EXHIBIT 99.1
Tech Data Corporation Reports Fiscal 2011 Second-Quarter Results
Net Income Grew 16 Percent to a Second-Quarter Record of $41 Million; Over 4 Million Shares Repurchased During the Quarter
CLEARWATER, Fla., Aug. 19, 2010 (GLOBE NEWSWIRE) -- Tech Data Corporation (Nasdaq:TECD), a leading distributor of IT products, today announced results for the second quarter ended July 31, 2010.
| Results At A Glance |
($ in millions, except per share amounts) | Three months ended
July 31, 2010 | Three months ended July 31, 2009
(As Adjusted) (1) | Six months ended
July 31, 2010 | Six months ended
July 31, 2009 (As Adjusted) (1) |
| | | | | |
| Net sales | $5,474.0 | $5,183.7 | $11,095.0 | $10,174.7 |
| Operating income | $65.8 | $53.9 | $135.2 | $101.7 |
| Operating income margin | 1.20% | 1.04% | 1.22% | 1.00% |
| Net income attributable to shareholders of Tech Data Corporation | $40.9 | $35.2 | $86.5 | $66.9 |
| Net income per diluted share attributable to shareholders of Tech Data Corporation | $0.82 | $0.70 | $1.70 | $1.33 |
(1) Effective February 1, 2010, Tech Data Corporation reclassified certain foreign currency exchange gains or losses within the accompanying Consolidated Statement of Operations to "Cost of products sold." Historically, these gains and losses were reported as a separate component of Other (income) expense titled "Net foreign currency exchange loss (gain)." Management believes this revised presentation is more consistent with how the company manages and reports the underlying transactions giving rise to these foreign currency exchange gains and losses.
Net sales for the second quarter ended July 31, 2010, were $5.47 billion, an increase of 5.6 percent from $5.18 billion in the prior-year second quarter. The strengthening of the U.S. dollar against certain foreign currencies during the second quarter of fiscal 2011, compared to the same period of the prior year, negatively impacted the year-over-year net sales comparison by approximately 6 percentage points. Operating income for the second quarter grew 22.1 percent to $65.8 million, or 1.20 percent of net sales, compared to operating income of $53.9 million, or 1.04 percent of net sales in the prior-year second quarter. Second-quarter net income attributable to shareholders of Tech Data Corporation increased 16.2 percent to $40.9 million, or $0.82 per diluted share, compared to $35.2 million, or $0.70 per diluted share in the prior-year period.
"Our second-quarter results clearly demonstrate our strategic focus on improving profitability and return on capital employed through responsible growth, and by diversifying into more specialized offerings," said Robert M. Dutkowsky, chief executive officer, Tech Data Corporation. "Despite various macroeconomic uncertainties at the start of the quarter, the IT market grew at a good pace in both of our regions, allowing us to continue our focus on net revenue growth – growing with select customers and vendors, while shifting away from less profitable, or more capital-consuming business. This strategy has served us exceptionally well for the last several quarters, significantly improving the quality of our vendor and customer portfolios, delivering select market share gains, meaningful operating margin expansion, record earnings, and industry-leading return on capital employed. Additionally, in the second quarter, we continued to put our strong balance sheet and excess cash to good use, announcing three acquisition agreements and buying back $170 million of stock under our share repurchase programs."
Second-Quarter Financial Highlights
- Net sales in the Americas (including North America and Latin America) were $2.60 billion, or 47 percent of worldwide net sales, representing an increase of 8.4 percent over the prior-year second quarter. Net sales in Europe totaled $2.87 billion, or 53 percent of worldwide net sales, representing an increase of 3.2 percent (15.0 percent increase on a euro basis) over the prior-year second quarter.
- Gross margin for the second quarter was 5.25 percent, compared to 5.19 percent in the prior-year second quarter.
- Selling, general and administrative expenses (SG&A) were $221.8 million, or 4.05 percent of net sales, compared to $215.2 million, or 4.15 percent of net sales in the prior-year second quarter. The increase in SG&A expenses, on a dollar basis, was primarily attributable to higher payroll expenses. As a percentage of net sales however, SG&A declined 10 basis points year-over-year due to leverage achieved on higher sales.
- Operating income in the Americas for the second quarter was $44.6 million, or 1.72 percent of net sales, compared to $35.4 million, or 1.48 percent of net sales in the prior-year second quarter. In Europe, the company generated operating income of $23.8 million, or .83 percent of net sales, compared to operating income of $21.3 million, or .76 percent of net sales in the prior-year second quarter. Stock-based compensation expense is not included in the regional segment reporting results. These expenses are presented as a separate line item in the company's segment reporting (see "Supplementary Information" table attached).
- Cash provided by operations during the second quarter totaled $196 million. The company continues to enjoy excellent liquidity and financial flexibility with a net cash position of $520 million at July 31, 2010.
