Tech Data Corporation Reports Fourth Quarter and Fiscal Year 2019 Results

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Tech Data (Nasdaq: TECD) (the Company) today announced its financial results for the fourth quarter ended January 31, 2019.

    Fourth quarter ended January 31,   Twelve months ended January 31,
($ in millions,

except per share amounts)

  2019   2018  

Y/Y Change

  2019   2018  

Y/Y Change

Net Sales   $10,464.5   $10,033.4   4%   $37,239.0   $33,597.8   11%
 
Operating income (GAAP) $166.1 $151.9 9% $493.8 $410.1 20%
Operating margin (GAAP) 1.59% 1.51% 8 bps 1.33% 1.22% 11 bps
 
Operating income (Non-GAAP) $260.9 $216.0 21% $707.9 $602.7 17%
Operating margin (Non-GAAP) 2.49% 2.15% 34 bps 1.90% 1.79% 11 bps
 
Net income (GAAP) $116.8 $1.3 NM $340.6 $116.6 192%
Net income (Non-GAAP) $171.1 $134.7 27% $435.9 $348.3 25%
 
EPS – diluted (GAAP) $3.11 $0.03 NM $8.89 $3.05 191%
EPS – diluted (Non-GAAP)   $4.55   $3.50   30%   $11.38   $9.11   25%

A reconciliation of GAAP to non-GAAP financial measures is presented in the financial tables of this press release.

This information is also available on the Investor Relations section of Tech Datas website at www.techdata.com/investor.

Financial Highlights for the Fourth Quarter Ended January, 31, 2019:

  • Net sales were $10.5 billion, an increase of 4 percent compared to the prior-year quarter. On a constant currency basis, net sales increased 8 percent.
    • Americas: Net sales were $4.2 billion (41 percent of worldwide net sales), an increase of 10 percent. On a constant currency basis, net sales increased 11 percent.
    • Europe: Net sales were $5.9 billion (56 percent of worldwide net sales), essentially flat compared to the prior-year quarter. On a constant currency basis, net sales increased 5 percent.
    • Asia Pacific: Net sales were $0.3 billion (3 percent of worldwide net sales), an increase of 8 percent. On a constant currency basis, net sales increased 13 percent.
  • Gross profit was $649.1 million, an increase of $32.3 million, or 5 percent. As a percentage of net sales, gross profit was 6.20 percent compared to 6.15 percent in the prior-year quarter.
  • Selling, general and administrative expenses (SG&A) were $414.5 million, or 3.96 percent of net sales, compared to $429.0 million, or 4.28 percent of net sales in the prior-year quarter. Non-GAAP SG&A was $388.3 million, a decrease of $12.6 million, or 3 percent. As a percentage of net sales, non-GAAP SG&A was 3.71 percent, compared to 4.00 percent in the prior-year quarter.
  • Worldwide operating income was $166.1 million, or 1.59 percent of net sales compared to $151.9 million or 1.51 percent of net sales in the prior-year quarter. Non-GAAP operating income was $260.9 million, an increase of $44.9 million, or 21 percent. As a percentage of net sales, non-GAAP operating income was 2.49 percent, an improvement of 34 basis points.
    • Americas: Operating income was $105.0 million, or 2.47 percent of net sales, compared to $53.9 million, or 1.40 percent of net sales in the prior-year quarter. Non-GAAP operating income was $125.2 million, an increase of $40.2 million, or 47 percent. As a percentage of net sales, non-GAAP operating income was 2.95 percent, an improvement of 74 basis points.
    • Europe: Operating income was $109.1 million, or 1.85 percent of net sales, compared to $100.4 million, or 1.71 percent of net sales in the prior-year quarter. Non-GAAP operating income was $133.4 million, an increase of $3.0 million, or 2 percent. As a percentage of net sales, non-GAAP operating income was 2.26 percent, an improvement of 4 basis points.
    • Asia Pacific: Operating loss was ($40.2) million, or (12.26) percent of net sales, compared to operating income of $5.7 million, or 1.88 percent of net sales in the prior-year quarter. Results for the fourth quarter of fiscal 2019 include a non-cash goodwill impairment charge of $47 million. Non-GAAP operating income was $9.7 million, an increase of $2.3 million, or 30 percent. As a percentage of net sales, non-GAAP operating income was 2.97 percent, an improvement of 52 basis points.
    • Stock-based compensation expense was $7.8 million, compared to $8.2 million in the prior-year quarter. These expenses are excluded from the regional operating results and presented as a separate line item in the companys segment reporting (see the GAAP to non-GAAP reconciliation in the financial tables of this press release).
  • Net income was $116.8 million, compared to $1.3 million in the prior-year quarter. Non-GAAP net income was $171.1 million, an increase of $36.4 million, or 27 percent.
  • Earnings per share on a diluted basis (EPS) were $3.11 compared to $0.03 in the prior year quarter. Non-GAAP EPS was $4.55, an increase of $1.05, or 30 percent compared to the prior-year quarter.
  • Net cash generated by operations during the quarter was $231 million.

