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Item 7. Management’s Discussion and Analysis

2025-01-24 compared with 2024-01-26 · 91 added, 104 removed, 332 unchanged (37% of the section changed)

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Amounts in certain tables appearing in this Report may not add or compute due to rounding.

This section of the Form 10-K generally discusses fiscal 2023 and 2022 items and year-to-year comparisons between fiscal 2023 and 2022.

Discussions of fiscal 2021 items and year-to-year comparisons between fiscal 2022 and 2021 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 2022 filed with the SEC on January 24, 2023.

This section of the Form 10-K generally discusses fiscal years 2024 and 2023 items and year-to-year comparisons between fiscal years 2024 and 2023.

Discussions of fiscal year 2022 items and year-to-year comparisons between fiscal years 2023 and 2022 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 2023 filed with the SEC on January 26, 2024.

In addition to historical information, the MD&A contains forward-looking statements that involve risks and uncertainties.

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We serve a critical role, bringing products from the world's leading and emerging technology vendors to market, and helping our customers create solutions best suited to maximize business outcomes for their end-user customers.

On March 22, 2021, we entered into an agreement and plan of merger (the “Merger Agreement”) which provided that legacy SYNNEX Corporation would acquire legacy Tech Data Corporation, a Florida corporation (“Tech Data”) through a series of mergers, which would result in Tech Data becoming an indirect subsidiary of TD SYNNEX Corporation (collectively, the "Merger").

On September 1, 2021, pursuant to the terms of the Merger Agreement, we acquired all the outstanding shares of common stock of Tiger Parent (AP) Corporation, the parent corporation of Tech Data, for consideration of $1.6 billion in cash ($1.1 billion in cash after giving effect to a $500.0 million equity contribution by Tiger Parent Holdings, L.P., Tiger Parent (AP) Corporation’s sole stockholder and an affiliate of Apollo Global Management, Inc., to Tiger Parent (AP) Corporation prior to the effective time of the Merger) and 44 million shares of common stock of SYNNEX, valued at approximately $5.6 billion.

See Note 3 - Acquisitions to the Consolidated Financial Statements for further information.

Economic and Industry Trends

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Our systems design and integration solutions business is highly dependent on the demand for cloud infrastructure, and the number of key customers and suppliers in the market.

Our business includes operations in the Americas, Europe and APJ, so we are affected by demand for our products in those regions, as well as the impact of fluctuations in foreign currency exchange rates compared to the U.S.

Our business includes operations in the Americas, Europe and Asia-Pacific and Japan ("APJ"), so we are affected by demand for our products in those regions, as well as the impact of fluctuations in foreign currency exchange rates compared to the U.S.

We continually seek to augment organic growth in our business with strategic acquisitions of businesses and assets that complement and expand our existing capabilities.

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We seek to acquire new OEM relationships, enhance our supply chain and integration capabilities, the services we provide to our customers and OEM suppliers, and expand our geographic footprint.

Results of Operations

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Interest expense and finance charges, net (0.55) % (0.50) %

Other (expense) income, net 0.00 % 0.00 %

Other expense, net

(0.01) % (0.00) %

Income before income taxes 1.48 % 1.37 %

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• Non-GAAP operating margin, which is non-GAAP operating income, as defined above, divided by revenue.

• Non-GAAP net income, which is net income, adjusted to exclude acquisition, integration and restructuring costs, amortization of intangible assets, share-based compensation expense, purchase accounting adjustments, legal settlements and other litigation, net, income taxes related to the aforementioned items, as well as a capital loss carryback benefit .

• Non-GAAP diluted earnings per common share (“EPS”), which is diluted EPS excluding the per share impact of acquisition, integration and restructuring costs, amortization of intangible assets, share-based compensation expense, purchase accounting adjustments, legal settlements and other litigation, net, income taxes related to the aforementioned items, as well as a capital loss carryback benefit .

• Non-GAAP net income, which is net income, adjusted to exclude acquisition, integration and restructuring costs, amortization of intangible assets, share-based compensation expense, purchase accounting adjustments and income taxes related to the aforementioned items.

• Non-GAAP diluted earnings per common share (“EPS”), which is diluted EPS excluding the per share impact of acquisition, integration and restructuring costs, amortization of intangible assets, share-based compensation expense, purchase accounting adjustments and income taxes related to the aforementioned items.

Acquisition, integration and restructuring costs, which are expensed as incurred, primarily represent professional services costs for legal, banking, consulting and advisory services, severance and other personnel related costs, share-based compensation expense and debt extinguishment fees that are incurred in connection with acquisition, integration, restructuring and divestiture activities.

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These adjustments benefited our non-GAAP operating income through the third fiscal quarter of fiscal 2023 based on historical settlement patterns with our vendors and in accordance with the timing defined in our policy for releasing vendor and customer liabilities we deem remote to be paid.

Legal settlements and other litigation, net includes a benefit recorded in other (expense) income, net during the fourth quarter of fiscal 2022 resulting from a decrease in our accrual for a legal matter in France.

