Shares of Synnex (SNX 97.51, +10.68, +12.30%) have jumped
to their best level in nearly five months after the company reported better
than expected results, issued upbeat guidance, and raised its dividend.
Synnex offers technology supply chain services to software publishers, original equipment manufacturers, and resellers. Strong demand for the company's services can be viewed as a positive sign about the health of businesses in those categories.
The company reported above-consensus fourth quarter earnings of $3.65 per share on a 5.8% yr/yr increase in revenue to $5.62 bln, which was also ahead of expectations.
Synnex issued guidance for the first quarter that was comfortably ahead of market expectations. The company primed investors for first quarter earnings between $2.70/share and $2.80/share on revenue between $5.23 bln and $5.43 bln. Looking to sweeten its report even more, the company announced that its quarterly dividend will be increased by 7.0% to $0.375 per share.
The company's Technology Solutions segment, which supplies more than 20,000 resellers and retailers in the United States, Canada, and Japan, reported a 2.7% yr/yr decline in revenue to $4.70 bln. However, operating income grew 9.5% yr/yr to $122.92 mln. Adjusted operating margin improved to 2.93% from 2.68% one year ago.
The Concentrix segment, which offers services like direct sales, technical support, customer care, lead management, and back-office processing, reported a 23.8% yr/yr increase in revenue to $2.50 bln. The sharp growth rate was mostly due to the early-October acquisition of Convergys. Operating income jumped 58.2% yr/yr to $75.35 mln. Adjusted operating margin improved to 13.24% from 12.11% one year ago.
The company did see an increase in inventory turnover (to 46 days from 41 days) while the cash conversion cycle was lengthened to 52 days from 40 days one year ago.
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