snx 7ae88a38-45e7-4b82-bffb-3404fd8027a5_snx012709
TRANSCRIPT
SYNNEX (NYSE: SNX)Analyst Day PresentationAnalyst Day Presentation
January 27, 2009
WELCOME
Thomas Alsborg
Chief Financial Officer
2
Safe Harbor
This presentation contains forward-looking statements th at involve risks and uncertainties. Theseforward looking statements include, but are not limited to, statements regarding expectations of ourrevenues, net income and earnings per share for the first qua rter of fiscal 2009 and beyond, ourcontinued execution, expansion of our business lines and im provements in efficiency and productivity,and our goal to provide expected profitability and returns, are subject to risks and uncertainties thatcould cause actual results to differ materially from those d iscussed in the forward-looking statements.These risks and uncertainties include, but are not limited t o: general economic conditions and anyweakness in IT spending; our ability to differentiate our bu siness and sustain competitive advantages,our ability to successfully execute on strategic focus goal s in the future, market acceptance and productlife of the products we assemble and distribute; the loss or c onsolidation of one or more of oursignificant OEM suppliers or customers ; competitive conditions in our industry and their impact on our
3
significant OEM suppliers or customers ; competitive conditions in our industry and their impact on ourmargins; pricing, margin and other terms with our OEM suppli ers; our ability to gain market share;variations in supplier-sponsored programs; changes in our costs and operating expenses; changes inforeign currency exchange rates; risks associated with our international operations; uncertainties andvariability in demand by our reseller and contract assembly customers; supply shortages or delays; anytermination or reduction in ours our customers’ floor plan f inancing arrangements; credit exposure toour reseller customers, and negative trends in their busine sses; any future incidents of theft; risksassociated with our contract assembly business.
For a discussion of the factors that could cause actual resul ts to differ, please refer to our most recentform 10-K under the section listed as “Risk Factors”. Except as required by law, we undertake noobligation to update or revise publicly any forward-lookin g statements after the date of this presentation.
Did you know …
SYNNEX has achieved 86 consecutive
profitable quarters
4
profitable quarters
SYNNEX is #1 with HP for Channel Sales
Out for last 2 years
Did you know …
5
Out for last 2 years
SYNNEX is the #1 Intel distributor in
North America over the last three years
Did you know …
6
North America over the last three years
SYNNEX has a comprehensive Public
Sector program and is the only distributor
Did you know …
7
Sector program and is the only distributor
with a GSA schedule and warehouse in
Chantilly, Virginia
SYNNEX has built 5 of the top 100
supercomputers in the world
Did you know …
8
supercomputers in the world
Meet the SYNNEX Executive Management Team
Kevin MuraiPresident and
Chief Executive
Thomas AlsborgChief Financial
Officer
Dennis Polk Chief Operating
Officer
Peter Larocque President, U.S.
Distribution
Jim Estill CEO, SYNNEX
Canada
Chris Caldwell Senior Vice
President, Global
9
Chief Executive
Officer
OfficerOfficerDistribution Canada President, Global
Business Solutions
Schedule of Today’s Event
9:30 a.m. Introductions - Thomas Alsborg, CFO
9:45 a.m. Kevin Murai, President & CEO
Peter Larocque, President, U.S. Distribution
Jim Estill, CEO, SYNNEX Canada
Dennis Polk, COO
11:30 p.m. Break for Lunch
10
11:30 p.m. Break for Lunch
12:30 p.m. Chris Caldwell, SVP, SYNNEX Global Business Solutions
Thomas Alsborg, CFO
Q&A Session – Executive Management
Closing Remarks – Kevin Murai
2:00 - 3:00 p.m. Reception
11
SYNNEX CORPORATION
Kevin MuraiPresident and Chief Executive Officer
SYNNEX – Overview
� Leading Business Process Services Company
� Channel Solutions for the Technology Industry
� Value-Add Supply Chain Solutions
– Core IT distribution solutions
– Supply chain management/contract assembly solutions
– Business process outsourcing solutions
� Fortune 500 Company
We offer OEMs and VARs an integratedsuite of Business Process Services
comprising: IT distribution, supply chain management, contract assembly and
business process outsourcing.
Demand generation,tech/customer support
12121212
� Fortune 500 Company
� 28 Years of Operating History
� Over 6,500 Employees Worldwide
� Seasoned Executive Management Team
� FY 2008 Revenues of $7.7 Billion
� Established Long-Standing Industry
Relationships
Core ITdistribution
services
Supply chain managementservices / Contractassembly services
SYNNEX Business Model- Providing Channel Solutions for the Technology Industry
End Users
Consumers
SMB
CorporateDistribution
15,000 +
Resellers /
Retailers /
Tech Support Supply Chain
Management
Design
Services
Demand Generation
100 + IT OEMs
13
We are expanding our services beyond Technology Distribution
� One-stop shop for CE and IT resellers
� Efficient go-to-market engine for manufacturers
� Supply-Chain Management reduces manufacturers inventory and improves time-to-market
� Design and Assembly Services
� Technical Support pre- and post-sales
� Demand Generation enables manufacturers’ go-to-market strategies
Corporate
Gov’tRetailers /
DMRsContract
Assembly
7.5% 7.4%7.9%
8.1%
6.9%7.3% 7.3%
8.9%
6.9%7.3%
6.6%
8.9%
7.8%7.2%
8.3%
10.6%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0% Prior Year Current Year
2.00%
3.00%
4.00%
5.00%
6.00%
Q405
Operating Margin
1.53%
Q408
Operating Margin
2.28%
SYNNEX Business Model- Financial Impact
SYNNEX Margin Trends Over Time SYNNEX ROIC Trends
0.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Latest QuarterROIC
AnnualROIC(1)
10.6% 8.5%
8.2%
5.8%
Latest QuarterOperating
Margin
TTM Operating Margin (1)
2.28% 1.95%
1.12%
0.86%
Q4
05
Q1
06
Q2
06
Q3
06
Q4
06
Q1
07
Q2
07
Q3
07
Q4
07
Q1
08
Q2
08
Q3
08
Q4
08
Gross Profit % Sales SG&A % Sales SG&A % Sales Excluding Charges
14141414
2007 2008
IM
TECD
IM
TECD
Note:1) TTM and annual numbers for IM and TECD are based on the prior three quarters of actual results for each companies respective fiscal year plus analyst estimates for the final quarter for each companies respective fiscal year.