- During the second quarter, the company purchased 4,327,654 shares of common stock, at a cost of $169.9 million, under two separate $100 million share repurchase programs announced in December 2009 and July 2010. As of August 12, 2010, the company had purchased an additional 621,682 shares, at a cost of $24.5 million, which completed the second repurchase program. Since 2005, the company has purchased $600 million of its stock.
Six-Month Results
Net sales for the six-month period ended July 31, 2010 were $11.09 billion, an increase of 9.0 percent from $10.17 billion for the six-month period ended July 31, 2009. The strengthening of the U.S. dollar against certain foreign currencies negatively impacted the year-over-year six-month period net sales comparison by approximately 1 percentage point. On a regional basis, the Americas represented 46 percent of net sales, and increased 9.9 percent to $5.06 billion from $4.61 billion for the prior-year period. Europe represented 54 percent of net sales, and increased 8.4 percent (11.9 percent on a euro basis) to $6.03 billion from $5.57 billion for the six-month period ended July 31, 2009.
For the six-month period ended July 31, 2010, the company recorded operating income of $135.2 million, or 1.22 percent of net sales, compared with operating income of $101.7 million, or 1.00 percent of net sales, in the prior-year period. The company recorded net income attributable to shareholders of Tech Data Corporation of $86.5 million, or $1.70 per diluted share, for the six-month period ended July 31, 2010. This compared to net income attributable to shareholders of Tech Data Corporation of $66.9 million, or $1.33 per diluted share, in the prior-year period.
Business Outlook
"As we look ahead to the third quarter, we expect demand trends to continue and sales to follow a seasonal pattern, allowing us to deliver year-over-year sales growth, on a local currency basis, in both regions. While we anticipate the impact of foreign currencies to have a more pronounced effect on the fiscal year's second-half results than the first half, we are confident that our continued focus on responsible growth and excellent expense and asset management, will deliver solid results for the remainder of the fiscal year, and keep us on the trajectory to achieve our longer-term financial objectives," said Dutkowsky.
Webcast Details
Tech Data will be discussing its second-quarter results on a conference call today at 9:00 a.m. ET. A webcast of the call, including supplemental schedules, will be available to all interested parties and can be accessed at www.techdata.com (Investor Relations section). The webcast will be available for replay until 5:00 p.m. ET on Thursday, August 26, 2010.
Forward-Looking Statements
Certain matters discussed in this news release are forward-looking statements, based on the company's current expectations that involve a number of risks and uncertainties. Factors that could cause actual results to differ materially include the following: downturns in the global economy; intense competition both domestically and internationally; narrow profit margins; dependence on information systems; potential adverse effects of acquisitions; exposure to natural disasters, war and terrorism; dependence on independent shipping companies; the impact of increases in freight and handling fees charged to customers; potential impact of labor strikes; risk of declines in inventory value; product supply and availability; changes in vendor terms and conditions; loss of significant customers; credit exposure due to the deterioration in the financial condition of our customers; the inability to obtain required capital; fluctuations in interest rates; foreign currency exchange risks and exposure to fo reign markets; the impact of changes in income tax and other regulatory legislation; changes in accounting rules; and the volatility of common stock. Additional discussion of these and other factors affecting the company's business and prospects is contained in the company's periodic filings with the Securities and Exchange Commission, copies of which can be obtained at the company's Investor Relations website at www.techdata.com. All information in this release is as of August 19, 2010. The company undertakes no duty to update any forward-looking statements herein to actual results or changes in the company's expectations.
About Tech Data
Tech Data Corporation (Nasdaq:TECD) is one of the world's largest distributors of technology products from leading IT hardware and software producers. Tech Data serves more than 125,000 IT solution providers in over 100 countries. Every day, these value-added resellers depend on Tech Data to cost-effectively support the technology needs of end users, including small and medium businesses (SMB), large enterprises and government agencies. Ranked 109th on the FORTUNE 500(R), Tech Data generated $22.1 billion in net sales for its fiscal year ended January 31, 2010. To learn more, visit www.techdata.com.