Financial Highlights for the Fiscal Year Ended January 31, 2019:

  • Net sales were $37.2 billion, an increase of 11 percent compared to the prior year. On a constant currency basis, net sales increased 10 percent.
    • Americas: Net sales were $16.0 billion (43 percent of worldwide net sales), an increase of 11 percent compared to the prior year. On a constant currency basis, net sales increased 12 percent.
    • Europe: Net sales were $20.0 billion (54 percent of worldwide net sales), an increase of 10 percent compared to the prior year. On a constant currency basis, net sales increased 9 percent.
    • Asia Pacific: Net sales were $1.2 billion (3 percent of worldwide net sales), an increase of 14 percent compared to the prior year. On a constant currency basis, net sales increased 17 percent.
  • Gross profit was $2.3 billion, an increase of $140.3 million, or 7 percent compared to the prior year. As a percentage of net sales, gross profit was 6.06 percent compared to 6.30 percent in the prior year.
  • Selling, general and administrative expenses (SG&A) were $1.6 billion, or 4.43 percent of net sales, compared to $1.6 billion, or 4.79 percent of net sales in the prior year. Non-GAAP SG&A was $1.5 billion, an increase of $35.1 million, or 2 percent, compared to the prior year. As a percentage of net sales, non-GAAP SG&A was 4.16 percent, compared to 4.50 percent in the prior year. Included in SG&A and non-GAAP SG&A expenses is a $25 million benefit from the collection of an accounts receivable balance previously considered uncollectible.
  • Worldwide operating income was $493.8 million, or 1.33 percent of net sales compared to $410.1 million or 1.22 percent of net sales in the prior year. Non-GAAP operating income was $707.9 million, an increase of $105.2 million, or 17 percent, compared to the prior year. As a percentage of net sales, non-GAAP operating income was 1.90 percent, an improvement of 11 basis points over the prior year.
    • Americas: Operating income was $366.6 million, or 2.29 percent of net sales, compared to $248.4 million, or 1.72 percent of net sales in the prior year. Non-GAAP operating income was $431.3 million, an increase of $97.6 million, or 29 percent, compared to the prior year. As a percentage of net sales, non-GAAP operating income was 2.69 percent, an improvement of 38 basis points over the prior year. Included in Americas operating income and non-GAAP operating income is a $25 million benefit from the collection of an accounts receivable balance previously considered uncollectible.
    • Europe: Operating income was $195.4 million, or 0.98 percent of net sales, compared to $173.6 million, or 0.96 percent of net sales in the prior year. Non-GAAP operating income was $287.5 million, an increase of $16.2 million, or 6 percent, compared to the prior year. As a percentage of net sales, non-GAAP operating income was 1.44 percent compared to 1.50 percent in the prior year.
    • Asia Pacific: Operating loss was ($36.7) million, or (3.13) percent of net sales, compared to operating income of $17.5 million, or 1.70 percent of net sales in the prior year. Results for fiscal 2019 include a non-cash goodwill impairment charge of $47 million. Non-GAAP operating income was $17.9 million, a decrease of $5.3 million, or 23 percent, compared to the prior year. As a percentage of net sales, non-GAAP operating income was 1.53 percent compared to 2.26 percent in the prior year.
    • Stock-based compensation expense was $31.5 million, an increase of $2.1 million, compared to the prior year. This includes $2.6 million of acquisition and integration-related stock compensation expense. These expenses are excluded from the regional operating results and presented as a separate line item in the companys segment reporting (see the GAAP to non-GAAP reconciliation in the financial tables of this press release).
  • Net income was $340.6 million, compared to $116.6 million in the prior year. Non-GAAP net income was $435.9 million, an increase of $87.6 million, or 25 percent, compared to the prior year. Included in net income and non-GAAP net income is an $18 million (net of tax) benefit from the collection of an accounts receivable balance previously considered uncollectible.
  • Earnings per share on a diluted basis (EPS) were $8.89, compared to $3.05 in the prior year. Non-GAAP EPS was $11.38, an increase of $2.27, or 25 percent compared to the prior year. Included in earnings per share and non-GAAP earnings per share is a $0.47 benefit from the collection of an accounts receivable balance previously considered uncollectible.
  • Net cash generated by operations during the fiscal year was $380 million.
  • Return on invested capital for the trailing twelve months was 12 percent, compared to 5 percent in the prior-year period. The adjusted return on invested capital for the trailing twelve month period was 14 percent, compared to 12 percent from the prior-year period. Excluding the after tax impact of the $25 million benefit from the collection of an accounts receivable balance previously considered uncollectible, adjusted return on invested capital was 13 percent.

