A Technology Solutions and Business Services Company … · Facts About SYNNEX 2017 Ranked No. 198...
Transcript of A Technology Solutions and Business Services Company … · Facts About SYNNEX 2017 Ranked No. 198...
A Technology Solutions and
Business Services Company
Raymond James Technology Investors Conference
December 5, 2017
1
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; shareholder return; our acquisition of the Westcon-
Comstor North America and Latin America businesses and minority investment in Westcon-Comstor
EMEA and APAC businesses, including the business and financial impact thereof and additional revenue;
TAM and CAGR of IT security, network infrastructure and UCC markets for each year through 2020 and
$10 billion plus of incremental TAM; the complementary market enterprise and operations of SYNNEX and
the acquired businesses; the business and financial impact of our acquisition of Tigerspike; margins;
revenues; technology trends and IT market growth; core CRM and BPO market disruptors, trends and
CAGR; Concentrix strategic focus and double digit adjusted operating margin in FY18; our product and
service features and capabilities; and our financial goals.
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.
© 2017, SYNNEX Corporation. All rights reserved. 2
Facts About SYNNEX
2017
Ranked
No. 1982007, Ranked
No. 360
Consecutive,
Profitable
Quarters!
5-Year
CAGR 6.2%
CELEBRATING
121as of August 31, 2017
LTM Adj. Operating Margin 3.56%
2016REVENUE
>$14 B
>110,000ASSOCIATES
NYSE: SNX
© 2017, SYNNEX Corporation. All rights reserved.
Operate
throughout
North and South
America, Asia-
Pacific and
Europe.
3
Global Leader in Magic Quadrant
Concentrix Top 5 Global CRM Business Services
Revenue Growth ($M) Adjusted Operating Margin(1)
LTM is the last twelve months ended August 31, 2017.
(1) Non-GAAP Measure. See the Appendix to this presentation for Definitions of
Non-GAAP Measures and reconciliation of such measures to GAAP.
(2) Over $17B current annual revenue run rate
Strong Performance Driven By Effective Pursuit
of Profitable Initiatives In Areas of Growth
$10,845
$13,840 $13,338$14,062
$15,621
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
2013 2014 2015 2016 LTM 2017
2.37%
2.94%3.14% 3.20%
3.56%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
2013 2014 2015 2016 LTM 2017
© 2017, SYNNEX Corporation. All rights reserved. 4
Non-GAAP Diluted EPS(1)
LTM is the last twelve months ended August 31, 2017.
(1) Non-GAAP Measure. See the Appendix to this presentation for Definitions of
Non-GAAP Measures and reconciliation of such measures to GAAP.
$4.28
$6.16 $6.28
$7.04
$8.63
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$10.00
2013 2014 2015 2016 LTM 2017
© 2017, SYNNEX Corporation. All rights reserved. 5
Five Year CAGR 2012-LTM 2017 of 16.1%
Non-GAAP EPS Growth Rate of 16% exceeds
Revenue Growth Rate of 8.7%
Efficient Deployment of
Technology and CE
Products and Services
through Volume and Value-
Add Distribution
Deliver High-Value
Business Services and
Solutions Through Digital
and Enabling Technologies
for the Customer
Relationship Lifecycle
All End Markets, including
Public Sector, Corporate &
Enterprise, SMB and
Consumer through Value
Added Resellers and
Retailers
The World’s Largest Data
Center Customers
Web 2.0/Social Media,
Finance, Entertainment
20,000+ Reseller and Retail Customers
Hyperscale Factories in the US and UK
A new paradigm for scale computing, with
purpose-built, large scale data center solutions
Focused Footprint in the US, Canada and Japan
Represent over 300 of the World’s Leading IT and CE
Manufacturers
5 Continents
40+ Languages
SYNNEX Today
Revenue $13.7B* Adjusted Operating Margin (1) 2.76%*
Over $15B current annual revenue run rate
Revenue $1,956M* Adjusted Operating
Margin (1) 9.10%*
*Represents the last twelve months ended August 31, 2017. (1) Non-GAAP Measure. See the Appendix to this
presentation for Definitions of Non-GAAP Measures and reconciliation of such measures to GAAP.
