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SYNNEX Corporation Reports Second Quarter Fiscal 2020 Results

June 25, 2020

FREMONT, Calif., June 25, 2020 /PRNewswire/ -- SYNNEX Corporation (NYSE: SNX), a leading business process services company, today announced financial results for the fiscal second quarter ended May 31, 2020. 



Q2 FY20



Q2 FY19



Net change

Revenue ($M)


$

5,533



$

5,723



-3.3%



Operating income ($M)


$

111.7



$

174.7



-36.0%



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


$

161.5



$

244.1



-33.8%



Operating margin



2.02%



3.05%


-103 bps



Non-GAAP operating margin(1)



2.92%



4.26%


-134 bps



Net income ($M)


$

57.0



$

114.5



-50.2%



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


$

94.3



$

146.8



-35.8%



Diluted earnings per common share ("EPS")


$

1.10



$

2.23



-50.7%



Non-GAAP Diluted EPS(1)


$

1.83



$

2.86



-36.0%



"Our Q2 performance is a true testament to the skills of our associates, our nimble and resilient operational capabilities, and it further validates our business strategies in this challenging period," said Dennis Polk, SYNNEX President and CEO. "I deeply appreciate the ongoing efforts and dedication of our worldwide team."

Second Quarter Fiscal 2020 Highlights

  • Technology Solutions: Revenue was $4.5 billion, down 2.1% from the prior fiscal year second quarter. Operating income was $88 million, or 2.0% of segment revenue, compared to $112 million, or 2.5% of segment revenue, in the prior fiscal year second quarter. Non-GAAP operating income was $98 million, or 2.2% of segment revenue, compared to $124 million, or 2.7% of segment revenue, in the prior fiscal year second quarter.
  • Concentrix: Revenue was $1.1 billion, down 8.1% from the prior fiscal year second quarter. Operating income was $24 million, or 2.2% of segment revenue, compared to $62 million, or 5.4% of segment revenue in the prior fiscal year second quarter. Non-GAAP operating income was $63 million, or 6.0% of segment revenue, compared to $120 million, or 10.3% of segment revenue, in the prior fiscal year second quarter.
  • The trailing fiscal four quarters Return on Invested Capital ("ROIC") was 8.7% compared to 8.2% in the prior fiscal year second quarter. The adjusted trailing fiscal four quarters ROIC was 10.6%.
  • Cash generated from operations was approximately $1.2 billion for the quarter.

Third Quarter Fiscal 2020 Outlook

The following statements are based on SYNNEX current expectations for the fiscal 2020 third 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 $5.5 billion to $5.9 billion.
  • Net income is expected to be in the range of $67.0 million to $93.0 million and on a non-GAAP basis, net income is expected to be in the range of $103.9 million to $129.9 million.
  • Diluted earnings per share is expected to be in the range of $1.29 to $1.79 and on a non-GAAP basis, diluted earnings per share is expected to be in the range of $2.00 to $2.50, based on estimated outstanding diluted weighted average shares of 51.3 million.
  • After-tax amortization of intangibles is expected to be $33.4 million, or $0.64 per share.
  • After-tax acquisition-related and integration expense is expected to be $3.5 million, or $0.07 per share.

Share Repurchase Announcement

The SYNNEX board of directors has approved a share repurchase program of up to $400 million of its common stock over a period of up to three years, effective July 1, 2020, replacing the previous three-year program. Stock repurchases may be made at management's discretion from time to time through open market or privately negotiated transactions, including pursuant to one or more Rule 10b5-1 trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934.

Conference Call and Webcast

SYNNEX will host a conference call at 2:00 PM (PT) to discuss second quarter fiscal 2020 results.

