EX-99.1 2 snx-ex991_6.htm EX-99.1 snx-ex991_6.htm

Exhibit 99.1

 

 

 

SYNNEX Corporation Reports Third Quarter Fiscal 2019 Results

 

Fremont, Calif., - September 24, 2019 - SYNNEX Corporation (NYSE: SNX), a leading business process services company, today announced financial results for the fiscal third quarter ended August 31, 2019.

 

 

 

 

Q3 FY19

 

 

Q3 FY18(2)

 

 

Net change

Revenue ($M)

 

$

6,204

 

 

$

4,822

 

 

28.6%

 

 

Operating income ($M)

 

$

208.9

 

 

$

113.8

 

 

83.5%

 

 

Non-GAAP operating income ($M)(1)

 

$

270.5

 

 

$

159.6

 

 

69.5%

 

 

Operating margin

 

 

3.37

%

 

 

2.36

%

 

101 bps

 

 

Non-GAAP operating margin(1)

 

 

4.36

%

 

 

3.31

%

 

105 bps

 

 

Net income ($M)

 

$

123.1

 

 

$

66.9

 

 

83.9%

 

 

Non-GAAP net income ($M)(1)

 

$

169.2

 

 

$

99.9

 

 

69.5%

 

 

Diluted earnings per common share ("EPS")

 

$

2.40

 

 

$

1.68

 

 

42.9%

 

 

Non-GAAP Diluted EPS(1)

 

$

3.30

 

 

$

2.51

 

 

31.5%

 

 

 

“Our record performance reflects the continued success of our go-to-market strategies in each business segment,” said Dennis Polk, SYNNEX President and CEO. “In the third quarter, our Technology Solutions revenue and earnings growth were exceptional, while Concentrix delivered another quarter of revenue expansion and superior execution.”

 

Third Quarter Fiscal 2019 Highlights:

Technology Solutions: Revenue was $5.0 billion, up 16.5% from the prior fiscal year third quarter. Operating income was $139 million, or 2.8% of segment revenue, compared to $102 million, or 2.3% of segment revenue, in the prior fiscal year third quarter. Non-GAAP operating income was $150 million, or 3.0% of segment revenue, compared to $117 million, or 2.7% of segment revenue, in the prior fiscal year third quarter.

Concentrix: Revenue was $1.2 billion, up 136.0% from the prior fiscal year third quarter as a result of the Convergys acquisition on October 5, 2018. Operating income was $70 million, or 6.0% of segment revenue, compared to $12 million, or 2.5% of segment revenue in the prior fiscal year third quarter. Non-GAAP operating income was $121 million, or 10.4% of segment revenue, compared to $43 million, or 8.7% of segment revenue, in the prior fiscal year third quarter.

The trailing fiscal four quarters Return on Invested Capital (“ROIC”) was 8.6% compared to 8.4% in the prior fiscal year third quarter. The adjusted trailing fiscal four quarters ROIC was 11.1%.



Fourth Quarter Fiscal 2019 Outlook:

The following statements are based on SYNNEX’ current expectations for the fourth quarter fiscal 2019. Non-GAAP financial measures exclude the impact of acquisition-related and integration expenses, the amortization of intangibles and the related tax effects thereon. These statements are forward-looking and actual results may differ materially.

Revenue is expected to be in the range of $5.85 billion to $6.15 billion.

Net income is expected to be in the range of $136.4 million to $146.9 million and on a non-GAAP basis, net income is expected to be in the range of $180.5 million to $191.0 million.

Diluted earnings per share is expected to be in the range of $2.64 to $2.85 and on a non-GAAP basis, diluted earnings per share is expected to be in the range of $3.50 to $3.70, based on estimated outstanding diluted weighted average shares of 51.1 million.

After-tax amortization of intangibles is expected to be $37.9 million, or $0.73 per share.

After-tax acquisition-related and integration expense is expected to be $6.3 million, or $0.12 per share.

Dividend Announcement

SYNNEX announced today that its Board of Directors declared a quarterly cash dividend of $0.375 per common share. The dividend is payable on October 25, 2019 to stockholders of record as of the close of business on October 11, 2019.

Q3 FY19 Conference Call and Webcast

SYNNEX will be discussing its financial results and outlook on a conference call today at 2:00 p.m. (PT):

Conference ID 1645308

Live call (866) 393-4306 or (734) 385-2616 (Int’l)

Live webcast of the earnings call will be available at http://ir.synnex.com. A replay will be available approximately two hours after the earnings call has concluded.

About SYNNEX

SYNNEX Corporation (NYSE: SNX) is a Fortune 200 corporation and a leading business process services company, providing a comprehensive range of distribution, logistics and integration services for the technology industry and providing outsourced services focused on customer engagement to a broad range of enterprises.  SYNNEX distributes a broad range of information technology systems and products, and also provides systems design and integration solutions. Founded in 1980, SYNNEX Corporation operates in numerous countries throughout North and South America, Asia-Pacific and Europe.  Additional information about SYNNEX may be found online at synnex.com.