5,641
6,344
7,004
7,768
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
1.38
1.69
2.04
2.63
0.50
1.00
1.50
2.00
2.50
3.00
EPS Growth in Dollars
SYNNEX Business Model - Financial Impact
Revenue Growth Billions
-
1,000
2005 2006 2007 2008
-
2005 2006 2007 2008
Annual Growth2008E (1)
28.9%
-17.5%
-18.2%
Annual Growth2008E (1)
10.9%
-0.87%
4.78%
15151515
IM
TECD
IM
TECD
Note:1) Annualized numbers for IM and TECD are based on the prior three quarters of actual results for each companies respective fiscal year plus analyst estimates for the final quarter for each companies respective fiscal year.
� Market Reality – Challenging Economic Environment
� SYNNEX Continues To Perform Well
Macro Economic Environment- SYNNEX Has Gained Share In Challenging Economies
– Increased Market Share
– Margin Expansion
– Earnings Growth
– ROIC Growth
– Superior Execution
– Diversification of the
Business Model
Driven By
� And We Continue To See Opportunities – We Have A Small Slice Of A Very
Large Pie.
– North American IT spend, excluding services forecast of approximately $300 billion in 2009
� North American Tier Two Market Share forecast of approximately $60 billion in 2009
– North American CE spend estimated forecast of $178 billion in 2009
– Global BPO and IT Services estimated forecast of $424 billion 2009
16
Note: Source: IDC, CEA and Company Reports,. (January 2009, July 2008)
Market Perception vs. Reality
Market Misnomers
� “You need a global footprint”
� “You need to be the largest in the space”
FWD P/E
TTM
Op Margin (1)
Annual
ROIC (1)
EPS
Growth (1)
Revenue
Growth (1)
17
FWD P/E Op Margin (1) ROIC (1) Growth (1) Growth (1)
8.5%
8.2%
5.8%
10.9%
-0.9%
4.8%
28.9%
-17.5%
-18.2%
2.0%
1.1%
0.9%
5.3
9.6
8.6
IM
TECD
Note:(1) Annualized numbers for IM and TECD are based on the prior three quarters of actual results for each companies respective fiscal year plus analyst estimates for the final quarter for each companies respective fiscal year.
Focus on Service and
relationships
IT Systems and
Processes
IT Distribution
Logistics Services
Streamlined, low-cost
infrastructure providing
economies of scale
The SYNNEX Difference- The Way We Manage Our Business
Superior Execution Highly Efficient
Low-Cost Model
Differentiated
Business Model
Processes
High Caliber People With
A “Can-Do-Attitude”
No Distractions – Clear
Focus on Moving Our
business forward
Assembly/
Manufacturing
Business Process
Services (BPO)
IT Systems
18
Optimize Core
Business
High-Growth
Adjacent MarketsDifferentiation
Through Services� Growth Beyond
Consumer
Electronics into
� Logistics Services
� Data Mining
� Professional
SYNNEX – Our Strategic Focus
Our Strategy Will Drive Growth, Margin and ROIC
� Continued focus on
Cost Efficiencies
� Working Capital Electronics into
Lifestyle Products
� Data Capture and
POS
� Enterprise (TSD)
� Managed Services
� Professional
Services
� SYNNEX Global
Business Solutions
19
� Working Capital
management
� Line Card expansion
� Enhanced Go-to-
Market capabilities
(VAR Communities,
Key Verticals Focus)
Questions ?
21
SYNNEX U.S.
Peter Larocque
President, U.S. Distribution
Overview
US Distribution � U.S. Business is $6.2 Billion
� Exceptional Gross Margin growth
� Execution Excellence
� Diverse business81%
19%
22
� 81% of the business
� Growing business
� Growing margins
� Growing ROIC
� Seasoned Management Team
� What makes us different
� Strategic focus in 2009
� Take away thoughts
81%
What Makes Us Different
� Business Model
– Segmented customer base
– Focused line card
– Multi site warehouse
– Full service supply chain offering
– Solutions distribution
� Execution
– Systems and processes
– Exceptional people
– Flat organization
23
– Flat organization
– Integration of companies
� Low Cost Provider
– Insourcing
– IT – Pricing model, sales P&L, processes
� Vendor - Customer Relationships
– #1 customer relationship as noted in the most recent CRN
Sourcing Guide
– #1 on 7 out of top 10 vendors (In market share)
– Data mining, incremental customer development
What Makes Us Different- Business Model - Segmentation
� 50+ Segments
� Trusted Advisor To The Customer
� Vendor Engagement To The Customer
� Unique Coverage - PRINTSolv
Business Segments
System BuilderSupplies
Retail
24242424
� Unique Coverage - PRINTSolv
TSD
Commercial
SMB/Corp/Gov’t
Outsourcing
Logistics
Over Supply
Reconditioned
Most Recent CRN Sourcing Guide: SYNNEX Voted #1 in Customer
Relationships by our customers.
