SNX 10-Q
Td Synnex Corp (SNX)
10-Q
2025-04-02
For: 2025-02-28
View Original
Added on
April 12, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________________
FORM 10-Q
_______________________________________________________________________
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended February 28, 2025
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from _________ to _________
Commission File Number: 001-31892
_______________________________________________________________________
(Exact name of registrant as specified in its charter)
_______________________________________________________________________
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
(510 ) 668-3400
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| x | Accelerated filer | o | |||||||||
| Non-accelerated filer | o | Smaller reporting company | |||||||||
| 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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
| Class | Outstanding as of March 26, 2025 | |||||||
| Common Stock, $0.001 par value | ||||||||
TD SYNNEX CORPORATION
FORM 10-Q
INDEX
| Page | ||||||||
| Item 2. | ||||||||
Item 5. | ||||||||
2
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
TD SYNNEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(currency and share amounts in thousands, except par value)
(unaudited)
| February 28, 2025 | November 30, 2024 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Receivables from vendors, net | |||||||||||
| Inventories | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Other assets, net | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Borrowings, current | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Other accrued liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term borrowings | |||||||||||
| Other long-term liabilities | |||||||||||
| Deferred tax liabilities | |||||||||||
| Total liabilities | |||||||||||
Commitments and contingencies (Note 13) | |||||||||||
| Stockholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
Treasury stock, | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Retained earnings | |||||||||||
| Total stockholders' equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
(Amounts may not add or compute due to rounding)
The accompanying Notes are an integral part of these Consolidated Financial Statements (unaudited).
3
TD SYNNEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(currency and share amounts in thousands, except per share amounts)
(unaudited)
| Three Months Ended | |||||||||||
| February 28, 2025 | February 29, 2024 | ||||||||||
| Revenue | $ | $ | |||||||||
| Cost of revenue | ( | ( | |||||||||
| Gross profit | |||||||||||
| Selling, general and administrative expenses | ( | ( | |||||||||
| Acquisition, integration and restructuring costs | ( | ( | |||||||||
| Operating income | |||||||||||
| Interest expense and finance charges, net | ( | ( | |||||||||
| Other expense, net | ( | ( | |||||||||
| Income before income taxes | |||||||||||
| Provision for income taxes | ( | ( | |||||||||
| Net income | $ | $ | |||||||||
| Earnings per common share: | |||||||||||
| Basic | $ | $ | |||||||||
| Diluted | $ | $ | |||||||||
| Weighted-average common shares outstanding: | |||||||||||
| Basic | |||||||||||
| Diluted | |||||||||||
(Amounts may not add or compute due to rounding)
The accompanying Notes are an integral part of these Consolidated Financial Statements (unaudited).
4
TD SYNNEX CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(currency in thousands)
(unaudited)
| Three Months Ended | |||||||||||
| February 28, 2025 | February 29, 2024 | ||||||||||
| Net income | $ | $ | |||||||||
| Other comprehensive loss: | |||||||||||
Unrealized losses on cash flow hedges during the period, net of tax benefit of $ | ( | ||||||||||
Reclassification of net gains on cash flow hedges to net income, net of tax benefit of ($ | ( | ||||||||||
Total change in unrealized losses on cash flow hedges, net of taxes | ( | ||||||||||
Foreign currency translation adjustments and other, net of tax expense of ($ | ( | ( | |||||||||
| Other comprehensive loss | ( | ( | |||||||||
| Comprehensive income | $ | $ | |||||||||
(Amounts may not add or compute due to rounding)
The accompanying Notes are an integral part of these Consolidated Financial Statements (unaudited).
5
TD SYNNEX CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(currency in thousands, except per share amounts)
(unaudited)
| Three Months Ended | |||||||||||
| February 28, 2025 | February 29, 2024 | ||||||||||
| Total Stockholders' equity, beginning balance | $ | $ | |||||||||
| Common stock and additional paid-in capital: | |||||||||||
| Beginning balance | |||||||||||
| Share-based compensation | |||||||||||
Treasury stock reissued for employee benefit plans | ( | ( | |||||||||
| Ending balance | |||||||||||
| Treasury stock: | |||||||||||
| Beginning balance | ( | ( | |||||||||
| Repurchases of common stock for tax withholdings on equity awards | ( | ( | |||||||||
| Reissuance of treasury stock for employee benefit plans | |||||||||||
| Repurchases of common stock | ( | ( | |||||||||
| Ending balance | ( | ( | |||||||||
| Retained earnings: | |||||||||||
| Beginning balance | |||||||||||
| Net income | |||||||||||
| Cash dividends declared | ( | ( | |||||||||
| Ending balance | |||||||||||
| Accumulated other comprehensive loss: | |||||||||||
| Beginning balance | ( | ( | |||||||||
| Other comprehensive loss | ( | ( | |||||||||
| Ending balance | ( | ( | |||||||||
| Total stockholders' equity, ending balance | $ | $ | |||||||||
| Cash dividends declared per share | $ | $ | |||||||||
(Amounts may not add or compute due to rounding)
The accompanying Notes are an integral part of these Consolidated Financial Statements (unaudited).
6
TD SYNNEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(currency in thousands)
(unaudited)
| Three Months Ended | |||||||||||
| February 28, 2025 | February 29, 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
Share-based compensation | |||||||||||
Provision for doubtful accounts | |||||||||||
| Other | |||||||||||
Changes in operating assets and liabilities, net of acquisition of businesses: | |||||||||||
| Accounts receivable, net | |||||||||||
| Receivables from vendors, net | ( | ||||||||||
| Inventories | ( | ||||||||||
| Accounts payable | ( | ( | |||||||||
| Other operating assets and liabilities | ( | ||||||||||
| Net cash (used in) provided by operating activities | ( | ||||||||||
| Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Acquisition of businesses, net of cash acquired | ( | ( | |||||||||
| Other | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
Dividends paid | ( | ( | |||||||||
Proceeds from reissuance of treasury stock | |||||||||||
Repurchases of common stock | ( | ( | |||||||||
Repurchases of common stock for tax withholdings on equity awards | ( | ( | |||||||||
Net borrowings (repayments) on revolving credit loans | ( | ||||||||||
| Principal payments on long-term debt | ( | ( | |||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | ( | ( | |||||||||
| Net decrease in cash and cash equivalents | ( | ( | |||||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ | |||||||||
(Amounts may not add or compute due to rounding)
The accompanying Notes are an integral part of these Consolidated Financial Statements (unaudited).
7
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION:
TD SYNNEX Corporation (together with its subsidiaries, herein referred to as "TD SYNNEX", "SYNNEX" or the “Company”) is a leading global distributor and solutions aggregator for the information technology ("IT") ecosystem, headquartered in Fremont, California and Clearwater, Florida and has operations in North and South America, Europe and Asia-Pacific and Japan. The Company operates in three reportable segments based on its geographic regions: the Americas, Europe and Asia-Pacific and Japan ("APJ").
The Consolidated Financial Statements include the accounts of the Company, its wholly-owned subsidiaries and variable interest entities if the Company is the primary beneficiary. All intercompany accounts and transactions have been eliminated. The Company operates on a fiscal year that ends on November 30.
The accompanying interim unaudited Consolidated Financial Statements as of February 28, 2025 and for the three months ended February 28, 2025 and February 29, 2024 have been prepared by the Company, without audit, in accordance with the rules and regulations of the United States ("U.S.") Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the U.S. have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, the accompanying unaudited Consolidated Financial Statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to state fairly the financial position of the Company and its results of operations and cash flows as of and for the periods presented. These financial statements should be read in conjunction with the annual audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2024.
Interim results of operations are not necessarily indicative of financial results for a full year, and the Company makes no representations related thereto. Certain columns and rows may not add or compute due to the use of rounded numbers.
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
For a discussion of the Company’s significant accounting policies, refer to the discussion in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2024.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. The Company evaluates these estimates on a regular basis and bases them on historical experience and on various assumptions that the Company believes are reasonable. Actual results could differ from the estimates.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentration of credit risk consist principally of cash and cash equivalents, accounts receivable, receivables from vendors and derivative instruments.
The Company’s cash and cash equivalents and derivative instruments are transacted and maintained with financial institutions with high credit standing, and their compositions and maturities are regularly monitored by management. Through February 28, 2025, the Company has not experienced any material credit losses on such deposits and derivative instruments.
8
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
Accounts receivable include amounts due from customers, including related parties. Receivables from vendors, net, includes amounts due from original equipment manufacturer ("OEM") vendors primarily in the technology industry. The Company performs ongoing credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary, but generally requires no collateral. The Company also maintains allowances for expected credit losses. In estimating the required allowances, the Company takes into consideration the overall quality and aging of its receivable portfolio, the existence of credit insurance and specifically identified customer and vendor risks.
The following table provides revenue generated from products purchased from vendors that exceeded 10% of our consolidated revenue for the periods indicated (as a percent of consolidated revenue):
| Three Months Ended | |||||||||||
| February 28, 2025 | February 29, 2024 | ||||||||||
| Apple, Inc. | % | % | |||||||||
| HP Inc. | % | N/A ( | |||||||||
_________________________
(1) Revenue generated from products purchased from this vendor was less than 10% of consolidated revenue during the period presented.
One customer accounted for 10 % of the Company's total revenue during both the three months ended February 28, 2025 and February 29, 2024. As of February 28, 2025 and November 30, 2024, no single customer comprised more than 10% of the consolidated accounts receivable balance.
Accounts Receivable
The Company maintains an allowance for doubtful accounts as an estimate to cover the future expected credit losses resulting from uncertainty regarding collections from customers or OEM vendors to make payments for outstanding balances. In estimating the required allowance, the Company takes into consideration historical credit losses, current conditions and reasonable and supportable forecasts. Adjustments to historical loss information are made for differences in current conditions as well as changes in forecasted macroeconomic conditions, such as changes in unemployment rates or gross domestic product growth. Expected credit losses are estimated on a pool basis when similar risk characteristics exist using an age-based reserve model. Receivables that do not share risk characteristics are evaluated on an individual basis.
Seasonality
The Company's operating results are affected by the seasonality of the IT products industry. The Company has historically experienced slightly higher sales in the first and fourth fiscal quarters due to patterns in capital budgeting, federal government spending and purchasing cycles of its customers and end-users. These historical patterns may not be repeated in subsequent periods.
9
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
Revenue Recognition
The Company generates revenue primarily from the sale of various IT products.
The Company recognizes revenue from the sale of IT hardware and software as control is transferred to customers, which is at the point in time when the product is shipped or delivered. The Company accounts for a contract with a customer when it has written approval, the contract is committed, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration is probable of collection. Binding purchase orders from customers together with agreement to the Company's terms and conditions of sale by way of an executed agreement or other signed documents are considered to be the contract with a customer. Products sold by the Company are delivered via shipment from the Company’s facilities, drop-shipment directly from the vendor, or by electronic delivery of software products. In situations where arrangements include customer acceptance provisions, revenue is recognized when the Company can objectively verify the products comply with specifications underlying acceptance and the customer has control of the products. Revenue is presented net of taxes collected from customers and remitted to government authorities. The Company generally invoices a customer upon shipment, or in accordance with specific contractual provisions. Payments are due as per contract terms and do not contain a significant financing component. In relation to product support, supply chain management and other services performed by the Company, revenue is recognized over time as the services are performed.
Provisions for sales returns and allowances are estimated based on historical data and are recorded concurrently with the recognition of revenue. A liability is recorded at the time of sale for estimated product returns based upon historical experience and an asset is recognized for the amount expected to be recorded in inventory upon product return. These provisions are reviewed and adjusted periodically by the Company. Revenue is reduced for early payment discounts and volume incentive rebates offered to customers, which are considered variable consideration, at the time of sale based on an evaluation of the contract terms and historical experience.
