SYNNEX Corporation Reports Fiscal 2019 Fourth Quarter and Full Year Results
FREMONT, Calif., Jan. 9, 2020 /PRNewswire/ -- SYNNEX Corporation (NYSE: SNX), a leading business process services company, today announced financial results for the fiscal fourth quarter and fiscal year ended November 30, 2019.( )
Q4 FY18
Q4 FY19 (2) Net change
Revenue ($M) $
6,581 $
5,544 18.7%
Operating income
($M) $
268.3 $
200.9 33.5%
Non-GAAP
operating income
($M)(1) $
338.5 $
267.8 26.4%
Operating margin 4.08 3.62
% %
46 bps
Non-GAAP
operating % %
margin(1) 5.14 4.83
31 bps
Net income ($M) $
176.0 $
115.2 52.8%
Non-GAAP net
income ($M)(1) $
219.6 $
173.6 26.5%
Diluted earnings
per common share
("EPS") $
3.41 $
2.45 39.2%
Non-GAAP Diluted
EPS(1) $
4.26 $
3.69 15.4%
"Our record financial performance in Q4, driven by strong contributions from our Technology Solutions and Concentrix segments, is a very satisfying conclusion to an exceptional year," said Dennis Polk, SYNNEX President and CEO. "Fiscal 2019 was a defining year for SYNNEX, as we invested in, integrated and operated both businesses at scale, while generating solid returns from each segment. Fiscal 2020 will be another defining period as we plan to separate SYNNEX and Concentrix to further enable each entity to achieve its growth potential."
Fourth Quarter Fiscal 2019 Highlights:
-- Technology Solutions: Revenue was $5.4 billion, up 17.4% from the prior
fiscal year fourth quarter. Operating income was $167 million, or 3.1%
of segment revenue, compared to $126 million, or 2.7% of segment
revenue, in the prior fiscal year fourth quarter. Non-GAAP operating
income was $178 million, or 3.3% of segment revenue, compared to $139
million, or 3.0% of segment revenue, in the prior fiscal year fourth
quarter.
-- Concentrix: Revenue was $1.2 billion, up 24.7% from the prior fiscal
year fourth quarter primarily due to the impact of the Convergys
acquisition on October 5, 2018. Operating income was $101 million, or
8.4% of segment revenue, compared to $75 million, or 7.7% of segment
revenue in the prior fiscal year fourth quarter. Non-GAAP operating
income was $161 million, or 13.3% of segment revenue, compared to $129
million, or 13.2% of segment revenue, in the prior fiscal year fourth
quarter.
-- The trailing fiscal four quarters Return on Invested Capital ("ROIC")
was 8.8% compared to 7.9% in the prior fiscal year fourth quarter. The
adjusted trailing fiscal four quarters ROIC was 11.0%.
FY18
FY19 (2) Net change
Revenue ($M) $
23,757 $
19,768 20.2%
Operating income
($M) $
813.8 $
550.2 47.9%
Non-GAAP
operating income
($M)(1) $
1,095.7 $
719.7 52.2%
Operating margin 3.43 2.78
% %
65 bps
Non-GAAP
operating % %
margin(1) 4.61 3.64
97 bps
Net income ($M) $
500.7 $
300.0 66.9%
Non-GAAP net
income ($M)(1) $
681.5 $
454.8 49.9%
Diluted earnings
per common share
("EPS") $
9.74 $
7.17 35.8%
Non-GAAP Diluted
EPS(1) $
13.26 $
10.87 22.0%
Fiscal 2019 Highlights:
-- Technology Solutions: Revenue was $19.1 billion, up 10.1% from the prior
fiscal year. Operating income was $519 million, or 2.7% of segment
revenue, compared to $405 million, or 2.3% of segment revenue, in the
prior fiscal year. Non-GAAP operating income was $564 million, or 3.0%
of segment revenue, in fiscal year 2019, compared to $463 million, or
2.7% of segment revenue, in the prior fiscal year.
-- Concentrix: Revenue was $4.7 billion, up 91.1% from the prior fiscal
year primarily due to the full year impact of the Convergys acquisition
on October 5, 2018. Operating income was $294 million, or 6.3% of
segment revenue, compared to $145 million, or 5.9% of segment revenue,
in the prior fiscal year. Non-GAAP operating income was $531 million, or
11.3% of segment revenue, in fiscal year 2018, compared to $257 million,
or 10.4% of segment revenue, in the prior fiscal year.
