SNX - Earnings call transcript Q3 2022

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Operator

Good morning. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the TD SYNNEX Third Quarter Fiscal 2022 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

joining With Good for Witt, Hume, CFO. you. morning, and Marshall you Thank everyone, CEO; and today's today me for call. are Rich thank us

plans Before let statements statements predictions, including estimates, you or other me positioning, that forward-looking including discussion contains and laws, we within federal the as strategy, for securities future well continue, about about events year statements fiscal meaning remind our today's of as the projections, expectations XXXX.

may from with release the any the XX-K statements. section intend of uncertainties differ discussed Actual filings filed the in and results and to not update a Risk Factors our earnings today's we materially in in these as forward-looking and Form statements and in risks SEC. our Form mentioned reports of forward-looking do other result We X-K those today

non-GAAP non-GAAP without SYNNEX Also, information. permission. release during this ir.tdsynnex.com. financial TD available earnings related are in and not is GAAP results on recorded of the press be Relations call property Form the Reconciliations our call, This Investor may rebroadcast website we X-K of included will reference and our or certain conference to our

to now over will I turn the Rich. Rich? call

Rich Hume

our on have held to that merger Thank a lot first our earnings accomplished and morning, value our TD validated merger. XX X, thank we having months everyone, the proposition year our you, first closed ago, our we've Good call. call Liz. you XXXX. and for led One together, joining SYNNEX, In as September

target. over in accretion $XX in per generated representing non-GAAP $X.X XX-month above billion $XX.XX in EBITDA, the Over adjusted XX past we well initial XX% billion share, our earnings and and in months, revenue,

teams possible, and have year. of elements, organizational in is those area benefits and and branding, realized TD results finance partner-facing every of culture. the of addition, work, at corporate systems, million, initial synergy In been benefits our Making million hard policies, the have cost harmonizing merger IT ahead first our $XXX of related already from expectation we which design, SYNNEX, $XXX

result, would year. personally one more for become to through thank and I than to have dedication, possible. And a helping combined their an incredibly like dynamic XX,XXX and our busy work, As we make perseverance in exceptional it co-workers company

September. behind us, thesis year first for today believe stronger the the is With last our that we than we merger anticipated

efficiently the customer of Our partners, and ever, realize expand. capabilities global now more broad help to importance than them deep relationships

of IT as such medium-sized high partner XXX,XXX our them especially, is which majority hybrid and analytics, help others. navigate customers, as security, have cloud, it well are landscape, IT to as plus IoT small the technology growth in trusted For resellers, important the increasingly to a areas

growth the with on the annualized continue fact pleased quarter had areas are basis. We growth and rates outpace to robust in an these that our overall

In addition, our expectations quarter. which growth hyperscale revenue also our exceeded the infrastructure business, the space, Hyve for serves

robust XX% the center for of in across above quarter Turning revenue year-over-year provided the Growth came than XX% is currency better merger-related expectations growth in outlook data adjusted June. business, our that hyperscale infrastructure. when our and we expected QX year-over-year with from in we demand and endpoint, constant worldwide the we normalized X% recognition growing quarter, This in performed when third to alignment. revenue policy our with the

we the to device continued PCs client solid where the quarter. primarily commercial increases and ASP we Commercial In segment, see specifically, serve demand during

in networking, Fiscal security infrastructure, strong all data a customer beginning played three in We and also hyperscale areas line of currency hybrid our 'XX regions. constant like with the robust across revenue the saw with center, basis the growth projects. expectations demand has out on at cloud, year

networking, in areas although the disruptions which exist chain like to including have infrastructure, seen endpoint, remain elevated rates. year-over-year and improved moderating continue of growth in center, and Supply areas PCs, data

led variety normalized the two supply or the issues chain chain take environment. supply three past a of years, get over have to time these factors to to that back Given it will

to see historical remains backlog product we that categories. compared we levels, imbalances and some elevated supply into continue will industry in anticipate our Our XXXX well to

believe revenue recognition successfully resilient policy of certain mid the long As cycles. the the when that guide business has evidenced different strong digit we we currency we and have our alignment. for fourth a we demand than environments look macro built by ahead growth merger-related project to history a revenue adjusted solid quarter, operating Despite less picture constant ahead, a as many high-single of in to

variable broad Our dynamic to and economy. deliver changes in allowed us have structure through the solutions cost portfolio, liquidity profile, results

believe to that will grow. overall continue IT market the We

that cloud, IoT, like believe market. infrastructure, the have analytics areas. have we high and overall growth hybrid discussed will above also security, We rate And we these in are investing solutions hyperscale in growth IT as the past,

this recently in important Year Global high this represented in grew for for was honor. our our of the the and quarter more awards. partner XX% achieving We Distributor than third with SYNNEX also technology very XXXX, the XXXX, Microsoft of as Worldwide recognized Year TD more two our strategy on area named Enterprise of year-to-date second evident consecutive Partner Hewlett-Packard gross billings. XX% were is Progress growth and revenue total than year

top testaments outstanding as and to partner and vendors, service a important on technology edge, our customers based commitment solutions These with cloud, to technologies. our invest providing leading are with acknowledgments

