SYNNEX Corp. (NYSE:SNX) Q2 2019 Earnings Conference Call - Final Transcript

Jun 25, 2019 • 05:00 pm ET


SYNNEX Corp. (NYSE:SNX) Q2 2019 Earnings Conference Call - Final Transcript


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Good afternoon. My name is Chris and I'll be your conference operator today. I would like to welcome everyone to the SYNNEX Second Quarter Fiscal 2019 Earnings Call. Today's call is being recorded and all lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session. At this time, for opening remarks, I would like to pass the call over to Ms. Mary Lai, Head of Investor Relations. Ms. Lai, you may begin.

Mary Lai

Thank you, Chris. Good afternoon and welcome to the SYNNEX Corporation earnings call for the second quarter of fiscal 2019. Joining me today to review our financial results are Dennis Polk, President and CEO; Marshall Witt, CFO and Chris Caldwell, President of Concentrix. After their prepared remarks, we will open the call to a question-and-answer session.

Before we begin, we remind everyone that today's discussion contains forward-looking forward-looking statements within the meaning of the federal securities laws. Statements include any predictions, estimate, projections or other statements about future events, including the Company's projected financial results. Actual results may differ materially from those mentioned in these forward-looking statements as a result of risks and uncertainties discussed in today's earnings release in the Form 8-K we filed today in the risk factor section of our Form 10-K and other reports and filings with SEC.

We do not intend to update any forward-looking statements. Also, during this call, we will reference during non-GAAP financial information, reconciliation of non-GAAP and GAAP reporting is included in our earnings press release and the related Form 8-K available under the Investor Relations section of our website. This conference call is the property of SYNNEX Corporation. It may not be recorded or rebroadcasted without our permission.

And now I will turn the call over to our CFO for the financial update. Marshall?

Marshall Witt

Thank you, Mary, and thank you all for joining us today. Our Q2 revenue, non-GAAP net income and deluded EPS all exceeded our expectations. On a consolidated basis, total revenue was a second quarter record of $5.7 billion, up 17% compared to $4.9 billion in the same quarter last year. Adjusting for FX, revenue increased 18%. At the segment level, Technology Solutions revenue was $4.6 billion, an increase of 3% compared to $4.4 billion in the prior quarter, which includes roughly $159 million of gross to net revenue headwinds. On a year-over-year basis, in constant currency gross revenue increased by 7%. Concentrix revenue was $1.2 billion, up 136% from $491 million in the prior year quarter, primarily due to the Convergys acquisition, which was completed in October of 2018.

On a pro forma basis and constant currency basis, revenue grew about 3%. Our consolidated gross profit dollars totaled $698 million, up 63% or $269 million versus the year ago, and gross margin was over 12%, an improvement of 346 basis points from the prior year quarter. Several factors contributed to the gross profit dollars and margin increase, most notably the positive contribution from our