Tech Data — Q1 FY2019 Earnings Presentation
29 slides from Tech Data's earnings presentation, May 31, 2018
Slide 1: Q1 Fiscal Year 2019 Financial Highlights
Q1 Fiscal Year 2019 Financial Highlights For the quarter ended April 30, 2018 May 31, 2018
Slide 2: Forward-Looking Statements
2 Forward - Looking Statements Certain statements in this communication may contain “forward - looking statements” within the meaning of the Private Securities Litigatio n Reform Act of 1995. These statements, including statements regarding Tech Data’s plans, objectives, expectations and intentions,
Slide 3: Worldwide Net Sales Q1 FY19
3 Worldwide Q1 FY19: • Worldwide reported net sales of $8.5 billion increased 22% year - over - year and declined 15% sequentially . • The increase in net sales year - over - year is primarily attributed to changes in foreign currency exchange rates and an additional month of Technology Solutions’ (
Slide 4: Americas Net Sales
4 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Americas $3.1 $3.8 $3.7 $3.9 $3.6 Y/Y growth 42% 53% 52% 57% 15% Y/Y CC growth ⁽ ¹ ⁾ 42% 53% 52% 56% 15% $3.1 $3.8 $3.7 $3.9 $3.6 0% 2% 4% 6% 8% 10% 12% $- $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 Q1 FY19: • On a reported, and constant currency basis, Am
Slide 5: Europe Net Sales
5 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Europe $3.7 $4.0 $4.5 $5.9 $4.7 Y/Y growth 13% 19% 23% 36% 26% Y/Y CC growth ⁽ ¹ ⁾ 20% 21% 17% 23% 10% $3.7 $4.0 $4.5 $5.9 $4.7 -1% 1% 3% 5% 7% 9% 11% 13% 15% $- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 Q1 FY19: • Europe’s reported net sales of $4.7 billion increa
Slide 6: Asia Pacific Net Sales
6 Asia Pacific Q1 FY19: • Asia Pacific reported net sales of $0.27 billion increased 48 % year - over - year and declined 12% sequentially. • The increase in net sales is primarily attributed to an additional month of TS results. • On a constant currency basis, net sales increased 46% year - over -
Slide 7: Worldwide Gross Profit and Margin
7 $457.1 $515.6 $526.1 $616.9 $523.1 6.51% 6.37% 6.23% 6.15% 6.12% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% $- $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Gross Profit Gross Margin Q1 FY19: • Gross profit of $523.1 million increased $66 million or 14% co
Slide 8: SG&A Expenses (Non-GAAP)
8 (1) Non - GAAP SG&A excludes acquisition - related amortization of intangibles expenses and tax indemnifications. See GAAP to Non - GAAP reconcil iation in the appendix. Note: Both GAAP and non - GAAP SG&A percentage of net sales adjusted to reflect adoption of ASC 606. Q1 FY19: • Non - GAAP SG&A
Slide 9: Worldwide Operating Income
9 ⁽ ¹ ⁾ See the GAAP to Non - GAAP reconciliation in the appendix. Note: Both GAAP and non - GAAP operating margin percentage adjusted to reflect adoption of ASC 606. Q1 FY19: • Worldwide non - GAAP operating income of $124.1 million increased $0.9 million or 1 % compared to the prior - year quarter
Slide 10: Americas Operating Income
10 (1) Before stock compensation expense. (2) See the GAAP to non - GAAP reconciliation in the appendix. Note: Both GAAP and non - GAAP operating margin percentage adjusted to reflect adoption of ASC 606. Q1 FY19: • Americas ’ non - GAAP operating income of $85.9 million increased $7.4 million or 9
Slide 11: Europe Operating Income
11 Europe Q1 FY19: • Europe’s non - GAAP operating income of $43.6 million decreased $0.5 million or 1 % compared to the prior - year quarter. • Non - GAAP operating margin decreased 25 basis points from the prior - year quarter. $24.8 $18.5 $29.9 $100.4 $17.3 0.67% 0.46% 0.66% 1.71% 0.37% 0.00% 1.0
Slide 12: Asia Pacific Operating Income
12 Asia Pacific Q1 FY19: • The Asia Pacific region’s non - GAAP operating income of $1.1 million decreased $4.1 million or 79% compared to the prior - year quarter. • Non - GAAP operating margin decreased 247 basis points from the prior - year quarter. $4.3 $5.1 $2.4 $5.7 $(0.6) 2.37% 1.81% 0.91% 1.
