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DATE

Sept. 24, 2026

CALL PARTICIPANTS

• Head of Investor Relations - Nate Friedel
• Chief Executive Officer - Patrick Zammit
• Chief Financial Officer - David Jordan

TAKEAWAYS

• Non-GAAP Gross Billings -- $31.8 billion, representing 40% growth year over year driven by strength in data center infrastructure and high-growth segments.
• Non-GAAP EPS -- $5.68, an increase of 59% year over year and above management's guidance range.
• Distribution Gross Billings -- $24.8 billion, growing 27% year over year with double-digit growth across all geographic regions.
• Advanced Solutions Billings -- 37% increase, reflecting demand for infrastructure, software, and AI-related technologies.
• Endpoint Solutions Billings -- 16% increase, supported by higher average selling prices in personal computing that offset a modest unit decline.
• Hyve Gross Billings -- $7 billion, an increase of 117% year over year due to increased demand from existing customers and programs.
• Hyve Manufacturing Growth -- Exceeded 130%, accounting for approximately two-thirds of total segment billings.
• Hyve Supply Chain Services -- Grew in excess of 90% year over year, driven by component demand for infrastructure deployments.
• Free Cash Flow -- Consumption of $1 billion for the quarter, reflecting inventory investments in the Hyve supply chain business and new customer ramps.
• Gross Cash Conversion Cycle -- 22 days, increasing by six days year over year due to a higher mix of Hyve business and working capital investments.
• Distribution Operating Margin -- 1.95% as a percentage of gross billings, expanding 35 basis points year over year.
• Hyve Operating Margin -- 3.61%, compared with 5.04% in the prior year period, reflecting a mix shift toward dilutive AI rack programs.
• Networking Revenue -- Increased 19% year over year, driven by demand for Wi-Fi 7, switches to support AI, and price increases.
• Share Repurchases -- $100 million returned to stockholders through buybacks during the quarter.
• Dividend Payment -- $38 million distributed to stockholders, with a declared cash dividend of $0.48 per common share for the fourth quarter.
• Q4 Gross Billings Guidance -- Approximately $31.9 billion, representing a 31% increase year over year at the midpoint of the range.
• Q4 Non-GAAP EPS Guidance -- Approximately $5.90, representing 54% growth year over year at the midpoint.
• Networking Capital -- $6.5 billion at the end of the quarter to support expected growth and new customer programs.
• Cash and Equivalents -- $749 million, with a net leverage ratio of 1.9x at the end of the third quarter.

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RISKS

• Jordan stated, "As a reminder, our operating margins reflect the growing contribution from large AI rack programs that has been strategically important but dilutive to Hyve's operating margins, creating a mixed headwind," noting that this impact has affected year-over-year profitability comparisons.
• Jordan reported that "free cash flow consumption for the quarter was approximately $1 billion," driven by increased inventory requirements and working capital investments for new customer ramps in the Hyve business.

SUMMARY

TD SYNNEX Corporation (SNX -9.87%) reported record non-GAAP gross billings for the third quarter, led by triple-digit growth in the Hyve segment and demand for data center infrastructure. Management reported that the company is investing working capital to support new hyperscale programs and AI infrastructure ramps, which led to a consumption of cash during the quarter. The company expanded its partnership with IBM into 20 additional countries and entered an agreement to support a large-scale NVIDIA AI factory deployment. For the upcoming fourth quarter, the company expects sequential growth in Hyve billings as new customer programs begin shipping.

• CEO Zammit noted that customers engaging with digital platforms like PartnerFirst and Digital Bridge grew their spend at nearly twice the pace of other customers.
• The company entered an agreement with Mach3 Systems to support an NVIDIA AI factory powered by Vera Rubin NVL72 systems for a large enterprise.
• Management reported that AI PCs now account for close to 50% of the company's personal computing revenue.
• IBM expanded its relationship with the company into 20 additional countries across Europe, Asia-Pacific, and Latin America.
• Design work is underway for advanced liquid-cooled networking racks that are expected to enter production in the first half of fiscal year 2027.
• CFO Jordan stated, "We expect we will generate cash in the quarter as recently deployed working capital begins to normalize."
• Management noted that networking growth is being driven by a need for a refresh in Wi-Fi 7 and switches to support AI workloads.

