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.

© 2019 Ingram Micro Inc. All rights reserved. Ingram Micro and the registered Ingram Micro logo are trademarks used under license by Ingram Micro Inc.

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.

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

Source: Ingram Micro Inc.