The Company recognizes revenue on a net basis on certain contracts, where the Company’s performance obligation is to arrange for the products or services to be provided by another party or the rendering of logistics services for the delivery of inventory for which the Company does not assume the risks and rewards of ownership, by recognizing the margins earned in revenue with no associated cost of revenue. Such arrangements include supplier service contracts, post-contract software support services, cloud computing and software as a service arrangements, certain fulfillment contracts, extended warranty contracts and certain of the Company's systems design and integration solutions arrangements which operate under a customer-owned procurement model.
The Company considers shipping and handling activities as costs to fulfill the sale of products. Shipping revenue is included in revenue when control of the product is transferred to the customer, and the related shipping and handling costs are included in cost of revenue.
The Company disaggregates its operating segment revenue by geography, which the Company believes provides a meaningful depiction of the nature of its revenue. Disaggregated revenue disclosure is presented in Note 12 – Segment Information.
Reclassifications
Certain reclassifications have been made to prior period amounts in the Consolidated Financial Statements to conform to the current period presentation. These reclassifications did not have a material impact on previously reported amounts.
10
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued an accounting standards update, ASU 2023-07, which requires the following enhanced segment disclosures on an annual and interim basis: (1) significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, (2) other segment items by reportable segment and a description of its composition, and (3) the title of the chief operating decision maker, an explanation of how they use the reported measures of segment profit/loss in assessing segment performance and decide how to allocate resources, as well as clarifications if they use more than one measure of a segment’s profit or loss in assessing segment performance. The amendments in ASU 2023-07 will first be applied in the Company's Annual Report on Form 10-K for the fiscal year ending November 30, 2025, and for subsequent interim periods. The Company is currently evaluating the impact the new accounting standard will have on its segment reporting disclosures in the notes to the consolidated financial statements.
In December 2023, the FASB issued an accounting standards update, ASU 2023-09, which requires enhanced income tax disclosures. The enhanced disclosures required include disclosure of specific categories and disaggregation of information in the rate reconciliation table. ASU 2023-09 also requires disclosure of disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations. The amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024, which for the Company would be the fiscal year ending November 30, 2026. Early adoption is permitted and the amendments should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating the impact the new accounting standard will have on its income tax disclosures in the notes to the consolidated financial statements.
NOTE 3—ACQUISITION, INTEGRATION AND RESTRUCTURING COSTS:
Acquisition, integration and restructuring costs during the three months ended February 29, 2024 were comprised of costs related to the Merger (as defined below). There were no acquisition, integration and restructuring costs related to other acquisitions during the three months ended February 29, 2024. Acquisition, integration and restructuring costs related to other acquisitions were $1.1 million during the three months ended February 28, 2025.
The Merger
On March 22, 2021, the Company entered into an agreement and plan of merger (the “Merger Agreement”) which provided that legacy SYNNEX Corporation would acquire legacy Tech Data Corporation, a Florida corporation ("Tech Data") through a series of mergers, which would result in Tech Data becoming an indirect subsidiary of TD SYNNEX Corporation (collectively, the "Merger"). On September 1, 2021, pursuant to the terms of the Merger Agreement, the Company acquired all the outstanding shares of common stock of Tiger Parent (AP) Corporation, the parent corporation of Tech Data, for consideration of $1.6 billion in cash ($1.1 billion in cash after giving effect to a $500.0 million equity contribution by Tiger Parent Holdings, L.P., Tiger Parent (AP) Corporation's sole stockholder and an affiliate of Apollo Global Management, Inc., to Tiger Parent (AP) Corporation prior to the effective time of the Merger) and 44 million shares of common stock of SYNNEX valued at approximately $5.6 billion.
11
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
The Company completed the acquisition, integration and restructuring activities related to the Merger during the first half of fiscal year 2024. There were no related expenses recognized during the three months ended February 28, 2025 and there are no related expenses expected in future periods. The Company previously incurred acquisition, integration and restructuring costs related to the completion of the Merger, including professional services costs, personnel and other costs, and long-lived assets charges and termination fees. Professional services costs are primarily comprised of IT and other consulting services, as well as legal expenses. Personnel and other costs are primarily comprised of costs related to retention and other bonuses, severance and duplicative labor costs. Long-lived assets charges and termination fees include accelerated depreciation and amortization expense of $0.4 million recorded during the three months ended February 29, 2024 due to changes in asset useful lives in conjunction with the consolidation of certain IT systems, along with $6.6 million recorded during the three months ended February 29, 2024 for termination fees related to certain IT systems.
In July 2023, the Company offered a voluntary severance program ("VSP") to certain co-workers in the U.S. as part of the Company's cost optimization efforts related to the Merger. The Company incurred $7.2 6.0 1.2
During the three months ended February 29, 2024, acquisition and integration expenses related to the Merger were composed of the following:
| Three Months Ended | ||||||||
| February 29, 2024 | ||||||||
| (currency in thousands) | ||||||||
| Professional services costs | $ | |||||||
| Personnel and other costs | ||||||||
| Long-lived assets charges and termination fees | ||||||||
Voluntary severance program costs | ||||||||
| Total | $ | |||||||
NOTE 4—SHARE-BASED COMPENSATION:
Overview of Stock Incentive Plans
The Company recognizes share-based compensation expense for all share-based awards made to employees and outside directors, including employee stock options, restricted stock awards ("RSAs"), restricted stock units ("RSUs"), performance-based RSUs ("PRSUs") and employee stock purchase rights, based on estimated fair values.
The following tables summarize the Company's share-based awards activity for stock incentive plans during the three months ended February 28, 2025.
A summary of the changes in the Company's stock options is set forth below:
(shares in thousands) | Stock options | ||||
Balances as of November 30, 2024 | |||||
| Exercised | ( | ||||
Balances as of February 28, 2025 | |||||
12
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
A summary of the changes in the Company's non-vested RSAs and RSUs is presented below:
(shares in thousands) | RSAs and RSUs | |||||||
Non-vested as of November 30, 2024 | ||||||||
| Granted | ||||||||
| Vested | ( | |||||||
Attainment adjustments(1) | ( | |||||||
Cancelled | ( | |||||||
Non-vested as of February 28, 2025 | ||||||||
__________________
(1) During the three months ended February 28, 2025, the attainment on PRSUs vested was adjusted to reflect actual performance.
The Company recorded $21.9 million and $17.5 million of share-based compensation expense during the three months ended February 28, 2025 and February 29, 2024, respectively within "Selling, general and administrative expenses" in the Consolidated Statements of Operations for stock incentive plans.
NOTE 5—STOCKHOLDERS' EQUITY:
Share Repurchase Program
In January 2023, the Board of Directors authorized a three-year $1.0 billion share repurchase program. In March 2024, the Board of Directors authorized a $2.0 billion share repurchase program (the "March 2024 share repurchase program"), supplementing the $196.7 million remaining authorization under the prior program, pursuant to which the Company may repurchase its outstanding common stock from time to time in the open market or through privately negotiated transactions, including pursuant to one or more Rule 10b5-1 trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. The March 2024 share repurchase program does not have an expiration date.
As of February 28, 2025, the Company had $1.7 billion available for future repurchases of its common stock under the March 2024 share repurchase program.
The Company's common share repurchase activity for the three months ended February 28, 2025 is summarized as follows:
(shares in thousands, except per share amounts) | Shares | Weighted-average price per share | |||||||||
Treasury stock balance as of November 30, 2024 | $ | ||||||||||
Shares of treasury stock repurchased under share repurchase program (1) | |||||||||||
| Shares of treasury stock repurchased for tax withholdings on equity awards | |||||||||||
| Shares of treasury stock reissued for employee benefit plans | ( | ||||||||||
Treasury stock balance as of February 28, 2025 | $ | ||||||||||
_________________________
(1) Weighted-average price per share excludes broker's commissions and excise taxes. "Repurchases of common stock" in the Consolidated Statements of Cash Flows for the three months ended February 28, 2025 and February 29, 2024 excludes amounts related to excise tax that when accrued are included in "Other current liabilities" and "Treasury stock" on the Consolidated Balance Sheets. Excise taxes paid are classified as operating activities in the Consolidated Statements of Cash Flows.
13
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
Dividends
On March 27, 2025 , the Company announced that its Board of Directors declared a quarterly cash dividend of $0.44 per common share payable on April 25, 2025 to stockholders of record as of the close of business on April 11, 2025 . Dividends are subject to continued capital availability and the declaration by the Board of Directors in the best interest of the Company’s stockholders.
NOTE 6—EARNINGS PER COMMON SHARE:
The following table sets forth the computation of basic and diluted earnings per common share for the periods indicated:
| Three Months Ended | |||||||||||
| February 28, 2025 | February 29, 2024 | ||||||||||
| (currency and share amounts in thousands, except per share amounts) | |||||||||||
| Basic earnings per common share: | |||||||||||
Net income attributable to common stockholders(1) | $ | $ | |||||||||
| Weighted-average number of common shares - basic | |||||||||||
| Basic earnings per common share | $ | $ | |||||||||
| Diluted earnings per common share: | |||||||||||
Net income attributable to common stockholders(1) | $ | $ | |||||||||
| Weighted-average number of common shares - basic | |||||||||||
| Effect of dilutive securities: | |||||||||||
| Stock options and RSUs | |||||||||||
| Weighted-average number of common shares - diluted | |||||||||||
| Diluted earnings per common share | $ | $ | |||||||||
| Anti-dilutive shares excluded from diluted earnings per share calculation | |||||||||||
_________________________
NOTE 7—BALANCE SHEET COMPONENTS:
Accounts receivable, net:
The following table summarizes accounts receivable, net:
| As of | |||||||||||
| February 28, 2025 | November 30, 2024 | ||||||||||
(currency in thousands) | |||||||||||
| Accounts receivable | $ | $ | |||||||||
| Less: Allowance for doubtful accounts | ( | ( | |||||||||
| Accounts receivable, net | $ | $ | |||||||||
14
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
Allowance for doubtful trade receivables:
The following table summarizes the changes to the allowance for doubtful trade receivables (currency in thousands):
Balance as of November 30, 2024 | $ | ||||
| Additions | |||||
| Write-offs, recoveries, reclassifications and foreign exchange translation | ( | ||||
Balance as of February 28, 2025 | $ | ||||
Accumulated other comprehensive loss:
The components of accumulated other comprehensive loss (“AOCI”), net of taxes, were as follows:
Unrealized (losses) gains on cash flow hedges, net of taxes | Foreign currency translation adjustment and other, net of taxes | Total | |||||||||||||||
Balance as of November 30, 2024 | $ | ( | $ | ( | $ | ( | |||||||||||
Other comprehensive loss before reclassification | ( | ( | ( | ||||||||||||||
Reclassification of gains from accumulated other comprehensive loss | ( | ( | |||||||||||||||
Balance as of February 28, 2025 | $ | ( | $ | ( | $ | ( | |||||||||||
Refer to Note 8 - Derivative Instruments for the location of gains and losses reclassified from AOCI to the Consolidated Statements of Operations.
