UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 31, 2017
TECH DATA CORPORATION
(Exact name of registrant as specified in its charter)
Florida | 0-14625 | 59-1578329 | ||
(State of Incorporation) |
(Commission File Number) |
(IRS employer Identification No.) |
5350 Tech Data Drive
Clearwater, Florida, 33760
(Address of principal executive offices)
727-539-7429
(Registrant’s telephone number)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02. Results of Operations and Financial Condition.
On August 31, 2017, Tech Data Corporation (the “Company”) issued a press release, furnished as Exhibit 99.1 and incorporated herein by reference, announcing its financial results for the three months ended July 31, 2017. The information in this Form 8-K, including Exhibit 99.1, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section and shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
GAAP to Non-GAAP Reconciliation
The disclosures of financial results for the three months ended July 31, 2017, contained herein are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) and are accompanied by disclosures and financial measures that are not prepared in conformity with GAAP. These non-GAAP disclosures include certain adjustments as noted below not reflected in the GAAP presentations.
· | LCD settlements and other, net: |
For the three months ended July 31, 2017, non-GAAP operating income and non-GAAP operating margin exclude gains associated with LCD settlements and other, net of $28.7 million. For the three months ended July 31, 2017, non-GAAP net income and non-GAAP net income per diluted share exclude this item, net of the tax impact.
· | Acquisition, integration and restructuring expenses: |
For the three months ended July 31, 2017, non-GAAP operating income and non-GAAP operating margin exclude acquisition, integration and restructuring expenses of $30.1 million. For the three months ended July 31, 2017, non-GAAP net income and non-GAAP net income per diluted share exclude this item, net of the tax impact.
· | Acquisition-related intangible assets amortization expense: |
For the three months ended July 31, 2017, non-GAAP selling, general and administrative expenses, non-GAAP operating income and non-GAAP operating margin exclude acquisition-related intangible assets amortization expense of $22.9 million. For the three months ended July 31, 2017, non-GAAP net income and non-GAAP net income per diluted share exclude this item, net of the tax impact.
In addition to GAAP results, Company management believes that the presentation of non-GAAP financial measures is useful to investors because it provides investors with a more complete understanding of our operational results and a meaningful comparison of our performance between periods. The non-GAAP results and outlook should only be used in conjunction with results reported in accordance with GAAP and are not intended to be a substitute for results reported in accordance with GAAP. Non-GAAP financial measures presented in the press release, supplemental slide presentation and similar documents issued by the Company include but are not limited to net 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. These non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by comparable companies. Management may also use these non-GAAP financial measures to establish operational goals and, in some cases, for measuring performance for compensation purposes. The press release and supplemental slide presentation provide a detailed reconciliation between results reported in accordance with GAAP and non-GAAP financial measures.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The following materials are attached as exhibits to this Current Report on Form 8-K:
Exhibit Number | Description |
99.1 | Press Release, dated August 31, 2017. |
99.2 | Supplemental slide presentation dated August 31, 2017. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Tech Data Corporation | |||
(Registrant) | |||
Date: August 31, 2017 | /s/ Charles V. Dannewitz | ||
Charles V. Dannewitz Executive Vice President, & Chief Financial Officer |
Exhibit 99.1
Tech Data Corporation Reports Second Quarter Fiscal Year 2018 Results
CLEARWATER, Fla., Aug. 31, 2017 /PRNewswire/ -- Tech Data (NASDAQ: TECD) (the "Company") today announced its financial results for the second quarter ended July 31, 2017.
| Second quarter ended July 31, | Six months ended July 31, | ||||
($ in millions,
| 2017 | 2016 | Y/Y
| 2017 | 2016 | Y/Y
|
Net Sales | $8,882.7 | $6,353.7 | 40% | $16,546.8 | $12,317.1 | 34% |
|
|
|
|
|
|
|
Operating income (GAAP) | $103.5 | $73.4 | 41% | $178.6 | $125.9 | 42% |
Operating margin (GAAP) | 1.17% | 1.15% | 2 bps | 1.08% | 1.02% | 6 bps |
|
|
|
|
|
|
|
Operating income (Non-GAAP) | $127.8 | $78.1 | 64% | $251.1 | $135.7 | 85% |
Operating margin (Non-GAAP) | 1.44% | 1.23% | 21 bps | 1.52% | 1.10% | 42 bps |
|
|
|
|
|
|
|
Net income (GAAP) | $47.5 | $46.4 | 2% | $78.1 | $79.8 | -2% |
Net income (Non-GAAP) | $66.7 | $50.3 | 33% | $136.8 | $87.3 | 57% |
|
|
|
|
|
|
|
EPS - diluted (GAAP) | $1.24 | $1.31 | -5% | $2.06 | $2.26 | -9% |
EPS - diluted (Non-GAAP) | $1.74 | $1.42 | 23% | $3.61 | $2.47 | 46% |
| ||||||
A reconciliation of GAAP to non-GAAP financial measures is presented in the financial tables of this press release.
|
Financial Highlights for the Second Quarter Ended July 31, 2017:
"Our fiscal 2018 first-half results clearly show the enhanced earnings and cash-generating power of the new Tech Data. In Q2, worldwide sales exceeded plan and our teams maintained disciplined cost controls; however, we did not deliver the earnings we expected in the quarter," said Robert M. Dutkowsky, chairman and chief executive officer. "Tech Data is a stronger company today than it was a year ago. With the addition of Technology Solutions, we now have a richer portfolio of advanced technology vendors and customers, along with deeper skills to serve them. At the same time, we continue to accelerate the expansion of our capabilities in next-generation technologies. Our integration is progressing as planned and we are on track to deliver our synergy and debt reduction targets."
