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Tech Data Corporation
Bob Dutkowsky
CEO
Nasdaq 34th Investor Program
Non-GAAP Financial Information
This document includes financial results prepared in accordance with generally accepted accounting principles (“GAAP”). In addition to GAAP
results, Tech Data management believes that the presentation of non-GAAP financial measures is useful to investors because it provides
investors with a more complete understanding of our operational results and a meaningful comparison of our performance between periods.
The non-GAAP results should only be used in conjunction with results reported in accordance with GAAP and are not intended to be a
substitute for results reported in accordance with GAAP. Non-GAAP financial measures presented in this presentation or other presentations,
press releases and similar documents issued by Tech Data, include but are not limited to sales, income or expense items as adjusted for the
impact of changes in foreign currencies (referred to as “constant currency”) , sales adjusted for the impact of the exit of certain country
operations, non-GAAP selling, general and administrative expenses (“SG&A”), non-GAAP operating income, non-GAAP operating margin,
non-GAAP net income, non-GAAP earnings per diluted share and Return on Invested Capital. These non-GAAP financial measures do not
have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by comparable companies.
Management may also use these non-GAAP financial measures to establish operational goals and, in some cases, for measuring
performance for compensation purposes. This presentation provides a detailed reconciliation between results reported in accordance with
GAAP and non-GAAP financial measures
Forward-Looking Statements
Certain statements made in this document are “Forward-Looking Statements” as described in the Private Securities Litigation Reform Act of 1995.
These statements are subject to risks and uncertainties further described in Tech Data Corporation’s (the “Company”) Annual Report on Form 10-K
filed March 24, 2016, a copy of which can be obtained from the Company’s Investor Relations website at www.techdata.com/investor. A number of
important factors, some of which are beyond the Company’s control, could cause actual events and results to differ materially from those contained in
or implied by the forward-looking statements. Forward-looking statements reflect management's analysis as of the filing date of this presentation. The
Company does not undertake to update or revise these statements to reflect subsequent developments.
2
Tech Data Today
• One of the world’s largest distributors of technology products ‒ #1 overall market position in Europe
#1 Broadline Distributor #1 Value Distributor #1 Mobility Distributor
‒ Leading market position in North America
• An indispensable link in the IT supply chain ‒ Hundreds of thousands of products sold through 105,000+ value added resellers (VARs), direct marketers, retailers
• An end-to-end portfolio of IT product and service offerings ‒ Strategic focus areas aligned with IT megatrends
• Solid EPS growth, cash flow generation and ROIC ‒ Strong, low-risk balance sheet, excellent liquidity
• Balanced approach to capital allocation ‒ Organic growth initiatives, selective M&A, share repurchases
3
Strategic Link in the IT Ecosystem
Vendor Strength: • Innovation through R&D
• Serving enterprise customers and consumers
through big box retailers
Vendor Challenge: • Reaching highly fragmented markets
4
Enterprise
Consumer
SMB
Indispensable Link in the IT Ecosystem
ONE-STOP SHOPPING FOR OUR CUSTOMERS
AN EFFICIENT ROUTE TO MARKET FOR OUR VENDORS
End-User customers
Resellers Direct Marketers
Retailers
Product
Availability
Multi-vendor
solutions
Technical
Support
Financing /
Inventory Mgmt
Marketing Support
5
Variable-Cost
Route to Market
Access to
Fragmented Mkt
World Class
Logistics
Integrated
Supply Chain
Cloud Aggregation
Where We Operate
Europe
61% of FY’16 Sales
18 Countries
11 Logistic Centers
North America
39% of FY’16 Sales
3 Countries
11 Logistic Centers
6
$6 billion
FY’16
$26 billion
FY’16
Fiscal year ended January 31, 2016
