Tech Data Corporation EBITDA jumped on 61.7% and EBITDA Margin showed almost no change
03/08/2018 • About Tech Data Corporation (
$TECD) • By InTwits
Tech Data Corporation reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 1.7% in FY2018 vs. 1.4% in FY2017 vs. 1.1% in FY2014
- Tech Data Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.2%.
- In the last 5 years the company invested considerably less than D&A: $272m vs. $403m
- The company has business model with average profitability: ROIC is 10.0%
- It operates with high leverage: Net Debt/EBITDA is 1.2x while industry average is 0.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 38.9%. Revenue growth showed acceleration in FY18Q4 - it increased 86.3% YoY. During the last 5 years Revenue growth bottomed in FY2017 at -8.3%. EBITDA Margin showed almost no change in FY2018.
Gross Margin increased slightly on 0.92 pp from 5.4% to 6.3% in FY2018. During FY2014-FY2018 Gross Margin bottomed in FY2016 at 4.9% and was growing since that time. SG&A as a % of Revenue increased slightly on 0.72 pp from 4.1% to 4.8% in FY2018. During the last 5 years SG&A as a % of Revenue bottomed in FY2016 at 3.8% and was growing since that time. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018. SBC as a % of Revenue was relatively stable in FY2014-FY2018.
Net Income margin showed almost no change in FY2018. The efficient tax rate was 61.0% in FY2018 while the average for the last five years was 32.5%.
Investments (CAPEX, working capital and M&A)
Tech Data Corporation's CAPEX/Revenue was 0.57% in FY2018. Tech Data Corporation showed small growth in CAPEX/Revenue of 0.50 pp from 0.067% in FY2015 to 0.57% in FY2018. Average CAPEX/Revenue for the last three years was 0.25%. CAPEX as a % of Revenue followed a growing trend in the last 5 years.
Accounts receivable as a % of Revenue increased on 5.4 pp from 12.6% to 18.0% in FY2018. Inventories as a % of Revenue showed almost no change at 8.8% in FY2018. Accounts payable as a % of Revenue increased on 5.3 pp from 16.8% to 22.1% in FY2018.
Tech Data Corporation has spent
$2,250m on M&A in FY2018 which accounts for 6.7% of revenue.
Return on investment
The company operates at low ROIC (10.0%) and ROE (4.6%). ROIC showed almost no change in FY2018. ROE decreased on 4.8 pp from 9.3% to 4.6% in FY2018.
Leverage (Debt)
Debt level is 1.2x Net Debt / EBITDA and 2.9x Debt / EBITDA. Net Debt / EBITDA jumped on 3.4x from -2.2x to 1.2x in FY2018. Debt surged on 20.2% while cash dropped on 55.0%.
Tech Data Corporation has no short term refinancing risk: cash is higher than short term debt (720.4%).
Valuation and dividends
The company's trades at EV/EBITDA 7.1x and P/E 28.2x.
Management team
CEO total compensation was
$7,337,307 in FY2018 which included
$1,345,355 salary and
$1,000,000 annual bonus. Charles V Dannewitz is a Tech Data Corporation's CFO. Charles V Dannewitz has spent 4 years at the company.
Insider ownership is 1.6%. Insider ownership didn't change in 2018.
At the end of financial year the company had 14,000 employees. The number of employees jumped on 47.4%. Average revenue per employee in FY2018 was
$2,399,846 and it decreased on 5.8%.