About Concentrix

Concentrix, a wholly-owned subsidiary of SYNNEX Corporation (NYSE: SNX), is a technology-enabled global business services company specializing in customer engagement and improving business performance for some of the world’s best brands. Every day, from more than 40 countries and across 6 continents, our staff delivers next generation customer experience and helps companies better connect with their customers. We create better business outcomes and help differentiate our clients through technology, design, data, process,


and people. Concentrix provides services to clients in ten industry verticals: automotive; banking and financial services; insurance; healthcare; technology; consumer electronics; media and communications; retail and e-commerce; travel and transportation and energy and public-sector. We are Different by Design. Visit concentrix.com to learn more.

(1)Use of Non-GAAP Financial Information

In addition to the financial results presented in accordance with GAAP, SYNNEX also uses adjusted selling, general and administrative expenses, non-GAAP operating income, non-GAAP operating margin, adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), non-GAAP net income, and non-GAAP diluted earnings per share, which are non-GAAP financial measures that exclude acquisition-related and integration expenses, restructuring costs, the amortization of intangible assets and the related tax effects thereon.

In fiscal year 2019, non-GAAP net income and non-GAAP diluted earnings per share also exclude a gain upon the settlement of contingent consideration related to the Westcon-Comstor Americas acquisition.

In fiscal year 2018, non-GAAP net income and non-GAAP diluted earnings per share also exclude the impact of an adjustment relating to the enactment of the Tax Cuts and Jobs Act of 2017. This adjustment includes a transition tax on accumulated overseas profits and the remeasurement of deferred tax assets and liabilities to the new U.S. tax rate.

Additionally, SYNNEX refers to growth rates at constant currency or adjusting for the translation effect of foreign currencies so that certain financial results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of SYNNEX’ business performance. Financial results adjusted for currency are calculated by translating current period activity in the transaction currency using the comparable prior year periods’ currency conversion rate. Generally, when the dollar either strengthens or weakens against other currencies, growth at constant currency rates or adjusting for currency will be higher or lower than growth reported at actual exchange rates.

Trailing fiscal four quarters ROIC is defined as the last four quarters’ tax effected operating income divided by the average of the last five quarterly balances of borrowings (excluding book overdraft) and equity, net of cash and cash equivalents in the United States. Adjusted ROIC is calculated by excluding the tax effected impact of acquisition-related and integration expenses, restructuring costs and the amortization of intangibles from operating income and equity and the impact of the contingent consideration gain and the U.S. tax reform adjustment on equity.

SYNNEX also uses free cash flow, which is cash flow from operating activities, reduced by purchases of property and equipment. SYNNEX uses free cash flow to conduct and evaluate its business because, although it is similar to cash flow from operations, SYNNEX believes it is a more conservative measure of cash flows since purchases of fixed assets are a necessary component of ongoing operations. Free cash flow reflects an additional way of viewing SYNNEX’ liquidity that, when viewed with its GAAP results, provides a more complete understanding of factors and trends affecting its cash flows. Free cash flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. For example, free cash flow does not incorporate payments for business acquisitions. Therefore, SYNNEX believes it is important to view free cash flow as a complement to its entire consolidated statements of cash flows.

SYNNEX management uses non-GAAP financial measures internally to understand, manage and evaluate the business, to establish operational goals, and in some cases for measuring performance for compensation purposes. These non-GAAP measures are intended to provide investors with an understanding of SYNNEX’


operational results and trends that more readily enable investors to analyze SYNNEX’ base financial and operating performance and to facilitate period-to-period comparisons and analysis of operational trends, as well as for planning and forecasting in future periods. Management believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. As these non-GAAP financial measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures, and should be read only in conjunction with SYNNEX’ consolidated financial statements prepared in accordance with GAAP. A reconciliation of SYNNEX’ GAAP to non-GAAP financial information is set forth in the supplemental information section at the end of this press release.

(2)Fiscal 2018 third quarter and year-to-date financial statements have been adjusted to reflect the adoption of the new guidance on revenue recognition, on a full retrospective basis. Impact of adoption of the new guidance on the Consolidated Statement of Operations is presented in the supplementary information section at the end of this press release.

Safe Harbor Statement

Statements in this news release regarding SYNNEX Corporation that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may be identified by terms such as believe, foresee, expect, may, will, provide, could and should and the negative of these terms or other similar expressions. These statements, including statements regarding our expectations and outlook for 2019 and the fiscal fourth quarter as to revenue, net income, non-GAAP net income, diluted earnings per share, non-GAAP diluted earnings per share, outstanding diluted weighted average shares, tax rate, after-tax amortization of intangibles, after-tax acquisition-related and integration expenses; effects of the Convergys acquisition; and the anticipated benefits of the non-GAAP financial measures, are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements. These risks and uncertainties include, but are not limited to: general economic conditions and any weakness in information technology and consumer electronics spending; the loss or consolidation of one or more of our significant original equipment manufacturer, or OEM, suppliers or customers; market acceptance and product life of the products we assemble and distribute; competitive conditions in our industry and their impact on our margins; pricing, margin and other terms with our OEM suppliers; our ability to gain market share; variations in supplier-sponsored programs; changes in our costs and operating expenses; changes in foreign currency exchange rates; changes in tax laws; risks associated with our international operations; uncertainties and variability in demand by our reseller and integration customers; supply shortages or delays; any termination or reduction in our floor plan financing arrangements; credit exposure to our reseller customers and negative trends in their businesses; any future incidents of theft; and other risks and uncertainties detailed in our Form 10-K for the fiscal year ended November 30, 2018 and subsequent SEC filings. Statements included in this press release are based upon information known to SYNNEX Corporation as of the date of this release, and SYNNEX Corporation assumes no obligation to update information contained in this press release.

