GuruFocus -
- Revenue Growth: 10% year over year in Q4.
- Gross Billings: $21.2 billion, up 7.4% year over year.
- Net Revenue: $15.8 billion, up 10% year over year.
- Free Cash Flow: $513 million in Q4; $1 billion for the full fiscal year 2024.
- Gross Profit: $1 billion, or 4.91% of gross billings.
- Non-GAAP Operating Income: $422 million, or 1.99% of gross billings.
- Non-GAAP Net Income: $263 million.
- Non-GAAP Diluted EPS: $3.09.
- Cash and Cash Equivalents: $1.06 billion.
- Debt: $3.9 billion.
- Gross Leverage Ratio: 2.2 times.
- Net Leverage Ratio: 1.6 times.
- Dividend Increase: 10% increase to $0.44 per common share.
- Shareholder Returns: $750 million returned in fiscal 2024, representing 72% of free cash flow.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TD (TSX:TD) Synnex Corp (NYSE:NYSE:SNX) reported a 10% year-over-year revenue growth and a 7% increase in gross billings for Q4.
- The company generated $513 million in free cash flow in Q4, meeting its target of $1 billion for the full fiscal year 2024.
- Strong performance was noted in the cloud, cybersecurity, and data and analytics portfolios, all of which grew by double digits across geographic segments.
- Hyve, the hyperscale infrastructure business, showed double-digit revenue growth, reflecting improved end-to-end capabilities.
- The company returned 72% of its free cash flow to shareholders through buybacks and dividends during fiscal year 2024.
- Despite strong growth, TD Synnex Corp (NYSE:SNX) experienced declining margins, with a 25 basis point decline in gross profit year over year.
- Hyve's tough year-over-year comparison impacted growth and operating margins, with elevated margins from cost recoveries not repeating this year.
- Interest expenses were higher than expected due to increased average borrowings throughout the quarter.
- The macroeconomic and political instability in Europe is creating uncertainty in the market, potentially impacting future growth.
- The company anticipates a continued margin headwind in Q1 fiscal 2025 due to the previous year's elevated margins in Hyve.
A: Patrick Zammit, Chief Operating Officer: We are pleased with growth in both distribution and Hyve. Excluding last year's one-off, Hyve showed strong growth in top line, GP, and operating income. We remain committed to profitable growth, and Hyve's margins are accretive to our portfolio. We plan to continue investing in Hyve due to its high return on investment.
Q: Can you discuss the macro impact in Europe and how it affects your outlook for fiscal '25?
A: Patrick Zammit, Chief Operating Officer: The European distribution market grew by 2% in Q4, despite macroeconomic and political uncertainties. We outperformed the market and continue to see demand in distribution. We expect Europe to remain stable, with growth driven by recovery in PCs and servers, particularly in the Americas and APAC.
Q: Could you provide insights on the PC recovery and any potential impacts from tariffs?
A: Patrick Zammit, Chief Operating Officer: We observed high single-digit growth in PCs, driven by the Windows 10 refresh and aged PC base from the pandemic. The commercial segment is driving growth, and we focus on this segment globally. It's unclear if growth is due to tariff anticipation.
Q: How do you view investments in Hyve and potential M&A opportunities?
A: Marshall Witt, Chief Financial Officer: We plan to invest in manufacturing capacity, engineering skills, and logistics for Hyve. We operate in an ODM and CM (TSX:CM) world, competing well in our markets. Currently, our strategy is organic growth, but we remain open to M&A if it aligns with our goals.
Q: Can you elaborate on the growth expectations for Endpoint and Advanced Solutions in fiscal '25?
A: Marshall Witt, Chief Financial Officer: Both segments are expected to grow, with Advanced Solutions potentially outpacing Endpoint due to recovery in networking and continued strength in software, cloud, and security. We anticipate mid-single-digit growth across quarters, considering macro uncertainties and market dynamics.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.