What Makes Us Different- Business Model – Solutions Distribution
25
What Makes Us Different- Execution
� Business Model
– Segmented customer base, Value-Velocity, Trusted Advisor
– Focused line card
– Multi-Warehouse
– Full service supply chain offering
– Solutions distribution
� Execution
– Exceptional people with a “can do attitude”
– Flat organization
– Integration of companies– Integration of companies
– Great solutions and services
� Low Cost Provider
– Insourcing
– IT – Pricing model
� Vendor - Customer Relationships
– #1 customer relationship as noted in the most recent CRN Sourcing Guide
– #1 on 7 out of top 10 vendors (In market share)
– Data mining, incremental customer development
26
What Makes Us Different- Low Cost Provider
� Business Model
– Segmented customer base, Value-Velocity, Trusted Advisor
– Focused line card
– Multi-Warehouse
– Full service supply chain offering
– Solutions distribution
� Execution
– Exceptional people
– Flat organization
– Integration of companies– Integration of companies
� Low Cost Provider
– Insourcing
– IT – Pricing model, Sales P&L, processes
� Vendor - Customer Relationships
– #1 customer relationship as noted in the most recent CRN Sourcing Guide
– #1 on 7 out of top 10 vendors (In market share)
– Data mining, incremental customer development
27
What Makes Us Different- Vendor\Customer Relationships
� Business Model
– Segmented customer base, Value-Velocity, Trusted Advisor
– Focused line card
– Multi-Warehouse
– Full Service supply chain offering
– Solutions distribution
� Execution
– Exceptional people
– Flat organization
– Integration of companies
28
– Integration of companies
� Low Cost Provider
– Insourcing
– IT – Pricing model
� Vendor - Customer Relationships
– #1 customer relationship as noted in the most recent CRN Sourcing Guide
– #1 on 7 out of top 10 vendors (In market share)
– Data mining, incremental customer development
What Makes Us Different- Vendor\Customer Relationships - Data Mining, Incremental
Vertical Market
SYNNEX
End User
Count
D&B
Total
US Base Penetration
COLLEGES, UNIVERSITIES,
PROFESSIONAL SCHOOLS, &
JR. COLLEGES 8,188 28,645 29%
ELEMENTARY AND
SECONDARY SCHOOLS40,961 171,767 24%
HOSPITALS 5,916 28,984 20%
ELECTRONIC COMPONENTS
Vertical Market Penetration (examples)Unique End User Count by Major Industry
REAL ESTATE
WHOLESALE TRADE - DURABLE GOODS
EDUCATIONAL SERVICES
HEALTH SERVICES
ENGINEERING, ACCOUNTING, …
BUSINESS SERVICES
29292929
90%+ of end users under 1000 employees (SMB)
ELECTRONIC COMPONENTS
AND ACCESSORIES 2,604 13,464 19%
FINANCE, TAXATION,
AND MONETARY POLICY 1,605 8,462 19%
EXECUTIVE OFFICES 7,478 40,253 19%
LABORATORY, ANALYTICAL,
OPTICAL & MEASURING
INSTRUMENTS 2,814 15,272 18%
ADMINISTRATION OF
PUBLIC HEALTH PROGRAMS 1,788 9,749 18%
DRUGS 1,641 9,398 17%
ELECTRIC SERVICES 2,115 12,892 16%
COMPUTER AND
OFFICE EQUIPMENT 1,608 9,833 16%
0 20,000 40,000 60,000 80,000100,000
WHOLESALE TRADE - NONDURABLE …
MISCELLANEOUS RETAIL
LEGAL SERVICES
MEMBERSHIP ORGANIZATIONS
CONSTRUCTION - SPECIAL TRADE …
REAL ESTATE
� Operational Excellence
� Consumer Electronics - NAE
� TSD
– Services
– HP Servers & Storage
– ICG
– PRINTSolv
� Vertical Markets
Strategic Focus - How We Will Outperform - Operational Excellence
30
– Government
– Healthcare
– Many more
� Oversupply - Reconditioned
� SMB Reseller Communities / Varnex
� New Vendors
� Operational Excellence
� Consumer Electronics – NAE
� TSD
– Services
– HP servers & storage
– ICG
– PRINTSolv
� Vertical Markets
Strategic Focus - How We Will Outperform- Consumer Electronics (New Age Electronics)
31313131
– Government
– Healthcare
– Many more
� Oversupply - Reconditioned
� SMB Reseller Communities / Varnex
� New Vendors
Strategic Focus - How We Will Outperform- Consumer Electronics (New Age Electronics)
� Integration Successful
� P&L Discipline Drives Results
� System Drove Better Behavior
� Vendor’s – Customers Satisfied
� Adjacent Business Grow is Faster
� Sales & Product Management Changes
Mass
Merchandise
Regional Retail
Photo
OPSS Commercial Clubs
32323232
� Sales & Product Management Changes
� Grow Share
– Existing customers
– New vendors
– New customers
– Cross sell – Legacy distribution
– New markets
� Competition Fragmented
MilitaryBroadcast
ChannelsRental
Food & Drug DRC E-Commerce
� Operational Excellence
� Consumer Electronics - NAE
� Technology Solutions Division (TSD)
– Services
– PRINTSolv
– HP servers & storage
– ICG
� Vertical Markets
Strategic Focus - How We Will Outperform - Technology Solutions Division Services
� Why?
