Tech Data (TECD) Earnings, Sales Surpass Estimates In Q3

Tech Data Corporation (NASDAQ:TECD) posted robust third-quarter fiscal 2019 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate. Results were backed by double-digit growth in all the three regions coupled with improvement in operating margins.

The company reported adjusted earnings of $3.02 per share in the third quarter of fiscal 2019. The figure not only surpassed the Zacks Consensus Estimate of $2.19 but also increased 51% on a year-over-year basis. Moreover, net sales of $9,340 million increased 11% year over year and surpassed the consensus mark of $8,875 million. Net sales rose 12% on a constant-currency (cc) basis.

Net sales from the Americas (44.3% of revenues) rose 12.9% to $4.1 billion. Sales from Europe (52.7% of revenues) grew 8.9% to $4.9 billion and from Asia-Pacific (3% of revenues) increased 5.9% to $282 million.

Tech Data Corporation Price, Consensus and EPS Surprise

Margins

Gross margin contracted 27 basis points (bps) from the year-ago quarter to 6%. Non-GAAP selling, general & administrative (SG&A) expenses as a percentage of revenues decreased 67 bps to 3.95% in the reported quarter.

Adjusted operating margin expanded 40 bps to 2%. Segment wise, operating margin expanded 68 bps for the Americas, 16 bps for Europe and 6 bps for Asia-Pacific.

Balance Sheet and Cash Flow

As of Sep 30, 2018, Tech Data had cash and cash equivalents of approximately $646.5 million, long-term debt of $1.3 billion and total stockholders’ equity of $2.8 billion.

During the quarter, the company bought back about 621,000 shares for $44 million. Tech Data generated cash from operations of $155 million in the reported quarter.

Outlook

Tech Data issued fourth-quarter fiscal 2019 view. It expects adjusted earnings of $3.90-$4.20 per share with tax rate of 24-26%.

Price Performance

We note that shares of this Zacks Rank #1 (Strong Buy) company have gained 28.4% in the past month, outperforming the industry’s growth of 3.8%.

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