Copyright 2019 SYNNEX Corporation. All rights reserved. SYNNEX, the SYNNEX Logo, CONCENTRIX, and all other SYNNEX company, product and services names and slogans are trademarks or registered trademarks of SYNNEX Corporation. SYNNEX, the SYNNEX Logo, and CONCENTRIX Reg. U.S. Pat. & Tm. Off. DIFFERENT BY DESIGN is a trademark or registered trademark of Concentrix Corporation. Other names and marks are the property of their respective owners.


SYNNEX Corporation

Consolidated Balance Sheets

(currency and share amounts in thousands)

(Amounts may not add due to rounding)

(unaudited)

 

 

August 31, 2019

 

 

November 30, 2018

 

 

 

 

 

 

 

(Adjusted)(1)

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

262,279

 

 

$

454,694

 

Accounts receivable, net

 

 

3,452,976

 

 

 

3,640,496

 

Receivable from vendors, net

 

 

338,315

 

 

 

351,744

 

Inventories

 

 

2,787,159

 

 

 

2,392,559

 

Other current assets

 

 

361,759

 

 

 

323,323

 

Total current assets

 

 

7,202,488

 

 

 

7,162,817

 

Property and equipment, net

 

 

552,904

 

 

 

571,326

 

Goodwill

 

 

2,214,115

 

 

 

2,203,316

 

Intangible assets, net

 

 

1,208,308

 

 

 

1,377,305

 

Deferred tax assets

 

 

89,692

 

 

 

76,508

 

Other assets

 

 

158,819

 

 

 

152,227

 

Total assets

 

$

11,426,327

 

 

$

11,543,498

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Borrowings, current

 

$

571,718

 

 

$

833,216

 

Accounts payable

 

 

2,932,046

 

 

 

3,048,102

 

Accrued compensation and benefits

 

 

366,761

 

 

 

358,352

 

Other accrued liabilities

 

 

694,778

 

 

 

672,635

 

Income taxes payable

 

 

13,379

 

 

 

41,322

 

Total current liabilities

 

 

4,578,681

 

 

 

4,953,627

 

Long-term borrowings

 

 

2,757,021

 

 

 

2,622,782

 

Other long-term liabilities

 

 

299,311

 

 

 

325,119

 

Deferred tax liabilities

 

 

189,504

 

 

 

206,916

 

Total liabilities

 

 

7,824,517

 

 

 

8,108,444

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value, 5,000 shares authorized, no shares issued or outstanding

 

 

 

 

 

 

Common stock, $0.001 par value, 100,000 shares authorized, 52,942 and 52,861 shares issued as of August 31, 2019 and November 30, 2018, respectively

 

 

53

 

 

 

53

 

Additional paid-in capital

 

 

1,534,743

 

 

 

1,512,201

 

Treasury stock, 2,337 and 2,167 shares as of August 31, 2019 and November 30, 2018, respectively

 

 

(165,710

)

 

 

(149,533

)

Accumulated other comprehensive income (loss)

 

 

(235,070

)

 

 

(126,288

)

Retained earnings

 

 

2,467,795

 

 

 

2,198,621

 

Total stockholders' equity

 

 

3,601,810

 

 

 

3,435,054

 

Total liabilities and equity

 

$

11,426,327

 

 

$

11,543,498

 

 

(1) Amounts have been adjusted to reflect the adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), on a full retrospective basis. 


SYNNEX Corporation

Consolidated Statements of Operations

(currency and share amounts in thousands, except per share amounts)

(Amounts may not add due to rounding)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

August 31, 2019

 

 

August 31, 2018

 

 

August 31, 2019

 

 

August 31, 2018

 

 

 

 

 

 

 

(Adjusted)(1)

 

 

 

 

 

 

(Adjusted)(1)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

5,047,968

 

 

$

4,334,755

 

 

$

13,695,725

 

 

$

12,746,591

 

Services

 

 

1,155,690

 

 

 

487,513

 

 

 

3,480,275

 

 

 

1,477,308

 

Total revenue

 

 

6,203,659

 

 

 

4,822,268

 

 

 

17,176,000

 

 

 

14,223,898

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

 

(4,746,197

)

 

 

(4,083,829

)

 

 

(12,876,410

)

 

 

(12,024,111

)

Services

 

 

(731,472

)

 

 

(308,322

)

 

 

(2,196,212

)

 

 

(926,998

)

Gross profit

 

 

725,990

 

 

 

430,117

 

 

 

2,103,379

 

 

 

1,272,790

 

Selling, general and administrative expenses

 

 

(517,135

)

 

 

(316,274

)

 

 

(1,557,906

)

 

 

(923,449

)

Operating income

 

 

208,855

 

 

 

113,843

 

 

 

545,473

 

 

 

349,341

 

Interest expense and finance charges, net

 

 

(42,945

)

 

 

(20,058

)

 

 

(127,695

)

 

 

(53,884

)

Other income (expense), net

 