Single mgmt. platform
including staging,
integration, 3PL,
deployment and resource
provisioning for UCC,
Network and Security
Services
Global customers
leveraging Westcon-
Comstor brand combined
with SMB, Corporate,
Enterprise and System
Integrators
10,000+ Reseller Customers
Focused Footprint in North & Latin America
SYNNEX IT Distribution
100,000+ Associates Worldwide
Among Top 5 Global Business Services Companies
Priority Verticals: Healthcare
and Pharmaceuticals, Banking
and Financial Services,
Insurance, Consumer
Electronics and Technology,
and Automotive
Design and Deliver Custom,
Purpose-Built Servers,
Storage, Switches
Efficient Design, Large Scale
and Worldwide Deployment
WHAT WE LOOK LIKE
WHO WE SERVE
WHAT WE DO
Represent over 130 of the World’s Leading Security, UCC and Networking Manufacturers
6
SYNNEX Technology
Solutions
© 2017, SYNNEX Corporation. All rights reserved. 7
Revenue Growth ($M) Adjusted Operating Margin(1)
$10,666
$12,756$11,937
$12,491
$13,680
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
2013 2014 2015 2016 LTM 2017
2.26%2.42%
2.56% 2.55%
2.76%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
2013 2014 2015 2016 LTM 2017
Higher Margin Investments in SYNNEX Cloud Solutions and Other
Strategic Solutions Generating Revenue and Margin Expansion
LTM is the last twelve months ended August 31, 2017.
(1) Non-GAAP Measure. See the Appendix to this presentation for Definitions of
Non-GAAP Measures and reconciliation of such measures to GAAP.
(2) Over $15B current annual revenue run rate
© 2017, SYNNEX Corporation. All rights reserved. 8
Technology Solutions
Business
Sector
Resellers
© 2017, SYNNEX Corporation. All rights reserved.
VALUE-ADD
Design Services
Assembly & Test
Professional Services
SPECIALTY
Niche – Targeted Markets
Partner Enablement
VOLUME
Supply Chain Efficiencies
Tech Support
Inventory Management
Financing Program
SMB35-40%
Consumers22-25%
Public Sector20-25%
Enterprise25-27%
Technology Solutions: over $15 Billion Business
9
End-markets revenue
breakdown does not
include data from
Westcon-Comstor
© 2017, SYNNEX Corporation. All rights reserved.
SYNNEX’ Comprehensive Cloud Strategy
ENTERPRISE HYPERSCALECOMPUTING
SMALL-TO-MEDIUM BUSINESSES
End-to-end Platform, XaaS, Subscription-Based
Deployment into SMB
Building out the Hyperscale
Datacenter with Custom Built,
Energy Efficient Solutions
Enabling Private and
Hybrid on Premise
Cloud-Based Architecture
10
Marketplace
Community
Applications
InfrastructureElectronic Software
Download
Ability to Burst to
the Public Cloud
OpenStack Cloud
Computing Platform
IaaS Utility Finance
Open Compute Project
High-Performance Computing
Design & Integration Capabilities
SYNNEX’ Acquisition of Westcon-Comstor Americas Business
Positions SYNNEX as a leader in the security and communications market
11
Westcon-Comstor Americas Overview
Note: Breakdown based on Westcon FY2017 revenue.
Security Networking UCC
48%
32%
15%
6%
Other
UCC
Cisco
Security
77%
23%
North America
Latin America
Segment Breakdown by Revenue
Select Technology Vendors
~$2.2BRevenue
130+Vendors
10,000+Customers
14Countries
~1,400Employees
12
Addressing Attractive Markets
IT Security
Worldwide IT Security Market
$36 $39
$42 $45
$49
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
2016 2017 2018 2019 2020
($B)
$36BTAM
Network Infrastructure UCC
Worldwide Network
Infrastructure Market
$41BTAM
$41 $42
$43 $45 $46
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
2016 2017 2018 2019 2020
($B)
Worldwide UCC Market
$30BTAM
$30
$34
$38
$42
$46
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
2016 2017 2018 2019 2020
($B)
Adds $10B+ of Incremental Distribution TAM to SYNNEX
Source: IDC research. Worldwide IT Security Forecast, Mar 2017.
Worldwide Enterprise Network Infrastructure Forecast, Sep 2016.
Worldwide Unified Communications & Collaboration Forecast, May 2017. 13
Security
More than 300 vendors in enterprise,
broadline, and retail distribution
VENDOR RELATIONSHIPS
TECHNOLOGIES
END MARKETS SERVED
Specialty line card in security,
UCC, and networking
Federal
SMB
Public Sector
Retail
Enterprise Enterprise
Global Service Providers
Network UCC
Server, Storage
System Components
PC, Printer, Peripheral
Security, Networking, UCC
Highly Complementary Market Expertise
14
© 2017, SYNNEX Corporation. All rights reserved. 15
Concentrix
Revenue Growth ($M) Adjusted Operating Margin(1)
Strategic Acquisitions and Investment in Key Business Units
Uniquely Positions Concentrix on a Global Basis
$189
$1,096
$1,417
$1,588
$1,956
$0
$500
$1,000
$1,500
$2,000
$2,500
2013 2014 2015 2016 LTM 2017
8.28%
8.86%
8.00%
8.27%
9.10%
7.20%
7.60%
8.00%
8.40%
8.80%
9.20%
2013 2014 2015 2016 LTM 2017
LTM is the last twelve months ended August 31, 2017.
