0001628280-26-023123
SEC filingRevenue grew 18.1% driven by broad segment growth and gross margin expansion to 7.30%, with operating income up 60.7%.
Consolidated revenue for the first quarter of fiscal 2026 increased 18.1% to $17.16 billion, driven by growth across all reportable segments and portfolios. On a constant currency basis, revenue rose 13.2%, reflecting strength in both Advanced Solutions and Endpoint Solutions distribution portfolios as well as Hyve Solutions. Gross profit increased 25.5% to $1.25 billion, with gross margin expanding 43 basis points to 7.30%, aided by a favorable mix shift toward net revenue recognition (37 bps impact) and margin expansion in distribution portfolios. Selling, general and administrative expenses grew 10.0% to $763 million, but as a percentage of gross profit improved from 69.5% to 60.9%, reflecting operating leverage. Operating income surged 60.7% to $489 million, translating to an operating margin of 2.85% (up 75 bps). Net income rose to $327 million, with diluted EPS of $4.04 compared to $1.98 in the prior year period. Non-GAAP diluted EPS increased to $4.73 from $2.80, benefiting from a $22.4 million realized gain on sale of equity securities.
All four segments delivered strong revenue growth. Americas distribution revenue increased 9.9% to $7.77 billion, with constant currency growth of 9.3%, driven by Advanced and Endpoint Solutions; operating margin improved from 1.87% to 2.52%. Europe distribution revenue grew 25.8% to $6.24 billion (12.3% constant currency), with operating margin up from 1.37% to 1.73%, benefiting from revenue growth and FX tailwinds. APJ distribution revenue rose 29.8% to $1.00 billion (30.8% constant currency), with operating margin expanding from 1.37% to 2.99%, driven by gross margin expansion and operating leverage. Hyve Solutions revenue increased 24.2% to $2.15 billion, reflecting strong demand for manufacturing and assembly services; operating margin improved significantly from 5.42% to 7.23%, partly due to a higher mix of customer-owned procurement model sales (262 bps positive impact). However, net revenue presentation negatively impacted reported revenue growth by approximately 71% in Hyve.
The MD&A does not provide explicit numerical guidance for future periods. Management highlighted strategic priorities including unifying reach, targeting new customers, expanding addressable market through unique vendor value propositions, diversifying offerings, and expanding service capabilities. The company continues to invest in growth and expects to fund operations through existing cash, cash flows, and credit facilities. No material changes to critical accounting policies were noted. Key uncertainties include tariff impacts, geopolitical risks, and demand variability, though the company believes its liquidity position is sufficient for at least the next twelve months.
As of February 28, 2026, TD SYNNEX held $1.56 billion in cash and cash equivalents, a decrease from $2.44 billion at November 30, 2025. Total debt stood at $4.72 billion, comprising $1.13 billion in current borrowings and $3.59 billion in long-term borrowings. Shareholders' equity was $8.78 billion. Inventory increased to $10.98 billion from $9.50 billion at year-end 2025. The company also reported $2.0 billion in accounts receivable sold to financial institutions under uncommitted purchase agreements, up from $1.8 billion at November 30, 2025.
The company disclosed $3.4 billion in obligations outstanding under supplier finance programs as of February 28, 2026, included in accounts payable. Additionally, TD SYNNEX is contingently liable for repurchase obligations related to customer inventory financing facilities, though losses have been insignificant historically. The company also has $58.5 million in outstanding standby letters of credit. A French antitrust matter resulted in a €24.9 million fine, which has been paid, with further appeal ongoing.
During the three months ended February 28, 2026, TD SYNNEX repurchased 512,000 shares for $80.2 million under its $2.0 billion share repurchase program, leaving $1.1 billion available for future repurchases. The company paid $38.7 million in dividends ($0.48 per share), a 9.1% increase from $0.44 per share in the prior year period. Capital expenditures were $33.1 million (0.2% of sales). Net debt increased by $112.8 million, primarily from $113.4 million in net borrowings on revolving credit facilities, partially offset by $0.7 million in principal payments on long-term debt.
TD SYNNEX revised its reportable segments in Q1 2026, now reporting four segments: Americas distribution, Europe distribution, APJ distribution, and Hyve Solutions. For the three months ended February 28, 2026, Americas distribution generated $7.77 billion in revenue (45.3% of total) and $196.1 million in operating income (2.5% margin). Europe distribution contributed $6.24 billion (36.3%) and $107.9 million (1.7% margin). APJ distribution added $1.00 billion (5.8%) and $29.8 million (3.0% margin). Hyve Solutions reported $2.15 billion (12.5%) and $155.5 million (7.2% margin). Revenue growth was strongest in APJ (+29.8% YoY) and Europe (+25.8% YoY), while Hyve Solutions grew 24.1% YoY.
Net income of $327M contrasts sharply with negative CFO of -$896M, highlighting severe working capital drain. The primary driver was a $1.4B inventory build, partly offset by a $284M increase in accounts payable. Capex intensity is low (capex/CFO not meaningful due to negative CFO), but capital expenditures at $33M reflect moderate investment. Without explicit FCF, the company's ability to cover capital returns relies on external financing: $113M in net borrowings funded $119M in combined dividends and buybacks. The negative CFO and heavy inventory accumulation signal potential liquidity pressure if trends persist.