Good afternoon and welcome to the SYNNEX First Quarter Fiscal 2018 Earnings Call. Today’s call is being and all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session [Operator Instructions]. At this time for opening remarks, I would like to pass the call over to Mr. Mary Lai, Head of Investor Relations at SYNNEX Corporation. Ma'am, you may begin.

Thank you and welcome to the SYNNEX Corporation earnings conference call for the first quarter fiscal 2018 ended February 28, 2018. Joining me on today's call is our President and CEO, Dennis Polk; our CFO, Marshall Witt; and our EVP and President of Concentrix Corporation, Chris Caldwell. Following their remarks, we will open the call to questions. As a reminder, today's call is being webcast and recorded. Please note that some of the information you will hear today consist of forward-looking statements within the meaning of the federal securities laws. Such statements may relate to, without limitation, market, demand, investment, growth, non-GAAP net income and diluted EPS, amortization of intangibles, margin, revenue, costs, expenses, shares, tax rate, seasonality, integration and overall performance. Actual results or trends could differ materially from our expectations. For more information, please refer to the risk factors discussed in our Form 10-K for fiscal 2017 and discussion of forward-looking statements in our earnings release and Form 8-K filed with the SEC today. SYNNEX assumes no obligation to update any forward-looking statements, which speak as of their respective dates. Also, during this call, we will reference certain non-GAAP financial information. Reconciliation of non-GAAP and GAAP reporting is included in today's earnings release and related Form 8-K on our website at www.synnex.com. This conference call is the property of SYNNEX Corporation and may not be recorded or rebroadcast without our specific written permission. With that, I will turn the call over to our CFO for the financial update. Marshall?

Thank you, Mary, and first to our start welcome Mary to the SYNNEX Corporation glad to have you onboard. First, I'm going to review the results for operations and our key financial metrics and then I'll conclude with guidance for the second quarter of fiscal 2018 before turning the call over to Dennis. Our first quarter revenue and non-GAAP net income and diluted EPS are in line with our expectations. On a consolidated basis, total revenue was $4.6 billion, up nearly 30% compared to $3.5 billion in the same quarter of the prior year. Adjusting for FX, revenue increased by 28%. Technology Solutions revenue was $4 billion, representing an increase of 33% compared to the prior year period. Adjusting for the Westcon-Comstor acquisition and FX, revenue increased by 11%. This increase was primarily driven by broad-based growth across the majority of our portfolio. Concentrix revenue was $508 million, up 6% from $478 million in the prior year quarter. Adjusting for FX, revenue increased by 3%. The increase was primarily due to increased volume and the expansion of services to existing customers and the impact of the Tigerspike acquisition. Now turning to gross profit. Our first quarter gross profit dollars totaled $414 million, up 21% or $72 million versus the year ago and our gross margin was 9.1% compared to 9.7% in the prior year period. The increase in gross profit dollars was primarily driven by the acquisition of Westcon-Comstor as well as overall growth in both business segments. The decrease in gross margin was primarily due to the higher mix of Technology Solutions business from the Weston-Comstor acquisition and customer and product mix within our system design and integration business solutions. First quarter total adjusted SG&A expense was $274 million or 6% of our revenue compared to 6.3% of revenue…

Thanks, Marshall. One month into my new role as CEO, I can confidently say, it has been a seamless transition. I want to thank all our team members for their effort and support since the announcement of Kevin’s retirement. Regarding our first quarter performance, SYNNEX had a successful start to our fiscal ’18. The momentum that we created in 2017 continued into our first quarter with revenue of nearly 4.6 billion, representing a year-over-year revenue growth of almost 30% and with solid execution, we delivered non-GAAP EPS of $2.14 per diluted share, a record for the first quarter. Our Technology Solution segment revenue grew by 33%. Excluding the FX and Westcon-Comstor growth was still over 11%, which is significantly about in the overall market. Our strong performance was broad based with strengthen system, peripherals, networking and security. From a customer perspective, all divisions have robust growth with commercial, DMR, public sector and SMB all performing well. Our Westcon-Comstor Americas business continued strong start with another fantastic quarter. We saw a revenue growth in the Westcon-Comstor business and both operating profits and margins were above expectations. We’re very pleased with the results of this business after the first two quarters post-acquisition and appreciate the efforts of all the Westcon-Comstor team members during the transition into SYNNEX. Additionally, as we further integrate Westcon-Comstor North America into a single operating platform, we expect that revenue and comp synergies will grow. Turning to our Concentrix segment, we grew revenue by 6% with strong contributions from consumer electronics, banking and financial services, travel and transportation verticals. Our non-GAAP operating margin increased year-over-year by nearly 70 basis points to 8.6%, reflecting good progress towards our target of double-digit operating margin for our fiscal 2018. For more input on Concentrix's business, I will turn the call over to Chris.

