Q4 2019 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 Miscarry lie head of Investor Relations.

Yes, you may begin.

Thank you David and good afternoon, everyone welcome for the fourth quarter fastball Twain actual earnings call.

Do you need to review, our two announced earlier today are that's all.

CEO Marshall Witt, CFO , Chris Caldwell President Concentrix.

After their prepared remarks, we'll open the call to a question answer session.

Before we begin we remind everyone that change discussion contain forward looking statements within the meaning of the federal security laws, which statements include any prediction.

Estimates projections or other statements about future.

Including the company's projected financial results and the expected separation transaction.

Actual results may differ materially from those mentioned and these forward looking statements as a result at the risk and uncertainties discussed in today's earnings release in the form 8-K, we filed today and the risk factor section of our Form 10-K , and our other reports and filings with the FCC. We did I tend to have to any forward looking statements also during this call.

We will reference certain non-GAAP financial situation.

Affiliation has not gotten got reporting is included in our earnings release and the related form 8-K available under the Investor Relations section of our website. This conference call as the property Astronics Corporation that may not be recorded or rebroadcast without our permission and now I will turn the call over to our CEO .

Thank you Mary.

Thank you to everyone joining us today.

I wanted to start off the call by acknowledging our very successful Q4 results announcement, which Marshall, Chris and I will review in more detail later, but you also acknowledge the news release, we issued today regarding our intention to separate cynics and concentrix into two publicly traded companies.

Over the past decade, we have regularly asked ourselves does it make strategic sense to separate the next then concentrix given the distinct differences are the two businesses.

Our investors have continually after this question as well.

To date, well able to separate we have not for many reasons, mostly though we believe fast to nurture both these segments under one entity.

What's the converges transaction one year ago.

We expected it would be sometime before we could consider a separation again.

Due to the years and effort expected to successfully integrate convergence into concentrix.

Especially so given the size of the transaction.

Also we expected it would take significant time to stabilize the business as converges with on a steady revenue decline path at the time of the acquisition.

Well as a result of the true entrepreneurial spirit and capability of snacks and Concentrix.

And under the excellent leadership of the management team, we substantially completed the integration and stabilize revenue growth and just one year far ahead of expectations.

This aspect along with the dynamics of operating a nearly 5 billion dollar a year or 225000, plus associates CRM services entity under the umbrella they technology distribution company moved us to the belief that the two segments operating independently wouldn't be more beneficial for all stakeholders.

Equally important and this decision is the fact that the markets that both businesses operate and have been and we'll continue to go through rapid change.

Considering this aspect, we believe that happen each business be independent to address the individual market dynamics and the nimbleness way well enabled the best opportunity for each entity to grow and drive returns.

Especially so and the significant market that each segment has to address.

I will talk about a few more aspects related to the separation later in my prepared remarks, but let me now turn over the call to Marshall to discuss our Q4 results.

Thanks, Dennis and regarding the proposed separation, we expect to transactions to be a tax free share distribution.

The next shareholders, resulting into publicly traded companies, we anticipate filing the associated form 10 in February .

With the effective date of separation expected in the second half of 2020.

The capital structure each segment will be detailed in the form 10, however, given early indications from financial partners, we expect both segments to access separation with strong capital position.

Resulting from continued operating performance and cash flow generation.

Please refer to the Investor presentation published on our website now.

Now, let's discuss Q4 results. We're pleased to report that we've exceeded expectations for all the Q4 financial metrics.

We previously guided to in September .

On a consolidated basis total revenue was an all time record of $6.6 billion up 19%.

Compared to $5.5 billion in the same quarter.

Last year FX did not have significant impact on our top line where bottom line.

Consolidated gross profit dollars totaled a record 795 million up 21% or 140 million versus a year ago.

And gross margin was 12% and improvement of 27 basis points from the prior year quarter.

Total adjusted <unk> expense was 456 million or 7% of revenue up 70 million in absolute dollars, but down four basis points as a percentage of revenue compared to year ago corridor.

We posted record consolidated non-GAAP operating income dollars.

