Ingram Micro Reports Second Quarter Financial Results

IRVINE, Calif.--(BUSINESS WIRE)-- Ingram Micro Inc. today announced financial results for the second quarter ended June 29, 2019. Ingram Micro experienced solid global demand and a strong increase in profits, led by double-digit sales growth, on a currency neutral basis, in commerce and lifecycle services and cloud and an increase in profitability across all lines of business. Worldwide 2019 second quarter net sales were $11.54 billion, a decrease of 2 percent in USD, with gross margin increasing strongly to 7.02 percent, up 49 basis points, as the company maintained continued focus on a better mix of higher margin sales. This compares to net sales of $11.80 billion and gross margin of 6.53 percent in the 2018 second quarter. The translation of foreign currencies versus last year had a negative impact of approximately 3 percentage points on worldwide net sales. Non-GAAP operating income for the 2019 second quarter increased 14 percent to $184 million, or 1.59 percent of sales, and non-GAAP net income was $119 million. This compares to 2018 second quarter non-GAAP operating income of $161 million, or 1.36 percent of sales, and non-GAAP net income of $94 million. GAAP operating income and net income for the 2019 second quarter were $156 million, or 1.35 percent of sales, and $97 million, respectively, including: the pre-tax negative impact of $10 million in restructuring, acquisition and transition costs, net of the receipt of an LCD flat panel class action settlement, and the pre-tax negative impact of $18 million in amortization expense. This compares to 2018 second quarter GAAP operating income and net income of $110 million, or 0.93 percent of sales, and $67 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 second quarter and the six months ended June 29, 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 second quarter and 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. 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)

	June 29,		December 29,
	2019		2018
ASSETS
Current assets:
Cash and cash equivalents	$	468,998	$	533,949
Trade accounts receivable, net		6,816,826		7,756,983
Inventory		4,487,645		4,509,474
Other current assets		690,638		669,044

Total current assets		12,464,107		13,469,450

Property and equipment, net		438,431		421,008
Goodwill		939,321		938,407
Intangible assets, net		279,042		316,597
Other assets		326,437		317,318

Total assets	$	14,447,338	$	15,462,780

LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable	$	7,295,606	$	8,578,895
Accrued expenses		879,041		835,474
Short-term debt and current maturities of long-term debt		152,178		175,215

Total current liabilities		8,326,825		9,589,584

Long-term debt, less current maturities		1,489,442		1,313,287
Other liabilities		158,930		163,806

Total liabilities		9,975,197		11,066,677

Stockholder's equity		4,472,141		4,396,103

Total liabilities and stockholder's equity	$	14,447,338	$	15,462,780

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

	Thirteen Weeks Ended
	June 29, 2019			June 30, 2018

Net sales	$	11,537,545		$	11,800,698
Cost of sales		10,727,728			11,030,469
Gross profit		809,817			770,229

Operating expenses:
Selling, general and administrative		631,931			618,418
Amortization of intangible assets		17,843			23,344
Reorganization costs		3,931			20,438
Gain on sale of affiliates		-			(1,940	)
		653,705			660,260

Income from operations		156,112			109,969

Other (income) expense:
Interest income		(638	)		(4,610	)
Interest expense		26,850			26,394
Net foreign currency exchange gain		(5,940	)		(403	)
Other		4,964			4,337
		25,236			25,718

Income before income taxes		130,876			84,251

Provision for income taxes		34,257			16,903

Net income	$	96,619		$	67,348

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

	Twenty-six Weeks Ended
	June 29, 2019			June 30, 2018

Net sales	$	23,113,061		$	23,562,838
Cost of sales		21,531,783			22,048,048
Gross profit		1,581,278			1,514,790

Operating expenses:
Selling, general and administrative		1,257,857			1,236,664
Amortization of intangible assets		37,551			48,077
Reorganization costs		4,234			35,354
Gain on sale of affiliates		-			(1,940	)
		1,299,642			1,318,155

Income from operations		281,636			196,635

Other (income) expense:
Interest income		(2,991	)		(9,732	)
Interest expense		53,888			53,453
Net foreign currency exchange gain		(17,010	)		(5,480	)
Other		11,333			10,422
		45,220			48,663

