SYNNEX Corp. (NYSE:SNX) posted a strong 33.3% growth in net income to $24.8 million for its fiscal 2010 second quarter, compared to $18.6 million a year ago. Earnings from continuing operations came in at 70 cents per share, surpassing both the Zacks Consensus Estimate of 68 cents and the year-ago result of 55 cents per share.
Total revenues during the quarter grew 12.8% to $2.03 billion from $1.80 billion in the year-ago quarter. The growth was driven by a 12.8% growth in distribution revenue to $2.01 billion coupled with a 10.5% increase in GBS revenues to $27.6 million.
Synnex’s gross profit grew 15.6% year over year to $116.7 million, while gross margin improved 10 basis points (bps) to 5.7%. Selling, general and administrative expenses, as a percentage of total revenues, dipped 30 bps to 3.6%. Accordingly, operating income rose 44.8% year over year to $43.4 million, while operating margin increased 50 bps to 2.1%.
Synnex ended the quarter with cash and short-term investments of $75.5 million and a debt-to-capitalization ratio of 24.1%, compared to a cash balance of $87.1 million and debt-to-capitalization of 30.8% in the year-ago quarter. During the quarter, the company utilized $2.4 million towards capital expenditure.
Looking ahead, Synnex expects earnings to range between 72 cents and 75 cents per share on revenues of $2.05 billion to $2.10 billion in the third quarter of fiscal 2010. The guidance is in line with the Zacks Consensus Estimate of 75 cents per share, which moved up 2 cents over the past 2 months. The Zacks Consensus Estimate on Synnex’s earnings for the entire fiscal 2010 presently stands at $3.00 per share, which increased 7 cents over the past 2 months.
Synnex is a business process services company, serving resellers and original equipment manufacturers (OEMs) worldwide. The company operates in two segments, distribution services and global business services (GBS). The flagship distribution services segment provides computer systems and complementary products to resellers, system integrators and offers assembly services to OEMs. The GBS segment offers services, such as customer management, software development, web hosting, domain name registration, and back office processing.