NOTE 8—DERIVATIVE INSTRUMENTS:
In the ordinary course of business, the Company is exposed to foreign currency risk, interest rate risk, equity risk, commodity price changes and credit risk. The Company enters into transactions, and owns monetary assets and liabilities, that are denominated in currencies other than the legal entity’s functional currency. The Company may enter into forward contracts, option contracts, swaps, or other derivative instruments to offset a portion of the risk on expected future cash flows, earnings, net investments in certain international subsidiaries and certain existing assets and liabilities. However, the Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign currency exchange or interest rates. The Company does not use derivative instruments to cover equity risk and credit risk. The Company’s hedging program is not used for trading or speculative purposes.
All derivatives are recognized on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded in the Consolidated Statements of Operations, or as a component of accumulated other comprehensive income (loss) ("AOCI") in the Consolidated Balance Sheets, as discussed below.
15
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
Cash Flow Hedges
The Company designates certain foreign currency forward contracts used to hedge forecasted inventory purchases and forecasted operating expenses that are denominated in currencies other than the legal entity's functional currency as cash flow hedges. These foreign currency forward contracts generally have terms up to 24 months. Gains and losses on cash flow hedges are recorded in AOCI until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of forecasted inventory purchases are recognized in "Cost of revenue" in the same period as the related expense is recognized. Deferred gains and losses associated with cash flow hedges of forecasted operating expenses are recognized in "Selling, general and administrative expenses" in the same period as the related expense is recognized.
Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in AOCI associated with such derivative instruments are reclassified into earnings in the period of de-designation. Any subsequent changes in fair value of such derivative instruments are recorded in earnings unless they are re-designated as hedges of other transactions. The Company classifies cash flows related to the settlement of its cash flow hedges as operating activities in the Consolidated Statements of Cash Flows.
Net Investment Hedges
The Company has entered into foreign currency forward contracts, as well as foreign currency forward contracts combined with zero cost foreign exchange collar contracts, to hedge a portion of its net investment in euro denominated foreign operations which are designated as net investment hedges. The Company entered into the net investment hedges to offset the risk of change in the U.S. dollar value of the Company's investment in a euro functional subsidiary due to fluctuating foreign exchange rates. Gains and losses on the net investment hedges, which have been recorded in AOCI and will remain in AOCI until the sale or substantial liquidation of the underlying assets of the Company's investment, are included within the "Foreign currency translation adjustments and other" caption on the Consolidated Statements of Comprehensive Income. The initial fair value of hedge components excluded from the assessment of effectiveness is being recognized in the Consolidated Statements of Operations under a systematic and rational method over the life of the hedging instrument. The Company classifies cash flows related to the settlement of its net investment hedges as investing activities in the Consolidated Statements of Cash Flows.
Non-Designated Derivatives
The Company uses short-term forward contracts to offset the foreign exchange risk of assets and liabilities denominated in currencies other than the functional currency of the respective entities. These contracts, which are not designated as hedging instruments, mature or settle within twelve months . Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates.
16
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
Fair Values of Derivative Instruments in the Consolidated Balance Sheets
The fair values of the Company’s derivative instruments are disclosed in Note 9 – Fair Value Measurements and summarized in the table below:
| Value as of | ||||||||||||||
Balance Sheet Line Item (currency in thousands) | February 28, 2025 | November 30, 2024 | ||||||||||||
| Derivative instruments not designated as hedging instruments: | ||||||||||||||
| Foreign exchange forward contracts (notional value) | $ | $ | ||||||||||||
| Other current assets | ||||||||||||||
| Other accrued liabilities | ||||||||||||||
| Derivative instruments designated as cash flow hedges: | ||||||||||||||
Foreign exchange forward contracts (notional value)(1) | $ | $ | ||||||||||||
| Other current assets | ||||||||||||||
Other current liabilities | ||||||||||||||
| Derivative instruments designated as net investment hedges: | ||||||||||||||
| Foreign currency forward contracts (notional value) | $ | $ | ||||||||||||
| Other current assets | ||||||||||||||
| Other long-term assets | ||||||||||||||
| Other accrued liabilities | ||||||||||||||
| Other long-term liabilities | ||||||||||||||
| Foreign exchange collar contracts (notional value) | $ | $ | ||||||||||||
| Other long-term assets | ||||||||||||||
(1) The Company had no material cash flow hedges outstanding as of November 30, 2024.
Volume of Activity
The notional amounts of foreign exchange forward contracts represent the gross amounts of foreign currency, including, principally, the Australian dollar, Brazilian real, British pound, Canadian dollar, Chinese yuan, Costa Rican colón, Czech koruna, Danish krone, Euro, Indian rupee, Indonesian rupiah, Japanese yen, Mexican peso, Norwegian krone, Polish zloty, Romanian leu, Singapore dollar, Swedish krona, Swiss franc and Turkish lira that will be bought or sold at maturity. The notional amounts of foreign exchange collar contracts represent the amounts of put and call options to sell or purchase Euros at a predetermined strike price. The notional amounts for outstanding derivative instruments provide one measure of the transaction volume outstanding and do not represent the amount of the Company’s exposure to credit or market loss. The Company’s exposure to credit loss and market risk will vary over time as currency and interest rates change.
17
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
The Effect of Derivative Instruments on AOCI and the Consolidated Statements of Operations
The following table shows the gains and losses, before taxes, of the Company’s derivative instruments designated as net investment hedges in Other Comprehensive Income (“OCI”) and not designated as hedging instruments in the Consolidated Statements of Operations for the periods presented:
| Three Months Ended | |||||||||||||||||
| Location of Gains (Losses) in Income | February 28, 2025 | February 29, 2024 | |||||||||||||||
(currency in thousands) | |||||||||||||||||
| Derivative instruments not designated as hedging instruments: | |||||||||||||||||
| Gains recognized from foreign exchange contracts, net⁽¹⁾ | Cost of revenue | $ | $ | ||||||||||||||
| (Losses) gains recognized from foreign exchange contracts, net⁽¹⁾ | Other expense, net | ( | |||||||||||||||
| Total | $ | $ | |||||||||||||||
Derivative instruments designated as cash flow hedges(2): | |||||||||||||||||
| Losses recognized in OCI on foreign exchange forward contracts | $ | ( | $ | ||||||||||||||
| Gains on foreign exchange forward contracts reclassified from AOCI into income | Cost of revenue | $ | $ | ||||||||||||||
| Losses on foreign exchange forward contracts reclassified from AOCI into income | Selling, general and administrative expenses | $ | ( | $ | |||||||||||||
| Derivative instruments designated as net investment hedges: | |||||||||||||||||
| Gains recognized in OCI on foreign exchange forward contracts | $ | $ | |||||||||||||||
| Gains recognized in income (amount excluded from effectiveness testing) | $ | $ | |||||||||||||||
Gains recognized in OCI on foreign exchange collar contracts(3) | $ | $ | |||||||||||||||
____________________________
(1) The gains and losses largely offset the currency gains and losses that resulted from changes in the assets and liabilities denominated in nonfunctional currencies.
(2) The Company had no material cash flow hedges outstanding during the three months ended February 29, 2024.
(3) The Company had no foreign exchange collar contracts outstanding during the three months ended February 29, 2024.
Except for the net investment hedge amounts shown above, there were no gain or loss amounts excluded from the assessment of effectiveness. Existing net losses in AOCI that are expected to be reclassified into earnings in the normal course of business within the next twelve months are $0.3 million.
Credit exposure for derivative financial instruments is limited to the amounts, if any, by which the counterparties’ obligations under the contracts exceed the Company’s obligations to the counterparties. The Company manages the potential risk of credit losses through careful evaluation of counterparty credit standing and selection of counterparties from a limited group of financial institutions.
18
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
NOTE 9—FAIR VALUE MEASUREMENTS:
The Company’s fair value measurements are classified and disclosed in one of the following three categories:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
The following table summarizes the valuation of the Company’s financial instruments that are measured at fair value on a recurring basis:
As of February 28, 2025 | As of November 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fair value measurement category | Fair value measurement category | ||||||||||||||||||||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||||
(currency in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
| Forward foreign currency exchange contracts not designated as hedges | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Forward foreign currency exchange contracts designated as net investment hedges | |||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange collar contracts designated as net investment hedges | |||||||||||||||||||||||||||||||||||||||||||||||
Forward foreign currency exchange contracts designated as cash flow hedges(1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Forward foreign currency exchange contracts not designated as hedges | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Forward foreign currency exchange contracts designated as net investment hedges | |||||||||||||||||||||||||||||||||||||||||||||||
Forward foreign currency exchange contracts designated as cash flow hedges(1) | |||||||||||||||||||||||||||||||||||||||||||||||
(1) The Company had no material cash flow hedges outstanding as of November 30, 2024.
The fair values of forward exchange contracts are measured based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers. The fair values of foreign exchange collar contracts are measured using the cash flows of the contracts, discount rates to account for the passage of time, implied volatility and current foreign exchange market data, which are all based on inputs readily available in public markets. The effect of nonperformance risk on the fair value of derivative instruments was not material as of February 28, 2025 and November 30, 2024.
19
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
The carrying values of accounts receivable, accounts payable and short-term debt approximate fair value due to their short maturities and interest rates which are variable in nature. The carrying value of the Company’s term loans approximate their fair value since they bear interest rates that are similar to existing market rates. The estimated fair value of the Senior Notes was approximately $2.3 billion as of both February 28, 2025 and November 30, 2024.
During the three months ended February 28, 2025, there were no transfers between the fair value measurement category levels.
NOTE 10—BORROWINGS:
Borrowings consist of the following:
| As of | |||||||||||
| February 28, 2025 | November 30, 2024 | ||||||||||
(currency in thousands) | |||||||||||
TD SYNNEX U.S. Accounts Receivable Securitization Agreement | $ | $ | |||||||||
| Other short-term borrowings | |||||||||||
| Borrowings, current | $ | $ | |||||||||
TD SYNNEX | $ | $ | |||||||||
TD SYNNEX | |||||||||||
TD SYNNEX | |||||||||||
TD SYNNEX | |||||||||||
Total TD SYNNEX Senior Notes | $ | $ | |||||||||
| TD SYNNEX Term Loan | |||||||||||
2024 Term Loan | |||||||||||
Total term loans | $ | $ | |||||||||
| Other credit agreements and long-term debt | |||||||||||
| Long-term borrowings, before unamortized debt discount and issuance costs | $ | $ | |||||||||
| Less: unamortized debt discount and issuance costs | ( | ( | |||||||||
| Long-term borrowings | $ | $ | |||||||||
(1) The interest rate payable on each of these series of Senior Notes is subject to adjustment from time to time if the credit rating assigned to such series of Senior Notes is downgraded (or downgraded and subsequently upgraded).
(2) The Company pays interest semi-annually on the Senior Notes on each of February 9 and August 9, except for the 2034 Senior Notes in which the Company pays interest semi-annually on each of April 12 and October 12.
20
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
TD SYNNEX U.S. Accounts Receivable Securitization Arrangement
In the U.S., the Company has an accounts receivable securitization program to provide additional capital for its operations (the “U.S. AR Arrangement”). Under the terms of the U.S. AR Arrangement, as amended, the Company and its subsidiaries that are party to the U.S. AR Arrangement can borrow based on the key terms in the table below (currency in thousands):
Maximum Borrowing Capacity (1) | Maturity Date | Effective Borrowing Cost(2) | Program Fee Payable(3) | Facility Fee Payable(4) | ||||||||||||||||||||||
| $ | November 30, 2026 | Blended rate | ||||||||||||||||||||||||
(1) Based on eligible trade accounts receivable.
(2) Based upon the composition of the lenders, that includes prevailing dealer commercial paper rates and a rate based upon SOFR.
(3) Payable on the used portion of the lenders’ commitment; accrues per annum.
(4) Payable on the adjusted commitment of the lenders, accrues at different tiers per annum depending on the amount of outstanding advances from time to time.
