01—Abstract
Summary
Summary of the 10-Q filed April 4, 2024. Cited figures are marked; the original filing is the authoritative source.
TD SYNNEX Corporation's 10-Q for the quarter ended February 29, 2024 shows revenue of $13.98 billiona, down from $15.13 billion in the prior-year quarter, as the decline was driven mainly by Advanced Solutions following strong prior-year demand and backlog conversion, plus a decline in Endpoint Solutions.
The company attributed about $450 millionb of the revenue decline to a greater share of revenue being presented on a net basis. Gross margin improved to 7.20% from 6.63%, citing margin expansion in strategic technologies, and operating income rose to $302.6 million from $298.2 million, helped by lower acquisition, integration and restructuring costs of $31.6 million versus $51.2 million. Net income was $172.1 million, or $1.93 diluted EPS, compared with $167.0 million, or $1.75, a year earlier.
On the balance sheet, total assets fell to $27.80 billionc from $29.41 billion at November 30, 2023, with accounts payable declining to $12.37 billion from $13.35 billion and accounts receivable to $8.90 billion from $10.30 billion. Net cash provided by operating activities was $384.7 million, compared with cash used of $102.8 million a year earlier, mainly due to lower receivables. The company repurchased $199.2 million of common stock and paid $35.7 million in dividends during the quarter.
Subsequent to the quarter, in March 2024, the Board authorized a new $2.0 billiond share repurchase program, and the company disclosed a secondary offering by selling stockholders of 12.1 million shares, with a concurrent repurchase of 500 thousand shares by the company. Investors should note the $700.0 million of 1.25% Senior Notes due August 9, 2024, which the company says it intends to refinance in some or all amount, and that it believes existing cash, operating cash flows and borrowing capacity are sufficient to repay them. Total outstanding borrowings were approximately $4.0 billion at February 29, 2024, compared with $4.1 billion at November 30, 2023.
02—Key points
Key Highlights
- Revenue of $13.98 billion declined from $15.13 billion in the prior-year quarter, with the decrease driven by Advanced Solutions and Endpoint Solutions.
- Gross margin rose to 7.20% from 6.63%, attributed to margin expansion in strategic technologies and a higher share of revenue presented on a net basis.
- Net income was $172.1 million, or $1.93 diluted EPS, versus $167.0 million, or $1.75, in the prior-year quarter.
- Operating cash flow was positive at $384.7 million, compared with cash used of $102.8 million a year earlier, largely from lower accounts receivable.
- The company repurchased $199.2 million of common stock in the quarter; in March 2024 the Board authorized a new $2.0 billion repurchase program.
- The $700.0 million 1.25% Senior Notes due August 9, 2024 are a near-term maturity, which management intends to refinance in some or all amount.
- Quarterly cash dividend declared at $0.40 per share, payable April 26, 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, TD Synnex kept $0.01.
- Revenue$13.98B100.0%
- Cost of revenue−$12.97B92.8%
- Gross profit$1.01B7.2%
- Operating costs−$703.2M5.0%
- Operating income$302.6M2.2%
- Interest, other & tax−$130.4M0.9%
- Net income$172.1M1.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed April 4, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $13.98B$15.13B | −7.6% |
| Cost of Revenue | $12.97B$14.12B | −8.2% |
| Gross Profit | $1.01B$1.00B | +0.2% |
| SG&A Expenses | $671.54M$654.22M | +2.6% |
| Operating Income | $302.57M$298.16M | +1.5% |
| Net Income | $172.13M$167.02M | +3.1% |
| EPS (Basic) | $1.94$1.76 | +10.2% |
| EPS (Diluted) | $1.93$1.75 | +10.3% |
| Shares Outstanding (Basic) | 87.89M94.26M | −6.8% |
| Shares Outstanding (Diluted) | 88.20M94.54M | −6.7% |
05—Questions
Frequently Asked Questions
Why did TD SYNNEX revenue decline year over year?
Revenue fell to $13.98 billion from $15.13 billion, primarily due to Advanced Solutions, where the prior year reflected strong demand and backlog conversion, and a decline in Endpoint Solutions. The company also said a greater share of revenue was presented on a net basis, which reduced revenue by about $450 million, and changes in foreign currencies reduced revenue by $102.5 million.
How did profitability change in the quarter?
Gross profit rose to $1.01 billion from $1.00 billion, and gross margin increased to 7.20% from 6.63%. Operating income increased to $302.6 million from $298.2 million, aided by lower acquisition, integration and restructuring costs of $31.6 million versus $51.2 million. Net income rose to $172.1 million from $167.0 million.
What drove the improvement in operating cash flow?
Net cash provided by operating activities was $384.7 million, compared with net cash used of $102.8 million a year earlier. The company attributed the change primarily to a decrease in accounts receivable related to the timing of cash receipts, which generated $1.34 billion in cash, partially offset by a $926.8 million decrease in accounts payable.
How is the company managing its debt and upcoming maturities?
Total outstanding borrowings were about $4.0 billion at February 29, 2024. The company has $700.0 million of 1.25% Senior Notes due August 9, 2024, which it intends to refinance in some or all amount. Management believes existing cash, operating cash flows and available borrowing capacity will be sufficient to repay the notes, and the company was in compliance with its financial covenants.
What are the company's capital return plans?
The company repurchased $199.2 million of common stock in the quarter and had $196.7 million remaining under its existing program at February 29, 2024. In March 2024, the Board authorized a new $2.0 billion repurchase program with no expiration date. It also declared a quarterly dividend of $0.40 per share payable April 26, 2024.
06—Continue