 

(1,087

)

 

 

(872

)

 

 

19,764

 

 

 

(3,497

)

Income before income taxes

 

 

164,823

 

 

 

92,913

 

 

 

437,542

 

 

 

291,960

 

Provision for income taxes

 

 

(41,691

)

 

 

(25,973

)

 

 

(112,831

)

 

 

(107,181

)

Net income

 

$

123,132

 

 

$

66,940

 

 

$

324,711

 

 

$

184,779

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.41

 

 

$

1.69

 

 

$

6.35

 

 

$

4.64

 

Diluted

 

$

2.40

 

 

$

1.68

 

 

$

6.32

 

 

$

4.61

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

50,601

 

 

 

39,254

 

 

 

50,661

 

 

 

39,483

 

Diluted

 

 

50,845

 

 

 

39,475

 

 

 

50,903

 

 

 

39,730

 

 

(1) Amounts have been adjusted to reflect the adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), on a full retrospective basis. 

 


SYNNEX Corporation

Segment Information

(currency in thousands)

(Amounts may not add due to rounding)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

August 31, 2019

 

 

August 31, 2018

 

 

August 31, 2019

 

 

August 31, 2018

 

 

 

 

 

 

 

(Adjusted)(1)

 

 

 

 

 

 

(Adjusted)(1)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology Solutions

 

$

5,047,970

 

 

$

4,334,767

 

 

$

13,695,729

 

 

$

12,746,673

 

Concentrix

 

 

1,160,928

 

 

 

491,882

 

 

 

3,495,076

 

 

 

1,490,865

 

Inter-segment elimination

 

 

(5,240

)

 

 

(4,382

)

 

 

(14,805

)

 

 

(13,639

)

Consolidated

 

$

6,203,659

 

 

$

4,822,268

 

 

$

17,176,000

 

 

$

14,223,898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology Solutions

 

$

138,830

 

 

$

101,775

 

 

$

352,594

 

 

$

279,926

 

Concentrix

 

 

70,025

 

 

 

12,068

 

 

 

192,879

 

 

 

69,415

 

Consolidated

 

$

208,855

 

 

$

113,843

 

 

$

545,473

 

 

$

349,341

 

 

(1) Amounts have been adjusted to reflect the adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), on a full retrospective basis. 



SYNNEX Corporation

Impact of adoption of Accounting Standards Codification (“ASC”) Topic 606 on Revenue and Earnings

(currency in thousands, except per share amounts)

(Amounts may not add due to rounding)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

August 31, 2019

 

 

August 31, 2018

 

 

August 31, 2019

 

 

August 31, 2018

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue as previously reported

 

 

 

 

 

$

4,906,610

 

 

 

 

 

 

$

14,431,562

 

Impact of adoption of ASC Topic 606

 

 

 

 

 

 

(84,342

)

 

 

 

 

 

 

(207,664

)

Revenue in accordance with ASC Topic 606(1)

 

$

6,203,659

 

 

$

4,822,268

 

 

$

17,176,000

 

 

$

14,223,898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue as previously reported

 

 

 

 

 

$

4,419,109

 

 

 

 

 

 

$

12,954,337

 

Impact of adoption of ASC Topic 606

 

 

 

 

 

 

(84,342

)

 

 

 

 

 

 

(207,664

)

Revenue in accordance with ASC Topic 606(1)

 

$

5,047,970

 

 

$

4,334,767

 

 

$

13,695,729

 

 

$

12,746,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Concentrix

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue as previously reported

 

 

 

 

 

$

491,882

 

 

 

 

 

 

$

1,490,865

 

Impact of adoption of ASC Topic 606

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue in accordance with ASC Topic 606(1)

 

$

1,160,928

 

 

$

491,882

 

 

$

3,495,076

 

 

$

1,490,865

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)Approximate value of transactions offset, in accordance with revenue recognition guidance on Principal versus Agent considerations, in circumstances where SYNNEX assumed an agency relationship, against cost of sales to present the margin earned on these transactions in revenue, with no associated cost of revenue.

 

$

836,000

 

 

$

803,000

 

 

$

2,547,000

 

 

$

2,198,000

 

 

 

 

 

 

 

 

 

 

 

 

 


SYNNEX Corporation

Impact of adoption of Accounting Standards Codification (“ASC”) Topic 606 on Revenue and Earnings

(currency in thousands, except for per share amounts)

(Amounts may not add due to rounding)

(unaudited)

(continued)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

 

August 31, 2018

 

 

August 31, 2018

 

 

Consolidated Statements of Operations

 

As Reported

 

 

As adjusted

 

 

As Reported

 

 

As adjusted

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Products

 

$

4,419,097

 

 

$

4,334,755

 

 

$

12,954,255

 

 

$

12,746,591

 

 

    Services

 

 

487,513

 

 

 

487,513

 

 

 

1,477,308

 

 

 

1,477,308

 

 

Total revenue

 

 

4,906,610

 

 

 

4,822,268

 

 

 

14,431,562

 

 

 

14,223,898

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Products

 

 

(4,165,118

)

 

 

(4,083,829

)

 

 

(12,228,350

)

 

 

(12,024,111

)

 

    Services

 

 

(308,322

)

 

 

