01—Abstract
Summary
Summary of the 10-K filed January 26, 2024. Cited figures are marked; the original filing is the authoritative source.
TD SYNNEX Corporation reported fiscal 2023 (year ended November 30, 2023) revenue of $57.56 billiona, down from $62.34 billion in fiscal 2022, with the decline driven by a post-pandemic drop in demand for Endpoint Solutions (personal computing ecosystem products), partially offset by growth in Advanced Solutions.
Gross margin rose to 6.87% from 6.26%, and operating income increased to $1.08 billionb from $1.05 billion. Net income was $626.9 million, compared with $651.3 million in fiscal 2022, and diluted EPS was $6.70 versus $6.77. Non-GAAP net income declined to $1.05 billion from $1.15 billion, and non-GAAP diluted EPS was $11.26 versus $11.94.
Cash flow and capital returns were a notable feature of the year. Net cash provided by operating activities was $1.4 billionc, compared with a use of $49.6 million in fiscal 2022, mainly from favorable inventory changes. The company repurchased $620.7 million of stock, paid $130.4 million in dividends, and ended the year with $1.03 billion in cash and total borrowings of about $4.1 billion.
Cash conversion cycle was 23 days, flat year over year. The company also declared a $0.40d quarterly dividend in January 2024.
Risk factors highlighted in the filing include concentration of ownership (Apollo Global Management owned about 32% and executives, directors and principal stockholders about 43%), dependence on a small number of OEM suppliers (Apple about 11% of revenue in both 2023 and 2022), low gross margins, and cybersecurity incidents in July 2022 and September 2023 that the company determined were not material. The auditor, KPMG LLP, issued an unqualified opinion, identifying revenue sufficiency of audit evidence as a critical audit matter.
02—Key points
Key Highlights
- Revenue fell to $57.56 billion in fiscal 2023 from $62.34 billion in fiscal 2022, driven by a decline in Endpoint Solutions partially offset by Advanced Solutions growth.
- Gross margin improved to 6.87% from 6.26%, and operating income rose to $1.08 billion from $1.05 billion.
- Net income was $626.9 million (diluted EPS $6.70) versus $651.3 million (diluted EPS $6.77) in fiscal 2022; non-GAAP diluted EPS was $11.26 versus $11.94.
- Operating cash flow was $1.41 billion, compared with a use of $49.6 million in fiscal 2022, with the cash conversion cycle flat at 23 days.
- The company repurchased $620.7 million of common stock and paid $130.4 million in dividends during fiscal 2023, and declared a $0.40 quarterly dividend in January 2024.
- Total borrowings were about $4.1 billion at November 30, 2023, including $2.5 billion of Senior Notes, and $3.5 billion of unused commitments under the revolving credit facility were available.
- Apollo Global Management owned about 32% of common stock and MiTAC Holdings about 9.3% as of November 30, 2023, following secondary offerings in January and October 2023.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, TD Synnex kept $0.01.
- Revenue$57.56B100.0%
- Cost of revenue−$53.60B93.1%
- Gross profit$3.96B6.9%
- Operating costs−$2.88B5.0%
- Operating income$1.08B1.9%
- Interest, other & tax−$451.1M0.8%
- Net income$626.9M1.1%
Where FY2023 revenue went
$57.56B- Cost of revenue: $53.60B, 93% of revenue
- Net income: $626.9M, 1.1% of revenue
- SG&A: $2.67B, 4.6% of revenue
- Interest, other & tax: $451.1M, 0.8% of revenue
Kept 1.1% as net incomeNet income $626.9M · 1.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed January 26, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $57.56B$62.34B | −7.7% |
| Cost of Revenue | $53.60B$58.44B | −8.3% |
| Gross Profit | $3.96B$3.90B | +1.5% |
| SG&A Expenses | $2.67B$2.63B | +1.7% |
| Operating Income | $1.08B$1.05B | +2.6% |
| Net Income | $626.91M$651.31M | −3.7% |
| EPS (Basic) | $6.72$6.79 | −1.0% |
| EPS (Diluted) | $6.70$6.77 | −1.0% |
| Shares Outstanding (Basic) | 92.57M95.22M | −2.8% |
| Shares Outstanding (Diluted) | 92.85M95.51M | −2.8% |
05—Questions
Frequently Asked Questions
Why did revenue decline in fiscal 2023?
Revenue decreased 7.7% to $57.56 billion, primarily because of a post-pandemic decline in demand for personal computer ecosystem products in the Endpoint Solutions portfolio. A greater share of revenue presented on a net basis due to product mix also reduced revenue growth by approximately 4%, partially offset by growth in Advanced Solutions and high-growth technologies.
How did profitability change?
Gross margin increased to 6.87% from 6.26%, mainly due to product mix, including growth in Advanced Solutions, and lower purchase accounting adjustments related to the Merger. Operating income rose 2.6% to $1.08 billion, but net income declined to $626.9 million from $651.3 million due to higher interest expense and finance charges, which increased to $288.3 million from $222.6 million.
What were the main sources of cash and uses of cash?
Operating activities provided $1.41 billion, mainly from favorable changes in inventories. The company used $620.7 million for share repurchases, $130.4 million for dividends and $156.4 million in investing activities. Cash and cash equivalents increased to $1.03 billion from $522.6 million.
What are the main concentration risks for investors?
One customer accounted for 11% of total revenue in fiscal 2023, and Apple accounted for about 11% of revenue. The company depends on a limited number of OEM suppliers, and its agreements are generally short-term and terminable on short notice. Apollo and its affiliates owned about 32% of common stock, which gives them significant influence over board composition and corporate actions.
Did the company disclose any material cybersecurity incidents?
The company disclosed that a threat actor gained access to a portion of its networks in July 2022 and again in September 2023. After a review with a third-party cybersecurity firm, it determined that these attacks did not have a material impact on the company, but it noted that broader impacts could occur if new information emerges.
06—Continue