Td Synnex Corporation · NYSE:SNX
Td Synnex — Investor Day (March 2022)
26 slides from Td Synnex's investor day presentation, Mar 29, 2022
Slide 1: Investor Day 2022
Investor Day 2022 Marshall Witt, Chief Financial Officer
Slide 2: Safe Harbor statement
Safe Harbor statement This Presentation contains “forward-looking statements” within the meaning of the Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may be identified by terms such as believe, foresee, expect, may,
Slide 3: Safe Harbor statement: No Offer or Solicitation
Safe Harbor statement No Offer or Solicitation The Presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue, or the solicitation of an offer to purchase, subscribe to or acquire, securities of TD SYNNEX, or an inducement to enter into investment act
Slide 4: Why own TD SYNNEX?
Why own TD SYNNEX? Attractive core Robust cash flow Clear path to business capitalizing engine creates compelling shareholder on high-growth financial flexibility returns technologies
Slide 5: Strong and consistent performance over the long-term
Strong and consistent performance over the long-term COVID crisis Net revenue Global financial crisis +6% CAGR 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Combined TD SYNNEX net revenue - Non-GAAP operating margin (1) (1) Non-GAAP measure. See the appendix to
Slide 6: Traditional distribution model
Traditional distribution model Illustrative business model OEM/Manufacturer Buys device for $960 (4% OEM gives back $20 of back-end front-end margin) and pays $960 $20 margin based on volume in ~75 days (~6% all-in gross margin) ~41 days of inventory held on average VAR pays in ~48 days $1,000 Sells
Slide 7: Bundled solution example
Bundled solution example $1,000 Bundled Solution: $700 Hardware + $300 Software Traditional Buy/Sell ASC 606 Adjusted Revenue $1,000 $720 COGS $940 $660 Gross profit $60 $60 Gross margin % 6% 8.3% High-growth technologies result in lower top-line revenue due to ASC 606 accounting adjustments, but hi
Slide 8: High value add model
High value add model Gross profit as a proxy for revenue FY21 Illustrative Revenue $60,623M $3,649M Gross profit $3,649M NA % Margin 6.02% -- EBITDA(1) $1,585M $1,585M % Margin 2.62% 43.44% High-growth technology products and solutions are substantially netted down given accounting requirements. Usi
Slide 9: Highly variable cost structure
Highly variable cost structure Approximately 2/3 of total cash operating More than 90% of overall cost structure is COGS, which is expenses are estimated to be variable directly linked to revenue generation and variable in nature ~35% Fixed Opex COGS ~65% Variable Our cost structure allows for flexi
Slide 10: Increasing concentration in high value add capabilities
Increasing concentration in high value add capabilities (1) TD SYNNEX gross revenue TD SYNNEX non-GAAP operating income 2021 2021 Approximately doubling high-growth technology revenue and non-GAAP operating income over the medium-term Medium- Medium- term term High-growth Core technologies Committed
Slide 11: Synergy update - $200M of incremental cash savings
Synergy update - $200M of incremental cash savings Track-record of more than 15 successful M&A transactions TD SYNNEX: Annual synergies with overachievement of synergy targets Deal Expected Realized Achieved? Corporate IT Occupancy/ Synergies $150M $200M+ procurement Personnel TD SYNNEX: Realization
Slide 12: Stable cash conversion cycle with countercyclical benefits
Stable cash conversion cycle with countercyclical benefits Steady cash conversion cycle (days) Countercyclical cash generation Dot com bubble Global financial crisis COVID-19 pandemic 41 14 25 51 42 48 46 42 41 Zero (56) (59) (75) 2000 2001 2002 2003 2008 2009 2010 2019 2020 2021 Operating cash flow
Slide 13: The power of our model
The power of our model FY21 combined modeled ($M) Combined modeled free cash flow(1) Assumes $200M of synergies realized on December 1st, 2020 EBITDA(1) $1,785 Less: Fixed Charges (2) ~$1.5B Interest Expense (260) Taxes (360) CAPEX (120) Normalized Free Cash Flow (3) ~$1,000M (Pre-working capital an
