TD SYNNEX (SNX) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides unaudited consolidated financial information, including statements, notes, and management's analysis Item 1. Financial Statements This section presents unaudited consolidated financial statements and notes for periods ended August 31, 2025 and 2024 Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity Consolidated Balance Sheets (in thousands) | Metric | August 31, 2025 (in thousands) | November 30, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | | Total assets | $31,683,202 | $30,274,479 | | Total current assets | $22,577,914 | $21,324,696 | | Cash and cash equivalents | $874,350 | $1,059,378 | | Accounts receivable, net | $10,925,068 | $10,341,625 | | Inventories | $9,137,505 | $8,287,048 | | Total liabilities | $23,229,401 | $22,239,045 | | Total current liabilities | $18,880,734 | $17,221,235 | | Borrowings, current | $1,194,794 | $171,092 | | Accounts payable | $15,651,286 | $15,084,107 | | Total stockholders' equity | $8,453,801 | $8,035,434 | - Total assets increased by approximately $1.4 billion from November 30, 2024, to August 31, 2025, driven by increases in accounts receivable and inventories[10] - Current borrowings significantly increased from $171.1 million to $1.19 billion[10] Consolidated Statements of Operations This section details the company's revenues, expenses, and net income over specific periods Consolidated Statements of Operations (in thousands) | Metric (in thousands) | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :---------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revenue | $15,650,924 | $14,684,712 | $45,128,946 | $42,607,873 | | Gross profit | $1,129,853 | $961,048 | $3,174,232 | $2,940,361 | | Operating income | $383,657 | $302,879 | $1,016,255 | $869,399 | | Net income | $226,795 | $178,556 | $579,253 | $494,289 | | Basic EPS | $2.76 | $2.09 | $6.95 | $5.70 | | Diluted EPS | $2.74 | $2.08 | $6.92 | $5.67 | - For the three months ended August 31, 2025, revenue increased by 6.6% YoY, gross profit by 17.6% YoY, operating income by 26.7% YoY, and net income by 27.0% YoY[12] - Diluted EPS increased from $2.08 to $2.74 YoY[12] - For the nine months ended August 31, 2025, revenue increased by 5.9% YoY, gross profit by 8.0% YoY, operating income by 16.9% YoY, and net income by 17.2% YoY[12] - Diluted EPS increased from $5.67 to $6.92 YoY[12] Consolidated Statements of Comprehensive Income This section presents net income and other comprehensive income components, showing total equity changes Consolidated Statements of Comprehensive Income (in thousands) | Metric (in thousands) | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :---------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income | $226,795 | $178,556 | $579,253 | $494,289 | | Other comprehensive income | $69,491 | $100,043 | $312,054 | $55,007 | | Comprehensive income | $296,286 | $278,599 | $891,307 | $549,296 | - Comprehensive income for the three months ended August 31, 2025, increased to $296.3 million from $278.6 million in the prior year, primarily driven by higher net income, despite a decrease in other comprehensive income[15] - For the nine months ended August 31, 2025, comprehensive income significantly increased to $891.3 million from $549.3 million in the prior year, largely due to a substantial increase in foreign currency translation adjustments and other comprehensive income[15] Consolidated Statements of Stockholders' Equity This section outlines changes in the company's equity, including retained earnings and treasury stock Consolidated Statements of Stockholders' Equity (in thousands) | Metric (in thousands) | August 31, 2025 | August 31, 2024 | | :---------------------- | :-------------- | :-------------- | | Total Stockholders' equity, ending balance | $8,453,801 | $8,164,083 | | Treasury stock, ending balance | $(1,895,564) | $(1,436,868) |\n| Retained earnings, ending balance | $3,224,616 | $2,595,005 | | Cash dividends declared per share | $0.44 | $0.40 | - Total stockholders' equity increased to $8.45 billion as of August 31, 2025, from $8.16 billion in the prior year, primarily due to higher retained earnings and other comprehensive income, partially offset by increased treasury stock repurchases[18] - Cash dividends declared per share increased from $0.40 to $0.44 for the three months ended August 31, 2025, and from $1.20 to $1.32 for the nine months ended August 31, 2025[18] Consolidated Statements of Cash Flows This section reports cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :---------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $71,326 | $655,783 | | Net cash used in investing activities | $(176,757) | $(181,573) | | Net cash used in financing activities | $(185,964) | $(655,436) | | Net decrease in cash and cash equivalents | $(185,028) | $(179,853) | | Cash and cash equivalents at end of period | $874,350 | $853,923 | - Net cash provided by operating activities