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Fiscal 2Q17 Proved to Be Challenging for Tech Data

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Aug. 29 2016, Updated 9:23 a.m. ET

Revenues of $6.4 billion in fiscal 2Q17

On August 25, 2016, Tech Data Corporation (TECD) announced its fiscal 2Q17 results, reporting revenue of $6.4 billion compared to the $6.6 billion in revenue it saw in fiscal 2Q16.

The company’s GAAP (generally accepted accounting principles) operating income for fiscal 2Q17 stood at $73.4 million, and its operating margin stood at 1.2%, compared to an operating income of $106.2 million and operating margin of 1.6% in fiscal 2Q16.

Tech Data’s GAAP net income for 2Q17 was $46.4 million, while its diluted EPS (earnings per share) were $1.31, compared to its net income and EPS of $76.4 million and $2.09, respectively, in fiscal 2Q16.

Its net income also fell from $52.5 million in fiscal 2Q16 to $50.3 million in fiscal 2Q17.

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Focus on profitable revenue

According to Tech Data’s CEO Robert Dutkowsky, the company has gained market share in the Americas as well as in European regions. Its revenue was below estimates and was impacted by weaker-than-expected information technology spending.

Driven by a focus on profitable revenue, vendor management, and disciplined cost controls, Tech Data delivered “solid non-GAAP EPS” in fiscal 2Q17.

Dutkowsky stated, “Through the first half of our fiscal year, we grew non-GAAP earnings per share by 11 percent, generated $185 million in cash flow from operations and earned a return on invested capital of 14 percent – a 150 basis points improvement over the prior year.”

Shares of Tech Data fell by 8.7% on August 25, 2016, after its revenue missed analysts’ estimates. Shares of peer companies such as SYNNEX (SNX), Ingram (IM), and Arrow Electronics (ARW) fell by 0.8%, 0.1%, and 0.2%, respectively, on August 25, 2016.

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