And operating margin in fourth quarter.

non-GAAP operating income was 338 million up 71 million or 26% year over year.

non-GAAP operating margin, that's just a 5.1% was a 31 basis point expansion from the prior year period.

Shifting gears to Q4 operating performance by business segment.

First on technology solutions.

I'll just solutions delivered its highest ever revenue of 5.4 billion, an increase of 17% compared to 4.6 doing in the prior year quarter.

Technology solutions gross margin of 6.3% increased 30 basis points from the prior year quarter, primarily due to favorable product mix non-GAAP operating income was also a record 179 up 28% or 39 million over the prior year quarter non-GAAP operating margin was 3.3%.

Up 27 basis points compared to a year ago.

Now to Concentrix.

Concentrix revenue was 1.2 billion, an increase of 25% compared to 1 billion in the prior quarter due to the full quarter in back of the convergence acquisition completed in October of 2018.

On a pro forma constant currency basis revenue grew almost 1%.

Concentrix gross margin was 37.8% down 149 basis points year over year.

non-GAAP operating income in the quarter was 161 million up 32 million in absolute dollars for 25% year over year.

non-GAAP operating margin was essentially flat year over year at 13.3%.

The increase in profit dollars was primarily due to the convergence acquisition the profile of the portfolio and integration synergies.

Now moving back to consolidated results.

Total non-GAAP net income was 220 million, a 46 million or 27% from the prior year period, and non-GAAP diluted EPS was $4 from 26 cents, a 57 cents for 50% or the same period from a year ago.

The effective tax rate for fourth quarter was 26.6% and consistent with our expectations.

For the first quarter of fiscal 2020, we expect the effective tax rate to be lower at 23% driven by anticipated reversal of uncertain tax positions.

Fourth quarter net total interest expense and finance charges of one of 39 million came in ahead of expectations and we expect this trend to be slightly lower and the first quarter of 2020.

Our cash conversion cycle for the fourth quarter was 44 days down five days sequentially and down four days year over year.

Our portfolio is comprised of healthy assets and we remain focused on optimizing our working capital efficiency.

Preliminary cash generated from operations was approximately 349 million for the fourth quarter, we achieved our 2019 goal of reducing debt by 400 million and exited the year with our debt to adjusted EBITDA leverage ratio of 2.4 times moving forward in Q1 fiscal 2020, we expect to.

Generate positive cash flow from both segments.

Into Q4 between our cash and credit facilities Synnex had about 2.2 billion in liquidity available to fund growth.

As described in our press release, the board of Directors approved a regular quarterly cash dividend of 40 cents per common share.

Which is an increase of 7% from the prior year.

The dividend is expected to be paid on January 31st 2020 stockholders of record as at the close of business on January 24 2020.

Before our Q1 outlook I'd like to make one comment on our largest five customer beginning in the second half of fiscal 2020, we anticipate a shift to a consignment service model for a large portion of products, we procure and integrate for this customer versus the current purchase and resell model.

This is expected to lower revenue in Q3 in Q4 by approximately 600 million a quarter. However, we do not expect this consignment model to merit materially change our earnings potential should bonds with a customer continue at existing levels.

Now moving to our first quarter fiscal 2020 outlook, we expect revenue to be in the range of 5.24 billion to 5.5 for billing non-GAAP net income is expected to be in the range of 157 million to 167 million.

non-GAAP diluted EPS is expected to be in the range of $3 in three cents to $3.22 per diluted share based on weighted average shares outstanding of approximately 51.3 million.

non-GAAP net income and non-GAAP diluted EPS guidance exclude after tax costs of approximately 43 mine or 82 cents per share related to the amortization of intangibles and acquisition related integration expenses. Please note that these statements at first quarter fiscal 2020 expectations are forward looking and actual results may differ materially.

I would now like to turn the call back over to Dennis.

Thank you Marshall.

Regarding our Q4 results as you've heard from Marshall Q4 was another record quarter.

With exceptional results in all categories.

Our technology solutions segment achieved revenue of 5.4 billion and non-GAAP operating margin of 3.3%.

Our core Ts business grew slightly better than market and continues to perform well in all aspects.

Contributing to our core Ts business growth was solid contribution from PC software cloud and networking product categories.

