Tech Data — Q3 FY2019 Earnings Presentation
30 slides from Tech Data's earnings presentation, Nov 29, 2018
Slide 1: Q3 Fiscal Year 2019 Financial Highlights
Q3 Fiscal Year 2019 Financial Highlights For the quarter ended October 31, 2018 November 29, 2018
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 Q3 FY19: • Worldwide reported net sales of $9.3 billion increased $10.0 $9.3 11% year-over-year and 5% sequentially. 3% $8.9 $8.4 $8.5 3% 3% 3% 3% 38% • On a constant currency basis, net sales increased 44% Asia Pacific 43% 42% 46% 12% year-over-year and 6% sequenti
Slide 4: Worldwide Gross Profit and Margin
Worldwide Gross Profit and Margin $ in Millions $616.9 Q3 FY19: $556.6 $526.1 $523.1 $527.0 • Gross profit of $556.6 million increased $30.5 million or 6% compared to the prior-year quarter. 6.23% 6.15% 6.12% 5.93% 5.96% • Gross profit margin declined 27 basis points from the prior-year quarter. Q3
Slide 5: Worldwide SG&A Expenses
Worldwide SG&A Expenses $ in Millions Q3 FY19: • Non-GAAP SG&A expenses of $368.6 million decreased $21.8 million or 6% compared to the prior- SG&A Expenses SG&A Expenses (Non-GAAP) (1) year quarter. • Included in SG&A and non-GAAP SG&A expenses is a $25 million benefit from the collection of a prev
Slide 6: Worldwide Operating Income
Worldwide Operating Income $ in Millions Q3 FY19: Operating Income Operating Income (Non-GAAP) (1) • Worldwide non-GAAP operating income of $188.0 million increased $52.3 million or 39% $151.9 $146.9 compared to the prior-year quarter. $216.0 • Included in Q3 FY19 operating income and non-GAAP $188.
Slide 7: Worldwide Net Income and EPS
Worldwide Net Income and EPS Q3 FY19: $ in Millions (except EPS) • The effective tax rate was 2%, compared to 32% in the prior-year quarter. Excluding non-GAAP adjustments, the effective tax rate was 26%, compared to 31% in the Net Income and EPS Net Income and EPS (Non-GAAP) (1) prior-year quarter.
Slide 8: Regional Results - Americas Net Sales
Regional Results - Americas Net Sales $ in Billions Q3 FY19: $4.0 $4.1 $3.9 $3.7 $3.6 • Americas’ reported net sales were $4.1 billion, an increase of 13% year-over-year and 2% sequentially • On a constant currency basis, net sales increased 14% year-over-year and 2% sequentially. Q3 FY18 Q4 FY18 Q1
Slide 9: Regional Results - Americas Operating Income
Regional Results - Americas Operating Income (1) $ in Millions Q3 FY19: • Americas’ non-GAAP operating income of $124.8 million increased $39.3 million or Operating Income Operating Income (Non-GAAP) (2) 46% compared to the prior-year quarter. $112.4 $124.8 • Included in Q3 FY19 operating income and
Slide 10: Regional Results - Europe Net Sales
Regional Results - Europe Net Sales $ in Billions Q3 FY19: $5.9 • Europe’s reported net sales were $4.9 billion, $4.9 an increase of 9% year-over-year and 8% $4.5 $4.7 $4.5 sequentially. • On a constant currency basis, net sales increased 12% year-over-year and 10% sequentially. Q3 FY18 Q4 FY18 Q1 F
Slide 11: Regional Results - Europe Operating Income
Regional Results - Europe Operating Income (1) $ in Millions Operating Income Operating Income (Non-GAAP) (2) Q3 FY19: $130.4 $100.4 • Europe’s non-GAAP operating income of $66.2 million increased $12.8 million or 24% compared to the prior-year quarter. $66.2 $53.4 $39.9 $43.6 $44.3 • Non-GAAP opera
Slide 12: Regional Results - Asia Pacific Net Sales
Regional Results - Asia Pacific Net Sales $ in Billions Q3 FY19: $0.30 $0.29 • Asia Pacific reported net sales were $0.28 $0.28 $0.27 $0.27 billion, an increase of 6% year-over-year and a decline of 4% sequentially. • On a constant currency basis, net sales increased 12% year-over-year and declined
Slide 13: Regional Results - Asia Pacific Operating Income
Regional Results - Asia Pacific Operating Income (1) $ in Millions Q3 FY19: Operating Income Operating Income (Non-GAAP) (2) $5.7 $7.5 • The Asia Pacific region’s non-GAAP operating income of $4.6 million increased $0.7 million or 18% compared to the prior- $2.7 $4.6 $2.4 $3.9 year quarter. 1.88% 2.
