SYNNEX Corporation Reports Third Quarter Fiscal 2020 Results
FREMONT, Calif., Sept. 29, 2020 /PRNewswire/ -- SYNNEX Corporation (NYSE: SNX), a leading business process services company, today announced financial results for the fiscal third quarter ended August 31, 2020.( )
Q3 FY20 Q3 FY19 Net change
Revenue ($M) $
6,465 $
6,204 4.2
%
Operating income ($M) $
209.1 $
208.9 0.1
%
Non-GAAP operating income ($M)(1) $
260.1 $
270.5 -3.8
%
Operating margin 3.24 3.37
% % -13
bps
Non-GAAP operating margin(1) 4.02 4.36
% % -34
bps
Net income ($M) $
134.5 $
123.1 9.2
%
Non-GAAP net income ($M)(1) $
172.6 $
169.2 2.0
%
Diluted earnings per common share ("EPS") $
2.60 $
2.40 8.3
%
Non-GAAP Diluted EPS(1) $
3.33 $
3.30 0.9
%
"Our strong third quarter performance is a reflection of our resiliency, our ongoing focus on serving our partners and clients and the continued dedication of our associates on the growth and improvement of our business during these unprecedented times," said Dennis Polk, SYNNEX President and CEO. "We remain on track with the proposed spin-off of Concentrix and believe this will result in incremental value for all of our stakeholders."
Third Quarter Fiscal 2020 Highlights
-- Technology Solutions: Revenue was $5.3 billion, up 5.1% over the prior
fiscal year third quarter. Operating income was $132 million, or 2.5% of
segment revenue, compared to $139 million, or 2.8% of segment revenue,
in the prior fiscal year third quarter. Non-GAAP operating income was
$142 million, or 2.7% of segment revenue, compared to $150 million, or
3.0% of segment revenue, in the prior fiscal year third quarter.
-- Concentrix: Revenue was $1.2 billion, up 0.2% from the prior fiscal year
third quarter. Operating income was $77 million, or 6.6% of segment
revenue, compared to $70 million, or 6.0% of segment revenue in the
prior fiscal year third quarter. Non-GAAP operating income was $118
million, or 10.1% of segment revenue, compared to $121 million, or 10.4%
of segment revenue, in the prior fiscal year third quarter.
-- The trailing fiscal four quarters Return on Invested Capital ("ROIC")
was 9.1% compared to 8.6% in the prior fiscal year third quarter. The
adjusted trailing fiscal four quarters ROIC was 10.7%.
-- Cash generated from operations was approximately $321 million for the
quarter.
Fourth Quarter Fiscal 2020 Outlook
The following statements are based on SYNNEX current expectations for the fiscal 2020 fourth 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 $6.45 billion to $6.65
billion.
-- Net income is expected to be in the range of $153.0 million to $166.0
million and on a non-GAAP basis, net income is expected to be in the
range of $190.5 million to $203.5 million.
-- Diluted earnings per share is expected to be in the range of $2.95 to
$3.20 and on a non-GAAP basis, diluted earnings per share is expected to
be in the range of $3.68 to $3.93, based on estimated outstanding
diluted weighted average shares of 51.5 million.
-- After-tax amortization of intangibles is expected to be $35.2 million,
or $0.68 per share.
-- After-tax acquisition-related and integration expense is expected to be
$2.3 million, or $0.04 per share.
