SYNNEX Corporation Reports Second Quarter Fiscal 2019 Results
FREMONT, Calif., June 25, 2019 /PRNewswire/ -- SYNNEX Corporation (NYSE: SNX), a leading business process services company, today announced financial results for the fiscal second quarter ended May 31, 2019.( )
Q2 FY19 Q2 FY18(2) Net change
Revenue
($M) $
5,723 $
4,908 16.6%
Operating
income
($M) $
174.7 $
124.0 40.8%
Non-
GAAP
operating
income
($M)(1) $
244.1 $
152.3 60.2%
Operating
margin 3.05% 2.53%
52 bps
Non-
GAAP
operating
margin(1) 4.26% 3.10%
116 bps
Net
income
($M) $
114.5 $
93.7 22.1%
Non-
GAAP
net
income
($M)(1) $
146.8 $
95.4 54.0%
Diluted
earnings
per
common
share
("EPS") $
2.23 $
2.34 -4.7%
Non-
GAAP
Diluted
EPS(1) $
2.86 $
2.38 20.2%
"We delivered strong results in our second quarter as both of our business segments exceeded expectations and set quarterly records," said Dennis Polk, SYNNEX President and CEO. "Our Concentrix business continued its momentum post the Convergys acquisition by delivering solid results, while executing ahead of schedule on our integration plan."
Second Quarter Fiscal 2019 Highlights:
-- Technology Solutions: Revenue was $4.6 billion, up 3.3% from the prior
fiscal year second quarter. Operating income was $112 million, or 2.5%
of segment revenue, compared to $96 million, or 2.2% of segment revenue,
in the prior fiscal year second quarter. Non-GAAP operating income was
$124 million, or 2.7% of segment revenue, compared to $111 million, or
2.5% of segment revenue, in the prior fiscal year second quarter.
-- Concentrix: Revenue was $1.2 billion, up 136.3% from the prior fiscal
year second quarter as a result of the Convergys acquisition on October
5, 2018. Operating income was $62 million, or 5.4% of segment revenue,
compared to $28 million, or 5.6% of segment revenue in the prior fiscal
year second quarter. Non-GAAP operating income was $120 million, or
10.3% of segment revenue, compared to $41 million, or 8.5% of segment
revenue, in the prior fiscal year second quarter.
-- The trailing fiscal four quarters Return on Invested Capital ("ROIC")
was 8.2% compared to 8.8% in the prior fiscal year second quarter. The
adjusted trailing fiscal four quarters ROIC was 10.8%.
Third Quarter Fiscal 2019 Outlook:
The following statements are based on SYNNEX' current expectations for the third quarter fiscal 2019. 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 $5.55 billion to $5.85
billion.
-- Net income is expected to be in the range of $99.0 million to $105.0
million and on a non-GAAP basis, net income is expected to be in the
range of $144.2 million to $150.2 million.
-- Diluted earnings per share is expected to be in the range of $1.92 to
$2.04 and on a non-GAAP basis, diluted earnings per share is expected to
be in the range of $2.80 to $2.92, based on estimated outstanding
diluted weighted average shares of 51.0 million.
-- After-tax amortization of intangibles is expected to be $37.7 million,
or $0.73 per share.
-- After-tax acquisition-related and integration expense is expected to be
$7.5 million, or $0.15 per share.
Dividend Announcement
SYNNEX announced today that its Board of Directors declared a quarterly cash dividend of $0.375 per common share. The dividend is payable on July 26, 2019 to stockholders of record as of the close of business on July 12, 2019.
Conference Call and Webcast
SYNNEX will be discussing its financial results and outlook on a conference call today at 2:00 p.m. (PT):
To Listen via Telephone:
(866) 393-4306 (U.S. callers) / (734) 385-2616 (International callers)
Conference ID 7791288
To Listen via Internet:
Live webcast of the earnings call will be available at http://ir.synnex.com. A replay will be available approximately two hours after the earnings call has concluded.