Slide 14: Strong investment grade balance sheet
Strong investment grade balance sheet Significant liquidity Long dated, well-laddered capital structure ($M) Nov 2021 Feb 2022 Cash $995M $510M Unsecured revolver $3,500M $3,500M 3,500 A/R securitization(1) $1,500M $751M Total liquidity $5,995M $4,761 Unlevered balance sheet with low costs – FY22 Ta
Slide 15: Medium-term target capital allocation
Medium-term target capital allocation Supplement organic growth with strategic 25% $400M stock buyback authorization in place investments and M&A (1) Optimize cost of capital ~$1.5B FCF and target ROIC ~2-4% 50% above WACC annually 50% dividend increase announced Target 2x gross leverage ratio 25% M
Slide 16: Financial targets
Financial targets Medium-term outlook Medium-term outlook – Top-line 6-7% CAGR Medium – term $60.6B FY21 FY22 outlook Revenue growth(1) 8.3% 3% - 4% 6% - 7% Adj. revenue 6.5% 6% - 8% growth(1)(2) FY21A FY22 Core High-growth Target technologies Adj. Operating 2.4% 2.5% - 2.7% 2.9% - 3.1% margin(2) %
Slide 17: Total shareholder return over the medium-term
Total shareholder return over the medium-term 2%+ 15-20% 1-2% 13-18% 1%+ 12-16% 11-15% Net income growth Buybacks Base TSR Dividends Base TSR Re-investment/ Medium-term pre-investment M&A TSR Annual TSR drivers calculated using FY21 as a base
Slide 18: The scarcity value of TD SYNNEX' financial profile
The scarcity value of TD SYNNEX’ financial profile, as well as its relative valuation vs. the market, make it a highly compelling investment opportunity Best-in-class financial profile Attractive relative value opportunity Medium-Term EPS Growth(1) S&P 500 Index ~$40 Trillion Market Capitalization 5
Slide 19: Why own TD SYNNEX?
Why own TD SYNNEX? Attractive core business Robust cash flow engine Clear path to shareholder capitalizing on high- creates financial flexibility return of 15-20% growth technologies Industry leader in secularly growing $1B of annual levered free cash flow(1) Total Shareholder Return of IT space ~$1
Slide 20: Appendix
© TD SYNNEX \ Appendix ;
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures Use of Non-GAAP Financial Measures In addition to the financial results presented in accordance with GAAP, TD SYNNEX also uses adjusted selling, general and administrative expenses, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, and non-GAAP di
Slide 22: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures Non-GAAP Financial Information: Fiscal Year Ended Three months ended Three months ended Three months ended 9 Months ended August Fiscal Year Ended Currency in thousands November 30, 2021 August 31, 2021 May 31, 2021 February 28, 2021 31, 2021 Nov
Slide 23: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures Non-GAAP Financial Information: Fiscal Year Ended Three months ended Three months ended Three months ended Three months ended Fiscal Year Ended Fiscal Year Ended Currency in thousands November 30, 2020 November 30, 2020 August 31, 2020 May 31, 20
Slide 24: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures Forecast Fiscal Year Ended November 30, 2022 (Amounts in millions, except per share amounts) Low High Revenue $ 62,100 $ 63,000 Adjustments Foreign Currency Exchange Impact (1) 1,200 1,200 Accounting Policy Alignment (2) 1,100 1,100 Adj. Revenue
Slide 25: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures Forecast Fiscal Year Ended November 30, 2022 (Amounts in millions) Low High Operating income $ 806 $ 1,013 Acquisition, integration and restructuring costs 267 227 Amortization of intangibles 330 310 Share-based compensation 41 39 Purchase accoun
Slide 26: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures Cash Conversion Cycle Three Months Ended November 30, November 30, November 30, 2021 2020 2019 (Amounts in thousands) Days sales outstanding ("DSO") Revenue (a) $ 15,611,266 $ 6,118,836 $ 5,374,241 Accounts receivable, net (b) 8,310,032 2,791,703