synnex investor presentation nov27 2018 · 2018-12-04 · form 10-q, for information on risk...

December 2018Investor Presentation

© 2018, SYNNEX Corporation

Safe Harbor StatementStatements in this presentation regarding SYNNEX Corporation which are not historical facts may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may be identified by terms such as believe, expect, may, will, provide, could and should and the negative of these terms or other similar expressions. These forward-looking statements include, but are not limited to, statements regarding our business strategy, our investments, our growth and growth opportunities, market forecasts regarding TAM and the technology solutions worldwide market, our comprehensive cloud strategy, market forecasts concerning worldwide cloud IT infrastructure revenue growth, market forecasts and opportunities for Concentrix beyond CRM, potential benefits of our acquisition of Convergys including future financial and operating results and synergies, our expectation to exceed $150 million of total cost synergies over a three-year period post-transaction integration with an accelerated pace of $75 million in the first year and non-GAAP EPS accretion, our adjusted ROIC, our total debt to adjusted EBITDA, our commitment to remain at or below historical leverage level of 2.5x, our acquisition execution and integration and generation of significant value, our growing and large TAM, our diversified revenue and profitability, our mix shift to higher margin technology platforms and services, Hyve Solutions and BPO Customer Care adjacent market growth, core organic growth beyond market growth in Technology Solutions and Concentrix-focused verticals, revenue growth and margin expansion, and our capital allocation top priorities of shareholder returns, investments in core business, strategic mergers and acquisitions, and investments in new markets. These are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements. Please refer to the documents filed with the Securities and Exchange Commission, specifically our most recent Form 10-K and Form 10-Q, for information on risk factors that could cause actual results to differ materially from those discussed in these forward-looking statements. Statements included in this presentation are based upon information known to SYNNEX Corporation as of the date of presentation and SYNNEX Corporation assumes no obligation to update information contained in this presentation.


Fortune 200

CompanyRanked #169

in 2018

125 Consecutive

Profitable Quarters

3.3% Q3 FY18 Non-GAAP

Operating Margin(1)

SYNNEXTop 3

Americas Distribution

CONCENTRIXTop 2

Global CRM Business Services

~$20B LTM

Revenue

SYNNEX FactsProven results and recognition

LTM is the last 12 months ended Aug. 31, 2018.(1) Non-GAAP measure. See the Appendix to this presentation for definitions

of non-GAAP measures and reconciliation of such measures to GAAP. © 2018, SYNNEX Corporation


$7.7 $7.7 $8.6 $10.4 $10.3 $10.8

$13.8 $13.3 $14.1

$17.0

$19.7

$22.4

2.0% 2.0%

2.4% 2.5% 2.6%2.4%

2.9%3.1% 3.2%

3.5%3.3%

-0 .2 %

0 .3%

0 .8%

1 .3%

1 .8%

2 .3%

2 .8%

3 .3%

3 .8%

$ 0.5

$ 5.5

$ 10 .5

$ 15 .5

$ 20 .5

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 LTM LTM IncludingConvergys*

Revenue ($B)

Adj. OP%(1)

Strong Track Record of Revenue and Profit Growth9% revenue CAGR (FY08-FY17)

LTM is the last twelve months ended Aug. 31, 2018.*Proforma LTM including Convergys reflects Convergys LTM revenue of $2.7B through June 30, 2018.

(1) Non-GAAP measure. See the Appendix to this presentation for definitions of non-GAAP measures and reconciliation of such measures to GAAP.

$14.4FY18 YTD

© 2018, SYNNEX Corporation© 2018, SYNNEX Corporation

ConcentrixGlobal business services company

Technology SolutionsDistribution, logistics, and integrated solutions

Locations: Americas, Japan, China

Product Categories: IT systems, security, networking equipment, UCC, software, system components & integrated solutions, peripherals

Cloud Strategy Servicing:SMB, mid-market, enterprise, hyperscale computing (Hyve Solutions)

Locations: 40+ countries in 6 continents

Priority Verticals: Healthcare, banking and financial, insurance, technology, automotive

Solutions: Technology-infused, omni-channel customer experience management, marketing optimization, digital, consulting, analytics, back office solutions

~$18BLTM

revenue

30K+tech products

distributed

25K+resellers &

retail customers

400+OEMs &partners

$2B+LTM

revenue

225K+associates

650+clients

70+languages

A Fortune 200 Global Business Process Services Company

LTM is the last 12 months ended Aug. 31, 2018.


Adj. Operating Profit(1)

($M)

$257

$407 $419 $450 $593

2.4%2.9% 3.1% 3.2%

3.5%

FY13 FY14 FY15 FY16 FY17

Adj. OP%(1)

Annual Trended Financial Metrics

(1) Non-GAAP measure. See the Appendix to this presentation for definitions of non-GAAP measures and reconciliation of such measures to GAAP.(2) Free cash flow defined as adjusted EBITDA less CapEx.

