FREMONT, Calif., Jan. 9, 2020 /PRNewswire/ -- SYNNEX Corporation (NYSE: SNX), a leading business process services company, today announced financial results for the fiscal fourth quarter and fiscal year ended November 30, 2019.
"Our record financial performance in Q4, driven by strong contributions from our Technology Solutions and Concentrix segments, is a very satisfying conclusion to an exceptional year," said Dennis Polk, SYNNEX President and CEO. "Fiscal 2019 was a defining year for SYNNEX, as we invested in, integrated and operated both businesses at scale, while generating solid returns from each segment. Fiscal 2020 will be another defining period as we plan to separate SYNNEX and Concentrix to further enable each entity to achieve its growth potential."
Fourth Quarter Fiscal 2019 Highlights:
- Technology Solutions: Revenue was $5.4 billion, up 17.4% from the prior fiscal year fourth quarter. Operating income was $167 million, or 3.1% of segment revenue, compared to $126 million, or 2.7% of segment revenue, in the prior fiscal year fourth quarter. Non-GAAP operating income was $178 million, or 3.3% of segment revenue, compared to $139 million, or 3.0% of segment revenue, in the prior fiscal year fourth quarter.
- Concentrix: Revenue was $1.2 billion, up 24.7% from the prior fiscal year fourth quarter primarily due to the impact of the Convergys acquisition on October 5, 2018. Operating income was $101 million, or 8.4% of segment revenue, compared to $75 million, or 7.7% of segment revenue in the prior fiscal year fourth quarter. Non-GAAP operating income was $161 million, or 13.3% of segment revenue, compared to $129 million, or 13.2% of segment revenue, in the prior fiscal year fourth quarter.
- The trailing fiscal four quarters Return on Invested Capital ("ROIC") was 8.8% compared to 7.9% in the prior fiscal year fourth quarter. The adjusted trailing fiscal four quarters ROIC was 11.0%.
Fiscal 2019 Highlights:
- Technology Solutions: Revenue was $19.1 billion, up 10.1% from the prior fiscal year. Operating income was $519 million, or 2.7% of segment revenue, compared to $405 million, or 2.3% of segment revenue, in the prior fiscal year. Non-GAAP operating income was $564 million, or 3.0% of segment revenue, in fiscal year 2019, compared to $463 million, or 2.7% of segment revenue, in the prior fiscal year.
- Concentrix: Revenue was $4.7 billion, up 91.1% from the prior fiscal year primarily due to the full year impact of the Convergys acquisition on October 5, 2018. Operating income was $294 million, or 6.3% of segment revenue, compared to $145 million, or 5.9% of segment revenue, in the prior fiscal year. Non-GAAP operating income was $531 million, or 11.3% of segment revenue, in fiscal year 2018, compared to $257 million, or 10.4% of segment revenue, in the prior fiscal year.
First Quarter Fiscal 2020 Outlook:
The following statements are based on SYNNEX' current expectations for the fiscal 2020 first quarter. Non-GAAP financial measures exclude the impact of acquisition-related and integration expenses, the amortization of intangibles and the related tax effects thereon. These statements are forward-looking and actual results may differ materially.
- Revenue is expected to be in the range of $5.240 billion to $5.540 billion.
- Net income is expected to be in the range of $114.7 million to $124.6 million and on a non-GAAP basis, net income is expected to be in the range of $157.3 million to $167.2 million.
- Diluted earnings per share is expected to be in the range of $2.21 to $2.40 and on a non-GAAP basis, diluted earnings per share is expected to be in the range of $3.03 to $3.22, based on estimated outstanding diluted weighted average shares of 51.3 million.
- After-tax amortization of intangibles is expected to be $36.2 million, or $0.70 per share.
- After-tax acquisition-related and integration expense is expected to be $6.4 million, or $0.12 per share.
SYNNEX announced today that its Board of Directors declared a quarterly cash dividend of $0.40 per common share, a 2.5-cent increase over the previous quarter's dividend. The dividend is payable on January 31, 2020 to stockholders of record as of the close of business on January 24, 2020.
