SYNNEX Corporation
Jan 12, 2015

SYNNEX Corporation Reports Record Revenue and Income for Fiscal 2014 Fourth Quarter and Full Year

Company Announces Quarterly Cash Dividend of $0.125 Per Common Share

FREMONT, Calif.--(BUSINESS WIRE)--

SYNNEX Corporation (SNX), a leading business process services company, today announced financial results for the fiscal fourth quarter and year ended November 30, 2014.

                   
     

Q4 FY14

   

Q4 FY13

   

Net change

Revenue ($M)     $3,824     $3,059     25.0%
Operating income ($M)     $99.7     $69.4     43.6%
Non-GAAP operating income ($M)(1)     $124.9     $77.3     61.6%
Operating margin     2.61%     2.27%     34bps
Non-GAAP operating margin(1)     3.27%     2.53%     74bps
Net income attributable to SYNNEX Corporation ($M)     $57.1     $41.5     37.6%
Non-GAAP net income attributable to SYNNEX Corporation ($M)(1)     $72.7     $46.7     55.7%
Diluted EPS     $1.44     $1.09     32.1%
Non-GAAP Diluted EPS(1)     $1.83     $1.23     48.8%
                   

(1) Non-GAAP financial measures exclude the impact of acquisition and integration expenses and the amortization of intangible assets. A reconciliation of GAAP to Non-GAAP financial information is presented in the supplementary information section at the end of this press release.

“I am pleased to report record revenue and profitability for our fourth quarter," stated Kevin Murai, President and Chief Executive Officer. “We achieved a banner year in 2014 with excellent performance in both our Technology Solutions and Concentrix divisions.”

Fiscal 2014 Fourth Quarter Highlights:

Fiscal Year 2014 Highlights:

                   
     

FY14

   

FY13

   

Net change

Revenue ($M)     $13,840     $10,845     27.6%
Operating income ($M)     $308.5     $240.8     28.1%
Non-GAAP operating income ($M)(1)     $406.7     $257.2     58.1%
Operating margin     2.23%     2.22%     1bps
Non-GAAP operating margin(1)     2.94%     2.37%     57bps
Net income attributable to SYNNEX Corporation ($M)(2)     $180.0     $152.2     18.3%
Non-GAAP net income attributable to SYNNEX Corporation ($M)(1)     $242.3     $163.3     48.4%
Diluted EPS     $4.57     $3.02     51.3%

Non-GAAP Diluted EPS(1)(3)

    $6.16     $4.28     43.9%
                   

(1) Non-GAAP financial measures exclude the impact of acquisition and integration expenses and the amortization of intangible assets. A reconciliation of GAAP to Non-GAAP financial information is presented in the supplementary information section at the end of this press release.

(2) FY13 “Other income, net” includes a $12.3M pre-tax benefit from a class-action legal settlement.

(3) FY13 non-GAAP Diluted EPS excludes a one-time numerator adjustment resulting in $0.97 dilution for convertible senior notes settlement.

Fiscal 2015 First Quarter Earnings Outlook and Dividend Announcement:

The following statements are based on SYNNEX' current expectations for the fiscal 2015 first quarter and do not include acquisition and integration expenses and amortization of intangibles. These statements are forward-looking and actual results may differ materially.

“Strong organic growth and the advancement of strategic initiatives in our Technology Solutions division positions us well for growth ahead of the market in 2015,” stated Kevin Murai, President and CEO of SYNNEX Corporation. “With the successful IBM CRM integration nearly complete, we foresee our efforts in high value industry verticals bearing fruit in the coming quarters.”

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 will also be available via telephone by dialing (888) 469-3219 in North America or (630) 395-0205 outside North America. The passcode code 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.

About SYNNEX

SYNNEX Corporation (SNX), a Fortune 500 corporation, is a leading business process services company, optimizing supply chains and providing customer care solutions for its clients. SYNNEX distributes a broad range of information technology systems and products, and also provides systems design and integration services. The Concentrix segment offers a portfolio of end-to-end outsourced services around process optimization, customer engagement strategy and back-office automation to clients in ten identified industry verticals. Founded in 1980, SYNNEX operates in over 25 countries around the world. Additional information about SYNNEX may be found online at www.synnex.com.

Use of Non-GAAP Financial Information

To supplement the financial results presented in accordance with GAAP, SYNNEX uses 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 the amortization of intangible assets and acquisition and integration related expenses. These non-GAAP measures provide investors with an additional tool to evaluate operating results. Because these non-GAAP 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.

SYNNEX management uses the non-GAAP financial measures internally to understand, manage and evaluate the business. SYNNEX management believes it is useful for the company and investors to review, as applicable, both GAAP information, and the non-GAAP measures in order to assess the performance of SYNNEX’ continuing businesses and for planning and forecasting in future periods. 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. The management of SYNNEX believes the 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. A reconciliation of SYNNEX’ non-GAAP financial information to GAAP is set forth in the supplemental information table at the end of this press release.