For further discussion of this legal matter, please refer to Note 17 - Commitments and Contingencies to the Consolidated Financial Statements included in Part II, Item 8 of this report.

In connection with the Merger, we restructured our foreign financing structure, as well as select legal entities in anticipation of legally integrating legacy Tech Data and SYNNEX foreign operations.

In addition to the treasury efficiencies, these restructurings resulted in a one-time domestic capital loss which would offset certain domestic capital gains when carried back under United States tax law, resulting in an income tax capital loss carryback benefit.

We believe that providing this additional information is useful to the reader to better assess and understand our base operating performance, especially when comparing results with previous periods and for planning and forecasting in future periods, primarily because management typically monitors the business adjusted for these items in addition to GAAP results.

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Consolidated Commentary

During the fiscal year ended November 30, 2023, consolidated revenue decreased by $4.8 billion and consolidated revenue in constant currency decreased by $4.7 billion, as compared to the prior fiscal year.

The decreases are primarily driven by a decline in our Endpoint Solutions portfolio as the industry experienced a post-pandemic decline in demand for personal computer ecosystem products, partially offset by growth in our Advanced Solutions portfolio.

A greater percentage of our revenue was presented on a net basis due to changes in product mix, which negatively impacted our revenue growth by approximately 4%.

During the fiscal year ended November 30, 2024, consolidated revenue increased by $897.0 million and consolidated revenue in constant currency increased by $775.4 million, as compared to the prior fiscal year.

The increases are primarily driven by growth in our Advanced Solutions portfolio, partially offset by the presentation of additional revenue on a net basis due to changes in product mix, which negatively impacted our revenue growth by approximately $1.2 billion, or 2%.

Americas Commentary

During the fiscal year ended November 30, 2023, Americas revenue decreased by $4.2 billion and Americas revenue in constant currency decreased by $4.1 billion, as compared to the prior fiscal year.

The decreases are primarily due to a decline in our Endpoint Solutions portfolio in the region as the industry experienced a post-pandemic decline in demand for personal computer ecosystem products, partially offset by growth in our Advanced Solutions portfolio.

A greater percentage of our revenue was presented on a net basis due to changes in product mix, which negatively impacted our revenue growth by approximately 5%.

During the fiscal year ended November 30, 2024, Americas revenue increased by $218.0 million and Americas revenue in constant currency increased by $250.9 million, as compared to the prior fiscal year.

Europe Commentary

During the fiscal year ended November 30, 2023, Europe revenue decreased by $866.9 million and Europe revenue in constant currency decreased by $1.0 billion, as compared to the prior fiscal year.

A greater percentage of our revenue was presented on a net basis, which negatively impacted our revenue growth by approximately 4%.

During the fiscal year ended November 30, 2024, Europe revenue increased by $211.9 million and Europe revenue in constant currency slightly decreased by $15.0 million, as compared to the prior fiscal year.

The increase in revenue is primarily driven by growth in our Endpoint Solutions portfolio in the region, along with the impact of changes in foreign currencies, partially offset by the presentation of additional revenue on a net basis due to changes in product mix, which negatively impacted our revenue growth by approximately $200 million, or 1%.

The impact of changes in foreign currencies is primarily due to the strengthening of the euro against the U.S.

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During the fiscal year ended November 30, 2024, APJ revenue increased by $467.2 million and APJ revenue in constant currency increased by $539.5 million, as compared to the prior fiscal year.

The increases are primarily driven by high-growth technologies and our Advanced Solutions portfolio.

The increases are primarily driven by growth in our Advanced Solutions portfolio in the region, partially offset by the presentation of additional revenue on a net basis due to changes in product mix, which negatively impacted our revenue by approximately $60 million, or 2%.

The impact of changes in foreign currencies is primarily due to the weakening of the Japanese yen against the U.S.

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Our gross margin is affected by a variety of factors, including competition, selling prices, mix of products, the percentage of revenue that is presented on a net basis, product costs along with rebate and discount programs from our suppliers, reserves or settlement adjustments, freight costs, inventory losses and fluctuations in revenue.

Our gross profit increased during the fiscal year ended November 30, 2023, as compared to the prior fiscal year, primarily due to the impact of lower purchase accounting adjustments related to the Merger and our improved gross margin, partially offset by the impact of a decline in revenue in our Endpoint Solutions portfolio.

Our gross margin increased during the fiscal year ended November 30, 2023, as compared to the prior fiscal year, primarily due to product mix, including an increase in revenue in our Advanced Solutions portfolio and margin expansion in high-growth technologies, as well as the impact of lower purchase accounting adjustments related to the Merger.

A greater percentage of our revenue was presented on a net basis due to changes in product mix, which positively impacted our gross margin by approximately 24 basis points.

Our non-GAAP gross profit decreased during the fiscal year ended November 30, 2023, as compared to the prior fiscal year, primarily due to the impact of a decline in revenue in our Endpoint Solutions portfolio, partially offset by our improved gross margin.

