Tech Data Corporation Reports Third Quarter Fiscal Year 2018 Results

CLEARWATER, Fla., Nov. 27, 2017 /PRNewswire/ -- Tech Data (NASDAQ: TECD) (the "Company") today announced its financial results for the third quarter ended October 31, 2017.


                                                                                       Third quarter ended October 31,   Nine months ended October 31,
                                                                                      -------------------------------   -----------------------------

    ($ in millions,                                                                          2017           2016                 Y/Y                        2017       2016       Y/Y
    except per share amounts)                                                                                                  Change                                         Change
    ------------------------                                                                                ---                                                      ---     ------

    Net Sales                                                                            $9,135.7       $6,490.3                              41%      $25,682.5  $18,807.4                 37%


    Operating income (GAAP)                                                                 $79.6          $62.9                              27%         $258.2     $188.8                 37%

    Operating margin (GAAP)                                                                 0.87%         0.97%                         -10 bps          1.01%     1.00%              1 bps


    Operating income (Non-GAAP)                                                            $135.7          $81.1                              67%         $386.8     $216.8                 78%

    Operating margin (Non-GAAP)                                                             1.49%         1.25%                          24 bps          1.51%     1.15%             36 bps


    Net income (GAAP)                                                                       $37.3          $36.5                               2%         $115.4     $116.3                 -1%

    Net income (Non-GAAP)                                                                   $76.7          $50.9                              51%         $213.5     $138.2                 54%


    EPS - diluted (GAAP)                                                                    $0.97          $1.03                              -6%          $3.03      $3.29                 -8%

    EPS - diluted (Non-GAAP)                                                                $2.00          $1.44                              39%          $5.60      $3.91                 43%
    -----------------------                                                                 -----          -----                              ---           -----      -----                 ---


    A reconciliation of GAAP to non-GAAP financial measures is presented in the financial tables of this press release.

    This information is also available on the Investor Relations section of Tech Data's website at www.techdata.com/investor.

Financial Highlights for the Third Quarter Ended October 31, 2017:

    --  Net sales were $9.1 billion, an increase of 41 percent 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 ("Technology Solutions"). On a constant currency
        basis, net sales increased 37 percent.
-- Americas: Net sales were $4.0 billion (44 percent of worldwide net sales), an increase of 53 percent compared to the prior-year quarter. The increase in net sales is primarily attributed to the addition of Technology Solutions. On a constant currency basis, net sales increased 52 percent. -- Europe: Net sales were $4.8 billion (53 percent of worldwide net sales), an increase of 25 percent compared to the prior-year quarter. The increase in net sales is primarily attributed to the addition of Technology Solutions. On a constant currency basis, net sales increased 19 percent. -- Asia Pacific: Net sales were $0.3 billion (3 percent of worldwide net sales). Asia Pacific net sales are attributed to the addition of Technology Solutions.
    --  Gross profit was $526.1 million, an increase of $210.2 million, or 67
        percent compared to the prior-year quarter. As a percentage of net
        sales, gross profit was 5.76 percent compared to 4.87 percent in the
        prior-year quarter. The increase in gross profit and gross margin
        percentage is primarily attributable to the addition of Technology
        Solutions.
    --  Selling, general and administrative expenses ("SG&A") were $416.8
        million, or 4.56 percent of net sales, compared to $240.0 million, or
        3.70 percent of net sales in the prior-year quarter. Non-GAAP SG&A was
        $390.4 million, an increase of $155.7 million, or 66 percent, compared
        to the prior-year quarter. As a percentage of net sales, non-GAAP SG&A
        was 4.27 percent, compared to 3.62 percent in the prior-year quarter.
        The increase in both dollars and percentage of net sales, on a GAAP and
        non-GAAP basis, is primarily attributable to the addition of Technology
        Solutions.
    --  Worldwide operating income was $79.6 million, or 0.87 percent of net
        sales compared to $62.9 million or 0.97 percent of net sales in the
        prior-year quarter. Non-GAAP operating income was $135.7 million, an
        increase of $54.6 million, or 67 percent, compared to the prior-year
        quarter. As a percentage of net sales, non-GAAP operating income was
        1.49 percent, an improvement of 24 basis points over the prior-year
        quarter.
-- Americas: Operating income was $55.6 million, or 1.39 percent of net sales, compared to $32.4 million, or 1.24 percent of net sales in the prior-year quarter. Non-GAAP operating income was $85.5 million, an increase of $43.1 million, or 101 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP operating income was 2.14 percent, an improvement of 52 basis points over the prior-year quarter. -- Europe: Operating income was $29.9 million, or 0.62 percent of net sales, compared to $34.0 million, or 0.88 percent of net sales in the prior-year quarter. Non-GAAP operating income was $53.4 million, an increase of $11.2 million, or 26 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP operating income was 1.10 percent compared to 1.09 percent in the prior-year quarter. -- Asia Pacific: Operating income was $2.4 million, or 0.82 percent of net sales. Non-GAAP operating income was $3.9 million, or 1.32 percent of net sales. -- Stock-based compensation expense was $8.3 million, an increase of $4.8 million, compared to the prior-year quarter. This includes $1.2 million of acquisition and integration-related stock compensation expense. These expenses are excluded from the regional operating results and presented as a separate line item in the company's segment reporting (see the GAAP to non-GAAP reconciliation in the financial tables of this press release).
    --  Net income was $37.3 million, compared to $36.5 million in the
        prior-year quarter. Non-GAAP net income was $76.7 million, an increase
        of $25.8 million, or 51 percent, compared to the prior-year quarter.
    --  Earnings per share on a diluted basis ("EPS") were $0.97, compared to
        $1.03 in the prior year quarter. Non-GAAP EPS was $2.00, an increase of
        $0.56, or 39 percent compared to the prior-year quarter.
    --  Net cash generated by operations during the quarter was $70 million.
    --  Return on invested capital for the trailing twelve months was 9 percent,
        compared to 13 percent in the prior year period. The adjusted return on
        invested capital for the trailing twelve months was 12 percent, compared
        to 14 percent in the prior year period.

"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 Robert M. Dutkowsky, chairman and chief executive officer. "For the first time in Tech Data's history, quarterly sales surpassed $9 billion, 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."

Business Outlook

    --  For the quarter ending January 31, 2018, the Company anticipates
        worldwide net sales to be in the range of $10.25 billion to $10.80
        billion.
    --  For the quarter ending January 31, 2018, the Company anticipates EPS to
        be in the range of $2.39 to $2.69 and non-GAAP EPS to be in the range of
        $3.35 to $3.65.
    --  This guidance assumes weighted average diluted shares outstanding of
        38.5 million and an effective tax rate in the range of 29 percent to 31
        percent.
    --  This guidance also assumes an average U.S. dollar to euro exchange rate
        of $1.18 to EUR1.00.

Webcast Details

Tech Data will hold a conference call today at 5:00 p.m. (ET) to discuss its financial results for the third quarter ended October 31, 2017. A webcast of the call, including supplemental schedules, will be available to all interested parties and can be obtained at www.techdata.com/investor. The webcast will be available for replay for three months.

Non-GAAP Financial Information

The non-GAAP financial information contained in this release is included with the intention of providing investors a more complete understanding of the Company's operational results and trends, but should only be used in conjunction with results reported in accordance with Generally Accepted Accounting Principles ("GAAP"). Certain non-GAAP measures presented in this release or other releases, presentations and similar documents issued by the Company include sales, income or expense items as adjusted for the impact of changes in foreign currencies (referred to as "constant currency"), non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP earnings per diluted share and Adjusted Return on Invested Capital. Certain non-GAAP measures also exclude acquisition-related intangible assets amortization expense, benefits associated with legal settlements, acquisition, integration and restructuring expenses, value-added tax assessments and acquisition-related financing expenses. A detailed reconciliation of the adjustments between results calculated using GAAP and non-GAAP in this release is contained in the attached financial schedules. This information can also be obtained from the Company's Investor Relations website at www.techdata.com/investor.

