First Quarter Ended |
|||
March 29, 2014 |
March 30, 2013 |
||
Net sales ($B) |
$10.38 |
$10.26 |
|
Gross Margin |
5.88% |
5.70% |
|
Operating margin |
0.66% |
0.88% |
|
Non-GAAP operating margin |
1.18% |
1.13% |
|
Earnings per diluted share |
$0.16 |
$0.32 |
|
Non-GAAP earnings per diluted share |
$0.43 |
$0.41 |
|
A reconciliation of GAAP financial measures to non-GAAP financial measures is presented in the Supplementary Information section in this press release. |
2014 First Quarter Business Drivers:
- Strong growth in
Europe andLatin America was partially offset by lower handset sales in the company's new mobility business inIndonesia , as previously indicated. - Gross margin continued to benefit from a stronger mix of advanced solution sales and mobility life cycle services, as well as the addition of recently acquired businesses, SoftCom, CloudBlue and Shipwire.
- The company maintained pricing discipline, particularly in
North America where the sales environment continues to be highly competitive. - GAAP operating margins were down due to significant restructuring expense related to the company's organizational effectiveness programs announced on
February 14, 2014 ; however, on a non-GAAP basis operating margin was up year-over-year inNorth America ,Europe ,Latin America and in the new mobility business, due to increasing contribution from higher margin businesses. - During the quarter the company accelerated its strategic investments and ramped up spending on key growth initiatives across the globe in advanced solutions, supply chain services, Cloud and mobility.
- First quarter earnings per share growth was impacted by the combination of these investments and higher interest and other expenses.
Worldwide sales increased by
Worldwide gross profit was
On a GAAP basis, operating income was
Non-GAAP operating income for the 2014 first quarter was
2014 first quarter non-GAAP net income was
Interest and other expenses for the 2014 first quarter was
The effective tax rate for the 2014 first quarter was 43.4 percent. The 2014 first quarter effective tax rate was negatively impacted by approximately 13 percentage points related to
Key 2014 first quarter business highlights:
Ingram Micro entered the execution phase of its organizational effectiveness programs, which are designed to further enhance the company's ability to innovate and respond to market needs with greater speed and efficiency. The programs involve three critical aspects:- Aligning and leveraging the company's infrastructure globally with its evolving businesses, opportunities and resources;
- De-layering and simplifying the organization to enable the company to be more nimble, responsive and collaborative; and
- Maintaining investments in expertise and capabilities to continue to transform the company's business mix in faster growing, higher margin businesses.
As a result of the alignment and de-layering programs, the company expects annual savings between
$80 and $100 million , and a similar level of one-time restructuring, integration and reorganization costs. In addition to headcount reductions in all regions, initial actions under the programs include consolidating warehouse facilities and other operations inEurope .
- The company started leveraging its global presence for its recently acquired CloudBlue IT asset disposal services business with the opening of new facilities in
Canada and theU.K. Ingram Micro plans to expand CloudBlue's business to multiple additional countries throughout 2014. Ingram Micro's recently acquired Shipwire ecommerce fulfillment business is benefiting from the company's worldwide infrastructure to broaden its global reach and has begun to integrate withIngram Micro's logistics facilities starting in theU.K. Ingram Micro will capitalize on its success inNorth America to expand Ingram Micro Cloud into a worldwide services organization that will specialize locally and scale globally to accelerate the adoption of cloud services.- The company expanded its strategic alliance with Parallels, a leading hosting and cloud services enablement provider, and will adopt and deploy Parallels Automation as the core service delivery platform for its new global Cloud Marketplace.
Ingram Micro partnered withVMware to expand its business reach and advanced solutions portfolio and now can market, sell and support the entireVMware portfolio to channel partners working within the U.S. federal government market.Ingram Micro secured authorizations fromNetApp, Inc. to sell high-value storage and data management solutions in multiple countries inEurope andAsia Pacific .Ingram Micro broadened its industry-leading solutions portfolio with the addition of market-leading 3D printing vendors MakerBot and3D Systems to its document imaging line card.- The Company expanded its data capture point of sale portfolio with the addition of solutions from
Honeywell inAustralia ,New Zealand ,Malaysia andThailand . Ingram Micro was recognized for its leadership in the channel, winning significant industry awards including: three "Distributor of the Year" awards fromCisco : U.S. Cloud Distributor of the Year, U.S. Security Distributor of the Year and Canada Collaboration Distributor of the Year;VMware's Americas Region VMware Partner Network Award in the "Distributor of the Year" category; and "U.S. Distributor of the Year" fromFortinet .- Ingram Micro Mobility announced that it was named the preferred handset distributor and services provider for the 360 Group, a consortium of four of
Verizon Wireless' largest national dealers including A Wireless,Diamond Wireless ,Go Wireless andMoorehead Communications (dba as TCC). As part of the agreement, Ingram Micro Mobility will integrate directly into more than 1,750 points of sale and will provide the 360 Group with a suite of industry-leading supply chain services, including forward and reverse logistics services. Sales and services under the agreement are expected to begin in the second quarter of 2014.
