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Synnex Boasts Record Sales In 2018

Synnex subsidiary Concentrix was boosted by the acquisition of Convergys, which was completed Oct. 5. Synnex announced its plans to buy Convergys for $2.8 billion in June. Fourth quarter revenue for Concentrix was up 82 percent to $972 million as a result of the deal.

Synnex revenue grew 17-percent during its last fiscal year on more than $20 billion in sales as the Fremont, Calif.-based distributor said strong demand in technology solutions drove what it said were record results.

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For the year, Synnex’s technology solutions revenue came in at $17.6 billion, up 16.8 percent over the previous year.

In the fourth quarter ending Nov. 30, Synnex said sales grew 5.8 percent with $5.62 billion in revenue, a net income of $113.2 million, and earnings per share of $2.41 up 6.6 percent.

Fourth quarter revenue for Synnex subsidiary Concentrix was boosted by the acquisition of Convergys which was completed Oct. 5. Synnex announced its plans to buy Convergys for $2.8 billion in June. Fourth quarter revenue for Concentrix was up 82 percent to $972 million as a result of the deal.

Synnex executive vice president Chris Caldwell, who is president of Concentrix, said excluding the Convergys buy, Concentrix would have achieved a double-digit operating margin for 2018.

“We did hit 10 percent, double-digit operating income for the entire year and within the fourth quarter, we had a very, very strong fourth quarter coming in at 13. 8 percent for the legacy Concetnrix business,” he said.

The uptick in Concentrix business this year was driven by replacing low-margin business, and installing more automation, and more digital practices which carry a higher margin profile, Caldwell said.

There was a 2.7 percent downturn in the fourth quarter in technology solutions category, which posted $4.7 billion in revenue.

On an earnings call on Thursday, analysts wanted to know if there was concern about government spending in the first quarter given the ongoing government shut down.

“We do have a reasonable amount of exposure to the fed spending space, if you will,” Synnex President and CEO Dennis Polk said. “Right now, we haven’t seen any material change in buying patterns, and we factored that into the guidance that we provided today. Obviously, if the shutdown extends out or broadens we would have more concern about spending activity.”

For the first fiscal quarter 2019, Polk said Synnex is expecting revenue to come in at $5.22 to 5.42 billion with earnings per share in the range of $1.71 to $1.81.

“We don’t see a lot of headwinds, and don’t hear a lot of concerns from our customers at this point in time. So it’s really the macro uncertainties that are out there,” Polk said. “We recognize 2019 currently presents more economic uncertainty compared to recent periods. Despite these headwinds, I’m optimistic about our ability to execute and drive value as we successfully demonstrated the ability to do so over the years … We expect to maintain our sales momentum, in both our business segments, while maintaining our profitability focus.”

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