SYNNEX Corporation
Sep 25, 2008

SYNNEX Corporation Reports Fiscal 2008 Third Quarter Results

Record Operating Margin of 1.93%


SYNNEX Corporation (NYSE:SNX), a leading business process services company, today announced financial results for the fiscal third quarter ended August 31, 2008.

For the third quarter of fiscal 2008, revenues were $2.05 billion, compared to $1.76 billion for the quarter ended August 31, 2007, representing a 16.2% increase over the prior year quarter. These results exceeded analyst projections and the Company's guidance of $1.92 billion to $1.99 billion.

Net income for the third quarter of fiscal 2008 was $22.1 million, or $0.66 per diluted share, also exceeding analysts' projections and the Company's guidance for net income of $18.7 million to $19.4 million and diluted earnings per share of $0.56 to $0.58. Compared to $14.4 million, or $0.44 per diluted share in the prior year quarter, these results represent a 53.2% increase in net income. The Company noted that during the third quarter of fiscal 2007, a charge of $2.7 million, or $1.7 million net of tax, was recorded for the restructuring and consolidation of its Canadian operations as a result of the acquisition of the Redmond Group of Companies and the purchase of a new logistics facility in Guelph, Canada. The Company also benefited in the third quarter of fiscal 2007 from a one-time $1.1 million reduction in income tax expense resulting from the conclusion of an income tax audit.

The third quarter for fiscal 2008 marks the 85th consecutive profitable quarter for SYNNEX.

"With the achievement of several significant financial milestones for SYNNEX, we believe the fiscal 2008 third quarter results underscore our continuing operational excellence," stated Robert T. Huang, President and Co-Chief Executive Officer. "We reported record breaking results for revenue, gross margin, operating margin, net income and EPS, and we continued our trend of improving year-over-year quarterly ROIC. Our performance this quarter is indicative of our solid management team, our growth strategies and the smooth transition of leadership responsibilities to Kevin Murai. I am very proud of the SYNNEX team for their focused execution and top notch performance, especially in light of the current economic environment."

    Third Quarter Fiscal 2008 Financial Highlights:

    --  Gross margin expanded to 5.52%, an increase of approximately
        34 basis points, compared to the third quarter of fiscal 2007,
        and up from 5.37% in the second quarter of fiscal 2008.

    --  Income from operations was $39.5 million, or 1.93% of
        revenues, versus $24.5 million, or 1.39% of revenues in the
        prior fiscal year third quarter, and up from $31.7 million, or
        1.69% in the second quarter of fiscal 2008.

    --  Depreciation and amortization were $2.8 million and $2.2
        million, respectively.

    --  Capital expenditures were $16.6 million.

    --  Borrowings under the Company's Canadian off-balance sheet
        accounts receivable securitization program totaled
        approximately $68.0 million as of August 31, 2008. This
        compares to $115.9 million as of November 30, 2007.

"Our results for the third quarter are a testament to our strong focus and ability to out-execute our competition and profitably gain market share," said Kevin Murai, Co-Chief Executive Officer. "Though our fourth quarter guidance remains cautious in light of the current economic environment, looking forward, we expect to continue to outperform the market in profitable growth. Our third quarter results combined with our current expectations for the fourth quarter position SYNNEX to exceed our stated goal of growing EPS in excess of 20% for the fiscal year."

Fourth Quarter Fiscal 2008 Outlook:

The following statements are based on the Company's current expectations for the fourth quarter of fiscal 2008. These statements are forward-looking and actual results may differ materially.

    --  Revenues are expected to be in the range of $2.10 billion to
        $2.20 billion.

    --  Net income is expected to be in the range of $23.6 million to
        $24.8 million.

    --  Diluted earnings per share are expected to be in the range of
        $0.70 to $0.73.

The calculation of diluted earnings per share for the fourth quarter of fiscal 2008 is based on a diluted weighted-average share count of approximately 33.8 million.

Conference Call and Webcast

SYNNEX will be discussing its financial results and outlook on a conference call today at 2:00 p.m. (PT). A webcast of the call will be available at The conference call can be accessed by dialing 866-364-4389 in North America or 706-902-0319 outside North America. The confirmation code for the call is 63761994. A replay of the conference call will be available at approximately two hours after the conclusion of the conference and will be archived until October 9, 2008.


SYNNEX Corporation, a Fortune 500 corporation, is a leading business process services company, servicing resellers and original equipment manufacturers in multiple regions around the world. The Company provides services in IT distribution, supply chain management, contract assembly and business process outsourcing. Founded in 1980, SYNNEX employs over 7,000 associates worldwide and operates in the United States, Canada, China, Japan, Mexico, the Philippines and the United Kingdom. Additional information about SYNNEX may be found online at

Statements in this press release regarding SYNNEX Corporation which are not historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may be identified by terms such as believe, expect, may, will, provide, plan, goal, continue, anticipate, position, could and should and the negative of these terms or other similar expressions. These statements, including statements regarding our operational excellence, our trend to better our financial position each quarter, maintaining and delivering growth and profitability, expectations to continue to outperform the market in profitable growth, our commitment to grow annual earnings per share in excess of 20% year-over-year, expectations of continued execution, and expectations of our revenues, net income and earnings per share, 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 IT spending; the loss or consolidation of one or more of our significant OEM suppliers or customers; market acceptance and product life of the products we assemble and distribute; competitive conditions in our industry and their impact on our margins; pricing, margin and other terms with our OEM suppliers; our ability to gain market share; variations in supplier-sponsored programs; changes in our costs and operating expenses; changes in foreign currency exchange rates; risks associated with our international operations; uncertainties and variability in demand by our reseller and contract assembly customers; supply shortages or delays; any termination or reduction in our floor plan financing arrangements; credit exposure to our reseller customers, and negative trends in their businesses; any future incidents of theft; risks associated with our contract assembly business; and other risks and uncertainties detailed in our Form 10-Q for the fiscal quarter ended May 31, 2008 and from time to time in our SEC filings. Statements included in this press release are based upon information known to SYNNEX Corporation as of the date of this release, and SYNNEX Corporation assumes no obligation to update information contained in this press release.

Copyright 2008 SYNNEX Corporation. All rights reserved. SYNNEX, the SYNNEX Logo, and all other SYNNEX company, product and services names and slogans are trademarks or registered trademarks of SYNNEX Corporation. SYNNEX and the SYNNEX Logo Reg. U.S. Pat. & Tm. Off. Other names and marks are the property of their respective owners.

                          SYNNEX Corporation
                     Consolidated Balance Sheets
                            (in thousands)

                                               August 31, November 30,
                                                  2008        2007
                                               ---------- ------------
Current assets:
    Cash and cash equivalents                  $   59,773 $     42,875
    Short-term investments                         13,794       17,257
    Accounts receivable, net                      776,337      729,797
    Receivable from vendors, net                  115,289       96,035
    Receivable from affiliates                      7,766        9,790
    Inventories                                   738,015      642,524
    Deferred income taxes                          18,083       18,612
    Current deferred assets                        17,860       14,478
    Other current assets                           12,746       16,859
                                               ---------- ------------
         Total current assets                   1,759,663    1,588,227

Property and equipment, net                        82,209       59,440
Goodwill                                          126,239       96,350
Intangible assets, net                             24,863       21,590
Deferred income taxes                               6,255        5,416
Long-term deferred assets                          79,653       97,171
Other assets                                       27,890       18,909
                                               ---------- ------------

         Total assets                          $2,106,772 $  1,887,103
                                               ========== ============

Liabilities and stockholders' equity
Current liabilities:
    Borrowings under securitization, term
     loans and lines of credit                 $  313,069 $    351,142
    Accounts payable                              639,108      588,801
    Payable to affiliates                          65,326       67,334
    Accrued liabilities                           133,915      120,617
    Current deferred liabilities                   39,209       35,522
    Income taxes payable                                -        5,103
                                               ---------- ------------
         Total current liabilities              1,190,627    1,168,519

Long-term borrowings                               21,864       37,537
Convertible debt                                  143,750            -
Long-term liabilities                              24,858       14,533
Long-term deferred liabilities                     50,903       60,565
Deferred income taxes                                 383          437
                                               ---------- ------------
         Total liabilities                      1,432,385    1,281,591
                                               ---------- ------------

Minority interest                                   4,419          958
                                               ---------- ------------

Stockholders' equity:
    Preferred stock                                     -            -
    Common stock                                       32           31
    Additional paid-in capital                    205,083      196,128
    Accumulated other comprehensive income         28,366       28,939
    Retained earnings                             436,487      379,456
                                               ---------- ------------
         Total stockholders' equity               669,968      604,554
                                               ---------- ------------

         Total liabilities and stockholders'
          equity                               $2,106,772 $  1,887,103
                                               ========== ============

                          SYNNEX Corporation
                Consolidated Statements of Operations
             (in thousands, except for per share amounts)

                            Three      Three      Nine
                            Months     Months     Months
                            Ended      Ended      Ended    Nine Months
                            August     August     August     Ended
                              31,        31,        31,     August 31,
                             2008       2007       2008       2007

Revenue                   $2,045,689 $1,760,360 $5,672,335 $5,033,444

Cost of revenue            1,932,790  1,669,134  5,362,781  4,783,549

Gross profit                 112,899     91,226    309,554    249,895

Selling, general and
 administrative expenses      73,394     63,960    205,597    171,874
Restructuring charges              -      2,744          -      2,744

Income from operations
 before non-operating
 items, income taxes and
 minority interest            39,505     24,522    103,957     75,277

Interest expense and
 finance charges, net          3,137      3,472     10,614     10,225
Other (income) expense,
 net                           1,787        132      3,252       (930)

Income from operations
 before income taxes and
 minority interest            34,581     20,918     90,091     65,982

Provision for income
 taxes                        12,427      6,452     32,253     22,908
Minority interest                 94         70        440        132

Net income                $   22,060 $   14,396 $   57,398 $   42,942

Diluted earnings per
 share                    $     0.66 $     0.44 $     1.72 $     1.32
Diluted weighted-average
 common shares
 outstanding                  33,657     32,742     33,319     32,502

Source: SYNNEX Corporation