First Quarter Fiscal 2020 Outlook:
The following statements are based on SYNNEX' current expectations for the fiscal 2020 first 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 $5.240 billion to $5.540
billion.
-- Net income is expected to be in the range of $114.7 million to $124.6
million and on a non-GAAP basis, net income is expected to be in the
range of $157.3 million to $167.2 million.
-- Diluted earnings per share is expected to be in the range of $2.21 to
$2.40 and on a non-GAAP basis, diluted earnings per share is expected to
be in the range of $3.03 to $3.22, based on estimated outstanding
diluted weighted average shares of 51.3 million.
-- After-tax amortization of intangibles is expected to be $36.2 million,
or $0.70 per share.
-- After-tax acquisition-related and integration expense is expected to be
$6.4 million, or $0.12 per share.
Dividend Announcement
SYNNEX announced today that its Board of Directors declared a quarterly cash dividend of $0.40 per common share, a 2.5-cent increase over the previous quarter's dividend. The dividend is payable on January 31, 2020 to stockholders of record as of the close of business on January 24, 2020.
Conference Call and Webcast
SYNNEX issued a separate news release today and announced plans to separate into two independent publicly traded companies: a top three Americas and Japan IT distribution company (SYNNEX Technology Solutions) and a top two global customer experience solutions company (Concentrix). SYNNEX will host a conference call for investors to discuss this transaction and to review its fiscal 2019 fourth quarter results at 2:00 p.m. (PT)/5:00 p.m. (ET) today.
Conference ID 9038089
Live call (866) 393-4306 or (763) 488-9145 (Int'l)
Live audio webcast of the earnings call will be accessible at http://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 eight industry verticals: technology & consumer electronics; banking, financial services & insurance; healthcare; media & communications; retail & e-commerce; travel & transportation; automotive; and energy & public-sector. 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, 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 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.
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 both operating income and equity, 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.
((2))Fiscal 2018 fourth 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 forward-looking statements include, but are not limited to, statements regarding strategies and objectives of SYNNEX for future operations, including the separation transaction; the future performances of SYNNEX and Concentrix if the separation is completed; our expectations and outlook for the fiscal 2020 first 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; 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 satisfaction of separation closing conditions; the ability to realize the anticipated benefits of the separation; disruption from the transaction making it more difficult to maintain business, contractual and operational relationships; the unfavorable outcome of any legal proceedings that have been or may be instituted against us, the ability to retain key personnel; negative effects of the transaction announcement or the consummation of the proposed separation on the market price of the capital stock of SYNNEX; 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 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)
(Amounts may not add due to rounding)
(unaudited)
November November
30,
30,
2019 2018
ASSETS (Adjusted)(1)
Current assets:
Cash and cash equivalents $
225,529 $
454,694
Accounts receivable, net 3,926,709 3,640,496
Receivable from vendors, net 368,505 351,744
Inventories 2,547,224 2,392,559
Other current assets 385,024 323,323
Total current assets 7,452,992 7,162,817
Property and equipment, net 569,899 571,326
