PR Newswire | Mar 22, 2021 07:55AM EDT

03/22 06:54 CDT

SYNNEX Corporation Reports First Quarter Fiscal 2021 Results FREMONT, Calif., March 22, 2021

FREMONT, Calif., March 22, 2021 /PRNewswire/ -- SYNNEX Corporation (NYSE: SNX), a leading provider of distribution, systems design, and integration services for the technology industry, today announced financial results for the fiscal first quarter ended February 28, 2021.

Q1 FY21 Q1 FY20 Net change

Revenue ($M) $ 4,939 $ 4,081 21.0%

Operating income ($M) $ 141.7 $ 100.4 41.1%

Non-GAAP operating income ($M)^(1) $ 156.0 $ 115.5 35.0%

Operating margin 2.87 % 2.46 % 41 bps

Non-GAAP operating margin^(1) 3.16 % 2.83 % 33 bps

Income from continuing operations $ 87.8 $ 68.5 28.2%

Non-GAAP Income from continuing operations^(1) $ 98.6 $ 73.6 33.9%

Diluted earnings per common share ("EPS") from continuing $ 1.69 $ 1.32 28.0%operations

Non-GAAP Diluted EPS from continuing operations^(1) $ 1.89 $ 1.42 33.1%

"Our strong momentum continued in Q1, driven by solid demand for technology products and services, as our customers continued to support users everywhere to connect, collaborate and increase productivity," said Dennis Polk, President and CEO of SYNNEX. "We are encouraged by the IT spending environment so far in 2021, led by the ongoing acceleration of digital transformation across industries and continued investment in remote enablement."

Fiscal 2021 First Quarter Highlights

* Revenue was $4.9 billion, up 21.0% from the prior fiscal first quarter. Operating income was $142 million, compared to $100 million, in the prior fiscal first quarter. Non-GAAP operating income was $156 million, in fiscal year first quarter 2021, compared to $116 million, in the prior fiscal first quarter. * The trailing fiscal first quarter Return on Invested Capital ("ROIC") was 14.9% compared to 12.0% in the prior fiscal year first quarter. The adjusted trailing fiscal four quarters ROIC was 15.9%. * Cash generated from operations was approximately $25 million for the quarter. * Post Separation, prior period financial results of Concentrix are presented as discontinued operations.

Second Quarter Fiscal 2021 OutlookThe following statements are based on SYNNEX' current expectations for the fiscal 2021 second quarter. Non-GAAP financial measures exclude the impact of the amortization of intangible assets, share-based compensation, 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 $4.70 billion to $5.00 billion. * Net income is expected to be in the range of $82.9 million to $92.9 million and on a non-GAAP basis, net income is expected to be in the range of $94.9 million to $105.0 million. * Diluted earnings per share is expected to be in the range of $1.58 to $1.77 and on a non-GAAP basis, diluted earnings per share is expected to be in the range of $1.80 to $2.00, based on estimated outstanding diluted weighted average shares of 51.8 million. * After-tax amortization of intangibles is expected to be $7.3 million, or $0.14 per share. * After-tax share-based compensation expense is expected to be $4.8 million, or $0.09 per share.

DividendSYNNEX announced today that its Board of Directors declared a quarterly cash dividend of $0.20 per common share. The dividend is payable on April 30, 2021 to stockholders of record as of the close of business on April 16, 2021.

Conference Call and WebcastSYNNEX will host a conference call to discuss the fiscal 2021 first quarter results today at 5:30 AM (PT)/8:30 AM (ET).

A 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 SYNNEXSYNNEX Corporation (NYSE: SNX) is a Fortune 200 corporation and a leading provider of a comprehensive range of distribution, systems design and integration services for the technology industry to a wide range of enterprises. 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.

(1)Use of Non-GAAP Financial InformationIn 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 income from continuing operations income, non-GAAP net income, and non-GAAP diluted earnings per share, which are non-GAAP financial measures that exclude transaction-related and integration expenses, the amortization of intangible assets, share-based compensation expense 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, transaction-related and integration expenses, and income from discontinued operations. In prior periods, SYNNEX has excluded other items relevant to those periods for purposes of its non-GAAP financial measures.

Transaction-related expenses typically consist of acquisition, integration, and divestiture related costs and are expensed as incurred. These expenses primarily represent costs for legal, banking, consulting and advisory services, and debt extinguishment fees. From time to time, this category may also include transaction-related gains/losses on divestitures/spin-off of businesses.

