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TD SYNNEX Reports Fiscal 2023 First Quarter Results

March 28, 2023
  • Revenue of $15.1 billion, down 2% from the prior fiscal first quarter, up 1% in constant currency
  • Non-GAAP gross billings of $20.2 billion, up 1% from the prior fiscal first quarter
  • Operating income of $298 million, up 34% from the prior fiscal first quarter and non-GAAP operating income of $443 million, up 3% from the prior fiscal first quarter
  • Diluted earnings per share (“EPS”) of $1.75, up 28% from the prior fiscal first quarter and non-GAAP diluted EPS of $2.93, towards the high end of the guidance range provided, but down 3% from the prior fiscal first quarter primarily due to higher interest expense
  • Achieved $25 million in incremental merger-related cost synergies during the fiscal first quarter, and have recognized over $170 million to date
  • Returned $148 million to shareholders in the fiscal first quarter in the form of share repurchases and dividends

TD SYNNEX (NYSE: SNX) today announced financial results for the fiscal first quarter ended February 28, 2023.

Consolidated Financial Highlights for the Fiscal 2023 First Quarter:
(Amounts may not add or compute due to rounding)

 

 

Q1 FY23

 

Q1 FY22

 

Net Change from Q1 FY22

Revenue ($M)

 

$

15,125.4

 

 

$

15,470.0

 

 

(2.2

)%

Non-GAAP gross billings ($M)(1)

 

$

20,202.2

 

 

$

20,064.5

 

 

0.7

%

Operating income ($M)

 

$

298.2

 

 

$

222.4

 

 

34.0

%

Non-GAAP operating income ($M)(1)

 

$

442.9

 

 

$

431.9

 

 

2.6

%

Operating margin

 

 

1.97

%

 

 

1.44

%

 

53 bps

Non-GAAP operating margin(1)

 

 

2.93

%

 

 

2.79

%

 

14 bps

Net income ($M)

 

$

167.0

 

 

$

132.3

 

 

26.2

%

Non-GAAP net income ($M)(1)

 

$

279.2

 

 

$

292.4

 

 

(4.5

)%

Diluted EPS

 

$

1.75

 

 

$

1.37

 

 

27.7

%

Non-GAAP Diluted EPS(1)

 

$

2.93

 

 

$

3.03

 

 

(3.3

)%

“Our broad, best-in-class portfolio and flexible business model allowed us to grow revenue in constant currency, and expand profitability and shareholder returns in the quarter. Our teams executed our strategy well, pivoting from the weaker demand environment for endpoint products to areas of growth, while simultaneously expanding margins,” said Rich Hume, CEO of TD SYNNEX. “We are confident that our variable cost structure, diversified portfolio and commitment to investing in high-growth technologies provide us with the flexibility to adjust to changes in the market environment.”

Fiscal 2023 First Quarter Highlights

  • Revenue was $15.1 billion, down 2.2% from the prior fiscal first quarter. On a constant currency basis, revenue increased by 0.7% compared to the prior fiscal first quarter. Revenue growth in constant currency was driven primarily by our Advanced Solutions portfolio and high-growth technologies, partially offset by a decline in our Endpoint Solutions portfolio. The shift in product mix resulted in the presentation of incremental revenues on a net basis, which negatively impacted our revenue growth by approximately 3%.
    • Americas: Revenue was $8.6 billion, a decrease of 4.8% compared to the prior fiscal first quarter. On a constant currency basis, revenue decreased 4.2% compared to the prior fiscal first quarter.
    • Europe: Revenue was $5.5 billion, a decrease of 1.1% compared to the prior fiscal first quarter. On a constant currency basis, revenue increased 5.1% compared to the prior fiscal first quarter.
    • Asia-Pacific and Japan: Revenue was $966 million, an increase of 18.4% compared to the prior fiscal first quarter. On a constant currency basis, revenue increased 25.8% compared to the prior fiscal first quarter.
  • Non-GAAP gross billings were $20.2 billion, compared to $20.1 billion in the prior fiscal first quarter.
  • Operating income was $298 million, compared to $222 million in the prior fiscal first quarter. Non-GAAP operating income was $443 million, compared to $432 million in the prior fiscal first quarter. Operating margin was 2.0%, compared to 1.4% in the prior fiscal first quarter. Non-GAAP operating margin was 2.9%, compared to 2.8% in the prior fiscal first quarter. Non-GAAP operating margin expansion was driven by mix shift to high-growth technologies and synergy execution.
    • Americas: Operating income was $180 million, compared to $139 million in the prior fiscal first quarter. Non-GAAP operating income was $266 million, compared to $258 million in the prior fiscal first quarter. Operating margin was 2.1%, compared to 1.5% in the prior fiscal first quarter. Non-GAAP operating margin was 3.1%, compared to 2.8% in the prior fiscal first quarter.
    • Europe: Operating income was $88 million, compared to $65 million in the prior fiscal first quarter. Non-GAAP operating income was $143 million, compared to $152 million in the prior fiscal first quarter. Operating margin was 1.6%, compared to 1.2% in the prior fiscal first quarter. Non-GAAP operating margin was 2.6%, compared to 2.7% in the prior fiscal first quarter.
    • Asia-Pacific and Japan: Operating income was $30 million, compared to $19 million in the prior fiscal first quarter. Non-GAAP operating income was $33 million, compared to $21 million in the prior fiscal first quarter. Operating margin was 3.2%, compared to 2.3% in the prior fiscal first quarter. Non-GAAP operating margin was 3.4%, compared to 2.6% in the prior fiscal first quarter.
  • Diluted EPS was $1.75, compared to $1.37 in the prior fiscal first quarter, an increase of 28%. Non-GAAP diluted EPS was $2.93, compared to $3.03 in the prior fiscal first quarter. This was towards the higher end of the guidance range we provided, but down 3% from the prior fiscal first quarter primarily due to higher interest expense.
  • Cash used in operations was approximately $103 million for the quarter, due to seasonal working capital trends.
  • Returned $148 million to shareholders via repurchases of our common stock of $115 million and dividends of $33 million.

