Net income on a non-generally accepted accounting principles (Non-GAAP), basis was $10.5 million or $0.34 per share. Non-GAAP net income represents GAAP net income adjusted to exclude, net of tax, $0.5 million in restructuring charges related to the company’s Canadian operations and a $1.0 million non operating loss on the company’s equity investment in MCJ Company Ltd. Synnex’s investment in MCJ was a result of the sale of its Japan operations in the second quarter of fiscal 2005. In the prior year quarter, Non-GAAP net income was $10.7 million, or $0.36 per share. Non-GAAP net income in the third quarter of fiscal 2004 excludes a non-operating settlement gain of $0.8 million, net of tax.
“In a generally stable demand environment in the North American IT channel marketplace, we are pleased with our results and execution for the third quarter of fiscal 2005,” said Robert Huang, president and CEO for Fremont, Calif.-based Synnex. “We continue to maintain our focus on profitable growth in our core business segments and we are making strides in our new business investments as well. Looking forward we will plan to continue to execute on our cost efficient business model while at the same time investing in new initiatives that deliver additional value to our customers and vendors.”
Huang said overall, he was pleased with the company’s performance, noting Synnex’s U.S. distribution business is consistently showing strong numbers for the North American marketplace. Moreover, he said he was “very pleased” with Synnex Canada’s distribution business and the results it posted in 3Q05, in contrast to admittedly disappointing earlier results.
“We saw the synergies from our EMJ Systems acquisition take hold last May, and it has continued throughout the third quarter as well,” he said. “The solid execution by our Canadian team is especially satisfying in an otherwise seasonal slow period in Canada.”
Noteworthy 3Q05 Synnex results include:
*Distribution revenues were $1.26 billion, an increase of nine per cent over the prior year quarter. Contract assembly revenues were $128 million, a decrease of 13 per cent over last year.
*Gross margin was 4.24 per cent, up 20 basis points from 3Q04.
*Income from operations was $19.7 million, or 1.42 per cent of revenues, versus $18.9 million, or 1.45 per cent of revenues in the prior year quarter. Income from operations, excluding the Canadian restructuring charge, was $20.6 million or 1.48 per cent of revenues.
*Income from distribution operations was $17.0 million, or 1.35 per cent of revenues, versus $15.7 million, or 1.36 per cent of revenues in the prior year quarter. Income from distribution operations, excluding the Canadian restructuring charge, was $17.9 million or 1.42 per cent of revenues.
*Income from assembly operations was $2.7 million, or 2.09 per cent of revenues, versus $3.2 million, or 2.16 per cent of revenues in the prior year quarter.
*3Q05 depreciation and amortization were $1.2 million and $1.0 million, respectively.
Officials said for Synnex’s fourth quarter fiscal 2005 outlook, revenues are expected to be in the range of $1.475 billion to $1.525 billion. Net income is expected to be in the range of $11.45 million to $12.15 million. Earnings per share are expected to be in the range of $0.37 to $0.39. The calculation of earnings per share for the fourth quarter of fiscal 2005 is based on an approximate weighted average diluted share count of 31.3 million.