I am very pleased to report that our teams delivered an excellent Q4, capping a strong finish to a record year for Tech Data. Fiscal year 19 worldwide sales grew to more than $37 billion, and non-GAAP operating income and earnings per share increased by double digits “ to the highest levels in Tech Data history. In addition, we generated $380 million in cash from operations, earned an adjusted return on invested capital north of 13 percent, paid down $200 million of debt, and returned $107 million to our shareholders through share repurchases, said Rich Hume, chief executive officer. Our fiscal 19 results demonstrate that our differentiated end-to-end portfolio, skills and capabilities are strengthening and expanding our position as a trusted partner to the world’s leading technology vendors while serving our customers better than any other company in our space. Our past years performance also reveals the enhanced financial profile of the new Tech Data “ delivering strong earnings growth, generating solid cash flow and industry-leading return on invested capital. The Boards authorization of an additional $100 million share repurchase reflects our continued confidence in Tech Datas business and our commitment to enhancing shareholder value.

Business Outlook

  • For the quarter ending April 30, 2019, the Company anticipates:
    • Worldwide net sales to be in the range of $8.3 billion to $8.6 billion
    • EPS to be in the range of $1.19 to $1.49 and non-GAAP EPS to be in the range of $1.80 to $2.10
    • An effective tax rate in the range of 24 percent to 26 percent
  • This guidance assumes an average U.S. dollar to euro exchange rate of $1.14 to ‚¬1.00 which compares to $1.23 to ‚¬1.00 in the year-ago period.

Webcast Details

Tech Data will hold a conference call today at 9:00 a.m. (ET) to discuss its financial results for the fourth quarter and fiscal year ended January 31, 2019. A webcast of the call, including supplemental schedules, will be available to all interested parties and can be obtained at http://investor.techdata.com/. The webcast will be available for replay for three months.

Non-GAAP Financial Information

The non-GAAP financial information contained in this release is included with the intention of providing investors a more complete understanding of the Companys operational results and trends, but should only be used in conjunction with results reported in accordance with Generally Accepted Accounting Principles (GAAP). Certain non-GAAP measures presented in this release or other releases, presentations and similar documents issued by the Company include sales, income or expense items as adjusted for the impact of changes in foreign currencies (referred to as constant currency), non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP earnings per diluted share and Adjusted Return on Invested Capital. Certain non-GAAP measures also exclude acquisition-related intangible assets amortization expense, benefits associated with legal settlements, acquisition, integration and restructuring expenses, goodwill impairment, value-added tax assessments and related interest expense, gain on disposal of subsidiary, tax indemnifications, acquisition-related financing expenses, changes in deferred tax valuation allowances and the impact of U.S. tax reform. A detailed reconciliation of the adjustments between results calculated using GAAP and non-GAAP in this release is contained in the attached financial schedules. This information can also be obtained from the Companys Investor Relations website at www.techdata.com/investor.