Thank you, Dennis. Concentrix is off to a solid start for 2018. First quarter revenue was 508 million, up 6% year-over-year. We earned 61 million of adjusted EBITDA in the period reflecting a double-digit growth from the prior year quarter making us a second consecutive quarter of which adjusted EBITDA grew twice as stocks of our revenue running it. This was helped by some better utilization material that was driven by additional volumes from our clients. We’ve also continued our focus on the right clients and the right services for sustainable growth in the first quarter. As an example, we added some key wins in our Tigerspike business from our existing Concentrix clients in the quarter helping two banks advanced their mobile, customer offerings and growing the number of clients who are doing Robotic Process Automation work or RPA. Our clients in the banking, insurance and healthcare spaces are seeing the most benefit from RPA. We're seeing these platforms provide better efficiency for our clients and then enhanced end user experience and reduce cycle times. While this integration and investment may pressure our short term revenue, we expect this will support our longer term stickiness with our clients and are aggressively implementing the technology across our client base. With information security being top of mind of all of our clients, I am also very proud that we won an award for best security practices this quarter in addition to receiving eight other awards from industry advisors with two specifically highlighting our diversity. These awards continue to reflect our culture and our care for our clients. Lastly, while we launched our temporary [indiscernible] late in the fourth quarter of last year, I'm very pleased to announce that we have completed our move into the permanent facility this first quarter. In addition, we also opened at a new location in Xi’an, China to fill current demand by our clients in these two markets. Turning to second quarter, we expect to call our normal seasonality. We expect to continue our focus on driving a right mix of services into our client base, while signing strategic clients in our key verticals. We entered the quarter with a strong pipeline of opportunities. Overall, I am pleased with the results for this quarters and we want to give thanks all of our clients and Concentrix staff around the world, who day-in and day-out delivered great innovative results for our clients. Back to you, Dennis.

Thanks, Chris. Now looking at our second quarter. Within Technology Solutions, we expect our legacy distribution business to perform in line with historical seasonality. We expect the Westcon-Comstor business to be within historical seasonal norms, which is a modest decrease from Q1 to Q2 given the Westcon-Comstor business has a more pronounced revenue month in December each year. And lastly, we expect our systems designs and integration solutions business to grow slightly both sequentially and year-over-year. This is driven by two main reasons. One, our Q2 '17 was exceptional from a sequential and overall growth perspective. And two, this business is primarily the base and could be difficult to forecast, hence we are planning accordingly. While our near term profit margin is challenging this quarter due to some high volume business of a few customers, we are still excited about the long term prospects and are investing for growth. Overall, with regards to Technology Solutions, our goals establishing deep and strategic relationships with our partners, continuing to translate to growth at our business. In Concentrix, as Chris noted, we expect Q2 revenue and non-GAAP operating margins to grow year-over-year. Concentrix have taken a proactive approach in optimizing its portfolio, reevaluating and in some cases allowing lower performing contracts to some set and being selective with new business. We're also focused on productivity improvements to offset general wage headwinds and leveraging our systems and global networks to improve scale. Overall demand is stable and growing and our projected signings are strong. We also expect to see incremental growth opportunities with our expanded portfolio of services and are strategic complement that Tigerspike provides. On the key elements of our success which I mentioned at our first quarter call is that we will continually challenge ourselves to be relevant to all stakeholders including associates, customers, partners and shareholders. We're focused on making the right investments, integrating strategic acquisitions and skilled resources and executing our strategies in the complex and rapidly changing markets that we serve. As we continue to do so, I believe our revenues and margins will improve which will generate strong cash flows and earnings per share growth. In closing, I want to say again that I’m honored to be taking on my new role at SYNNEX. I want to thank Kevin for his leadership, his contributions over the past 10 years and ensuring a smooth transition. The strategy developed with Kevin and the other leaders at this company will serve us well moving forward. We expand to execute on our plan. Lastly, I want to take this opportunity to thank all our associates around the world for their hard work and dedication and also thank our business partners and shareholders for their support. With that, I’d like to open the call for questions.