Goodwill 2,254,402 2,203,316
Intangible assets, net 1,162,212 1,377,305
Deferred tax assets 97,539 76,508
Other assets 160,917 152,227
Total assets $
11,697,960 $
11,543,498
LIABILITIES AND EQUITY
Current liabilities:
Borrowings, current $
298,969 $
833,216
Accounts payable 3,149,443 3,048,102
Accrued compensation and benefits 402,771 358,352
Other accrued liabilities 723,716 672,635
Income taxes payable 32,223 41,322
Total current liabilities 4,607,122 4,953,627
Long-term borrowings 2,718,267 2,622,782
Other long-term liabilities 361,911 325,119
Deferred tax liabilities 222,210 206,916
Total liabilities 7,909,510 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, 53,154 and 52,861
shares issued as of November 30, 2019 and
2018, respectively 53 53
Additional paid-in capital 1,545,421 1,512,201
Treasury stock, 2,399 and 2,167 shares as
of November 30, 2019 and 2018,
respectively (172,627) (149,533)
Accumulated other comprehensive income
(loss) (209,077) (126,288)
Retained earnings 2,624,680 2,198,621
Total stockholders' equity 3,788,450 3,435,054
Total liabilities and equity $
11,697,960 $
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 per share amounts)
(Amounts may not add due to rounding)
(unaudited)
Three Months Ended
Fiscal Year Ended
November November November November
30, 30, 30, 30,
2019 2018 2019 2018
(Adjusted)(1) (Adjusted)(1)
Revenue:
Products $
5,374,241 $
4,576,487 $
19,069,966 $
17,323,078
Services 1,207,052 967,559 4,687,327 2,444,867
Total revenue 6,581,293 5,544,046 23,757,293 19,767,945
Cost of revenue:
Products (5,036,301) (4,302,465) (17,912,711) (16,326,576)
Services (750,453) (587,472) (2,946,664) (1,514,470)
Gross profit 794,539 654,110 2,897,917 1,926,899
Selling, general and
administrative expenses (526,251) (453,215) (2,084,156) (1,376,664)
Operating income 268,288 200,895 813,761 550,236
Interest expense and finance
charges, net (38,726) (30,791) (166,421) (84,675)
Other income (expense), net 10,599 (5,487) 30,363 (8,984)
Income before income taxes 240,161 164,617 677,703 456,577
Provision for income taxes (64,160) (49,415) (176,991) (156,596)
Net income $
176,001 $
115,201 $
500,712 $
299,981
Earnings per common share:
Basic $
3.44 $
2.46 $
9.79 $
7.21
Diluted $
3.41 $
2.45 $
9.74 $
7.17
Weighted-average common
shares outstanding:
Basic 50,693 46,429 50,669 41,215
Diluted 51,032 46,633 50,936 41,451
(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 Fiscal Year Ended
November November November November
30, 30, 30, 30,
2019 2018 2019 2018
(Adjusted)(1) (Adjusted)(1)
Revenue:
Technology Solutions $
5,374,241 $
4,576,491 $
19,069,970 $
17,323,163
Concentrix 1,212,836 972,286 4,707,912 2,463,151
Inter-segment elimination (5,784) (4,730) (20,589) (18,369)
Consolidated $
6,581,293 $
5,544,046 $
23,757,293 $
19,767,945
Operating income:
Technology Solutions $
166,834 $
125,549 $
519,429 $
405,474
Concentrix 101,454 75,346 294,332 144,761
Consolidated $
268,288 $
200,895 $
813,761 $
550,236
(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 per share amounts)
(Amounts may not add due to rounding)
(unaudited)
Three Months Ended Fiscal Year Ended
November November November November
30, 30, 30, 30,
2019 2018 2019 2018
Revenue
Consolidated
Revenue as previously reported $
5,622,201 $
20,053,764
Impact of adoption of ASC Topic
606 (78,155) (285,819)
Revenue in accordance with ASC
Topic 606(1) $
6,581,293 $
5,544,046 $
23,757,293 $
19,767,945
Technology Solutions
Revenue as previously reported $
4,654,646 $
17,608,982
Impact of adoption of ASC Topic
606 (78,155) (285,819)
Revenue in accordance with ASC
Topic 606(1) $
5,374,241 $
4,576,491 $
19,069,970 $
17,323,163
Concentrix
Revenue as previously reported $
972,286 $
2,463,151
Impact of adoption of ASC Topic
606
Revenue in accordance with ASC
Topic 606(1) $
1,212,836 $
972,286 $
4,707,912 $
2,463,151
(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 $
819,000 $
