raymond james s4 conference december 2014 · 2018-07-30 · non -gaap diluted eps $ 1.59 $ 1.33 $...
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Raymond James S4 Conference – December 2014
Statements in this presentation regarding SYNNEX Corporation, which are not historical facts may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may be identified by terms such as believe, expect, may, will, provide, could and should and the negative of these terms or other similar expressions. These forward looking statements include, but are not limited to, statements regarding success of the acquired IBM CRM business and related integration, our strategy, investments and growth, expectations of our revenues, net income and diluted earnings per share, our performance, benefits of our business alliances, benefits of our business model, our competitive position, our expectations for our operating margins, profitability, ROIC, EBITDA, features and capabilities of our products and services, and market conditions and trends. These are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements. Please refer to the documents filed with the Securities and Exchange Commission, specifically our most recent Form 10-K and 10-Q, for information on risk factors that could cause actual results to differ materially from those discussed in these forward looking statements.
Statements included in this presentation are based upon information known to SYNNEX Corporation as of the date of presentation and SYNNEX Corporation assumes no obligation to update information contained in this presentation.
Safe Harbor Statement
One Company: SYNNEX’ Integrated Suite of Services
Broad line and value add
distribution services
Supply chain optimization,
reverse logistics
System integration
for large scale data
center deployment
Global Services focused
on process optimization,
customer engagement
strategy, technology
innovation and
ecosystem performance
Technology Solutions (IT Distribution and Hyve Solutions)
Concentrix
1
2014 Ranked No. 260 on
Fortune 500
Seasoned executive
management team with
average 20+ years
tech/channel expertise
>50,000 employees and
associates worldwide
Facts About SYNNEX
50
2
2013 Revenues of $10.8 billion
YTD 3Q14 Revenues >$10 billion
Celebrating 109 consecutive
profitable quarters; That’s >27 years!
Worldwide operations
Facts About SYNNEX
109 Q
3Q14
3
Continued Excellent Track Record
109 consecutive quarters of profitability
Strong results in both Technology Solutions & Concentrix segments
Trailing four quarter ROIC of 8.2% (10.6% excl. IBM acq/integration costs)
Consistent Results in a Competitive Environment
Technology Solutions organic revenue growth of 19%
Successfully integrating transformative IBM CRM acquisition to capitalize
on long-term growth opportunities
Focus and invest in higher growth, higher margin Technology Solutions
segments and higher value Concentrix industry verticals
Strong Balance Sheet and Liquidity (as of 8/31/2014)
Debt to capitalization of 38%
Excellent liquidity: > $400 million in cash/credit facilities to fund growth
Significant cash flow generation from IBM CRM acquisition
FQ3 2014 Highlights
4
SYNNEX Technology
Solutions
SYNNEX’ Hybrid Distribution Model for the Technology Industry
Converged Solution Distribution
Supply-chain management reduces manufacturer’s
inventory and improves time-to-market
Demand generation enhances manufacturers’
go-to-market strategies
End Users
Consumers
SMB
Corporate
Public Sector
20,000 +
Resellers /
System Integrators
Retailers /
DMRs
Supply Chain
Management
Design
Services
Assembly
And Test
Differentiation Within Technology Distribution … Channel Solutions Beyond Technology Distribution
SYNNEX Hybrid
Solutions Distribution
Cross-sell/Up-sell
Direct Sales
Tech/Customer Support
Hybrid Solutions Distribution spans spectrum of value
and volume distribution
One-stop shop for CE and IT resellers
Efficient go-to-market engine for manufacturers
Design and assembly services
Technical support 5
SYNNEX Technology Solutions Segment Overview
$0
$50
$100
$150
$200
$250
2011 2012 2013 2014 2015 2016
(1) Source: MarketLine (June 2013)
Global Technology Distributors
Industry Revenue (1)
($bn)
32% - 36%
30% - 34%
15% - 19%
9% - 13%
4% - 8%
2016 global technology distributors industry revenue
expected to reach $223.2 billion
SYNNEX FY2013 Revenue by Product
Peripherals
IT Systems
System Components
Software
Networking
36 - 40%
29 - 33%
15% - 19%
6% - 10%
4% - 8%
6
Cost-effective, energy-efficient servers and storage data center solutions
built to actual workloads, yet scalable
Unique role in the innovative Open Compute Project
Easily deployed, customized data center solutions with integration of
hardware, software, and services
Purpose-Built Data Center Solutions A new paradigm for computing
7
Channel Solutions for Real Business Challenges
Investing in Value Added Solutions
Vertical Practices Technology Practices
