Submitted by admin on 9/28/2015 @ 1:18 PM SYNNEX Corporation
FREMONT, Calif., Sept. 28, 2015 /PRNewswire/ -- SYNNEX Corporation (NYSE: SNX), a leading business process services company, today announced financial results for the fiscal third quarter ended August 31, 2015. Q3 FY15 Q3 FY14 Net change Revenue ($M) $3,333 $3,535 -5.7% Operating income ($M) $81.3 $78.8 3.1% Non-GAAP operating income ($M)(1) $97.0 $106.3 -8.7% Operating margin 2.44% 2.23% 21 bps Non-GAAP operating margin(1) 2.91% 3.01% (10) bps Net income attributable to SYNNEX Corporation ($M) $48.2 $45.0 7.1% Non-GAAP net income attributable to SYNNEX Corporation ($M)(1) $58.4 $62.5 -6.6% Diluted EPS $1.21 $1.14 6.1% Non-GAAP Diluted EPS(1) $1.47 $1.58 -7.0% (1) Non-GAAP financial measures exclude the impact of acquisition and other integration expenses and the amortization of intangible assets. A reconciliation of GAAP to Non-GAAP financial information is presented in the supplementary information section at the end of this press release.
"Both businesses contributed to our solid profitability during the third quarter," stated Kevin Murai, President and Chief Executive Officer. He added, "And our Concentrix business achieved revenue growth well above market growth rates."
Fiscal 2015 Third Quarter Highlights: -- Technology Solutions: Revenue was $3.0 billion, down 7.1% from the prior fiscal year quarter. Adjusting for the translation effect of foreign currencies, the Technology Solutions business decreased by 4.0% compared with last year. Technology Solutions income before non-operating items, income taxes and noncontrolling interest was $71.0 million, or 2.39% of segment revenue, compared with $76.9 million, or 2.40% of segment revenue, in the fiscal third quarter of 2014. Fiscal third quarter 2015 results were negatively impacted by an expected $2.3 million Japan pension expense. -- Concentrix: Revenue was $359.5 million, a 7.7% increase from the $333.8 million in revenue generated during the third quarter of last year. Adjusting for the translation effect of foreign currencies, Concentrix revenue grew 15.5% compared with last year. Income before non-operating items, income taxes and noncontrolling interest was $10.1 million, or 2.82% of Concentrix revenue, compared with $1.7 million in the prior fiscal year quarter. Non-GAAP income before non-operating items, income taxes and noncontrolling interest was $25.2 million, or 7.02% of segment revenue, for fiscal third quarter of 2015, compared with $28.3 million, or 8.49% of segment revenue, in the fiscal third quarter of 2014. -- The trailing fiscal four quarters Return on Invested Capital ("ROIC") was 8.7% compared with 8.2% in the prior year fiscal third quarter. Excluding the impact of acquisition and integration expenses and amortization of intangibles, the trailing fiscal four quarters ROIC was 10.1%. -- The debt to capitalization ratio was 30%, down from 38% in the prior fiscal year quarter. -- Depreciation and amortization were $13.0 million and $13.7 million, respectively. -- Cash generated from operations was approximately $220 million for the quarter and approximately $555 million year-to-date. -- The Company repurchased 120,000 shares during the quarter at an aggregate cost of $8.7 million. -- The Company paid a quarterly dividend of $0.125 per share or $4.9 million.
Fiscal 2015 Fourth Quarter Outlook:
The following statements are based on SYNNEX's current expectations for the fiscal 2015 fourth quarter and the non-GAAP financial measures exclude acquisition and other integration expenses and amortization of intangibles. These statements are forward-looking and actual results may differ materially. -- Revenue is expected to be in the range of $3.48 billion to $3.58 billion. -- Non-GAAP net income is expected to be in the range of $69.5 million to $71.5 million. -- Non-GAAP diluted earnings per share are expected to be in the range of $1.74 to $1.79. -- After-tax amortization of intangibles is expected to be $8.5 million, or $0.21 per share. -- We anticipate a negative currency impact on revenue of approximately $110 million.