INDUSTRY GLOSSARY

• Hyve Solutions: A segment of TD SYNNEX that provides custom-designed data center infrastructure for hyperscale and large enterprise customers.
• Endpoint Solutions: A product category including personal computing devices, mobile phones, printers, and peripherals.
• Advanced Solutions: A product category focused on complex data center technologies such as cloud, security, networking, and software.
• Non-GAAP Gross Billings: A financial metric representing the total amount billed to customers, including the full value of hardware and software.
• ASP (Average Selling Price): The average price at which a particular class of product or service is sold.
• Hyperscalers: Large cloud service providers, such as Amazon, Google, or Microsoft, that operate massive data center networks.

Full Conference Call Transcript

Operator: Good morning. My name is Rebecca, and I will be your conference operator today. I would like to welcome everyone to the TD SYNNEX third quarter fiscal 2026 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 Nate Friedel, Head of Investor Relations at TD SYNNEX. Nate, you may begin.

Nate Friedel: Good morning, everyone, and welcome to TD SYNNEX's fiscal 2026 third quarter earnings call. Joining me on today's call are Chief Executive Officer, Patrick Zammit, and Chief Financial Officer, David Jordan. 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 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 risks 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 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 8-K available on our investor relations website, ir.tdsynnex.com. This conference call is the property of TD SYNNEX and may not be recorded or rebroadcast without our permission.

I will now turn the call over to Patrick.

Patrick Zammit: Thank you, Nate, and good morning, everyone. We delivered another record quarter with Distribution and Hyve both performing above our expectations and growing above market within the quarter. Results were broad-based across geographies, technologies, customers, and programs, with notable strength in data center infrastructure. Our success securing opportunities with new and existing customers, particularly within Hyve, required working capital investment to support these ramps. As David will discuss in more detail, those investments affected near-term cash flow during the quarter but position us to support committed customer demand and future growth. Looking beyond the quarter, we continue to see encouraging developments across the technology landscape. Enterprise AI adoption is progressing toward broader production deployments.

Data center modernization remains a priority as organizations prepare for next-generation infrastructure requirements, while AI is driving new security, governance, and compliance requirements across technology environments. We believe these trends expand our opportunities across both Distribution and Hyve and reinforce our confidence in the long-term growth opportunity ahead. I will now begin with Distribution. Distribution delivered strong growth during the quarter, with non-GAAP gross billings reaching $24.8 billion, up 27% year-over-year, exceeding our expectations and growing above market across each of our regions. Our performance reflects a broader trend across the technology ecosystem. As technology environments become more complex, customers increasingly need help integrating, deploying, securing, and managing solutions across multiple vendors and technologies.

Vendors are looking for partners that can not only efficiently reach customers but enable customer capabilities, activate demand, and execute consistently around the world. This is increasing the strategic importance of Distribution. One area we are particularly encouraged by is the growing number of enterprises moving from AI experimentation towards production-scale centralized AI factory deployments. This quarter, TD SYNNEX and Mach3 Systems signed an agreement to support an NVIDIA AI factory powered by Vera Rubin NVL72 systems.

This is one of the largest enterprise AI factory infrastructure deployments expected to be delivered through the channel, bringing together the design, integration, deployment, day two co-admin operations, financing, and supply chain capabilities needed to operationalize a sophisticated NVIDIA-based AI factory platform for a large enterprise. As enterprises evaluate next-generation platforms, we are seeing growing demand for partners that can simplify complexity and accelerate implementation through their enablement capabilities. AI factories have the potential to power transformative new products and services, but realizing that potential requires far more than access to compute. Organizations that ensure AI investments are secure, governed, cost-effective, and aligned with measurable business outcomes.

Similar to the evolution of cloud computing, we believe disciplines such as financial operations and security operations will become increasingly important as AI becomes embedded in business-critical processes. Organizations will need support selecting the right models for the right workloads, deploying them on the right infrastructure, and balancing performance, security, and governance across edge, private, hybrid, and public cloud environments. While still early in the adoption curve, deployments of this scale signal a market that is moving toward broader deployment. As AI becomes embedded across more users, workloads, and business processes, we believe the requirements to secure, govern, optimize, and support these environments will continue to expand.