Revenue($B )

$10.8 $13.8 $13.3 $14.1

$17.0 5% 28%

-4% 5% 21%


Growth Y/Y

Adj. EBITDA(1)

($M)

$274 $443 $468 $516

$674 2.5%

3.2% 3.5% 3.7% 4.0%


Adj. EBITDA Margin%(1)

Free Cash Flow(2)

($M)

$245

$386 $368 $392

$576



Adj. Operating Profit(1)

($M)

$141 $140 $193

$140 $152 $163

3.6%3.3%

3.6%3.1% 3.1% 3.3%

Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18

Adj. OP% (1)

Quarterly Trended Financial Metrics


Revenue($M )

$3,936 $4,277 $5,312

$4,552 $4,973 $4,907

16% 17%37% 29% 26% 15%


Growth Y/Y

Adj. EBITDA(1)

($M)

$161 $160 $215

$162 $175 $185

4.1%3.7% 4.0%

3.6% 3.5% 3.8%


Adj. EBITDA Margin% (1)

Adj. Earnings Per Share(1)

$2.08 $2.16 $2.79

$2.14 $2.38 $2.57

52%25% 9% 18% 14% 19%


Growth Y/Y


• Best of breed capability in market knowledge, technology, and services• Deep vendor relationships in

technology services

Our Strategic FocusDedicated and skilled teams focused on growing the business

• Leverage Concentrix’ scale• Passionate about adding

value, “customer first”

Technology Solutions

Concentrix

HarvestOptimize CorePlenty of fuel in the tank

• Leverage IP to grow in high-margin verticals• Concentrix proprietary

platforms delivering improved business results

• Relentless focus on core growth, margin expansion and working capital efficiencies• Identify and partner with

winners

Grow

• Linecard expansion beyond traditional adjacent technology products• Identify new profit pools in

cloud, software, integration, and services

Grow Beyond CoreLeverage existing competencies into new markets

• Penetration in BPO markets beyond CRM• Strengthen priority industry

verticals with organic investments and strategic acquisitions

SeedDifferentiationThrough unique and proprietary services and capabilities


Passionate and Committed Management TeamDeep bench with 70+ years of combined experience

Dennis PolkPresident & CEO

16+ years with company, joined in 2002

Past roles at SYNNEX:COO, CFO, SVP Finance

Marshall WittCFO

5+ years with company, joined in 2013

Past roles:15-year tenure with FedEx

Corporation, held progressive financial and

operational roles

Peter LarocquePresident,

North America Technology Solutions

35+ years with company, joined 1984

Past roles at SYNNEX:President of U.S.

Distribution, EVP of Distribution, SVP Sales and

Marketing

Chris CaldwellPresident, Concentrix14+ years with company,

joined 2004Past roles at Concentrix:SVP & GM of Concentrix,

VP Emerging Business and Global Business Development

SYNNEX Technology Solutions


LTM is the last twelve months ended August 31, 2018.(1) Non-GAAP measure. See the Appendix to this presentation for definitions of

non-GAAP measures and reconciliation of such measures to GAAP.

2.4%

2.6% 2.6%2.7%

2.6%

FY14 FY15 FY16 FY17 LTM

Annual Adj. Operating Margin(1)

Quarterly Revenue($M)

$3,458 $3,785 $4,781

$4,049 $4,486 $4,419

13% 16%41% 33% 30% 17%


Growth Y/Y

3.0%2.7% 2.7%

2.4% 2.5% 2.7%


Quarterly Adj. Operating Margin(1)

(% of Rev.)

Technology Solutions Highlights

Annual Revenue($B)

$12.8 $11.9 $12.5 $15.1

$17.7


Adjusted Operating Income(1)

TTM $456M2.5%

FY18 YTD

$13.0FY18 YTDLong-term focus

with targets to sustain above market growth rates


Technology SolutionsGrowth and diversification through organic investments and acquisitions

*LTM is the last 12 months ended Aug. 31, 2018.

• Growth in changing environment

• Investments aligned with market growth areas

• Solid base for next step-up

Multi-Faceted Corporate, Commercial, Consumer,

Cloud, Services Value-Added Distributor

New Age

Electronics

Japan

Westcon-

Comstor

Cloud

SolutionsNew

Consumption

Models

(XaaS)

~$18BLTM

Revenue*

~$5BRevenue

2005 TODAY


(1) IDC Worldwide Black Book: 3rd Platform Edition, June 2018.

(2) IDC Worldwide Unified Communications & Collaboration Forecast, 2018-2022.

(3) IDC, March 2017.

