SYNNEX
Corporation Reports Fiscal Third Quarter 2005 Results
FREMONT,
Calif.--(BUSINESS WIRE)--Sept. 27, 2005--SYNNEX Corporation
(NYSE:SNX), a global IT supply chain services company, today
announced financial results for the third quarter of fiscal
2005, ended August 31, 2005.
For the third quarter of fiscal
2005, revenues increased by 7% to $1.39 billion compared
to $1.30 billion for the quarter ended August 31, 2004. Net
income from continuing operations for the third quarter decreased
21% to $9.0 million, or $0.29 per share, compared with net
income of $11.4 million, or $0.38 per share in the prior
year quarter.
Net income on a non generally accepted
accounting principles, or Non-GAAP, basis was $10.5 million
or $0.34 per share. Non-GAAP net income represents GAAP net
income adjusted to exclude, net of tax, $0.5 million in restructuring
charges related to the Company's Canadian operations and
a $1.0 million non operating loss on the Company's equity
investment in MCJ Company, Ltd. The Company's investment
in MCJ was a result of the sale of its Japan operations in
the second quarter of fiscal 2005. In the prior year quarter,
Non-GAAP net income was $10.7 million, or $0.36 per share.
Non-GAAP net income in the third quarter of fiscal 2004 excludes
a non-operating settlement gain of $0.8 million, net of tax.
"In a generally stable demand environment
in the North American IT channel marketplace, we are pleased
with our results and execution for the third quarter of fiscal
2005," said Robert Huang, President and Chief Executive Officer. "We
continue to maintain our focus on profitable growth in our
core business segments and we are making strides in our new
business investments as well. Looking forward we will plan
to continue to execute on our cost efficient business model
while at the same time investing in new initiatives that
deliver additional value to our customers and vendors."
Third Quarter Financial Notes:
-- Distribution revenues were $1.26 billion, an increase of 9%
over the prior year quarter. Contract assembly revenues were
$128 million, a decrease of 13% over the prior year quarter.
-- Gross margin was 4.24%, up 20 basis points from the prior year
quarter.
-- Income from operations was $19.7 million, or 1.42% of
revenues, versus $18.9 million, or 1.45% of revenues in the
prior year quarter. Income from operations, excluding the
Canadian restructuring charge, was $20.6 million or 1.48% of
revenues.
-- Income from distribution operations was $17.0 million, or
1.35% of revenues, versus $15.7 million, or 1.36% of revenues
in the prior year quarter. Income from distribution
operations, excluding the Canadian restructuring charge, was
$17.9 million or 1.42% of revenues.
-- Income from assembly operations was $2.7 million, or 2.09% of
revenues, versus $3.2 million, or 2.16% of revenues in the
prior year quarter.
-- Third quarter depreciation and amortization were $1.2 million
and $1.0 million, respectively.
Fourth Quarter Fiscal 2005 Outlook:
The
following statements are based on the Company's current expectations for
the fourth quarter
of fiscal 2005. The outlook amounts do not include any impact
of stock option expensing, gains or losses from the Company's
investment in MCJ and 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 $1.475 billion to
$1.525 billion.
-- Net income is expected to be in the range of $11.45 million to
$12.15 million.
-- Earnings per share are expected to be in the range of $0.37 to
$0.39.
The
calculation of earnings per share for the fourth quarter of fiscal 2005
is based on an
approximate weighted average diluted share count of 31.3
million.
Conference Call and Webcast
SYNNEX will be discussing its financial
results and outlook on a conference call today at 5:00 p.m.
(EDT). A webcast of the call will be available at http://ir.synnex.com.
The conference call can be accessed by dialing 866-814-1919
in North America or 703-639-1363 outside North America. The
confirmation code for the call is 777138. 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 11, 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.
