SYNNEX Corporation Reports Second Quarter Fiscal 2020 Results
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 November
30,
31, 2020 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 May May May
31, 2020 31, 2019 31, 2020 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 May May May
31, 2020 31, 2019 31, 2020 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 May May May
31, 2020 31, 2019 31, 2020 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 May May May
31, 2020 31, 2019 31, 2020 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 May May May
31, 2020 31, 2019 31, 2020 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 May May May
31, 2020 31, 2019 31, 2020 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 May May May
31, 2020 31, 2019 31, 2020 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 May May May
31, 2020 31, 2019 31, 2020 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 May
31, 2020 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 574,105 393,858
quarters average)
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 May
31, 2020 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 May
31, 2020 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 53 56
days during the period)
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 57 48
days during the period)
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 64 51
days during the period)
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