Geographically the U.S. was the main driver of our growth, but the rest of our Geo has performed well and were essentially in line with expectations.

In addition to the core business growth the large project an integration business, we discussed as being a positive in our third quarter was equally positive and much more than expected in our fourth quarter.

This was mainly due to the unpredictability of this business the mix of what we sold.

And orders that were not expected to transaction the quarter, but ultimately dead.

Our Concentrix business also delivered in Q4.

I'd like to now turn the call over to Chris to discuss Concentrix results and outlook, Chris Thanks, Dennis with the announcement today, the Concentrix team as both energized and focused on ensuring that we continue to execute and it has concentrix as refer to silver separate the two businesses. We feel that this is a natural progression coming at the right time.

Our size scale and abilities that allow us to be more aggressive enriching our goals.

We believe this will result in benefits for the cynic shareholders. Our team members around the world and our clients. This exciting announcement top to various foundational change here for Concentrix and a strong fourth quarter with Concentrix, continuing our trend of like for like constant currency revenue growth and year over year margin expansion.

By the ended the quarter. Our main integration activities were essentially complete and the related synergies contributed to 120 point basis points expansion in our pro forma adjusted operating margin.

Fourth quarter revenue for Concentrix totaled 1.21 billion, an increase of approximately 25% on a reported basis.

On a like for like constant currency basis revenues were up a little under 1% with currency fluctuations, causing just under 1% headwind this quarter.

We're going into a new year with a strong pipeline that has a good representation across our verticals geographies and capabilities. We have also executed well on our strategy to rebalance our portfolio with telecom revenues now under 23% of revenue for the fourth quarter, representing an impact of 4% to our pro forma growth rate, but giving us.

A healthier business and more balanced business.

Adjusted operating income for the quarter was 161 million up from 129 million in the year ago period.

Adjusted operating margin was 13.3% up from 13.2% in the fourth quarter last year, it's important to understand on an apples to apples measurement taking into consideration when convergence acquisition happen. The fourth quarter. Adjusted operating income margin was up 120 basis points from 12.1% last year.

Sure.

The improved profit margins are the result of progress on integration strategies execution on our plan to improve the profit margins our portfolio.

On the transaction synergy front, we exited the quarter annualized run rate for synergies of approximately a 120 million well ahead of a year one target of 75 million and believe we will achieve more than the 150 million run rate at the end of fiscal 2020, a full year ahead of our schedule.

Our GAAP results for the quarter reflect approximately 18 million of integration and separation related expenses. This is slightly higher than we anticipated entering the quarter as we were able to accelerate some facilities consolidation activities and recorded related charges in the quarter.

As we enter 2020 the integration of converges is essentially complete we do anticipate a few remaining integration activities to continue into fiscal 2020, primarily related to the consolidation of facilities and data centers. We estimate we will incur approximately $20 million expenses related to these activities in 2020 that will be primarily.

These exit costs.

Our margin expansion and disciplined investment strategy resulted in another quarter of strong cash flow generation cash flow from operations in the quarter totaled approximately 126 million. Additionally, we spent 40 million unexpected or is this quarter primarily to support new business wins, we continue to believe that on a long term basis.

Capital spend in this business should be approximately 3% of our revenue.

As I mentioned earlier this was a transformational year for Concentrix, we essentially completed the integration of converges within about a years' time. This represented the largest acquisition has been completed in our space as I mentioned earlier. We are ahead of schedule on our synergy plan and confident by the end of 2020, we will exceed 150 million annual.

Synergy savings on a run rate basis.

On a pro forma constant currency basis, we grew revenues by approximately 2% to over 4.7 billion in 2019.

In doing so we overcame two meaningful headwinds first we had to turn around the revenue trajectory of the convergence business. We saw revenue decreased by roughly 7% on a constant currency basis in the second quarter of 2018.

Second we continue to the process of rebalancing our portfolio to improve the profit profile of our business. In this process. We grew despite having to replace an additional 4% of our revenue during the year that offset low margin business and the telecom sector, which we continue to see shrinking as a percentage of our overall business.