Conference Call and Webcast
SYNNEX issued a separate news release today and announced plans to separate into two independent publicly traded companies: a top three Americas and Japan IT distribution company (SYNNEX Technology Solutions) and a top two global customer experience solutions company (Concentrix). SYNNEX will host a conference call for investors to discuss this transaction and to review its fiscal 2019 fourth quarter results at 2:00 p.m. (PT)/5:00 p.m. (ET) today.
Conference ID 9038089
Live call (866) 393-4306 or (763) 488-9145 (Int'l)
Live audio webcast of the earnings call will be accessible at http://ir.synnex.com , and a replay of the webcast will be available following the call.
SYNNEX Corporation (NYSE: SNX) is a Fortune 200 corporation and a leading business process services company, providing a comprehensive range of distribution, logistics and integration services for the technology industry and providing outsourced services focused on customer engagement to a broad range of enterprises. SYNNEX distributes a broad range of information technology systems and products, and also provides systems design and integration solutions. Founded in 1980, SYNNEX Corporation operates in numerous countries throughout North and South America, Asia-Pacific and Europe. Additional information about SYNNEX may be found online at synnex.com .
Concentrix, a wholly-owned subsidiary of SYNNEX Corporation (NYSE: SNX), is a technology-enabled global business services company specializing in customer engagement and improving business performance for some of the world's best brands. Every day, from more than 40 countries and across 6 continents, our staff delivers next generation customer experience and helps companies better connect with their customers. We create better business outcomes and help differentiate our clients through technology, design, data, process, and people. Concentrix provides services to clients in eight industry verticals: technology & consumer electronics; banking, financial services & insurance; healthcare; media & communications; retail & e-commerce; travel & transportation; automotive; and energy & public-sector. We are Different by Design. Visit concentrix.com to learn more.
(1)Use of Non-GAAP Financial Information
In addition to the financial results presented in accordance with GAAP, SYNNEX also uses adjusted selling, general and administrative expenses, non-GAAP operating income, non-GAAP operating margin, adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), non-GAAP net income, and non-GAAP diluted earnings per share, which are non-GAAP financial measures that exclude acquisition-related and integration expenses, restructuring costs, the amortization of intangible assets and the related tax effects thereon.
In fiscal year 2019, non-GAAP net income and non-GAAP diluted earnings per share also exclude gains upon the settlement of contingent consideration and a contingent gain related to the Westcon-Comstor Americas acquisition.
In fiscal year 2018, non-GAAP net income and non-GAAP diluted earnings per share also exclude the impact of an adjustment relating to the enactment of the Tax Cuts and Jobs Act of 2017. This adjustment includes a transition tax on accumulated overseas profits and the remeasurement of deferred tax assets and liabilities to the new U.S. tax rate.
Additionally, SYNNEX refers to growth rates at constant currency or adjusting for the translation effect of foreign currencies so that certain financial results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of SYNNEX' business performance. Financial results adjusted for currency are calculated by translating current period activity in the transaction currency using the comparable prior year periods' currency conversion rate. Generally, when the dollar either strengthens or weakens against other currencies, growth at constant currency rates or adjusting for currency will be higher or lower than growth reported at actual exchange rates.
Trailing fiscal four quarters ROIC is defined as the last four quarters' tax effected operating income divided by the average of the last five quarterly balances of borrowings (excluding book overdraft) and equity, net of cash and cash equivalents in the United States. Adjusted ROIC is calculated by excluding the tax effected impact of acquisition-related and integration expenses, restructuring costs and the amortization of intangibles from both operating income and equity, the impact of the contingent consideration gain and a contingent gain, and the U.S. tax reform adjustment on equity.