The following statements are based on TD SYNNEX’s current expectations for the fiscal 2023 second quarter. Non-GAAP financial measures exclude the impact of acquisition, integration and restructuring costs, amortization of intangible assets, share-based compensation, purchase accounting adjustments, and the related tax effects thereon. These statements are forward-looking and actual results may differ materially.

Fiscal 2023 Second Quarter Outlook

  • Revenue is expected to be in the range of $14.0 billion to $15.0 billion.
  • Non-GAAP gross billings are expected to be in the range of $18.7 billion to $20.0 billion, compared to $19.7 billion in the prior fiscal second quarter.
  • Net income is expected to be in the range of $105 million to $152 million and on a non-GAAP basis, net income is expected to be in the range of $214 million to $261 million.
  • Diluted earnings per share is expected to be in the range of $1.10 to $1.60 and on a non-GAAP basis, diluted earnings per share is expected to be in the range of $2.25 to $2.75, based on estimated outstanding diluted weighted average shares of 94.2 million.
  • The outlook for the fiscal 2023 second quarter reflects the impact of year-over-year foreign exchange headwinds on revenue and non-GAAP gross billings of approximately $200 million and $250 million, respectively, and interest rate movements of approximately $30 million.

Dividend

TD SYNNEX announced today that its Board of Directors declared a quarterly cash dividend of $0.35 per common share. The dividend is payable on April 28, 2023 to stockholders of record as of the close of business on April 14, 2023.

Conference Call and Webcast

TD SYNNEX will host a conference call today to discuss the 2023 fiscal first quarter results at 6:00 AM (PT)/9:00 AM (ET).

A live audio webcast of the earnings call will be accessible at ir.tdsynnex.com and a replay of the webcast will be available following the call.

About TD SYNNEX

TD SYNNEX (NYSE: SNX) is a leading global distributor and solutions aggregator for the IT ecosystem. We’re an innovative partner helping more than 150,000 customers in 100+ countries to maximize the value of technology investments, demonstrate business outcomes and unlock growth opportunities. Headquartered in Fremont, California, and Clearwater, Florida, TD SYNNEX’s 23,500 co-workers are dedicated to uniting compelling IT products, services and solutions from 1,500+ best-in-class technology vendors. Our edge-to-cloud portfolio is anchored in some of the highest-growth technology segments including cloud, cybersecurity, big data/analytics, IoT, mobility and everything as a service. TD SYNNEX is committed to serving customers and communities, and we believe we can have a positive impact on our people and our planet, intentionally acting as a respected corporate citizen. We aspire to be a diverse and inclusive employer of choice for talent across the IT ecosystem. For more information, visit TDSYNNEX.com or follow us on Twitter, LinkedIn, Facebook and Instagram.

(1)Use of Non-GAAP Financial Information

In addition to the financial results presented in accordance with GAAP, TD SYNNEX refers to revenues on a constant currency basis which adjusts for the translation effect of foreign currencies so that certain financial results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of our performance. Financial results adjusted for constant currency are calculated by translating current period activity using the comparable prior year periods’ currency conversion rate. TD SYNNEX uses non-GAAP gross billings, which adjusts revenues to exclude costs related to sales of third-party supplier service contracts, software as a service arrangements and certain fulfillment contracts. Non-GAAP gross billings are a useful non-GAAP metric in understanding the volume of our business activity and serve as an important performance metric in internally managing our operations. TD SYNNEX uses non-GAAP gross profit and non-GAAP gross margin which exclude purchase accounting adjustments. TD SYNNEX also uses adjusted selling, general and administrative expenses, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, and non-GAAP diluted earnings per share, which are non-GAAP financial measures that exclude acquisition, integration and restructuring costs, the amortization of intangible assets, share-based compensation expense, purchase accounting adjustments, legal settlements and other litigation, net and the related tax effects thereon. Further, the Company uses adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) which excludes other income (expense), net, acquisition, integration and restructuring costs, share-based compensation expense and purchase accounting adjustments. In prior periods, TD SYNNEX has excluded other items relevant to those periods for purposes of its non-GAAP financial measures.

