TECH DATA CORP (TECD) SEC Filing 10-Q Quarterly report for the period ending Wednesday, October 31, 2018

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NEWS     
FOR IMMEDIATE RELEASE     

TECH DATA CORPORATION REPORTS THIRD QUARTER
FISCAL YEAR 2019 RESULTS


CLEARWATER, Fla., (November 29, 2018)
-- Tech Data (Nasdaq: TECD) (the “Company”) today announced its financial results for the third quarter ended October 31, 2018.

 
 Third quarter ended October 31,
Nine months ended October 31,
($ in millions,
except per share amounts)
2018
2017
Y/Y Change
2018
2017
Y/Y Change
Net Sales
$9,340.0
$8,448.5
11%
$26,774.4
$23,564.4
14%
 
 
 
 
 
 
 
Operating income (GAAP)
$146.9
$79.6
85%
$327.7
$258.2
27%
Operating margin (GAAP)
1.57%
0.94%
63 bps
1.22%
1.10%
12 bps
 
 
 
 
 
 
 
Operating income (Non-GAAP)
$188.0
$135.7
39%
$447.0
$386.8
16%
Operating margin (Non-GAAP)
2.01%
1.61%
40 bps
1.67%
1.64%
3 bps
 
 
 
 
 
 
 
Net income (GAAP)
$114.2
$37.3
206%
$223.8
$115.4
94%
Net income (Non-GAAP)
$116.3
$76.7
52%
$264.8
$213.5
24%
 
 
 
 
 
 
 
EPS - diluted (GAAP)
$2.96
$0.97
205%
$5.80
$3.03
91%
EPS - diluted (Non-GAAP)
$3.02
$2.00
51%
$6.87
$5.60
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 Third Quarter Ended October, 31, 2018:
Net sales were $9.3 billion, an increase of 11 percent compared to the prior-year quarter. On a constant currency basis, net sales increased 12 percent.

o
Americas: Net sales were $4.1 billion (44 percent of worldwide net sales), an increase of 13 percent. On a constant currency basis, net sales increased 14 percent.

o
Europe: Net sales were $4.9 billion (53 percent of worldwide net sales), an increase of 9 percent. On a constant currency basis, net sales increased 12 percent.

o
Asia Pacific: Net sales were $0.3 billion (3 percent of worldwide net sales), an increase of 6 percent. On a constant currency basis, net sales increased 12 percent.
Gross profit was $556.6 million, an increase of $30.5 million, or 6 percent. As a percentage of net sales, gross profit was 5.96 percent compared to 6.23 percent in the prior-year quarter.

Selling, general and administrative expenses (“SG&A”) were $396.7 million, or 4.25 percent of net sales, compared to $416.8 million, or 4.93 percent of net sales in the prior-year quarter. Non-GAAP SG&A was $368.6 million, a decrease of $21.8 million, or 6 percent. As a percentage of net sales, non-GAAP SG&A was 3.95 percent, compared to 4.62 percent in the prior-year quarter. Included in SG&A and non-GAAP SG&A expenses is a $25 million benefit from the collection of a previously reserved accounts receivable.