Customers are also seeking greater flexibility in how they engage with us and have seen benefits from our digital strategy. Customers regularly engaging across our digital offerings have grown their spend with TD SYNNEX at nearly twice the pace of similar customers with us. Through solutions such as PartnerFirst and Digital Bridge, enhanced with AI agents embedded throughout the customer experience, we help customers identify opportunities, simplify purchasing decisions, and engage efficiently across a broad range of technologies and vendors. We view digital engagement as an extension of our broader enablement strategy.

Whether customers engage through digital platforms, technical specialists, enablement programs, or a combination of all three, our objective remains the same: helping our customers build capabilities, grow their business, and better serve their end users. The same capabilities creating value for customers are also important for vendors. As technology portfolios expand and customer requirements become more specialized, vendors are seeking partners that can combine global execution with expertise across technologies, customer segments, and geographies. This is expanding the addressable market served through Distribution. Earlier this quarter, IBM expanded its relationship with TD SYNNEX into 20 additional countries across Europe, Asia-Pacific, and Latin America.

We believe this expansion reflects the strength of our go-to-market model and the confidence our vendors place in our ability to activate demand, execute consistently across end markets around the world, and accelerate growth. Collectively, over the last year, we have added multiple billion USD of incremental gross billings into the portfolios through new customer wins and an expanded vendor line card. More importantly, we believe these relationships deepen our role in the technology ecosystem and create additional opportunities for long-term profitable growth and potential earnings expansion. Turning to Hyve. Hyve delivered a strong quarter with non-GAAP gross billings of $7 billion, up 117% year-over-year, exceeding our expectations as we saw continued increased demand from existing customers and programs.

Our previously announced programs with new customers have progressed as planned, with shipments expected to begin in our fiscal fourth quarter. These programs improve visibility into future growth, including maintaining a healthy pipeline of opportunities, and support a broader customer and program mix over time. We believe increasingly sophisticated infrastructure requirements are elevating the importance of expertise in engineering, validation, manufacturing, and supply chain execution. As a result, customers are engaging Hyve earlier in the development process, creating additional opportunities to expand our relationship with our current customer base and potential new customers.

One example is our work with multiple customers on the design of advanced liquid-cooled networking racks that are expected to enter into production in the first half of fiscal year 2027. At the same time, we remain focused on ensuring growth translates into attractive long-term returns. While customer demand and revenue growth remain robust during the quarter, profitability remains an important area of focus. The business is working through a period of significant customer ramps, manufacturing expansion, and elevated investment activity, including engineering talent, technical expertise, and operating capabilities as we support multiple large growth initiatives at the same time.

Several opportunities in our pipeline are being awarded at margin profiles that are neutral to accretive relative to our current operating performance. As previously awarded programs mature and newer programs ramp, we expect modest margin improvement over time, even as we continue investing to support future growth. Our manufacturing investments remain aligned with awarded customer programs, and our focus remains on deploying capital in ways that strengthen our competitive position and are expected to generate attractive returns over time. In closing, we believe both Distribution and Hyve continue to benefit from durable technology trends and expanding customer relationships.

Within Distribution, enterprise AI adoption, digitally enabled experiences paired with human expertise, and growing technology complexity are increasing the value we provide to customers and vendors. Within Hyve, sophisticated infrastructure architectures are driving deeper customer engagement and expanding opportunities across a broader set of customer and programs. While we have deployed significant capital to support customer growth initiatives, particularly within Hyve, we believe those investments strengthen our competitive position, support future growth, and increase the long-term earnings power of the company. As these programs mature, we expect free cash flow generation and conversion to improve, and we remain focused on demonstrating progress as we close fiscal year 2026 and enter fiscal 2027.

With that, I will turn it over to David to discuss our financial performance and outlook in greater detail. David?

David Jordan: Thank you, Patrick, and good morning, everyone. This was another strong quarter for TD SYNNEX. Both Distribution and Hyve grew above market and contributed meaningfully to earnings, while our operating income and EPS continued to grow faster than gross billings. Starting with the top line, our non-GAAP gross billings for the third quarter was $31.8 billion, increasing 40% year-over-year or 41% year-over-year in constant currency and exceeding the high end of our guidance range. Non-GAAP operating income was $736 million, an increase of 55% year-over-year or 56% year-over-year in constant currency. Non-GAAP EPS was $5.68, an increase of 59% year-over-year and above the high end of our guidance range. GAAP operating income was $643 million, an increase of 68% year-over-year.