Acquisition, integration and restructuring costs typically consist of acquisition, integration, restructuring and divestiture related costs and are expensed as incurred. These expenses primarily represent professional services costs for legal, banking, consulting and advisory services, severance and other personnel-related costs, share-based compensation expense and debt extinguishment fees. From time to time, this category may also include transaction-related gains/losses on divestitures/spin-off of businesses, costs related to long-lived assets including impairment charges and accelerated depreciation and amortization expense due to changes in asset useful lives, as well as various other costs associated with the acquisition or divestiture.

TD SYNNEX’s acquisition activities have resulted in the recognition of finite-lived intangible assets which consist primarily of customer relationships and vendor lists. Finite-lived intangible assets are amortized over their estimated useful lives and are tested for impairment when events indicate that the carrying value may not be recoverable. The amortization of intangible assets is reflected in the Company’s Statements of Operations. Although intangible assets contribute to the Company’s revenue generation, the amortization of intangible assets does not directly relate to the sale of the Company’s products. Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of the Company’s acquisition activity. Accordingly, the Company believes excluding the amortization of intangible assets, along with the other non-GAAP adjustments, which neither relate to the ordinary course of the Company’s business nor reflect the Company’s underlying business performance, enhances the Company’s and investors’ ability to compare the Company’s past financial performance with its current performance and to analyze underlying business performance and trends. Intangible asset amortization excluded from the related non-GAAP financial measure represents the entire amount recorded within the Company’s GAAP financial statements, and the revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure. Intangible asset amortization is excluded from the related non-GAAP financial measure because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised.

Share-based compensation expense is a non-cash expense arising from the grant of equity awards to employees based on the estimated fair value of those awards. Although share-based compensation is an important aspect of the compensation of our employees, the fair value of the share-based awards may bear little resemblance to the actual value realized upon the vesting or future exercise of the related share-based awards and the expense can vary significantly between periods as a result of the timing of grants of new stock-based awards, including grants in connection with acquisitions. Given the variety and timing of awards and the subjective assumptions that are necessary when calculating share-based compensation expense, TD SYNNEX believes this additional information allows investors to make additional comparisons between our operating results from period to period.

Purchase accounting adjustments are primarily related to the impact of recognizing the acquired vendor and customer liabilities related to the merger with Tech Data at fair value. The Company expects the duration of these adjustments to benefit our non-GAAP operating income through a portion of fiscal 2023 based on historical settlement patterns with our vendors and in accordance with the timing defined in our policy for releasing vendor and customer liabilities we deem remote to be paid.

Trailing fiscal four quarters ROIC is defined as the last four quarters’ tax effected operating income divided by the average of the last five quarterly balances of borrowings and equity, net of cash. Adjusted ROIC is calculated by excluding the tax effected impact of non-GAAP adjustments from operating income and by excluding the cumulative tax effected impact of current and prior period non-GAAP adjustments on equity.

TD SYNNEX also uses free cash flow, which is cash flow from operating activities, reduced by purchases of property and equipment. TD SYNNEX uses free cash flow to conduct and evaluate its business because, although it is similar to cash flow from operations, TD SYNNEX believes it is an additional useful measure of cash flows since purchases of property and equipment are a necessary component of ongoing operations. Free cash flow reflects an additional way of viewing TD SYNNEX’s liquidity that, when viewed with its GAAP results, provides a more complete understanding of factors and trends affecting its cash flows. Free cash flow has limitations as it does not represent the residual cash flow available for discretionary expenditures. For example, free cash flow does not incorporate payments for business acquisitions. Therefore, TD SYNNEX believes it is important to view free cash flow as a complement to its entire Consolidated Statements of Cash Flows.

TD SYNNEX management uses non-GAAP financial measures internally to understand, manage and evaluate the business, to establish operational goals, and in some cases for measuring performance for compensation purposes. These non-GAAP measures are intended to provide investors with an understanding of TD SYNNEX’s operational results and trends that more readily enable investors to analyze TD SYNNEX’s base financial and operating performance and to facilitate period-to-period comparisons and analysis of operational trends, as well as for planning and forecasting in future periods. Management believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. As these non-GAAP financial measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures, and should be read only in conjunction with TD SYNNEX’s Consolidated Financial Statements prepared in accordance with GAAP. A reconciliation of TD SYNNEX’s GAAP to non-GAAP financial information is set forth in the supplemental tables at the end of this press release.