Income before income taxes		236,416			147,972

Provision for income taxes		63,262			34,031

Net income	$	173,154		$	113,941

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

	Twenty-six Weeks Ended
	June 29, 2019			June 30, 2018
Cash flows from operating activities:
Net income	$	173,154		$	113,941
Adjustments to reconcile net income to cash (used) provided by operating activities:
Depreciation and amortization		97,668			103,303
Gain on marketable securities, net		(7,210	)		(2,541	)
Gain on sale of property and equipment		(439	)		(754	)
Gain on sale of affiliates		-			(1,940	)
Noncash charges for interest and bond discount amortization		1,178			1,929
Deferred income taxes		583			(3,074	)
Changes in operating assets and liabilities, net of effects of acquisitions:
Trade accounts receivable		1,168,517			1,006,509
Inventory		(58,345	)		202,766
Other current assets		(26,019	)		(90,246	)
Accounts payable		(1,162,919	)		(354,385	)
Change in book overdrafts		(131,991	)		72,701
Accrued expenses		(58,321	)		(177,909	)
Cash (used) provided by operating activities		(4,144	)		870,300

Cash flows from investing activities:
Capital expenditures		(80,773	)		(59,374	)
Movements from restricted cash		-			14,379
(Purchase) sale of marketable securities, net		(2,586	)		3,968
Proceeds from sale of property and equipment		1,084			1,755
Proceeds from sale of affiliates		-			1,318
Return of investment		-			163
Acquisitions, net of cash acquired		(1,381	)		(3,153	)
Cash used by investing activities		(83,656	)		(40,944	)

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		(131,067	)		(44,242	)
Net proceeds from (repayments of) revolving and other credit facilities		152,680			(786,389	)
Cash provided (used) by financing activities		19,646			(850,152	)

Effect of exchange rate changes on cash and cash equivalents		3,203			(14,288	)

Decrease in cash and cash equivalents		(64,951	)		(35,084	)

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

Cash and cash equivalents, end of period	$	468,998		$	514,474

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

	Thirteen Weeks Ended
	June 29, 2019			June 30, 2018

Net Sales	$	11,537.5		$	11,800.7

GAAP Operating Income	$	156.1		$	110.0
Reorganization, integration and transition costs		14.1			29.7
Amortization of intangible assets		17.8			23.3
Settlement of a class action lawsuit		(4.2	)		-
Gain on sale of affiliates		-			(1.9	)

Non-GAAP Operating Income	$	183.8		$	161.1


GAAP Operating Margin		1.35	%		0.93	%
Non-GAAP Operating Margin		1.59	%		1.36	%


	Twenty-six Weeks Ended
	June 29, 2019			June 30, 2018

Net Sales	$	23,113.1		$	23,562.8

GAAP Operating Income	$	281.6		$	196.6
Reorganization, integration and transition costs		22.4			53.2
Amortization of intangible assets		37.6			48.1
Settlement of a class action lawsuit		(4.2	)		-
Gain on sale of affiliates		-			(1.9	)

Non-GAAP Operating Income	$	337.4		$	296.0


GAAP Operating Margin		1.22	%		0.83	%
Non-GAAP Operating Margin		1.46	%		1.26	%

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

	Thirteen Weeks Ended
	June 29, 2019			June 30, 2018

	Net Income			Net Income

As Reported Under GAAP	$	96.6		$	67.3
Reorganization, integration and transition costs		9.7			22.6
Amortization of intangible assets		12.5			17.7
Settlement of a class action lawsuit		(2.9	)		-
Gain on sale of affiliates		-			(1.5	)
Pan-Europe foreign currency exchange loss (gain)		3.2			(3.4	)
Tax impact on intercompany sale of certain intangible assets		-			(8.5	)

Non-GAAP Financial Measure	$	119.1		$	94.2


	Twenty-six Weeks Ended
	June 29, 2019			June 30, 2018

	Net Income			Net Income

As Reported Under GAAP	$	173.2		$	113.9
Reorganization, integration and transition costs		16.1			39.2
Amortization of intangible assets		27.2			35.2
Settlement of a class action lawsuit		(2.9	)		-
Gain on sale of affiliates		-			(1.5	)
Pan-Europe foreign currency exchange loss (gain)		0.6			(2.4	)
Tax impact on intercompany sale of certain intangible assets		-			(8.5	)

Non-GAAP Financial Measure	$	214.2		$	175.9

Note: Amounts above are net of applicable income taxes.

View source version on businesswire.com: https://www.businesswire.com/news/home/20190905005172/en/

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

Source: Ingram Micro Inc.

Released September 5, 2019

Ingram Micro Reports Second Quarter Financial Results

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