Peripherals(1)

$74BSoftware

(1)

$478B

IT Security(1)

$38B

Technology Solutions’ Worldwide Marketplace

Network

Equipment(1)

$45BUCC

(2)

$36B

IT Systems(3)

$168B

8% CAGR

$120B

$150B

$ 0 $ 15 $ 30 $ 45 $ 60 $ 75 $ 90 $ 105 $ 120 $ 135 $ 150 $ 165

2017

2020


Source: The NPD Group, Inc., U.S. B2B Distributor Tracking Service, based on dollar sales, May 2016- June 2018. Sales are adjusted for 5-wk Jan. 2018 vs. 4-wk Jan. 2017.

2.0%1.4%

2.3%

3.8%

2.6%

5.7%

4.1%4.6%

5.0%

Q2CY16

Q3CY16

Q4CY16

Q1CY17

Q2CY17

Q3CY17

Q4CY17

Q1CY18

Q2CY18

Total U.S. Distribution Revenue Growth YoYQuarterly Revenue % Change

Strength in U.S. Distribution Market Continues9 consecutive quarters of channel growth


SMB29-35%

Public Sector21-25%

Consumer7-13%

Enterprise30-38%

Value-AddDesign Services

Assembly and TestProfessional Services

(UCC, Network, Security, Servers)

SpecialtyNiche – Targeted Markets

Partner Enablement (XaaS, SW, Wholesale, Strategic Procurement)

VolumeSupply Chain Efficiencies

Tech SupportInventory Management

Financing Program(Consumer, Commercial)

Technology Solutions’ Hybrid Structure

Enables partners to leverage our range of solutions to grow their business

• CSPs• DMRs• System

Integrators

• Resellers• VARs• MSPs

ConsumerEnterprise, SMB, Public Sector• Retailers• Nationals• E-Commerce

• Fashion• Military• Broadcast


Technology Solutions is Strategically PositionedStrong Americas’ footprint and rest of the world regions to support our global customers

Westcon-Comstor

10% interest in Westcon-Comstor EMEA and APAC businesses

Technology SolutionsUnited StatesCanadaMexicoLatin AmericaJapanChina


Best-in-Class Market Expertise

Vendor Relationships

Technologies

End-Markets Served

• 400+ enterprise, broadline, retail distribution vendors

• Specialty linecard in security, UCC, networking

• IT Systems• Security • Networking Equipment

• UCC• System Components and

Integrated Solutions

• Peripherals• Software

• SMBs• Retail

• Public Sector• Federal

• Enterprise


Comprehensive Cloud Strategy

Mid-Market + Enterprise Hyperscale ComputingSMB + Mid-MarketEnd-to-end platform, XaaS, subscription-based deployment, based on foundation of IoT solutions

Public cloud

Building out hyperscale datacenters with custom built solutions

Enabling private and hybrid on premise cloud-based architecture

Public + private clouds

• Cloud services• Marketplace• Applications• Community• Infrastructure• Data/analytics• Artificial Intelligence

• Application modernization and containerization

• OpenStack cloud computing platform

• Utility finance• IaaS• Ability to burst to the

public cloud

CLOUDSolvMOBILITYSolv CONVERGESolv Hyve Solutions

• Design, manufacturing, deployment capabilities

• Global reach with worldwide manufacturing


We design, manufacture

and deploy custom

purpose built products for

the world’s largest data

center customers

Worldwide Cloud IT Infrastructure revenue to

reach $82.9 billion in 2022; five-year CAGR 11.2%1

(1) Source: IDC, WW Quarterly Cloud IT Infrastructure Tracker, June 2018.

Servers

Storage

SwitchGlobal reach with

manufacturing sites in

U.S., Europe, Asia

Deploy full-rack solutions at scale worldwide


8.9%8.0% 8.3%

9.0% 9.5%

3 .0%

4 .0%

5 .0%

6 .0%

7 .0%

8 .0%

9 .0%

10 .0 %


Annual Adj. Operating Margin(1)

Quarterly Revenue($M)

$478 $482 $496

$534

$508 $491 $492

39% 43% 22% 7% 6% 2% -1%

$ 44 0

$ 46 0

$ 48 0

$ 50 0

$ 52 0

$ 54 0

$ 56 0

Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18

Growth Y/Y

Quarterly Adj. Operating Margin(1)

7.9% 8.1% 7.8%

12.1%

8.6% 8.5% 8.7%

Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18

Concentrix Highlights

Generated Strong Cash Flow From Operations

Annual Revenue($B)

$1.1 $1.4

$1.6 $2.0 $2.0


Adjusted EBITDA(1)

TTM $262M

8.6%FY18 YTD

$1.5FY18 YTD

LTM is the last twelve months ended Aug 31, 2018.(1) Non-GAAP measure. See the Appendix to this presentation for definitions of

non-GAAP measures and reconciliation of such measures to GAAP.


