SYNNEX Corporation Reports Third Quarter Fiscal 2018 Results
FREMONT, Calif., Oct. 3, 2018 /PRNewswire/ -- SYNNEX Corporation (NYSE: SNX), a leading business process services company, today announced financial results for the fiscal third quarter ended August 31, 2018.
Q3 FY18 | Q3 FY17 | Net change | |
Revenue ($M) | $4,907 | $4,277 | 14.7% |
Operating income ($M) | $116.9 | $122.2 | (4.4)% |
Non-GAAP operating income ($M)(1) | $162.7 | $139.9 | 16.2% |
Operating margin | 2.38% | 2.86% | (48) bps |
Non-GAAP operating margin(1) | 3.32% | 3.27% | 5 bps |
Net income ($M) | $69.3 | $75.2 | (7.8)% |
Non-GAAP net income ($M)(1) | $102.3 | $86.8 | 17.8% |
Diluted EPS | $1.74 | $1.87 | (7.0)% |
Non-GAAP Diluted EPS(1) | $2.57 | $2.16 | 19.0% |
(1) Non-GAAP financial measures exclude the impact of acquisition-related and integration expenses, the amortization of intangible assets together with the related tax effects thereon. A reconciliation of GAAP to Non-GAAP financial measures is presented in the supplementary information section at the end of this press release. |
"We saw continued momentum in both of our business segments that resulted in record third quarter performance," said Dennis Polk, President and Chief Executive Officer, SYNNEX Corporation. "Our focus on profitable growth and leveraging the strategic investments we've made in our business drove solid margin and earnings expansion."
"We are also excited about the expected close of the Convergys acquisition on October 5th. The talented and dedicated global associates of Convergys will significantly amplify Concentrix and our value proposition," Mr. Polk added. "We look forward to the growth and value that the combination of these two companies will create, and it will enhance our leadership position as a premier global customer engagement services company."
Third Quarter Fiscal 2018 Highlights:
- Technology Solutions: Revenue was $4.4 billion, up 17% from the prior fiscal year third quarter. Operating income was $105 million, or 2.4% of segment revenue, compared to $100 million, or 2.6% of segment revenue, in the prior fiscal year third quarter. Non-GAAP operating income was $120 million, or 2.7% of segment revenue, in the fiscal third quarter of 2018, compared to $101 million, or 2.7% of segment revenue, in the prior fiscal year third quarter.
- Concentrix: Revenue was $492 million, down 1% from the prior fiscal year third quarter. Operating income was $12 million, or 2.5% of segment revenue, compared to $22 million, or 4.5% of segment revenue in the prior fiscal year third quarter. Non-GAAP operating income was $43 million, or 8.7% of segment revenue, in the fiscal third quarter of 2018, compared to $39 million, or 7.8% of segment revenue, in the prior fiscal year third quarter.
- The trailing fiscal four quarters Return on Invested Capital ("ROIC") was 8.5% compared to 10.8% in the prior fiscal year third quarter. The adjusted trailing fiscal four quarters ROIC was 10.9%.
- The debt to capitalization ratio was 43.9%, up from 32.1% in the prior fiscal year third quarter, primarily as a result of the Westcon-Comstor Americas acquisition in the fiscal fourth quarter of 2017.
- Depreciation and amortization were $23 million and $26 million, respectively.
- Cash used in operations was approximately $103 million during the quarter.
Fourth Quarter Fiscal 2018 Outlook:
The following statements are based on SYNNEX's current expectations for the fiscal 2018 fourth quarter, including the impact of the planned Convergys acquisition. Non-GAAP financial measures exclude the amortization of intangibles, acquisition-related and integration expenses and the related tax effect thereon. These statements are forward-looking and actual results may differ materially.
- Revenue is expected to be in the range of $5.2 billion to $5.4 billion.
- Net income is expected to be in the range of $48.3 million to $57.9 million and on a Non-GAAP basis, net income is expected to be in the range of $136.8 million to $146.4 million.
- Diluted earnings per share is expected to be in the range of $1.02 to $1.23 and on a Non-GAAP basis, diluted earnings per share is expected to be in the range of $2.90 to $3.10.
