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SYNNEX (SNX) Q4 Earnings & Revenues Top Estimates, Up Y/Y

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SYNNEX (SNX - Free Report) delivered stellar fourth-quarter fiscal 2020 results, wherein the top and bottom lines surpassed the respective Zacks Consensus Estimate and marked year-over-year improvements as well. The company’s fiscal fourth-quarter non-GAAP earnings of $5.21 per share topped the Zacks Consensus Estimate of $3.83 and came in higher than the year-ago quarter’s $4.26.

Revenues grew to $7.41 billion from the year-earlier quarter’s $6.58 billion. The top-line figure also beat the Zacks Consensus Estimate of $6.57 billion.

Quarterly Details

Gross profit grew 4% year over year to $823 million, while margin contracted 100 basis points (bps) to 11.1%. Total selling, general & administrative (SG&A) expenses declined to $503 million from the year-ago quarter’s $526 million, mainly due to continued Concentrix synergies associated to the Convergys acquisition and lower Concentrix variable operating expenses.

In the reported quarter, non-GAAP operating income was up 14.7% to $388.2 million. Also, non-GAAP operating margin expanded 10 bps on a year-over-year basis to 5.24%.

Segment wise, SYNNEX’s Technology Solutions revenues increased 13.9% year on year to $6.1 billion. Concentrix business revenues climbed 7.3% year over year to $1.3 billion.

Non-GAAP operating income for Technology Solutions was $216.2 million, up 21.6% from the prior-year quarter. For the Concentrix segment, non-GAAP operating income was $172 million, up 7% year on year.

SYNNEX ended the fiscal fourth quarter with cash and cash equivalents of $1.41 billion compared with the $1.45 billion witnessed at the end of the fiscal third quarter. During the fiscal fourth quarter, the company generated $297 million of cash flow from operational activities.

Additionally, the company announced that its board of directors reinstated a quarterly cash dividend of 20 cents per share. The newly-approved dividend will be payable on Jan 29 to shareholders of record date as of Jan 22, 2021.

Guidance

For the first quarter of fiscal 2021, revenues are expected between $4.5 billion and $4.8 billion.

Non-GAAP net income is estimated in the range of $81-$91.5 million. Moreover, the company projects non-GAAP earnings between $1.55 and $1.75 per share.

Further, the company stated that it has completed the previous announcement of splitting its Concentrix business into a separate publicly-traded company on Dec 1, 2020. With this separation, SYNNEX is now left with its Technology Solution business. The separated business has been named Concentrix Corporation (CNXC - Free Report) . Management believes this strategic action would help add shareholder value and enhance the company's competitive edge.

Zacks Rank & Key Picks

SYNNEX currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader technology sector include Dell Technologies (DELL - Free Report) and NetApp (NTAP - Free Report) , flaunting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Dell and NetApp is currently pegged at 12% and 11.9%, respectively.

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