SYNNEX acquires

BSA Sales

Concentrix acquires

Link2Support

e4e Teleservices, Encover and Aspire

are acquired

gem (Belfast) is acquired

10,000 Staff 55,000 Staff50 Staff

7,500 Staff

2004

2015

2014

2013

2012

2011

2010

2007

2006

2005

1,800 Staff

2008

Intelligent Outsourcing and

Occidental Business Services

are acquired

2009

A Rich Heritage of Investments with More to Come in the FutureOur strategy has always been to invest in what delivers high value

IBM CRM Industry Vertical Business is

acquired

Concentrix is acquired and

integrated with BSA to make the new

ConcentrixMinacs is acquired

2016

110,000 Staff

Ultimate CSR and Tigerspike are

acquired

2017

Convergys is acquired

225,000 Staff

2018


Concentrix at a Glance

Source: Gartner March 2017 Magic Quadrant for Customer Management Contact Center BPO, Worldwide; IAOP GO 100, 9th time; Top 5 Ranking. based on 2017 Revenue. Revenue per company filings and press releases; Voted Best

Place to Work in several cities worldwide in 2013-2017.

Top 2global business services company

Presence in

6 continents

Unparalleled Ability to deliver high-value services globally

Deeper industry and domain knowledge

Exceptional technology, digital and analytics expertise

650+ clients

• 50 unicorns / disruptors

• 80+ Fortune 500 clients

40+countries

12+years average client tenure

80+industry awards

70+languages

225k+staff

Robustglobal footprint

6k+ credentialed professionals


Banking & Financial Services

TechnologyInsurance AutomotiveHealthcare

Concentrix Industry Verticals and Service Offerings

Energy & Public Sector

Retail & e-commerce

Media & Communications

Travel, Transportation

& Tourism

Consumer Electronics

Technology Platforms

Analytics Consulting / Transformation

Digital Customer Engagement


Concentrix Services Go Beyond the Traditional CCO Model Strategy

CX / UI

Analytics and Insights

RPA, Machine Learning, AI

Optimization

Emerging Technologies

Systems Integration

Delivering next generation CX to meet customers in the future

Evolving models for talent, recruitment and labor of the future

Digital products and services to enable transformation

Optimized process and business models for speed and efficiency


Improved Business OutcomesCu

stom

er Li

fecyc

le

Man

agem

ent Custom

er

Engagement


Gartner Positions Concentrix Above All Others

Gartner Magic QuadrantHighest in the ability to execute and

most forward in completeness of vision


Everest Group Recognizes Us as a PEAK Leader

Fourth time as a leader

A star performer based on movement

High buyer satisfaction scores

A leader in market impact



Distinguished as a Clear Top 2 Leader in the CRM BPO Market

2017 CRM BPO Market Share by Revenue(1)

($M)

(1) Compiled based on public filings & sources and most recent fiscal year available.(2) Included Pro forma for Intelenet acquisition.

(3) Converted at a 1.176 EURUSD rate as of 07/09/18.

Atento

Transcosmos

Alorica

Concentrix + Convergys

Telepeformance (2) (3)



Convergys Acquisition Strategic RationaleDelivering significant long-term shareholder value

Strengthens position in strategic industry verticals

Significantly expands strategic client base and geographical footprint

Increases Concentrix’ scale and diversifies revenue base

Enhances SYNNEX’ position as a leading business process services company

Delivers highly compelling financial attributes


Transaction SummaryAcquisition of Convergys closed on October 5, 2018

• SYNNEX acquired Convergys for ~$2.2 billion, which included:• $1.2 billion in total cash or $13.25 per

share• 11.51 million shares of SYNNEX stock or

0.1263 SYNNEX common shares for each share of Convergys common stock

• In addition, $270 million of net debt on the balance sheet assumed

Transaction Consideration

Financial Impact Financing

• Expect to exceed $150 million of total cost synergies over a 3-year period post transaction integration:• Expect an accelerated pace of $75 million

in the first year• Expect non-GAAP EPS accretion(1) :

• Year-1: mid-to-high single-digits % (previously mid single-digits)

• Year-2: double-digits % • Expect adjusted ROIC to meet or exceed

our requirements

• Secured $1.8 billion of debt financing for this transaction

• Total debt to adjusted EBITDA of ~3.0x at close, and expect return to historical levels of ~2.5x or less within 18-24 months

SYNNEX’ Concentrix division becomes the premier global customer engagement services company

.(1) After cost synergies and before one-time costs.


Combination of Concentrix and Convergys

~$4.7B(1)

revenue

650+clients

225,000+employees

40+countries

70+languages Higher Value Capabilities

• Leverage combined company’s higher value capabilities across new and existing client base

• Operational excellence, technology, automation, and process expertise

Global Footprint• Combined geographic footprint is one of the most robust in the industry• Combined base stronger in Asia Pacific, Latin American, Central America,

Eastern Europe

Vertical Expertise• Convergys further enhances domain expertise in 5 key strategic verticals –

Banking & Financial Services, Healthcare, Technology, Automotive, Insurance

Customer Base• Combined client base of 650+ of the best brands• Fortune 1000 & high growth market disruptor companies

6,000+credentialed professionals

(1) Based on Convergys’ trailing twelve months $2.7B in revenue as of June 30, 2018.


