SYNNEX Corporation Reports Second Quarter Fiscal 2019 Results

Posted Wednesday, June 26, 2019 9:15 am

Kathleen Maris

SYNNEX Corporation, a leading business process services company, announced financial results for the fiscal second quarter ended May 31, 2019.

	Q2 FY19		Q2 FY18		Net change
Revenue ($M)	$	5,723	$	4,908	16.6%
Operating income ($M)	$	174.7	$	124.0	40.8%
Non-GAAP operating income ($M)	$	244.1	$	152.3	60.2%
Operating margin		3.05%		2.53%	52 bps
Non-GAAP operating margin		4.26%		3.10%	116 bps
Net income ($M)	$	114.5	$	93.7	22.1%
Non-GAAP net income ($M)	$	146.8	$	95.4	54.0%
Diluted earnings per common share ("EPS")	$	2.23	$	2.34	-4.7%
Non-GAAP Diluted EPS	$	2.86	$	2.38	20.2%

"We delivered strong results in our second quarter as both of our business segments exceeded expectations and set quarterly records," said Dennis Polk, SYNNEX President and CEO. "Our Concentrix business continued its momentum post the Convergys acquisition by delivering solid results, while executing ahead of schedule on our integration plan."

Second Quarter Fiscal 2019 Highlights:

Technology Solutions: Revenue was $4.6 billion, up 3.3% from the prior fiscal year second quarter. Operating income was $112 million, or 2.5% of segment revenue, compared to $96 million, or 2.2% of segment revenue, in the prior fiscal year second quarter. Non-GAAP operating income was $124 million, or 2.7% of segment revenue, compared to $111 million, or 2.5% of segment revenue, in the prior fiscal year second quarter.
Concentrix: Revenue was $1.2 billion, up 136.3% from the prior fiscal year second quarter as a result of the Convergys acquisition on October 5, 2018. Operating income was $62 million, or 5.4% of segment revenue, compared to $28 million, or 5.6% of segment revenue in the prior fiscal year second quarter. Non-GAAP operating income was $120 million, or 10.3% of segment revenue, compared to $41 million, or 8.5% of segment revenue, in the prior fiscal year second quarter.
The trailing fiscal four quarters Return on Invested Capital ("ROIC") was 8.2% compared to 8.8% in the prior fiscal year second quarter. The adjusted trailing fiscal four quarters ROIC was 10.8%.

Third Quarter Fiscal 2019 Outlook:

The following statements are based on SYNNEX' current expectations for the third quarter fiscal 2019. Non-GAAP financial measures exclude the impact of acquisition-related and integration expenses, the amortization of intangibles and the related tax effects thereon. These statements are forward-looking and actual results may differ materially.

Revenue is expected to be in the range of $5.55 billion to $5.85 billion.
Net income is expected to be in the range of $99.0 million to $105.0 million and on a non-GAAP basis, net income is expected to be in the range of $144.2 million to $150.2 million.
Diluted earnings per share is expected to be in the range of $1.92 to $2.04 and on a non-GAAP basis, diluted earnings per share is expected to be in the range of $2.80 to $2.92, based on estimated outstanding diluted weighted average shares of 51.0 million.
After-tax amortization of intangibles is expected to be $37.7 million, or $0.73 per share.
After-tax acquisition-related and integration expense is expected to be $7.5 million, or $0.15 per share.

Dividend Announcement

SYNNEX announced that its Board of Directors declared a quarterly cash dividend of $0.375 per common share. The dividend is payable on July 26, 2019 to stockholders of record as of the close of business on July 12, 2019.

Conference Call and Webcast

SYNNEX will be discussing its financial results and outlook on a conference call today at 2:00 p.m. (PT).

To Listen via Telephone:

(866) 393-4306 (U.S. callers) / (734) 385-2616 (International callers)Conference ID 7791288

To Listen via Internet:

Live webcast of the earnings call will be available at http://ir.synnex.com. A replay will be available approximately two hours after the earnings call has concluded.

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SYNNEX Corporation Reports Second Quarter Fiscal 2019 Results

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