GAAP EPS was $5.18, an increase of 89% year-over-year and above the high end of our guidance range. Turning to our quarterly performance for each business. Distribution non-GAAP gross billings increased 27% to $24.8 billion with double-digit growth across each region in most major technologies. Our end-to-end portfolio continues to position us well across technology cycles with healthy demand throughout the business, in particular strength in data center infrastructure. Endpoint Solutions gross billings increased 16%, supported by continued strength in PCs, including higher ASPs and a modest decline in units. Advanced Solutions gross billings increased 37%, driven by strength in infrastructure, software, and AI-related technologies. Distribution gross profit increased 22% to $1.15 billion.

Distribution gross margins were slightly impacted by customer and product mix, which was more than offset by disciplined expense management. Non-GAAP operating income increased 55% to $483 million, and non-GAAP operating margin as a percentage of gross billings expanded 35 basis points year-over-year to 1.95%. Turning to Hyve. Hyve's gross billings increased 117% to $7 billion, with growth across both manufacturing and supply chain services. Manufacturing grew in excess of 130% and represented approximately two-thirds of Hyve's gross billings, reflecting higher volumes and expanded programs with existing customers. Supply chain services grew in excess of 90%, supported by component demand associated with customer infrastructure deployments.

Hyve's gross profit increased 47% to $276 million, and non-GAAP operating income increased 56% to $253 million. Non-GAAP operating margin as a percentage of gross billings was 3.61%, compared with 5.04% in the prior year period. As a reminder, our operating margins reflect the growing contribution from large AI rack programs that has been strategically important but dilutive to Hyve's operating margins, creating a mixed headwind, which we believe has stabilized. Our objective is to build a broader, more diversified Hyve business that combines sustainable growth with improving profitability, stronger cash generation, and attractive returns on invested capital.

Shifting to cash flow and capital allocation, free cash flow consumption for the quarter was approximately $1 billion, driven by increased inventory in Hyve's supply chain business, in addition to new customers and new programs with existing customers. Networking capital closed at $6.5 billion with a gross cash conversion cycle of 22 days, an increase of five days sequentially and six days year-over-year, reflecting incremental mix of Hyve. Year to date, we have made substantial investments in Hyve's working capital and believe we now have a significant portion of the investments to support our expected growth now in place. Our focus is now on execution, cash conversion, and realizing the expected returns on our investments.

We ended the quarter with $749 million of cash and cash equivalents and net leverage of 1.9x. During the quarter, we returned $100 million through share repurchases and $38 million through dividends. Our board also approved a cash dividend of $0.48 per common share, payable on October 30th, 2026, to shareholders of record as of the close of business on October 16th, 2026. Turning to our fourth quarter outlook, we expect continued momentum across both businesses, translating to non-GAAP gross billings of approximately $31.9 billion, plus or minus $500 million, up approximately 31% year-over-year at the midpoint. A gross to net adjustment of approximately 30%, revenue of approximately $22.2 billion, plus or minus $400 million.

Non-GAAP net income of approximately $474 million, ±$20 million. Non-GAAP diluted earnings per share of approximately $5.90, ±$0.25, up approximately 54% at the midpoint, based on approximately 79.2 million diluted shares outstanding. We expect Hyve's non-GAAP gross billings will increase sequentially quarter-over-quarter as we continue to see further benefit from ramping programs across multiple new customers. We expect we will generate cash in the quarter as recently deployed working capital begins to normalize. Looking ahead to fiscal 2027, we expect further improvements in Hyve's cash conversion as programs mature. In summary, we are extremely proud of our teams for the results they continue to deliver.

Distribution for multiple quarters has delivered above-market growth and broad-based growth, operating leverage, and cash flow. Hyve continues to add new customers and new programs with existing customers. We expect each of our major programs to generate attractive returns, although some will not reach their full potential until the back half of fiscal 2027. With that, we will open the call for questions. Operator?