4.5% CAGR

Sources: (1) IDC Worldwide Black Book: 3rd Platform Edition, June 2018

(2) Worldwide and U.S. Business Process Outsourcing Services Forecast, 2018-2022; Back Office BPO includes the following functions - Finance and Accounting BPO, Human Resource BPO,

Human Resources Processing, and Procurement BPO (3) IDC Worldwide Services Forecast, 2018-2022

(4) HfS(5) IDC Worldwide Digital Strategy and Agency Services Forecast, Doc#US42796517

Marketplace Opportunity Larger Than Just CRM

Customer Care BPO(2)

IoT(1)

$673B+

IT Consulting(3)

$36B+

Artificial Intelligence(1)

$12B+

Big Data & Analytics(1)

$147B+

RPA(4)

$443M+Back Office

BPO(2)

$120B+

Digital Strategy Services(5)

$64B+

$71B

$81B

$ 0 $ 15 $ 30 $ 45 $ 60 $ 75 $ 90

2017

2020

SYNNEX: Focused on the Future


Top Market Leaders in Both Business Groups

2017 Americas Distribution Market Share by Revenue(1)

ScanSource

ArrowEnterpriseSolutions

SYNNEXTechnologySolutions

TechData

Ingram

(1) Based on public filings and in some cases estimates based on most recent fiscal year available.(2) Included Pro forma for Intelenet acquisition.

(3) Converted at a 1.176 EURUSD rate as of 07/09/18.

2017 CRM BPO Market Share by Revenue(1)

Atento

Transcosmos

Alorica

Concentrix + Convergys

Telepeformance(2) (3)


Capital AllocationTop Priorities

As of Q3 FY18

Strategic M&As

Investments in New Markets

Investments in Core Business

Shareholder Returns

Dividends $0.35/share paid Oct 2018 • 4 consecutive years of increasing dividends

Share Repurchase 3-Year Program 2017-2020, $300M Authorized • FY18 YTD repurchased $56M of stock, $244M remaining in the program

CapEx FY18 YTD $75M • Disciplined capex spend

M&A Convergys acquisition closed in Oct 2018

• Completed Westcon-Comstor North America integration in June 2018• ROIC well above our WACC

Leverage $3.7B in liquidity between cash and credit facilities, debt/cap. ratio 43.9%

• Debt / Adj. EBITDA ~3.0x at closing of Convergys acquisition• Expect return to ~2.5x or less within 18-24 months


Consistent Track Record of Disciplined Acquisition Execution and Integration

Strong track record and continued commitment to deleverage

Committed to remain at or below historical leverage level of 2.5x

Total Debt / LTM Adj. EBITDA(1)


1.2x

2.6x 2.8x

2.6x

2.2x

1.8x

1.5x 1.6x 1.6x

1.5x 1.5x 1.7x

1.9x 1.8x 1.8x 1.7x

2.9x

2.6x 2.5x 2.5x

Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18

Completed IBM CRM acquisition

Completed Minacs acquisition

Completed Westcon-Comstor acquisition

Completed Convergys acquisition ~3.0x


Focused on the Future

Growingand large TAM

Provencapital structure management

Scaledindustry leader with ~$20B in revenue and ~230K employees

StrongM&A execution that generates significant value

Diversified revenue and profitability

Distinguished leadership team with deep industry experience

Compellingfinancial profile with industry-leading margins


Emerging Technologies –Third platform/IoT services and Concentrix proprietary platforms

Adjacent Market Growth –Hyve Solutions, BPO beyond customer care

Continued Growth and Margin Expansion

Sustainable Margin Expansion

Continued mix shift to higher margin technology platforms and services

Deeper penetration of Concentrix in priority high margin verticals

Leverage scale in Technology Solutions and Concentrix to drive more efficiency

Core organic growth beyond market growth in Technology Solutions and Concentrix focused verticals

Revenue Growth Platform

Continued optimization of core businesses

Mary LaiInvestor RelationsSYNNEX Corporation44201 Nobel Drive,Fremont, CA 94538

[email protected]