[Operator Instructions] We have our first question and it is coming from Matt Sheerin with Stifel. Your line is now open.

Just, actually before I get into some questions, just want to clarify your comments, Dennis, regarding within Technology Solutions specifically the cloud, the systems integration business. I think you said that comps are going to be obviously tough after a strong Q2 of last year and that you expected it to be down slightly year-over-year and quarter-over-quarter. Was that right?

No, it's going to be slightly up quarter-over-quarter and sequentially.

Okay, year-on-year, but obviously you have been growing that business 50% plus so pretty dramatic slowdown. Is a visibility in that business getting tougher because you have had very, very strong growth obviously for several quarters in a row now? And I know there's a big customer concentration issue within that business too. So has anything changed in terms of visibility or what you are seeing from that customer or other customers in that business?

Yes, Matt, from a visibility standpoint no major changes over the past few quarters. As we have talked about it is more of a bid based business. So every quarter, we are going to -- with each customer we are looking at the various bids and some we push hard to win and some we will pull back from depend on profitability. So that really hasn’t changed over the past couple of quarters over the last year. What is occurring though is we are becoming pretty concentrated with a few customers. And those customers look at us down to see a lot of balance their business as well. So it’s a little more difficult to grow with them giving the size and percentage of the business we are with them today. So that’s some of the pressure we have as far as going the system design integration business as well.

Is that a longer term challenge then as those -- obviously those customers and one specifically is very big, and that market is so dominated by just a few players in the hyper scale place? So what's the strategy to grow that business in that kind of environment?

It's a market with quite a few participants, but the largest of the large do make up the bulk of the revenue. Our revenue is again primarily made up of a few customers but we have a very good pipeline of quite a few other customers that we expect to close fairly quickly and keeping as once we close them become a meaningful part of their market share.

And just on the margins in the tech solution business which were down year-over-year 40 basis points or so and backing into your net income guidance for next year, looks like it’s going to be down year-over-year. I know you had a very strong May quarter last year, in that business. But is that primarily due to the cloud of the high business? Or there any other issues within the core distribution business because you had tech data just a few weeks ago? Talk about pressures from OEM suppliers and then also competitive pressures from customers? So is that part of a two? And could you just comment broadly about what you’re seeing and in terms of the competitive environment?

Sure Matt. Yes, multiple question there. As far as kind of year-over-year comparison from a margin standpoint, as you know that we did have a very solid Q2 last year, most of which was driven by our system design integration business. So that’s probably the main reason, why the compare is tough year-over-year. From a vendor program perspective, no real major changes to talk about over the past two quarters and EBITDA and even the past year. Obviously, program is change from vendor-to-vendor, change from quarter-to-quarter, but we seen no material changes in the past, again few quarters and for the past year. As far as overall competitiveness in the marketplace, as we always said this mark is very competitive. I would say that in the recent few quarters on higher volume larger customer based. It’s been a bit more competitive, but outside of that market is been pretty stable.

And then Mark, this is Marshall. Just a complement what benefit there too. Yes, as we look to Q2, there is some margin headwind around the system design integration business. And as Dennis said, the rest of the business right within norms and seasonality, the other thing just to note in some of our customers in system design integration business, we have what's called an open book where we share kind of due to due to there were some, some one-time adjustment in Q1. That represented a few basis points that we don’t anticipate occurring again.

Our next question is coming from Adam Tindle from Raymond James. Your line is now open.

I just wanted to maybe continue the conversation on system design integration. Can you just help us with what has changed in the bid process? Is it that competitors or coming more rationale? Is that customers are pressuring you more? Just more color there and how do you think about the timeline to see improvement?

