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TD SYNNEX Reports Fiscal 2023 Third Quarter Results

September 26, 2023
  •  Revenue of $14.0 billion, at the midpoint of the previously provided outlook of $13.5 - $14.5 billion.
  • Non-GAAP gross billings(1) of $18.6 billion, at the midpoint of the previously provided outlook of $18.0 - $19.3 billion.
  • Gross margin was 6.96%, up 99 bps from the prior fiscal third quarter, and non-GAAP gross margin(1) was 6.97%, up 84 bps from the prior fiscal third quarter.
  • Operating margin was 1.72%, up 15 bps from the prior fiscal third quarter, and non-GAAP operating margin(1) was 2.84%, up 25 bps from the prior fiscal third quarter.
  • Net income was $139 million, and non-GAAP net income(1) was $260 million, above the previously provided outlook of $206 - $253 million.
  • Diluted earnings per share (“EPS”) of $1.49, and non-GAAP diluted EPS(1) of $2.78, above the previously provided outlook of $2.20 - $2.70.
  • Cash provided by operations of $592 million, and free cash flow(1) of $552 million.
  • Returned $136 million to shareholders in the form of share repurchases and dividends, and expect accelerated shareholder return in the fiscal fourth quarter.

TD SYNNEX (NYSE: SNX) today announced financial results for the fiscal third quarter ended August 31, 2023.

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

 

 

 

Q3 FY23

 

Q3 FY22

 

Net Change from Q3 FY22

Revenue ($M)

 

$

13,960.6

 

 

$

15,356.1

 

 

(9.1

)%

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

 

$

18,583.6

 

 

$

19,971.2

 

 

(6.9

)%

Gross profit ($M)

 

$

971.3

 

 

$

916.0

 

 

6.0

%

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

 

$

973.7

 

 

$

942.0

 

 

3.4

%

Gross margin

 

 

6.96

%

 

 

5.97

%

 

99

bps

Non-GAAP gross margin(1)

 

 

6.97

%

 

 

6.13

%

 

84

bps

Operating income ($M)

 

$

240.2

 

 

$

241.5

 

 

(0.5

)%

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

 

$

396.8

 

 

$

398.3

 

 

(0.4

)%

Operating margin

 

 

1.72

%

 

 

1.57

%

 

15

bps

Non-GAAP operating margin(1)

 

 

2.84

%

 

 

2.59

%

 

25

bps

Net income ($M)

 

$

139.3

 

 

$

148.8

 

 

(6.4

)%

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

 

$

259.8

 

 

$

263.4

 

 

(1.4

)%

Diluted EPS

 

$

1.49

 

 

$

1.55

 

 

(3.9

)%

Non-GAAP Diluted EPS(1)

 

$

2.78

 

 

$

2.74

 

 

1.5

%

“Our third quarter results demonstrate the momentum we are seeing on our deliberate and strategic goal to expand in high growth technologies, with robust margin expansion in the Americas and strong EPS generation,” said Rich Hume, CEO of TD SYNNEX. “Our expansive portfolio of products, solutions, and services, along with a relentless focus on execution allowed us to successfully navigate the post-COVID IT spending environment, while our resilient business model enabled us to generate over $500 million in cash from operations, equipping us to increase capital returned to shareholders via share repurchases.”