(1) Non-GAAP Measure. See the Appendix to this presentation for Definitions of
Non-GAAP Measures and reconciliation of such measures to GAAP.
© 2017, SYNNEX Corporation. All rights reserved. 16
Concentrix Today
#5 global provider but still
a small % of CRM market
500+ clients – vast
majority name brand,
unicorns or major players
in their marketplace
Presence now in 35+
countries
Positioned Well In The
Current CRM Market
Four Distinct
Business UnitsTigerspike
Acquisition
Significantly strengthens
digital capabilities with
enterprise mobile
application development
expertise
CRM – Core business provides scale with global footprint and strong client
base; model under disruption
CIS – Insurance solutions that historically has seen almost
no disruption but high barriers to entry
Emerging Business –Connected car, IoT, OEM
marketing solutions driving growth and margin expansion
Tigerspike – Digital capabilities to be leveraged
across client base; becoming a more meaningful part of
Concentrix in coming years
17
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
•
Note: Based on 2016 revenue as available. Revenue of peers pro forma adjusted for acquisitions.
Concentrix revenue adjusted for Minacs acquisition.
Source: Company filings, Wall Street research and Gartner research.
18
#5
Top 10 Players in the CRM BPO Market ($M Revenue) Next Top 10
Evolving competitive landscape where we
expect disruptive changes
Concentrix Well Positioned in the Market
$1.3B revenue
$1.2B revenue
$1.1B revenue
$1.0B revenue
$1B revenue
$1B revenue
$900M revenue
$690M revenue
$640M revenue
$580M revenue
18
19Source: IDC research, Nelson Hall research, Gartner research, Nasscom reports, Company public filings, and other industry research.
$64B
CRM BPOAnalytics
$10B+
Consulting
$35BMaintenance
Services
$135B+
Back Office
BPO
$100B+
Vertical BPO
$170B+
RPA
$250M
Artificial
Intelligence
$12.5B
Digital Services
$100B+
IoT
$400B
Marketplace – Larger Than Just CRM BPO
19
CRM Marketplace Disruptors
`20
Core Market
Market Trends
Disruptive Areas
Growing Significantly Faster Than
Rest of Market
▪ Core CRM market today at $64B
▪ Expected to grow at ~3-5%
CAGR over next 5 years
▪ BPO market at $180B, growing
at 4.8% CAGR, represents
adjacent opportunities
▪ Digital
▪ AI
▪ RPA
▪ Alternative
Workforce
Solutions
▪ Drive towards increased
digital / non-human
(automation, AI) handling of
transactions
▪ Higher value service offerings
and vertical expertise
becoming more critical
▪ Mobile intelligent apps / self
service
▪ Increased M&A activity in
digital / RPA / AI
20
Concentrix Strategic Focus
Invest in the Future
Leverage Strengths Across Concentrix
Business Units
Double Digit Adjusted Operating
Margins in FY 18
Drive Brand Recognition As the
Market Leader
Continue to Invest in Key Verticals While Expanding Margins
• Continued growth in higher margin strategic verticals
• Growing share with strategic relationships
• Continue to invest in high value services• Ongoing optimization of network
• AI / Chatbots
• RPA
• Workforce Alternatives
• Digital
+
• Customers
• Footprint
• Technologies
• Capabilities
21
SYNNEX:Focused on the Future
© 2017, SYNNEX Corporation. All rights reserved. 22
23
Investment Highlights
© 2017, SYNNEX Corporation. All rights reserved. 23
Strong Track Record of Revenue Growth,
Margin Expansion and Strategic Investments
WHAT WE ACCOMPLISHED
Superior Total Shareholder Return
Seasoned Management with In-Depth Industry
Experience
Recognized Leadership in Customer Care BPO
and Technology Distribution
Penetrated Growth Markets
Customer-Centric Business Strategy Focused on
Growth Markets
Appendix
© 2017, SYNNEX Corporation. All rights reserved. 24
Use of Non-GAAP Financial Measures
To supplement the financial results presented in accordance with GAAP, SYNNEX uses 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, and 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. These
non-GAAP measures provide investors with an additional tool to evaluate operating results. Because 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.
SYNNEX management uses the 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. SYNNEX management believes it is useful for the company and investors to
review, as applicable, both GAAP information, and the non-GAAP measures in order to assess the
performance of SYNNEX’ continuing businesses and for planning and forecasting in future periods. 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. The
management of SYNNEX believes the 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. A reconciliation of SYNNEX’ non-GAAP financial information to GAAP is set
forth in the supplemental information tables in the following slides.