Conference Call and Webcast
SYNNEX will host a conference call to discuss third quarter fiscal 2020 results:
Tuesday, September 29, 2020
2:00 PM (PT) / 5:00 PM (ET)
Conference ID 8016677
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 the proposed spin-off of Concentrix, including status, timing, what shareholders will own immediately following the spin-off and shareholder value; our expectations and outlook for the fiscal 2020 fourth 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 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)
August November
30,
31, 2020 2019
ASSETS
Current assets:
Cash and cash equivalents $
1,452,273 $
225,529
Accounts receivable, net 3,580,970 3,926,709
Receivables from vendors, net 323,027 368,505
Inventories 2,832,607 2,547,224
Other current assets 375,273 385,024
Total current assets 8,564,151 7,452,992
Property and equipment, net 583,951 569,899
Goodwill 2,257,292 2,254,402
Intangible assets, net 1,031,168 1,162,212
Deferred tax assets 116,263 97,539
Other assets, net 710,283 160,917
Total assets $
13,263,107 $
11,697,960
LIABILITIES AND EQUITY
Current liabilities:
Borrowings, current $
244,114 $
298,969
Accounts payable 3,655,215 3,149,443
Accrued compensation and benefits 447,661 402,771
Other accrued liabilities 1,257,160 723,716
Income taxes payable 27,998 32,223
Total current liabilities 5,632,148 4,607,122
Long-term borrowings 2,609,809 2,718,267
Other long-term liabilities 722,343 361,911
Deferred tax liabilities 205,225 222,210
Total liabilities 9,169,525 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, 53,380 and 53,154
shares issued as of August 31, 2020 and
November 30, 2019, respectively 53 53
Additional paid-in capital 1,579,026 1,545,421
Treasury stock, 2,454 and 2,399 shares
as of August 31, 2020 and November 30,
2019, respectively (178,775) (172,627)
Accumulated other comprehensive income
(loss) (224,628) (209,077)
Retained earnings 2,917,906 2,624,680
Total stockholders' equity 4,093,582 3,788,450
Total liabilities and equity $
13,263,107 $
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
Nine Months Ended
August August August August
31, 2020 31, 2019 31, 2020 31, 2019
Revenue:
Products $
5,306,361 $
5,047,968 $
13,858,313 $
13,695,725
Services 1,158,421 1,155,690 3,403,305 3,480,275
Total revenue 6,464,782 6,203,659 17,261,619 17,176,000
Cost of revenue:
Products (5,008,881) (4,746,197) (13,031,113) (12,876,410)
Services (747,809) (731,472) (2,206,256) (2,196,212)
Gross profit 708,092 725,990 2,024,249 2,103,379
Selling, general and
administrative expenses (498,956) (517,135) (1,514,734) (1,557,906)
Operating income 209,136 208,855 509,515 545,473
Interest expense and finance
charges, net (28,749) (42,945) (99,046) (127,695)
Other income (expense), net (567) (1,087) 3,280 19,764
Income before income taxes 179,819 164,823 413,748 437,542
Provision for income taxes (45,356) (41,691) (99,740) (112,831)
Net income $
134,464 $
123,132 $
314,008 $
324,711
Earnings per common share:
Basic $
2.61 $
2.41 $
6.10 $
6.35
Diluted $
2.60 $
2.40 $
6.07 $
6.32
Weighted-average common shares
outstanding:
Basic 50,890 50,601 50,851 50,661
Diluted 51,241 50,845 51,172 50,903
SYNNEX Corporation
Segment Information
(currency in thousands)
(Amounts may not add due to rounding)
(unaudited)
Three Months Ended Nine Months Ended
August August August August
31, 2020 31, 2019 31, 2020 31, 2019
Revenue:
Technology Solutions $
5,306,361 $
5,047,970 $
13,858,313 $
13,695,729
Concentrix 1,163,694 1,160,928 3,418,676 3,495,076
Inter-segment elimination (5,273) (5,240) (15,371) (14,805)
Consolidated $
6,464,782 $
6,203,659 $
17,261,619 $
17,176,000
Operating income:
Technology Solutions $
132,373 $
