Q3 2020 SYNNEX Corp Earnings Call

[noise]. Good afternoon, My name is Chantelle and I'll be your conference operator today.

I would like to welcome everyone to the select third quarter fiscal 2020 earnings call.

Today's call is being recorded an all licensees on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session.

At this time for opening remarks, I would like to pass the call over to Marshall with the next harp CFO Marshall you may begin.

Thank you Shawn so and good afternoon, everyone and welcome to the Synnex third quarter fiscal 2020 earnings call.

Joining me today to review our financial results are doubtful president and CEO.

Chris Caldwell President of Concentrix before we continue.

To remind everyone that today's discussion contains forward looking statements within the meaning of the federal securities laws.

Such statements include any predictions estimates projections.

Or other statements about future events.

Including up to the expected spin off demand economic recovery.

<unk> expenses debt cash margin and liquidity.

<unk> results may differ materially from those mentioned in these forward looking statements as a result of risks and uncertainties discussed in todays earnings release.

In a form 8-K, we filed today and in the risk factor section of our form 10-K.

And our other reports and filings with the FTC.

We do not intend to update any forward looking statements also during this call we will reference certain non-GAAP financial information reconciliation of non-GAAP and GAAP reporting is included in our earnings press release and the related form 8-K available under the Investor Relations section of our website.

This conference call is the property of Synnex Corporation, and May not be recorded or rebroadcast without our permission.

So now I'll cover some of the key highlights from Q3 and discuss Q4 guide.

In the face of continuing economic uncertainty and these unprecedented times, our revenue net income and diluted EPS, all exceeded our expectations, reflecting our resiliency and ability to do what we do best.

Our GAAP results announced today will continue to be impacted by Kogut have not been adjusting for Cobi 19 call where pro.

Where appropriate I will reference the financial impact Cobot 19 had on Q3 results.

On a consolidated basis total revenue was a third quarter record of 6.5 billion.

4% compared to 6.2 billion in the same quarter last year on a.

On a constant currency basis revenue was up 5% compared to the prior year quarter.

Our consolidated gross profit dollars totaled 708 million down, 2% or 18 million versus a year ago.

Gross margin was 11% compared to 11.7% a year ago total.

Total adjusted SGN expense was 448 million or 7% of revenue.

8 million compared to the year ago quarter.

Consolidated non-GAAP operating income was 260 million down 10 million or 4% compared to year ago.

Non-GAAP operating margin of 4% was lower by 34 basis points compared to the prior year period now.

Now shifting gears to Q3 operating performance by business segment.

First on technology solutions revenue was 5.3 billion up 5% for 258 million over the prior year quarter technology solutions gross margin was 5.6%.

It was 37 basis points lower than the prior year quarter, primarily due to product mix operating income of 132 million was down 6 million compared to a year ago. non-GAAP operating income was 142 million down, 5% or 7 million compared to the prior year quarter.

Non-GAAP operating margin was 2.7% 29 basis points lower than a year ago.

Acknowledging solutions Cobot 19 related net incremental expense was approximately 8 million for the quarter, primarily made up of an increase in allowance for doubtful accounts staffing and work from home costs now.

Now to Concentrix Concentrix revenue was 1.2 billion up 24 basis points over the prior year quarter Concentrix gross margin was 35.5% up 308 basis points sequentially and down 126 basis points compared to the year ago quarter, primarily due to the impact of covered my team.

Non-GAAP operating income in the quarter was 118 million down $3 million in absolute dollars or 2% compared to a year ago.

Non-GAAP operating margin was 10.1% compared to 5.9% in fiscal Q2, and 10.4% a year ago net.

Net concentrix cobot 19 related incremental expenses were approximately 13 million for the quarter now.

Now moving back to our consolidated results third quarter net total interest expense and finance charges were 29 million a reduction of 14 million compared to year ago quarter. The decrease was driven by a reduction in our average outstanding borrowings compared to the prior year quarter as well as a lower interest rate environment for fourth quarter.

Expect interest expense to be approximately 29 million.

Total non-GAAP net income was 173 million up $3 million or 2% over the prior year period and.