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 www.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 ten industry verticals: automotive; banking and financial services; insurance; healthcare; technology; consumer electronics; media and communications; retail and e-commerce; travel and transportation; and energy and public-sector. We are Different by Design. Visit www.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, 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 2019, non-GAAP net income and non-GAAP diluted earnings per share also exclude a gain upon the settlement of contingent consideration 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.
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 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, 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 and the impact of the contingent consideration gain and the U.S. tax reform adjustment on 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 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.
((2))Fiscal 2018 second quarter and year-to-date financial statements have been adjusted to reflect the adoption of the new guidance on revenue recognition, on a full retrospective basis. Impact of adoption of the new guidance on the Consolidated Statement of Operations is presented in the supplementary 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 statements, including statements regarding our expectations and outlook for 2019 and the fiscal 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; effects of the Convergys acquisition; 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: 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, 2018 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 2019 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)
(Amounts may not add due to rounding)
(unaudited)
May 31, 2019 November 30, 2018
(Adjusted)(1)
ASSETS
Current assets:
Cash and cash equivalents $
271,491 $
454,694
Accounts receivable, net 3,457,110 3,640,496
Receivable from vendors, net 350,330 351,744
Inventories 2,608,453 2,392,559
Other current assets 327,730 323,323
Total current assets 7,015,116 7,162,817
Property and equipment, net 564,290 571,326
Goodwill 2,192,076 2,203,316
Intangible assets, net 1,266,671 1,377,305
Deferred tax assets 82,353 76,508
Other assets 155,452 152,227
Total assets $
11,275,958 $
11,543,498
LIABILITIES AND EQUITY
Current liabilities:
Borrowings, current $
728,962 $
833,216
Accounts payable 2,764,919 3,048,102
Accrued compensation and benefits 325,165 358,352
Other accrued liabilities 612,159 672,635
Income taxes payable 30,012 41,322
Total current liabilities 4,461,217 4,953,627
Long-term borrowings 2,792,649 2,622,782
Other long-term liabilities 305,019 325,119
Deferred tax liabilities 180,020 206,916
Total liabilities 7,738,905 8,108,444
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, 52,929 and 52,861
shares issued as of May 31, 2019 and
November 30, 2018, respectively 53 53
Additional paid-in capital 1,527,383 1,512,201
Treasury stock, 2,336 and 2,167 shares as
of May 31, 2019 and November 30, 2018,
respectively (165,601) (149,533)
Accumulated other comprehensive income
(loss) (188,561) (126,288)
Retained earnings 2,363,779 2,198,621
Total stockholders' equity 3,537,053 3,435,054
Total liabilities and equity $
11,275,958 $
11,543,498
(1)
Amounts have been adjusted to
reflect the adoption of
Accounting Standards Update
2014-09, Revenue from Contracts
with Customers (Topic 606), on
a full retrospective basis.
SYNNEX Corporation
Consolidated Statements of Operations
(currency and share amounts in thousands, except for per share amounts)
(Amounts may not add due to rounding)
(unaudited)
Three Months Ended
Six Months Ended
May 31, 2019 May 31, 2018 May 31, 2019 May 31, 2018
(Adjusted)(1) (Adjusted)(1)
Revenue:
Products $
4,567,072 $
4,422,093 $
8,647,757 $
8,411,836
Services 1,155,816 486,188 2,324,585 989,795
Total revenue 5,722,889 4,908,281 10,972,341 9,401,631
Cost of revenue:
Products (4,297,096) (4,174,771) (8,130,213) (7,940,283)
Services (727,324) (304,352) (1,464,739) (618,675)
Gross profit 698,468 429,158 1,377,389 842,673
Selling, general and
administrative expenses (523,813) (305,156) (1,040,771) (607,175)
Operating income 174,655 124,002 336,618 235,498
Interest expense and finance
charges, net (43,144) (16,375) (84,750) (33,826)
Other income (expense), net 21,546 (1,446) 20,851 (2,624)
Income before income taxes 153,057 106,181 272,719 199,048
Provision for income taxes (38,584) (12,439) (71,140) (81,208)
Net income $
114,473 $
93,742 $
201,579 $
117,840
Earnings per common share:
Basic $
2.24 $
2.35 $
3.94 $
2.95
Diluted $
2.23 $
2.34 $
3.92 $
2.93
Weighted-average common
shares outstanding:
Basic 50,675 39,505 50,691 39,599
Diluted 50,939 39,742 50,933 39,859
(1)
Amounts have been adjusted to
reflect the adoption of
Accounting Standards Update
2014-09, Revenue from Contracts
with Customers (Topic 606), on
a full retrospective basis.