Marshall to complexity, is further synergy few customers, simplify the new them merger-related this market, accelerate minutes. to our will details our help reduce For skills in their provide a attainment their cost help we time gap, and on markets. as key, expand portfolio

ERP give in on me an Americas. let system the you consolidation So our update

year, by CIF, of the conversion our business Canadian were successful, mentioned in earlier this is XX% system approximately SYNNEX. As Canadian and now used legacy ERP transacting efforts our

transitioning throughout is of fiscal remainder Our the now that XXXX. to expect have activity meaningful QX U.S. we early a by and with transition migrated underway, portion

and team and believe by together I the how In ecosystem proud that of entire and global the future. have come and resources into we capabilities the IT our market leading now closing, am energized necessary have serve partner efforts to the

it details on of turn thoughts progress us, well-being impacted to those note is top one and are of Before of mind of path. that financial our over with I carefully by offices all safety performance, projected Bay please coworkers Ian. Hurricane are we and for Tampa storm's area, our our to provide with the our monitoring Marshall main the in The and additional

over Marshall, you. I'll turn it to

Marshall Witt

to team revenue Thanks, margin a today. We for above focus our us performed QX in to Rich, of and growth an hard-to-predict year occurred backdrop. the the as-combined period. and macroeconomic note Please and assumes everyone comparisons the fiscal beginning versus thanks This of is with amidst which our testament growth prior at expectations the joining well merger year-over-year. commitment basis the that are on

XX% normalized approximate X% growth Total June. billion, and we accounted currency worldwide XX% recognition better than adjusted revenue we when up expected the was in for is million year-over-year. constant to $XXX when up year-over-year, rate policy This year-over-year devaluation for the an Euro $XX.X revenue alignment in relating for fiscal headwind last QX the merger. spoke

due we robust had quarter regions From as a saw all Hyve three distribution, this technologies. record high double-digit grew in revenue with product the broad-based across And a quarter. in growth and growth perspective, growth XX $XXX technology and million mix. profit customer basis X%, growth unusually strong QX, approximately primarily from responded gross high hyperscale down margin points to to business demand. was product was Gross

X.X%, up adjusted million, representing QX. revenue, basis expectations $XX income line our $XXX down of non-GAAP operating up was million, basis $XXX points in expense to driven was XX% XX cost merger Total synergy approximately And SG&A points million, year-over-year, discipline by approximately and Non-GAAP with or year-over-year. execution. was X.X% margin XX and operating compared

non-GAAP the interest interest basis, year-over-year. expense were rates during approximately Due XX%, in non-GAAP million increased tax effective was line above our rate finance $XX to our On million, constant and higher-than-expected expectations. non-GAAP the income a and with currency outlook, $X charges XX% operating quarter, the

As rate. facility on loan borrowings Outstanding under interest fixed Notes variable, our credit a borrowings our a are reminder, revolving while term bear our a rates under Senior and floating interest interest rate, bear

interest on our was consistent hedged our loan. $XXX partially net diluted guidance. the variable $X.XX, income non-GAAP have We EPS term was previous rate million, non-GAAP and Total with

to equivalents of $X.X of the debt million the ended sheet. Now and We billion. and $XXX turning cash cash quarter with balance

leverage net by as X.X gross and prior was in billion $X.X $X.X continued Inventories times. from ratio partners billion their our terms. up the increased billion, was offset billion, AP from leverage of X.X the $X.X totaled times to quarter, $X.X billion Accounts Our approximately $X.X but approximately receivable quarter. adjust totaled up prior

within increase network. half distribution growth to elevated backlog. than due our the the of strong inventory was More revenue increased and This

increase the forecast agreement protection inventory demand inventory inventory As remainder a of and result customers. business of is of risks reminder, The for These generally hyperscale price support purchases majority covered to increases the infrastructure carrying this our of minimal recovery for margin Hyve. our costs. in and by represents increases carry the

We and QX 'XX. beyond. to inventory into and fiscal profit expect improve in generation in, in to and expect All QX revenue returns this inventory translate to we

the quarter was $X.X Our net QX. working third approximately an of increase the at from $XXX capital end of billion, million