SYNNEX' acquisition activities have resulted in the recognition of intangible assets which consist primarily of customer relationships and vendor lists. 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. 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.

Share-based compensation expense is a non-cash expense arising from the grant of equity awards to employees based on the estimated fair value of those awards. Although share-based compensation is an important aspect of the compensation of our employees, the fair value of the share-based awards may bear little resemblance to the actual value realized upon the vesting or future exercise of the related share-based awards and the expense can vary significantly between periods as a result of the timing of grants of new stock-based awards, including grants in connection with acquisitions. Given the variety and timing of awards and the subjective assumptions that companies can use when calculating share-based compensation expense, SYNNEX believes this additional information allows investors to make additional comparisons between our operating results from period to period.

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 surplus cash. Adjusted ROIC is calculated by excluding the tax effected impact of non-GAAP adjustments from operating income and by excluding the cumulative tax effected impact of current and prior period non-GAAP adjustments 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 an additional useful 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 tables at the end of this press release.

Safe Harbor StatementStatements 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; our expectations and outlook for the fiscal 2021 second 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, and after-tax share-based compensation; 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 unfavorable outcome of any legal proceedings that have been or may be instituted against us; the ability to retain key personnel; 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; the declaration, timing and payment of dividends, and the Board's reassessment thereof; and other risks and uncertainties detailed in our Form 10-K for the fiscal year ended November 30, 2020 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 2021 SYNNEX Corporation. All rights reserved. SYNNEX, the SYNNEX Logo, and all other SYNNEX company, product and services names and slogans are trademarks or registered trademarks of SYNNEX Corporation. SYNNEX and the SYNNEX Logo Reg. U.S. Pat. & Tm. Off. Other names and marks are the property of their respective owners.

Investor ContactLiz Moraliir@synnex.com510-668-8436

SYNNEX Corporation

Consolidated Balance Sheets

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

(Amounts may not add due to rounding)

(unaudited)

February 28, 2021 November 30, 2020

ASSETS

Current assets:

Cash and cash equivalents $ 1,443,748 $ 1,412,016

Accounts receivable, net 2,381,064 2,791,703

Receivables from vendors, net 261,982 286,327

Inventories 2,556,716 2,684,076

Other current assets 161,101 173,940

Current assets of discontinued - 1,421,065operations

Total current assets 6,804,611 8,769,127

Property and equipment, net 155,869 157,645

Goodwill 423,989 423,885

Intangible assets, net 176,554 186,047

Deferred tax assets 36,303 39,636

Other assets, net 128,707 138,070

Noncurrent assets of discontinued - 3,754,180operations

Total assets $ 7,726,033 $ 13,468,590

LIABILITIES AND EQUITY

Current liabilities:

Borrowings, current $ 135,804 $ 124,958

Accounts payable 3,116,095 3,751,240

Accrued compensation and benefits 75,021 103,075

Other accrued liabilities 579,316 618,616

Income taxes payable 62,073 46,363

Current liabilities of discontinued - 985,840operations

Total current liabilities 3,968,308 5,630,092

Long-term borrowings 1,496,970 1,496,700

Other long-term liabilities 124,341 130,296

Deferred tax liabilities 7,116 5,836

Noncurrent liabilities of discontinued - 1,866,807operations

Total liabilities 5,596,735 9,129,730

Stockholders' equity:

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

Common stock, $0.001 par value, 100,000shares authorized, 53,701 and 53,671 54 54shares issued as of February 28, 2021and November 30, 2020, respectively

Additional paid-in capital 1,596,598 1,591,536

Treasury stock, 2,547 and 2,538 sharesas of February 28, 2021 and November (192,010) (191,216)30, 2020, respectively

Accumulated other comprehensive income (179,973) (194,571)(loss)

Retained earnings 904,629 3,133,058

Total stockholders' equity 2,129,298 4,338,860

Total liabilities and equity $ 7,726,033 $ 13,468,590

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

February 28, 2021 February 29, 2020

Revenue $ 4,939,014 $ 4,081,024

Cost of revenue (4,634,447) (3,825,920)

Gross profit 304,567 255,105

Selling, general and administrative (162,820) (154,660)expenses

Operating income 141,748 100,445

Interest expense and finance charges, (22,838) (18,792)net

Other expense, net (1,333) (855)

Income from continuing operations 117,576 80,798before income taxes

Provision for income taxes (29,754) (12,284)

