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SYNNEX Corporation Reports Second Quarter Fiscal 2019 Results

SNX

FREMONT, Calif., June 25, 2019 /PRNewswire/ -- SYNNEX Corporation (NYSE: SNX), a leading business process services company, today announced financial results for the fiscal second quarter ended May 31, 2019. 



Q2 FY19


Q2 FY18(2)


Net change

Revenue ($M)


$

5,723


$

4,908


16.6%

Operating income ($M)


$

174.7


$

124.0


40.8%

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


$

244.1


$

152.3


60.2%

Operating margin



3.05%



2.53%


52 bps

Non-GAAP operating margin(1)



4.26%



3.10%


116 bps

Net income ($M)


$

114.5


$

93.7


22.1%

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


$

146.8


$

95.4


54.0%

Diluted earnings per common share ("EPS")


$

2.23


$

2.34


-4.7%

Non-GAAP Diluted EPS(1)


$

2.86


$

2.38


20.2%

SYNNEX Corporation

"We delivered strong results in our second quarter as both of our business segments exceeded expectations and set quarterly records," said Dennis Polk, SYNNEX President and CEO. "Our Concentrix business continued its momentum post the Convergys acquisition by delivering solid results, while executing ahead of schedule on our integration plan."

Second Quarter Fiscal 2019 Highlights:

  • Technology Solutions: Revenue was $4.6 billion, up 3.3% from the prior fiscal year second quarter. Operating income was $112 million, or 2.5% of segment revenue, compared to $96 million, or 2.2% of segment revenue, in the prior fiscal year second quarter. Non-GAAP operating income was $124 million, or 2.7% of segment revenue, compared to $111 million, or 2.5% of segment revenue, in the prior fiscal year second quarter.
  • Concentrix: Revenue was $1.2 billion, up 136.3% from the prior fiscal year second quarter as a result of the Convergys acquisition on October 5, 2018. Operating income was $62 million, or 5.4% of segment revenue, compared to $28 million, or 5.6% of segment revenue in the prior fiscal year second quarter. Non-GAAP operating income was $120 million, or 10.3% of segment revenue, compared to $41 million, or 8.5% of segment revenue, in the prior fiscal year second quarter.
  • The trailing fiscal four quarters Return on Invested Capital ("ROIC") was 8.2% compared to 8.8% in the prior fiscal year second quarter. The adjusted trailing fiscal four quarters ROIC was 10.8%.

Third Quarter Fiscal 2019 Outlook:

The following statements are based on SYNNEX' current expectations for the third 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 $5.55 billion to $5.85 billion.
  • Net income is expected to be in the range of $99.0 million to $105.0 million and on a non-GAAP basis, net income is expected to be in the range of $144.2 million to $150.2 million.
  • Diluted earnings per share is expected to be in the range of $1.92 to $2.04 and on a non-GAAP basis, diluted earnings per share is expected to be in the range of $2.80 to $2.92, based on estimated outstanding diluted weighted average shares of 51.0 million.
  • After-tax amortization of intangibles is expected to be $37.7 million, or $0.73 per share.
  • After-tax acquisition-related and integration expense is expected to be $7.5 million, or $0.15 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 July 26, 2019 to stockholders of record as of the close of business on July 12, 2019.

Conference Call and Webcast

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

To Listen via Telephone:
(866) 393-4306 (U.S. callers) / (734) 385-2616 (International callers)
Conference ID 7791288

To Listen via Internet:

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 www.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 www.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 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 second 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 third 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)




May 31, 2019


November 30, 2018






(Adjusted)(1)

ASSETS







Current assets:







Cash and cash equivalents


$

271,491


$

454,694

Accounts receivable, net



3,457,110



3,640,496

Receivable from vendors, net



350,330



351,744

Inventories



2,608,453



2,392,559

Other current assets



327,730



323,323

Total current assets



7,015,116



7,162,817

Property and equipment, net



564,290



571,326

Goodwill



2,192,076



2,203,316

Intangible assets, net



1,266,671



1,377,305

Deferred tax assets



82,353



76,508

Other assets



155,452



152,227

Total assets


$

11,275,958


$

11,543,498








LIABILITIES AND EQUITY







Current liabilities:







Borrowings, current


$

728,962


$

833,216

Accounts payable



2,764,919



3,048,102

Accrued compensation and benefits



325,165



358,352

Other accrued liabilities



612,159



672,635

Income taxes payable



30,012



41,322

Total current liabilities



4,461,217



4,953,627

Long-term borrowings



2,792,649



2,622,782

Other long-term liabilities



305,019



325,119

Deferred tax liabilities



180,020



206,916

Total liabilities



7,738,905



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, 52,929 and 52,861 shares issued as of May 31, 2019 and November 30, 2018, respectively



53



53

Additional paid-in capital



1,527,383



1,512,201

Treasury stock, 2,336 and 2,167 shares as of May 31, 2019 and November 30, 2018, respectively



(165,601)



(149,533)

Accumulated other comprehensive income (loss)



(188,561)



(126,288)

Retained earnings



2,363,779



2,198,621

Total stockholders' equity



3,537,053



3,435,054

Total liabilities and equity


$

11,275,958


$

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 for per share amounts)

(Amounts may not add due to rounding)

(unaudited)




Three Months Ended



Six Months Ended



May 31, 2019



May 31, 2018



May 31, 2019



May 31, 2018







(Adjusted)(1)







(Adjusted)(1)

Revenue:
















Products


$

4,567,072



$

4,422,093



$

8,647,757



$

8,411,836

Services



1,155,816




486,188




2,324,585




989,795

Total revenue



5,722,889




4,908,281




10,972,341




9,401,631

Cost of revenue:
















Products



(4,297,096)




(4,174,771)




(8,130,213)




(7,940,283)

Services



(727,324)




(304,352)




(1,464,739)




(618,675)

Gross profit



698,468




429,158




1,377,389




842,673

Selling, general and administrative expenses



(523,813)




(305,156)




(1,040,771)




(607,175)

Operating income



174,655




124,002




336,618




235,498

Interest expense and finance charges, net



(43,144)




(16,375)




(84,750)




(33,826)

Other income (expense), net



21,546




(1,446)




20,851




(2,624)

Income before income taxes



153,057




106,181




272,719




199,048

Provision for income taxes



(38,584)




(12,439)




(71,140)




(81,208)

Net income


$

114,473



$

93,742



$

201,579



$

117,840

Earnings per common share:
















Basic


$

2.24



$

2.35



$

3.94



$

2.95

Diluted


$

2.23



$

2.34



$

3.92



$

2.93

Weighted-average common shares outstanding:
















Basic



50,675




39,505




50,691




39,599

Diluted



50,939




39,742




50,933




39,859


(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



Six Months Ended



May 31, 2019



May 31, 2018



May 31, 2019



May 31, 2018







(Adjusted)(1)







(Adjusted)(1)

Revenue:
















Technology Solutions


$

4,567,074



$

4,422,106



$

8,647,759



$

8,411,905

Concentrix



1,160,877




491,246




2,334,148




998,983

Inter-segment elimination



(5,063)




(5,071)




(9,565)




(9,257)

Consolidated


$

5,722,889



$

4,908,281



$

10,972,341



$

9,401,631

















Operating income:
















Technology Solutions


$

112,393



$

96,318



$

213,764



$

178,151

Concentrix



62,263




27,684




122,853




57,347

Consolidated


$

174,655



$

124,002



$

336,618



$

235,498


(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

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)




Three Months Ended



Six Months Ended



May 31, 2019



May 31, 2018



May 31, 2019



May 31, 2018

Revenue
















Consolidated
















Revenue as previously reported






$

4,972,583







$

9,524,953

Impact of adoption of ASC Topic 606







(64,302)








(123,322)

Revenue in accordance with ASC Topic 606(1)


$

5,722,889



$

4,908,281



$

10,972,341



$

9,401,631

















Technology Solutions
















Revenue as previously reported






$

4,486,408







$

8,535,227

Impact of adoption of ASC Topic 606







(64,302)








(123,322)

Revenue in accordance with ASC Topic 606(1)


$

4,567,074



$

4,422,106



$

8,647,759



$

8,411,905

















Concentrix
















Revenue as previously reported






$

491,246







$

998,983

Impact of adoption of ASC Topic 606














Revenue in accordance with ASC Topic 606(1)


$

1,160,877



$

491,246



$

2,334,148



$

998,983

















(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.


$

870,000



$

711,000



$

1,711,000



$

1,395,000

 

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



Six Months Ended




May 31, 2018



May 31, 2018


Consolidated Statements of Operations


As Reported



As adjusted



As Reported



As adjusted


Revenue:

















    Products


$

4,486,395



$

4,422,093



$

8,535,158



$

8,411,836


    Services



486,188




486,188




989,795




989,795


Total revenue



4,972,583




4,908,281




9,524,953




9,401,631


Cost of revenue:

















    Products



(4,239,137)




(4,174,771)




(8,063,233)




(7,940,283)


    Services



(304,352)




(304,352)




(618,675)




(618,675)


Gross profit



429,094




429,158




843,045




842,673


Selling, general and administrative expenses



(305,156)




(305,156)




(607,175)




(607,175)


Operating income



123,938




124,002




235,870




235,498


Interest expense and finance charges, net



(16,375)




(16,375)




(33,826)




(33,826)


Other income (expense), net



(1,446)




(1,446)




(2,624)




(2,624)


Income before income taxes



106,117




106,181




199,420




199,048


Provision for income taxes



(12,424)




(12,439)




(81,293)




(81,208)


Net income


$

93,693



$

93,742



$

118,127



$

117,840


Earnings per common share:

















    Basic


$

2.35



$

2.35



$

2.96



$

2.95


    Diluted


$

2.34



$

2.34



$

2.94



$

2.93


Non-GAAP financial measures

















Non-GAAP operating income


$

152,260



$

152,324



$

292,707



$

292,335


GAAP operating margin



2.49

%



2.53

%



2.48

%



2.50

%

Non-GAAP operating margin



3.06

%



3.10

%



3.07

%



3.11

%

Non-GAAP net income


$

95,302



$

95,354



$

181,648



$

181,356


Non-GAAP diluted EPS


$

2.38



$

2.38



$

4.52



$

4.51


 

SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(currency in thousands)

(Amounts may not add due to rounding)




Three Months Ended



Six Months Ended



May 31, 2019



May 31, 2018



May 31, 2019



May 31, 2018







(Adjusted)(1)







(Adjusted)(1)

Revenue in constant currency
















Consolidated
















Revenue


$

5,722,889



$

4,908,281



$

10,972,341



$

9,401,631

Foreign currency translation



56,850








107,938





Revenue in constant currency


$

5,779,739



$

4,908,281



$

11,080,279



$

9,401,631

















Technology Solutions
















Revenue


$

4,567,074



$

4,422,106



$

8,647,759



$

8,411,905

Foreign currency translation



42,381








79,114





Revenue in constant currency


$

4,609,455



$

4,422,106



$

8,726,873



$

8,411,905

















Concentrix
















Revenue


$

1,160,877



$

491,246



$

2,334,148



$

998,983

Foreign currency translation



14,469








28,824





Revenue in constant currency


$

1,175,346



$

491,246



$

2,362,972



$

998,983





Three Months Ended



Six Months Ended



May 31, 2019



May 31, 2018



May 31, 2019



May 31, 2018







(Adjusted)(1)







(Adjusted)(1)

Selling, general and administrative expenses
















Consolidated
















GAAP selling, general and administrative expenses


$

523,813



$

305,156



$

1,040,771



$

607,175

Acquisition-related and integration expenses



16,533




2,046




44,382




3,851

Amortization of intangibles



52,441




25,814




104,898




52,105

Adjusted selling, general and administrative expenses


$

454,839



$

277,296



$

891,491



$

551,219

















Technology Solutions
















GAAP selling, general and administrative expenses


$

157,586



$

151,013



$

303,781



$

293,467

Acquisition-related and integration expenses



649




2,046




981




3,851

Amortization of intangibles



10,975




12,462




21,969




25,278

Adjusted selling, general and administrative expenses


$

145,962



$

136,505



$

280,831



$

264,338

















Concentrix
















GAAP selling, general and administrative expenses


$

368,265



$

155,894



$

740,983



$

317,136

Acquisition-related and integration expenses



15,884







43,401




Amortization of intangibles



41,466




13,352




82,929




26,827

Adjusted selling, general and administrative expenses


$

310,915



$

142,542



$

614,653



$

290,309

 

SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(currency in thousands)

(Amounts may not add due to rounding)

(continued)




Three Months Ended



Six Months Ended




May 31, 2019



May 31, 2018



May 31, 2019



May 31, 2018








(Adjusted)(1)







(Adjusted)(1)


Operating income and Operating margin

















Consolidated

















Revenue


$

5,722,889



$

4,908,281



$

10,972,341



$

9,401,631



















GAAP operating income


$

174,655



$

124,002



$

336,618



$

235,498


Acquisition-related and integration expenses



16,533




2,046




44,382




3,851


Amortization of intangibles



52,864




26,276




105,721




52,986


Non-GAAP operating income


$

244,052



$

152,324



$

486,721



$

292,335


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



38,890




22,596




80,407




44,520


Adjusted EBITDA


$

282,942



$

174,920



$

567,128



$

336,855



















GAAP operating margin



3.05

%



2.53

%



3.07

%



2.50

%

Non-GAAP operating margin



4.26

%



3.10

%



4.44

%



3.11

%


















Technology Solutions

















Segment revenue


$

4,567,074



$

4,422,106



$

8,647,759



$

8,411,905



















GAAP operating income


$

112,393



$

96,318



$

213,764



$

178,151


Acquisition-related and integration expenses



649




2,046




981




3,851


Amortization of intangibles



10,975




12,462




21,969




25,278


Non-GAAP operating income


$

124,017



$

110,826



$

236,714



$

207,280


Depreciation



5,475




5,010




10,844




9,844


Adjusted EBITDA


$

129,492



$

115,836



$

247,558



$

217,124



















GAAP operating margin



2.46

%



2.18

%



2.47

%



2.12

%

Non-GAAP operating margin



2.72

%



2.51

%



2.74

%



2.46

%


















Concentrix

















Segment revenue


$

1,160,877



$

491,246



$

2,334,148



$

998,983



















GAAP operating income


$

62,263



$

27,684



$

122,853



$

57,347


Acquisition-related and integration expenses



15,884







43,401





Amortization of intangibles



41,889




13,814




83,752




27,708


Non-GAAP operating income


$

120,036



$

41,498



$

250,006



$

85,055


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



33,415




17,586




69,563




34,676


Adjusted EBITDA


$

153,451



$

59,084



$

319,569



$

119,731



















GAAP operating margin



5.36

%



5.64

%



5.26

%



5.74

%

Non-GAAP operating margin



10.34

%



8.45

%



10.71

%



8.51

%

 

SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

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

(Amounts may not add due to rounding)

(continued)




Three Months Ended



Six Months Ended



May 31, 2019



May 31, 2018



May 31, 2019



May 31, 2018







(Adjusted)(1)







(Adjusted)(1)

Net income
















Net income


$

114,473



$

93,742



$

201,579



$

117,840

Acquisition-related and integration expenses (benefit)



16,362




(588)




44,211




1,217

Amortization of intangibles



52,864




26,276




105,721




52,986

Contingent consideration



(19,034)







(19,034)




Income taxes related to the above(2)



(17,820)




(7,076)




(39,780)




(15,388)

U.S. tax reform adjustment






(17,000)







24,701

Non-GAAP net income


$

146,845



$

95,354



$

292,697



$

181,356

















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
















Net income


$

114,473



$

93,742



$

201,579



$

117,840

Less: net income allocated to participating securities



1,027




860




1,813




1,076

Net income attributable to common stockholders



113,446




92,882




199,766




116,764

Acquisition-related and integration expenses (benefit) attributable to common stockholders



16,216




(583)




43,814




1,206

Amortization of intangibles attributable to common stockholders



52,391




26,036




104,772




52,503

Contingent consideration attributable to common stockholders



(18,864)







(18,863)




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



(17,661)




(7,011)




(39,423)