Business Outlook
Webcast Details
Tech Data will hold a conference call today at 5:00 p.m. (ET) to discuss its financial results for the second quarter ended July 31, 2017. 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.
Investor Day Event
The Company also announced it will host an Investor Day in New York City beginning at 8:30 a.m. on Tuesday, October 10, 2017. Chairman and CEO Bob Dutkowsky, COO Rich Hume, and CFO Chuck Dannewitz, along with other members of the management team, will review the company's strategy, highlight its performance and outline the company's financial goals. A live webcast of the investor day event, including slides and 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 acquisition-related financing expenses. 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, which may relate to the Technology Solutions business, 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, 2017, 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 Corporation is one of the world's largest wholesale distributors of technology products, services and solutions. Its advanced logistics capabilities and value added services enable 115,000 resellers to efficiently and cost effectively support the diverse technology needs of end users in more than 100 countries. Tech Data generated $26.2 billion in net sales for the fiscal year ended January 31, 2017. It is ranked No. 107 on the Fortune 500® and one of Fortune's "World's Most Admired Companies." To learn more, visit www.techdata.com, or follow us on Facebook and Twitter.
Contacts:
Charles V. Dannewitz, Executive Vice President, Chief Financial Officer
727-532-8028 (chuck.dannewitz@techdata.com)
Arleen Quiñones, Corporate Vice President, Investor Relations and Corporate Communications
727-532-8866 (arleen.quinones@techdata.com)
TECH DATA CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENT OF OPERATIONS | |||||||
(In thousands, except per share amounts) | |||||||
(Unaudited) | |||||||
|
|
|
| ||||
|
|
|
| ||||
| Three months ended |
| Six months ended | ||||
July 31, |
| July 31, | |||||
| 2017 |
| 2016 |
| 2017 |
| 2016 |
|
|
|
|
|
|
|
|
Net sales | $8,882,691 |
| $6,353,739 |
| $16,546,754 |
| $12,317,101 |
Cost of products sold | 8,367,100 |
| 6,037,289 |
| 15,574,075 |
| 11,702,040 |
Gross profit | 515,591 |
| 316,450 |
| 972,679 |
| 615,061 |
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative expenses | 410,598 |
| 243,763 |
| 763,230 |
| 490,259 |
Acquisition, integration and restructuring expenses | 30,117 |
| 1,982 |
| 72,183 |
| 1,982 |
LCD settlements and other, net | (28,655) |
| (3,699) |
| (41,343) |
| (4,142) |
Value added tax assessments | - |
| 1,049 |
| - |
| 1,049 |
| 412,060 |
| 243,095 |
| 794,070 |
| 489,148 |
Operating income | 103,531 |
| 73,355 |
| 178,609 |
| 125,913 |
Interest expense | 28,272 |
| 6,288 |
| 59,280 |
| 11,889 |
Other expense (income), net | 284 |
| (1,230) |
| (131) |
| (2,264) |
Income before income taxes | 74,975 |
| 68,297 |
| 119,460 |
| 116,288 |
Provision for income taxes | 27,516 |
| 21,903 |
| 41,347 |
| 36,521 |
Net income | $ 47,459 |
| $ 46,394 |
| $ 78,113 |
| $ 79,767 |
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
Basic | $ 1.24 |
| $ 1.32 |
| $ 2.07 |
| $ 2.27 |
Diluted | $ 1.24 |
| $ 1.31 |
| $ 2.06 |
| $ 2.26 |
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
Basic | 38,174 |
| 35,207 |
| 37,720 |
| 35,167 |
Diluted | 38,388 |
| 35,378 |
| 37,935 |
| 35,373 |
TECH DATA CORPORATION AND SUBSIDIARIES | |||
CONSOLIDATED BALANCE SHEET | |||
(In thousands, except par value and share amounts) | |||
| |||
|
|
|
|
July 31, | January 31, | ||
| 2017 |
| 2017 |
ASSETS | (unaudited) |
|
|
Current assets: |
|
|
|
Cash and cash equivalents | $ 1,033,267 |
| $ 2,125,591 |
Accounts receivable, net | 4,981,866 |
| 3,047,927 |
Inventories | 2,703,763 |
| 2,118,902 |
Prepaid expenses and other assets | 247,504 |
| 119,906 |
Total current assets | 8,966,400 |
| 7,412,326 |
Property and equipment, net | 136,577 |
| 74,239 |