And non-GAAP diluted EPS was $3.33 up three cents or 1% over the same period a year ago.

The effective tax rate for the third quarter was 25.2% compared to 25.3% a year ago for the fourth quarter of fiscal 2020, we expect the effective tax rate to be approximately 25% to.

Turning to the balance sheet, our accounts receivable totaled 3.6 billion and inventories totaled 2.8 billion on.

On August 31, 2020, our cash conversion cycle for the third quarter was 38 days 11 days lower from a year ago and improved eight days from last quarter and last.

And led to a preliminary cash flow from operations of 321 million yes.

The improvement was supported by continued collaboration with our partners and faster turn on our inventory at the end.

At the end of Q3, including our cash and credit facilities Synnex had approximately 2.8 billion in total liquidity available to fund operations.

I also wanted to provide an update regarding the concentrix and we remain on track for a calendar Q4 spend and believe the most natural date for the spend to be December onest as it is consistent with our year end and it's a good clean start for 2020 for both Concentrix and Synnex as Weve.

As we see it today the estimated Synnex CT Corp, gross debt will be approximately 2.6 billion with concentrix, receiving approximately 1.1 billion.

And Pfenex, receiving approximately 1.5 billion.

The majority of cash on hand, which we estimate will be approximately 700 million at spin will be held by the next day.

The use of cash in Q4 will be for normal seasonal uses and debt paydown.

As we have previously discussed we want both companies to be well positioned to month amongst its peers from a leverage and liquidity standpoint.

These debt balances our estimates and could change based on Q4 performance, we're well down the path with our bankers and securing third party financing for Concentrix and are confident in the capital structure of both businesses.

Synnex and Concentrix, we'll have the appropriate dry powder to support growth and M&A opportunities now moving to our fourth quarter outlook, we expect revenue to be in the range of 6.45 billion to 6.65 billion non-GAAP net income is expected to be in the range of 191 million 204 million non-GAAP.

Non-GAAP diluted EPS is expected to be in the range of $3.68 to $3.93 per diluted share on a weighted average shares of approximately 51.5 million non.

Non-GAAP net income and non-GAAP diluted EPS guidance excludes after tax cost of approximately $37.5 million or 72 cents per share related to the amortization of intangibles and acquisition related and integration expenses once.

One final note before I turn the call over to Dennis and.

In previous discussions with you. We've let you know about one of our high customers that will be moving to a consignment model the trend.

The transition date remain fluid and will not begin in early 2021, as we learn more and have proper visibility to a start date, we will certainly let you know.

Please note that these statements fourth quarter fiscal 2020 expectations are forward looking and our actual results may differ materially with that I will now turn the call to Dennis.

Thank you Marshall and thank you to everyone for joining our call.

I want to start off by expressing my appreciation to all our stakeholders across the globe for their continued commitment and dedication in partnering with US as we have jointly faced a multitude of challenges and economic issues in 2020.

Our associates delivered a phenomenal results in Q3 for which I am truly grateful.

Well a bit worn down by the ongoing pandemic, but the cynic spirit and determination continues to inspire me.

I see the positive impact we are having on our communities and the strong support our teams are providing to each other our partners and customers.

Along with executing a great quarter. The team also made significant progress on our proposed spin of Concentrix to a standalone public company.

The Concentrix 10 document is available for your review third party financing is in final stages and most of the remaining spin related activities are nearing completion. Thus we believe we are in a solid position to close this transaction in calendar Q4.

Now moving to our third quarter results and our Ts distribution business better than expected revenue was driven by strong demand in education state and local and E commerce channels. This.

This was driven by ongoing work learn and.

And shop from home needs.

We also experienced a slight improvement from our second quarter and office environment, an SMB sales.

Consistent with Q2, we saw higher demand and notebooks chromebooks cloud collaboration and security products.

From a year over year perspective, we experienced some softness in products supporting the office environment, such as desktop Pcs printers supplies and on premise datacenter equipment.

From a geographic perspective, North America was the strongest performer, but all geos net or performed better than expectations during the quarter.

Overall, Ts distribution grew year over year.

