Yahoo Finance TD SYNNEX (SNX) Plunges 10% on Q2 Earnings and Revenue Miss
TD SYNNEX Corporation SNX shares plunged 9.6% on Tuesday after it reported weaker-than-expected second-quarter fiscal 2024 results. The company reported second-quarter non-GAAP earnings of $2.73 per share, which fell short of the Zacks Consensus Estimate of $2.76.
However, the bottom line increased 12.4% from the year-ago quarter’s earnings of $2.43 per share. The improvement reflects the benefits of efficient cost management, which more than offset the negative impact of a decline in revenues.
SNX’s quarterly revenues decreased 0.8% year over year to $13.95 billion and missed the consensus mark of $14.12 billion. The decline was primarily due to an increase in gross-to-net revenue adjustments as the company’s software-as-a-service offerings continue to represent a greater portion of the overall business.
TD SYNNEX Corporation Price, Consensus and EPS Surprise
TD SYNNEX Corporation price-consensus-eps-surprise-chart | TD SYNNEX Corporation Quote
Quarterly Details
The non-GAAP gross profit rose 0.5% year over year to $973.5 million, while the gross margin improved 9 basis points (bps) to 6.98%. Adjusted SG&A expenses decreased to $585.5 million from the year-ago quarter’s $592.5 million. However, as a percentage of revenues, SG&A expenses increased 4 bps to 5.09%.
The second-quarter non-GAAP operating income was up 3.2% to $388 million. The non-GAAP operating margin increased 11 bps on a year-over-year basis to 2.78%.
TD SYNNEX ended the fiscal second quarter of 2024 with cash and cash equivalents of $1.17 billion compared with $1.03 billion at the end of the fiscal first quarter. The company ended the quarter with a debt of $4.6 billion.
During the reported quarter, SNX used $114.7 million worth of cash for operational activities. It ended the quarter with a negative free cash flow of $152.5 million. In the first half of fiscal 2024, the company generated operating cash flow and free cash flow of $270 million and $191.1 million, respectively.
The company returned $288 million to shareholders in the first quarter by repurchasing stocks worth $254 million and paying out $34 million in dividends. In the first half of fiscal 2024, it returned $523 million through repurchasing $453 million worth of common stocks and paying $70 million in dividends.
During the quarter, SNX’s board of directors also approved a 14% hike in the quarterly dividend to 40 cents per share. The quarterly cash dividend will be payable on Jul 26 to shareholders of record date as of Jul 12.
Guidance
SNX issued guidance for the third quarter of fiscal 2024. For the third quarter, it expects to generate revenues between $13.3 billion and $14.9 billion (midpoint $14.1 billion). The Zacks Consensus Estimate is pegged at $14.52 billion for the third quarter of fiscal 2024.
The non-GAAP net income is estimated in the range of $219-$261 million. Moreover, TD SYNNEX projects non-GAAP EPS between $2.55 and $3.05 for the third quarter (midpoint $2.80). The consensus mark for non-GAAP EPS is pegged at $2.85.
Zacks Rank and Stocks to Consider
Currently, TD SYNNEX carries a Zacks Rank #3 (Hold). SNX stock has risen 8.7% year to date (YTD).
Some better-ranked stocks from the broader technology sector are NVIDIA NVDA, Dropbox DBX and Zscaler ZS, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVIDIA’s second-quarter fiscal 2025 earnings has been revised 6 cents upward to 63 cents per share over the past 60 days. Shares of NVDA have skyrocketed 156.6% YTD.
The Zacks Consensus Estimate for Dropbox’s second-quarter 2024 earnings has been revised by 2 cents northward to 52 cents per share in the past 60 days. Shares of DBX have plunged 25.6% YTD.
The Zacks Consensus Estimate for Zscaler’s fourth-quarter fiscal 2024 earnings has been revised upward by 2 cents to 69 cents per share in the past 30 days. Shares of ZS have declined 17.6% YTD.
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