Thursday, June 25, 2020
2:00 PM (PT) / 5:00 PM (ET)
Conference ID 7294773
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 operational capabilities; our expectations and outlook for the fiscal 2020 third 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; capital allocation; 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)




May   31, 2020



November   30, 2019


ASSETS









Current assets:









Cash and cash equivalents


$

1,112,556



$

225,529


Accounts receivable, net



3,215,370




3,926,709


Receivable from vendors, net



310,993




368,505


Inventories



3,033,320




2,547,224


Other current assets



296,381




385,024


Total current assets



7,968,621




7,452,992


Property and equipment, net



563,346




569,899


Goodwill



2,234,068




2,254,402


Intangible assets, net



1,060,510




1,162,212


Deferred tax assets



117,621




97,539


Other assets



694,994




160,917


Total assets


$

12,639,159



$

11,697,960











LIABILITIES AND EQUITY









Current liabilities:









Borrowings, current


$

159,440



$

298,969


Accounts payable



3,405,317




3,149,443


Accrued compensation and benefits



373,539




402,771


Other accrued liabilities



1,281,969




723,716


Income taxes payable



9,031




32,223


Total current liabilities



5,229,297




4,607,122


Long-term borrowings



2,645,477




2,718,267


Other long-term liabilities



715,635




361,911


Deferred tax liabilities



214,370




222,210


Total liabilities



8,804,778




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, 53,305 and 53,154 shares issued as of May 31, 2020 and November 30, 2019, respectively



53




53


Additional paid-in capital



1,566,764




1,545,421


Treasury stock, 2,453 and 2,399 shares as of May 31, 2020 and November 30, 2019, respectively



(178,609)




(172,627)


Accumulated other comprehensive income (loss)



(337,276)




(209,077)


Retained earnings



2,783,449




2,624,680


Total stockholders' equity



3,834,381




3,788,450


Total liabilities and equity


$

12,639,159



$

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



Six Months Ended




May   31, 2020



May   31, 2019



May   31, 2020



May   31, 2019


Revenue:

















Products


$

4,470,928



$

4,567,072



$

8,551,952



$

8,647,757


Services



1,061,711




1,155,816




2,244,884




2,324,585


Total revenue



5,532,639




5,722,889




10,796,836




10,972,341


Cost of revenue:

















Products



(4,196,312)




(4,297,096)




(8,022,232)




(8,130,213)


Services



(718,514)




(727,324)




(1,458,447)




(1,464,739)


Gross profit



617,812




698,468




1,316,157




1,377,389


Selling, general and administrative expenses



(506,088)




(523,813)




(1,015,778)




(1,040,771)


Operating income



111,724




174,655




300,379




336,618


Interest expense and finance charges, net



(33,921)




(43,144)




(70,297)




(84,750)


Other income (expense), net



1,466




21,546




3,847




20,851


Income before income taxes



79,270




153,057




233,929




272,719


Provision for income taxes



(22,310)




(38,584)




(54,385)




(71,140)


Net income


$

56,960



$

114,473



$

179,544



$

201,579


Earnings per common share:

















Basic


$

1.11



$

2.24



$

3.49



$

3.94


Diluted


$

1.10



$

2.23



$

3.47



$

3.92


Weighted-average common shares outstanding:

















Basic



50,849




50,675




50,832




50,691


Diluted



51,047




50,939




51,137




50,933


 

SYNNEX Corporation

Segment Information

(currency in thousands)

(Amounts may not add due to rounding)

(unaudited)




Three Months Ended



Six Months Ended




May   31, 2020



May   31, 2019



May   31, 2020



May   31, 2019


Revenue:

















Technology Solutions


$

4,470,928



$

4,567,074



$

8,551,952



$

8,647,759


Concentrix



1,066,363




1,160,877




2,254,982




2,334,148


Inter-segment elimination



(4,652)




(5,063)




(10,098)




(9,565)


Consolidated


$

5,532,639



$

5,722,889



$

10,796,836



$

10,972,341



















Operating income:

















Technology Solutions


$

88,144



$

112,393



$

188,589



$

213,764


Concentrix



23,580




62,263




111,791




122,853


Consolidated


$

111,724



$

174,655



$

300,379



$

336,618


 

SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(currency in thousands)

(Amounts may not add due to rounding)




