01—Abstract
Summary
Summary of the 10-K filed January 28, 2013. Cited figures are marked; the original filing is the authoritative source.
SYNNEX Corporation, now TD SYNNEX Corporation, reported fiscal 2012 (year ended November 30, 2012) revenue of $10.29 billiona, down from $10.41 billion in fiscal 2011, while net income attributable to SYNNEX rose to $151.4 million from $150.3 million.
Gross profit increased 4.2% to $656.7 millionb, with gross margin rising to 6.39% of revenue from 6.06%, helped by the fee-for-service transition of a customer contract, favorable hard disk drive supply-demand conditions and vendor rebates. Diluted EPS was $3.99, compared with $4.08 in fiscal 2011. The company operates two segments: distribution services, which generated $10.12 billion of revenue, and global business services (GBS), which generated $197.4 million and a lower $13.5 million of operating income as margins compressed.
Balance sheet liquidity improved. Cash and cash equivalents rose to $163.7 millionc from $67.6 million, and operating cash flow was $242.8 million. Total borrowings fell to $275.3 million, and total equity grew to $1.32 billion.
The $143.75 milliond 4.0% Convertible Senior Notes due 2018 are classified as current because holders may require repurchase on May 15, 2013. The company intends to settle them in cash, using its U.S. receivables securitization and revolver, which were amended in October 2012 to extend maturities to 2015 and 2017, respectively. The filing also highlights concentration and governance factors.
HP products accounted for about 36% of fiscal 2012 revenue. MiTAC International and its affiliates owned about 27% of common stock, and Synnex Technology International is a potential competitor.
The CFO, Thomas Alsborg, is expected to retire by May 31, 2013 or upon appointment of a successor. The company repurchased 244 thousand shares in the fourth quarter under a $65 million anti-dilution program, and it has never paid cash dividends.
02—Key points
Key Highlights
- Revenue was $10.29 billion in fiscal 2012, down from $10.41 billion in fiscal 2011, with distribution revenue of $10.12 billion and GBS revenue of $197.4 million.
- Gross margin rose to 6.39% from 6.06%, and gross profit increased 4.2% to $656.7 million.
- Net income attributable to SYNNEX Corporation was $151.4 million, versus $150.3 million in fiscal 2011; diluted EPS was $3.99 versus $4.08.
- GBS operating income declined to $13.5 million from $18.9 million, and its margin fell to 6.83% from 11.57% of GBS revenue.
- Cash rose to $163.7 million and operating cash flow was $242.8 million; total borrowings declined to $275.3 million.
- The $143.75 million convertible notes due 2018 are classified as current because of a May 15, 2013 holder put, and the company intends to cash-settle them.
- HP accounted for about 36% of fiscal 2012 revenue, and MiTAC International and affiliates owned about 27% of common stock.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, TD Synnex kept $0.01.
- Revenue$10.29B100.0%
- Cost of revenue−$9.63B93.6%
- Gross profit$656.7M6.4%
- Operating costs−$401.7M3.9%
- Operating income$255.0M2.5%
- Interest, other & tax−$103.6M1.0%
- Net income$151.4M1.5%
Where FY2012 revenue went
$10.29B- Cost of revenue: $9.63B, 94% of revenue
- Net income: $151.4M, 1.5% of revenue
- SG&A: $401.7M, 3.9% of revenue
- Interest, other & tax: $103.6M, 1.0% of revenue
Kept 1.5% as net incomeNet income $151.4M · 1.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed January 28, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $10.29B$10.41B | −1.2% |
| Cost of Revenue | $9.63B$9.78B | −1.5% |
| Gross Profit | $656.74M$630.50M | +4.2% |
| SG&A Expenses | $401.73M$374.27M | +7.3% |
| Operating Income | $255.01M$256.23M | −0.5% |
| Interest Expense | $27.62M$28.81M | −4.1% |
| Net Income | $151.38M$150.33M | +0.7% |
| EPS (Basic) | $4.08$4.20 | −2.9% |
| EPS (Diluted) | $3.96$4.08 | −2.9% |
| Shares Outstanding (Basic) | 36.58M35.83M | +2.1% |
| Shares Outstanding (Diluted) | 37.75M36.83M | +2.5% |
05—Questions
Frequently Asked Questions
How did SYNNEX perform financially in fiscal 2012?
Revenue was $10.29 billion, down from $10.41 billion in fiscal 2011. Gross profit rose 4.2% to $656.7 million, and net income attributable to SYNNEX was $151.4 million, compared with $150.3 million a year earlier. Diluted EPS was $3.99, versus $4.08 in fiscal 2011.
What drove the improvement in gross margin?
Gross margin rose 33 basis points to 6.39%. The filing attributes 25 basis points to transitioning certain customer revenue to a fee-for-service basis, and also cites lower reserve requirements, more favorable vendor incentive rebates, and supply-demand constraints in hard disk drives that ran from the fourth quarter of fiscal 2011 into the first quarter of fiscal 2012.
What are the main near-term debt obligations?
The Convertible Senior Notes are classified as current debt because holders may require repurchase for cash on May 15, 2013 at 100% of principal plus accrued interest. The company intends to settle them in cash using its U.S. securitization and revolving facilities, which were extended in October 2012 to October 2015 and October 2017, respectively.
How concentrated is the business?
HP products represented approximately 36% of fiscal 2012 revenue, and no customer exceeded 10% of revenue in fiscal 2012 or 2011. MiTAC International and its affiliates owned about 27% of common stock as of November 30, 2012, and their influence could delay or prevent a change in control.
What changes in leadership or capital return were disclosed?
CFO Thomas Alsborg is expected to retire upon the earlier of May 31, 2013 or the appointment of a new CFO. Under the $65 million anti-dilution share repurchase program, the company bought 244 thousand shares in the fourth quarter of fiscal 2012. The company has not declared or paid cash dividends since its IPO.
06—Continue