significantly decreased to $71.3 million for the nine months ended August 31, 2025, from $655.8 million in the prior year, primarily due to changes in accounts receivable and accounts payable[21] - Net cash used in financing activities decreased to $186.0 million from $655.4 million, mainly due to increased net borrowings and a decrease in share repurchases[21] Notes to the Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION This note describes the company's global operations and the basis for its interim financial statements - TD SYNNEX Corporation is a global IT distributor and solutions aggregator, operating in three reportable segments: the Americas, Europe, and Asia-Pacific and Japan (APJ)[22] - The interim unaudited Consolidated Financial Statements are prepared in accordance with SEC rules and GAAP, reflecting all necessary adjustments for fair presentation[24] NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note outlines key accounting principles, estimates, and new accounting standards - The Company's financial statements rely on management estimates and assumptions, which are regularly evaluated based on historical experience and reasonable forecasts[27] - Credit risk concentration exists in cash, accounts receivable, receivables from vendors, and derivative instruments, managed through credit evaluations and allowances for expected credit losses[28][30][32] Revenue from Key Vendors (as a percent of consolidated revenue) | Vendor | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :---------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Apple, Inc. | 11 % | 11 % | 12 % | 12 % | | HP Inc. | 10 % | N/A | 10 % | N/A | - The Company experiences seasonality with slightly higher sales in the first and fourth fiscal quarters due to capital budgeting and purchasing cycles[34] - Revenue is primarily generated from IT product sales, recognized when control transfers to customers (shipment/delivery), and presented net of taxes and estimated returns/discounts[36][37][38] - New accounting standards (ASU 2023-07, 2023-09, 2024-03, 2025-05, 2025-06) are being evaluated for their impact on segment disclosures, income tax disclosures, expense disaggregation, credit loss estimation, and internal-use software capitalization, with effective dates ranging from fiscal year 2025 to 2029[43][44][45][46][47] NOTE 3—ACQUISITION, INTEGRATION AND RESTRUCTURING COSTS This note details costs associated with acquisitions, integration, and restructuring efforts - Acquisition, integration, and restructuring costs for the nine months ended August 31, 2025, totaled $4.03 million, significantly down from $70.19 million in the prior year, primarily due to the completion of Merger-related activities[12][48] - On July 1, 2025, TD SYNNEX acquired Apptium Technologies, LLC for approximately $111.8 million, recording $74.9 million in goodwill and $36.3 million in intangible assets, as a strategic investment in its technology solutions orchestration[49][50] - The Merger-related acquisition, integration, and restructuring activities were completed in the first half of fiscal year 2024, incurring $64.38 million in costs for the nine months ended August 31, 2024, including professional services, personnel, long-lived asset charges, and voluntary severance program costs[52][53][54] NOTE 4—SHARE-BASED COMPENSATION This note provides information on the company's share-based compensation plans and expense recognition Share-Based Awards Activity (shares in thousands) | Metric | Stock options (as of Aug 31, 2025) | RSAs and RSUs (as of Aug 31, 2025) | | :-------------------------- | :--------------------------------- | :--------------------------------- | | Balances as of Nov 30, 2024 | 482 | 1,252 | | Exercised/Granted | (158) | 153 | | Vested | - | (233) | | Cancelled | - | (43) | | Balances as of Aug 31, 2025 | 324 | 1,117 | - Share-based compensation expense decreased to $12.4 million for the three months ended August 31, 2025, from $16.2 million in the prior year, and to $46.2 million for the nine months, from $47.1 million in the prior year[58] NOTE 5—STOCKHOLDERS' EQUITY This note details changes in stockholders' equity, including share repurchases and dividends - The Board of Directors authorized a new $2.0 billion share repurchase program in March 2024, supplementing the prior program, with $1.4 billion available for future repurchases as of August 31, 2025[59][60] Common Share Repurchase Activity (Nine Months Ended August 31, 2025) | Metric | Shares (in thousands) | Weighted-average price per share | | :---------------------------------------------- | :-------------------- | :------------------------------- | | Treasury stock balance as of November 30, 2024 | 15,289 | $98.96 | | Shares repurchased under share repurchase program | 3,316 | $127.58 | | Shares repurchased for tax withholdings | 75 | $123.81 | | Shares reissued for employee benefit plans | (534) | $100.35 | | Treasury stock balance as of August 31, 2025 | 18,146 | $104.46 | - A quarterly cash dividend of $0.44 per common share was declared on September 25, 2025, payable on October 31, 2025[61] NOTE 6—EARNINGS PER COMMON SHARE This note presents the calculation of basic and diluted earnings per common share for the reported periods Earnings Per Common Share (EPS) | Metric (in thousands, except per share) | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income attributable to common stockholders | $224,759 | $176,927 | $573,975 | $489,818 | | Basic EPS | $2.76 | $2.09 | $6.95 | $5.70 | | Diluted EPS | $2.74 | $2.08 | $6.92 | $5.67 | | Weighted-average common shares outstanding (diluted) | 81,901 | 84,937 | 82,928 | 86,323 | - Diluted EPS increased by 31.7% for the three months ended August 31, 2025, and by 22.0% for the nine months ended August 31, 2025, compared to the prior year periods[62] NOTE 7—BALANCE SHEET COMPONENTS This note provides disaggregated information for key balance sheet accounts Accounts Receivable, Net (in thousands) | Metric | August 31, 2025 | November 30, 2024 | | :------------------------ | :-------------- | :---------------- | | Accounts receivable | $11,024,521 | $10,443,290 | | Less: Allowance for doubtful accounts | $(99,453) | $(101,665) | | Accounts receivable, net | $10,925,068 | $10,341,625 | Allowance for Doubtful Trade Receivables (in thousands) | Metric | Amount | | :---------------------------------------------------- | :-------------- | | Balance as of November 30, 2024 | $101,665 | | Additions | $21,707 | | Write-offs, recoveries, reclassifications and foreign exchange translation | $(23,919) | | Balance as of August 31, 2025 | $99,453 | Accumulated Other Comprehensive Loss (AOCI), Net of Taxes (in thousands) | Component | Balance as of Nov 30, 2024 | Other comprehensive (loss) income before reclassification | Reclassification of losses from AOCI into income | Balance as of Aug 31, 2025 | | :------------------------------------------------ | :------------------------- | :-------------------------------------------------------- | :----------------------------------------------- | :------------------------- | | Unrealized (losses) gains on cash flow hedges, net of taxes | $(110) | $(2,414) | $2,086 | $(438) | | Foreign currency translation adjustment and other, net of taxes | $(645,007) | $312,382 | — | $(332,625) | | Total | $(645,117) | $309,968 | $2,086 | $(333,063) | NOTE 8—DERIVATIVE INSTRUMENTS This note describes the company's use of derivative instruments to manage foreign currency and interest rate risks - The Company uses derivative instruments, such as forward contracts, options, and swaps, to manage exposure to foreign currency and interest rate risks, but not for trading or speculative purposes[66][67] - Cash flow hedges are used for forecasted sales, inventory purchases, and operating expenses, with gains/losses recorded in AOCI until the hedged item impacts earnings[68][69] - Net investment hedges are used to offset foreign currency risk in euro-denominated foreign operations, with gains/losses recorded in AOCI until sale or liquidation of underlying assets[70] Fair Values of Derivative Instruments (in thousands) | Derivative Type | Balance Sheet Line Item | August 31, 2025 | November 30, 2024 | | :-------------------------------------------------- | :-------------------------- | :-------------- | :---------------- | | Forward foreign currency exchange contracts (not designated) | Other current assets | $5,552 | $11,863 | | | Other accrued liabilities | $9,137 | $8,096 | | Forward foreign currency exchange contracts (cash flow hedges) | Other current assets | $183 | — | | | Other current liabilities | $241 | — | | Forward foreign currency exchange contracts (net investment hedges) | Other accrued liabilities | $31,004 | $91 | | | Other long-term liabilities | $20,301 | $7,889 | | Foreign currency exchange collar contracts (net investment hedges) | Other long-term liabilities | $6,173 | — | Effect of Derivative Instruments on Consolidated Statements of Operations (in thousands, before taxes) | Derivative Type | Location of Gains (Losses) in Income | Three Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2025 | | :-------------------------------------------------- | :----------------------------------- | :------------------------------ | :----------------------------- | | Not designated as hedging instruments | Cost of revenue | $(8,787) | $(56,191) | | | Other income (expense), net | $2,653 | $41 | | Cash flow hedges (losses recognized in OCI) | OCI | $(1,099) | $(2,725) | | Cash flow hedges (reclassified from AOCI) | Revenue | $(1,744) | $(1,744) | | Net investment hedges (losses recognized in OCI) | OCI | $(11,387) | $(53,839) | | Net investment hedges (gains recognized in income) | Interest expense and finance charges, net | $2,548 | $7,625 | NOTE 9—FAIR VALUE MEASUREMENTS This note explains the fair value hierarchy and measurement techniques used for financial instruments - The Company classifies fair