– Scale, stickiness, defense, offense, annuity-refresh
� Capabilities:
– Assessment
– Server
– Storage
– Remote monitoring
– Onsite deployment
– Recycle
33333333
– Government
– Healthcare
– Many more
� Oversupply - Reconditioned
� SMB Reseller Communities / Varnex
� New Vendors
– Recycle
– Asset management
� Tools
– Remote monitoring
– Asset management
– Assessment writing
� Agnostic Opinion
� Dedicated Team
� Operational Excellence
� Consumer Electronics- NAE
� Technology Solutions Division (TSD)
– Services
– PRINTSolv
– HP servers & storage
– ICG
� Vertical Markets
Strategic Focus - How We Will Outperform - TSD PRINTSolv
� The Print Market Is $9 Billion
� Managed Print Is Growing At 25%
� What Is PRINTSolv
� Results:
– 80 million pages and growing
� Field Reps Call On End Users - Behalf Of VARs
34343434
– Government
– Healthcare
– Many more
� Oversupply - Reconditioned
� SMB Reseller Communities / Varnex
� New Vendors
� Field Reps Call On End Users - Behalf Of VARs
� ½ Business In Annuity
� Products Sold As A Contract
� Operational Excellence
� Consumer Electronics - NAE
� Technology Solutions Division (TSD)
– Services
– PRINTSolv
– HP Servers & Storage
– ICG
� Vertical Markets
Strategic Focus - How We Will Outperform- TSD HP Servers & Storage
� Huge Target Market Of Other Manufacturers
� Complete Suite Of Authorizations
� HP Is A Winner
� Dedicated Team
– Technically savvy sales team both inside and field
� Strong Growth Potential
Strong Value Proposition
35353535
� Vertical Markets
– Government
– Healthcare
– Many others
� Oversupply - Reconditioned
� SMB Reseller Communities / Varnex
� New Vendors
� Strong Value Proposition
� Operational Excellence
� Consumer Electronics - NAE
� TSD– Services
– PRINTSolv
– H.P. servers & storage
– ICG
� Vertical Markets
Strategic Focus - How We Will Outperform - Vertical Markets - Government
� Grow The Market
� Dedicated Team
� Chantilly Location – TAA Compliant Stock
� GSA Schedule – Example Of Success
36363636
– Government
– Healthcare
– Many more
� Oversupply - Reconditioned
� SMB Reseller Communities / Varnex
� New Vendors
Take-Away Thoughts
� We Have Exceptional People
� We Execute
� We Run A Tight Ship
� We Have Significant Upside On The Value Business – We Hit Our TSD Metrics
37
� We Are Excited With Our New Businesses
Jim Estill
SYNNEX Canada
38
Jim EstillChief Executive Officer, SYNNEX Canada, LTD
North America Auto I.D., North America Supplies
81%
19%
Overview
■ SYNNEX Canada Business is $1.4B in 2008
■ Canadian Distribution Market is about $5.5B
■ Canadian and U.S. Markets Align But Have
Several Key Differentiators – Vendors tend to sell to major retail through
Distribution
– National VARs (Corporate VARs) are a
Canada Distribution
– National VARs (Corporate VARs) are a significant segment
■ SYNNEX Canada ranked #2 in Revenues; More Than Doubling Revenues since FY 2003
■ Outside of National VAR, SYNNEX share is disproportionately high
■ We have significant share in both IT and Consumer Electronics
� 19% of the business
� Growing business
� Growing margins
� Growing ROIC
SYNNEX Canada
� Business Model
– Segmented sales force and web based communities creates
value through expertise
– More warehouses increase service and lower freight costs; sales
presence across Canada (Vancouver to Halifax)
� Execution
– Process and systems
– Exceptional people
– Flat organization
40
– Flat organization
– Integration of companies
� Low Cost Provider
– In sourcing
– IT – Pricing model, processes
� Vendor - Customer Relationships
– Broad line card coverage for IT business and consumer
electronics
– #1 in market share with 8 of our top 10 vendors
SYNNEX Canada- Business Model - Segmentation
� Strong Market Share Position In All
Reseller/Retailer Segments Outside
Of National VAR/DMR:
– Major retail (IT, CE) #1
– Smb var #1/#2
– Office product dealers #1
41
– Office product dealers #1
– System builders #1/#2
– Apple authorized resellers #1/#2
– Independent retailers #1/#2
– Point of sales/auto ID market #1
Segmented Sales Divisions and
Web Based Marketing
“Communities” Add Value through
Expertise
SYNNEX Canada– Business Model – Geographic Warehouse and Sales Coverage
� 4 Regional Warehouses
– Guelph, Vancouver, Calgary, Halifax
– Increased redundancy
� Master Warehouse in Guelph
– Low overhead
Decentralized Warehouse Strategy
Means Better Service, Lower Cost
– Low overhead
– Better service
� Value-add Configuration Center
– Guelph
� 8 Sales Locations
� Warehouse Coverage Provides Next-day
Ground Delivery To Over 95% Of The
PopulationGuelph, ON
Toronto, ONVancouver, BC
Montreal, QC
Calgary, AB
Halifax, NS
Master Warehouse
Regional Warehouses
Configuration Centers
Sales Locations
Sales Branches
Winnipeg, MB
Ottawa, ON
SYNNEX Canada
� Business Model
– Segmented sales force and web based communities creates
value through expertise
– More warehouses increase service and lower freight costs; sales
presence across Canada (Vancouver to Halifax)
� Execution
– Process and systems
– Exceptional people
– Flat organization
43
– Flat organization
– Integration of companies
� Low Cost Provider
– In sourcing
– IT – Pricing model, processes
� Vendor - Customer Relationships
– Broad line card coverage for IT business and consumer
electronics
– #1 in market share with 8 of our top 10 vendors
SYNNEX Canada
� Business Model
– Segmented sales force and web based communities creates
value through expertise
– More warehouses increase service and lower freight costs; sales
presence across Canada (Vancouver to Halifax)
� Execution
– Process and systems
– Exceptional people
– Flat organization
44
– Flat organization
– Integration of companies
� Low Cost Provider
– In sourcing
– IT – Pricing model, processes
� Vendor - Customer Relationships
– Broad line card coverage for IT business and consumer
electronics
– #1 in market share with 8 of our top 10 vendors
SYNNEX Canada– Vendor – Customer Relationships
� Business Model
– Segmented sales force and web based communities creates
value through expertise
– More warehouses increase service and lower freight costs; sales
presence across Canada (Vancouver to Halifax)
� Execution
– Process and systems