This is Dennis, I’ll take that. As far as the overall market. I wouldn’t say it's gotten any more competitive. So from a competitor bid perspective, it's pretty stable over the past few quarters. As far as our business specifically as we talk about, we’re fairly concentrated with a few set of customers. And within that concentration, we are actually somewhat concentrated in a number of SKUs, high volume run rate SKUs. So we’re not occurs with customers, you expect that pricing negotiations become pretty tough and pretty specific given the high volume, lower level of SKUs that were servicing for the customers. So we’d experience that over the past number of quarters and that’s the main reason why our margins have come down. As far as improving them, the key thing is what we talk about before, it’s diversifying within the existing customers that we have, number of SKUs that we offer to them. And then also expanding our customer base and bringing on new customers and then going to volume with them and offsetting some of this concentration that we have.

And then Adam, this is Marshall. Just to reiterate, we see this lasting for a couple of more quarters, but very -- we feel very positive about the businesses. And as Dennis said, our focus is on winning desirable customers, it takes a little bit longer sale cycle for that to happen, but we’re quite positive about what this area and the business looks like in the next few quarters.

And maybe on just TS growth in generally ex-Westcon may guidance looks like it suggests that TS is flowing to kind of a low single digit year-over-year growth after a number of quarters of double digit growth. But many of your vendors sound pretty bullish on IT spending, so can you just talk about how your view is different? And could we think about further deceleration in TS year-over-year organic growth as comps get tougher in the back half of the year?

Yes, I’ll start Adam and then let Dennis comment. The way what I heard your question was, is ex-Westcon, what does the seasonality look like? And as we said, it’s right in line maybe slightly ahead of seasonality, but right in line when you look at the various aspects and elements speaking of U.S., Canada, Japan, it’s right on line. So, it’s hard to see that with so many different layers and companies that we brought on board, but we see that in Q2 in terms of just overall relationship from Q1.

And I would just add Adam that back to our script, we try to point out that, legacy core distribution business is growing nicely from a seasonal perspective and we actually expect to be growing expect to be growing faster than the market this quarter.

And maybe if I could just get one quick clarification from Chris, the comment on -- pressure on revenue in Concentrix, I just want, it looked like Concentrix grew 6% or so year-over-year this quarter, seasonal guidance for next quarter suggests that sort of level would continue. So could just maybe help clarify the pressure on short term revenue? Does that mean beyond the next quarter we’re going to see some -- that’s when we’ll see the pressure because I wouldn't think 6% type growth is much of the deceleration there?

Adam, so, we saw that in the last sort of two quarters and we’ll see in the next couple of quarter, we’re actually eroding our revenue by putting in RPA in some of our clients, and then kind of building the back up, so clearly frankly we’d like to grow faster, but at 6% that includes some of the kind of headwinds we’ve seen by replacing some of our existing revenue with lower revenue using RPA tools.

So, that’s the -- so 6% would be the type of growth rate that you would suggest is kind of exhibiting the pressure that you're talking about?

Adam, as we’ve talked about before sort of we want to definitely grow sort of out markets a bit faster, market is 3.5% to 4%, so I kind of view those numbers versus a 6% number, but in theory yes, we want to continue to grow at that market while we are implementing all the new technology for our clients.

Our next question is coming from Frank Atkins with SunTrust. Your line is now open.

Maybe following up on that last question on Concentrix a little bit, some nice margin improvement there, what are drivers of margin improvement going forward, going to be? Is that more RPA work, Tigerspike? What can you do to continue to drive that margin?

So, Frank, it’s really a couple of problems that we look it, one is as we continue increase our revenue coming from our strategic verticals like insurance and healthcare and banking, that has a higher margin profile just because of the complexity work. And so what we'll do in that space. So we continue to focus on growing in those areas. The second thing as the technology, which you've talked about, the more RPA solutions we put in, the more mobility solutions we put in from Tigerspike and the more sort of the technology that the client uses that we've developed in-house, we continue to see margin expansion opportunities from that. And then really the last, third part is better utilization of footprint. As you've noticed, we've launched the new, number of new geographies likely. And we continue to ramp up. As we mentioned in that accretive to our business as of yet, but as we expect to exit this year, when they're fully ramped, they'll be accretive to our business and to expand our margin. So we've got a number of levers that we're pulling on and showing to drive up into the right -- from a margin expansion perspective.