Operator: We will now begin the question and answer session. We request that you limit yourself to one question to allow time for the other participants to ask their questions. If there is remaining time, you are welcome to re-queue with additional questions. To ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Please pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Joseph Cardoso with JPMorgan. Please go ahead.

Speaker 4: This is NK on for Joseph Cardoso from JPMorgan. Thank you for taking my question. Great results. My question is, you stated several pipeline opportunities are being awarded at margins neutral to accretive relative to current performance. What is driving this improved margin discipline, and how sustainable is it as competition for AI infrastructure intensifies?

David Jordan: Thanks for your question. Just to provide, this is David, a little more clarity on Hyve's operating margins and how the new customer programs are coming. What we put in the prepared remarks, and if you reflect on the commentary we provided on the call last quarter, Hyve is ramping three new hyperscalers and multiple programs within each of those customers. As we look forward, one of the comments that we made is the new programs that we have won, which are predominantly manufacturing, are neutral to accretive to Hyve. Additionally, some of the programs that we are ramping this year, as those programs mature, we continue to find ways to improve the margins within there.

As we look forward, that is what gives us confidence that Hyve's margins have stabilized and should improve as we move forward.

Operator: Your next question comes from Keith Housum with Northcoast Research. Please go ahead.

Keith Housum: Good morning, guys. I appreciate the question, and great quarter for you guys. Guys, as we are kind of looking at the growth, obviously, servers and storage were phenomenal for you guys this quarter, but the strength was really broad-based. I think there might be concern with some investors that you are getting more rumors about data centers perhaps peaking here, and I think there are rumors of Oracle even perhaps pulling back on data centers here. How are you guys thinking about the data center market for the next year or two? Any concerns that you might have a pullback here on spending or any constraints out there? How are you thinking about the broader market?

Patrick Zammit: Yes, Keith, good morning. Thanks a lot for the question. So, one, as you said, we are very pleased because the growth in the quarter has been broad-based by geo, Distribution high, by technology. By the way, our Q4 guidance reflects that. If you look at next year, so we are in the process of building our budget for next year and collecting all the data. We continue to be overall positive about the market prospects, and we expect to continue to grow a little bit faster than the market.

Specifically to data center, when you look at what is driving the demand, you have, of course with the hyperscalers, they have continued to support the frontier models with capacity for training. What we see, and that's confirmed by our OEMs is that companies are now investing more and more, enterprise are investing more and more in agentic capabilities. We know that agentic AI is going to be a fantastic driver for productivity gains and improving customer experience. We've mentioned one of a big win this quarter from an enterprise, and we see that as clearly a trend accelerating.

So we continue to be positive about the prospects for next year, and specifically to Hyve, as David just mentioned, we've won some new customers, and we're going to benefit for the ramp-up. So overall, we are cautiously optimistic.

Keith Housum: Great. Just as a follow-up to that, the business you win with Hyve, is that cancelable if the market did go south by those customers? Or are these non-cancelable agreements that you guys enter into?

Patrick Zammit: So go ahead.

David Jordan: The way the programs work are similar to Distribution. You could cancel contracts, but these are longer-term agreements. Both sides have potential cancellation rights if people don't perform. But when you go into one of these programs, it can take you a year to get up to speed, and what we're working on is we've won a category within a hyperscaler where we support a multiyear piece of technology. In many cases, these programs can last a few years, but there is always the potential that volumes can move around. But we feel really good about where Hyve sits within the customers that it supports, the value that it adds, and how we stack it up relative to the competition.

All of those items will provide a firm level of insulation if we need it.

Patrick Zammit: I just want to add two things. One, when you look at the forecast we've received or the backlog we have, we don't see any sign of concern today. That's point number one. Point number two is, it was interesting to watch the results of Q3, and clearly everybody referring to the fact that there is not enough capacity today in the data center to meet the demands. Again, the combination of the two makes me feel cautiously optimistic for next year.

Keith Housum: Great. Thank you, guys.

Operator: Your next question comes from Ruplu Bhattacharya with Bank of America. Please go ahead.

Ruplu Bhattacharya: Hi. Good morning, Patrick and David. Thanks for taking my question. You have reported good results and guidance. Looks like gross margin overall declined 60 basis points year-on-year. Can you elaborate more on what was that mix that impacted margins? Was there anything unique about the Advanced Solutions side of the Americas Distribution business? Because looks like that region had gross margins down the most of about 120 basis points. Any further color on what impacted margins? Thank you.