– Exceptional people
– Flat organization
IPG
Imaging
45
– Flat organization
– Integration of companies
� Low Cost Provider
– In sourcing
– IT – Pricing model, processes
� Vendor - Customer Relationships
– Broad line card coverage for IT business and consumer
electronics
– #1 in market share with 8 of our top 10 vendors Exclusive Distributor in Canada
SYNNEX Canada is the #1 performing Distributor in Canada
� Operational Excellence
– Cash to cash cycle focus
– Continue to reduce costs as a percentage of sales while enhancing
our value proposition
– Farm team
– Guelph
� Enterprise Solutions to SMB VARs
Strategic Focus - How We Will Outperform- Operational Excellence
46
� Enterprise Solutions to SMB VARs
� Fee Based Logistics
� New Vendors
� Increase Sales to Independent Retailers
� Scale our “AVS Model” (RGC)
– We fully represent consumer electronic vendors, high value model
Strategic Focus - How We Will Outperform- Enterprise Solutions to SMB / VARs
� Enterprise Solutions to SMB VARS
– Printsolv – North American initiative
– HP EVA – North American initiative
– VIBE (SMB server virtualization solution) –
local initiative
� Operational Excellence
– Reduce inventory days without compromising high fill rates
– Continue to reduce costs as a percentage of sales while
enhancing our value proposition
� Enterprise Solutions to SMB VARs
� Fee Based Logistics
� New Vendors
47
� New Vendors
� Increase Sales to Independent Retailers
� Scale our “AVS Model” (RGC)
– We fully represent consumer electronic vendors,
high value model
� Operational Excellence
– Reduce inventory days without compromising high fill rates
– Continue to reduce costs as a percentage of sales while
enhancing our value proposition
� Enterprise Solutions to SMB VARs
� Fee Based Logistics
� New Vendors
Strategic Focus - How We Will Outperform- Fee Based Logistics
� SYNNEX Canada Provides the Logistics
Capabilities to the Vendor Communities,
Establishing Strong Relationships With The
Top IT and CE Canadian Retailers:
– Wal-Mart
– Staples
– Costco
– Future Shop/Best Buy
48
� New Vendors
� Increase Sales to Independent Retailers
� Scale our “AVS Model” (RGC)
– We fully represent consumer electronic vendors,
high value model
– Future Shop/Best Buy
� Operational Excellence
– Reduce inventory days without compromising high
fill rates
– Continue to reduce costs as a percentage of sales
while enhancing our value proposition
� Enterprise Solutions to SMB VARs
� Fee Based Logistics
Strategic Focus - How We Will Outperform- New Vendors
� Selectively Fill Line Card Gaps
� Strong Focus On Emerging Vendors in
Growth Technologies
49
� New Vendors
� Increase Sales to Independent Retailers
� Scale our “AVS Model” (RGC)
– We fully represent consumer electronic vendors,
high value model
� Operational Excellence
– Reduce inventory days without compromising high
fill rates
– Continue to reduce costs as a percentage of sales
while enhancing our value proposition
� Enterprise Solutions to SMB VARs
� Fee Based Logistics
Strategic Focus - How We Will Outperform- Increase Sales to Independent Retailers
� Increase Sales to Independent Retailers
– Many VARS/System Builders/Apple Resellers also
have “store fronts” and etailing
– XM Exclusive brings SYNNEX 1,000+ new Car Audio
Retailers
50
� New Vendors
� Increase Sales to Independent Retailers
� Scale our “AVS Model” (RGC)
– We fully represent consumer electronic vendors,
high value model
� Operational Excellence
– Reduce inventory days without compromising high
fill rates
– Continue to reduce costs as a percentage of sales
while enhancing our value proposition
� Enterprise Solutions to SMB VARs
� Fee Based Logistics
Strategic Focus - How We Will Outperform - Scale Our AVS Model (RGC)
� SYNNEX AVS Represents Vendors For All
Sales And Marketing Programs For Major
Retailers
� Current Exclusives Include Sandisk, Cobra,
Sakar, GE Cameras, Case Logic
� Very Narrow Line Card Ensures Deep Focus
51
� New Vendors
� Increase Sales to Independent Retailers
� Scale our “AVS Model” (RGC)
– We fully represent consumer electronic vendors,
high value model
� Allocated Resources To Continue Growing
This Business
Take-Away Thoughts
� SYNNEX Canada continues to grow faster than our competitors
- Growing market share while also growing gross margins
� SYNNEX Canada is second largest but #1 in share with vendor base:
- #1 in market share with 8 of our top 10 vendors
52
- #1 in market share with 8 of our top 10 vendors
� We Are Contributing Solid Profitability For SYNNEX Overall
� Focused Execution
� Growing ROIC with Cash to Cash cycle focus
OPERATIONAL OVERVIEW
Dennis Polk
Chief Operating Officer
53
Operational Overview Agenda
�Operating Model Differentiators
� Low Cost Leader
�Acquisition Strategy
�Asset Management/Financial Operations
54
� Take-Away Thoughts
Operating Model Differentiators
� North American Concentrated
– Reduced complexity/Swift Execution
– Focused product line
� IT System
– Company developed for distribution business
– Operational and financial transparency
– “Scalable” and “Changeable”
� Offshore Support/Onshore Investment
US & CanadaDistribution Network
55555555
� Offshore Support/Onshore Investment
– In-sourced versus outsourced
– Ten year history/stability/execution
– Cost offshore enable onshore investment
� Warehouse Strategy
– Diversified/customer focused
� Manufacturing/Product Value Add
– Synergy with distribution business
Low Cost Distribution Leader
� Management Philosophy
� IT System
� Transaction Visibility
– P&L’s by:� SKU, order, customer, vendor
– All factors of business incorporated� Direct expense, overhead, capital
– Drives P&L responsibility to each department
within the company
SG&A as Percentage of Sales: 2003 - 2008
4.00%
5.00%
6.00%
Q405
Operating Margin
Q408
Operating Margin
2.28%
56565656
within the company� Daily / real-time visibility
� Warehouse Set-up/Investment
� Insourcing
2.00%
3.00%
Q4
05
Q1
06
Q2
06
Q3
06
Q4
06
Q1
07
Q2
07
Q3
07
Q4
07
Q1
08
Q2
08
Q3
08
Q4
08
Gross Profit % Sales SG&A % Sales SG&A % Sales Excluding Charges
Operating Margin
1.53%
Overseas Back Offices
� Order Entry
– Less than 15% of orders touched in the U.S.