(15,248)

U.S. tax reform adjustment attributable to common stockholders






(16,844)







24,476

Non-GAAP net income attributable to common stockholders


$

145,528



$

94,480



$

290,065



$

179,702

















Weighted-average number of common shares - diluted:



50,939




39,742




50,933




39,859

















Diluted EPS(3)


$

2.23



$

2.34



$

3.92



$

2.93

Acquisition-related and integration expenses (benefit)



0.32




(0.01)




0.86




0.03

Amortization of intangibles



1.03




0.66




2.06




1.32

Contingent consideration



(0.37)







(0.37)




Income taxes related to the above(2)



(0.35)




(0.18)




(0.77)




(0.38)

U.S. tax reform adjustment






(0.42)







0.61

Non-GAAP Diluted EPS


$

2.86



$

2.38



$

5.70



$

4.51

 

SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(amounts in millions, except for per share amounts)

(Amounts may not add due to rounding)

(continued)




Forecast



Three Months Ending August 31, 2019



Low



High

Net income


$

99,003



$

105,003

Acquisition-related and integration expenses



10,305




10,305

Amortization of intangibles



51,608




51,608

Income taxes related to the above(2)



(16,717)




(16,717)

Non-GAAP net income


$

144,200



$

150,200









Diluted EPS(3)


$

1.92



$

2.04

Acquisition-related and integration expenses



0.20




0.20

Amortization of intangibles



1.00




1.00

Income taxes related to the above(2)



(0.32)




(0.32)

Non-GAAP Diluted EPS


$

2.80



$

2.92










(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 six months ended May 31, 2019 and 2018. Net income allocable to participating securities is estimated to be approximately 0.9% of the forecast Net income for the three months ending August 31, 2019.

 

SYNNEX Corporation

Calculation of Financial Metrics

(currency in thousands)

(Amounts may not add or compute due to rounding)


Return on Invested Capital ("ROIC")




May 31, 2019



May 31, 2018


ROIC









Operating income (trailing fiscal four quarters)(1)


$

651,784



$

517,574


Income taxes on operating income(2)



(180,564)




(194,642)


Operating income after taxes(1)


$

471,220



$

322,932











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


$

2,823,841



$

1,537,631


Total equity (last five quarters average)



3,024,940




2,250,775


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



(72,005)




(132,465)


Total invested capital


$

5,776,776



$

3,655,941











ROIC



8.2

%



8.8

%










Adjusted ROIC









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


$

914,514



$

625,206


Income taxes on Non-GAAP operating income(2)



(245,487)




(199,325)


Non-GAAP operating income after taxes(1)


$

669,027



$

425,881











Total invested capital


$

5,776,776



$

3,655,941


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

   quarters average)



393,862




253,198


Total Non-GAAP invested capital


$

6,170,638



$

3,909,139











Adjusted ROIC



10.8

%



10.9

%


(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 and May 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






May 31, 2019



May 31, 2018

Total borrowings, excluding book overdraft


(a)


$

3,517,322



$

1,810,926

Trailing fiscal four quarters Adjusted EBITDA(1)


(b)


$

1,051,356



$

711,558

Debt to Adjusted EBITDA leverage ratio


(c)=(a)/(b)



3.3




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 and May 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)

(continued)


Cash Conversion Cycle






Three Months Ended





May 31, 2019



May 31, 2018









(Adjusted)(1)

Days sales outstanding










Revenue (products and services)


(a)


$

5,722,889



$

4,908,281

Accounts receivable, net


(b)



3,457,110




2,519,218

Days sales outstanding


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



56




47











Days inventory outstanding










Cost of revenue (products and services)


(d)


$

5,024,420



$

4,479,123

Inventories


(e)



2,608,453




1,996,161

Days inventory outstanding


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



48




41











Days payable outstanding










Cost of revenue (products and services)


(g)


$

5,024,420



$

4,479,123

Accounts payable


(h)



2,764,919




2,287,954

Days payable outstanding


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



51




47











Cash conversion cycle


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



53




41


(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

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/synnex-corporation-reports-second-quarter-fiscal-2019-results-300874755.html

SOURCE SYNNEX Corporation



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