Through a combination of integration synergies cost discipline and profitable organic growth, we drove a steep change in our margin trajectory in 2019, our full year 2019, adjusted operating income margin was 13 straight, 11.3% and 90 basis improvement over 2018 on an as reported basis and then.

180 basis point improvement on a pro forma basis.

Through our margin expansion and disciplined investment approach, we generated cash flows from operations approximately 450 million in 2019 capital expenditures for the year totaled 111 million.

Our 2019 accomplishments position us to continue to grow and to expand our margins further in 2020, turning to the first quarter 2020, we expect to see the typical seasonal confirmed business importantly, we do expect to see modest constant currency revenue growth and margin expansion in the first quarter on a year over year basis.

I'd like to conclude I would like to thank the Concentrix team members, who are working to exceed our clients' needs and have helped us achieve the successful 29 team while working to integrate convergence through their efforts. We have established a platform for growth margin expansion and success in 2020 and beyond that we will be able to take advantage on us as we enter this new chapter.

Of Concentrix, the new chapter was only possible with division of bought won the founder of sex and really the starting person up Concentrix Dennis for support and guidance drug to Concentrix growth and the some export for the supporting US taking a step. Thank you very much now back to your data.

Thanks, Chris.

As Chris indicated 2019 was especially year for Concentrix.

As well there was a special year for all of the Fedex.

We ended the year with nearly 24 billion in revenue.

Third year in a row, increasing our top line by approximately 3 billion.

We were able to do so because of investments made in the preceding years going forward. We will continue to invest in our business as we adapt to our marketplace and prepare for the next opportunities.

Before commenting on our Q1 outlook I wanted to touch on the items mentioned by Marshall that will affect our 2020 revenue.

Well the decision by a major customer to consigned components to us for integration does not ideal from the topline standpoint, we treat the decision as another area to partner on where the customer versus focused on the revenue implications as such we will ensure a smooth transition equally important we are focused on earning a solid return.

On the design and integration services, we provide and we expect this to continue as Marshall indicated.

While the topline will decline will benefit from lower cash used in this business and will ensure this capital is properly utilized.

Now turning to our outlook for Q1 fiscal 2020.

And our technology solutions business, we expect the market to remain competitive.

But we're confident that we can leverage our line card and cross selling efforts to maintain our sales momentum.

As a result, we expect our core Ts business to grow better than market.

Regarding our project and integration business, while the last two quarters have been much more than expected, we see Q1 at a more normalized level essentially in line with Q1 2019.

In Concentrix as Chris noted, we expect our Q1 to be within normal seasonal ranges with positive revenue growth and margin expansion.

As we look at the markets. We serve businesses are continuing to invest in new technologies and we remain at the forefront of those actions.

Strategically providing solutions, enabling our partners and customers to grow.

As we make our way to the spend process. We will continue to invest in both technology solutions and Concentrix and expect to deliver the best results possible through the separation date.

Regarding concentrix I'm very happy for Chris to be taking on the CEO role for Concentrix once the separation occurs.

Chris understands the BPL market very well as a well regarded leader in the industry has taken the best of the Synnex culture, and forming Concentrix and has a very solid team to execute a successful independent company following the separation.

My expectation is that Concentrix will it be even more exciting and the next 10 years than in the past 10, where it grew from $100 million an annual revenue to nearly 5 billion.

I'm equally energetic about the prospects of the Standalone Ts business.

I believe the most exciting times in the Ts business, our to come as well considering the current positive business momentum of Tee us.

Separate capital structure post separation and plentiful how do full investment opportunities in the market.

I want to thank all our passionate and dedicated associates around the world for making this journey possible and thanks to our business partners and shareholders for their continuous support.

With that I would like to open up the call for questions.

To ask a question, we'll need to press star one on your telephone to withdraw your question press the pound or hash key.

Again to ask the question Press Star one on your telephone.

Please standby, while we compile the Q and a roster.

Your first question comes from the line since collegial with Barrington Research. Please go ahead.

Yes. Thanks for taking my question is a few for you Chris.

The the growth in the.

The quarter actually when you exited the quarter I think you were talking about growing along with the market.

So I was just curious when do you think you'll see that happen going forward.