| TECH DATA CORPORATION AND SUBSIDIARIES |
| CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) |
| ($ in thousands, except per share amounts) |
| |
| | Three months ended | Six months ended |
| | July 31, | July 31, |
| | 2010 | 2009(1)
(As Adjusted) | 2010 | 2009(1)
(As Adjusted) |
| Net sales | $5,473,961 | $5,183,731 | $11,095,016 | $10,174,690 |
| Cost of products sold | 5,186,424 | 4,914,657 | 10,514,676 | 9,644,401 |
| Gross profit | 287,537 | 269,074 | 580,340 | 530,289 |
| Selling, general and administrative expenses | 221,779 | 215,200 | 445,096 | 428,605 |
| Operating income | 65,758 | 53,874 | 135,244 | 101,684 |
| Interest expense | 7,329 | 7,135 | 13,917 | 15,025 |
| Other (income) expense, net | (94) | (412) | (370) | (1,872) |
| Income before income taxes | 58,523 | 47,151 | 121,697 | 88,531 |
| Provision for income taxes | 17,691 | 12,141 | 35,221 | 21,928 |
| Consolidated net income | 40,832 | 35,010 | 86,476 | 66,603 |
| Net loss attributable to noncontrolling interest | 23 | 147 | 12 | 319 |
| Net income attributable to shareholders of Tech Data Corporation | $40,855 | $35,157 | $86,488 | $66,922 |
| | | | | |
Net income per common share attributable to
shareholders of Tech Data Corporation: | | | | |
| Basic | $0.82 | $0.70 | $1.71 | $1 33 |
| Diluted | $0.82 | $0.70 | $1.70 | $1.33 |
| Weighted average common shares outstanding: | | | | |
| Basic | 49,612 | 50,252 | 50,537 | 50,203 |
| Diluted | 49,986 | 50,461 | 51,012 | 50,352 |
(1) Effective February 1, 2010, Tech Data Corporation reclassified certain foreign currency exchange gains or losses within the accompanying Consolidated Statement of Operations to "Cost of products sold." Historically, these gains and losses were reported as a separate component of Other (income) expense titled "Net foreign currency exchange loss (gain)." Management believes this revised presentation is more consistent with how the company manages and reports the underlying transactions giving rise to these foreign currency exchange gains and losses.
| TECH DATA CORPORATION AND SUBSIDIARIES | | |
| CONSOLIDATED BALANCE SHEET | | |
| ($ in thousands) | | |
| | | |
| | July 31, | January 31, |
| ASSETS | 2010
(Unaudited) | 2010(1)
|
| Current assets: | | |
| Cash and cash equivalents | $940,058 | $1,116,579 |
| Accounts receivable, net | 2,356,816 | 2,593,919 |
| Inventories | 1,782,822 | 1,704,658 |
| Prepaid expenses and other assets | 155,714 | 156,448 |
| Total current assets | 5,235,410 | 5,571,604 |
| Property and equipment, net | 83,535 | 90,634 |
| Other assets, net | 177,185 | 167,881 |
| Total assets | $5,496,130 | $5,830,119 |
LIABILITIES AND EQUITY | | |
| Current liabilities: | | |
| Revolving credit loans | $76,579 | $65,384 |
| Accounts payable | 2,613,435 | 2,799,949 |
| Accrued expenses and other liabilities | 455,264 | 455,841 |
| Total current liabilities | 3,145,278 | 3,321,174 |
| Long-term debt, net | 342,612 | 338,157 |
| Other long-term liabilities | 76,414 | 76,255 |
| Total liabilities | 3,564,304 | 3,735,586 |
| Equity attributable to shareholders of Tech Data Corporation | 1,926,549 | 2,088,895 |
| Noncontrolling interest | 5,277 | 5,638 |
| Total equity | 1,931,826 | 2,094,533 |
| Total liabilities and equity | $5,496,130 | $5,830,119 |
(1) Certain reclassifications have been made to the January 31, 2010 consolidated balance sheet to conform to the July 31, 2010 consolidated balance sheet presentation. Such reclassifications had no effect on previously reported equity.
| TECH DATA CORPORATION AND SUBSIDIARIES |
| SUPPLEMENTARY INFORMATION (UNAUDITED) |
| ($ in thousands) |
| | | |
| | Three months ended
July 31, 2010 | Three months ended
July 31, 2009(1) |
| Operating Income by Segment | Operating Income | Operating Margin | Operating Income | Operating Margin |
| Americas | $44,580 | 1.72% | $35,421 | 1.48% |
| Europe | 23,838 | 0.83% | 21,286 | 0.76% |
| Stock-based compensation | (2,660) | (0.05)% | (2,833) | (0.05)% |
| Worldwide total | $65,758 | 1.20% | $53,874 | 1.04% |
| | | | | |
| | Six months ended
July 31, 2010 | Six months ended
July 31, 2009(1) |
| Operating Income by Segment | Operating Income | Operating Margin | Operating Income | Operating Margin |
| Americas | $88,870 | 1.76% | $60,767 | 1.32% |
| Europe | 51,483 | 0.85% | 46,548 | 0.84% |
| Stock-based compensation | (5,109) | (0.05)% | (5,631) | (0.06)% |
| Worldwide total | $135,244 | 1.22% | $101,684 | 1.00% |
(1) Effective February 1, 2010, Tech Data Corporation reclassified certain foreign currency exchange gains or losses within the accompanying Consolidated Statement of Operations to "Cost of products sold." Historically, these gains and losses were reported as a separate component of Other (income) expense titled "Net foreign currency exchange loss (gain)." Management believes this revised presentation is more consistent with how the company manages and reports the underlying transactions giving rise to these foreign currency exchange gains and losses.
CONTACT: Tech Data Corporation
Jeffery P. Howells, Executive Vice President
and Chief Financial Officer
727-538-7825
jeff.howells@techdata.com
Arleen Quinones, Director, Investor Relations
and Shareholder Services
727-532-8866
arleen.quinones@techdata.com