138,830 $
320,962 $
352,594
Concentrix 76,763 70,025 188,554 192,879
Consolidated $
209,136 $
208,855 $
509,515 $
545,473
SYNNEX Corporation
Reconciliation of GAAP to Non-GAAP financial measures
(currency in thousands)
(Amounts may not add due to rounding)
Three Months Ended Nine Months Ended
August August August August
31, 2020 31, 2019 31, 2020 31, 2019
Revenue in constant currency
Consolidated
Revenue $
6,464,782 $
6,203,659 $
17,261,619 $
17,176,000
Foreign currency translation 35,239 111,756
Revenue in constant currency $
6,500,021 $
6,203,659 $
17,373,375 $
17,176,000
Technology Solutions
Revenue $
5,306,361 $
5,047,970 $
13,858,313 $
13,695,729
Foreign currency translation 32,798 79,488
Revenue in constant currency $
5,339,159 $
5,047,970 $
13,937,801 $
13,695,729
Concentrix
Revenue $
1,163,694 $
1,160,928 $
3,418,676 $
3,495,076
Foreign currency translation 2,441 32,268
Revenue in constant currency $
1,166,135 $
1,160,928 $
3,450,944 $
3,495,076
Three Months Ended Nine Months Ended
August August August August
31, 2020 31, 2019 31, 2020 31, 2019
Selling, general and administrative expenses
Consolidated
GAAP selling, general and administrative expenses $
498,956 $
517,135 $
1,514,734 $
1,557,906
Acquisition-related and integration expenses 4,163 9,200 22,701 53,582
Amortization of intangibles 46,533 52,066 139,435 156,964
Adjusted selling, general and administrative expenses $
448,260 $
455,869 $
1,352,598 $
1,347,360
Technology Solutions
GAAP selling, general and administrative expenses $
165,107 $
162,944 $
506,239 $
466,725
Acquisition-related and integration expenses 981
Amortization of intangibles 9,995 10,999 30,130 32,968
Adjusted selling, general and administrative expenses $
155,112 $
151,945 $
476,109 $
432,776
Concentrix
GAAP selling, general and administrative expenses $
335,770 $
356,155 $
1,014,339 $
1,097,139
Acquisition-related and integration expenses 4,163 9,200 22,701 52,601
Amortization of intangibles 36,538 41,067 109,305 123,996
Adjusted selling, general and administrative expenses $
295,069 $
305,888 $
882,333 $
920,542
SYNNEX Corporation
Reconciliation of GAAP to Non-GAAP financial measures
(currency in thousands)
(Amounts may not add due to rounding)
(continued)
Three Months Ended Nine Months Ended
August August August August
31, 2020 31, 2019 31, 2020 31, 2019
Operating income and Operating margin
Consolidated
Revenue $
6,464,782 $
6,203,659 $
17,261,619 $
17,176,000
GAAP operating income $
209,136 $
208,855 $
509,515 $
545,473
Acquisition-related and integration expenses 4,163 9,200 22,701 53,582
Amortization of intangibles 46,828 52,428 140,320 158,149
Non-GAAP operating income $
260,127 $
270,483 $
672,536 $
757,204
GAAP operating margin 3.24 3.37 2.95 3.18
% % % %
Non-GAAP operating margin 4.02 4.36 3.90 4.41
% % % %
Technology Solutions
Segment revenue $
5,306,361 $
5,047,970 $
13,858,313 $
13,695,729
GAAP operating income $
132,373 $
138,830 $
320,962 $
352,594
Acquisition-related and integration expenses 981
Amortization of intangibles 9,995 10,999 30,130 32,968
Non-GAAP operating income $
142,368 $
149,829 $
351,092 $
386,543
GAAP operating margin 2.49 2.75 2.32 2.57
% % % %
Non-GAAP operating margin 2.68 2.97 2.53 2.82
% % % %
Concentrix
Segment revenue $
1,163,694 $
1,160,928 $
3,418,676 $
3,495,076
GAAP operating income $
76,763 $
70,025 $
188,554 $
192,879
Acquisition-related and integration expenses 4,163 9,200 22,701 52,601
Amortization of intangibles 36,833 41,429 110,190 125,181
Non-GAAP operating income $
117,759 $
120,654 $
321,445 $
370,661
GAAP operating margin 6.60 6.03 5.52 5.52
% % % %
Non-GAAP operating margin 10.12 10.39 9.40 10.61
% % % %
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 Nine Months Ended
