Tech Data: screw you Wall St, we're a high flying distie
Sales trounce money mens' forcasts, and don't even start on operating profit
Walloping Wall Street expectations is becoming a bit of a habit for Tech Data - tighter cost controls beefed up operating profit, and higher than expected sales led to a double digit spike in the share price.
The world’s second largest tech distie suffered at the hands of currency exchange rates - like the rest of the US-based tech industry - falling four per cent year-on-year to $6.58bn in Q2.
But in constant currency sales actually grew eight per cent, well above city analyst consensus.
In North America, Tech Data reported a one per cent rise in sales to $2.7bn. Excluding the contribution in the same quarter a year ago of the now shuttered Chile, Peru and Uruguay offices, sales went up five per cent.
Chief beanie Charles Dannewitz said on a conference call that the state, healthcare and local education segments came good for its customers.
“At a product level, the U.S. experienced strong growth in data center solutions, namely storage, security and software, as well as growth in broadline products, in particular notebooks,” he said.
Across the pond in Europe, revenues dropped seven per cent to $3.8bn, but discounting the impact of for-ex rates, they climbed by eleven per cent.
“Our European team executed exceptionally well during the quarter with the vast majority of our trade regions posting year-over-year sales growth in local currencies,” the abacus stroker claimed.
Germany, Benelux, Italy and Iberia were given special mention for double digit expansion but the Brit operation was conspicuous by its absence.
Mobility, software and data centre stuff, “in particular storage and security” fuelled the sales engine, Dannewitz said. The distie also saw “solid” demand for volume products, “primarily notebooks”.
Aside from some nifty hedging, the currency effect is something Tech Data can’t control, but it was able to slash costs in the quarter.
Selling, general and admin expenses dropped 12.2 per cent to $249.8m, Tech Data received $21.5m from a LCD monopoly case that was ruled in its favour, and it also bagged a $9.5m tax benefit. All in this meant that operating expenses fell by 22.7 per cent to $219m.
The obvious result was much higher operating profit, rising to $106.2m from $67.7m in the prior year’s quarter. Interest and income tax left a net profit of $76.4m versus $39.3m.
CEO Bob Dutkovsky said on the call there is “more work to be done to improve profitability in both regions” and that it continued to put funds behind cloud services aggregation, mobility, the data centre, consumer electronics and integrated supply chain “solutions”.
For Q3, Tech Data expects mid-single digit growth in the Americas and high-single digit growth in Europe.
The share price was up 13.12 per cent at the end of the day’s trading to $63.65, but this is still down on the 52-week high of $67.90. ®