Consolidated Fiscal 2023 Third Quarter Highlights

  • Revenue was $14.0 billion, compared to $15.4 billion in the prior fiscal third quarter, representing a decrease of 9.1%. On a constant currency(1) basis, revenue decreased by 10.2% compared to the prior fiscal third quarter. The revenue change was driven primarily by a decline in our Endpoint Solutions portfolio as the industry continued to see post-pandemic declines in demand for PC ecosystem products. This was partially offset by growth in our Advanced Solutions portfolio. The shift in product mix resulted in a greater percent of our revenues being presented on a net basis, which negatively impacted our revenue compared to the prior fiscal third quarter by approximately 2%.
  • Non-GAAP gross billings(1) were $18.6 billion, compared to $20.0 billion in the prior fiscal third quarter.
  • Gross profit was $971 million, compared to $916 million in the prior fiscal third quarter. Non-GAAP gross profit(1) was $974 million, compared to $942 million in the prior fiscal third quarter.
  • Gross margin was 7.0%, compared to 6.0% in the prior fiscal third quarter. Non-GAAP gross margin(1) was 7.0%, compared to 6.1% in the prior fiscal third quarter. The increase in gross margin was driven primarily by a greater portion of our revenues coming from higher-margin high-growth technologies.
  • Operating income was $240 million, compared to $242 million the prior fiscal third quarter. Non-GAAP operating income(1) was $397 million, compared to $398 million in the prior fiscal third quarter.
  • Operating margin was 1.7%, compared to 1.6% in the prior fiscal third quarter. Non-GAAP operating margin(1) was 2.8%, compared to 2.6% in the prior fiscal third quarter.
  • Diluted EPS was $1.49, compared to $1.55 in the prior fiscal third quarter. Non-GAAP diluted EPS(1) was $2.78, compared to $2.74 in the prior fiscal third quarter, including a $16 million headwind from higher interest expense.
  • Cash provided by operations of $592 million, and free cash flow(1) of $552 million, driven in part by a reduction in inventories as backlogs normalize, resulting in the cash conversion cycle improving by 1 day as compared to the fiscal second quarter.
  • We returned $136 million to shareholders in the form of $103 million of share repurchases and $33 million of dividends.

Regional Fiscal 2023 Third Quarter Highlights

  • Americas:
    • Revenue was $8.9 billion, compared to $9.9 billion in the prior fiscal third quarter, representing a decrease of 10.3%. On a constant currency(1) basis, revenue decreased by 10.1% compared to the prior fiscal third quarter.
    • Operating income was $193 million, compared to $180 million in the prior fiscal third quarter. Non-GAAP operating income(1) was $302 million, compared to $282 million in the prior fiscal third quarter.
    • Operating margin was 2.2%, compared to 1.8% in the prior fiscal third quarter. Non-GAAP operating margin(1) was 3.4%, compared to 2.8% in the prior fiscal third quarter.
  • Europe:
    • Revenue was $4.2 billion, compared to $4.7 billion in the prior fiscal third quarter, representing a decrease of 9.7%. On a constant currency(1) basis, revenue decreased by 14.3% compared to the prior fiscal third quarter.
    • Operating income was $30 million, compared to $44 million in the prior fiscal third quarter. Non-GAAP operating income(1) was $75 million, compared to $97 million in the prior fiscal third quarter.
    • Operating margin was 0.7%, compared to 0.9% in the prior fiscal third quarter. Non-GAAP operating margin(1) was 1.8%, compared to 2.1% in the prior fiscal third quarter.
  • Asia-Pacific and Japan:
    • Revenue was $853 million, compared to $774 million in the prior fiscal third quarter, representing an increase of 10.3%. On a constant currency(1) basis, revenue increased by 12.3% compared to the prior fiscal third quarter.
    • Operating income was $18 million, compared to $17 million in the prior fiscal third quarter. Non-GAAP operating income(1) was $20 million, compared to $19 million in the prior fiscal third quarter.
    • Operating margin was 2.1%, compared to 2.2% in the prior fiscal third quarter. Non-GAAP operating margin(1) was 2.3%, compared to 2.5% in the prior fiscal third quarter.

Fiscal 2023 Fourth Quarter Outlook

The following statements are based on TD SYNNEX’ current expectations for the fiscal 2023 fourth quarter. These statements are forward-looking and actual results may differ materially. Non-GAAP gross billings(1) include the impact of costs incurred and netted against revenue related to sales of third-party supplier service contracts, software as a service arrangements and certain fulfillment contracts, and the remaining non-GAAP financial measures exclude the impact of acquisition, integration and restructuring costs, amortization of intangible assets, share-based compensation, and the related tax effects thereon.

 

 

Q4 2023 Outlook

Revenue

 

$14.0 - $15.0 billion

Non-GAAP gross billings(1)

 

$18.5 - $19.7 billion

Net income

 

$116 - $162 million

Non-GAAP net income(1)

 

$223 - $269 million

Diluted earnings per share

 

$1.25 - $1.75

Non-GAAP diluted earnings per share(1)

 

$2.40 - $2.90

Estimated outstanding diluted weighted average shares

 

91.9 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 October 27, 2023 to stockholders of record as of the close of business on October 13, 2023.