SYNNEX Corporation
Segment Information
(currency in thousands)
(Amounts may not add due to rounding)
(unaudited)
Three Months Ended Six Months Ended
May 31, 2019 May 31, 2018 May 31, 2019 May 31, 2018
(Adjusted)(1) (Adjusted)(1)
Revenue:
Technology Solutions $
4,567,074 $
4,422,106 $
8,647,759 $
8,411,905
Concentrix 1,160,877 491,246 2,334,148 998,983
Inter-segment elimination (5,063) (5,071) (9,565) (9,257)
Consolidated $
5,722,889 $
4,908,281 $
10,972,341 $
9,401,631
Operating income:
Technology Solutions $
112,393 $
96,318 $
213,764 $
178,151
Concentrix 62,263 27,684 122,853 57,347
Consolidated $
174,655 $
124,002 $
336,618 $
235,498
(1)
Amounts have been adjusted to
reflect the adoption of
Accounting Standards Update
2014-09, Revenue from Contracts
with Customers (Topic 606), on
a full retrospective basis.
SYNNEX Corporation
Impact of adoption of Accounting Standards Codification ("ASC") Topic 606 on Revenue and Earnings
(currency in thousands, except for per share amounts)
(Amounts may not add due to rounding)
(unaudited)
Three Months Ended Six Months Ended
May 31, 2019 May 31, 2018 May 31, 2019 May 31, 2018
Revenue
Consolidated
Revenue as previously reported $
4,972,583 $
9,524,953
Impact of adoption of ASC Topic
606 (64,302) (123,322)
Revenue in accordance with ASC
Topic 606(1) $
5,722,889 $
4,908,281 $
10,972,341 $
9,401,631
Technology Solutions
Revenue as previously reported $
4,486,408 $
8,535,227
Impact of adoption of ASC Topic
606 (64,302) (123,322)
Revenue in accordance with ASC
Topic 606(1) $
4,567,074 $
4,422,106 $
8,647,759 $
8,411,905
Concentrix
Revenue as previously reported $
491,246 $
998,983
Impact of adoption of ASC Topic
606
Revenue in accordance with ASC
Topic 606(1) $
1,160,877 $
491,246 $
2,334,148 $
998,983
(1)Approximate value of
transactions offset, in in revenue, with no associated
accordance with revenue cost of revenue.
recognition guidance on
Principal versus Agent
considerations, in
circumstances where SYNNEX
assumed an agency
relationship, against cost of
sales to present the margin
earned on these transactions $
870,000 $
711,000 $
1,711,000 $
1,395,000
SYNNEX Corporation
Impact of adoption of Accounting Standards Codification ("ASC") Topic 606 on Revenue and Earnings
(currency in thousands, except for per share amounts)
(Amounts may not add due to rounding)
(unaudited)
(continued)
Three Months Ended
Six Months Ended
May 31, 2018
May 31, 2018
Consolidated Statements of
Operations As Reported As adjusted As Reported As adjusted
Revenue:
Products $
4,486,395 $
4,422,093 $
8,535,158 $
8,411,836
Services 486,188 486,188 989,795 989,795
Total revenue 4,972,583 4,908,281 9,524,953 9,401,631
Cost of revenue:
Products (4,239,137) (4,174,771) (8,063,233) (7,940,283)
Services (304,352) (304,352) (618,675) (618,675)
Gross profit 429,094 429,158 843,045 842,673
Selling, general and
administrative expenses (305,156) (305,156) (607,175) (607,175)
Operating income 123,938 124,002 235,870 235,498
Interest expense and finance
charges, net (16,375) (16,375) (33,826) (33,826)
Other income (expense), net (1,446) (1,446) (2,624) (2,624)
Income before income taxes 106,117 106,181 199,420 199,048
Provision for income taxes (12,424) (12,439) (81,293) (81,208)
Net income $
93,693 $
93,742 $
118,127 $
117,840
Earnings per common share:
Basic $
2.35 $
2.35 $
2.96 $
2.95
Diluted $
2.34 $
2.34 $
2.94 $
2.93
Non-GAAP financial measures
