Tech Data Reports Second Quarter Fiscal Year 2020 Results

Tech Data (NASDAQ: TECD) (the "Company”) today announced its financial results for the second quarter ended July 31, 2019.

A reconciliation of GAAP to non-GAAP financial measures is presented in the financial tables of this press release.

This information is also available on the Investor Relations section of Tech Data’s website at www.techdata.com/investor.

"We are pleased to report that Tech Data delivered an outstanding second quarter performance marked by broad-based improvement across our geographies. A stable demand environment, combined with strong execution by our teams, resulted in a number of key achievements, including: solid sales growth in constant currency, double-digit growth in operating income and earnings per share, positive cash flow, and an industry-leading return on invested capital,” said Rich Hume, chief executive officer. "We achieved all of this while continuing to advance our strategy, invest for the future and return cash to our shareholders in the form of share repurchases. The Board’s authorization of an additional $200 million share repurchase reflects our continued confidence in our business and commitment to creating value for our shareholders.”

Regional Financial Highlights for the Second Quarter Ended July 31, 2019:

Note: WW = worldwide
Stock-based compensation expense was $8.1 million, an increase of $0.1 million, compared to the prior-year quarter. These expenses are excluded from the regional operating results and presented as a separate line item in the company’s segment reporting (see the GAAP to non-GAAP reconciliation in the financial tables of this press release).

• Net sales were $9.1 billion, an increase of 2 percent compared to the prior-year quarter. On a constant currency basis, net sales increased 5 percent.
  • Americas: Net sales were $4.3 billion, an increase of 7 percent compared to the prior-year quarter. On a constant currency basis, net sales also increased 7 percent.
  • Europe: Net sales were $4.4 billion, a decrease of 2 percent compared to the prior-year quarter. On a constant currency basis, net sales increased 2 percent.
  • Asia Pacific: Net sales were $0.3 billion, an increase of 14 percent compared to the prior-year quarter. On a constant currency basis, net sales increased 17 percent.
• Net cash generated by operations during the quarter was $40 million.
• Return on invested capital for the trailing twelve months was 13 percent, compared to 5 percent in the prior year. Adjusted return on invested capital for the trailing twelve months was 15 percent, compared to 11 percent in the comparable period.
• "Year to date, we generated $103 million in cash from operations, returned $118 million to our shareholders through share repurchases, and for the trailing twelve month period earned an adjusted return on invested capital of 15 percent,” said Chuck Dannewitz, executive vice president, chief financial officer. "We also took steps to optimize our liquidity and financial profile, as we continue to rigorously review our capital structure to enhance shareholder value.”

• Business Outlook
• For the quarter ending October 31, 2019, the Company anticipates:
  • Worldwide net sales to be in the range of $9.2 billion to $9.5 billion
  • EPS to be in the range of $2.33 to $2.63 and non-GAAP EPS to be in the range of $2.85 to $3.15
  • An effective tax rate in the range of 24 percent to 25 percent
• This guidance assumes an average U.S. dollar to euro exchange rate of $1.12 to €1.00 which compares to $1.16 to €1.00 in the year-ago period.

Webcast Details

Tech Data will hold a conference call today at 9:00 a.m. (ET) to discuss its financial results for the second quarter ended July 31, 2019. A webcast of the call, including supplemental schedules, will be available to all interested parties and can be obtained at www.techdata.com/investor. The webcast will be available for replay for three months.

Non-GAAP Financial Information

The non-GAAP financial information contained in this release is included with the intention of providing investors a more complete understanding of the Company’s operational results and trends, but should only be used in conjunction with results reported in accordance with Generally Accepted Accounting Principles ("GAAP”). Certain non-GAAP measures presented in this release or other releases, presentations and similar documents issued by the Company include sales, income or expense items as adjusted for the impact of changes in foreign currencies (referred to as "constant currency”), non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP earnings per diluted share and Adjusted Return on Invested Capital. Certain non-GAAP measures also exclude acquisition-related intangible assets amortization expense, benefits associated with legal settlements, acquisition, integration and restructuring expenses, value-added tax assessments and related interest expense, gain on disposal of subsidiary, tax indemnifications and changes in deferred tax valuation allowances. A detailed reconciliation of the adjustments between results calculated using GAAP and non-GAAP in this release is contained in the attached financial schedules. This information can also be obtained from the Company’s Investor Relations website at www.techdata.com/investor.

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 Data’s financial results and estimates and/or business prospects, involve a number of risks and uncertainties and actual results could differ materially from those projected. These forward looking statements are based on current expectations, estimates, forecasts, and projections about the operating environment, economies and markets in which Tech Data operates and the beliefs and assumptions of our management. Words such as "expects,” "anticipates,” "targets,” "goals,” "projects,” "intends,” "plans,” "believes,” "seeks,” "estimates,” variations of such words, and similar expressions are intended to identify such forward looking statements. In addition, any statements that refer to projections of Tech Data’s future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances, are forward looking statements. These forward looking statements are only predictions and are subject to risks, uncertainties, and assumptions. Therefore, actual results may differ materially and adversely from those expressed in any forward looking statements.

For additional information with respect to risks and other factors which could occur, see Tech Data’s Annual Report on Form 10-K for the year ended January 31, 2019, including Part I, Item 1A, "Risk Factors” therein, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other securities filings with the Securities and Exchange Commission (the "SEC”) that are available at the SEC’s website at www.sec.gov and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Many of these factors are beyond Tech Data’s control. Unless otherwise required by applicable securities laws, Tech Data disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Tech Data undertakes no duty to update any forward looking statements contained herein to reflect actual results or changes in Tech Data’s expectations.

About Tech Data

Tech Data connects the world with the power of technology. Our end-to-end portfolio of products, services and solutions, highly specialized skills, and expertise in next-generation technologies enable channel partners to bring to market the products and solutions the world needs to connect, grow and advance. Tech Data is ranked No. 88 on the Fortune 500^® and has been named one of Fortune’s World’s Most Admired Companies for 10 straight years. To find out more, visit www.techdata.com or follow us on Twitter, LinkedIn, Facebook and Instagram.

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