Goodwill | 853,767 |
| 199,021 |
Intangible assets, net | 1,149,530 |
| 130,676 |
Other assets, net | 267,651 |
| 115,604 |
Total assets | $ 11,373,925 |
| $ 7,931,866 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable | $ 5,465,428 |
| $ 3,844,532 |
Accrued expenses and other liabilities | 742,815 |
| 493,199 |
Revolving credit loans and current maturities of long-term debt, net | 465,407 |
| 373,123 |
Total current liabilities | 6,673,650 |
| 4,710,854 |
Long-term debt, less current maturities | 1,802,618 |
| 989,924 |
Other long-term liabilities | 165,425 |
| 61,200 |
Total liabilities | $ 8,641,693 |
| $ 5,761,978 |
Shareholders' equity: |
|
|
|
Common stock, par value $0.0015; 200,000,000 shares authorized; 59,245,585
| $ 89 |
| $ 89 |
Additional paid-in capital | 811,046 |
| 686,042 |
Treasury stock, at cost (21,100,662 and 24,018,983 shares at July 31, 2017
| (940,868) |
| (1,070,994) |
Retained earnings | 2,707,406 |
| 2,629,293 |
Accumulated other comprehensive income (loss) | 154,559 |
| (74,542) |
Total shareholders' equity | 2,732,232 |
| 2,169,888 |
Total liabilities and shareholders' equity | $ 11,373,925 |
| $ 7,931,866 |
TECH DATA CORPORATION AND SUBSIDIARIES | |||||||||
GAAP TO NON-GAAP RECONCILIATION | |||||||||
(In thousands) | |||||||||
|
| ||||||||
|
| ||||||||
| Three months ended July 31, 2017 | ||||||||
| 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
| 14,242 |
| 14,685 |
| 145 |
| 1,045 |
| 30,117 |
Acquisition-related intangible
| 12,413 |
| 8,965 |
| 1,477 |
|
|
| 22,855 |
Total non-GAAP operating income
| $ (3,316) |
| $ 24,966 |
| $ 1,622 |
| $ 1,045 |
| $ 24,317 |
Non-GAAP operating income | $ 84,659 |
| $ 43,430 |
| $ 6,688 |
| $ (6,929) |
| $ 127,848 |
GAAP operating margin | 2.10% |
| 0.42% |
| 1.76% |
|
|
| 1.17% |
Non-GAAP operating margin | 2.02% |
| 0.99% |
| 2.32% |
|
|
| 1.44% |
(1) GAAP operating income does not include stock compensation expense at the regional level. |
| Three months ended July 31, 2016 | |||||||
| Americas(1) |
| Europe(1) |
|
| Stock
|
| 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 | 1,046 |
| 936 |
|
|
|
| 1,982 |
Acquisition-related intangible assets amortization expense | 580 |
| 4,828 |
|
|
|
| 5,408 |
LCD settlements and other, net | (3,699) |
| - |
|
|
|
| (3,699) |
Total non-GAAP operating income adjustments | $ (2,480) |
| $ 7,220 |
|
|
|
| $ 4,740 |
Non-GAAP operating income | $ 38,761 |
| $ 43,147 |
|
| $ (3,813) |
| $ 78,095 |
GAAP operating margin | 1.54% |
| 0.98% |
|
|
|
| 1.15% |
Non-GAAP operating margin | 1.45% |
| 1.17% |
|
|
|
| 1.23% |
(1) GAAP operating income does not include stock compensation expense at the regional level. |
TECH DATA CORPORATION AND SUBSIDIARIES | |||||||||
GAAP TO NON-GAAP RECONCILIATION | |||||||||
(In thousands) | |||||||||
| |||||||||
| |||||||||
| Six months ended July 31, 2017 | ||||||||
| Americas(1) |
| Europe(1) |
| APAC(1) |
| Stock
|
| Consolidated |
Net Sales | $ 7,661,312 |
| $ 8,408,974 |
| $ 476,468 |
|
|
| $ 16,546,754 |
GAAP operating income(1) | $ 138,875 |
| $ 43,263 |
| $ 9,363 |
| $ (12,892) |
| $ 178,609 |
LCD settlements and other, net | (42,659) |
| 1,316 |
| - |
|
|
| (41,343) |
Acquisition, integration and
| 44,424 |
| 26,257 |
| 145 |
| 1,357 |
| 72,183 |
Acquisition-related intangible
| 22,514 |
| 16,713 |
| 2,377 |
|
|
| 41,604 |
Total non-GAAP operating income
| $ 24,279 |
| $ 44,286 |
| $ 2,522 |
| $ 1,357 |
| $ 72,444 |
Non-GAAP operating income | $ 163,154 |
| $ 87,549 |
| $ 11,885 |
| $ (11,535) |
| $ 251,053 |
GAAP operating margin | 1.81% |
| 0.51% |
| 1.97% |
|
|
| 1.08% |
Non-GAAP operating margin | 2.13% |
| 1.04% |
| 2.49% |
|
|
| 1.52% |
(1) GAAP operating income does not include stock compensation expense at the regional level. |
| Six months ended July 31, 2016 | |||||||
| Americas(1) |
| Europe(1) |
|
| Stock
|
| Consolidated |
Net Sales | $ 5,062,890 |
| $ 7,254,211 |
|
|
|
| $ 12,317,101 |
GAAP operating income(1) | $ 72,516 |
| $ 60,867 |
|
| $ (7,470) |
| $ 125,913 |
Value added tax assessments | (407) |