- After-tax amortization of intangibles is expected to be $49.8 million, or $1.05 per share and after-tax acquisition-related and integration expenses are expected to be $38.7 million, $0.82 per share.
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 live audio webcast of the call will be available at https://ir.synnex.com. The conference call will also be available via telephone by dialing (866) 393-4306 in North America or (734) 385-2616 for international callers. The passcode for the call is "SNX." A replay of the webcast will be available at https://ir.synnex.com approximately two hours after the conference call has concluded where it will be archived for one year.
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 www.synnex.com.
About Concentrix
Concentrix, a wholly-owned subsidiary of SYNNEX Corporation (NYSE: SNX), is a leading business services company. We focus on customer engagement and improving business outcomes for over 450 global clients across many continents. Our 100,000+ staff deliver technology-infused, omni-channel customer experience management, marketing optimization, digital, consulting, analytics and back office solutions in 40+ languages from 125+ delivery centers. We serve automotive; banking and financial services; insurance; healthcare; technology; consumer electronics; media and communications; retail and ecommerce; travel and transportation; and energy and public sector clients. Visit http://www.concentrix.com to learn more.
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 2018, non-GAAP net income and non-GAAP diluted earnings per share also exclude the impact of a provisional adjustment relating to the enactment of the Tax Cuts and Jobs Act of 2017. This adjustment includes an estimated transition tax on accumulated overseas profits and the estimated remeasurement of deferred tax assets and liabilities to the new U.S. tax rate. These estimates may be impacted by new guidance issued by regulators, additional information obtained related to earnings and profits in foreign jurisdictions and the impact of our financial position as of the measurement date of November 30, 2018. SYNNEX expects the accounting for the tax effects of the Tax Cuts and Jobs Act will be completed during the one-year measurement period.
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 the Company's 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 operating income and equity.
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 the Company's consolidated financial statements prepared in accordance with GAAP. A reconciliation of SYNNEX' non-GAAP financial information to GAAP 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, which are not historical facts, are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may be identified by terms such as believe, foresee, expect, may, will, provide, could and should and the negative of these terms or other similar expressions. These statements, including statements regarding SYNNEX' expectations and outlook for the fiscal 2018 fourth quarter as to revenue, net income, non-GAAP net income, diluted earnings per share, non-GAAP diluted earnings per share, tax rate, after-tax amortization of intangibles, and after-tax acquisition-related and integration expenses, as well as statements regarding currency impact, the anticipated benefits of the non-GAAP financial measures, estimates related to the Tax Cuts and Jobs Act of 2017, as well as expectations relating to the accounting thereof, tax rate, expected close of the Convergys acquisition, and impact, including growth, leverage and other benefits, in connection with the planned Convergys acquisition, 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: general economic conditions and any weakness in information technology and consumer electronics spending; the timing of the close and estimated financial impact of the Convergys transaction, 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, 2017 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 2018 SYNNEX Corporation. All rights reserved. SYNNEX, the SYNNEX Logo, CONCENTRIX, and all other SYNNEX company, product and services names and slogans are trademarks or registered trademarks of SYNNEX Corporation. SYNNEX, the SYNNEX Logo, and CONCENTRIX Reg. U.S. Pat. & Tm. Off. Other names and marks are the property of their respective owners.