Forward-Looking Statements

Certain statements in this communication may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, including statements regarding Tech Data's plans, objectives, expectations and intentions, which may relate to the Technology Solutions business, Tech Data's financial results and estimates and/or business prospects, involve a number of risks and uncertainties and actual results could differ materially from those projected. These forward looking statements are based on current expectations, estimates, forecasts, and projections about the operating environment, economies and markets in which Tech Data operates and the beliefs and assumptions of our management. Words such as "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," variations of such words, and similar expressions are intended to identify such forward looking statements. In addition, any statements that refer to projections of Tech Data's future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances, are forward looking statements. These forward looking statements are only predictions and are subject to risks, uncertainties, and assumptions. Therefore, actual results may differ materially and adversely from those expressed in any forward looking statements.

For additional information with respect to risks and other factors which could occur, see Tech Data's Annual Report on Form 10-K for the year ended January 31, 2017, including Part I, Item 1A, "Risk Factors" therein, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other securities filings with the Securities and Exchange Commission (the "SEC") that are available at the SEC's website at www.sec.gov and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Many of these factors are beyond Tech Data's control. Unless otherwise required by applicable securities laws, Tech Data disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Tech Data undertakes no duty to update any forward looking statements contained herein to reflect actual results or changes in Tech Data's expectations.

About Tech Data

Tech Data connects the world with the power of technology. Our end-to-end portfolio of products, services and solutions, highly specialized skills, and expertise in next-generation technologies enable channel partners to bring to market the products and solutions the world needs to connect, grow and advance. Tech Data is ranked No. 107 on the Fortune 500(®) and has been named one of Fortune's World's Most Admired Companies for eight straight years. To find out more, visit www.techdata.com or follow us on Twitter, LinkedIn, and Facebook.

Contacts:

Charles V. Dannewitz, Executive Vice President,Chief Financial Officer
727-532-8028 (chuck.dannewitz@techdata.com)

Arleen Quiñones, Corporate Vice President, Investor Relations and Corporate Communications
727-532-8866 (arleen.quinones@techdata.com)


    TECH DATA CORPORATION AND SUBSIDIARIES

    CONSOLIDATED STATEMENT OF OPERATIONS

    (In thousands, except per share amounts)

    (Unaudited)




                                                                 Three months ended            Nine months ended

                                                     October 31,     October 31,
                                                     -----------     -----------

                                                                        2017              2016                        2017        2016


    Net sales                                                     $9,135,728        $6,490,265                 $25,682,482 $18,807,366

    Cost of products sold                                          8,609,647         6,174,426                  24,183,722  17,876,466
                                                                   ---------         ---------                  ----------  ----------

    Gross profit                                                     526,081           315,839                   1,498,760     930,900

    Operating expenses:

    Selling, general and administrative expenses                     416,766           239,952                   1,179,996     730,211

    Acquisition, integration and restructuring expenses               29,748            13,015                     101,931      14,997

    LCD settlements and other, net                                         -                -                   (41,343)    (4,142)

    Value added tax assessments                                            -                -                          -      1,049
                                                                         ---              ---                        ---      -----

                                                                     446,514           252,967                   1,240,584     742,115
                                                                     -------           -------                   ---------     -------

    Operating income                                                  79,567            62,872                     258,176     188,785

    Interest expense                                                  25,925             9,475                      85,205      21,364

    Other (income) expense, net                                      (1,243)            1,747                     (1,374)      (517)
                                                                      ------             -----                      ------        ----

    Income before income taxes                                        54,885            51,650                     174,345     167,938

    Provision for income taxes                                        17,617            15,144                      58,964      51,665
                                                                      ------            ------                      ------      ------

    Net income                                                       $37,268           $36,506                    $115,381    $116,273
                                                                     =======           =======                    ========    ========


    Earnings per share:

       Basic                                                           $0.98             $1.04                       $3.05       $3.30
                                                                       =====             =====                       =====       =====

