SYNNEX Corporation Reports Fiscal 2012 Fourth Quarter and Year-End Results

SYNNEX Corporation Reports Fiscal 2012 Fourth Quarter and Year-End Results

Strong Earnings, Exceptional Distribution Execution and 21% GBS Organic Growth

FREMONT, Calif.--(BUSINESS WIRE)-- SYNNEX Corporation (NYS: SNX) , a leading business process services company, today announced financial results for the fiscal fourth quarter and year ended November 30, 2012.

Q4 FY12

Q4 FY11

Net Change

Revenue ($M)

$2,765

$2,841

-2.7%

Operating income ($M)

$74.7

$84.7

-11.9%

Operating margin

2.70%

2.98%

-28bp

Net income attributable to SYNNEX Corporation ($M)

$43.6

$50.2

-13.0%

Diluted EPS

$1.16

$1.37

-15.3%


"I am pleased to report solid quarterly earnings even as compared to the prior year's exceptional profits from the hard disk drive shortage. Strong operational execution within the core Distribution Segment aligned well with rapid expansion into adjacent, higher margin service and solution businesses," stated Kevin Murai, President and Chief Executive Officer, "Also our GBS Segment's organic revenue growth continues to accelerate driven by continued investment and increasing momentum in our rapidly growing Concentrix business."

Fiscal 2012 Fourth Quarter Highlights:

  • Distribution: Revenue was $2.72 billion, down 3% from the prior fiscal year quarter, due in part to a previously reported customer business transition starting within Q4 2011 from gross revenue to net fee for services, resulting in lower reported revenue in Q4 2012. Distribution income before non-operating items, income taxes and noncontrolling interest was $70.4 million, or 2.59% of distribution revenue compared with $81.1 million, or 2.89% in the prior fiscal year quarter. As previously reported, the fiscal 2011 fourth quarter included a very significant gross margin benefit resulting from shortages of hard disk drives.

  • Global Business Services (GBS): Revenue grew to $54.9 million, an increase of 22.2% over the prior fiscal year quarter. GBS income before non-operating items, income taxes and noncontrolling interest was $4.3 million, or 7.89% of GBS revenue compared with $3.6 million, or 8.11% in the prior fiscal year quarter.

  • The trailing four quarters ROIC was 10.5% for the fiscal fourth quarter of 2012, compared to 11.1% in the prior year fiscal fourth quarter.

  • The cash conversion cycle was 40 days compared to 39 days in the prior fiscal year quarter.

  • The debt to capitalization ratio was 17%.

  • Depreciation and amortization were $3.9 and $2.1 million, respectively.

Fiscal Year 2012 Highlights:

FY12(1)

FY11(2)

Net Change

Revenue ($M)

$10,286

$10,410

-1.2%

Operating income ($M)

$255.0

$256.2

-0.5%

Operating margin

2.48%

2.46%

2 bp

Net income attributable to SYNNEX Corporation ($M)

$151.4

$150.3

0.7%

Diluted EPS

$3.99

$4.08

-2.2%

(1) FY 2012 includes a $0.7 million credit adjustment to SG&A for contingent M&A consideration.

(2) FY 2011 includes a $5.4 million credit adjustment to SG&A for contingent M&A consideration.

  • Distribution: Revenue from continuing operations was $10.12 billion, a decrease of 1.5% over the prior fiscal year. Distribution income from continuing operations before non-operating items, income taxes and noncontrolling interest was $241.8 million, or 2.39% of distribution revenue compared with $237.3 million, or 2.31% in the prior fiscal year. Fiscal year 2012 results include certain customer business which transitioned year-over-year from a gross revenue business to a net fee for service logistics relationship starting within the fiscal fourth quarter of 2011.

  • Global Business Services (GBS): Revenue from continuing operations was $197.4 million, an increase of 20.8% over the prior fiscal year. GBS income from continuing operations before non-operating items, income taxes and noncontrolling interest was $13.5 million, or 6.83% of GBS revenue compared with $18.9 million, or 11.57% in the prior fiscal year. FY 2012 includes a $0.7 million credit adjustment to SG&A for contingent M&A consideration compared to a $5.4 million credit adjustment in FY 2011.

  • SYNNEX consolidated depreciation and amortization were $16.3 million and $8.3 million, respectively.

Fiscal 2013 First Quarter Outlook:

The following statements are based on the Company's current expectations for the fiscal 2013 first quarter. These statements are forward-looking and actual results may differ materially.

  • Revenue is expected to be in the range of $2.38 billion to $2.48 billion.

  • Net income is expected to be in the range of $32.2 million to $33.4 million.

  • Diluted earnings per share are expected to be in the range of $0.85 to $0.89.

Conference Call and Webcast

SYNNEX will be discussing its financial results and outlook on a conference call today at 2:00 p.m. (PT). A webcast of the call will be available at http://ir.synnex.com. The conference call will also be available via telephone by dialing (888) 469-3219 in North America or (630) 395-0205 outside North America. The passcode code for the call is "SNX." A replay of the webcast will be available at http://ir.synnex.com approximately two hours after the conference call has concluded.

About SYNNEX

SYNNEX Corporation (NYS: SNX) , a Fortune 500 corporation, is a leading business process services company, servicing resellers, retailers and original equipment manufacturers in multiple regions around the world. The Company provides services in IT distribution, supply chain management, contract assembly and business process outsourcing. Founded in 1980, SYNNEX employs approximately 11,000 full-time and part-time associates worldwide. Additional information about SYNNEX may be found online at www.synnex.com.

