TD SYNNEX Corporation

Credit and liquidity · Debt service and covenant compliance

Our ability to make scheduled debt payments or to refinance our debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions. We cannot be certain that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal and interest on our indebtedness.

Market and investment · Asset valuation and impairment

We recorded substantial goodwill and both finite and indefinite-lived intangible assets as a result of our previous acquisitions, including the Merger. We could be required to record a significant charge to earnings in our financial statements during the period in which any impairment of our goodwill or intangible assets is determined, negatively impacting our results of operations.

Capital structure and performance · Financial performance volatility

Our operating results have fluctuated and will fluctuate in the future as a result of many factors, including the impact of business acquisitions and dispositions, general economic conditions and level of IT spending, loss or consolidation of significant OEM suppliers or customers, market acceptance and pricing of products and services, competitive conditions, trends towards cloud based infrastructure, pricing and margin terms with OEM suppliers, product obsolescence, and fluctuations in currency rates.

International and currency · International operations and emerging markets

A substantial portion of our IT systems operations, including a substantial portion of our IT systems support and software development operations, are located in China. Our operations in China are subject to a number of risks relating to China's economic and political systems, including a government controlled foreign exchange rate and limitations on the convertibility of the Chinese Renminbi, extensive government regulation, and a relatively uncertain legal system.

International and currency · Foreign exchange and currency exposure

Approximately 47%, 47% and 45% of our revenues in fiscal years 2024, 2023 and 2022, respectively, were generated outside the United States. Most of our international revenue, cost of revenue and operating expenses are denominated in foreign currencies. Changes in exchange rates between foreign currencies and the U.S. dollar may adversely affect our operating margins.

Credit and liquidity · Credit risk and customer defaults

We extend credit to our customers for a significant portion of our sales to them and they have a period of time, generally 30 days after the date of invoice, to make payment. We are subject to the risk that our customers will not pay on time or at all. Our credit exposure risk may increase due to financial difficulties or liquidity or solvency issues experienced by our customers.

Market and investment · Interest rate and yield curve risk

Interest rates in the United States and other countries where we operate have increased and may continue to increase in the future. As a result, interest rates on the obligations under certain of our credit facilities could be higher than current levels. If interest rates increase, debt service obligations and our interest expense will increase even though the amount borrowed remains the same.

Technology infrastructure · Network connectivity and telecommunications

We depend on IT and telecommunications systems and the Internet for our operations. These systems support a variety of functions including inventory management, order processing, shipping, shipment tracking, and billing. Failures or significant downtime of our IT or telecommunications systems could prevent us from taking customer orders, printing product pick-lists, shipping products, billing customers and handling call volume.

Core operations · Facility damage and equipment failure

From time to time, we have experienced incidents of theft at various facilities, water damages to our properties and other casualty events. These types of incidents may make it more difficult or expensive for us to obtain insurance coverage in the future.

Supply chain and procurement · Transportation and logistics disruption

We rely almost entirely on arrangements with independent shipping companies, such as FedEx and UPS, for the delivery of our products from OEM suppliers and delivery of products to reseller and retail customers. Freight and shipping charges can have a significant impact on our gross margin. An increase in freight surcharges due to inflation, rising fuel cost or general price increases will have an immediate adverse effect on our margins.

Human capital and workforce · Key personnel dependence and succession

We are dependent in large part on our ability to retain the services of our key senior executives and other technological and industry experts and personnel. Except for certain of our key executives, we generally do not have employment agreements with our co-workers. We also do not carry 'key person' insurance coverage for any of our key executives.

Strategic execution · Merger acquisition and divestiture risks

We have in the past pursued, and in the future expect to pursue, acquisitions of, or investments in, businesses and assets in new markets. Our acquisition strategy involves a number of risks, including difficulty in successfully integrating acquired operations, IT systems, customers, OEM supplier relationships, products, services and businesses with our operations, and risk that the acquired businesses will fail to maintain the quality of services.

Market position and competition · Market cyclicality and demand volatility

We have, in the past, experienced decreases in demand and we anticipate that the industries we operate in will be subject to a high degree of cyclicality in the future. Softening demand for our products and services caused by economic downturns and over-capacity may impact our revenue, as well as the salability of inventory and collection of reseller and retail customer accounts receivable.

Customer and revenue · Customer concentration and key customer dependence

Our future success is highly dependent on our relationships with a small number of OEM suppliers. For example, sales of Apple Inc. products and services comprised approximately 12%, 11%, and 11% of our total revenue for fiscal years 2024, 2023, and 2022, respectively, and sales of HP Inc. products and services comprised approximately 10% of our total revenue for fiscal year 2022. The loss or deterioration of our relationship with Apple Inc., HP Inc. or any other major OEM supplier could adversely affect our business.

Market position and competition · Pricing pressure and margin compression

As a result of significant price competition in the IT products and services industry, our gross margins are low, and we expect them to continue to be low in the future. These low gross margins magnify the impact of variations in revenue and operating costs on our operating results.

Natural and catastrophic events · Natural disasters and extreme weather

Our worldwide operations could be subject to natural disasters, adverse weather conditions, global pandemics and other business disruptions, which could seriously harm our revenue and financial condition. Certain of our facilities, including our corporate headquarters locations in Clearwater, Florida and Fremont, California, are located in geographic areas that heighten our exposure to hurricanes, tropical storms, earthquakes and other severe weather events.

Geopolitical and trade · International conflicts and tensions

Worldwide economic conditions remain uncertain due to the persistence of inflation, elevated interest rates, market volatility as a result of political leadership in certain countries, including due to Russia's invasion of Ukraine, the conflicts involving Israel and the surrounding region and other disruptions to global and regional economies and markets.

Data and privacy · Data protection and privacy laws

Data privacy is subject to frequently changing rules and regulations, which sometimes conflict among the various jurisdictions and countries in which we provide services. The General Data Protection Regulation ('GDPR') in Europe, the California Consumer Privacy Act and other similar laws have resulted, and will continue to result, in increased compliance costs.

Tax and financial reporting · Financial reporting and accounting standards

We prepare our financial statements to conform to generally accepted accounting principles in the United States ('GAAP'). These accounting principles are subject to interpretation by the Financial Accounting Standards Board, American Institute of Certified Public Accountants, the SEC and various bodies formed to interpret and create appropriate accounting policies. A change in those policies can have a significant effect on our reported results.

Legal and litigation · Intellectual property disputes

From time to time, we receive notifications alleging infringements of intellectual property rights allegedly held by others relating to our business or the products we sell or integrate for our OEM suppliers and others. Litigation with respect to patents or other intellectual property matters could result in substantial costs and diversion of management and other resources.