SYNNEX Corporation (NYSE: SNX), a leading business process services
company, today announced financial results for the fiscal third quarter
ended August 31, 2014.
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Q3 FY14
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Q3 FY13
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Net change
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Revenue ($M)
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|
|
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$3,535
|
|
$2,734
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29.3%
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Operating income ($M)
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$78.8
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$63.5
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24.1%
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Non-GAAP operating income ($M)
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$106.3
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$68.1
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56.1%
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Operating margin
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2.23%
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2.32%
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(9 bps)
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Non-GAAP operating margin
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3.01%
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2.49%
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52 bps
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Net income attributable to SYNNEX Corporation ($M)(1)
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$45.0
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$46.6
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-3.5%
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Non-GAAP net income attributable to SYNNEX Corporation ($M)
(2)
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$62.5
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$50.0
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25.1%
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Diluted EPS
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$1.15
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$0.19
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505.3%
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Non-GAAP Diluted EPS(2)(3)
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$1.59
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$1.33
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19.5%
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(1) Q3 FY13 “Other income, net” includes a $12.3M pre-tax benefit
from a class-action legal settlement.
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(2) Non-GAAP financial measures exclude the impact of acquisition
and integration expenses and the amortization of intangible assets.
A reconciliation of GAAP to Non-GAAP financial information is
presented in the supplementary information section at the end of
this press release.
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(3) Q3 FY13 non-GAAP Diluted EPS excludes one-time numerator
adjustment resulting in $1.05 dilution for convertible senior
notes settlement.
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“We are pleased to report record quarterly results in terms of both
revenues and non-GAAP net income," stated Kevin Murai, President and
Chief Executive Officer. “Stronger than anticipated revenue growth in
Technology Solutions and excellent performance in all aspects of
Concentrix led to results ahead of our expectations.”
Fiscal 2014 Third Quarter Highlights:
-
Technology Solutions: Revenue was $3.2 billion, up 19.12%
organically from the prior fiscal year quarter. Technology Solutions
income before non-operating items, income taxes and non-controlling
interest was $76.9 million, or 2.40% of segment revenue, compared with
$62.5 million, or 2.32% of segment revenue, in the fiscal third
quarter of 2013.
-
Concentrix: Revenue was $333.8 million, up from $46.3 million
in the prior fiscal year quarter, due largely to our having completed
over 99% of our acquisition of the IBM CRM business during the first
half of 2014. Concentrix’ income before non-operating items, income
taxes and non-controlling interest was $1.7 million, or 0.52% of
Concentrix revenue, compared with income of $0.8 million, or 1.78% of
Concentrix revenue, in the prior fiscal year quarter. Non-GAAP
Concentrix income before non-operating items, income taxes and
non-controlling interest was $28.3 million, or 8.49% of Concentrix
revenue, for fiscal third quarter of 2014, compared to $4.4 million,
or 9.55% of Concentrix revenue, in the prior year period.
-
The trailing fiscal four quarter ROIC was 8.2% compared to 9.7% in the
prior year fiscal third quarter. Excluding the impact of acquisition
and integration expenses, the current fiscal quarter’s trailing ROIC
was 10.6%.
-
The debt to capitalization ratio was 38%, consistent with the second
fiscal quarter of 2014.
-
Depreciation and amortization were $10.2 million and $17.6 million,
respectively.
Fiscal 2014 Fourth Quarter Outlook:
The following statements are based on the Company’s current expectations
for the fiscal 2014 fourth quarter and do not include acquisition and
integration expenses and amortization of intangibles. These statements
are forward-looking and actual results may differ materially.
-
Revenue is expected to be in the range of $3.65 billion to $3.75
billion.
-
Non-GAAP net income is expected to be in the range of $65.9 million to
$67.9 million.
-
Non-GAAP diluted earnings per share are expected to be in the range of
$1.66 to $1.71
-
After-tax amortization of intangibles is expected to be $11 million,
or $0.28 per share. These estimates are based on the preliminary
purchase price allocation of the IBM CRM acquisition and are subject
to change.
“Our fourth quarter guidance reflects seasonally strong, healthy
year-on-year growth in Technology Solutions and continued strong
performance in Concentrix,” stated Kevin Murai, President and CEO of
SYNNEX Corporation.