IR website: ir.synnex.com

Thank You

Appendix


Non-GAAP Financial MeasuresUse of Non-GAAP Financial Measures

To supplement the financial results presented in accordance with GAAP, SYNNEX uses Revenue in constant currency, adjusted selling, general and administrative expenses, adjusted operating income, adjusted operating margin, adjusted earnings before interest, taxes, depreciation and amortization, non-GAAP net income attributable to SYNNEX Corporation, non-GAAP diluted earnings per share (“EPS), and adjusted return on invested capital, which are non-GAAP financial measures that exclude the amortization of intangible assets, restructuring costs, acquisition-related and integration expenses and the related tax effects thereon. In the fiscal year 2018, non-GAAP net income and non-GAAP diluted earnings per share also exclude the impact of a provisional adjustment relating to the enactment of the Tax Cuts and Jobs Act of 2017. This adjustment includes an estimated transition tax on accumulated overseas profits and the estimated remeasurement of deferred tax assets and liabilities to the new U.S. tax rate. These estimates may be impacted by new guidance issued by regulators, additional information obtained related to earnings and profits in foreign jurisdictions and the impact of our financial position as of the measurement date of November 30, 2018. SYNNEX expects the accounting for the tax effects of the Tax Cuts and Jobs Act will be completed during the one-year measurement period.

SYNNEX management uses non-GAAP financial measures internally to understand, manage and evaluate the business, to establish operational goals, and in some cases for measuring performance for compensation purposes. These non-GAAP measures are intended to provide investors with an understanding of SYNNEX’ operational results and trends that more readily enable investors to analyze SYNNEX' base financial and operating performance and to facilitate period-to-period comparisons and analysis of operational trends, as well as for planning and forecasting in future periods. Management believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. As these non-GAAP measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP. A reconciliation of SYNNEX’ non-GAAP financial information to GAAP is set forth in the following slides.

Definition of Non-GAAP Financial MeasuresNon-GAAP financial measures included in this presentation are:• Adjusted operating income, which is operating income as adjusted to exclude acquisition-related and integration expenses, restructuring costs and the amortization of intangible assets.• Adjusted operating margin, which is Adjusted operating income as defined above, divided by Revenue.• Adjusted EBITDA, which is Adjusted operating income as defined above, plus depreciation.• Adjusted EBITDA margin, which is Adjusted EBITDA as defined above, divided by Revenue.• Non-GAAP diluted EPS, which is diluted EPS excluding the per share, tax effected impact of (i) acquisition-related and integration expenses, (ii) restructuring costs, and (iii) amortization of intangible assets,

and the per share amount of the net impact of the adjustments related to the Tax Cuts and Jobs Act of 2017.


Reconciliation of GAAP to Non-GAAP Financial Measures(Currency in thousands)(Amounts may not add due to rounding)

Q3 YTD2008 2013 2014 2015 2016 2017 2018

ConsolidatedRevenue 10,285,507$ 10,845,164$ 13,839,590$ 13,338,397$ 14,061,837$ 17,045,700$ 14,431,562$

Operating Income 240,828$ 308,507$ 354,552$ 379,596$ 508,965$ 352,766$ Acquisition-related and integration expenses 8,394 43,036 10,109 10,393 4,781 23,419 Restructuring costs - - - 4,255 - - Amortization of intangibles 7,953 55,161 54,756 55,490 79,181 79,183

Adjusted operating income 257,175$ 406,704$ 419,417$ 449,734$ 592,927$ 455,368$ Depreciation 16,509 36,538 48,754 65,803 80,705 67,031

Adjusted EBITDA 273,684$ 443,242$ 468,171$ 515,537$ 673,632$ 522,399$

Operating margin 2.22% 2.23% 2.66% 2.70% 2.99% 2.44%Adjusted operating margin 2.37% 2.94% 3.14% 3.20% 3.48% 3.16%Adjusted EBITDA margin 2.52% 3.20% 3.51% 3.67% 3.95% 3.62%

Fiscal year ended November 30,


Reconciliation of GAAP to Non-GAAP Financial Measures(Continued)

Q3 YTD2013 2014 2015 2016 2017 2018

Technology SolutionsRevenue 10,666,215$ 12,755,514$ 11,936,660$ 12,490,718$ 15,071,185$ 12,954,337$

Operating income 237,290$ 305,499$ 302,950$ 315,485$ 394,320$ 283,351$ Acquisition-related and integration expenses - - - - 3,724 6,349 Amortization of intangibles 3,912 3,538 2,630 2,657 14,929 37,802

Adjusted operating income 241,202$ 309,037$ 305,580$ 318,142$ 412,973$ 327,502$

GAAP operating margin 2.22% 2.40% 2.54% 2.53% 2.62% 2.19%Adjusted operating margin 2.26% 2.42% 2.56% 2.55% 2.74% 2.53%

ConcentrixRevenue 189,463$ 1,096,214$ 1,416,670$ 1,587,736$ 1,990,180$ 1,490,865$

Operating income 3,249$ 2,455$ 51,127$ 63,877$ 114,623$ 69,415$ Acquisition-related and integration expenses 8,394 43,036 10,109 10,393 1,057 17,070 Restructuring costs - - - 4,255 - - Amortization of intangibles 4,041 51,623 52,126 52,833 64,252 41,381