value measurements into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[78][79] - All derivative instruments are classified as Level 2[79] Fair Value Measurement Categories (in thousands) | Instrument Type | Total (Aug 31, 2025) | Level 1 (Aug 31, 2025) | Level 2 (Aug 31, 2025) | Level 3 (Aug 31, 2025) | | :-------------------------------------------------- | :------------------- | :--------------------- | :--------------------- | :--------------------- | | Assets: Forward foreign currency exchange contracts not designated as hedges | $5,552 | — | $5,552 | — | | Assets: Forward foreign currency exchange contracts designated as cash flow hedges | $183 | — | $183 | — | | Liabilities: Forward foreign currency exchange contracts not designated as hedges | $9,137 | — | $9,137 | — | | Liabilities: Forward foreign currency exchange contracts designated as net investment hedges | $51,305 | — | $51,305 | — | | Liabilities: Foreign currency exchange collar contracts designated as net investment hedges | $6,173 | — | $6,173 | — | - The fair values of forward exchange contracts and foreign currency exchange collar contracts are measured using observable market data, such as spot and forward rates, discount rates, and implied volatility[80] NOTE 10—BORROWINGS This note details the company's debt structure, including borrowings, credit facilities, and covenants Borrowings (in thousands) | Borrowing Type | August 31, 2025 | November 30, 2024 | | :------------------------------------------------- | :-------------- | :---------------- | | Borrowings, current | $1,194,794 | $171,092 | | Long-term borrowings | $3,044,048 | $3,736,399 | | Total TD SYNNEX Senior Notes in long-term debt | $1,700,000 | $2,400,000 | | Total term loans | $1,331,250 | $1,331,250 | - Current borrowings significantly increased to $1.19 billion as of August 31, 2025, from $171.1 million at November 30, 2024, primarily due to the reclassification of TD SYNNEX 1.750% Senior Notes due August 9, 2026, to current[83] - The Company has a U.S. accounts receivable securitization program with a maximum borrowing capacity of $1.5 billion, maturing in November 2026, with no amounts outstanding as of August 31, 2025[84] - The TD SYNNEX Revolving Credit Facility has an aggregate principal amount of $3.5 billion, maturing on April 16, 2029, with $245.0 million outstanding at an interest rate of 5.71% as of August 31, 2025[85] - The TD SYNNEX Term Loan has $581.3 million outstanding, maturing on September 1, 2026, and the 2024 Term Loan has $750.0 million outstanding, maturing on September 1, 2027[87][89] - The Company issued $600.0 million of 2034 Senior Notes on April 12, 2024, using proceeds to repay $700.0 million of 2024 Senior Notes[91] - As of August 31, 2025, the Company was in compliance with all material financial covenants for its credit facilities[97] NOTE 11 – SUPPLIER FINANCE PROGRAMS This note describes the company's participation in supplier finance programs and outstanding obligations - The Company participates in Supplier Finance Programs, allowing vendors to sell their receivables to third-party financial institutions, which generally provides the Company with more favorable payment terms[98] - As of August 31, 2025, obligations outstanding under these programs totaled $2.9 billion, included in 'Accounts payable' on the Consolidated Balance Sheets, down from $3.2 billion at November 30, 2024[98] NOTE 12—SEGMENT INFORMATION This note provides financial data broken down by the company's operating segments: Americas, Europe, and APJ Segment Revenue and Operating Income (in thousands) | Segment | Three Months Ended Aug 31, 2025 Revenue | Three Months Ended Aug 31, 2025 Operating Income | Nine Months Ended Aug 31, 2025 Revenue | Nine Months Ended Aug 31, 2025 Operating Income | | :-------- | :-------------------------------------- | :----------------------------------------------- | :------------------------------------- | :---------------------------------------------- | | Americas | $9,267,939 | $283,647 | $26,666,472 | $730,015 | | Europe | $5,174,835 | $70,419 | $15,202,597 | $206,623 | | APJ | $1,208,150 | $29,591 | $3,259,877 | $79,617 | | Consolidated | $15,650,924 | $383,657 | $45,128,946 | $1,016,255 | - All segments (Americas, Europe, APJ) reported revenue and operating income growth for both the three and nine months ended August 31, 2025, compared to the prior year[99] NOTE 13—COMMITMENTS AND CONTINGENCIES This note outlines the company's contingent liabilities, including inventory financing and legal proceedings - The Company has inventory financing facilities with financial institutions for customers, with contingent repurchase obligations in case of default, but believes the likelihood of material loss is remote based on insignificant historical repurchases[100] - The French appeals court reduced a fine related to an anticompetitive agreement with Apple from €76.1 million to €24.9 million, which the Company paid[101] - A related