892,000 $
3,366,000 $
3,090,000
SYNNEX Corporation
Impact of adoption of Accounting Standards Codification ("ASC") Topic 606 on Revenue and Earnings
(currency in thousands, except per share amounts)
(Amounts may not add due to rounding)
(unaudited)
(continued)
Three Months Ended
Fiscal Year Ended
November
30, November
30,
2018 2018
Consolidated Statements of
Operations As reported As adjusted As reported As adjusted
Revenue:
Products $
4,654,642 $
4,576,487 $
17,608,897 $
17,323,078
Services 967,559 967,559 2,444,867 2,444,867
Total revenue 5,622,201 5,544,046 20,053,764 19,767,945
Cost of revenue:
Products (4,383,245) (4,302,465) (16,611,595) (16,326,576)
Services (587,472) (587,472) (1,514,470) (1,514,470)
Gross profit 651,485 654,110 1,927,699 1,926,899
Selling, general and
administrative expenses (453,215) (453,215) (1,376,664) (1,376,664)
Operating income 198,270 200,895 551,036 550,236
Interest expense and finance
charges, net (30,791) (30,791) (84,675) (84,675)
Other income (expense), net (5,487) (5,487) (8,984) (8,984)
Income before income taxes 161,992 164,617 457,377 456,577
Provision for income taxes (48,811) (49,415) (156,779) (156,596)
Net income $
113,180 $
115,201 $
300,598 $
299,981
Earnings per common share:
Basic $
2.42 $
2.46 $
7.23 $
7.21
Diluted $
2.41 $
2.45 $
7.19 $
7.17
Non-GAAP financial measures
Non-GAAP operating income $
265,132 $
267,757 $
720,500 $
719,700
GAAP operating margin 3.53 3.62
%
%
% % 2.75 2.78
Non-GAAP operating margin 4.72 4.83
%
%
% % 3.59 3.64
Non-GAAP net income $
171,522 $
173,586 $
455,428 $
454,794
Non-GAAP diluted EPS $
3.65 $
3.69 $
10.89 $
10.87
SYNNEX Corporation
Reconciliation of GAAP to Non-GAAP financial measures
(currency in thousands)
(Amounts may not add due to rounding)
Three Months Ended Fiscal Year Ended
November November November November
30, 30, 30, 30,
2019 2018 2019 2018
(Adjusted)(1) (Adjusted)(1)
Revenue in constant currency
Consolidated
Revenue $
6,581,293 $
5,544,046 $
23,757,293 $
19,767,945
Foreign currency translation 16,349 143,530
Revenue in constant currency $
6,597,642 $
5,544,046 $
23,900,823 $
19,767,945
Technology Solutions
Revenue $
5,374,241 $
4,576,491 $
19,069,970 $
17,323,163
Foreign currency translation 5,666 89,786
Revenue in constant currency $
5,379,907 $
4,576,491 $
19,159,756 $
17,323,163
Concentrix
Revenue $
1,212,836 $
972,286 $
4,707,912 $
2,463,151
Foreign currency translation 10,683 53,744
Revenue in constant currency $
1,223,519 $
972,286 $
4,761,656 $
2,463,151
Three Months Ended Fiscal Year Ended
November November November November
30, 30, 30, 30,
2019 2018 2019 2018
(Adjusted)(1) (Adjusted)(1)
Selling, general and
administrative expenses
Consolidated
GAAP selling, general and
administrative expenses $
526,251 $
453,215 $
2,084,156 $
1,376,664
Acquisition-related and
integration expenses 17,872 21,713 71,454 45,132
Amortization of intangibles 51,937 44,662 208,901 122,544
Adjusted selling, general and
administrative expenses $
456,442 $
386,840 $
1,803,801 $
1,208,988
Technology Solutions
GAAP selling, general and
administrative expenses $
171,105 $
148,476 $
637,830 $
591,106
Acquisition-related and
integration expenses 1,293 981 7,642
Amortization of intangibles 10,907 12,205 43,875 50,007
Adjusted selling, general and
administrative expenses $
160,198 $
134,978 $
592,974 $
533,457
Concentrix
GAAP selling, general and
administrative expenses $
356,977 $
306,670 $
1,454,116 $
792,791
Acquisition-related and
integration expenses 17,872 20,420 70,473 37,490
Amortization of intangibles 41,030 32,457 165,026 72,537
Adjusted selling, general and
administrative expenses $
298,075 $
253,793 $
1,218,617 $
682,764
SYNNEX Corporation
Reconciliation of GAAP to Non-GAAP financial measures
(currency in thousands)
(Amounts may not add due to rounding)
(continued)
Three Months Ended Fiscal Year Ended
November November November November
30, 30, 30, 30,
2019 2018 2019 2018