| 1,456 |
|
|
|
| 1,049 |
Acquisition, integration and restructuring
| 1,046 |
| 936 |
|
|
|
| 1,982 |
Acquisition-related intangible assets
| 1,160 |
| 9,693 |
|
|
|
| 10,853 |
LCD settlements and other, net | (4,142) |
| - |
|
|
|
| (4,142) |
Total non-GAAP operating income adjustments | $ (2,343) |
| $ 12,085 |
|
|
|
| $ 9,742 |
Non-GAAP operating income | $ 70,173 |
| $ 72,952 |
|
| $ (7,470) |
| $ 135,655 |
GAAP operating margin | 1.43% |
| 0.84% |
|
|
|
| 1.02% |
Non-GAAP operating margin | 1.39% |
| 1.01% |
|
|
|
| 1.10% |
(1) GAAP operating income does not include stock compensation expense at the regional level. |
Selling, general and administrative expenses ("SG&A") | Three months ended July 31, | ||
2017 |
| 2016 | |
Net Sales | $ 8,882,691 |
| $ 6,353,739 |
GAAP SG&A | 410,598 |
| 243,763 |
Acquisition-related intangible assets amortization expense | (22,855) |
| (5,408) |
Non-GAAP SG&A | $ 387,743 |
| $ 238,355 |
|
|
|
|
GAAP SG&A percentage of net sales | 4.62% |
| 3.84% |
Non- GAAP SG&A percentage of net sales | 4.37% |
| 3.75% |
|
|
|
|
|
|
|
|
| Six months ended July 31, | ||
| 2017 |
| 2016 |
Net Sales | $ 16,546,754 |
| $ 12,317,101 |
GAAP SG&A | 763,230 |
| 490,259 |
Acquisition-related intangible assets amortization expense | (41,604) |
| (10,853) |
Non-GAAP SG&A | $ 721,626 |
| $ 479,406 |
|
|
|
|
GAAP SG&A percentage of net sales | 4.61% |
| 3.98% |
Non- GAAP SG&A percentage of net sales | 4.36% |
| 3.89% |
| Three months ended July 31, | ||||
| 2017 |
| 2016 | ||
| Net Income | Diluted EPS |
| Net Income | Diluted EPS |
GAAP Results | $47,459 | $1.24 |
| $46,394 | $1.31 |
LCD settlements and other, net | (28,332) | (0.74) |
| (3,699) | (0.10) |
Value added tax assessments | - | - |
| 1,386 | 0.04 |
Acquisition, integration and restructuring
| 30,117 | 0.78 |
| 1,982 | 0.05 |
Acquisition-related intangible assets
| 22,855 | 0.60 |
| 5,408 | 0.15 |
Income tax effect of the above adjustments | (5,367) | (0.14) |
| (1,178) | (0.03) |
Non-GAAP results | $66,732 | $1.74 |
| $50,293 | $1.42 |
|
|
|
|
|
|
| Six months ended July 31, | ||||
| 2017 |
| 2016 | ||
| Net Income | Diluted EPS |
| Net Income | Diluted EPS |
GAAP Results | $78,113 | $2.06 |
| $79,767 | $2.26 |
LCD settlements and other, net | (41,020) | (1.08) |
| (4,142) | (0.12) |
Value added tax assessments | - | - |
| 1,386 | 0.04 |
Acquisition, integration and restructuring expenses | 72,183 | 1.90 |
| 1,982 | 0.05 |
Acquisition-related intangible assets amortization expense | 41,604 | 1.10 |
| 10,853 | 0.31 |
Acquisition-related financing expenses | 8,807 | 0.23 |
| - | - |
Income tax effect of the above adjustments | (22,896) | (0.60) |
| (2,511) | (0.07) |
Non-GAAP results | $136,791 | $3.61 |
| $87,335 | $2.47 |
Return on Invested Capital (ROIC) | |||
| |||
| |||
| Twelve months ended July 31, | ||
| 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 |
Shareholders' Equity (5-qtr average) | 2,316,790 |
| 2,036,086 |
Total average capital | 3,645,641 |
| 2,402,198 |
Less: Cash (5-qtr average) | (1,081,802) |
| (669,836) |
Average invested capital less average cash | $ 2,563,839 |
| $ 1,732,362 |
ROIC | 10% |
| 14% |
|
|
|
|
* Trailing Twelve Months is abbreviated as TTM. |
|
|
|
(1) Income taxes on operating income was calculated using the trailing 12 months effective tax rate during the respective periods. |
Adjusted Return on Invested Capital (ROIC) | |||
| |||
| |||
| Twelve months ended July 31, | ||
| 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) | $ 340,608 |
| $ 16,796 |
Long-term debt (5-qtr average) | 988,243 |
| 349,316 |
Shareholders' Equity (5-qtr average) | 2,316,790 |
| 2,036,086 |
Tax effected impact of non-GAAP adjustments(3) | 31,842 |
| (27,154) |
Total average capital, as adjusted | 3,677,483 |
| 2,375,044 |
Less: Cash (5-qtr average) | (1,081,802) |
| (669,836) |
Average invested capital less average cash | $ 2,595,681 |
| $ 1,705,208 |
Adjusted ROIC | 12% |
| 14% |
|
|
|
|
* Trailing Twelve Months is abbreviated as TTM.
