SYNNEX Corporation Reports Fiscal 2012 Second Quarter Results - Marks 100 Consecutive Quarters of Profitability
SYNNEX Corporation (NYSE: SNX), a leading business process services company, announced financial results for the fiscal second quarter ended May 31, 2012.
Q2 FY12(1) Q2 FY11 Net Change
Revenue ($M) $2,483 $2,496 -0.5%
Operating income ($M)(2) $59.3 $54.2 9.5%
Operating margin 2.39% 2.17% 22 bp
Net income attributable to SYNNEX Corporation ($M)(3) $34.4 $31.4 9.5%
Diluted EPS $0.90 $0.85 5.9%
1. The fiscal 2012 second quarter results include the transition of certain customer gross revenue business
to a fee for service logistics relationship which resulted in a decline in the reported revenue.
2. The fiscal 2011 second quarter income before non-operating items, income taxes and noncontrolling interest
includes a $1.3 million credit adjustment to contingent M&A consideration offset in part by $0.4 million for acquisition and integration expenses.
3. The fiscal 2011 second quarter net income attributable to SYNNEX Corporation includes a $1.3 million credit adjustment to contingent M&A consideration offset in part by acquisition and integration expenses of $0.3 million, net of tax.
"The SYNNEX team is very proud to announce our 100th quarter of consecutive profitability. In our second quarter of fiscal 2012, I am pleased with our continued execution and performance in a mixed demand environment," stated Kevin Murai, President and Chief Executive Officer. "Within our distribution business we achieved good growth in the commercial business, partially offset by a dampened retail market. We continue to achieve success in signing new business contracts in our GBS division which we expect to contribute to margin expansion in the coming quarters."
Fiscal 2012 Second Quarter Highlights:
•Distribution: Revenue was $2.44 billion, a decrease of 0.8% over the prior fiscal year quarter. Distribution income before non-operating items, income taxes and noncontrolling interest grew to $56.4 million, or 2.31% of distribution revenue compared with $50.5 million, or 2.05% in the prior fiscal year quarter. Fiscal 2012 second quarter results included certain customer business which transitioned year-over-year from a gross revenue business to a net fee for service logistics relationship.
•Global Business Services (GBS): Revenue was $47.7 million, an increase of 23.1% over the prior fiscal year quarter. GBS income before non-operating items, income taxes and non-controlling interest was $2.6 million, or 5.40% of GBS revenue compared with $3.7 million, or 9.56% in the prior fiscal year quarter. The fiscal 2011 second quarter SG&A included a $1.3 million credit adjustment to contingent M&A consideration offset in part by $185 thousand in direct acquisition and integration expenses. Fiscal 2012 second quarter includes continued incremental expenses related to investing for accelerated growth in the business.
•The trailing fiscal four quarters ROIC increased to 11.7% for the fiscal second quarter of 2012, up from 10.3% in the prior year fiscal second quarter.
•The cash conversion cycle was 44 days.
•The debt to capitalization ratio was 19%.
•Depreciation and amortization were $4.2 and $2.1 million, respectively.
Fiscal 2012 Third Quarter Outlook:
The following statements are based on the Company's current expectations for the fiscal 2012 third quarter. These statements are forward-looking and actual results may differ materially.
"Our guidance reflects strong execution in our distribution business given the more muted outlook for the continuing economic recovery and the ongoing year-over-year transition of certain customer gross revenue to a net fee for service logistics relationship," Mr. Murai continued. "While earnings in the prior year third quarter included some exceptional items, including a large benefit to GBS SG&A for a contingent M&A credit, this year's third quarter outlook reflects a more normalized profit margin for our distribution segment and continued progress in our GBS segment."
•Revenue is expected to be in the range of $2.55 billion to $2.65 billion.
•Net income is expected to be in the range of $34.4 million to $35.7 million.
•Diluted earnings per share are expected to be in the range of $0.91 to $0.95.
Conference Call and Webcast
SYNNEX discussed its financial results and outlook on a conference call on Monday, June 25th, at 5:00 p.m. (ET). A webcast of the call is available at http://ir.synnex.com. A replay of the webcast will be available at http://ir.synnex.com.
SYNNEX Visits NYSE to Ring the Opening Bell
On Tuesday, June 26, 2012, SYNNEX visited the New York Stock Exchange (NYSE) to celebrate 100 consecutive quarters of profitability. To mark the occasion, President and Chief Executive Officer Kevin Murai rang the NYSE Opening Bell at 9:30 a.m. (ET), along with several members of the Company's executive leadership team. For photos and video of the bell ringing, connect with NYSE Euronext on Facebook, YouTube, or Twitter, #NYSEBell.
SYNNEX Corporation (NYSE: 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 over 10,000 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, execution in our distribution business, transition of customers from gross revenue to net fee for service, growth in our GBS business segment, margin expansion, 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 February 29, 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.
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