Conference Call and Webcast
SYNNEX will be discussing its financial results and outlook on a
conference call today at 2:00 p.m. (PT). A webcast of the call will be
available at http://ir.synnex.com.
The conference call will also be available via telephone by dialing
(888) 469-3219 in North America or (630) 395-0205 outside North America.
The passcode code for the call is “SNX.” A replay of the webcast will be
available at http://ir.synnex.com
approximately two hours after the conference call has concluded.
About SYNNEX
SYNNEX Corporation (NYSE: SNX), a Fortune 500 corporation, is a leading
business process services company, optimizing supply chains and
providing customer care solutions for its clients. The Company
distributes a broad range of information technology systems and
products, and also provides systems design and integration services. The
Concentrix segment offers a portfolio of end-to-end outsourced services
around process optimization, customer engagement strategy and
back-office automation to clients in ten identified industry verticals.
Founded in 1980, SYNNEX has over 50,000 employees worldwide. Additional
information about SYNNEX may be found online at www.synnex.com.
Use of Non-GAAP Financial Information
To supplement the financial results presented in accordance with GAAP,
SYNNEX uses non-GAAP operating income, non-GAAP operating margin,
non-GAAP net income and non-GAAP diluted earnings per share, which are
non-GAAP financial measures that exclude the amortization of intangible
assets and acquisition and integration related expenses. These non-GAAP
measures provide investors with an additional tool to evaluate operating
results. Because these non-GAAP 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 the Company's consolidated financial statements
prepared in accordance with GAAP.
SYNNEX management uses the non-GAAP financial measures internally to
understand, manage and evaluate the business. SYNNEX management believes
it is useful for the Company and investors to review, as applicable,
both GAAP information, and the non-GAAP measures in order to assess the
performance of the Company's continuing businesses and for planning and
forecasting in future periods. These non-GAAP measures are intended to
provide investors with an understanding of the Company's 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. The
management of SYNNEX believes the 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. A reconciliation of the Company's non-GAAP
financial information to GAAP is set forth in the following supplemental
information table.
Safe Harbor Statement
Statements in this press release regarding SYNNEX Corporation, which 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, expect, may, will, provide,
could and should and the negative of these terms or other similar
expressions. These statements, including statements regarding Technology
Solutions and Concentrix sales, performance and growth, integration and
acquisition costs, post-acquisition operations and migration work,
market demand, our revenue, net income and earnings per share,
amortization of intangibles, 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: our ability to successfully integrate our recent
acquisitions; diversion of management as a result of our recent and
pending acquisitions; loss of vendors and suppliers as a result of our
recent acquisitions; general economic conditions and any weakness in IT
and consumer electronics spending; the loss or consolidation of one or
more of our significant 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 the tax laws; risks associated with our international
operations; uncertainties and variability in demand by our reseller and
contract assembly 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; risks associated with our global business
services and contract assembly business; risks associated with our
anti-dilution share repurchase program; and other risks and
uncertainties detailed in our Form 10-Q for the fiscal quarter ended
May 31, 2014 and from time to time in our 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 2014 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. Other names and marks are the property of their
respective owners.
