Tech Data — Q4 FY2019 Earnings Presentation
31 slides from Tech Data's earnings presentation, Mar 7, 2019
Slide 1: Q4 Fiscal Year 2019 Financial Highlights
Q4 Fiscal Year 2019 Financial Highlights For the quarter ended January 31, 2019 March 7, 2019
Slide 2: Forward-Looking Statements
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, Tech D
Slide 3: Worldwide Net Sales
Worldwide Net Sales $ in Billions Q4 FY19: $10.5 $10.0 • Worldwide reported net sales of $10.5 billion $9.3 3% increased 4% year-over-year and 12% sequentially. 3% $8.5 $8.9 3% 3% 3% 38% 41% • On a constant currency basis, net sales increased 8% 44% Asia Pacific 42% 46% year-over-year and 13% sequen
Slide 4: Worldwide Gross Profit and Margin
Worldwide Gross Profit and Margin $ in Millions Q4 FY19: • Gross profit of $649.1 million increased $32.3 million or 5% compared to the prior-year quarter. • Gross margin rate improved 5 basis points from the prior-year quarter. Note: Gross margin percentage adjusted to reflect adoption of ASC 606.
Slide 5: Worldwide SG&A Expenses
Worldwide SG&A Expenses $ in Millions Q4 FY19: • Non-GAAP SG&A expenses of $388.3 million decreased $12.6 million or 3% compared to the prior- year quarter. • Non-GAAP SG&A as a percentage of net sales decreased 29 basis points from the prior-year quarter. • GAAP depreciation and amortization expens
Slide 6: Worldwide Operating Income
Worldwide Operating Income $ in Millions Q4 FY19: • Worldwide non-GAAP operating income of $260.9 million increased $44.9 million or 21% compared to the prior-year quarter, and 25% on a constant currency basis. • Worldwide non-GAAP operating margin improved 34 basis points from the prior-year quarte
Slide 7: Worldwide Net Income and EPS
Worldwide Net Income and EPS Q4 FY19: $ in Millions (except EPS) • The effective tax rate was 12%, compared to 99% in the prior-year quarter. The non-GAAP effective tax rate was 25%, compared to 29% in the prior-year quarter. • Non-GAAP net income of $171.1 million increased $36.4 million or 27% com
Slide 8: Regional Results - Americas Net Sales
Regional Results - Americas Net Sales $ in Billions Q4 FY19: $4.2 $4.0 $4.1 $3.9 $3.6 • Americas’ reported net sales were $4.2 billion, an increase of 10% year-over-year and 3% sequentially • On a constant currency basis, net sales increased 11% year-over-year and 3% sequentially. Q4 FY18 Q1 FY19 Q2
Slide 9: Regional Results - Americas Operating Income
Regional Results - Americas Operating Income (1) $ in Millions Q4 FY19: • Americas’ non-GAAP operating income of $125.2 million increased $40.2 million or 47% compared to the prior-year quarter, and 49% on a constant currency basis. • Non-GAAP operating margin improved 74 basis points over the prior
Slide 10: Regional Results - Europe Net Sales
Regional Results - Europe Net Sales $ in Billions Q4 FY19: $5.9 $5.9 • Europe’s reported net sales were $5.9 billion, $4.9 essentially flat year-over-year and an increase $4.7 $4.5 of 20% sequentially. • On a constant currency basis, net sales increased 5% year-over-year and 22% sequentially. Q4 FY1
Slide 11: Regional Results - Europe Operating Income
Regional Results - Europe Operating Income (1) $ in Millions Q4 FY19: • Europe’s non-GAAP operating income of $133.4 million increased $3.0 million or 2% compared to the prior-year quarter, and 7% on a constant currency basis. • Non-GAAP operating margin improved 4 basis points from the prior-year q
Slide 12: Regional Results - Asia Pacific Net Sales
Regional Results - Asia Pacific Net Sales $ in Billions Q4 FY19: $0.33 $0.30 $0.29 • Asia Pacific reported net sales were $0.33 $0.28 $0.27 billion, an increase of 8% year-over-year and an increase of 16% sequentially. • On a constant currency basis, net sales increased 13% year-over-year and 15% se
Slide 13: Regional Results - Asia Pacific Operating Income
Regional Results - Asia Pacific Operating Income (1) $ in Millions Q4 FY19: • The Asia Pacific region’s non-GAAP operating income of $9.7 million increased $2.3 million or 30% compared to the prior- year quarter, and 38% on a constant currency basis. • Non-GAAP operating margin improved 52 basis poi
Slide 14: Worldwide Cash Metrics
Worldwide Cash Metrics Cash Flow from Operations Cash Conversion Cycle ⁽¹⁾ $ in Millions Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Days of Sales 55 56 53 58 54 Outstanding Days of Supply 29 33 33 33 31 Days of Purchases (68) (65) (68) (73) (70) Outstanding Cash Conversion 16 24 18 18 15 Cycle FY19: •
Slide 15: Worldwide Balance Sheet Highlights
Worldwide Balance Sheet Highlights Q4 FY19: • Accumulated other comprehensive income, which consists of currency translation, net of applicable taxes, was $44 million. • Capital expenditures were $21 million. • At January 31, 2019, the company had $2.9 billion of equity, and 36.94 million shares out
Slide 16: Worldwide Return on Invested Capital