Investor Contact: Mary Lai Investor Relations SYNNEX Corporation [email protected] (510) 668-8436
SYNNEX Corporation | |||||||
Consolidated Balance Sheets | |||||||
(currency and share amounts in thousands, except for per share amounts) | |||||||
(Amounts may not add due to rounding) | |||||||
(unaudited) | |||||||
August 31, 2018 | November 30, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 203,988 | $ | 550,688 | |||
Restricted cash | 6,850 | 5,837 | |||||
Short-term investments | 3,321 | 5,475 | |||||
Accounts receivable, net | 2,951,011 | 2,846,371 | |||||
Receivable from related parties | 32 | 77 | |||||
Inventories | 2,040,103 | 2,162,626 | |||||
Other current assets | 199,891 | 168,704 | |||||
Total current assets | 5,405,197 | 5,739,778 | |||||
Property and equipment, net | 343,548 | 346,589 | |||||
Goodwill | 853,914 | 872,641 | |||||
Intangible assets, net | 497,013 | 583,051 | |||||
Deferred tax assets | 31,802 | 31,687 | |||||
Other assets | 126,829 | 124,780 | |||||
Total assets | $ | 7,258,302 | $ | 7,698,526 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Borrowings, current | $ | 732,272 | $ | 805,471 | |||
Accounts payable | 2,214,040 | 2,626,720 | |||||
Payable to related parties | 21,099 | 16,888 | |||||
Accrued compensation and benefits | 193,502 | 204,665 | |||||
Other accrued liabilities | 380,268 | 354,104 | |||||
Income taxes payable | 40,818 | 33,359 | |||||
Total current liabilities | 3,581,999 | 4,041,207 | |||||
Long-term borrowings | 1,090,654 | 1,136,089 | |||||
Other long-term liabilities | 170,414 | 124,008 | |||||
Deferred tax liabilities | 87,873 | 113,527 | |||||
Total liabilities | 4,930,940 | 5,414,831 | |||||
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, 41,193 and 41,092 shares issued as of August 31, 2018 and November 30, 2017, respectively | 41 | 41 | |||||
Additional paid-in capital | 488,538 | 467,948 | |||||
Treasury stock, 1,985 and 1,419 shares as of August 31, 2018 and November 30, 2017, respectively | (134,841) | (77,133) | |||||
Accumulated other comprehensive income (loss) | (126,721) | (61,919) | |||||
Retained earnings | 2,100,345 | 1,954,758 | |||||
Total stockholders' equity | 2,327,362 | 2,283,695 | |||||
Total liabilities and equity | $ | 7,258,302 | $ | 7,698,526 | |||
SYNNEX Corporation | |||||||||||||||
Consolidated Statements of Operations | |||||||||||||||
(currency and share amounts in thousands, except for per share amounts) | |||||||||||||||
(Amounts may not add due to rounding) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
August 31,2018 | August 31,2017 | August 31,2018 | August 31,2017 | ||||||||||||
Revenue: | |||||||||||||||
Products | $ | 4,419,097 | $ | 3,784,599 | $ | 12,954,255 | $ | 10,289,463 | |||||||
Services | 487,513 | 492,087 | 1,477,308 | 1,444,360 | |||||||||||
Total revenue | 4,906,610 | 4,276,686 | 14,431,562 | 11,733,823 | |||||||||||
Cost of revenue: | |||||||||||||||
Products | (4,165,118) | (3,590,007) | (12,228,350) | (9,736,190) | |||||||||||
Services | (308,322) | (311,735) | (926,998) | (908,661) | |||||||||||
Gross profit | 433,170 | 374,944 | 1,276,215 | 1,088,972 | |||||||||||
Selling, general and administrative expenses | (316,274) | (252,728) | (923,449) | (739,867) | |||||||||||
Operating income | 116,896 | 122,216 | 352,766 | 349,105 | |||||||||||
Interest expense and finance charges, net | (20,058) | (9,754) | (53,884) | (26,898) | |||||||||||
Other income (expense), net | (872) | 1,854 | (3,497) | 1,325 | |||||||||||
Income before income taxes | 95,966 | 114,316 | 295,385 | 323,532 | |||||||||||
