raymond james s4 conference december 2014 · 2018-07-30 · non -gaap diluted eps $ 1.59 $ 1.33 $...

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


$-

$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


GAAP operating margin 2.40 % 2.32 % 2.27 % 2.15 %


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


GAAP operating margin 0.52 % 1.78 % (0.29 )% 4.74 %


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 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$


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 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$


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$


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


4

raymond james s4 conference december 2014 · 2018-07-30 · non -gaap diluted eps $ 1.59 $ 1.33 $...

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