Use Of Non-GAAP Financial Information
The Non-GAAP data contained in this
release are included with the intention of providing investors
a more complete understanding of our operational results
and trends, but should only be used in conjunction with results
reported in accordance with Generally Accepted Accounting
Principles, or GAAP. The Non-GAAP financial measures enable
investors to analyze the base financial and operating performance
of the Company and facilitate period-to-period comparisons
and analysis of operating trends. Non-GAAP measures presented
in this release or other releases, presentations and similar
documents issued by the Company, exclude restructuring charges,
non operating settlement gains or losses, results associated
with the Company's discontinued Japan operations, gains or
losses, including foreign exchange, in the Company's equity
investment in MCJ and other infrequent or unusual items.
A detailed reconciliation of the adjustments between results
calculated using GAAP and Non-GAAP in this release is contained
in the attached financial summary.
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 profitable growth in our core business segments,
expansion of our business model and execution on our new
business investments, our intent to continue to execute our
cost efficient business model and to invest in new initiatives
that derive additional value to our customers and vendors,
our expectations of our revenues, and net income and earnings
per share for the fourth quarter of fiscal 2005, 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-Q for the fiscal quarter ended May
31, 2005 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.
Consolidated Balance Sheets
(in thousands)
(unaudited)
August 31, November 30,
2005 2004
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 9,870 $ 28,726
Restricted cash - 2,020
Short-term investments 21,868 5,051
Accounts receivable, net 363,467 372,604
Receivable from vendors, net 74,682 69,033
Receivable from affiliates 7,749 1,970
Inventories 404,601 408,346
Deferred income taxes 17,320 17,645
Other current assets 12,968 7,599
----------- -----------
Total current assets 912,525 912,994
Property and equipment, net 33,257 33,851
Goodwill and intangible assets 44,427 48,722
Deferred income taxes 2,773 1,421
Other assets 5,663 2,709
----------- -----------
Total assets $ 998,645 $ 999,697
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Borrowings under term loans and
lines of credit $ 60,491 $ 74,996
Payable to affiliates 63,140 68,977
Accounts payable 369,749 386,638
Accrued liabilities 62,950 62,611
Income taxes payable 13,995 2,837
----------- -----------
Total current liabilities 570,325 596,059
Long-term borrowings 1,224 13,074
Long-term liabilities 6,985 17,772
Deferred income taxes 820 1,054
----------- -----------
Total liabilities 579,354 627,959
----------- -----------
Minority interest in subsidiaries - 2,082
----------- -----------
Stockholders' equity:
Common stock 29 28
Additional paid-in-capital 155,764 145,423
Accumulated other comprehensive income 11,353 12,086
Retained earnings 252,145 212,119
----------- -----------
Total stockholders' equity 419,291 369,656
----------- -----------
Total liabilities and
stockholders' equity $ 998,645 $ 999,697
=========== ===========
SYNNEX Corporation
Consolidated Statements of Operations
(in thousands, except for per share amounts)
(unaudited)
Three Months Three Months Nine Months Nine Months
Ended August Ended August Ended August Ended August
31, 2005 31, 2004 31, 2005 31, 2004
-----------------------------------------------------
Revenue $ 1,391,590 $ 1,303,741 $ 4,047,681 $ 3,709,632
Cost of revenue 1,332,612 1,251,080 3,876,013 3,555,520
----------- ----------- ----------- -----------
Gross profit 58,978 52,661 171,668 154,112
Selling, general
and
administrative
expenses 39,249 33,772 117,120 99,562
----------- ----------- ----------- -----------
Income from
operations 19,729 18,889 54,548 54,550
Interest expense
and finance
charges, net 3,775 1,378 11,108 5,166
Other (income)
expense, net 1,157 (241) (501) 916
----------- ----------- ----------- -----------
Income before
income taxes
and minority
interest 14,797 17,752 43,941 48,468
Provision for
income taxes 5,759 6,382 16,807 17,749