� Customer Service
– Major customers support – offshore
– 30% of CSR
� Tech Support
– 90%+ of all inbound calls
SYNNEX China
Low Cost Leader - Insourcing
57575757
– 90%+ of all inbound calls
� Financial / Operations
– Accounts payable
– Vendor claims
– Credit
– Purchasing
– Warehouse monitoring
– Content support
SYNNEX Philippines
�More To Be Done
– Margin Improvement
� Freight
– Top Grading
� Compensation ROI
Low Cost Leader- More To Be Done
58
– Cash Conversion Cycle
– Operational Efficiency\Insourcing
Acquisition Strategy
� Organic Growth First
� Needs From Acquisition Perspective:
– Line improvement
– Customer breadth
– New product segments
– Geographic expansion
– Diversify business
� Investment Requirements:
59595959
� Investment Requirements:
– Strict ROIC/EPS accretion goals
– Ease of integration
– Solid leadership/adaptable to SYNNEX culture
– Synergistic
� Current Environment
– Disciplined philosophy on acquisition strategy
Asset Management/Financial Operations
�Cash to Cash Cycle Focus
�Credit Management:– Solid performance in tough environment
– IT system provides high level of visibility
– Portfolio is well diversified
– Reseller’s are primarily long standing/well run companies
– Protect assets through insurance and other means
– Credit availability for growth – Credit availability for growth
� Inventory Management:– Solid performance in tough environment
– IT system provides high level of visibility
– Do business with well capitalized/long-term channel positive vendors
– Limited line card allows for deep understanding of product set/great relationships
60
Take-Away Thoughts
�High Visibility To All Aspects Of Organization
� Low Cost Culture But Willing To Make Investment “Bets”
�Culture of “Can Do” And Rapid Response
�ROIC Focused�ROIC Focused
– Cash to Cash Cycle
�Company is Built To Execute In Up And Down Economic Environments
– Zero based budget philosophy
� The Machine is Running Well
61
SYNNEX GLOBAL BUSINESS
Chris Caldwell
Senior Vice President, Global Business Solutions
62
� Business Process Outsourcing services specializing in:
– Customer Care
– BPO/KPO
– IT/Internet services
� 4,500+ employees around the world
� “Best-shore” delivery model
� Value Proposition:
Overview
63
� Value Proposition:
– Allow businesses to focus on core capabilities
– More efficient on customers non-core processes
– Scalable cost efficient labor pool
– Knowledge management transfer expertise
We target companies that require multiple high value interactions with their customers.
In 2008, we were trusted by our clients to represent them in over 14 million interactions.
SGB Org Chart
64
BPO Investments
� Customer Care� BPO/KPO� IT Services
� SAAS� IT/Internet Services
� Customer Care� BPO/KPO� Internet Services
Customer Care BPO/KPO IT Services
Core Capabilities
Technical Support / Customer Service
End to End Transaction ProcessingEnd to End Transaction Processing
65
Web Design / Hosting / SAASWeb Design / Hosting / SAAS
Process AutomationProcess Automation
Application DevelopmentApplication Development
Data Analytics / Marketing Services / Lead Generation / Sales Data Analytics / Marketing Services / Lead Generation / Sales
SGB Supply Circle
SGB Major Offices
SGB Major Offices
67
� Over 25 offices worldwide
� Over 12 languages supported
� Our staff in our facilities
OUTSOURCE HC = 100 ONSHORE HC = 20
ONSHORE
$1.00 = $1.00 0%
Cost Neutral
$1.00 = $0.7525%
Cost Model Sample
68
CUSTOMER
OUTSOURCE HC = 100 ONSHORE HC = 20NEARSHORE HC = 80
NEARSHORE
25% Decrease
OFFSHORE
$1.00 = $0.6040%
Decrease
SGB Segment Financials
SGB
Fiscal Year ended November 30, 2008:
Revenue 113,998
Income from operations 13,022
Total assets 165,648
Fiscal Year ended November 30, 2007:
Revenue 82,722
2 YEAR CAGR 2 YEAR CAGR
Sales 69%Sales 69%
69
Revenue 82,722
Income from operations 9,059
Total assets 117,818
Fiscal Year ended November 30, 2006:
Revenue 39,639
Income from operations 3,760
Total assets 35,681
Sales 69%Sales 69%
Income fromIncome fromOperationsOperations 86%86%
� Increase share of spend from existing customers
– Customers utilizing us for multiple services
� Create incremental value in existing client services
– Increased ROI on their spend
� Offer branded services
– Brand affinity – unique differentiator
Focus
� Focus services around the customer lifecycle
– Lower costs / higher value for our clients customers
� On boarding new client relationships
Acquire – Support – Retain – Renew
70
PCI CertificationClient Award 2007 and 2008: Star Award in Technical Support & Customer Care
“Site of the Year” 2007 and 2008
Client Award
Recognitions
71
Level III
“Best in Class B2B Teleservices 2008
Top Employer for Northern Mindanao 2008
2009 World’s Best Service Advisor
Rankings
“Best 10 Companies by Services Offered
2008
�Services we offer create value for SYNNEX vendors and customers
�Growing profitably both organically and through new customers
�Good, diversified income base: top 10 customers represent less
than 50% of business
Take-Away Thoughts
72
than 50% of business
�Trusted advisor and thought leader to our clients
�We deliver high value, cohesive global services
FINANCIAL OVERVIEW
Thomas Alsborg
Chief Financial Officer
73
Financial Overview Agenda
� Overview Financial Model / Financial Position
� Overview Financial Performance Results
- Segment Reporting
� Balance Sheet Specifics
- Corporate working capital lines refinancing
74
� Financial Misnomers / Questions
� Valuation Considerations
� Take-Away Thoughts
Overview Financial Model / Financial Position - Flexible Financial Model and Healthy Financial Position
� Over 20 years of consecutive quarterly profitability
– Consistent performer in all economic environments
� SYNNEX utilizes a well-run, low-cost, flexible financial model
– With a substantial portion of our industry SG&A being variable costs; we can flex in a soft
economy
� Strong, healthy balance sheet and liquidity
– Quality of working capital assets is very good
– Cash conversion cycle has gotten shorter
– Good continuous growth in equity
� Strong established banking relationships afford continuous access to capital
75
DRAFT
2.00%
3.00%
4.00%
5.00%
6.00%
Q40
5
Q10
6
Q20
6
Q30
6
Q40
6
Q10
7
Q20
7
Q30
7
Q40
7
Q10
8
Q20
8
Q30
8
Q40
8
Gross Profit % Sales SG&A % Sales SG&A % Sales Excluding Charges
Q405
Operating Margin
1.53%
Q408
Operating Margin
2.28%
SYNNEX Margin Trends Over Time
5,641
6,344
7,004
7,768
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2005 2006 2007 2008
Revenue Growth Billions
Overview Financial Performance Results– Differentiating Results
7.5% 7.4%7.9%
8.1%
6.9%7.3% 7.3%
8.9%
6.9%7.3%
6.6%
8.9%
7.8%7.2%
8.3%
10.6%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Prior Year Current Year
76767676
SYNNEX ROIC Trends
1.38
1.69
2.04
2.63
-
0.50
1.00
1.50
2.00
2.50
3.00
2005 2006 2007 2008
EPS Growth in Dollars
2007 2008
Overview Financial Performance Results- Able to Consistently Generate Positive Operating Cash Flows
2008 2007 2006
Cash flows from operating activities ($K): $ 52,593 $ (152,453) $ (18,939)
149,268
2007 adjustments for reclassification of off balance sheet AR 280,730
Proforma adjusted cash flow from operating activities $ 52,593 $ 128,277 $ 130,329
77
Proforma adjusted cash flow from operating activities $ 52,593 $ 128,277 $ 130,329
Less Capital Expenditures(1) (33,521) (22,781) (7,916)
Proforma Free Cash Flow $ 19,072 $ 105,496 $ 122,413
(1) Maintenance capital expenditure is approx $10M.