XX QX. Our two $XX cash days million. was in the And quarter the was about conversion up in cash days, quarter from operations third for our cycle approximately used

to dividend XXXX. of From share. is our cash $X.XX on XX, October for approved Board dividend XX, return quarter, as on XXXX shareholder perspective Directors close the stockholders of common of of record has current of the a a October payable The per business

three repurchase quarter, repurchasing and $XX first the of on 'XX. our continued quarters million in program share our through of fiscal We stock the million executing $XX

dividends repurchases free fiscal and medium-term to of track targeted achieve XX% are to flow returned cash of We the on target of in buybacks. remain for for form pace shareholders ahead $XXX our our million 'XX and of

million three-year XXXX. stock repurchase in $XXX of have authorization, which We expires July on remaining our

one, from $XXX ahead year our we to for to synergy Finally, initial of recognize plan merger-related $XXX cost compared of expecting million, a million. perspective, plan remain a

$XXX We to total expect in a of to cost XXXX. synergies continue August million by achieve

Now our for moving fiscal to QX. outlook

backdrop. to the midpoint billion to strong to the policy million to of approximately around demand QX, revenue primarily range billion, in in million macro at year-on-year and revenue of Growth to when approach approximately to a currency alignment our $XX.X adjusted $XX.X recognition expected growth basis. equates on hyperscale given which total X% the the in for guidance, rates $XXX of lower expect impacts be of due unusually $XXX are and QX We cautionary Hyve than be

on guidance of rate dollar exchange X.XX. a Our to is based euro

range for of $XXX expense shares of to approximately non-GAAP on $X.XX be is QX is $XX.X of average 'XX Non-GAAP compared $XX.XX that the weighted to the net diluted million EPS expected expect is $XX.XX approximately provided tax the be we equates million and June. year be non-GAAP in income $XX.XX to $XX.XX based of XX%. to outstanding share of and to to million, This $XXX to the to Interest range EPS in to per expected million. $X.XX we $XX expected rate be full approximately in outlook to diluted

despite for we closing, our current the business our growth company. In on bullish the are confident headlines, in economic and prospects

growing of creation in our experience markets, in solid through decades and our our Given large cycles. history of shareholder and and value economic participation execution managing

take We will Operator? questions. your now

Operator

with Your Housum Research. Keith Instructions] comes question [Operator first from line of the Northcoast

Your open. line is

Keith Housum

and guys thanks opportunity. morning, for Good the

you just up total how technology can revisiting of us was is Rich, high year-to-date area real quick if Just, the growth big you are that that business? remind the XX%.

Rich Hume

Yeah.

netted especially, Keith, the high offerings, of terms of in gross so. growth cloud-based because a lot we get billings usually, about talk technology the ones those segment (ph) So

As it from perspective. in a slightly entire script, of gross prepared side we our business said billings XX% now is over the

Marshall Witt

And, in under billings gross just $XX came quarter Keith, for the billion.

Keith Housum

Great.

would your quarter? time guidance, maybe here up, about a saw takes little end meet of a for think follow puts bullish the the a perhaps in -- of you're and as on end the volatile of guidance obviously, range? you business, or we're next but terms what trajectory about take to the and low your the -- the high In bit I as And the obviously, talk in

Marshall Witt

a One are influencing There's that QX. overall Yeah. for is interest things our expense. few thoughts

at guided guided We course, we for above QX, $XX guided million. million we million. and, we of it's that at when $XX $XX back, step to QX, Just came

the I that's And being difference putting look EPS usual, of So range, broader that tend in to comment macro position environment we at cautious. about we is thought at of made the probably infrastructure in the biggest a of we terms end us where as Keith, hyperscale we'd the just range. when the Certainly guide be. lower

Keith Housum

Thank Great. Good you. Appreciate luck. guys.

Rich Hume

Thanks, Keith.

Operator

J.P. is of Cardoso next Your question the from line Joseph Morgan. with

Your line is open.

Joseph Cardoso

Thank good and guys. you, morning,

how backlog normalized Also, how we update So what provide where when thoughts relative normal you levels? And quarter me, your any the you levels? shaking consider exiting first would out? and reach question this on from mix to those might of just be to has is to us stand more do can we tracked an that

Rich Hume

Thank very Great Yeah. you question. much.