And our Ts Hyve business, we delivered a sequential improvement and a year over year increase in revenue as we continue to support our largest customers in Q3.

The mix of programs delivered was more skewed toward higher volume lower margin products, but overall, we're pleased with the high result in Q3.

Our concentrix business also exceeded our expectations in Q3, despite the known challenges.

I'm very pleased with how we have performed and I will now turn over the call to Chris to discuss Concentrix in more detail.

Thanks, Dennis we're very pleased with our continued momentum both in our business execution on being ready to spin as Marshall indicated early December we delivered very solid results returning to pre co good revenue growth trajectory and double digit adjusted operating margin.

The third quarter revenue for Concentrix totaled 1.16 billion slightly higher than the same quarter last year on a sequential basis third quarter revenue increased across all our delivery regions.

This would not have been possible without addressing cobot 19 challenges across three separate areas aggressively.

Thus, providing a flexible safe workplace incorporates both at home and office elements to nimbly meet our clients' demands second our strong technology solutions that support clients, regardless of the channel they choose and third driving a culture of security and integrity backed up by innovations like our recently announced secure CX offering.

Secure CX is our proprietary platform that incorporates advanced technology to ensure close to the same level of security at home as available in an office. This is just the latest innovation from our stop of well over 1000 skilled engineers and developers Concentrix has been enabling technology and few solutions like this for well over a decade.

We will continue to lead by investing in this space.

We continue to be happy with our execution also around vertical mix. The communication vertical is now approximately 21% of revenue representing an impact of 4% to our year over year growth rate, but giving us a much more balanced portfolio.

As expected our travel transportation and tourism clients during the quarter had been impacted by cobot 19, resulting in an additional 2% impact on growth.

More than offsetting these headwinds with strong growth with clients and our technology healthcare financial services and E Commerce verticals, which represent about two thirds of our business on a combined basis new build.

New business signings were very encouraging in the quarter coming in at a record level of expected annualized contract revenue.

This heightened demand is based on the value that our clients, placing the strengths of our best in class CX platform and our ability to meet their evolving needs. We continue to take share with strong signings across our strategic verticals and win new business that has historically not been outsourced even with our record signings our pipeline remains strong and growing.

We continue to watch the cobot development daily and are ready to calibrate recalibrate with our clients as their needs change now.

Now moving to profitability adjusted operating income for the quarter was $118 million or 10.1% nearly reaching the year ago level. The return to double digit operating margin reflects revenue overperformance with lower variable spend despite 13 million of additional net cobot 19 cost impacts.

Cash flow from operations in the third quarter totaled approximately 91 million.

Capital expenditures totaled approximately 37 million, we generated positive free cash flow. Despite the impact of prior quarter revenue reductions reduced our collections in the third quarter.

Capital expenditures, we see trending slightly higher than historical norms to support growth and reconfiguring some of our facilities due to cope in 19.

Turning to our outlook for the fourth quarter, we remain focused on keeping our staff saved over delivering for our clients. So that we remain the partner of choice and emerging from the pandemic stronger so that we can drive sequential improvement in both revenue and profitability in the fourth quarter, we expect more sequential revenue growth than last year, resulting from strong new business signings in the.

Third quarter. In addition to seasonal increases as a result, we expect fourth quarter revenue to increase by 2% year over year on a constant currency basis, and we expect our adjusted operating margin to be above 12.5%.

We continue to feel confident in our ability to achieve and exceed industry growth rates, while increasing our adjusted operating margin over time.

Now turning to our spin from Citrix estimated to be on December Onest. We believe that we are ready to go we intend to announce our board of directors and updated form 10 registration statement in early October we are very proud the board will reflect the diversity, we have in our business as Marshall indicated we will have less than approximately two times debt to either.

Data when we separate giving a strong liquidity and meaningful flexibility to invest in organic and inorganic growth as always we have a disciplined approach to both we believe the spinoff will result in benefits for the FSIC shareholders. Our team members and our clients a pre spin event will be held for analysts early November with one on one meetings with him.

Yes, or shortly thereafter, I look forward to updating you in the coming weeks on the incredible opportunity and our superior ability to lead in the customer experience industry.