Forward-Looking Statements

Certain statements in this communication may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, including statements regarding Tech Datas plans, objectives, expectations and intentions, Tech Datas financial results and estimates and/or business prospects, involve a number of risks and uncertainties, and actual results could differ materially from those projected. These forward looking statements are based on current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which Tech Data operates, and the beliefs and assumptions of our management. Words such as expects, anticipates, targets, goals, projects, intends, plans, believes, seeks, estimates, variations of such words, and similar expressions are intended to identify such forward looking statements. In addition, any statements that refer to projections of Tech Datas future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances, are forward looking statements. These forward looking statements are only predictions and are subject to risks, uncertainties, and assumptions. Therefore, actual results may differ materially and adversely from those expressed in any forward looking statements.

For additional information with respect to risks and other factors which could occur, see Tech Datas Annual Report on Form 10-K for the year ended January 31, 2018, including Part I, Item 1A, Risk Factors therein, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other securities filings with the Securities and Exchange Commission (the SEC) that are available at the SECs website at www.sec.gov and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Many of these factors are beyond Tech Datas control. Unless otherwise required by applicable securities laws, Tech Data disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Tech Data undertakes no duty to update any forward looking statements contained herein to reflect actual results or changes in Tech Datas expectations.

About Tech Data

Tech Data connects the world with the power of technology. Our end-to-end portfolio of products, services and solutions, highly specialized skills, and expertise in next-generation technologies enable channel partners to bring to market the products and solutions the world needs to connect, grow and advance. Tech Data is ranked No. 83 on the Fortune 500 and has been named one of Fortune’s “World’s Most Admired Companies” for ten straight years. To find out more, visit www.techdata.com or follow us on TwitterLinkedIn and Facebook.

       

TECH DATA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 
Three months ended January 31, Twelve months ended January 31,
2019 2018 2019 2018
 

(As Adjusted1)

 

(As Adjusted1)

Net sales $ 10,464,501 $ 10,033,397 $ 37,238,950 $ 33,597,841
Cost of products sold   9,815,353   9,416,536   34,983,051     31,482,220  
Gross profit 649,148 616,861 2,255,899 2,115,621
Operating expenses:
Selling, general and administrative expenses 414,540 428,965 1,648,895 1,608,961
Acquisition, integration, and restructuring expenses 21,121 34,341 87,920 136,272
Goodwill impairment 47,434 47,434
Legal settlements and other, net (15,406 ) (41,343 )
Gain on disposal of subsidiary (6,746 )
Value added tax assessments     1,652       1,652  
  483,095   464,958   1,762,097     1,705,542  
Operating income 166,053 151,903 493,802 410,079
Interest expense 27,345 27,002 106,725 112,207
Other expense (income), net   6,013   162   13,792     (1,212 )
Income before income taxes 132,695 124,739 373,285 299,084
Provision for income taxes   15,896   123,479   32,705     182,443  
Net income $ 116,799 $ 1,260 $ 340,580   $ 116,641  
 
Earnings per share:
Basic $ 3.13 $ 0.03 $ 8.94   $ 3.07  
Diluted $ 3.11 $ 0.03 $ 8.89   $ 3.05  
Weighted average common shares outstanding:
Basic   37,316   38,194   38,094     37,957  
Diluted   37,577   38,529   38,317     38,216  
 
1 Amounts have been adjusted to reflect the adoption of Accounting Standard Update 2014-09, Revenue from Contracts with Customers (ASC 606) on a full retrospective basis.
   

TECH DATA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(In thousands, except par value and share amounts)

(Unaudited)

 
January 31, January 31,
2019 2018
ASSETS  

(As Adjusted1)

 
Current assets:
Cash and cash equivalents $ 799,123 $ 955,628
Accounts receivable, net 6,241,740 6,035,716
Inventories 3,297,385 2,965,521
Prepaid expenses and other assets   354,601     403,548  
Total current assets 10,692,849 10,360,413
Property and equipment, net 274,917 279,091
Goodwill 892,990 969,168
Intangible assets, net 950,858 1,086,772
Other assets, net   174,938     224,915  
Total assets $ 12,986,552   $ 12,920,359  
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 7,496,466 $ 6,962,193
Accrued expenses and other liabilities 1,000,126 1,169,986
Revolving credit loans and current maturities of long-term debt, net   110,368     132,661  
Total current liabilities 8,606,960 8,264,840
Long-term debt, less current maturities 1,300,554 1,505,248
Other long-term liabilities   142,315     228,779  
Total liabilities $ 10,049,829   $ 9,998,867  
 