|
|
|
|
(1) Represents operating income as adjusted to exclude acquisition, integration and restructuring expenses, LCD settlements and other, net, value added tax assessments and acquisition-related intangible assets amortization expense. | |||
(2) Income taxes on non-GAAP operating income was calculated using the trailing 12 months effective tax rate adjusted for the impact of non-GAAP adjustments during the respective periods. | |||
(3) Represents the 5 quarter average of the year-to-date impact of non-GAAP adjustments. |
Guidance Reconciliation | |||
| |||
| |||
| Three months ended October 31, 2017 | ||
| Low end of
|
| High end of
|
Earnings per share - diluted | $0.80 |
| $1.00 |
Acquisition, integration and restructuring expenses | 0.85 |
| 0.85 |
Acquisition-related intangible assets amortization expense | 0.62 |
| 0.62 |
Income tax effect of the above adjustments | (0.43) |
| (0.43) |
Non-GAAP earnings per share - diluted | $1.84 |
| $2.04 |
Exhibit 99.2
Q2 Fiscal Year 2018 Financial Highlights For the quarter ended July 31, 2017 August 31, 2017
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, including statements regarding Tech Data’s plans, objectives, expectations and intentions, which may relate to the Technology Solutions business, Tech Data’s financial results and estimates and/or business prospects, involve a number of ris ks and uncertainties and actual results could differ materially from those projected. These forward looking statements are based on current expect ati ons, estimates, forecasts, and projections about the operating environment, economies and markets in which Tech Data operates and the beliefs an d assumptions of our management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seek s,” “estimates,” variations of such words, and similar expressions are intended to identify such forward looking statements. In addition, any statements tha t r efer to projections of Tech Data’s future financial performance, our anticipated growth and trends in our businesses, and other characterizations of fu ture events or circumstances, are forward looking statements. These forward looking statements are only predictions and are subject to risks , u ncertainties, and assumptions. Therefore, actual results may differ materially and adversely from those expressed in any forward looking statem ent s. For additional information with respect to risks and other factors which could occur, see Tech Data’s Annual Report on Form 1 0 - K for the year ended January 31, 2017, 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 .go v and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward - looking statements, which speak o nly 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 an y intention or obligation to update or revise any forward - looking statements, whether as a result of new information, future event s or otherwise. Tech Data undertakes no duty to update any forward looking statements contained herein to reflect actual results or changes in Tec h D ata’s expectations. This document includes financial results prepared in accordance with generally accepted accounting principles (“GAAP”). In additio n t o GAAP results, Tech Data management believes that the presentation of non - GAAP financial measures is useful to investors because it pr ovides investors with a more complete understanding of our operational results and a meaningful comparison of our performance betwee n p eriods. The non - GAAP results and outlook should only be used in conjunction with results reported in accordance with GAAP and are not intended to be a substitute for results reported in accordance with GAAP. Non - GAAP financial measures presented in this presentation or othe r presentations, press releases and similar documents issued by Tech Data, include but are not limited to sales , income or expense items as adjusted for the impact of changes in foreign currencies (referred to as “constant currency ”) , non - GAAP selling, general and administrative expenses (“SG&A”), non - GAAP operating income, non - GAAP operating margin, non - GAAP net income, non - GAAP earnings per diluted share and A djusted Return on Invested Capital. These non - GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by comparable companies. Management may also use these non - GAA P financial measures to establish operational goals and, in some cases, for measuring performance for compensation purposes. Th is presentation provides a detailed reconciliation between results reported in accordance with GAAP and non - GAAP financial measures. Non - GAAP Financial Information
