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SYNNEX Corporation Reports Third Quarter Fiscal 2020 Results

·15 mins read

FREMONT, Calif. , Sept. 29, 2020 /PRNewswire/ -- SYNNEX Corporation (NYSE: SNX), a leading business process services company, today announced financial results for the fiscal third quarter ended August 31, 2020.  

SYNNEX Corporation
SYNNEX Corporation



Q3 FY20



Q3 FY19



Net change

Revenue ($M)


$

6,465



$

6,204



4.2

%

Operating income ($M)


$

209.1



$

208.9



0.1

%

Non-GAAP operating income ($M) (1)


$

260.1



$

270.5



-3.8

%

Operating margin



3.24

%



3.37

%


-13

bps

Non-GAAP operating margin (1)



4.02

%



4.36

%


-34

bps

Net income ($M)


$

134.5



$

123.1



9.2

%

Non-GAAP net income ($M) (1)


$

172.6



$

169.2



2.0

%

Diluted earnings per common share ("EPS")


$

2.60



$

2.40



8.3

%

Non-GAAP Diluted EPS (1)


$

3.33



$

3.30



0.9

%

"Our strong third quarter performance is a reflection of our resiliency, our ongoing focus on serving our partners and clients and the continued dedication of our associates on the growth and improvement of our business during these unprecedented times," said Dennis Polk , SYNNEX President and CEO. "We remain on track with the proposed spin-off of Concentrix and believe this will result in incremental value for all of our stakeholders."

Third Quarter Fiscal 2020 Highlights

  • Technology Solutions: Revenue was $5.3 billion , up 5.1% over the prior fiscal year third quarter. Operating income was $132 million , or 2.5% of segment revenue, compared to $139 million , or 2.8% of segment revenue, in the prior fiscal year third quarter. Non-GAAP operating income was $142 million , or 2.7% of segment revenue, compared to $150 million , or 3.0% of segment revenue, in the prior fiscal year third quarter.

  • Concentrix: Revenue was $1.2 billion , up 0.2% from the prior fiscal year third quarter. Operating income was $77 million , or 6.6% of segment revenue, compared to $70 million , or 6.0% of segment revenue in the prior fiscal year third quarter. Non-GAAP operating income was $118 million , or 10.1% of segment revenue, compared to $121 million , or 10.4% of segment revenue, in the prior fiscal year third quarter.

  • The trailing fiscal four quarters Return on Invested Capital ("ROIC") was 9.1% compared to 8.6% in the prior fiscal year third quarter. The adjusted trailing fiscal four quarters ROIC was 10.7%.

  • Cash generated from operations was approximately $321 million for the quarter.

Fourth Quarter Fiscal 2020 Outlook

The following statements are based on SYNNEX current expectations for the fiscal 2020 fourth quarter. Non-GAAP financial measures exclude the impact of acquisition-related and integration expenses, the amortization of intangibles and the related tax effects thereon. These statements are forward-looking and actual results may differ materially.

  • Revenue is expected to be in the range of $6.45 billion to $6.65 billion .

  • Net income is expected to be in the range of $153.0 million to $166.0 million and on a non-GAAP basis, net income is expected to be in the range of $190.5 million to $203.5 million .

  • Diluted earnings per share is expected to be in the range of $2.95 to $3.20 and on a non-GAAP basis, diluted earnings per share is expected to be in the range of $3.68 to $3.93 , based on estimated outstanding diluted weighted average shares of 51.5 million.

  • After-tax amortization of intangibles is expected to be $35.2 million , or $0.68 per share.

  • After-tax acquisition-related and integration expense is expected to be $2.3 million , or $0.04 per share.

Conference Call and Webcast

SYNNEX will host a conference call to discuss third quarter fiscal 2020 results:

Tuesday, September 29, 2020
2:00 PM (PT) / 5:00 PM (ET)
Conference ID 8016677
Live call (866) 393-4306 or (763) 488-9145 (Int'l)

Live audio webcast of the earnings call will be accessible at ir.synnex.com, and a replay of the webcast will be available following the call.

About SYNNEX

SYNNEX Corporation (NYSE: SNX) is a Fortune 200 corporation and a leading business process services company, providing a comprehensive range of distribution, logistics and integration services for the technology industry and providing outsourced services focused on customer engagement to a broad range of enterprises.  SYNNEX distributes a broad range of information technology systems and products, and also provides systems design and integration solutions. Founded in 1980, SYNNEX Corporation operates in numerous countries throughout North and South America , Asia-Pacific and Europe . Additional information about SYNNEX may be found online at synnex.com.