is So, of couple has of but two of things, the is come cities. number one sort the down, backlog tale

lot we're one first ecosystem, -- big So relative really to quite really there the down, because particular the in they vendor come in has those is enough progress going serviceable. things strength where are finding in backlog more PC reduction, a endpoint that, there backlog, is and good forward. of vendor is servicing sort made that segment, we that, of Interestingly news that great has a but particular that backlog that

trending having the is of believe run don't So, find whereby this the growth. situation the mean, I and off we suddenly, strong sort challenging moving forward. a demand backlogs ourselves isn't to we

again, summarizing predominance of but one has who lot the vendor, down, by that strength endpoint of forward. a is led So going is

to it Advanced we many few either are growing what segment, are or within there relates declining. Solutions As the backlog that call is that stable still there, and

the will, take and into it sometime would stability you within 'XX we the we that Advanced Solutions until Advanced have peak, have segment, not until well perspective. Solutions we from yet if So seen will anticipate

That's is we that flare-ups any the anything the maybe COVID will say and it stabilization. world. obviously remain in better foreseeable be that crystal mid-XX, sometime But that state there else from might barring or happen Again, does elevated future. I elevated, new for would ball, in

Marshall Witt

do at you usually question, Joseph, any? about about a levels. is track the didn't it that, question. It's very what to have think if to asked also But guess and a extensively on add look We just worth Rich, pre-pandemic. month's Rich, normalize how just I I'd is And were good it. it's of I I'll you turn,

Rich Hume

are we over materially And Yeah. that still.

Joseph Cardoso

is broader moderating follow-up colors you component spending to maybe seems memory alike. and hyperscale the a and record like, the levels, going just around this and highlighting guys all a then the very commentary from led of some concerns the like Appreciate from quarter, business. community No. it's business the think sounds quick Hyve on suppliers storage It there but forward be by in investment I strong,

relative Just a potential heading given forward to from you concerned seeing provide Thanks. trends color today, there going you're you're your XXXX? demand are any can and customers period what into what you of on seeing digestion

Rich Hume

it Yeah. Maybe to over turn I'll start and Marshall. then

always So first, attributes business. reminder state we basis. to opportunity get. just feel a everyone, annualized this if on we But every we great growth lumpy it Hyve an is as offers a

And prepared up so, was positive the than in thought. his comments, as lumpiness time, Marshall we this said more

demand still guide I that our good good see we we into candidly, think see pretty is here demand consistent we as So, and with QX, which demand overall look segment. for

nothing periods, segment. strategic I to think the would know that perspective, sort relative talk that longer and sort So, of I hyperscale me over growth to a segment differently think that from we of being double-digit about attributes, always cause

Marshall Witt

add I supply opening. on is the chain availability in on constraints. There would and inefficiency also regards to hyperscale just a Yeah. supply infrastructure data the Joseph, chain center

are So capacity to struggling the keep with themselves. up hyperscalers their

do So, a center. bit quite and queue, ready is data product we in that to put of into be have positioned

So, datacenters. the itself, the it's getting all chain but supply it's way to through [indiscernible] not into just the

Rich Hume

to in supply thought, the of of the orders queue, kind of and just this could, Yeah. all just I hard he construction it. flows for talks that It's the about If of finish have datacenters. ebbs Marshall's we

Marshall Witt

in reasons obviously stays the that we the one on is which elevated space. and Hyve books, our right inventory inventory why That's see of

Joseph Cardoso

color. No, the makes Appreciate sense. all

Operator

with of Ruplu America. Bhattacharya Your Bank of is question from line next the

is open. line Your

Ruplu Bhattacharya

Rich, you against But commentary so the Hi. to I'm the remains about in strong. for far than heard in growth questions. gave, my continuing you strong talked looks we've it trying you from OEMs, mean, like from taking right. demand that Solutions business. the that PC Advanced Thank very business XX% and endpoint reconcile I business, more the what even demand

in So, PC consumer commercial some certain end but market, in the also weakness PC heard market, the talk market, weakness we've OEMs about PC developing.

as some then the talked incremental about OEMs some And weakness well. businesses enterprise in have

from that because share versus us we -- synergies we that gains strength like be we're are help it commentary reconcile having? OEMs you're there be you're what you're of seeing? hearing So of synergies? the OEMs. you're should what versus from could because Is revenue seeing, how some Could seeing that reconcile the hearing it So that

Rich Hume

question. Thanks for Ruplu. the Yeah,

it's segment. once our being felt. highlight where numbers think are segment is more to we a consumer perspective, big the I again don't from things upon First, the reliance that And important deeply consumer have

think, we portfolio. our from I benefit Second, again once here,

privilege in the cetera. ebb PC flow those cycles, the have on market, depending product vendors of demands et serving the We them their for sometimes, top-tier between and and

us segment actually to came earlier. the endpoint Marshall had detailed the wants significant midpoint So endpoint to a segment, that our be to well. guide, more think that, pretty upside and as when our advanced I the both clear which Marshall really I make, had content, that as at well that look just Hyve QX, us as from that for know growth relative we take and about serves has some but comments want PC talked is I of he ecosystem

into look overall we QX, an We reasonably see environment well. healthy as

ASP comfortable want pretty the move we Marshall, relative But and to have in volume unit share. you each of you QX. feel know that our particular I really we So, into information as to execution segments some

