SYNNEX Corporation Reports 2007 First Quarter Results
FREMONT, CA--March 22, 2007--SYNNEX
Corporation (NYSE:SNX), a global IT supply chain services company,
today announced financial results for the first quarter ended February
28, 2007.
For the first quarter of fiscal 2007, revenues increased by 5.8%
to $1.59 billion compared to $1.50 billion for the quarter ended
February 28, 2006. Net income for the first quarter increased by 29.9%
to $13.9 million, or $0.43 per share, compared with $10.7 million, or
$0.34 per share in the prior year quarter."We continue to deliver improved results due to increased
efficiencies in our business model and solid execution in our core
distribution business," said Robert T. Huang, President and Chief
Executive Officer. "Recent investments intended to enhance our
distribution segment and further develop our Business Process
Outsourcing revenue will enable our ongoing overall growth strategy.
During the quarter I was pleased to welcome our new team members from
Link2Support and PC Wholesale and I look forward to working with them
to further develop the services we offer our vendors and customers
within the supply chain."
First Quarter Financial Notes:
-- Distribution revenues were $1.48 billion, an increase of 6.2%
over the prior year quarter.
-- Contract assembly revenues were $111.4 million, flat
comparatively over the prior year quarter.
-- Income from operations was $24.9 million, or 1.57% of
revenues, versus $22.2 million, or 1.48% of revenues in the
prior year quarter.
-- Distribution income from operations was $23.6 million, or
1.60% of distribution revenues, versus $20.3 million, or 1.46%
of revenues in the prior year quarter.
-- Contract assembly income from operations was $1.4 million, or
1.24% of contract assembly revenues, versus $2.0 million, or
1.79% of revenues in the prior year quarter.
-- First quarter depreciation and amortization were $1.6 million
and $1.2 million, respectively.
-- First quarter capital expenditures were $1.9 million.
-- The Company completed the acquisitions of Link2Support, Inc.
and PC Wholesale for a total of $54.4 million, which excludes
any potential future adjustment or earn-out payments that
could be made. Both transactions were completed at the end of
the quarter, thus revenue and profit contributions were
negligible.
-- During the quarter the Company completed an arrangement with
its existing banking group which increased the Company's
United States borrowing facilities to a maximum, based on
available assets, of $450 million, from the previous level of
$320 million. The terms of the new arrangement require the
accounts receivable securitization portion of the borrowing
facilities to be classified as an on-balance sheet borrowing
transaction, versus the prior agreement which allows the
accounting for the accounts receivable funding to be
off-balance sheet. The February 28, 2007 balance sheet,
included in this press release, reflects this change and is
evidenced by the increase in accounts receivable and
borrowings.
-- Off-balance sheet borrowings for SYNNEX Canada totaled
approximately $64.1 million at February 28, 2007.
Second Quarter Fiscal 2007 Outlook:
The following statements are based on the Company's current
expectations for the second quarter of fiscal 2007. The outlook
amounts do not include any impact of 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 $1.595 billion to
$1.645 billion.
-- Net income is expected to be in the range of $14.0 million to
$14.7 million.
-- Earnings per share are expected to be in the range of $0.43 to
$0.45.
The calculation of earnings per share for the second quarter of
fiscal 2007 is based on an approximate weighted-average diluted share
count of 32.8 million. On March 5, 2007, SYNNEX Canada completed the purchase, for
approximately $12 million, of a logistics facility in Guelph, Canada
where it will consolidate its two existing Ontario Canada area
logistics facilities. Over the next three quarters, the Company
expects to incur up to $0.01 on an earnings per share basis, per
quarter, in additional expenses to operate the new and existing
facilities until the integration is complete. This amount is factored
into the above outlook. The Company may incur additional non-recurring
expenses when the existing facilities are closed. Conference Call and Webcast SYNNEX will be discussing its financial results and outlook on a
conference call today at 2:00 p.m. (PDT). A webcast of the call will
be available at http://ir.synnex.com. The conference call can be
accessed by dialing 866-261-3330 in North America or 703-639-1224
outside North America. The confirmation code for the call is 1057975.