As I conclude I'd like to thank the Concentrix team members and our clients the effort resourcefulness and dedication are attributed to our people our culture and our diversity that we'll be able to take advantage of as we enter this new chapter of Concentrix. Thank you very much and I will hand, the call back to Dennis.

Thank you, Chris turning to our fourth quarter outlook, our priority continues to be on the safety and health of our associates.

For our business in general we see positive signs of continued recovery as economies open. Further however, we are still cautious as there are many differences from geo to geo and within Geos.

For technology solutions, we expect an overall seasonal improvement for Q4, we.

We anticipate Ts distribution will be up sequentially, partially offset by a decline in Ts Hot.

TS distribution will be driven by continued strength in remote enablement.

Federal buying season improvement in delayed on premise projects and overall continued investment in digital transformation.

We expect a solid quarter for Ts Hyatt gold.

It will be comparing to an exceptional Q4 last year.

As well given the unpredictability of this business, we tend to use the low end of internal expectations and our guidance calculations.

As Marshall indicated cobot related expenses declined in Q3 and are expected to decline in Q4, as we stated in our last call. A portion of these costs will be part of our normal Ts run rate going forward.

Overtime, we expect to find ways to offset these amounts while running the most effective and efficient business possible.

For Concentrix as Chris indicated we expect to have a seasonally strong Q4.

Our return to growth positive cash flow at a solid pipeline are among many aspects that I am pleased about as concentrix moves toward becoming an independent business.

I'm also pleased and excited for the independent Ts as well.

Our ongoing opportunities to improve our core operations. The many investments we have in place to organically grow our business.

The opportunities that exist for inorganic investments gives me confidence in our business and the services, we provide our partners.

As well our goal of growing faster than the market and increasing our profit at a higher rate will continue.

As I conclude my prepared remarks on behalf of the entire management team.

I want to again, thank our associates and business partners. We appreciate everything you have done for Synnex during this challenging period.

Our thoughts continued to be with those who have been affected by cobot 19, Please stay safe and healthy.

As well we are with all those who are working for positive change on social issues I have.

I appreciate the Synnex team members, who have been up service and these and other important areas.

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

As a reminder.

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Operator, we're having trouble hearing you.

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Are you able to hear me.

Yes, we can hear you Chanel.

Okay.

Thank you very Terry your line is open.

Hi, Ruplu.

Congrats on the quarter and on the strong guide as well.

My first question, Chris I wanted to ask you what is the mix of voice versus non voice in your in your revenues and what in the long term what mix would you like to get to and when you look at the current environment do you see voice demand growing or demand from non voice services growing faster.

I read blue so prior to either convert this acquisition. We were we were goal was to get the 50 50, and we're getting relatively close to about it but 60 voice 40 non voice split.

Converts acquisition, we sort of certainly increased our boys business, but overall our goal is to get back to that 50 50 split between voice.

Split between voiced unvoiced and right now we're seeing good growth in both frankly areas. So it's taking a little longer to get that split to where we'd like it but we're.

We're seeing good margin performance and good growth rates on both sides of the business.

Okay. Thanks for that Chris and for my follow up Dennis on the TS side last quarter, you had record backlog I was just wondering has the backlog normalized any and are you still having any issues with the supply chain in terms of getting product that is impacting revenues.

Hi, This is Dennis yes, so overall I'd say incrementally the supply chain is better our was better in Q3 versus Q2, but by no means are we back to normal SLS.

Well with regards to our backlog it actually has remained at a fairly high elevated level.

We certainly shipped a lot of what was existing at the end of Q2, but we actually filled it up throughout the quarter and at the end of Q3, we're about at the same level. We were at the end of Q2.

Okay. Thank you for all the details and congrats again.

Thank you for.

Again, if you would like to ask a question Thats Star one on your telephone please limit yourself to one question and one follow up question.

Your first question. Your next question comes from Adam Tindle with Raymond James Your line is open.

Okay. Thanks, Good afternoon, I, just wanted to start and congrats on the results on that.