Our non-GAAP gross margin increased during the fiscal year ended November 30, 2023, as compared to the prior fiscal year, primarily due to product mix, including an increase in revenue in our Advanced Solutions portfolio and margin expansion in high-growth technologies.

Our gross profit, on both a GAAP and non-GAAP basis, increased during the fiscal year ended November 30, 2024, as compared to the prior fiscal year, primarily due to the increase in revenue.

Our gross margin, on both a GAAP and non-GAAP basis, slightly decreased during the fiscal year ended November 30, 2024, as compared to the prior fiscal year, primarily due to higher strategic technologies margins in the prior year period.

The presentation of additional revenues on a net basis due to changes in product mix positively impacted our gross margin by approximately 14 basis points.

Selling, General and Administrative Expenses

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Selling, general and administrative expenses also include cost of warehouses, delivery centers and other non-integration facilities, utility expenses, legal and professional fees, depreciation on certain of our capital equipment, bad debt expense, amortization of our intangible assets, and marketing expenses, offset in part by reimbursements from our OEM suppliers.

Selling, general and administrative expenses increased in fiscal year 2023, compared to fiscal year 2022, primarily due to higher personnel costs.

Selling, general and administrative expenses increased as a percentage of revenue, compared to the prior year period, primarily due to a decrease in revenue in our Endpoint Solutions portfolio and higher personnel costs.

A greater percentage of our revenue was presented on a net basis due to changes in product mix, which contributed to the increase in selling, general and administrative expenses as a percentage of revenue by approximately 17 basis points.

Selling, general and administrative expenses increased in fiscal year 2024, compared to fiscal year 2023, primarily due to higher personnel costs and higher share-based compensation expense, partially offset by lower credit costs.

Selling, general and administrative expenses as a percentage of revenue was relatively flat compared to the prior year period.

A greater percentage of our revenue was presented on a net basis due to changes in product mix, which increased the ratio of selling, general and administrative expenses as a percentage of revenue for fiscal year 2024 by approximately 10 basis points.

Acquisition, Integration and Restructuring Costs

Acquisition, integration and restructuring costs are primarily comprised of costs related to the Merger and costs related to the Global Business Optimization 2 Program initiated by Tech Data prior to the Merger (the “GBO 2 Program”).

We incurred acquisition, integration and restructuring costs related to the completion of the Merger, including professional services costs, personnel and other costs, long-lived assets charges and termination fees and stock-based compensation expense.

Costs related to the GBO 2 Program were $3.9 million and $9.4 million during the fiscal years ended November 30, 2024 and 2023 , respectively.

Acquisition, integration and restructuring costs related to other acquisitions were $3.0 million for fiscal year 2024.

We do not expect to incur additional costs under the GBO 2 Program in future periods.

We substantially completed the acquisition, integration and restructuring activities related to the Merger during the first half of fiscal year 2024, and there are no related expenses expected in future periods.

We previously incurred acquisition, integration and restructuring costs related to the completion of the Merger, including professional services costs, personnel and other costs, long-lived assets charges and termination fees and stock-based compensation expense.

Professional services costs are primarily comprised of IT and other consulting services, as well as legal expenses.

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Long-lived asset charges and termination fees include accelerated depreciation and amortization expense of $5.5 million and $17.4 million during fiscal years 2024 and 2023, respectively, due to changes in asset useful lives in conjunction with the consolidation of certain IT systems.

Long-lived asset charges and termination fees also include $24.4 million recorded during fiscal year 2023 for termination fees related to certain IT systems, along with $4.7 million recorded during fiscal year 2022 for impairment charges.

Long-lived asset charges and termination fees also include $17.0 million and $24.4 million recorded during fiscal years 2024 and 2023, respectively, for termination fees related to certain IT systems.

Stock-based compensation expense primarily relates to costs associated with the conversion of certain Tech Data performance-based equity awards issued prior to the Merger into restricted shares of TD SYNNEX (refer to Note 4 – Share-Based Compensation to the Consolidated Financial Statements for further information) and expenses for certain restricted stock awards issued in conjunction with the Merger.

In July 2023, we offered a voluntary severance program ("VSP") to certain co-workers in the United States as part of our cost optimization efforts related to the Merger.

We incurred $52.1 million of costs in connection with the VSP during the fiscal year ended November 30, 2023, including $42.3 million of severance costs and $9.8 million of duplicative labor costs.

We incurred $10.1 million of costs in connection with the VSP during fiscal year 2024, including $8.0 million of severance costs and $2.1 million of duplicative labor costs.

We incurred $52.1 million of costs in connection with the VSP during fiscal year 2023, including $42.3 million of severance costs and $9.8 million of duplicative labor costs.

During the fiscal years ended November 30, 2024 and 2023, acquisition and integration expenses related to the Merger were composed of the following:

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Stock-based compensation

35,709 52,171

Voluntary severance program costs

10,113 52,091

Total $ 64,381 $ 196,851

During fiscal 2023, acquisition and integration expenses related to the Merger increased, compared to the prior year period, primarily due to costs incurred related to the VSP, partially offset by the decline in long-lived assets charges and termination fees and a decrease in stock-based compensation expense.

