SYNNEX Corporation
Reports Third Quarter 2004 Results
FREMONT,
CA - Sept. 29, 2004 - SYNNEX
Corporation (NYSE:SNX), a global IT supply chain
services company, today announced
financial results for the third quarter of fiscal 2004,
ended August 31, 2004.
For the third quarter, revenues
increased by 29% to $1.34 billion compared to $1.04
billion for the quarter ended August 31, 2003. Third
quarter net income increased 50% to $11.5 million,
or $0.38 per diluted share, compared with net income
of $7.7 million, or $0.32 per diluted share in the
prior year third quarter. Third quarter 2004 net
income includes a non-operating one-time benefit
of $0.7 million (net of tax), or $0.02 per diluted
share.
On December 1, 2003, SYNNEX
completed its initial public offering (IPO) that
resulted in net 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.
"SYNNEX achieved another
strong quarter of sales and profits, due to reasonable
market conditions and our focus on executing our
distribution strategy," said Robert Huang, President
and Chief Executive Officer. "With the acquisition
of EMJ Data Systems complete, we welcome Jim Estill
and his team to the SYNNEX family. We believe EMJ
will solidify us as a leader in the Canadian distribution
market. The integration of EMJ's systems and employees
is nearly complete, and once completed, we should
begin to see the financial benefits of this transaction."
Third Quarter Financial Notes:
-- Distribution revenues were $1.19 billion, an increase of 21%
over the prior year quarter. Contract assembly revenues were
$147.4 million, an increase of 184% over the prior year
quarter.
-- Gross margin was 4.08%, down 46 basis points from the prior
year quarter. Higher volume of sales to larger customers and
product mix in our contract assembly business were the primary
reasons for the decline.
-- Income from operations was $19.0 million, or 1.42% of
revenues, versus $14.6 million, or 1.41% of revenues in the
prior year quarter.
-- Income from distribution operations was $15.8 million, or
1.33% of revenues, versus $13.7 million, or 1.39% of revenues
in the prior year quarter.
-- Income from assembly operations was $3.2 million, or 2.16% of
revenues, versus $1.0 million, or 1.84% of revenues in the
prior year quarter.
-- Third quarter depreciation and amortization were $1.1 million
and $0.8 million, respectively.
-- In the third quarter of 2004, the Company received
approximately $1.2 million as settlement of the final purchase
price related to the acquisition of our UK subsidiary from
MiTAC International Corporation. The original date of the
acquisition was in fiscal 2000.
Outlook For The Fourth Quarter of 2004 ending November 30, 2004:
On September 18, 2004, SYNNEX
completed the acquisition of EMJ Data Systems Ltd.
(EMJ), a technology product distributor based in
Canada. The following statements are based on the
Company's current expectations for the fourth quarter
of 2004, which include the expected results of EMJ
from the date of acquisition. The outlook amounts
do not include any special charges or restructuring
amounts that could be incurred.
These statements are forward
looking and actual results may differ materially.
-- Revenues are expected to be in the range of $1.40 billion to
$1.45 billion.
-- Net income is expected to be in the range of $11.8 million to
$12.4 million.
-- Diluted earnings per share are expected to be in the range of
$0.39 to $0.41.
The calculation of diluted
earnings per share for the fourth quarter of 2004
is based on an approximate weighted average diluted
share count of 30.5 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 888-639-6218 in North
America or 334-420-2502 outside North America. The
confirmation code for the call is 561315. A replay
of the conference call will be available at http://ir.synnex.com
approximately two hours after the conference call
has concluded and will be archived until October
13, 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 the benefits of the
acquisition of EMJ, the integration of EMJ, our expectations
as to improvement for our non-U.S. entities, our
business model and our expectations of our revenues,
net income and earnings per share for the fourth
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; the integration of EMJ; 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-Q for the quarter ended May
31, 2004 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 Operations
(in thousands, except for per share amounts)
(unaudited)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
August 31, August 31, August 31, August 31,
2004 2003 2004 2003
------------ ----------- ----------- -----------
Revenue $1,340,181 $1,035,265 $3,835,393 $2,873,293
Cost of revenue (1,285,481) (988,249) (3,674,007) (2,741,446)
------------ ----------- ----------- -----------
Gross profit 54,700 47,016 161,386 131,847
Selling, general
and administrative
expenses (35,710) (32,385) (105,922) (91,968)
------------ ----------- ----------- -----------
Income from
operations 18,990 14,631 55,464 39,879
Interest expense,
net (124) (352) (927) (1,437)
Other expense, net (1,108) (1,930) (5,492) (4,901)
------------ ----------- ----------- -----------
Income before income
taxes and minority
interest 17,758 12,349 49,045 33,541
Provision for
income taxes (6,384) (4,833) (18,008) (12,276)
Minority interest
in subsidiaries 75 134 276 106
------------ ----------- ----------- -----------
Net income $ 11,449 $ 7,650 $ 31,313 $ 21,371
------------ ----------- ----------- -----------
Diluted earnings
per share $ 0.38 $ 0.32 $ 1.05 $ 0.87
------------ ----------- ----------- -----------
Diluted weighted
average common
shares outstanding 29,939 24,243 29,899 24,443
------------ ----------- ----------- -----------
SYNNEX Corporation
Consolidated Balance Sheets
(in thousands)
(unaudited)
August 31, November 30,
2004 2003
----------- -------------
Assets
Current assets:
Cash and cash equivalents $ 20,747 $ 22,079
Restricted cash 3,043 4,306
Short-term investments 4,361 3,832
Accounts receivable, net 343,081 263,944
Receivable from vendors, net 63,255 54,209
Receivable from affiliates 4,254 667
Inventories 356,883 360,686
Deferred income taxes 14,904 15,902
Other current assets 6,780 16,783
----------- -------------
Total current assets 817,308 742,408
Property and equipment, net 27,185 23,938
Intangible assets 19,036 19,357
Deferred income taxes 704 708
Other assets 2,051 3,517
----------- -------------
Total assets $866,284 $789,928
=========== =============
Liabilities and Stockholders' Equity
Current liabilities:
Borrowings under term loans
and lines of credit $ 31,249 $ 69,464
Payable to affiliates 47,505 54,986
Accounts payable 379,933 343,071
Accrued liabilities 50,851 53,279
Income taxes payable 671 4,211
----------- -------------
Total current liabilities 510,209 525,011
Long-term borrowings 10,708 8,134
Long-term liabilities 38 1,123
Deferred income taxes 625 260
----------- -------------
Total liabilities 521,580 534,528
----------- -------------
Commitments and contingencies -- --
Minority interest in subsidiaries 2,106 2,586
----------- -------------
Stockholders' equity:
Preferred stock -- --
Common stock 27 22
Additional paid-in-capital 138,411 80,067
Unearned stock-based compensation -- (202)
Accumulated other comprehensive income 7,293 7,373
Retained earnings 196,867 165,554
----------- -------------
Total stockholders' equity 342,598 252,814
----------- -------------
Total liabilities and
stockholders' equity $866,284 $789,928
=========== =============