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 41% year - over - year and 13% sequentially. Net Sales 3 $ in Billions Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Asia Pacific $0.0 $0.0 $0.0 $1.0 $1.0 Americas $2.7 $2.6 $2.7 $3.5 $4.2 Europe $3.7 $3.9 $4.7 $4.0 $4.4 Reported Y/Y Growth -3% 1% -1% 29% 40% Y/Y CC Growth⁽¹⁾ -2% 4% 2% 33% 41% $7.7 $6.4 $6.5 $7.4 58% 42% 60% 40% 6 4 % 36% 52% 45% 3% 50% 47% 3% $8.9 ⁽¹ ⁾ CC: constant currency
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: • Americas reported net sales of $4.2 billion increased 57% year - over - year and 21% sequentially . The increase in net sales is primarily attributed to the addition of Technology Solutions. 4 ⁽¹ ⁾ CC: constant currency
$ 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 reported net sales of $4.4 billion increased 20% year - over - year and 10% sequentially. The increase in net sales is primarily attributed to the addition of Technology Solutions. • On a constant currency basis, net sales increased 2 1 % year - over - year and 5% sequentially. ⁽¹ ⁾ CC: constant currency
$ 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 Americas $- $- $- $0.2 $0.2 0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 0.16 0.18 0.2 0.22 0.24 0.26 0.28 0.3 0.32 0.34 0.36 0.38 0.4 0.42 0.44 0.46 0.48 0.5 0.52 0.54 0.56 0.58 0.6 0.62 0.64 0.66 0.68 0.7 0.72 0.74 0.76 0.78 0.8 0.82 0.84 0.86 0.88 0.9 0.92 0.94 0.96 0.98 1 $- $0.1 $0.1 $0.2 $0.2 $0.3 $0.3 $0.2
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 million or 63% compared to the prior - year quarter. • Gross profit margin increased 82 basis points from the prior - year quarter. • The increase in gross profit and gross margin percentage is primarily attributable to the addition of Technology Solutions. $ in Millions Gross Profit and Margin 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 amortization of intangibles expenses. See GAAP to Non - GAAP reconciliation in the appendix. SG&A Expenses Worldwide Q2 FY18: • Non - GAAP SG&A expenses of $387.7 million increased $149.4 million or 63% compared to the prior - year quarter. • Non - GAAP SG&A as a percentage of net sales increased 62 basis points from the prior - year quarter . • The increase in both dollars and percentage of net sales, on a GAAP and non - GAAP basis, is primarily attributable to the addition of Technology Solutions. • GAAP depreciation and amortization expense was $38.9 million compared to $14.0 million in the prior - year quarter. 8 $243.8 $240.0 $253.9 $352.6 $410.6 3.84% 3.70% 3.42% 4.60% 4.62% 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 SG&A Expenses (Non - GAAP) (1) SG&A Expenses
$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 operating income of $127.8 million increased $49.8 million or 64% compared to the prior - year quarter . • Worldwide non - GAAP operating margin improved 21 basis points from the prior - year quarter. • The increase in operating income and operating margin percentage, on a GAAP and non - GAAP basis, is primarily attributable to the addition of Technology Solutions. $73.4 $62.9 $103.1 $75.1 $103.5 1.15% 0.97% 1.39% 0.98% 1.17% $- $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 Operating Income (Non - GAAP) (1 ) Operating Income
$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 appendix. $ in Millions 10 Operating Income (1) Americas Q2 FY18: • Americas ’ non - GAAP operating income of $84.7 million increased $45.9 million or 118% compared to the prior - year quarter. • Non - GAAP operating margin improved 57 basis points over the prior - year quarter. • The increase in operating income and operating margin percentage, on a GAAP and non - GAAP basis, is primarily attributable to the addition of Technology Solutions. $41.2 $32.4 $39.3 $50.9 $88.0 1.54% 1.24% 1.45% 1.47% 2.10% 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 Operating Income (Non - GAAP) ( 2 ) Operating Income
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 Millions Operating Income (1) Europe Q2 FY18: • Europe’s non - GAAP operating income of $43.4 million increased $0.3 million or 1 % compared to the prior - year quarter. • Non - GAAP operating margin declined 18 basis points from the prior - year quarter. $35.9 $34.0 $66.7 $24.8 $18.5 0.98% 0.88% 1.41% 0.62% 0.42% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% $- $20.0 $40.0 $60.0 $80.0 $100.0 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Operating Income (Non - GAAP) ( 2 ) Operating Income
$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 Asia Pacific region’s non - GAAP operating income was $6.7 million or 2.32% of net sales. • No prior period results reported for the region by Tech Data due to the acquisition of the Technology Solutions business on February 27, 2017. $4.3 $5.1 2.28% 1.76% 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 Operating Income (Non - GAAP) ( 2 ) Operating Income
