2.72

-18%

$5.51

$7.36

 -25%

 

EPS - diluted (Non-GAAP)

$2.45

$2.29

 7%

$6.36

$5.77

  10%

 


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 Fourth Quarter Ended January 31, 2017:

  • Net sales were $7.4 billion, a decrease of 1 percent compared to the prior-year quarter. On a constant currency basis, net sales increased 2 percent.
    • The Americas: Net sales were $2.7 billion (36 percent of worldwide net sales), essentially flat compared to the prior-year quarter.
    • Europe: Net sales were $4.7 billion (64 percent of worldwide net sales), a decrease of 1 percent compared to the prior-year quarter. On a constant currency basis, net sales increased 3 percent.
  • Gross profit was $371.0 million, an increase of $16.4 million, compared to the prior-year quarter. As a percentage of net sales, gross profit was 5.00 percent compared to 4.74 percent in the prior-year quarter.
  • Selling, general and administrative expenses (“SG&A”) were $253.9 million, or 3.42 percent of net sales, compared to $244.0 million, or 3.26 percent of net sales in the prior-year quarter. Non-GAAP SG&A was $248.9 million, an increase of $11.0 million, or 5 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP SG&A was 3.35 percent, compared to 3.18 percent in the prior-year quarter.
  • Worldwide operating income was $103.1 million, or 1.39 percent of net sales compared to $145.2 million or 1.94 percent of net sales in the prior-year quarter. Operating income for the prior-year quarter included $35.3 million of gains related to LCD settlement agreements, net of attorney fees and expenses. Non-GAAP operating income was $122.1 million, an increase of $5.3 million, or 5 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP operating income was 1.64 percent, an improvement of 8 basis points over the prior-year quarter.
    • The Americas: Operating income was $39.3 million, or 1.45 percent of net sales, compared to $73.6 million, or 2.73 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 $47.4 million, an increase of $8.5 million, or 22 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP operating income was 1.75 percent, an improvement of 31 basis points over the prior-year quarter.
    • Europe: Operating income was $66.7 million, or 1.41 percent of net sales, compared to $75.1 million, or 1.57 percent of net sales in the prior-year quarter. Non-GAAP operating income was $77.7 million, a decline of $3.8 million, or 5 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP operating income was 1.65 percent compared to 1.70 percent in the prior-year quarter.
    • Stock-based compensation expense was $2.9 million, a decrease of $0.6 million, compared to 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 $78.8 million, compared to $96.1million 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 $87.0 million, an increase of $6.1 million, or 8 percent, compared to the prior-year quarter.
  • Earnings per share on a diluted basis (“EPS”) were $2.22, compared to $2.72 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 $2.45, an increase of $0.16, or 7 percent compared to the prior-year quarter.
  • Net cash generated by operations during the quarter was $445 million.  

Financial Highlights for the Fiscal Year Ended January 31, 2017:

  • Net sales were $26.2 billion, a decrease of 1 percent compared to the prior year. On a constant currency basis, net sales increased approximately 1 percent.
    • The Americas: Net sales were $10.4 billion (40 percent of worldwide net sales), essentially flat compared to the prior-year. On a constant currency basis, net sales increased approximately 1 percent.
    • Europe: Net sales were $15.8 billion (60 percent of worldwide net sales), a decrease of 1 percent compared to the prior-year. On a constant currency basis, net sales increased approximately 2 percent.
  • Gross profit was $1.3 billion, an increase of $15.3 million, compared to the prior-year. As a percentage of net sales, gross profit was 4.96 percent compared to 4.88 percent in the prior-year.
  • Selling, general and administrative expenses (“SG&A”) were $984.2 million, or 3.75 percent of net sales, compared to $990.9 million, or 3.76 percent of net sales in the prior-year. Non-GAAP SG&A was $963.0 million, a decrease of $4.6 million, compared to the prior-year. As a percentage of net sales, non-GAAP SG&A was 3.67 percent, consistent with the prior-year.
  • Worldwide operating income was $291.9 million, or 1.11 percent of net sales compared to $401.4 million or 1.52 percent of net sales in the prior-year. Operating income for the prior-year included $98.4 million of gains related to LCD settlement agreements, net of attorney fees and expenses. Non-GAAP operating income was $338.9 million, an increase of $19.9 million, or 6 percent, compared to the prior-year. As a percentage of net sales, non-GAAP operating income was 1.29 percent, an improvement of 8 basis points from the prior-year.
    • The Americas: Operating income was $144.2 million, or 1.39 percent of net sales, compared to $235.6 million, or 2.27 percent of net sales in the prior-year. Operating income for the prior-year included the aforementioned LCD settlement gains. Non-GAAP operating income was $160.0 million, an increase of $20.2 million, or 14 percent, compared to the prior-year. As a percentage of net sales, non-GAAP operating income was 1.54 percent, an improvement of 19 basis points from the prior-year.
    • Europe: Operating income was $161.6 million, or 1.02 percent of net sales, compared to $180.7 million, or 1.13 percent of net sales in the prior-year. Non-GAAP operating income was $192.9 million, a decrease of $1.3 million, or 1 percent, compared to the prior-year. As a percentage of net sales, non-GAAP operating income was 1.22 percent, an improvement of 1 basis point from the prior-year.
    • Stock-based compensation expense was $13.9 million, a decrease of $0.9 million, compared to the prior-year. 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 $195.1 million, compared to $265.7 million in the prior-year. Net income for the prior-year included the aforementioned LCD settlement gains, net of taxes. Non-GAAP net income was $225.2 million, an increase of $17.1 million, or 8 percent, compared to the prior-year.
  • Earnings per share on a diluted basis (“EPS”) were $5.51, compared to $7.36 in the prior year. Earnings per share for the prior-year included the aforementioned LCD settlement gains, net of taxes. Non-GAAP EPS was $6.36, an increase of $0.59, or 10 percent compared to the prior-year.
  • For fiscal year 2017, net cash provided by operations was $657 million.
  • Return on invested capital on a non-GAAP basis for the trailing twelve months was 14 percent compared to 13 percent in the prior year period.

“Our strong Q4 results capped a historic year for Tech Data - a fiscal year of significant strategic progress and strong financial performance. In fiscal 17 we achieved all of our primary financial objectives: we gained share in key geographies, gained share in select product categories and with key vendors. We also improved non-GAAP operating income; and delivered our highest non-GAAP earnings per share in the history of our company,” said Robert M. Dutkowsky, chief executive officer. “Tech Data accomplished all of this despite a dynamic global geopolitical and economic environment, a significant vendor consolidation, and an evolving IT consumption model. On top of this, we recapitalized the company and entered into the largest, most transformative acquisition in our company’s history which we completed last week. Our fiscal 2017 performance clearly validates our strategy and speaks to the strength of our operations, the quality of our management team, and the exceptional talent and hard work of our employees.”

Business Outlook  

Due to the short timeframe between the reporting of Tech Data’s fourth quarter results and completion of Tech Data’s acquisition of Avnet’s Technology Solutions business (“Technology Solutions”), the Company is not providing financial guidance for its first quarter of fiscal year 2018. Tech Data plans to provide financial guidance for the combined company with its first-quarter fiscal year 2018 results.

Tech Data expects the Technology Solutions transaction to be significantly accretive to the Company’s non-GAAP earnings per share in the first year after closing. The Company also expects to realize $50 million of cost savings in the first 12 months after closing, and $100 million during the second full year. In addition, the Company expects to incur one-time costs to achieve the cost savings of approximately $150 million.

Webcast Details

Tech Data will hold a conference call today at 9:00 a.m. (ET) to discuss its financial results for the fourth quarter ended January 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”) 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, acquisition and integration-related expenses, restatement and remediation related expenses, acquisition-related financing expenses and the reversal of deferred tax valuation allowances. 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 relating to the acquisition of Avnet’s Technology Solutions business (“Technology Solutions”), Technology Solutions’ expected contribution to Tech Data’s results, the expected benefits of Technology Solutions, Tech Data’s and Technology Solutions’ 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 Technology Solutions and the operating environment, economies and markets in which Tech Data and Technology Solutions  operate 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 or Technology Solutions’ 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, 2016, 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 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 $26.2 billion in net sales for the fiscal year ended January 31, 2017. 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)

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)

TECH DATA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(In thousands, except par value and share amounts)

TECH DATA CORPORATION AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

 (In thousands)


TECH DATA CORPORATION AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

 (In thousands)


TECH DATA CORPORATION AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

(In thousands, except per share amounts) 

TECH DATA CORPORATION AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

 (In thousands)

Return on Invested Capital (ROIC)

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