Shareholders equity:

Common stock, par value $0.0015; 200,000,000 shares authorized; 59,245,585 shares issued at January 31, 2019 and January 31, 2018

$ 89 $ 89
Additional paid-in capital 844,206 827,301

Treasury stock, at cost (22,305,464 and 21,083,972 shares at January 31, 2019 and January 31, 2018)

(1,037,872 ) (940,124 )
Retained earnings 3,086,514 2,745,934
Accumulated other comprehensive income   43,786     288,292  
Total shareholders’ equity   2,936,723     2,921,492  
Total liabilities and shareholders’ equity $ 12,986,552   $ 12,920,359  
 

1 Amounts have been adjusted to reflect the adoption of Accounting Standard Update 2014-09, Revenue from Contracts with Customers (ASC 606) on a full retrospective basis.

 

     

TECH DATA CORPORATION AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

(In thousands)

 
Three months ended January 31, 2019
Americas (1) Europe (1)   Asia Pacific (1)  

Stock Compensation Expense

Consolidated
Net Sales $ 4,241,714   $ 5,895,072   $ 327,715     $ 10,464,501  
Operating income (GAAP) (1) $ 104,966 $ 109,083 $ (40,177 ) $ (7,819 ) $ 166,053
Acquisition, integration and restructuring expenses 6,145 13,293 1,348 335 21,121
Goodwill impairment 47,434 47,434
Tax indemnifications 708 3,033 (202 ) 3,539
Acquisition-related intangible assets amortization expense   13,414     7,977     1,315       22,706  
Total non-GAAP operating income adjustments $ 20,267   $ 24,303   $ 49,895   $ 335   $ 94,800  
Operating income (non-GAAP) $ 125,233   $ 133,386   $ 9,718   $ (7,484 ) $ 260,853  
Operating margin (GAAP) 2.47 % 1.85 % -12.26 % 1.59 %
Operating margin (non-GAAP) 2.95 % 2.26 % 2.97 % 2.49 %
 
(1) GAAP operating income does not include stock compensation expense at the regional level.
 
                 
Three months ended January 31, 2018
Americas (1) Europe (1) Asia Pacific (1)  

Stock Compensation Expense

  Consolidated
Net Sales $ 3,850,705   $ 5,878,873   $ 303,819     $ 10,033,397  
Operating income (GAAP) (1) $ 53,924 $ 100,439 $ 5,704 $ (8,164 ) $ 151,903
Acquisition, integration and restructuring expenses 16,990 15,807 322 1,222 34,341
Value added tax assessments 494 1,158 1,652
Tax indemnifications 6,526 6,526
Acquisition-related intangible assets amortization expense   13,664     6,434     1,431       21,529  
Total non-GAAP operating income adjustments $ 31,148   $ 29,925   $ 1,753   $ 1,222   $ 64,048  
Operating income (non-GAAP) $ 85,072   $ 130,364   $ 7,457   $ (6,942 ) $ 215,951  
Operating margin (GAAP) 1.40 % 1.71 % 1.88 % 1.51 %
Operating margin (non-GAAP) 2.21 % 2.22 % 2.45 % 2.15 %
 
(1) GAAP operating income does not include stock compensation expense at the regional level.
   

TECH DATA CORPORATION AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

(In thousands)

 
Twelve months ended January 31, 2019
Americas (1) Europe (1)   Asia Pacific (1)  

Stock Compensation Expense

  Consolidated
Net Sales $ 16,041,103   $ 20,026,057   $ 1,171,790     $ 37,238,950  
Operating income (GAAP) (1) $ 366,637 $ 195,375 $ (36,697 ) $ (31,513 ) $ 493,802
Acquisition, integration and restructuring expenses 25,206 57,755 2,378 2,581 87,920
Goodwill impairment 47,434 47,434
Legal settlements and other, net (15,406 ) (15,406 )
Gain on disposal of subsidiary (6,746 ) (6,746 )
Tax indemnifications 708 9,484 (558 ) 9,634
Acquisition-related intangible assets amortization expense   54,196     31,673     5,379       91,248  
Total non-GAAP operating income adjustments $ 64,704   $ 92,166   $ 54,633   $ 2,581   $ 214,084  
Operating income (non-GAAP) $ 431,341   $ 287,541   $ 17,936   $ (28,932 ) $ 707,886  
Operating margin (GAAP) 2.29 % 0.98 % -3.13 % 1.33 %
Operating margin (non-GAAP) 2.69 % 1.44 % 1.53 % 1.90 %
 
(1) GAAP operating income does not include stock compensation expense at the regional level.
                 