Non-GAAP operating income $
152,260 $
152,324 $
292,707 $
292,335
GAAP operating margin 2.49 2.53 2.48 2.50
% % % %
Non-GAAP operating margin 3.06 3.10 3.07 3.11
% % % %
Non-GAAP net income $
95,302 $
95,354 $
181,648 $
181,356
Non-GAAP diluted EPS $
2.38 $
2.38 $
4.52 $
4.51
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, 2019 May 31, 2018 May 31, 2019 May 31, 2018
(Adjusted)(1) (Adjusted)(1)
Revenue in constant currency
Consolidated
Revenue $
5,722,889 $
4,908,281 $
10,972,341 $
9,401,631
Foreign currency translation 56,850 107,938
Revenue in constant currency $
5,779,739 $
4,908,281 $
11,080,279 $
9,401,631
Technology Solutions
Revenue $
4,567,074 $
4,422,106 $
8,647,759 $
8,411,905
Foreign currency translation 42,381 79,114
Revenue in constant currency $
4,609,455 $
4,422,106 $
8,726,873 $
8,411,905
Concentrix
Revenue $
1,160,877 $
491,246 $
2,334,148 $
998,983
Foreign currency translation 14,469 28,824
Revenue in constant currency $
1,175,346 $
491,246 $
2,362,972 $
998,983
Three Months Ended Six Months Ended
May 31, 2019 May 31, 2018 May 31, 2019 May 31, 2018
(Adjusted)(1) (Adjusted)(1)
Selling, general and
administrative expenses
Consolidated
GAAP selling, general and
administrative expenses $
523,813 $
305,156 $
1,040,771 $
607,175
Acquisition-related and
integration expenses 16,533 2,046 44,382 3,851
Amortization of intangibles 52,441 25,814 104,898 52,105
Adjusted selling, general and
administrative expenses $
454,839 $
277,296 $
891,491 $
551,219
Technology Solutions
GAAP selling, general and
administrative expenses $
157,586 $
151,013 $
303,781 $
293,467
Acquisition-related and
integration expenses 649 2,046 981 3,851
Amortization of intangibles 10,975 12,462 21,969 25,278
Adjusted selling, general and
administrative expenses $
145,962 $
136,505 $
280,831 $
264,338
Concentrix
GAAP selling, general and
administrative expenses $
368,265 $
155,894 $
740,983 $
317,136
Acquisition-related and
integration expenses 15,884 43,401
Amortization of intangibles 41,466 13,352 82,929 26,827
Adjusted selling, general and
administrative expenses $
310,915 $
142,542 $
614,653 $
290,309
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, 2019 May 31, 2018 May 31, 2019 May 31, 2018
(Adjusted)(1) (Adjusted)(1)
Operating income and Operating
margin
Consolidated
Revenue $
5,722,889 $
4,908,281 $
10,972,341 $
9,401,631
GAAP operating income $
174,655 $
124,002 $
336,618 $
235,498
Acquisition-related and
integration expenses 16,533 2,046 44,382 3,851
Amortization of intangibles 52,864 26,276 105,721 52,986
Non-GAAP operating income $
244,052 $
152,324 $
486,721 $
292,335
Depreciation (excluding
accelerated depreciation
included in acquisition-
related expenses above) 38,890 22,596 80,407 44,520
Adjusted EBITDA $
282,942 $
174,920 $
567,128 $
336,855
GAAP operating margin 3.05 2.53 3.07 2.50
% % % %
Non-GAAP operating margin 4.26 3.10 4.44 3.11
% % % %
Technology Solutions
Segment revenue $
4,567,074 $
4,422,106 $
8,647,759 $
8,411,905
GAAP operating income $
112,393 $
96,318 $
213,764 $
178,151
Acquisition-related and
integration expenses 649 2,046 981 3,851
Amortization of intangibles 10,975 12,462 21,969 25,278
Non-GAAP operating income $
124,017 $
110,826 $
236,714 $
207,280
Depreciation 5,475 5,010 10,844 9,844
Adjusted EBITDA $
129,492 $
115,836 $
247,558 $
217,124
GAAP operating margin 2.46 2.18 2.47 2.12
% % % %