About Concentrix

Concentrix, a wholly-owned subsidiary of SYNNEX Corporation (NYSE: SNX), is a technology-enabled global business services company specializing in customer engagement and improving business performance for some of the world's best brands. Every day, from more than 40 countries and across 6 continents, our staff delivers next generation customer experience and helps companies better connect with their customers. We create better business outcomes and help differentiate our clients through technology, design, data, process, and people. Concentrix provides services to clients in five primary industry verticals: technology and consumer electronics; communications and media; retail, travel and ecommerce; banking, financial services and insurance; and healthcare. We are Different by Design. Visit concentrix.com to learn more.

(1) Use of Non-GAAP Financial Information

In addition to the financial results presented in accordance with GAAP, SYNNEX also uses adjusted selling, general and administrative expenses, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, and non-GAAP diluted earnings per share, which are non-GAAP financial measures that exclude acquisition-related and integration expenses, restructuring costs, the amortization of intangible assets and the related tax effects thereon. The Company also uses adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") which excludes other income (expense), net and acquisition-related and integration expenses. In fiscal year 2019, non-GAAP net income and non-GAAP diluted earnings per share also exclude gains upon the settlement of contingent consideration and a contingent gain related to the Westcon-Comstor Americas acquisition. In fiscal year 2018, non-GAAP net income and non-GAAP diluted earnings per share also exclude the impact of an adjustment relating to the enactment of the Tax Cuts and Jobs Act of 2017. This adjustment includes a transition tax on accumulated overseas profits and the remeasurement of deferred tax assets and liabilities to the new U.S. tax rate.

SYNNEX' acquisition activities have resulted in the recognition of intangible assets which consist primarily of customer relationships, vendor lists and technology. Definite-lived intangible assets are amortized over their estimated useful lives and are tested for impairment when events indicate that the carrying value may not be recoverable. The amortization of intangible assets is reflected in the Company's statements of operations within each segment. Although intangible assets contribute to the Company's revenue generation, the amortization of intangible assets does not directly relate to the sale of the Company's products and the services performed for the Company's clients. Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of the Company's acquisition activity. Accordingly, the Company believes excluding the amortization of intangible assets, along with the other non-GAAP adjustments which neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business performance, enhances the Company's and investors' ability to compare the Company's past financial performance with its current performance and to analyze underlying business performance and trends. Intangible asset amortization excluded from the related non-GAAP financial measure represents the entire amount recorded within the Company's GAAP financial statements, and the revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure. Intangible asset amortization is excluded from the related non-GAAP financial measure because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised.

Additionally, SYNNEX refers to revenue at constant currency or adjusting for the translation effect of foreign currencies so that certain financial results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of SYNNEX' business performance. Financial results adjusted for currency are calculated by translating current period activity in the transaction currency using the comparable prior year periods' currency conversion rate. Generally, when the dollar either strengthens or weakens against other currencies, revenue at constant currency rates or adjusting for currency will be higher or lower than revenue reported at actual exchange rates.

Trailing fiscal four quarters ROIC is defined as the last four quarters' tax effected operating income divided by the average of the last five quarterly balances of borrowings (excluding book overdraft) and equity, net of cash and cash equivalents in the United States . Adjusted ROIC is calculated by excluding the tax effected impact of acquisition-related and integration expenses, restructuring costs and the amortization of intangibles from operating income and equity and the impact of the contingent consideration gain and a contingent gain and the U.S. tax reform adjustment on equity.

SYNNEX also uses free cash flow, which is cash flow from operating activities, reduced by purchases of property and equipment. SYNNEX uses free cash flow to conduct and evaluate its business because, although it is similar to cash flow from operations, SYNNEX believes it is a more conservative measure of cash flows since purchases of fixed assets are a necessary component of ongoing operations. Free cash flow reflects an additional way of viewing SYNNEX' liquidity that, when viewed with its GAAP results, provides a more complete understanding of factors and trends affecting its cash flows. Free cash flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. For example, free cash flow does not incorporate payments for business acquisitions. Therefore, SYNNEX believes it is important to view free cash flow as a complement to its entire consolidated statements of cash flows.

