TD SYNNEX (SNX) - 2024 Q3 - Quarterly Results

Fiscal 2024 Third Quarter Performance Overview TD SYNNEX reported strong Q3 FY2024 results, exceeding outlooks with robust revenue and non-GAAP EPS, driven by operational execution Q3 FY2024 Key Results TD SYNNEX reported strong Q3 FY2024 results, with revenue of $14.7 billion and non-GAAP diluted EPS of $2.86, exceeding outlooks Q3 FY2024 Financial Highlights vs. Outlook | Metric | Q3 FY2024 Actual | Q3 FY2024 Outlook | | :--- | :--- | :--- | | Revenue | $14.7 billion | $13.3 - $14.9 billion | | Non-GAAP Gross Billings | $20.3 billion | $18.9 - $20.1 billion | | Net Income | $179 million | - | | Non-GAAP Net Income | $245 million | - | | Diluted EPS | $2.08 | - | | Non-GAAP Diluted EPS | $2.86 | - | Q3 FY2024 vs. Q3 FY2023 Performance Comparison (GAAP, in millions) | Metric | Q3 FY2024 | Q3 FY2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $14,684.7 | $13,960.6 | +5.2% | | Operating Income | $302.9 | $240.2 | +26.1% | | Net Income | $178.6 | $139.3 | +28.2% | | Diluted EPS | $2.08 | $1.49 | +39.6% | Q3 FY2024 vs. Q3 FY2023 Performance Comparison (Non-GAAP, in millions) | Metric | Q3 FY2024 | Q3 FY2023 | YoY Change | | :--- | :--- | :--- | :--- | | Gross Billings | $20,282.5 | $18,583.6 | +9.1% | | Operating Income | $392.9 | $396.8 | -1.0% | | Net Income | $245.4 | $259.8 | -5.5% | | Diluted EPS | $2.86 | $2.78 | +2.9% | - The company generated $386 million in cash from operations and $339 million in free cash flow during the quarter[1][4] CEO Commentary CEO Patrick Zammit highlighted a strong Q3, noting significant growth across all segments and optimism for IT market recovery - The CEO stated that Q3 was a strong quarter, reinforcing optimism about an IT market recovery[4] - Significant growth was observed across geographic segments and in both Endpoint and Advanced solutions businesses[4] - Non-GAAP gross billings grew 9% YoY, exceeding the high end of the company's guidance range[4] Detailed Financial Performance This section details consolidated financial results and regional performance, highlighting revenue growth and operating income changes Consolidated Financial Results Consolidated revenue grew 5.2% to $14.7 billion, driven by portfolio growth, while GAAP operating income rose 26.1% due to lower costs - Revenue growth was driven by both Advanced Solutions and Endpoint Solutions portfolios. On a constant currency basis, revenue increased by 5.6%[4] - A greater percentage of revenue being presented on a net basis negatively impacted reported revenue by approximately 4%[4] - Gross margin declined from 7.0% to 6.5% YoY, primarily due to higher margins in the prior year in strategic technologies and product mix[4] - The increase in GAAP operating income was primarily due to a decrease in acquisition, integration, and restructuring costs[4] Regional Performance All geographic regions showed strong YoY growth in Q3, led by Asia-Pacific and Japan with 17.6% revenue increase Americas The Americas region reported 2.4% revenue growth to $9.1 billion, with non-GAAP gross billings up 7.7% Americas Q3 FY2024 Performance (in millions/billions) | Metric | Q3 FY2024 | Q3 FY2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $9.1 billion | $8.9 billion | +2.4% | | Non-GAAP Gross Billings | $13.0 billion | $12.1 billion | +7.7% | | Operating Income | $221 million | $193 million | +14.7% | | Non-GAAP Operating Income | $272 million | $302 million | -9.8% | - Revenue presentation on a net basis negatively impacted the Americas' revenue by approximately 5%[5] Europe Europe's revenue increased 8.6% to $4.6 billion, with non-GAAP gross billings growing 9.6% YoY Europe Q3 FY2024 Performance (in millions/billions) | Metric | Q3 FY2024 | Q3 FY2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $4.6 billion | $4.2 billion | +8.6% | | Non-GAAP Gross Billings | $6.0 billion | $5.5 billion | +9.6% | | Operating Income | $57 million | $30 million | +94.6% | | Non-GAAP Operating Income | $94 million | $75 million | +25.3% | - On a constant currency basis, revenue in Europe increased by 8.9% YoY[5] Asia-Pacific and Japan Asia-Pacific and Japan led regional growth with 17.6% revenue increase to $1.0 billion and 23.6% non-GAAP gross billings growth Asia-Pacific and Japan Q3 FY2024 Performance (in millions/billions) | Metric | Q3 FY2024 | Q3 FY2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $1.0 billion | $0.9 billion | +17.6% | | Non-GAAP Gross Billings | $1.3 billion | $1.0 billion | +23.6% | | Operating Income | $25 million | $18 million | +35.9% | | Non-GAAP Operating Income | $27 million | $20 million | +33.0% | - On a constant