Income from continuing operations 87,822 68,514

Income from discontinued operations, - 54,070net of taxes

Net income $ 87,822 $ 122,584

Earnings per common share:

Basic

Continuing operations $ 1.70 $ 1.33

Discontinued operations - 1.05

Net income $ 1.70 $ 2.38

Diluted

Continuing operations $ 1.69 $ 1.32

Discontinued operations - 1.04

Net income $ 1.69 $ 2.36

Weighted-average common sharesoutstanding:

Basic 51,145 50,815

Diluted 51,563 51,232

SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(currency in thousands)

(Amounts may not add due to rounding)

Three Months Ended

February 28, 2021 February 29, 2020

Revenue in constant currency

Revenue $ 4,939,014 $ 4,081,024

Foreign currency translation (15,256)

Revenue in constant currency $ 4,923,758 $ 4,081,024

Three Months Ended

February 28, 2021 February 29, 2020

Selling, general and administrativeexpenses

GAAP selling, general and $ 162,820 $ 154,660administrative expenses

Transaction-related and integration - 291expenses

Amortization of intangibles 9,369 10,188

Share-based compensation 4,887 4,599

Adjusted selling, general and $ 148,564 $ 139,582administrative expenses

Three Months Ended

February 28, 2021 February 29, 2020

Operating income and operating margin

Revenue $ 4,939,014 $ 4,081,024

GAAP operating income $ 141,748 $ 100,445

Transaction-related and integration - 291expenses

Amortization of intangibles 9,369 10,188

Share-based compensation 4,887 4,599

Non-GAAP operating income $ 156,004 $ 115,523

GAAP operating margin 2.87 % 2.46 %

Non-GAAP operating margin 3.16 % 2.83 %

Three Months Ended

February 28, 2021 February 29, 2020

Adjusted EBITDA

Net income $ 87,822 $ 122,584

Interest expense and finance charges, 22,838 18,792net

Provision for income taxes 29,754 12,284

Depreciation 5,499 5,876

Amortization of intangibles 9,369 10,188

EBITDA $ 155,282 $ 169,724

Other (income) expense, net 1,333 855

Transaction-related and integration - 291expenses

Share-based compensation 4,887 4,599

Income from discontinued operations - (54,070)

Adjusted EBITDA $ 161,502 $ 121,399

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

February 28, 2021 February 29, 2020

Income from continuing operations

Income from continuing operations $ 87,822 $ 68,514

Transaction-related and integration - 291expenses

Amortization of intangibles 9,369 10,188

Share-based compensation 4,887 4,599

Income taxes related to the above^(1) (3,525) (10,009)

Non-GAAP income from continuing $ 98,553 $ 73,583operations

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

Income from continuing operations $ 87,822 $ 68,514

Less: income from continuing operations 882 869allocated to participating securities

Income from continuing operations 86,940 67,645attributable to common stockholders

Transaction-related and integrationexpenses attributable to common - 288stockholders

Amortization of intangibles 9,273 10,073attributable to common stockholders

Share-based compensation 4,837 4,547

Income taxes related to the above (3,489) (9,896)attributable to common stockholders^(1)

Non-GAAP income from continuingoperations attributable to common $ 97,561 $ 72,657stockholders

Weighted-average number of common 51,563 51,232shares - diluted:

Diluted EPS from continuing operations^ $ 1.69 $ 1.32(2)

Transaction-related and integration - 0.01expenses

Amortization of intangibles 0.18 0.20

Share-based compensation 0.09 0.09

Income taxes related to the above^(1) (0.07) (0.19)

Non-GAAP diluted EPS from continuing $ 1.89 $ 1.42operations^(2)

Three Months Ended

February 28, 2021 February 29, 2020

Free cash flow

Net cash provided by operating $ 24,977 $ 2,555activities [Continuing operations]

Purchases of property and equipment (4,253) (8,012)[Continuing operations]

Free cash flow [Continuing operations] $ 20,724 $ (5,457)

SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(currency in millions, except per share amounts)

(Amounts may not add due to rounding)

(continued)

Forecast

Three Months Ending May 31, 2021

Low High

Net income $ 82.9 $ 92.9

Amortization of intangibles 9.7 9.7

Share-based compensation 6.4 6.4

Income taxes related to the above^(1) (4.0) (4.0)

Non-GAAP net income $ 94.9 $ 105.0

Diluted EPS^(2) $ 1.58 $ 1.77

Amortization of intangibles 0.18 0.18

Share-based compensation 0.12 0.12

Income taxes related to the above^(1) (0.08) (0.08)

Non-GAAP diluted EPS $ 1.80 $ 2.00

^(1) The tax effect of taxable and deductible non-GAAP adjustments wascalculated using the effective year-to-date tax rate during the respectiveperiods.