Safe Harbor Statement

Statements in this news release regarding TD SYNNEX that 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. Such forward-looking statements are inherently uncertain, and shareholders and other potential investors must recognize that actual results may differ materially from TD SYNNEX expectations as a result of a variety of factors. These forward-looking statements may be identified by terms such as believe, foresee, expect, may, will, provide, could and should and the negative of these terms or other similar expressions. These forward-looking statements include, but are not limited to, statements about our strategy, plans and positioning, as well as guidance related to the second quarter of 2023. Such forward-looking statements are based upon management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which TD SYNNEX is unable to predict or control, that may cause TD SYNNEX actual results, performance, or plans to differ materially from any future results, performance or plans expressed or implied by such forward-looking statements.

These risks and uncertainties include, but are not limited to: the risk that the legacy SYNNEX and legacy Tech Data businesses will not be integrated successfully or realize the anticipated benefits of the combined company; the unfavorable outcome of any legal proceedings that have been or may be instituted against us; the ability to retain key personnel; general economic and political conditions; any weakness in information technology and consumer electronics spending; seasonality; the loss or consolidation of one or more of our significant original equipment manufacturer, or 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; our ability to gain market share; variations in supplier-sponsored programs; changes in our costs and operating expenses; changes in foreign currency exchange rates; increased inflation; increased risk in the banking system; changes in tax laws; risks associated with our international operations; uncertainties and variability in demand by our reseller and integration 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 incidents of theft; the declaration, timing and payment of dividends, and the Board’s reassessment thereof; and other risks and uncertainties detailed in our Form 10-K for the fiscal year ended November 30, 2022 and subsequent SEC filings. Statements included in this press release are based upon information known to TD SYNNEX as of the date of this release, and TD SYNNEX assumes no obligation to update information contained in this press release unless otherwise required by law.

Copyright 2023 TD SYNNEX CORPORATION. All rights reserved. TD SYNNEX, the TD SYNNEX Logo, and all other TD SYNNEX company, product and services names and slogans are trademarks or registered trademarks of TD SYNNEX Corporation. Other names and marks are the property of their respective owners.

TD SYNNEX Corporation

Consolidated Balance Sheets

(Currency and share amounts in thousands, except par value)

(Amounts may not add or compute due to rounding)

(Unaudited)

 

 

 

February 28, 2023

 

November 30, 2022

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

539,285

 

 

$

522,604

 

Accounts receivable, net

 

 

9,357,059

 

 

 

9,420,999

 

Receivables from vendors, net

 

 

974,720

 

 

 

819,135

 

Inventories

 

 

8,372,834

 

 

 

9,066,620

 

Other current assets

 

 

721,338

 

 

 

671,507

 

Total current assets

 

 

19,965,236

 

 

 

20,500,865

 

Property and equipment, net

 

 

429,882

 

 

 

421,064

 

Goodwill

 

 

3,832,762

 

 

 

3,803,850

 

Intangible assets, net

 

 

4,390,100

 

 

 

4,422,877

 

Other assets, net

 

 

617,186

 

 

 

585,342

 

Total assets

 

$

29,235,166

 

 

$

29,733,998

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Borrowings, current

 

$

572,771

 

 

$

268,128

 

Accounts payable

 

 

12,997,681

 

 

 

13,988,980

 

Other accrued liabilities

 

 

2,220,164

 

 

 

2,171,613

 

Total current liabilities

 

 

15,790,616

 

 

 

16,428,721

 

Long-term borrowings

 

 

3,815,952

 

 

 

3,835,665

 

Other long-term liabilities

 

 

528,842

 

 

 

501,856

 

Deferred tax liabilities

 

 

951,170

 

 

 

942,250

 

Total liabilities

 

 

21,086,580

 

 

 

21,708,492

 

Stockholders’ equity:

 

 

 

 

Preferred stock, $0.001 par value, 5,000 shares authorized, no shares issued or outstanding

 

 

 

 

 

 

Common stock, $0.001 par value, 200,000 shares authorized, 98,901 and 98,696 shares issued as of February 28, 2023 and November 30, 2022, respectively

 

 

99

 

 

 

99

 

Additional paid-in capital

 

 

7,400,752

 

 

 

7,374,100

 

Treasury stock, 5,287 and 4,049 shares as of February 28, 2023 and November 30, 2022, respectively

 

 

(458,698

)

 

 

(337,217

)

Accumulated other comprehensive loss

 

 

(635,609

)

 

 

(719,710

)

Retained earnings

 

 

1,842,042

 

 

 

1,708,234

 

Total stockholders' equity

 

 

8,148,586

 

 

 

8,025,506

 

