Tech Data — Q2 FY2018 Earnings Presentation
27 slides from Tech Data's earnings presentation, Aug 31, 2017
Slide 1: Q2 Fiscal Year 2018 Financial Highlights
Q2 Fiscal Year 2018 Financial Highlights For the quarter ended July 31, 2017 August 31, 2017
Slide 2: Forward-Looking Statements Safe Harbor & Non-GAAP Financial Information
Forward - Looking Statements Safe Harbor & Non - GAAP Financial Information Forward - Looking Statements Safe Harbor Certain statements in this communication may contain “ forward - looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, incl
Slide 3: Worldwide Net Sales
Worldwide Q2 FY18: • Worldwide reported net sales of $8.9 billion increased 40% year - over - year and 16% sequentially. The increase in net sales is primarily due to the Technology Solutions business acquired from Avnet, Inc. on February 27, 2017. • On a constant currency basis, net sales increased
Slide 4: Americas Net Sales
Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Americas $2.7 $2.6 $2.7 $3.5 $4.2 Reported Y/Y growth -3% 2% 0% 45% 57% Y/Y CC growth⁽¹⁾ -2% 2% 0% 45% 57% $2.7 $2.6 $2.7 $3.5 $4.2 -4% -2% 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 $ in Billions Net Sales Americas Q2 FY18
Slide 5: Europe Net Sales
$ in Billions Net Sales Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Europe $3.7 $3.9 $4.7 $4.0 $4.4 Reported Y/Y growth -4% 1% -1% 12% 20% Y/Y CC growth⁽¹⁾ -2% 5% 3% 19% 21% $3.7 $3.9 $4.7 $4.0 $4.4 -5% -3% -1% 1% 3% 5% 7% 9% 11% 13% 15% $- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 Europe 5 Q2 FY18: • Europe’s repo
Slide 6: Asia Pacific Net Sales
$ in Billions Net Sales Asia Pacific 6 Q2 FY18: • The Asia Pacific region’s reported net sales were $0.3 billion. • No prior period results reported for the region by Tech Data due to the acquisition of the Technology Solutions business on February 27, 2017. Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 A
Slide 7: Gross Profit and Margin Worldwide
7 $316.5 $315.8 $371.0 $457.1 $515.6 4.98% 4.87% 5.00% 5.96% 5.80% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% $- $100.0 $200.0 $300.0 $400.0 $500.0 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Gross Profit Gross Margin $ in Millions Quarterly Results Q2 FY18: • Gross profit of $515.6 million increased $199.1 mi
Slide 8: SG&A Expenses Worldwide
$238.4 $234.7 $248.9 $333.9 $387.7 3.75% 3.62% 3.35% 4.36% 4.37% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% $- $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 $400.0 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 $ in Millions (1) Non - GAAP SG&A excludes acquisition - related amorti
Slide 9: Operating Income Worldwide
$78.1 $81.1 $122.1 $123.2 $127.8 1.23% 1.25% 1.64% 1.61% 1.44% $- $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 $160.0 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 $ in Millions ⁽ ¹ ⁾ See the GAAP to Non - GAAP reconciliation in the appendix. 9 Operating Income Worldwide Q2 FY18: • Worldwide non - GAAP op
Slide 10: Operating Income Americas
$38.8 $42.5 $47.4 $78.5 $84.7 1.45% 1.62% 1.75% 2.26% 2.02% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% $- $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 (1) Before stock compensation expense. (2) See the GAAP to non - GAAP reconciliation in the appendi
Slide 11: Operating Income Europe
11 $43.1 $42.2 $77.7 $44.1 $43.4 1.17% 1.09% 1.65% 1.10% 0.99% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% $- $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 (1) Before stock compensation expense. (2) See the GAAP to non - GAAP reconciliation in the appendix. $ in Million
Slide 12: Operating Income Asia Pacific
$5.2 $6.7 2.76% 2.32% 0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.1 0 2 4 6 8 10 12 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 12 (1) Before stock compensation expense. (2) See the GAAP to non - GAAP reconciliation in the appendix. $ in Millions Operating Income (1) Asia Pacific Q2 FY18: • The Asi