GBO 2 Program

Prior to the Merger, Tech Data implemented its GBO 2 Program, that includes investments to optimize and standardize processes and apply data and analytics to be more agile in a rapidly evolving environment, increasing productivity, profitability and optimizing net-working capital.

TD SYNNEX continued this program in conjunction with the Company’s integration activities.

Acquisition, integration and restructuring expenses related to the GBO 2 Program are primarily comprised of restructuring costs and other costs.

Restructuring costs are comprised of severance costs and other associated exit costs, including certain consulting costs.

Other costs are primarily comprised of personnel costs, facilities costs and certain professional services fees not related to restructuring activities.

We incurred acquisition, integration, and restructuring costs under the GBO 2 Program of $9.4 million and $31.5 million during the fiscal years ended November 30, 2023 and 2022 , respectively.

During fiscal 2023, restructuring costs under the GBO 2 Program decreased, compared to the prior year period, due to the wind-down of activities as the program was completed as of November 30, 2023.

Operating Income

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Non-GAAP operating margin 2.78 % 2.85 %

Consolidated operating income increased during the fiscal year ended November 30, 2023, compared to the prior fiscal year, primarily due to a decrease in purchase accounting adjustments related to the Merger and an improvement in gross margin due to product mix, including an increase in revenue in our Advanced Solutions portfolio and margin expansion in high-growth technologies, partially offset by the decline in revenues in our Endpoint Solutions portfolio and higher personnel costs.

Consolidated operating margin increased during the fiscal year ended November 30, 2023, compared to the prior fiscal year, primarily due to a decrease in purchase accounting adjustments related to the Merger and an improvement in gross margin due to product mix, partially offset by higher selling, general and administrative expenses as a percentage of revenue due to the decrease in revenues in our Endpoint Solutions portfolio and higher personnel costs.

Consolidated non-GAAP operating income decreased during the fiscal year ended November 30, 2023, compared to the prior fiscal year, primarily due to the decrease in revenue in our Endpoint Solutions portfolio and higher personnel costs, partially offset by an increase in gross margin due to product mix, including an increase in revenue in our Advanced Solutions portfolio and margin expansion in high-growth technologies.

Consolidated non-GAAP operating margin increased during the fiscal year ended November 30, 2023, compared to the prior fiscal year, primarily due to an increase in gross margin due to product mix, partially offset by higher selling, general and administrative expenses as a percentage of revenue due to the decrease in revenues in our Endpoint Solutions portfolio and higher personnel costs.

Consolidated operating income and margin increased during the fiscal year ended November 30, 2024, compared to the prior fiscal year, primarily due to lower acquisition, integration and restructuring costs.

Consolidated non-GAAP operating income slightly decreased during the fiscal year ended November 30, 2024, compared to the prior fiscal year, primarily due to a decrease in strategic technologies gross margins and higher personnel costs, partially offset by the increase in revenue and lower credit costs.

Consolidated non-GAAP operating margin slightly decreased during the fiscal year ended November 30, 2024, compared to the prior fiscal year, primarily due to the decrease in strategic technologies gross margins and higher personnel costs, partially offset by lower credit costs.

Fiscal Years Ended November 30, Percent Change

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Share-based compensation 45,107 35,955

Purchase accounting adjustments — 65,117

Non-GAAP operating income $ 1,081,760 $ 1,107,974 (2.4) %

GAAP operating margin 2.13 % 1.89 %

Operating margin

2.35 % 2.13 %

Non-GAAP operating margin 3.11 % 3.20 %

Americas operating income was flat during the fiscal year ended November 30, 2023, compared to the prior fiscal year, primarily due to increased gross margin in the region due to product mix, including an increase in revenue in our Advanced Solutions portfolio and margin expansion in high-growth technologies, and a decrease in purchase accounting adjustments related to the Merger, offset by the decrease in revenue in our Endpoint Solutions portfolio and costs incurred related to the VSP.

Americas operating margin increased during the fiscal year ended November 30, 2023, compared to the prior fiscal year, primarily due to increased gross margin in the region due to product mix and a decrease in purchase accounting adjustments related to the Merger, partially offset by higher selling, general and administrative expenses as a percentage of revenue due to the decrease in revenues in our Endpoint Solutions portfolio and costs incurred related to the VSP.

Americas non-GAAP operating income decreased during the fiscal year ended November 30, 2023, compared to the prior fiscal year, primarily due to the decrease in revenue in our Endpoint Solutions portfolio, partially offset by increased gross margin in the region due to product mix, including an increase in revenue in our Advanced Solutions portfolio and margin expansion in high-growth technologies.

Americas non-GAAP operating margin increased during the fiscal year ended November 30, 2023, compared to the prior fiscal year, primarily due to increased gross margin in the region due to product mix, partially offset by higher selling, general and administrative expenses as a percentage of revenue due to the decrease in revenues.