August August August August
31, 2020 31, 2019 31, 2020 31, 2019
Adjusted EBITDA
Consolidated
Net income $
134,464 $
123,132 $
314,008 $
324,711
Interest expense and finance charges, net 28,749 42,945 99,046 127,695
Provision for income taxes 45,356 41,691 99,740 112,831
Depreciation (excluding accelerated
depreciation included in acquisition-related
and integration expenses below) 37,446 38,597 110,981 119,004
Amortization of intangibles 46,828 52,428 140,320 158,149
EBITDA $
292,843 $
298,793 $
764,095 $
842,390
Other (income) expense, net (excluding amounts
included in acquisition-related and
integration expenses below) 567 1,087 (3,798) (19,593)
Acquisition-related and integration expenses 4,163 9,200 23,219 53,411
Adjusted EBITDA $
297,573 $
309,080 $
783,516 $
876,208
Technology Solutions
Net income $
85,531 $
87,778 $
204,237 $
236,080
Interest expense and finance charges, net 19,747 17,775 59,531 55,725
Provision for income taxes 27,119 29,739 56,189 77,873
Depreciation 5,937 5,875 17,650 16,719
Amortization of intangibles 9,995 10,999 30,130 32,968
EBITDA $
148,329 $
152,166 $
367,737 $
419,365
Other (income) expense, net (25) 3,538 1,004 (17,083)
Acquisition-related and integration expenses 981
Adjusted EBITDA $
148,304 $
155,704 $
368,741 $
403,263
Concentrix
Net income $
48,933 $
35,354 $
109,771 $
88,631
Interest expense and finance charges, net 9,002 25,170 39,515 71,970
Provision for income taxes 18,236 11,952 43,551 34,958
Depreciation (excluding accelerated
depreciation included in acquisition-related
and integration expenses below) 31,509 32,722 93,331 102,285
Amortization of intangibles 36,833 41,429 110,190 125,181
EBITDA $
144,513 $
146,627 $
396,358 $
423,025
Other (income) expense, net (excluding amounts
included in acquisition-related and
integration expenses below) 592 (2,450) (4,802) (2,510)
Acquisition-related and integration expenses 4,163 9,200 23,219 52,430
Adjusted EBITDA $
149,268 $
153,377 $
414,775 $
472,945
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 Nine Months Ended
August August August August
31, 2020 31, 2019 31, 2020 31, 2019
Net income
Net income $
134,464 $
123,132 $
314,008 $
324,711
Acquisition-related and integration expenses 4,163 9,200 23,219 53,411
Amortization of intangibles 46,828 52,428 140,320 158,149
Contingent consideration (19,034)
Income taxes related to the above(1) (12,899) (15,548) (41,407) (55,328)
Non-GAAP net income $
172,556 $
169,212 $
436,140 $
461,909
Diluted earnings per common share ("EPS")(2)
Net income $
134,464 $
123,132 $
314,008 $
324,711
Less: net income allocated to participating
securities 1,481 1,066 3,602 2,883
Net income attributable to common stockholders 132,983 122,066 310,406 321,828
Acquisition-related and integration expenses
attributable to common stockholders 4,117 9,121 22,960 52,938
Amortization of intangibles attributable to
common stockholders 46,312 51,975 138,755 156,748
Contingent consideration attributable to common
stockholders (18,865)
Income taxes related to the above attributable
to common stockholders(1) (12,757) (15,414) (40,945) (54,838)
Non-GAAP net income attributable to common
stockholders $
170,655 $
167,748 $
431,176 $
457,810
Weighted-average number of common shares -
diluted: 51,241 50,845 51,172 50,903
Diluted EPS(2) $
2.60 $
2.40 $
6.07 $
6.32
Acquisition-related and integration expenses 0.08 0.18 0.45 1.04
Amortization of intangibles 0.90 1.02 2.71 3.08
Contingent consideration (0.37)
Income taxes related to the above(1) (0.25) (0.30) (0.80) (1.08)
Non-GAAP diluted EPS $
3.33 $
3.30 $
8.43 $
8.99
( )
SYNNEX Corporation
Reconciliation of GAAP to Non-GAAP financial measures
