Tech Data — Q2 FY2019 Earnings Presentation
29 slides from Tech Data's earnings presentation, Aug 30, 2018
Slide 1: Q2 Fiscal Year 2019 Financial Highlights
Q2 Fiscal Year 2019 Financial Highlights For the quarter ended July 31, 2018 August 30, 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 Q2 FY19: $10.0 • Worldwide reported net sales of $8.9 billion increased 10% year-over-year and 4% sequentially. 3% $8.5 $8.9 $8.1 $8.4 3% 3% 3% 3% 38% • On a constant currency basis, net sales increased 8% Asia Pacific 43% 42% 46% year-over-year and 7% sequentially.
Slide 4: Americas Net Sales
Americas Net Sales $ in Billions Q2 FY19: $4.0 $3.8 $3.9 $3.7 $3.6 • Americas’ reported net sales were $4.0 billion, an increase of 7% year-over-year and 12% sequentially, on both a reported and constant currency basis. Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Americas Y/Y Growth 53% 52% 57% 15% 7% Y
Slide 5: Europe Net Sales
Europe Net Sales $ in Billions Q2 FY19: $5.9 • Europe’s reported net sales were $4.5 billion, $4.5 $4.7 $4.5 an increase of 13% year-over-year and a $4.0 decline of 2% sequentially. • On a constant currency basis, net sales increased 9% year-over-year and 3% sequentially. Q2 FY18 Q3 FY18 Q4 FY18 Q1
Slide 6: Asia Pacific Net Sales
Asia Pacific Net Sales $ in Billions Q2 FY19: $0.30 $0.29 • Asia Pacific reported net sales were $0.29 $0.28 $0.27 $0.27 billion, an increase of 5% year-over-year and 9% sequentially. • On a constant currency basis, net sales increased 7% year-over-year and 13% sequentially. Q2 FY18 Q3 FY18 Q4 FY18
Slide 7: Worldwide Gross Profit and Margin
Worldwide Gross Profit and Margin $ in Millions Q2 FY19: • Gross profit of $527.0 million increased $11.4 million or 2% compared to the prior-year quarter. • Gross profit margin declined 44 basis points from the prior-year quarter. Note: Gross margin percentage adjusted to reflect adoption of ASC 60
Slide 8: Worldwide SG&A Expenses
Worldwide SG&A Expenses $ in Millions Q2 FY19: • Non-GAAP SG&A expenses of $392.1 million increased $4.4 million or 1% compared to the prior- year quarter. • Non-GAAP SG&A as a percentage of net sales decreased 38 basis points from the prior-year quarter. • GAAP depreciation and amortization expense
Slide 9: Worldwide Operating Income
Worldwide Operating Income $ in Millions Q2 FY19: • Worldwide non-GAAP operating income of $135.0 million increased $7 million or 6% compared to the prior-year quarter. • Worldwide non-GAAP operating margin declined 6 basis points from the prior-year quarter. ⁽¹⁾ See the GAAP to Non-GAAP reconciliat
Slide 10: Americas Operating Income
Americas Operating Income (1) $ in Millions Q2 FY19: • Americas’ non-GAAP operating income of $95.4 million increased $10.7 million or 13% compared to the prior-year quarter. • Non-GAAP operating margin improved 11 basis points over the prior-year quarter. (1) Before stock compensation expense. (2)
Slide 11: Europe Operating Income
Europe Operating Income (1) $ in Millions Q2 FY19: • Europe’s non-GAAP operating income of $44.3 million increased $0.9 million or 2% compared to the prior-year quarter. • Non-GAAP operating margin declined 10 basis points from the prior-year quarter. (1) Before stock compensation expense. (2) See t
Slide 12: Asia Pacific Operating Income
Asia Pacific Operating Income (1) $ in Millions Q2 FY19: • The Asia Pacific region’s non-GAAP operating income of $2.5 million decreased $4.2 million or 63% compared to the prior- year quarter. • Non-GAAP operating margin decreased 153 basis points from the prior-year quarter. (1) Before stock compe
Slide 13: Worldwide Net Income and EPS
