01—Abstract
Summary
Summary of the 10-Q filed July 3, 2024. Cited figures are marked; the original filing is the authoritative source.
TD SYNNEX Corporation's Form 10-Q for the quarter ended May 31, 2024 reports revenue of $13.95 billiona for the three months ended May 31, 2024, slightly down from $14.06 billion a year earlier, and $27.92 billion for the six months, down from $29.19 billion.
The filing attributes the revenue decline primarily to additional revenue being presented on a net basis, which reduced revenue by approximately $550 millionb in the quarter, partially offset by growth in the Advanced Solutions and Endpoint Solutions portfolios. Despite lower revenue, operating income rose to $263.9 million from $252.9 million in the quarter, and net income increased to $143.6 million from $133.1 million. Diluted EPS was $1.66 versus $1.41 in the prior-year quarter.
Balance sheet and cash flow highlights include cash and cash equivalents of $1.17 billionc, total borrowings that the filing describes as approximately $4.6 billion, and net cash provided by operating activities of $270.0 million for the six months, down from $604.8 million. The company repurchased $453.4 million of common stock in the six months and issued $600.0 million of 6.100% senior notes due 2034, which it intends to use to repay $700.0 million of 1.250% notes maturing August 9, 2024. The company also declared a quarterly cash dividend of $0.40 per share, payable July 26, 2024.
Management reported that its disclosure controls and procedures were effective and that there was no material change in internal control over financial reporting during the quarter. The filing states that management believes current cash, operating cash flows and credit availability are sufficient for at least the next twelve months.
02—Key points
Key Highlights
- Revenue of $13.95 billion for the quarter ended May 31, 2024, down from $14.06 billion, with the decline attributed mainly to presenting more revenue on a net basis (about $550 million impact in the quarter).
- GAAP operating income rose to $263.9 million from $252.9 million, and net income increased to $143.6 million from $133.1 million year over year.
- Diluted EPS of $1.66 for the quarter versus $1.41 a year earlier; non-GAAP diluted EPS was $2.73 versus $2.43.
- Six-month operating cash flow was $270.0 million, compared with $604.8 million in the prior-year period, mainly due to a smaller inventory decrease and a larger decrease in accounts payable.
- Issued $600.0 million of 6.100% senior notes due 2034 to refinance the $700.0 million 1.250% notes maturing August 9, 2024; the company also entered a $3.5 billion revolving credit facility and a $750.0 million 2024 Term Loan.
- Repurchased $453.4 million of common stock in the six months ended May 31, 2024, and $1.9 billion remained available under the March 2024 repurchase program; a quarterly dividend of $0.40 per share was declared June 25, 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, TD Synnex kept $0.01.
- Revenue$13.95B100.0%
- Cost of revenue−$12.97B93.0%
- Gross profit$973.5M7.0%
- Operating costs−$709.6M5.1%
- Operating income$263.9M1.9%
- Interest, other & tax−$120.3M0.9%
- Net income$143.6M1.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 3, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $13.95B$14.06B | −0.8% |
| Cost of Revenue | $12.97B$13.10B | −0.9% |
| Gross Profit | $973.55M$963.41M | +1.1% |
| SG&A Expenses | $671.71M$673.70M | −0.3% |
| Operating Income | $263.95M$252.88M | +4.4% |
| Net Income | $143.60M$133.09M | +7.9% |
| EPS (Basic) | $1.67$1.41 | +18.4% |
| EPS (Diluted) | $1.66$1.41 | +17.7% |
| Shares Outstanding (Basic) | 85.45M93.39M | −8.5% |
| Shares Outstanding (Diluted) | 85.87M93.64M | −8.3% |
05—Questions
Frequently Asked Questions
Why did revenue decline even though operating income improved?
The filing states that the revenue decline was primarily driven by the presentation of additional revenue on a net basis, which reduced quarterly revenue by approximately $550 million. Gross margin improved to 6.98% from 6.85%, largely because of this net presentation and lower purchase accounting adjustments related to the Merger, which lifted operating income.
How much debt does the company have and how is it being managed?
Total outstanding borrowings were approximately $4.6 billion at May 31, 2024, up from $4.1 billion at November 30, 2023. The company issued $600.0 million of 6.100% senior notes due 2034, entered a $3.5 billion senior unsecured revolving credit facility and a $750.0 million 2024 Term Loan, and intends to use the proceeds to repay the $700.0 million of 1.250% notes due August 9, 2024. The filing states the company was in compliance with its financial covenants as of May 31, 2024.
Is the company returning capital to shareholders?
Yes. The company repurchased $453.4 million of common stock in the six months ended May 31, 2024, and paid dividends of $69.8 million. A quarterly cash dividend of $0.40 per share was declared on June 25, 2024, payable July 26, 2024. As of May 31, 2024, $1.9 billion remained available under the March 2024 share repurchase program, which has no expiration date.
Why did operating cash flow decline in the first half of fiscal 2024?
The filing attributes the decrease in net cash provided by operating activities, which fell to $270.0 million from $604.8 million, primarily to a larger decrease in inventory in the prior-year period related to ongoing sell-through of strategic inventory purchases made in fiscal 2022, partially offset by a larger decrease in accounts payable in the prior-year period.
What were the main sources of the company's profit change?
The filing states that consolidated operating income increased in the quarter mainly due to higher gross profit, including lower purchase accounting adjustments related to the Merger, and lower personnel costs, partly offset by higher share-based compensation. Americas operating income increased 11.8% for the quarter, while Europe and APJ operating income decreased in the quarter.
06—Continue