Provision for income taxes | (26,675) | (39,153) | (107,968) | (113,432) | |||||||||||
Net income | $ | 69,291 | $ | 75,163 | $ | 187,417 | $ | 210,100 | |||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 1.75 | $ | 1.88 | $ | 4.70 | $ | 5.27 | |||||||
Diluted | $ | 1.74 | $ | 1.87 | $ | 4.67 | $ | 5.24 | |||||||
Weighted-average common shares outstanding: | |||||||||||||||
Basic | 39,254 | 39,563 | 39,483 | 39,530 | |||||||||||
Diluted | 39,475 | 39,748 | 39,730 | 39,722 | |||||||||||
Cash dividends declared per share | $ | 0.35 | $ | 0.25 | $ | 1.05 | $ | 0.75 | |||||||
SYNNEX Corporation | |||||||||||||||
Segment Information | |||||||||||||||
(currency in thousands) | |||||||||||||||
(Amounts may not add due to rounding) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
August 31,2018 | August 31,2017 | August 31,2018 | August 31,2017 | ||||||||||||
Revenue: | |||||||||||||||
Technology Solutions | $ | 4,419,109 | $ | 3,784,678 | $ | 12,954,337 | $ | 10,289,694 | |||||||
Concentrix | 491,882 | 495,974 | 1,490,865 | 1,455,817 | |||||||||||
Inter-segment elimination | (4,382) | (3,966) | (13,639) | (11,688) | |||||||||||
Consolidated | $ | 4,906,610 | $ | 4,276,686 | $ | 14,431,562 | $ | 11,733,823 | |||||||
Operating income: | |||||||||||||||
Technology Solutions | $ | 104,828 | $ | 99,968 | $ | 283,351 | $ | 282,094 | |||||||
Concentrix | 12,068 | 22,248 | 69,415 | 66,989 | |||||||||||
Inter-segment elimination | — | — | — | 22 | |||||||||||
Consolidated | $ | 116,896 | $ | 122,216 | $ | 352,766 | $ | 349,105 | |||||||
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 31,2018 | August 31,2017 | August 31,2018 | August 31,2017 | ||||||||||||
Revenue in Constant Currency | |||||||||||||||
Consolidated | |||||||||||||||
Revenue | $ | 4,906,610 | $ | 4,276,686 | $ | 14,431,562 | $ | 11,733,823 | |||||||
Foreign currency translation | 10,733 | (63,162) | |||||||||||||
Revenue in constant currency | $ | 4,917,343 | $ | 4,276,686 | $ | 14,368,400 | $ | 11,733,823 | |||||||
Technology Solutions | |||||||||||||||
Segment revenue | $ | 4,419,109 | $ | 3,784,678 | $ | 12,954,337 | $ | 10,289,694 | |||||||
Foreign currency translation | 5,704 | (45,554) | |||||||||||||
Revenue in constant currency | $ | 4,424,813 | $ | 3,784,678 | $ | 12,908,783 | $ | 10,289,694 | |||||||
Concentrix | |||||||||||||||
Segment revenue | $ | 491,882 | $ | 495,974 | $ | 1,490,865 | $ | 1,455,817 | |||||||
Foreign currency translation | 5,029 | (17,608) | |||||||||||||
Revenue in constant currency | $ | 496,911 | $ | 495,974 | $ | 1,473,257 | $ | 1,455,817 | |||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
August 31,2018 | August 31,2017 | August 31,2018 | August 31,2017 | ||||||||||||
Selling, general and administrative expenses | |||||||||||||||
Consolidated | |||||||||||||||
GAAP selling, general and administrative expenses | $ | 316,274 | $ | 252,728 | $ | 923,449 | $ | 739,867 | |||||||
Acquisition-related and integration expenses | 19,568 | 1,026 | 23,419 | 1,637 | |||||||||||
Amortization of intangibles | 25,777 | 16,268 | 77,882 | 47,984 | |||||||||||
Adjusted selling, general and administrative expenses | $ | 270,929 | $ | 235,434 | $ | 822,148 | $ | 690,246 | |||||||
Technology Solutions | |||||||||||||||
GAAP selling, general and administrative expenses | $ | 149,163 | $ | 94,702 | $ | 442,630 | $ | 271,407 | |||||||
Acquisition-related and integration expenses | 2,498 | 705 | 6,349 | 705 | |||||||||||
Amortization of intangibles | 12,524 | 656 | 37,802 | 1,961 | |||||||||||