Overview Financial Performance Results - Segment Reporting ($K)
Distribution GBSInter-Segment
Elimination ConsolidatedFiscal Year ended November 30, 2006:
Revenue………………………………………………………………………….6,316,332$ 39,639$ (12,457)$ 6,343,514$ Income from operations before non-operating items,
income taxes and minority interest……………………………………………92,482 3,760 - 96,242 Depreciation and amortization expense………………….………………………..8,911 870 - 9,781 Total assets………………………………………………………………………1,356,999 35,681 (9,946) 1,382,734
Fiscal Year ended November 30, 2007:Revenue………………………………………………………………………….6,938,926$ 82,722$ (17,528)$ 7,004,120$ Income from operations before non-operating items,
income taxes and minority interest……………………………………………103,088 9,059 - 112,147
78
Financial Synergies: Revenue Generation, Margin Enh ancing, Reduced Costs,Income Diversification, Cash Flow Complementary
income taxes and minority interest……………………………………………103,088 9,059 - 112,147 Total assets………………………………………………………………………1,841,369 117,818 (72,084) 1,887,103
Fiscal Year ended November 30, 2008:Revenue………………………………………………………………………….7,674,048$ 113,998$ (19,816)$ 7,768,230$ Income from operations before non-operating items,
income taxes and minority interest……………………………………………138,826 13,022 - 151,848 Total assets………………………………………………………………………1,951,024 165,648 (83,792) 2,032,880
Balance Sheet Specifics
� Maintaining Good Liquidity
� Good Access to Capital
� Ample Cash Availability
� Excellent Banking Relationships
79
Balance Sheet Specifics- Maintaining Good Liquidity
Net Current Assets Ratio Remains Healthy� Maintaining Good Liquidity
– Liquid assets trends consistently in range of 1.5
times current liabilities
– We expect liquidity to increase in soft economic
environment, thereby further improving the ratio
– No deterioration in Cash Conversion Cycle
� Good Access to Capital
80808080
� Ample Cash Availability
� Excellent Banking Relationships
� Good Access to Capital
– Available corporate credit up to $430M
– “Accordion” feature can increase facilities by
$120M additional credit when desired
– $390M in eligible assets today
� Ample Cash Availability
– $150M in available borrowing today
Balance Sheet Specifics- Good Access to Capital, Ample Cash Availability
� Maintaining Good Liquidity
� Good Access to Capital
� Ample Cash Availability
� Excellent Banking Relationships
81818181
Balance Sheet Specifics- Excellent Banking Relationships
� Maintaining Good Liquidity
� Good Access to Capital
� Ample Cash Availability
� Excellent Banking Relationships
� Excellent Banking Relationships
– Recently refinanced working capital lines
– Increased flexibility of terms for business growth
– Non constraining covenants
– Comparable effective interest rates
82828282
� AR Securitization
– 364 day facility
– $350M credit
– CP + 150 bps
� 2 Financial Covenants
– Fixed Charge Coverage Ratio – same covenant
as revolver
Excellent Banking Relationships- Corporate Working Capital Line Refinancing, January 2009
� Revolving ABL Credit Facility
– Line matures in February 2011
– $80M credit
– Can increase to $150M
– LIBOR +250 bps or Prime
� 2 Financial Covenants
– Fixed Charge Coverage Ratio of 1.25 : 1.00
83838383
as revolver
– Net Worth – same covenant as revolver
� Increased Flexibility
– More room for M&A – same terms as revolver
– Others
– Fixed Charge Coverage Ratio of 1.25 : 1.00
– Minimum Net Worth of $429.3M
� Increased Flexibility
– More room for M&A
– Others
Financial Misnomers / Questions
� “Over leveraged: Debt to capitalization ratio too hard to manage in weak
economy?”
� “Weak economy could cause goodwill charges. Could this cause a covenant
default?”
� “How can SYNNEX continue to perform in headwinds of weak economy?”
84
11/30/2008
Securitization (1) $266.4
Revolver $110.0
Converts (4% due 2013) $143.8
Other (2) $31.8
Total Debt $551.9
Total Equity $679.8
Financial Misnomers / Questions - Capital Structure
SYNNEX Capitalization� Total Debt to Cap Ratio is 44.8%
– Low 40’s range selected intentionally
– Use of debt lowers cost of capital, allows SYNNEX
to optimize WACC
� Fixed-term debt to cap ratio is 14.0%
– Fixed debt has static service requirements
Total Equity $679.8
Total Capitalization $1,231.7
Fixed Debt to Capitalization (3) 14.0%
Working Capital Lines to Capitalization 30.8%
(1) Includes $59M in Canadian off balance sheet AR line.
(2) Primarily term debt of subsidiaries.
(3) Includes converts and Other.