(308,322

)

 

 

(926,998

)

 

 

(926,998

)

 

Gross profit

 

 

433,170

 

 

 

430,117

 

 

 

1,276,215

 

 

 

1,272,790

 

 

Selling, general and administrative expenses

 

 

(316,274

)

 

 

(316,274

)

 

 

(923,449

)

 

 

(923,449

)

 

Operating income

 

 

116,896

 

 

 

113,843

 

 

 

352,766

 

 

 

349,341

 

 

Interest expense and finance charges, net

 

 

(20,058

)

 

 

(20,058

)

 

 

(53,884

)

 

 

(53,884

)

 

Other income (expense), net

 

 

(872

)

 

 

(872

)

 

 

(3,497

)

 

 

(3,497

)

 

Income before income taxes

 

 

95,966

 

 

 

92,913

 

 

 

295,385

 

 

 

291,960

 

 

Provision for income taxes

 

 

(26,675

)

 

 

(25,973

)

 

 

(107,968

)

 

 

(107,181

)

 

Net income

 

$

69,291

 

 

$

66,940

 

 

$

187,417

 

 

$

184,779

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Basic

 

$

1.75

 

 

$

1.69

 

 

$

4.70

 

 

$

4.64

 

 

    Diluted

 

$

1.74

 

 

$

1.68

 

 

$

4.67

 

 

$

4.61

 

 

Non-GAAP financial measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating income

 

$

162,661

 

 

$

159,608

 

 

$

455,368

 

 

$

451,943

 

 

GAAP operating margin

 

 

2.38

%

 

 

2.36

%

 

 

2.44

%

 

 

2.46

%

 

Non-GAAP operating margin

 

 

3.32

%

 

 

3.31

%

 

 

3.16

%

 

 

3.18

%

 

Non-GAAP net income

 

$

102,258

 

 

$

99,852

 

 

$

283,905

 

 

$

281,207

 

 

Non-GAAP diluted EPS

 

$

2.57

 

 

$

2.51

 

 

$

7.08

 

 

$

7.01

 

 


      SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(currency in thousands)

(Amounts may not add due to rounding)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

August 31, 2019

 

 

August 31, 2018

 

 

August 31, 2019

 

 

August 31, 2018

 

 

 

 

 

 

 

(Adjusted)(1)

 

 

 

 

 

 

(Adjusted)(1)

 

Revenue in constant currency

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

6,203,659

 

 

$

4,822,268

 

 

$

17,176,000

 

 

$

14,223,898

 

Foreign currency translation

 

 

19,243

 

 

 

 

 

 

 

127,181

 

 

 

 

 

Revenue in constant currency

 

$

6,222,902

 

 

$

4,822,268

 

 

$

17,303,181

 

 

$

14,223,898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

5,047,970

 

 

$

4,334,767

 

 

$

13,695,729

 

 

$

12,746,673

 

Foreign currency translation

 

 

5,006

 

 

 

 

 

 

 

84,120

 

 

 

 

 

Revenue in constant currency

 

$

5,052,976

 

 

$

4,334,767

 

 

$

13,779,849

 

 

$

12,746,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Concentrix

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

1,160,928

 

 

$

491,882

 

 

$

3,495,076

 

 

$

1,490,865

 

Foreign currency translation

 

 

14,237

 

 

 

 

 

 

 

43,061

 

 

 

 

 

Revenue in constant currency

 

$

1,175,165

 

 

$

491,882

 

 

$

3,538,137

 

 

$

1,490,865

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

August 31, 2019

 

 

August 31, 2018

 

 

August 31, 2019

 

 

August 31, 2018

 

 

 

 

 

 

 

(Adjusted)(1)

 

 

 

 

 

 

(Adjusted)(1)

 

Selling, general and administrative expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP selling, general and administrative expenses

 

$

517,135

 

 

$

316,274

 

 

$

1,557,906

 

 

$

923,449

 

Acquisition-related and integration expenses

 

 

9,200

 

 

 

19,568

 

 

 

53,582

 

 

 

23,419

 

Amortization of intangibles

 

 

52,066

 

 

 

25,777

 

 

 

156,964

 

 

 

77,882

 

Adjusted selling, general and administrative expenses

 

$

455,869

 

 

$

270,929

 

 

$

1,347,360

 

 

$

822,148

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP selling, general and administrative expenses

 

$

162,944

 

 

$

149,163

 

 

$

466,725

 

 

$

442,630

 

Acquisition-related and integration expenses

 

 

-

 

 

 

2,498

 

 

 

981

 

 

 

6,349

 

Amortization of intangibles

 

 

10,999

 

 

 

12,524

 

 

 

32,968

 

 

 

37,802

 

Adjusted selling, general and administrative expenses

 

$

151,945

 

 

$

134,141

 

 

$

432,776

 

 

$

398,479

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Concentrix

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP selling, general and administrative expenses

 

$

356,155

 

 

$

168,984

 

 

$

1,097,139

 

 

$

486,120

 

Acquisition-related and integration expenses

 

 

9,200

 

 

 

17,070

 

 

 

52,601

 

 

 

17,070

 

Amortization of intangibles

 

 

41,067

 

 

 

13,253

 

 

 

123,996

 

 

 

40,080

 

