Ingram Micro Reports Third Quarter Financial Results

IRVINE, Calif.--(BUSINESS WIRE)-- Ingram Micro Inc. today announced financial results for the third quarter ended Sept. 28, 2019. The company experienced solid global demand and a strong increase in profits, led by double-digit sales growth in commerce and lifecycle services and cloud, and a strong increase in operating profitability across all lines of business. Worldwide 2019 third quarter net sales were $11.87 billion, a decrease of 1 percent in USD, with gross margin increasing strongly to 6.73 percent, up 38 basis points, as the company maintained continued focus on a better mix of higher margin sales. This compares to net sales of $12.04 billion and gross margin of 6.35 percent in the 2018 third quarter. The translation of foreign currencies versus last year had a negative impact of approximately 2 percentage points on worldwide net sales. Non-GAAP operating income for the 2019 third quarter increased 4 percent to $186 million, or 1.57 percent of sales, and non-GAAP net income was $116 million. This compares to 2018 third quarter non-GAAP operating income of $180 million, or 1.49 percent of sales, and non-GAAP net income of $114 million. GAAP operating income and net income for the 2019 third quarter were $160 million, or 1.35 percent of sales, and $102 million, respectively, including: the pre-tax negative impact of $7 million in restructuring, acquisition and transition costs and the pre-tax negative impact of $19 million in amortization expense. This compares to 2018 third quarter GAAP operating income and net income of $140 million, or 1.16 percent of sales, and $94 million, respectively.

Non-GAAP Disclosures

In addition to GAAP results, Ingram Micro is reporting non-GAAP operating income, non-GAAP operating margin and non-GAAP net income for the 2019 third quarter and the nine months ended Sept. 28, 2019. These non-GAAP measures exclude charges associated with reorganization, acquisitions, integration and transition costs, including those associated with the company’s cost savings programs, and the amortization of intangible assets. These non-GAAP financial measures also exclude a benefit in the second quarter of 2019 related to the receipt of an LCD flat panel class action settlement. Non-GAAP net income also excludes the impact of foreign exchange gains or losses related to the translation effect on Euro-based inventory purchases in Ingram Micro’s pan-European entity. 2018 year to date non-GAAP operating income further excludes a gain on the sale of affiliates and non-GAAP net income also excludes a non-cash tax benefit primarily related to the intercompany sale of certain intangible assets and the impact on U.S. tax reform repatriation tax. The non-GAAP measures noted above are primary indicators that Ingram Micro’s management uses internally to conduct and measure its business and evaluate the performance of its consolidated operations and operating segments. Ingram Micro’s management believes these non-GAAP financial measures are useful because they provide meaningful comparisons to prior periods and an alternate view of the impact of acquired businesses. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. These non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting Ingram Micro’s business. A material limitation associated with these non-GAAP measures as compared to the GAAP measures is that they may not be comparable to other companies with similarly titled items that present related measures differently. The non-GAAP measures should be considered as a supplement to, and not as a substitute for or superior to, the corresponding measures calculated in accordance with GAAP. A reconciliation of GAAP to non-GAAP financial measures for the periods presented is attached to this press release.

About Ingram Micro Inc.

Ingram Micro helps businesses realize the promise of technology™. It delivers a full spectrum of global technology and supply chain services to businesses around the world. Deep expertise in technology solutions, mobility, cloud, and supply chain solutions enables its business partners to operate efficiently and successfully in the markets they serve. More at www.ingrammicro.com.

Ingram Micro Inc.
Consolidated Balance Sheets
(Amounts in 000s)
(Unaudited)


	September 28,		December 29,
		2019		2018

ASSETS
Current assets:
Cash and cash equivalents	$	414,461	$	533,949
Trade accounts receivable, net		7,023,168		7,756,983
Inventory		4,296,109		4,509,474
Other current assets		691,478		669,044

Total current assets		12,425,216		13,469,450

Property and equipment, net		442,741		421,008
Goodwill		934,794		938,407
Intangible assets, net		264,108		316,597
Other assets		321,837		317,318

Total assets	$	14,388,696	$	15,462,780

LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable	$	7,335,723	$	8,578,895
Accrued expenses		904,859		835,474
Short-term debt and current maturities of long-term debt		143,845		175,215

Total current liabilities		8,384,427		9,589,584

Long-term debt, less current maturities		1,392,397		1,313,287
Other liabilities		161,939		163,806

Total liabilities		9,938,763		11,066,677

Stockholder's equity		4,449,933		4,396,103

Total liabilities and stockholder's equity	$	14,388,696	$	15,462,780

Ingram Micro Inc.
Consolidated Statements of Income
(Amounts in 000s)
(Unaudited)


	Thirteen Weeks Ended
	September 28, 2019			September 29, 2018

Net sales	$	11,869,975		$	12,043,164
Cost of sales		11,070,711			11,278,280
Gross profit		799,264			764,884

Operating expenses:
Selling, general and administrative		620,272			592,266
Amortization of intangible assets		18,732			22,781
Reorganization costs		(120	)		9,630
		638,884			624,677

Income from operations		160,380			140,207

Other (income) expense:
Interest income		(3,765	)		(6,283	)
Interest expense		26,601			25,255
Net foreign currency exchange gain		(5,347	)		(1,893	)
Other		5,246			5,425
		22,735			22,504

Income before income taxes		137,645			117,703

Provision for income taxes		35,814			23,834

Net income	$	101,831		$	93,869

Ingram Micro Inc.
Consolidated Statements of Income
(Amounts in 000s)
(Unaudited)


	Thirty-nine Weeks Ended
	September 28, 2019			September 29, 2018

Net sales	$	34,983,036		$	35,606,002
Cost of sales		32,602,494			33,326,328
Gross profit		2,380,542			2,279,674