Total liabilities and equity

 

$

29,235,166

 

 

$

29,733,998

 

TD SYNNEX Corporation

Consolidated Statements of Operations

(Currency and share amounts in thousands, except per share amounts)

(Amounts may not add or compute due to rounding)

(Unaudited)

 

 

 

Three Months Ended

 

 

February 28, 2023

 

February 28, 2022

Revenue

 

$

15,125,371

 

 

$

15,469,977

 

Cost of revenue

 

 

(14,121,804

)

 

 

(14,501,316

)

Gross profit

 

 

1,003,567

 

 

 

968,661

 

Selling, general and administrative expenses

 

 

(654,223

)

 

 

(652,851

)

Acquisition, integration and restructuring costs

 

 

(51,182

)

 

 

(93,370

)

Operating income

 

 

298,162

 

 

 

222,440

 

Interest expense and finance charges, net

 

 

(80,200

)

 

 

(42,343

)

Other expense, net

 

 

(156

)

 

 

(4,268

)

Income before income taxes

 

 

217,806

 

 

 

175,829

 

Provision for income taxes

 

 

(50,786

)

 

 

(43,505

)

Net income

 

$

167,020

 

 

$

132,324

 

Earnings per common share:

 

 

 

 

Basic

 

$

1.76

 

 

$

1.38

 

Diluted

 

$

1.75

 

 

$

1.37

 

Weighted-average common shares outstanding:

 

 

 

 

Basic

 

 

94,259

 

 

 

95,584

 

Diluted

 

 

94,539

 

 

 

95,892

 

TD SYNNEX Corporation

Regional Financial Highlights

(Currency in millions)

(Amounts may not add or compute due to rounding)

 

 

 

Q1 FY23

 

Q1 FY22

 

Net Change from
Q1 FY22

Americas

 

 

 

 

 

 

Revenue

 

$

8,638.7

 

 

$

9,074.3

 

 

(4.8

)%

Operating income

 

$

179.5

 

 

$

138.5

 

 

29.6

%

Non-GAAP operating income(1)

 

$

266.4

 

 

$

258.1

 

 

3.2

%

Operating margin

 

 

2.08

%

 

 

1.53

%

 

55 bps

Non-GAAP operating margin(1)

 

 

3.08

%

 

 

2.84

%

 

24 bps

 

 

 

 

 

 

 

Europe

 

 

 

 

 

 

Revenue

 

$

5,520.4

 

 

$

5,579.8

 

 

(1.1

)%

Operating income

 

$

88.2

 

 

$

65.3

 

 

35.0

%

Non-GAAP operating income(1)

 

$

143.4

 

 

$

152.5

 

 

(5.9

)%

Operating margin

 

 

1.60

%

 

 

1.17

%

 

43 bps

Non-GAAP operating margin(1)

 

 

2.60

%

 

 

2.73

%

 

(13) bps

 

 

 

 

 

 

 

Asia-Pacific and Japan

 

 

 

 

 

 

Revenue

 

$

966.2

 

 

$

815.9

 

 

18.4

%

Operating income

 

$

30.5

 

 

$

18.6

 

 

63.8

%

Non-GAAP operating income(1)

 

$

33.1

 

 

$

21.3

 

 

55.0

%

Operating margin

 

 

3.15

%

 

 

2.28

%

 

87 bps

Non-GAAP operating margin(1)

 

 

3.42

%

 

 

2.62

%

 

80 bps

(1)

A reconciliation of TD SYNNEX’s GAAP to non-GAAP financial information is set forth in the supplemental tables at the end of this press release.

TD SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(Currency in thousands)

(Amounts may not add or compute due to rounding)

 

 

 

Three Months Ended

 

 

February 28, 2023

 

February 28, 2022

Revenue in constant currency

 

 

 

 

Consolidated

 

 

 

 

Revenue

 

$

15,125,371

 

$

15,469,977

Impact of changes in foreign currencies

 

 

459,657

 

 

Revenue in constant currency

 

$

15,585,028

 

$

15,469,977

 

 

 

 

 

Americas

 

 

 

 

Revenue

 

$

8,638,704

 

$

9,074,273

Impact of changes in foreign currencies

 

 

55,155

 

 

Revenue in constant currency

 

$

8,693,859

 

$

9,074,273

 

 

 

 

 

Europe

 

 

 

 

Revenue

 

$

5,520,437

 

$

5,579,788

Impact of changes in foreign currencies

 

 

343,929

 

 

Revenue in constant currency

 

$

5,864,366

 

$

5,579,788

 

 

 

 

 

Asia-Pacific and Japan

 

 

 

 

Revenue

 

$

966,230

 

$

815,916

Impact of changes in foreign currencies

 

 

60,573

 

 

Revenue in constant currency

 

$

1,026,803

 