Dividends
SYNNEX announced today that its Board of Directors has declared a quarterly cash dividend of $0.20 per common share. The dividend will be payable on October 30, 2015 to stockholders of record as of the close of business on October 16, 2015.
Conference Call and Webcast
SYNNEX will be discussing its financial results and outlook on a conference call today at 2:00 p.m. (PT). A webcast of the call will be available at http://ir.synnex.com . The conference call will also be available via telephone by dialing (888) 469-3219 in North America or (630) 395-0205 outside North America. The passcode code for the call is "SNX." A replay of the webcast will be available at http://ir.synnex.com approximately two hours after the conference call has concluded where it will be archived for one year.
About SYNNEX Corporation
SYNNEX Corporation (NYSE: SNX), a Fortune 500 corporation, is a leading business process services company, optimizing supply chains and providing outsourced services focused on customer relationship management. SYNNEX distributes a broad range of information technology systems and products, and also provides systems design and integration solutions. Concentrix, a wholly-owned subsidiary of SYNNEX Corporation, offers a portfolio of strategic solutions and end-to-end business services around customer engagement strategy, process optimization, technology innovation, front and back-office automation and business transformation to clients in ten identified industry verticals. Founded in 1980, SYNNEX Corporation operates in 25 countries around the world. Additional information about SYNNEX may be found online at www.synnex.com .
Use of Non-GAAP Financial Information
To supplement the financial results presented in accordance with GAAP, SYNNEX uses 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 the amortization of intangible assets and acquisition and integration related expenses. These non-GAAP measures provide investors with an additional tool to evaluate operating results. Because these non-GAAP 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 the Company's consolidated financial statements prepared in accordance with GAAP.
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 the Company's business performance. Financial results adjusted for currency are calculated by translating current period activity in local currency using the comparable prior year periods' currency conversion rate. This approach is used for countries where the functional currency is the local currency. Generally, when the dollar either strengthens or weakens against other currencies, the 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 debt and equity. ROIC excluding the impact of acquisition and integration expenses and amortization of intangibles is calculated by excluding the tax effected impact of these items from operating income and equity.
SYNNEX management uses the non-GAAP financial measures internally to understand, manage and evaluate the business. SYNNEX management believes it is useful for the company and investors to review, as applicable, both GAAP information and the non-GAAP measures in order to assess the performance of SYNNEX' continuing businesses and for planning and forecasting in future periods. 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. The management of SYNNEX believes the 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. A reconciliation of SYNNEX' non-GAAP financial information to GAAP is set forth in the supplemental information table at the end of this press release.
Safe Harbor Statement
Statements in this news release regarding SYNNEX Corporation, which are not historical facts, are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may be identified by terms such as believe, foresee, expect, may, will, provide, could and should and the negative of these terms or other similar expressions. These statements, including statements regarding SYNNEX' expectations and outlook for the fiscal 2015 fourth quarter as to revenue, non-GAAP net income, non-GAAP diluted earnings per share, after-tax amortization of intangibles, currency impact, investments, successful resolution related to one Concentrix contract, expense associated with the Japan multi-employer pension plan withdrawal, the frequency and occurrence of dividend declarations, and the anticipated benefits of the non-GAAP financial measures, are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements. These risks and uncertainties include, but are not limited to: our ability to successfully integrate our recent acquisitions; diversion of management as a result of our recent and pending acquisitions; loss of vendors and suppliers as a result of our recent acquisitions; general economic conditions and any weakness in IT and consumer electronics spending; the loss or consolidation of one or more of our significant 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; risks associated with our anti-dilution share repurchase program; and other risks and uncertainties detailed in our Form 10-K for the fiscal year ended November 30, 2014 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 2015 SYNNEX Corporation. All rights reserved. SYNNEX, the SYNNEX Logo, CONCENTRIX, HYVE SOLUTIONS, NEW AGE ELECTRONICS, and all other SYNNEX company, product and services names and slogans are trademarks or registered trademarks of SYNNEX Corporation. SYNNEX, the SYNNEX Logo, CONCENTRIX, HYVE SOLUTIONS and NEW AGE ELECTRONICS Reg. U.S. Pat. & Tm. Off. Other names and marks are the property of their respective owners.
