SYNNEX Corporation Reports 2007 Second Quarter Results
FREMONT, CA — June 25, 2007 — SYNNEX
Corporation (NYSE:SNX), a business process services company, today
announced financial results for the second quarter ended May 31, 2007.
For the second quarter of fiscal 2007, revenues increased by 11%
to $1.68 billion compared to $1.51 billion for the quarter ended May
31, 2006. Net income for the second quarter increased by 30% to $14.7
million, or $0.45 per share, compared with $11.3 million, or $0.36 per
share in the prior year quarter.
"Our second quarter results mark a significant milestone on the
road to evolving our business model from a traditional broad line
distributor to a leading business process services company," said
Robert T. Huang, President and Chief Executive Officer. "The strategic
acquisitions we have made over the past year to enhance our solutions
offerings and our continued relentless focus on operational
efficiencies in our core distribution service should further enable,
and help accelerate, our goal to reach a double digit return on
invested capital."
Second Quarter Financial Highlights:
Income from operations was $25.8 million, or 1.53% of
revenues, versus $22.4 million, or 1.48% of revenues in the
prior year quarter.
Second quarter depreciation and amortization were $2.4 million
and $1.7 million, respectively.
Second quarter capital expenditures were $15.5 million, which
includes $12.5 million for the purchase of a new logistics
facility in Guelph, Canada.
On April 5, 2007, the Company acquired controlling interest in
China Civilink (Cayman), which operates under the name of
HiChina Web Solutions, for $30.0 million.
On May 1, 2007, the Company completed the acquisition of
substantially all of the assets of the Redmond Group of
Companies (RGC) for approximately $40.0 million, which
includes $9.0 million of assumed debt.
Combined revenue results from the two acquisitions was
approximately $16.0 million for the quarter. There was a
negligible impact to the Company's reported net income from
these acquisitions.
Off-balance sheet borrowings under the Company's accounts
receivable securitization program totaled approximately $83.5
million as of May 31, 2007, compared to $289.7 million for the
quarter ended May 31, 2006. During the first quarter of 2007,
the Company amended the terms of its U.S. accounts receivable
securitization. The amended U.S. arrangement requires the
Company to account for this transaction as an on-balance sheet
borrowing, leaving only the SYNNEX Canada accounts receivable
securitization as off-balance sheet borrowing.
As a result of recent acquisitions, the dependency and integrated
nature of the Company's distribution and assembly services, how the
Company assesses its service offerings, and a review of the
appropriate generally accepted accounting principles, the Company has
deemed that its business process service offerings constitute one
reportable segment. This external reporting will be reflective in the
Company's interim financial statements for the second quarter of
fiscal 2007.
Third Quarter Fiscal 2007 Outlook:
The following statements are based on the Company's current
expectations for the third quarter of fiscal 2007. These statements
are forward-looking and actual results may differ materially.
Revenues are expected to be in the range of $1.70 billion to
$1.75 billion.
Net income is expected to be in the range of $14.5 million to
$15.2 million.
Earnings per share are expected to be in the range of $0.44 to
$0.46.
The calculation of earnings per share for the third quarter of
fiscal 2007 is based on an approximate weighted-average diluted share
count of 33.0 million.
On March 9, 2007, SYNNEX Canada completed the purchase, for
approximately $12.5 million, of a logistics facility in Guelph, Canada
where it will consolidate certain of its existing Canada logistics
facilities. Within the reported results of the second quarter of
fiscal 2007, the Company incurred approximately $0.01 on an earnings
per share basis in additional costs to operate the new and existing
facilities. The Company expects to incur a similar amount of expense
over the next quarter until the integration is complete. This amount
is factored into the preceding third quarter outlook.
In addition, the Company anticipates incurring restructuring and
other non-recurring costs of approximately $1.0 to $1.5 million to
complete the integration of the RGC acquisition and facilities
consolidation at its Canadian operations. This amount is expected to
be incurred in the third quarter of fiscal 2007 and is not included in
the Company's third quarter outlook provided above.
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 1099546.
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 July 9, 2007.