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 5, 2007. 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, business process outsourcing 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, provide, could and should and the negative of these
terms or other similar expressions. These statements, including
statements regarding our efforts to grow our overall growth strategy,
anticipated benefits of our acquisition of Link2Support and PC
Wholesale, our expectations of our revenues, net income and earnings
per share for the second quarter of fiscal 2007, and the consolidation
of our Canadian facilities and related expenses 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, 2006 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. Copyright 2007 SYNNEX Corporation. All rights reserved. SYNNEX,
the SYNNEX Logo, and all other SYNNEX company, product and services
names and slogans are trademarks or registered trademarks of SYNNEX
Corporation. SYNNEX and the SYNNEX Logo Reg. U.S. Pat. & Tm. Off.
Other names and marks are the property of their respective owners.
SYNNEX Corporation
Consolidated Balance Sheets
(in thousands)
(unaudited)
February 28, November 30,
2007 2006
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 22,473 $ 27,881
Short-term investments 14,986 13,271
Accounts receivable, net 589,512 363,437
Receivable from vendors, net 88,880 95,080
Receivable from affiliates 5,210 1,855
Inventories 524,300 594,642
Deferred income taxes 16,897 17,994
Current deferred assets 13,713 13,990
Other current assets 11,755 9,887
------------ ------------
Total current assets 1,287,726 1,138,037
Property and equipment, net 40,182 36,698
Goodwill and intangible assets, net 73,410 48,588
Deferred income taxes 6,722 6,716
Long-term deferred assets 126,244 139,111
Other assets 15,993 13,584
------------ ------------
Total assets $1,550,277 $1,382,734
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Borrowings under securitization, term
loans and lines of credit $ 243,973 $ 50,834
Accounts payable 461,657 462,480
Payable to affiliates 70,025 89,831
Accrued liabilities 74,196 81,818
Current deferred liabilities 28,389 29,516
Income taxes payable 10,048 6,693
------------ ------------
Total current liabilities 888,288 721,172
Long-term borrowings 41,715 47,967
Long-term liabilities 11,048 10,131
Long-term deferred liabilities 81,432 90,686
Deferred income taxes 1,205 1,232
------------ ------------
Total liabilities 1,023,688 871,188
------------ ------------
Stockholders' equity:
Preferred stock - -
Common stock 30 30
Additional paid-in-capital 184,173 181,188
Accumulated other comprehensive income 12,182 13,999
Retained earnings 330,204 316,329
------------ ------------
Total stockholders' equity 526,589 511,546
------------ ------------
Total liabilities and stockholders'
equity $1,550,277 $1,382,734
============ ============
SYNNEX Corporation
Consolidated Statements of Operations
(in thousands, except for per share amounts)
(unaudited)
Three Months Three Months
Ended Ended
February 28, February 28,
2007 2006
-------------------------
Revenue $1,588,276 $1,501,735
Cost of revenue 1,513,852 1,436,725
-------------------------
Gross profit 74,424 65,010
Selling, general and administrative expenses 49,481 42,763
-------------------------
Income from operations before non-operating
items and income taxes 24,943 22,247
Interest expense and finance charges, net 3,058 5,853
Other (income) expense, net (158) (273)
-------------------------
Income from operations before income taxes 22,043 16,667
Provision for income taxes 8,168 5,984
-------------------------
Net income $ 13,875 $ 10,683
-------------------------
Diluted earnings per share $ 0.43 $ 0.34
-------------------------
Diluted weighted-average common shares
outstanding 32,372 31,204
-------------------------
CONTACT: SYNNEX Corporation
Laura Crowley, 510-668-3715
Director of Investor Relations and Public Relations
laurack@synnex.com
SOURCE: SYNNEX Corporation