(Amounts may not add due to rounding)
(continued)
Three Months Ended Nine Months Ended
(Amounts in thousands) August August August August
31, 2020 31, 2019 31, 2020 31, 2019
Free cash flow
Net cash provided by (used in) operating activities $
320,617 $
249,853 $
1,547,098 $
202,473
Purchases of property and equipment (42,705) (33,020) (127,326) (93,432)
Free cash flow $
277,912 $
216,833 $
1,419,772 $
109,041
Forecast
Three Months Ending November
30, 2020
(Amounts in millions,
except per share
amounts) Low High
Net income $
153.0 $
166.0
Acquisition-related and
integration expenses 3.0 3.0
Amortization of
intangibles 47.0 47.0
Income taxes related to
the above(1) (12.5) (12.5)
Non-GAAP net income $
190.5 $
203.5
Diluted EPS(2) $
2.95 $
3.20
Acquisition-related and
integration expenses 0.06 0.06
Amortization of
intangibles 0.90 0.90
Income taxes related to
the above(1) (0.24) (0.24)
Non-GAAP diluted EPS $
3.68 $
3.93
(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 nine months ended August 31, 2020,
respectively and approximately 0.9% for
both the three and nine months ended
August 31, 2019. Net income allocable to
participating securities is estimated to
be approximately 0.9% of the forecasted
Net income for the three months ending
November 30, 2020.
SYNNEX Corporation
Calculation of Financial Metrics
(currency in thousands)
(Amounts may not add or compute due to rounding)
Return on Invested Capital ("ROIC")
August August
31, 2020 31, 2019
ROIC
Operating income
(trailing fiscal four
quarters) $
777,803 $
746,368
Income taxes on
operating income(1) (193,398) (201,002)
Operating income after
taxes $
584,405 $
545,366
Total borrowings,
excluding book
overdraft (last five
quarters average) $
3,019,573 $
3,126,339
Total equity (last five
quarters average) 3,834,782 3,282,537
Less: U.S. cash and cash
equivalents (last five
quarters average) (398,398) (67,727)
Total invested capital $
6,455,957 $
6,341,149
ROIC 9.1 8.6
% %
Adjusted ROIC
Non-GAAP operating
income (trailing fiscal
four quarters) $
1,011,028 $
1,024,961
Income taxes on Non-
GAAP operating
income(1) (253,279) (263,045)
Non-GAAP operating
income after taxes $
757,749 $
761,916
Total invested capital $
6,455,957 $
6,341,149
Tax effected impact of
cumulative non-GAAP
adjustments (last five 616,468 439,557
quarters average)
Total Non-GAAP invested
capital $
7,072,425 $
6,780,706
Adjusted ROIC 10.7 11.2
% %
(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
August August
31, 2020 31, 2019
Total borrowings, excluding book overdraft
(a) $
2,851,890 $
3,323,416
Less: cash and cash equivalents
(b) 1,452,273 262,279
Net debt
(c)=(a)-(b) $
1,399,617 $
3,061,137
Trailing four quarters Adjusted EBITDA
(d) $
1,160,281 $
1,177,889
Debt to Adjusted EBITDA leverage ratio
(e)=(a)/(d) 2.5 2.8
Net debt to Adjusted EBITDA leverage ratio
(f)=(c)/(d) 1.2 2.6
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
August August
31, 2020 31, 2019
Days sales outstanding
Revenue (products and services)
(a) $
6,464,782 $
6,203,659
Accounts receivable, net
(b) 3,580,970 3,452,976
Days sales outstanding
(c) = (b)/((a)/the number of 51 51
days during the period)
Days inventory outstanding
Cost of revenue (products and services)
(d) $
5,756,690 $
5,477,669
Inventories
(e) 2,832,607 2,787,159
Days inventory outstanding
(f) = (e)/((d)/the number of 45 47
days during the period)
Days payable outstanding
Cost of revenue (products and services)
(g) $
5,756,690 $
5,477,669
Accounts payable
(h) 3,655,215 2,932,046
Days payable outstanding
(i) = (h)/((g)/the number of 58 49
days during the period)
Cash conversion cycle
(j) = (c)+(f)-(i) 38 49
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SOURCE SYNNEX Corporation