Adjusted selling, general and administrative expenses

 

$

305,888

 

 

$

138,661

 

 

$

920,542

 

 

$

428,970

 

 

 


SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(currency in thousands)

(Amounts may not add due to rounding)

(continued)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

August 31, 2019

 

 

August 31, 2018

 

 

August 31, 2019

 

 

August 31, 2018

 

 

 

 

 

 

 

(Adjusted)(1)

 

 

 

 

 

 

(Adjusted)(1)

 

Operating income and Operating margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

6,203,659

 

 

$

4,822,268

 

 

$

17,176,000

 

 

$

14,223,898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income

 

$

208,855

 

 

$

113,843

 

 

$

545,473

 

 

$

349,341

 

Acquisition-related and integration expenses

 

 

9,200

 

 

 

19,568

 

 

 

53,582

 

 

 

23,419

 

Amortization of intangibles

 

 

52,428

 

 

 

26,197

 

 

 

158,149

 

 

 

79,183

 

Non-GAAP operating income

 

$

270,483

 

 

$

159,608

 

 

$

757,204

 

 

$

451,943

 

Depreciation (excluding accelerated depreciation included in acquisition-related expenses above)

 

 

38,597

 

 

 

22,511

 

 

 

119,004

 

 

 

67,031

 

Adjusted EBITDA

 

$

309,080

 

 

$

182,119

 

 

$

876,208

 

 

$

518,974

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating margin

 

 

3.37

%

 

 

2.36

%

 

 

3.18

%

 

 

2.46

%

Non-GAAP operating margin

 

 

4.36

%

 

 

3.31

%

 

 

4.41

%

 

 

3.18

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment revenue

 

$

5,047,970

 

 

$

4,334,767

 

 

$

13,695,729

 

 

$

12,746,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income

 

$

138,830

 

 

$

101,775

 

 

$

352,594

 

 

$

279,926

 

Acquisition-related and integration expenses

 

 

 

 

 

2,498

 

 

 

981

 

 

 

6,349

 

Amortization of intangibles

 

 

10,999

 

 

 

12,524

 

 

 

32,968

 

 

 

37,802

 

Non-GAAP operating income

 

$

149,829

 

 

$

116,797

 

 

$

386,543

 

 

$

324,077

 

Depreciation

 

 

5,875

 

 

 

5,212

 

 

 

16,719

 

 

 

15,056

 

Adjusted EBITDA

 

$

155,704

 

 

$

122,009

 

 

$

403,262

 

 

$

339,133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating margin

 

 

2.75

%

 

 

2.35

%

 

 

2.57

%

 

 

2.20

%

Non-GAAP operating margin

 

 

2.97

%

 

 

2.69

%

 

 

2.82

%

 

 

2.54

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Concentrix

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment revenue

 

$

1,160,928

 

 

$

491,882

 

 

$

3,495,076

 

 

$

1,490,865

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income

 

$

70,025

 

 

$

12,068

 

 

$

192,879

 

 

$

69,415

 

Acquisition-related and integration expenses

 

 

9,200

 

 

 

17,070

 

 

 

52,601

 

 

 

17,070

 

Amortization of intangibles

 

 

41,429

 

 

 

13,673

 

 

 

125,181

 

 

 

41,381

 

Non-GAAP operating income

 

$

120,654

 

 

$

42,811

 

 

$

370,661

 

 

$

127,866

 

Depreciation (excluding accelerated depreciation included in acquisition-related expenses above)

 

 

32,722

 

 

 

17,299

 

 

 

102,285

 

 

 

51,975

 

Adjusted EBITDA

 

$

153,376

 

 

$

60,110

 

 

$

472,946

 

 

$

179,841

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating margin

 

 

6.03

%

 

 

2.45

%

 

 

5.52

%

 

 

4.66

%

Non-GAAP operating margin

 

 

10.39

%

 

 

8.70

%

 

 

10.61

%

 

 

8.58

%


SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(currency and share amounts in thousands, except per share amounts)

(Amounts may not add due to rounding)

(continued)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

August 31, 2019

 

 

August 31, 2018

 

 

August 31, 2019

 

 

August 31, 2018

 

 

 

 

 

 

 

(Adjusted)(1)

 

 

 

 

 

 

(Adjusted)(1)

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

123,132

 

 

$

66,940

 

 

$

324,711

 

 

$

184,779

 

Acquisition-related and integration expenses

 

 

9,200

 

 

 

19,568

 

 

 

53,411

 

 

 

20,785

 

Amortization of intangibles

 

 

52,428

 

 

 

26,197

 

 

 

158,149

 

 

 

79,183

 

Contingent consideration

 

 

 

 

 

 

 

 

(19,034

)

 

 

 

Income taxes related to the above(2)

 

 

(15,548

)

 

 

(12,853

)

 

 

(55,328

)

 

 

(28,241

)

U.S. tax reform adjustment

 

 

 

 

 

 

 

 

 

 

 

24,701

 

Non-GAAP net income

 

$

169,212

 

 

$

99,852

 

 

$

461,909

 

 

$

281,207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share ("EPS")(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

123,132

 

 

$

66,940

 

 

$

324,711

 

 

$

184,779

 

Less: net income allocated to participating securities

 

