Press release

Ingram Micro Reports 2019 Fiscal Year Financial Results

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Ingram Micro Inc. today announced financial results for the 2019 fiscal year ended Dec. 28, 2019. Ingram Micro delivered robust revenues and record profits for the year, including double-digit increases in Cloud and Commerce & Lifecycle Services revenues and profitability, as the company benefited from a strategic focus on growing high-value services and solutions. Worldwide 2019 fiscal year sales were $47.2 billion, a decrease of $3.2 billion, or 6 percent in USD, as the company focused on delivering a better mix of higher margin sales. The translation of foreign currencies compared to last year had a negative impact of approximately $1.2 billion, or nearly 2.5%, on 2019 fiscal year sales. The company also said that the adoption of ASC 606, related to changes in the reporting of certain software revenue transactions from a gross to a net basis, had a negative impact to fiscal 2019 annual sales of approximately $1.5 billion, or 3%, when compared to fiscal 2018 annual sales. 2019 fiscal year gross profit increased by $170 million to $3.3 billion, with gross margin growing by 79 basis points to 7.09 percent. This compares to sales of $50.4 billion, gross profit of $3.2 billion and gross margin of 6.30 percent for the 2018 fiscal year. 2019 fiscal year non-GAAP operating income increased by more than $80 million to $820 million, or 1.73 percent of revenue, a 27 basis-point increase over last year, with non-GAAP net income for the 2019 fiscal year up $70 million to $530 million. This compares to 2018 fiscal year non-GAAP operating income of $730 million, or 1.46 percent of revenue, and non-GAAP net income of $460 million. 2019 fiscal year GAAP operating income and net income were $700 million, or 1.48 percent of revenue, and $505 million, respectively, including: the pre-tax negative impact of $73 million in amortization expense and $48 million in restructuring, acquisition and transition costs, partially offset by the pre-tax positive impact of the receipt of an LCD flat panel class action settlement of $4 million and the $58 million tax benefit related to a worthless stock deduction. This compares to 2018 fiscal year GAAP operating income and net income of $550 million, or 1.09 percent of revenue, and $350 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 two years covered in this release. 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 to the receipt of an LCD flat panel class action settlement, as well as a tax benefit related to a worthless stock deduction. 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 fiscal year non-GAAP operating and net income also excludes the gain on the sale of affiliates, non-cash tax benefits primarily related to the intercompany sale of certain intangible assets and the impact on U.S. tax reform repatriation tax and additional tax expense on the write-off of net operating loss carryforward of a subsidiary and related to the foreign currency exchange gain of another subsidiary. 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.

© 2020 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)
 
 

December 28,

 

December 29,

 

2019

 

 

2018

 
ASSETS
Current assets:
Cash and cash equivalents

$

671,821

$

533,949

Trade accounts receivable, net

 

7,903,900

 

7,756,983

Inventory

 

4,193,232

 

4,509,474

Other current assets

 

688,627

 

669,044

 
Total current assets

 

13,457,580

 

13,469,450

 
Property and equipment, net

 

455,440

 

421,008

Goodwill

 

946,953

 

938,407

Intangible assets, net

 

253,179

 

316,597

Other assets

 

360,296

 

317,318

 
Total assets

$

15,473,448

$

15,462,780

 
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accounts payable

$

8,088,974

$

8,578,895

Accrued expenses

 

1,065,307

 

835,474

Short-term debt and current maturities of long-term debt

 

142,437

 

175,215

 
Total current liabilities

 

9,296,718

 

9,589,584

 
Long-term debt, less current maturities

 

1,337,788

 

1,313,287

Other liabilities

 

169,289

 

163,806

 
Total liabilities

 

10,803,795

 

11,066,677

 
Stockholder’s equity

 

4,669,653

 

4,396,103

 
Total liabilities and stockholder’s equity

$

15,473,448

$

15,462,780

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

Thirteen Weeks Ended

December 28, 2019

 

December 29, 2018

 
Net sales

$

12,213,912

 

$

14,830,668

 

Cost of sales

 

11,248,182

 

 

