Press release

Ingram Micro Reports Third Quarter Financial Results

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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.

© 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)
 
 

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.