What It Means to Distributors: Strong demand for cloud, AI and infrastructure is driving growth and margin gains, but rising inventory and negative cash flow highlight ongoing working capital pressures across the distribution sector.
TD SYNNEX posted strong year-over-year growth in its fiscal first quarter, with revenue, profit and earnings all increasing at double-digit rates as both its core distribution business and Hyve infrastructure unit expanded.
The global IT distributor reported first-quarter revenue of $17.16 billion for the period ending Feb. 28, up 18.1% from $14.53 billion a year earlier. On a constant-currency basis, revenue increased 13.2%.
Gross billings, which the company uses to measure overall business volume, rose 24.4% to $25.78 billion from $20.72 billion in the prior-year quarter.
Gross profit increased 25.5% to $1.25 billion from $998.0 million, while gross margin improved 43 basis points to 7.30% from 6.87%.
Operating income rose 60.7% to $489.4 million from $304.5 million. Operating margin increased to 2.85% from 2.10%.
Net income climbed 95.1% to $326.9 million from $167.5 million.
TD SYNNEX said the quarter also reflected strength in Hyve Solutions, its business that designs, manufactures and delivers traditional and accelerated compute, cloud, and connected infrastructure systems, alongside growth in its regional distribution operations across the Americas, Europe and Asia-Pacific and Japan.
During the quarter, the company changed its reportable segments to align with how management now runs the business. It now reports four segments: Americas distribution, Europe distribution, Asia-Pacific and Japan distribution, and Hyve Solutions.
Despite the earnings gains, cash flow remained under pressure. Net cash used in operating activities totaled $895.9 million in the quarter, compared with $748.0 million used a year earlier. Inventory rose to $10.98 billion as of Feb. 28 from $9.50 billion at the end of November.
The company returned $118 million to shareholders during the quarter, including about $79.7 million in share repurchases and $38.7 million in dividends. TD SYNNEX also said its board approved a quarterly cash dividend of $0.48 per share, up 9% from a year earlier.
For its fiscal second quarter, TD SYNNEX projected revenue of $16.1 billion to $16.9 billion and gross billings of $24.6 billion to $25.6 billion.
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