SYNNEX Corp. Reports Operating Results (10-Q)
Synnex Corp has a market cap of $1.41 billion; its shares were traded at around $37.81 with a P/E ratio of 8.9 and P/S ratio of 0.1. Synnex Corp had an annual average earning growth of 16.1% over the past 5 years.
Highlight of Business Operations:We combine our core strengths in distribution with our BPO services to help our customers achieve greater efficiencies in time to market, cost minimization, real-time linkages in the supply chain and after-market product support. We distribute more than 25,000 technology products (as measured by SKUs) from more than 200 IT and CE OEM suppliers to more than 20,000 resellers, system integrators, and retailers throughout the United States, Canada, Japan and Mexico. As of February 29, 2012, we had over 10,000 full-time and temporary employees worldwide. From a geographic perspective, approximately 86% and 85% of our total revenue was from North America for the three months ended February 29, 2012 and February 28, 2011, respectively.
During the three months ended February 29, 2012, our revenue in the distribution segment decreased compared to the three months ended February 28, 2011 primarily due to the effects of transitioning a certain customer contract from a traditional full service distribution relationship that had existed, to a fee-for-service basis starting in the fourth quarter of fiscal year 2011. The impact of this change resulted in approximately $150.0 million lower revenue recorded during the three months ended February 29, 2012. In comparison to the three months ended February 28, 2011, our sales of systems and system components increased by 7% and 6%, respectively, our sales of peripherals, networking and software decreased by 10%, 11% and 6%, respectively. The change in the customer contract to fee-for-service basis resulted in lower revenue recorded in all product categories and was the primary cause for the decrease in revenue recorded for software and networking sales. The demand environment in North America for IT products was stable during the first quarter of 2012.
Our income from operations before non-operating items, income taxes and noncontrolling interest as a percentage of revenue increased to 2.60% in the three months ended February 29, 2012 from 2.03% in the three months ended February 28,
Until July 31, 2010, we worked with MiTAC International on OEM outsourcing and jointly marketed MiTAC International s design and electronic manufacturing services and its contract assembly capabilities. This relationship enabled us to build relationships with MiTAC International s customers. On July 31, 2010, MiTAC International purchased certain assets related to our contract assembly business, including inventory and customer contracts, primarily related to customers then being jointly serviced by MiTAC International and us. As part of this transaction, we provided MiTAC International certain transition services for the business for a monthly fee over a period of twelve months. The sales agreement also included earn-out and profit sharing provisions, which were based on operating performance metrics achieved over twelve to eighteen months from the closing date for the defined customers included in this transaction. During the three months ended February 29, 2012 and February 28, 2011, we recorded $0.9 million and $1.5 million, respectively, for service fees earned and reimbursements for facilities and overhead costs.
We purchased inventories, from MiTAC International and its affiliates totaling $0.2 million and $1.4 million during the three months ended February 29, 2012 and February 28, 2011, respectively. Our sales to MiTAC International and its affiliates during the three months ended February 29, 2012 and February 28, 2011 totaled $1.1 million and $0.3 million, respectively.
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