Twelve months ended January 31, 2018
Americas (1) Europe (1) Asia Pacific (1)

Stock Compensation Expense

Consolidated
Net Sales $ 14,419,221   $ 18,147,917   $ 1,030,703     $ 33,597,841  
Operating income (GAAP) (1) $ 248,350 $ 173,611 $ 17,499 $ (29,381 ) $ 410,079
Acquisition, integration and restructuring expenses 75,563 56,192 753 3,764 136,272
Legal settlements and other, net (42,659 ) 1,316 (41,343 )
Value added tax assessments 494 1,158 1,652
Tax indemnifications 6,526 6,526
Acquisition-related intangible assets amortization expense   51,994     32,509     5,015       89,518  
Total non-GAAP operating income adjustments $ 85,392   $ 97,701   $ 5,768   $ 3,764   $ 192,625  
Operating income (non-GAAP) $ 333,742   $ 271,312   $ 23,267   $ (25,617 ) $ 602,704  
Operating margin (GAAP) 1.72 % 0.96 % 1.70 % 1.22 %
Operating margin (non-GAAP) 2.31 % 1.50 % 2.26 % 1.79 %
 
(1) GAAP operating income does not include stock compensation expense at the regional level.
 

TECH DATA CORPORATION AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

(In thousands)

 
Selling, general and administrative expenses (“SG&A”) Three months ended January 31,
2019   2018
Net Sales $ 10,464,501   $ 10,033,397  
SG&A Expenses (GAAP) $ 414,540 $ 428,965
Tax indemnifications (3,539 ) (6,526 )
Acquisition-related intangible assets amortization expense   (22,706 )   (21,529 )
SG&A Expenses (non-GAAP) $ 388,295   $ 400,910  
 
SG&A Expenses (GAAP) % 3.96 % 4.28 %
SG&A Expenses (non-GAAP) % 3.71 % 4.00 %
 
 
Twelve months ended January 31,
2019 2018
Net Sales $ 37,238,950   $ 33,597,841  
SG&A Expenses (GAAP) $ 1,648,895 $ 1,608,961
Tax indemnifications (9,634 ) (6,526 )
Acquisition-related intangible assets amortization expense   (91,248 )   (89,518 )
SG&A Expenses (non-GAAP) $ 1,548,013   $ 1,512,917  
 
SG&A Expenses (GAAP) % 4.43 % 4.79 %
SG&A Expenses (non-GAAP) % 4.16 % 4.50 %
 
Three months ended January 31,
2019   2018
Net Income   Diluted EPS Net Income   Diluted EPS
GAAP Results $116,799 $3.11 $1,260 $0.03
Acquisition, integration and restructuring expenses 21,121 0.56 34,341 0.89
Goodwill impairment 47,434 1.26
Value added tax assessments and related interest expense 2,568 0.07
Tax indemnifications 3,539 0.09 6,526 0.17
Acquisition-related intangible assets amortization expense 22,706 0.60 21,529 0.56
Income tax effect of tax indemnifications (3,539) (0.09) (6,526) (0.17)
Income tax effect of other adjustments above (8,815) (0.23) (21,565) (0.56)
Change in deferred tax valuation allowances (2,914) (0.08) 1,224 0.03
Impact of US tax reform (25,234) (0.67) 95,369 2.48
           