13,931,976

 

Gross profit

 

965,730

 

 

898,692

 

 
Operating expenses:
Selling, general and administrative

 

688,574

 

 

660,327

 

Amortization of intangible assets

 

16,577

 

 

21,708

 

Reorganization costs

 

2,792

 

 

2,913

 

 

707,943

 

 

684,948

 

 
Income from operations

 

257,787

 

 

213,744

 

 
Other (income) expense:
Interest income

 

(5,190

)

 

(3,584

)

Interest expense

 

26,998

 

 

27,652

 

Net foreign currency exchange gain

 

(1,900

)

 

(533

)

Other

 

4,581

 

 

5,014

 

 

24,489

 

 

28,549

 

 
Income before income taxes

 

233,298

 

 

185,195

 

 
Provision for income taxes

 

3,144

 

 

40,819

 

 
Net income

$

230,154

 

$

144,376

 

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

Fifty-two Weeks Ended

December 28, 2019

 

December 29, 2018

 
Net sales

$

47,196,948

 

$

50,436,670

 

Cost of sales

 

43,850,676

 

 

47,258,304

 

Gross profit

 

3,346,272

 

 

3,178,366

 

 
Operating expenses:
Selling, general and administrative

 

2,566,703

 

 

2,489,257

 

Amortization of intangible assets

 

72,860

 

 

92,566

 

Reorganization costs

 

6,906

 

 

47,897

 

Gain on sale of affiliates

 

 

 

(1,940

)

 

2,646,469

 

 

2,627,780

 

 
Income from operations

 

699,803

 

 

550,586

 

 
Other (income) expense:
Interest income

 

(11,946

)

 

(19,599

)

Interest expense

 

107,487

 

 

106,360

 

Net foreign currency exchange gain

 

(24,257

)

 

(7,906

)

Other

 

21,160

 

 

20,861

 

 

92,444

 

 

99,716

 

 
Income before income taxes

 

607,359

 

 

450,870

 

 
Provision for income taxes

 

102,220

 

 

98,684

 

 
Net income

$

505,139

 

$

352,186

 

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

Fifty-two Weeks Ended

December 28, 2019

 

December 29, 2018

 
Cash flows from operating activities:
Net income

$

505,139

 

$

352,186

 

Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization

 

194,731

 

 

208,983

 

(Gain) loss on marketable securities, net

 

(11,734

)

 

2,737

 

Gain on sale of property and equipment

 

(788

)

 

(1,831

)

Gain on sale of affiliates

 

 

 

(1,940

)

Impairment of property and equipment

 

 

 

1,802

 

Revaluation of other consideration for acquisitions

 

(2,775

)

 

1,930

 

Noncash charges for interest and bond discount amortization

 

2,123

 

 

3,783

 

Deferred income taxes

 

(14,459

)

 

(26,361

)

Changes in operating assets and liabilities, net of effects of acquisitions:
Trade accounts receivable

 

56,629

 

 

(380,866

)

Inventory

 

225,398

 

 

(179,745

)

Other assets

 

(40,248

)

 

(100,016

)

Accounts payable

 

(398,086

)

 

1,214,136

 

Change in book overdrafts

 

(63,570

)

 

(98,738

)

Accrued expenses

 

109,315

 

 

(91,296

)

Cash provided by operating activities

 

561,675

 

 

904,764

 

 
Cash flows from investing activities:
Capital expenditures

 

(168,782

)

 

(136,853

)

Movements from restricted cash

 

 

 

14,379

 

(Purchase) sale of marketable securities, net

 

(2,250

)

 

3,442

 

Proceeds from sale of property and equipment

 

3,333

 

 

711

 

Proceeds from sale of affiliates

 

 

 

1,318

 

Return of investment

 

 

 

2,361

 

Acquisitions, net of cash acquired

 

(5,701

)

 

(3,424

)

Cash used by investing activities

 

(173,400

)

 

(118,066

)

 
Cash flows from financing activities:
Settlement of stock-based awards due to Merger

 

 

 

(13,520

)

Other consideration for acquisitions

 