Safe Harbor Statement

Statements in this press release regarding SYNNEX Corporation, which are not historical facts, are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may be identified by terms such as believe, expect, may, will, provide, could and should and the negative of these terms or other similar expressions. These statements, including statements regarding the demand environment, growth in profitability, expansion into higher margin service and solution businesses, extent of investment in our GBS segment, transition of customers from gross revenue to net fee for service, and our revenue, operating margins, net income and earnings per share, are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements. These risks and uncertainties include, but are not limited to: our ability to successfully integrate our recent acquisitions; diversion of management as a result of our recent acquisitions; loss of vendors and suppliers as a result of our recent acquisitions; market acceptance and product life of the platforms sold by companies recently acquired; general economic conditions and any weakness in IT and consumer electronics spending; the loss or consolidation of one or more of our significant OEM suppliers or customers; market acceptance and product life of the products we assemble and distribute; competitive conditions in our industry and their impact on our margins; pricing, margin and other terms with our OEM suppliers; our ability to gain market share; variations in supplier-sponsored programs; changes in our costs and operating expenses; changes in foreign currency exchange rates; changes in the tax laws; risks associated with our international operations; uncertainties and variability in demand by our reseller and contract assembly customers; supply shortages or delays; any termination or reduction in our floor plan financing arrangements; credit exposure to our reseller customers, and negative trends in their businesses; any future incidents of theft; risks associated with our business process outsourcing and contract assembly business; risks associated with our anti-dilution share repurchase program; and other risks and uncertainties detailed in our Form 10-Q for the fiscal quarter ended August 31, 2012 and from time to time in our 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 2013 SYNNEX Corporation. All rights reserved. SYNNEX, the SYNNEX Logo, CONCENTRIX and all other SYNNEX company, product and services names and slogans are trademarks or registered trademarks of SYNNEX Corporation. SYNNEX, the SYNNEX Logo and CONCENTRIX Reg. U.S. Pat. & Tm. Off. Other names and marks are the property of their respective owners.

SNX-F

SYNNEX Corporation

Consolidated Balance Sheets

(currency in thousands)

(unaudited)

November 30,

November 30,

2012

2011

ASSETS

Current assets:

Cash and cash equivalents

$

163,699

$

67,571

Short-term investments

15,933

16,017

Accounts receivable, net

1,401,087

1,293,027

Receivable from affiliates

285

1,344

Inventories

923,340

975,047

Current deferred tax assets

23,390

28,241

Other current assets

52,727

57,168

Total current assets

2,580,461

2,438,415

Property and equipment, net

122,923

125,157

Goodwill

189,088

185,312

Intangible assets, net

29,049

37,539

Deferred tax assets

619

590

Other assets

41,122

46,282

Total assets

$

2,963,262

$

2,833,295

LIABILITIES AND EQUITY

Current liabilities:

Borrowings under securitization, term loans and lines of credit

$

52,698

$

159,200

Convertible debt

141,436

-

Accounts payable

1,111,833

1,035,691

Accrued liabilities

181,270

172,226

Income taxes payable

7,470

5,136

Total current liabilities

1,494,707

1,372,253

Long-term borrowings

81,152

87,659

Convertible debt

-

136,163

Long-term liabilities

58,783

60,676

Deferred tax liabilities

9,265

8,086

Total liabilities

1,643,907

1,664,837

SYNNEX Corporation stockholders' equity:

Preferred stock

-

-

Common stock

37

37

Additional paid-in capital

324,292

310,316

Treasury stock

(21,611

)

(11,524

)

Accumulated other comprehensive income

35,405

30,026

Retained earnings

980,900

829,524

Total SYNNEX Corporation stockholders' equity

1,319,023

1,158,379

Noncontrolling interest

332

10,079

Total equity

1,319,355

1,168,458

Total liabilities and equity

$

2,963,262

$

2,833,295

SYNNEX Corporation

Consolidated Statements of Operations

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

(unaudited)

Three Months Ended

Fiscal Year Ended

November 30, 2012

November 30, 2011

November 30, 2012

November 30, 2011

Revenue

$

2,765,066

$

2,840,971

$

10,285,507

$

10,409,840

Cost of revenue

(2,585,966

)

(2,653,130

)

(9,628,770

)

(9,779,342

)

Gross profit

179,100

187,841

656,737

630,498

Selling, general and administrative expenses

(104,448

)

(103,144

)

(401,725

)

(374,270

)

Income before non-operating items, income taxes and noncontrolling interest

74,652

84,697

255,012

256,228

Interest expense and finance charges, net

(5,567

)

(6,595

)

(22,930

)

(25,505

)

Other income (expense), net

1,864

(936

)

4,471

(1,005

)

Income before income taxes and noncontrolling interest

70,949

77,166

236,553

229,718

Provision for income taxes

(27,256

)

(26,964

)

(84,050

)

(79,165

)

Net income

43,693

50,202

152,503

150,553

Net income attributable to noncontrolling interest

(53

)

(29

)

(1,127

)

(222

)

Net income attributable to SYNNEX Corporation

$

43,640

$

50,173

$

151,376

$

150,331

Net income per share attributable to SYNNEX Corporation:

Basic

$

1.19

$

1.39