TD SYNNEX Corporation

or other statements about future events, including statements about our strategy, demand, plans and positioning, growth, cash flow, capital allocation, and stockholder return, as well as our financial expectations for future fiscal periods. Actual results may differ materially from those mentioned in these forward-looking statements as a result of risk and uncertainties discussed in today's earnings release. In the Form 8-K we filed today, in the risk factors section of our Form 10-K and 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 the earnings press release and the related Form 8-K available on our investor relations website, ir.tdsenex.com. This conference call is the property of TD Cinex and may not be recorded or rebroadcast without our permission. I will now turn the call over to Patrick. Patrick?

Thank you, David. Good morning, everyone, and thank you for joining us today. I'm excited to report on our strong second quarter performance and provide an update on the impacts we are seeing from the macroeconomic uncertainties. Our Q2 results demonstrate the continued strength of the IT distribution and hyperscaler markets. Meanwhile, our strategy and the execution of our team are enabling us to grow ahead of market. In Q2, gross billings grew 12%. 11% in constant currency and non-GAAP deleted EPS exceeded the high end of our guidance with all regions and major technologies contributing. We believe the quarter benefited from some demand pull forward. Within TDC-NEXT, excluding HIVE, gross billings grew 11% year over year and operating margins expanded, resulting in strong operating income growth. From a technology perspective, we saw strong growth across both endpoint and advanced solutions. Hive, which is included within the advanced solutions portfolio, grew gross billings in the high teens. Hive profit margins declined sequentially, on which Marshall will provide more color. Within TDCnex, all regions and major technologies experienced growth during the quarter. Software continues to be a bright spot in our portfolio, experiencing 20% billings growth fueled by cloud, cybersecurity, and infrastructure software. Additionally, we continue to see strong growth in PCs driven by the refresh cycle, and we were also pleased to see growth in networking after multiple weak quarters. We saw broad-based demand across all our major customer segments, specifically SMB, MSPs, and public sector, all of which grew double digits during the quarter. At Investor Day, we shared five strategic imperatives we believe will enable us to deliver above market growth. These include unifying our reach, targeting new customers, distribution market expansion, diversifying our offerings, and accelerating on services. The execution of our strategy is recognized by 40-plus honors we received in the channel during the quarter. Additionally, HPE announced yesterday TD Cinex is their global distribution partner of the year. Other highlights of honors during the quarter include being named NVIDIA's America's Distributor of the Year, CrowdStrike America's Partner of the Year, Dell EMEA Distributor of the Year, Lenovo US Distributor of the Year, NetApp LATAM Distributor of the Year, and Fortinet Hong Kong Distributor of the Year, among others. A key component of our strategy is targeting new customers and allowing them to scale through our digital capabilities. For example, many customers invest a significant portion of their SG&A in operational overhead. And in the U.S., we had a new customer to address this with a specialized solution. We partnered with our customer to develop a completely integrated and automated operational model that drove efficiency through TD Cinex transactional APIs and custom workflows, everything from configuration to renewals. By fully leveraging our digital capabilities, our partner was able to make an outsized investment in sales, marketing, and engineering talent. This has resulted in exponential sales growth at accretive margins for both our partner and TD Cinex. Additionally, we continue to make great strides with our delivering services strategic imperative. In a recent example with a leading advanced solutions OEM, we are deeply engaged in several important services initiatives, including building various data center solutions and deploying the AI infrastructure solutions. We are certified to build solutions on their behalf. both for their direct and indirect channels, and this facilitates robust supply chain acceleration to significantly improve their time to cash and extend their overall capacity. Between our multi-vendor technical expertise and our robust integration, supply chain, support, and professional services, we are well positioned to connect OEMs with a network of technology vendors required for the AI infrastructure solutions. Our North Star remains generating profitable growth and free cash flow while being a valued partner to our vendors and customers across the world. We continue to allocate excess cash to high return opportunities to ensure sustainable value creation for our shareholders. Now, I will pass it to Marshall for financial performance and outlook.

