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Synnex Blows Past Analyst Expectations To Report Strong Second Fiscal Quarter 2019

Synnex President and CEO Dennis Polk attributes the strong revenue and income growth to the new technologies it has added since its acquisition of Westcon-Comstor as well as the increased efficiency they bring to the end-user customers its channel partners serve.

Distribution heavyweight Synnex blew past analyst expectations Tuesday with its second fiscal quarter 2019 financials, with both its business segments setting records for the quarter.

Synnex, Fremont, Calif., reported strong revenue and income growth across the board in its Technology Solutions business and its Concentrix customer relationship management and business process outsourcing service.

Synnex delivered on a strong second quarter and first half of fiscal year 2019, said President and CEO Dennis Polk in prepared comments during Synnex's quarterly financial analyst call.

[Related: CRN Exclusive: Synnex CEO Kevin Murai And His Successor, Dennis Polk, Discuss The Future Of Distribution]  

"Overall, we set records for the May quarter for both revenue and earnings. … These results show our ability to operate as a differentiated business process service provider, with a significant contribution from both Concentrix and Technology Solutions," Polk said.

Synnex reported revenue for its second fiscal quarter 2019, which ended May 31, of $5.72 billion, up 16.6 percent from the $4.91 billion the company reported for its second fiscal quarter 2018.

That revenue figure included $4.6 billion from its Technology Solutions business, up 3.3 percent over last year, as well as $1.2 billion from its Concentrix business, up 136.3 percent over last year. The Concentrix revenue included revenue from its $2.4 billion acquisition of Convergys. That acquisition, announced just about one year ago, closed in October. Convergys is now a part of Synnex Concentrix.

Synnex also reported GAAP net income of $114.5 million, or $2.23 per share, up strongly from the $93.7 million, or $2.34 per share, it reported a year ago.

On a non-GAAP basis, net income was $146.8 million, or $2.86 per share, up from last year's $95.4 million, or $2.38 per share.  

The results for the quarter solidly beat analyst revenue expectations by $200 million, GAAP earnings per share by 34 cents, and non-GAAP earnings per share by 15 cents, according to Seeking Alpha.

Polk, in response to an analyst question during the conference call, said big reasons for Synnex's strong growth over last year included increased internal efficiency, the new technologies the company has added to its product line card since its 2017 acquisition of Westcon-Comstor, and the efficiency that technology brings to the end-user customers that Synnex's channel partners serve.

"That's [the] reason why we're optimistic about our going-forward growth," he said.  

Looking ahead, Synnex is expecting its third fiscal quarter 2019 revenue to be in the range of $5.55 billion to $5.85 billion. That is a strong jump from the $4.91 billion the company reported for its third fiscal quarter 2018.

Synnex also expects net income of $99.0 million to $105.0 million, or $1.20 to $2.04 per share on a GAAP basis, a healthy growth over the $69.3 million, or $1.74 per share, it reported last year. On a non-GAAP basis, third quarter fiscal 2019 net income is expected to reach $144.2 million to $150.2 million, or $2.80 to $2.92 per share, up from last year's $102.3 million, or $2.50 per share.

Synnex reported financials after the close of the trading day. For the day, the company's share prices rose just over 4 percent to reach $95.75 per share, and then rose slightly in after-hours trading.

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