$

815,916

TD SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(Currency in thousands)

(Amounts may not add or compute due to rounding)

 

 

 

Three Months Ended

 

 

February 28,
2023

 

February 28,
2022

Non-GAAP gross billings

 

 

 

 

Revenue

 

$

15,125,371

 

$

15,469,977

Costs incurred related to sales of third-party supplier service contracts, software as a service arrangements and certain fulfillment contracts

 

 

5,076,822

 

 

4,594,503

Non-GAAP gross billings

 

$

20,202,193

 

$

20,064,480

 

 

Three Months Ended

 

 

February 28,
2023

 

February 28,
2022

Gross profit and gross margin

 

 

 

 

Revenue

 

$

15,125,371

 

 

$

15,469,977

 

 

 

 

 

 

Gross profit

 

$

1,003,567

 

 

$

968,661

 

Purchase accounting adjustments

 

 

7,450

 

 

 

25,079

 

Non-GAAP gross profit

 

$

1,011,017

 

 

$

993,740

 

 

 

 

 

 

Gross margin

 

 

6.63

%

 

 

6.26

%

Non-GAAP gross margin

 

 

6.68

%

 

 

6.42

%

 

 

Three Months Ended

 

February 28,
2023

 

February 28,
2022

Selling, general and administrative expenses

 

 

 

 

Selling, general and administrative expenses

 

$

705,405

 

$

746,221

Acquisition, integration and restructuring costs

 

 

51,182

 

 

93,370

Amortization of intangibles

 

 

73,023

 

 

76,136

Share-based compensation

 

 

13,074

 

 

6,750

Purchase accounting adjustments

 

 

 

 

8,082

Adjusted selling, general and administrative expenses

 

$

568,126

 

$

561,883

TD SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(Currency in thousands)

(Amounts may not add or compute due to rounding)

 

 

 

Three Months Ended

 

 

February 28,
2023

 

February 28,
2022

Operating income and operating margin - Consolidated

 

 

 

 

Revenue

 

$

15,125,371

 

 

$

15,469,977

 

 

 

 

 

 

Operating income

 

$

298,162

 

 

$

222,440

 

Acquisition, integration and restructuring costs

 

 

51,182

 

 

 

93,370

 

Amortization of intangibles

 

 

73,023

 

 

 

76,136

 

Share-based compensation

 

 

13,074

 

 

 

6,750

 

Purchase accounting adjustments

 

 

7,450

 

 

 

33,161

 

Non-GAAP operating income

 

$

442,891

 

 

$

431,857

 

 

 

 

 

 

Operating margin

 

 

1.97

%

 

 

1.44

%

Non-GAAP operating margin

 

 

2.93

%

 

 

2.79

%

 

 

Three Months Ended

 

 

February 28,
2023

 

February 28,
2022

Operating income and operating margin - Americas

 

 

 

 

Revenue

 

$

8,638,704

 

 

$

9,074,273

 

 

 

 

 

 

Operating income

 

$

179,505

 

 

$

138,519

 

Acquisition, integration and restructuring costs

 

 

35,133

 

 

 

51,530

 

Amortization of intangibles

 

 

42,414

 

 

 

43,528

 

Share-based compensation

 

 

9,362

 

 

 

6,750

 

Purchase accounting adjustments

 

 

 

 

 

17,738

 

Non-GAAP operating income

 

$

266,414

 

 

$

258,065

 

 

 

 

 

 

Operating margin

 

 

2.08

%

 

 

1.53

%

Non-GAAP operating margin

 

 

3.08

%

 

 

2.84

%

TD SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(Currency in thousands)

(Amounts may not add or compute due to rounding)

 

 

 

Three Months Ended

 

 

February 28,
2023

 

February 28,
2022

Operating income and operating margin - Europe

 

 

 

 

Revenue

 

$

5,520,437

 

 

$

5,579,788

 

 

 

 

 

 

Operating income

 

$

88,205

 

 

$

65,332

 

Acquisition, integration and restructuring costs

 

 

14,583

 

 

 

39,729

 

Amortization of intangibles

 

 

29,985

 

 

 

31,970

 

Share-based compensation

 

 

3,176

 

 

 

 

Purchase accounting adjustments

 

 

7,450

 

 

 

15,423

 

Non-GAAP operating income

 

$

143,399

 

 

$

152,454

 

 

 

 

 

 

Operating margin

 

 

1.60

%

 

 

1.17

%

Non-GAAP operating margin

 

 

2.60

%

 

 

2.73

%

 

 

Three Months Ended

 

 

February 28,
2023

 

February 28,
2022

Operating income and operating margin - Asia-Pacific and Japan

 

 

 

 

Revenue

 

$

966,230

 

 

$

815,916

 

 

 

 

 

 

Operating income

 

$

30,452

 

 

$

18,589

 

