TD SYNNEX (SNX)2025-01-10 20:13Financial Data and Key Metrics - Total adjusted SG&A expense was 10 million YoY and 1 billion [1] - Non-GAAP operating income was 66 million, 286 million, and non-GAAP diluted EPS was 0.23 above the high end of guidance [1] - Cash and cash equivalents stood at 4.1 billion, resulting in a gross leverage ratio of 2.3x and net leverage of 1.7x [1] - Accounts receivable totaled 8.9 billion in the prior quarter [1] - Free cash flow for fiscal 23 was 1 billion target, with 19.7 billion, down 6% YoY, driven by stabilization in the Americas and outperformance in Europe [6] - Net revenue for Q4 was 270 million negative adjustment due to a customer migration to a consignment model [6] - Non-GAAP gross profit was 19-20 billion, representing a 3% YoY decline at the midpoint, with revenue expected to be 0.40 per share and plans to return 50% of free cash flow to shareholders via dividends and share repurchases [6][8] Management Commentary on Operating Environment and Future Outlook - Management noted early signs of stabilization in IT spending, with improving YoY declines in endpoint solutions [6] - The company expects a gradual recovery in endpoint solutions throughout FY24, driven by normalized PC buying patterns, while advanced solutions face tougher YoY comparisons [4][6] - Management remains confident in the company's ability to navigate the dynamic IT landscape and capitalize on emerging growth opportunities [4][6] Other Important Information - The company achieved its second consecutive top score in the Corporate Equality Index and formalized its commitment to disability inclusion [3] - Patrick Zamet was appointed as Chief Operating Officer, focusing on day-to-day distribution operations and driving profitable growth [3][4] - The company repurchased approximately 6.5 million shares, or 7% of shares outstanding, during fiscal 23 [6] Q&A Summary Question: How is the company thinking about fiscal 24, particularly in terms of gross billings and IT spending? - The company expects flattish growth in the first half of FY24, with mid-to-high single-digit growth in the second half, driven by recovery in endpoint solutions and stabilization in advanced solutions [9][10] - Management anticipates growth in both endpoint and advanced solutions segments in the second half of the year [10] Question: How is AI expected to impact the business over the next year or two? - AI is seen as a significant growth vector, with the company leveraging its data analytics expertise and partnerships with leading vendors to accelerate AI adoption [11][12] - The company expects AI to have a positive effect on IT growth, though it will likely involve reprioritization of IT budgets rather than a complete increment [12] Question: What is the outlook for free cash flow and shareholder returns in FY24? - The company expects to generate approximately 270 million, with no material impact on operating profit, and is expected to impact net revenue by approximately $250 million per quarter in FY24 [13][14] Question: How is the company thinking about organic investments versus M&A? - The company maintains a balanced capital allocation strategy, with 50% of free cash flow allocated to shareholder returns and 50% to reinvestment in the business, including potential M&A opportunities [15][16] Question: What is the outlook for SG&A expenses in FY24? - SG&A expenses are expected to start around 3% of gross billings in Q1 and gradually decline throughout the year, with a focus on investments in advanced solutions [16][17] Question: How is the company positioned to capitalize on the AI-enabled PC wave? - The company expects AI-enabled PCs to represent a mid-single-digit percentage of total PC volume in the latter half of 2024, with growth accelerating in FY25 and FY26 [18][22] Question: What is the outlook for advanced solutions (AS) growth and margins in the mid-term? - The company expects AS to return to growth in FY24, with mid-to-high single-digit growth in the second half, and remains confident in the long-term growth potential of the segment [24][26]