David Jordan: Sure. Thanks, Ruplu. When you look at the overall margins, if we just focus on Distribution for a second, the mix that we are referring to is largely product related. So within North America, there was a few larger transactions, specifically around infrastructure build-outs, and some of those categories have slightly lower gross margins relative to the average. Within Hyve, it is the same impact that we had commented on last quarter, which was we have ramped a large AI server program that is profitable, but at margins that are slightly below the average Hyve margin, and that is what has caused the year-over-year decline for Hyve.

Net, when you take a huge step back, our teams both in Distribution and Hyve have done a really nice job managing margin, managing pricing, and making sure that within Distribution, when volume shifts between categories, that they prudently manage their cost to continue to drive operating leverage. So we feel very good about the performance that the teams put out for the quarter.

Ruplu Bhattacharya: Okay. Thanks for the details.

Operator: Your next question comes from Erik Woodring with Morgan Stanley. Please go ahead.

Erik Woodring: Super, guys. Thank you so much for taking my question. I am going to ask something kind of similar to Ruplu there, and maybe try to be a little more specific, which is on that Advanced Solutions side, you are talking about mix. I just want to make sure, and clarify for everyone here, I think there is probably some concern there could be pricing issues with the cost-plus model just because of where pricing is going. Can you just clarify for us that the Advanced Solutions gross margin pressure that you saw was really just a function of mixing those deals and that any like for like margins, we are not seeing pressure year over year this quarter?

Thanks so much, guys.

David Jordan: Sure. No, Erik, thanks for the question, and you have read it correctly. When you look at the overall margins, if you really start to double-click them, they are relatively stable. As we have shared previously, our business, we make a percentage of the average selling price. What impacted the quarter is we had a couple of large transactions, and larger orders tend to be slightly lower margin. The mix of that is what caused some of the margin impact, in addition to us selling a decent amount of AI infrastructure. It is all profitable business. It is all good ROIC business, but that is what impacted the margin, specifically in Advanced Solutions year over year.

Structurally, the margins remain highly resilient when you look at it from a category perspective. So we feel pretty good about that.

Patrick Zammit: Erik, good morning. I just want to add one thing, so talking a little bit about our management system. Every month, we are reviewing our margins, of course, by geography, but most important, by technology and by vendor and customer segment. We are monitoring that indeed, like for like, margins are stable or evolving, and then we look for the why and take corrective measures. So it is a very disciplined approach. That is the reason when we talk about mix, it is either customer segment who grew faster and has a lower margin or higher margin, or geo who grew faster and has a higher margin or lower margin. So it is really mix.

Otherwise, very strong discipline on margin reviews to anticipate any issues and take corrective actions very rapidly. But again, as David mentioned today, we have no issues.

Erik Woodring: Awesome. Thank you so much, guys. Good luck.

Patrick Zammit: The other thing I would add is, and that is very important, we talked about taking to the bottom line at least 50% of the GP growth, and you can see that today that ratio is significantly better than that. Again, the teams are doing a fabulous job managing cost. We are also obviously starting to leverage AI, which basically is improving the productivity of the overall team. So, operating margins have been consistently improving over the past quarters, and it was true again in Q3.

Erik Woodring: Thank you, Patrick.

Operator: Next comes from David Vogt with UBS. Please go ahead.

David Vogt: Great. Thanks, guys. I'll just squeeze in one and just a little bit multipart question for David. David, you touched on seeing free cash flow getting better in Q4, and seasonally Q4 is your better period of conversion, better conversion of working capital. Can you help us think through where you think the company's cash flow needs look like as we stretch out into 2027? Because the business is structurally 50% bigger than it was effectively a year ago.

Just trying to get a sense for where your cash needs are today, what you feel comfortable with cash on your balance sheet, and how you're thinking about all the different vectors and permutations, particularly as Hyve should continue to grow pretty nicely next year. Thanks.

