Tech Data — Q3 FY2018 Earnings Presentation
26 slides from Tech Data's earnings presentation, Nov 27, 2017
Slide 1: Q3 Fiscal Year 2018 Financial Highlights
Q3 Fiscal Year 2018 Financial Highlights For the quarter ended October 31, 2017 November 27, 2017
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
3 Worldwide Q3 FY18: • Worldwide reported net sales of $9.1 billion increased 41% year - over - year and 3 % sequentially. The increase in net sales year - over - year is primarily due to the Technology Solutions business acquired from Avnet, Inc. on February 27, 2017. • On a constant currency basis
Slide 4: Americas Net Sales
4 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Americas $2.6 $2.7 $3.5 $4.2 $4.0 Reported Y/Y growth 2% 0% 45% 57% 53% Y/Y CC growth ⁽ ¹ ⁾ 2% 0% 45% 57% 52% $2.6 $2.7 $3.5 $4.2 $4.0 0% 2% 4% 6% 8% 10% 12% $(0.3) $0.3 $0.8 $1.3 $1.8 $2.3 $2.8 $3.3 $3.8 $4.3 $4.8 Q3 FY18: • Americas reported net sales of $
Slide 5: Europe Net Sales
5 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Europe $3.9 $4.7 $4.0 $4.4 $4.8 Reported Y/Y growth 1% -1% 12% 20% 25% Y/Y CC growth ⁽ ¹ ⁾ 5% 3% 19% 21% 19% $3.9 $4.7 $4.0 $4.4 $4.8 -3% -1% 1% 3% 5% 7% 9% 11% 13% 15% $- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 Q3 FY18: • Europe’s reported net sales of $4.8 billion i
Slide 6: Asia Pacific Net Sales
6 Asia Pacific Q3 FY18: • The Asia Pacific region’s reported net sales were $0.3 billion. • Asia Pacific results are attributable entirely to the acquisition of the Technology Solutions business on February 27, 2017, as Tech Data had no operations in the region prior to the acquisition. Q3 FY17 Q4 F
Slide 7: Gross Profit and Margin
7 $315.8 $371.0 $457.1 $515.6 $526.1 4.87% 5.00% 5.96% 5.80% 5.76% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% $- $100.0 $200.0 $300.0 $400.0 $500.0 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Gross Profit Gross Margin Q3 FY18: • Gross profit of $526.1 million increased $210.2 million or 67% compared to the pri
Slide 8: SG&A Expenses
8 (1) Non - GAAP SG&A excludes acquisition - related amortization of intangibles expenses. See GAAP to Non - GAAP reconciliation in the app endix. Q3 FY18: • Non - GAAP SG&A expenses of $390.4 million increased $155.7 million or 66% compared to the prior - year quarter. • Non - GAAP SG&A as a percen
Slide 9: Worldwide Operating Income
9 ⁽ ¹ ⁾ See the GAAP to Non - GAAP reconciliation in the appendix. Q3 FY18: • Worldwide non - GAAP operating income of $135.7 million increased $54.6 million or 67% compared to the prior - year quarter . • Worldwide non - GAAP operating margin improved 24 basis points from 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. Q3 FY18: • Americas ’ non - GAAP operating income of $85.5 million increased $43.1 million or 101% compared to the prior - year quarter. • Non - GAAP operating margin improved 52 basis points ove
Slide 11: Europe Operating Income
11 Europe (1) Before stock compensation expense. (2) See the GAAP to non - GAAP reconciliation in the appendix. Q3 FY18: • The decrease in GAAP operating income and operating margin percentage is primarily due to acquisition, integration and restructuring expenses. • Europe’s non - GAAP operating in
Slide 12: Asia Pacific Operating Income
12 Asia Pacific (1) Before stock compensation expense. (2) See the GAAP to non - GAAP reconciliation in the appendix. Q3 FY18: • The Asia Pacific region’s non - GAAP operating income was $3.9 million or 1.32% of net sales. • Asia Pacific results are attributable entirely to the acquisition of the Te
Slide 13: Worldwide Net Income and EPS
13 $50.9 $87.0 $70.1 $66.7 $76.7 $1.44 $2.45 $1.87 $1.74 $2.00 $- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $- $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 $100.0 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18. (1) See the GAAP to non - GAAP reconciliation in the appendix. Q3 FY18: • The effective tax r