currency basis, revenue in Asia-Pacific and Japan increased by 19.7% YoY[6] Forward-Looking Guidance and Shareholder Returns This section outlines Q4 FY2024 financial outlook and details capital allocation strategies, including share repurchases and dividends Fiscal 2024 Fourth Quarter Outlook TD SYNNEX projects Q4 FY2024 revenue between $14.9 billion and $15.7 billion, with non-GAAP diluted EPS of $2.80 to $3.30 Q4 2024 Outlook (in millions/billions) | Metric | Q4 2024 Outlook | | :--- | :--- | | Revenue | $14.9 - $15.7 billion | | Non-GAAP gross billings | $20.5 - $21.5 billion | | Net income | $162 - $205 million | | Non-GAAP net income | $239 - $282 million | | Diluted EPS | $1.90 - $2.40 | | Non-GAAP diluted EPS | $2.80 - $3.30 | Capital Allocation In Q3, TD SYNNEX returned $91 million to stockholders through share repurchases and dividends, increasing its quarterly cash dividend by 14% - Returned a total of $91 million to stockholders in Q3, comprised of $57 million in share repurchases and $34 million in dividends[1][4] - Announced a quarterly cash dividend of $0.40 per common share, representing a 14% increase from the prior fiscal third quarter[1][8] Financial Statements and Key Metrics This section presents consolidated balance sheets, statements of operations, and key performance metrics, including cash conversion cycle and ROIC Consolidated Balance Sheets As of August 31, 2024, total assets were $29.2 billion, with cash at $854 million and total stockholders' equity stable at $8.16 billion Selected Balance Sheet Items (in millions) | Account | Aug 31, 2024 | Nov 30, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $853.9 | $1,033.8 | | Accounts receivable, net | $10,032.4 | $10,297.8 | | Inventories | $7,674.4 | $7,146.3 | | Total current assets | $20,057.8 | $20,084.4 | | Total assets | $29,207.5 | $29,412.8 | | Accounts payable | $13,873.2 | $13,347.3 | | Total liabilities | $21,043.5 | $21,229.6 | | Total stockholders' equity | $8,164.1 | $8,183.2 | Consolidated Statements of Operations Q3 FY2024 revenue grew to $14.7 billion, with operating income increasing to $302.9 million due to significantly lower restructuring costs Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended Aug 31, 2024 | Three Months Ended Aug 31, 2023 | | :--- | :--- | :--- | | Revenue | $14,684,712 | $13,960,615 | | Gross profit | $961,048 | $971,273 | | Acquisition, integration and restructuring costs | ($656) | ($71,586) | | Operating income | $302,879 | $240,233 | | Net income | $178,556 | $139,262 | | Diluted EPS | $2.08 | $1.49 | Key Performance Metrics Operational efficiency improved with the cash conversion cycle shortening to 21 days, and free cash flow for Q3 was $339 million - Free cash flow for the three months ended August 31, 2024 was $339 million, compared to $552 million in the prior year period[4][29] Return on Invested Capital (ROIC) | Metric | August 31, 2024 | August 31, 2023 | | :--- | :--- | :--- | | ROIC | 8.2% | 7.8% | | Adjusted ROIC | 10.0% | 10.6% | Cash Conversion Cycle (in days) | Component | Q3 FY2024 | Q3 FY2023 | | :--- | :--- | :--- | | Days sales outstanding | 63 | 59 | | Days inventory outstanding | 51 | 53 | | Days payable outstanding | 93 | 89 | | Cash conversion cycle | 21 | 23 | Appendix This appendix details the use of non-GAAP financial information and provides a safe harbor statement regarding forward-looking statements Use of Non-GAAP Financial Information TD SYNNEX uses non-GAAP measures to provide clearer insights into core operational results by excluding specific non-recurring items - The company uses non-GAAP measures to provide investors with a better understanding of operational results and trends, facilitating period-to-period comparisons[13] - Key non-GAAP measures include constant currency revenue, non-GAAP gross billings, non-GAAP gross profit, non-GAAP operating income, non-GAAP net income, non-GAAP diluted EPS, Adjusted EBITDA, and free cash flow[11][12] - Adjustments from GAAP typically exclude acquisition, integration and restructuring costs, amortization of intangible assets, share-based compensation, and purchase accounting adjustments[11] Safe Harbor Statement This report contains forward-looking statements subject to risks, including IT spending weakness, competition, and supply chain issues - The press release contains forward-looking statements regarding strategy, demand, and financial guidance, which are inherently uncertain[14] - Key risks that could cause actual results to differ include weakness in IT spending, competitive industry conditions, supply shortages, and changes in foreign currency exchange rates[14]