SYNNEX
Corporation Reports First Quarter 2005 Results
FREMONT, CA — March 29, 2005 -- SYNNEX Corporation
(NYSE:SNX), a global IT supply chain services company, today
announced financial results for the first quarter of fiscal 2005,
ended February 28, 2005.
For the first quarter, revenues increased by 10% to $1.35 billion
compared to $1.22 billion for the quarter ended February 29,
2004. Net income for the first quarter decreased 11% to $8.6
million, or $0.27 per diluted share, compared with net income
of $9.7 million, or $0.33 per diluted share in the prior year
quarter.
Results for the first quarter of 2005 include one-time charges
totaling $1.4 million (net of tax), or $0.05 per share, related
to restructuring activities at the Company's subsidiary, SYNNEX
Canada Limited. The restructuring amount includes $1.6 million
(pre-tax) of severance, facility exit costs and other related
charges and $0.5 million (pre-tax) of debt restructuring related
charges.
"As we reported earlier this month, increased competition, mild
reductions in demand, delayed synergy benefits from our EMJ acquisition
and assembly supply chain issues were the causes for the revenue
and profit shortfall versus our expectations," said Robert Huang,
President and Chief Executive Officer. "Despite the less than
expected results, the SYNNEX team did perform well in the first
quarter of 2005, including 10% organic growth year over year
in our core US distribution business and continued strong balance
sheet management. Looking forward, we intend to continue to execute
on our market leading efficiency, expansion of our business model
and efforts to continue to increase market share."
First Quarter Financial Notes:
-- Distribution revenues were $1.22 billion, an increase of
10% over the prior year quarter. Contract assembly revenues were
$130 million, an increase of 10% over the prior year quarter.
-- Gross margin was 4.37%, up four basis points from the prior
year quarter.
-- Income from operations, inclusive of $1.6 million in restructuring
activities, was $17.3 million, or 1.28% of revenues, versus $17.6
million, or 1.44% of revenues in the prior year quarter.
-- Income from distribution operations, inclusive of $1.6 million
in restructuring activities, was $13.9 million, or 1.14% of revenues,
versus $14.6 million, or 1.33% of revenues in the prior year
quarter.
-- Income from assembly operations was $3.4 million, or 2.63%
of revenues, versus $3.0 million, or 2.52% of revenues in the
prior year quarter.
-- First quarter depreciation and amortization were $1.2 million
and $1.0 million, respectively.
Second Quarter Fiscal 2005 Outlook:
The following statements are based on the Company's current
expectations for the second quarter of 2005. The outlook amounts
do not include any impact of stock option expensing, special
charges or restructuring amounts that could be incurred. The
outlook amounts also assume that the previously announced sale
of the Company's Japan subsidiary will close by the end of April
2005 and do not include the expected gain to be recorded from
this transaction.
These statements are forward looking and actual results may
differ materially.
-- Revenues are expected to be in the range of $1.30 billion
to $1.35 billion.
-- Net income is expected to be in the range of $9.35 million
to $9.95 million.
-- Diluted earnings per share are expected to be in the range
of $0.30 to $0.32.
The calculation of diluted earnings per share for the second
quarter of 2005 is based on an approximate weighted average diluted
share count of 31.1 million.
"Our second quarter 2005 guidance reflects continuation of a
very competitive North American distribution marketplace and
an overall more challenging IT demand environment versus last
year," noted Huang.
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 888-675-7686 in North America
or 334-420-2612 outside North America. The confirmation code
for the call is 670930. 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 April 12, 2005.
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, demand generation marketing 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 expectations as to our intent to continue to focus
on market leading efficiency, expansion of our business model,
efforts to increase market share, our expectations of our revenues,
net income and earnings per share for the second quarter of fiscal
2005, and our expectation that the sale of our subsidiary in
Japan will close by the end of April 2005 and will result in
a recorded gain, 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 fiscal year ended November
30, 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 Three
Months Months
Ended Ended
Feb. 28, Feb. 29
2005 2004
----------- -----------
Revenue $1,349,425 $1,222,151
Cost of revenue (1,290,402) (1,169,189)
----------- -----------
Gross profit 59,023 52,962
Selling, general
and administrative expenses (41,695) (35,356)
----------- -----------
Income from operations 17,328 17,606
Interest expense, net (781) (525)
Other expense, net (2,586) (2,085)
----------- -----------
Income before income taxes
and minority interest 13,961 14,996
Provision for income taxes (5,332) (5,471)
Minority interest in subsidiaries (22) 128
----------- -----------
Net income $8,607 $9,653
----------- -----------
Diluted earnings per share $0.27 $0.33
----------- -----------
Diluted weighted average common
shares outstanding 31,450 29,506
----------- -----------
SYNNEX Corporation
Consolidated Balance Sheets
(in thousands)
(unaudited)
Feb. 28, Nov. 30
2005 2004
--------- ---------
Assets
Current assets:
Cash and cash equivalents $21,607 $28,726
Restricted cash 1,034 2,020
Short-term investments 6,178 5,051
Accounts receivable, net 392,838 372,604
Receivable from vendors, net 59,930 69,033
Receivable from affiliates 3,523 1,970
Inventories 381,592 408,346
Deferred income taxes 18,299 17,645
Other current assets 9,105 7,599
--------- ---------
Total current assets 894,106 912,994
Property and equipment, net 34,125 33,851
Goodwill and intangible assets 46,527 48,722
Deferred income taxes 2,403 1,421
Other assets 5,453 2,709
--------- ---------
Total assets $982,614 $999,697
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Liabilities and Stockholders' Equity
Current liabilities:
Borrowings under term loans and lines of credit $72,416 $74,996
Payable to affiliates 66,990 68,977
Accounts payable 375,674 386,638
Accrued liabilities 57,459 62,611
Income taxes payable 6,450 2,837
--------- ---------
Total current liabilities 578,989 596,059
Long-term borrowings 12,236 13,074
Long-term liabilities 6,282 17,772
Deferred income taxes 820 1,054
--------- ---------
Total liabilities 598,327 627,959
--------- ---------
Commitments and contingencies - -
Minority interest in subsidiaries 2,104 2,082
--------- ---------
Stockholders' equity:
Preferred stock - -
Common stock 28 28
Additional paid-in-capital 151,347 145,423
Accumulated other comprehensive income 10,082 12,086
Retained earnings 220,726 212,119
--------- ---------
Total stockholders' equity 382,183 369,656
--------- ---------
Total liabilities and stockholders'
equity $982,614 $999,697
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