Assets Sales
Operating
Income (1)
(non-GAAP)
Americas
33%
Europe
67%
Americas
39%
Europe
61%
Americas
42%
Europe
58%
Regional Operating Mix
(1) Excluding stock compensation
7
$334 million
FY’16
$6 billion
Q1 FY’17
$6 billion
Q1 FY’17
Quarter ended April 30, 2016
Assets Sales
Operating
Income (1)
(non-GAAP)
Americas
32%
Europe
68%
Americas
40%
Europe
60%
Americas
55%
Europe
45%
Regional Operating Mix
(1) Excluding stock compensation
8
$56 million
Q1 FY’17
22 strategically-located distribution centers • ~ 95% of worldwide sales on SAP
• ~ $100 million of orders processed daily
• Average order size ~ $2,000
Competitive advantage focused on delivering excellent execution
70% of orders received electronically
IT Systems and value-added
services that provide flexibility
and strengthen channel
partnerships
Broadline
Data Center Solutions
Software & Cloud
Aggregation
Mobility
Consumer Electronics
Integrated Supply
Chain Solutions
Expand product and customer
portfolios to leverage
infrastructure and improve
profitability
A Consistent Strategy
9
10
47% 22% 18% 10%
$4.7B
$200+M annual cloud
run-rate
$5.9B
#1 market position in
Europe & leading
position in the
Americas
$2.8B
#1 market position in
Europe
(by revenue)
3%
$700M
~$5B
~$6B
~$3B ~$1B
Integrated Supply Chain Services
~$12B
Strategic Focus Areas Aligned with IT Megatrends
Notebooks
Tablets
Desktops
Printers & Supplies
Components
Virtualization
Security
Desktop Applications
Operating Systems
Utilities Software
Mobile Phones
Accessories
Activations
Mobile Device Management
TVs
Consumer A/V Devices
Network-Attached
Consumer Devices
Networking
Storage
Industry Standard Servers
Converged Infrastructure
Value-Added Services
Broadline Data
Center
Software
& Cloud
Mobility Consumer
Electronics
Company estimates for the 12-months ended April 30, 2016.
10
11
Broadline
~$12B
(Q1 FY’17
TTM Sales)
Notebook
Tablet
Ultrabook
Tablet PC
Desktop
• #1 market position in Europe
• Volume Engine
• Successfully navigating the ever-
evolving IT market landscape
• 40+ year history of adapting and
capitalizing on emerging trends
& shifting demand
Cycle Driven
by OEM
Innovation
Data Center
~$3.7
$2.9
$2.7
Europe Data Center Hardware and Software Sales (TTM, $B)
• #1 market position in Europe &
#3 in the Americas
• 12% CAGR (FY’07 – Q1 FY’17 TTM)
• Accelerating the Data Center
Through
• Networking Security and Collaboration
• Industry Standard and Proprietary Servers
• Virtualization and Software Defined Networks
• Converged Infrastructure
• Enabling Cloud Solutions
Data Center
Hardware & Software
sales
Arrow - ECS
Avnet - TS
Tech Data
~$3.8
$5.9
$6.1
The Americas Data Center Hardware and Software Sales (TTM, $B)
Arrow - ECS
Avnet - TS
Tech Data
~$7.5B
(Q1 FY’17
TTM Sales)
12
Software & Cloud
~$5B
(Q1 FY’17
TTM Sales)
•Low capital-intensive software drives
operating income $ and ROIC
•TDCloud:
• Growing ~100% annually
• Scalability through multi-vendor technology solutions offered through a menu of web services for portable digital processes
• Recurring revenue stream
• TDCloud powered by
Physical Virtual
Traditional Software Sales
Cloud Commerce
• Software licenses
• Renewals
• Multi-vendor provisioning
• Technical Support
• API integration of cloud
solutions
• Aggregation & marketplace
• Pre-packaged, multi-vendor
bundled products
• Consumption and operating
metrics
• White label storefronts
• Assessments and Migration
• Consolidated, simplified
billing
• Business tracking and
analytics
• Recurring billing
~$7B
Data Center
Hardware &
Software
13
Mobility
~$3B
(Q1 FY’17
TTM Sales)
•#1 market position in Europe
•Launched 2007 as a greenfield JV
• Investing to grow a differentiated
model in the Americas
•Diversified Product & Services
Portfolio
• Mobile Phones
• Accessories
• Activations
• Mobile Device Management
$0
FY’07
$1.6B FY’12
~$3B Q1 FY’17
TTM
14%
CAGR FY12 – Q1 FY’17
TTM
Data Center
Hardware &
Software
Mobility Sales
14
Consumer Electronics
~$1B
(Q1 FY17
TTM Sales)
15
~$7B
Data Center
Hardware &
Software
• The Internet of Things opens
up significant opportunities
• New products / vendors /
customers
• Disruptive technologies
Cisco’s Estimate of Connected Devices
