Tech Data Corporation (

TECD

)

F4Q2012 Earnings Conference Call

February 28, 2012, 09:00 a.m. ET

Executi

ve

s

Arleen Quinones - Director, IR and Shareholder Services

Bob Dutkowsky - CEO

Jeff Howells - EVP and CFO

Néstor Cano - President, Europe

Murray Wright - President, The Americas

Analysts

Brian Alexander - Raymond James

Matt Sheerin - Stifel Nicolaus

Ananda Baruah - Brean Murray Carret and Company

Scott Craig - Bank of America/Merrill Lynch

Ben Reitzes - Barclays Capital

Osten Bernardez - Cross Research

Craig Hettenbach - Goldman Sachs

Presentation

Operator

Compare to:
Previous Statements by TECD
» Tech Data CEO Discusses F3Q2012 Results - Conference Call Transcript
» Tech Data's CEO Discusses Q2 2012 Results - Earnings Call Transcript
» Tech Data Corp. F3Q10 (Qtr End 10/31/09) Earnings Call Transcript

Good morning. Welcome to Tech Data Corporation’s Fiscal Year 2012 Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. (Operator Instructions) Today’s conference is being recorded. If you have any objections you may disconnect at this time.

Now, I’ll turn the meeting over to Ms. Arleen Quinones, Director of Investor Relations. Ma’am, you may begin.

Arleen Quinones

Thank you, Latonya. Good morning and welcome to Tech Data’s fourth quarter and fiscal year 2012 earnings conference call. I’m joined this morning by Bob Dutkowsky, Chief Executive Officer; Jeff Howells, Executive Vice President and Chief Financial Officer; Néstor Cano, President, Europe; and Murray Wright, President, The Americas.

Before we begin, I’d like to remind all listeners that today’s earnings press release and certain matters discussed in today’s call may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on the company’s current expectations and are subject to risks and uncertainties. These risks and uncertainties include, but are not limited to, those factors identified in the release and in our filings with the Securities and Exchange Commission.

Please be advised that the statements made during today’s call should be considered to represent the expectations of management as of the date of this call. The company undertakes no duty to update any forward-looking statements to actual results or changes in expectations. In addition, this call is the property of Tech Data and may not be recorded or rebroadcast without specific written permission from the company.

I will now turn the call over to Tech Data’s Chief Executive Officer, Bob Dutkowsky.

Bob Dutkowsky

Thank you, Arleen. Good morning, everyone, and thank you for joining us on our fourth quarter and fiscal year 2012 earnings conference call.

We’re very pleased to report another solid quarter and a record fiscal year for Tech Data. We entered fiscal year ‘12 with strong momentum and with the tailwinds of an IT market recovery at our back. As the year progressed, we faced challenges brought on by natural disasters in Japan and Thailand, a European sovereign debt crisis and a slowing IT market. Despite these challenges, our focus on responsible sales growth, improved earnings and return on invested capital remained unchanged, and the results are reflected in our solid fiscal year 2012 performance.

Sales grew 9% in the year to more than $26 billion. Excluding the costs to exit Brazil and Colombia, we improved both operating and net income and achieved non-GAAP earnings per diluted share of $5.09, our fifth consecutive year of double-digit earnings growth per share. We generated $503 million of operating cash flow and earned return on invested capital of 14%, well above our weighted average cost of capital.

In addition, we returned $315 million of value back to our shareholders in the form of stock repurchases, the most stock we bought back in any one year, bringing our accumulative repurchases to $915 million since 2005. And while delivering a solid financial performance, we also took proactive steps to further strengthen and better position the company for the future.

In the fourth quarter, we exited unprofitable markets in Latin America and realigned our resources in Europe to improve productivity and match our cost structure with market conditions. During the year, we acquired two European specialty software distributors. We further integrated Triade, invested in technology including our innovative one-of-a-kind TDMobility and Stream One initiatives, and enhanced our capital structure to provide us with greater financial flexibility at lower cost.

We have clearly demonstrated once again what we believe to be a hallmark of our business model and one of Tech Data’s core competencies, the ability to successfully navigate the ever-changing IT market landscape and deliver strong results for our shareholders. Our strategy of execution, diversification and innovation is differentiating Tech Data in the market. Our disciplined focus is delivering excellent results for our shareholders, and together, they position the company for long-term market share gains, improved profitability and shareholder value creation.

I’ll now turn the call over to Jeff for a review of our financial results. And then I will provide some additional business highlights. Jeff?

Jeff Howells

Thank you, Bob. Many of my comments will reference the supplemental schedules which are available on the Investor Relations section of our website at www.techdata.com.

Please note that in our commentary and slides, we have excluded a $28.3 million loss on disposal of subsidiaries related to the company’s exit of its in-country operations in Brazil and Colombia from the current-year period. A reconciliation could be found in our press release and in the supplemental schedules.

Beginning with the first slide, worldwide net sales for the fourth quarter ended January 31, 2012 were $7.1 billion, consistent with the prior-year fourth quarter. The weakening of certain foreign currencies against the U.S. dollar compared to the same period in the prior year negatively impacted the year-over-year sales comparison by approximately 1 percentage point. Sequentially, net sales for the fourth quarter ended January 31, 2012 increased 8% over the third quarter. Weaker foreign currencies during the fourth quarter negatively impacted the sequential growth by approximately 4 percentage points.

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