Slide 13: Net Income and EPS Worldwide
$50.3 $50.9 $87.0 $70.1 $66.7 $1.42 $1.44 $2.45 $1.87 $1.74 $- $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 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 (1) See the GAAP to non - GAAP reconciliation in the appendix. 13 $ in Millions, except EPS Net I
Slide 14: Cash Metrics Worldwide
14 Cash Metrics Worldwide - $91 $27 $445 $224 $146 -$150 -$50 $50 $150 $250 $350 $450 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Cash Flow from Operations Cash Conversion Cycle $ Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Days of Sales Outstanding 39 40 37 49 51 Days of Supply 32 33 27 30 29 Days of Purch
Slide 15: Balance Sheet Highlights Worldwide
15% 15% 39% 48% 45% Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Debt $362 $365 $1,363 $2,286 $2,268 Equity $2,108 $2,092 $2,170 $2,481 $2,732 Debt to Total Capital ratio 15% 15% 39% 48% 45% Debt to Total Capital 15 $ in Millions Balance Sheet Highlights Worldwide Q2 FY18: • Accumulated other comprehensive in
Slide 16: Return on Invested Capital Worldwide
• Company’s Weighted Average Cost of Capital is approximately 8% (2) (1) See reconciliation of ROIC calculation in appendix. (2) Source: Bloomberg, August 25, 2017. 16 Return on Invested Capital (1) Worldwide $ 14% 10% Q2 FY17 TTM Q2 FY18 TTM Adjusted ROIC (1 ) ROIC (1 ) 14% 12% Q2 FY17 TTM Q2 FY18
Slide 17: Product Mix Worldwide
Total may not foot due to rounding. 17 Product Mix Worldwide • In Q2 FY18, the following vendors represented 10% or more of consolidated net sales: • Apple 12% • HP Inc. 11% • Cisco 11% Products Twelve months ended July 31, 2017 Broadline Notebooks, Tablets, Desktops, Printers & Supplies, Components
Slide 18: Appendix: GAAP to Non-GAAP Reconciliations
APPENDIX GAAP to Non - GAAP Reconciliations
Slide 19: SG&A Reconciliation
A - 1 Three months ended July 31, 2016 October 31, 2016 January 31, 2017 April 30, 2017 July 31, 2017 (In thousands) Net Sales $ 6,353,739 $ 6,490,265 $ 7,427,510 $ 7,664,063 $ 8,882,691 GAAP SG&A expenses 243,763$ 239,952$ 253,941$ 352,632$ 410,598$ Acquisition-related intangible assets amortizatio
Slide 20: Operating Income Q2 FY18
A - 2 Operating Income Q2 FY18 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,
Slide 21: Operating Income Q1 FY18
A - 3 Operating Income Q1 FY18 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, in
Slide 22: Operating Income Q4 FY17
A - 4 Operating Income Q4 FY17 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 intan
Slide 23: Operating Income Q3 FY17
A - 5 Operating Income Q3 FY17 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 intang
Slide 24: Operating Income Q2 FY17
A - 6 Operating Income Q2 FY17 Americas ⁽ ¹ ⁾ Europe ⁽ ¹ ⁾ Stock Compensation Expense Consolidated Net Sales 2,674,886$ 3,678,853$ 6,353,739$ GAAP operating income ⁽ ¹ ⁾ 41,241$ 35,927$ (3,813)$ 73,355$ Value added tax assessments (407) 1,456 1,049 Acquisition, integration and restructuring expenses
Slide 25: Net Income and Diluted EPS Reconciliation
A - 7 Net IncomeDiluted EPS Net IncomeDiluted EPS Net IncomeDiluted EPS Net IncomeDiluted EPS Net IncomeDiluted EPS GAAP Results $46,394 $1.31 $36,506 $1.03 $78,822 $2.22 $30,654 $0.82 $47,459 $1.24 LCD settlements and other, net (3,699) (0.10) - - - - (12,688) (0.34) (28,332) (0.74) Value added tax
Slide 26: Return on Invested Capital Calculation
A - 8 2017 2016 TTM Net Operating Profit After Tax (NOPAT)*: Operating Income 344,598$ 339,168$ Income taxes on operating income ⁽ ¹ ⁾ (88,150) (103,254) NOPAT 256,448$ 235,914$ Average Invested Capital: Short-term debt (5-qtr average) 340,608$ 16,796$ Long-term debt (5-qtr average) 988,243 349,316
Slide 27: Adjusted Return on Invested Capital Calculation
A - 9 2017 2016 TTM Net Operating Profit After Tax (NOPAT), as adjusted *: Non-GAAP operating income ⁽ ¹ ⁾ 454,332$ 323,366$ Income taxes on non-GAAP operating income ⁽ ² ⁾ (134,878) (91,519) NOPAT, as adjusted 319,454$ 231,847$ Average Invested Capital, as adjusted: Short-term debt (5-qtr average)