Safe Harbor Statement

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, 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 for the fiscal 2015 first quarter as to revenue, non-GAAP net income, non-GAAP diluted earnings per share, and after-tax amortization of intangibles, and statements regarding, acquisition and integration success and completion timing, benefits of efforts in high value industry verticals and other investments and timing of realization of such benefits, advancement of strategic initiatives and the benefits of such initiatives, growth ahead of the market, our ongoing commitment to return cash to shareholders, debt repayment and share repurchases, the frequency and occurrence of dividend declarations, and the anticipated benefits of the non-GAAP financial measures, are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements. These risks and uncertainties include, but are not limited to: our ability to successfully integrate our recent acquisitions; diversion of management as a result of our recent and pending acquisitions; loss of vendors and suppliers as a result of our recent acquisitions; general economic conditions and any weakness in IT and consumer electronics 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; changes in the tax laws; 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 global business services and contract assembly business; risks associated with our anti-dilution share repurchase program; and other risks and uncertainties detailed in our Form 10-Q for the fiscal quarter ended August 31, 2014 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 2015 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 in thousands)

(unaudited)

 
    November 30,
2014
  November 30,
2013
ASSETS            
Current assets:            
Cash and cash equivalents   $ 180,143     $ 151,622  
Short-term investments   7,128     15,134  
Accounts receivable, net   2,091,511     1,593,191  
Receivable from related parties   332     146  
Inventories   1,398,463     1,095,107  
Current deferred tax assets   34,310     22,031  
Other current assets   188,102     54,502  

Total current assets

  3,899,989     2,931,733  
Property and equipment, net   200,803     133,249  
Goodwill   314,213     188,535  
Intangible assets, net   229,684     23,772  
Deferred tax assets   10,790     7,867  
Other assets   57,563     40,733  
Total assets   $ 4,713,042     $ 3,325,889  
             
LIABILITIES AND EQUITY            
Current liabilities:            
Borrowings under securitization, term loans and lines of credit   $ 716,257     $ 252,523  
Accounts payable   1,585,606     1,350,040  
Payable to related parties   5,129     3,861  
Accrued liabilities   391,608     181,325  
Income taxes payable   23,129     1,629  
Total current liabilities   2,721,729     1,789,378  
Long-term borrowings   264,246     65,405  
Long-term liabilities   60,215     56,418  
Deferred tax liabilities   12,867     3,047  
Total liabilities   3,059,057     1,914,248  
SYNNEX Corporation stockholders’ equity:            
Preferred stock        
Common stock   40     38  
Additional paid-in capital   384,625     286,329  
Treasury stock   (32,723 )   (27,450 )
Accumulated other comprehensive income   (6,628 )   19,168  
Retained earnings   1,308,244     1,133,137  
Total SYNNEX Corporation stockholders’ equity   1,653,558     1,411,222  
Noncontrolling interest   427     419  
Total equity   1,653,985     1,411,641  
Total liabilities and equity   $ 4,713,042     $ 3,325,889  
                 
 

SYNNEX Corporation

Consolidated Statements of Operations

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

(unaudited)

 
    Three Months Ended   Fiscal Year Ended
   

November 30,
2014

 

November 30,
2013

 

November 30,
2014

 

November 30,
2013

Revenue   $ 3,823,869     $ 3,059,051     $ 13,839,590     $ 10,845,164  
Cost of revenue   (3,510,247 )   (2,879,238 )   (12,740,586 )   (10,190,194 )
Gross profit   313,622     179,813     1,099,004     654,970  
Selling, general and administrative expenses   (213,950 )   (110,388 )   (790,497 )   (414,142 )
Income before non-operating items, income taxes and noncontrolling interest   99,672     69,425     308,507     240,828  
Interest expense and finance charges, net   (6,927 )   (3,776 )   (25,187 )   (17,115 )
Other income (expense), net   (1,261 )   391     962     14,339  
Income before income taxes and noncontrolling interest   91,484     66,040     284,282     238,052  
Provision for income taxes   (34,376 )   (24,534 )   (104,132 )   (85,730 )
Net income   57,108     41,506     180,150     152,322  
Net income attributable to noncontrolling interest   (28 )   (18 )   (116 )   (85 )
Net income attributable to SYNNEX Corporation   $ 57,080     $ 41,488     $ 180,034     $ 152,237  
Earnings per share attributable to SYNNEX Corporation:                        
Basic   $ 1.45     $ 1.10     $ 4.61     $ 4.06  
Diluted   $ 1.44     $ 1.09     $ 4.57     $ 3.02  
Weighted-average common shares outstanding:                        
Basic   38,874     37,139     38,490     36,888  
Diluted   39,223     37,566     38,845     37,633  
Cash dividends declared and paid per share   $ 0.13     $     $ 0.13     $  
                                 

SYNNEX Corporation
Segment Information
(currency in thousands)
(unaudited)

Effective in the first quarter of 2014, SYNNEX realigned its business segments. Certain operations of SYNNEX which were previously reported under the Concentrix segment and which provided inter-segment support and IT services to the Technology Solutions segment have now been aligned with and report into the Technology Solutions segment. The Concentrix segment includes the legacy Concentrix business and the newly acquired IBM customer care business. For comparability, the financial information presented herein reflects the impact of the preceding segment structure change for all periods presented.