Operating expenses:
Selling, general and administrative		1,878,129			1,828,930
Amortization of intangible assets		56,283			70,858
Reorganization costs		4,114			44,984
Gain on sale of affiliates		-			(1,940	)
		1,938,526			1,942,832

Income from operations		442,016			336,842

Other (income) expense:
Interest income		(6,756	)		(16,015	)
Interest expense		80,489			78,708
Net foreign currency exchange gain		(22,357	)		(7,373	)
Other		16,579			15,847
		67,955			71,167

Income before income taxes		374,061			265,675

Provision for income taxes		99,076			57,865

Net income	$	274,985		$	207,810

Ingram Micro Inc.
Consolidated Statements of Cash Flows
(Amounts in 000s)
(Unaudited)


	Thirty-nine Weeks Ended
	September 28, 2019			September 29, 2018

Cash flows from operating activities:
Net income	$	274,985		$	207,810
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		148,078			154,155
Gain on marketable securities, net		(7,413	)		(3,396	)
Gain on sale of property and equipment		(950	)		(1,161	)
Gain on sale of affiliates		-			(1,940	)
Impairment of property and equipment		-			1,802
Revaluation of other consideration for acquisitions		(449	)		-
Noncash charges for interest and bond discount amortization		1,465			2,856
Deferred income taxes		(1,106	)		(17,765	)
Changes in operating assets and liabilities, net of effects of acquisitions:
Trade accounts receivable		864,322			743,557
Inventory		74,048			(98,106	)
Other current assets		(39,189	)		(93,357	)
Accounts payable		(1,057,097	)		105,497
Change in book overdrafts		(66,890	)		57,616
Accrued expenses		(34,841	)		(118,486	)
Cash provided by operating activities		154,963			939,082

Cash flows from investing activities:
Capital expenditures		(125,558	)		(92,651	)
Movements from restricted cash		-			14,379
(Purchase) sale of marketable securities, net		(2,174	)		2,728
Proceeds from sale of property and equipment		2,996			965
Proceeds from sale of affiliates		-			1,318
Return of investment		-			163
Acquisitions, net of cash acquired		(9,038	)		(3,188	)
Cash used by investing activities		(133,774	)		(76,286	)

Cash flows from financing activities:
Settlement of stock-based awards due to Merger		-			(13,520	)
Other consideration for acquisitions		(1,967	)		(6,001	)
Dividends paid to shareholders		(188,512	)		(44,242	)
Net proceeds from (repayments of) revolving and other credit facilities		58,115			(866,730	)
Cash used by financing activities		(132,364	)		(930,493	)

Effect of exchange rate changes on cash and cash equivalents		(8,313	)		(1,870	)

Decrease in cash and cash equivalents		(119,488	)		(69,567	)

Cash and cash equivalents, beginning of period		533,949			549,558

Cash and cash equivalents, end of period	$	414,461		$	479,991

Ingram Micro Inc.
Supplementary Information
Income from Operations - Reconciliation of GAAP to Non-GAAP Information
(Amounts in Millions)
(Unaudited)


	Thirteen Weeks Ended
	September 28, 2019			September 29, 2018

Net Sales	$	11,870.0		$	12,043.2

GAAP Operating Income	$	160.4		$	140.2
Reorganization, integration and transition costs		7.1			16.7
Amortization of intangible assets		18.7			22.8

Non-GAAP Operating Income	$	186.2		$	179.7


GAAP Operating Margin		1.35	%		1.16	%
Non-GAAP Operating Margin		1.57	%		1.49	%


	Thirty-nine Weeks Ended
	September 28, 2019			September 29, 2018

Net Sales	$	34,983.0		$	35,606.0

GAAP Operating Income	$	442.0		$	336.8
Reorganization, integration and transition costs		29.6			69.8
Amortization of intangible assets		56.3			70.9
Settlement of a class action lawsuit		(4.2	)		-
Gain on sale of affiliates		-			(1.9	)

Non-GAAP Operating Income	$	523.7		$	475.6


GAAP Operating Margin		1.26	%		0.95	%
Non-GAAP Operating Margin		1.50	%		1.34	%

Ingram Micro Inc.
Supplementary Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(Amounts in Millions)
(Unaudited)


	Thirteen Weeks Ended
	September 28, 2019			September 29, 2018

	Net Income			Net Income

As Reported Under GAAP	$	101.8		$	93.9
Reorganization, integration and transition costs		4.7			12.6
Amortization of intangible assets		12.5			17.4
Pan-Europe foreign currency exchange (gain) loss		(3.3	)		1.0
Tax impact on US tax reform repatriation tax		-			(4.0	)
Tax impact on intercompany sale of certain intangible assets		-			(6.8	)

Non-GAAP Financial Measure	$	115.7		$	114.1


	Thirty-nine Weeks Ended
	September 28, 2019			September 29, 2018

	Net Income			Net Income

As Reported Under GAAP	$	275.0		$	207.8
Reorganization, integration and transition costs		20.8			51.8
Amortization of intangible assets		39.7			52.5
Settlement of a class action lawsuit		(2.9	)		-
Gain on sale of affiliates		-			(1.5	)
Pan-Europe foreign currency exchange gain		(2.6	)		(1.3	)
Tax impact on US tax reform repatriation tax		-			(4.0	)
Tax impact on intercompany sale of certain intangible assets		-			(15.3	)

Non-GAAP Financial Measure	$	330.0		$	290.0


Note: Amounts above are net of applicable income taxes.

View source version on businesswire.com: https://www.businesswire.com/news/home/20191105005320/en/

Ingram Micro Inc.
Damon Wright
(714) 382-5013
damon.wright@ingrammicro.com

Source: Ingram Micro Inc.

Released November 5, 2019

Ingram Micro Reports Third Quarter Financial Results

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