Americas operating income increased during the fiscal year ended November 30, 2024, compared to the prior fiscal year, primarily due to lower acquisition, integration and restructuring costs, lower credit costs and an increase in revenue, partially offset by a decrease in strategic technologies gross margins.

Americas operating margin increased during the fiscal year ended November 30, 2024, compared to the prior fiscal year, primarily due to lower acquisition, integration and restructuring costs, lower credit costs, and the impact of the presentation of additional revenue on a net basis due to changes in product mix, partially offset by the decrease in strategic technologies gross margins.

Americas non-GAAP operating income decreased during the fiscal year ended November 30, 2024, compared to the prior fiscal year, primarily due to the decrease in strategic technologies gross margins, partially offset by lower credit costs.

Americas non-GAAP operating margin decreased during the fiscal year ended November 30, 2024, compared to the prior fiscal year, primarily due to the decrease in strategic technologies gross margins, partially offset by lower credit costs and the impact of the presentation of additional revenue on a net basis due to changes in product mix.

Fiscal Years Ended November 30, Percent Change

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Non-GAAP operating income $ 424,629 $ 421,550 0.7 %

GAAP operating margin 1.22 % 1.12 %

Operating margin

1.34 % 1.22 %

Non-GAAP operating margin 2.16 % 2.17 %

Europe operating income and operating margin increased during the fiscal year ended November 30, 2023, compared to the prior fiscal year, primarily due to an increase in gross margin in the region due to product mix, a decrease in purchase accounting adjustments related to the Merger, and a decrease in acquisition, integration, and restructuring costs, partially offset by the impact of the decline in revenues in our Endpoint Solutions portfolio and an increase in personnel costs.

Europe non-GAAP operating income and non-GAAP operating margin decreased during the fiscal year ended November 30, 2023, compared to the prior fiscal year, primarily due to the impact of the decline in revenues in our Endpoint Solutions portfolio and an increase in personnel costs, partially offset by an increase in gross margin in the region due to product mix.

Europe operating income increased during the fiscal year ended November 30, 2024, compared to the prior fiscal year, primarily due to lower acquisition, integration and restructuring costs, the prior year impact of purchase accounting adjustments related to the Merger and an increase in revenue.

Europe operating margin increased during the fiscal year ended November 30, 2024, compared to the prior fiscal year, primarily due to lower acquisition, integration and restructuring costs and the prior year impact of purchase accounting adjustments related to the Merger.

Europe non-GAAP operating income slightly increased during the fiscal year ended November 30, 2024, compared to the prior fiscal year, primarily due to the increase in revenue.

Europe non-GAAP operating margin was relatively flat during the fiscal year ended November 30, 2024, compared to the prior fiscal year.

Fiscal Years Ended November 30, Percent Change

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Non-GAAP operating income $ 120,641 $ 112,800 7.0 %

GAAP operating margin 2.95 % 2.74 %

Operating margin

2.80 % 2.95 %

Non-GAAP operating margin 3.00 % 3.17 %

APJ operating income and non-GAAP operating income increased during the fiscal year ended November 30, 2023, compared to the prior fiscal year, primarily due to increased sales in the region due to high-growth technologies and our Advanced Solutions portfolio partially offset by higher personnel costs.

APJ operating margin and non-GAAP operating margin were relatively flat, compared to the prior fiscal year.

APJ operating income and non-GAAP operating income increased during the fiscal year ended November 30, 2024, compared to the prior fiscal year, primarily due to the increase in revenue, partially offset by higher personnel costs.

APJ operating margin and non-GAAP operating margin decreased during the fiscal year ended November 30, 2024, compared to the prior fiscal year, primarily due to a decrease in gross margin in the region, partially offset by a decrease in selling, general and administrative expenses as a percentage of revenue due to the increase in revenue.

Interest Expense and Finance Charges, Net

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Percentage of revenue 0.55 % 0.50 %

Amounts recorded in interest expense and finance charges, net, consist primarily of interest expense on our Senior Notes, our lines of credit, our term loans and our accounts receivable securitization facilities, and fees associated with the sale of accounts receivable, partially offset by income earned on our cash investments.

Our interest expense and finance charges net, increased during fiscal year 2023, compared to fiscal year 2022, primarily due to higher average interest rates, along with increased costs associated with the sale of accounts receivable due to higher discount fees, which totaled $ 51.1 million and $ 26.2 million during the fiscal years ended November 30, 2023 and 2022, respectively.

Amounts recorded in interest expense and finance charges, net, consist primarily of interest expense on our Senior Notes, our lines of credit, our term loans and our accounts receivable securitization facility, and fees associated with the sale of accounts receivable, partially offset by income earned on our cash investments.

Our interest expense and finance charges net, increased during fiscal year 2024, compared to fiscal year 2023, primarily due to increased costs associated with the sale of accounts receivable due to higher discount fees, which totaled $67.8 million and $51.1 million during the fiscal years ended November 30, 2024 and 2023, respectively, along with higher average interest rates on our Senior Notes.