Three Months Ended



Six Months Ended




May   31, 2020



May   31, 2019



May   31, 2020



May   31, 2019


Revenue in constant currency

















Consolidated

















Revenue


$

5,532,639



$

5,722,889



$

10,796,836



$

10,972,341


Foreign currency translation



68,323








76,517






Revenue in constant currency


$

5,600,962



$

5,722,889



$

10,873,353



$

10,972,341



















Technology Solutions

















Revenue


$

4,470,928



$

4,567,074



$

8,551,952



$

8,647,759


Foreign currency translation



46,015








46,690






Revenue in constant currency


$

4,516,943



$

4,567,074



$

8,598,642



$

8,647,759



















Concentrix

















Revenue


$

1,066,363



$

1,160,877



$

2,254,982



$

2,334,148


Foreign currency translation



22,308








29,827






Revenue in constant currency


$

1,088,671



$

1,160,877



$

2,284,809



$

2,334,148





















Three Months Ended



Six Months Ended




May   31, 2020



May   31, 2019



May   31, 2020



May   31, 2019


Selling, general and administrative expenses

















Consolidated

















GAAP selling, general and administrative expenses


$

506,088



$

523,813



$

1,015,778



$

1,040,771


Acquisition-related and integration expenses



3,468




16,533




18,538




44,382


Amortization of intangibles



46,031




52,441




92,902




104,898


Adjusted selling, general and administrative expenses


$

456,589



$

454,839



$

904,338



$

891,491



















Technology Solutions

















GAAP selling, general and administrative expenses


$

186,472



$

157,586



$

341,132



$

303,781


Acquisition-related and integration expenses






649







981


Amortization of intangibles



9,947




10,975




20,135




21,969


Adjusted selling, general and administrative expenses


$

176,525



$

145,962



$

320,997



$

280,831



















Concentrix

















GAAP selling, general and administrative expenses


$

321,590



$

368,265



$

678,569



$

740,983


Acquisition-related and integration expenses



3,468




15,884




18,538




43,401


Amortization of intangibles



36,084




41,466




72,767




82,929


Adjusted selling, general and administrative expenses


$

282,038



$

310,915



$

587,264



$

614,653


 

SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(currency in thousands)

(Amounts may not add due to rounding)

(continued)




Three Months Ended



Six Months Ended




May   31, 2020



May   31, 2019



May   31, 2020



May   31, 2019


Operating income and Operating margin

















Consolidated

















Revenue


$

5,532,639



$

5,722,889



$

10,796,836



$

10,972,341



















GAAP operating income


$

111,724



$

174,655



$

300,379



$

336,618


Acquisition-related and integration expenses



3,468




16,533




18,538




44,382


Amortization of intangibles



46,326




52,864




93,492




105,721


Non-GAAP operating income


$

161,518



$

244,052



$

412,409



$

486,721



















GAAP operating margin



2.02

%



3.05

%



2.78

%



3.07

%

Non-GAAP operating margin



2.92

%



4.26

%



3.82

%



4.44

%


















Technology Solutions

















Segment revenue


$

4,470,928



$

4,567,074



$

8,551,952



$

8,647,759



















GAAP operating income


$

88,144



$

112,393



$

188,589



$

213,764


Acquisition-related and integration expenses






649







981


Amortization of intangibles



9,947




10,975




20,135




21,969


Non-GAAP operating income


$

98,091



$

124,017



$

208,724



$

236,714



















GAAP operating margin



1.97

%



2.46

%



2.21

%



2.47

%

Non-GAAP operating margin



2.19

%



2.72

%



2.44

%



2.74

%


















Concentrix

















Segment revenue


$

1,066,363



$

1,160,877



$

2,254,982



$

2,334,148



















GAAP operating income


$

23,580



$

62,263



$

111,791



$

122,853


Acquisition-related and integration expenses



3,468




15,884




18,538




43,401


Amortization of intangibles



36,379




41,889




73,357




83,752


Non-GAAP operating income


$

63,427



$

120,036



$

203,686



$

250,006



















GAAP operating margin



2.21

%



5.36

%



4.96

%



5.26

%

Non-GAAP operating margin



5.95

%



10.34

%



9.03

%



10.71

%

 