David Jordan: No, it's a good question. Thanks, David. When you think about what we put in our prepared remarks is we expect to generate cash in Q4. You're right that seasonally, we tend to generate more cash in the back half of the year. Here's the way we think about it. We would expect a couple of days of improvement in gross cash days, quarter-over-quarter. That is largely driven by two things, continued momentum across both Distribution and Hyve, and knowing that a lot of the cash consumption year to date has come from Hyve, and we have to make investments in programs ahead of the ramp. As those programs ramp, we expect them to be cash generative.

As you think about 2027 or more beyond, we expect all of our businesses to be sustainable cash generators. We recognize that FY 2026 was a period of hypergrowth. But we also front-loaded a lot of working capital investments to enable that. As we move forward, we would expect all of our businesses, Tom, to become cash generative. We feel pretty good about where we are.

Patrick Zammit: I'll just add one remark. When we look at-

David Vogt: Okay.

Patrick Zammit: Our more mature programs at Hyve, indeed we see that when they reach maturity, they are generating free cash flow. Okay, so no concerns from that standpoint. But the reality is that the team has done a very good job winning some new programs, expanding the customer base, and yes, so we are in an investment phase to ramp up all those programs. But again, when the program matures, it generates free cash flow.

David Vogt: Great. Thanks, Patrick.

Operator: Your next question comes from Katherine Murphy with Goldman Sachs. Please go ahead.

Katherine Murphy: Thank you for the question. Maybe to stick on the Hyve manufacturing piece, can you talk more about the mix of programs in the quarter? You mentioned that the AI server business that you highlighted last quarter remains largely stable, and as these new programs layer in, mix should improve. But maybe talk more to the outlook for the traditional server networking storage programs in the new engagements, as well as the timing of when some of these legacy engagements may start to roll off or be less significant. Thank you very much.

Patrick Zammit: Yeah, good morning. If you look at the quarter, Q3, we had this large GPU program, and networking continued to be very strong. If you look at the new programs we have won, they are primarily networking programs. Again, at a good margin. We started seeing some of the ramp this quarter, and we are going to see an acceleration in Q4 and Q1.

Katherine Murphy: Thank you.

Operator: Your next question comes from Guy Hardwick with Barclays. Please go ahead.

Guy Hardwick: Hi, good morning. I want to see if you guys could update us on the agreement with Amazon, whether that has had an impact on revenues in the quarter, and also whether some of the revenues, the unvested portion or vested portion is being netted off the revenues. Then a follow-up question on Hyve. Given there was more manufacturing growth and supply chain growth, although I know you have already answered the question, you would expect a positive mix from that, but you are saying within manufacturing there is a negative mix. Am I understanding that correctly?

David Jordan: Thanks for the question. We will try to cover both of them. As you know, we announced a warrant agreement with Amazon, and what we shared at that time is we expect this to be mutually beneficial to both of us. This is an agreement that is seven years long, and so we would expect over the course of the agreement that both sides to benefit. I think it is too soon to get into exact specifics on how things played out in the quarter. But what I can tell you is our relationships across all of our customers within Hyve are very good, and we continue to invest in capabilities that add value to all of our partners.

When you think about the mix within margins as it relates to Hyve, you are correct that the AI server program that we have referenced, which has caused some of the margin decline year-over-year, is a manufacturing program. A lot of the new programs that we have won are also manufacturing. This has been a year where we have had somewhat of a headwind to gross margins. But as we look forward, and as these new programs ramp, we feel very good about the trajectory of the margins, as a lot of these new programs are neutral to accretive to Hyve in total.

Guy Hardwick: Thank you.

Operator: Your next question comes from David Paige with RBC Capital Markets. Please go ahead.

David Paige: Hi, good morning, Patrick, David. Thanks for taking my question. I want to ask on Distribution at Endpoint. One of your closest competitors had noted that there's still 300 or 400 million PCs un-refreshed to Windows 11. It looks like you had good growth in PC in the quarter. I just wanted to get your thoughts on, I guess, the demand environment, the refresh cycle, and what you see going forward. Thanks.

Patrick Zammit: Yeah, thanks a lot. Good morning. PC did overall well and grew double digit. If you peel the onion, units were down. We had forecasted the PC units to go down mid to high single digit, which is what happened this quarter, and more than offset by price increases and mix. Let me just provide some color here. Indeed, component price increase has driven an increase of ASP average selling prices. But another phenomenon which is very interesting is the fact that the market is buying more the mid-range and higher range type PCs, rather than the low range. Why?

