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Record Operating Margin of 1.93%
FREMONT, Calif.--(BUSINESS WIRE)--
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."
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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 http://ir.synnex.com. 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 http://ir.synnex.com approximately two hours after the conclusion of the conference and will be archived until October 9, 2008.
About SYNNEX
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 www.synnex.com.
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)
(unaudited)
August 31, November 30,
2008 2007
---------- ------------
Assets
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)
(unaudited)
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