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TD Synnex CEO Rich Hume On Varnex And Tech Select Communities, Future Acquisitions And The Supply Chain
Joseph F. Kovar
‘The [supply chain] backlog represents current needs and now there’s an emerging part of that backlog, which is future orders that are also part of that overall model. Our crystal ball would say that hopefully we’ll be beyond the peak by the middle of the year, and then really start to see progress being made and working it off in the back half of the year, says TD Synnex CEO Rich Hume.
TD Synnex is a result of the biggest merger in IT distribution. Does the company have plans to make further acquisitions going forward? Are there things that you could see acquiring to expand your reach into the solution provider community?
[On Tuesday] we announced our capital allocation strategy. In other words, that means what are we going to do with our cash. We said over the continuum that our plan would be to return 50 percent of that capital to shareholders in the form of dividends and share repurchases, and the other 50 percent would be reinvested into the business. You can do that organically, or you can do that through acquisitions. So the first big point is, absolutely we‘ll be investing in the business. We anticipate that our free cash flow in [fiscal year] 2023 will be around $1 billion. So this becomes meaningful money. And then second, we’re always interested in pursuing acquisitions that make us a better company, mostly from a strategic dimension. We have a pretty good footprint in the Americas and in Europe. We have a smaller footprint in Asia-Pacific. So that could be an area of expansion. And throughout the world, there might be particular countries or regions where we could benefit from having a bit more content that might align with our strategic direction. And should we find the right opportunity, we would clearly pursue it.
You just talked about acquisitions for geographic expansion. How about in terms of other services? What are some services that you would like to maybe bring in with acquisitions?
I think there are a couple of points here. First of all, technology always ebbs and flows, and there are always new needs. There are always really good services opportunities which emerge. But the mandate of us serving partners will not be compromised. That‘s our commitment. [Pursuing acquisitions] will be in the context of supporting a two-tier model.
Any particular services you think you'd like to bring in to expand TD Synnex's business?
We like to follow growth, so services that are aligned with the next-generation categories of cloud, security, analytics, and IoT are of interest because there‘s a good complement to where our business is growing. I would say those services, and primarily digital services, would be a focus area. We aren’t averse to labor-based services, but I think where the world is going is more in the context of digital services and the next-generation requirements.