WASHINGTON: Shares of Tech Data Corp. TECD plunged nearly 10.1% in yesterday’s trading session following weaker-than-expected quarterly results. The company reported third-quarter fiscal 2016 adjusted earnings of $1.28 per share, which missed the Zacks Consensus Estimate of $1.33. However, earnings came in higher than the prior-year quarter figure of $1.18 per share. Tech Data’s revenues dropped 4.9% year over year to $6.4 billion and also lagged the Zacks Consensus Estimate of $6.5 billion.
Revenues from the Americas (40% of revenues) decreased 3%, while the same from Europe (60% of revenues) decreased 6%, both on a year-over-year basis. Revenues from America were primarily impacted by the company’s exit from lower-margin businesses and lower-than-expected demand, especially in verticals like Small and Midsize Business and the public sector. Revenues from Europe were affected by unfavorable currency translations despite strength in mobility and broadline products.
The company’s gross profit in the quarter was $314.8 million, down from $335 million in the year-ago quarter. Gross margin declined marginally to 4.90% from 4.95% in the prior-year quarter.
Non-GAAP selling, general & administrative (SG&A) expenses decreased 7.7% year over year to $243.9 million in the reported quarter. As a percentage of revenues, SG&A expenses declined to 3.79% from 3.91% in the year-ago quarter. Nonetheless, non-GAAP operating income inched up 0.1% year over year to $70.9 million. Operating margin also improved 5 basis points (bps) year over year to 1.1%.
Geographically, non-GAAP operating income decreased 4.2% in the Americas, but improved 3.8% year over year in Europe. Non-GAAP net income was $45.2 million compared with $45.3 million in the year-ago quarter.
Tech Data had approximately $586 million in cash and cash equivalents at the end of the quarter compared with $543 million as on Jan 31, 2015. Total debt was $348.4 million, down from $351.6 million a year ago. Cash outflow for operations was $82 million in the quarter.