On the post spin capital structure, I think you mentioned that most of the cash will go to Ts and it just as an aside I would think that yes on a forward basis would have some cash tailwind from the consignment shift into 2021, so very healthy liquidity to the question maybe for Dennis just touch on how you thought about options and rationale for this being the most crude.

Capital structure for the two entities.

Sure I'll start and Marshall can add some comments as well first.

First of all we want to make sure that both companies were capitalized well and we think we got to a very good conclusion with regards to that goal when it came to dividing up the cash and the debt. If you do the math Adam It's about 50 50 on a net basis.

When it comes to how much cash on one segment versus another part of that is just where the cash is currently.

And some other tax considerations as well that's ultimately why the cash fell more on the Concentrix excuse me on the Ts side and the Concentrix side and then add this is Marshall if we said before we clearly want to physicians Bull.

Businesses in a.

And a good setting in regards to the peer set and.

And we think that that does that.

Understood. Thanks, and maybe just as a follow up for Chris and Concentrix I think coming into this quarter youre expecting operating margins to be down year over year, you had done stranded labor you talked about kind of that kind of 90% productivity, but the last 10% can be the toughest.

We're expecting meaningful cobot expenses and ultimately we were only down 20 basis points I think year over year. So maybe you could touch on the biggest buckets of upside in the quarter and how you're thinking about the normalized margins for that business moving forward. Thank you.

So Adam a few things that happened clearly we had net cobot impact of around $13 million from an expense perspective, but we're very aggressive at making sure we controlled other variable cost within our business.

We saw over achievement and we called out a couple of verticals you know.

E Commerce and technology and financial services healthcare that we are able to ramp at a little faster within the quarter of new business that we won in both end of Q2 and early Q3. So that certainly helped I think from a margin perspective, clearly we want to get back to where we were last year.

On a on a quarterly basis, and even exceed that a bit but our belief is that as we.

Finished this year finish all the the last integration of convergence that's effectively done at this point start to.

Start to see a more normalized revenue returned to revenue ramping perspective, we will be able to continue to grow our op adjusted op income basis over what our historical highs were last year.

Our next question comes from Vincent Colicchio with Barrington Research. Your line is open.

Okay.

Yes, Chris.

His concentric concentrix continued to gain share from players that are struggling with the virtual delivery or is that sort of played out.

Hi, Vince its a good question, we actually saw where we gained share from clients who were sorry from.

Editors, who are unable to execute bolt on.

Virtual.

At home work models as well as in office work models, where they just weren't able to make that happen and then we also saw where we gained share from clients who are looking for a higher level of security.

That they needed from work that was going to be performed not home model and so we're able to show them, what we have done and where we've invested.

Over many many years now is proving a very large benefit for them.

Just in terms of integrity of operations and so those are really the two areas. We think that will continue and we see sort of a lot of business that seems to be moving around right at the moment as people look for reliable X.

Execution within the within their own business.

Business, So certainly our hope to take advantage of that as we go forward.

And our clients in some of the more sensitive areas regarding data getting more comfortable with virtual delivery.

Where I'm getting at is you know is the mindset, giving you confidence that maybe.

The virtual mix is going to be.

Shifting to be more sustainable than previously thought.

We expect that there will be a much higher level of work at home delivery post co bit for sure I think that's a given but we do think that a significant amount of work will return back to bricks and mortar at some point. What we are seeing is that from a more sensitive work being done theres, a higher push to get it.

Into more digital transformation, which were.

Executing with our Tiger Spike business, which were executed with some of our other.

Technology assets within our business too.

To to kind of completely get rid of the work which might have taken a little longer.

Corporate expenses and then what we're also finding is that clients are looking for solutions like our secure CX solution, which gives sort of like security at home for bricks and mortar and that's.

Sort of very differentiated within the marketplace with what were offering. So it's both of those will continue to help us give clients a level of security, but again after co, but we do expect some of this to come back into bricks and mortar.

Okay nice quarter guys. Thank you.

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Our next question comes from Matt Sheerin Stifel. Your line is open.

Yes. Thanks. Good afternoon, I was just a question regarding.