Conference Call and Webcast

TD SYNNEX will host a conference call today to discuss the 2023 fiscal third 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’ 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, AI, 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 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 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, which are expensed as incurred, 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 that are incurred in connection with acquisition, integration, restructuring, and divestiture activities. 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’ 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. These adjustments benefited our non-GAAP operating income through the third fiscal quarter 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’ 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’ operational results and trends that more readily enable investors to analyze TD SYNNEX’ 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’ Consolidated Financial Statements prepared in accordance with GAAP. A reconciliation of TD SYNNEX’ 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, demand, plans and positioning, as well as guidance related to the fourth 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; our ability to realize additional cost optimization benefits; 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; continued or increased 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; the timing and amount of returns to our shareholders via repurchases of our common stock and dividends; 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)

 

 

 

August 31, 2023

 

November 30, 2022

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,250,872

 

 

$

522,604

 

Accounts receivable, net

 

 

8,892,130

 

 

 

9,420,999

 

Receivables from vendors, net

 

 

822,284

 

 

 

819,135

 

Inventories

 

 

7,462,162

 

 

 

9,066,620

 

Other current assets

 

 

741,052

 

 

 

671,507

 

Total current assets

 

 

19,168,500

 

 

 

20,500,865

 

Property and equipment, net

 

 

437,017

 

 

 

421,064

 

Goodwill

 

 

3,883,425

 

 

 

3,803,850

 

Intangible assets, net

 

 

4,313,828

 

 

 

4,422,877

 

Other assets, net

 

 

701,824

 

 

 

585,342

 

Total assets

 

$

28,504,594

 

 

$

29,733,998

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Borrowings, current

 

$

939,713

 

 

$

268,128

 

Accounts payable

 

 

12,485,180

 

 

 

13,988,980

 

Other accrued liabilities

 

 

2,107,129

 

 

 

2,171,613

 

Total current liabilities

 

 

15,532,022

 

 

 

16,428,721

 

Long-term borrowings

 

 

3,139,469

 

 

 

3,835,665

 

Other long-term liabilities

 

 

505,202

 

 

 

501,856

 

Deferred tax liabilities

 

 

960,153

 

 

 

942,250

 

Total liabilities

 

 

20,136,846

 

 

 

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, 99,012 and 98,696 shares issued as of August 31, 2023 and November 30, 2022, respectively

 

 

99

 

 

 

99

 

Additional paid-in capital

 

 

7,441,649

 

 

 

7,374,100

 

Treasury stock, 6,978 and 4,049 shares as of August 31, 2023 and November 30, 2022, respectively

 

 

(622,160

)

 

 

(337,217

)

Accumulated other comprehensive loss

 

 

(500,538

)

 

 

(719,710

)

Retained earnings

 

 

2,048,698

 

 

 

1,708,234

 

Total stockholders' equity

 

 

8,367,748

 

 

 

8,025,506

 

Total liabilities and equity

 

$

28,504,594

 

 

$

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

 

Nine Months Ended

 

 

August 31, 2023

 

August 31, 2022

 

August 31, 2023

 

August 31, 2022

Revenue

 

$

13,960,615

 

 

$

15,356,085

 

 

$

43,148,110

 

 

$

46,095,853

 

Cost of revenue

 

 

(12,989,342

)

 

 

(14,440,055

)

 

 

(40,209,860

)

 

 

(43,255,373

)

Gross profit

 

 

971,273

 

 

 

916,030

 

 

 

2,938,250

 

 

 

2,840,480

 

Selling, general and administrative expenses

 

 

(659,454

)

 

 

(628,078

)

 

 

(1,987,375

)

 

 

(1,951,503

)

Acquisition, integration and restructuring costs

 

 

(71,586

)

 

 

(46,418

)

 

 

(159,597

)

 

 

(172,266

)

Operating income

 

 

240,233

 

 

 

241,534

 

 

 

791,278

 

 

 

716,711

 

Interest expense and finance charges, net

 

 

(67,703

)

 

 

(52,119

)

 

 

(222,188

)

 

 

(142,430

)

Other expense, net

 

 

(2,371

)

 

 

(1,852

)

 

 

(6,691

)

 

 

(12,375

)

Income before income taxes

 

 

170,159

 

 

 

187,563

 

 

 

562,399

 

 

 

561,906

 

Provision for income taxes

 

