Tech Data — Q4 FY2018 Earnings Presentation
26 slides from Tech Data's earnings presentation, Mar 8, 2018
Slide 1: Q4 Fiscal Year 2018 Financial Highlights
Q4 Fiscal Year 2018 Financial Highlights For the quarter ended January 31, 2018 March 8, 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
3 Worldwide Q4 FY18: • Worldwide reported net sales of $11.1 billion increased 49% year - over - year and 21% 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 basi
Slide 4: Americas Net Sales
4 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Americas $2.7 $3.5 $4.2 $4.0 $4.3 Reported Y/Y growth 0% 45% 57% 53% 59% Y/Y CC growth ⁽ ¹ ⁾ 0% 45% 57% 52% 58% $2.7 $3.5 $4.2 $4.0 $4.3 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 Q4 FY18: • Americas reported net sales of $4.3 bil
Slide 5: Europe Net Sales
5 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Europe $4.7 $4.0 $4.4 $4.8 $6.5 Reported Y/Y growth -1% 12% 20% 25% 37% Y/Y CC growth ⁽ ¹ ⁾ 3% 19% 21% 19% 24% $4.7 $4.0 $4.4 $4.8 $6.5 -3% -1% 1% 3% 5% 7% 9% 11% 13% 15% $- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 Q4 FY18: • Europe’s reported net sales of $6.5 bi
Slide 6: Asia Pacific Net Sales
6 Asia Pacific Q4 FY18: • The Asia Pacific region’s reported net sales were $0.34 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 Q1
Slide 7: Worldwide Gross Profit and Margin
7 $371.0 $457.1 $515.6 $526.1 $616.9 5.00% 5.96% 5.80% 5.76% 5.56% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% $- $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Gross Profit Gross Margin Q4 FY18: • Gross profit of $616.9 million increased $245.8 million or 66% compared to
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 reconciliation in the appendix. Q4 FY18: • Non - GAAP SG&A expenses of $400.9 million increased $152.0 million or 61% compared to the prior - year quarter. • Non
Slide 9: Worldwide Operating Income
9 ⁽ ¹ ⁾ See the GAAP to Non - GAAP reconciliation in the appendix. Q4 FY18: • Worldwide non - GAAP operating income of $216.0 million increased $93.8 million or 7 7% compared to the prior - year quarter . • Worldwide non - GAAP operating margin improved 31 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. Q4 FY18: • Americas ’ non - GAAP operating income of $85.1 million increased $37.7 million or 80% compared to the prior - year quarter. • Non - GAAP operating margin improved 23 basis points over
Slide 11: Europe Operating Income
11 Europe (1) Before stock compensation expense. (2) See the GAAP to non - GAAP reconciliation in the appendix. Q4 FY18: • Europe’s non - GAAP operating income of $130.4 million increased $52.7 million or 68% compared to the prior - year quarter. • Non - GAAP operating margin increased 37 basis poin
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. Q4 FY18: • The Asia Pacific region’s non - GAAP operating income was $7.5 million or 2.21% of net sales. • Asia Pacific results are attributable entirely to the acquisition of the Te
Slide 13: Net Income and Earnings per Diluted Share
13 $87.0 $70.1 $66.7 $76.7 $134.7 $2.45 $1.87 $1.74 $2.00 $3.50 $- $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 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 (1) See the GAAP to non - GAAP reconciliation in the appendix. Q4 FY18: • The effective tax rate was 99
Slide 14: Cash Metrics
14 Worldwide $445 $224 $146 $70 $657 -$150 -$50 $50 $150 $250 $350 $450 $550 $650 $750 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Cash Conversion Cycle Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Days of Sales Outstanding 37 49 51 48 47 Days of Supply 27 30 29 31 27 Days of Purchases Outstanding (49) (57)
Slide 15: Balance Sheet Highlights
15 39% 48% 45% 41% 36% Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Debt $1,363 $2,286 $2,268 $1,920 $1,638 Equity $2,170 $2,481 $2,732 $2,724 $2,921 Debt to Total Capital ratio 39% 48% 45% 41% 36% Debt to Total Capital Worldwide Q4 FY18: • 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 10% (2) (1) See reconciliation of ROIC calculation in appendix. (2) Source: Bloomberg, February 19, 2018. 13% 5% FY17 FY18 Adjusted ROIC (1 ) ROIC (1 ) 14% 12% FY17 FY18 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 January 31, 2017 April 30, 2017 July 31, 2017 October 31, 2017 January 31, 2018 (In thousands) Net Sales $ 7,427,510 $ 7,664,063 $ 8,882,691 $ 9,135,728 $ 11,092,529 GAAP SG&A expenses 253,941$ 352,632$ 410,598$ 416,766$ 428,965$ Tax indemnifications - - - - (6,526) Acquisition
Slide 19: Operating Income Q4 FY18
19 Americas ⁽ ¹ ⁾ Europe ⁽ ¹ ⁾ APAC ⁽ ¹ ⁾ Stock Compensation Expense Consolidated Net Sales 4,291,488$ 6,463,007$ 338,034$ 11,092,529$ 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 20: Operating Income Q3 FY18
20 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 21: Operating Income Q2 FY18
21 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 22: Operating Income Q1 FY18
22 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 23: Operating Income Q4 FY17
23 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 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 $78,822 $2.22 $30,654 $0.82 $47,459 $1.24 $37,268 $0.97 $1,260 $0.03 LCD settlements and other, net - - (12,688) (0.34) (28,332) (0.74) - - - - Value added tax assessmen
Slide 25: Return on Invested Capital Calculation
25 TTM Net Operating Profit After Tax (NOPAT)*: 2018 2017 Operating income 410,079$ 291,902$ Income taxes on operating income ⁽ ¹ ⁾ (250,151) (70,106) NOPAT 159,928$ 221,796$ Average Invested Capital: Short-term debt (5-qtr average) 314,154$ 157,496$ Long-term debt (5-qtr average) 1,580,778 407,275
Slide 26: Adjusted Return on Invested Capital Calculation
26 TTM Net Operating Profit After Tax (NOPAT), as adjusted *: 2018 2017 Non-GAAP operating income ⁽ ¹ ⁾ 602,704$ 338,934$ Income taxes on non-GAAP operating income ⁽ ² ⁾ (184,370) (97,354) NOPAT, as adjusted 418,334$ 241,580$ Average Invested Capital, as adjusted: Short-term debt (5-qtr average) 314