Other Expense, Net

Fiscal Years Ended November 30, Percent Change

Fiscal Years Ended November 30, Change in Dollars

2024 2023 2024 vs.

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Amounts recorded as other expense, net include foreign currency transaction gains and losses on certain financing transactions and the related derivative instruments used to hedge such financing transactions, the cost of hedging, investment gains and losses, and other non-operating gains and losses, such as settlements received from class action lawsuits.

During fiscal year 2023, our other expense, net was relatively flat, compared to fiscal year 2022.

Fiscal year 2023 activity was driven primarily by foreign currency hedging costs, partially offset by legal settlements received.

Fiscal year 2022 activity was driven primarily by foreign currency hedging costs, partially offset by a decrease in our accrual for a legal matter in France of $10.8 million.

For further discussion of this legal matter in France, please refer to Note 17 - Commitments and Contingencies to the Consolidated Financial Statements included in Part II, Item 8 of this Report.

During fiscal year 2024, our other expense, net increased compared to fiscal year 2023.

Fiscal year 2024 other expense, net consisted primarily of foreign currency hedging costs.

Fiscal year 2023 other expense, net was lower due to legal settlements received of $10.7 million, which partially offset our foreign currency hedging costs.

These legal settlements did not recur in fiscal year 2024.

Provision for Income Taxes

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Income taxes consist of our current and deferred tax expense resulting from our income earned in domestic and foreign jurisdictions.

Our income tax expense decreased during the fiscal year ended November 30, 2023, as compared to the prior fiscal year, primarily due to lower income during the period along with a lower effective tax rate.

The effective tax rate for fiscal year 2023 was lower when compared to the prior fiscal year primarily due to the utilization of tax credits earned in certain jurisdictions and the relative mix of earnings and losses within the taxing jurisdictions in which we operate, partially offset by a tax benefit recorded in the prior year related to a capital loss carryback.

Our income tax expense increased during the fiscal year ended November 30, 2024, as compared to the prior fiscal year, primarily due to higher income during the period.

The effective tax rate for fiscal year 2024 was slightly lower when compared to the prior fiscal year primarily due to the utilization of tax credits earned in certain jurisdictions and the relative mix of earnings and losses within the taxing jurisdictions in which we operate, partially offset by current year withholding taxes in certain jurisdictions and other favorable tax items in the prior fiscal year.

Net Income and Diluted EPS

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Fiscal Years Ended November 30,

Net Income- Consolidated (in thousands)

Net Income $ 626,911 $ 651,307

Net Income - Consolidated

(in thousands)

$ 689,091 $ 626,911

Acquisition, integration and restructuring costs 71,314 213,585

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Purchase accounting adjustments — 15,047

Legal settlements and other litigation, net — (10,792)

Income taxes related to above (109,973) (144,994)

Income tax capital loss carryback benefit — (8,299)

Non-GAAP net income $ 1,011,937 $ 1,053,559

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Purchase accounting adjustments — 0.16

Legal settlements and other litigation, net — (0.11)

Income taxes related to above (1.27) (1.55)

Income tax capital loss carryback benefit — (0.09)

Non-GAAP diluted EPS $ 11.68 $ 11.26

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We calculate CCC as days of the last fiscal quarter’s revenue outstanding in accounts receivable plus days of supply on hand in inventory, less days of the last fiscal quarter’s cost of revenue outstanding in accounts payable.

Our CCC was 23 days at the end of fiscal year 2023, which remained flat, as compared to fiscal year 2022, as our net working capital balances declined on a consistent basis with the decrease in revenues in the current quarter as compared to prior periods.

Our CCC was 18 days at the end of fiscal year 2024, and 23 days at the end of fiscal year 2023, respectively.

Our CCC decreased, as compared to fiscal year 2023, primarily due to a decrease in DSO as our revenue increased year-over-year while our accounts receivable balance remained relatively consistent due to increased collections.

To increase our market share and better serve our customers, we may further expand our operations through investments or acquisitions.

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Operating Activities

Net cash provided by operating activities was $1.4 billion during fiscal year 2023 compared to net cash used in operating activities of $49.6 million during fiscal year 2022.

The increase in cash provided by operating activities was primarily due to favorable changes in working capital driven by the change in inventories.

In fiscal year 2022, our inventory increased to support growth in our business in comparison to a decline in our inventory during fiscal year 2023.

The favorable change in inventory was partially offset by a corresponding unfavorable change in accounts payable.

Net cash provided by operating activities was $1.2 billion during fiscal year 2024 compared to net cash provided by operating activities of $1.4 billion during fiscal year 2023.

The decrease in net cash provided by operating activities was primarily due to a decrease in inventory during fiscal year 2023 related to ongoing sell-through of strategic inventory purchases that occurred during fiscal year 2022, as compared to an increase in inventory in fiscal year 2024 correlated with the year-over-year revenue growth in the fourth quarter, as well as a decrease in other accrued liabilities in fiscal year 2024.