       Diluted                                                         $0.97             $1.03                       $3.03       $3.29
                                                                       =====             =====                       =====       =====

    Weighted average common shares outstanding:

       Basic                                                          38,186            35,218                      37,877      35,184
                                                                      ======            ======                      ======      ======

       Diluted                                                        38,433            35,449                      38,105      35,393
                                                                      ======            ======                      ======      ======


    TECH DATA CORPORATION AND SUBSIDIARIES

    CONSOLIDATED BALANCE SHEET

    (In thousands, except par value and share amounts)




                                                                                                                        October 31,             January 31,

                                                                                                                                           2017                     2017

                                                                               ASSETS                                   (unaudited)
                                                                                                                        ----------

    Current assets:

    Cash and cash equivalents                                                                                                          $562,645               $2,125,591

    Accounts receivable, net                                                                                                          4,816,963                3,047,927

    Inventories                                                                                                                       2,862,199                2,118,902

    Prepaid expenses and other assets                                                                                                   237,873                  119,906
                                                                                                                                        -------                  -------

    Total current assets                                                                                                              8,479,680                7,412,326

    Property and equipment, net                                                                                                         273,568                   74,239

    Goodwill                                                                                                                            842,223                  199,021

    Intangible assets, net                                                                                                            1,117,025                  130,676

    Other assets, net                                                                                                                   247,357                  115,604
                                                                                                                                        -------                  -------

        Total assets                                                                                                                $10,959,853               $7,931,866
                                                                                                                                    ===========               ==========


                                                                                   LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities:

    Accounts payable                                                                                                                 $5,464,759               $3,844,532

    Accrued expenses and other liabilities                                                                                              706,319                  493,199

    Revolving credit loans and current maturities of long-term debt, net                                                                113,422                  373,123
                                                                                                                                        -------                  -------

    Total current liabilities                                                                                                         6,284,500                4,710,854

    Long-term debt, less current maturities                                                                                           1,806,456                  989,924

    Other long-term liabilities                                                                                                         145,074                   61,200
                                                                                                                                        -------                   ------

    Total liabilities                                                                                                                $8,236,030               $5,761,978
                                                                                                                                     ----------               ----------

    Shareholders' equity:

    Common stock, par value $0.0015; 200,000,000 shares authorized; 59,245,585                                                              $89                      $89
    shares issued at October 31, 2017 and January 31, 2017

    Additional paid-in capital                                                                                                          819,157                  686,042

    Treasury stock, at cost (21,092,348 and 24,018,983 shares at  October 31,                                                         (940,497)             (1,070,994)
    2017 and January 31, 2017)

    Retained earnings                                                                                                                 2,744,674                2,629,293

    Accumulated other comprehensive income (loss)                                                                                       100,400                 (74,542)
                                                                                                                                        -------                  -------

          Total shareholders' equity                                                                                                  2,723,823                2,169,888
                                                                                                                                      ---------                ---------

          Total liabilities and shareholders' equity                                                                                $10,959,853               $7,931,866
                                                                                                                                    ===========               ==========


    TECH DATA CORPORATION AND SUBSIDIARIES

    GAAP TO NON-GAAP RECONCILIATION

    (In thousands)




                                                                                                               Three months ended October 31, 2017
                                                                                                            -----------------------------------

                                                                                                 Americas[1]                                       Europe[1]            APAC[1]                Stock           Consolidated
                                                                                                                                                                                         Compensation
                                                                                                                                                                                            Expense
                                                                                                                                                                                                                                ---

    Net Sales                                                                                                 $3,997,159                                     $4,841,961         $296,608                                    $9,135,728
                                                                                                              ==========                                     ==========         ========                                    ==========

    GAAP operating income[1]                                                                                     $55,551                                        $29,909           $2,432              $(8,325)                 $79,567

    Acquisition, integration and                                                                                  14,149                                         14,128              287                 1,184                   29,748
    restructuring expenses

    Acquisition-related intangible                                                                                15,816                                          9,362            1,207                                        26,385
    assets amortization expense

    Total non-GAAP operating income                                                                              $29,965                                        $23,490           $1,494                $1,184                  $56,133
    adjustments
                                                                                                                                                                                                                                ---

    Non-GAAP operating income                                                                                    $85,516                                        $53,399           $3,926              $(7,141)                $135,700
                                                                                                                 =======                                        =======           ======               =======                 ========

    GAAP operating margin                                                                                          1.39%                                         0.62%           0.82%                                        0.87%

    Non-GAAP operating margin                                                                                      2.14%                                         1.10%           1.32%                                        1.49%

    [1]   GAAP operating income does not include stock compensation expense at the regional level.