Slide 13: Net Income and EPS
13 $70.1 $66.7 $76.7 $134.7 $70.8 $1.87 $1.74 $2.00 $3.50 $1.84 $- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $- $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 (1) See the GAAP to non - GAAP reconciliation in the appendix. Q1 FY19: • The effective tax rate was 21
Slide 14: Cash Metrics and Cash Conversion Cycle
14 Worldwide $224 $146 $70 $657 ($567) -$750 -$550 -$350 -$150 $50 $250 $450 $650 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Cash Conversion Cycle Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Days of Sales Outstanding 56 58 54 55 56 Days of Supply 32 32 32 29 33 Days of Purchases Outstanding (63) (66) (63)
Slide 15: Balance Sheet Highlights: Debt to Total Capital
15 48% 45% 41% 36% 36% Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Debt $2,286 $2,268 $1,920 $1,638 $1,620 Equity $2,481 $2,732 $2,724 $2,921 $2,869 Debt to Total Capital ratio 48% 45% 41% 36% 36% Debt to Total Capital Worldwide Q1 FY19: • Accumulated other comprehensive income, which consists of currency tr
Slide 16: Return on Invested Capital
16 • Company’s Weighted Average Cost of Capital is approximately 9 % (2) (1) See reconciliation of ROIC calculation in appendix. (2) Source: Bloomberg, May 24, 2018. 11% 4% Q1 FY18 TTM Q1 FY19 TTM Adjusted ROIC (1 ) ROIC (1 ) 13% 11% Q1 FY18 TTM Q1 FY19 TTM Return on Invested Capital Worldwide
Slide 17: Business Outlook
17 (1) See reconciliation in appendix. For the quarter ending July 31, 2018 Business Outlook Net Sales $8.6 billion - $8.9 billion EPS $1.13 - $1.43 Non - GAAP EPS (1) $1.95 - $2.25 Forward - Looking Statements Certain statements made in this document are “Forward - Looking Statements” as described
Slide 18: Appendix: GAAP to Non-GAAP Reconciliations
18 APPENDIX GAAP to Non - GAAP Reconciliations
Slide 19: ASC 606 Impact to Previously Reported Results
19 As reported Adjusted for ASC 606 As reported Adjusted for ASC 606 As reported Adjusted for ASC 606 As reported Adjusted for ASC 606 Net sales $7,664,063 $7,023,620 $8,882,691 $8,092,353 $9,135,728 $8,448,471 $11,092,529 $10,033,397 Gross profit margin 5.96% 6.51% 5.80% 6.37% 5.76% 6.23% 5.56% 6.1
Slide 20: SG&A Reconciliation
20 Three months ended April 30, 2017 July 31, 2017 October 31, 2017 January 31, 2018 April 30, 2018 (In thousands) Net Sales $ 7,023,620 $ 8,092,353 $ 8,448,471 $ 10,033,397 $ 8,548,319 GAAP SG&A expenses 352,632$ 410,598$ 416,766$ 428,965$ 422,361$ Tax indemnifications - - - (6,526) - Acquisition-r
Slide 21: Operating Income Q1 FY19
21 Americas ⁽ ¹ ⁾ Europe ⁽ ¹ ⁾ APAC ⁽ ¹ ⁾ Stock Compensation Expense Consolidated Net Sales 3,618,206$ 4,661,702$ 268,411$ 8,548,319$ GAAP operating income (loss) ⁽ ¹ ⁾ 61,342$ 17,318$ (577)$ (7,587)$ 70,496$ Acquisition, integration and restructuring expenses 13,916 17,988 321 1,000 33,225 Acquisit