Slide 14: Cash Metrics and Cash Conversion Cycle
14 Worldwide $27 $445 $224 $146 $70 -$150 -$50 $50 $150 $250 $350 $450 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Cash Conversion Cycle Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Days of Sales Outstanding 40 37 49 51 48 Days of Supply 33 27 30 29 31 Days of Purchases Outstanding (51) (49) (57) (59) (58) C
Slide 15: Balance Sheet Highlights
15 15% 39% 48% 45% 41% Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Debt $365 $1,363 $2,286 $2,268 $1,920 Equity $2,092 $2,170 $2,481 $2,732 $2,724 Debt to Total Capital ratio 15% 39% 48% 45% 41% Debt to Total Capital Worldwide Q3 FY18: • Accumulated other comprehensive income, which consists of currency tran
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, November 5, 2017. 13% 9% Q3 FY17 TTM Q3 FY18 TTM Adjusted ROIC (1 ) ROIC (1 ) 14% 12% Q3 FY17 TTM Q3 FY18 TTM Return on Invested Capital Worldwide
Slide 17: Appendix: GAAP to Non-GAAP Reconciliations
17 APPENDIX GAAP to Non - GAAP Reconciliations
Slide 18: SG&A Reconciliation
18 Three months ended October 31, 2016 January 31, 2017 April 30, 2017 July 31, 2017 October 31, 2017 (In thousands) Net Sales $ 6,490,265 $ 7,427,510 $ 7,664,063 $ 8,882,691 $ 9,135,728 GAAP SG&A expenses 239,952$ 253,941$ 352,632$ 410,598$ 416,766$ Acquisition-related intangible assets amortizatio
Slide 19: Operating Income Q3 FY18
19 Americas ⁽ ¹ ⁾ Europe ⁽ ¹ ⁾ APAC ⁽ ¹ ⁾ Stock Compensation Expense Consolidated Net Sales 3,997,159$ 4,841,961$ 296,608$ 9,135,728$ 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 20: Operating Income Q2 FY18
20 Americas ⁽ ¹ ⁾ Europe ⁽ ¹ ⁾ APAC ⁽ ¹ ⁾ Stock Compensation Expense Consolidated Net Sales 4,192,475$ 4,402,054$ 288,162$ 8,882,691$ 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 21: Operating Income Q1 FY18
21 Americas ⁽ ¹ ⁾ Europe ⁽ ¹ ⁾ APAC ⁽ ¹ ⁾ Stock Compensation Expense Consolidated Net Sales 3,468,837$ 4,006,920$ 188,306$ 7,664,063$ 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 22: Operating Income Q4 FY17
22 Americas ⁽ ¹ ⁾ Europe ⁽ ¹ ⁾ Stock Compensation Expense Consolidated Net Sales 2,707,286$ 4,720,224$ 7,427,510$ GAAP operating income ⁽ ¹ ⁾ 39,316$ 66,728$ (2,927)$ 103,117$ Acquisition, integration and restructuring expenses 7,496 6,473 13,969 Acquisition-related intangible assets amortization ex
Slide 23: Operating Income Q3 FY17
23 Americas ⁽ ¹ ⁾ Europe ⁽ ¹ ⁾ Stock Compensation Expense Consolidated Net Sales 2,614,347$ 3,875,918$ 6,490,265$ GAAP operating income ⁽ ¹ ⁾ 32,414$ 34,008$ (3,550)$ 62,872$ Acquisition, integration and restructuring expenses 9,456 3,559 13,015 Acquisition-related intangible assets amortization exp
Slide 24: Net Income and Diluted EPS Reconciliation
24 Net Income Diluted EPS Net Income Diluted EPS Net Income Diluted EPS Net Income Diluted EPS Net Income Diluted EPS GAAP Results $36,506 $1.03 $78,822 $2.22 $30,654 $0.82 $47,459 $1.24 $37,268 $0.97 LCD settlements and other, net - - - - (12,688) (0.34) (28,332) (0.74) - - Acquisition, integration
Slide 25: Return on Invested Capital Calculation
25 TTM Net Operating Profit After Tax (NOPAT)*: 2017 2016 Operating income 361,293$ 333,987$ Income taxes on operating income ⁽ ¹ ⁾ (94,679) (100,045) NOPAT 266,614$ 233,942$ Average Invested Capital: Short-term debt (5-qtr average) 360,705$ 86,220$ Long-term debt (5-qtr average) 1,279,729 278,970 S
Slide 26: Adjusted Return on Invested Capital Calculation
26 TTM Net Operating Profit After Tax (NOPAT), as adjusted *: 2017 2016 Non-GAAP operating income ⁽ ¹ ⁾ 508,902$ 333,593$ Income taxes on non-GAAP operating income ⁽ ² ⁾ (151,859) (95,174) NOPAT, as adjusted 357,043$ 238,419$ Average Invested Capital, as adjusted: Short-term debt (5-qtr average) 360