SYNNEX management uses non-GAAP financial measures internally to understand, manage and evaluate the business, to establish operational goals, and in some cases for measuring performance for compensation purposes. These non-GAAP measures are intended to provide investors with an understanding of SYNNEX' operational results and trends that more readily enable investors to analyze SYNNEX' base financial and operating performance and to facilitate period-to-period comparisons and analysis of operational trends, as well as for planning and forecasting in future periods. Management believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. As these non-GAAP financial measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures, and should be read only in conjunction with SYNNEX' consolidated financial statements prepared in accordance with GAAP. A reconciliation of SYNNEX' GAAP to non-GAAP financial information is set forth in the supplemental information section at the end of this press release.

Safe Harbor Statement

Statements in this news release regarding SYNNEX Corporation that are not historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may be identified by terms such as believe, foresee, expect, may, will, provide, could and should and the negative of these terms or other similar expressions. These forward-looking statements include, but are not limited to, statements regarding the proposed spin-off of Concentrix, including status, timing, what shareholders will own immediately following the spin-off and shareholder value; our expectations and outlook for the fiscal 2020 fourth quarter as to revenue, net income, non-GAAP net income, diluted earnings per share, non-GAAP diluted earnings per share, outstanding diluted weighted average shares, tax rate, after-tax amortization of intangibles, after-tax acquisition-related and integration expenses; and the anticipated benefits of the non-GAAP financial measures.

The forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements. These risks and uncertainties include, but are not limited to: the impact of COVID-19 or coronavirus, or other pandemics, and the impact of related governmental, individual and business responses, including the ability of our staff to travel to work, our ability to maintain adequate inventories, delivery capabilities, the impact on our customers and supply chain, and the impact on demand in general; general economic and market conditions; the ability to realize the anticipated benefits of the previously-announced separation of SYNNEX and Concentrix and the disruption such transaction might cause to our business; negative effects of the transaction announcement or the consummation of the proposed separation on the market price of the capital stock of SYNNEX; the unfavorable outcome of any legal proceedings that have been or may be instituted against us; the ability to retain key personnel; any weakness in information technology and consumer electronics spending; the loss or consolidation of one or more of our significant original equipment manufacturer, or OEM, suppliers or customers; market acceptance and product life of the products we assemble and distribute; competitive conditions in our industry and their impact on our margins; pricing, margin and other terms with our OEM suppliers; our ability to gain market share; variations in supplier-sponsored programs; changes in our costs and operating expenses; changes in foreign currency exchange rates; changes in tax laws; risks associated with our international operations; uncertainties and variability in demand by our reseller and integration customers; supply shortages or delays; any termination or reduction in our floor plan financing arrangements; credit exposure to our reseller customers and negative trends in their businesses; any future incidents of theft; and other risks and uncertainties detailed in our Form 10-K for the fiscal year ended November 30, 2019 and subsequent SEC filings. Statements included in this press release are based upon information known to SYNNEX Corporation as of the date of this release, and SYNNEX Corporation does not intend to update information contained in this press release, except as required by law.

Copyright 2020 SYNNEX Corporation.  All rights reserved. SYNNEX, the SYNNEX Logo, CONCENTRIX, and all other SYNNEX company, product and services names and slogans are trademarks or registered trademarks of SYNNEX Corporation. SYNNEX, the SYNNEX Logo, and CONCENTRIX Reg. U.S. Pat. & Tm. Off. DIFFERENT BY DESIGN is a trademark or registered trademark of Concentrix Corporation. Other names and marks are the property of their respective owners.

 

SYNNEX Corporation

Consolidated Balance Sheets

(currency and share amounts in thousands, except par value)

(Amounts may not add due to rounding)

(unaudited)




August   31, 2020



November   30, 2019


ASSETS









Current assets:









Cash and cash equivalents


$

1,452,273



$

225,529


Accounts receivable, net



3,580,970




3,926,709


Receivables from vendors, net



323,027




368,505


Inventories



2,832,607




2,547,224


Other current assets



375,273




385,024


Total current assets



8,564,151




7,452,992


Property and equipment, net



583,951




569,899


Goodwill



2,257,292




2,254,402


Intangible assets, net



1,031,168




1,162,212


Deferred tax assets



116,263




97,539


Other assets, net



710,283




160,917


Total assets


$

13,263,107



$

11,697,960











LIABILITIES AND EQUITY









Current liabilities:









Borrowings, current


$

244,114



$

298,969


Accounts payable



3,655,215




3,149,443


Accrued compensation and benefits



447,661




402,771


Other accrued liabilities



1,257,160




723,716


Income taxes payable



27,998




32,223


Total current liabilities



5,632,148




4,607,122


Long-term borrowings



2,609,809




2,718,267


Other long-term liabilities



722,343




361,911


Deferred tax liabilities



205,225




222,210


Total liabilities



9,169,525




7,909,510


Stockholders' equity:









Preferred stock, $0.001 par value, 5,000 shares authorized, no shares issued or outstanding







Common stock, $0.001 par value, 100,000 shares authorized, 53,380 and 53,154 shares issued as of August 31, 2020 and November 30, 2019, respectively



53




53


Additional paid-in capital



1,579,026




1,545,421


Treasury stock, 2,454 and 2,399 shares as of August 31, 2020 and November 30, 2019, respectively



(178,775)




(172,627)


Accumulated other comprehensive income (loss)



(224,628)




(209,077)


Retained earnings



2,917,906




2,624,680


Total stockholders' equity



4,093,582




3,788,450


Total liabilities and equity


$

13,263,107



$

11,697,960


 

SYNNEX Corporation

Consolidated Statements of Operations

(currency and share amounts in thousands, except per share amounts)

(Amounts may not add due to rounding)

(unaudited)




Three Months Ended



Nine Months Ended




August   31, 2020



August   31, 2019



August   31, 2020



August   31, 2019


Revenue:

















Products


$

5,306,361



$

5,047,968



$

13,858,313



$

13,695,725


Services



1,158,421




1,155,690




3,403,305




3,480,275


Total revenue



6,464,782




6,203,659




17,261,619




17,176,000


Cost of revenue:

















Products



(5,008,881)




(4,746,197)




(13,031,113)




(12,876,410)


Services



(747,809)




(731,472)




(2,206,256)




(2,196,212)


Gross profit



708,092




725,990




2,024,249




2,103,379


Selling, general and administrative expenses



(498,956)




(517,135)




(1,514,734)




(1,557,906)


Operating income



209,136




208,855




509,515




545,473


Interest expense and finance charges, net



(28,749)




(42,945)




(99,046)




(127,695)


Other income (expense), net



(567)




(1,087)




3,280




19,764


Income before income taxes



179,819




164,823




413,748




437,542


Provision for income taxes



(45,356)




(41,691)




(99,740)




(112,831)


Net income


$

134,464



$

123,132



$

314,008



$

324,711


Earnings per common share:

















Basic


$

2.61



$

2.41



$

6.10



$

6.35


Diluted


$

2.60



$

2.40



$

6.07



$

6.32


Weighted-average common shares outstanding:

















Basic



50,890




50,601




50,851




50,661


Diluted



51,241




50,845




51,172




50,903


 

SYNNEX Corporation

Segment Information

(currency in thousands)

(Amounts may not add due to rounding)

(unaudited)




Three Months Ended



Nine Months Ended




August   31, 2020



August   31, 2019



August   31, 2020



August   31, 2019


Revenue:

















Technology Solutions


$

5,306,361



$

5,047,970



$

13,858,313



$

13,695,729


Concentrix



1,163,694




1,160,928




3,418,676




3,495,076


Inter-segment elimination



(5,273)




(5,240)




(15,371)




(14,805)


Consolidated


$

6,464,782



$

6,203,659



$

17,261,619



$

17,176,000



















Operating income:

















Technology Solutions


$

132,373



$

138,830



$

320,962



$

352,594


Concentrix



76,763




70,025




188,554




192,879


Consolidated


$

209,136



$

208,855



$

509,515



$

545,473


SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(currency in thousands)

(Amounts may not add due to rounding)