$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 Income and EPS Worldwide Q2 FY18: • The effective tax rate was 36.7%, compared to 32.1% in the prior - year quarter. Excluding non - GAAP adjustments, the effective tax rate was 33%, compared to 31.5% in the prior - year quarter. • Non - GAAP net income of $66.7 million increased $16.4 million or 33% compared to the prior - year quarter . • Non - GAAP Earnings per diluted share of $1.74 increased $0.32 or 23% compared to the prior - year quarter. $46.4 $36.5 $78.8 $30.7 $47.5 $1.31 $1.03 $2.22 $0.82 $1.24 $- $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 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Net Income and EPS (Non - GAAP) (1) Net Income and EPS
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 Purchases Outstanding (49) (51) (49) (57) (59) Cash Conversion Cycle 22 22 15 22 21 Q2 FY18: • Net cash generated by operations was $146 million. • The cash balance at the end of the quarter was $1.0 billion. $ in Millions
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 income, which consists of currency translation, net of applicable taxes, was $154.6 million • Capital expenditures were $11 million. • At July 31, 2017, the company had $2.7 billion of equity, and 38.1 million shares outstanding resulting in book value of $71.63 per share. • At July 31, 2017, the company had approximately $1.9 billion of goodwill and acquired intangibles. $
• 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 TTM
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 43% Data Center Industry Standard Servers, Proprietary Servers, Networking, Storage 26% Software Virtualization, Cloud, Security, Desktop Applications, Operating Systems, Utilities Software 18% Mobility Mobile Phones, Accessories 10% Consumer Electronics TVs, Digital Displays, Consumer A/V Devices Network - Attached Consumer Devices 2% Services 1%
APPENDIX GAAP to Non - GAAP Reconciliations
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 amortization expense (5,408) (5,243) (5,063) (18,749) (22,855) Non-GAAP SG&A expenses 238,355$ 234,709$ 248,878$ 333,883$ 387,743$ GAAP SG&A percentage of net sales 3.84% 3.70% 3.42% 4.60% 4.62% Non-GAAP SG&A percentage of net sales 3.75% 3.62% 3.35% 4.36% 4.37% Selling, general and administrative ("SG&A") Three months ended SG&A
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, integration and restructuring expenses 14,242 14,685 145 1,045 30,117 Acquisition-related intangible assets amortization expense 12,413 8,965 1,477 22,855 Total non-GAAP operating income adjustments (3,316)$ 24,966$ 1,622$ 1,045$ 24,317$ Non-GAAP operating income 84,659$ 43,430$ 6,688$ (6,929)$ 127,848$ GAAP operating margin 2.10% 0.42% 1.76% 1.17% Non-GAAP operating margin 2.02% 0.99% 2.32% 1.44% Three months ended July 31, 2017 ⁽ ¹ ⁾ GAAP operating income does not include stock compensation expense at the regional level. (In thousands)
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, integration and restructuring expenses 30,182 11,572 - 312 42,066 Acquisition-related intangible assets amortization expense 10,101 7,748 900 18,749 Total non-GAAP operating income adjustments 27,595$ 19,320$ 900$ 312$ 48,127$ Non-GAAP operating income 78,495$ 44,119$ 5,197$ (4,606)$ 123,205$ GAAP operating margin 1.47% 0.62% 2.28% 0.98% Non-GAAP operating margin 2.26% 1.10% 2.76% 1.61% Three months ended April 30, 2017 ⁽ ¹ ⁾ GAAP operating income does not include stock compensation expense at the regional level. (In thousands)
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 intangible assets amortization expense 580 4,483 5,063 Total non-GAAP operating income adjustments 8,076$ 10,956$ 19,032$ Non-GAAP operating income 47,392$ 77,684$ (2,927)$ 122,149$ GAAP operating margin 1.45% 1.41% 1.39% Non-GAAP operating margin 1.75% 1.65% 1.64% Three months ended January 31, 2017⁽ ¹ ⁾ GAAP operating income does not include stock compensation expense at the regional level. (In thousands)
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 intangible assets amortization expense 580 4,663 5,243 Total non-GAAP operating income adjustments 10,036$ 8,222$ 18,258$ Non-GAAP operating income 42,450$ 42,230$ (3,550)$ 81,130$ GAAP operating margin 1.24% 0.88% 0.97% Non-GAAP operating margin 1.62% 1.09% 1.25% Three months ended October 31, 2016⁽ ¹ ⁾ GAAP operating income does not include stock compensation expense at the regional level. (In thousands)
