Avnet TS acquisition increased Tech Data’s margin

Tech Data lifted its sales and margins in Q3. Net sales were $9.1bn, an increase of 41% compared to the prior-year quarter. The increase in net sales is primarily due to the addition of the Technology Solutions business acquired from Avnet, Inc. on February 27, 2017. On a constant currency basis, net sales increased 37%. 

In Europe, which had been Tech Data’s main market before the acquisition, net sales were $4.8bn (53% of worldwide net sales), an increase of 25% compared to the prior-year quarter. The increase in net sales is primarily attributed to the addition of Technology Solutions, it says. On a constant currency basis, net sales increased 19%. 

Gross profit was $526.1m, an increase of $210.2 million, or 67% compared to the prior-year quarter. As a percentage of net sales, gross profit was 5.76% compared to 4.87% in the prior-year quarter. The increase in gross profit and gross margin percentage is primarily attributable to the addition of Technology Solutions.  

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“We are pleased to report Q3 results that were in line with our expectations and that continue to highlight the enhanced earnings power and cash flow profile of the new Tech Data,” said Bob Dutkowsky (above), chairman and chief executive officer. “For the first time in Tech Data’s history, quarterly sales surpassed $9bn, and through pricing discipline and strong cost controls, we delivered solid non-GAAP earnings per share. In addition, we generated $70 million of cash from operations, paid down $350 million of our debt, reflecting our strong commitment to deleverage the company, and earned an adjusted return on invested capital for the trailing twelve-month period well in excess of our weighted average cost of capital. We continue on our path to building the IT distributor of the future, one with breadth, specialized skills and extensive capabilities to help our customers and vendor partners capitalize on growth opportunities across the computing continuum.”  

For the quarter ending January 31, 2018,  it anticipates worldwide net sales to be in the range of $10.25bn to $10.80bn.