Non-GAAP Results $171,097   $4.55 $134,726   $3.50
 
Twelve months ended January 31,
2019 2018
Net Income Diluted EPS Net Income Diluted EPS
GAAP Results $340,580 $8.89 $116,641 $3.05
Acquisition, integration and restructuring expenses 87,920 2.29 136,272 3.57
Goodwill impairment 47,434 1.24
Legal settlements and other, net (15,406) (0.40) (41,020) (1.07)
Gain on disposal of subsidiary (6,746) (0.18)
Value added tax assessments and related interest expense (928) (0.02) 2,568 0.06
Tax indemnifications 9,634 0.25 6,526 0.17
Acquisition-related intangible assets amortization expense 91,248 2.38 89,518 2.34
Acquisition-related financing expenses 8,807 0.23
Income tax effect of tax indemnifications (9,634) (0.25) (6,526) (0.17)
Income tax effect of other adjustments above (39,925) (1.04) (61,113) (1.60)
Income tax benefit from acquisition settlement (13,046) (0.34)
Change in deferred tax valuation allowances (5,987) (0.16) 1,224 0.03
Impact of US tax reform (49,234) (1.28) 95,369 2.50
           
Non-GAAP Results $435,910   $11.38 $348,266   $9.11
 

TECH DATA CORPORATION AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

(In thousands)

 

Return on Invested Capital (ROIC)

 
Twelve months ended January 31,
TTM Net Operating Profit After Tax (NOPAT)*: 2019   2018
Operating income $ 493,802 $ 410,079
Income taxes on operating income (1)   (43,264 )   (250,151 )
NOPAT $ 450,538   $ 159,928  
 
Average Invested Capital:
Short-term debt (5-qtr end average) $ 116,931 $ 314,154
Long-term debt (5-qtr end average) 1,402,967 1,580,778
Shareholders’ Equity (5-qtr end average)   2,883,085     2,605,736  
Total average capital 4,402,983 4,500,668
Less: Cash (5-qtr end average)   (707,933 )   (1,107,734 )
Average invested capital less average cash $ 3,695,050   $ 3,392,934  
ROIC 12 % 5 %
 
* Trailing Twelve Months is abbreviated as TTM.
(1) Income taxes on operating income was calculated using the trailing twelve months effective tax rate.
 

Adjusted Return on Invested Capital (ROIC)

 
Twelve months ended January 31,
TTM Net Operating Profit After Tax (NOPAT), as adjusted*: 2019   2018
Non-GAAP operating income (1) $ 707,886 $ 602,704
Income taxes on non-GAAP operating income (2)   (181,704 )   (184,370 )
NOPAT, as adjusted $ 526,182   $ 418,334  
 
Average Invested Capital, as adjusted:
Short-term debt (5-qtr end average) $ 116,931 $ 314,154
Long-term debt (5-qtr end average) 1,402,967 1,580,778
Shareholders’ Equity (5-qtr end average) 2,883,085 2,605,736
Tax effected impact of non-GAAP adjustments (3)   88,879     94,193  
Total average capital, as adjusted 4,491,862 4,594,861
Less: Cash (5-qtr end average)   (707,933 )   (1,107,734 )
Average invested capital less average cash $ 3,783,929   $ 3,487,127  
Adjusted ROIC 14 % 12 %
 
* Trailing Twelve Months is abbreviated as TTM.
(1) Represents operating income as adjusted to exclude acquisition, integration and restructuring expenses, legal settlements and other, net, gain on disposal of subsidiary, value added tax assessments, acquisition-related intangible assets amortization expense, goodwill impairment and tax indemnifications.
(2) Income taxes on non-GAAP operating income was calculated using the trailing twelve months effective tax rate adjusted for the impact of non-GAAP adjustments during the respective periods.
(3) Represents the 5 quarter average of the year-to-date impact of non-GAAP adjustments.
 

TECH DATA CORPORATION AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATION

Guidance Reconciliation

 
Three months ending April 30, 2019

Low end of guidance range

 

High end of guidance range

Earnings per share – diluted $1.19   $1.49
Acquisition, integration and restructuring expenses 0.22 0.22
Acquisition-related intangible assets amortization expense 0.58 0.58
Income tax effect of the above adjustments (0.19)   (0.19)
Non-GAAP earnings per share – diluted $1.80   $2.10

Investor Contacts:
Arleen QuiƱones, Corporate Vice
President, Investor Relations and Corporate Communications
727-532-8866
([email protected])
Media
Contact:

Bobby Eagle, External Communications Director
727-538-5864
([email protected])