SYNNEX
Corporation Reports First Quarter 2004 Results
FREMONT, Calif.,
Mar 25, 2004 -- SYNNEX Corporation (NYSE:SNX),
a global IT supply chain services company, today announced
financial results for the first quarter of fiscal 2004, ended
February 29, 2004.
For the first quarter, net revenues
increased by 37% to $1.22 billion compared to $892.9 million
for the quarter ended February 28, 2003. First quarter net
income totaled $9.7 million, or $0.33 per diluted share,
compared with net income of $6.7 million, or $0.27 per diluted
share in the prior year first quarter.
On December 1, 2003, SYNNEX completed
its Initial Public Offering (IPO) that resulted in aggregate
proceeds of $48.8 million to the Company. As a result fiscal
2004 amounts in this press release reflect the effects of
the IPO whereas fiscal 2003 amounts do not.
"I am very pleased by our execution
and financial results for the first quarter of fiscal 2004," said
Robert Huang, President and Chief Executive Officer. "We
believe the solid revenue increase, coupled with our continued
cost discipline is further evidence that our go-to-market
strategy and business model are working."
First Quarter Financial Highlights:
-- Distribution net revenues were $1.10 billion, an increase of
30% over the prior year quarter. Assembly net revenues were
$117.2 million, an increase of 176% over the prior year
quarter.
-- Gross margin was 4.33%, down 37 basis points from the prior
year quarter. Higher volume of sales to larger customers and
competitive pressures contributed to the decline in gross
margins.
-- Income from operations was $17.6 million, or 1.44% of revenue,
versus $12.1 million, or 1.35% of revenue in the prior year
quarter.
-- Income from distribution operations was $14.6 million, or
1.33% of revenue, versus $12.2 million, or 1.44% of revenue in
the prior year quarter.
-- Income from assembly operations was $3.0 million, or 2.5% of
revenue, versus essentially break-even results in the prior
year quarter.
-- First quarter depreciation, amortization and stock-based
compensation expense was $0.9 million, $0.7 million and $0.1
million respectively.
Outlook For The Second Quarter of 2004 Ending May 31, 2004:
The following statements are based
on the Company's current expectations for the second quarter
of 2004. These statements are forward looking and actual
results may differ materially.
-- Net revenues are expected to be in the range of $1.225 billion
to $1.275 billion.
-- Net income is expected to be in the range $9.9 million to
$10.5 million.
-- Diluted earnings per share are expected to be in the range of
$0.33 to $0.35.
The calculation of diluted earnings
per share for the second quarter of 2004 is based on an approximate
weighted average diluted share count of 30.4 million.
Conference Call and Webcast
SYNNEX will be discussing its financial
results and outlook on a conference call today at 5:00 p.m.
(EST). A webcast of the call will be available at http://ir.synnex.com.
The conference call can be accessed by dialing 888-806-9459
in North America or 703-871-3093 outside North America. The
confirmation code for the call is 4060158. A replay of the
webcast will be available at http://ir.synnex.com approximately
two hours after the conference call has concluded and will
be archived until April 8, 2004.
About SYNNEX
Founded in 1980, SYNNEX Corporation
is a global IT supply chain services company offering a comprehensive
range of services to original equipment manufacturers, software
publishers and reseller customers worldwide. SYNNEX offers
product distribution, related logistics services and contract
assembly and works with the leading industry suppliers of
IT systems, peripherals, system components, software and
networking equipment. 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, could and should, and the negative of these terms or
other similar expressions. These statements, including statements
regarding our go-to-market strategy, our business model and
our expectations of our net revenues, net income and earnings
per share for the second quarter of 2004, 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 IT 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; variations in our levels of excess inventory and
doubtful accounts and changes in the terms of OEM supplier-sponsored
programs; changes in our costs and operating expenses; changes
in foreign currency exchange rates, 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
contract assembly business and other risks and uncertainties
detailed in our Form 10-K for the year ended November 30,
2003 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.
SYNNEX and the SYNNEX logo are trademarks
of SYNNEX Corporation or its subsidiaries and should be treated
as such. All rights reserved. All other company names mentioned
herein are trademarks of their respective owners.
SYNNEX Corporation
Consolidated Statements of Income
(in thousands, except for share and per share amounts)
Quarter Ended Quarter Ended
February 29, February 29,
2004 2003
--------------- ---------------
Revenue $1,222,151 $892,924
Cost of revenue 1,169,189 850,936
--------------- ---------------
Gross profit 52,962 41,988
Selling, general and
administrative expenses 35,356 29,894
--------------- ----------------
Income from operations 17,606 12,094
Interest income (expense), net (525) (589)
Other income (expense), net (2,085) (1,268)
--------------- ---------------
Income before income taxes
and minority interest 14,996 10,237
Provision for income taxes (5,471) (3,493)
Minority interest in subsidiary 128 (43)
--------------- ---------------
Net income $9,653 $6,701
--------------- ---------------
Diluted earnings per share $0.33 $0.27
--------------- ---------------
Diluted weighted average common
shares outstanding 29,505,628 24,637,184
--------------- ---------------
SYNNEX Corporation
Consolidated Balance Sheet
(in thousands)
February 29, November 30,
2004 2003
------------ ------------
Assets
Current assets:
Cash and cash equivalent $19,544 $22,079
Restricted cash 4,290 4,306
Short-term investments 4,477 3,832
Accounts receivable, net 295,634 263,944
Receivable from vendors, net 54,943 54,209
Receivable from affiliates 1,539 667
Inventories 385,529 360,686
Deferred income taxes 15,259 15,902
Other current assets 10,938 16,783
---------- ----------
Total current assets 792,153 742,408
Property and equipment, net 24,045 23,938
Intangible assets 18,687 19,357
Deferred income
taxes 695 708
Other assets 1,955 3,517
---------- ----------
Total assets $837,535 $789,928
========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Borrowings under term loans and
lines of credit $46,897 $69,464
Payable to affiliates 73,779 54,986
Accounts payable 338,498 343,071
Accrued liabilities 46,303 53,279
Income taxes payable 6,465 4,211
---------- ----------
Total current liabilities 511,942 525,011
Long-term borrowings 7,650 8,134
Long-term
liabilities 1,130 1,123
Deferred income
taxes 258 260
---------- ----------
Total liabilities 520,980 534,528
---------- ----------
Commitments and contingencies - -
Minority interest 2,454 2,586
---------- ----------
Shareholders' equity:
Preferred stock - -
Common stock 26 22
Additional paid-in-capital 132,294 80,067
Unearned stock-based compensation (65) (202)
Accumulated other comprehensive income
(loss) 6,639 7,373
Retained earnings 175,207 165,554
---------- ----------
Total shareholders' equity 314,101 252,814
---------- ----------
Total liabilities and shareholders' equity $837,535 $789,928
========== ==========