8
Concentrix A Division of
SYNNEX Corporation
SYNNEX Differentiators in Concentrix Segment
A Global Business Services Company
Focused on an holistic approach to…
Process Optimization
Customer Engagement Strategy
Technology Innovation
Driving unique, transformational solutions for our clients
within their ecosystem across 10 industry verticals
Benefits to SYNNEX Contribution of high-margin revenue
Value-added, strategic services to vendors and customers
Back-office sales and support to operations
9
Global Consistency, Local Intimacy Location matters, size matters, and best in class is now measured on a global scale but with local expertise
9
Ireland
United States
Canada
Uruguay
Costa Rica
Brazil
Nicaragua
Bulgaria
United Kingdom
Hungary
Portugal
Slovakia
India
China
Japan
Malaysia
Singapore
Australia
New Zealand
Hong Kong
Philippines
Spain
UAE
Colombia
South Korea
50,000+ Staff 25 Countries 40+
Languages 300+ Clients
10
SYNNEX Differentiators in Concentrix Segment
Voice of the Customer analysis
Propensity To Buy
Process Optimization
Campaign Management
Cross-Media Marketing
Demand Generation
Direct Sales
Data Management
Technical Support
Concierge / Customer
Care
Web Production
Back Office Administration /
Billings
Cross-sell / Up-sell
Service Revenue Generation
Loyalty Programs
License Renewals
Social Media
Automotive
Media and Communications
Banking and Financial Services
Retail and eCommerce
Government and Public Sector
Consumer Electronics
Healthcare and Pharmaceutical
Technology
Insurance
Travel, Transportation and Tourism
11
Shifting Mix to Value-Added Higher Margin Business Through
Investments in Both Technology Solutions and Concentrix Segments
Revenue Growth(1) Operating Margin(1)
(1) Fiscal Year Ended 11/30; Revenue CAGR and Operating Margin improvement calculated on full years 2008-2013; Operating Margin attributable to SYNNEX from Continuing Operations. Fiscal year 2013 operating margin excludes $8.4M acquisition expenses and integration charges primarily related to our announced acquisition of the IBM CRM unit. YTD 3Q13 excludes $5.9M amortization of intangibles and $2.6M one time acquisition and integration-related expenses, and YTD 3Q14 OM excludes $38.4M amortization of intangibles and $34.6M one time acquisition and integration-related expenses
5yr CAGR 2008-13 of 7% & YTD 3Q14 up 28% OM up 41bps 2008-13 & YTD 3Q14 up 50bps
s
$7.8B
2.31%
2.81%
$10.0B
Please refer to Appendix for reconciliation of GAAP to non-GAAP financial measures
$3,000
$4,500
$6,000
$7,500
$9,000
$10,500
$12,000
2008 2009 2010 2011 2012 2013 YTD3Q13
YTD3Q14
($MMs)
1.00%
2.00%
3.00%
2008 2009 2010 2011 2012 2013 YTD3Q13
YTD3Q14
12
Investing in Mix Shift to Higher Margin Segments to Drive Long-term EPS and ROIC Growth
(1) Fiscal Year Ended 11/30; EPS CAGR and ROIC calculated on full fiscal years 2008-2013.
ROIC(1,2)
(2) ROIC %’s = fiscal trailing four quarters. FY13 and 3Q14 ROIC % excludes acquisition & integration expenses.
EPS Trend(1,3)
Trend(1
(3) FY13 EPS excludes $0.16 impact from acquisition expenses and integration expenses, and a one time numerator
adjustment resulting in $0.97 dilution for convertible senior notes settlement. YTD FY13 excludes $0.10 impact of
amortization of intangibles and $0.05 impact of one time acquisition and integration-related expenses. YTD FY14 excludes
$0.63 impact of amortization of intangibles and $0.57 impact of one time acquisition and integration-related expenses
5yr CAGR 2008-13 of 13% YTD FY14 up 42%
s
10.6%
$3.08
$4.36
5yr Increase of 120bps between 2008-13
Please refer to Appendix for reconciliation of GAAP to non-GAAP financial measures
$-
$1.00
$2.00
$3.00
$4.00
$5.00
2008 2009 2010 2011 2012 2013 YTD3Q13
YTD3Q14
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2008 2009 2010 2011 2012 2013 3Q14
13
Exceptional Distribution Business (Technology Solutions segment) Low cost leader in the industry due to focused geographies, flexible cost structure
Competitive differentiators include proprietary ERP system as real-time dashboard
Consistent, excellent financial performance even in difficult macro-environments
Differentiated Hybrid Distribution Model Moving up the value chain in services, solutions & support
Investing in high growth, high margin tech segments
Investing in people/infrastructure to profit from Third Platform & Cloud Computing trends
Fast Growing CRM Services Business (Concentrix segment) Combined Concentrix’ platform CRM solutions expanded across 10 industry verticals
Now a Top 10 player with a blue chip client base in a growing $55B market
IBM CRM acquisition adds to strong margin profile with significant cash flow generation;
supportive of long-term ROIC goals
Growing Margins, EPS and ROIC Driving profit expansion from prior/current acquisitions
Increasing revenue in high-growth adjacent markets
SNX Investment Summary Margin Expansion Opportunities Ahead
14
Questions?