Adjusted operating income 15,684$ 97,114$ 113,362$ 131,358$ 179,932$ 127,866$

GAAP operating margin 1.71% 0.22% 3.61% 4.02% 5.76% 4.66%Adjusted operating margin 8.28% 8.86% 8.00% 8.27% 9.04% 8.58%

Fiscal year ended November 30,

(Currency in thousands)(Amounts may not add due to rounding)



Q2 Q3 Q4 Q1 Q2 Q3 LTM2017 2017 2017 2018 2018 2018 2018*

ConsolidatedRevenue 3,936,268$ 4,276,686$ 5,311,877$ 4,552,370$ 4,972,583$ 4,906,610$ 19,743,440$

Operating Income 125,130$ 122,216$ 159,860$ 111,932$ 123,938$ 116,896$ 512,626$

Acquisition-related and integration expenses - 1,026 3,144 1,805 2,046 19,568 26,563

Amortization of intangibles 16,069 16,688 29,937 26,710 26,276 26,197 109,120

Adjusted operating income 141,199$ 139,930$ 192,941$ 140,447$ 152,260$ 162,661$ 648,309$

Depreciation 19,413 20,185 21,647 21,924 22,596 22,511 88,678

Adjusted EBITDA 160,612$ 160,115$ 214,588$ 162,371$ 174,856$ 185,172$ 736,987$

GAAP Operating margin 3.18% 2.86% 3.01% 2.46% 2.49% 2.38% 2.60%

Adjusted operating margin 3.59% 3.27% 3.63% 3.09% 3.06% 3.32% 3.28%

Adjusted EBITDA margin 4.08% 3.74% 4.04% 3.57% 3.52% 3.77% 3.73%


*LTM 2018 is last twelve months ended August 31, 2018.



Q1 Q2 Q3 Q4 Q1 Q2 Q3 LTM2017 2017 2017 2017 2018 2018 2018 2018*

Technology SolutionsRevenue 3,046,696$ 3,458,320$ 3,784,678$ 4,781,491$ 4,048,819$ 4,486,408$ 4,419,109 17,735,827$

Operating income 80,421$ 101,705$ 99,968$ 112,226$ 82,269$ 96,254$ 104,828 395,577$

Acquisition-related and integration expenses - - 705 3,019 1,805 2,046 2,498 9,368

Amortization of intangibles 654 651 656 12,968 12,816 12,462 12,524 50,770

Adjusted operating income 81,075$ 102,356$ 101,329$ 128,213$ 96,890$ 110,762$ 119,850$ 455,715$

Depreciation 3,476 3,402 3,530 4,703 4,834 5,010 5,212 19,759$

Adjusted EBITDA 84,551$ 105,758$ 104,859$ 132,916$ 101,724$ 115,772$ 125,062$ 475,474$

GAAP operating margin 2.64% 2.94% 2.64% 2.35% 2.03% 2.15% 2.37% 2.23%

Adjusted operating margin 2.66% 2.96% 2.68% 2.68% 2.39% 2.47% 2.71% 2.57%

ConcentrixRevenue 478,164$ 481,679$ 495,974$ 534,363$ 507,737$ 491,246$ 491,882$ 2,025,228$

Operating income 21,316$ 23,425$ 22,248$ 47,636$ 29,663$ 27,684$ 12,068$ 117,051$

Acquisition-related and integration expenses 611 - 321 125 - - 17,070 17,195

Amortization of intangibles 15,833 15,418 16,032 16,969 13,894 13,814 13,673 58,350

Adjusted operating income 37,760$ 38,843$ 38,601$ 64,730$ 43,557$ 41,498$ 42,811$ 192,596$

Depreciation 16,007 16,011 16,655 16,944 17,090 17,586 17,299 68,919

Adjusted EBITDA 53,767$ 54,854$ 55,256$ 81,674$ 60,647$ 59,084$ 60,110$ 261,515$

GAAP operating margin 4.46% 4.86% 4.49% 8.91% 5.84% 5.64% 2.45% 5.78%

Adjusted operating margin 7.90% 8.06% 7.78% 12.11% 8.58% 8.45% 8.70% 9.51%





Q2 Q3 Q4 Q1 Q2 Q3 LTM2017 2017 2017 2018 2018 2018 2018*

Diluted EPS(1) 1.83$ 1.87$ 2.26$ 0.61$ 2.34$ 1.74$ 6.95$ Acquisition-related and other integration expenses (benefit) - 0.03 0.08 0.04 (0.01) 0.49 0.60 Amortization of intangibles 0.40 0.42 0.74 0.66 0.66 0.66 2.72 Income taxes related to the above(2) (0.15) (0.15) (0.29) (0.21) (0.18) (0.32) (1.00) U.S. tax reform adjustment - - - 1.03 (0.42) - 0.61

Non-GAAP Diluted EPS 2.08$ 2.16$ 2.79$ 2.14$ 2.38$ 2.57$ 9.88$

(1) Diluted EPS for LTM 2018 represents the sum of the Diluted EPS of each of the last four quarters ended on August 31, 2018.

