SYNNEX Corp. (NYSE:SNX) Q3 2016 Earnings Conference Call - Final Transcript

Sep 26, 2016 • 05:00 pm ET

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SYNNEX Corp. (NYSE:SNX) Q3 2016 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good afternoon. My name is Laura, and I will be your conference operator today for the SYNNEX 2016 third quarter earnings call. (Operator Instructions). Today's conference is being recorded. If you have any objections, you may disconnect. Thank you.

At this time, I would like to pass the call over to Mr. Mike Vaishnav, Senior Vice President, Corporate Finance and Treasurer at SYNNEX Corporation. Sir, you may now begin.

Executive
Mike Vaishnav

Thank you, Laura. Good afternoon, and welcome to SYNNEX Corporation's earnings call for the FY16 third quarter ended August 31, 2016. Joining us on today's call are Kevin Murai, President and CEO, Dennis Polk, COO, Marshall Witt, CFO, and Chris Caldwell, EVP and President of Concentrix Corporation. (Forward-Looking Cautionary Statements).

Now, I would like to turn over the call to Marshall for an update on our financial performance. Marshall?

Executive
Marshall Witt

Thanks, Mike. First I'll review our results of operations and key financial metrics, and then I'll conclude with guidance for the fourth quarter of FY16 before turning the call over to Kevin. Our Q3 revenue, non-GAAP net income, and non-GAAP EPS all exceeded our expectations. On a consolidated basis, total revenue was $3.7 billion, up 10.1%, compared to $3.3 billion in the same quarter of the prior year.

Adjusting for FX of [$16] million, revenue in constant currency was 9.6% higher compared to the prior year quarter. Our gross profit on Q3 revenues was $326 million or 8.9% of revenues, compared to $290.8 million or 8.7% of revenues in Q3 of 2015. Technology Solutions segment revenues were $3.3 billion, representing an increase of 9.8% compared to the prior year quarter.

The TS revenue increase was mainly due to strong demand for our Hyve services, across the board growth in TS US and Canada, driven by great execution, and offset by negative growth in Japan Technology Solutions. On a constant currency basis, Technology Solutions segment revenues increased approximately 9% year-over-year.

Concentrix revenues were $406.7 million, up 13.1% from $359.5 million in the year-ago quarter. The Minacs acquisition contributed $36.2 million of revenue and $0.9 million of GAAP earnings to the Company's total consolidated results of operations. Adjusting for the acquisitions and the negative impact of FX of $6.8 million, revenue in constant currency increased 5%.

Q3 total selling, general and administrative expenses, excluding acquisition and other integration expenses, restructuring costs and amortization costs, was $212.3 million or 5.79% of our revenue, compared to 5.82% of revenue or $194 million in the third quarter of FY15 Consolidated non-GAAP operating income was $113.6 million or 3.1% of revenue, compared to $97 million or 2.91% of revenue in the prior year third quarter.

At the segment level, Q3 Technology Solutions non-GAAP operating income was $80.1 million or 2.45% of revenue, up 11.72% from the prior year quarter results of $71.7 million or 2.41% of revenue. For Concentrix, non-GAAP operating income was in the quarter was $33.5 million or 8.24% of revenue, up from the prior year quarter result of $25.2 million or 7.02% of revenue, primarily due