And then I'd like to ask a little bit about use of cash going forward. Can you talk a little bit about kind of your comfort level with the debt? Where it is and where you might allocate the dollars in terms of as you look at your ROIC? And then real quickly, if you can comment on DSOs that will be wonderful too.

Okay, Frank. Let me first hit the DSO and then I'll do cap and then turn it over to Dennis. So our cash conversion which core Concentrix get rolled into that and buried somewhat was slightly better than last year is at where I wanted to be, no. We certainly have improvements on the inventory side that we can do. On the overall capital allocation and we call it dry powder. As I've mentioned, we got over $2 billion in liquidity available. And as we look at our opportunities, you heard us say that we're clearly focused on looking at our debt, looking at paying that down. We paid down debt at $100 million in the last three months really happy about that to see interest expense come down accordingly. We expect cash flow to continue to be positive as we head up to the rest of fiscal year and then I'll let Dennis comment just on a rough thought on M&A.

Yes as far as just to add on to what Marshall was saying. I mean we are comfortable with where we're at right now. And as Marshall noted, we have some improvements to make now bring us to even more positive capital position. But the overall M&A market and all of our segments continues to be a place where we want to be opportunistic. And M&A is been a key part of our growth and building our platform over the years. And nothing has changed as far as our thoughts going forward. With respect to continued investment in M&A type opportunities. And that's our plan going forward.

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

Hi, thank you. This is Ashley Ellis on for Shannon today. My first question just around EPS guidance, I was wondering if you could walk us through the puts and takes. You've just commented that Concentrix operating income should grow year-over-year, but it looks like you've also lowered the range for cash flow for the last year. So what's kind of driving EPS to be down or below of what we were expecting? And then I have a follow up.

Alright, Ashley, I'll go short and then I'll go longer as you needed. The short answer is the biggest called it adjustment or headwind associated with EPS for Q2 is what Dennis spoke to which is the margin depression that we're temporarily feeling in our system design and integration business. All other aspects of our business are performing very well and are healthy. But with that said, you've referenced tax, we did provide in our prepared remarks comment that what the tax rate was for the quarter, which is 29 and the we provided what the record year looks like which is 27.5 to 28 as we announced last quarter what that benefit commence from tax reform it is a benefit for us and so that we get a share in that for the rest of this year but Dennis I'll let you comment anything else from an overall EPS perspective.

So, I think and Marshall covered that the highlights well. The key is the core business is performing quite well we do have opportunity in our SG&A to bring a few more dollars to the bottom line as we work through the integration of Westcon comp store and just execute better and the few prices of our business but the main factor right now that we are working on from a headwind perspective and it is profitability of the system design integration business. But as we talked about before as we diversify that business and grow outside of our core few core customers we will see profitability return there as well.

And the second question is just regarding server demand, it's been a few months and few last spoke about the vulnerability. So I'm just wondering your conversations have started to pick up with customers, if you've seen any pick in demand or any change around those vulnerabilities?

Yes, since the last call really nothing to call out for us our server demand that was very stable throughout the quarter and based on our projections today we don’t see that changing at all so really nothing to call out on that topic at this point in time.

Our next question is coming from Louis Miscioscia with Pivotal Research Group. Your line is now open.

Just to the tailgate on some of the prior questions. So on service we think stable do you mean that we grow? And could you mention it was a mid-single to high single and low single? And then I guess I can get into couple of condenser questions please.

Sure. Yes, specific to our server business, not given out exact percentages, but we did grow the server business very heavily in the quarter but pretty consistent if you will if the rest of our core TS business.

I guess switching over to Concentrix. Could you help us out with RPA in the sense where do you think we are with this whole process in the sense of would it still like in the first or second innings or we've further a long and then time isn’t there please when you look at our Concentrix business how much of it do you think is RPA above, if you take the whole whatever the revenue line was $2 billion what percent of that do you think could be RPA?