Yes, I think we're going to continue to see.

The effective growth that we're doing I think we were a little more aggressive and kind of Q3 Q4, replacing some of the lower margin business and closing some of the facilities that went along with that that impacted the bed.

But underlying based on our pipeline, we continue to see great confidence to continue to get back to that at that rate within 2020.

And could you give us some color on how voice performed versus non voice and and may be within non voice, how our PPA is performing.

We saw sort of balance growth actually on both the voice and non voice parts of the business RK had sort of a lots of an impact.

With the business in the last quarter as we've had a lot of sort of integration already done.

New deals tend to come across with some of the automation already completed.

So it wasn't necessarily a meaningful part of the revenue mix.

And then yes, it looks like it's a nice job stabilizing that converges for sure.

I'm curious you know a year in now is there any meaningful churn from converges clients.

No we have the business a 100% integrated we had obviously comment clients across the two and no no meaningful churn whatsoever.

And Dennis I think.

Someone mentioned that you expect gross in the Tech solutions business at a premium to the to the market.

How should we think about the growth in the market in 2020 any help there will be will be good.

Sure event as far as the product sets that we carry today and represent in the market we see that.

In the next year growing between two and 4%.

And as I indicated.

In my remarks, and as always our goal, we expect to grow faster than the market rates.

Thank you operator next question please.

Your next question comes from the line of Matt Sheerin with Stifel. Please go ahead, Sir your line is open.

Thank you.

Thanks for taking the questions and congrats on the decision to spin out the two businesses.

Just first.

Question on on the spin spin out.

Was there any consideration by the board chairman instead.

Spending out two public companies said to look at an alternative.

Transaction, perhaps with a PE or strategic buyer in either of the two segments was there a reason why is that something that you've you look you've looked into.

Hi, Matt This is Dennis thanks for the question.

Yes, so our board as part of the process to make the decision that we announced today asked us to look at all potential opportunities for each business segment technologies solutions, and Concentrix and once we analyze everything and each possibility, how the positives and negatives, but once we analyzed everything we buy.

Please that the separation process that we announced today was the best.

Option for our company.

Were there any particular, you're not top three reasons why you wouldnt that route.

Yeah, No what I would do is first call out and remind folks what.

What a marshall called out in his script regarding.

The presentation, we posted on our IR site today, where we detailed the rationale the why now aspects of how we believe this will create value for all stakeholders.

For our business, including our customers our partners our associates and shareholders. So I think if you take a look at that presentation, you'll get a lot more the detail of why we thought the.

The spin process to deliver Concentrix as a public company the market is the best alternative.

Got it okay. Thank you and then on the on the revenue recognition change with the Hyve customer I understand that the lower revenue how does that impact your gross profit dollars and operating profit dollars because I imagine there was some margin that you made on some of that.

Pass through those those components I.

I know there was a carrying costs to have recently.

And you didn't mention that earlier, but could you just quantify that any impact on the operating margin or operating profits.

Hey, Matt This is Marshall yeah, our expectations are that operating profit dollars are anticipated to grow.

Operating margins will improve.

And don't lose sight, what Dennis had mentioned too that we will see overall working capital needs to go down which will help our debt levels and lower interest expense.

Okay. So.

It sounds like there's any negatives it sounds like I'd open positive.

Move for you, Okay, very good and I think thats it from that yeah. Okay. Thank you.

Yes, we do ask during the question and answer session that you ask one question a follow up please.

Next question comes from the line of Shannon Cross with Cross Research. Please go ahead. Your line is open I.

Thank you very much for taking my question.

Just curious maybe Chris is that as you can talk about how you see these two businesses on a go forward basis I guess, there's there's obviously been from consolidation in the industry concentric clearly has been a consolidates works.

Would you assume that that's sort of the same track you want to go one or again sort of maybe going back to the board discussion, but you know is this something where you think that the value creation might be through a bigger transaction, where maybe either tee us or or concentrix becomes part of it.

Bigger company I'm, just I'm trying to think about how you're thinking about this from maybe a little bit long longer term perspective.