Adjusted selling, general and administrative expenses | $ | 134,141 | $ | 93,341 | $ | 398,479 | $ | 268,741 | |||||||
Concentrix | |||||||||||||||
GAAP selling, general and administrative expenses | $ | 168,984 | $ | 159,728 | $ | 486,120 | $ | 474,132 | |||||||
Acquisition-related and integration expenses | 17,070 | 321 | 17,070 | 932 | |||||||||||
Amortization of intangibles | 13,253 | 15,612 | 40,080 | 46,023 | |||||||||||
Adjusted selling, general and administrative expenses | $ | 138,661 | $ | 143,795 | $ | 428,970 | $ | 427,177 | |||||||
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 31,2018 | August 31,2017 | August 31,2018 | August 31,2017 | ||||||||||||
Operating income and Operating margin | |||||||||||||||
Consolidated | |||||||||||||||
Revenue | $ | 4,906,610 | $ | 4,276,686 | $ | 14,431,562 | $ | 11,733,823 | |||||||
GAAP operating income | $ | 116,896 | $ | 122,216 | $ | 352,766 | $ | 349,105 | |||||||
Acquisition-related and integration expenses | 19,568 | 1,026 | 23,419 | 1,637 | |||||||||||
Amortization of intangibles | 26,197 | 16,688 | 79,183 | 49,244 | |||||||||||
Non-GAAP operating income | $ | 162,661 | $ | 139,930 | $ | 455,368 | $ | 399,986 | |||||||
Depreciation | 22,511 | 20,185 | 67,031 | 59,058 | |||||||||||
Adjusted EBITDA | $ | 185,172 | $ | 160,115 | $ | 522,399 | $ | 459,044 | |||||||
GAAP operating margin | 2.38 | % | 2.86 | % | 2.44 | % | 2.98 | % | |||||||
Non-GAAP operating margin | 3.32 | % | 3.27 | % | 3.16 | % | 3.41 | % | |||||||
Technology Solutions | |||||||||||||||
Segment revenue | $ | 4,419,109 | $ | 3,784,678 | $ | 12,954,337 | $ | 10,289,694 | |||||||
GAAP operating income | $ | 104,828 | $ | 99,968 | $ | 283,351 | $ | 282,094 | |||||||
Acquisition-related and integration expenses | 2,498 | 705 | 6,349 | 705 | |||||||||||
Amortization of intangibles | 12,524 | 656 | 37,802 | 1,961 | |||||||||||
Non-GAAP operating income | $ | 119,850 | $ | 101,329 | $ | 327,502 | $ | 284,760 | |||||||
Depreciation | 5,212 | 3,530 | 15,056 | 10,408 | |||||||||||
Adjusted EBITDA | $ | 125,062 | $ | 104,859 | $ | 342,558 | $ | 295,168 | |||||||
GAAP operating margin | 2.37 | % | 2.64 | % | 2.19 | % | 2.74 | % | |||||||
Non-GAAP operating margin | 2.71 | % | 2.68 | % | 2.53 | % | 2.77 | % | |||||||
Concentrix | |||||||||||||||
Segment revenue | $ | 491,882 | $ | 495,974 | $ | 1,490,865 | $ | 1,455,817 | |||||||
GAAP operating income | $ | 12,068 | $ | 22,248 | $ | 69,415 | $ | 66,989 | |||||||
Acquisition-related and integration expenses | 17,070 | 321 | 17,070 | 932 | |||||||||||
Amortization of intangibles | 13,673 | 16,032 | 41,381 | 47,283 | |||||||||||
Non-GAAP operating income | $ | 42,811 | $ | 38,601 | $ | 127,866 | $ | 115,204 | |||||||
Depreciation | 17,299 | 16,655 | 51,975 | 48,673 | |||||||||||
Adjusted EBITDA | $ | 60,110 | $ | 55,256 | $ | 179,841 | $ | 163,877 | |||||||
GAAP operating margin | 2.45 | % | 4.49 | % | 4.66 | % | 4.60 | % | |||||||
Non-GAAP operating margin | 8.70 | % | 7.78 | % | 8.58 | % | 7.91 | % | |||||||
SYNNEX Corporation | |||||||||||||||
Reconciliation of GAAP to Non-GAAP financial measures | |||||||||||||||
(currency and share amounts in thousands, except for per share amounts) | |||||||||||||||
(Amounts may not add due to rounding) | |||||||||||||||
(continued) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
August 31,2018 | August 31,2017 | August 31,2018 | August 31,2017 | ||||||||||||
Net income | |||||||||||||||
Net income | $ | 69,291 | $ | 75,163 | $ | 187,417 | $ | 210,100 | |||||||
Acquisition-related and integration expenses | 19,568 | 1,026 | 20,785 | 1,637 | |||||||||||