Three Months Ended



Nine Months Ended




August 31, 2020



August 31, 2019



August 31, 2020



August 31, 2019


Revenue in constant currency

















Consolidated

















Revenue


$

6,464,782



$

6,203,659



$

17,261,619



$

17,176,000


Foreign currency translation



35,239








111,756






Revenue in constant currency


$

6,500,021



$

6,203,659



$

17,373,375



$

17,176,000



















Technology Solutions

















Revenue


$

5,306,361



$

5,047,970



$

13,858,313



$

13,695,729


Foreign currency translation



32,798








79,488






Revenue in constant currency


$

5,339,159



$

5,047,970



$

13,937,801



$

13,695,729



















Concentrix

















Revenue


$

1,163,694



$

1,160,928



$

3,418,676



$

3,495,076


Foreign currency translation



2,441








32,268






Revenue in constant currency


$

1,166,135



$

1,160,928



$

3,450,944



$

3,495,076





Three Months Ended



Nine Months Ended




August 31, 2020



August 31, 2019



August 31, 2020



August 31, 2019


Selling, general and administrative expenses

















Consolidated

















GAAP selling, general and administrative expenses


$

498,956



$

517,135



$

1,514,734



$

1,557,906


Acquisition-related and integration expenses



4,163




9,200




22,701




53,582


Amortization of intangibles



46,533




52,066




139,435




156,964


Adjusted selling, general and administrative expenses


$

448,260



$

455,869



$

1,352,598



$

1,347,360



















Technology Solutions

















GAAP selling, general and administrative expenses


$

165,107



$

162,944



$

506,239



$

466,725


Acquisition-related and integration expenses












981


Amortization of intangibles



9,995




10,999




30,130




32,968


Adjusted selling, general and administrative expenses


$

155,112



$

151,945



$

476,109



$

432,776



















Concentrix

















GAAP selling, general and administrative expenses


$

335,770



$

356,155



$

1,014,339



$

1,097,139


Acquisition-related and integration expenses



4,163




9,200




22,701




52,601


Amortization of intangibles



36,538




41,067




109,305




123,996


Adjusted selling, general and administrative expenses


$

295,069



$

305,888



$

882,333



$

920,542


SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(currency in thousands)

(Amounts may not add due to rounding)

(continued)




Three Months Ended



Nine Months Ended




August 31, 2020



August 31, 2019



August 31, 2020



August 31, 2019


Operating income and Operating margin

















Consolidated

















Revenue


$

6,464,782



$

6,203,659



$

17,261,619



$

17,176,000



















GAAP operating income


$

209,136



$

208,855



$

509,515



$

545,473


Acquisition-related and integration expenses



4,163




9,200




22,701




53,582


Amortization of intangibles



46,828




52,428




140,320




158,149


Non-GAAP operating income


$

260,127



$

270,483



$

672,536



$

757,204



















GAAP operating margin



3.24

%



3.37

%



2.95

%



3.18

%

Non-GAAP operating margin



4.02

%



4.36

%



3.90

%



4.41

%


















Technology Solutions

















Segment revenue


$

5,306,361



$

5,047,970



$

13,858,313



$

13,695,729



















GAAP operating income


$

132,373



$

138,830



$

320,962



$

352,594


Acquisition-related and integration expenses












981


Amortization of intangibles



9,995




10,999




30,130




32,968


Non-GAAP operating income


$

142,368



$

149,829



$

351,092



$

386,543



















GAAP operating margin



2.49

%



2.75

%



2.32

%



2.57

%

Non-GAAP operating margin



2.68

%



2.97

%



2.53

%



2.82

%


















Concentrix

















Segment revenue


$

1,163,694



$

1,160,928



$

3,418,676



$

3,495,076



















GAAP operating income


$

76,763



$

70,025



$

188,554



$

192,879


Acquisition-related and integration expenses



4,163




9,200




22,701




52,601


Amortization of intangibles



36,833




41,429




110,190




125,181


Non-GAAP operating income


$

117,759



$

120,654



$

321,445



$

370,661



















GAAP operating margin



6.60

%



6.03

%



5.52

%



5.52

%

Non-GAAP operating margin



10.12

%



10.39

%



9.40

%



10.61

%

SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(currency and share amounts in thousands, except per share amounts)

(Amounts may not add due to rounding)

(continued)




Three Months Ended



Nine Months Ended




August 31, 2020



August 31, 2019



August 31, 2020



August 31, 2019


Adjusted EBITDA

















Consolidated

















Net income


$

134,464



$

123,132



$

314,008



$

324,711


Interest expense and finance charges, net



28,749




42,945




99,046




127,695


Provision for income taxes



45,356




41,691




99,740




112,831


Depreciation (excluding accelerated depreciation included in acquisition-related and integration expenses below)



37,446




38,597




110,981




119,004


Amortization of intangibles



46,828




52,428




140,320




158,149


EBITDA


$

292,843



$

298,793



$

764,095



$

842,390


Other (income) expense, net (excluding amounts included in acquisition-related and integration expenses below)



567




1,087




(3,798)




(19,593)