This change was partially offset by an increase in accounts payable during fiscal year 2024 related to the increase in inventory purchases and associated timing of cash payments, as compared to a decrease in accounts payable during fiscal year 2023 correlated with the decrease in inventory in the prior year.

Investing Activities

Net cash used in investing activities was $193.8 million and $156.4 million during fiscal years 2024 and 2023, respectively.

The increase as compared to fiscal year 2022 is primarily due to an increase in integration related capital expenditures due to the Merger.

The increase in cash used in investing activities is primarily due to cash paid for the acquisition of businesses in the current year of $43.7 million, increased capital expenditures of $25.1 million and an increase in payments to settle net investment hedges of $14.3 million, partially offset by proceeds from the sale of a building in the current year of $42.9 million.

Financing Activities

Net cash used in financing activities was $953.1 million and $785.9 million during fiscal years 2024 and 2023, respectively.

The increase as compared to fiscal year 2022 is primarily due to an increase in share repurchases under the share repurchase program, which totaled $620.7 million for fiscal year 2023 as compared to $125.0 million for fiscal year 2022.

In addition, we paid stockholder dividends of $130.4 million and $114.9 million during fiscal years 2023 and 2022, respectively.

The increase in net cash used in financing activities as compared to fiscal year 2023 is primarily due to an increase in net repayments of long-term borrowings of $114.5 million, primarily due to the net repayment of senior notes, an increase in net repayments of short-term borrowings of $37.0 million and $13.9 million of debt issuance costs.

We believe our current cash balances, cash flows from operations and credit availability are sufficient to support our operating activities for at least the next twelve months.

Capital Resources

Our cash and cash equivalents totaled $1.0 billion and $522.6 million as of November 30, 2023 and 2022, respectively.

Our cash and cash equivalents totaled $1.1 billion and $1.0 billion as of November 30, 2024 and 2023, respectively.

Our cash and cash equivalents held by international subsidiaries are no longer subject to U.S.

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Presently, we believe we have sufficient resources, cash flow and liquidity within the United States to fund current and expected future working capital, investment and other general corporate funding requirements.

We believe that our available cash and cash equivalents balances, cash flows from operations and our existing sources of liquidity, including available capacity under our borrowing facilities, will be sufficient to enable the repayment of $700.0 million of our Senior Notes due in August 2024 and satisfy our current and planned working capital and investment needs, for the next twelve months in all geographies.

We believe that our available cash and cash equivalents balances, cash flows from operations and our existing sources of liquidity, including available capacity under our borrowing facilities, will be sufficient to satisfy our current and planned working capital and investment needs, for the next twelve months in all geographies.

We also believe that our longer-term working capital, planned capital expenditures, anticipated stock repurchases, dividend payments and other general corporate funding requirements will be satisfied through cash flows from operations and, to the extent necessary, from our borrowing facilities and future financial market activities.

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AR Arrangement can borrow up to a maximum of $1.5 billion based upon eligible trade accounts receivable.

AR Arrangement, as amended December 11, 2023, has a maturity date of December 2025.

We also have a credit agreement, dated as of April 16, 2021 and amended May 22, 2023 (as amended, the "TD SYNNEX Credit Agreement"), pursuant to which we received commitments for the extension of a senior unsecured revolving credit facility not to exceed an aggregate principal amount of $3.5 billion, which revolving credit facility (the "TD SYNNEX revolving credit facility") may, at our request but subject to the lenders' discretion, potentially be increased by up to an aggregate amount of $500.0 million.

The TD SYNNEX Credit Agreement also includes a $1.5 billion term loan facility that was fully funded in connection with the Merger.

The TD SYNNEX Credit Agreement has a maturity date of September 2026 and, in the case of the TD SYNNEX revolving credit facility, subject to two one-year extensions upon our prior notice to the lenders and the agreement of the lenders to extend such maturity date.

The outstanding amount of our borrowings under the U.S.

AR Arrangement and the TD SYNNEX revolving credit facility may fluctuate in response to changes in our working capital and other liquidity requirements.

There were no amounts outstanding under the U.S.

AR Arrangement or the TD SYNNEX revolving credit facility at November 30, 2023 and 2022.

We have various other committed and uncommitted lines of credit with financial institutions, finance leases, short-term loans, term loans, credit facilities and book overdraft facilities, totaling approximately $583.1 million in borrowing capacity as of November 30, 2023.

AR Arrangement, as amended, has a maturity date of November 2026.

We also have an amended and restated credit agreement, dated as of April 16, 2024 (as amended, the "TD SYNNEX Credit Agreement"), pursuant to which we received commitments for the extension of a senior unsecured revolving credit facility not to exceed an aggregate principal amount of $3.5 billion, which revolving credit facility (the "TD SYNNEX Revolving Credit Facility") may, at our request but subject to the lenders' discretion, potentially be increased by up to an aggregate amount of $500.0 million.

There we re no amounts outstanding under the U.S.

AR Arrangement or the TD SYNNEX Revolving Credit Facility at November 30, 2024, or 2023, respectively.