         
    Three Months Ended   Fiscal Year Ended
   

November 30,
2014

 

November 30,
2013

 

November 30,
2014

 

November 30,
2013

Revenue:                        
Technology Solutions   $ 3,485,075     $ 3,009,818     $ 12,755,514     $ 10,666,215  
Concentrix   341,971     52,077     1,096,214     189,463  
Inter-segment elimination   (3,177 )   (2,844 )   (12,138 )   (10,514 )
Consolidated   $ 3,823,869     $ 3,059,051     $ 13,839,590     $ 10,845,164  
                         
Income (loss) before non-operating items, income taxes and noncontrolling interest:                        
Technology Solutions   $ 94,897     $ 72,572     $ 305,499     $ 237,290  
Concentrix   4,657     (3,267 )   2,455     3,249  
Inter-segment elimination   118     120     553     289  
Consolidated   $ 99,672     $ 69,425     $ 308,507     $ 240,828  
                                 
 

SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(currency in thousands)

 
    Three Months Ended   Fiscal Year Ended
   

November 30,
2014

 

November 30,
2013

 

November 30,
2014

 

November 30,
2013

Consolidated:                        
Revenue   $ 3,823,869     $ 3,059,051     $ 13,839,590     $ 10,845,164  
                         
GAAP income before non-operating items, income taxes and noncontrolling interest   $ 99,672     $ 69,425     $ 308,507     $ 240,828  
IBM CRM acquisition and other integration expenses   8,455     5,798     43,036     8,394  
Amortization of intangibles   16,734     2,031     55,161     7,953  
Non-GAAP operating income   $ 124,861     $ 77,254     $ 406,704     $ 257,175  
                         
GAAP operating margin   2.61 %   2.27 %   2.23 %   2.22 %
Non-GAAP operating margin   3.27 %   2.53 %   2.94 %   2.37 %
                         
Technology Solutions:                        
Revenue   $ 3,485,075     $ 3,009,818     $ 12,755,514     $ 10,666,215  
                         
GAAP income before non-operating items, income taxes and noncontrolling interest   $ 94,897     $ 72,572     $ 305,499     $ 237,290  
Amortization of intangibles   727     1,008     3,538     3,912  
Non-GAAP operating income   $ 95,624     $ 73,580     $ 309,037     $ 241,202  
                         
GAAP operating margin   2.72 %   2.41 %   2.40 %   2.22 %
Non-GAAP operating margin   2.74 %   2.44 %   2.42 %   2.26 %
                         
Concentrix:                        
Revenue   $ 341,971     $ 52,077     $ 1,096,214     $ 189,463  
                         
GAAP income (loss) before non-operating items, income taxes and noncontrolling interest   $ 4,657     $ (3,267 )   $ 2,455     $ 3,249  
IBM CRM acquisition and other integration expenses   8,455     5,798     43,036     8,394  
Amortization of intangibles   16,007     1,023     51,623     4,041  
Non-GAAP operating income   $ 29,119     $ 3,554     $ 97,114     $ 15,684  
                         
GAAP operating margin   1.36 %   (6.27 )%   0.22 %   1.71 %
Non-GAAP operating margin   8.52 %   6.82 %   8.86 %   8.28 %
                         
 

SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(currency in thousands except per share amounts)

 
    Three Months Ended   Fiscal Year Ended
   

November 30,
2014

 

November 30,
2013

 

November 30,
2014

 

November 30,
2013

Diluted net income adjusted for impact of conversion premium   $ 57,080     $ 41,488     $ 180,034     $ 115,828
Impact of conversion premium of convertible debt on net income(1)               36,409
Net income attributable to SYNNEX Corporation   $ 57,080     $ 41,488     $ 180,034     $ 152,237
IBM CRM acquisition and other integration expenses, net of taxes(2)   5,181     3,922     27,357     5,986
Amortization of intangibles, net of taxes(2)   10,416     1,271     34,956     5,089
Non-GAAP net income attributable to SYNNEX Corporation   $ 72,677     $ 46,681     $ 242,347     $ 163,312
                       
Diluted EPS   $ 1.44     $ 1.09     $ 4.57     $ 3.02
Impact of conversion premium on EPS               0.97
IBM CRM acquisition and other integration expenses   0.13     0.10     0.70     0.16
Amortization of intangibles   0.26     0.04     0.89     0.13
Non-GAAP Diluted EPS   $ 1.83     $ 1.23     $ 6.16     $ 4.28

(1) For fiscal year ended November 30, 2013, net income for the purpose of computation of diluted EPS was adjusted for the change in the estimated value of the conversion premium of the convertible notes from April 2013 through the final settlement date. The convertible notes were settled in the third quarter of fiscal year 2013.

(2) The tax effect of the non-GAAP adjustments was calculated using the applicable effective tax rate during the periods, except for IBM CRM acquisition and other integration expenses for the three and twelve months ended November 31, 2013, which was calculated using the tax deductible portion of the expenses and applying the entity-specific, U.S. Federal and blended state tax rates.

 

Contact:

SYNNEX Corporation
Deirdre Skolfield, CFA, 510-668-3715
Investor Relations
deirdres@synnex.com