About SYNNEX
Founded in 1980, SYNNEX Corporation, a Fortune 500 company, is a
business process services company offering a comprehensive range of
services to original equipment manufacturers, software publishers and
reseller customers worldwide. SYNNEX offers product distribution,
logistics services, business process outsourcing and contract
assembly. 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 goal to reach a double digit return on
invested capital, expectations of our revenues, net income and
earnings per share for the third quarter of fiscal 2007, change in our
segment reporting, the consolidation of our Canadian facilities, and
the related expenses and impact on our earnings per share, and the
impact of integrating RGC, and the related expenses and the timing of
these 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; risks associated
with the consolidation and integration of our recent acquisitions and
other risks and uncertainties detailed in our Form 10-Q for the fiscal
quarter ended February 28, 2007 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)
May 31, November 30,
2007 2006
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 37,814 $ 27,881
Short-term investments 15,494 13,271
Accounts receivable, net 552,095 363,437
Receivable from vendors, net 96,580 95,080
Receivable from affiliates 8,564 1,855
Inventories 569,993 594,642
Deferred income taxes 16,183 17,994
Current deferred assets 14,704 13,990
Other current assets 16,166 9,887
------------ ------------
Total current assets 1,327,593 1,138,037
Property and equipment, net 58,246 36,698
Goodwill and intangible assets, net 118,593 48,588
Deferred income taxes 6,833 6,716
Long-term deferred assets 120,612 139,111
Other assets 17,156 13,584
------------ ------------
Total assets $ 1,649,033 $ 1,382,734
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Borrowings under securitization, term
loans and lines of credit $ 247,235 $ 50,834
Accounts payable 505,230 462,480
Payable to affiliates 62,182 89,831
Accrued liabilities 91,697 81,818
Current deferred liabilities 36,047 29,516
Income taxes payable 13,578 6,693
------------ ------------
Total current liabilities 955,969 721,172
Long-term borrowings 47,958 47,967
Long-term liabilities 12,183 10,131
Long-term deferred liabilities 76,800 90,686
Deferred income taxes 1,311 1,232
------------ ------------
Total liabilities 1,094,221 871,188
------------ ------------
Minority interest in subsidiary 656 -
------------ ------------
Stockholders' equity:
Preferred stock - -
Common stock 31 30
Additional paid-in-capital 188,386 181,188
Accumulated other comprehensive income 20,864 13,999
Retained earnings 344,875 316,329
------------ ------------
Total stockholders' equity 554,156 511,546
------------ ------------
Total liabilities and stockholders'
equity $ 1,649,033 $ 1,382,734
============ ============
SYNNEX Corporation
Consolidated Statements of Operations
(in thousands, except for per share amounts)
(unaudited)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
May 31, May 31, May 31, May 31,
2007 2006 2007 2006
---------------------------------------------
Revenue $1,684,808 $1,511,701 $3,273,084 $3,013,436
Cost of revenue 1,600,563 1,443,353 3,114,415 2,880,078
---------------------------------------------
Gross profit 84,245 68,348 158,669 133,358
Selling, general and
administrative
expenses 58,433 45,952 107,914 88,715
---------------------------------------------
Income from operations
before non-operating
items and income taxes 25,812 22,396 50,755 44,643
Interest expense and
finance charges, net 3,695 4,340 6,753 10,192
Other (income) expense,
net (904) 482 (1,062) 209
---------------------------------------------
Income from operations
before income taxes 23,021 17,574 45,064 34,242
Provision for income
taxes 8,288 6,257 16,456 12,242
Minority interest in
subsidiary 62 - 62 -
---------------------------------------------
Net income $ 14,671 $ 11,317 $ 28,546 $ 22,000
=============================================
Diluted earnings per
share $ 0.45 $ 0.36 $ 0.88 $ 0.70
=============================================
Diluted weighted-
average common shares
outstanding 32,657 31,600 32,559 31,477
=============================================
CONTACT: SYNNEX Corporation
Laura Crowley, 510-668-3715
Director of Investor Relations and Public Relations
laurack@synnex.com