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SYNNEX Corporation Consolidated Balance Sheets (currency in thousands) (unaudited) August 31, November 30, 2015 2014 ---- ---- ASSETS Current assets: Cash and cash equivalents $308,076 $180,143 Restricted cash 64,910 34,269 Short-term investments 5,387 7,128 Accounts receivable, net 1,579,736 2,091,511 Receivable from related parties 117 332 Inventories 1,326,751 1,398,463 Current deferred tax assets 33,470 34,310 Other current assets 95,782 153,833 Total current assets 3,414,229 3,899,989 Property and equipment, net 236,192 200,803 Goodwill 306,843 314,213 Intangible assets, net 180,609 229,684 Deferred tax assets 14,598 10,790 Other assets 62,049 57,563 Total assets $4,214,520 $4,713,042 LIABILITIES AND EQUITY Current liabilities: Borrowings under securitization, term loans and lines of credit $89,917 $716,257 Accounts payable 1,267,738 1,585,606 Payable to related parties 7,729 5,129 Accrued compensation and benefits 117,761 125,733 Other accrued liabilities 237,948 265,875 Income taxes payable 16,869 23,129 Total current liabilities 1,737,962 2,721,729 Long-term borrowings 647,594 264,246 Long-term liabilities 67,308 60,215 Deferred tax liabilities 11,871 12,867 Total liabilities 2,464,735 3,059,057 SYNNEX Corporation stockholders' equity: Preferred stock - - Common stock 40 40 Additional paid-in capital 404,755 384,625 Treasury stock (46,644) (32,723) Accumulated other comprehensive loss (48,676) (6,628) Retained earnings 1,439,857 1,308,244 Total SYNNEX Corporation stockholders' equity 1,749,332 1,653,558 Noncontrolling interest 453 427 --- --- Total equity 1,749,785 1,653,985 Total liabilities and equity $4,214,520 $4,713,042
SYNNEX Corporation Consolidated Statements of Operations (currency and share amounts in thousands, except for per share amounts) (unaudited) Three Months Ended Nine Months Ended August 31, 2015 August 31, 2014 August 31, 2015 August 31, 2014 ---- Revenue $3,332,537 $3,535,202 $9,788,780 $10,015,721 Cost of revenue (3,041,759) (3,235,480) (8,909,725) (9,230,339) Gross profit 290,778 299,722 879,055 785,382 Selling, general and administrative expenses (209,499) (220,920) (629,468) (576,547) Income before non- operating items, income taxes and noncontrolling interest 81,279 78,802 249,587 208,835 Interest expense and finance charges, net (6,794) (7,602) (19,050) (18,260) Other income (expense), net (150) (548) (1,667) 2,223 ---- ---- Income before income taxes and noncontrolling interest 74,335 70,652 228,870 192,798 Provision for income taxes (26,164) (25,647) (82,487) (69,756) Net income 48,171 45,005 146,383 123,042 Net income attributable to noncontrolling interest - (19) (15) (88) --- --- --- --- Net income attributable to SYNNEX Corporation $48,171 $44,986 $146,368 $122,954 Earnings per share attributable to SYNNEX Corporation: Basic $1.22 $1.15 $3.71 $3.16 Diluted $1.21 $1.14 $3.68 $3.13 Weighted-average common shares outstanding: Basic 39,082 38,753 39,035 38,363 Diluted 39,328 39,068 39,325 38,720 Cash dividends declared per share $0.13 $ - $0.38 $ -
SYNNEX Corporation Segment Information (currency in thousands) (unaudited) Three Months Ended Nine Months Ended August 31, 2015 August 31, 2014 August 31, 2015 August 31, 2014 ---- Revenue: Technology Solutions $2,976,996 $3,204,534 $8,756,841 $9,270,439 Concentrix 359,464 333,796 1,043,031 754,243 Inter-segment elimination (3,923) (3,128) (11,092) (8,961) Consolidated $3,332,537 $3,535,202 $9,788,780 $10,015,721 Income (loss) before non-operating items, income taxes and noncontrolling interest: Technology Solutions $71,032 $76,937 $222,512 $210,602 Concentrix 10,129 1,746 26,719 (2,202) Inter-segment elimination 118 119 356 435 Consolidated $81,279 $78,802 $249,587 $208,835
