Tech Data Tops Expectations For Q3 Behind Acquisitions, IT Refresh

Tech Data on Monday reported sales and earnings for its fiscal third quarter that handily topped Wall Street expectations, thanks to significant gains in its U.S. sales, added heft from acquisitions in Europe, and strength behind emerging technologies like tablet computers.

For its fiscal third quarter, Tech Data reported profit of $50.46 million or $1.07 per share, up 17 percent from the $43.14 million, or 84 cents per share, it reported in the year-ago quarter. Sales were $6.16 billion, up 9.2 percent from $5.64 billion a year ago, and 12.6 percent sequentially from Tech Data's Q2.

Wall Street analysts on average were expecting about 95 cents per share on $5.79 billion in sales.

"Building on the momentum of the last several quarters, the Tech Data team once again performed exceptionally well, exceeding our plan and delivering record-setting results in the third quarter," said Robert Dutkowsky, Tech Data CEO, in a statement.

Net sales in the Americas region were $2.70 billion for the quarter, accounting for 44 percent of worldwide net sales, and an increase of 9.7 percent year over year. Net sales in Europe, which include those of Triade Holding and the other companies Tech Data acquired in the region, were $3.46 billion, accounting for 56 percent of worldwide net sales, and an increase of 8.9 percent year over year.

On the company's quarterly earnings conference call Monday, Dutkowsky said Tech Data benefited from an ongoing technology refresh cycle and that all of its business in the Americas grew.

"While completing the acquisition of Triade as well as two other companies, we capitalized on solid demand for technology products in both the Americas and Europe, and successfully balanced market share gains with responsible growth," Dutkowsky said. "This, combined with solid expense management, provided strong operating leverage, resulting in the highest third quarter sales, earnings and earnings per diluted share in our company's history, as well as return on capital employment of 14 percent."

Among product and segment highlights, Dutkowsky called out tablets -- which made it on to Tech Data's list of growing products for the first time -- and also digital signage as top performers. Tech Data's SMB business is also growing, he noted.

Fourth quarter guidance was vague, but Dutkowsky said he expected no slowdown.

"Looking ahead to the fourth quarter, we expect solid demand trends to continue and sales could exceed historical seasonal patterns, primarily in the Americas, resulting year-over-year, as well as sequential, sales growth in both regions, on a local currency basis," Dutkowsky said in a statement, repeated on the conference call. "We will maintain our focus on responsible growth, while closely managing costs and working capital, as we continue to make progress on achieving our long-term financial goals."