 

(30,897

)

 

 

(38,728

)

 

 

(123,030

)

 

 

(131,830

)

Net income

 

$

139,262

 

 

$

148,835

 

 

$

439,369

 

 

$

430,076

 

Earnings per common share:

 

 

 

 

 

 

 

 

Basic

 

$

1.49

 

 

$

1.55

 

 

$

4.67

 

 

$

4.48

 

Diluted

 

$

1.49

 

 

$

1.55

 

 

$

4.66

 

 

$

4.47

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

92,590

 

 

 

95,115

 

 

 

93,400

 

 

 

95,355

 

Diluted

 

 

92,881

 

 

 

95,407

 

 

 

93,676

 

 

 

95,648

 

TD SYNNEX Corporation
Regional Financial Highlights
(Currency in millions)
(Amounts may not add or compute due to rounding)

 

 

 

Q3 FY23

 

Q3 FY22

 

Net Change from Q3 FY22

Americas

 

 

 

 

 

 

Revenue

 

$

8,879.6

 

 

$

9,900.8

 

 

(10.3

)%

Operating income

 

$

192.6

 

 

$

180.5

 

 

6.7

%

Non-GAAP operating income(1)

 

$

301.8

 

 

$

282.1

 

 

7.0

%

Operating margin

 

 

2.17

%

 

 

1.82

%

 

35

bps

Non-GAAP operating margin(1)

 

 

3.40

%

 

 

2.85

%

 

55

bps

 

 

 

 

 

 

 

Europe

 

 

 

 

 

 

Revenue

 

$

4,227.6

 

 

$

4,681.8

 

 

(9.7

)%

Operating income

 

$

29.5

 

 

$

44.3

 

 

(33.4

)%

Non-GAAP operating income(1)

 

$

75.0

 

 

$

96.8

 

 

(22.5

)%

Operating margin

 

 

0.70

%

 

 

0.95

%

 

(25)

bps

Non-GAAP operating margin(1)

 

 

1.78

%

 

 

2.07

%

 

(29)

bps

 

 

 

 

 

 

 

Asia-Pacific and Japan

 

 

 

 

 

 

Revenue

 

$

853.4

 

 

$

773.5

 

 

10.3

%

Operating income

 

$

18.1

 

 

$

16.8

 

 

7.7

%

Non-GAAP operating income(1)

 

$

20.0

 

 

$

19.3

 

 

3.6

%

Operating margin

 

 

2.12

%

 

 

2.17

%

 

(5)

bps

Non-GAAP operating margin(1)

 

 

2.34

%

 

 

2.50

%

 

(16)

bps

(1)

A reconciliation of TD SYNNEX’ 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

 

Nine Months Ended

 

 

August 31, 2023

 

August 31, 2022

 

August 31, 2023

 

August 31, 2022

Revenue in constant currency

 

 

 

 

 

 

 

 

Consolidated

 

 

 

 

 

 

 

 

Revenue

 

$

13,960,615

 

 

$

15,356,085

 

$

43,148,110

 

$

46,095,853

Impact of changes in foreign currencies

 

 

(176,615

)

 

 

 

 

414,683

 

 

Revenue in constant currency

 

$

13,784,000

 

 

$

15,356,085

 

$

43,562,793

 

$

46,095,853

 

 

 

 

 

 

 

 

 

Americas

 

 

 

 

 

 

 

 

Revenue

 

$

8,879,585

 

 

$

9,900,779

 

$

26,217,631

 

$

28,751,985

Impact of changes in foreign currencies

 

 

24,979

 

 

 

 

 

147,323

 

 

Revenue in constant currency

 

$

8,904,564

 

 

$

9,900,779

 

$

26,364,954

 

$

28,751,985

 

 

 

 

 

 

 

 

 

Europe

 

 

 

 

 

 

 

 

Revenue

 

$

4,227,590

 

 

$

4,681,797

 

$

14,209,488

 

$

14,914,196

Impact of changes in foreign currencies

 

 

(216,477

)

 

 

 

 

154,406

 

 

Revenue in constant currency

 

$

4,011,113

 

 

$

4,681,797

 

$

14,363,894

 

$

14,914,196

 

 

 

 

 

 

 

 

 

Asia-Pacific and Japan

 

 

 

 

 