civil lawsuit by eBizcuss was dismissed in the Company's favor, with an appeal pending, but the Company believes material loss is remote[101] - The Company is subject to various claims in the ordinary course of business but does not believe these commitments and contingencies will have a material adverse effect on its financial results[102][103] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial condition, operations, and liquidity Overview This section provides an overview of TD SYNNEX's business, vision, and strategic imperatives - TD SYNNEX is a Fortune 100 global IT distributor and solutions aggregator, playing a critical role in bringing technology products from leading vendors to market and helping customers create solutions[109] - The company's vision is to be the vital solutions aggregator and orchestrator connecting the IT ecosystem, driven by digital transformation and the migration to cloud computing[110] - Strategic imperatives include expanding portfolio reach, targeting new customer groups with personalized solutions, growing addressable market through vendor relationships, diversifying offerings (e.g., hyperscale infrastructure), and accelerating investment in services[111][114] - Offerings are grouped into Endpoint Solutions (personal computing, mobile, printers) and Advanced Solutions (hybrid cloud, security, storage, networking, servers, software, hyperscale infrastructure via Hyve business)[112] Economic and Industry Trends This section discusses the impact of end-market demand, economic conditions, and industry trends - The company's performance is highly dependent on end-market demand for IT products, influenced by new product introductions, replacement cycles, cloud computing, AI trends, and overall economic conditions[115] - A challenging economic environment, characterized by inflation, elevated interest rates, market volatility, and geopolitical developments, may lead to declines in the IT industry or increased price-based competition[115] - The systems design and integration solutions business is particularly sensitive to demand for cloud infrastructure and the dynamics of key customers and suppliers[115] Acquisitions This section details the company's strategic acquisition activities - TD SYNNEX pursues strategic acquisitions to complement and expand existing capabilities, acquire new OEM relationships, enhance supply chain and integration, and expand geographic footprint[116] - On July 1, 2025, the Company acquired Apptium Technologies, LLC for approximately $111.8 million, a strategic investment in its cloud commerce platform and technology solutions orchestration strategy[117] - The Merger with Tech Data Corporation was completed on September 1, 2021, for $1.6 billion in cash and 44 million shares of common stock valued at approximately $5.6 billion[118] Results of Operations This section analyzes the company's financial performance, including revenue, gross profit, and net income Consolidated Statements of Operations Data (as percentages of total revenue) | Metric | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revenue | 100.00 % | 100.00 % | 100.00 % | 100.00 % | | Gross profit | 7.22 % | 6.54 % | 7.03 % | 6.90 % | | Selling, general and administrative expenses | (4.75)% | (4.48)% | (4.77)% | (4.70)% | | Operating income | 2.45 % | 2.06 % | 2.25 % | 2.04 % | | Net income | 1.45 % | 1.22 % | 1.28 % | 1.16 % | - The company uses non-GAAP financial measures, including adjusted selling, general and administrative expenses, non-GAAP operating income/margin, non-GAAP net income, and non-GAAP diluted EPS, to provide a clearer view of underlying business performance by excluding acquisition, integration, restructuring costs, intangible asset amortization, and share-based compensation[120][121][122][123][124] Revenue This section analyzes the company's revenue performance, including consolidated and segment growth Revenue and Revenue in Constant Currency (in thousands) | Segment | Period | Revenue (Actual) | Revenue (Constant Currency) | Percent Change (Actual) | Percent Change (Constant Currency) | | :----------- | :------------------------------ | :--------------- | :-------------------------- | :---------------------- | :--------------------------------- | | Consolidated | Three Months Ended Aug 31, 2025 | $15,650,924 | $15,335,249 | 6.6 % | 4.4 % | | Consolidated | Nine Months Ended Aug 31, 2025 | $45,128,946 | $44,982,394 | 5.9 % | 5.6 % | | Americas | Three Months Ended Aug 31, 2025 | $9,267,939 | $9,270,032 | 2.0 % | 2.0 % | | Americas | Nine Months Ended Aug 31, 2025 | $26,666,472 | $26,772,989 | 4.4 % | 4.8 % | | Europe | Three Months Ended Aug 31, 2025 | $5,174,835 | $4,868,519 | 12.7 % | 6.0 % | | Europe | Nine Months Ended Aug 31, 2025 | $15,202,597 | $14,952,698 | 7.6 % | 5.8 % | | APJ | Three Months Ended Aug 31, 2025 | $1,208,150 | $1,196,698 | 20.4 % | 19.2 % | | APJ | Nine Months Ended Aug 31, 2025 | $3,259,877 | $3,256,707 | 11.6 % | 11.5 % | - Consolidated