Tech Data Q1 Adjusted Earnings Top Estimations, Provide Upbeat EPS Forecast

Tech Data Corporation TECD announced 35 percent drop in net income for the first quarter despite 1 percent growth in net sales. However, its adjusted earnings came in above the Street analysts' expectations. Similarly, the company provided upbeat earnings outlook for the second quarter.

Tech Data reported 35% drop in net income to $33.4 million from $51.3 million while earnings dipped 32 percent to $0.94 a share from $1.38 a share in the year-ago quarter. On an adjusted basis, it would have earned $1.05 a share for the first quarter.

The company said its net sales rose one percent to $6 billion while the increase would have been 2 percent on a constant currency basis. Wall Street analysts expected the company to earn $0.94 a share on $6.0 billion revenue.

Tech Data's CEO, Robert Dutkowsky, commented, "We are pleased to report a strong start to fiscal year 2017. In Q1, our teams capitalized on pockets of demand and delivered above-market sales growth. Higher sales, coupled with strong margin and expense management, resulted in double-digit growth in non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per share."

He continued, "In addition, we generated $276 million in cash from operations and earned a return on invested capital of 14 percent – a 300 basis point improvement over the prior year period. Tech Data's Q1 results are a testament to the strength of our geographic, vendor, product and customer portfolios and to the flexibility of our business model. Our diverse, end-to-end portfolio of IT Solutions enables us to capture opportunities in the evolving IT marketplace, deliver differentiated value to our customers and vendor partners, and produce strong results for our shareholders."

Going forward, the company expects adjusted earnings to be $1.39-$1.49 a share on revenues of $6.55-$6.75 billion for the Second quarter. Analysts' expect the company to deliver earnings of $1.35 a share on revenues of $6.38 billion.