85858585
Core ITdistribution
services
Supply chain managementservices / Contractassembly services
� Remaining debt from working capital
lines
– Lines flex with working capital requirements
– Don’t have static service requirements
– At yearend lines were 30.8% of total
capitalization
Financial Misnomers / Questions – Debt Management Shown to be Consistently Managed
� Debt to cap ratio consistently managed
over the years
– Managed in 40 to 45 range since IPO
� Working capital lines flex with
economic environment
– Provide ultimate flexibility for seasonal business
SYNNEX’ Debt to Cap Ratio
86868686
Core ITdistribution
services
Supply chain managementservices / Contractassembly services
– Provide ultimate flexibility for seasonal business
– Natural debt “right sizing” as cash to cash cycle
is managed
– Slow growth uses less cash, thus less debt to
service
� Increased flexibility
– More room for M&A
Financial Misnomers / Questions - 2008 Working Capital Management Shown to Improve
34
36
38
40
42
44
46
48
87
SYNNEX’ working capital lines flex with working capital requirements
-Naturally “right size” debt with proper working capital management
30
32
34
Q108 Q208 Q308 Q408
DSO DIO
Financial Misnomers / Questions
� “Over leveraged: Debt to cap ratio too hard to manage in weak economy?”
� “Weak economy could cause goodwill charges. Could this cause a covenant
default?”
� “How can SYNNEX continue to perform in headwinds of weak economy?”
88
Financial Misnomers / Questions- Debt Covenants
Actual Pro Forma11/30/2008 11/30/2008
Fixed Charge Coverage Ratio
No Write-offs 1.63 1.63
With Goodwill Charge No Effect
With Goodwill and Intangible Charge No Effect
Required 1.25 1.25
Fixed Charge Coverage Ratio
89
Required 1.25 1.25
Net Worth 679,935
With Goodwill Charge 605,973 (a)
With Goodwill and Intangible Charge 588,724 (b)
Required 429,287 429,287
(a) Goodwill was $113,438 as of November 30, 2008.
(b) Goodwill and intangibles were $139,894 as of November 30, 2008
Financial Misnomers / Questions - Debt Covenants: “What If Scenarios” Intangible Impairment
Actual Pro Forma11/30/2008 11/30/2008
Fixed Charge Coverage Ratio
No Write-offs 1.63 1.63
With Goodwill Charge No Effect
With Goodwill and Intangible Charge No Effect
Required 1.25 1.25
90
Required 1.25 1.25
Net Worth 679,935
With Goodwill Charge 605,973 (a)
With Goodwill and Intangible Charge 588,724 (b)
Required 429,287 429,287
(a) Goodwill was $113,438 as of November 30, 2008.
(b) Goodwill and intangibles were $139,894 as of November 30, 2008
Key take-away: SYNNEX has no liquidity impact in any impairment scenario.
SYNNEX Financial Position - Misnomers
� “Over leveraged: Debt to cap ratio too hard to manage in weak economy?”
� “Weak economy could cause goodwill charges. Could this cause a covenant
default?”
� “How can SYNNEX continue to perform in headwinds of weak economy?”
91
Financial Misnomers / Questions- SYNNEX Earnings Model Proves to be Flexible, Sustainable
� SYNNEX called a weak economy heading into 2008 and still delivered substantial
EPS and ROIC growth
� Flexible cost structure – substantial part of our industry leading SG&A margin
made up of variable costs
� Minimal risks
- Income diversification comes through our business model and adjacent market segment penetration, not
geography where risk is greater
92
- North America is relatively more stable and expected to lead world out of recession
� Of course no guarantees, but consider SYNNEX’ past and recent performance
- 86 quarters of consecutive profitability; record performances in 2008
Valuation Considerations
� Solving for the misnomers and questions
� Considering the embedded value of Business Process Outsourcing with SYNNEX
Global Business
� Back to basics valuation techniques
FWD P/E
TTM
Op Margin (1)
Annual
ROIC (1)
EPS
Growth (1)
Revenue
Growth (1)
93
FWD P/E Op Margin (1) ROIC (1) Growth (1) Growth (1)
8.5%
8.2%
5.8%
10.9%
-0.9%
4.8%
28.9%
-17.5%
-18.2%
2.0%
1.1%
0.9%
5.3
9.6
8.6
IM
TECD
Note:(1) Annualized numbers for IM and TECD are based on the prior three quarters of actual results for each companies respective fiscal year plus analyst estimates for the final quarter for each companies respective fiscal year.
Valuation Considerations
� Solving for the misnomers and questions
� Considering the embedded value of Business Process Outsourcing with SYNNEX
Global Business
– BPO has an historical P/E ratio that is as much as 2 to 3 times traditional distribution multiples
– BPO has experienced industry growth rates of 18 to 20%
– SYNNEX GSB has grown revenue at a 2-year CAGR of 69% with an operating income CAGR of 86%
– SYNNEX GSB contributing in range of 10% of SYNNEX earnings, and growing
� Back to basics valuation techniques
– With balance sheet concerns minimized, valuation ought to be based on growth in income and
returns
– SYNNEX has established a more profitable business model than traditional distribution which has
traditional P/Es of 10 to 14 times earnings
– SYNNEX distribution segment margins well surpass those of the traditional broadline space
– SYNNEX has clearly differentiated its model as more profitable and sustainable
94
Key Take-Away Thoughts
� Our business is differentiated and as a result, our financial results also stand out
� We have a flexible, sustainable earnings model and a strong, healthy balance sheet
� Our debt and capital structure is strategic and readily manageable; we have no
concerns about covenants, liquidity, or cash availability
� We have performed well in prior weak economies and are we are succeeding
95
� We have performed well in prior weak economies and are we are succeeding
during the current weak economy as well
� We believe current and even traditional distribution valuations overlook the
embedded value of the BPO business of SYNNEX’ SGB segment
� Given our low risk profile and our superior financial track record, at a fwd P/E of 5
times earnings, SYNNEX represents a significant value to investors
Thank you for your attention today. We would like
to open the discussion up for your questions.to open the discussion up for your questions.
Thank You