Technology distributor Tech Data (TECD 90.74, -3.06) is lower by 3.3% despite beating earnings estimates for the fourth quarter.
The company reported above-consensus earnings of $2.45 per share on a 0.7% year-over-year decline in revenue to $7.43 billion, which was just below estimates. In addition to reporting earnings, the company noted that it will not be providing guidance for the first quarter due to a short timeframe between the company's earnings release date and the completion of its acquisition of Avnet's Technology Solutions business.
Tech Data expects to realize $50 million in cost savings in the first 12 months after closing of the acquisition and $100 million during the second full year. The company expects to incur one-time costs associated with the planned cost saving measures.
Sales in the Americas were little changed at $2.70 billion (36.0% of net sales) while sales in Europe fell 1.0% to $4.70 billion (64.0% of net sales). The decline in European sales was softened by a favorable exchange rate, which improved the reported rate of decline by two percentage points.
Gross margin improved to 5.00% from 4.74% while non-GAAP operating income increased 5.0% year-over-year to $122.10 million. Fourth quarter operating income represented 1.64% of net sales, up from 1.56% of net sales one year ago.
Shares of Tech Data probed a fresh all-time high before reversing. Even with today's decline, the stock is still up 6.0% for the year versus a 5.9% gain in the S&P 500. For reference, the technology sector has climbed 10.6% so far this year.