OREANDA-NEWS. Tech Data Corporation today announced its financial results for the first quarter ended April 30, 2016.

Financial Highlights for the First Quarter Ended April 30, 2016:

  • Net sales were $6.0 billion, an increase of 1 percent compared to the prior-year quarter. On a constant currency basis, and excluding from the prior period net sales generated in Chile, Peru and Uruguay (“exited operations”) due to the Company’s previously announced exit from those countries, net sales increased 2 percent.
    • The Americas: Net sales were $2.4 billion (40 percent of worldwide net sales), an increase of 2 percent compared to the prior-year quarter. On a constant currency basis, and excluding from the prior period net sales generated in the exited operations, net sales grew approximately 4 percent.
    • Europe: Net sales were $3.6 billion (60 percent of worldwide net sales), an increase of 1 percent compared to the prior-year quarter. On a constant currency basis, net sales grew 1 percent year-over-year.
  • Gross profit was $298.6 million, an increase of $6.7 million, or 2 percent, compared to the prior-year quarter. As a percentage of net sales, gross profit was 5.01 percent, an improvement of 5 basis points.
  • Selling, general and administrative expenses (“SG&A”) were $246.5 million, or 4.13 percent of net sales, compared to $248.5 million, or 4.22 percent of net sales in the prior-year quarter. Non-GAAP SG&A was $241.1 million, a decrease of $0.7 million, compared to the prior-year quarter. As a percentage of net sales, non-GAAP SG&A was 4.04 percent, an improvement of 7 basis points.
     
  • Worldwide operating income was $52.6 million, or 0.88 percent of net sales compared to $81.9 million or 1.39 percent of net sales in the prior-year quarter. Operating income for the prior-year quarter included $38.5 million of gains related to LCD settlement agreements, net of attorney fees and expenses. Non-GAAP operating income was $57.6 million, an increase of $7.4 million, or 15 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP operating income was 0.97 percent, an improvement of 12 basis points.
    • The Americas: Operating income was $31.3 million, or 1.31 percent of net sales, compared to $62.4 million, or 2.67 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 $31.4 million, an increase of $7.0 million, or 29 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP operating income was 1.32 percent, an improvement of 28 basis points.
    • Europe: Operating income was $24.9 million, or 0.70 percent of net sales, compared to $23.4 million, or 0.66 percent of net sales in the prior-year quarter. Non-GAAP operating income was $29.8 million, an increase of $0.2 million or approximately 1 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP operating income was 0.83 percent, essentially flat compared to the prior-year quarter.
    • Stock-based compensation expense was $3.7 million, compared to $3.8 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 $33.4 million, compared to $51.3 million in the prior-year quarter. Earnings per share on a diluted basis (“EPS”) were $0.94, compared to $1.38 in the prior year quarter. Net income and EPS for the prior-year quarter included the aforementioned LCD settlement gains, net of taxes. Non-GAAP net income was $37.0 million, an increase of $7.5 million, or 25 percent, compared to the prior-year quarter. Non-GAAP EPS was $1.05, an increase of $0.25, or 31 percent, compared to $0.80 in the prior-year quarter.
     
  • Net cash generated by operations during the quarter was $276 million.
     
  • Return on invested capital on a non-GAAP basis for the trailing twelve months was 14 percent compared to 11 percent in the prior year.

“We are pleased to report a strong start to fiscal year 2017,” said Robert M. Dutkowsky, chief executive officer. “In Q1, our teams capitalized on pockets of demand and delivered above-market sales growth. Higher sales, coupled with strong margin and expense management, resulted in double-digit growth in non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per share. In addition, we generated $276 million in cash from operations and earned a return on invested capital of 14 percent – a 300 basis point improvement over the prior year period. Tech Data’s Q1 results are a testament to the strength of our geographic, vendor, product and customer portfolios and to the flexibility of our business model. Our diverse, end-to-end portfolio of IT Solutions enables us to capture opportunities in the evolving IT marketplace, deliver differentiated value to our customers and vendor partners, and produce strong results for our shareholders.” 

Business Outlook

  • For the quarter ending July 31, 2016, the Company anticipates worldwide net sales to be in the range of $6.55 billion to $6.75 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 $1.12 to €1.00. 
     
  • For the quarter ending July 31, 2016, the Company anticipates non-GAAP EPS to be in the range of $1.39 to $1.49.
     
  • This guidance assumes weighted average diluted shares outstanding of 35.4 million and an effective tax rate in the range of 28 percent to 30 percent.