(2) The tax effect of the non-GAAP adjustments was calculated using the effective year-to date tax rate during the respective fiscal periods. The effective tax rate for fiscal year 2018 excludes the impact of the transition tax on accumulated overseas profits and the remeasurement of deferred tax assets and liabilities to the new U.S. tax rate related to the enactment of the Tax Cuts and Jobs Act of 2017.




Calculation of Financial MetricsLTM Q2 LTM Q3 LTM Q4 LTM Q1 LTM Q2 LTM Q3 LTM Q4 LTM Q1 LTM Q2 LTM Q3

2016* 2016* 2016* 2017* 2017* 2017* 2017* 2018* 2018* 2018*

ConsolidatedRevenue 13,387,275$ 13,724,552$ 14,061,837$ 14,457,084$ 15,013,853$ 15,620,725$ 17,045,700$ 18,077,201$ 19,113,516$ 19,743,440$

Operating income 337,176 353,919 379,596 405,729 455,553 479,747 508,965 519,138 517,946 512,626

Acquisition-related and integration expenses 5,647 5,966 10,393 10,002 9,434 8,102 4,781 5,975 8,021 26,563 Restructuring costs 3,997 4,255 4,255 4,255 258 - - - - - Amortization of intangibles 50,199 49,494 55,490 60,273 64,548 68,225 79,181 89,404 99,611 109,120

Adjusted operating income 397,019$ 413,634$ 449,734$ 480,259$ 529,793$ 556,074$ 592,927$ 614,517$ 625,578$ 648,309$ Depreciation 57,648 59,998 65,803 70,789 73,502 78,312 80,705 83,169 86,352 88,678

Adjusted EBITDA 454,667$ 473,632$ 515,537$ 551,048$ 603,295$ 634,386$ 673,632$ 697,686$ 711,930$ 736,987$

Total Borrow ings, excluding book overdraft $ 704,219 $ 806,025 $ 963,584 $ 1,006,485 $ 1,087,703 $ 1,049,605 $ 1,937,253 $ 1,802,666 $ 1,810,926 $ 1,821,617

Total Debt/LTM EBITDA 1.5x 1.7x 1.9x 1.8x 1.8x 1.7x 2.9x 2.6x 2.5x 2.5x

LTM Q4 LTM Q1 LTM Q2 LTM Q3 LTM Q4 LTM Q1 LTM Q2 LTM Q3 LTM Q4 LTM Q12013* 2014* 2014* 2014* 2014* 2015* 2015* 2015* 2015* 2016*

ConsolidatedRevenue 10,845,164$ 11,411,309$ 12,273,483$ 13,074,772$ 13,839,590$ 14,015,064$ 13,815,314$ 13,612,649$ 13,338,397$ 13,261,561$

Operating income 240,828 246,838 262,957 278,260 308,507 325,504 346,782 349,259 354,552 351,231

Acquisition-related and integration expenses 8,394 17,302 33,043 40,379 43,036 38,122 24,419 16,526 10,109 7,118 Restructuring costs - - - - - - - - - - Amortization of intangibles 7,952 11,696 24,890 40,458 55,161 64,057 62,353 58,505 54,756 51,867

Adjusted operating income 257,174$ 275,836$ 320,891$ 359,098$ 406,705$ 427,683$ 433,554$ 424,290$ 419,417$ 410,216$ Depreciation 16,509 17,891 23,096 29,349 36,538 42,052 43,962 46,673 48,754 52,057

Adjusted EBITDA 273,683$ 293,727$ 343,987$ 388,447$ 443,243$ 469,735$ 477,516$ 470,963$ 468,171$ 462,273$

Total Borrow ings, excluding book overdraft $ 317,928 $ 762,707 $ 976,349 $ 1,000,802 $ 980,503 $ 839,897 $ 735,728 $ 737,511 $ 730,891 $ 704,727

Total Debt/LTM EBITDA 1.2x 2.6x 2.8x 2.6x 2.2x 1.8x 1.5x 1.6x 1.6x 1.5x

Currency in thousands)(Amounts may not add due to rounding)

*LTM is last twelve months ended the respective fiscal period.


Calculation of Financial Metrics(Continued)

As of August 31, 2018Debt to CapitalizationTotal borrowings, excluding book overdraft (a) 1,821,617$

Total equity (b) 2,327,362

Debt to capitalization (a) / ((a) + (b)) 43.9%

Currency in thousands)(Amounts may not add due to rounding)

synnex investor presentation nov27 2018 · 2018-12-04 · form 10-q, for information on risk...

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