Worldwide Return on Invested Capital • Company’s Weighted Average Cost of Capital is approximately 9% • Excluding a $25 million benefit from the collection of an accounts receivable balance previously considered uncollectible, adjusted return on invested capital in Q4 FY19 TTM was 13% (1) See reconc
Slide 17: Worldwide Share Repurchase Activity
Worldwide Share Repurchase Activity Number of Amount Shares Average Repurchased Repurchased Price Per ($ millions) Share (millions) Q4 FY19 Share Repurchases $63 0.808 $78.28 FY19 Share Repurchases $107 1.429 $74.89 Amount remaining on current authorization* $193 million * Amount remaining reflects
Slide 18: Forward-Looking Statements and Business Outlook
Forward-Looking Statements Business Outlook Certain statements made in this document are “Forward-Looking Statements” as described in the For the quarter ending April 30, 2019 Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties further described
Slide 19: FY20 Annual Modeling Assumptions
FY20 Annual Modeling Assumptions Revenue Growth Low-single digit 1 Adjusted Non-GAAP Operating Income Growth Mid-single digit 1,2 Interest Expense $100 million - $105 million Effective Tax Rate 24% - 26% Adjusted Non-GAAP EPS Growth ~10% 1,2 Capex $90 million - $100 million Adjusted ROIC 13% - 14% 1
Slide 20: Appendix: GAAP to Non-GAAP Reconciliations
APPENDIX GAAP to Non-GAAP Reconciliations 20
Slide 21: ASC Impact to Previously Reported Results
ASC 606 Impact to Previously Reported Results Three months ended, April 30, 2017 July 31, 2017 October 31, 2017 January 31, 2018 Adjusted for Adjusted for Adjusted for Adjusted for As reported As reported As reported As reported ASC 606 ASC 606 ASC 606 ASC 606 Net sales $7,664,063 $7,023,620 $8,882,
Slide 22: SG&A
SG&A $ in thousands Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Net Sales $ 10,033,397 $ 8,548,319 $ 8,886,101 $ 9,340,029 $ 10,464,501 SG&A Expenses (GAAP) $ 428,965 $ 422,361 $ 415,319 $ 396,675 $ 414,540 Tax indemnifications (6,526) - (554) (5,541) (3,539) Acquisition-related intangible assets amorti
Slide 23: Operating Income Q4 FY19
Operating Income Q4 FY19 (In thousands) Q4 FY19 Stock Americas (1) Europe (1) Asia Pacific (1) Compensation Consolidated Expense Net Sales $ 4,241,714 $ 5,895,072 $ 327,715 $ 10,464,501 Operating income (GAAP) (1) $ 104,966 $ 109,083 $ (40,177) $ (7,819) $ 166,053 Acquisition, integration and restru
Slide 24: Operating Income Q3 FY19
Operating Income Q3 FY19 Q3 FY19 (In thousands) Stock Americas (1) Europe (1) Asia Pacific (1) Compensation Consolidated Expense Net Sales $ 4,137,852 $ 4,920,156 $ 282,021 $ 9,340,029 Operating income (GAAP) (1) $ 112,399 $ 39,889 $ 2,739 $ (8,139) $ 146,888 Acquisition, integration and restructuri
Slide 25: Operating Income Q2 FY19
Operating Income Q2 FY19 Q2 FY19 (In thousands) Stock Americas (1) Europe (1) Asia Pacific (1) Compensation Consolidated Expense Net Sales $ 4,043,331 $ 4,549,127 $ 293,643 $ 8,886,101 Operating income (GAAP) (1) $ 87,930 $ 29,085 $ 1,318 $ (7,968) $ 110,365 Acquisition, integration and restructurin
Slide 26: Operating Income Q1 FY19
Operating Income Q1 FY19 (In thousands) Q1 FY19 Stock Americas (1) Europe (1) Asia Pacific (1) Compensation Consolidated Expense Net Sales $ 3,618,206 $ 4,661,702 $ 268,411 $ 8,548,319 Operating income (GAAP) (1) $ 61,342 $ 17,318 $ (577) $ (7,587) $ 70,496 Acquisition, integration and restructuring
Slide 27: Operating Income Q4 FY18
Operating Income Q4 FY18 (In thousands) Q4 FY18 Stock Americas (1) Europe (1) Asia Pacific (1) Compensation Consolidated Expense Net Sales $ 3,850,705 $ 5,878,873 $ 303,819 $ 10,033,397 Operating income (GAAP) (1) $ 53,924 $ 100,439 $ 5,704 $ (8,164) $ 151,903 Acquisition, integration and restructur
Slide 28: Net Income and EPS
Net Income and EPS (In thousands, except per Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 share data) Net Income Diluted EPS Net Income Diluted EPS Net Income Diluted EPS Net Income Diluted EPS Net Income Diluted EPS GAAP Results $1,260 $0.03 $33,699 $0.87 $75,866 $1.97 $114,216 $2.96 $116,799 $3.11 Acqu
Slide 29: Return on Invested Capital
Return on Invested Capital $ in thousands Twelve months ended January 31, TTM Net Operating Profit After Tax (NOPAT)*: 2018 2019 Operating income $ 410,079 $ 493,802 Income taxes on operating income (1) (250,151) (43,264) NOPAT $ 159,928 $ 450,538 Average Invested Capital: Short-term debt (5-qtr end
Slide 30: Adjusted Return on Invested Capital
Adjusted Return on Invested Capital $ in thousands Twelve months ended January 31, TTM Net Operating Profit After Tax (NOPAT), as adjusted*: 2018 2019 Non-GAAP operating income (1) $ 602,704 $ 707,886 Income taxes on non-GAAP operating income (2) (184,370) (181,704) NOPAT, as adjusted $ 418,334 $ 52
Slide 31: Guidance Reconciliation
Guidance Reconciliation Three months ending April 30, 2019 Low end of High end of guidance range guidance range Earnings per share - diluted $1.19 $1.49 Acquisition, integration and restructuring expenses 0.22 0.22 Acquisition-related intangible assets amortization expense 0.58 0.58 Income tax effec