Yeah. So from that Concentrix perspective, we continue to see opportunities in the markets consolidate and we'll continue to be participating as a consolidator in the marketplace.

I share and this is Dennis from a Ts perspective, I'll refer you back to the investor deck that we.

Posted today on slide 11, you can see the.

Strategic playbook that we have for our Ts business.

In a separate company from Concentrix.

Does not change the strategy the company.

But being a standalone business will allow us a few opportunities that we haven't had to date, but again the strategy has not changed and if you follow the the deck that we have it's a three pronged we really want to continue to optimize.

Our core business, we think we run a very efficient company, but we always though we can approve it and offer more returns as a result.

We think we can that's number one number two we think we can drive.

Significant organic growth by investing in a few more areas in our business.

Number one is line card expansion, we have a very healthy line card and while it's not the easy thing to do to add an additional vendor relationship. We do think we had the ability to do so going forward so up opportunity for growth there.

We're significantly investing in and.

All the offerings around anything as a service and cloud solutions and we'll continue to do that as the market expands and offers opportunities.

And then ran continue to invest in our team we've actually hired a lot of sales product and business development folks over the past year somewhat under the radar, but that's helped us grow our business and as we absorb those.

Additional headcount.

Well then go for around two and continue invest in that area, our business and we expect that will drive organic growth as well and then last but not leave.

Yeah, we have been a consolidator in this industry through M&A and other strategic investments.

We haven't done as much in the last couple of years since our west coast or acquisition.

Primarily the result of the fact that we are very focused on the convergence transaction and that.

Was came with a lot of capital contributed to it so as a separate company, while the ability to focus solely on the M&A needs. If you will have the Ts business and Thats, what we plan to do.

Okay. That's very helpful. And then just one question we've been out at CES and met with your your partners on the PC side and you know clearly there are challenges with access to see Peos, which obviously did not manifest itself. This quarter I would assume there was a fair amount of channel so going into quarter. So I'm I'm just curious.

Anticipate there being a time, where you know what Intel is it.

No no doings with PC partners at this point will actually hit your numbers or is there a reason why we should does that.

You can kind of get through this and I would need to worry about as is typical PC trend. Thank you.

Sure. John This is Dennis so the reality is we've been dealing with the situation essentially on and off for the last year and I think what we see what what the market sees which as we expected a public continue for a couple more quarters at least.

But we've been able to I think navigate it fairly well work with our partners to ensure that product is delivered.

As soon as a cat and the plan is to continue to do that for the next couple of quarters as.

As a situation plays out.

Thank you.

Okay.

Second comes from the line of Adam Tindle with Raymond James. Please go ahead. Your line is open.

Good afternoon. This is Madison on for Adam and Thanks for taking my questions. Marshall I know, it's early but I was hoping you could help us better understand some of the balance sheet dynamics between the two businesses.

Maybe anything related to cash conversion cycle and how can we think about the allocation at that between the businesses post spin.

Yeah, we expected to be about 50, 50, and our prepared remarks, and then what I said, we absolutely believe given where we're projecting in terms of strong.

Balance sheet for both entities additional improvement in operating performance and cash flow that that only bolstered bolster that comment.

Okay, and any differences around cash conversion cycle is between the businesses.

There is a unique differences clearly for t. assets.

It's a full spectrum of cash conversion from a our two inventory to 80.

And as we said in the past with.

With Concentrix, it's predominantly they are.

So cycle.

And then medicine. This data it's just a follow up on the capital side as Marshall indicated were falling a form 10 as part of this transaction and there'll be more information about the go forward capital structure and that document.

Okay. Thanks, and then just a quick follow up here I know the spin will qualify as tax free but would there be any tax implications for a potential buyer to come into play here.

Yes, so as we said, we expect us to be a tax free spin.

And and it will be a pro rata allocation through dividend to our arsenic shareholders.

Okay. If you would like to ask the question Press Star one on your telephone.

Your next question comes from the line of Tim Yang with Citi. Please go ahead. Your line is open.

Hey, Thanks for taking the question on Concentrix I think it a target for topline growth mid single digits and Youre growing low single digit for soon as in 2019, I think you mentioned that you have some portfolio optimization I think the question is are you comfortable with your current unexposed right now and how should we think about the timeline.