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 1,046 936 1,982 Acquisition-related intangible assets amortization expense 580 4,828 5,408 LCD settlements and other, net (3,699) - (3,699) Total non-GAAP operating income adjustments (2,480)$ 7,220$ 4,740$ Non-GAAP operating income 38,761$ 43,147$ (3,813)$ 78,095$ GAAP operating margin 1.54% 0.98% 1.15% Non-GAAP operating margin 1.45% 1.17% 1.23% Three months ended July 31, 2016⁽ ¹ ⁾ GAAP operating income does not include stock compensation expense at the regional level. (In thousands)
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 assessments 1,386 0.04 - - - - - - - - Acquisition, integration and restructuring expenses 1,982 0.05 13,015 0.37 13,969 0.39 42,066 1.12 30,117 0.78 Acquisition-related intangible assets amortization expense 5,408 0.15 5,243 0.15 5,063 0.14 18,749 0.50 22,855 0.60 Acquisition-related financing expenses - - 3,414 0.10 8,476 0.24 8,807 0.24 - - Income tax effect of the above adjustments (1,178) (0.03) (7,277) (0.21) (6,864) (0.19) (17,529) (0.47) (5,367) (0.14) Reversal of deferred tax valuation allowances - - - - (12,455) (0.35) - - - - Non-GAAP results $50,293 $1.42 $50,901 $1.44 $87,011 $2.45 $70,059 $1.87 $66,732 $1.74 Weighted average shares outstanding - diluted 35,378 35,449 35,512 37,468 38,388 Three months ended, July 31, 2016 October 31, 2016 January 31, 2017 April 30, 2017 July 31, 2017 (In thousands, except per share data) Net Income and EPS
A - 8 2017 2016 TTM Net Operating Profit After Tax (NOPAT)*: Operating Income 344,598$ 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 Shareholders' Equity (5-qtr average) 2,316,790 2,036,086 Total average capital 3,645,641 2,402,198 Less: Cash (5-qtr average) (1,081,802) (669,836) Average invested capital less average cash 2,563,839$ 1,732,362$ ROIC 10% 14% * Trailing Twelve Months is abbreviated as TTM. Twelve months ended July 31, ⁽ ¹ ⁾ Income taxes on operating income was calculated using the trailing 12 months effective tax rate during the respective periods. Q1 FY15 Return on Invested Capital $ in thousands
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) 340,608$ 16,796$ Long-term debt (5-qtr average) 988,243 349,316 Shareholders' Equity (5-qtr average) 2,316,790 2,036,086 Tax effected impact of non-GAAP adjustments ⁽ ³ ⁾ 31,842 (27,154) Total average capital, as adjusted 3,677,483 2,375,044 Less: Cash (5-qtr average) (1,081,802) (669,836) Average invested capital less average cash 2,595,681$ 1,705,208$ Adjusted ROIC 12% 14% * Trailing Twelve Months is abbreviated as TTM. ⁽ ³ ⁾ Represents the 5 quarter average of the year-to-date impact of non-GAAP adjustments. Twelve months ended July 31, ⁽ ¹ ⁾ Represents operating income as adjusted to exclude acquisition, integration and restructuring expenses, LCD settlements and other, net, value added tax assessments and acquisition-related intangible assets amortization expense ⁽ ² ⁾ Income taxes on non-GAAP operating income was calculated using the trailing 12 months effective tax rate adjusted for the impact of non-GAAP adjustments during the respective periods. Q1 FY15 Adjusted Return on Invested Capital $ in thousands
K);\.'1W#>K[SQ3I+BG6=S>"G#8@U(U)U%N^LKNFO
M=NTNER2/S:9)EH%]Q?>G>0D'@E"^&>F*]E#A]%1Q,$++.<=I.8?$^\*RY-XC
M75TKS,^[6C8!G/P'N*LK%35O2")!$@B01((D$6%U$^,/R%JRZ35#2YYN2<X9OIXK"]OZFG_/;P/\
MM9N-CD4.QGZ5\>7B.UW>M:J
FME HBF]^6[;$S.> ,-?G
M%Y\NZ$_Q"-[%JKT:BDDUVL/B
PZW9SX=RV\I:ETV(/;J;F'CWW4X_!V
MV31Y;3Q^]WI5IZK3\XZPR^M(4J79;PG=3^R5*WB2.8W?!%=RHK)'5 IP;- !
M^)*LN2E%$VF-01=Q.G8 IKUDN 6II5<%P[Y2NGTUYQHY_P IND('UBF("A@]
M(JHXMI&[7W*Q5\_H]+)+L!WZN]>9!WBKOB2H\R>D^&.NKC1-RK_;#5O_ !#L
M[4EY:-UZL..U!SAQ(6K=1]Q"//',\H9^=Q!XU-L-VGO74\FZ?F<.9M=<\.X*
MHNUEAQY63CQA+1^M$/E9/R8(X1K-]W
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M_D,Y7I0.4!D_UI[+N"^]W
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MI\HL
C^([.">'9<+>3VRVUQ:3O'=P=Q7$2YU+XAV\#%OL_A3PJ
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M;PP3:O<:WX;\:^'+?0;V_>'[3 ^*?'>MZKKMO830Q:]/9^'7U5+EO#NCFSZ,?PAPWDE
M3C'$8]YMCL)P_7X2>78;"X[!4*V)I\3X.>,6%Q>/AA<5AVL.I*$LPP5&4:T*
M"J8:BXXV%2CSX'BC/V\,_%.R\,ZO?ZBVI>&[SP;J0@_M30?B)I-AX#^WXCQ
M5/&QX_RZAG$LVJT
%J0PE?V.)P]*=3%QPZS#'?5Z&*K4L.L9B9N,7%UI8F<(R7\
MMOP$^&'_ 43_P"")GB_XS_!+X%?L?:U^WU^PC\1?B1JOQ1^"NH_#SXD:1X;
M^+OP@O?$-K::5-X,\7Z/K.GZYJ^MO8Z-X=\/Z;J=QIWA^#PIJEU:GX@V7B;2
MM<\4>(OA]I'N/[-G['W[;?[97[4OQP_;Q_;NT"Y_9(L_%7[-_B7]ES]F_P#9
ME\)^/(_&7B;P+X0\8Z1XBM;SXE_$+6/#-]IOAS4M
'J3]I.;=:I37-6<7
MGK"$(^Z?19;EM#*Z>*I4)U9QQ>99AFE3VKBW&OF5>.(KP@XQC:E&I&U-2O)1
M;4I2T:*_!'_@W8_9'_:._8R_8K^*7PP_:>^%NI?"3Q[KW[4'BCQWH_AS5->\
M'>(KB^\(W_P4^ OA>SUM+WP1XD\4:5%#/KWA+Q'IRVMQ?PZ@DFERS2V<=K/:
M3W'[W44\-G&)PN39MDE.G1EA
TE.=-J6+SJG6IXJG-*FKT(1KS=&*M.+MSSFE8_EY_9^^!7_!2O_@D
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MXB\7^,?%WB?]$K\1Y1AZ6?9M5S'A?-,7F_#./RBGCL'@,UP_%V:8K,