Under the terms of the U.S. AR Arrangement, the Company and certain of its U.S. subsidiaries sell, on a revolving basis, their receivables to a wholly-owned, bankruptcy-remote subsidiary. Such receivables, which are recorded in the Consolidated Balance Sheet, totaled approximately $3.1 billion and $3.4 billion as of February 28, 2025 and November 30, 2024, respectively. The borrowings are funded by pledging all of the rights, title and interest in the receivables acquired by the Company's bankruptcy-remote subsidiary as security. Any amounts borrowed under the U.S. AR Arrangement are recorded as debt on the Company's Consolidated Balance Sheets. There was $390.0 million outstanding under the U.S. AR Arrangement at February 28, 2025 at an interest rate of 5.33 %. There were no amounts outstanding under the U.S. AR Arrangement at November 30, 2024.
TD SYNNEX Credit Agreement
The Company is party to an amended and restated credit agreement, dated as of April 16, 2024 (as amended, the “TD SYNNEX Credit Agreement”) with the lenders party thereto and Citibank, N.A., as agent, pursuant to which the Company received commitments for the extension of a senior unsecured revolving credit facility (the “TD SYNNEX Revolving Credit Facility”) not to exceed an aggregate principal amount of $3.5 billion, which may, at the request of the Company but subject to the lenders’ discretion, potentially be increased by up to an aggregate amount of $500.0 million. The borrowers under the TD SYNNEX Credit Agreement are TD SYNNEX Corporation and certain subsidiaries of the Company. There were no Borrowings under the TD SYNNEX Revolving Credit Facility bear interest at a per annum rate equal to the applicable SOFR rate, plus a credit spread adjustment, plus the applicable margin, as well as a commitment fee as referenced in the table below:
| Maturity Date | Credit Spread Adjustment | Margin(2) | Commitment Fee(3) | |||||||||||||||||
April 16, 2029(1) | ||||||||||||||||||||
(1) As amended, the TD SYNNEX revolving credit facility will mature on April 16, 2029, subject, in the lender's discretion to two one-year extensions upon the Company's prior notice to lenders.
(2) The margin is based on the Company’s Public Debt Rating (as defined in the TD SYNNEX Credit Agreement). The applicable margin on base rate loans is 1.00 % less than the corresponding margin on SOFR rate based loans.
(3) The commitment fee range is applied to any unused commitment under the TD SYNNEX Revolving Credit Facility based on the Company’s Public Debt Rating.
21
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
The TD SYNNEX Credit Agreement also includes a senior unsecured term loan (the “TD SYNNEX Term Loan”) in an original aggregate principal amount of $1.5 billion. There was $581.3 Loans borrowed under the TD SYNNEX Credit Agreement bear interest at a per annum rate equal to the applicable SOFR rate, plus a credit spread adjustment, plus the applicable margin as referenced in the table below:
| Maturity Date | Credit Spread Adjustment | Margin(1) | Effective Interest Rate as of February 28, 2025 | Effective Interest Rate as of November 30, 2024 | ||||||||||||||||||||||
September 1, 2026 | ||||||||||||||||||||||||||
(1) The margin is based on the Company’s Public Debt Rating. The applicable margin on base rate loans is 1.00 % less than the corresponding margin on SOFR rate based loans.
TD SYNNEX Term Loan Credit Agreement
On April 19, 2024, the Company entered into a Term Loan Credit Agreement ("the "2024 Term Loan Credit Agreement") with the initial lenders party thereto, Bank of America N.A., as administrative agent for the lenders, and BOFA Securities, Inc. as lead arranger and lead bookrunner. The 2024 Term Loan Credit Agreement provides for a senior unsecured term loan in the aggregate principal amount of $750.0 million (the "2024 Term Loan"). The borrower under the 2024 Term Loan is the Company.
Loans borrowed under the 2024 Term Loan Credit Agreement bear interest at a per annum rate equal to the applicable SOFR rate, plus credit spread adjustment, plus the applicable margin within a range based on the Company’s Public Debt Rating (as defined in the 2024 Term Loan Credit Agreement). Key terms for the 2024 Term Loan Credit Agreement are as follows:
| Maturity Date | Credit Spread Adjustment | Margin | Effective Interest Rate as of February 28, 2025 | Effective Interest Rate as of November 30, 2024 | ||||||||||||||||||||||
| September 1, 2027 | ||||||||||||||||||||||||||
TD SYNNEX Senior Notes
On August 9, 2021, the Company completed its offering of $2.5 billion aggregate principal amount of senior unsecured notes due in 2024, 2026, 2028 and 2031 (collectively, the “Senior Notes,” and such offering, the “Senior Notes Offering”). In July 2022, the Company completed an offer to exchange (the "Exchange Offer") its outstanding unregistered Senior Notes for new registered notes (the "Exchange Notes"). The aggregate principal amount of Exchange Notes that were issued was equal to the aggregate principal amount of Senior Notes that were surrendered pursuant to the Exchange Offer. The terms of the Exchange Notes are substantially identical to the terms of the respective series of the Senior Notes, except that the Exchange Notes are registered under the Securities Act, and certain transfer restrictions, registration rights, and additional interest provisions relating to the Senior Notes do not apply to the Exchange Notes.
On April 12, 2024, the Company issued and sold $600.0 million of senior notes due in 2034 (the "2034 Senior Notes" and such offering, the "2034 Senior Notes Offering"). The Company used the net proceeds from the 2034 Senior Notes Offering, together with other available funds, to repay the $700.0 million aggregate principal amount of the 1.250 % Senior Notes that were due August 9, 2024 and for general corporate purposes. The Company incurred $6.1 million towards issuance costs on the 2034 Senior Notes. References to the collective Senior Notes hereafter also include the 2034 Senior Notes.
22
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
The Company may redeem the outstanding Senior Notes, in whole or in part, at any time and from time to time, prior to respective Par Call Dates (as reflected in the table below) at a redemption price equal to the greater of (x) 100 % of the aggregate principal amount of the applicable Senior Notes to be redeemed and (y) the sum of the present values of the remaining scheduled payments of the principal and interest on the Senior Notes, in each case discounted to the date of redemption (assuming the applicable Senior Notes matured on the applicable Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a rate equal to the sum of the applicable treasury rate (as defined in the supplemental indenture establishing the terms of the applicable Senior Notes) plus the applicable spread, as shown in the table below, plus in each case, accrued and unpaid interest thereon to, but excluding, the redemption date. The Company may also redeem the Senior Notes of any series at its option, in whole or in part, at any time and from time to time on or after the applicable Par Call Date, at a redemption price equal to 100 % of the principal amount of the Senior Notes to be redeemed.
Par Call Dates and the spread to the applicable treasury rate for the respective outstanding Senior Notes are as follows:
Senior Notes | Par Call Date | Spread (in basis points) | ||||||||||||
Senior Notes due 2026 | ||||||||||||||
Senior Notes due 2028 | ||||||||||||||
Senior Notes due 2031 | ||||||||||||||
Senior Notes due 2034 | ||||||||||||||
Other Short-Term Borrowings
The Company has various other committed and uncommitted lines of credit with financial institutions, short-term loans, term loans, credit facilities, and book overdraft facilities, totaling approximately $566.0 million in borrowing capacity as of February 28, 2025. Most of these facilities are provided on a short-term basis and are reviewed periodically for renewal. Interest rates and other terms of borrowing under these lines of credit vary by country, depending on local market conditions. There was $201.0 million outstanding on these facilities at February 28, 2025, at a weighted average interest rate of 5.78 %, and there was $171.1 million outstanding at November 30, 2024, at a weighted average interest rate of 7.91 %. Borrowings under these lines of credit facilities are guaranteed by the Company or secured by eligible accounts receivable.
At February 28, 2025, the Company was also contingently liable for reimbursement obligations with respect to issued standby letters of credit in the aggregate outstanding amount of $56.2 million. These letters of credit typically act as a guarantee of payment to certain third parties in accordance with specified terms and conditions.
The maximum commitment amounts for local currency credit facilities have been translated into U.S. dollars at February 28, 2025 exchange rates.
Covenant Compliance
The Company's credit facilities have a number of covenants and restrictions that require the Company to maintain specified financial ratios, including a maximum debt to EBITDA ratio and a minimum interest coverage ratio, in each cash tested on the last day of each fiscal quarter. The covenants also limit the Company’s ability to incur additional debt, create liens, enter into agreements with affiliates, modify the nature of the Company’s business, and merge or consolidate. As of February 28, 2025, the Company was in compliance with all material financial covenants for the above arrangements.
23
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
NOTE 11 – SUPPLIER FINANCE PROGRAMS:
NOTE 12—SEGMENT INFORMATION:
| Americas | Europe | APJ | Consolidated | ||||||||||||||||||||
(currency in thousands) | |||||||||||||||||||||||
| Three Months Ended February 28, 2025 | |||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Operating income | |||||||||||||||||||||||
| Three Months Ended February 29, 2024 | |||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Operating income | |||||||||||||||||||||||
24
TD SYNNEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended February 28, 2025 and February 29, 2024
(Except per share amounts or as otherwise indicated, currency and share amounts in thousands)
(unaudited)
NOTE 13—COMMITMENTS AND CONTINGENCIES:
As is customary in the technology industry, to encourage certain customers to purchase products from us, the Company also has other financing agreements with financial institutions to provide inventory financing facilities to the Company’s customers and allow certain customers of the Company to finance their purchases directly with the financial institutions. The Company is contingently liable to repurchase inventory sold under these agreements in the event of any default by its customers under the agreement and such inventory being repossessed by the financial institutions. As the Company does not have access to information regarding the amount of inventory purchased from the Company still on hand with the customer at any point in time, the Company’s repurchase obligations relating to inventory cannot be reasonably estimated. Losses, if any, would be the difference between the repossession cost and the resale value of the inventory. Repurchases under these arrangements have been insignificant to date and the Company is not aware of any pending customer defaults or repossession obligations. The Company believes that, based on historical experience, the likelihood of a material loss pursuant to these inventory repurchase obligations is remote.
In 2013, The French Autorité de la Concurrence (“Competition Authority”) began an investigation into the French market for certain products of Apple, Inc. ("Apple") for which the Company is a distributor. In March 2020, the Competition Authority imposed fines on the Company, on another distributor, and on Apple, finding that the Company entered into an anticompetitive agreement with Apple regarding volume allocations of Apple products. The initial fine imposed on the Company was €76.1 million. The Company appealed its determination to the French courts, seeking to set aside or reduce the fine. On October 6, 2022, the appeals court issued a ruling that reduced the fine imposed on the Company from €76.1 million to €24.9 million. As a result of the appeals court ruling, the Company paid €24.9 million through fiscal year 2022. The Company continues to contest the arguments of the Competition Authority and has further appealed this matter. A civil lawsuit related to this matter, alleging anticompetitive actions in association with the established distribution networks for Apple, the Company and another distributor was filed by eBizcuss. On November 25, 2024, the Paris Commercial Court ruled in favor of the Company and the other defendants and dismissed the claims in the eBizcuss civil lawsuit. An appeal to the ruling has since been made by eBizcuss, and while the Company continues to evaluate this matter, based on the favorable ruling from the Paris Commercial Court, the Company believes the likelihood of a material loss related to the eBizcuss lawsuit is remote.