Financial and operational results
FY ended 01/31/2018
Tech Data Corporation ($TECD) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 26,822 | 27,671 | 26,380 | 24,194 | 33,598 | 38.9% |
| Gross Profit | 1,362 | 1,394 | 1,287 | 1,302 | 2,116 | 62.5% |
| SG&A | 1,117 | 1,114 | 991 | 984 | 1,609 | 63.5% |
| EBITDA | 300 | 336 | 459 | 346 | 560 | 61.7% |
| EBIT | 228 | 268 | 401 | 292 | 410 | 40.5% |
| Interest expence | 27 | 27 | | | | |
| Tax | 24 | 64 | 117 | 62 | 182 | 195.9% |
| Net Income | 180 | 175 | 266 | 195 | 117 | -40.2% |
| Stock Based Compensation | 8 | 13 | 15 | 14 | 29 | 110.7% |
Balance Sheet
|
|---|
| Cash | 570 | 543 | 531 | 2,126 | 956 | -55.0% |
| Accounts Receivable | 3,216 | 2,812 | 2,995 | 3,048 | 6,036 | 98.0% |
| Inventory | 2,451 | 1,960 | 2,117 | 2,119 | 2,966 | 40.0% |
| Accounts Payable | 3,959 | 3,120 | 3,428 | 3,845 | 6,962 | 81.1% |
| Short Term Debt | 43 | 13 | 18 | 373 | 133 | -64.4% |
| Long Term Debt | 354 | 352 | 349 | 990 | 1,505 | 52.1% |
Cash flow
|
|---|
| Capex | 16 | 19 | 21 | 25 | 192 | 669.8% |
| Acquisitions | -6 | | 28 | 3 | 2,250 | 77,055.3% |
Ratios
|
|---|
| Revenue growth | 5.8% | 3.2% | -4.7% | -8.3% | 38.9% | |
| EBITDA growth | -6.7% | 11.9% | 36.4% | -24.5% | 61.7% | |
|
|---|
| Gross Margin | 5.1% | 5.0% | 4.9% | 5.4% | 6.3% | 0.9% |
| EBITDA Margin | 1.1% | 1.2% | 1.7% | 1.4% | 1.7% | 0.2% |
| EBIT Margin | 0.8% | 1.0% | 1.5% | 1.2% | 1.2% | 0.0% |
| SG&A, % of revenue | 4.2% | 4.0% | 3.8% | 4.1% | 4.8% | 0.7% |
| SBC, % of revenue | 0.0% | 0.0% | 0.1% | 0.1% | 0.1% | 0.0% |
| Net Income Margin | 0.7% | 0.6% | 1.0% | 0.8% | 0.3% | -0.5% |
| CAPEX, % of revenue | 0.1% | 0.1% | 0.1% | 0.1% | 0.6% | 0.5% |
|
|---|
| ROIC | 9.0% | 10.9% | 17.0% | 9.9% | 10.0% | 0.2% |
| ROE | 9.0% | 8.6% | 13.4% | 9.3% | 4.6% | -4.8% |
| Net Debt/EBITDA | -0.6x | -0.5x | -0.4x | -2.2x | 1.2x | 3.4x |
| Interest expence / Average debt | 6.7% | 7.0% | | | | |
People
|
|---|
| Insider ownership | 1.6% | 1.6% | 1.6% | 1.6% | 1.6% | 0.0% |
| Employees | 9,100 | 8,900 | 9,000 | 9,500 | 14,000 | 47.4% |
| Revenue/Employee, th. $ | 2,947 | 3,109 | 2,931 | 2,547 | 2,400 | -5.8% |
Tech Data Corporation ($TECD) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 7,024 | 8,092 | 8,448 | 10,033 | | 17.8% | 27.4% | 30.2% | 86.3% |
| EBITDA | 107 | 142 | 122 | 189 | | 60.3% | 62.9% | 60.4% | 62.5% |
| Net Income | 31 | 47 | 37 | 1 | | -8.1% | 2.3% | 2.1% | -98.4% |
Balance Sheet
|
|---|
| Cash | 862 | 1,033 | 563 | 956 | | 4.3% | 48.2% | -18.6% | -55.0% |
| Short Term Debt | 486 | 465 | 113 | 133 | | 2,610.1% | 3,496.9% | -69.0% | -64.4% |
| Long Term Debt | 1,800 | 1,803 | 1,806 | 1,505 | | 415.9% | 416.5% | | 52.1% |
Ratios
|
|---|
| Gross Margin | 6.5% | 6.4% | 6.2% | 6.1% | | 1.5% | 1.4% | 1.4% | -0.7% |
| EBITDA Margin | 1.5% | 1.8% | 1.4% | 1.9% | | 0.4% | 0.4% | 0.3% | -0.3% |
| Net Income Margin | 0.4% | 0.6% | 0.4% | 0.0% | | -0.1% | -0.1% | -0.1% | -1.5% |
Peers in Technology Distributors
Below you can find Tech Data Corporation benchmarking vs. other companies in Technology Distributors industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| EACO Corp ($EACO) | | 4.1% | 5.9% | 5.7% | 23.1% |