Acquisition-related and integration expenses



4,163




9,200




23,219




53,411


Adjusted EBITDA


$

297,573



$

309,080



$

783,516



$

876,208



















Technology Solutions

















Net income


$

85,531



$

87,778



$

204,237



$

236,080


Interest expense and finance charges, net



19,747




17,775




59,531




55,725


Provision for income taxes



27,119




29,739




56,189




77,873


Depreciation



5,937




5,875




17,650




16,719


Amortization of intangibles



9,995




10,999




30,130




32,968


EBITDA


$

148,329



$

152,166



$

367,737



$

419,365


Other (income) expense, net



(25)




3,538




1,004




(17,083)


Acquisition-related and integration expenses












981


Adjusted EBITDA


$

148,304



$

155,704



$

368,741



$

403,263



















Concentrix

















Net income


$

48,933



$

35,354



$

109,771



$

88,631


Interest expense and finance charges, net



9,002




25,170




39,515




71,970


Provision for income taxes



18,236




11,952




43,551




34,958


Depreciation (excluding accelerated depreciation included in acquisition-related and integration expenses below)



31,509




32,722




93,331




102,285


Amortization of intangibles



36,833




41,429




110,190




125,181


EBITDA


$

144,513



$

146,627



$

396,358



$

423,025


Other (income) expense, net (excluding amounts included in acquisition-related and integration expenses below)



592




(2,450)




(4,802)




(2,510)


Acquisition-related and integration expenses



4,163




9,200




23,219




52,430


Adjusted EBITDA


$

149,268



$

153,377



$

414,775



$

472,945


SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(currency and share amounts in thousands, except per share amounts)

(Amounts may not add due to rounding)

(continued)




Three Months Ended



Nine Months Ended




August 31, 2020



August 31, 2019



August 31, 2020



August 31, 2019


Net income

















Net income


$

134,464



$

123,132



$

314,008



$

324,711


Acquisition-related and integration expenses



4,163




9,200




23,219




53,411


Amortization of intangibles



46,828




52,428




140,320




158,149


Contingent consideration












(19,034)


Income taxes related to the above(1)



(12,899)




(15,548)




(41,407)




(55,328)


Non-GAAP net income


$

172,556



$

169,212



$

436,140



$

461,909



















Diluted earnings per common share ("EPS")(2)

















Net income


$

134,464



$

123,132



$

314,008



$

324,711


Less: net income allocated to participating securities



1,481




1,066




3,602




2,883


Net income attributable to common stockholders



132,983




122,066




310,406




321,828


Acquisition-related and integration expenses attributable to common stockholders



4,117




9,121




22,960




52,938


Amortization of intangibles attributable to common stockholders



46,312




51,975




138,755




156,748


Contingent consideration attributable to common stockholders












(18,865)


Income taxes related to the above attributable to common stockholders(1)



(12,757)




(15,414)




(40,945)




(54,838)


Non-GAAP net income attributable to common stockholders


$

170,655



$

167,748



$

431,176



$

457,810



















Weighted-average number of common shares - diluted:



51,241




50,845




51,172




50,903



















Diluted EPS(2)


$

2.60



$

2.40



$

6.07



$

6.32


Acquisition-related and integration expenses



0.08




0.18




0.45




1.04


Amortization of intangibles



0.90




1.02




2.71




3.08


Contingent consideration












(0.37)


Income taxes related to the above(1)



(0.25)




(0.30)




(0.80)




(1.08)


Non-GAAP diluted EPS


$

3.33



$

3.30



$

8.43



$

8.99


SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(Amounts may not add due to rounding)

(continued)




Three Months Ended



Nine Months Ended


(Amounts in thousands)


August 31, 2020



August 31, 2019



August 31, 2020



August 31, 2019


Free cash flow

















Net cash provided by (used in) operating activities


$

320,617



$

249,853



$

1,547,098



$

202,473


Purchases of property and equipment



(42,705)




(33,020)




(127,326)




(93,432)


Free cash flow


$

277,912



$

216,833



$

1,419,772



$

109,041





Forecast




Three Months Ending November 30, 2020


(Amounts in millions, except per share amounts)


Low



High


Net income


$

153.0



$

166.0


Acquisition-related and integration expenses



3.0




3.0


Amortization of intangibles



47.0




47.0


Income taxes related to the above(1)



(12.5)




(12.5)


Non-GAAP net income


$

190.5



$

203.5











Diluted EPS(2)


$

2.95



$

3.20


Acquisition-related and integration expenses



0.06




0.06


Amortization of intangibles



0.90




0.90


Income taxes related to the above(1)



(0.24)




(0.24)


Non-GAAP diluted EPS


$

3.68



$

3.93












(1)The tax effect of taxable and deductible non-GAAP adjustments was calculated using the effective year-to-date tax rate during the respective periods.