^(2) Diluted EPS is calculated using the two-class method. Unvested restrictedstock awards granted to employees are considered participating securities. Forpurposes of calculating Diluted EPS, income from continuing operationsallocated to participating securities was approximately 1.0% and 1.3% of incomefrom continuing operations for the three months ended February 28, 2021 andFebruary 29, 2020, respectively. Net income allocable to participatingsecurities is estimated to be approximately 1.2% of the forecast Net income forthe three months ending May 31, 2021.

SYNNEX Corporation

Calculation of Financial Metrics

(currency in thousands)

(Amounts may not add or compute due to rounding)

Return on Invested Capital ("ROIC")

February 28, 2021 February 29, 2020

ROIC

Operating income (trailing fiscal $ 562,645 $ 518,502four quarters)

Income taxes on operating income^(1) (137,259) (101,452)

Operating income after taxes $ 425,386 $ 417,050

Total invested capital comprisingequity and borrowings, less surplus $ 2,854,262 $ 3,477,429cash (last five quarters average)^(2)

ROIC 14.9 % 12.0 %

Adjusted ROIC

Non-GAAP operating income (trailing $ 627,016 $ 567,110fiscal four quarters)

Income taxes on Non-GAAP operating (151,129) (121,307)income^(1)

Non-GAAP operating income after taxes $ 475,887 $ 445,803

Total invested capital comprisingequity and borrowings, less surplus $ 2,854,262 $ 3,477,429cash (last five quarters average)^(2)

Tax effected impact of cumulativenon-GAAP adjustments (last five 139,978 104,360

quarters average)

Total Non-GAAP invested capital (last $ 2,994,240 $ 3,581,789five quarters average)^(2)

Adjusted ROIC 15.9 % 12.4 %

^(1) Income taxes on GAAP operating income was calculated using the effectiveyear-to-date tax rates during the respective periods. Income taxes on non-GAAPoperating income was calculated by excluding the tax effect of taxable anddeductible non-GAAP adjustments using the effective year-to-date tax rateduring the respective periods.

^(2) Invested capital for the fiscal quarters preceding the quarter endedFebruary 28, 2021 are based on pro forma presentation to reflect the separationof the Company's erstwhile Concentrix reportable segment into an independentpublic company on December 1, 2020.

Debt to Adjusted EBITDA leverage ratio

February 28, 2021 February 29, 2020

Total borrowings, excluding book overdraft^(1) (a) $ 1,631,721 $ 1,648,255

Less: cash and cash equivalents^(1) (b) 1,443,748 207,586

Net debt (c)=(a)-(b) $ 187,973 $ 1,440,669

Trailing four quarters Adjusted EBITDA (d) $ 651,560 $ 603,240

Debt to Adjusted EBITDA leverage ratio (e)=(a)/(d) 2.5 2.7

Net debt to Adjusted EBITDA leverage ratio (f)=(c)/(d) 0.3 2.4

^(1) Borrowings and cash and cash equivalents as of February 29, 2020 are basedon pro forma presentation to reflect the separation of the Company's erstwhileConcentrix reportable segment into an independent public company on December 1,2020.

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

February 28, 2021 February 29, 2020

Days sales outstanding

Revenue (a) $ 4,939,014 $ 4,081,024

Accounts receivable, net^(1) (b) 2,381,064 2,325,468

Days sales outstanding (c) = (b)/((a)/the number 43 52 of days during the period)

Days inventory outstanding

Cost of revenue (d) $ 4,634,447 $ 3,825,920

Inventories^(1) (e) 2,556,716 2,710,251

Days inventory outstanding (f) = (e)/((d)/the number 50 64 of days during the period)

Days payable outstanding

Cost of revenue (g) $ 4,634,447 $ 3,825,920

Accounts payable^(1) (h) 3,116,095 2,483,636

Days payable outstanding (i) = (h)/((g)/the number 61 59 of days during the period)

Cash conversion cycle (j) = (c)+(f)-(i) 32 57

^(1) Accounts receivable, inventories and accounts payable as of February 29,2020 are based on pro forma presentation to reflect the separation of theCompany's erstwhile Concentrix reportable segment into an independent publiccompany on December 1, 2020.

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SOURCE SYNNEX Corporation