01—Abstract
Summary
Summary of the 10-K filed January 28, 2016. Cited figures are marked; the original filing is the authoritative source.
SYNNEX Corporation, a Fortune 500 business process services company headquartered in Fremont, California, reported fiscal 2015 (year ended November 30, 2015) revenue of $13.34 billiona, down from $13.84 billion in fiscal 2014, with net income attributable to SYNNEX Corporation of $208.5 million, or $5.24 diluted EPS, up from $4.57.
Operating income rose to $354.6 millionb from $308.5 million, and operating margin improved to 2.66% from 2.23%. The company operates two segments: Technology Solutions, which distributes IT and consumer electronics products and represented 89% of revenue, and Concentrix, a customer engagement services business that grew to $1.42 billion in segment revenue, largely reflecting the full-year impact of the IBM CRM acquisition completed in fiscal 2014 for $425.7 million. The Technology Solutions segment's revenue declined 6.4% to $11.94 billion, driven by the loss of a significant consumer retail vendor and currency translation effects, while its operating income was roughly flat at $302.9 million.
Concentrix operating income increased to $51.1 millionc from $2.5 million. Balance sheet strength improved: cash and cash equivalents rose to $336.1 million, total borrowings were $730.9 million, and the company's total equity reached $1.80 billion. Operating cash flow was $643.6 million, versus a use of $234.8 million in fiscal 2014, mainly due to a $292.9 million decrease in accounts receivable.
Concentration and related-party exposure remain notable. HP products accounted for approximately 25% of consolidated revenue in fiscal 2015, and MiTAC Holdings and its affiliates beneficially owned approximately 25% of common stock, with the company purchasing $87.1 milliond of inventory from MiTAC affiliates during the year. The board declared a quarterly dividend of $0.20 per share, raised from $0.125 earlier in the year.
02—Key points
Key Highlights
- Revenue of $13.34 billion in fiscal 2015, down from $13.84 billion in fiscal 2014; diluted EPS of $5.24 versus $4.57 in fiscal 2014.
- Operating income of $354.6 million (2.66% operating margin) versus $308.5 million (2.23%) in fiscal 2014.
- Concentrix segment revenue of $1.42 billion and operating income of $51.1 million, versus $2.5 million in fiscal 2014, aided by the IBM CRM acquisition.
- Technology Solutions segment revenue fell to $11.94 billion from $12.76 billion, with segment operating income of $302.9 million.
- Operating cash flow of $643.6 million in fiscal 2015 compared with a use of $234.8 million in fiscal 2014.
- HP accounted for approximately 25% of consolidated revenue; MiTAC Holdings and affiliates owned approximately 25% of outstanding common stock.
- Quarterly dividend increased to $0.20 per share in September 2015, with another $0.20 declared on January 8, 2016.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, TD Synnex kept $0.02.
- Revenue$13.34B100.0%
- Cost of revenue−$12.15B91.1%
- Gross profit$1.19B8.9%
- Operating costs−$837.2M6.3%
- Operating income$354.6M2.7%
- Interest, other & tax−$146.0M1.1%
- Net income$208.5M1.6%
Where FY2015 revenue went
$13.34B- Cost of revenue: $11.28B, 85% of revenue
- Net income: $208.5M, 1.6% of revenue
- SG&A: $837.2M, 6.3% of revenue
- Other operating costs: $869.8M, 6.5% of revenue
- Interest, other & tax: $146.0M, 1.1% of revenue
Kept 1.6% as net incomeNet income $208.5M · 1.6%Interest, other & tax $146.0M · 1.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed January 28, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $13.34B$13.84B | −3.6% |
| Cost of Revenue | $11.28B$12.74B | −11.5% |
| Gross Profit | $1.19B$1.10B | +8.4% |
| SG&A Expenses | $837.24M$790.50M | +5.9% |
| Operating Income | $354.55M$308.51M | +14.9% |
| Interest Expense | $27.93M$28.02M | −0.3% |
| Net Income | $208.53M$180.03M | +15.8% |
| EPS (Basic) | $5.28$4.61 | +14.5% |
| EPS (Diluted) | $5.24$4.57 | +14.7% |
| Shares Outstanding (Basic) | 39.06M38.49M | +1.5% |
| Shares Outstanding (Diluted) | 39.35M38.84M | +1.3% |
05—Questions
Frequently Asked Questions
What drove the change in SYNNEX's revenue and profitability in fiscal 2015?
Total revenue declined 3.6% to $13.34 billion. Technology Solutions revenue fell primarily because of the loss of a significant consumer retail vendor and unfavorable currency translation, mainly from the Canadian Dollar and Japanese Yen. Concentrix revenue grew 29.2% to $1.42 billion, mainly from the full-year impact of the IBM CRM business. Operating income increased 14.9%, primarily due to higher profit in Concentrix and lower acquisition and integration expenses ($10.1 million versus $43.0 million).
How concentrated is SYNNEX's business with its suppliers and customers?
HP was the largest OEM supplier, representing approximately 25% of consolidated revenue in fiscal 2015. HP's agreement is short-term and may be terminated without cause on short notice. No customer accounted for 10% or more of consolidated revenue in fiscal 2015, 2014 or 2013.
What is the company's debt position and liquidity?
Total borrowings were $730.9 million as of November 30, 2015, down from $980.5 million a year earlier. The U.S. securitization arrangement had no outstanding balance at year end, and the U.S. credit agreement term loan was $617.2 million, maturing in May 2020. The company stated it believes current cash balances and credit availability are sufficient to support operations for at least the next twelve months.
What is the influence of MiTAC Holdings on SYNNEX?
MiTAC Holdings and its affiliates beneficially owned approximately 25% of outstanding common stock as of November 30, 2015, giving them significant influence over matters submitted to stockholders, including mergers and acquisitions. The company purchased $87.1 million of inventory from MiTAC Holdings and its affiliates during fiscal 2015. Synnex Technology International, which is affiliated with MiTAC Holdings, is also a potential competitor, and neither is restricted from competing with SYNNEX.
06—Continue