Slide 14: Worldwide Cash Metrics
Worldwide Cash Metrics Cash Flow from Operations Cash Conversion Cycle ⁽¹⁾ $ in Millions Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 $657 $561 Days of Sales 54 55 56 53 58 Outstanding $155 $70 Days of Supply 32 29 33 33 33 Days of Purchases (63) (68) (65) (68) (73) Outstanding ($567) Cash Conversion 23
Slide 15: Worldwide Balance Sheet Highlights
Worldwide Balance Sheet Highlights Debt to Total Capital Q3 FY19: • Accumulated other comprehensive income, which consists of currency translation, net of applicable taxes, was $7 million. • Capital expenditures were $17 million. • At October 31, 2018, the company had $2.8 41% billion of equity, and
Slide 16: Worldwide Return on Invested Capital
Worldwide Return on Invested Capital ROIC (1) Adjusted ROIC (1) • Company’s Weighted Average Cost of Capital is approximately 9% 9% 8% 12% 12% Q3 FY18 TTM Q3 FY19 TTM Q3 FY18 TTM Q3 FY19 TTM (1) See reconciliation of ROIC to adjusted ROIC calculation in appendix. 16
Slide 17: Worldwide Share Repurchase Activity
Worldwide Share Repurchase Activity Number of Amount Shares Average Repurchased Repurchased Price Per ($ millions) Share (millions) Q3 FY19 Share Repurchases $44 0.621 $70.48 17
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 January 31, 2019 Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties further describe
Slide 19: Appendix: GAAP to Non-GAAP Reconciliations
APPENDIX GAAP to Non-GAAP Reconciliations 19
Slide 20: 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 21: SG&A
SG&A $ in thousands Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Net Sales $ 8,448,471 $ 10,033,397 $ 8,548,319 $ 8,886,101 $ 9,340,029 SG&A Expenses (GAAP) $ 416,766 $ 428,965 $ 422,361 $ 415,319 $ 396,675 Tax indemnifications - (6,526) - (554) (5,541) Acquisition-related intangible assets amortization
Slide 22: Operating Income Q3 FY19
Operating Income Q3 FY19 (In thousands) Q3 FY19 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 23: Operating Income Q2 FY19
Operating Income Q2 FY19 (In thousands) Q2 FY19 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 24: 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 25: 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 26: Operating Income Q3 FY18
Operating Income Q3 FY18 (In thousands) Q3 FY18 Stock Americas (1) Europe (1) Asia Pacific (1) Compensation Consolidated Expense Net Sales $ 3,663,498 $ 4,518,669 $ 266,304 $ 8,448,471 Operating income (GAAP) (1) $ 55,551 $ 29,909 $ 2,432 $ (8,325) $ 79,567 Acquisition, integration and restructuring
Slide 27: Net Income and EPS
Net Income and EPS (In thousands, except per Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 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 $37,268 $0.97 $1,260 $0.03 $33,699 $0.87 $75,866 $1.97 $114,216 $2.96 Legal
Slide 28: Return on Invested Capital
Return on Invested Capital $ in thousands Twelve months ended October 31, TTM Net Operating Profit After Tax (NOPAT)*: 2017 2018 Operating income $ 361,293 $ 479,652 Income taxes on operating income (1) (94,679) (184,189) NOPAT $ 266,614 $ 295,463 Average Invested Capital: Short-term debt (5-qtr end
Slide 29: Adjusted Return on Invested Capital
Adjusted Return on Invested Capital $ in thousands Twelve months ended October 31, TTM Net Operating Profit After Tax (NOPAT), as adjusted*: 2017 2018 Non-GAAP operating income (1) $ 508,902 $ 662,984 Income taxes on non-GAAP operating income (2) (151,859) (180,184) NOPAT, as adjusted $ 357,043 $ 48
Slide 30: Guidance Reconciliation
Guidance Reconciliation Three months ending January 31, 2019 Low end of guidance High end of guidance range range Earnings per share - diluted $3.00 $3.30 Acquisition, integration and restructuring expenses 0.59 0.59 Acquisition-related intangible assets amortization expense 0.61 0.61 Income tax eff