Tech Data's Q3 Beats Expectations

Tech Data reported fiscal 2006 third-quarter earnings Tuesday that beat the consensus estimate on Wall Street after the distributor posted strong sales yet again in the Americas.

Tech Data reported $5.1 billion in revenue for the quarter ended Oct. 31, a 6.6 percent increase from one year ago. While the company's net income fell year-over-year to $23 million, or 40 cents a share, because of restructuring charges in Europe, the Middle East and Africa (EMEA), earnings still surpassed expectations for the quarter. Without one-time charges, Tech Data's earnings would have been 53 cents a share compared to the average Wall Street estimate of 46 cents a share, according to Tomson First Call. As a result, Tech Data shares improved 14 percent on the Nasdaq Tuesday morning.

During the earnings call, Tech Data chairman and CEO Steve Raymund said the quarter's performance was driven by impressive sales in North and South America, which grew 15.3 percent year-over-year, and cost-structure improvements for its EMEA operations made by the company's restructuring program, which was announced in May after a poor performance in Europe during the first quarter. Results for the third quarter of fiscal 2006 include $4.8 million of restructuring charges and $3.2 million of consulting costs related to the EMEA restructuring program. Tech Data said it has recorded $24.1 million in restructuring charges related to the EMEA program and anticipates generating future annualized savings of approximately the same amount.

Excluding charges and costs related to the EMEA effort, Tech Data said it expects sales for the fourth quarter, ending Jan. 31, 2006, to be between $5.3 billion and $5.45 billion, while earnings are estimated to be between $36 million, or 63 cents a share, and $39 million, or 69 cents a share.