Non-GAAP operating margin 2.72 2.51 2.74 2.46
% % % %
Concentrix
Segment revenue $
1,160,877 $
491,246 $
2,334,148 $
998,983
GAAP operating income $
62,263 $
27,684 $
122,853 $
57,347
Acquisition-related and
integration expenses 15,884 43,401
Amortization of intangibles 41,889 13,814 83,752 27,708
Non-GAAP operating income $
120,036 $
41,498 $
250,006 $
85,055
Depreciation (excluding
accelerated depreciation
included in acquisition-
related expenses above) 33,415 17,586 69,563 34,676
Adjusted EBITDA $
153,451 $
59,084 $
319,569 $
119,731
GAAP operating margin 5.36 5.64 5.26 5.74
% % % %
Non-GAAP operating margin 10.34 8.45 10.71 8.51
% % % %
SYNNEX Corporation
Reconciliation of GAAP to Non-GAAP financial measures
(currency and share amounts in thousands, except for per share amounts)
(Amounts may not add due to rounding)
(continued)
Three Months Ended Six Months Ended
May 31, 2019 May 31, 2018 May 31, 2019 May 31, 2018
(Adjusted)(1) (Adjusted)(1)
Net income
Net income $
114,473 $
93,742 $
201,579 $
117,840
Acquisition-related and
integration expenses (benefit) 16,362 (588) 44,211 1,217
Amortization of intangibles 52,864 26,276 105,721 52,986
Contingent consideration (19,034) (19,034)
Income taxes related to the
above(2) (17,820) (7,076) (39,780) (15,388)
U.S. tax reform adjustment (17,000) 24,701
Non-GAAP net income $
146,845 $
95,354 $
292,697 $
181,356
Diluted earnings per common share
("EPS")(3)
Net income $
114,473 $
93,742 $
201,579 $
117,840
Less: net income allocated to
participating securities 1,027 860 1,813 1,076
Net income attributable to common
stockholders 113,446 92,882 199,766 116,764
Acquisition-related and
integration expenses (benefit)
attributable to common
stockholders 16,216 (583) 43,814 1,206
Amortization of intangibles
attributable to common
stockholders 52,391 26,036 104,772 52,503
Contingent consideration
attributable to common
stockholders (18,864) (18,863)
Income taxes related to the above
attributable to common
stockholders(2) (17,661) (7,011) (39,423) (15,248)
U.S. tax reform adjustment
attributable to common
stockholders (16,844) 24,476
Non-GAAP net income attributable
to common stockholders $
145,528 $
94,480 $
290,065 $
179,702
Weighted-average number of common
shares - diluted: 50,939 39,742 50,933 39,859
Diluted EPS(3) $
2.23 $
2.34 $
3.92 $
2.93
Acquisition-related and
integration expenses (benefit) 0.32 (0.01) 0.86 0.03
Amortization of intangibles 1.03 0.66 2.06 1.32
Contingent consideration (0.37) (0.37)
Income taxes related to the
above(2) (0.35) (0.18) (0.77) (0.38)
U.S. tax reform adjustment (0.42) 0.61
Non-GAAP Diluted EPS $
2.86 $
2.38 $
5.70 $
4.51
SYNNEX Corporation
Reconciliation of GAAP to Non-GAAP financial measures
(amounts in millions, except for per share amounts)
(Amounts may not add due to rounding)
(continued)
Forecast
Three Months Ending August 31, 2019
Low High
Net income $
99,003 $
105,003
Acquisition-related and
integration expenses 10,305 10,305
Amortization of intangibles 51,608 51,608
Income taxes related to the
above(2) (16,717) (16,717)
Non-GAAP net income $
144,200 $
150,200
Diluted EPS(3) $
1.92 $
2.04
Acquisition-related and
integration expenses 0.20 0.20
Amortization of intangibles 1.00 1.00
Income taxes related to the
above(2) (0.32) (0.32)
Non-GAAP Diluted EPS $
2.80 $
2.92
(1)
Adjusted to reflect the
adoption of the new guidance on revenue
recognition, on a full retrospective
basis.