 

1,066

 

 

 

643

 

 

 

2,883

 

 

 

1,717

 

Net income attributable to common stockholders

 

 

122,066

 

 

 

66,297

 

 

 

321,828

 

 

 

183,062

 

Acquisition-related and integration expenses attributable to common stockholders

 

 

9,121

 

 

 

19,381

 

 

 

52,938

 

 

 

20,593

 

Amortization of intangibles attributable to common stockholders

 

 

51,975

 

 

 

25,947

 

 

 

156,748

 

 

 

78,450

 

Contingent consideration attributable to common stockholders

 

 

 

 

 

 

 

 

(18,865

)

 

 

 

Income taxes related to the above attributable to common stockholders(2)

 

 

(15,414

)

 

 

(12,730

)

 

 

(54,838

)

 

 

(27,980

)

U.S. tax reform adjustment attributable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

24,472

 

Non-GAAP net income attributable to common stockholders

 

$

167,748

 

 

$

98,896

 

 

$

457,810

 

 

$

278,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares - diluted:

 

 

50,845

 

 

 

39,475

 

 

 

50,903

 

 

 

39,730

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS(3)

 

$

2.40

 

 

$

1.68

 

 

$

6.32

 

 

$

4.61

 

Acquisition-related and integration expenses

 

 

0.18

 

 

 

0.49

 

 

 

1.04

 

 

 

0.52

 

Amortization of intangibles

 

 

1.02

 

 

 

0.66

 

 

 

3.08

 

 

 

1.97

 

Contingent consideration

 

 

 

 

 

 

 

 

(0.37

)

 

 

 

Income taxes related to the above(2)

 

 

(0.30

)

 

 

(0.32

)

 

 

(1.08

)

 

 

(0.70

)

U.S. tax reform adjustment

 

 

 

 

 

 

 

 

 

 

 

0.62

 

Non-GAAP Diluted EPS

 

$

3.30

 

 

$

2.51

 

 

$

8.99

 

 

$

7.01

 

 

 


SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(Amounts may not add due to rounding)

(continued)

 

(Currency in thousands)

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

August 31, 2019

 

 

August 31, 2018

 

 

August 31, 2019

 

 

August 31, 2018

 

Net cash provided by (used in) operating activities

 

$

249,853

 

 

$

(103,095

)

 

$

202,473

 

 

$

(40,385

)

Purchases of property and equipment

 

 

(33,020

)

 

 

(25,453

)

 

 

(93,432

)

 

 

(75,473

)

Free cash flow

 

$

216,833

 

 

$

(128,548

)

 

$

109,041

 

 

$

(115,858

)

 

 

 

Forecast

 

 

 

Three Months Ending November 30, 2019

 

(Amounts in millions, except per share amounts)

 

Low

 

 

High

 

Net income

 

$

136.4

 

 

$

146.9

 

      Acquisition-related and integration expenses

 

 

8.5

 

 

 

8.5

 

Amortization of intangibles

 

 

51.3

 

 

 

51.3

 

Income taxes related to the above(2)

 

 

(15.6

)

 

 

(15.6

)

Non-GAAP net income

 

$

180.5

 

 

$

191.0

 

 

 

 

 

 

 

 

 

 

Diluted EPS(3)

 

$

2.64

 

 

$

2.85

 

      Acquisition-related and integration expenses

 

 

0.16

 

 

 

0.16

 

Amortization of intangibles

 

 

0.99

 

 

 

0.99

 

Income taxes related to the above(2)

 

 

(0.30

)

 

 

(0.30

)

Non-GAAP Diluted EPS

 

$

3.50

 

 

$

3.70

 

 

 

 

 

 

 

 

 

 

 

(1) Adjusted to reflect the adoption of the new guidance on revenue recognition, on a full retrospective basis.

(2) The tax effect of taxable and deductible non-GAAP adjustments was calculated using the effective year-to-date tax rate during the respective periods. The effective tax rate for fiscal year 2018 excludes the impact of the transition tax on accumulated overseas profits and the remeasurement of deferred tax assets and liabilities to the new U.S. tax rate related to the enactment of the Tax Cuts and Jobs Act of 2017.

(3) Diluted EPS is calculated using the two-class method. Unvested restricted stock awards granted to employees are considered participating securities. For purposes of calculating Diluted EPS, Net income allocated to participating securities was approximately 0.9% of Net income for the three and nine months ended August 31, 2019 and 2018. Net income allocable to participating securities is estimated to be approximately 1.1% of the forecast Net income for the three months ending November 30, 2019.


