Subjects: ERN, CCA, ERP
SYNNEX Corporation Reports Third Quarter Fiscal 2020 Results
FREMONT, Calif., Sept. 29, 2020 /PRNewswire/ -- SYNNEX Corporation (NYSE: SNX), a leading business process services company, today announced financial results for the fiscal third quarter ended August 31, 2020.
Q3 FY20 | Q3 FY19 | Net change | ||||||||||
Revenue ($M) | $ | 6,465 | $ | 6,204 | 4.2 | % | ||||||
Operating income ($M) | $ | 209.1 | $ | 208.9 | 0.1 | % | ||||||
Non-GAAP operating income ($M)(1) | $ | 260.1 | $ | 270.5 | -3.8 | % | ||||||
Operating margin | 3.24 | % | 3.37 | % | -13 | bps | ||||||
Non-GAAP operating margin(1) | 4.02 | % | 4.36 | % | -34 | bps | ||||||
Net income ($M) | $ | 134.5 | $ | 123.1 | 9.2 | % | ||||||
Non-GAAP net income ($M)(1) | $ | 172.6 | $ | 169.2 | 2.0 | % | ||||||
Diluted earnings per common share ("EPS") | $ | 2.60 | $ | 2.40 | 8.3 | % | ||||||
Non-GAAP Diluted EPS(1) | $ | 3.33 | $ | 3.30 | 0.9 | % | ||||||
"Our strong third quarter performance is a reflection of our resiliency, our ongoing focus on serving our partners and clients and the continued dedication of our associates on the growth and improvement of our business during these unprecedented times," said Dennis Polk, SYNNEX President and CEO. "We remain on track with the proposed spin-off of Concentrix and believe this will result in incremental value for all of our stakeholders."
Third Quarter Fiscal 2020 Highlights
- Technology Solutions: Revenue was $5.3 billion, up 5.1% over the prior fiscal year third quarter. Operating income was $132 million, or 2.5% of segment revenue, compared to $139 million, or 2.8% of segment revenue, in the prior fiscal year third quarter. Non-GAAP operating income was $142 million, or 2.7% of segment revenue, compared to $150 million, or 3.0% of segment revenue, in the prior fiscal year third quarter.
- Concentrix: Revenue was $1.2 billion, up 0.2% from the prior fiscal year third quarter. Operating income was $77 million, or 6.6% of segment revenue, compared to $70 million, or 6.0% of segment revenue in the prior fiscal year third quarter. Non-GAAP operating income was $118 million, or 10.1% of segment revenue, compared to $121 million, or 10.4% of segment revenue, in the prior fiscal year third quarter.
- The trailing fiscal four quarters Return on Invested Capital ("ROIC") was 9.1% compared to 8.6% in the prior fiscal year third quarter. The adjusted trailing fiscal four quarters ROIC was 10.7%.
- Cash generated from operations was approximately $321 million for the quarter.
Fourth Quarter Fiscal 2020 Outlook
The following statements are based on SYNNEX current expectations for the fiscal 2020 fourth quarter. 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 $6.45 billion to $6.65 billion.
- Net income is expected to be in the range of $153.0 million to $166.0 million and on a non-GAAP basis, net income is expected to be in the range of $190.5 million to $203.5 million.
- Diluted earnings per share is expected to be in the range of $2.95 to $3.20 and on a non-GAAP basis, diluted earnings per share is expected to be in the range of $3.68 to $3.93, based on estimated outstanding diluted weighted average shares of 51.5 million.
- After-tax amortization of intangibles is expected to be $35.2 million, or $0.68 per share.
- After-tax acquisition-related and integration expense is expected to be $2.3 million, or $0.04 per share.
Conference Call and Webcast
SYNNEX will host a conference call to discuss third quarter fiscal 2020 results:
Tuesday, September 29, 2020
2:00 PM (PT) / 5:00 PM (ET)
Conference ID 8016677
Live call (866) 393-4306 or (763) 488-9145 (Int'l)
Live audio webcast of the earnings call will be accessible at ir.synnex.com, and a replay of the webcast will be available following the call.
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 five primary industry verticals: technology and consumer electronics; communications and media; retail, travel and ecommerce; banking, financial services and insurance; and healthcare. 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, 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. The Company also uses adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") which excludes other income (expense), net and acquisition-related and integration expenses. In fiscal year 2019, non-GAAP net income and non-GAAP diluted earnings per share also exclude gains upon the settlement of contingent consideration and a contingent gain 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.
SYNNEX' acquisition activities have resulted in the recognition of intangible assets which consist primarily of customer relationships, vendor lists and technology. Definite-lived intangible assets are amortized over their estimated useful lives and are tested for impairment when events indicate that the carrying value may not be recoverable. The amortization of intangible assets is reflected in the Company's statements of operations within each segment. Although intangible assets contribute to the Company's revenue generation, the amortization of intangible assets does not directly relate to the sale of the Company's products and the services performed for the Company's clients. Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of the Company's acquisition activity. Accordingly, the Company believes excluding the amortization of intangible assets, along with the other non-GAAP adjustments which neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business performance, enhances the Company's and investors' ability to compare the Company's past financial performance with its current performance and to analyze underlying business performance and trends. Intangible asset amortization excluded from the related non-GAAP financial measure represents the entire amount recorded within the Company's GAAP financial statements, and the revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure. Intangible asset amortization is excluded from the related non-GAAP financial measure because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised.
Additionally, SYNNEX refers to revenue 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, revenue at constant currency rates or adjusting for currency will be higher or lower than revenue 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 a contingent 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.
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 forward-looking statements include, but are not limited to, statements regarding the proposed spin-off of Concentrix, including status, timing, what shareholders will own immediately following the spin-off and shareholder value; our expectations and outlook for the fiscal 2020 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; and the anticipated benefits of the non-GAAP financial measures.
The forward-looking statements 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: the impact of COVID-19 or coronavirus, or other pandemics, and the impact of related governmental, individual and business responses, including the ability of our staff to travel to work, our ability to maintain adequate inventories, delivery capabilities, the impact on our customers and supply chain, and the impact on demand in general; general economic and market conditions; the ability to realize the anticipated benefits of the previously-announced separation of SYNNEX and Concentrix and the disruption such transaction might cause to our business; negative effects of the transaction announcement or the consummation of the proposed separation on the market price of the capital stock of SYNNEX; the unfavorable outcome of any legal proceedings that have been or may be instituted against us; the ability to retain key personnel; 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, 2019 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 does not intend to update information contained in this press release, except as required by law.
Copyright 2020 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, except par value) (Amounts may not add due to rounding) (unaudited) | ||||||||
August 31, 2020 | November 30, 2019 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,452,273 | $ | 225,529 | ||||
Accounts receivable, net | 3,580,970 | 3,926,709 | ||||||
Receivables from vendors, net | 323,027 | 368,505 | ||||||
Inventories | 2,832,607 | 2,547,224 | ||||||
Other current assets | 375,273 | 385,024 | ||||||
Total current assets | 8,564,151 | 7,452,992 | ||||||
Property and equipment, net | 583,951 | 569,899 | ||||||
Goodwill | 2,257,292 | 2,254,402 | ||||||
Intangible assets, net | 1,031,168 | 1,162,212 | ||||||
Deferred tax assets | 116,263 | 97,539 | ||||||
Other assets, net | 710,283 | 160,917 | ||||||
Total assets | $ | 13,263,107 | $ | 11,697,960 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Borrowings, current | $ | 244,114 | $ | 298,969 | ||||
Accounts payable | 3,655,215 | 3,149,443 | ||||||
Accrued compensation and benefits | 447,661 | 402,771 | ||||||
Other accrued liabilities | 1,257,160 | 723,716 | ||||||
Income taxes payable | 27,998 | 32,223 | ||||||
Total current liabilities | 5,632,148 | 4,607,122 | ||||||
Long-term borrowings | 2,609,809 | 2,718,267 | ||||||
Other long-term liabilities | 722,343 | 361,911 | ||||||
Deferred tax liabilities | 205,225 | 222,210 | ||||||
Total liabilities | 9,169,525 | 7,909,510 | ||||||
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, 53,380 and 53,154 shares issued as of August 31, 2020 and November 30, 2019, respectively | 53 | 53 | ||||||
Additional paid-in capital | 1,579,026 | 1,545,421 | ||||||
Treasury stock, 2,454 and 2,399 shares as of August 31, 2020 and November 30, 2019, respectively | (178,775) | (172,627) | ||||||
Accumulated other comprehensive income (loss) | (224,628) | (209,077) | ||||||
Retained earnings | 2,917,906 | 2,624,680 | ||||||
Total stockholders' equity | 4,093,582 | 3,788,450 | ||||||
Total liabilities and equity | $ | 13,263,107 | $ | 11,697,960 | ||||
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, 2020 | August 31, 2019 | August 31, 2020 | August 31, 2019 | |||||||||||||
Revenue: | ||||||||||||||||
Products | $ | 5,306,361 | $ | 5,047,968 | $ | 13,858,313 | $ | 13,695,725 | ||||||||
Services | 1,158,421 | 1,155,690 | 3,403,305 | 3,480,275 | ||||||||||||
Total revenue | 6,464,782 | 6,203,659 | 17,261,619 | 17,176,000 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Products | (5,008,881) | (4,746,197) | (13,031,113) | (12,876,410) | ||||||||||||
Services | (747,809) | (731,472) | (2,206,256) | (2,196,212) | ||||||||||||
Gross profit | 708,092 | 725,990 | 2,024,249 | 2,103,379 | ||||||||||||
Selling, general and administrative expenses | (498,956) | (517,135) | (1,514,734) | (1,557,906) | ||||||||||||
Operating income | 209,136 | 208,855 | 509,515 | 545,473 | ||||||||||||
Interest expense and finance charges, net | (28,749) | (42,945) | (99,046) | (127,695) | ||||||||||||
Other income (expense), net | (567) | (1,087) | 3,280 | 19,764 | ||||||||||||
Income before income taxes | 179,819 | 164,823 | 413,748 | 437,542 | ||||||||||||
Provision for income taxes | (45,356) | (41,691) | (99,740) | (112,831) | ||||||||||||
Net income | $ | 134,464 | $ | 123,132 | $ | 314,008 | $ | 324,711 | ||||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | 2.61 | $ | 2.41 | $ | 6.10 | $ | 6.35 | ||||||||
Diluted | $ | 2.60 | $ | 2.40 | $ | 6.07 | $ | 6.32 | ||||||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic | 50,890 | 50,601 | 50,851 | 50,661 | ||||||||||||
Diluted | 51,241 | 50,845 | 51,172 | 50,903 | ||||||||||||
SYNNEX Corporation Segment Information (currency in thousands) (Amounts may not add due to rounding) (unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
August 31, 2020 | August 31, 2019 | August 31, 2020 | August 31, 2019 | |||||||||||||
Revenue: | ||||||||||||||||
Technology Solutions | $ | 5,306,361 | $ | 5,047,970 | $ | 13,858,313 | $ | 13,695,729 | ||||||||
Concentrix | 1,163,694 | 1,160,928 | 3,418,676 | 3,495,076 | ||||||||||||
Inter-segment elimination | (5,273) | (5,240) | (15,371) | (14,805) | ||||||||||||
Consolidated | $ | 6,464,782 | $ | 6,203,659 | $ | 17,261,619 | $ | 17,176,000 | ||||||||
Operating income: | ||||||||||||||||
Technology Solutions | $ | 132,373 | $ | 138,830 | $ | 320,962 | $ | 352,594 | ||||||||
Concentrix | 76,763 | 70,025 | 188,554 | 192,879 | ||||||||||||
Consolidated | $ | 209,136 | $ | 208,855 | $ | 509,515 | $ | 545,473 | ||||||||
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, 2020 | August 31, 2019 | August 31, 2020 | August 31, 2019 | |||||||||||||
Revenue in constant currency | ||||||||||||||||
Consolidated | ||||||||||||||||
Revenue | $ | 6,464,782 | $ | 6,203,659 | $ | 17,261,619 | $ | 17,176,000 | ||||||||
Foreign currency translation | 35,239 | 111,756 | ||||||||||||||
Revenue in constant currency | $ | 6,500,021 | $ | 6,203,659 | $ | 17,373,375 | $ | 17,176,000 | ||||||||
Technology Solutions | ||||||||||||||||
Revenue | $ | 5,306,361 | $ | 5,047,970 | $ | 13,858,313 | $ | 13,695,729 | ||||||||
Foreign currency translation | 32,798 | 79,488 | ||||||||||||||
Revenue in constant currency | $ | 5,339,159 | $ | 5,047,970 | $ | 13,937,801 | $ | 13,695,729 | ||||||||
Concentrix | ||||||||||||||||
Revenue | $ | 1,163,694 | $ | 1,160,928 | $ | 3,418,676 | $ | 3,495,076 | ||||||||
Foreign currency translation | 2,441 | 32,268 | ||||||||||||||
Revenue in constant currency | $ | 1,166,135 | $ | 1,160,928 | $ | 3,450,944 | $ | 3,495,076 | ||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
August 31, 2020 | August 31, 2019 | August 31, 2020 | August 31, 2019 | |||||||||||||
Selling, general and administrative expenses | ||||||||||||||||
Consolidated | ||||||||||||||||
GAAP selling, general and administrative expenses | $ | 498,956 | $ | 517,135 | $ | 1,514,734 | $ | 1,557,906 | ||||||||
Acquisition-related and integration expenses | 4,163 | 9,200 | 22,701 | 53,582 | ||||||||||||
Amortization of intangibles | 46,533 | 52,066 | 139,435 | 156,964 | ||||||||||||
Adjusted selling, general and administrative expenses | $ | 448,260 | $ | 455,869 | $ | 1,352,598 | $ | 1,347,360 | ||||||||
Technology Solutions | ||||||||||||||||
GAAP selling, general and administrative expenses | $ | 165,107 | $ | 162,944 | $ | 506,239 | $ | 466,725 | ||||||||
Acquisition-related and integration expenses | ? | ? | ? | 981 | ||||||||||||
Amortization of intangibles | 9,995 | 10,999 | 30,130 | 32,968 | ||||||||||||
Adjusted selling, general and administrative expenses | $ | 155,112 | $ | 151,945 | $ | 476,109 | $ | 432,776 | ||||||||
Concentrix | ||||||||||||||||
GAAP selling, general and administrative expenses | $ | 335,770 | $ | 356,155 | $ | 1,014,339 | $ | 1,097,139 | ||||||||
Acquisition-related and integration expenses | 4,163 | 9,200 | 22,701 | 52,601 | ||||||||||||
Amortization of intangibles | 36,538 | 41,067 | 109,305 | 123,996 | ||||||||||||
Adjusted selling, general and administrative expenses | $ | 295,069 | $ | 305,888 | $ | 882,333 | $ | 920,542 | ||||||||
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, 2020 | August 31, 2019 | August 31, 2020 | August 31, 2019 | |||||||||||||
Operating income and Operating margin | ||||||||||||||||
Consolidated | ||||||||||||||||
Revenue | $ | 6,464,782 | $ | 6,203,659 | $ | 17,261,619 | $ | 17,176,000 | ||||||||
GAAP operating income | $ | 209,136 | $ | 208,855 | $ | 509,515 | $ | 545,473 | ||||||||
Acquisition-related and integration expenses | 4,163 | 9,200 | 22,701 | 53,582 | ||||||||||||
Amortization of intangibles | 46,828 | 52,428 | 140,320 | 158,149 | ||||||||||||
Non-GAAP operating income | $ | 260,127 | $ | 270,483 | $ | 672,536 | $ | 757,204 | ||||||||
GAAP operating margin | 3.24 | % | 3.37 | % | 2.95 | % | 3.18 | % | ||||||||
Non-GAAP operating margin | 4.02 | % | 4.36 | % | 3.90 | % | 4.41 | % | ||||||||
Technology Solutions | ||||||||||||||||
Segment revenue | $ | 5,306,361 | $ | 5,047,970 | $ | 13,858,313 | $ | 13,695,729 | ||||||||
GAAP operating income | $ | 132,373 | $ | 138,830 | $ | 320,962 | $ | 352,594 | ||||||||
Acquisition-related and integration expenses | ? | ? | ? | 981 | ||||||||||||
Amortization of intangibles | 9,995 | 10,999 | 30,130 | 32,968 | ||||||||||||
Non-GAAP operating income | $ | 142,368 | $ | 149,829 | $ | 351,092 | $ | 386,543 | ||||||||
GAAP operating margin | 2.49 | % | 2.75 | % | 2.32 | % | 2.57 | % | ||||||||
Non-GAAP operating margin | 2.68 | % | 2.97 | % | 2.53 | % | 2.82 | % | ||||||||
Concentrix | ||||||||||||||||
Segment revenue | $ | 1,163,694 | $ | 1,160,928 | $ | 3,418,676 | $ | 3,495,076 | ||||||||
GAAP operating income | $ | 76,763 | $ | 70,025 | $ | 188,554 | $ | 192,879 | ||||||||
Acquisition-related and integration expenses | 4,163 | 9,200 | 22,701 | 52,601 | ||||||||||||
Amortization of intangibles | 36,833 | 41,429 | 110,190 | 125,181 | ||||||||||||
Non-GAAP operating income | $ | 117,759 | $ | 120,654 | $ | 321,445 | $ | 370,661 | ||||||||
GAAP operating margin | 6.60 | % | 6.03 | % | 5.52 | % | 5.52 | % | ||||||||
Non-GAAP operating margin | 10.12 | % | 10.39 | % | 9.40 | % | 10.61 | % | ||||||||
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, 2020 | August 31, 2019 | August 31, 2020 | August 31, 2019 | |||||||||||||
Adjusted EBITDA | ||||||||||||||||
Consolidated | ||||||||||||||||
Net income | $ | 134,464 | $ | 123,132 | $ | 314,008 | $ | 324,711 | ||||||||
Interest expense and finance charges, net | 28,749 | 42,945 | 99,046 | 127,695 | ||||||||||||
Provision for income taxes | 45,356 | 41,691 | 99,740 | 112,831 | ||||||||||||
Depreciation (excluding accelerated depreciation included in acquisition-related and integration expenses below) | 37,446 | 38,597 | 110,981 | 119,004 | ||||||||||||
Amortization of intangibles | 46,828 | 52,428 | 140,320 | 158,149 | ||||||||||||
EBITDA | $ | 292,843 | $ | 298,793 | $ | 764,095 | $ | 842,390 | ||||||||
Other (income) expense, net (excluding amounts included in acquisition-related and integration expenses below) | 567 | 1,087 | (3,798) | (19,593) | ||||||||||||
Acquisition-related and integration expenses | 4,163 | 9,200 | 23,219 | 53,411 | ||||||||||||
Adjusted EBITDA | $ | 297,573 | $ | 309,080 | $ | 783,516 | $ | 876,208 | ||||||||
Technology Solutions | ||||||||||||||||
Net income | $ | 85,531 | $ | 87,778 | $ | 204,237 | $ | 236,080 | ||||||||
Interest expense and finance charges, net | 19,747 | 17,775 | 59,531 | 55,725 | ||||||||||||
Provision for income taxes | 27,119 | 29,739 | 56,189 | 77,873 | ||||||||||||
Depreciation | 5,937 | 5,875 | 17,650 | 16,719 | ||||||||||||
Amortization of intangibles | 9,995 | 10,999 | 30,130 | 32,968 | ||||||||||||
EBITDA | $ | 148,329 | $ | 152,166 | $ | 367,737 | $ | 419,365 | ||||||||
Other (income) expense, net | (25) | 3,538 | 1,004 | (17,083) | ||||||||||||
Acquisition-related and integration expenses | ? | ? | ? | 981 | ||||||||||||
Adjusted EBITDA | $ | 148,304 | $ | 155,704 | $ | 368,741 | $ | 403,263 | ||||||||
Concentrix | ||||||||||||||||
Net income | $ | 48,933 | $ | 35,354 | $ | 109,771 | $ | 88,631 | ||||||||
Interest expense and finance charges, net | 9,002 | 25,170 | 39,515 | 71,970 | ||||||||||||
Provision for income taxes | 18,236 | 11,952 | 43,551 | 34,958 | ||||||||||||
Depreciation (excluding accelerated depreciation included in acquisition-related and integration expenses below) | 31,509 | 32,722 | 93,331 | 102,285 | ||||||||||||
Amortization of intangibles | 36,833 | 41,429 | 110,190 | 125,181 | ||||||||||||
EBITDA | $ | 144,513 | $ | 146,627 | $ | 396,358 | $ | 423,025 | ||||||||
Other (income) expense, net (excluding amounts included in acquisition-related and integration expenses below) | 592 | (2,450) | (4,802) | (2,510) | ||||||||||||
Acquisition-related and integration expenses | 4,163 | 9,200 | 23,219 | 52,430 | ||||||||||||
Adjusted EBITDA | $ | 149,268 | $ | 153,377 | $ | 414,775 | $ | 472,945 | ||||||||
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, 2020 | August 31, 2019 | August 31, 2020 | August 31, 2019 | |||||||||||||
Net income | ||||||||||||||||
Net income | $ | 134,464 | $ | 123,132 | $ | 314,008 | $ | 324,711 | ||||||||
Acquisition-related and integration expenses | 4,163 | 9,200 | 23,219 | 53,411 | ||||||||||||
Amortization of intangibles | 46,828 | 52,428 | 140,320 | 158,149 | ||||||||||||
Contingent consideration | ? | ? | ? | (19,034) | ||||||||||||
Income taxes related to the above(1) | (12,899) | (15,548) | (41,407) | (55,328) | ||||||||||||
Non-GAAP net income | $ | 172,556 | $ | 169,212 | $ | 436,140 | $ | 461,909 | ||||||||
Diluted earnings per common share ("EPS")(2) | ||||||||||||||||
Net income | $ | 134,464 | $ | 123,132 | $ | 314,008 | $ | 324,711 | ||||||||
Less: net income allocated to participating securities | 1,481 | 1,066 | 3,602 | 2,883 | ||||||||||||
Net income attributable to common stockholders | 132,983 | 122,066 | 310,406 | 321,828 | ||||||||||||
Acquisition-related and integration expenses attributable to common stockholders | 4,117 | 9,121 | 22,960 | 52,938 | ||||||||||||
Amortization of intangibles attributable to common stockholders | 46,312 | 51,975 | 138,755 | 156,748 | ||||||||||||
Contingent consideration attributable to common stockholders | ? | ? | ? | (18,865) | ||||||||||||
Income taxes related to the above attributable to common stockholders(1) | (12,757) | (15,414) | (40,945) | (54,838) | ||||||||||||
Non-GAAP net income attributable to common stockholders | $ | 170,655 | $ | 167,748 | $ | 431,176 | $ | 457,810 | ||||||||
Weighted-average number of common shares - diluted: | 51,241 | 50,845 | 51,172 | 50,903 | ||||||||||||
Diluted EPS(2) | $ | 2.60 | $ | 2.40 | $ | 6.07 | $ | 6.32 | ||||||||
Acquisition-related and integration expenses | 0.08 | 0.18 | 0.45 | 1.04 | ||||||||||||
Amortization of intangibles | 0.90 | 1.02 | 2.71 | 3.08 | ||||||||||||
Contingent consideration | ? | ? | ? | (0.37) | ||||||||||||
Income taxes related to the above(1) | (0.25) | (0.30) | (0.80) | (1.08) | ||||||||||||
Non-GAAP diluted EPS | $ | 3.33 | $ | 3.30 | $ | 8.43 | $ | 8.99 | ||||||||
SYNNEX Corporation Reconciliation of GAAP to Non-GAAP financial measures (Amounts may not add due to rounding) (continued) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
(Amounts in thousands) | August 31, 2020 | August 31, 2019 | August 31, 2020 | August 31, 2019 | ||||||||||||
Free cash flow | ||||||||||||||||
Net cash provided by (used in) operating activities | $ | 320,617 | $ | 249,853 | $ | 1,547,098 | $ | 202,473 | ||||||||
Purchases of property and equipment | (42,705) | (33,020) | (127,326) | (93,432) | ||||||||||||
Free cash flow | $ | 277,912 | $ | 216,833 | $ | 1,419,772 | $ | 109,041 | ||||||||
Forecast | ||||||||
Three Months Ending November 30, 2020 | ||||||||
(Amounts in millions, except per share amounts) | Low | High | ||||||
Net income | $ | 153.0 | $ | 166.0 | ||||
Acquisition-related and integration expenses | 3.0 | 3.0 | ||||||
Amortization of intangibles | 47.0 | 47.0 | ||||||
Income taxes related to the above(1) | (12.5) | (12.5) | ||||||
Non-GAAP net income | $ | 190.5 | $ | 203.5 | ||||
Diluted EPS(2) | $ | 2.95 | $ | 3.20 | ||||
Acquisition-related and integration expenses | 0.06 | 0.06 | ||||||
Amortization of intangibles | 0.90 | 0.90 | ||||||
Income taxes related to the above(1) | (0.24) | (0.24) | ||||||
Non-GAAP diluted EPS | $ | 3.68 | $ | 3.93 | ||||
(1)The tax effect of taxable and deductible non-GAAP adjustments was calculated using the effective year-to-date tax rate during the respective periods. |
(2)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 1.1% and 1.2% of Net income for the three and nine months ended August 31, 2020, respectively and approximately 0.9% for both the three and nine months ended August 31, 2019. Net income allocable to participating securities is estimated to be approximately 0.9% of the forecasted Net income for the three months ending November 30, 2020. |
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, 2020 | August 31, 2019 | |||||||
ROIC | ||||||||
Operating income (trailing fiscal four quarters) | $ | 777,803 | $ | 746,368 | ||||
Income taxes on operating income(1) | (193,398) | (201,002) | ||||||
Operating income after taxes | $ | 584,405 | $ | 545,366 | ||||
Total borrowings, excluding book overdraft (last five quarters average) | $ | 3,019,573 | $ | 3,126,339 | ||||
Total equity (last five quarters average) | 3,834,782 | 3,282,537 | ||||||
Less: U.S. cash and cash equivalents (last five quarters average) | (398,398) | (67,727) | ||||||
Total invested capital | $ | 6,455,957 | $ | 6,341,149 | ||||
ROIC | 9.1 | % | 8.6 | % | ||||
Adjusted ROIC | ||||||||
Non-GAAP operating income (trailing fiscal four quarters) | $ | 1,011,028 | $ | 1,024,961 | ||||
Income taxes on Non-GAAP operating income(1) | (253,279) | (263,045) | ||||||
Non-GAAP operating income after taxes | $ | 757,749 | $ | 761,916 | ||||
Total invested capital | $ | 6,455,957 | $ | 6,341,149 | ||||
Tax effected impact of cumulative non-GAAP adjustments (last five quarters average) | 616,468 | 439,557 | ||||||
Total Non-GAAP invested capital | $ | 7,072,425 | $ | 6,780,706 | ||||
Adjusted ROIC | 10.7 | % | 11.2 | % | ||||
(1)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, 2020 | August 31, 2019 | |||||||||
Total borrowings, excluding book overdraft | (a) | $ | 2,851,890 | $ | 3,323,416 | |||||
Less: cash and cash equivalents | (b) | 1,452,273 | 262,279 | |||||||
Net debt | (c)=(a)-(b) | $ | 1,399,617 | $ | 3,061,137 | |||||
Trailing four quarters Adjusted EBITDA | (d) | $ | 1,160,281 | $ | 1,177,889 | |||||
Debt to Adjusted EBITDA leverage ratio | (e)=(a)/(d) | 2.5 | 2.8 | |||||||
Net debt to Adjusted EBITDA leverage ratio | (f)=(c)/(d) | 1.2 | 2.6 | |||||||
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, 2020 | August 31, 2019 | |||||||||
Days sales outstanding | ||||||||||
Revenue (products and services) | (a) | $ | 6,464,782 | $ | 6,203,659 | |||||
Accounts receivable, net | (b) | 3,580,970 | 3,452,976 | |||||||
Days sales outstanding | (c) = (b)/((a)/the number of | 51 | 51 | |||||||
Days inventory outstanding | ||||||||||
Cost of revenue (products and services) | (d) | $ | 5,756,690 | $ | 5,477,669 | |||||
Inventories | (e) | 2,832,607 | 2,787,159 | |||||||
Days inventory outstanding | (f) = (e)/((d)/the number of | 45 | 47 | |||||||
Days payable outstanding | ||||||||||
Cost of revenue (products and services) | (g) | $ | 5,756,690 | $ | 5,477,669 | |||||
Accounts payable | (h) | 3,655,215 | 2,932,046 | |||||||
Days payable outstanding | (i) = (h)/((g)/the number of | 58 | 49 | |||||||
Cash conversion cycle | (j) = (c)+(f)-(i) | 38 | 49 | |||||||
SOURCE SYNNEX Corporation
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