Marshall Witt

Ruplu. Yeah,

probably low was at rate. and growth but ecosystem we was the an rate for in the to science, low-to-single in probably look digit QX volume our not On double-digit the if results, PC it's growth ASP exact high-single distribution our network,

ecosystem we grew net-net, PC the business. in all So, in

Rich Hume

ASPs Ruplu, that start happen the too probably down come to And in U.S., going probably time abate through future. not those what's to or the in think, is will distant I

to So, of a is dimension ASP so, of there. know an euro sort pretty ASP, start but perspective. to a there all know dollar-based currency more little that hockey will the know second figure we stick in weakening PC some euro out moderation We a abate that much is of more tricky is an to the the sort buy takes itself that, perspective, from Europe industry, inflationary be a you might industry increased manifest from category. lot bit things that as

a that, relative think bit see I we other dynamic So longer of a what might to in that Europe life have in might ASP jurisdictions.

Ruplu Bhattacharya

for materializes? Okay. appreciate Can for longer opportunity all details. in see I about do what talked solutions term this is an type months like that you you or XX integration material Thanks that, from I aggregation And need and also the When combined do of is the opportunity? Rich. had ask new that as a think that this you, company. next you to revenues investments the revenues, the is and opportunity

Marshall Witt

good Very Yeah. question.

aggregation 'XX. and relative This what solutions call go happens to well to talked build we we marketplaces. quite you aggregating whole underway a Investor our We're we frequently run in in a click if our also solutions. Day, 'XX, back multi-vendor been cloud So, about 'XX, of being to building solutions inventory have

cloud we are on pre-configured solutions available So, these platform. make our that

helps to platform overall So, certainly that -- a that accelerate cloud growth. ramp, our

profile margin than aggregated the sales are Typically, point product solutions of better overall.

forward. and of we of element late into course, driving of cloud into to And it then as in timeframe, we growth know, this then 'XX then, 'XX, sort a your a question, think is but it's you 'XX 'XX, I really future, model. orchestration said move strategically So the critical answer going build, our

those out all platform we're building capability. So, of

engineering and investments those the more we have certainly are lined your incrementing is made these answer to aggregated the to in in up. technical is all continually So, over that been move resources, to as the qualify resources, We've which resources investment then time. piece be sales question, platform, it's last solutions, the investments last been

Ruplu Bhattacharya

all Appreciate the it. details. Okay. Great. for Thanks

Operator

from Ellis Your Ashley of line the next is Suisse. with question Credit

Your open. line is

Ashley Ellis

question. Hi. taking my Thank you for

on historical, usual go expectations Marshall, us could it maybe stay growth what of for kind currency? low the are at guidance of a anything back end What the for the in but like Hyve coming you benefited at could we give using if your down, assume Just if it quarter, you will on of our Sorry, the Are quarter. maybe in I growth flat? in from that is look headwinds? fair estimated the backlog, fourth PC you step And bridge fourth overall then is X% kind down of the it a kind range? than basis seems to us quarter? to like interpret think to fourth XQ slower backlog kind of to expecting comments of and are sequential kind backlog the

Marshall Witt

Sure. backlog. on let touch I'll help start and plus you Rich then to whatever want

do we you if about So, have QX. the strong sequential a did think actually, relationships,

so more right XX% does compared growth currency, constant revenue to X% that make a we'll the a in kind QX the unusual. Typically, it's bit middle. And X% see little added of rate,

I So, that think of relationships. explains some the

to be If about headwinds, FX ago X.XX. call long the at did you or X.XX. the euro, we're X.XX guiding we wasn't at when continuing that by were think out impacted It we

for So that to have some us. continues headwinds

the of But business, conversations want within And Asia-PAC, go the around the the as to ranges. growth did you still typically lower growth want add we whether end the growth anything and then, guide, Hyve plot mention solid do said, that? distribution as Americas. (ph) technology we it's with of hyperscale or I year-on-year outcome you Europe Hyve, when expect the do we well towards in the in else networks, to high infrastructure, that Rich,

Rich Hume

No. comprehensive. Thank quite It's you, Marshall.