SYNNEX Corporation

Calculation of Financial Metrics

(currency in thousands)

(Amounts may not add or compute due to rounding)

 

Return on Invested Capital ("ROIC")

 

 

 

August 31, 2019

 

 

August 31, 2018

 

ROIC

 

 

 

 

 

 

 

 

Operating income (trailing fiscal four quarters)(1)

 

$

743,743

 

 

$

509,201

 

Income taxes on operating income(2)

 

 

(200,430

)

 

 

(184,952

)

Operating income after taxes(1)

 

$

543,313

 

 

$

324,249

 

 

 

 

 

 

 

 

 

 

Total borrowings, excluding book overdraft (last five quarters average)

 

$

3,126,273

 

 

$

1,684,413

 

Total equity (last five quarters average)

 

 

3,282,537

 

 

 

2,293,198

 

Less: U.S. cash and cash equivalents (last five quarters average)

 

 

(67,727

)

 

 

(114,037

)

Total invested capital

 

$

6,341,083

 

 

$

3,863,574

 

 

 

 

 

 

 

 

 

 

ROIC

 

 

8.6

%

 

 

8.4

%

 

 

 

 

 

 

 

 

 

Adjusted ROIC

 

 

 

 

 

 

 

 

Non-GAAP operating income (trailing fiscal four quarters)(1)

 

$

1,022,336

 

 

$

644,884

 

Income taxes on Non-GAAP operating income(2)

 

 

(268,384

)

 

 

(196,090

)

Non-GAAP operating income after taxes(1)

 

$

753,952

 

 

$

448,794

 

 

 

 

 

 

 

 

 

 

Total invested capital

 

$

6,341,083

 

 

$

3,863,574

 

Tax effected impact of cumulative non-GAAP adjustments (last five

   quarters average)

 

 

439,514

 

 

 

279,088

 

Total Non-GAAP invested capital

 

$

6,780,597

 

 

$

4,142,662

 

 

 

 

 

 

 

 

 

 

Adjusted ROIC

 

 

11.1

%

 

 

10.8

%

 

(1) GAAP and non-GAAP operating income included in the trailing fiscal four quarters calculation reflects the adoption of ASC Topic 606 for the fiscal quarters ended February 28, 2019 and 2018, May 31, 2019 and 2018 and August 31, 2019 and 2018. GAAP and non-GAAP operating income for other quarters included in the trailing fiscal four quarters calculation are based on amounts as previously reported.

(2) Income taxes on GAAP operating income was calculated using the effective year-to-date tax rates during the respective periods. Income taxes on non-GAAP operating income was calculated by excluding the tax effect of taxable and deductible non-GAAP adjustments using the effective year-to-date tax rate during the respective periods. In fiscal year 2018, the effective tax rate for non-GAAP operating income excludes the impact of the transition tax on accumulated overseas profits and the remeasurement of deferred tax assets and liabilities to the new U.S. tax rate related to the enactment of the Tax Cuts and Jobs Act of 2017.

Debt to Adjusted EBITDA leverage ratio

 

 

 

 

 

August 31, 2019

 

 

August 31, 2018

 

Total borrowings, excluding book overdraft

 

(a)

 

$

3,323,089

 

 

$

1,821,617

 

Trailing fiscal four quarters Adjusted EBITDA(1)

 

(b)

 

$

1,175,264

 

 

$

733,562

 

Debt to Adjusted EBITDA leverage ratio

 

(c)=(a)/(b)

 

 

2.8

 

 

 

2.5

 

 

(1) Adjusted EBITDA included in the trailing fiscal four quarters calculation reflects the adoption of ASC Topic 606 for the fiscal quarters ended February 28, 2019 and 2018, May 31, 2019 and 2018 and August 31, 2019 and 2018. Adjusted EBITDA for other quarters included in the trailing fiscal four quarters calculation is based on amounts as previously reported.


SYNNEX Corporation

Calculation of Financial Metrics

(currency in thousands)

(Amounts may not add or compute due to rounding)

(continued)

 

Cash Conversion Cycle

 

 

 

 

Three Months Ended

 

 

 

 

 

August 31, 2019

 

 

August 31, 2018

 

 

 

 

 

 

 

 

 

(Adjusted)(1)

 

 

 

 

 

 

 

Days sales outstanding

 

 

 

 

 

 

 

 

 

 

Revenue (products and services)

 

(a)

 

$

6,203,659

 

 

$

4,822,268

 

Accounts receivable, net

 

(b)

 

 

3,452,976

 

 

 

2,727,276

 

Days sales outstanding

 

(c) = (b)/((a)/the number of days during the period)

 

 

51

 

 

 

52

 

 

 

 

 

 

 

 

 

 

 

 

Days inventory outstanding

 

 

 

 

 

 

 

 

 

 

Cost of revenue (products and services)

 

(d)

 

$

5,477,669

 

 

$

4,392,151

 

Inventories

 

(e)

 

 

2,787,159

 

 

 

1,927,713

 

Days inventory outstanding

 

(f) = (e)/((d)/the number of days during the period)

 

 

47

 

 

 

40

 

 

 

 

 

 

 

 

 

 

 

 

Days payable outstanding

 

 

 

 

 

 

 

 

 

 

Cost of revenue (products and services)

 

(g)

 

$

5,477,669

 

 

$

4,392,151

 

Accounts payable

 

(h)

 

 

2,932,046

 

 

 

2,235,139

 

Days payable outstanding

 

(i) = (h)/((g)/the number of days during the period)

 

 

49

 

 

 

47

 

 

 

 

 

 

 

 

 

 

 

 

Cash conversion cycle

 

(j) = (c)+(f)-(i)

 

 

49

 

 

 

45

 

(1) Adjusted to reflect the adoption of the new guidance on revenue recognition, on a full retrospective basis.

 

Investor Contact:

Mary Lai

Investor Relations

SYNNEX Corporation

marylai@synnex.com

(510) 668-8436