SYNNEX also uses free cash flow, which is cash flow from operating activities, reduced by purchases of property and equipment. SYNNEX uses free cash flow to conduct and evaluate its business because, although it is similar to cash flow from operations, SYNNEX believes it is a more conservative measure of cash flows since purchases of fixed assets are a necessary component of ongoing operations. Free cash flow reflects an additional way of viewing SYNNEX' liquidity that, when viewed with its GAAP results, provides a more complete understanding of factors and trends affecting its cash flows. Free cash flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. For example, free cash flow does not incorporate payments for business acquisitions. Therefore, SYNNEX believes it is important to view free cash flow as a complement to its entire consolidated statements of cash flows.
SYNNEX management uses non-GAAP financial measures internally to understand, manage and evaluate the business, to establish operational goals, and in some cases for measuring performance for compensation purposes. These non-GAAP measures are intended to provide investors with an understanding of SYNNEX' operational results and trends that more readily enable investors to analyze SYNNEX' base financial and operating performance and to facilitate period-to-period comparisons and analysis of operational trends, as well as for planning and forecasting in future periods. Management believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. As these non-GAAP financial measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures and should be read only in conjunction with SYNNEX' consolidated financial statements prepared in accordance with GAAP. A reconciliation of SYNNEX' GAAP to non-GAAP financial information is set forth in the supplemental information section at the end of this press release.
(2)Fiscal 2018 fourth quarter and year-to-date financial statements have been adjusted to reflect the adoption of the new guidance on revenue recognition, on a full retrospective basis. Impact of adoption of the new guidance on the Consolidated Statement of Operations is presented in the supplementary information section at the end of this press release.
Safe Harbor Statement
Statements in this news release regarding SYNNEX Corporation that are not historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may be identified by terms such as believe, foresee, expect, may, will, provide, could and should and the negative of these terms or other similar expressions. These forward-looking statements include, but are not limited to, statements regarding strategies and objectives of SYNNEX for future operations, including the separation transaction; the future performances of SYNNEX and Concentrix if the separation is completed; our expectations and outlook for the fiscal 2020 first quarter as to revenue, net income, non-GAAP net income, diluted earnings per share, non-GAAP diluted earnings per share, outstanding diluted weighted average shares, tax rate, after-tax amortization of intangibles, after-tax acquisition-related and integration expenses; and the anticipated benefits of the non-GAAP financial measures.
The forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements. These risks and uncertainties include, but are not limited to: the satisfaction of separation closing conditions; the ability to realize the anticipated benefits of the separation; disruption from the transaction making it more difficult to maintain business, contractual and operational relationships; the unfavorable outcome of any legal proceedings that have been or may be instituted against us, the ability to retain key personnel; negative effects of the transaction announcement or the consummation of the proposed separation on the market price of the capital stock of SYNNEX; general economic conditions and any weakness in information technology and consumer electronics spending; the loss or consolidation of one or more of our significant original equipment manufacturer, or OEM, suppliers or customers; market acceptance and product life of the products we assemble and distribute; competitive conditions in our industry and their impact on our margins; pricing, margin and other terms with our OEM suppliers; our ability to gain market share; variations in supplier-sponsored programs; changes in our costs and operating expenses; changes in foreign currency exchange rates; changes in tax laws; risks associated with our international operations; uncertainties and variability in demand by our reseller and integration customers; supply shortages or delays; any termination or reduction in our floor plan financing arrangements; credit exposure to our reseller customers and negative trends in their businesses; any future incidents of theft; and other risks and uncertainties detailed in our Form 10-K for the fiscal year ended November 30, 2018 and subsequent SEC filings. Statements included in this press release are based upon information known to SYNNEX Corporation as of the date of this release, and SYNNEX Corporation assumes no obligation to update information contained in this press release.
Copyright 2020 SYNNEX Corporation. All rights reserved. SYNNEX, the SYNNEX Logo, CONCENTRIX, and all other SYNNEX company, product and services names and slogans are trademarks or registered trademarks of SYNNEX Corporation. SYNNEX, the SYNNEX Logo, and CONCENTRIX Reg. U.S. Pat. & Tm. Off. DIFFERENT BY DESIGN is a trademark or registered trademark of Concentrix Corporation. Other names and marks are the property of their respective owners.
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