(Adjusted)(1) (Adjusted)(1)
Operating income and Operating
margin
Consolidated
Revenue $
6,581,293 $
5,544,046 $
23,757,293 $
19,767,945
GAAP operating income $
268,288 $
200,895 $
813,761 $
550,236
Acquisition-related and
integration expenses 17,872 21,713 71,454 45,132
Amortization of intangibles 52,332 45,149 210,481 124,332
Non-GAAP operating income $
338,492 $
267,757 $
1,095,696 $
719,700
Depreciation (excluding
accelerated depreciation
included in acquisition-
related expenses above) 38,273 33,924 157,277 100,955
Adjusted EBITDA $
376,765 $
301,681 $
1,252,973 $
820,655
GAAP operating margin 4.08 3.62 3.43 2.78
% % % %
Non-GAAP operating margin 5.14 4.83 4.61 3.64
% % % %
Technology Solutions
Segment revenue $
5,374,241 $
4,576,491 $
19,069,970 $
17,323,163
GAAP operating income $
166,834 $
125,549 $
519,429 $
405,474
Acquisition-related and
integration expenses 1,293 981 7,642
Amortization of intangibles 10,907 12,205 43,875 50,007
Non-GAAP operating income $
177,741 $
139,047 $
564,285 $
463,123
Depreciation 5,735 5,625 22,454 20,681
Adjusted EBITDA $
183,476 $
144,672 $
586,739 $
483,804
GAAP operating margin 3.10 2.74 2.72 2.34
% % % %
Non-GAAP operating margin 3.31 3.04 2.96 2.67
% % % %
Concentrix
Segment revenue $
1,212,836 $
972,286 $
4,707,912 $
2,463,151
GAAP operating income $
101,454 $
75,346 $
294,332 $
144,761
Acquisition-related and
integration expenses 17,872 20,420 70,473 37,490
Amortization of intangibles 41,425 32,944 166,606 74,325
Non-GAAP operating income $
160,751 $
128,710 $
531,411 $
256,576
Depreciation (excluding
accelerated depreciation
included in acquisition-
related expenses above) 32,538 28,299 134,823 80,274
Adjusted EBITDA $
193,289 $
157,009 $
666,234 $
336,850
GAAP operating margin 8.37 7.75 6.25 5.88
% % % %
Non-GAAP operating margin 13.25 13.24 11.29 10.42
% % % %
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 Fiscal Year Ended
November November November November
30, 30, 30, 30,
2019 2018 2019 2018
(Adjusted)(1) (Adjusted)(1)
Net income
Net income $
176,001 $
115,201 $
500,712 $
299,981
Acquisition-related and
integration expenses 17,872 21,713 71,283 42,498
Amortization of intangibles 52,332 45,149 210,481 124,332
Contingent consideration (19,034)
Acquisition-related contingent
gain (11,112) (11,112)
Income taxes related to the
above(2) (15,492) (16,887) (70,820) (45,128)
U.S. tax reform adjustment 8,410 33,111
Non-GAAP net income $
219,601 $
173,586 $
681,510 $
454,794
Diluted earnings per common share
("EPS")(3)
Net income $
176,001 $
115,201 $
500,712 $
299,981
Less: net income allocated to
participating securities 1,812 995 4,573 2,716
Net income attributable to common
stockholders 174,189 114,206 496,139 297,265
Acquisition-related and
integration expenses attributable
to common stockholders 17,680 21,515 70,623 42,106
Amortization of intangibles
attributable to common
stockholders 51,771 44,737 208,531 123,186
Contingent consideration
attributable to common
stockholders (18,858)
Acquisition-related contingent
gain attributable to common
stockholders (10,993) (11,009)
Income taxes related to the above
attributable to common
stockholders(2) (15,326) (16,733) (70,164) (44,712)
U.S. tax reform adjustment
attributable to common
stockholders 8,333 32,806
Non-GAAP net income attributable
to common stockholders $
217,322 $
172,058 $
675,262 $
450,651
Weighted-average number of common
shares - diluted: 51,032 46,633 50,936 41,451
Diluted EPS(3) $
3.41 $
2.45 $
9.74 $
7.17
Acquisition-related and
integration expenses 0.35 0.46 1.39 1.02
Amortization of intangibles 1.01 0.96 4.09 2.97
Contingent consideration (0.37)
Acquisition-related contingent
gain (0.22) (0.22)
Income taxes related to the
above(2) (0.30) (0.36) (1.38) (1.08)
U.S. tax reform adjustment 0.18 0.79
Non-GAAP Diluted EPS $
4.26 $
3.69 $
13.26 $
10.87
SYNNEX Corporation
Reconciliation of GAAP to Non-GAAP financial measures
