Why TD Synnex Shares Are Sliding Today

TD Synnex Corp SNX reported a second-quarter FY23 revenue decline of 7.9% Y/Y to $14.06 billion, missing the consensus of $14.42 billion.

On a constant currency basis, revenue fell by 7.0% Y/Y, owing to a decline in its Endpoint Solutions portfolio on post-pandemic weakness in PC ecosystem products demand.

Non-GAAP gross billings declined 4.9% Y/Y to $18.7 billion.

Adjusted EPS of $2.43, missing the consensus of $2.55.

Adjusted operating income fell 5.6% Y/Y to $376 million, with margins expanding to 2.7% from 2.6%.

Operating cash flow declined to $708 million in Q2 vs. $1.04 billion a year ago. 

The company held cash and equivalents of $852.1 million as of May 31, 2023.

SNX achieved incremental merger-related cost synergies of $30 million in Q2 FY23, reaching the previously announced target of $200 million ahead of schedule, and expects to realize additional cost optimization benefits of $50 million in the next several quarters.

The company returned $93 million through share repurchases of $60 million and dividends of $33 million, and projects accelerated shareholder return in the latter half of the fiscal year.

Dividend: TD Synnex declared a quarterly dividend per share of $0.35, payable on July 28, 2023, to shareholders of record as on July 14, 2023.

Q3 Outlook: The company expects revenue of $13.5 billion-$14.5 billion (vs. below the consensus of $14.96 billion), adjusted EPS of $2.20-$2.70 (vs. below the Street view of $2.76), and adjusted gross billings in the range of $18.0 billion-$19.3 billion. 

Price Action: SNX shares traded lower by 7.67% at $90.21 on the last check Tuesday.