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



Six Months Ended




May   31, 2020



May   31, 2019



May   31, 2020



May   31, 2019


Adjusted EBITDA

















Consolidated

















Net income


$

56,960



$

114,473



$

179,544



$

201,579


Interest expense and finance charges, net



33,921




43,144




70,297




84,750


Provision for income taxes



22,310




38,584




54,385




71,140


Depreciation (excluding accelerated depreciation included in acquisition-related and integration expenses below)



35,998




38,890




73,535




80,407


Amortization of intangibles



46,326




52,864




93,492




105,721


EBITDA


$

195,515



$

287,955



$

471,253



$

543,597


Other (income) expense, net (excluding amounts included in acquisition-related and integration expenses below)



(1,702)




(21,375)




(4,365)




(20,680)


Acquisition-related and integration expenses



3,704




16,362




19,056




44,211


Adjusted EBITDA


$

197,517



$

282,942



$

485,944



$

567,128




































Technology Solutions

















Net income


$

50,192



$

90,258



$

118,706



$

148,302


Interest expense and finance charges, net



20,992




19,442




39,784




37,950


Provision for income taxes



16,786




23,657




29,069




48,134


Depreciation



5,837




5,475




11,713




10,844


Amortization of intangibles



9,947




10,975




20,135




21,969


EBITDA


$

103,754



$

149,807



$

219,407



$

267,199


Other (income) expense, net



174




(20,965)




1,029




(20,621)


Acquisition-related and integration expenses






649







981


Adjusted EBITDA


$

103,928



$

129,491



$

220,436



$

247,559




































Concentrix

















Net income


$

6,768



$

24,215



$

60,838



$

53,277


Interest expense and finance charges, net



12,928




23,702




30,513




46,801


Provision for income taxes



5,524




14,926




25,315




23,006


Depreciation (excluding accelerated depreciation included in acquisition-related and integration expenses below)



30,161




33,415




61,822




69,563


Amortization of intangibles



36,379




41,889




73,357




83,752


EBITDA


$

91,760



$

138,147



$

251,845



$

276,399


Other (income) expense, net (excluding amounts included in acquisition-related and integration expenses below)



(1,876)




(410)




(5,394)




(60)


Acquisition-related and integration expenses



3,704




15,713




19,056




43,230


Adjusted EBITDA


$

93,588



$

153,450



$

265,507



$

319,569


 

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



Six Months Ended




May   31, 2020



May   31, 2019



May   31, 2020





May   31, 2019


Net income



















Net income


$

56,960



$

114,473



$

179,544





$

201,579


Acquisition-related and integration expenses



3,704




16,362




19,056






44,211


Amortization of intangibles



46,326




52,864




93,492






105,721


Contingent consideration






(19,034)









(19,034)


Income taxes related to the above(1)



(12,657)




(17,820)




(28,508)






(39,780)


Non-GAAP net income


$

94,333



$

146,845



$

263,584





$

292,697





















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



















Net income


$

56,960



$

114,473



$

179,544





$

201,579


Less: net income allocated to participating securities



648




1,027




2,138






1,813


Net income attributable to common stockholders



56,312




113,446




177,406






199,766


Acquisition-related and integration expenses attributable to common stockholders



3,662




16,216




18,839






43,814


Amortization of intangibles attributable to common stockholders



45,799




52,391




92,429






104,772


Contingent consideration attributable to common stockholders






(18,864)









(18,863)


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



(12,513)




(17,661)




(28,184)






(39,423)


Non-GAAP net income attributable to common stockholders


$

93,259



$

145,528



$

260,490





$

290,065





















Weighted-average number of common shares - diluted:



51,047




50,939




51,137






50,933





















Diluted EPS(2)


$

1.10



$

2.23



$

3.47





$

3.92


Acquisition-related and integration expenses



0.07




0.32




0.37






0.86


Amortization of intangibles



0.90




1.03




1.81






2.06


Contingent consideration






(0.37)









(0.37)


Income taxes related to the above(1)



(0.25)




(0.35)




(0.55)






