01—Abstract
Summary
Summary of the 10-K filed January 28, 2022. Cited figures are marked; the original filing is the authoritative source.
TD SYNNEX Corporation's fiscal 2021 Form 10-K (fiscal year ended November 30, 2021) reports revenue of $31.61 billiona, up from $19.98 billion in fiscal 2020, driven mainly by the September 1, 2021 acquisition of Tech Data, which the filing says contributed approximately $10 billion of revenue in the period.
Gross profit rose to $1.89 billionb with gross margin of 5.98%, while operating income increased to $623.2 million (operating margin 1.97%, down from 2.61%) as acquisition, integration and restructuring costs rose to $112.2 million and amortization of intangibles increased to $105.3 million. Net income from continuing operations was $395.1 million, or $6.24 diluted EPS, compared with $529.2 million in total net income for fiscal 2020, which included discontinued Concentrix results. Non-GAAP diluted EPS from continuing operations was $9.40.
The balance sheet expanded substantially: total assets were $27.67 billionc and total stockholders' equity was $7.91 billion, versus $13.47 billion and $4.34 billion a year earlier. Borrowings grew to roughly $4.1 billion, including $2.5 billion of Senior Notes issued in August 2021 to help fund the Merger, and the company reported $994.0 million of cash and cash equivalents. Cash provided by operating activities was $809.8 million, and the cash conversion cycle shortened to 14 days from 25 days.
The Merger consideration totaled $7.22 billiond, including 44 million newly issued shares, and Apollo Global Management owned approximately 45.0% of common stock, which the filing identifies as a significant influence over corporate matters. The filing also discloses that HP Inc. accounted for approximately 12% of fiscal 2021 revenue and one customer for 17%. The company reinstated a quarterly dividend of $0.20 per share in January 2021, which it increased to $0.30 per share in January 2022.
Its $400 million share repurchase program had no repurchases under it as of November 30, 2021. The auditor, KPMG LLP, issued an unqualified opinion, and management excluded Tech Data from its internal control assessment, which covered approximately 40% of total assets and 32% of revenue.
02—Key points
Key Highlights
- Revenue rose to $31.61 billion from $19.98 billion, with the filing attributing the increase primarily to roughly $10 billion of revenue from the Tech Data Merger completed September 1, 2021.
- Operating income increased to $623.2 million, but operating margin fell to 1.97% from 2.61%, reflecting higher employee costs, $112.2 million of acquisition, integration and restructuring costs, and $105.3 million of intangible amortization.
- Diluted EPS from continuing operations was $6.24, versus $6.46 in fiscal 2020; non-GAAP diluted EPS from continuing operations was $9.40 versus $7.38.
- Total assets nearly doubled to $27.67 billion, with goodwill of $3.92 billion and intangible assets of $4.91 billion, and total borrowings of about $4.1 billion including $2.5 billion of Senior Notes.
- The Merger consideration was $7.22 billion, including $1.61 billion in cash and 44 million shares valued at about $5.61 billion, and Apollo Global Management owns approximately 45.0% of common stock.
- Customer and supplier concentration remains significant: HP Inc. was about 12% of revenue and one customer was 17% in fiscal 2021.
- The cash conversion cycle improved to 14 days from 25 days, and operating cash flow was $809.8 million; the dividend was raised to $0.30 per share for January 2022.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, TD Synnex kept $0.01.
- Revenue$31.61B100.0%
- Cost of revenue−$29.72B94.0%
- Gross profit$1.89B6.0%
- Operating costs−$1.27B4.0%
- Operating income$623.2M2.0%
- Interest, other & tax−$228.1M0.7%
- Net income$395.1M1.2%
Where FY2021 revenue went
$31.61B- Cost of revenue: $29.72B, 94% of revenue
- Net income: $395.1M, 1.2% of revenue
- SG&A: $1.15B, 3.7% of revenue
- Interest, other & tax: $228.1M, 0.7% of revenue
Kept 1.2% as net incomeNet income $395.1M · 1.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed January 28, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $31.61B$19.98B | +58.3% |
| Cost of Revenue | $29.72B$18.78B | +58.3% |
| Gross Profit | $1.89B$1.19B | +58.3% |
| SG&A Expenses | $1.15B$665.10M | +73.5% |
| Operating Income | $623.22M$521.34M | +19.5% |
| Net Income | $395.07M$529.16M | −25.3% |
| EPS (Basic) | $6.28$10.28 | −38.9% |
| EPS (Diluted) | $6.24$10.21 | −38.9% |
| Shares Outstanding (Basic) | 62.24M50.90M | +22.3% |
| Shares Outstanding (Diluted) | 62.70M51.24M | +22.4% |
05—Questions
Frequently Asked Questions
How did the Tech Data acquisition affect TD SYNNEX's financial results in fiscal 2021?
The Merger closed September 1, 2021, and the filing states that Tech Data contributed estimated revenue of approximately $10.0 billion for the year. The increase in revenue, employee costs, amortization and acquisition-related costs drove most of the change in results, and the filing notes that comparisons between periods are affected by the Merger.
Why did operating margin decline even though operating income increased?
Operating income rose to $623.2 million from $521.3 million, but operating margin fell to 1.97% from 2.61%. The filing attributes the margin decline to higher employee-related expenses from the Merger, increased acquisition, integration and restructuring costs, and higher amortization of acquired intangible assets.
How is the company financing its debt and liquidity after the Merger?
The company issued $2.5 billion of Senior Notes in August 2021 and entered into a $3.5 billion revolving credit facility plus a $1.5 billion term loan. As of November 30, 2021, it had $994.0 million of cash and cash equivalents, and the filing says management believes cash and credit availability are sufficient for at least the next twelve months.
What do shareholders need to know about dividends and buybacks?
The company reinstated a quarterly dividend of $0.20 per share in January 2021 and announced a $0.30 per share dividend on January 11, 2022, payable January 28, 2022. Under its $400 million three-year repurchase program authorized in June 2020, the company had not repurchased any shares as of November 30, 2021.
How concentrated is the company's business with suppliers and customers, and what control does Apollo have?
HP Inc. accounted for about 12% of fiscal 2021 revenue, and one customer accounted for 17%. Apollo Global Management and its affiliates owned approximately 45.0% of common stock as of November 30, 2021, and under the Investor Rights Agreement can nominate up to four directors at the 30% ownership level, which the filing says could allow it to influence stockholder votes and board composition.
06—Continue