Acquisition, integration and restructuring costs

 

 

1,466

 

 

 

2,111

 

Amortization of intangibles

 

 

624

 

 

 

638

 

Share-based compensation

 

 

536

 

 

 

 

Non-GAAP operating income

 

$

33,078

 

 

$

21,338

 

 

 

 

 

 

Operating margin

 

 

3.15

%

 

 

2.28

%

Non-GAAP operating margin

 

 

3.42

%

 

 

2.62

%

TD SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(Currency in thousands, except per share amounts)

(Amounts may not add or compute due to rounding)

 

 

 

Three Months Ended

 

 

February 28,
2023

 

February 28,
2022

Adjusted EBITDA

 

 

 

 

Net income

 

$

167,020

 

$

132,324

Interest expense and finance charges, net

 

 

80,200

 

 

42,343

Provision for income taxes

 

 

50,786

 

 

43,505

Depreciation(1)

 

 

31,654

 

 

79,365

Amortization of intangibles

 

 

73,023

 

 

76,136

EBITDA

 

$

402,683

 

$

373,673

Other expense, net

 

 

156

 

 

4,268

Acquisition, integration and restructuring costs

 

 

45,029

 

 

40,499

Share-based compensation

 

 

13,074

 

 

6,750

Purchase accounting adjustments

 

 

7,450

 

 

33,161

Adjusted EBITDA

 

$

468,392

 

$

458,351

(1)

Includes depreciation recorded in acquisition, integration, and restructuring costs.

 

 

Three Months Ended

 

 

February 28,
2023

 

February 28,
2022

Net income and diluted EPS

 

 

 

 

Net income

 

$

167,020

 

 

$

132,324

 

Acquisition, integration and restructuring costs

 

 

53,424

 

 

 

95,202

 

Amortization of intangibles

 

 

73,023

 

 

 

76,136

 

Share-based compensation

 

 

13,074

 

 

 

6,750

 

Purchase accounting adjustments

 

 

7,450

 

 

 

33,161

 

Income taxes related to the above

 

 

(34,756

)

 

 

(47,883

)

Income tax capital loss carryback benefit

 

 

 

 

 

(3,246

)

Non-GAAP net income

 

$

279,235

 

 

$

292,444

 

 

 

 

 

 

Diluted EPS(1)

 

$

1.75

 

 

$

1.37

 

Acquisition, integration and restructuring costs

 

 

0.56

 

 

 

0.99

 

Amortization of intangibles

 

 

0.76

 

 

 

0.79

 

Share-based compensation

 

 

0.14

 

 

 

0.07

 

Purchase accounting adjustments

 

 

0.08

 

 

 

0.34

 

Income taxes related to the above

 

 

(0.36

)

 

 

(0.50

)

Income tax capital loss carryback benefit

 

 

 

 

 

(0.03

)

Non-GAAP Diluted EPS(1)

 

$

2.93

 

 

$

3.03

 

(1)

Diluted EPS is calculated using the two-class method. Unvested restricted stock awards granted to employees are considered participating securities. For purposes of calculating Diluted EPS, net income allocated to participating securities was approximately 0.8% and 0.7% of net income for the three months ended February 28, 2023 and 2022, respectively.

TD SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(Amounts may not add or compute due to rounding)

 

 

 

Three Months Ended

(Currency in thousands)

 

February 28, 2023

 

February 28, 2022

Free cash flow

 

 

 

 

Net cash used in operating activities

 

$

(102,795

)

 

$

(1,320,448

)

Purchases of property and equipment

 

 

(37,278

)

 

 

(25,217

)

Free cash flow

 

$

(140,073

)

 

$

(1,345,665

)

 

 

Forecast

 

 

Three Months Ending May 31, 2023

(Currency in millions, except per share amounts)

 

Low

 

High

Net income

 

$

105

 

 

$

152

 

Acquisition, integration and restructuring costs

 

 

50

 

 

 

50

 

Amortization of intangibles

 

 

75

 

 

 

75

 

Share-based compensation

 

 

13

 

 

 

13

 

Purchase accounting adjustments

 

 

6

 

 

 

6

 

Income taxes related to the above

 

 

(35

)

 

 

(35

)

Non-GAAP net income

 

$

214

 

 

$

261

 

 

 

 

 

 

Diluted EPS(1)

 

$

1.10

 

 

$

1.60

 

Acquisition, integration and restructuring costs

 

 

0.53

 

 

 

0.53

 

Amortization of intangibles

 

 

0.79

 

 

 

0.79

 

Share-based compensation

 

 

0.14

 

 

 

0.14

 

Purchase accounting adjustments

 

 

0.06

 

 

 

0.06

 

Income taxes related to the above

 

 

(0.37

)

 

 

(0.37

)

Non-GAAP Diluted EPS

 

$

2.25

 

 

$

2.75

 

(1)

Diluted EPS is calculated using the two-class method. Unvested restricted stock awards granted to employees are considered participating securities. Net income allocable to participating securities is estimated to be approximately 0.8% of the forecast net income for the three months ending May 31, 2023.