                                                                                                Three months ended October 31, 2016
                                                                                                -----------------------------------

                                                                                                     Americas[1]                    Europe[1]               Stock              Consolidated
                                                                                                                                                         Compensation
                                                                                                                                                           Expense
                                                                                                                                                                                                 ---

    Net Sales                                                                                                     $2,614,347                  $3,875,918                                    $6,490,265
                                                                                                                  ==========                  ==========                                    ==========

    GAAP operating income[1]                                                                                         $32,414                     $34,008              $(3,550)                 $62,872

    Acquisition, integration and                                                                                       9,456                       3,559                                        13,015
    restructuring expenses

    Acquisition-related intangible assets                                                                                580                       4,663                                         5,243
    amortization expense

    Total non-GAAP operating income                                                                                  $10,036                      $8,222                                       $18,258
    adjustments
                                                                                                                                                                                                 ---

    Non-GAAP operating income                                                                                        $42,450                     $42,230              $(3,550)                 $81,130
                                                                                                                     =======                     =======               =======                  =======

    GAAP operating margin                                                                                              1.24%                      0.88%                                        0.97%

    Non-GAAP operating margin                                                                                          1.62%                      1.09%                                        1.25%

    [1]   GAAP operating income does not include stock compensation expense at the regional level.


    TECH DATA CORPORATION AND SUBSIDIARIES

    GAAP TO NON-GAAP RECONCILIATION

    (In thousands)




                                                                                                                Nine months ended October 31, 2017
                                                                                                              ----------------------------------

                                                                                                 Americas[1]                                       Europe[1]             APAC[1]                Stock            Consolidated
                                                                                                                                                                                          Compensation
                                                                                                                                                                                             Expense
                                                                                                                                                                                                                                   ---

    Net Sales                                                                                                $11,658,471                                     $13,250,935         $773,076                                     $25,682,482
                                                                                                             ===========                                     ===========         ========                                     ===========

    GAAP operating income[1]                                                                                    $194,426                                         $73,172          $11,795              $(21,217)                 $258,176

    LCD settlements and other, net                                                                              (42,659)                                          1,316                -                                       (41,343)

    Acquisition, integration and                                                                                  58,573                                          40,385              431                  2,542                   101,931
    restructuring expenses

    Acquisition-related intangible                                                                                38,330                                          26,075            3,584                                          67,989
    assets amortization expense

    Total non-GAAP operating income                                                                              $54,244                                         $67,776           $4,015                 $2,542                  $128,577
    adjustments
                                                                                                                                                                                                                                   ---

    Non-GAAP operating income                                                                                   $248,670                                        $140,948          $15,810              $(18,675)                 $386,753
                                                                                                                ========                                        ========          =======               ========                  ========

    GAAP operating margin                                                                                          1.67%                                          0.55%           1.53%                                          1.01%

    Non-GAAP operating margin                                                                                      2.13%                                          1.06%           2.05%                                          1.51%

    [1]   GAAP operating income does not include stock compensation expense at the regional level.


