SYNNEX Corp. (NYSE:SNX) Q1 2017 Earnings Conference Call - Final Transcript

Mar 27, 2017 • 05:00 pm ET

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SYNNEX Corp. (NYSE:SNX) Q1 2017 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good afternoon. My name is Iris, and I will be your conference operator today for the SYNNEX 2017 First 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 Mike Vaishnav, Senior Vice President, Corporate Finance and Treasurer at SYNNEX Corporation.

Executive
Mike Vaishnav

Thank you, Iris. Good afternoon, and welcome to the SYNNEX Corporation earnings conference call for the fiscal 2017 first quarter ended February 28, 2017. 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)

This conference call is the property of SYNNEX Corporation and may not be recorded or rebroadcast without our specific written permission.

Now I would like to turn our call to Marshall for an update of our financial performance. Marshall?

Executive
Marshall Witt

Thanks, Mike. First, I will review our results of operations and key financial metrics and then conclude with guidance for the second quarter of fiscal 2017 before turning the call over to Kevin.

Our Q1 net income and EPS, both GAAP and non-GAAP, exceeded our expectations, while revenue was in line with our expectations. On a consolidated basis, total revenue was $3.5 billion, up 12.6% compared to $3.1 billion in the same quarter of the prior year. Adjusting for FX of $19 million, revenue in constant currency was 12% higher compared to the prior quarter.

Technology Solutions segment revenues were $3 billion, representing an increase of 9.4% compared to the prior-year quarter. The TS revenue increase was mainly due to strong demand for our cloud-based solutions. On a constant currency basis, Technology Solutions segment revenues increased approximately 8.6% year-over-year.

Concentrix revenues were $478.2 million, up 38.7% from $344.7 million in the prior-year quarter. The Minacs acquisition contributed to the majority of the increase in revenue. Adjusting for the acquisition and the negative impact of FX, revenue in constant currency was comparable to the prior-year quarter.

Now turning to gross profit. Our gross profit on Q1 revenues was $341.8 million or 9.7% of revenue compared to $284.2 million or 9.1% of revenues in Q1 of 2016. The increase in gross profit dollars was due to higher sales in our Concentrix segment and higher value-added services.

Q1 total adjusted selling, general and administrative expenses were $223.3 million or 6.34% of our revenue compared to 6.28% of revenue or $196.2 million in the first quarter of fiscal 2016. The increase was due to the Minacs acquisition. Both segments effectively managed support costs, while growing revenue.

Consolidated non-GAAP operating income was $118.9 million or 3.38% of revenue compared to $88.3 million or 2.83% of revenue in the prior-year first quarter. At the segment level, Q1 Technology Solutions' non-GAAP operating income was $81.1 million or 2.66% of revenue, up 18.67% from the prior-year quarter result of $68.3 million or 2.45% of revenue due to higher value-added services, scale efficiencies and solid