TD SYNNEX Corporation

Reconciliation of GAAP to Non-GAAP financial measures

(Amounts may not add or compute due to rounding)

 

 

 

Forecast

 

 

Three Months Ending

(Currency in billions)

 

May 31, 2023

Non-GAAP gross billings

 

Low

 

High

Revenue

 

$

14.0

 

$

15.0

Costs incurred related to sales of third-party supplier service contracts, software as a service arrangements and certain fulfillment contracts

 

 

4.7

 

 

5.0

Non-GAAP gross billings

 

$

18.7

 

$

20.0

 

 

Three Months Ended

(Currency in thousands)

 

May 31, 2022

Non-GAAP gross billings

 

 

Revenue

 

$

15,269,791

Costs incurred related to sales of third-party supplier service contracts, software as a service arrangements and certain fulfillment contracts

 

 

4,414,726

Non-GAAP gross billings

 

$

19,684,517

TD SYNNEX Corporation

Calculation of Financial Metrics

Return on Invested Capital (“ROIC”)

(Currency in thousands)

(Amounts may not add or compute due to rounding)

 

 

 

February 28,
2023

 

February 28,
2022

ROIC

 

 

 

 

Operating income (trailing fiscal four quarters)

 

$

1,126,595

 

 

$

703,910

 

Income taxes on operating income(1)

 

 

(237,869

)

 

 

(114,578

)

Operating income after taxes

 

$

888,726

 

 

$

589,332

 

 

 

 

 

 

Total invested capital comprising equity and borrowings, less cash (last five quarters average)

 

$

11,857,925

 

 

$

6,080,058

 

 

 

 

 

 

ROIC

 

 

7.5

%

 

 

9.7

%

 

 

 

 

 

Adjusted ROIC

 

 

 

 

Non-GAAP operating income (trailing fiscal four quarters)

 

$

1,735,073

 

 

$

1,177,984

 

Income taxes on non-GAAP operating income(1)

 

 

(401,326

)

 

 

(290,195

)

Non-GAAP operating income after taxes

 

$

1,333,747

 

 

$

887,789

 

 

 

 

 

 

Total invested capital comprising equity and borrowings, less cash (last five quarters average)

 

$

11,857,925

 

 

$

6,080,058

 

Tax effected impact of cumulative non-GAAP adjustments (last five quarters average)

 

 

742,036

 

 

 

284,682

 

Total non-GAAP invested capital (last five quarters average)

 

$

12,599,961

 

 

$

6,364,740

 

 

 

 

 

 

Adjusted ROIC

 

 

10.6

%

 

 

13.9

%

(1)

Income taxes on GAAP operating income was calculated using the effective year-to-date tax rates during the respective periods. Income taxes on non-GAAP operating income was calculated by excluding the tax effect of taxable and deductible non-GAAP adjustments using the effective year-to-date tax rate during the respective periods.

TD SYNNEX Corporation

Calculation of Financial Metrics

Cash Conversion Cycle

(Currency in thousands)

(Amounts may not add or compute due to rounding)

 

 

 

 

 

Three Months Ended

 

 

 

 

February 28,
2023

 

February 28,
2022

Days sales outstanding

 

 

 

 

 

 

Revenue

 

(a)

 

$

15,125,371

 

$

15,469,977

Accounts receivable, net

 

(b)

 

 

9,357,059

 

 

8,732,024

Days sales outstanding

 

(c) = ((b)/(a))*the number of days during the period

 

 

56

 

 

51

 

 

 

 

 

 

 

Days inventory outstanding

 

 

 

 

 

 

Cost of revenue

 

(d)

 

$

14,121,804

 

$

14,501,316

Inventories

 

(e)

 

 

8,372,834

 

 

7,883,265

Days inventory outstanding

 

(f) = ((e)/(d))*the number of days during the period

 

 

53

 

 

49

 

 

 

 

 

 

 

Days payable outstanding

 

 

 

 

 

 

Cost of revenue

 

(g)

 

$

14,121,804

 

$

14,501,316

Accounts payable

 

(h)

 

 

12,997,681

 

 

12,193,263

Days payable outstanding

 

(i) = ((h)/(g))*the number of days during the period

 

 

83

 

 

76

 

 

 

 

 

 

 

Cash conversion cycle

 

(j) = (c)+(f)-(i)

 

 

26

 

 

24

 

Liz Morali
Investor Relations
510-668-8436
ir@tdsynnex.com

Bobby Eagle
Global Corporate Communications
727-538-5864
bobby.eagle@tdsynnex.com

Source: TD SYNNEX