Post Earnings Coverage as SYNNEX Earnings Surge 21.9 Percent and Increases Dividend

LONDON, UK / ACCESSWIRE / September 29, 2016 / Active Wall St. announces its post-earnings coverage on SYNNEX Corp. (NYSE: SNX). The company reported its financial results for the third quarter fiscal 2016 (Q3 FY16) on September 26, 2016. The business process services company topped earnings and revenue expectations and raised its quarterly dividend. Register with us now for your free membership at: http://www.activewallst.com/register/.

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Earnings Reviewed

For the quarter ended on August 31st, 2016, SYNNEX reported net income of $58.7 million, or $1.47 per share; with net income up 21.9%, compared to net income of $48.2 million, or $1.21 per share, for the year ago period. After adjustments for acquisition-related expenses and other factors, the company posted earnings of $1.73 per share, topping analysts’ estimates of $1.56 per share as well as SYNNEX’s forecast of between $1.52 per share to $1.57 per share.

For Q3 FY16, SYNNEX generated revenue of $3.67 billion, up 10.1% compared to revenue of $3.33 billion in the comparable quarter for 2015. Analysts expected revenue of $3.49 billion. Y-o-y revenue grew almost 9% to $3.7 billion excluding the Minacs acquisition and adjusting for currency. The company’s consolidated non-GAAP operating margin was 3.10%, representing nearly 20 basis points improvement compared to the prior year. HP Inc., at approximately 16% of sales, was the only vendor accounting for more than 10% of sales.

On July 11, 2016, SYNNEX announced that it will acquire Minacs and integrate it into its Concentrix business segment for a purchase price of approximately $420 million.

Clients

During Q3 FY16, SYNNEX added 12 new clients, totaling 26 new clients for the year, well up from last year. The company also received a record 25 industry awards in Q3 FY16, many won in partnership with its clients. Concentrix India became the first Company in India to be certified ISO 14001 for environmental stewardship.

Segment Results

During Q3 FY16, SYNNEX’s Technology Solutions segment generated revenues of $3.3 billion, representing an increase of 9.8% compared to the prior year quarter, bolstered by strong demand for its Hyve services, across the board growth in Technology Solutions US and Canada and offset by negative growth in Japan Technology Solutions. Technology Solutions non-GAAP operating income was $80.1 million, or 2.45% of revenue, up 11.72%, from the prior year’s quarter results of $71.7 million, or 2.41% of revenue.

The company’s Concentrix division contributed revenues of $406.7 million in Q3 FY16, up 13.1% from $359.5 million in the year-ago quarter. The Minacs’ acquisition contributed $36.2 million of revenue and $0.9 million of GAAP earnings to the Company’s total consolidated results of operations. For Concentrix, non-GAAP operating income in Q3 FY16 came in at $33.5 million, or 8.24% of revenue, up from the prior year’s quarter result of $25.2 million, or 7.02% of revenue.

Balance Sheet

SYNNEX’s overall cash conversion cycle for Q3 2016 was 42 days, representing an improvement of 3 days from Q3 of 2015. From a financing perspective, SYNNEX’s debt to capitalization ratio in Q3 FY16 came in at 29%. Preliminary cash flows used in operations were approximately $9 million for Q3 FY16. Capital expenditures for the reported quarter were $28 million, primarily due to continued Concentrix facility expansion. As of August 31, 2016, SYNNEX had cash and cash equivalents worth $223.28 million, down compared to cash and cash equivalents of $336.07 million as of November 30, 2015.

SYNNEX Board of Directors approved a regular quarterly cash dividend of $0.25 per common share to be paid on October 28, 2016 to stockholders of record as of the close of business on October 14, 2016. This is an increase from SYNNEX’s previous quarterly dividend of $0.20.

Outlook

For Q4 FY16, SYNNEX is projecting to generate revenue in the range of $3.83 billion to $3.93 billion. For non-GAAP net income, the forecast is for a range of $82.7 million to $84.7 million. Non-GAAP diluted EPS is anticipated to be in the range of $2.06 per share to $2.11 per share.

Stock Performance

The stock closed Wednesday trading session at $115.50, slightly falling 0.96% from its previous closing price of $116.62. A total volume of 522.55 thousand shares have exchanged hands, which was higher than the 3-month average volume of 228.17 thousand shares. SYNNEX’s stock price advanced 8.63% in the last month, 24.44% in the past three months, and 25.29% in the previous six months. Furthermore, since the start of the year, shares of the company has surged 29.32%. The stock is trading at a PE ratio of 22.88 and has a dividend yield of 0.69%.

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