SNX-F
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SYNNEX Corporation
Consolidated Balance Sheets
(currency in thousands)
(unaudited)
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August 31,
2014
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November 30,
2013
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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127,664
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$
|
151,622
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Short-term investments
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|
11,430
|
|
|
15,134
|
|
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Accounts receivable, net
|
|
1,851,884
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|
|
1,593,191
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Receivable from related parties
|
|
948
|
|
|
146
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|
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Inventories
|
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1,445,256
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|
|
1,095,107
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|
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Current deferred tax assets
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19,767
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|
22,031
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Other current assets
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150,599
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|
54,502
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Total current assets
|
|
3,607,548
|
|
|
2,931,733
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|
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Property and equipment, net
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197,204
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|
133,249
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Goodwill
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373,914
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|
|
188,535
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Intangible assets, net
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|
252,090
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|
|
23,772
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Deferred tax assets
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|
371
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|
|
7,867
|
|
|
Other assets
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|
45,942
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|
|
40,733
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|
Total assets
|
|
$
|
4,477,069
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|
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$
|
3,325,889
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LIABILITIES AND EQUITY
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Current liabilities:
|
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|
|
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Borrowings under securitization, term loans and lines of credit
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$
|
726,201
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|
|
$
|
252,523
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|
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Accounts payable
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|
1,372,641
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|
|
1,350,040
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|
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Payable to related parties
|
|
10,066
|
|
|
3,861
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|
|
Accrued liabilities
|
|
388,737
|
|
|
181,325
|
|
|
Income taxes payable
|
|
17,873
|
|
|
1,629
|
|
|
Total current liabilities
|
|
2,515,518
|
|
|
1,789,378
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|
Long-term borrowings
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|
274,601
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|
|
65,405
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Long-term liabilities
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|
53,522
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|
|
56,418
|
|
|
Deferred tax liabilities
|
|
8,319
|
|
|
3,047
|
|
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Total liabilities
|
|
2,851,960
|
|
|
1,914,248
|
|
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SYNNEX Corporation stockholders’ equity:
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Preferred stock
|
|
—
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|
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—
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|
Common stock
|
|
40
|
|
|
38
|
|
|
Additional paid-in capital
|
|
376,567
|
|
|
286,329
|
|
|
Treasury stock
|
|
(29,472
|
)
|
|
(27,450
|
)
|
|
Accumulated other comprehensive income
|
|
21,465
|
|
|
19,168
|
|
|
Retained earnings
|
|
1,256,091
|
|
|
1,133,137
|
|
|
Total SYNNEX Corporation stockholders’ equity
|
|
1,624,691
|
|
|
1,411,222
|
|
|
Noncontrolling interest
|
|
418
|
|
|
419
|
|
|
Total equity
|
|
1,625,109
|
|
|
1,411,641
|
|
|
Total liabilities and equity
|
|
$
|
4,477,069
|
|
|
$
|
3,325,889
|
|
|
|
|
|
|
|
|
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|
|
SYNNEX Corporation
Consolidated Statements of Operations
(currency and share amounts in thousands, except for per share
amounts)
(unaudited)
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Three Months Ended
|
|
Nine Months Ended
|
|
|
|
August 31, 2014
|
|
August 31, 2013
|
|
August 31, 2014
|
|
August 31, 2013
|
|
Revenue
|
|
$
|
3,535,202
|
|
|
$
|
2,733,913
|
|
|
$
|
10,015,721
|
|
|
$
|
7,786,113
|
|
|
Cost of revenue
|
|
(3,235,480
|
)
|
|
(2,569,633
|
)
|
|
(9,230,339
|
)
|
|
(7,310,956
|
)
|
|
Gross profit
|
|
299,722
|
|
|
164,280
|
|
|
785,382
|
|
|
475,157
|
|
|
Selling, general and administrative expenses
|
|
(220,920
|
)
|
|
(100,781
|
)
|
|
(576,547
|
)
|
|
(303,754
|
)
|
|
Income before non-operating items, income taxes and noncontrolling
interest
|
|
78,802
|
|
|
63,499
|
|
|
208,835
|
|
|
171,403
|
|
|
Interest expense and finance charges, net
|
|
(7,602
|
)
|
|
(2,983
|
)
|
|
(18,260
|
)
|
|
(13,339
|
)
|
|
Other income (expense), net
|
|
(548
|
)
|
|
12,159
|
|
|
2,223
|
|
|
13,948
|
|
|
Income before income taxes and noncontrolling interest
|
|
70,652
|
|
|
72,675
|
|
|
192,798
|
|
|
172,012
|
|
|
Provision for income taxes
|
|
(25,647
|
)
|
|
(26,042
|
)
|
|
(69,756
|
)
|
|
(61,196
|
)
|
|
Net income
|
|
45,005
|
|
|
46,633
|
|
|
123,042
|
|
|
110,816
|
|
|
Net income attributable to noncontrolling interest
|
|
(19
|
)
|
|
(22
|
)
|
|
(88
|
)
|
|
(67
|
)
|
|
Net income attributable to SYNNEX Corporation
|
|
$
|
44,986
|
|
|
$
|
46,611
|
|
|
$
|
122,954
|
|
|
$
|
110,749
|
|
|
Earnings per share attributable to SYNNEX Corporation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.16
|
|
|
$
|
1.26
|
|
|
$
|
3.21
|
|
|
$
|
3.01
|
|
|
Diluted
|
|
$
|
1.15
|
|
|
$
|
0.19
|
|
|
$
|
3.16
|
|
|
$
|
1.97
|
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
38,749
|
|
|
36,965
|
|
|
38,363
|
|
|
36,805
|
|
|
Diluted
|
|
39,270
|
|
|
37,559
|
|
|
38,907
|
|
|
37,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SYNNEX Corporation
Segment Information
(currency in thousands)
(unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
August 31, 2014
|
|
August 31, 2013
|
|
August 31, 2014
|
|
August 31, 2013
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology Solutions
|
|
$
|
3,204,534
|
|
|
$
|
2,690,265
|
|
|
$
|
9,270,439
|
|
|
$
|
7,656,397
|
|
|
Concentrix
|
|
333,796
|
|
|
46,288
|
|
|
754,243
|
|
|
137,386
|
|
|
Inter-segment elimination
|
|
(3,128
|
)
|
|
(2,640
|
)
|
|
(8,961
|
)
|
|
(7,670
|
)
|
|
Consolidated
|
|
$
|
3,535,202
|
|
|
$
|
2,733,913
|
|
|
$
|
10,015,721
|
|
|
$
|
7,786,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before non-operating items, income taxes and noncontrolling
interest:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology Solutions
|
|
$
|
76,937
|
|
|
$
|
62,496
|
|
|
$
|
210,602
|
|
|
$
|
164,718
|
|
|
Concentrix
|
|
1,746
|
|
|
826
|
|
|
(2,202
|
)
|
|
6,516
|
|
|
Inter-segment elimination
|
|
119
|
|
|
177
|
|
|
435
|
|
|
169
|
|
|
Consolidated
|
|
$
|
78,802
|
|
|
$
|
63,499
|
|
|
$
|
208,835
|
|
|
$
|
171,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP financial measures
(currency in thousands)
|
|
|
|
Effective in the first quarter of 2014, the Company realigned its
business segments. Certain operations of the Company which were
previously reported under the Concentrix segment and which provided
inter-segment support and IT services to the Technology Solutions
segment have now been aligned with and report into the Technology
Solutions segment. The Concentrix segment includes the legacy
Concentrix business and the newly acquired IBM customer care
business. For comparability, the financial information presented
herein reflects the impact of the preceding segment structure change
for all periods presented.
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