                                                                                              Nine months ended October 31, 2016
                                                                                              ----------------------------------

                                                                                                  Americas[1]                    Europe[1]                Stock               Consolidated
                                                                                                                                                       Compensation
                                                                                                                                                          Expense
                                                                                                                                                                                                 ---

    Net Sales                                                                                                    $7,677,237                $11,130,129                                     $18,807,366
                                                                                                                 ==========                ===========                                     ===========

    GAAP operating income[1]                                                                                       $104,930                    $94,875              $(11,020)                 $188,785

    Value added tax assessments                                                                                       (407)                     1,456                                           1,049

    Acquisition, integration and                                                                                     10,502                      4,495                                          14,997
    restructuring expenses

    Acquisition-related intangible                                                                                    1,740                     14,356                                          16,096
    assets amortization expense

    LCD settlements and other, net                                                                                  (4,142)                         -                                        (4,142)

    Total non-GAAP operating income                                                                                  $7,693                    $20,307                                         $28,000
    adjustments
                                                                                                                                                                                                 ---

    Non-GAAP operating income                                                                                      $112,623                   $115,182              $(11,020)                 $216,785
                                                                                                                   ========                   ========               ========                  ========

    GAAP operating margin                                                                                             1.37%                     0.85%                                          1.00%

    Non-GAAP operating margin                                                                                         1.47%                     1.03%                                          1.15%

    [1]   GAAP operating income does not include stock compensation expense at the regional level.


    Selling, general and administrative expenses ("SG&A")           Three months ended October 31,
                                                                    ------------------------------

                                                               2017                                   2016
                                                               ----                                   ----

    Net Sales                                                                                   $9,135,728  $6,490,265
                                                                                                ==========  ==========

    GAAP SG&A                                                                                      416,766     239,952

    Acquisition-related intangible assets amortization expense                                    (26,385)    (5,243)

    Non-GAAP SG&A                                                                                 $390,381    $234,709
                                                                                                  ========    ========


    GAAP SG&A percentage of net sales                                                                4.56%      3.70%

    Non- GAAP SG&A percentage of net sales                                                           4.27%      3.62%



                                                                    Nine months ended October 31,
                                                                    -----------------------------

                                                                                                      2017        2016
                                                                                                      ----        ----

    Net Sales                                                                                  $25,682,482 $18,807,366
                                                                                               =========== ===========

    GAAP SG&A                                                                                    1,179,996     730,211

    Acquisition-related intangible assets amortization expense                                    (67,989)   (16,096)

    Non-GAAP SG&A                                                                               $1,112,007    $714,115
                                                                                                ==========    ========


    GAAP SG&A percentage of net sales                                                                4.59%      3.88%

    Non- GAAP SG&A percentage of net sales                                                           4.33%      3.80%


                                               Three months ended October 31,
                                               ------------------------------

                                                                          2017                     2016
                                                                          ----                     ----

                                                          Net Income           Diluted EPS              Net Income           Diluted EPS

    GAAP Results                                                       $37,268               $0.97                   $36,506                 $1.03

    Acquisition, integration and restructuring                          29,748                0.77                    13,015                  0.37
    expenses

    Acquisition-related intangible assets                               26,385                0.69                     5,243                  0.15
    amortization expense

    Acquisition-related financing expenses                                   -                  -                    3,414                  0.10

    Income tax effect of the above adjustments                        (16,652)             (0.43)                  (7,277)               (0.21)

    Non-GAAP results                                                   $76,749               $2.00                   $50,901                 $1.44
                                                                       =======               =====                   =======                 =====


                                                Nine months ended October 31,
                                                -----------------------------

                                                                          2017                     2016
                                                                          ----                     ----

                                                          Net Income           Diluted EPS              Net Income           Diluted EPS

    GAAP Results                                                      $115,381               $3.03                  $116,273                 $3.29

    LCD settlements and other, net                                    (41,020)             (1.08)                  (4,142)               (0.12)

    Value added tax assessments                                              -                  -                    1,386                  0.04

    Acquisition, integration and restructuring                         101,931                2.68                    14,997                  0.42
    expenses

    Acquisition-related intangible assets                               67,989                1.78                    16,096                  0.45
    amortization expense

    Acquisition-related financing expenses                               8,807                0.23                     3,414                  0.10

    Income tax effect of the above adjustments                        (39,548)             (1.04)                  (9,788)               (0.27)

