Tech Data Corp. (
expects improved profitability for fiscal 2015, as the company's
Americas business segment continues to regain market share.
However, much of the improvement is expected to come in the later
half due to volatile macro-environment in Europe.
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The IT distributor reported results for the third quarter and
nine months of fiscal 2014 after a prolonged delay (last quarter
call was on Mar 4, 2013), due to restatement of previously issued
quarterly and audited annual financial statements for the fiscal
years 2011, 2012 and 2013.
In the third quarter of fiscal 2014, Tech Data reported earnings
of $1.04 per share, which declined 13.0% from the year-ago
quarter and was well short of the Zacks Consensus Estimate of
Tech Data announced preliminary fourth-quarter results. The
company also declared that it will hold the annual shareholder
meeting on Jun 4, 2014.
Tech Data reported revenues of $6.37 billion in the third quarter
of fiscal 2014, which lagged the Zacks Consensus Estimate of
$6.73 billion but improved 5.6% from the year-ago quarter.
Americas (40.0% of revenues) and Europe (60.0% of revenues)
increased 8.6% and 3.6% year over year, respectively.
Tech Data's 2012 acquisition SDG contributed approximately $560.0
million of sales. The implementation of the sales inventory and
credit management modules of SAP within the U.S. operations
helped the company to regain market share.
Although European revenues increased on a dollar basis, it
declined 2.0% on euro basis, primarily due to weak market
conditions in certain countries, as well as a decline in market
share in several countries, as Tech Data continued to focus on
maintain its higher gross margin.
Gross margin improved to 5.12% from 5.07% in the year-ago
quarter, driven by higher improvement in European margin,
partially offset by unfavorable product mix in the domestic
market and intensifying competitive environment in the
Selling, general & administrative (SG&A) expenses
increased 11.4% year over year to $270.1 million in the reported
quarter. The increase in SG&A was primarily due to higher
expenses related to the SDG acquisition and higher expenditure in
the European legacy business.
Operating profit declined 7.6% year over year to $65.0 million.
Geographically, operating profit in the Americas region increased
3.3% from the year-ago quarter, while European operating profit
plunged 17.1%. Net income was $39.6 million compared with $45.3
million in the year-ago quarter.
Tech Data had approximately $471.0 million in cash and total debt
of $400.4 million at the end of the last quarter.
Preliminary Fourth-Quarter results
Tech Data reported revenues of $8.0 billion, driven by mid
single-digit growth in both the Americas and Europe in the fourth
quarter. The company reported non-GAAP operating income in the
range of $110.0 to $120 million and non-GAAP earnings of $1.85 to
$2.05 per share in the quarter.
We believe sluggish PC shipments are expected to hurt Tech Data's
top-line growth in fiscal 2015. The company's growing exposure to
volatile European markets remains a concern. Moreover, Tech
Data's back-end loaded guidance will remain a headwind in the
Nevertheless, fourth quarter is the strongest seasonal quarter in
Europe, which will drive top-line growth in the near term. The
completion of the SAP implementation will improve execution.
Further, the company's partnerships with
will drive its top-line growth, going forward. Tech Data's
improving execution (particularly in Europe), superior customer
service and improving market share in the Americas are the major
positives, going ahead.
Currently, Tech Data has a Zacks Rank #3 (Hold).