Thanks, Patrick, and good morning, everyone. We had a strong performance in the second quarter with gross billings of $21.6 billion, up 12% year-over-year, 11% in constant currency, and above the high end of our guidance range. We were pleased to see year-over-year growth across all regions and major technologies. Our teams continue to execute extremely well, and in addition to that, We believe we were modestly aided by our customers advancing their forecasted purchases in light of a volatile economic environment. In Q2, there was approximately 31% reduction from gross billings to net revenue, which was slightly higher than our expectations. This was primarily driven by an increase in high transactions where we act as an agent and a higher mix of software. Net revenue was $14.9 billion, up 7% year-over-year, and above the high end of our guidance range. In Q2, our endpoint solutions portfolio grew gross billings 13% year-over-year, driven by the ongoing PC refresh cycle and customers modestly advancing their forecasted purchases. Our advanced solutions portfolio grew gross billings 12% year-over-year, 10% year-over-year when excluding the impact of HIVE, driven by accelerated demand for data center infrastructure and continued growth in cloud, security, AI, and other high-growth technologies. Hive, which is reported within the Advanced Solutions portfolio, grew in the high teens, primarily due to strength in programs associated with server and network rack builds. Growth profit increased 7% year-over-year to $1 billion. Gross margin as a percentage of gross billings was 5%, which was consistent sequentially and a decline of 21 basis points year over year. Excluding HIVE, gross margins were relatively flat year over year. HIVE gross margins declined from Q1 due to unrealized FX losses and program mix. We expect a portion of the unrealized FX losses will be recovered as we sell through the product in the back half of the year. Non-GAAP SG&A expense was $632 million, or 3% of gross billings, representing an 11 basis point improvement year over year. The cost to gross profit percentage, which we define as the ratio of non-GAAP SG&A expense to gross profit, was 60% in Q2, consistent with quarter one. Non-GAAP operating income increased 7% to $414 million. Non-GAAP operating margin as a percentage of gross buildings was 2%, representing a 10 basis point decline year over year and consistent with Q1. Interest expense and finance charges were $90 million, slightly higher than expectations, and relatively consistent quarter over quarter. The non-GAAP effective tax rate was approximately 23%, which was in line with expectations. Total non-GAAP net income was $251 million, and non-GAAP diluted earnings per share was $2.99, both above the upper end of our guidance range. Turning to the balance sheet for quarter two, networking capital was $4 billion, which is an improvement quarter over quarter, despite the accelerated growth that we experienced throughout the business. We experienced a four-day improvement in our cash conversion cycle on a net basis quarter over quarter, consistent with expectations. Pre-cash flow generation for the quarter was approximately $543 million. We returned $186 million to stockholders in quarter two with $149 million in share repurchases and $37 million in dividend payments. For the current quarter, our board of directors has approved a cash dividend of 44 cents per common share that will be payable on July 25th, 2025 to stockholders of record as of the close of business on July 11th, 2025. We ended the quarter with $767 million in cash and cash equivalents and debt of $4.1 billion. Our growth leverage ratio was 2.4 times, and our net leverage ratio was 1.9 times. Moving on to our outlook, I want to start by addressing the fact that we're in a volatile environment given the ongoing developments with respect to global trade. I also want to acknowledge that this is our best view based on what we know today. With that, for the third quarter, we expect. non-GAAP gross billings in the range of 21 to 22 billion, representing growth of approximately 6% at the midpoint. Our outlook is based on a Euro to dollar exchange rate of 1.13. Net revenue in the range of 14.7 to 15.5 billion, which translates to an anticipated growth to net adjustment of 30%. Non-GAAP net income in the range of 227 to 268 million, Non-GAAP diluted earnings per share in the range of $2.75 to $3.25 per diluted share based on weighted average shares outstanding of approximately $81.8 million. We expect a non-GAAP tax rate of approximately 23% and interest expense of $89 million. We expect to execute approximately $175 million of share repurchases during the quarter and will remain opportunistic in our strategy to return excess cash to our shareholders. In closing, we believe we are in a strong financial position heading into the second half of the year and are leveraging our strategy to ensure we remain the partner of choice in IT distribution. With that, we'll open it up for your questions. Operator?