Benefitting from the stable demand for technology solutions, Synnex Corp. (SNX) registered strong earnings growth in the third quarter, which exceeded market expectations. However, the company’s stock dropped after the business process services provider provided below-consensus guidance for the fourth quarter.
Adjusted earnings, excluding one-time items, jumped 19% annually to $2.57 per share in the August quarter, far exceeding analysts’ forecast. Meanwhile, unadjusted earnings dropped to $69.3 million or $1.74 per share from $75.2 million or $1.87 per share in the third quarter of 2017, primarily due to higher operating costs.
Driving the bottom-line growth, revenues advanced 14.7% year-on-year to $4.9 billion, slightly above estimates. Contributing significantly to the overall top-line growth, revenues of the Technology Solutions segment jumped 17% to $4.4 billion. Geographically, the US market topped in terms of revenue generation.
Driving the bottom-line growth, revenues advanced 14.7% year-on-year to $4.9 billion, slightly above the estimates
“We saw continued momentum in both of our business segments that resulted in record third quarter performance. Our focus on profitable growth and leveraging the strategic investments we’ve made in our business drove solid margin and earnings expansion,” said Synnex CEO Dennis Polk.
The management expects to close the $2.4-billion acquisition of Convergys Corp. this week. Accordingly, results for the fourth quarter will include the projected operational performance of Convergys during the remainder of the quarter.
The current revenue estimate for the fourth quarter is in the range of $5.2 billion to $5.4 billion. Earnings per share are forecast in the $1.02-$1.23 range and adjusted earnings per share between $2.90 and $3.10. Further, the company forecasts adjusted earnings in the range of $11.40 per share to $11.90 per share for the whole of 2019 when operations are expected to benefit from organic earnings growth in the legacy business and the Convergys deal.
Over the past twelve months, Synnex shares lost about 39% after hitting a record high last year. The stock closed Wednesday’s trading session higher but dropped sharply during the extended trading hours.
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