The following information was filed by TECH DATA CORP on Thursday, November 29, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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  • 18466305_44
    Financial - Expense
    29 29 The following tables provide a comparison of our selling, general and administrative expenses for the three and nine months ended October 31, 2018 and 2017: The quarter to date decrease in SG&A;, as adjusted, of $12.5 million, as compared to the same period in the prior fiscal year, is primarily due to a benefit of approximately $25 million related to the collection of an accounts receivable balance previously considered uncollectible, partially offset by an expense of $5.5 million to record an indemnification liability to Avnet due to the resolution of a pre-acquisition tax matter.
  • 18466305_49
    MA - Other
    Acquisition of TS Acquisition of TS Acquisition of TS Acquisition, integration and restructuring expenses related to the acquisition of TS are primarily comprised of restructuring costs, Information Technology ("IT") related costs, professional services, transaction related costs and other costs.
  • 18466305_8
    Other - Other
    Risk Factors in our Annual Report on Form 10-K for the year ended January 31, 2018 for further information with respect to important risks and other factors that could cause actual results to differ materially from those in the forward-looking statements.
  • 18466305_43
    Financial - Earnings
    The quarter and year to date decrease in gross profit as a percentage of net sales, as reported, of 27 basis points and 36 basis points, respectively, is primarily due to the mix of products sold and the impact of a competitive environment.
  • 18466305_50
    Financial - Expense
    Restructuring costs are comprised of severance and facility exit costs.
  • 18466305_61
    Financial - Expense
    Restructuring expenses for the three and nine months ended October 31, 2018 related to the GBO Program are comprised of the following: During the three months ended October 31, 2018, we recorded restructuring costs related to the GBO Program of $2.5 million in the Americas, $10.1 million in Europe and $0.5 million in Asia-Pacific.
  • 18466305_82
    Financial - Expense
    Interest expense decreased by $0.5 million to $25.4 million in the third quarter of fiscal 2019 compared to $25.9 million in the third quarter of fiscal 2018.
  • 18466305_48
    MA - Other
    Acquisition, integration and restructuring expenses are comprised of costs related to the fiscal 2018 acquisition of TS as well as restructuring costs related to the Global Business Optimization Program which was initiated in fiscal 2019.
  • 18466305_70
    Financial - Income
    The quarter and year to date increases in non-GAAP operating income of $52.3 million and $60.2 million, respectively, are primarily due to an increase in net sales volume and a benefit of approximately $25 million related to the collection of an accounts receivable balance previously considered uncollectible.
  • 18466305_74
    Financial - Income
    The quarter and year to date increases in non-GAAP operating income of $39.3 million and $57.4 million, respectively, are primarily due to an increase in net sales volume and a benefit of approximately $25 million related to the collection of an accounts receivable balance previously considered uncollectible.
  • 18466305_32
    Financial - Income
    25 25 The following table sets forth our Consolidated Statement of Income as a percentage of net sales: 26 26 The following table summarizes our net sales and change in net sales by geographic region for the three months ended October 31, 2018 and 2017: The increase in Americas net sales, as adjusted, of $496 million is primarily due to growth in personal computer systems and data center products.
  • 18466305_41
    Financial - Earnings
    The following tables provide a comparison of our gross profit and gross profit as a percentage of net sales for the three and nine months ended October 31, 2018 and 2017: The quarter and year to date increase in gross profit, as adjusted, of $40.2 million and $76.9 million, respectively, is primarily due to an increase in net sales volume.
  • 18466305_76
    Financial - Income
    33 33 The quarter to date increases in both GAAP and non-GAAP operating income are primarily due to an increase in net sales volume.
  • 18466305_31
    Other - Other
    Additionally, because these non-GAAP measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures reported by other companies.
  • 18466305_84
    Financial - Expense
    On a year to date basis, interest expense decreased by $5.8 million to $79.4 million in the first nine months of fiscal 2019 compared to $85.2 million in the same period of the prior fiscal year.
  • 18466305_143
    Other - Other
    The outstanding principal amount of the 2022 Term Loans is payable in equal quarterly installments of i) for the first three years after the funding date, 5.0% per annum of the initial principal amount and ii) for the fourth and fifth years after the funding date, 10.0% per annum of the initial principal amount, with the remaining balance payable on February 27, 2022.
  • 18466305_37
    Revenue - Geography
    The increase in Europe net sales, as adjusted, of approximately $1.3 billion is primarily due to growth in data center and software products, including the impact of an additional month of TS operations due to the timing of the completion of the acquisition in the prior year, as well as growth in mobility products and personal computer systems.
  • 18466305_99
    Financial - Earnings
    During the three and nine months ended October 31, 2018, we decreased our provisional estimate of the one-time transition tax by $24.0 million upon further analysis of earnings and profits of our foreign subsidiaries and utilization of foreign tax credits.
  • 18466305_36
    Revenue - Product
    27 27 The following table summarizes our net sales and change in net sales by geographic region for the nine months ended October 31, 2018: The increase in Americas net sales, as adjusted, of approximately $1.2 billion is primarily due to growth in data center and software products, including the impact of an additional month of TS operations due to the timing of the completion of the acquisition in the prior year, as well as growth in personal computer systems.
  • 18466305_132
    Other - Other
