SYNNEX Corporation Reports First
Quarter 2006 Results
GAAP EPS of $0.34
Non-GAAP EPS of $0.36
FREMONT, CA —March 23, 2006 —SYNNEX
Corporation (NYSE:SNX), a global IT supply chain services
company, today announced financial results for its fiscal
first quarter ended
February 28, 2006.
For the first quarter of fiscal
2006, revenues increased by 15% to $1.50 billion compared
to $1.31 billion for the quarter ended February 28, 2005.
Income from continuing operations for the first quarter increased
29% to $10.7 million, or $0.34 per share, compared with $8.3
million, or $0.26 per share in the prior year quarter.
Net income on a non-generally accepted
accounting principles, or Non-GAAP, basis for the first quarter
of fiscal 2006 was $11.2 million, or $0.36 per share, which
excludes stock-based compensation expense of $0.5 million,
net of tax, or $0.02 per share, compared with net income
of $9.7 million, or $0.31 per share in prior year quarter.
The Non-GAAP results from the first quarter of fiscal 2005
exclude Canadian restructuring charges and charges associated
with the early retirement of debt. Net income prior to fiscal
2006 did not include stock-based compensation expense due
to the adoption of SFAS 123(R) in the first quarter of fiscal
2006.
"We are pleased with our revenue
and profit growth in the first quarter of 2006," said Robert
Huang, President and Chief Executive Officer. "Our US and
Canadian distribution teams performed well and built on the
momentum they generated in the second half of fiscal 2005.
We look forward to further executing on our fiscal 2006 goals
throughout the balance of the year."
First Quarter Financial Highlights:
Distribution revenues were $1.39
billion, an increase of 18% over the prior year quarter.
Contract assembly revenues were
$110.9 million, a decrease of 14% over the prior year quarter.
Income from continuing operations
was $22.2 million, or 1.48% of revenues, versus $16.4 million,
or 1.25% of revenues in the prior year quarter. Income
from continuing operations on a Non-GAAP basis, which excludes
approximately $0.8 million of stock based compensation
expense, was $23.0 million, or 1.53% of revenues. Non-GAAP
income from continuing operations for the first quarter
of fiscal 2005, excluding Canadian restructuring charges
of approximately $1.6 million, was $18.1 million or 1.38%
of revenues.
Income from distribution continuing
operations was $20.2 million, or 1.46% of revenues, versus
$13.0 million, or 1.10% of revenues in the prior year quarter.
Income from distribution continuing operations on a Non-GAAP
basis, excluding the stock based compensation expense,
was $20.9 million, or 1.51% of revenues. Non-GAAP income
from distribution continuing operations for the first quarter
of fiscal 2005, excluding Canadian restructuring charges
of approximately $1.6 million, was $14.7 million or 1.24%
of revenues.
Income from contract assembly
continuing operations was $2.0 million, or 1.79% of revenues,
versus $3.4 million, or 2.63% of revenues in the prior
year quarter. Non-GAAP income from contract assembly continuing
operations was essentially the same.
First quarter depreciation and
amortization were $1.2 million and $1.0 million, respectively.
First quarter capital expenditures were $3.0 million.
Off-balance sheet borrowings
totaled approximately $290 million at February 28, 2006.
Second Quarter Fiscal 2006 Outlook:
The following statements are based
on the Company's current expectations for the second quarter
of fiscal 2006. The outlook amounts do not include any impact
of stock option expensing, 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 $1.45 billion to $1.50 billion.
Net income is expected to be
in the range of $10.9 million to $11.6 million.
Earnings per share are expected
to be in the range of $0.35 to $0.37.
The effect of stock option and other
related non-cash compensation expense will approximate $0.02
to $0.03 per share in the second quarter of fiscal 2006.
The calculation of earnings per
share for the second quarter of fiscal 2006 is based on an
approximate weighted average diluted share count of 31.5
million.
Conference Call and Webcast
SYNNEX will be discussing its financial
results and outlook on a conference call today at 2:00 p.m.
(PST). A webcast of the call will be available at http://ir.synnex.com.
The conference call can be accessed by dialing 866-847-7859
in North America or 703-639-1426 outside North America. The
confirmation code for the call is 872177. 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 6, 2006.
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 Co. Ltd., stock based compensation expense
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 the execution of our fiscal 2006 goals, our expectations
of our revenues, net income and earnings per share for the
second quarter of fiscal 2006, and expectations regarding
our expenses for the second quarter of fiscal 2006, 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, 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.