The TD SYNNEX Credit Agreement also includes a $1.5 billion term loan facility (the "TD SYNNEX Term Loan") that was fully funded in connection with the Merger.

The TD SYNNEX Term Loan has a maturity date of September 2026.

As amended, the TD SYNNEX Revolving Credit Facility will mature on April 16, 2029, subject, in the lender's discretion, to two one-year extensions upon our prior notice to the lenders.

On April 19, 2024, we entered into a Term Loan Credit Agreement (the "2024 Term Loan Credit Agreement") which provides for a senior unsecured term loan in the amount of $750.0 million (the "2024 Term Loan").

The proceeds from the 2024 Term Loan were used to repay a portion of the TD SYNNEX Term Loan.

The 2024 Term Loan will mature on September 1, 2027.

We have various other committed and uncommitted lines of credit with financial institutions, short-term loans, term loans, credit facilities and book overdraft facilities, totaling approximately $570.5 million in borrowing capacity as of November 30, 2024.

Our borrowings on these facilities vary within the period primarily based on changes in our working capital.

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We have had similar borrowing arrangements with various financial institutions throughout our years as a public company.

We had total outstanding borrowings of approximately $4.1 billion as of November 30, 2023 and 2022.

Our outstanding borrowings include Senior Notes of $2.5 billion at November 30, 2023 and 2022, and term loans under the term loan facility of the TD SYNNEX Credit Agreement of approximately $1.3 billion and $1.4 billion at November 30, 2023 and 2022, respectively.

We had total outstanding borrowings of approximately $3.9 billion and $4.1 billion as of November 30, 2024 and 2023, respectively.

Our outstanding borrowings include Senior Notes of $2.4 billion and $2.5 billion at November 30, 2024 and 2023, respectively and term loans described above as the TD SYNNEX Term Loan and 2024 Term Loan of approximately $1.3 billion and $1.4 billion at November 30, 2024 and 2023, respectively.

For additional information on our borrowings, see Note 10 - Borrowings to the Consolidated Financial Statements included in Part II, Item 8 of this Report.

Accounts Receivable Purchase Agreements

We have uncommitted supply-chain financing programs under which trade accounts receivable owed by certain customers may be acquired, without recourse, by certain financial institutions.

We have uncommitted accounts receivable purchase agreements under which trade accounts receivable owed by certain customers may be acquired, without recourse, by certain financial institutions.

Available capacity under these programs is dependent upon the level of our trade accounts receivable eligible to be sold into these programs and the financial institutions’ willingness to purchase such receivables.

In addition, certain of these programs also require that we continue to service, administer and collect the sold accounts receivable.

At November 30, 2023 and 2022, we had a total of $864.6 million and $1.4 billion, respectively, of trade accounts receivable sold to and held by financial institutions under these programs.

At November 30, 2024 and 2023, we had a total of $1.2 billion and $864.6 million, respectively, of trade accounts receivable sold to and held by financial institutions under these programs.

Discount fees for these programs in the years ended November 30, 2024 and 2023 totaled $67.8 million and $51.1 million, respectively.

Share Repurchase Program

In June 2020, the Board of Directors authorized a three-year $400.0 million share repurchase program, effective July 1, 2020.

In January 2023, the Board of Directors authorized a new three-year $1.0 billion share repurchase program, replacing the existing $400.0 million share repurchase program, pursuant to which we may repurchase our outstanding common stock from time to time in the open market or through privately negotiated transactions.

In January 2023, our Board of Directors authorized a three-year $1.0 billion share repurchase program.

In March 2024, our Board of Directors authorized a new $2.0 billion share repurchase program, supplementing the amount remaining under the existing program, pursuant to which we may repurchase our outstanding common stock from time to time in the open market or through privately negotiated transactions, including pursuant to one or more Rule 10b5-1 trading plans adopted in accordance with Rule 10b5-1 of the Exchange Act.

The March 2024 share repurchase authorization does not have an expiration date.

We repurchased 5.5 million shares of common stock for $611.9 million and 6.5 million shares of common stock for $620.7 million in fiscal 2024 and 2023, respectively.

As of November 30, 2023, we had $395.9 million available for future repurchases of our common stock.

As of November 30, 2024, we had $1.8 billion available for future repurchases of our common stock.

For additional information on our share repurchase program, see Note 5 - Stockholders' Equity to the Consolidated Financial Statements included in Part II, Item 8 of this Report.

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They also limit our (or our subsidiaries', as applicable) ability to incur additional debt or liens, enter into agreements with affiliates, modify the nature of our business, and merge or consolidate.

As of November 30, 2023, we were in compliance with the financial covenant requirements for the above arrangements.

As of November 30, 2024, we were in compliance with all material covenants for the above arrangements.

Contractual Obligations

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We recognize interest and penalties related to unrecognized tax benefits in the provision for income taxes.

Related Party Transactions

For a summary of related party transactions, see Note 13 - Related Party Transactions to the Consolidated Financial Statements included in Part II, Item 8 of this Report.

Recently Issued Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis