SNX - Earnings call transcript Q2 2021

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Operator

Good afternoon. My name is Jeff and I'll be your conference operator today. I would like to welcome everyone to the SYNNEX Second Quarter Fiscal 2021 Earnings Call. Today's call is being recorded and all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. opening to would Investor Liz for the to Relations. time over call Morali, this remarks, like I pass At Head of Liz, begin. you may

Liz Morali

you today's Jeff joining and are CEO you, and Witt, afternoon President everyone. Thank CFO. Marshall good Dennis Polk, us With call. Thank for and me today to for

our not press is filings Form Relations may during the release call website, SYNNEX of I we XX-K X-K turn now or and about me to permission. our will the capital non-GAAP estimates, that growth. meaning earnings continue, and SEC. today's X-K Risk will be results of available Federal the today and statements. as of structure, Before a the to release, are conference projections discussed of merger various may re-broadcasted reference our Factors to financial merger, call this forward-looking other Laws, contains statements to over including non-GAAP any intend let We in and mentioned Marshall? recorded stakeholders, related Securities we we filed predictions, future section included and risks discussion of earnings Also the on the not call, ir.synnex.com. GAAP certain and proposed remind Form uncertainties differ those timing everyone Form and materially including the forward-looking the the Investor with property from result benefits Reconciliations forward-looking This or update statements the in events, statements Corporation in results without Marshall. our information. our these of our in other within today's Actual reports in of do

Marshall Witt

call. everyone joining thank and you today's Liz Thanks for us to

by remind getting that impacted year into first the quarter everyone to I the like full the was quarter COVID-XX performance, the pandemic. the Before ago quarter's would of details

that year-over-year we XXXX than greater discuss fiscal that normal had Given on today in comparisons impact the the significant results, our magnitude. are QX this negative

fueled down the profit by compared the X.X% prior for up year, million. $XX ago SG&A to in both from margin was XX% the expectation. line $XXX the prior and operations was operations $XX million up in our continuing prior XX increased fiscal expense in year X.X% Our was million, continuing Non-GAAP year Gross mix. million, versus due to points the results improved prior $XXX demand tax margin charges operating revenue Gross were $XXX was operating came XX% prior the revenue, QX or income strong was from $X.X and prior Total basis X.X%, by X.X%, the product XX%, was continued of income down to due was rate $XXX our to Total up year. in improved year. the year-over-year billion. million was $XX expense non-GAAP to interest up million by and over to non-GAAP $XX primarily quarter, EPS effective finance QX million with expenses year million XX% of or in $X.XX COVID-related from approximately $XX environment. expectations, primarily compared diluted adjusted from million $X.XX, Total year-over-year. or well ahead and XX% year non-GAAP and QX

and cash billion, totaled Now, debt cash and flat $X.X XX% of receivable year-over-year the from sheet. totaled inventories $X.X ended of quarter turning year. the balance Accounts with billion, $X.X prior to down the billion. We and equivalents billion $X.X

liquidity. $XXX turns. the $X.X and our operations XX we days the quarter available second million DSO for facilities, cash was including from Cash and quarter improved improvements approximately in year. Our by from was cash approximately had cycle days, was decrease last inventory credit The conversion XX driven billion better and of generated

that paid report the Directors July is XXth, dividend current to to have approved of The business quarter. XXth, as of be share common pleased dividend our for expected quarterly July on are XXXX. of on a $X.XX Board close the of XXXX per cash We stockholders of record to

me our billion Before with Since proposed the the a brief we debt March, to announcement the merger QX track and provide through moving outlook, for update our facility are a merger have the financing merger. with let for our Data. new regarding established structure capital on in Tech $X planned credit

of income consignment to have within to our time, in approximately $XX.X net customer diluted range Non-GAAP on shares fiscal related based in is $X.XX change $X.XX impact QX. fiscal the of occur to about. range is longer non-GAAP outstanding to for weighted no the that per to share moving we the $X.XX This contemplate in expected to million. Now, Revenue spoken million billion. $X.XX estimate XXXX. million and we expected previously billion any be of be expected our expect the this of change not average XX.X outlook to be is does At EPS $XXX.X range diluted to to the

of diluted the income related $X.XX net after-tax turn the of amortization and will million to and of or statements $X compensation. exclude share may to non-GAAP differ non-GAAP Dennis. forward-looking now EPS over per note call share-based and expectations intangibles $X.XX QX our the related guidance share or to third Please results XXXX that cost that quarter per our are Our fiscal actual I $X.X materially. million these and

Dennis Polk

very announcement, there in off off Tech with and joining thank Data start along this strong news our special to the was merger call. Thank to daily our you, our to distraction you With everyone thank being a want with results starting for much QX. quarter appreciation of a potential Marshall efforts. I you with our a to associates delivering

and our the provided the service team of manage continued As dynamics expected our customers though and to executed very expertly well, for to ongoing industry our pandemic. exceptional

and digital growth. Essentially, transformation, QX, the security, ongoing in collaboration. overall capability, notably most our purchasing, services, remote in to networking, and category above For we data our and market cloud, came product office strength saw for expectations continued recovery above due notebooks, results participate quarter, every Chromebooks, in of center IT the internal demand

with Our manufacturing across our at SMB leading from very also internal sector all way. or end came a results geographical expectations segments business and forecast. above of public From our the all with better. were the performed The most customer high demand regions perspective, well

Regarding our going everything with Data, is proposed merger Tech well.

transaction. of As effective up Marshall mentioned, the an are for we set financing

and Our held proxy has process a week. clearance regulatory our we And shareholder through a authorities been normal the be rest from have meeting and will to governmental standpoint, next number expect course. of from received filed

for to when strategic continued external and led merger. regulatory the We countries. announced work we review We our still close the of the support XXXX, delays transaction in the announcement for close supports have deal receive has to second rules, forward this a closes to sharing further to integration look in we transaction, the to months to of transaction expected, internal we of benefits of As March. typical discussed would the of year. have be eight this some more and later six the the deal reflective this believe complexity. limited size since that COVID the performed will The timeframe albeit due announcement, pandemic in Since half

the our outlook, of our safety on and priority to our remains Moving health associates.

the We vaccines when will who our still calendar effectiveness of current are in access of the supply Overall, we forecast to these know Specific As as are we enterprise we are business. for as resumption business a one we are to our Considering conservatism we planning demand, desire challenges. chain be on-premise this remains and in the XXXX, for thankful business, component our will the that backlog, there, our environment, very enter of half hopeful strong it expectation is tailwinds seen geographies all soon spending have potential widely-reported added have of the reopening distribution QX believe about quarter possible. strong, the optimistic continued it represent growth projects. IT for of IT just given current factors guidance, the the more the but bit and transact. given the second

improving of team of and I in this the strategy view all up driving continue I'd to vendor year, merger of with outlook, is Taking a we reflects our internal the the quarter, over view result closing in incorporates the execution these of ongoing QX partners whose closing, I'd QX businesses efforts of the products, always, to our us proposed current low strive we in our believe am daily very with increasing our stated the low range overall and and over-forecast outstanding conservative business, confident for always, various the our year the thank the to forecasting our do success. to business. better. we'll core open prior unpredictable putting call balanced on will This strong reason takes trust like their all use reflect nature last will for as With manufacturing questions. Hopefully, for we assist business, successfully Tech like organic that, of factors a this and as for growing a their In services progress and and into For decline and our value-added our growth, to Data. are associates achievement our customers which account, puts of for environment. This purposes. end manufacturing QX year. end our

Operator

Bank of America. [Operator the from of of Bhattacharya Ruplu Instructions] First question line

Your open. is line

Ruplu Bhattacharya

Thank help mean, My between revenues bridge revenue question performance, sequentially? you like Marshall, first my margin us fiscal plus and stronger were $XXX questions. a had million the up you XQ Hi. on is performance. for XQ you taking sequentially. I than operating can margin expected fiscal Looks

much how looks that of operating that you of XX much bridge cost like mix how FX? were was if about COVID-related related? can down that just of us help And How that performance? margins was margin was Just much bps,

Marshall Witt

just most Sure, the was QX to I'll it sequential relationship of in Ruplu. Yes, of it QX. through from related walk terms mix

sectors locations and the of at remarks balanced market. you and as our very look products various well. of overall they underlying his all Dennis good a from the did was of said end all business, the contribution It If performance across spectrum in

Dennis Polk

add, I QX. very we performed now and Ruplu, through would well And just QX

team. So, to performance by had compensation we some make accruals in we QX, had that recognize the to strong

Ruplu Bhattacharya

Okay.

correctly Maybe happen Did that happen Okay, quarter expectation will fiscal the is talk for thanks consignment hear in little that in of this that. you revenues transition my does follow-up, not for And on bit XQ transition? when year? XQ I the what model XXXX, per about higher details it a the for or can impact?

Marshall Witt

Ruplu, you're right.

as it or I in taking don't transacting place prepared my remarks, said this XXXX, year. anticipate we For

we think we'll face we next get there. when to have As year, that about

will overall customer the change. in relationship change, growth the ongoing basis, previously, said this types on had provide we but that economics of with services assuming not profit dollar As we a should

Ruplu Bhattacharya

Okay.

Dennis Polk

follow-up my XXXX, to would be just just program it assisting their needs. longer customer time whatever so, execute is to time. our flexible do -- we'll we're the And and they and taking Ruplu, Clearly them and be at help out that consignment staying desire is when

Ruplu Bhattacharya

If Okay, I squeeze great. more. in can one just

expected allocation that is that? In And how -- left, Just much still this meantime, plan, is on Marshall know just your repurchase transaction versus you to share on I transaction growth thoughts inorganic close do buybacks later on on authorization the you your capital till are year. have spending happens? your the left

Marshall Witt

open our March transaction. the to said repurchase into in going anticipate now now, ensure enter We to anti-dilutive discussion is only but do right to that is yes, Ruplu, the we as as program than our right overall actually an merger, our it in with more goal regards our we have in that place. we that. beyond appropriate be ratios we've But you keep leverage results

of the really we keeping we of the a position to and strength well are won't into intent forward. overall merger. we in as just laid we And out merger. we're on current have So as But our announce allocation that another this real heading will move change structure, thinking quarter. the strong really just long-term happy terms $X.XX the capital dividends, into of be of That about go

Ruplu Bhattacharya

the thanks Appreciate all for it. Okay, details.

Marshall Witt

You're welcome.

Operator

Vincent of line of Next Research. question the Barrington Colicchio from

open. is Your line

Vincent Colicchio

approvals Yes. talked of that are -- approvals regulatory the have the some your prepared already. remaining most In that -- of extent occurred balance? remarks, in approvals? most the Does To about was you what

Dennis Polk

our Yes, Vince, to this -- we're regulatory point, is XX I'd work this at And had Hi halfway through. through. than Dennis. approvals more we about have say we way so

Vincent Colicchio

Thanks that Okay. clarity. for

any constraints, constraints, In of the be chain terms helpful? supply where biggest are color would

Dennis Polk

in devices across CPUs, really, Yes, networking, certainly some constraints, print displays Vince, the even board, client products. and it's

really, challenges. been supply So, months. over Certainly frankly, over chain quarter, to there that product XX category we by the wasn't last a that but serve has XX the major not affected last

Vincent Colicchio

you. Thank Nice quarter.

Dennis Polk

Thank you.

Operator

of the Investment. Suva question line Next from Jim Citigroup of

is open. line Your

Jim Suva

outlook. comments, conservative expected? you the you and is ability being In your than to on that your better your to also conservativism, more being But conservative regarding visibility some probably procure forecasting is and lead-times the question demand extent? side you. the that the accurate discounting mentioned about it prepared Thank supply? for is demand Or are you're My on

Dennis Polk

for No, say again. our million put you aspects in $XXX a that our supply the and right account I'd and guidance. more is oversteer to our the say, elevated you. lead-time too higher question back million for cautious for I delivery the on -- around us should challenges thank Jim, the now. this covering our what most causing we're I'd that is, that would you we're to on the it's the experiencing conservatism completion conservative it's of is product reduce To hear we Thank our what's say making $XXX it, placing that the really or much don't about forecast. from number in forecast be normal I to chain want investors glad

elevation few be good to SLAs year to the customers, Vince and on of of $XXX a been just seconds quarter products and a half you chain and if will, to little responded I but challenges $XXX million. a supply have million As get our conservative plus, to tightness, takes everything for the to more we about start to tune ago, going was

Jim Suva

commentary. for detail much It's and so appreciated. greatly additional the you thank Great,

Dennis Polk

Thank Jim. you,

Marshall Witt

Thanks Jim.

Operator

from the of James. line Tindle Adam question Raymond Next of

Your line is open.

Adam Tindle

talk to Okay, afternoon. thanks. external and both and vendor/partners I you to wanted getting to the Dennis, internal announcing since -- talked transaction, you've start Good more about customers. feedback had time

Just synergy how could revenue those And should you potential wondering from we with on associated click of dissynergy that? think double about cohorts? feedback and each

Dennis Polk

Yes, Adam, question. thank you for the

our positive first our off to our customers, main shareholders. with our want and vendors, I is start associates, is as what four what So, constituents; classify the from feedback we our

So, since will. categories, our if customers and positive all feedback our vendors. Specific our regarding again, four announcement, we question received, have from recognition to your and you

service and Tech all products having needs. our more to vendor with SYNNEX their all geography and merger, see a build perspective. a because larger serve niche to are with platform from combined they Data, So, positive perspective of customers a prior a all us the with a customers But sets geographies.

they From and from positive wherever positive needs any want sell their customer as to investments global So vendor as vendor invest feedback where very, that products. we'll to we'll either is able a fact very result. side, from important, platform next-gen an And again, cloud, combined other set to going, consistent be and IT our a consolidate a as-a-service, or business that product. their feedback the to service have, again

Adam Tindle

expect, seeking guess Okay. customers competitors were Data to just their expectations the near-term TS, sort makes I tune because both so asked the lot for that share Tech main wondering And a but shift I of one obviously, when to magnitude? are I'm diversify. talked there of just $XXX long-term the if acquired or of million about sense, synergies investors as of should Avnet

Dennis Polk

and our to that's and partners, Adam, know this this business, we service get business. combined When more every well, expectation our your the not And less, we prior acquisition vendor through for customer expect grow is you through expectation we your transaction. acquisition. and

Adam Tindle

a been behind follow-up, talked work to you of rationale far so little it. integration the And strategic Got do as just supports a that how able about bit you've this.

SYNNEX comment, phone decide potentially how go SAP double from be maybe workflow to going color also helpful. -- you. versus which Thank would can you're any on integration will home you if system system updated on that a particularly click wondering a standpoint, on Just

Dennis Polk

Sure, Adam. Thanks.

to emphasize, we talked So, before. and I for do. want Again, the there's again, can much constituents thesis to four about transaction. But during period, able this I the this so only reiterate support we've discussions our for have,

culturally, to forward. how for together, had solidified, with that's been We two our it at also the co-workers going talked discussions Tech we've was about as important Data come teams

your forward. that other also coming good about potential from and going So, the the are merger very, from cross to aspects, And are happy of out benefits sell the those discussions aspects about cultural very point as I this to we together all preliminary, I time, about well. and March. emphasize all that know in back need we'll and benefits close But the get to have point transaction at see talked we that ideas

Adam Tindle

Thank it. Got very you much.

Dennis Polk

you. Thank

Operator

Sheerin The from line next of Matt the of question Stifel.

Your line open. is

Matt Sheerin

down you and devices you’re continuing across of still on-prem legs I robust the specifically quarter SMB? to continuing a picture. infrastructure more cycle? a afternoon. like Could I on know into the PCs. wanted Are in you there do Good on to factored fairly market board, it’s your your mean I and is frankly bit you you. last spending. education a started talk It to client drill the to commentary be little that guidance? the that to seeing is see regarding side, sounds -- Thank then about strong, see that see infrastructure And PC you bit pickup demand little

Dennis Polk

for to so are three and now. three which Thanks question. experiencing you our Yes, business right the there talked all Matt. Hi about of great be is positive, categories

come pandemic in really you a slower last our saw SMB of and we a was out that strong especially business one the time from challenged was quarters, real it the more a year few past back SMB. Specifically, frankly, result for recovery. this areas our called the of as of Certainly But the perspective, QX, environment.

that rest we’re throughout continues year the beyond. by that hopeful very it encouraged of and the So, and

was the It to hard. sector the in overall of enterprise changing our by products, them our challenges, too our But And another spending, your the out affected we in was our very really another still the quarters. state is There all educational fed is public -- than is in not last strong. prepared I and specific remarks across business coming and local see the so business this to we’re that then and year-over-year of and quarter have about your and business that sector part just very growth includes pandemic factor prior don’t sector public that. That called quarter. very good. comment, Regarding last education months supply but we much chain overall, business hit of year quarters business the had point of was that starting some growth was area our and incremental again, was from than time. another positive enterprise of growth see QX better that the to

Matt Sheerin

was and looks That of the a great. guidance were they issues then very anything of ago. up like it quarters helpful. a your regarding or that income the on follow-up And operating and back benefit mix mix well, function net into near be will revenue to couple margin, and there? sequentially backing on my on both going gross else as the or levels of Is Okay,

Marshall Witt

exactly in into heading those right. some mix part mix margin a and see improvements also We of Yes, QX. QX played we Matt, see benefiting probably you’re

Dennis Polk

the business Matt, still and Yes, at obviously in said, our a pathway pandemic another But I QX the step from would normal as just on where Marshall add, definitely our business mix towards point and we’re standpoint. that is forward. and the is is a guidance not normal everything

Matt Sheerin

Understood.

much. so Thanks Okay.