Reconciliation of GAAP to Non-GAAP financial measures (currency and share amounts in thousands, except for per share amounts) Three Months Ended Nine Months Ended August 31, August 31, August 31, August 31, 2015 2014 2015 2014 ---- ---- ---- ---- Operating income and Operating margin Consolidated Revenue $3,332,537 $3,535,202 $9,788,780 $10,015,721 GAAP income before non-operating items, income taxes and noncontrolling interest $81,279 $78,802 $249,587 $208,835 IBM CRM acquisition and other integration expenses 2,039 9,932 8,071 34,581 Amortization of intangibles 13,716 17,564 41,771 38,427 Non-GAAP operating income $97,034 $106,298 $299,429 $281,843 GAAP operating margin 2.44% 2.23% 2.55% 2.09% Non-GAAP operating margin 2.91% 3.01% 3.06% 2.81% Technology Solutions Revenue $2,976,996 $3,204,534 $8,756,841 $9,270,439 GAAP income before non-operating items, income taxes and noncontrolling interest $71,032 $76,937 $222,512 $210,602 Amortization of intangibles 651 914 1,978 2,810 --- --- Non-GAAP operating income $71,683 $77,851 $224,490 $213,412 GAAP operating margin 2.39% 2.40% 2.54% 2.27% Non-GAAP operating margin 2.41% 2.43% 2.56% 2.30% Concentrix Revenue $359,464 $333,796 $1,043,031 $754,243 GAAP income (loss) before non-operating items, income taxes and noncontrolling interest $10,129 $1,746 $26,719 $(2,202) IBM CRM acquisition and other integration expenses 2,039 9,932 8,071 34,581 Amortization of intangibles 13,065 16,650 39,793 35,617 Non-GAAP operating income $25,233 $28,328 $74,583 $67,996 GAAP operating margin 2.82% 0.52% 2.56% (0.29)% Non-GAAP operating margin 7.02% 8.49% 7.15% 9.02%
Reconciliation of GAAP to Non-GAAP financial measures (currency and share amounts in thousands, except for per share amounts) Three Months Ended Nine Months Ended August 31, 2015 August 31, 2014 August 31, 2015 August 31, 2014 Net income Net income attributable to SYNNEX Corporation $48,171 $44,986 $146,368 $122,954 IBM CRM acquisition and other integration expenses, net of taxes(1) $1,328 $6,327 $5,162 $22,176 Amortization of intangibles, net of taxes(1) $8,886 $11,188 $26,716 $24,540 Non-GAAP net income attributable to SYNNEX Corporation $58,385 $62,501 $178,246 $169,670 Diluted earnings per common share ("EPS")(2) Net income attributable to SYNNEX Corporation $48,171 $44,986 $146,368 $122,954 Less: net income allocated to participating securities (525) (587) (1,731) (1,652) ---- ---- Net income attributable to SYNNEX Corporation common stockholders 47,646 44,399 144,637 121,302 IBM CRM acquisition and other integration expenses attributable to SYNNEX Corporation common stockholders, net of taxes(1) 1,314 6,245 5,104 21,887 Amortization of intangibles attributable to SYNNEX Corporation common stockholders, net of taxes(1) 8,789 11,043 26,398 24,217 Non-GAAP net income attributable to SYNNEX Corporation common stockholders $57,749 $61,687 $176,139 $167,406 Weighted-average number of common shares - diluted: 39,328 39,068 39,325 38,720 Diluted EPS(2) $1.21 $1.14 $3.68 $3.13 IBM CRM acquisition and other integration expenses 0.03 0.16 0.13 0.57 Amortization of intangibles 0.22 0.28 0.67 0.63 ---- ---- ---- ---- Non-GAAP Diluted EPS(3) $1.47 $1.58 $4.48 $4.32