Integrated Supply Chain Services
16
Data Center
Hardware &
Software
Warehousing &
Distribution
Logistics &
Transportation
Management
E-Commerce Order
Management
• Market Demand Planning
• Geographic Product Placement Planning
• Financial Clearinghouse Services
• Reverse Logistics
Beyond 3PL
• Customer Care
• Credit and Collections
• Call Center – inbound and outbound
Traditional 3PL
End-to-end supply chain support guided by consultative solutions
Value-Added Services offered to our Reseller Customers
17
Financing Tech Data Credit and Third-party Financing Options
Integration Services Product Assembly / Configuration / Customization
Technical Training and Certification / Pre-Sales Support / Product Support Tools / Onsite Maintenance and Installation
Marketing Creative Campaigns / Web and E-marketing / Events / Video Strategic Outreach / Demand Generation
Logistics Fulfillment / Drop Ship / Pick Up / Same-Day Shipping ``````````
Professional Services Data Center Maintenance, Consulting & Staff Augmentation
Financial Metrics that Drive Tech Data
Select Market Share Gains
Gross Profit $ | Operating Income $
Earnings Per Share
Cash Flow Generation
Return on Invested Capital
$
18
Worldwide Financial Highlights – Q1 FY’17
In Fiscal 16, we achieved all our stated annual financial objectives:
Gained share in select markets
Grew earnings in local currency
Generated positive cash flow
Earned ROIC above WACC
1% in US$
2% in CC*
15% in US$
31% in US$
Sales Non-GAAP
Operating Income Non-GAAP
EPS
* In constant currency and adjusted for sales generated in the prior-year quarter in Chile, Peru and Uruguay due to the Company’s exit from those countries.
GAAP to non-GAAP reconciliation available at www.techdata.com/investor
Solid execution delivers excellent results
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$6 billion $57.6 million $1.05
Regional Financial Highlights – Q1 FY’17
The Americas The Americas Europe
⁽¹⁾ In constant currency and adjusted for sales generated in the prior-year quarter in Chile, Peru and Uruguay due to the Company’s exit from those countries. (2) Regional operating income and margin exclude stock compensation expense. Reconciliation of GAAP to non-GAAP financial measures available at www.techdata.com/investor
Sales Non-GAAP
Operating Income(2)
2% in US$
4% in CC(1)
29% in US$
Sales Non-GAAP
Operating Income(2)
1% in US$
1% in CC
1% in US$
20
$2.4 billion $31 million $3.6 billion $30 million
• Counter cyclical balance sheet positively impacts cash flow during down sales cycles
21
Cash Flow from Operations $
$319 Million
$119 Million
$189 Million
$276 Million
FY'14 FY'15 FY'16 Q1 FY'17
22
Strong, Low-risk Balance Sheet $
16% 16% 15% 15%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
FY'14 FY'15 FY'16 Q1 FY'17
Debt $398 $365 $367 $367
Equity $2,099 $1,960 $2,006 $2,135
Debt to TotalCapital ratio
16% 16% 15% 15%
Debt: • Investment-grade debt ratings from S&P
and Moody’s Low-risk profile: Accounts Receivable: • Wide and diverse customer base - no
customers exceed 10% of sales • Large portion of European A/R insured
through credit insurance
Inventory: • Many vendor agreements allow for stock
rotation and price protection
$ in millions
10% 11% 13% 14%
FY'14 FY'15 FY'16 Q1 FY'17ttm
• Estimated Weighted Average
Cost of Capital: ~ 9% (2)
23
Return on Invested Capital (1) $
(1) Reconciliation of ROIC calculation available at www.techdata.com/investor
(2) Source: Bloomberg, May 20, 2016.
• Worldwide SAP
platform
• Data Center
• Mobility
• ISCS
• Value-Added Services
• Software & Cloud
Solutions
Balanced Capital Allocation $
Return of Capital
to Shareholders
Selective M&A Organic Growth
Initiatives
• $1.3 billion in share
repurchases since
FY’06
• Returned nearly half of
Free Cash Flow to
shareholders through
share buybacks since
FY’06
• Invested ~$900
million in 18
acquisitions since
FY’08
• 16 of 18 acquisitions
in Europe
24
Tech Data In Summary
Solid EPS Growth, Cash Flow Generation and ROIC
Strong, Low-risk Balance Sheet and Flexible Capital Structure
End-to-End Portfolio Diversified Across Geographies, Customers & Products
Deep Vendor Relationships
One Worldwide IT Platform
25