The upside that you saw.

In the quarter, particularly in technology solutions by my math, you beat our revenue estimate by roughly 700 million you talked about strength in some of that that fit Ts verticals.

Terms of products and then customers and then also high could you tell us sort of what the split was between Hyve and in the core business.

Hi, Matt This is Dennis.

Just to take a question a up a notch to start I would say you are part of our feet. During the quarter was due to the fact that we were fairly conservative in our guide back in Q2, we.

We were concerned a bit about the marketplace, what was going on with co bid.

And everything associated with that so we did give a fairly conservative guide in hindsight overall the markets that we participated on the TS side were generally better than we thought three months ago. So thats one of the reasons why we did better. The second was due to I think we took some market share as well during.

The quarter that wasn't just tactical share taken during the quarter I think we are also benefiting from wins.

Wins of new customers and new business from quarters in the past that are now playing through in the current quarter and we expect to go forward. So that was a benefit that we didn't factor as much into our guide going into Q3, but it did benefit us we believe that.

Then last to your specific combat that with regards to Hyve versus Ts distribution split.

In general we had contribution fairly equally from from both in the quarter to our initial expectations.

Okay. That's.

Very helpful and then turning to the Concentrix business, Chris You're one commentary you talked about.

New program wins with customers that are outsourcing for the first time so.

So what do you attribute that in do you see that trend.

Accelerated accelerating are continuing.

Hi, Matt So the two things that we're seeing first of all we're seeing that where our clients are looking for more variable cost model just as they kind of go through their challenges of their own business model and then the second thing that we're seeing is where they're not able to perform because of.

Coated in their own delivery systems, and therefore looking at outsourcing and where we're seeing that growth is not only to your point of new clients were never outsourced, but also clients that we've been working with but are now outsourcing.

Work that historically, they have never outsourced primarily for the two initial reasons and I think.

And I think a couple of things that we're winning for US is really we have a lot of technology around what we offer for our clients and we're driving lot of transformation for them. So not only are we saying look we can support your business that historically have no source, but we can support it more efficiently more securely with our technology and our transformation techniques and thats.

Frankly, allowing have a much more variable cost model and better scale.

Scalability up and down within that within their business. So it's it's resonating very very well, primarily because people need to make those decisions faster now with the business is being impacted by cobot.

Okay. Thanks very much.

Thank you.

Our next question comes from and then different capital your line is open.

Good afternoon, guys. Congratulations on the on the drilling side the outlook in the upcoming completion of this.

The split.

Q for keeping me if I could as well that is just.

Going back to your comments and I'm going to go about taking share in past cycles are win wins in past quarters that are now paying off.

We see that being can you any chance you can give us some context around what led to that is when and you feel like there's when could be structural and the extended again that could those going forward and then I just have a quick follow up.

Sure and under I'd say, a couple of things to that question. One that we have been and continue through the last six months investing in our business investing in sales business development and product management resources and by doing so we can deliver the full suite of Synnex.

Services to the fullest extent and we think our CFO.

Our customer set is seeing that and benefiting from that and that's allowed us to to win more business.

Well, we're about three years past the Westcon comp store acquisition, but we've really hit our stride in that business as well and we've started to see some new wins by combined our prior business with those vendor relationships and bringing in some new business for our company.

Okay, that's great and actually I'll just I'll just thank you for the follow up Dennis I recall, maybe it was the beginning of this year maybe it was February.

You only called out and who is not steady or is the prior quarter, you guys had called out or something similar or whats kind of comp store and maybe some early color cross sell opportunities to cross sell results.

It also had led nicely just some upside.

So.

Yes, yes.

Sort of is this sort of that dynamic now really hitting stride or are you are you sort of even outperforming your.

Your original expectations with that sort of in that regard.

Yeah, what I'd say is.

Well, we do still track cross sell internally to little harder as you get farther away from from transaction date, but I don't really think about really cross sell anymore. When it comes to the West coast comp store business I, just think about sell we're selling more as a company as we brought all these products and services together and I think as we mature.

And again invested in people and resources to support the business we've enjoyed the benefits from it.

