TD SYNNEX Corporation

Good morning. My name is Devin and I will be your conference operator today. I would like to welcome everyone to the TD Cinex fourth quarter fiscal 2022 earnings call. Today's call is being recorded and all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. At this time, for opening remarks, I would like to pass the call over to Liz Morali, head of investor relations. Liz, you may begin.

Thank you. Good morning, everyone, and thank you for joining us for today's call. With me today are Rich Hume, CEO, and Marshall Witt, CFO. Before we continue, let me remind you that today's discussion contains forward-looking statements within the meaning of the federal securities laws, including predictions, estimates, projections, or other statements about future events, including statements about strategy, plans, and positioning, as well as our expectations for future fiscal periods. Actual results may differ materially from those mentioned in these forward-looking statements as a result of risks and uncertainties discussed in today's earnings release, in the Form 8K we filed today, and in the risk factors section of our Form 10K and our other reports and filings with the SEC. We do not intend to update any forward-looking statements. Also, during this call, we will reference certain non-GAAP financial information. Reconciliations of GAAP to non-GAAP results are included in our earnings press release and the related form 8K available on our investor relations website, ir.tdsinex.com. This conference call is the property of TD Sinex and may not be recorded or rebroadcast without our permission. I will now turn the call over to Rich. Rich?

Thank you, Liz. Good morning, everyone, and thanks for joining us for our first earnings call of the new calendar year. We are pleased with our strong fiscal Q4 results, closing out what was truly a phenomenal year for TD Cinex. We began the year with a lot on our to-do list relative to the merger and integration activities and ended the year having met or exceeded our objectives. As I've mentioned along the way, this merger has gone very well. Today, TD Cynics is a $62 billion company with over 23,000 coworkers serving 150,000 customers across 100 countries. I judge the success of this merger from a few different perspectives. First, from the point of view of our customers and vendor partners. Our teams continue to provide consistent and uninterrupted service to our partners post-merger. And the financial results we've delivered are confirmation of the strong value proposition that we are delivering to the market. Next, from the perspective of our coworkers, we have largely completed our initiatives focused on harmonization of benefits and compensation, and recently undertook our first TD Cynics Global Coworker Survey, which indicated a high level of engagement, an accomplishment that can be hard to achieve in the first year of a large merger. Finally, looking at the merger through the lens of our shareholders, we exceeded the fiscal 22 financial targets we set. For fiscal 22, we achieved revenue of $62.3 billion, up 9% year over year, adjusting for FX impact and merger-related accounting policy alignment, which was above the 6% to 8% range we anticipated. Non-GAAP operating margin was 2.8%, also above the targeted range of 2.5% to 2.7%. And we delivered non-GAAP earnings per share of $11.94, $0.29 above the high end of our guidance range we provided for FY22 on our September earnings call and 74 cents above the high end of the original guidance range provided January of last year, despite higher than forecasted FX and interest expense headwinds. Finally, we returned $240 million to shareholders via dividends and share repurchases during the fiscal year. representing progress towards our medium-term capital allocation goals. With regard to the merger integration, we set the ambitious goal of achieving $100 million in cost synergies by the end of year one, and we overachieved on that goal by 45%, realizing $145 million in fiscal 22. One of the largest integration projects is the consolidation of Tech Data America's ERP systems into CIS, the legacy Cinex ERP platform. We have made excellent progress on the Canadian migration, which we transitioned first, and our U.S. transition is well underway, having recently completed another major milestone. I'm happy to report that more than 45% of the legacy tech data US SAP business has now moved over to CIS and is executing well. We will continue transitioning the remainder of the business throughout the fiscal year and are on track with our plan to largely be complete within two years of the merger close date. Let me now talk about the trends we saw in fiscal Q4 from a market perspective. In short, we experienced a continuation of many of the themes that have played out over the past several quarters. Advanced solutions continued to experience robust growth in the quarter above expectations with strength in servers, networking, and infrastructure. Endpoint solutions gross revenue was modestly down year over year as the PC market and related peripherals continued to see a normalization from last year's pandemic-related highs. Several areas of endpoint solutions saw solid growth, including printers and mobile phones. Our services and specialized solution businesses also experienced solid growth in the corridor. Rounding out our portfolio, our hyperscale infrastructure-focused business, Hive, delivered a record quarter with continued outsized robust revenue and profitability growth as we continue to fulfill strong demand from our CSP customers. We also experienced operating profits above expectation from the Hive business, which Marshall will provide additional color on in a few minutes. From a regional perspective, all three regions delivered strong revenue growth on a constant currency basis with operating margin expansion on a global basis. We continue to accelerate our revenue in high-growth technologies as the markets we are targeting grew faster than the market projections we provided at our March Investor Day. We achieved greater than a 20% year-over-year growth in gross billings for the quarter and for the full year 2022 in these areas, which include cloud, security, data analytics, and hyperscale infrastructure. This growth was in excess of our expectation, and high-growth technologies represented $16 billion of our total gross billings in fiscal 2022. up from $13 billion in fiscal 2021. We saw improvement in the supply chain during the quarter, with a meaningful reduction in our backlog. Despite decreases in both endpoint solutions and advanced solutions, our total backlog level remains elevated when compared to historical norms. Our customers are living the reality of a more uncertain and volatile macroeconomic environment with inflation, higher interest rates, and a competitive market for talent. This need for talent is particularly relevant in the IT sector, where the increasingly complex technology landscape and ongoing shift to cloud-based multi-vendor solutions requires an even greater level of knowledge and experience to serve the needs of the market. For these reasons and others, the value proposition that TD Cynics brings to the market resonates with our customers. On the vendor side, our utility as a variable cost route to market also becomes more valuable in times of economic uncertainty when vendors desire to lower their costs. During the quarter, we were privileged to receive further recognition from our partner community, including being named the 2022 North America Partner of the Year by CDW, the 2022 Global Distributor of the Year by Palo Alto Networks, the EMEA Distributor Partner of the Year by AWS and Lenovo, and the Americas Distributor of the Year by Nutanix. We also continue to progress on our ESG journey and expect to publish our first corporate citizenship report this quarter. In addition, we recently received a grade of awareness from the Carbon Disclosure Project, a strong achievement in our first year of combined reporting. We look forward to continuing to share updates on our continued progress in this space. As we think about fiscal 2023, the critical nature of technology as an enabler of customer experiences and coworker collaboration, keeper of cyber safety, and a tool to realize cost optimization and efficiency cannot be underestimated. And for these reasons, we believe IT spending will continue to outpace GDP growth in 2023. We are prepared and well equipped to continue executing on our growth strategy and are targeting above market growth rates as we leverage our industry leading portfolio products and services and broad global footprint to bring world class service and innovation to the market. We enter fiscal 23 even more confident in our strategy being capable of capitalizing on the trends shaping the IT industry and the opportunities ahead. Lastly, I want to thank our 23,000 plus coworkers around the world for their exceptional efforts in making TD Cinex's first fiscal year a great success. I'll now pass it over to Marshall, who will share more details about our performance and outlook.