(Amounts may not add due to rounding)
(continued)
Three Months Ended Fiscal Year Ended
(Currency in thousands) November November November November
30, 30, 30, 30,
2019 2018 2019 2018
Net cash provided by
operating activities $
349,280 $
141,092 $
549,918 $
100,706
Purchases of property and
equipment (45,825) (49,832) (137,423) (125,305)
Free cash flow $
303,455 $
91,260 $
412,495 $
(24,599)
Forecast
Three Months Ending February 29, 2020
(Amounts in millions,
except per share
amounts) Low High
Net income $
114.7 $
124.6
Acquisition-related and
integration expenses 8.3 8.3
Amortization of
intangibles 47.0 47.0
Income taxes related to
the above(2) (12.7) (12.7)
Non-GAAP net income $
157.3 $
167.2
Diluted EPS(3) $
2.21 $
2.40
Acquisition-related and
integration expenses 0.16 0.16
Amortization of
intangibles 0.91 0.91
Income taxes related to
the above(2) (0.25) (0.25)
Non-GAAP Diluted EPS $
3.03 $
3.22
(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
1.0% and 0.9% of Net income for the three
months ended November 30, 2019 and 2018,
respectively. Net income allocated to
participating securities was approximately
0.9% of Net income for both the years
ended November 30, 2019 and 2018. Net
income allocable to participating
securities is estimated to be
approximately 1.2% of the forecast Net
income for the three months ending
February 29, 2020.
SYNNEX Corporation
Calculation of Financial Metrics
(currency in thousands)
(Amounts may not add or compute due to rounding)
Return on Invested Capital ("ROIC")
November 30, 2019 November 30, 2018
(Adjusted)(1)
ROIC
Operating income
(trailing fiscal four
quarters)(1) $
813,761 $
550,236
Income taxes on operating
income(2) (211,985) (188,731)
Operating income after
taxes(1) $
601,776 $
361,505
Total borrowings,
excluding book overdraft
(last five quarters
average) $
3,364,846 $
2,164,694
Total equity (last five
quarters average) 3,574,562 2,536,835
Less: U.S. cash and cash
equivalents (last five
quarters average) (66,036) (134,377)
Total invested capital $
6,873,372 $
4,567,152
ROIC 8.8
% 7.9
%
Adjusted ROIC
Non-GAAP operating
income (trailing fiscal
four quarters)(1) $
1,095,696 $
719,700
Income taxes on Non-GAAP
operating income(2) (288,168) (194,679)
Non-GAAP operating
income after taxes(1) $
807,528 $
525,021
Total invested capital $
6,873,372 $
4,567,152
Tax effected impact of
cumulative non-GAAP
adjustments (last five
quarters
average) 487,301 314,248
Total Non-GAAP invested
capital $
7,360,673 $
4,881,400
Adjusted ROIC 11.0
% 10.8
%
(1)
Adjusted
to reflect the adoption of the new
guidance on revenue recognition, on a
full retrospective basis.
(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
November 30, 2019 November 30, 2018
Total borrowings,
excluding book
overdraft (a) $
3,014,152 $
3,451,006
Trailing fiscal four
quarters Adjusted
EBITDA(1) (b) $
1,252,973 $
820,655
Debt to Adjusted
EBITDA leverage ratio (c)=(a)/(b) 2.4 4.2
(1)
Adjusted EBITDA for all
fiscal quarters in 2019 and
2018 included in the trailing
fiscal four quarters
calculation reflects the
adoption of ASC Topic 606.
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
November 30, 2019 November 30, 2018
(Adjusted)(1)
Days sales outstanding
Revenue (products and
services)
(a) $
6,581,293 $
5,544,046
Accounts receivable, net
(b) 3,926,709 3,640,496
Days sales outstanding (c) = (b)/((a)/the
number of days during
the period) 54 60
Days inventory
outstanding
Cost of revenue (products
and services)
(d) $
5,786,754 $
4,889,937
Inventories
(e) 2,547,224 2,392,559
Days inventory (f) = (e)/((d)/the
outstanding number of days during
the period) 40 45
Days payable outstanding
Cost of revenue (products
and services)
(g) $
5,786,754 $
4,889,937
Accounts payable
(h) 3,149,443 3,048,102
Days payable outstanding (i) = (h)/((g)/the
number of days during
the period) 50 57
Cash conversion cycle (j) = (c)+(f)-(i) 44 48
(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