© 2017, SYNNEX Corporation. All rights reserved. 25
Definition of Non-GAAP Financial Measures
Non-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.
▪ 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.
© 2017, SYNNEX Corporation. All rights reserved. 26
Reconciliation of GAAP to Non-GAAP Financial Measures(Amounts in thousands, except per share amounts)
© 2017, SYNNEX Corporation. All rights reserved. 27
LTM
2012 2013 2014 2015 2016 as of August 31, 2017
Consolidated
Revenue 10,285,507$ 10,845,164$ 13,839,590$ 13,338,397$ 14,061,837$ 15,620,725$
Operating Income 255,012$ 240,828$ 308,507$ 354,552$ 379,596$ 479,747$
Acquisition-related and integration expenses - 8,394 43,036 10,109 10,393 8,102
Restructuring costs - - - - 4,255 -
Amortization of intangibles 8,289 7,953 55,161 54,756 55,490 68,225
Adjusted operating income 263,301$ 257,175$ 406,704$ 419,417$ 449,734$ 556,074$
Operating margin 2.48% 2.22% 2.23% 2.66% 2.70% 3.07%
Adjusted operating margin 2.56% 2.37% 2.94% 3.14% 3.20% 3.56%
Technology Solutions
Revenue 10,135,795$ 10,666,215$ 12,755,514$ 11,936,660$ 12,490,718$ 13,680,443$
Operating income 248,924$ 237,290$ 305,499$ 302,950$ 315,485$ 374,683$
Acquisition-related and integration expenses 705
Amortization of intangibles 3,882 3,912 3,538 2,630 2,657 2,631
Adjusted operating income 252,806$ 241,202$ 309,037$ 305,580$ 318,142$ 378,019$
GAAP operating margin 2.46% 2.22% 2.40% 2.54% 2.53% 2.74%
Adjusted operating margin 2.49% 2.26% 2.42% 2.56% 2.55% 2.76%
Concentrix
Revenue 159,522$ 189,463$ 1,096,214$ 1,416,670$ 1,587,736$ 1,956,221$
Operating income 6,376$ 3,249$ 2,455$ 51,127$ 63,877$ 105,011$
Acquisition-related and integration expenses - 8,394 43,036 10,109 10,393 7,397
Restructuring costs - - - - 4,255 -
Amortization of intangibles 4,407 4,041 51,623 52,126 52,833 65,594
Adjusted operating income 10,783$ 15,684$ 97,114$ 113,362$ 131,358$ 178,002$
GAAP operating margin 4.00% 1.71% 0.22% 3.61% 4.02% 5.37%
Adjusted operating margin 6.76% 8.28% 8.86% 8.00% 8.27% 9.10%
Fiscal year ended November 30,
Reconciliation of GAAP to Non-GAAP Financial Measures(Amounts in thousands, except per share amounts)
(Continued)
© 2017, SYNNEX Corporation. All rights reserved. 28
LTM
2012 2013 2014 2015 2016 as of August 31, 2017
Diluted EPS(1)3.96$ 3.02$ 4.57$ 5.24$ 5.88$ 7.37$
Acquisition-related and other integration expenses 0.22 1.09 0.25 0.26 0.21
Restructuring charges - - - - 0.11 -
Amortization of intangibles 0.22 0.21 1.40 1.38 1.39 1.70
Impact of conversion premium(2)- 0.97 - - - -
Income taxes related to the above(3)(0.08) (0.14) (0.91) (0.59) (0.60) (0.64)
Non-GAAP Diluted EPS(4)4.10$ 4.28$ 6.16$ 6.28$ 7.04$ 8.63$
Fiscal year ended November 30,
(3) The tax effect of the non-GAAP adjustments was calculated using the effective year-to date tax rate during the respective fiscal periods, except for the
acquisition-related and other integration expenses for fiscal year 2013, which was calculated using the tax deductible portion of the expenses and applying
the entity-specific, U.S. Federal and blended state tax rates.
(4) The sum of the components of Non-GAAP Diluted EPS may not agree to totals, as presented, due to rounding.
(2) For fiscal year 2013, net income attributable to SYNNEX Corporation for the purpose of computation of diluted EPS was adjusted for the change in the
estimated value of the conversion premium of convertible notes from April 2013 through the final settlement date. The convertible notes were settled in the
third quarter of fiscal year 2013.
(1) Diluted EPS for LTM 2017 represents the sum of the Diluted EPS of each of the last four quarters ended on August 31, 2017.