Ashley Ellis

generating and merger And always synergies. you. at performed I -- synergies, both your Okay. companies of then looking mean typically, more kind over have outperformed Thank

that are would into about consider you then like we I of how see raise is target? and event and same the recession? a million So, in spending spending system? Asia keeping kind about the How there opportunity is move those you're do systems, maybe know kind your be as And their of you environment a maybe room you plan go -- on thinking Europe synergies? thinking macro to to that own Just $XXX you weakening, the may are and ERP B to

Marshall Witt

touch on I'll Yeah. synergies.

So Ashley. right, you're

We But million, a time have are remarks, I kind the believe a now, $XXX our have also We last stepped may year. be, this so get from prepared bottoms-up the spoke. and do in overperformed confident of still in number now, million do but we conversation the only exit but you to end of that higher. we as synergy typically for at is the all as outlook we're that up of thought second as closer million probably not what we earlier more year our target, to Right million saw $XXX $XXX synergies that informed fiscal on 'XX, for good you. we'll $XX

Rich Hume

Yeah.

CIS systems, the the work legacy U.S. the system. we're ERP from lot in back in we've on the to got the end a onto the do. Data On particular of In now, Tech that of ERP middle migration

outside have the was focused We $XX we hands entity. plan that. deck and on everybody, we're on then of ERP The to all systems billion going are would a steadfastly combined U.S. that our maintain because keep

makes we We down ERP the done now. And determine sense it whether to carry are the road, the way want evaluation right then we future we're to an aligned changes and will get out to sure or whether there distracted sometime properly. that make aren't

Ashley Ellis

you. Thank Okay.

Rich Hume

Thank Ashley. Have you, day. a great

Operator

Your next with Raymond from question is Tindle James. Adam

open. is line Your

Adam Tindle

to during the probably income a Europe wanted operating surprising and that's for since strength I you said to people. on quarter the guess, non-GAAP mid-teens EMEA, reason I as growth morning. Good in start its some Thanks. constant in currency Okay.

here EMEA of the comment could on in you cadence end and the you're there maybe the demand So, region? at of September seeing what

everything many so headlines and related on fears that. just macro recessionary to There's

real you're time QX there, for the embedded September what Europe? in real in your and demand wondering time learning of for guidance QX cadence through Just what's

Rich Hume

I'll you in. Adam, start then can Rich, Yeah. chime and

So year-on-year think month, standpoint in strengthened guide cadence about as that from in saw QX. we by it what Adam, confidence continues reflect to Europe, we saw August, and and we strength our a continued is

So, rest quite and the that speaking plus analysis the are it forecast surprising, with European grow. the don't word of to and same at to overall we supply looking kind with macro up QX. their strength do our if Rich? come definitely backdrop is convicted, know, continue demand is that is our does, world do -- but I and the thing chain they thoughts expect bottoms and around And they to up issues the it didn't see of teams, something

Rich Hume

Yeah, Adam.

So that. if first a Marshall, bit higher-single look correct that than surprise. entirety the we of pleasant channel, memory, the substantially rate we take mid-slightly relative wrong, I mid-sort little the a when digit a overall. From of -- -- at have, had growth but grew to visibility we Actually, I'm it think of a higher me that we

from a country, and build And have and a for visibility as pretty business country, strengthened for Europe so, bottoms our country perspective of well. robust outlook, QX is has if and Marshall we sort of good as that the will, has a stated the aggregate coming up you quarter,

seems relative of challenges business solution a like to the in the we, technology read driving efficiencies lot you, help in to to headlines So be yet for a entities. some Europe,

environment we and levels. the word to that third solid now, right seen, pretty quarter be, a seems well. to things is think competitive just going to in IT businesses historical I a And -- order always tough, yet fact forward own a projection is I'll about tool part that consumption than will remain we but in long my as and of call I are when the that and buildup necessary the that GDP, talk useful as be is for think see in that tool And it's personal outpaces how it fourth opinion such the

Adam Tindle

cash talking of majority but I component, since at that the the the And Okay. inventory related merger to follow-up, it build maybe has you're did which you as a business. say an about volatile I the here, on Hyve flow, been is and Marshall, look distribution build. understand

(ph) is So guide a to that and of have kind you growth? extend forecast you got out. we odd you to distribution in inventory of growth trying the to a dynamics It business, kind comfortable days core more days figure for out for softer timing inventory as for given -- forward the have usually robust let letting what continue forward flush for grow those to

structural And inventory build kind so is lot I targets then outside I'm you structure cash is this cyclical maybe just medium days, the think there and cycle payables lastly, there's kind any conversion cash normalized not you and but of important temporary just term, this a have flow about receivables factors that too offsetting of can inventory here, on to the if the question, the talk beyond out of on think there given benefits, for wondering far days. about we and of dynamics normalized how

and business will with cash year? billion in flow the starting aspect aspect the how of generate So next cost $X inventory cyclicality structural the