(2,582

)

 

(7,479

)

Dividends paid to shareholders

 

(248,665

)

 

(182,505

)

Net repayments of revolving and other credit facilities

 

(1,178

)

 

(584,966

)

Cash used by financing activities

 

(252,425

)

 

(788,470

)

 
Effect of exchange rate changes on cash and cash equivalents

 

2,022

 

 

(13,837

)

 
Increase (decrease) in cash and cash equivalents

 

137,872

 

 

(15,609

)

 
Cash and cash equivalents, beginning of year

 

533,949

 

 

549,558

 

 
Cash and cash equivalents, end of year

$

671,821

 

$

533,949

 

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

Thirteen Weeks Ended

December 28, 2019

 

December 29, 2018

 
Net Sales

$

12,213.9

 

$

14,830.7

 

 
GAAP Operating Income

$

257.8

 

$

213.7

 

Reorganization, integration and transition costs

 

18.0

 

 

23.5

 

Amortization of intangible assets

 

16.6

 

 

21.7

 

 
Non-GAAP Operating Income

$

292.4

 

$

258.9

 

 
 
GAAP Operating Margin

 

2.11

%

 

1.44

%

Non-GAAP Operating Margin

 

2.39

%

 

1.75

%

 
 

Fifty-two Weeks Ended

December 28, 2019

 

December 29, 2018

 
Net Sales

$

47,196.9

 

$

50,436.7

 

 
GAAP Operating Income

$

699.8

 

$

550.6

 

Reorganization, integration and transition costs

 

47.5

 

 

93.3

 

Amortization of intangible assets

 

72.9

 

 

92.6

 

Settlement of a class action lawsuit

 

(4.2

)

 

 

Gain on sale of affiliates

 

 

 

(1.9

)

 
Non-GAAP Operating Income

$

816.0

 

$

734.6

 

 
 
GAAP Operating Margin

 

1.48

%

 

1.09

%

Non-GAAP Operating Margin

 

1.73

%

 

1.46

%

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

Thirteen Weeks Ended

December 28, 2019

 

December 29, 2018

 

 

 

Net Income

 

Net Income

 
As Reported Under GAAP

$

230.2

 

$

144.4

 

Reorganization, integration and transition costs

 

12.2

 

 

18.3

 

Amortization of intangible assets

 

11.3

 

 

17.0

 

Pan-Europe foreign currency exchange loss

 

3.5

 

 

2.0

 

Tax benefit on worthless stock deduction

 

(57.9

)

 

 

Tax impact on US tax reform repatriation tax

 

 

 

(8.5

)

Tax impact on intercompany sale of certain intangible assets

 

 

 

(11.3

)

Tax impact on the write-off of net operating net loss carryforward of a subsidiary

 

 

 

2.8

 

Tax impact on a subsidiary’s foreign currency exchange gain

 

 

 

3.1

 

 
Non-GAAP Financial Measure

$

199.3

 

$

167.8

 

 
 

Fifty-two Weeks Ended

December 28, 2019

 

December 29, 2018

 

 

 

Net Income

 

Net Income

 
As Reported Under GAAP

$

505.1

 

$

352.2

 

Reorganization, integration and transition costs

 

33.1

 

 

70.1

 

Amortization of intangible assets

 

51.0

 

 

69.5

 

Settlement of a class action lawsuit

 

(2.9

)

 

 

Gain on sale of affiliates

 

 

 

(1.5

)

Pan-Europe foreign currency exchange loss

 

0.8

 

 

0.7

 

Tax benefit on worthless stock deduction

 

(57.9

)

 

 

Tax impact on US tax reform repatriation tax

 

 

 

(12.5

)

Tax impact on intercompany sale of certain intangible assets

 

 

 

(26.6

)

Tax impact on the write-off of net operating loss carryforward of a subsidiary

 

 

 

2.8

 

Tax impact on a subsidiary’s foreign currency exchange gain

 

 

 

3.1

 

 
Non-GAAP Financial Measure

$

529.2

 

$

457.8

 

 
Note: Amounts above are net of applicable income taxes.