Because also when our manufacturers get the allocations, they allocate them to the mid-range and the higher range of their portfolio. Some of the ASP increase is really due to components, but some of it is due to a change in mix. The refresh is not over, and we should still see some tailwinds because of that. The price increase, as expected, is having some impact on the volume. It has less impact on B2B, where we play. It has more impact on B2C, where we don't place. We have a very small play in the market. PC continues to be overall in value, a very good category.

Just add that AI PCs continue to grow and represent now close to 50% of the total revenue for us. AI PCs is potentially becoming an important part of the infrastructure to run AI workloads.

David Paige: Thank you.

Operator: Your next question comes from Vincent Colicchio with Barrington Research. Please go ahead.

Vincent Colicchio: Yes. Are you seeing customers consolidate their Distribution relationships as technology becomes more complex? Is the company gaining wallet share as a result?

Patrick Zammit: Good morning. Thanks a lot for the question. As you have noticed, we grew faster than market, and we've done that now consistently for many quarters. I think it's due to two things. One, from a customer side, indeed, we have this collection of specialist approach, which means that we have a very appealing value-added, value proposition by technology, and that puts our teams in a very good position to support customers who have to deliver business outcomes which are more and more complex to deliver. Yes, I believe that our approach makes us, I would say, probably very well differentiated to help our customers win the deals and grow.

We see, at the same time, in the vendor community, a trend accelerating in terms of rationalizing the go-to market, reducing the number of direct customers, direct resellers, and number of distributors. Because of our value prop, because of the relationships we've built over the years, I think we are going to continue to benefit from that trend.

Operator: Thank you.

Operator: Your next question comes from Alek Valero with Loop Capital. Please go ahead.

Alek Valero: Hey, guys. Good morning. Thank you for taking my question. My first question's on enterprise. You've mentioned that you're seeing more growth in enterprise. It sounds like this is something that's going to continue. Can you talk to the kinds of things that enterprise customers are prioritizing, and where are you best positioned to capture that spend?

Patrick Zammit: Okay. Good morning. I'm going to distinguish between compute and storage. On compute, two things. You still have the refresh of the general compute server base. As you know, the new generation has more cores and can replace several servers from the old generation. What you see is a decline in unit, but an average value which is significantly higher. We see very nice growth in general compute, and we also see, obviously, an increased demand when it comes to AI compute, driven by the fact that companies are absolutely building their factories to take advantage of agentic AI.

What we see is some very large deals coming from large enterprises, but we are starting to see also mid-size companies investing in that space. On storage, what we see is a modernization, an acceleration of the modernization of the data center. I think AI will continue to play a key role. Important aspect if you want to get the full benefit of your language models, you need to have the data in a good shape, and that means investing in storage. That is something we are seeing too. Here for storage, we see an increase in units and of course in value.

Alek Valero: Got it. That is super helpful. Thank you for that. Just a quick follow-up on networking, actually. I see networking grew 19% year-over-year. Although it was the slowest growing hardware category, what are the puts and takes there? Any color you can provide on networking?

Patrick Zammit: Yeah. Networking, again, just want to put some context. If you just go back last year, was a little bit a challenge category. Things have completely changed now. You have a need for massive refresh, Wi-Fi 7, switches to support AI. You have a series of tailwinds in networking which are driving a nice increase in units. On top of it, the magnitude is not comparable to what we see in compute or PCs, but we start seeing some price increases also. The combination of the two makes the category very strong and I think it is going to continue for some time. It is another category where we are very optimistic for the coming quarters. Yeah.

Alek Valero: Awesome. Thank you.

Operator: We have reached the end of the Q&A session. I will now turn the call back to Patrick for closing remarks.

Patrick Zammit: Thank you all for joining us this morning. As we conclude, I would like to express my gratitude to our coworkers around the world whose hard work, dedication, and commitment make our success possible, as well as to our partners for their continued trust and support. To everyone on today's call, thank you for your ongoing interest in TD SYNNEX, and I am wishing you a great day.

Operator: This concludes today's conference call. You may now disconnect. Have a great day.