revenue increased by $1.0 billion (6.6%) for the three months and $2.5 billion (5.9%) for the nine months ended August 31, 2025, driven by growth in both Advanced Solutions and Endpoint Solutions portfolios, partially offset by a higher percentage of net-basis sales[126][127] - Foreign currency fluctuations, primarily the strengthening of the euro against the U.S. dollar, had a negative impact on consolidated revenue, reducing it by $315.7 million for the three months and $146.6 million for the nine months[125][126][127] Gross Profit This section examines changes in gross profit and gross margin, highlighting profitability factors Gross Profit & Gross Margin - Consolidated (in thousands) | Metric | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :---------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Gross profit | $1,129,853 | $961,048 | $3,174,232 | $2,940,361 | | Gross margin | 7.22 % | 6.54 % | 7.03 % | 6.90 % | - Gross profit increased by 17.6% for the three months and 8.0% for the nine months ended August 31, 2025, primarily due to increased revenue and gross margin expansion[135][137] - Gross margin increased by 68 basis points (to 7.22%) for the three months and 13 basis points (to 7.03%) for the nine months, positively impacted by the presentation of additional revenues on a net basis and margin expansion in the Endpoint Solutions portfolio[134][136][138] Selling, General and Administrative ("SG&A") Expenses This section analyzes trends in selling, general, and administrative expenses SG&A Expenses (in thousands) | Metric | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Selling, general and administrative expenses | $743,892 | $657,513 | $2,153,947 | $2,000,772 | | Adjusted selling, general and administrative expenses | $654,924 | $568,164 | $1,886,479 | $1,734,867 | | SG&A expenses as a percent of gross profit | 65.8 % | 68.4 % | 67.9 % | 68.0 % | | Adjusted SG&A expenses as a percent of gross profit | 58.0 % | 59.1 % | 59.4 % | 59.0 % | - SG&A expenses and adjusted SG&A expenses increased primarily due to higher personnel costs for both the three and nine months ended August 31, 2025[141][142] - SG&A expenses as a percentage of gross profit decreased for the three months due to gross profit growth exceeding the increase in SG&A expenses, while remaining relatively consistent for the nine months[141][142] Acquisition, Integration and Restructuring Costs This section details the costs incurred for acquisition, integration, and restructuring activities - Acquisition, integration, and restructuring costs for the nine months ended August 31, 2025, were $4.03 million, a significant decrease from $70.19 million in the prior year, primarily due to the completion of Merger-related activities[119][143] - Costs for the three and nine months ended August 31, 2025, included $1.3 million related to the Apptium acquisition[143] Merger-Related Acquisition and Integration Expenses (Nine Months Ended August 31, 2024, in thousands) | Expense Category | Amount | | :-------------------------------------- | :------- | | Professional services costs | $16,456 | | Personnel and other costs | $15,279 | | Long-lived assets charges and termination fees | $22,533 | | Voluntary severance program costs | $10,113 | | Total | $64,381 | Operating Income This section analyzes the company's operating income and margin performance Consolidated Operating Income & Operating Margin (in thousands) | Metric | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :---------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Operating income | $383,657 | $302,879 | $1,016,255 | $869,399 | | Non-GAAP operating income | $474,929 | $392,884 | $1,287,753 | $1,205,494 | | Operating margin | 2.45 % | 2.06 % | 2.25 % | 2.04 % | | Non-GAAP operating margin | 3.03 % | 2.68 % | 2.85 % | 2.83 % | - Consolidated operating income increased by 26.7% for the three months and 16.9% for the nine months ended August 31, 2025, driven by revenue growth and gross margin expansion, along with lower acquisition, integration, and restructuring costs for the nine-month period[148][149] - Americas operating income increased by 28.4% for the three months and 23.8% for the nine months, benefiting from growth in both Advanced and Endpoint Solutions and increased gross margin[151][152][154] - Europe operating income increased by 22.6% for the three months and 3.3% for the nine months, primarily due to increased revenue and decreased acquisition, integration, and restructuring costs for the nine-month period[158][160] - APJ operating income increased by 20.5% for the three months, driven by revenue growth, while remaining relatively consistent for the nine months[163][164] Interest Expense and Finance Charges, Net This section examines changes in interest expense and finance charges, net, and their drivers Interest Expense and Finance Charges, Net (in thousands) | Metric | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Interest expense and finance charges, net | $91,188 | $80,447 | $269,050 | $233,039 | | Percentage of revenue | 0.59 % | 0.55 % | 0.60 % | 0.54 % | - Interest expense and finance charges, net, increased by 13.4% for the three months and 15.5% for the nine months ended August 31, 2025[165] - The increase for the three months was driven by higher short-term borrowings and increased costs from accounts receivable sales[166] - For the nine months, it was due to higher short-term borrowings and average interest rates on Senior Notes, partially offset by lower accounts receivable discount fees[167] Other Income (Expense), Net This section details other non-operating income and expenses, including hedging costs Other Income (Expense), Net (in thousands) | Metric | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Other income (expense), net | $792 | $(1,518) | $(983) | $(7,493) | | Percentage of revenue | 0.01 % | (0.01)% | — % | (0.02)% | - Other income (expense), net, improved by $2.31 million for the three months and $6.51 million for the nine months ended August 31, 2025, primarily due to decreased hedging costs[168][169] Provision for Income Taxes This section analyzes the company's income tax provision and effective tax rate Provision for Income Taxes (in thousands) | Metric | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Provision for income taxes | $66,466 | $42,358 | $166,969 | $134,578 | | Percentage of income before income taxes | 22.66 % | 19.17 % | 22.38 % | 21.40 % | - Income tax expense increased by 56.9% for the three months and 24.1% for the nine months ended August 31, 2025, due to higher income and a higher effective tax rate[170][172] - The effective tax rate increased primarily due to fewer favorable discrete items in the prior year and changes in the mix of earnings across taxing jurisdictions[172] - The recently enacted One Big Beautiful Bill Act (OBBBA) in the U.S. is not anticipated to have a material impact on the effective tax rate, with key provisions beginning in fiscal year 2026[171] Net Income and Diluted EPS This section presents the company's net income and diluted earnings per share, including non-GAAP adjustments Non-GAAP Net Income - Consolidated (in thousands) | Metric | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Income | $226,795 | $178,556 | $579,253 | $494,289 | | Non-GAAP net income | $296,244 | $245,439 | $784,132 | $748,523 | Non-GAAP Diluted EPS | Metric | Three Months Ended Aug 31, 2025 | Three Months Ended Aug 31, 2024 | Nine Months Ended Aug 31, 2025 | Nine Months Ended Aug 31, 2024 | | :-------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Diluted EPS | $2.74 | $2.08 | $6.92 | $5.67 | | Non-GAAP diluted EPS | $3.58 | $2.86 | $9.37 | $8.59 | - Non-GAAP diluted EPS increased by 25.2% to $3.58 for the three months and by 9.1% to $9.37 for the nine months ended August 31, 2025, reflecting adjustments for acquisition, integration, restructuring costs, amortization of intangibles, and share-based compensation[173] Liquidity and Capital Resources This section discusses the company's cash flow, working capital, debt, and capital allocation - The business is working capital intensive, relying on term loans, accounts receivable sales, securitization programs, revolver programs, and trade credit from vendors[175] Cash Conversion Cycle (CCC) (in days) | Metric | August 31, 2025 | November 30, 2024 | August 31, 2024 | | :---------------------- | :-------------- | :---------------- | :-------------- | | Days sales outstanding ("DSO") | 64 | 60 | 63 | | Days inventory outstanding ("DIO") | 58 | 51 | 51 | | Days payable outstanding ("DPO") | 99 | 93 | 93 | | Cash conversion cycle ("CCC") | 23 | 18 | 21 | - The CCC increased to 23 days as of August 31, 2025, from 18 days at November 30, 2024, primarily due to increases in DSO (timing of cash receipts) and DIO (inventory to support growth), partially offset by an increase in DPO[176][177] - Net cash provided by operating activities significantly decreased to $71.3 million for the nine months ended August 31, 2025, from $655.8 million in the prior year, mainly due to changes in accounts receivable and accounts payable[180] - Net cash used in investing activities slightly decreased to $176.8 million, while net cash used in financing activities decreased to $186.0 million, primarily due to increased net borrowings and lower share repurchases[181][182] - The Company believes its current cash balances ($874.4 million as of August 31, 2025), cash flows from operations, and credit availability are sufficient to support operating activities and debt repayments for at least the next twelve months[183][184][185] - Total outstanding borrowings were approximately $4.2 billion as of August 31, 2025, including $2.4 billion in Senior Notes and $1.3 billion in term loans[192] - The Company repurchased 1.2 million shares for $173.8 million in the three months and 3.3 million shares for $423.1 million in the nine months ended August 31, 2025, with $1.4 billion remaining under the March 2024 share repurchase program[195] - As of August 31, 2025, the Company was in compliance with all material financial covenants for its credit facilities[196] Critical Accounting Policies and Estimates This section confirms no material changes to critical accounting policies and estimates - There were no material changes to the Company's critical accounting policies and estimates during the nine months ended August 31, 2025, compared to those disclosed in the Annual Report on Form 10-K for fiscal year ended November 30, 2024[197] Recently Issued Accounting Pronouncements This section refers to Note 2 for a summary of new accounting standards and their effects - A summary of recent accounting pronouncements and their anticipated effects on the consolidated financial statements is provided in Note 2 – Summary of Significant Accounting Policies[198] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section refers to the Company's Annual Report on Form 10-K for a detailed description of market risks, stating that no material changes have occurred since November 30, 2024 - No material changes have occurred in the Company's market risks since November 30, 2024, as detailed in the Annual Report on Form 10-K[199] Item 4. Controls and Procedures This section details the evaluation of the Company's disclosure controls and procedures and internal control over financial reporting, concluding on their effectiveness and reporting no material changes - The Company maintains disclosure controls and procedures designed to ensure timely and accurate reporting of information required under the Exchange Act, which were deemed effective at a reasonable assurance level as of August 31, 2025[200][201] - No changes in internal control over financial reporting were identified during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[202] PART II. OTHER INFORMATION This section provides additional information not covered in financial statements, including legal proceedings and risk factors Item 1. Legal Proceedings This section incorporates information on commitments and contingencies from Note 13, detailing legal matters - Information regarding legal proceedings is incorporated by reference from Note 13 – Commitments and Contingencies in the Notes to the Consolidated Financial Statements[204] Item 1A. Risk Factors This section directs readers to the Annual Report on Form 10-K for risk factors, noting no material changes - There have been no material changes to the risk factors disclosed in the Company's 2024 Annual Report on Form 10-K[205] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase program, including a new $2.0 billion authorization and recent activity - In March 2024, the Board of Directors authorized a new $2.0 billion share repurchase program, supplementing the prior program, with no expiration date[206] Issuer Purchases of Equity Securities (Quarter Ended August 31, 2025, in thousands except per share amounts) | Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or program | Maximum dollar value of shares that may yet be purchased under the plans or programs | | :---------------------- | :------------------------------- | :--------------------------- | :---------------------------------------------------------------- | :------------------------------------------------------------------- | | June 1 - June 30, 2025 | 244 | $126.50 | 244 | $1,503,833 | | July 1 - July 31, 2025 | 226 | $142.37 | 226 | $1,471,644 | | August 1 - August 31, 2025 | 755 | $146.75 | 755 | $1,360,922 | | Total | 1,225 | $141.90 | 1,225 | | Item 5. Other Information This section discloses Rule 10b5-1 trading arrangements adopted by the former CEO and a Board member - Richard T. Hume, former CEO and current Board member, adopted a Rule 10b5-1 trading arrangement on July 14, 2025, for the sale of up to 86,848 shares of common stock until March 27, 2026[210] - Merline Saintil, a Board member, adopted a Rule 10b5-1 trading arrangement on August 2, 2025, for the sale of up to 671 shares of common stock until March 13, 2026[211] Item 6. Exhibits This section lists all exhibits filed with the 10-Q report, including corporate documents, certifications, and XBRL data - The report includes exhibits such as the Restated Certificate of Incorporation, Amended and Restated Bylaws, a Severance Agreement, Rule 13a-14(a) Certifications from the CEO and CFO, and XBRL Instance, Schema, Calculation, Definition, and Label Linkbase Documents[213] - Certifications under Section 906 of the Sarbanes-Oxley Act are furnished and deemed to accompany the Form 10-Q but are not considered 'filed' for Section 18 purposes[214] Signatures This section formally certifies the accuracy and completeness of the financial report by authorized officers - The report is duly signed on October 1, 2025, by Patrick Zammit, President and Chief Executive Officer, and Marshall W. Witt, Chief Financial Officer, on behalf of TD SYNNEX Corporation[217]