Okay, that's great to hear thanks, a lot.

Thanks, a lot.

Our next question comes from Shannon Cross with Cross Research Your line is open.

Thank you very much I wanted to talk a little bit about some of the drivers from a revenue perspective for TS you know when you think about the quarter, how important where peak season and that we're just trying to think about sustainability and also.

Also some of the some of the supply chain clean accomplish this Don we're talking about weakness in enterprise demand. So I'm. Just curious if you can talk a bit about what you're seeing do you think people are coming back and maybe pursuing some larger deals.

Deals or is this just more sort of like PC like.

Recovery or work from home recovering and I have a follow up thank you.

Hi, Shannon this Dennis so.

Yes, the highest of the high runners if you will were notebooks and chromebooks.

During the quarter, we also had benefit from cloud and collaboration and other products. So those were what drove the quarter.

When it comes to Pcs.

It was incrementally better in Q3 versus Q2, but on a year over year basis still a bit challenged.

That being said, we're seeing continual improvement all the way through our current quarter today.

One thing I'd emphasize is that's coming back the second thing I also called out my script that as far as data Center office purchases. If you will we're seeing a come back in that as well again incrementally better Q3 versus Q2 still a bit challenged.

Year over year, but also seeing implemented.

Implementations and projects and and datacenter completions occurring all the way through the current date, which gives us a little bit of confidence as we move into Q4 regarding that part of our business.

Okay, Great and then if I heard a couple of more one just a clarification on highs.

We think guidance I assume that I think the consignment start not this quarter, but next so it was is this just referring to sort of lumpiness and intend to go hide sorry, five sales and then my second question. Since you talked about the fact that you went into last quarter and frankly, the quarter before that being quite conservative in terms of your out.

Rick.

How do you think your positioning this quarter. Thank you Hey, Shannon Marshall I'll answer the first.

The consignment model for the large customer we referenced in high did get pushed out at the very end of my comments I just mentioned that when we have more definitive definitive structure. When that's going to happen timing wise will come back and let everyone know, but right now we initially thought it would start 22 early 2021 and now that's been pushed back a little bit.

And then Shannon the status on your visibility question I would say that each passing month and quarter. This year.

Obviously since the pandemic, we've had better visibility into our business so with each passing quarter that we give guidance you can infer that we have a better understanding of what we think is going to happen in the following quarter.

Great. Thank you very much.

Thank you.

Our next question comes from Simeon.

Your line is open.

Hi, Thanks for taking my question.

Question for Chris Concentrix topline was roughly flat year over year this quarter and is expected to be up roughly 2% year over year next quarter. Given there are still uncertainties with was the virus and also you become next year is 3% to 5% growth still your sales growth target for Concentrix and if so.

When do you think think achieved that target.

Hey, Tim.

Yes, I mean, our expectation is that we can grow a little faster than market. Once we finish our rebalancing and and I think now we're tuning to do that with or without sort of cobot impact that's going through.

Well, we have been impacted by the travel transportation industry as we talked about.

Reality is is that we're winning more business and other segments that is giving us confidence to continue to reiterate that we haven't called that out from a.

Guidance perspective, and won't because we're only looking at sort of one quarter forward, but I think you can take from our comments that we feel quite confident we can get there in a reasonable period of time.

Got it that's very helpful. My next question is for off from Marshall any timeline or threshold for you to reinstate the dividend.

Yes, good question we.

We certainly as we suspended it wanted to make sure we have that.

We'll call it predictable and strong performance in return to where we thought we would be which is of course of course, what we recorded in where we think we're going to be for Q4 and then the other part two is because we're going to be spending here and were going up two separate board, we want that to be the decision now that will be made by those separate boards going forward after the spin.

Got it thank you.

Thanks, Tim.

At this time there are no more questions I will turn the call back over to Dan for closing remarks.

In closing I want to thank the Synnex and Concentrix teams for their ongoing efforts I have.

I have confidence in our business and look forward to each of our segments are executing well in Q4 and continuing to do so post spin as independent entities I Hope you all stay well, thank you and good evening.

This concludes today's conference call you may now disconnect.

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