 

 

 

Revenue

 

$

853,440

 

 

$

773,509

 

$

2,720,991

 

$

2,429,672

Impact of changes in foreign currencies

 

 

14,883

 

 

 

 

 

112,954

 

 

Revenue in constant currency

 

$

868,323

 

 

$

773,509

 

$

2,833,945

 

$

2,429,672

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

 

Nine Months Ended

 

 

August 31, 2023

 

August 31, 2022

 

August 31, 2023

 

August 31, 2022

Non-GAAP gross billings

 

 

 

 

 

 

 

 

Revenue

 

$

13,960,615

 

 

$

15,356,085

 

 

$

43,148,110

 

 

$

46,095,853

 

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

 

 

4,623,011

 

 

 

4,615,129

 

 

 

14,353,615

 

 

 

13,624,358

 

Non-GAAP gross billings

 

$

18,583,626

 

 

$

19,971,214

 

 

$

57,501,725

 

 

$

59,720,211

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

August 31, 2023

 

August 31, 2022

 

August 31, 2023

 

August 31, 2022

Gross profit and gross margin

 

 

 

 

 

 

 

 

Revenue

 

$

13,960,615

 

 

$

15,356,085

 

 

$

43,148,110

 

 

$

46,095,853

 

 

 

 

 

 

 

 

 

 

Gross profit

 

$

971,273

 

 

$

916,030

 

 

$

2,938,250

 

 

$

2,840,480

 

Purchase accounting adjustments

 

 

2,427

 

 

 

25,922

 

 

 

15,047

 

 

 

78,407

 

Non-GAAP gross profit

 

$

973,700

 

 

$

941,952

 

 

$

2,953,297

 

 

$

2,918,887

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

6.96

%

 

 

5.97

%

 

 

6.81

%

 

 

6.16

%

Non-GAAP gross margin

 

 

6.97

%

 

 

6.13

%

 

 

6.84

%

 

 

6.33

%

 

 

Three Months Ended

 

Nine Months Ended

 

 

August 31, 2023

 

August 31, 2022

 

August 31, 2023

 

August 31, 2022

Selling, general and administrative expenses

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

$

731,040

 

 

$

674,496

 

 

$

2,146,972

 

 

$

2,123,769

 

Acquisition, integration and restructuring costs

 

 

71,586

 

 

 

46,418

 

 

 

159,597

 

 

 

172,266

 

Amortization of intangibles

 

 

74,029

 

 

 

73,270

 

 

 

220,571

 

 

 

224,082

 

Share-based compensation

 

 

8,530

 

 

 

6,643

 

 

 

29,252

 

 

 

20,431

 

Purchase accounting adjustments

 

 

 

 

 

4,496

 

 

 

 

 

 

16,564

 

Adjusted selling, general and administrative expenses

 

$

576,895

 

 

$

543,669

 

 

$

1,737,552

 

 

$

1,690,426

 

 

 

 

 

 

 

 

 

 

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

 

Nine Months Ended

 

 

August 31, 2023

 

August 31, 2022

 

August 31, 2023

 

August 31, 2022

Operating income and operating margin - Consolidated

 

 

 

 

 

 

 

 

Revenue

 

$

13,960,615

 

 

$

15,356,085

 

 

$

43,148,110

 

 

$

46,095,853

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

240,233

 

 

$

241,534

 

 

$

791,278

 

 

$

716,711

 

Acquisition, integration and restructuring costs

 

 

71,586

 

 

 

46,418

 

 

 

159,597

 

 

 

172,266

 

Amortization of intangibles

 

 

74,029

 

 

 

73,270

 

 

 

220,571

 

 

 

224,082

 

Share-based compensation

 

 

8,530

 

 

 

6,643

 

 

 

29,252

 

 

 

20,431

 

Purchase accounting adjustments

 

 

2,427

 

 

 

30,418

 

 

 

15,047

 

 

 

94,971

 

Non-GAAP operating income

 

$

396,805

 

 

$

398,283

 

 

$

1,215,745

 

 

$

1,228,461

 

 

 

 

 

 

 

 

 

 

Operating margin

 

 

1.72

%

 

 

1.57

%

 

 

1.83

%

 

 

1.55

%

Non-GAAP operating margin

 

 

2.84

%

 

 

2.59

%

 

 

2.82

%

 

 

2.67

%

 

 

Three Months Ended

 

Nine Months Ended

 

 

August 31, 2023

 

August 31, 2022

 

August 31, 2023

 

August 31, 2022

Operating income and operating margin - Americas

 

 

 

 

 

 

 

 

Revenue

 

$

8,879,585

 

 

$

9,900,779

 

 

$

26,217,631

 

 

$

28,751,985

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

192,606

 

 

$

180,471

 

 

$

559,370

 

 

$

511,813

 

Acquisition, integration and restructuring costs

 

 

60,393

 

 

 

33,545

 

 

 

122,682

 

 

 

102,964

 

Amortization of intangibles

 

 

42,437

 

 

 

43,523

 

 

 

127,233

 

 

 

130,619

 

Share-based compensation

 

 

6,325

 

 

 

5,036

 

 

 

21,076

 

 

 

16,126

 

Purchase accounting adjustments

 

 

 

 

 

19,564

 

 

 

 

 

 

56,132

 

Non-GAAP operating income

 

$

301,761

 

 

$

282,139

 

 

$

830,361

 

 

$

817,654

 

 

 

 

 

 

 

 

 

 

Operating margin

 

 

2.17

%

 

 

1.82

%

 

 

2.13

%

 

 

1.78

%

Non-GAAP operating margin

 

 

3.40

%

 

 

2.85

%

 

 

3.17

%

 

 

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

 

Nine Months Ended

 

 

August 31, 2023

 

August 31, 2022

 

August 31, 2023

 

August 31, 2022

Operating income and operating margin - Europe

 

 

 

 

 

 

 

 

Revenue

 

$

4,227,590

 

 

$

4,681,797

 

 

$

14,209,488

 

 

$

14,914,196

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

29,531

 

 

$

44,260

 

 

$

157,793

 

 

$

150,117

 

Acquisition, integration and restructuring costs

 

 

10,304

 

 

 

11,313

 

 

 

33,750

 

 

 

62,112

 

Amortization of intangibles

 

 

30,970

 

 

 

29,103

 

 

 

91,469

 

 

 

91,543

 

Share-based compensation

 

 

1,809

 

 

 

1,286

 

 

 

6,851

 

 

 

3,366

 

Purchase accounting adjustments

 

 

2,427

 

 

 

10,854

 

 

 

15,047

 

 

 

38,839

 

Non-GAAP operating income

 

$

75,041

 

 

$

96,816

 

 

$

304,910

 

 

$

345,977

 

 

 

 

 

 

 

 

 

 

Operating margin

 

 

0.70

%

 

 

0.95

%

 

 

1.11

%

 

 

1.01

%

Non-GAAP operating margin

 

 

1.78

%

 

 

2.07

%

 

 

2.15

%

 

 

2.32

%

 

 

Three Months Ended

 

Nine Months Ended

 

 

August 31, 2023

 

August 31, 2022

 

August 31, 2023

 

August 31, 2022

Operating income and operating margin - Asia-Pacific and Japan

 

 

 

 

 

 

 

 

Revenue

 

$

853,440

 

 

$

773,509

 

 

$

2,720,991

 

 

$

2,429,672

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

18,096

 

 

$

16,803

 

 

$

74,115

 

 

$

54,781

 

Acquisition, integration and restructuring costs

 

 

889

 

 

 

1,560

 

 

 

3,165

 

 

 

7,190

 

Amortization of intangibles

 

 

622

 

 

 

644

 

 

 

1,869

 

 

 

1,920

 

Share-based compensation

 

 

396

 

 

 

321

 

 

 

1,325

 

 

 

939

 

Non-GAAP operating income

 

$

20,003

 

 

$

19,328

 

 

$

80,474

 

 

$

64,830

 

 

 

 

 

 

 

 

 

 

Operating margin

 

 

2.12

%

 

 

2.17

%

 

 

2.72

%

 

 

2.25

%

Non-GAAP operating margin

 

 

2.34

%

 

 

2.50

%

 

 

2.96

%

 

 

2.67

%

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

 

Nine Months Ended

 

 

August 31, 2023

 

August 31, 2022

 

August 31, 2023

 

August 31, 2022

Adjusted EBITDA

 

 

 

 

 

 

 

 

Net income

 

$

139,262

 

$

148,835

 

$

439,369

 

$

430,076

Interest expense and finance charges, net

 

 

67,703

 

 

52,119

 

 

222,188

 

 

142,430

Provision for income taxes

 

 

30,897

 

 

38,728

 

 

123,030

 

 

131,830

Depreciation(1)

 

 

31,256

 

 

28,247

 

 

94,346

 

 

132,561

Amortization of intangibles

 

 

74,029

 

 

73,270

 

 

220,571

 

 

224,082

EBITDA

 

$

343,147

 

$

341,199

 

$

1,099,504

 

$

1,060,979

Other expense, net

 

 

2,371

 

 

1,852

 

 

6,691

 

 

12,375

Acquisition, integration and restructuring costs

 

 

66,846

 

 

42,025

 

 

143,360

 

 

115,002

Share-based compensation

 

 

8,530

 

 

6,643

 

 

29,252

 

 

20,431

Purchase accounting adjustments

 

 

2,427

 

 

30,418

 

 

15,047

 

 

94,971

Adjusted EBITDA

 

$

423,321

 

$

422,137

 

$

1,293,854

 

$

1,303,758

(1)

Includes depreciation recorded in acquisition integration and restructuring costs.

 

 

Three Months Ended

 

Nine Months Ended

 

 

August 31, 2023

 

August 31, 2022

 

August 31, 2023

 

August 31, 2022

Net income and diluted EPS

 

 

 

 

 

 

 

 

Net income

 

$

139,262

 

 

$

148,835

 

 

$

439,369

 

 

$

430,076

 

Acquisition, integration and restructuring costs

 

 

73,897

 

 

 

48,730

 

 

 

166,446

 

 

 

178,691

 

Amortization of intangibles

 

 

74,029

 

 

 

73,270

 

 

 

220,571

 

 

 

224,082

 

Share-based compensation

 

 

8,530

 

 

 

6,643

 

 

 

29,252

 

 

 

20,431

 

Purchase accounting adjustments

 

 

2,427

 

 

 

30,418

 

 

 

15,047

 

 

 

94,971

 

Income taxes related to the above

 

 

(38,375

)

 

 

(39,419

)

 

 

(102,700

)

 

 

(121,827

)

Income tax capital loss carryback benefit

 

 

 

 

 

(5,053

)

 

 

 

 

 

(8,299

)

Non-GAAP net income

 

$

259,770

 

 

$

263,424

 

 

$

767,985

 

 

$

818,125

 

 

 

 

 

 

 

 

 

 

Diluted EPS(1)

 

$

1.49

 

 

$

1.55

 

 

$

4.66

 

 

$

4.47

 

Acquisition, integration and restructuring costs

 

 

0.79

 

 

 

0.50

 

 

 

1.76

 

 

 

1.86

 

Amortization of intangibles

 

 

0.79

 

 

 

0.76

 

 

 

2.34

 

 

 

2.33

 

Share-based compensation

 

 

0.09

 

 

 

0.07

 

 

 

0.31

 

 

 

0.21

 

Purchase accounting adjustments

 

 

0.03

 

 

 

0.32

 

 

 

0.16

 

 

 

0.99

 

Income taxes related to the above

 

 

(0.41

)

 

 

(0.41

)

 

 

(1.09

)

 

 

(1.27

)

Income tax capital loss carryback benefit

 

 

 

 

 

(0.05

)

 

 

 

 

 

(0.09

)

Non-GAAP Diluted EPS(1)

 

$

2.78

 

 

$

2.74

 

 

$

8.14

 

 

$

8.50

 

(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 0.7% of net income for both the three and nine months ended August 31, 2023, and was approximately 0.6% of net income for both the three and nine months ended August 31, 2022.

TD SYNNEX Corporation
Reconciliation of GAAP to Non-GAAP financial measures
(Amounts may not add or compute due to rounding)

 

 

 

Three Months Ended

 

Nine Months Ended

(Currency in thousands)

 

August 31, 2023

 

August 31, 2022

 

August 31, 2023

 

August 31, 2022

Free cash flow

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

 

$

591,955

 

 

$

(67,311

)

 

$

1,196,705

 

 

$

(351,793

)

Purchases of property and equipment

 

 

(39,808

)

 

 

(32,021

)

 

 

(107,417

)

 

 

(78,522

)

Free cash flow

 

$

552,147

 

 

$

(99,332

)

 

$

1,089,288

 

 

$

(430,315

)

 

 

Forecast

 

 

Three Months Ending November 30, 2023

(Currency in millions, except per share amounts)

 

Low

 

High

Net income

 

$

116

 

 

$

162

 

Acquisition, integration and restructuring costs

 

 

50

 

 

 

50

 

Amortization of intangibles

 

 

75

 

 

 

75

 

Share-based compensation

 

 

16

 

 

 

16

 

Income taxes related to the above

 

 

(34

)

 

 

(34

)

Non-GAAP net income

 

$

223

 

 

$

269

 

 

 

 

 

 

Diluted EPS(1)

 

$

1.25

 

 

$

1.75

 

Acquisition, integration and restructuring costs

 

 

0.54

 

 

 

0.54

 

Amortization of intangibles

 

 

0.81

 

 

 

0.81

 

Share-based compensation

 

 

0.17

 

 

 

0.17

 

Income taxes related to the above

 

 

(0.37

)

 

 

(0.37

)

Non-GAAP Diluted EPS

 

$

2.40

 

 

$

2.90

 

(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 November 30, 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)

 

November 30, 2023

Non-GAAP gross billings

 

Low

 

High

Revenue

 

$

14.0

 

$

15.0

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

 

 

4.5

 

 

4.7

Non-GAAP gross billings

 

$

18.5

 

$

19.7

 

 

Three Months Ended

(Currency in thousands)

 

November 30, 2022

Non-GAAP gross billings

 

 

Revenue

 

$

16,247,957

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

 

 

4,665,011

Non-GAAP gross billings

 

$

20,912,968

TD SYNNEX Corporation
Calculation of Financial Metrics
Return on Invested Capital (“ROIC”)
(Currency in thousands)
(Amounts may not add or compute due to rounding)

 

 

 

August 31, 2023

 

August 31, 2022

ROIC

 

 

 

 

Operating income (trailing fiscal four quarters)

 

$

1,125,440

 

 

$

902,076

 

Income taxes on operating income(1)

 

 

(228,334

)

 

 

(152,953

)

Operating income after taxes

 

$

897,106

 

 

$

749,123

 

 

 

 

 

 

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

 

$

11,575,572

 

 

$

9,809,290

 

 

 

 

 

 

ROIC

 

 

7.8

%

 

 

7.6

%

 

 

 

 

 

Adjusted ROIC

 

 

 

 

Non-GAAP operating income (trailing fiscal four quarters)

 

$

1,711,323

 

 

$

1,636,397

 

Income taxes on non-GAAP operating income(1)

 

 

(381,272

)

 

 

(396,905

)

Non-GAAP operating income after taxes

 

$

1,330,051

 

 

$

1,239,492

 

 

 

 

 

 

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

 

$

11,575,572

 

 

$

9,809,290

 

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

 

 

961,319

 

 

 

489,671

 

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

 

$

12,536,891

 

 

$

10,298,961

 

 

 

 

 

 

Adjusted ROIC

 

 

10.6

%

 

 

12.0

%

(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

 

 

 

 

August 31, 2023

 

August 31, 2022

Days sales outstanding

 

 

 

 

 

 

Revenue

 

(a)

 

$

13,960,615

 

$

15,356,085

Accounts receivable, net

 

(b)

 

 

8,892,130

 

 

8,114,004

Days sales outstanding

 

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

 

 

59

 

 

49

 

 

 

 

 

 

 

Days inventory outstanding

 

 

 

 

 

 

Cost of revenue

 

(d)

 

$

12,989,342

 

$

14,440,055

Inventories

 

(e)

 

 

7,462,162

 

 

9,755,228

Days inventory outstanding

 

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

 

 

53

 

 

62

 

 

 

 

 

 

 

Days payable outstanding

 

 

 

 

 

 

Cost of revenue

 

(g)

 

$

12,989,342

 

$

14,440,055

Accounts payable

 

(h)

 

 

12,485,180

 

 

13,718,980

Days payable outstanding

 

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

 

 

89

 

 

88

 

 

 

 

 

 

 

Cash conversion cycle

 

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

 

 

23

 

 

23

 

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