Addenda
Resellers Reduce Complexity by Deploying the CLOUDSolv Platform as Their Cloud Business Platform for SMB Customers
Marketplace
Operations
Solutions
Hosting
Plan + Pilot Assessments
Procure + Provision Consolidated purchasing and provisioning
Integrate + Deploy Migrations Upgrades
Support + Manage Support Services Managed Services
SYNNEX Differentiators SYNNEX Differentiator: CLOUDSolv
RFID Tag
Connect Connected people, workforce and devices
MOBILITYSolv Enables End-to-End Enterprise Mobility (MDM, BYOD & M2M)
Wired, WiFi, RFID, Mobile
WAN Move Push and pull information across the enterprise
MaaS, RaaS, RitC, MDM Services
Control Control, manage and secure
SYNNEX Differentiator: MobilitySolv
Reconciliation of GAAP to Non-GAAP Reconciliation of GAAP to Non-GAAP financial measures
(currency in thousands except per share amounts)
Three Months Ended Nine Months Ended
August 31, 2014 August 31, 2013 August 31, 2014 August 31, 2013
Diluted Net Income adjusted for Impact of
conversion premium $ 44,986 $ 7,137
$ 122,954
$ 74,340
Impact of conversion premium on Net Income(1)
— 39,474 — 36,409
Net income attributable to SYNNEX Corporation $ 44,986 $ 46,611 $ 122,954 $ 110,749
IBM CRM acquisition and other integration
expenses, net of taxes(2)
6,327
2,064
22,176
2,064
Amortization of Intangibles(2)
11,188 1,282 24,540 3,818
Non-GAAP net income attributable to SYNNEX
Corporation $ 62,501 $ 49,957
$ 169,670
$ 116,631
Diluted EPS $ 1.15 $ 0.19 $ 3.16 $ 1.97
Impact of conversion premium on EPS(1)
— 1.05 — 0.96
IBM CRM acquisition and other integration
expenses 0.16
0.06
0.57
0.05
Amortization of Intangibles 0.28 0.03 0.63 0.10
Non-GAAP Diluted EPS $ 1.59 $ 1.33 $ 4.36 $ 3.08
(1) For the three months ended August 31, 2013, the impact of conversion premium is the difference between the
estimated conversion premium as of May 31, 2013 and the final conversion premium settlement amount.
For the nine months ended August 31, 2013, the impact of conversion premium is the difference between the estimated
conversion premium as of April 2013 and the final conversion premium settlement amount.
(2) The tax effect of the non-GAAP adjustments was calculated using the applicable effective tax rate during the
periods, except for IBM CRM acquisition and other integration expenses for the three months ended August 31, 2013,
which was calculated using the tax deductible portion of the expenses and applying the entity-specific, U.S. Federal
and blended state tax rates.
Reconciliation of GAAP to non-GAAP Effective in the first quarter of 2014, the Company realigned its business segments. Certain operations of the Company which were
previously reported under the Concentrix segment and which provided inter -segment support and IT services to the Technology
Solutions segment have now been aligned with and report into the Technology Solutions segment. The Concentrix segment includes
the legacy Concentrix business and the newly acquired IBM customer care business. For comparability, the financial informati on
presented herein reflects the impact of the preceding segment structure change for all periods presented.