Operator

Loop line the from of question Ananda Baruah Capital. Next of

open. is line Your

Ananda Baruah

strong it. environment guys solid IT and one to lot. Thanks a results. my guys like Yes, the spending guess Thanks Yes. queue, are execution strengthen. to the taking sounds I you congrats the continue on and first for appreciate the in anticipating it I question

question tighten you guess have the environment follow-up. And component well? Thanks. is, the I further so as a quick I are And first then seeing

Dennis Polk

is Sure Ananda, Dennis. this

they talked only as forward in -- and investments demand we a businesses. remarks, We returns other going when are to by encouraged strong we IT overall. businesses as are by made we continue even we prepared yes, the get product, going individuals transformation talk and and technology think and lot invest that’s that about So, about digital companies in often

to of and positive tightening So, question the we’re in that about supply components about. now. are challenges include definitely your definitely components Yes, in talked and Specific they chain that we’re part marketplace that right we about the category. we

Ananda Baruah

you of continuing demand it And PC the in just to sort it. you sound general, Okay. are optimistic ongoingly like business get and sounds guys about really good then

the the in the Do has PCs see OEM that’s data monthly to you been of question That’s of any in of I from cadence choppy I Thanks. May. Some it. demand the data guess it. out any appreciate April sort change -- come seeing general? you is Taiwan, are of

Dennis Polk

call Sure. At really in from point a cadence to perspective. you. out significant time, this nothing Thank

our and balancing obviously challenge against obviously, supply customers. getting comments about and We’re today product our receiving chain the talked to we

overall But right in about no good we factor. to that’s that certainly So, and quarter any guiding change don’t overall a if just the demand you’re expect we’re talking today. now demand, about feel

Ananda Baruah

appreciate really it. Thank That’s helpful. you, I guys.

Dennis Polk

Thank you.

Operator

from of line question Shannon Research. the Next Cross of Cross

open. Your is line

Shannon Cross

some the given Thank you pricing, then that issues I’m might commodity some price And think of follow from passed of have pricing. on much. customer if was terms elasticity thinking curious I side. to partners. demand about and Hive to within I you’re you like you. very impact any Thank more of increases seeing from there And increases a are a in any component perspective seeing from you in prices. we the through timing hardware I’m your wondering realize you’re need up. then, hesitancy due perspective And I’m a just But I expected what of curious, IT

Dennis Polk

Hi, is This Shannon. Dennis.

business. will a standpoint, So, in necessarily that segment order. any a challenges in standpoint of the -- demand seen aspect from our any of reverse I’ll affect business for our not Hive take do From that pricing no,

we’re in way. such more of far it any cycles overall pricing your working demand, you is not we environment continuation an where hurt that than far the customers reseller if major our issues as with sales increasing have customers But our not. will, As any end and would as their question, in as certainly seen with

Shannon Cross

what supply and about about you’re a bigger put guidance $XXX And question. it of regard you’re thinking have $XXX how for with much think few together quarter lot you a if to potentially supply I in Thank talked on last you But how you are about for chain parameters side the have your know expectations And million said I to it. just we’ve know, that walk given as lead could through exceeded of picture thinking could you quarters, can takes script. we the revenue guidance for I idea that an maybe to then puts gave about you just upside chain the Okay. so you beyond be some that and us given may to million, that things the look of times mentioned think conservative the several challenges. you.

Dennis Polk

Shannon. Thanks

a forecast the the to today term a So, We that talk have to use that talked a you the just high. and to we about the that because low factor challenges. is very I’ll of of because guide one. two, with That’s million we one our chain low unpredictable. of business about, we lumpy, fact reduction million you in off have that number that about number our on numbers what and forecast we with internally into our fact for $XXX Number business hard take the has the end $XXX start predict. supply manufacturing conservatism always We

of benefit always so enjoying low sense it and performance makes that. to to above And guide the the end

and factor some been I for to something time important So, for think out calling investors know we’ve a is that’s now. that that’s

business. The third we conservatism make is to perform well our just We overall want metrics. in and our hit sure

to we of we numbers discount bit on put investors, obviously, little whenever end the our produce sure our we and the meet And our when them. of that look so we at we bring a before to just a that, at them quarter, you numbers make

Shannon Cross

Thank Okay. you.

Dennis Polk

you. Thank

Operator

at call And are the turn will Dennis there time more to for closing this questions. back no Polk I Okay. remarks.

Dennis Polk

closing, you. dedication thank I Thank want for efforts. good. to the In and their team SYNNEX Very

well. Data. combination and eventual with ongoing Stay forward our We in to have Tech the Thank confidence you. look business

Operator

Thank concludes Thank you. that participating. you everyone And today's for conference.

You disconnect. may now

TD SYNNEX (SNX) 25 Jun 212021 Q2 Earnings call transcript