Keeping the part of your gross.

Yes, so we see the market growing between three and 5% and our expectations is that we'll achieve that in 2020.

We're very comfortable with our portfolio right now, we're very comfortable with our pipeline right now and we've actually sort of been more aggressive that.

Rebalancing our portfolio over the last quarter on a bit to make sure. We have a more rich margin profile and more diverse portfolio file across our verticals, so quite quite happy where we're at.

And timeline for achieving the target gross.

It was in 2020, we've said that we're comfortable of achieving it within our 2020 timeline between the market growth rates.

Gotcha. Okay. One quick follow up have you had a very strong result in Ts business, but some of your vendors mentioned the enterprise spending remains pressured can you help us understand why there's a disconnect between go pro formas versus your vendors. Thank you.

Hi, This is Dennis.

Couple of reasons for that one.

We've been executing very well in the marketplace overall part of that go back to what I said before we've been investing in the business.

Total sales head count additional.

BD and product folks that it really it helped us take share. So that's allowed us to grow faster than the overall market.

Also.

Yes, as we talked about in our Q3 results and as I mentioned in the script today.

Our integration and system design business, we've been able to cross sell additional services to that customer set which are more distribution like for supply chain like services and we benefited by that again as well in the quarter.

Thank you so much.

Do you.

Your next question comes from the line of an agenda with loop capital. Please go ahead. Your line is open.

Hey, good Thats the guys congratulations on this.

Nice new.

Hey, just a couple from me.

Dennis and Marshall and Chris as well.

He talked earlier about having both companies I believe heading up the key decent things now.

Separately.

The Navy they weren't able to previously can you talk about what some of those more material things.

Might be.

You know whether the revenue revenue related strategic related.

Optimism related would love to know, what which faces might be and then they have a quick follow up thanks.

Hi, now under this Dennis.

So to be clear, yes, the separation doesn't immediately change anything with regard to either segment our strategies for Concentrix at Synnex have been in place for quite some time than we've been executing on them.

But having two companies under one umbrella under one umbrella does.

I have the situation come up now and again, where you have to make a decision between the two.

That won't occur going forward. So that that's the key first thing that will happen once the separation occurs but then when the independent companies have their own management teams in place are on board of directors they'll be able to specifically focused on their strategies and by.

Doing that along with a separate capital structure I think the long term prospects of each individual entity I will be better than they are today.

But to emphasize the strategies of the business our change because the separation there just.

Improved as a result.

Yeah understood understood and then just with regards to.

To the comments that you guys made on the T.S. side, how you sitting Ben This is my tearing like kind of on pause you haven't gotten much M&A right there.

The open to doing stuff again can you help I just think about where you think.

The industry.

Bill could benefit from consolidations.

It's been a lot of consolidation that CTO level.

The bar levels, yes, it hasn't been as much is there any other areas just kinda like that higher level would be helpful. Appreciate it.

Sure enough that it's Dennis again, I'd say two areas.

That would benefit the industry one would be further consolidation I do think.

A larger.

Set of.

Call a power distributors, if you will.

Will benefit the market more by offering a streamlined services and efficient services to the.

Oh, Yeah and of our community that's number one and number two I think weekend as a distribution channel can use our resources to invest and other services to further help our partners out.

OEM or a bar to extend their their offerings to the customer.

Any any type of particular particular types of services that pop out.

Yeah I go back to one of the strategies that we talk about in the investor deck.

We're investing in and.

Cloud related services and anything around anything out of the service.

And so there might be possibilities to do investments in those areas beyond the organic ones that I talked about.

Okay, great. Thanks, a lot releasing soon.

Okay. If he would like to ask a question press star one on your telephone.

As a reminder, we do ask for one question and one follow up.

If you would like to ask the question Press Star one on your telephone.

There are no further questions at this time I will turn the call back to marry lie for closing remarks.

Thank you for joining us today I appreciate your time and your interest we look forward speaking with you next time. This concludes our conference call. Thank you.

Ladies and gentlemen. This concludes today's conference call. Thank you for participate you may now disconnect.