Three Months Ended Nine Months Ended
August 31, 2014 August 31, 2013 August 31, 2014 August 31, 2013
Consolidated:
Revenue $ 3,535,202 $ 2,733,913 $ 10,015,721 $ 7,786,113
GAAP operating income $ 78,802 $ 63,499 $ 208,835 $ 171,403
IBM CRM acquisition and other integration expenses 9,932
2,596
34,581
2,596
Amortization of intangibles 17,564 1,998 38,427 5,922
Non-GAAP operating income $ 106,298 $ 68,093 $ 281,843 $ 179,921
GAAP operating margin 2.23 % 2.32 % 2.09 % 2.20 %
Non-GAAP operating margin 3.01 % 2.49 % 2.81 % 2.31 %
Technology Solutions
Revenue $ 3,204,534 $ 2,690,265 $ 9,270,438 $ 7,656,397
GAAP operating income $ 76,937 $ 62,496 $ 210,602 $ 164,718
Amortization of intangibles 914 998 2,811 2,904
Non-GAAP operating income $ 77,851 $ 63,494 $ 213,413 $ 167,622
GAAP operating margin 2.40 % 2.32 % 2.27 % 2.15 %
Non-GAAP operating margin 2.43 % 2.36 % 2.30 % 2.19 %
Concentrix
Revenue $ 333,796 $ 46,288 $ 754,242 $ 137,386
GAAP operating income (loss) $ 1,746 $ 826 $ (2,202 ) $ 6,516
IBM CRM acquisition and other integration expenses 9,932
2,596
34,581
2,596
Amortization of intangibles 16,650 1,000 35,617 3,019
Non-GAAP operating income $ 28,328 $ 4,422 $ 67,996 $ 12,131
GAAP operating margin 0.52 % 1.78 % (0.29 )% 4.74 %
Non-GAAP operating margin 8.49 % 9.55 % 9.02 % 8.83 %
Reconciliation of GAAP to non-GAAP
Computation of GAAP diluted earnings per share
Amounts in thousands except per share amounts
Fiscal Year Ended
November 30, 2013Numerator:
Net income attributable to SYNNEX Corporation 152,237$
Less: impact of conversion premium * (36,409)
Net income for diluted earnings per share calculation 115,828$
Denominator:
Weighted average common shares outstanding- diluted 37,800
Diluted earnings per share attributable to SYNNEX Corporation ("Diluted EPS") 3.06$
Impact of conversion premium on diluted earnings per share (0.97)$
No adjustments were needed to prior year diluted earnings per share.
* For the fiscal year ended November 30, 2013 the impact of conversion premium of the Convertible Notes is
the difference between the estimated conversion premium as of April 2013 and the final conversion
premium settlement amount. The Convertible Notes were settled in the third quarter of fiscal year ended
November 30, 2013.
Reconciliation of GAAP to non-GAAP
Reconciliation of GAAP to Non-GAAP financial measures
Amounts in thousands
November 30, 2013 November 30, 2013
Consolidated:
Revenue 3,059,051$ 10,845,164$
GAAP operating income 69,425$ 240,828$
IBM CRM acquisition and other
integration expenses 5,798 8,394
Non-GAAP operating income 75,223$ 249,222$
GAAP operating margin 2.27% 2.22%
Non-GAAP operating margin 2.46% 2.30%
GBS:
Revenue 61,003$ 223,600$
GAAP operating income (loss) (2,062)$ 7,960$
IBM CRM acquisition and other
integration expenses 5,798 8,394
Non-GAAP operating income 3,736$ 16,354$
GAAP operating margin -3.38% 3.56%
Non-GAAP operating margin 6.12% 7.31%
Three months ended Fiscal Year Ended
Reconciliation of GAAP to non-GAAP
Reconciliation of GAAP to Non-GAAP financial measures
Amounts in thousands except per share amounts
November 30, 2013 November 30, 2013
Net income attributable to SYNNEX
Corporation 41,488$ 152,237$
IBM CRM acquisition and other
integration expenses, net of taxes (1) 3,922 5,986
Non-GAAP net income attributable to
SYNNEX Corporation 45,410$ 158,223$
Diluted EPS 1.10$ 3.06$
IBM CRM acquisition and other
integration expenses 0.10 0.16
Impact of conversion premium (2) - 0.97
Non-GAAP Diluted EPS 1.20$ 4.19$
Three months ended Fiscal Year Ended
(1) The tax effect of the Non-GAAP adjustments was calculated using the tax deductible portion of the expenses
and applying the entity-specific, U.S Federal and blended state tax rates. The estimated tax effect of these items
was $1.9 million and $2.4 million for the three and twelve months ended November 30, 2013.
(2) For the fiscal year ended November 30, 2013, the net income for the purpose of computation of diluted EPS
was adjusted for the change in the estimated value of the conversion premium of the convertible notes from
April 2013 through the settlement date. The convertible notes were settled in the third quarter of fiscal year 2013.
Financial Results
Record Revenue of $10.8B
Record revenues in both
Technology Solutions and
Concentrix segments, up 7.9% and
13.3% respectively, over prior year
in constant dollars
Non-GAAP diluted EPS of $4.19
5% growth over 2012
Trailing four quarters ROIC of 9.4%
9.7% excl. IBM acquisition costs
FY 2013 Highlights
Business Results
Technology Solutions
Strong growth in US and Japan
Acquisition of SuperCom Canada
Japan profitability improvements
taking hold
Grew TSD double digits
Doubled Hyve Solutions sales
Concentrix
Non-GAAP Operating Income up
21% yr/yr
Transformative IBM CRM acquisition
announced in Sept 2013
Please refer to Appendix for reconciliation of GAAP to non-GAAP financial measures
4
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