From time to time, the Company receives notices from third parties, including customers and suppliers, seeking indemnification, payment of money or other actions in connection with claims made against them. Also, from time to time, the Company has been involved in various bankruptcy preference actions where the Company was a supplier to the companies now in bankruptcy. In addition, the Company is subject to various other claims, both asserted and unasserted, that arise in the ordinary course of business. The Company evaluates these claims and records the related liabilities in cases where a contingent obligation is deemed probable and reasonably estimable. It is possible that the ultimate liabilities could differ from the amounts recorded.
25
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and related Notes included elsewhere in this Report. Amounts in certain tables may not add or compute due to rounding.
When used in this Quarterly Report on Form 10-Q, or this “Report”, the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “allows,” “can,” “may,” “could,” “designed,” “will,” and similar expressions are intended to identify forward-looking statements. These are statements that relate to future periods and include statements about our business model and our services, our business and market strategy, future growth, demand, our infrastructure, our investment in our information technology ("IT") systems, our employee hiring and retention, our revenue, sources of revenue, our gross margins, our operating costs and results, timing of payment, the value of our inventory, our competition, our future needs and sources for additional financing, contract terms, relationships with our suppliers, adequacy of our facilities, our legal proceedings, our operations, foreign currency exchange rates and hedging activities, our strategic acquisitions, seasonality of sales, adequacy of our cash resources, our debt and financing arrangements, including our supplier finance programs, the impact of any change to our credit rating, interest rate risk and impact thereof, cash held by our international subsidiaries and repatriation, changes in fair value of derivative instruments, our tax liabilities, adequacy of our disclosure controls and procedures, cybersecurity and cyberattacks, impact of our pricing policies, impact of economic and industry trends, changes to the markets in which we compete, impact of new reporting rules and accounting policies, our estimates and assumptions, impact of inventory repurchase obligations and commitments and contingencies, our effective tax rates, impact of any impairment of our goodwill and intangible assets, and our share repurchase and dividend program. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, those risks discussed herein and others, including risks related to the buying patterns of our customers, concentration of sales to large customers, the loss or consolidation of one or more of our significant original equipment manufacturer ("OEM") suppliers or customers, market acceptance of the products we assemble and distribute, competitive conditions in our industry and their impact on our margins, pricing 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, increased inflation, dependence upon and trends in capital spending budgets in the IT industry, fluctuations in general economic conditions, 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, changes in value of foreign currencies and interest rates and other risk factors contained in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended November 30, 2024. These forward-looking statements speak only as of the date hereof. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, unless otherwise required by law.
In the Management’s Discussion and Analysis of Financial Condition and Results of Operations, all references to “TD SYNNEX,” "SYNNEX," “we,” “us,” “our” or the “Company” mean TD SYNNEX Corporation and its subsidiaries, except where it is made clear that the term means only the parent company or one of its segments.
TD SYNNEX, the TD SYNNEX logo and all other TD SYNNEX company, product and services names and slogans are trademarks or registered trademarks of TD SYNNEX Corporation. Other names and marks are the property of their respective owners.
Overview
We are a Fortune 100 corporation and a leading global distributor and solutions aggregator for the information technology ("IT") ecosystem. We serve a critical role, bringing products from the world's leading and emerging technology vendors to market, and helping our customers create solutions best suited to maximize business outcomes for their end-user customers.
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Digital transformation and the migration to cloud computing is reshaping our industry, enabling businesses and consumers to evaluate, procure, acquire, and consume technology products and services in a variety of ways. Hybrid models of IT consumption, supporting both physical and virtual delivery methods are emerging, as hardware and software-based solutions become increasingly combined. As a result, customers are seeking greater integration of products, services and solutions that tie technologies together. Therefore, we believe it is important to provide a broad, end-to-end portfolio, with deep capabilities across the computing continuum to help customers manage the increasingly complex IT ecosystem and deliver the solutions and business outcomes the market desires. Our vision for the future is to be the vital solutions aggregator and orchestrator that connects the IT ecosystem.
Our global strategy is to deliver higher value by focusing on the following strategic priorities:
•Invest in strategic technologies such as hybrid cloud, security, data analytics, artificial intelligence ("AI"), hyperscale infrastructure and services.
•Strengthen our end-to-end portfolio of products, services and solutions, including technology-as-a-service and recurring revenue models.
•Transform our company digitally through greater automation and advanced analytics, which we believe will enhance the customer experience, broaden our customer base, increase sales and augment our presence in strategic technologies.
•Expand our global footprint and enhance the operational excellence of our businesses around the world.
We offer a comprehensive catalog of technology products from original equipment manufacturers (“OEM”), such as personal computing devices, mobile phones and accessories, and strategic technologies such as cloud, security, data analytics, AI and hyperscale infrastructure. This enables us to offer comprehensive solutions to our reseller and retail customers. Our reseller customers include value-added resellers ("VARs"), corporate resellers, government resellers, system integrators, direct marketers, retailers and managed service providers ("MSPs"). We combine our core strengths in distribution with demand generation, supply chain management and design and integration solutions to help our customers achieve greater efficiencies in time to market, cost minimization, real-time linkages in the supply chain and aftermarket product support. We also provide comprehensive IT solutions in key vertical markets such as government and healthcare, and specialized service offerings that increase efficiencies in the areas of global computing components, logistics services and supply chain management. Additionally, we provide systems design and integration solutions for data center servers and networking solutions built specific to our customers’ workloads and data center environments.
We group the majority of our offerings into two primary solutions portfolios, Endpoint Solutions and Advanced Solutions. Our Endpoint Solutions portfolio primarily includes personal computing devices and peripherals, mobile phones and accessories, printers and supplies. Our Advanced Solutions portfolio primarily includes data center technologies such as hybrid cloud, security, storage, networking, servers, software, converged and hyper-converged infrastructure and hyperscale infrastructure, via our Hyve business.
Our business is characterized by low gross profit as a percentage of revenue, or gross margin, and low operating income as a percentage of revenue, or operating margin. The market for IT products has generally been characterized by declining unit prices and short product life cycles, although unit prices for certain products have increased during certain periods due to factors such as supply chain constraints and inflation. We set our sales price based on the market supply and demand characteristics for each particular product or bundle of products we distribute and services we provide.
Economic and Industry Trends
We are highly dependent on the end-market demand for IT products, and on our partners’ strategic initiatives and business models. This end-market demand is influenced by many factors including the introduction of new IT products and software by OEM suppliers, replacement cycles for existing IT products, trends toward cloud computing and AI, overall economic growth and general business activity. A difficult and challenging economic environment, due to the continued persistence of inflation, elevated interest rates, market volatility connected to geopolitical developments including tariff uncertainty, or other factors may also lead to decline in the IT industry or increased price-based competition. Our systems design and integration solutions business is highly dependent on the demand for cloud infrastructure, and the number of key customers and suppliers in the market. Our business includes operations in the Americas, Europe and Asia-Pacific and Japan ("APJ") so we are affected by demand for our products in those regions, as well as the impact of fluctuations in foreign currency exchange rates compared to the United States ("U.S.") dollar.
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Acquisitions
As part of our corporate strategy and to augment organic growth, we evaluate strategic acquisitions of businesses and assets that complement and expand our existing capabilities or enable us to acquire new OEM relationships, enhance our supply chain and integration capabilities, the services we provide to our customers and OEM suppliers, and expand our geographic footprint. In addition, we continually review our operations and product and service offerings and divest businesses that we deem no longer strategic to our ongoing operations.
On March 22, 2021, we entered into an agreement and plan of merger (the “Merger Agreement”) which provided that legacy SYNNEX Corporation would acquire legacy Tech Data Corporation, a Florida corporation (“Tech Data”) through a series of mergers, which would result in Tech Data becoming an indirect subsidiary of TD SYNNEX Corporation (collectively, the "Merger"). On September 1, 2021, pursuant to the terms of the Merger Agreement, we acquired all the outstanding shares of common stock of Tiger Parent (AP) Corporation, the parent corporation of Tech Data, for consideration of $1.6 billion in cash ($1.1 billion in cash after giving effect to a $500.0 million equity contribution by Tiger Parent Holdings, L.P., Tiger Parent (AP) Corporation's sole stockholder and an affiliate of Apollo Global Management, Inc., to Tiger Parent (AP) Corporation prior to the effective time of the Merger) and 44 million shares of common stock of SYNNEX, valued at approximately $5.6 billion.
Results of Operations
The following table sets forth, for the indicated periods, data as percentages of total revenue:
| Three Months Ended | |||||||||||
Consolidated Statements of Operations Data: | February 28, 2025 | February 29, 2024 | |||||||||
| Revenue | 100.00 | % | 100.00 | % | |||||||
| Cost of revenue | (93.13) | % | (92.80) | % | |||||||
| Gross profit | 6.87 | % | 7.20 | % | |||||||
| Selling, general and administrative expenses | (4.77) | % | (4.81) | % | |||||||
| Acquisition, integration and restructuring costs | — | % | (0.22) | % | |||||||
| Operating income | 2.10 | % | 2.17 | % | |||||||
| Interest expense and finance charges, net | (0.60) | % | (0.54) | % | |||||||
| Other expense, net | (0.02) | % | (0.03) | % | |||||||
| Income before income taxes | 1.48 | % | 1.60 | % | |||||||
| Provision for income taxes | (0.33) | % | (0.37) | % | |||||||
| Net income | 1.15 | % | 1.23 | % | |||||||
Certain Non-GAAP Financial Information
In addition to disclosing financial results that are determined in accordance with GAAP, we also disclose certain non-GAAP financial information, including:
•Revenue in constant currency, which is revenue adjusted 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 our business performance. Revenue in constant currency is calculated by translating the revenue for the three months ended February 28, 2025 in the billing currency using the comparable prior period currency conversion rate. Generally, when the dollar either strengthens or weakens against other currencies, the growth at constant currency rates will be higher or lower than growth reported at actual exchange rates.
•Non-GAAP operating income, which is operating income, adjusted to exclude acquisition, integration and restructuring costs, amortization of intangible assets and share-based compensation expense.
•Non-GAAP operating margin, which is non-GAAP operating income, as defined above, divided by revenue.
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•Non-GAAP net income, which is net income, adjusted to exclude acquisition, integration and restructuring costs, amortization of intangible assets, share-based compensation expense and income taxes related to the aforementioned items.
•Non-GAAP diluted earnings per common share (“EPS”), which is diluted EPS excluding the per share impact of acquisition, integration and restructuring costs, amortization of intangible assets, share-based compensation expense and income taxes related to the aforementioned items.
Acquisition, integration and restructuring costs, which are expensed as incurred, primarily represent professional services costs for legal, banking, consulting and advisory services, severance and other personnel related costs, share-based compensation expense and debt extinguishment fees that are incurred in connection with acquisition, integration, restructuring and divestiture activities. From time to time, this category may also include transaction-related gains/losses on divestitures/spin-off of businesses, costs related to long-lived assets including impairment charges and accelerated depreciation and amortization expense due to changes in asset useful lives, as well as various other costs associated with the acquisition or divestiture.
Our acquisition activities have resulted in the recognition of finite-lived intangible assets which consist primarily of customer relationships and vendor lists. Finite-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 our Consolidated Statements of Operations. Although intangible assets contribute to our revenue generation, the amortization of intangible assets does not directly relate to the sale of our products. Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of our acquisition activity. Accordingly, we believe excluding the amortization of intangible assets, along with the other non-GAAP adjustments which neither relate to the ordinary course of our business nor reflect our underlying business performance, enhances our and our investors’ ability to compare our past financial performance with our 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 our 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.
Share-based compensation expense is a non-cash expense arising from the grant of equity awards to employees and non-employee members of our Board of Directors based on the estimated fair value of those awards. Although share-based compensation is an important aspect of the compensation of our employees, the fair value of the share-based awards may bear little resemblance to the actual value realized upon the vesting or future exercise of the related share-based awards and the expense can vary significantly between periods as a result of the timing of grants of new stock-based awards, including grants in connection with acquisitions. Given the variety and timing of awards and the subjective assumptions that are necessary when calculating share-based compensation expense, we believe this additional information allows investors to make additional comparisons between our operating results from period to period.
We believe that providing this additional information is useful to the reader to better assess and understand our base operating performance, especially when comparing results with previous periods and for planning and forecasting in future periods, primarily because management typically monitors the business adjusted for these items in addition to GAAP results. Management also uses these non-GAAP measures to establish operational goals and, in some cases, for measuring performance for compensation purposes. 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 used as a complement to, and in conjunction with data presented in accordance with GAAP.
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Three Months Ended February 28, 2025 and February 29, 2024:
Revenue
The following table summarizes our revenue and change in revenue by segment for the three months ended February 28, 2025 and February 29, 2024:
| Three Months Ended | |||||||||||||||||
| February 28, 2025 | February 29, 2024 | Percent Change | |||||||||||||||
Revenue in constant currency | (in thousands) | ||||||||||||||||
| Consolidated | |||||||||||||||||
| Revenue | $ | 14,531,707 | $ | 13,975,253 | 4.0 | % | |||||||||||
| Impact of changes in foreign currencies | 283,697 | — | |||||||||||||||
| Revenue in constant currency | $ | 14,815,404 | $ | 13,975,253 | 6.0 | % | |||||||||||
| Americas | |||||||||||||||||
| Revenue | $ | 8,389,338 | $ | 7,903,096 | 6.2 | % | |||||||||||
| Impact of changes in foreign currencies | 66,239 | — | |||||||||||||||
| Revenue in constant currency | $ | 8,455,577 | $ | 7,903,096 | 7.0 | % | |||||||||||
| Europe | |||||||||||||||||
| Revenue | $ | 5,137,765 | $ | 5,117,252 | 0.4 | % | |||||||||||
| Impact of changes in foreign currencies | 198,678 | — | |||||||||||||||
| Revenue in constant currency | $ | 5,336,443 | $ | 5,117,252 | 4.3 | % | |||||||||||
| APJ | |||||||||||||||||
| Revenue | $ | 1,004,604 | $ | 954,905 | 5.2 | % | |||||||||||
| Impact of changes in foreign currencies | 18,780 | — | |||||||||||||||
| Revenue in constant currency | $ | 1,023,384 | $ | 954,905 | 7.2 | % | |||||||||||
Consolidated Commentary
During the three months ended February 28, 2025, consolidated revenue and revenue in constant currency increased by $556.5 million and $840.2 million, respectively, as compared to the prior year period. The increases are primarily driven by growth in both our Endpoint Solutions and Advanced Solutions portfolios, partially offset by a greater percentage of our sales being presented on a net basis due to changes in product mix, which negatively impacted our revenue compared to the prior three months ended February 29, 2024 by approximately $490 million, or 4%. The impact of changes in foreign currencies is primarily due to the weakening of the euro against the U.S. dollar.
Americas Commentary
During the three months ended February 28, 2025, Americas revenue and revenue in constant currency increased by $486.2 million and $552.5 million, respectively, as compared to the prior year period. The increases are primarily driven by growth in both our Endpoint Solutions and Advanced Solutions portfolios in the region, partially offset by a greater percentage of our sales being presented on a net basis due to changes in product mix, which negatively impacted our revenue compared to the three months ended February 29, 2024 by approximately $150 million, or 2%. The impact of changes in foreign currencies is primarily due to the weakening of the Canadian dollar against the U.S. dollar.
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Europe Commentary
During the three months ended February 28, 2025, Europe revenue and revenue in constant currency increased by $20.5 million and $219.2 million, respectively, as compared to the prior year period. The increases are primarily driven by growth in both our Endpoint Solutions and Advanced Solutions portfolios in the region, partially offset by a greater percentage of our sales being presented on a net basis due to changes in product mix, which negatively impacted our revenue compared to the three months ended February 29, 2024 by approximately $200 million, or 4%. The impact of changes in foreign currencies is primarily due to the weakening of the euro against the U.S. dollar.
APJ Commentary
During the three months ended February 28, 2025, APJ revenue and revenue in constant currency increased by $49.7 million and $68.5 million, respectively, as compared to the prior year period. The increases are primarily driven by growth in both our Endpoint Solutions and Advanced Solutions portfolios in the region, partially offset by a greater percentage of our sales being presented on a net basis due to changes in product mix, which negatively impacted our revenue by approximately $130 million, or 14%. The impact of changes in foreign currencies is primarily due to the weakening of the Japanese yen against the U.S. dollar.
Gross Profit
| Three Months Ended | |||||||||||||||||
| February 28, 2025 | February 29, 2024 | Percent Change | |||||||||||||||
Gross profit & gross margin - Consolidated | (in thousands) | ||||||||||||||||
| Revenue | $ | 14,531,707 | $ | 13,975,253 | 4.0 | % | |||||||||||
| Gross profit | $ | 998,006 | $ | 1,005,766 | (0.8) | % | |||||||||||
| Gross margin | 6.87 | % | 7.20 | % | |||||||||||||
Our gross margin is affected by a variety of factors, including competition, selling prices, mix of products, the percentage of revenue that is presented on a net basis, product costs along with rebate and discount programs from our suppliers, reserves or settlement adjustments, freight costs, inventory losses and fluctuations in revenue.
Our gross profit decreased during the three months ended February 28, 2025, compared to the prior year period, primarily due to the decrease in gross margin, partially offset by an increase in revenue due to growth in both our Endpoint Solutions and Advanced Solutions portfolios.
Our gross margin decreased during the three months ended February 28, 2025, compared to the prior year period, primarily due to higher strategic technologies margins in the prior year period and a less profitable mix of products sold in the current period. The presentation of additional revenues on a net basis due to changes in product mix positively impacted our gross margin by approximately 23 basis points.
Selling, General and Administrative Expenses
| Three Months Ended | |||||||||||||||||
| February 28, 2025 | February 29, 2024 | Percent Change | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Selling, general and administrative expenses | $ | 692,485 | $ | 671,545 | 3.1 | % | |||||||||||
| Percentage of revenue | 4.77 | % | 4.81 | % | |||||||||||||
Our selling, general and administrative expenses consist primarily of personnel costs such as salaries, commissions, bonuses and temporary personnel costs. Selling, general and administrative expenses also include cost of warehouses, delivery centers and other non-integration facilities, share-based compensation expense, utility expenses, legal and professional fees, depreciation on certain of our capital equipment, bad debt expense, amortization of our intangible assets, and marketing expenses, offset in part by reimbursements from our OEM suppliers.
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During the three months ended February 28, 2025, selling, general and administrative expenses increased, compared to the prior year period, primarily due to higher personnel costs and higher share-based compensation expense. Selling, general and administrative expenses as a percentage of revenue was relatively flat compared to the prior year period. A greater percentage of our revenue was presented on a net basis due to changes in product mix, which increased the ratio of selling, general and administrative expenses as a percentage of revenue for the three months ended February 28, 2025 by approximately 16 basis points.
Acquisition, Integration and Restructuring Costs
Acquisition, integration and restructuring costs during the three months ended February 29, 2024 were comprised of costs related to the Merger. There were no acquisition, integration and restructuring costs related to other acquisitions during the three months ended February 29, 2024. Acquisition, integration and restructuring costs related to other acquisitions were $1.1 million during the three months ended February 28, 2025.
The Merger
We completed the acquisition, integration and restructuring activities related to the Merger during the first half of fiscal year 2024. There were no related expenses recognized during the three months ended February 28, 2025 and there are no related expenses expected in future periods. We previously incurred acquisition, integration and restructuring costs related to the completion of the Merger, including professional services costs, personnel and other costs, and long-lived assets charges and termination fees. Professional services costs are primarily comprised of IT and other consulting services, as well as legal expenses. Personnel and other costs are primarily comprised of costs related to retention and other bonuses, severance and duplicative labor costs. Long-lived assets charges and termination fees include accelerated depreciation and amortization expense of $0.4 million recorded during the three months ended February 29, 2024 due to changes in asset useful lives in conjunction with the consolidation of certain IT systems, along with $6.6 million recorded during the three months ended February 29, 2024 for termination fees related to certain IT systems.
In July 2023, we offered a voluntary severance program ("VSP") to certain co-workers in the U.S. as part of our cost optimization efforts related to the Merger. We incurred $7.2 million of costs in connection with the VSP during the three months ended February 29, 2024, including $6.0 million of severance costs and $1.2 million of duplicative labor costs.
During the three months ended February 29, 2024, acquisition and integration expenses related to the Merger were composed of the following:
| Three Months Ended | ||||||||
| February 29, 2024 | ||||||||
| (in thousands) | ||||||||
| Professional services costs | $ | 9,429 | ||||||
| Personnel and other costs | 7,963 | |||||||
| Long-lived assets charges and termination fees | 7,037 | |||||||
Voluntary severance program costs | 7,220 | |||||||
| Total | $ | 31,649 | ||||||
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Operating Income
The following tables provide an analysis of operating income and non-GAAP operating income on a consolidated and regional basis as well as a reconciliation of operating income to non-GAAP operating income on a consolidated and regional basis for the three months ended February 28, 2025 and February 29, 2024:
| Three Months Ended | |||||||||||||||||
| February 28, 2025 | February 29, 2024 | Percent Change | |||||||||||||||
Operating income & operating margin - Consolidated | (in thousands) | ||||||||||||||||
| Revenue | $ | 14,531,707 | $ | 13,975,253 | |||||||||||||
| Operating income | $ | 304,459 | $ | 302,572 | 0.6 | % | |||||||||||
| Acquisition, integration and restructuring costs | 1,062 | 31,649 | |||||||||||||||
| Amortization of intangibles | 71,407 | 72,877 | |||||||||||||||
| Share-based compensation | 21,861 | 17,490 | |||||||||||||||
| Non-GAAP operating income | $ | 398,789 | $ | 424,588 | (6.1) | % | |||||||||||
GAAP operating margin | 2.10 | % | 2.17 | % | |||||||||||||
| Non-GAAP operating margin | 2.74 | % | 3.04 | % | |||||||||||||
Consolidated operating income slightly increased during the three months ended February 28, 2025, compared to the prior year period, primarily due to lower acquisition, integration and restructuring costs and an increase in revenue, partially offset by a decrease in strategic technologies gross margins and higher personnel costs.
Consolidated non-GAAP operating income decreased during the three months ended February 28, 2025, compared to the prior year period, primarily due to a decrease in strategic technologies gross margins and higher personnel costs, partially offset by the increase in revenue.
Consolidated operating margin slightly decreased during the three months ended February 28, 2025, compared to the prior year period, primarily due to a decrease in strategic technologies gross margins, partially offset by lower acquisition, integration and restructuring costs.
Consolidated non-GAAP operating margin decreased during the three months ended February 28, 2025, compared to the prior year period, primarily due to the decrease in strategic technologies gross margins.
| Three Months Ended | |||||||||||||||||
| February 28, 2025 | February 29, 2024 | Percent Change | |||||||||||||||
Operating income & operating margin - Americas | (in thousands) | ||||||||||||||||
| Revenue | $ | 8,389,338 | $ | 7,903,096 | |||||||||||||
| Operating income | $ | 193,722 | $ | 159,682 | 21.3 | % | |||||||||||
| Acquisition, integration and restructuring costs | 324 | 27,372 | |||||||||||||||
| Amortization of intangibles | 40,417 | 41,453 | |||||||||||||||
| Share-based compensation | 13,651 | 11,798 | |||||||||||||||
| Non-GAAP operating income | $ | 248,114 | $ | 240,305 | 3.2 | % | |||||||||||
GAAP operating margin | 2.31 | % | 2.02 | % | |||||||||||||
| Non-GAAP operating margin | 2.96 | % | 3.04 | % | |||||||||||||
Americas operating income increased during the three months ended February 28, 2025, as compared to the prior year period, primarily due to lower acquisition, integration and restructuring costs and the increase in revenue, partially offset by a decrease in strategic technologies gross margins and an increase in personnel costs.
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Americas operating margin increased during the three months ended February 28, 2025, compared to the prior year period, primarily due to lower acquisition, integration and restructuring costs, partially offset by the decrease in strategic technologies gross margins.
Americas non-GAAP operating income increased during the three months ended February 28, 2025, compared to the prior year period, primarily due to the increase in revenue, partially offset by the decrease in strategic technologies gross margins and an increase in personnel costs.
Americas non-GAAP operating margin slightly decreased during the three months ended February 28, 2025, compared to the prior year period, primarily due to the decrease in strategic technologies gross margins.
| Three Months Ended | |||||||||||||||||
| February 28, 2025 | February 29, 2024 | Percent Change | |||||||||||||||
Operating income & operating margin - Europe | (in thousands) | ||||||||||||||||
| Revenue | $ | 5,137,765 | $ | 5,117,252 | |||||||||||||
| Operating income | $ | 85,892 | $ | 108,325 | (20.7) | % | |||||||||||
| Acquisition, integration and restructuring costs | 626 | 3,952 | |||||||||||||||
| Amortization of intangibles | 30,189 | 30,802 | |||||||||||||||
| Share-based compensation | 6,860 | 4,763 | |||||||||||||||
| Non-GAAP operating income | $ | 123,567 | $ | 147,842 | (16.4) | % | |||||||||||
GAAP operating margin | 1.67 | % | 2.12 | % | |||||||||||||
| Non-GAAP operating margin | 2.41 | % | 2.89 | % | |||||||||||||
Europe operating income and non-GAAP operating income decreased during the three months ended February 28, 2025, compared to the prior year period, primarily due to the decrease in strategic technologies gross margins and higher personnel costs.
Europe operating margin and non-GAAP operating margin decreased during the three months ended February 28, 2025, compared to the prior year period, primarily due to the decrease in strategic technologies gross margins.
| Three Months Ended | |||||||||||||||||
| February 28, 2025 | February 29, 2024 | Percent Change | |||||||||||||||
Operating income & operating margin - APJ | (in thousands) | ||||||||||||||||
| Revenue | $ | 1,004,604 | $ | 954,905 | |||||||||||||
| Operating income | $ | 24,845 | $ | 34,565 | (28.1) | % | |||||||||||
| Acquisition, integration and restructuring costs | 112 | 325 | |||||||||||||||
| Amortization of intangibles | 801 | 622 | |||||||||||||||
| Share-based compensation | 1,350 | 929 | |||||||||||||||
| Non-GAAP operating income | $ | 27,108 | $ | 36,441 | (25.6) | % | |||||||||||
GAAP operating margin | 2.47 | % | 3.62 | % | |||||||||||||
| Non-GAAP operating margin | 2.70 | % | 3.82 | % | |||||||||||||
APJ operating income and non-GAAP operating income decreased during the three months ended February 28, 2025, compared to the prior year period, primarily due to the decrease in strategic technologies gross margins.
APJ operating margin and non-GAAP operating margin decreased during the three months ended February 28, 2025, compared to the prior year period, primarily due to the decrease in strategic technologies gross margins, partially offset by the impact of the presentation of additional revenue on a net basis due to changes in product mix.
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Interest Expense and Finance Charges, Net
| Three Months Ended | |||||||||||||||||
| February 28, 2025 | February 29, 2024 | Percent Change | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Interest expense and finance charges, net | $ | 87,880 | $ | 75,891 | 15.8 | % | |||||||||||
| Percentage of revenue | 0.60 | % | 0.54 | % | |||||||||||||
Amounts recorded in interest expense and finance charges, net, consist primarily of interest expense paid on our Senior Notes, our lines of credit, our accounts receivable securitization facility and our term loans, and fees associated with the sale of accounts receivable, partially offset by income earned on our cash investments.
During the three months ended February 28, 2025, our interest expense and finance charges, net increased, compared to the prior year period, primarily driven by an increase in short-term borrowings to fund working capital requirements along with higher average interest rates on our Senior Notes, partially offset by decreased costs associated with the sale of accounts receivable due to lower volumes of sold accounts receivable along with lower related discount fees. Accounts receivable discount fees totaled $12.0 million in the three months ended February 28, 2025, compared to $16.0 million in the three months ended February 29, 2024.
Other Expense, Net
| Three Months Ended | |||||||||||||||||
| February 28, 2025 | February 29, 2024 | Change in Dollars | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Other expense, net | $ | 1,696 | $ | 2,884 | $ | (1,188) | |||||||||||
| Percentage of revenue | 0.02 | % | 0.03 | % | |||||||||||||
Amounts recorded as other expense, net include foreign currency transaction gains and losses on certain financing transactions and the related derivative instruments used to hedge such financing transactions, the cost of hedging, investment gains and losses, and other non-operating gains and losses, such as settlements received from class action lawsuits.
During the three months ended February 28, 2025, our other expense, net slightly decreased compared to the prior year period, primarily due to decreased hedging costs.
Provision for Income Taxes
| Three Months Ended | |||||||||||||||||
| February 28, 2025 | February 29, 2024 | Percent Change | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Provision for income taxes | $ | 47,346 | $ | 51,669 | (8.4) | % | |||||||||||
| Percentage of income before income taxes | 22.03 | % | 23.09 | % | |||||||||||||
Income taxes consist of our current and deferred tax expense resulting from our income earned in domestic and foreign jurisdictions. Income taxes for the interim periods presented have been included in the accompanying Consolidated Financial Statements on the basis of an estimated annual effective tax rate.
During the three months ended February 28, 2025, our income tax expense decreased, compared to the prior year period, primarily due to lower income during the period and a slightly lower effective tax rate. The effective tax rate was slightly lower during the three months ended February 28, 2025 as compared to the three months ended February 29, 2024, primarily due to the relative mix of earnings and losses within the taxing jurisdictions in which we operate.
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Net Income and Diluted EPS
The following tables present net income and diluted EPS as well as a reconciliation of our most comparable GAAP measures to the related non-GAAP measures presented:
| Three Months Ended | |||||||||||
| February 28, 2025 | February 29, 2024 | ||||||||||
Non-GAAP net income - Consolidated | (in thousands) | ||||||||||
Net Income | $ | 167,537 | $ | 172,128 | |||||||
| Acquisition, integration and restructuring costs | 1,062 | 31,649 | |||||||||
| Amortization of intangibles | 71,407 | 72,877 | |||||||||
| Share-based compensation | 21,861 | 17,490 | |||||||||
| Income taxes related to the above | (24,496) | (27,921) | |||||||||
| Non-GAAP net income | $ | 237,371 | $ | 266,223 | |||||||
| Three Months Ended | |||||||||||
Non-GAAP diluted EPS | February 28, 2025 | February 29, 2024 | |||||||||
Diluted EPS(1) | $ | 1.98 | $ | 1.93 | |||||||
| Acquisition, integration and restructuring costs | 0.01 | 0.36 | |||||||||
| Amortization of intangibles | 0.84 | 0.81 | |||||||||
| Share-based compensation | 0.26 | 0.20 | |||||||||
| Income taxes related to the above | (0.29) | (0.31) | |||||||||
Non-GAAP diluted EPS(1) | $ | 2.80 | $ | 2.99 | |||||||
_________________________
(1) 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 0.9% of net income for both the three months ended February 28, 2025 and February 29, 2024.
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Liquidity and Capital Resources
Cash Conversion Cycle
| Three Months Ended | |||||||||||||||||||||||
| February 28, 2025 | November 30, 2024 | February 29, 2024 | |||||||||||||||||||||
| (Amounts in thousands) | |||||||||||||||||||||||
| Days sales outstanding ("DSO") | |||||||||||||||||||||||
| Revenue | (a) | $ | 14,531,707 | $ | 15,844,563 | $ | 13,975,253 | ||||||||||||||||
| Accounts receivable, net | (b) | 9,424,100 | 10,341,625 | 8,902,803 | |||||||||||||||||||
| Days sales outstanding | (c) = ((b)/(a))*the number of days during the period | 58 | 60 | 58 | |||||||||||||||||||
| Days inventory outstanding ("DIO") | |||||||||||||||||||||||
| Cost of revenue | (d) | $ | 13,533,701 | $ | 14,803,618 | $ | 12,969,487 | ||||||||||||||||
| Inventories | (e) | 8,359,741 | 8,287,048 | 7,091,146 | |||||||||||||||||||
| Days inventory outstanding | (f) = ((e)/(d))*the number of days during the period | 56 | 51 | 50 | |||||||||||||||||||
| Days payable outstanding ("DPO") | |||||||||||||||||||||||
| Cost of revenue | (g) | $ | 13,533,701 | $ | 14,803,618 | $ | 12,969,487 | ||||||||||||||||
| Accounts payable | (h) | 13,037,467 | 15,084,107 | 12,372,749 | |||||||||||||||||||
| Days payable outstanding | (i) = ((h)/(g))*the number of days during the period | 87 | 93 | 87 | |||||||||||||||||||
| Cash conversion cycle ("CCC") | (j) = (c)+(f)-(i) | 27 | 18 | 21 | |||||||||||||||||||
Cash Flows
Our business is working capital intensive. Our working capital needs are primarily to finance accounts receivable and inventory. We rely heavily on term loans, sales of accounts receivable, our securitization program, our revolver programs and net trade credit from vendors for our working capital needs. We have financed our growth and cash needs to date primarily through cash generated from operations and financing activities. As a general rule, when sales volumes are increasing, our net investment in working capital dollars typically increases, which generally results in decreased cash flow generated from operating activities. Conversely, when sales volumes decrease, our net investment in working capital dollars typically decreases, which generally results in increases in cash flows generated from operating activities.
We calculate CCC as days of the last fiscal quarter’s revenue outstanding in accounts receivable plus days of supply on hand in inventory, less days of the last fiscal quarter’s cost of revenue outstanding in accounts payable. Our CCC was 27 days as of February 28, 2025, and 18 and 21 days as of November 30, 2024 and February 29, 2024, respectively. Our CCC increased as compared to November 30, 2024 primarily due to a decrease in DPO as our accounts payable declined due to timing of cash payments and an increase in DIO due to higher inventories related to strategic technologies products, partially offset by a decrease in DSO due to timing of cash receipts. Our CCC increased compared to February 29, 2024, primarily due to the aforementioned increase in DIO due to higher inventories related to strategic technologies products.
To increase our market share and better serve our customers, we may further expand our operations through investments or acquisitions. We expect that any such expansions would require an initial investment in working capital, personnel, facilities and operations. These investments or acquisitions would likely be funded primarily by our existing cash and cash equivalents, additional borrowings, or the issuance of securities.
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Operating Activities
Net cash used in operating activities was $748.0 million during the three months ended February 28, 2025, compared to net cash provided by operating activities of $384.7 million during the three months ended February 29, 2024. The decrease in net cash provided by operating activities was primarily due to a larger decrease in accounts payable during the three months ended February 28, 2025 related to the timing of cash payments.
Investing Activities
Net cash used in investing activities during the three months ended February 28, 2025 and February 29, 2024 was $44.5 million and $67.9 million, respectively. The decrease in cash used in investing activities is primarily due to a decrease in cash paid for acquisition of businesses, which was $3.8 million paid during the three months ended February 28, 2025 compared to $28.4 million paid during the three months ended February 29, 2024.
Financing Activities
Net cash provided by financing activities during the three months ended February 28, 2025 was $288.6 million as compared to net cash used in financing activities during the three months ended February 29, 2024 of $311.2 million. The increase in net cash provided by financing activities is primarily due to an increase in short-term borrowings to fund working capital requirements, which totaled $421.4 million of net borrowings during the three months ended February 28, 2025 compared to $56.1 million of net repayments during the three months ended February 29, 2024, along with a decrease in repurchases of common stock under our share repurchase program, which totaled $100.5 million during the three months ended February 28, 2025, compared to $199.2 million during the three months ended February 29, 2024.
We believe our current cash balances, cash flows from operations and credit availability are sufficient to support our operating activities for at least the next twelve months.
Capital Resources
Our cash and cash equivalents totaled $541.9 million and $1.1 billion as of February 28, 2025 and November 30, 2024, respectively. Our cash and cash equivalents held by international subsidiaries are no longer subject to U.S. federal tax on repatriation into the U.S. Repatriation of some foreign balances is restricted by local laws. If in the future we repatriate foreign cash back to the U.S., we will report in our Consolidated Financial Statements the impact of state and withholding taxes depending upon the planned timing and manner of such repatriation. Presently, we believe we have sufficient resources, cash flow and liquidity within the U.S. to fund current and expected future working capital, investment and other general corporate funding requirements.
We believe that our available cash and cash equivalents balances, cash flows from operations and our existing sources of liquidity, including available capacity under our borrowing facilities, will be sufficient to satisfy our current and planned working capital and investment needs for the next twelve months in all geographies. We also believe that our longer-term working capital, planned capital expenditures, anticipated stock repurchases, dividend payments and other general corporate funding requirements will be satisfied through cash flows from operations and, to the extent necessary, from our borrowing facilities and future financial market activities.
Credit Facilities and Borrowings
In the U.S., we have an accounts receivable securitization program to provide additional capital for our operations (the "U.S. AR Arrangement"). Under the terms of the U.S. AR Arrangement, we and our subsidiaries that are party to the U.S. AR Arrangement can borrow up to a maximum of $1.5 billion based upon eligible trade accounts receivable. The U.S. AR Arrangement, as amended, has a maturity date of November 2026. We also have an amended and restated credit agreement, dated as of April 16, 2024 (as amended, the "TD SYNNEX Credit Agreement"), pursuant to which we received commitments for the extension of a senior unsecured revolving credit facility not to exceed an aggregate principal amount of $3.5 billion, which revolving credit facility (the "TD SYNNEX Revolving Credit Facility") may, at our request but subject to the lenders' discretion, potentially be increased by up to an aggregate amount of $500.0 million. Our borrowings on these facilities vary within the period primarily based on changes in our working capital. There was $390.0 million outstanding under the U.S. AR Arrangement at February 28, 2025 at an interest rate of 5.33%. There were no amounts outstanding under the U.S. AR Arrangement at November 30, 2024. There were no amounts outstanding on the TD SYNNEX Revolving Credit Facility at February 28, 2025 or November 30, 2024.
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The TD SYNNEX Credit Agreement also includes a $1.5 billion term loan facility (the "TD SYNNEX Term Loan") that has a maturity date of September 2026. There was $581.3 million outstanding on the TD SYNNEX Term Loan as of both February 28, 2025 and November 30, 2024. As amended, the TD SYNNEX Revolving Credit Facility will mature on April 16, 2029, subject, in the lender's discretion, to two one-year extensions upon our prior notice to the lenders.
On April 19, 2024, we entered into a Term Loan Credit Agreement (the "2024 Term Loan Credit Agreement") which provides for a senior unsecured term loan in the amount of $750.0 million (the "2024 Term Loan"). The proceeds from the 2024 Term Loan were used to repay a portion of the TD SYNNEX Term Loan. The 2024 Term Loan will mature on September 1, 2027.
We have various other committed and uncommitted lines of credit with financial institutions, short-term loans, term loans, credit facilities and book overdraft facilities, totaling approximately $566.0 million in borrowing capacity as of February 28, 2025. Our borrowings on these facilities vary within the period primarily based on changes in our working capital. There was $201.0 million outstanding on these facilities at February 28, 2025, at a weighted average interest rate of 5.78%, and there was $171.1 million outstanding on these facilities at November 30, 2024, at a weighted average interest rate of 7.91%.
Historically, we have renewed our accounts receivable securitization program and our parent company credit facilities on, or prior to, their respective expiration dates. We have no reason to believe that these and other arrangements will not be renewed or replaced as we continue to be in good credit standing with the participating financial institutions. We have had similar borrowing arrangements with various financial institutions throughout our years as a public company.
We had total outstanding borrowings of approximately $4.3 billion and $3.9 billion as of February 28, 2025 and November 30, 2024, respectively. Our outstanding borrowings include Senior Notes of $2.4 billion as of both February 28, 2025 and November 30, 2024, and term loans described above as the TD SYNNEX Term Loan and 2024 Term Loan of approximately $1.3 billion as of both February 28, 2025 and November 30, 2024. For additional information on our borrowings, see Note 10 – Borrowings to the Consolidated Financial Statements included in Part I, Item 1 of this Report.
Accounts Receivable Purchase Agreements
We have uncommitted accounts receivable purchase agreements under which trade accounts receivable owed by certain customers may be acquired, without recourse, by certain financial institutions. Available capacity under these programs is dependent upon the level of our trade accounts receivable eligible to be sold into these programs and the financial institutions’ willingness to purchase such receivables. In addition, certain of these programs also require that we continue to service, administer and collect the sold accounts receivable. At February 28, 2025 and November 30, 2024, we had a total of $1.3 billion and $1.2 billion, respectively, of trade accounts receivable sold to and held by financial institutions under these programs. Discount fees for these programs totaled $12.0 million in the three months ended February 28, 2025 and $16.0 million in the three months ended February 29, 2024, respectively.
Share Repurchase Program
In January 2023, our Board of Directors authorized a three-year $1.0 billion share repurchase program. In March 2024, our Board of Directors authorized a new $2.0 billion share repurchase program, supplementing the amount remaining under the prior program, pursuant to which we may repurchase our outstanding common stock from time to time in the open market or through privately negotiated transactions, including pursuant to one or more Rule 10b5-1 trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. The March 2024 share repurchase authorization does not have an expiration date. We repurchased 0.7 million shares of common stock for $100.5 million in the three months ended February 28, 2025 and 2.0 million shares for $199.2 million during the three months ended February 29, 2024. As of February 28, 2025, we had $1.7 billion available for future repurchases of our common stock. For additional information on our share repurchase program, see Note 5 – Stockholders' Equity to the Consolidated Financial Statements included in Part I, Item 1 of this Report.
Covenant Compliance
Our credit facilities have a number of covenants and restrictions that require us to maintain specified financial ratios. They also limit our (or our subsidiaries', as applicable) ability to incur additional debt or liens, enter into agreements with affiliates, modify the nature of our business, and merge or consolidate. As of February 28, 2025, we were in compliance with all material financial covenants for the above arrangements.
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Critical Accounting Policies and Estimates
During the three months ended February 28, 2025, there were no material changes to our critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the fiscal year ended November 30, 2024.
Recently Issued Accounting Pronouncements
For a summary of recent accounting pronouncements and the anticipated effects on our consolidated financial statements, see Note 2 – Summary of Significant Accounting Policies to the Consolidated Financial Statements, which can be found under Part I, Item 1 of this Report.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
For a description of the Company’s market risks, see “Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended November 30, 2024. No material changes have occurred in our market risks since November 30, 2024.
ITEM 4. Controls and Procedures
(a)Evaluation of disclosure controls and procedures. We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the U.S. Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer) have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
(b)Changes in internal control over financial reporting. There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) identified in connection with management’s evaluation during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1A. Risk Factors
You should carefully review and consider the information regarding certain factors that could materially affect our business, financial condition or future results set forth under Part I, Item 1A "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended November 30, 2024. There have been no material changes to the risk factors disclosed in our 2024 Annual Report on Form 10-K.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
In January 2023, our Board of Directors authorized a three-year $1.0 billion share repurchase program. In March 2024, our Board of Directors authorized a new $2.0 billion share repurchase program (the "March 2024 share repurchase program"), supplementing the $196.7 million remaining authorization under the prior program, pursuant to which we may repurchase our outstanding common stock from time to time in the open market or through privately negotiated transactions, including pursuant to one or more Rule 10b5-1 trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934 (the "Exchange Act"). The March 2024 share repurchase program does not have an expiration date.
The following table presents information with respect to purchases of common stock by the Company under the share repurchase program described above, during the quarter ended February 28, 2025:
| Issuer Purchases of Equity Securities (amounts in thousands except for per share amounts) | ||||||||||||||||||||||||||
| Period | Total number of shares purchased | Average price paid per share (1) | Total number of shares purchased as part of publicly announced plans or program | Maximum dollar value of shares that may yet be purchased under the plans or programs | ||||||||||||||||||||||
| December 1 - December 31, 2024 | — | $ | — | — | $ | 1,784,010 | ||||||||||||||||||||
| January 1 - January 31, 2025 | 303 | 141.97 | 303 | 1,741,011 | ||||||||||||||||||||||
| February 1 - February 28, 2025 | 404 | 142.23 | 404 | 1,683,511 | ||||||||||||||||||||||
| Total | 707 | $ | 142.12 | 707 | ||||||||||||||||||||||
_________________________
(1) Excludes excise taxes, whether accrued or paid, and excludes broker's commissions.
ITEM 5. Other Information
During the three months ended February 28, 2025, none of the Company's directors or officers adopted, amended, or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement", as those terms are defined in Regulation S-K, Item 408.
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ITEM 6. Exhibits
| Exhibit Number | Description of Document | |||||||
| 3(i).1 | ||||||||
| 3(ii).1 | ||||||||
10.1+ | ||||||||
10.2# | ||||||||
10.3# | ||||||||
10.4# | ||||||||
10.5# | ||||||||
10.6# | ||||||||
10.7# | ||||||||
10.8# | ||||||||
| 31.1 | ||||||||
| 31.2 | ||||||||
| 32.1* | ||||||||
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |||||||
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# Indicates management contract or compensatory plan or arrangement.
* In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purpose of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.
+Schedules (or similar attachments) and certain information have been omitted pursuant to Items 601(a)(5), 601(a)(6) and/or 601(b)(10)(iv) of Regulation S-K. TD SYNNEX hereby undertakes to furnish supplementally a copy of any omitted schedule or exhibit to such agreement to the U.S. Securities and Exchange Commission upon request; provided, however, that TD SYNNEX may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedules or exhibits so furnished.
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SIGNATURES
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, thereunto duly authorized.
Date: April 2, 2025
TD SYNNEX CORPORATION
| By: | /s/ Patrick Zammit | |||||||
Patrick Zammit | ||||||||
President and Chief Executive Officer | ||||||||
| (Duly authorized officer and principal executive officer) | ||||||||
| By: | /s/ Marshall W. Witt | |||||||
| Marshall W. Witt | ||||||||
| Chief Financial Officer | ||||||||
| (Duly authorized officer and principal financial officer) | ||||||||
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