| Richardson Electronics, Ltd. ($RELL) | | -0.7% | 3.7% | -3.6% | 19.2% |
| Synnex Corporation ($SNX) | | -3.6% | 5.4% | 21.2% | 17.6% |
| Wayside Technology Group, Inc. ($WSTG) | | 12.1% | 9.4% | -61.6% | 13.0% |
| Arrow Electronics, Inc. ($ARW) | | 2.3% | 0.9% | 13.1% | 11.8% |
| |
|---|
| Median (16 companies) | | 4.5% | 5.3% | 5.7% | 8.3% |
|---|
| Tech Data Corporation ($TECD) | | 3.2% | -4.7% | -8.3% | 38.9% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Taitron Components Incorporated ($TAIT) | 25.4% | 31.1% | -10.8% | 39.4% | 44.0% |
| Richardson Electronics, Ltd. ($RELL) | 29.7% | 30.0% | 31.6% | 32.1% | 33.7% |
| EACO Corp ($EACO) | 27.5% | 29.3% | 29.3% | 28.5% | 28.5% |
| Surge Components Inc ($SPRS) | 24.5% | 25.0% | 25.2% | 25.2% | 25.6% |
| ADDvantage Technologies Group, Inc. ($AEY) | 32.3% | 35.0% | 32.2% | 30.4% | 23.7% |
| |
|---|
| Median (16 companies) | 15.9% | 16.3% | 14.2% | 16.9% | 16.3% |
|---|
| Tech Data Corporation ($TECD) | 5.1% | 5.0% | 4.9% | 5.4% | 6.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Taitron Components Incorporated ($TAIT) | -8.6% | -3.2% | -39.0% | 13.0% | 19.2% |
| CDW Corporation ($CDW) | 7.3% | 7.5% | 7.7% | 7.6% | 7.7% |
| ePlus inc. ($PLUS) | 7.3% | 7.5% | 7.6% | 7.3% | 7.1% |
| EACO Corp ($EACO) | 4.0% | 4.5% | 4.7% | 4.5% | 5.9% |
| Surge Components Inc ($SPRS) | 2.8% | 3.8% | -1.5% | 1.2% | 4.8% |
| |
|---|
| Median (16 companies) | 3.2% | 3.5% | 3.6% | 3.8% | 4.1% |
|---|
| Tech Data Corporation ($TECD) | 1.1% | 1.2% | 1.7% | 1.4% | 1.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Richardson Electronics, Ltd. ($RELL) | 2.0% | 3.5% | 3.4% | 3.8% | 3.2% |
| ePlus inc. ($PLUS) | 0.9% | 1.0% | 2.1% | 1.5% | 1.0% |
| EACO Corp ($EACO) | 0.6% | 0.4% | 0.3% | 5.5% | 0.8% |
| Avnet, Inc. ($AVT) | 0.4% | 0.6% | 0.8% | 0.7% | 0.8% |
| PC Connection, Inc. ($CNXN) | 0.3% | 0.5% | 0.4% | 0.4% | 0.8% |
| |
|---|
| Median (16 companies) | 0.5% | 0.6% | 0.4% | 0.5% | 0.5% |
|---|
| Tech Data Corporation ($TECD) | 0.1% | 0.1% | 0.1% | 0.1% | 0.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Surge Components Inc ($SPRS) | 6.7% | 9.5% | -4.0% | 3.9% | 24.6% |
| CDW Corporation ($CDW) | 16.5% | 17.3% | 18.8% | 20.1% | 23.1% |
| EACO Corp ($EACO) | 19.6% | 21.8% | 22.2% | 16.1% | 21.2% |
| ePlus inc. ($PLUS) | 20.1% | 21.0% | 21.5% | 22.8% | 20.8% |
| Insight Enterprises, Inc. ($NSIT) | 17.0% | 17.4% | 20.7% | 19.3% | 20.0% |
| |
|---|
| Median (17 companies) | 13.6% | 12.1% | 12.1% | 11.5% | 11.8% |
|---|
| Tech Data Corporation ($TECD) | 9.0% | 10.9% | 17.0% | 9.9% | 10.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Synnex Corporation ($SNX) | 2.0x | 0.9x | 1.2x | 2.1x | 3.9x |
| Anixter International Inc. ($AXE) | 3.2x | 4.7x | 3.6x | 3.0x | 3.1x |
| ScanSource, Inc. ($SCSC) | -1.4x | -0.9x | 0.2x | 0.6x | 2.5x |
| CDW Corporation ($CDW) | 3.2x | 3.3x | 2.8x | 2.7x | 2.4x |
| Arrow Electronics, Inc. ($ARW) | 1.8x | 2.2x | 2.2x | 2.3x | 2.2x |
| |
|---|
| Median (15 companies) | 0.1x | -0.2x | 0.7x | 1.2x | 0.5x |
|---|
| Tech Data Corporation ($TECD) | -0.6x | -0.5x | -0.4x | -2.2x | 1.2x |
