snx-8k_20200109.htm
false 0001177394 0001177394 2020-01-09 2020-01-09

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): January 9, 2020

SYNNEX CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

001-31892

94-2703333

(State or Other Jurisdiction of Incorporation)

(Commission File Number)

(I.R.S. Employer Identification Number)

 

44201 Nobel Drive, Fremont, California

 

94538

(Address of principal executive offices)

 

(Zip Code)

(510) 656-3333
(Registrant’s telephone number, including area code)

N/A
(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

SNX

The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company   ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

 

 

 

Item 2.02    Results of Operations and Financial Condition.

The information in this Item 2.02 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information in this Item 2.02 shall not be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

On January 9, 2020 SYNNEX Corporation (“SYNNEX”) issued a press release regarding SYNNEX’ financial results for its fiscal fourth quarter and year ended November 30, 2019 and the announcement of a dividend in the amount of $0.40 for the first quarter of fiscal year 2020. The full text of SYNNEX’ press release is furnished herewith as Exhibit 99.1.

Item 7.01    Regulation FD Disclosure.

On January 9, 2020, SYNNEX announced plans to separate into two publicly traded companies: SYNNEX Technology Solutions, a leading IT distribution, services and integrated solutions company, and Concentrix, a leading global CX solutions company. The transaction is expected to be subject to certain conditions, including, among others, obtaining final approval from SYNNEX’ Board of Directors, receipt of a favorable opinion with respect to the tax-free nature of the transaction for federal income tax purposes and the effectiveness of a Form 10 filing with the Securities and Exchange Commission. SYNNEX issued a press release describing the plans, and the full text of this press release is furnished herewith as Exhibit 99.2.

Statements in this report 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 forward-looking statements include, but are not limited to, statements regarding the separation transaction, including the tax-free nature of the spin-off of Concentrix.

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: risks related to the satisfaction of closing conditions in the anticipated timeframe or at all; the unfavorable outcome of any legal proceedings that have been or may be instituted against SYNNEX or Concentrix; the ability to retain key personnel; negative effects of the transaction announcement or the consummation of the proposed spin-off on the market price of the capital stock of SYNNEX or Concentrix; significant transaction costs, fees, expenses and charges; unknown liabilities; the risk of litigation and/or regulatory actions related to the transaction; transaction-related financings; other business effects; future exchange and interest rates; changes in laws, regulations, and policies; and competitive developments; 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.

Item 8.01    Other Events.

SYNNEX has established record and meeting dates for its 2020 Annual Meeting of Stockholders. SYNNEX stockholders of record at the close of business on January 23, 2020, will be entitled to notice of the meeting and to vote upon matters considered at the meeting. The meeting will be held in Fremont, California at SYNNEX’ headquarters located at 44201 Nobel Drive, beginning at 10:00 a.m. PT on March 17, 2020.

A stockholder proposal not included in the proxy statement for SYNNEX’ 2020 Annual Meeting will be ineligible for presentation at the meeting unless the stockholder gives timely notice of the proposal in writing to SYNNEX’ Corporate Secretary at its headquarters and otherwise complies with the provisions of SYNNEX’ Bylaws. To be timely, SYNNEX’ Bylaws provide that SYNNEX must have received the stockholder’s notice not less than 50 days nor more than 75 days prior to the scheduled date of such meeting. However, if notice or prior public disclosure of the date of the annual meeting is given or made to stockholders less than 65 days prior to the meeting date, SYNNEX must receive the stockholder’s notice by the earlier of (i) the close of business on the 15th day after the earlier of the day SYNNEX mailed notice of the annual meeting date or provided such public disclosure of the meeting date and (ii) two days prior to the scheduled date of the annual meeting. For SYNNEX’ 2020 Annual Meeting of Stockholders, stockholders must submit written notice to the Corporate Secretary in accordance with the foregoing Bylaw provisions no later than the close of business on January 27, 2020.

Item 9.01    Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit No.

 

Description of Document

 

 

99.1

 

Press Release dated January 9, 2020 regarding financial results.

99.2

 

Press Release dated January 9, 2020 regarding separation

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

2

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: January 9, 2020

SYNNEX CORPORATION

 

 

 

 

By:

/s/ Simon Y. Leung

 

 

Simon Y. Leung

Senior Vice President, General Counsel and Corporate Secretary

 

 

 

 

3

Exhibit 99.1

 

 

 

SYNNEX Corporation Reports Fiscal 2019 Fourth Quarter and Full Year Results

Quarterly Cash Dividend Increased by 7% to $0.40 Per Share

 

Fremont, Calif., January 9, 2020 - 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 FY19

 

 

Q4 FY18(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%.

 

 

 

FY19

 

 

FY18(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 30, 2019

 

 

November 30, 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 30,

2019

 

 

November 30,

2018

 

 

November 30,

2019

 

 

November 30,

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 30,

2019

 

 

November 30,

2018

 

 

November 30,

2019

 

 

November 30,

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 30,

2019

 

 

November 30,

2018

 

 

November 30,

2019

 

 

November 30,

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 accordance with 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 in revenue, with no associated cost of revenue.

