IT products distributor Tech Data Corp. (TECD) Monday reported a profit for the third quarter that more-than doubled from last year, mainly reflecting lower foreign currency exchange losses. Meanwhile, net sales declined from the prior year, as Americas and Europe experienced softened demand environment, yet sales beat market projections. Looking ahead, the Clearwater, Florida-based company said it expects low-to-mid single digit sales growth in the fourth quarter.
Third-quarter net income attributable to shareholders of Tech Data surged 157% to $43.14 million or $0.84 per share, from $16.80 million or $0.33 per share last year.
On average, nine analysts polled by Thomson Reuters expected the company to report earnings of $0.71 per share for the quarter. Analysts' estimates typically exclude special items.
For the latest third quarter, the company recorded $962 thousand in net foreign currency exchange losses, while prior year results were affected by a $23.49 million foreign currency exchange loss related to extreme foreign currency volatility and the use of certain portions of inventory as a hedge against foreign currency exposures in accounts payable.
The company also said its prior year results were adjusted to reflect a new standard by the Financial Accounting Standards Board that changes the accounting treatment for convertible debt instruments.
In its preceding second quarter, Tech Data's net income attributable to shareholders of the company was $35.16 million or $0.70 per share.
Net sales for the third quarter declined 8.1% to $5.64 billion from $6.14 billion in the same quarter last year, yet beat seven Wall Street analysts' consensus estimate of $5.33 billion. The company noted that the drop in revenues reflected some moderation in the overall decline in IT spending.
The strengthening of certain foreign currencies against the U.S. dollar positively impacted third-quarter net sales comparison by about two percentage points.
Sequentially, net sales for the third quarter increased 8.8% from $5.18 billion from the second quarter, with about three percentage points growth from stronger foreign currencies.
Tech Data was projecting third-quarter sales to decline year-over-year, but with some moderation compared to the decline in the first half of the fiscal year. The estimated decline was due to the current economic environment and related decline in IT spending, combined with the potential strengthening of the U.S. dollar against certain foreign currencies.
On a geographical basis, net sales in the Americas, including North America and Latin America, fell 10.9% year-over-year to $2.46 billion, or 44% of worldwide net sales. Net sales in Europe totaled $3.18 billion, or 56% of worldwide net sales, representing a decrease of 5.7% from last year, and the sales decline was 9% on a euro basis. The company attributed the decline in net sales in both regions to the softened demand environment.
Tech Data's gross profit edged down to $296.57 million from $297.97 million a year ago, while gross margin rose to 5.26% from last year's 4.86%, mainly attributable to solid execution of the company's inventory, pricing and freight management practices.
Operating income for the third quarter, however, grew to $66.03 million, or 1.17% of net sales, from $59.09 million, or 0.96% of net sales, a year ago, helped by decline in selling, general and administrative expenses to $230.54 million from prior year's $238.88 million. Operating income in the Americas was $39.3 million, compared to $38.8 million, in the prior year. In Europe, the company generated operating income of $29.7 million, compared to $23.4 million last year.
Commenting on the results, Robert Dutkowsky, chief executive officer, stated, "Tech Data continues to execute very well in a challenging environment. Our third-quarter results exceeded our expectations for the fourth consecutive quarter, validating the power of our business model and the strength of our leadership team. The continued expansion of our IT solutions portfolio combined with disciplined pricing, cost control and working capital management practices delivered an improved operating margin and an exceptional return on capital employed of 14.5% for the quarter."
Among others in the sector, Ingram Micro Inc. (IM) in late October reported a dip in third quarter earnings, as revenues declined from last year, impacted by the weakened global economies. The Santa Ana, California-based IT products distributor's net income declined to $42.31 million or $0.25 per share from $46.37 million or $0.27 per share in the previous year quarter. Net sales for the quarter decreased to $7.385 billion from $8.284 billion a year ago, as sales continue to be impacted by the weakened global economies coupled with internal efforts to adjust the business mix toward more profitable accounts.
In September, Synnex Corp. (SNX), a Fremont, California-based business process service provider, reported an increase in third quarter net income to $23.08 million or $0.67 per share from $22.06 million or $0.66 per share a year ago on lower expenses. Revenues for the quarter, meanwhile, declined 1.88% to $2.01 billion from $2.05 billion last year.
For the November ending fourth quarter, Synnex expects net income in the range of $25.1 million to $26.1 million and earnings per share in the range of $0.72 to $0.75, on revenues between $2.025 billion to $2.125 billion. Wall Street currently expects earnings of $0.76 per share for the quarter, on revenues of $2.11 billion.
For the nine months ended October 31, Tech Data's net income attributable to shareholders of the company was $110.06 million or $2.17 per share, higher than last year's $60.28 million or $1.16 per share. Net sales were $15.82 billion, down 13.9% from $18.37 billion a year ago. The strengthening of the U.S. dollar against certain foreign currencies negatively impacted the net sales by approximately five percentage points. Net sales in the Americas decreased 14.5% to $7.1 billion, and in the Europe fell 13.4% to $8.7 billion. Operating income was $169.65 million, or 1.07% of net sales, compared to $143.61 million, or 0.78% of net sales, last year.
Looking ahead, Tech Data projects net sales for the fourth quarter to increase in the low-to-mid single digit range from last year, assuming the recent signs of improving IT demand continue, as well as the strength of certain foreign currencies against the U.S. Dollar. Analysts expect revenues of $5.65 billion for the fourth quarter, representing a 1.2% drop from last year.
Dutkowsky added, "Although the magnitude and timing of an economic recovery remain uncertain, there are clearly signs of an improving outlook. In our 35 years of serving the distribution channel, we've weathered many economic and IT spending cycles while continuing to invest in our business for the long-term. Our performance this year is a testament to our strength and Tech Data is well-positioned to continue to prosper in the future."
TECD closed Friday's regular trading session at $42.82, up $1.31, on a volume of 976,600 shares. In the past 52 weeks, shares have been trading in a broad range of $14.14 to $44.63.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.