Julien Eichinger - stock.adobe.c

Tech Data shares final FY numbers before Apollo takes off

Global distributor Tech Data has released the last set of full year results before it changes ownership in a few months

Tech Data has shared it last set of full-year results before it changes ownership, with the distributor continuing to move towards higher margin business.

For the year ended 31 January, the channel player reported a 1% drop in net sales at $37bn. Fourth-quarter revenues were down by the same margin at $10.38bn.

In Europe, the numbers were down by 4% for the financial year (FY) at $19.1bn, and in the fourth quarter net sales were $5.8bn, a decrease of 2% compared to the prior year quarter. The European business is the largest contributor, accounting for 52% of global sales.

The firm has been following a four-pronged approach: investing in next generation technologies, strengthening the end-to-end portfolio, transforming its business digitally, and optimising its global footprint.

During the firm’s third quarter, it announced plans to acquire DLT Solutions, a software and cloud solutions aggregator focused on the US public sector as part of the strategy to deliver higher value and increase the expertise in next-generation technologies.

The progress of those moves to gain higher margin opportunities could be seen with the net income numbers.

Net income for the year increased by 10% to $374.5m, and in the fourth quarter improved by 28% to $149.1m.

Towards the end of 2019, Apollo Global Management tabled a bid for Tech Data, initially offering $5.4bn before upping that to $6bn to fend off a rival suitor. The distributor’s board backed the deal in February, and it should close in the first half of this year.

As a result of that imminent change in ownership, the distributor opted not to add too much commentary around the results, swerving an earnings call or the usual practice of providing some forward-looking guidance, instead simply providing some comments from Tech Data CEO Rich Hume.

He made reference to the Apollo acquisition, describing the results as capping “a momentous year for Tech Data”.

“For the fiscal year 2020, we delivered a strong financial performance while making strategic progress and continuing to deliver higher value to our channel partners, colleagues and shareholders,” he said.

“We ended the year by reaching our biggest milestone yet – the agreement to be acquired by Apollo. We look forward to completing the transaction and working with the Apollo team to accelerate investments in our business,” he added.

The Apollo deal is still awaiting regulatory approval, but the expectation is that it will close in the next few months and Hume will remain at the helm of Tech Data, retaining his CEO position.

Higher value for Tech Data

Tech Data’s CEO Rich Hume has been following a strategy of looking for higher value since he took up the appointment in June 2018.

Speaking to analysts this time last year, he outlined the strategy: “Fiscal ‘19 was a year of strategic progress. As you may recall, our four-pillar strategy includes investing in next-generation technologies, strengthening our end-to-end portfolio, transforming Tech Data digitally, and optimising our global footprint. We summarise our strategy as moving to higher value.

“Tech Data’s position at the centre of the IT channel positions us to serve both traditional and born-in-the-cloud vendors and global network of conventional customers, as well as new customers such as ISVs [independent software vendors] and MSPs [managed service providers],” he added.

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