SYNNEX Corporation

synnex
Jun 28,2018

SYNNEX Corporation Reports Second Quarter Fiscal 2018 Results

FREMONT, Calif., June 28, 2018 /PRNewswire/ -- SYNNEX Corporation (NYSE: SNX), a leading business process services company, today announced financial results for the fiscal second quarter ended May 31, 2018.

 

Q2 FY18

Q2 FY17

Net change

Revenue ($M)

$4,973

$3,936

26.3%

Operating income ($M)

$123.9

$125.1

(1.0)%

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

$152.3

$141.2

7.8%

Operating margin

2.49%

3.18%

(69) bps

Non-GAAP operating margin(1)

3.06%

3.59%

(53) bps

Net income ($M)

$93.7

$73.1

28.1%

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

$95.3

$83.2

14.5%

Diluted EPS

$2.34

$1.83

27.9%

Non-GAAP Diluted EPS(1)

$2.38

$2.08

14.4%

 

(1) Non-GAAP financial measures exclude the impact of acquisition-related and integration expenses, the amortization of intangible assets together with the related tax effects thereon, and a tax benefit related to repatriation tax. A reconciliation of GAAP to Non-GAAP financial measures is presented in the supplementary information section at the end of this press release.

"Strong results in both of our segments enabled us to deliver another record quarter for both revenue and earnings," said Dennis Polk, President and Chief Executive Officer, SYNNEX Corporation. "These results reflect our persistent focus on executing the strategies we have set out and our ability to operate effectively and with discipline."

Second Quarter Fiscal 2018 Highlights:

  • Technology Solutions: Revenue was $4.5 billion, up 30% from the prior fiscal year second quarter. Operating income was $96 million, or 2.1% of segment revenue, compared to $102 million, or 2.9% of segment revenue, in the prior fiscal year second quarter. Non-GAAP operating income was $111 million, or 2.5% of segment revenue, in the fiscal second quarter of 2018, compared to $102 million, or 3.0% of segment revenue, in the prior fiscal year second quarter.
  • Concentrix: Revenue was $491 million, up 2% from the prior fiscal year second quarter. Operating income was $28 million, or 5.6% of segment revenue, compared to $23 million, or 4.9% of segment revenue in the prior fiscal year second quarter. Non-GAAP operating income was $41 million, or 8.4% of segment revenue, in the fiscal second quarter of 2018, compared to $39 million, or 8.1% of segment revenue, in the prior fiscal year second quarter.
  • The trailing fiscal four quarters Return on Invested Capital ("ROIC") was 8.9% compared to 11.0% in the prior fiscal year second quarter. The adjusted trailing fiscal four quarters ROIC was 10.9%.
  • The debt to capitalization ratio was 43.9%, up from 33.9% in the prior fiscal year second quarter, primarily as a result of the Westcon-Comstor Americas acquisition in the fiscal fourth quarter of 2017.
  • Depreciation and amortization were $23 million and $26 million, respectively.
  • Cash generated from operations was approximately $68 million during the quarter.
  • Tax expense for the second quarter of fiscal 2018 includes a benefit of $17 million, or $0.42 per diluted share, related to repatriation tax.

Third Quarter Fiscal 2018 Outlook:

The following statements are based on SYNNEX's current expectations for the fiscal 2018 third quarter. Non-GAAP financial measures exclude the amortization of intangibles and the related tax effect thereon. These statements are forward-looking and actual results may differ materially.

  • Revenue is expected to be in the range of $4.8 billion to $5.0 billion.
  • Net income is expected to be in the range of $77.9 million to $81.6 million and on a Non-GAAP basis, net income is expected to be in the range of $97.0 million to $100.7 million.
  • Diluted earnings per share is expected to be in the range of $1.95 to $2.04 and on a Non-GAAP basis, diluted earnings per share is expected to be in the range of $2.42 to $2.52.
  • After-tax amortization of intangibles is expected to be $19.1 million, or $0.48 per share.

Dividend Announcement

SYNNEX announced today that its Board of Directors declared a quarterly cash dividend of $0.35 per common share. The dividend is payable on July 27, 2018 to stockholders of record as of the close of business on July 13, 2018.

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 live audio webcast of the call will be available at http://ir.synnex.com. The conference call will also be available via telephone by dialing (800) 369-1162 in North America or (415) 228-5007 for international callers. The passcode 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 where it will be archived for one year.

About SYNNEX Corporation

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. Concentrix, a wholly-owned subsidiary of SYNNEX Corporation, offers a portfolio of strategic solutions and end-to-end business services focused on customer engagement, process optimization, technology innovation, front and back-office automation and business transformation to clients in ten identified industry verticals. 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.

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 2018, non-GAAP net income and non-GAAP diluted earnings per share also exclude the impact of a provisional adjustment relating to the enactment of the Tax Cuts and Jobs Act of 2017. This adjustment includes an estimated transition tax on accumulated overseas profits and the estimated remeasurement of deferred tax assets and liabilities to the new U.S. tax rate. These estimates may be impacted by new guidance issued by regulators, additional information obtained related to earnings and profits in foreign jurisdictions and the impact of our financial position as of the measurement date of November 30, 2018. SYNNEX expects the accounting for the tax effects of the Tax Cuts and Jobs Act will be completed during the one-year measurement period.

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 the Company's 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.

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 the Company's consolidated financial statements prepared in accordance with GAAP. A reconciliation of SYNNEX' non-GAAP financial information to GAAP 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, 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, foresee, expect, may, will, provide, could and should and the negative of these terms or other similar expressions. These statements, including statements regarding SYNNEX' expectations and outlook for the fiscal 2018 third quarter as to revenue, net income, non-GAAP net income, diluted earnings per share, non-GAAP diluted earnings per share, tax rate, after-tax amortization of intangibles, currency impact, the frequency and occurrence of dividend declarations, the anticipated benefits of the non-GAAP financial measures, and estimates related to the Tax Cuts and Jobs Act of 2017, as well as expectations relating to the accounting thereof, 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, 2017 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 2018 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

SYNNEX Corporation

Consolidated Balance Sheets

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

(unaudited)

 
 

May 31,
2018

 

November 30,
2017

ASSETS

     

Current assets:

     

Cash and cash equivalents

$

354,176

   

$

550,688

 

Restricted cash

6,172

   

5,837

 

Short-term investments

3,940

   

5,475

 

Accounts receivable, net

2,712,550

   

2,846,371

 

Receivable from related parties

161

   

77

 

Inventories

2,129,779

   

2,162,626

 

Other current assets

220,573

   

168,704

 

Total current assets

5,427,351

   

5,739,778

 

Property and equipment, net

344,290

   

346,589

 

Goodwill

861,455

   

872,641

 

Intangible assets, net

525,867

   

583,051

 

Deferred tax assets

31,802

   

31,687

 

Other assets

125,043

   

124,780

 

Total assets

$

7,315,808

   

$

7,698,526

 
       

LIABILITIES AND EQUITY

     

Current liabilities:

     

Borrowings, current

$

705,120

   

$

805,471

 

Accounts payable

2,257,594

   

2,626,720

 

Payable to related parties

30,360

   

16,888

 

Accrued compensation and benefits

183,689

   

204,665

 

Other accrued liabilities

402,798

   

354,104

 

Income taxes payable

60,262

   

33,359

 

Total current liabilities

3,639,823

   

4,041,207

 

Long-term borrowings

1,106,622

   

1,136,089

 

Other long-term liabilities

170,283

   

124,008

 

Deferred tax liabilities

87,605

   

113,527

 

Total liabilities

5,004,333

   

5,414,831

 

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, 41,172 and 41,092 shares issued as of May 31, 2018 and November 30, 2017, respectively

41

   

41

 

Additional paid-in capital

481,561

   

467,948

 

Treasury stock, 1,883 and 1,419 shares as of May 31, 2018 and November 30, 2017, respectively

(124,801)

   

(77,133)

 

Accumulated other comprehensive income (loss)

(90,265)

   

(61,919)

 

Retained earnings

2,044,939

   

1,954,758

 

Total stockholders' equity

2,311,475

   

2,283,695

 

Total liabilities and equity

$

7,315,808

   

$

7,698,526

 

 

SYNNEX Corporation

Consolidated Statements of Operations

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

(unaudited)

 
 

Three Months Ended

 

Six Months Ended

 

May 31, 2018

 

May 31, 2017

 

May 31, 2018

 

May 31, 2017

Revenue:

             

Products

$

4,486,395

   

$

3,458,243

   

$

8,535,158

   

$

6,504,864

 

Services

486,188

   

478,025

   

989,795

   

952,273

 

Total revenue

4,972,583

   

3,936,268

   

9,524,953

   

7,457,137

 

Cost of revenue:

             

Products

(4,239,137)

   

(3,265,630)

   

(8,063,233)

   

(6,146,183)

 

Services

(304,352)

   

(298,393)

   

(618,675)

   

(596,926)

 

Gross profit

429,094

   

372,245

   

843,045

   

714,028

 

Selling, general and administrative expenses

(305,156)

   

(247,115)

   

(607,175)

   

(487,139)

 

Operating income

123,938

   

125,130

   

235,870

   

226,889

 

Interest expense and finance charges, net

(16,375)

   

(8,962)

   

(33,826)

   

(17,144)

 

Other expense, net

(1,446)

   

(206)

   

(2,624)

   

(529)

 

Income before income taxes

106,117

   

115,962

   

199,420

   

209,216

 

Provision for income taxes

(12,424)

   

(42,814)

   

(81,293)

   

(74,279)

 

Net income

$

93,693

   

$

73,148

   

$

118,127

   

$

134,937

 

Earnings per common share:

             

Basic

$

2.35

   

$

1.83

   

$

2.96

   

$

3.38

 

Diluted

$

2.34

   

$

1.83

   

$

2.94

   

$

3.37

 

Weighted-average common shares outstanding:

             

Basic

39,505

   

39,533

   

39,599

   

39,513

 

Diluted

39,742

   

39,711

   

39,859

   

39,708

 

Cash dividends declared per share

$

0.35

   

$

0.25

   

$

0.70

   

$

0.50

 

 

SYNNEX Corporation

Segment Information

(currency in thousands)

(unaudited)

 
 

Three Months Ended

 

Six Months Ended

 

May 31, 2018

 

May 31, 2017

 

May 31, 2018

 

May 31, 2017

Revenue:

             

Technology Solutions

$

4,486,408

   

$

3,458,320

   

$

8,535,227

   

$

6,505,016

 

Concentrix

491,246

   

481,679

   

998,983

   

959,843

 

Inter-segment elimination

(5,071)

   

(3,731)

   

(9,257)

   

(7,722)

 

Consolidated

$

4,972,583

   

$

3,936,268

   

$

9,524,953

   

$

7,457,137

 
               

Operating income:

             

Technology Solutions

$

96,254

   

$

101,705

   

$

178,523

   

$

182,126

 

Concentrix

27,684

   

23,425

   

57,347

   

44,741

 

Inter-segment elimination

   

   

   

22

 

Consolidated

$

123,938

   

$

125,130

   

$

235,870

   

$

226,889

 

 

SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(currency in thousands)

 
 

Three Months Ended

 

Six Months Ended

 

May 31, 2018

 

May 31, 2017

 

May 31, 2018

 

May 31, 2017

Revenue in Constant Currency

             

Consolidated

             

Revenue

$

4,972,583

   

$

3,936,268

   

$

9,524,953

   

$

7,457,137

 

Foreign currency translation

(35,798)

       

(73,895)

     

Revenue in constant currency

$

4,936,785

   

$

3,936,268

   

$

9,451,058

   

$

7,457,137

 
               

Technology Solutions

             

Segment revenue

$

4,486,408

   

$

3,458,320

   

$

8,535,227

   

$

6,505,016

 

Foreign currency translation

(26,828)

       

(51,258)

     

Revenue in constant currency

$

4,459,580

   

$

3,458,320

   

$

8,483,969

   

$

6,505,016

 
               

Concentrix

             

Segment revenue

$

491,246

   

$

481,679

   

$

998,983

   

$

959,843

 

Foreign currency translation

(8,970)

       

(22,637)

     

Revenue in constant currency

$

482,276

   

$

481,679

   

$

976,346

   

$

959,843

 
 
 
 

Three Months Ended

 

Six Months Ended

 

May 31, 2018

 

May 31, 2017

 

May 31, 2018

 

May 31, 2017

Selling, general and administrative expenses

             

Consolidated

             

GAAP selling, general and administrative expenses

$

305,156

   

$

247,115

   

$

607,175

   

$

487,139

 

Acquisition-related and integration expenses

2,046

   

   

3,851

   

611

 

Amortization of intangibles

25,814

   

15,649

   

52,105

   

31,716

 

Adjusted selling, general and administrative expenses

$

277,296

   

$

231,466

   

$

551,219

   

$

454,812

 
               

Technology Solutions

             

GAAP selling, general and administrative expenses

$

151,013

   

$

90,983

   

$

293,467

   

$

176,705

 

Acquisition-related and integration expenses

2,046

   

   

3,851

   

 

Amortization of intangibles

12,462

   

651

   

25,278

   

1,305

 

Adjusted selling, general and administrative expenses

$

136,505

   

$

90,332

   

$

264,338

   

$

175,400

 
               

Concentrix

             

GAAP selling, general and administrative expenses

$

155,894

   

$

158,034

   

$

317,136

   

$

314,404

 

Acquisition-related and integration expenses

   

   

   

611

 

Amortization of intangibles

13,352

   

14,998

   

26,827

   

30,411

 

Adjusted selling, general and administrative expenses

$

142,542

   

$

143,036

   

$

290,309

   

$

283,382

 

 

SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(currency in thousands)

(continued)

 
 

Three Months Ended

 

Six Months Ended

 

May 31, 2018

 

May 31, 2017

 

May 31, 2018

 

May 31, 2017

Operating income and Operating margin

             

Consolidated

             

Revenue

$

4,972,583

   

$

3,936,268

   

$

9,524,953

   

$

7,457,137

 
               

GAAP operating income

$

123,938

   

$

125,130

   

$

235,870

   

$

226,889

 

Acquisition-related and integration expenses

2,046

   

   

3,851

   

611

 

Amortization of intangibles

26,276

   

16,069

   

52,986

   

32,556

 

Non-GAAP operating income

$

152,260

   

$

141,199

   

$

292,707

   

$

260,056

 

Depreciation

22,596

   

19,413

   

44,520

   

38,873

 

Adjusted EBITDA

$

174,856

   

$

160,612

   

$

337,227

   

$

298,929

 
               

GAAP operating margin

2.49

%

 

3.18

%

 

2.48

%

 

3.04

%

Non-GAAP operating margin

3.06

%

 

3.59

%

 

3.07

%

 

3.49

%

               

Technology Solutions

             

Segment revenue

$

4,486,408

   

$

3,458,320

   

$

8,535,227

   

$

6,505,016

 
               

GAAP operating income

$

96,254

   

$

101,705

   

$

178,523

   

$

182,126

 

Acquisition-related and integration expenses

2,046

   

   

3,851

   

 

Amortization of intangibles

12,462

   

651

   

25,278

   

1,305

 

Non-GAAP operating income

$

110,762

   

$

102,356

   

$

207,652

   

$

183,431

 

Depreciation

5,010

   

3,402

   

9,844

   

6,878

 

Adjusted EBITDA

$

115,772

   

$

105,758

   

$

217,496

   

$

190,309

 
               

GAAP operating margin

2.15

%

 

2.94

%

 

2.09

%

 

2.80

%

Non-GAAP operating margin

2.47

%

 

2.96

%

 

2.43

%

 

2.82

%

               

Concentrix

             

Segment revenue

$

491,246

   

$

481,679

   

$

998,983

   

$

959,843

 
               

GAAP operating income

$

27,684

   

$

23,425

   

$

57,347

   

$

44,741

 

Acquisition-related and integration expenses

   

   

   

611

 

Amortization of intangibles

13,814

   

15,418

   

27,708

   

31,251

 

Non-GAAP operating income

$

41,498

   

$

38,843

   

$

85,055

   

$

76,603

 

Depreciation

17,586

   

16,011

   

34,676

   

32,018

 

Adjusted EBITDA

$

59,084

   

$

54,854

   

$

119,731

   

$

108,621

 
               

GAAP operating margin

5.64

%

 

4.86

%

 

5.74

%

 

4.66

%

Non-GAAP operating margin

8.45

%

 

8.06

%

 

8.51

%

 

7.98

%

 

SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

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

(continued)

 
 

Three Months Ended

 

Six Months Ended

 

May 31, 2018

 

May 31, 2017

 

May 31, 2018

 

May 31, 2017

Net income

             

Net income

$

93,693

   

$

73,148

   

$

118,127

   

$

134,937

 

Acquisition-related and integration expenses (benefit)

(588)

   

   

1,217

   

611

 

Amortization of intangibles

26,276

   

16,069

   

52,986

   

32,556

 

Income taxes related to the above(1)

(7,079)

   

(6,006)

   

(15,383)

   

(11,775)

 

U.S. tax reform adjustment

(17,000)

   

   

24,701

   

 

Non-GAAP net income

$

95,302

   

$

83,211

   

$

181,648

   

$

156,329

 
               

Diluted earnings per common share ("EPS")(2)

             

Net income

$

93,693

   

$

73,148

   

$

118,127

   

$

134,937

 

Less: net income allocated to participating securities

(859)

   

(672)

   

(1,078)

   

(1,250)

 

Net income attributable to common stockholders(3)

92,834

   

72,476

   

117,048

   

133,687

 

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

(583)

   

   

1,257

   

605

 

Amortization of intangibles attributable to common stockholders

26,036

   

15,921

   

52,503

   

32,254

 

Income taxes related to the above attributable to common stockholders(1)

(7,014)

   

(5,949)

   

(15,258)

   

(11,664)

 

U.S. tax reform adjustment attributable to common stockholders

(16,844)

   

   

24,476

   

 

Difference in the allocation of GAAP and Non-GAAP net income to participating securities

(1)

   

   

(35)

   

 

Non-GAAP net income attributable to common stockholders(3)

$

94,428

   

$

82,448

   

$

179,991

   

$

154,882

 
               

Weighted-average number of common shares - diluted:

39,742

   

39,711

   

39,859

   

39,708

 
               

Diluted EPS(2)

$

2.34

   

$

1.83

   

$

2.94

   

$

3.37

 

Acquisition-related and integration expenses (benefit)

(0.01)

   

   

0.03

   

0.02

 

Amortization of intangibles

0.66

   

0.40

   

1.32

   

0.81

 

Income taxes related to the above(1)

(0.18)

   

(0.15)

   

(0.38)

   

(0.29)

 

U.S. tax reform adjustment

(0.42)

   

   

0.61

   

 

Non-GAAP Diluted EPS(3)

$

2.38

   

$

2.08

   

$

4.52

   

$

3.90

 

 

SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(amounts in millions, except for per share amounts)

(continued)

 
 

Forecast

 

Three Months Ending August 31, 2018

 

Low

 

High

Net income

     

Net income

$

77.9

   

$

81.6

 

Amortization of intangibles

26.2

   

26.2

 

Income taxes related to the above(1)

(7.1)

   

(7.1)

 

Non-GAAP net income

$

97.0

   

$

100.7

 
       

Diluted EPS(2)

$

1.95

   

$

2.04

 

Amortization of intangibles

0.65

   

0.65

 

Income taxes related to the above(1)

(0.18)

   

(0.18)

 

Non-GAAP Diluted EPS(3)

$

2.42

   

$

2.52

 
 

(1) The tax effect of the 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.

 

(2) Diluted EPS for all periods presented 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, 2018 and 2017. 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, 2018.

 

(3) Amounts may not add due to rounding.

 

SYNNEX Corporation

Calculation of Financial Metrics

(currency in thousands)

 

ROIC

 
 

May 31, 2018

 

May 31, 2017

ROIC

     

Operating income (trailing fiscal four quarters)

$

517,946

   

$

455,553

 

Income taxes on operating income(1)

(194,700)

   

(154,573)

 

Operating income after taxes

323,246

   

300,980

 
       

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

$

1,537,631

   

$

913,007

 

Total equity (last five quarters average)

2,248,738

   

1,986,402

 

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

(132,465)

   

(161,559)

 

Total invested capital

3,653,904

   

2,737,850

 
       

ROIC

8.9

%

 

11.0

%

       

Adjusted ROIC

     

Non-GAAP operating income (trailing fiscal four quarters)

$

625,578

   

$

529,790

 

Income taxes on Non-GAAP operating income(1)

(199,401)

   

(179,555)

 

Non-GAAP operating income after taxes

426,177

   

350,235

 
       

Total invested capital

$

3,653,904

   

$

2,737,850

 

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

253,203

   

182,015

 

Total Non-GAAP invested capital

3,907,107

   

2,919,865

 
       

Adjusted ROIC

10.9

%

 

12.0

%

 

(1) Income taxes on GAAP and non-GAAP operating income was calculated using the effective year-to-date tax rates during the respective periods. The effective tax rate for non-GAAP operating income in 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.

 

Debt to Capitalization

 
   

May 31, 2018

 

May 31, 2017

Total borrowings, excluding book overdraft

(a)

$

1,810,926

   

$

1,087,703

 

Total equity

(b)

2,311,475

   

2,116,210

 

Debt to capitalization

(a)/((a)+(b))

43.9

%

 

33.9

%

 

SYNNEX Corporation

Calculation of Financial Metrics

(currency in thousands)

(continued)

 

Cash Conversion Cycle

 
   

Three Months Ended

   

May 31, 2018

 

May 31, 2017

Days sales outstanding

       

Revenue (products and services)

(a)

$

4,972,583

   

$

3,936,268

 

Accounts receivable, including receivable from related parties

(b)

2,712,711

   

1,787,437

 

Days sales outstanding

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

50

   

42

 
         

Days inventory outstanding

       

Cost of revenue (products and services)

(d)

$

4,543,489

   

$

3,564,023

 

Inventories

(e)

2,129,779

   

2,112,590

 

Days inventory outstanding

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

43

   

55

 
         

Days payable outstanding

       

Cost of revenue (products and services)

(g)

$

4,543,489

   

$

3,564,023

 

Accounts payable, including payable to related parties

(h)

2,287,954

   

1,706,408

 

Days payable outstanding

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

46

   

44

 
         

Cash conversion cycle

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

47

   

53

 

 

 

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SOURCE SYNNEX Corporation

Investor Contact: Mary Lai, Senior Director, Investor Relations, SYNNEX Corporation, (510) 668-8436

SYNNEX Corporation