    Non-GAAP results                                                  $213,540               $5.60                  $138,236                 $3.91
                                                                      ========               =====                  ========                 =====


    Return on Invested Capital (ROIC)


                                                                                                                                       Twelve months ended October 31,

    TTM Net Operating Profit After Tax (NOPAT)*:                                                                                                      2017                   2016
                                                                                                                                                      ----                   ----

    Operating income                                                                                                                              $361,293               $333,987

    Income taxes on operating income[1]                                                                                                           (94,679)             (100,045)

    NOPAT                                                                                                                                         $266,614               $233,942
                                                                                                                                                  ========               ========


    Average Invested Capital:

    Short-term debt (5-qtr average)                                                                                                               $360,705                $86,220

    Long-term debt (5-qtr average)                                                                                                               1,279,729                278,970

    Shareholders' Equity (5-qtr average)                                                                                                         2,439,925              2,061,796
                                                                                                                                                 ---------              ---------

    Total average capital                                                                                                                        4,080,359              2,426,986

    Less: Cash (5-qtr average)                                                                                                                 (1,054,922)             (666,295)
                                                                                                                                                ----------               --------

    Average invested capital less average cash                                                                                                  $3,025,437             $1,760,691
                                                                                                                                                ==========             ==========

    ROIC                                                                                                                                                9%                   13%


    * Trailing Twelve Months is abbreviated as TTM.


    [1] Income taxes on operating income was calculated using the trailing 12 months effective tax rate during the respective periods.


    Adjusted Return on Invested Capital (ROIC)


                                                                                                                                                Twelve months ended October 31,

    TTM Net Operating Profit After Tax (NOPAT), as adjusted *:                                                                                                2017                                2016
                                                                                                                                                              ----                                ----

    Non-GAAP operating income[1]                                                                                                                          $508,902                            $333,593

    Income taxes on non-GAAP operating income[2]                                                                                                         (151,859)                           (95,174)

    NOPAT, as adjusted                                                                                                                                    $357,043                            $238,419
                                                                                                                                                          ========                            ========


    Average Invested Capital, as adjusted:

    Short-term debt (5-qtr average)                                                                                                                       $360,705                             $86,220

    Long-term debt (5-qtr average)                                                                                                                       1,279,729                             278,970

    Shareholders' Equity (5-qtr average)                                                                                                                 2,439,925                           2,061,796

    Tax effected impact of non-GAAP adjustments[3]                                                                                                          50,441                            (13,338)
                                                                                                                                                            ------                             -------

    Total average capital, as adjusted                                                                                                                   4,130,800                           2,413,648

    Less: Cash (5-qtr average)                                                                                                                         (1,054,922)                          (666,295)
                                                                                                                                                        ----------                            --------

    Average invested capital less average cash                                                                                                          $3,075,878                          $1,747,353
                                                                                                                                                        ==========                          ==========

    Adjusted ROIC                                                                                                                                              12%                                14%


    * Trailing Twelve Months is abbreviated as TTM.

    [1] Represents operating income as adjusted to exclude acquisition, integration and restructuring expenses, LCD settlements and other, net, value added tax assessments and acquisition-related intangible assets amortization
     expense


    [2] Income taxes on non-GAAP operating income was calculated using the trailing 12 months effective tax rate adjusted for the impact of non-GAAP adjustments during the respective periods.


    [3] Represents the 5 quarter average of the year-to-date impact of non-GAAP adjustments.


    Guidance Reconciliation


                                                               Three months ended January 31, 2018
                                                               -----------------------------------

                                                                           Low end of                  High end of
                                                                         guidance range              guidance range
                                                                         --------------              --------------

    Earnings per share - diluted                                                               $2.39                  $2.69

    Acquisition, integration and restructuring expenses                                         0.84                   0.84

    Acquisition-related intangible assets amortization expense                                  0.61                   0.61

    Income tax effect of the above adjustments                                                (0.49)                (0.49)

    Non-GAAP earnings per share - diluted                                                      $3.35                  $3.65
                                                                                               =====                  =====

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SOURCE Tech Data Corporation