Slide 22: Operating Income Q4 FY18
22 Americas ⁽ ¹ ⁾ Europe ⁽ ¹ ⁾ APAC ⁽ ¹ ⁾ Stock Compensation Expense Consolidated Net Sales 3,850,705$ 5,878,873$ 303,819$ 10,033,397$ GAAP operating income ⁽ ¹ ⁾ 53,924$ 100,439$ 5,704$ (8,164)$ 151,903$ Acquisition, integration and restructuring expenses 16,990 15,807 322 1,222 34,341 Acquisition-
Slide 23: Operating Income Q3 FY18
23 Americas ⁽ ¹ ⁾ Europe ⁽ ¹ ⁾ APAC ⁽ ¹ ⁾ Stock Compensation Expense Consolidated Net Sales 3,663,498$ 4,518,669$ 266,304$ 8,448,471$ GAAP operating income ⁽ ¹ ⁾ 55,551$ 29,909$ 2,432$ (8,325)$ 79,567$ Acquisition, integration and restructuring expenses 14,149 14,128 287 1,184 29,748 Acquisition-rel
Slide 24: Operating Income Q2 FY18
24 Americas ⁽ ¹ ⁾ Europe ⁽ ¹ ⁾ APAC ⁽ ¹ ⁾ Stock Compensation Expense Consolidated Net Sales 3,769,696$ 4,043,110$ 279,547$ 8,092,353$ GAAP operating income ⁽ ¹ ⁾ 87,975$ 18,464$ 5,066$ (7,974)$ 103,531$ LCD settlements and other, net (29,971) 1,316 - (28,655) Acquisition, integration and restructuri
Slide 25: Operating Income Q1 FY18
25 Americas ⁽ ¹ ⁾ Europe ⁽ ¹ ⁾ APAC ⁽ ¹ ⁾ Stock Compensation Expense Consolidated Net Sales 3,135,322$ 3,707,265$ 181,033$ 7,023,620$ GAAP operating income ⁽ ¹ ⁾ 50,900$ 24,799$ 4,297$ (4,918)$ 75,078$ LCD settlements and other, net (12,688) - - (12,688) Acquisition, integration and restructuring ex
Slide 26: Net Income and Diluted EPS Reconciliation
26 Net Income Diluted EPS Net Income Diluted EPS Net Income Diluted EPS Net Income Diluted EPS Net Income Diluted EPS GAAP Results $30,654 $0.82 $47,459 $1.24 $37,268 $0.97 $1,260 $0.03 $33,699 $0.87 LCD settlements and other, net (12,688) (0.34) (28,332) (0.74) - - - - (2,965) (0.08) Value added ta
Slide 27: Return on Invested Capital
27 TTM Net Operating Profit After Tax (NOPAT)*: 2018 2017 Operating income 405,497$ 314,422$ Income taxes on operating income ⁽ ¹ ⁾ (242,229) (75,583) NOPAT 163,268$ 238,839$ Average Invested Capital: Short-term debt (5-qtr end average) 262,413$ 251,115$ Long-term debt (5-qtr end average) 1,683,828
Slide 28: Adjusted Return on Invested Capital
28 TTM Net Operating Profit After Tax (NOPAT), as adjusted *: 2018 2017 Non-GAAP operating income ⁽ ¹ ⁾ 603,559$ 404,583$ Income taxes on non-GAAP operating income ⁽ ² ⁾ (178,518) (117,875) NOPAT, as adjusted 425,041$ 286,708$ Average Invested Capital, as adjusted: Short-term debt (5-qtr end average
Slide 29: Guidance Reconciliation
29 Guidance Reconciliation Low end of guidance range High end of guidance range Earnings per share - diluted $1.13 $1.43 Acquisition, integration and restructuring expenses 0.49 0.49 Acquisition-related intangible assets amortization expense 0.60 0.60 Income tax effect of the above adjustments (0.27