August 31, 2014
|
|
August 31, 2013
|
|
August 31, 2014
|
|
August 31, 2013
|
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
3,535,202
|
|
|
$
|
2,733,913
|
|
|
$
|
10,015,721
|
|
|
$
|
7,786,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income before non-operating items, income taxes and
noncontrolling interest
|
|
$
|
78,802
|
|
|
$
|
63,499
|
|
|
$
|
208,835
|
|
|
$
|
171,403
|
|
|
IBM CRM acquisition and other integration expenses
|
|
9,932
|
|
|
2,596
|
|
|
34,581
|
|
|
2,596
|
|
|
Amortization of intangibles
|
|
17,564
|
|
|
1,998
|
|
|
38,427
|
|
|
5,922
|
|
|
Non-GAAP operating income
|
|
$
|
106,298
|
|
|
$
|
68,093
|
|
|
$
|
281,843
|
|
|
$
|
179,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating margin
|
|
2.23
|
%
|
|
2.32
|
%
|
|
2.09
|
%
|
|
2.20
|
%
|
|
Non-GAAP operating margin
|
|
3.01
|
%
|
|
2.49
|
%
|
|
2.81
|
%
|
|
2.31
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
3,204,534
|
|
|
$
|
2,690,265
|
|
|
$
|
9,270,438
|
|
|
$
|
7,656,397
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income before non-operating items, income taxes and
noncontrolling interest
|
|
$
|
76,937
|
|
|
$
|
62,496
|
|
|
$
|
210,602
|
|
|
$
|
164,718
|
|
|
Amortization of intangibles
|
|
914
|
|
|
998
|
|
|
2,811
|
|
|
2,904
|
|
|
Non-GAAP operating income
|
|
$
|
77,851
|
|
|
$
|
63,494
|
|
|
$
|
213,413
|
|
|
$
|
167,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating margin
|
|
2.40
|
%
|
|
2.32
|
%
|
|
2.27
|
%
|
|
2.15
|
%
|
|
Non-GAAP operating margin
|
|
2.43
|
%
|
|
2.36
|
%
|
|
2.30
|
%
|
|
2.19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Concentrix
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
333,796
|
|
|
$
|
46,288
|
|
|
$
|
754,242
|
|
|
$
|
137,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income (loss) before non-operating items, income taxes and
noncontrolling interest
|
|
$
|
1,746
|
|
|
$
|
826
|
|
|
$
|
(2,202
|
)
|
|
$
|
6,516
|
|
|
IBM CRM acquisition and other integration expenses
|
|
9,932
|
|
|
2,596
|
|
|
34,581
|
|
|
2,596
|
|
|
Amortization of intangibles
|
|
16,650
|
|
|
1,000
|
|
|
35,617
|
|
|
3,019
|
|
|
Non-GAAP operating income
|
|
$
|
28,328
|
|
|
$
|
4,422
|
|
|
$
|
67,996
|
|
|
$
|
12,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating margin
|
|
0.52
|
%
|
|
1.78
|
%
|
|
(0.29
|
)%
|
|
4.74
|
%
|
|
Non-GAAP operating margin
|
|
8.49
|
%
|
|
9.55
|
%
|
|
9.02
|
%
|
|
8.83
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP to Non-GAAP financial measures
(currency in thousands except per share amounts)
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
August 31, 2014
|
|
August 31, 2013
|
|
August 31, 2014
|
|
August 31, 2013
|
|
Diluted Net Income adjusted for Impact of conversion premium
|
|
$
|
44,986
|
|
|
$
|
7,137
|
|
|
$
|
122,954
|
|
|
$
|
74,340
|
|
Impact of conversion premium on Net Income(1)
|
|
—
|
|
|
39,474
|
|
|
—
|
|
|
36,409
|
|
Net income attributable to SYNNEX Corporation
|
|
$
|
44,986
|
|
|
$
|
46,611
|
|
|
$
|
122,954
|
|
|
$
|
110,749
|
|
IBM CRM acquisition and other integration expenses, net of taxes(2)
|
|
6,327
|
|
|
2,064
|
|
|
22,176
|
|
|
2,064
|
|
Amortization of Intangibles, net of taxes(2)
|
|
11,188
|
|
|
1,282
|
|
|
24,540
|
|
|
3,818
|
|
Non-GAAP net income attributable to SYNNEX Corporation
|
|
$
|
62,501
|
|
|
$
|
49,957
|
|
|
$
|
169,670
|
|
|
$
|
116,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
$
|
1.15
|
|
|
$
|
0.19
|
|
|
$
|
3.16
|
|
|
$
|
1.97
|
|
Impact of conversion premium on EPS
|
|
—
|
|
|
1.05
|
|
|
—
|
|
|
0.96
|
|
IBM CRM acquisition and other integration expenses
|
|
0.16
|
|
|
0.06
|
|
|
0.57
|
|
|
0.05
|
|
Amortization of Intangibles
|
|
0.28
|
|
|
0.03
|
|
|
0.63
|
|
|
0.10
|
|
Non-GAAP Diluted EPS
|
|
$
|
1.59
|
|
|
$
|
1.33
|
|
|
$
|
4.36
|
|
|
$
|
3.08
|
|
(1) For the three months ended August 31, 2013, the impact of
conversion premium is the difference between the estimated
conversion premium as of May 31, 2013 and the final conversion
premium settlement amount.
|
|
|
|
For the nine months ended August 31, 2013, the impact of
conversion premium is the difference between the estimated
conversion premium as of April 2013 and the final conversion
premium settlement amount.
|
|
|
|
(2) The tax effect of the non-GAAP adjustments was calculated
using the applicable effective tax rate during the periods, except
for IBM CRM acquisition and other integration expenses for the three
months ended August 31, 2013, which was calculated using the tax
deductible portion of the expenses and applying the entity-specific,
U.S. Federal and blended state tax rates.
|
Copyright Business Wire 2014