Marshall Witt

distribution start in Yeah. certainly We want (ph). expect billion sure Sure. supply in to assuming generate as our AP the for one out to still Rich $X just environment, clicking make part. of And we and understand billion got as 'XX that. and I'll then just Hyve, for up you into it level that, or caused reasons, did effect in $X flow comment you've free go stable that inventory so offset chime QX, down then that said, the cash going both or most chain a but that over in by

Obviously, this of give flow. up our our at our cash When we and just temporary QX to generation $XX, just now looking profit in delays comments there's sun at to Thinking and I and around do. effects in As it the supply beyond. and and $XX in too, Adam, together we finished and cash my prepared volatility, translate we year, does some and there revenue so should at inventory said is days look in $X. back expect first cash sense us days we last and year seasonality, what a we're chain finished

into What and you really how it add? to certainty and chain come day, the down anything Rich, of caused end in 'XX. Hyve the do abate volatility manifests the overall does call we'll distribution. supply that else starts to or XX-XX but the itself QX that? that and into think Basically, in 'XX, want around it unwind that, between, at We infrastructure and split to

Rich Hume

Yeah.

us make understands cash Adam, that on everybody free not of flow cash to free I So, importance generating lost it's and the flow. want sure

been about part a As the pandemic cetera. has volatility, the due of et it, prior to and downs of the think this big ups I

out And materially at went look an I vendor their across as with base they're look and largely our carried some pretty group. to a elevated and speaking, and take analysis actually happening aggregate what's inventories

forward, we So, manifestation been find again, the way our through said, shorts profile manage I just of to our days. longs believe think being to that what in cash and That will the through. fundamentally I trying moving and that's we've

be to, couple start it might for little the I as it earlier, pretty space there the first as ecosystem do the said next I swing bit we We of less, year. erraticness of but and is see a a quarters call I'll we in within think find AS move PC stability so great the year, bumpy through that

that profile confidence settlement. the we once elevated, get they're but So all we some say correct, challenges yes, have the supply manage these we to around can chain the of I'd that

Adam Tindle

Thank you.

Operator

Colicchio Research. from with Your question Barrington next is Vincent

is open. line Your

Vincent Colicchio

on synergies. Yes, questions thoughts revenue Just I'm cost what meaningful curious, are lot you of there? any your are synergies? seeing

Rich Hume

have synergies, of on a Again, revenue revenue lot the clearly synergies. opportunity we Yeah. around

say you of. move had -- you executable, I'll we one they a other into become ERP of can't system, that side that vendors a all side the As that the lot common more have didn't take the advantage because

next be system. there'll more and more that ERP we'll take will as get year, ramp so, advantage the move that on being towards to And able as we that sort year, of believe through I to of because a one move the of we start be

system, training I'd the haven't, in ERP that only cross-training now, that activity all the of not the the done, the FY 'XX of sort but also ramp. happens on the one we're all vendors say that will middle side have that have, others and the of You'll with -- that

So we that see definitely of opportunity ahead us.

Vincent Colicchio

into move recession a a here, the integration, meaningful if perhaps of in we be expect middle should obviously, And large opportunistic, we some -- smaller deals? should yeah,

Marshall Witt

on I'll this. go first

history or inventory about if again, sure I our make experience you're and M&A talking – I about actual I want if think you're given and to opportunities, buy talking

Vincent Colicchio

The latter.

Marshall Witt

M&A?

Vincent Colicchio

Yes.

Marshall Witt

and say, appropriate expansion, in ability environment, think and the pretty deals I value-added, steady Rich? I would been economic we've that it's our look of a are Yeah, to at or appetite but expansion capability regardless whether footprint

Rich Hume

No.

we are believe assets right. the teams have of to pipeline, and I mean, at that's we sheet if see the strategic our frequently we around pursue we with think right I will, them. if looking you table the set balance the

it's multiples where that some people be I pass was, realization are a your of the which and as matter the of, the acquisitive and two that on worth that although companies to of opportunity market previously just that the to always think I and are the hey, based things time have was think I I buying assets is and have patient that finding of think rolling, here so complementary are a find being to will way you right make of test I'm continue articulate just our there to still been business. still again, company I sure would we'll

Vincent Colicchio

guys. Thanks

Marshall Witt

Well, thank you.

Operator

from Loop Markets. question Alek next is Valero Your with Capital

Your line is open.

