Tech Data Corporation - TECD - Results for the third quarter ended October 31, 2012

Tech Data Corporation (Nasdaq:TECD), a leading distributor of IT products, announced results for the third quarter ended October 31, 2012.



TECD Net sales for the third quarter ended October 31, 2012 were $6.04 billion, a decrease of 8 percent from $6.59 billion in the prior-year third quarter. The weakening of certain foreign currencies against the U.S. dollar negatively impacted the year-overyear net sales comparison by approximately 5 percentage points. In the first quarter of fiscal 2013, the company prospectively revised its presentation of sales of vendor warranty services and certain fulfillment contracts such that they are now reflected on an agency basis as net fees as opposed to net sales and cost of products sold. These items would have contributed approximately $215 million of net sales in the third quarter, which negatively impacted the year-over-year net sales comparison by approximately 3 percentage points. This change had no impact on gross profit dollars, operating income dollars, net income dollars or earnings per share for any period reported, but positively impacted the gross margin and operating margin percentages in the third quarter of fiscal 2013 by approximately 17 and 4 basis points, respectively. Also included in prior year net sales is approximately $52 million related to the in-country operations of Brazil and Colombia, which the company exited at the end of fiscal 2012. Excluding the impact of the above factors, net sales increased approximately 1 percent.



Operating income for the third quarter was $69.5 million or 1.15 percent of net sales. This compared to operating income of $89.6 million or 1.36 percent of net sales in the prior-year third quarter. The year-over-year decline in operating income is attributable to the impact on gross profit of competitive pricing, product mix and certain vendor programs in both regions. Operating income in the Americas region was also impacted by a shortfall in sales and gross profit resulting from a loss of market share in the U.S. following the implementation of certain SAP modules during the second quarter.



Third-quarter net income attributable to shareholders of Tech Data Corporation was $45.9 million or $1.21 per diluted share compared to $53.5 million or $1.26 per diluted share in the prior-year period. The year-over-year decline is primarily attributable to the aforementioned items, partially offset by lower interest expense and lower non-controlling interest resulting from the acquisition of the company's European mobility joint venture partner's 50 percent interest in September. A lower average share count attributable to the company's share repurchases further lessened the impact of the reduced operating results on earnings per share.



Business Outlook



For the fourth quarter of fiscal year 2013, on a reported basis, the company expects year-over-year, low single-digit sales growth and sequential improvement in gross and operating margins. In Europe, excluding the impact of SDG which was acquired November 1, 2012, the company expects year-over-year sales growth of low single digits, in euros.



About Tech Data - TECD



Tech Data Corporation (TECD) is one of the world's largest wholesale distributors of technology products. Its advanced logistics capabilities and value added services enable 125,000 resellers in more than 100 countries to efficiently and cost effectively support the diverse technology needs of end users. TECD generated $26.5 billion in net sales for the fiscal year ended January 31, 2012 and is ranked 109th on the Fortune 500®.