So, Lou, to be quite honest we have to go by industry because some industries are little more advanced. As we mentioned sort of financing services and specifically in that sort of retail banking, there is lot of opportunities including insurance lots of opportunities and I would say we are probably in the fourth inning, we are out of prototyping and proof of concepts, and we are into sort of good implementations that are driving real returns for our finance and seeing good attracting with that. Some other industries are probably in the first and second inning and just kind of looking at it I mean proof of concepts, but overall and long sort of run rate as in years of continued improvements and betterment using the technology of businesses so it's not something that's going to be overnight but it is something that we see as a competitive advantage to take share from our competitors and improve our relationships with our clients by offering them higher value sort of services. In terms of sort of RPA-able, I think you call at a call a number among misleading I think what people are seeing is anywhere from 20% to 40% improvements on processes that can be RPA-able, but then what's happening is that what's left is becoming a higher value, higher chargeable service and general recommending additional revenue from not as well. So our expectation is we’re forecasting internally set headwind -- the cannibalization of our own revenue and we still like growth at market. And so that’s how I would look at our revenue for the business.

And then I wonder if they came up on the tech data call was this specific comment that there was lower OEM payouts, pretty much across the board. Obviously, you’ve mentioned that most of your margin degradation was in the system design business. So were you not seeing I guess lower OEM payouts in general?

We feel really good about our partnership, about the programs we have in place. And again evidenced by commentary may about seasonality and embedded in that is also our confidence on our ability to continue to hit the various thresholds that we have with our partner. So we’re seeing in the strong market. We’re seeing call it, good partner commitments. And other than the comment around this design integration, we feel good about the rest for business. And we do feel good about system too it’s just a headwind right now.

Our next question is coming from Sean Hannan with Needham & Company. Your line is now open.

Just at least in terms of looking at the Westcon business. Where are you folks in terms of cutting over looking at system integration, if actually being able to get to say single invoicing? If I recall correctly, I think that was one of the key enablers in order to be able to see some revenue acceleration in that combined entity and one of the key aspects of the synergy. So just trying to get an understanding of what perspective can you share around timing for that and how would you expect that to be an enabler and shape some improvement here through the year?

Regarding the synergy benefit, you’re absolutely right. Once we combined systems, we do expect to get revenue synergies from this business. We are getting some today but it’s a little difficult as you can imagine working in with two systems. So it’s very manual and just not efficient at all but still getting benefit, so that’s a positive despite the headwind of two systems. As far as when we plan to combine systems, we said that we want to get system combination done in the first half of this year and that will be calendar comment. So that’s by the end of June. I can say at this point, I think we’re going to beat that deadline pretty well. So in the very short-term, you’ll see or you’ll hear about us doing a successful system integration.

And then as a follow-up here is kind of the high level question, I’m not sure what you’ll be able to have in terms of insight. But is there anything that you’re seeing or sensing in terms of budgets opening or potentially opening more as a result of tax reform and perhaps allowing for another revenue contributor later on in the year? Or what perspective can you share around how this recent tax perform could ultimately help your business in that regard? Thanks.

The overall answer is we haven’t seen anything material to-date affecting our business. We do expect when companies have more cash available to them due to lower tax rate that they’ll invest them back in their business and those investments will include technology spend. So it is our expectation that will start to occur, but we have not seen anything material to-date though.

Our next question is coming from Jim Suva with Citi. Your line is now open.

I know a lot of time has been focused a little bit on the challenges of operating profit margin on the system designing and integration business. Can you just help us better understand, is this due to some excess desire to expand its customer base or due to increased competition in its existing customer base?

I’d say it’s in no particular order here, it’s due to competition in our customer base, it’s also due to the fact that we've been investing in the business to scale it out to ensure we can not only handle existing business with current customers but also to take on new business with new customers. And then the last aspect would be again just the high volume of low amount of SKUs, which has allowed for lower pricing overall and then lower margin accordingly in our business.

And then were there vendors over 10% representing your sell through?

In total, we typically have one or two. We disclosed them in our Q. It’s the same one, Jim that you’ve seen in the past in the Qs and Ks.

And then finally there’s been a lot of talk in the media about privacy impacts from some of the social media companies about using personal data. Has that impacted your order rate or anything, for example accelerate them or pause them or any impact from the social media privacy?

It’s something we thought about, but to-date we have not seen any spike, if you will, from anything related to that. Is our general business up or is part of that increase up, I should say, because of potentially related to what you’re talking about that is possible. But we have not seen anything specific that we would call it out and say this is a factor in and why business is up.