(0.77)


Non-GAAP diluted EPS


$

1.83



$

2.86



$

5.09





$

5.70


 

SYNNEX Corporation
Reconciliation of GAAP to Non-GAAP financial measures
(Amounts may not add due to rounding)
(continued)

 



Three Months Ended



Six Months Ended


(Amounts in thousands)


May   31, 2020



May   31, 2019



May   31, 2020



May   31, 2019


Free cash flow

















Net cash provided by (used in) operating activities


$

1,168,340



$

110,920



$

1,226,481



$

(47,380)


Purchases of property and equipment



(32,720)




(31,612)




(84,620)




(60,412)


Free cash flow


$

1,135,620



$

79,308



$

1,141,861



$

(107,792)


 



Forecast




Three Months Ending August   31, 2020


(Amounts in millions, except per share amounts)


Low



High


Net income


$

67.0



$

93.0


Acquisition-related and integration expenses



4.7




4.7


Amortization of intangibles



45.8




45.8


Income taxes related to the above(1)



(13.6)




(13.6)


Non-GAAP net income


$

103.9



$

129.9











Diluted EPS(2)


$

1.29



$

1.79


Acquisition-related and integration expenses



0.09




0.09


Amortization of intangibles



0.88




0.88


Income taxes related to the above(1)



(0.26)




(0.26)


Non-GAAP diluted EPS


$

2.00



$

2.50











(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 six months ended May 31, 2020, respectively and approximately 0.9% for both the three and six months ended May 31, 2019. Net income allocable to participating securities is estimated to be approximately 1.1% of the forecasted Net income for the three months ending August 31, 2020.

 

SYNNEX Corporation

Calculation of Financial Metrics

(currency in thousands)

(Amounts may not add or compute due to rounding)

 

Return on Invested Capital ("ROIC")

 



May   31, 2020



May   31, 2019


ROIC









Operating income (trailing fiscal four quarters)


$

777,522



$

651,356


Income taxes on operating income(1)



(193,488)




(180,472)


Operating income after taxes


$

584,034



$

470,884











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


$

3,152,659



$

2,823,841


Total equity (last five quarters average)



3,723,476




3,025,133


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



(200,925)




(72,005)


Total invested capital


$

6,675,210



$

5,776,969











ROIC



8.7

%



8.2

%










Adjusted ROIC









Non-GAAP operating income (trailing fiscal four quarters)


$

1,021,384



$

914,086


Income taxes on Non-GAAP operating income(1)



(252,581)




(245,443)


Non-GAAP operating income after taxes


$

768,803



$

668,643











Total invested capital


$

6,675,210



$

5,776,969


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

   quarters average)



574,105




393,858


Total Non-GAAP invested capital


$

7,249,315



$

6,170,827











Adjusted ROIC



10.6

%



10.8

%

(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

 





May   31, 2020



May   31, 2019


Total borrowings, excluding book overdraft


(a)


$

2,804,460



$

3,517,322


Trailing fiscal four quarters Adjusted EBITDA


(b)


$

1,171,789



$

1,050,928


Debt to Adjusted EBITDA leverage ratio


(c)=(a)/(b)



2.4




3.3


 

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






May   31, 2020



May   31, 2019


Days sales outstanding











Revenue (products and services)


(a)


$

5,532,639



$

5,722,889


Accounts receivable, net


(b)



3,215,370




3,457,110


Days sales outstanding


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



53




56













Days inventory outstanding











Cost of revenue (products and services)


(d)


$

4,914,826



$

5,024,420


Inventories


(e)



3,033,320




2,608,453


Days inventory outstanding


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



57




48













Days payable outstanding











Cost of revenue (products and services)


(g)


$

4,914,826



$

5,024,420


Accounts payable


(h)



3,405,317




2,764,919


Days payable outstanding


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



64




51













Cash conversion cycle


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



46




53


Investor Contact:
Mary Lai
Investor Relations
SYNNEX Corporation
marylai@synnex.com
(510) 668-8436

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SOURCE SYNNEX Corporation

Categories: Press Releases