Amortization of intangibles | 26,197 | 16,688 | 79,183 | 49,244 | |||||||||||
Income taxes related to the above(1) | (12,798) | (6,064) | (28,181) | (17,839) | |||||||||||
U.S. tax reform adjustment | — | — | 24,701 | — | |||||||||||
Non-GAAP net income | $ | 102,258 | $ | 86,813 | $ | 283,905 | $ | 243,142 | |||||||
Diluted earnings per common share ("EPS")(2) | |||||||||||||||
Net income | $ | 69,291 | $ | 75,163 | $ | 187,417 | $ | 210,100 | |||||||
Less: net income allocated to participating securities | (665) | (686) | (1,741) | (1,943) | |||||||||||
Net income attributable to common stockholders | 68,626 | 74,477 | 185,676 | 208,157 | |||||||||||
Acquisition-related and integration expenses attributable to common stockholders | 19,381 | 1,017 | 20,593 | 1,622 | |||||||||||
Amortization of intangibles attributable to common stockholders | 25,947 | 16,535 | 78,450 | 48,787 | |||||||||||
Income taxes related to the above attributable to common stockholders(1) | (12,676) | (6,009) | (27,920) | (17,673) | |||||||||||
U.S. tax reform adjustment attributable to common stockholders | — | — | 24,472 | — | |||||||||||
Non-GAAP net income attributable to common stockholders | $ | 101,279 | $ | 86,020 | $ | 281,271 | $ | 240,893 | |||||||
Weighted-average number of common shares - diluted: | 39,475 | 39,748 | 39,730 | 39,722 | |||||||||||
Diluted EPS(2) | $ | 1.74 | $ | 1.87 | $ | 4.67 | $ | 5.24 | |||||||
Acquisition-related and integration expenses (benefit) | 0.49 | 0.03 | 0.52 | 0.04 | |||||||||||
Amortization of intangibles | 0.66 | 0.42 | 1.97 | 1.23 | |||||||||||
Income taxes related to the above(1) | (0.32) | (0.15) | (0.70) | (0.44) | |||||||||||
U.S. tax reform adjustment | — | — | 0.62 | — | |||||||||||
Non-GAAP Diluted EPS | $ | 2.57 | $ | 2.16 | $ | 7.08 | $ | 6.06 | |||||||
SYNNEX Corporation | |||||||
Reconciliation of GAAP to Non-GAAP financial measures | |||||||
(amounts in millions, except for per share amounts) | |||||||
(Amounts may not add due to rounding) | |||||||
(continued) | |||||||
Forecast | |||||||
Three Months Ending November 30, 2018 | |||||||
Low | High | ||||||
Net income | |||||||
Net income | $ | 48.3 | $ | 57.9 | |||
Acquisition-related and integration expenses | 52.2 | 52.2 | |||||
Amortization of intangibles | 66.1 | 66.1 | |||||
Income taxes related to the above(1) | (29.8) | (29.8) | |||||
Non-GAAP net income | $ | 136.8 | $ | 146.4 | |||
Diluted EPS(2) | $ | 1.02 | $ | 1.23 | |||
Acquisition-related and integration expenses | 1.11 | 1.11 | |||||
Amortization of intangibles | 1.40 | 1.40 | |||||
Income taxes related to the above(1) | (0.63) | (0.63) | |||||
Non-GAAP Diluted EPS | $ | 2.90 | $ | 3.10 | |||
(1) The tax effect of the non-GAAP adjustments was calculated using the effective year-to date tax rate during the respective fiscal years, except for acquisition-related and integration expenses and amortization of intangibles for the three months ending November 30, 2018, which was calculated by estimating the tax deductible portion of these expenses and applying the entity-specific tax rates. The effective tax rate for fiscal year 2018 excludes the impact of the transition tax on accumulated overseas profits and the remeasurement of deferred tax assets and liabilities to the new U.S. tax rate related to the enactment of the Tax Cuts and Jobs Act of 2017. |