    We, at our option, may redeem the 3.70% Senior Notes at any time prior to January 15, 2022 and the 4.95% Senior Notes at any time prior to November 15, 2026, in each case in whole or in part, at a redemption price equal to the greater of (i) 100% of the principal amount of the 2017 Senior Notes to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the 2017 Senior Notes to be redeemed, discounted to the date of redemption on a semi-annual basis at a rate equal to the sum of the applicable Treasury Rate plus 30 basis points for the 3.70% Senior Notes and 40 basis points for the 4.95% Senior Notes, plus the accrued and unpaid interest on the principal amount being redeemed up to the date of redemption.
  • 18466305_164
    Other - Other
    We have uncommitted accounts receivable purchase agreements under which certain accounts receivable may be sold, without recourse, to third-party financial institutions.
  • 18466305_38
    Revenue - Geography
    The impact of changes in foreign currencies is primarily due to the strengthening of the euro against the U.S. dollar.
  • 18466305_55
    Financial - Expense
    For the nine months ended October 31, 2018, other costs are partially offset by the gain recorded related to the settlement agreement with Avnet (see Note 4 of Notes to Consolidated Financial Statements for further discussion).
  • 18466305_116
    Other - Other
    The increase in net cash used by financing activities is primarily due to current year payments of $200 million under the Term Loan Credit Agreement as compared to net borrowings in the prior year of $800 million, partially offset by the repayment of $350 million of Senior Notes upon maturity in the prior year.
  • 18466305_33
    Revenue - Geography
    The increase in Europe net sales, as adjusted, of $522 million is primarily due to growth in mobility and data center products, as well as personal computer systems.
  • 18466305_35
    Revenue - Geography
    The increase in Asia-Pacific net sales, as adjusted, of $31 million is primarily due to growth in data center products.
  • 18466305_110
    Revenue - Product
    Our net cash days are defined as days of sales outstanding in accounts receivable ("DSO") plus days of supply on hand in inventory ("DOS"), less days of purchases outstanding in accounts payable ("DPO").
  • 18466305_4
    Other - Other
    In addition, any statements that refer to our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances, are forward-looking statements.
  • 18466305_73
    Financial - Income
    The year to date increase in GAAP operating income of $67.3 million is primarily due to an increase in net sales volume, a benefit of approximately $25 million related to the collection of an accounts receivable balance previously considered uncollectible and a decrease in acquisition, integration and restructuring expenses, partially offset by lower gains from legal settlements.
  • 18466305_153
    Other - Other
    There were no amounts outstanding under the Receivables Securitization Program at October 31, 2018 and January 31, 2018.
  • 18466305_107
    Financial - Earnings
    38 38 The following table provides an analysis of GAAP and non-GAAP net income and earnings per share-diluted as well as a reconciliation of results recorded in accordance with GAAP and non-GAAP financial measures for the three months ended October 31, 2018 and 2017 ($ in millions, except per share data): 39 39 The following table provides an analysis of GAAP and non-GAAP net income and earnings per share-diluted as well as a reconciliation of results recorded in accordance with GAAP and non-GAAP financial measures for the nine months ended October 31, 2018 and 2017 ($ in millions, except per share data): 40 40 Our discussion of liquidity and capital resources includes an analysis of our cash flows and capital structure for all periods presented.
  • 18466305_52
    Other - Other
    Professional services are primarily comprised of integration related activities, including professional fees for project management, accounting, tax and other consulting services.
  • 18466305_133
    Other - Other
    We may also redeem the 2017 Senior Notes, at any time in whole or from time to time in part, on or after January 15, 2022 for the 3.70% Senior Notes and November 15, 2026 for the 4.95% Senior Notes, in each case, at a redemption price equal to 100% of the principal amount of the 2017 Senior Notes to be redeemed.
  • 18466305_115
    MA - Other
    The decrease in net cash used in investing activities is primarily due to $2.25 billion in cash paid in the prior year for the acquisition of TS, net of cash acquired.
  • 18466305_39
    Revenue - Geography
    The increase in Asia-Pacific net sales, as adjusted, of $132 million is primarily due to growth in data center products and the impact of an additional month of TS operations due to the timing of the completion of the acquisition in the prior year.
  • 18466305_167
    Other - Other
    In addition, certain of these agreements also require that we continue to service, administer and collect the sold accounts receivable.
  • 18466305_79
    Financial - Income
    The year to date decreases in both GAAP and non-GAAP operating income are primarily due to investments in personnel to support our operations in the region.
  • 18466305_26
    Revenue - Geography
    The impact of changes in foreign currencies is calculated by using the exchange rates from the prior year comparable period applied to the results of operations for the current period.
  • 18466305_60
    Financial - Expense
    The GBO Program is expected to result in annual cost savings of $70 million to $80 million over the next two years, of which approximately half is expected to be reinvested to accelerate our strategic priorities.
  • 18466305_40
    Revenue - Product
    28 28 The following table provides a comparison of net sales generated from products purchased from vendors that exceeded 10% of our consolidated net sales for the three and nine months ended October 31, 2018 and 2017 (as a percent of consolidated net sales): There were no customers that exceeded 10% of our consolidated net sales for the three and nine months ended October 31, 2018 and 2017.

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  • Form Type: Quarterly
  • Number of times amended: 0
  • Accession Number: 0000790703-18-000029
  • Submitted to the SEC: Thursday, December 6, 2018 6:07:44 AM EST
  • Accepted by the SEC: Thursday, December 6, 2018
  • Period ending: October 2018
  • Industry: Wholesale Computers And Peripheral Equipment And Software