 

$

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, 2018

 

 

November 30, 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 30,

2019

 

 

November 30,

2018

 

 

November 30,

2019

 

 

November 30,

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 30,

2019

 

 

November 30,

2018

 

 

November 30,

2019

 

 

November 30,

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 30,

2019

 

 

November 30,

2018

 

 

November 30,

2019

 

 

November 30,

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 30,

2019

 

 

November 30,

2018

 

 

November 30,

2019

 

 

November 30,

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 30,

2019

 

 

November 30,

2018

 

 

November 30,

2019

 

 

November 30,

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 outstanding

 

(f) = (e)/((d)/the 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

[email protected]

(510) 668-8436

 

Exhibit 99.2

 

 

            

 

 

SYNNEX Announces Plan to Separate into Two Industry-Leading,

Publicly Traded Companies

 

 

Highlights

 

•

Creates two industry-leading public companies poised for continued success

 

•

SYNNEX, a top three Americas and Japan IT distribution company

 

•

Concentrix, a top two global customer experience (“CX”) solutions company

 

 

Fremont, Calif., January 9, 2020 - SYNNEX Corporation (NYSE: SNX) today announced its plan to separate into two publicly traded companies: comprising of SYNNEX Technology Solutions, a leading IT distribution, services and integrated solutions company, and Concentrix, a leading global CX solutions company. Immediately following the transaction, SYNNEX shareholders will own shares of both SYNNEX and Concentrix.

 

“Today, SYNNEX is taking affirmative steps to further drive shareholder value by announcing our plan to separate into two strong, independent, public companies,” said Dennis Polk, SYNNEX President and CEO. “The spin-off will provide each company with sharper strategic and managerial focus and enable SYNNEX shareholders to own and value each business separately.  We are very proud of our company and the returns we generated by investing in IT Distribution and CX Services over our nearly 40-year history. We are equally proud to have these two businesses reach a point where they are industry leaders and positioned well to be successful standalone public companies.”

 

Chris Caldwell, President of Concentrix, added, “With Concentrix achieving its current scale and efficiency ahead of expectations, coupled with the market opportunities ahead of us, the appropriate time to separate is now. The separation of the two businesses will enhance each company’s competitive position and accelerate significant value creation opportunities. I, along with the rest of the Concentrix team, are grateful for our time within the SYNNEX family and look forward to continuing the successful SYNNEX legacy.”

 

 

 

 

 

 

 

 

 

Transaction Details

SYNNEX Technology Solutions

SYNNEX Technology Solutions, with approximately $19 billion in annual revenue, will continue as a top three Americas and Japan IT distribution company, providing a comprehensive range of distribution, logistics and integration services for the technology industry. With one of the industry’s most robust linecards and portfolio of services, SYNNEX is well positioned to further invest in capabilities and initiatives that will continue to grow its market share. Through this separation, SYNNEX will have the flexibility, focus and control to further execute its strategic initiatives.

 

Concentrix

Concentrix, with approximately $4.7 billion in annual revenue, will continue as a top two global provider of technology-infused CX solutions, centered on helping clients enhance brand experience for its end-customers and providing end-to-end capabilities that drive deep customer engagement. With a differentiated portfolio of solutions, Concentrix supports over 125 Global Fortune 2000 clients and over 50 disruptive, high-growth clients across 275+ global locations, delivering a consistent brand experience across all channels. As a stand-alone company, Concentrix will be better positioned to drive sustainable and profitable growth.

 

Management Structure

Both companies have strong, well-tenured leadership teams with significant industry experience, well suited to lead the two companies going forward in their distinct markets.

 

Dennis Polk, SYNNEX President and CEO, will continue to hold this position and lead SYNNEX following the separation.

 

Chris Caldwell, President of Concentrix, will lead Concentrix as President and CEO, and will continue to oversee the business as a standalone company following the separation.  

 

Over the coming months, Concentrix will assemble its Board of Directors and announce the appointments closer to the expected date of separation.

 

Transaction Process

The transaction is expected to be completed in the second half of 2020. The separation is intended to qualify as a tax-free transaction for federal income tax purposes for both SYNNEX Corporation and current SYNNEX shareholders. Immediately following the separation, SYNNEX shareholders will own shares of both SYNNEX Technology Solutions and Concentrix, at the same percentage owned of SYNNEX, prior to the transaction.

 

Completion of the separation will not require a shareholder vote but will be subject to customary closing conditions, including final approval of the SYNNEX Board of Directors, the receipt of favorable opinion with respect to the tax-free nature of the transaction, and the effectiveness of a Form-10 filing with the U.S. Securities and Exchange Commission.

 

SYNNEX will operate on a “business as usual” basis while details of the separation are being finalized. After the separation, SYNNEX and Concentrix are expected to be appropriately capitalized with ample liquidity to support ongoing investments and growth.

Conference Call and Webcast

SYNNEX will host a conference call for investors to discuss this transaction and to review its fiscal 2019 fourth quarter results, issued in a separate news release, 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 conference call, together with a slide presentation, 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 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.

 

 

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 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; the purpose, methodology, effects, timing and tax-free nature of the spin-off of Concentrix; expected market share or competitive performance relating to products or services; management structure; expected positioning, capitalization and liquidity for investments and growth; the belief that the transaction creates significant value creation opportunities; and market opportunities.

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: risks related to the satisfaction of closing conditions in the anticipated timeframe or at all; risks related to the ability to realize the anticipated benefits of the transaction; 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 SYNNEX or Concentrix; the ability to retain key personnel; negative effects of the transaction announcement or the consummation of the proposed spin-off on the market price of the capital stock of SYNNEX or Concentrix; significant transaction costs, fees, expenses and charges; unknown liabilities; the risk of litigation and/or regulatory actions related to the transaction; transaction-related financings; other business effects; future exchange and interest rates; changes in laws, regulations, and policies; and competitive developments; 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. Other names and marks are the property of their respective owners.

 

Investor Contact:

Mary Lai

Investor Relations

SYNNEX Corporation

[email protected]

(510) 668-8436