(2) Diluted EPS for all periods presented is calculated using the two-class method. Unvested restricted stock awards granted to employees are considered participating securities. For purposes of calculating Diluted EPS, Net income allocated to participating securities was approximately 1.0% and 0.9% of Net income for the three and nine months ended August 31, 2018, respectively and approximately 0.9% of Net income for both the three and nine months ended August 31, 2017. Net income allocable to participating securities is estimated to be approximately 0.8% of the forecast Net income for the three months ending November 30, 2018. |
SYNNEX Corporation | |||||||
Calculation of Financial Metrics | |||||||
(currency in thousands) | |||||||
(Amounts may not add or compute due to rounding) | |||||||
ROIC | |||||||
August 31, 2018 | August 31, 2017 | ||||||
ROIC | |||||||
Operating income (trailing fiscal four quarters) | $ | 512,626 | $ | 479,745 | |||
Income taxes on operating income(1) | (185,645) | (162,241) | |||||
Operating income after taxes | 326,981 | 317,504 | |||||
Total borrowings, excluding book overdraft (last five quarters average) | $ | 1,684,413 | $ | 982,084 | |||
Total equity (last five quarters average) | 2,290,968 | 2,054,776 | |||||
Less: U.S. cash and cash equivalents (last five quarters average) | (114,037) | (85,189) | |||||
Total invested capital | 3,861,344 | 2,951,671 | |||||
ROIC | 8.5 | % | 10.8 | % | |||
Adjusted ROIC | |||||||
Non-GAAP operating income (trailing fiscal four quarters) | $ | 648,309 | $ | 556,071 | |||
Income taxes on Non-GAAP operating income(1) | (196,784) | (187,841) | |||||
Non-GAAP operating income after taxes | 451,525 | 368,230 | |||||
Total invested capital | $ | 3,861,344 | $ | 2,951,671 | |||
Tax effected impact of cumulative non-GAAP adjustments (last five quarters average) | 279,106 | 194,195 | |||||
Total Non-GAAP invested capital | 4,140,450 | 3,145,866 | |||||
Adjusted ROIC | 10.9 | % | 11.7 | % | |||
(1) Income taxes on GAAP and non-GAAP operating income was calculated using the effective year-to-date tax rates during the respective periods. The effective tax rate for non-GAAP operating income in fiscal year 2018 excludes the impact of the transition tax on accumulated overseas profits and the remeasurement of deferred tax assets and liabilities to the new U.S. tax rate related to the enactment of the Tax Cuts and Jobs Act of 2017. |
Debt to Capitalization | ||||||||
August 31, 2018 | August 31, 2017 | |||||||
Total borrowings, excluding book overdraft | (a) | $ | 1,821,617 | $ | 1,049,605 | |||
Total equity | (b) | 2,327,362 | 2,216,871 | |||||
Debt to capitalization | (a)/((a)+(b)) | 43.9 | % | 32.1 | % | |||
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, 2018 | August 31, 2017 | |||||||
Days sales outstanding | ||||||||
Revenue (products and services) | (a) | $ | 4,906,610 | $ | 4,276,686 | |||
Accounts receivable, including receivable from related parties | (b) | 2,951,043 | 1,861,481 | |||||
Days sales outstanding | (c) = (b)/((a)/the numberof days during the period) | 55 | 40 | |||||
Days inventory outstanding | ||||||||
Cost of revenue (products and services) | (d) | $ | 4,473,440 | $ | 3,901,742 | |||
Inventories | (e) | 2,040,103 | 2,242,083 | |||||
Days inventory outstanding | (f) = (e)/((d)/the numberof days during the period) | 42 | 53 | |||||
Days payable outstanding | ||||||||
Cost of revenue (products and services) | (g) | $ | 4,473,440 | $ | 3,901,742 | |||
Accounts payable, including payable to related parties | (h) | 2,235,139 | 1,804,110 | |||||
Days payable outstanding | (i) = (h)/((g)/the numberof days during the period) | 46 | 43 | |||||
Cash conversion cycle | (j) = (c)+(f)-(i) | 51 | 50 | |||||
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SOURCE SYNNEX Corporation