Tech Data Suffers 2Q Loss Due To Overseas Challenges
Tech Data posted a loss of $155.5 million, or $2.81 per share, for its second quarter ended July 31, compared with a loss of $59.4 million, or $1.02 per share, a year earlier. The Clearwater, Fla.,-based distributor's sales, however, climbed to $4.94 billion from $4.81 billion during the period.
The second-quarter results include a $136.1 million goodwill impairment charge related to its EMEA performance and nearly $20 million in other charges. Without the charges, Tech Data would have earned $300,000 in the quarter, matching financial analysts' expectations.
"The second quarter proved challenging, as difficult market conditions in EMEA, coupled with distractions from our restructuring initiatives, slowed our progress in delivering improved profitability," Tech Data Chairman and CEO Steve Raymund said in a statement. "While it will take longer than previously anticipated to reach an acceptable level of profitability in EMEA, our efforts to date have been productive, strengthening our foundation for improvement. We will continue to invest in programs that optimize our sales, pricing and inventory management practices and support our long-term potential in both the Americas and EMEA."
Tech Data had downgraded its second-quarter forecast earlier this month. The distributor previously projected earnings before special charges of $17 million to $20 million, or 30 cents to 36 cents per share, and revenue of $4.95 billion to $5.10 billion.
Looking ahead to the third quarter ending Oct. 31, Tech Data said it expects sales between $5.1 billion and $5.25 billion. The consensus analyst forecast is $5.18 billion, according to Thomson Financial. Tech Data declined to offer earnings guidance for the third quarter, citing the continued difficulties in its EMEA operations.
The earnings call could be the last for Raymund as CEO of Tech Data. He announced in late January that he would give up that role when a successor was found. The search for his replacement is nearing seven months after an initial three- to six-month estimate.
"We've met with many talented individuals over the last several months, narrowing the slate of candidates to a select few. Look for more news on this front in the coming weeks," Raymund said Wednesday in a conference call with financial analysts.
Tech Data opens its TechSelect conference in Chicago on Wednesday. TechSelect solution providers initially hoped Raymund would attend the event so they could fete him for his career achievements at the distribution giant, but scheduling conflicts--such as the earnings call on Wednesday--dashed any party plans.
Tech Data shares closed at $34.82 Tuesday, up 14 cents per share.