And my final thing is more of a housekeeping. What type of tax rate should we look at now with tax reforms have been finalized and your integration is progressing well?

Jim, I would view 27.5% to 28.5% for the rest of the fiscal ’18 for your model.

Our next question is coming from Ananda Baruah with Loop Capital. Your line is now open.

A few from me, if I could. Just going back to the [indiscernible] decompression, Dennis, I believe and I heard you comment that you saw it was just for a couple of more quarters. Did I get it accurately and if so what the visibility do you have that it could flat now for the next couple of quarters?

You did hit that correctly. We expect it to last for couple of more quarters. And then I think at that point, I would say margins we believe will begin to expand again. And Dennis?

Just adding on to that, Ananda, the key for us is to diversify the business as we talked about a few times now today. But also -- and that's with new customers but also to bring on new solutions and new offerings to the existing customers to further diversify the business that has caused our margins to come down a bit, which again is a result of concentration of small amount of skews at high volumes.

So I guess the visibility that you guys have that we should say couple of more quarters is you've laid out some investible costs, you think you’ll have new customers coming on at a reasonable timeframe, so that gets you some fixed cost absorption. And then secondarily to the new product the new skews at the existing customers. Do you think that when that occurs, they would diminish some of the pricing pressure on the original skews, the existing skews, or do you think that continues but you just get some lift from the incremental skews?

It's the latter part of what you said. The goal is to bring on new offerings and new skews to lift the operating profit but that will not change the profile of the existing bids that we've won.

And then to the extent that you guys can, does the amplified investment from Google hyperscale from Azure hyperscale -- does that impact you at all or are you hopeful that you can benefit from that? I guess, any context there, I think would probably be helpful collectively to it.

Well, we love to be in growing markets and that's one of the reasons why we invested in this business five or six, seven years ago now. So the fact that the market is growing and there is several players who are increasing their spend we think is a good think and is opportunity for us.

And Dennis I believe the comment made last quarter that the business have been impacted by some pull forward. Was that material? And to the extent that when -- material does it matter and then to the extent that it did, do you think that impacted -- is that impacting the guide as well?

As far as our current quarter and our current quarter guide, notwithstanding that we've always said this is a very lumpy business and hard to predict. But there really isn't any pull forward aspect going on that's factored into our guide for Q2 or from the results we posted in Q1.

Ananda, you might be thinking about last year quarter two where we did see some pull in, if you will. And that's making the year-on-year comparison little bit harder.

I think that's what it is, Marshall. I mean, that's exactly what it is. I appreciate the clarification and the reminder. And then finally, I didn't hear -- can you just talk to how Westcon synergies are attracting, if it was mentioned on the call, I totally missed it and that's on me but I’d love just an update there?

Overall, again we’re very pleased with the Westcon-Comstor business for the first two quarters. The business is performing well, meeting and exceeding the goals, which is fantastic. As far as synergies on the top line, we’re still working through the system integration, like we talked about before. So we haven’t achieved all the revenue synergies that we would hope for to-date, but we do see significant opportunity to achieve the expected revenue synergies once we consolidate the systems in North America. From an expense standpoint, we didn’t really call out expense being a major synergistic area in this transaction. But the reality is we are starting to see some benefits that weren’t anticipated and we do expect to see more as we consolidate the system. So that’s an added benefit to the transaction.

And if I recall, the guide upon deal closure with $0.70 for the 12 months. Is that accurate?

Ananda that was where we had upon announcement.

And Marshall, when you -- Marshall or Dennis, when you are saying that you are tracking in line -- in line flat, let’s call it, is that $0.70 whatever track you have to that $0.70, you’re in line plus with that from an overall perspective.

Last question here, but I’ll answer in a different way. First of all, we’re pleased with the performance of Westcon all-in North America, pleased with the margins. But we also have operation and sales teams that are now fully integrated from a North American perspective. So it becomes very difficult to now to begin to bifurcate and figure out what’s Westcon North America versus -- or U.S. versus what’s U.S. did. So very pleased with the performance, exceeding expectations, leave it at that.

Thank you. And this concludes our call.

Thank you. And that concludes today’s conference. Thank you for your participation. You may disconnect at this time.