Minority interest
in subsidiaries - (76) (58) (320)
----------- ----------- ----------- -----------
Net income from
continuing
operations 9,038 11,446 27,192 31,039
Income from
discontinued
operations,
net of tax - 3 511 274
Gain on sale of
discontinued
operations,
net of tax - - 12,323 -
----------- ----------- ----------- -----------
Net Income $ 9,038 $ 11,449 $ 40,026 $ 31,313
----------- ----------- ----------- -----------
Diluted earnings
per share from
continuing
operations $ 0.29 $ 0.38 $ 0.87 $ 1.04
----------- ----------- ----------- -----------
Diluted earnings
per share $ 0.29 $ 0.38 $ 1.28 $ 1.05
----------- ----------- ----------- -----------
Diluted weighted
average common
shares
outstanding 31,120 29,939 31,177 29,899
----------- ----------- ----------- -----------
The following tables reconcile GAAP to Non GAAP Reported Results
----------------------------------------------------------------------
1. Operating Expenses Reconciliation:
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
August 31, August 31, August 31,August 31,
2005 2004 2005 2004
----------------------------------------------
Operating Expenses
- GAAP $ 39,249 $ 33,772 $117,120 $ 99,562
Canadian restructuring
charges (842) - (2,482) -
-------- -------- -------- --------
Operating Expenses
- Non GAAP $ 38,407 $ 33,772 $114,638 $ 99,562
======== ======== ======== ========
2. Income from Distribution Operations Reconciliation:
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
August 31, August 31, August 31,August 31,
2005 2004 2005 2004
----------------------------------------------
Income from Distribution
Operations - GAAP $ 17,046 $ 15,708 $ 44,491 $ 44,237
Canadian restructuring
charges 842 - 2,482 -
-------- -------- -------- --------
Income from Distribution
Operations - Non GAAP $ 17,888 $ 15,708 $ 46,973 $ 44,237
======== ======== ======== ========
3. Income from Contract Assembly Operations Reconciliation:
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
August 31, August 31, August 31,August 31,
2005 2004 2005 2004
----------------------------------------------
Income from Contract
Assembly Operations -
GAAP $ 2,683 $ 3,181 $ 10,057 $ 10,313
Canadian restructuring
charges - - - -
-------- -------- -------- --------
Income from Contract
Assembly Operations -
Non GAAP $ 2,683 $ 3,181 $ 10,057 $ 10,313
======== ======== ======== ========
4. Operating Income Reconciliation:
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
August August August August
31, 31, 31, 31,
2005 2004 2005 2004
---------------------------------
Income from Operations - GAAP $19,729 $18,889 $ 54,548 $54,550
Canadian restructuring charges 842 - 2,482 -
------- ------- -------- -------
Income from Operations - Non GAAP $20,571 $18,889 $ 57,030 $54,550
======= ======= ======== =======
5. Net Income Reconciliation:
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
August August August August
31, 31, 31, 31,
2005 2004 2005 2004
---------------------------------
Net Income - GAAP $ 9,038 $11,449 $ 40,026 $31,313
Canadian restructuring charges, net
of tax 513 - 1,605 -
Penalty on early debt payment, net of
tax - - 333 -
Loss on Japan investment, net of tax 995 - 438 -
Gain on sale of Japan, net of tax - - (12,323) -
Gain on settlement of UK acquisition,
net of tax - (784) - (784)
------- ------- -------- -------
Net Income - Non GAAP $10,546 $10,665 $ 30,079 $30,529
======= ======= ======== =======
6. Diluted Earnings Per Share Reconciliation:
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
August August August August
31, 31, 31, 31,
2005 2004 2005 2004
---------------------------------
Diluted Earnings Per Share - GAAP $ 0.29 $ 0.38 $ 1.28 $ 1.05
Canadian restructuring charges, net
of tax 0.02 - 0.06 -
Penalty on early debt payment, net of
tax - - 0.01 -
Loss on Japan investment, net of tax 0.03 - 0.01 -
Gain on sale of Japan, net of tax - - (0.40) -
Gain on settlement of UK acquisition,
net of tax - (0.02) - (0.03)
------- ------- -------- -------
Diluted Earnings Per Share - Non
GAAP $ 0.34 $ 0.36 $ 0.96 $ 1.02
======= ======= ======== =======
CONTACT:
SYNNEX Corporation
Laura Kelley,
510-668-3715
(Director of Investor Relations and Public Relations) laurac@synnex.com
SOURCE: SYNNEX Corporation