01—Abstract
Summary
Summary of the 10-Q filed October 3, 2024. Cited figures are marked; the original filing is the authoritative source.
TD SYNNEX Corporation's Form 10-Q for the quarter ended August 31, 2024 shows third-quarter revenue of $14.68 billiona, up from $13.96 billion a year earlier, while nine-month revenue declined to $42.61 billion from $43.15 billion.
The filing attributes the quarterly increase to growth in both the Advanced Solutions and Endpoint Solutions portfolios, partly offset by a greater share of revenue being presented on a net basis, which the company says reduced revenue by approximately $550 millionb in the quarter. Third-quarter net income rose to $178.6 million from $139.3 million, and GAAP operating income rose to $302.9 million from $240.2 million, mainly because acquisition, integration and restructuring costs fell sharply. Non-GAAP operating income was $392.9 million, slightly below the prior-year $396.8 million, and third-quarter diluted EPS was $2.08 versus $1.49.
Cash generation weakened over the nine months, with operating cash flow of $655.8 millionc compared with $1.20 billion a year earlier, mainly reflecting changes in inventory and accounts payable and other operating liabilities. The company repurchased $509.9 million of common stock during the nine months, and it had $1.9 billion remaining under its March 2024 repurchase authorization at quarter end. Total borrowings were approximately $4.1 billion, and the company repaid $700.0 million of 1.250% Senior Notes at maturity using proceeds from a new $600.0 million 6.100% Senior Notes issuance due 2034.
Cash and cash equivalents were $853.9 milliond at August 31, 2024, compared with $1.03 billion at November 30, 2023. The company reported that it had substantially completed its Merger-related integration and restructuring activities, so no material related expenses are expected in future periods.
Management stated that the company's cash, operating cash flows and credit availability are sufficient for at least the next twelve months. The filing also discloses that the company is contesting a French Competition Authority fine related to Apple product distribution and that a civil lawsuit related to the matter is pending, with management unable to estimate a potential loss.
02—Key points
Key Highlights
- Third-quarter revenue rose to $14.68 billion from $13.96 billion, while nine-month revenue fell to $42.61 billion from $43.15 billion.
- Third-quarter GAAP operating income increased to $302.9 million from $240.2 million, primarily due to lower acquisition, integration and restructuring costs, which were $0.7 million versus $71.6 million a year earlier.
- Non-GAAP operating income was $392.9 million for the quarter versus $396.8 million a year earlier, and the company attributed the decline to lower non-GAAP gross profit.
- Third-quarter diluted EPS was $2.08 versus $1.49, and non-GAAP diluted EPS was $2.86 versus $2.78.
- Operating cash flow for the nine months was $655.8 million, down from $1.20 billion, and the company repurchased $509.9 million of common stock during the period.
- The company repaid $700.0 million of 1.250% Senior Notes due August 2024 using proceeds from a $600.0 million 6.100% Senior Notes issuance due 2034, and it had $1.9 billion remaining under its March 2024 share repurchase authorization.
- Management reported that Merger-related integration and restructuring activities are substantially complete, with no material expenses expected in future periods.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, TD Synnex kept $0.01.
- Revenue$14.68B100.0%
- Cost of revenue−$13.72B93.5%
- Gross profit$961.0M6.5%
- Operating costs−$658.2M4.5%
- Operating income$302.9M2.1%
- Interest, other & tax−$124.3M0.8%
- Net income$178.6M1.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 3, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $14.68B$13.96B | +5.2% |
| Cost of Revenue | $13.72B$12.99B | +5.7% |
| Gross Profit | $961.05M$971.27M | −1.1% |
| SG&A Expenses | $657.51M$659.45M | −0.3% |
| Operating Income | $302.88M$240.23M | +26.1% |
| Net Income | $178.56M$139.26M | +28.2% |
| EPS (Basic) | $2.09$1.49 | +40.3% |
| EPS (Diluted) | $2.08$1.49 | +39.6% |
| Shares Outstanding (Basic) | 84.51M92.59M | −8.7% |
| Shares Outstanding (Diluted) | 84.94M92.88M | −8.6% |
05—Questions
Frequently Asked Questions
Why did revenue grow in the quarter but decline over the nine months?
Third-quarter revenue increased $724.1 million to $14.68 billion, driven by growth in Advanced Solutions and Endpoint Solutions. Nine-month revenue decreased $540.2 million to $42.61 billion, primarily because a greater share of revenue was presented on a net basis, which reduced nine-month revenue by approximately $1.6 billion compared with the prior-year period.
How did profitability change?
GAAP operating income rose to $302.9 million from $240.2 million and net income rose to $178.6 million from $139.3 million, largely because acquisition, integration and restructuring costs declined. Non-GAAP operating income was slightly lower at $392.9 million versus $396.8 million, reflecting lower non-GAAP gross profit, with gross margin of 6.54% versus 6.97% in the prior-year quarter.
What is the company's liquidity and debt position?
Cash and cash equivalents were $853.9 million at August 31, 2024. Total outstanding borrowings were approximately $4.1 billion, including $2.4 billion of Senior Notes and about $1.3 billion of term loans. The company had no amounts outstanding under its $3.5 billion revolving credit facility and stated it was in compliance with its financial covenants.
How much capital has the company returned to shareholders?
The company paid $104.1 million in dividends and repurchased $509.9 million of common stock during the nine months ended August 31, 2024. It declared a quarterly dividend of $0.40 per share payable October 25, 2024, and had $1.9 billion available under its March 2024 repurchase authorization.
Are there material legal or contingent liabilities?
The French Autorité de la Concurrence fine was reduced on appeal from €76.1 million to €24.9 million, which the company paid in fiscal 2022. The company continues to contest the matter, and a related civil lawsuit alleging anticompetitive actions is pending. The company is currently evaluating this lawsuit and cannot currently estimate the probability or amount of any potential loss, but states that it does not believe its commitments and contingencies will have a material adverse effect.
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