(2)Diluted EPS is calculated using the two-class method. Unvested restricted stock awards granted to employees are considered participating securities. For purposes of calculating Diluted EPS, Net income allocated to participating securities was approximately 1.1% and 1.2% of Net income for the three and nine months ended August 31, 2020, respectively and approximately 0.9% for both the three and nine months ended August 31, 2019. Net income allocable to participating securities is estimated to be approximately 0.9% of the forecasted Net income for the three months ending November 30, 2020.

SYNNEX Corporation

Calculation of Financial Metrics

(currency in thousands)

(Amounts may not add or compute due to rounding)

Return on Invested Capital ("ROIC")




August 31, 2020



August 31, 2019


ROIC









Operating income (trailing fiscal four quarters)


$

777,803



$

746,368


Income taxes on operating income(1)



(193,398)




(201,002)


Operating income after taxes


$

584,405



$

545,366











Total borrowings, excluding book overdraft (last five quarters average)


$

3,019,573



$

3,126,339


Total equity (last five quarters average)



3,834,782




3,282,537


Less: U.S. cash and cash equivalents (last five quarters average)



(398,398)




(67,727)


Total invested capital


$

6,455,957



$

6,341,149











ROIC



9.1

%



8.6

%










Adjusted ROIC









Non-GAAP operating income (trailing fiscal four quarters)


$

1,011,028



$

1,024,961


Income taxes on Non-GAAP operating income(1)



(253,279)




(263,045)


Non-GAAP operating income after taxes


$

757,749



$

761,916











Total invested capital


$

6,455,957



$

6,341,149


Tax effected impact of cumulative non-GAAP adjustments (last five

quarters average)



616,468




439,557


Total Non-GAAP invested capital


$

7,072,425



$

6,780,706











Adjusted ROIC



10.7

%



11.2

%


(1)Income taxes on GAAP operating income was calculated using the effective year-to-date tax rates during the respective periods. Income taxes on non-GAAP operating income was calculated by excluding the tax effect of taxable and deductible non-GAAP adjustments using the effective year-to-date tax rate during the respective periods. In fiscal year 2018, the effective tax rate for non-GAAP operating income excludes the impact of the transition tax on accumulated overseas profits and the remeasurement of deferred tax assets and liabilities to the new U.S. tax rate related to the enactment of the Tax Cuts and Jobs Act of 2017.

Debt to Adjusted EBITDA leverage ratio






August 31, 2020



August 31, 2019


Total borrowings, excluding book overdraft


(a)


$

2,851,890



$

3,323,416


Less: cash and cash equivalents


(b)



1,452,273




262,279


Net debt


(c)=(a)-(b)


$

1,399,617



$

3,061,137


Trailing four quarters Adjusted EBITDA


(d)


$

1,160,281



$

1,177,889


Debt to Adjusted EBITDA leverage ratio


(e)=(a)/(d)



2.5




2.8


Net debt to Adjusted EBITDA leverage ratio


(f)=(c)/(d)



1.2




2.6


SYNNEX Corporation

Calculation of Financial Metrics

(currency in thousands)

(Amounts may not add or compute due to rounding)

(continued)

Cash Conversion Cycle






Three Months Ended






August 31, 2020



August 31, 2019


Days sales outstanding











Revenue (products and services)


(a)


$

6,464,782



$

6,203,659


Accounts receivable, net


(b)



3,580,970




3,452,976


Days sales outstanding


(c) = (b)/((a)/the number of
days during the period)



51




51













Days inventory outstanding











Cost of revenue (products and services)


(d)


$

5,756,690



$

5,477,669


Inventories


(e)



2,832,607




2,787,159


Days inventory outstanding


(f) = (e)/((d)/the number of
days during the period)



45




47













Days payable outstanding











Cost of revenue (products and services)


(g)


$

5,756,690



$

5,477,669


Accounts payable


(h)



3,655,215




2,932,046


Days payable outstanding


(i) = (h)/((g)/the number of
days during the period)



58




49













Cash conversion cycle


(j) = (c)+(f)-(i)



38




49


Cision
Cision

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SOURCE SYNNEX Corporation