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SYNNEX (SNX) Q4 Earnings & Revenues Top Estimates, Up Y/Y

Zacks Equity Research
·3 min read

SYNNEX SNX delivered stellar fourth-quarter fiscal 2020 results, wherein the top and bottom lines surpassed the respective Zacks Consensus Estimate and marked year-over-year improvements as well. The company’s fiscal fourth-quarter non-GAAP earnings of $5.21 per share topped the Zacks Consensus Estimate of $3.83 and came in higher than the year-ago quarter’s $4.26.

Revenues grew to $7.41 billion from the year-earlier quarter’s $6.58 billion. The top-line figure also beat the Zacks Consensus Estimate of $6.57 billion.

Quarterly Details

Gross profit grew 4% year over year to $823 million, while margin contracted 100 basis points (bps) to 11.1%. Total selling, general & administrative (SG&A) expenses declined to $503 million from the year-ago quarter’s $526 million, mainly due to continued Concentrix synergies associated to the Convergys acquisition and lower Concentrix variable operating expenses.

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In the reported quarter, non-GAAP operating income was up 14.7% to $388.2 million. Also, non-GAAP operating margin expanded 10 bps on a year-over-year basis to 5.24%.

SYNNEX Corporation Price and Consensus

SYNNEX Corporation Price and Consensus
SYNNEX Corporation Price and Consensus

SYNNEX Corporation price-consensus-chart | SYNNEX Corporation Quote

Segment wise, SYNNEX’s Technology Solutions revenues increased 13.9% year on year to $6.1 billion. Concentrix business revenues climbed 7.3% year over year to $1.3 billion.

Non-GAAP operating income for Technology Solutions was $216.2 million, up 21.6% from the prior-year quarter. For the Concentrix segment, non-GAAP operating income was $172 million, up 7% year on year.

SYNNEX ended the fiscal fourth quarter with cash and cash equivalents of $1.41 billion compared with the $1.45 billion witnessed at the end of the fiscal third quarter. During the fiscal fourth quarter, the company generated $297 million of cash flow from operational activities.

Additionally, the company announced that its board of directors reinstated a quarterly cash dividend of 20 cents per share. The newly-approved dividend will be payable on Jan 29 to shareholders of record date as of Jan 22, 2021.

Guidance

For the first quarter of fiscal 2021, revenues are expected between $4.5 billion and $4.8 billion.

Non-GAAP net income is estimated in the range of $81-$91.5 million. Moreover, the company projects non-GAAP earnings between $1.55 and $1.75 per share.

Further, the company stated that it has completed the previous announcement of splitting its Concentrix business into a separate publicly-traded company on Dec 1, 2020. With this separation, SYNNEX is now left with its Technology Solution business. The separated business has been named Concentrix Corporation CNXC. Management believes this strategic action would help add shareholder value and enhance the company's competitive edge.

Zacks Rank & Key Picks

SYNNEX currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader technology sector include Dell Technologies DELL and NetApp NTAP, flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Dell and NetApp is currently pegged at 12% and 11.9%, respectively.

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