Alek Valero

Good for on guys. actually I'm Yeah. Ananda. morning,

you my pricing on margins? any question any if is, would the down, seeing come so prices see are you and impact impact to So, guys were broadly on

Rich Hume

a will think environment that our have opportunity a selling price be or we're hold particular So, of We lenders prices start prices I'll seeing living profile. and the typically, start history either retain those our those to are us have to or the ebb through are margin predict profile in instance specifically In the inventory those decrease. at can't still but when, maybe start Certainly, and an increases. overall to stability flow long ASP we here. in time, down, able stable time come -- things at what either I of through when to forward, margin on -- take we because we

bit a is price stay There move margin of the of of an increases That's slow much as a Marshall reasonably bit expect ASP seen past that that in we a not forward, smoothing we've would the happening profile activity. business basis decreases. has we've little or as because benefited XX either there. environment the stable there's somewhere we would that the starting to regardless down escalating that points. commented around But in

Alek Valero

that. a for quick follow-up. as you Maybe Thank

sense are softer of So, you which be do for may areas -- if stronger maybe areas, well? guys or any could your guys and as are you key expand getting product you have by geography

Rich Hume

product we're the weaknesses our question seeing strength where was and about capabilities globally? Alek, in

Alek Valero

product Yeah. That's And right. on areas? your

Rich Hume

So, every QX product I seen basically mean, our across I'll strength we of major uniform in categories, start with region. all in had this.

anything in I good it's high-single think -- wasn't pretty in we of sort our really isn't about going falling X.X-ish if being view downside, you I Hyve revenue a out, revenue growth there anything bit uniform ones the the book. in of the but midpoint adjusted mean, of the overall, good. there had will a rather, business the if digits think but in I that's fairly think I think little other are might that unusual. less is think growing a it each So unit, to forward. Maybe pretty surprised, guide of QX which the my categories bit that frankly, as be QX XX% in and I And of commented earlier, you

report weak. being that say there a So, QX we would that particular as I isn't would area in

Alek Valero

Thanks for that. Awesome.

Operator

question final Your the comes Suva Jim Citigroup. with of from line

open. is line Your

Jim Suva

from you in inventory some some builds digestion linearity or then Hyve know the Thank much. so We it. the business has past, and big that had some unpredictable

from running business and just has at from quarter, the sit there and it, things? you your a digestion know big it or some at As I demand inventory see was equilibrium you that is occur sit company an that look to here where point is now,

Marshall Witt

in bit some call revenue did that, we've XX-month we continues to than year-on-year, capacity thing space. yeah, grow or trailing basis One little greater mention center give still ability fairly both earlier, their constraints Jim, their and remains Jim, it income a customers broader is with absorb. it data our it, where hyperscale that a lumpy is operating as to is said perspective there demand to on

it -- we ready-to-go it's And our books until That sitting customized position. they customers over or accept is three to in and inventory racks translates first fiscal. that we're of it we've this the hyperscaler then cycle. up of through kind have so revenue the then we our our It's built for quarters a on racks, the has what do, and

I see related thing may or play normality that in that start come comes inventory one into to that to think down. that's equalizes as 'XX, we

Jim Suva

to gears -- That ahead. Okay. makes go sense. then And switching

Marshall Witt

paid they're it's we for going what that, ready around of to a just in digest. customers, do for for we our get until holding I Jim, to that that do hyperscale them reminder space more say, a

the a from it's not So, inventory being perspective. recovered margin that isn't

Jim Suva

breakdown that Europe it then, of exposure, And versus again us sense. remind lot can is enterprise? percent come of of just on Europe makes of then, And a maybe your consumer for That seems versus are then in changes PC there Okay. the because total U.S.? maybe totality company versus you U.S. and the like

Rich Hume

Yeah.

this little me talked bit the me let So about question. Marshall honest. earnings We answer keep in can global the call. last

or I think Europe the to low consumer relative of you I So, the total the of mid-single piece of sort digit don't versus portfolio Americas? Marshall, revenue XX% is total And portfolio. exposure overall sort the do of percent. facts balanced. have reasonably know, the PC they're The

Marshall Witt

Yeah.

It's they fairly I equal. think are.

Rich Hume

Yeah.

So there Europe, vendors. one concentration in versus in isn't mobility strong have mobility business the one we caveat top-tier of a other. the One with to that, the

there So bit consider to mobility mobility you a Europe. PC, within quite business that, were healthy if concentration larger of be a the now. right in then is That might

Marshall Witt

primarily And that's commercial.

Rich Hume

Primarily of Europe, and consumer. market mobility sort business commercial, in the broad served that sorry, that's commercial actually right. No,

Jim Suva

the Great. Thank much you so for clarifications.

Marshall Witt

Thanks, Jim.

Operator

concludes participation This call. today's your for you Thank conference today.

a day. Have disconnect. now may You nice

TD SYNNEX (SNX) 27 Sep 222022 Q3 Earnings call transcript