Worldwide Net Income and EPS $ in Millions (except EPS) Q2 FY19: • The effective tax rate was 7%, compared to 37% in the prior-year quarter. Excluding non-GAAP adjustments, the effective tax rate was 27%, compared to 33% in the prior-year quarter. • Non-GAAP net income of $77.7 million increased $11
Slide 14: Worldwide Cash Metrics
Worldwide Cash Metrics Cash Flow from Operations Cash Conversion Cycle ⁽¹⁾ $ in Millions Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Days of Sales 58 54 55 56 53 Outstanding Days of Supply 32 32 29 33 33 Days of Purchases (66) (63) (68) (65) (68) Outstanding Cash Conversion 24 23 16 24 18 Cycle Q2 FY19:
Slide 15: Worldwide Balance Sheet Highlights
Worldwide Balance Sheet Highlights Q2 FY19: • Accumulated other comprehensive income, which consists of currency translation, net of applicable taxes, was $98 million. • Capital expenditures were $14.3 million. • At July 31, 2018, the company had $2.9 billion of equity, and 38.35 million shares outs
Slide 16: Worldwide Return on Invested Capital
Worldwide Return on Invested Capital • Company’s Weighted Average Cost of Capital is approximately 9%(2) (1) See reconciliation of ROIC to adjusted ROIC calculation in appendix. (2) Source: Bloomberg, August 24, 2018. 16
Slide 17: Forward-Looking Statements 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 October 31, 2018 Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties further describe
Slide 18: Appendix: GAAP to Non-GAAP Reconciliations
APPENDIX GAAP to Non-GAAP Reconciliations 18
Slide 19: 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 20: SG&A
SG&A $ in thousands Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Net Sales $ 8,092,353 $ 8,448,471 $ 10,033,397 $ 8,548,319 $ 8,886,101 SG&A Expenses (GAAP) $ 410,598 $ 416,766 $ 428,965 $ 422,361 $ 415,319 Tax indemnifications - - (6,526) - (554) Acquisition-related intangible assets amortization expens
Slide 21: 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 22: 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 23: 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 24: 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 25: Operating Income Q2 FY18
Operating Income Q2 FY18 (In thousands) Q2 FY18 Stock Americas (1) Europe (1) Asia Pacific (1) Compensation Consolidated Expense Net Sales $ 3,769,696 $ 4,043,110 $ 279,547 $ 8,092,353 Operating income (GAAP) (1) $ 87,975 $ 18,464 $ 5,066 $ (7,974) $ 103,531 Acquisition, integration and restructurin
Slide 26: Net Income and EPS
Net Income and EPS (In thousands, except per Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 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 $47,459 $1.24 $37,268 $0.97 $1,260 $0.03 $33,699 $0.87 $75,866 $1.97 Legal
Slide 27: Return on Invested Capital
Return on Invested Capital $ in thousands Twelve months ended July 31, TTM Net Operating Profit After Tax (NOPAT)*: 2017 2018 Operating income $ 344,598 $ 412,331 Income taxes on operating income (1) (88,150) (211,261) NOPAT $ 256,448 $ 201,070 Average Invested Capital: Short-term debt (5-qtr end av
Slide 28: Adjusted Return on Invested Capital
Adjusted Return on Invested Capital $ in thousands Twelve months ended July 31, TTM Net Operating Profit After Tax (NOPAT), as adjusted*: 2017 2018 Non-GAAP operating income (1) $ 454,332 $ 610,691 Income taxes on non-GAAP operating income (2) (134,878) (172,797) NOPAT, as adjusted $ 319,454 $ 437,8
Slide 29: Guidance Reconciliation
Guidance Reconciliation Three months ending October 31, 2018 Low end of High end of guidance range guidance range Earnings per share - diluted $1.19 $1.49 Acquisition, integration and restructuring expenses 0.49 0.49 Acquisition-related intangible assets amortization expense 0.59 0.59 Income tax eff