SYNNEX Corporation
Consolidated Balance Sheets
(in thousands)
(unaudited)
February 28, November 30,
2006 2005
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 11,146 $ 13,636
Short-term investments 21,826 27,985
Accounts receivable, net 301,645 342,322
Receivable from vendors, net 76,477 82,721
Receivable from affiliates 3,001 5,177
Inventories 524,705 494,617
Deferred income taxes 15,400 15,445
Current deferred assets 5,752 -
Other current assets 12,597 10,908
------------ ------------
Total current assets 972,549 992,811
Property and equipment, net 35,655 33,713
Goodwill and intangible assets 42,814 43,004
Deferred income taxes 3,869 4,781
Long-term deferred assets 71,202 -
Other assets 5,124 8,179
------------ ------------
Total assets $1,131,213 $1,082,488
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Borrowings under term loans and lines of
credit $ 30,751 $ 28,548
Accounts payable 445,208 448,339
Payable to affiliates 66,754 85,871
Accrued liabilities 56,586 68,619
Other current liabilities 6,211 6,085
Current deferred liabilities 7,758 -
Income taxes payable 6,661 4,820
------------ ------------
Total current liabilities 619,929 642,282
Long-term borrowings 1,091 1,153
Long-term liabilities 1,129 840
Long-term deferred liabilities 54,438 -
Deferred income taxes 986 988
------------ ------------
Total liabilities 677,573 645,263
------------ ------------
Stockholders' equity:
Preferred stock - -
Common stock 29 29
Additional paid-in-capital 169,382 161,195
Unearned stock-based compensation (6,244) (1,644)
Accumulated other comprehensive income 14,846 12,701
Retained earnings 275,627 264,944
------------ ------------
Total stockholders' equity 453,640 437,225
------------ ------------
Total liabilities and
stockholders' equity $1,131,213 $1,082,488
============ ============
SYNNEX Corporation
Consolidated Statements of Operations
(in thousands, except for per share amounts)
(unaudited)
Three Months Three Months
Ended Ended
February 28, February 28,
2006 2005
-------------------------
Revenue $1,501,735 $1,309,763
Cost of revenue 1,436,725 1,253,629
-------------------------
Gross profit 65,010 56,134
Selling, general and administrative expenses 42,763 39,712
-------------------------
Income from continuing operations before
non-operating items, income taxes and
minority interest 22,247 16,422
Interest expense and finance charges, net 5,853 3,812
Other (income) expense, net (273) (709)
-------------------------
Income from continuing operations before
income taxes and minority interest 16,667 13,319
Provision for income taxes 5,984 5,042
Minority interest in subsidiary - (26)
-------------------------
Income from continuing operations 10,683 8,303
Income from discontinued operations, net of
tax - 304
-------------------------
Net income $ 10,683 $ 8,607
=========================
Diluted earnings per share from continuing
operations $ 0.34 $ 0.26
-------------------------
Diluted earnings per share $ 0.34 $ 0.27
-------------------------
Diluted weighted average common shares
outstanding 31,204 31,450
=========================
SYNNEX Corporation
GAAP to Non-GAAP Reconciliation
(in thousands, except for per share amounts)
(unaudited)
The following tables reconcile GAAP to Non GAAP financial information
----------------------------------------------------------------------
1. Operating Expenses Reconciliation:
Three Months Three Months
Ended Ended
February 28, February 28,
2006 2005
-------------------------
Operating Expenses - GAAP $42,763 $39,712
Canadian restructuring charges - (1,640)
Stock-based compensation expense (735) -
-------------------------
Operating Expenses - Non GAAP $42,028 $38,072
=========================
2. Income from Distribution Continuing Operations Reconciliation:
Three Months Three Months
Ended Ended
February 28, February 28,
2006 2005
-------------------------
Income from Distribution Continuing
Operations before non-operating items,
income taxes and minority interest - GAAP $20,257 $13,016
Canadian restructuring charges - 1,640
Stock-based compensation expense 676 -
-------------------------
Income from Distribution Continuing
Operations before non-operating items,
income taxes and minority interest - Non
GAAP $20,933 $14,656
=========================
3. Income from Contract Assembly Continuing Operations Reconciliation:
Three Months Three Months
Ended Ended
February 28, February 28,
2006 2005
-------------------------
Income from Contract Assembly Continuing
Operations before non-operating items,
income taxes and minority interest - GAAP $ 1,990 $ 3,406
Canadian restructuring charges - -
Stock-based compensation expense 59 -
-------------------------
Income from Contract Assembly Continuing
Operations before non-operating items,
income taxes and minority interest - Non
GAAP $ 2,049 $ 3,406
=========================
4. Operating Income Reconciliation:
Three Months Three Months
Ended Ended
February 28, February 28,
2006 2005
-------------------------
Income from Continuing Operations before non-
operating items, income taxes and minority
interest - GAAP $22,247 $16,422
Canadian restructuring charges - 1,640
Stock-based compensation expense 735 -
-------------------------
Income from Continuing Operations before non-
operating items, income taxes and minority
interest - Non GAAP $22,982 $18,062
=========================
5. Net Income Reconciliation:
Three Months Three Months
Ended Ended
February 28, February 28,
2006 2005
-------------------------
Net Income - GAAP $10,683 $ 8,607
Stock-based compensation expense, net of tax 470 -
Canadian restructuring charges, net of tax - 1,092
Penalty on early debt payment, net of tax - 333
Income from discontinued operations, net of
tax - (304)
-------------------------
Net Income - Non GAAP $11,153 $ 9,728
=========================
6. Diluted Earnings Per Share Reconciliation:
Three Months Three Months
Ended Ended
February 28, February 28,
2006 2005
-------------------------
Diluted Earnings Per Share - GAAP $ 0.34 $ 0.27
Stock-based compensation expense, net of tax 0.02 -
Canadian restructuring charges, net of tax - 0.04
Penalty on early debt payment, net of tax - 0.01
Income from discontinued operations, net of
tax - (0.01)
-------------------------
Diluted Earnings Per Share - Non GAAP $ 0.36 $ 0.31
=========================
CONTACT: SYNNEX Corporation
Laura Crowley, 510-668-3715
laurack@synnex.com