(2)
The tax
effect of taxable and deductible 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.
(3)
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
0.9% of Net income for the three and six
months ended May 31, 2019 and 2018. 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, 2019.
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, 2019 May 31, 2018
ROIC
Operating income
(trailing fiscal four
quarters)(1) $
651,784 $
517,574
Income taxes on operating
income(2) (180,564) (194,642)
Operating income after
taxes(1) $
471,220 $
322,932
Total borrowings,
excluding book overdraft
(last five quarters
average) $
2,823,841 $
1,537,631
Total equity (last five
quarters average) 3,024,940 2,250,775
Less: U.S. cash and cash
equivalents (last five
quarters average) (72,005) (132,465)
Total invested capital $
5,776,776 $
3,655,941
ROIC 8.2 8.8
% %
Adjusted ROIC
Non-GAAP operating
income (trailing fiscal
four quarters)(1) $
914,514 $
625,206
Income taxes on Non-GAAP
operating income(2) (245,487) (199,325)
Non-GAAP operating
income after taxes(1) $
669,027 $
425,881
Total invested capital $
5,776,776 $
3,655,941
Tax effected impact of
cumulative non-GAAP
adjustments (last five 393,862 253,198
quarters average)
Total Non-GAAP invested
capital $
6,170,638 $
3,909,139
Adjusted ROIC 10.8 10.9
% %
(1)
GAAP and
non-GAAP operating income included
in the trailing fiscal four quarters
calculation reflects the adoption of
ASC Topic 606 for the fiscal quarters
ended February 28, 2019 and 2018 and
May 31, 2019 and 2018. GAAP and non-
GAAP operating income for other
quarters included in the trailing
fiscal four quarters calculation are
based on amounts as previously
reported.
(2) 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, 2019 May 31, 2018
Total borrowings,
excluding book
overdraft (a) $
3,517,322 $
1,810,926
Trailing fiscal four
quarters Adjusted
EBITDA(1) (b) $
1,051,356 $
711,558
Debt to Adjusted EBITDA
leverage ratio (c)=(a)/(b) 3.3 2.5
(1)
Adjusted EBITDA included in
the trailing fiscal four
quarters calculation reflects
the adoption of ASC Topic 606
for the fiscal quarters ended
February 28, 2019 and 2018
and May 31, 2019 and 2018.
Adjusted EBITDA for other
quarters included in the
trailing fiscal four quarters
calculation is based on
amounts as previously
reported.
SYNNEX Corporation
Calculation of Financial Metrics
(currency in thousands)
(continued)
Cash Conversion Cycle
Three Months Ended
May 31, 2019 May 31, 2018
(Adjusted)
(1)
Days sales outstanding
Revenue (products and
services)
(a) $
5,722,889 $
4,908,281
Accounts receivable, net
(b) 3,457,110 2,519,218
Days sales outstanding (c) = (b)/((a)/the
number of days during
the period) 56 47
Days inventory
outstanding
Cost of revenue (products
and services)
(d) $
5,024,420 $
4,479,123
Inventories
(e) 2,608,453 1,996,161
Days inventory (f) = (e)/((d)/the
outstanding number of days during
the period) 48 41
Days payable outstanding
Cost of revenue (products
and services)
(g) $
5,024,420 $
4,479,123
Accounts payable
(h) 2,764,919 2,287,954
Days payable outstanding (i) = (h)/((g)/the
number of days during
the period) 51 47
Cash conversion cycle (j) = (c)+(f)-(i) 53 41
(1)
Adjusted to reflect the
adoption of the new guidance on
revenue recognition, on a full
retrospective basis.
Investor Contact:
Mary Lai
Investor Relations
SYNNEX Corporation
marylai@synnex.com
(510) 668-8436
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SOURCE SYNNEX Corporation