Outlook
For the 2014 second quarter, the company currently expects worldwide revenue to increase year-over-year in the low- to mid-single digits, with gross margin improving over the second quarter of 2013 by mid- single-digit basis points.
In addition to GAAP results,
Non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP earnings per diluted share are primary indicators that
Conference Call and Webcast
Additional information about
The replay of the conference call with presentation slides will be available for one week at www.ingrammicro.com (Investor Relations section) or by calling (888) 203-1112 or (719) 457-0820 outside
About
Cautionary Statement for the Purpose of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995
The matters in this press release that are forward-looking statements, including statements relating to the expected benefits of acquisitions and the financial performance of the combined company, are based on current management expectations. Certain risks may cause such expectations to not be achieved and, in turn, may have a material adverse effect on
© 2014
Ingram Micro Inc. |
|||
Consolidated Balance Sheet |
|||
(Amounts in 000s) |
|||
(Unaudited) |
|||
March 29, |
December 28, |
||
2014 |
2013 |
||
ASSETS |
|||
Current assets: |
|||
Cash and cash equivalents |
$ 424,511 |
$ 674,390 |
|
Trade accounts receivable, net |
4,550,176 |
5,454,832 |
|
Inventory |
3,896,389 |
3,724,447 |
|
Other current assets |
600,165 |
521,902 |
|
Total current assets |
9,471,241 |
10,375,571 |
|
Property and equipment, net |
490,288 |
488,699 |
|
Goodwill |
527,526 |
527,526 |
|
Intangible assets, net |
365,351 |
375,423 |
|
Other assets |
39,961 |
23,976 |
|
Total assets |
$10,894,367 |
$ 11,791,195 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
Current liabilities: |
|||
Accounts payable |
$ 5,217,255 |
$ 6,175,604 |
|
Accrued expenses |
571,752 |
710,040 |
|
Short-term debt and current maturities of long-term debt |
167,289 |
48,772 |
|
Total current liabilities |
5,956,296 |
6,934,416 |
|
Long-term debt, less current maturities |
848,499 |
797,454 |
|
Other liabilities |
104,759 |
109,700 |
|
Total liabilities |
6,909,554 |
7,841,570 |
|
Stockholders' equity |
3,984,813 |
3,949,625 |
|
Total liabilities and stockholders' equity |
$10,894,367 |
$ 11,791,195 |
Ingram Micro Inc. |
|||
Consolidated Statement of Income |
|||
(Amounts in 000s, except per share data) |
|||
(Unaudited) |
|||
Thirteen Weeks Ended |
|||
March 29, 2014 |
March 30, 2013 |
||
Net sales |
$ 10,383,989 |
$ 10,262,444 |
|
Cost of sales |
9,773,409 |
9,677,139 |
|
Gross profit |
610,580 |
585,305 |
|
Operating expenses: |
|||
Selling, general and administrative |
489,644 |
474,078 |
|
Amortization of intangible assets |
14,152 |
11,765 |
|
Reorganization costs |
38,424 |
8,666 |
|
542,220 |
494,509 |
||
Income from operations |
68,360 |
90,796 |
|
Interest and other: |
|||
Interest income |
(1,425) |
(1,829) |
|
Interest expense |
19,322 |
15,638 |
|
Net foreign currency exchange loss (gain) |
1,588 |
(1,934) |
|
Other |
4,983 |
2,869 |
|
24,468 |
14,744 |
||
Income before income taxes |
43,892 |
76,052 |
|
Provision for income taxes |
19,059 |
26,293 |
|
Net income |
$ 24,833 |
$ 49,759 |
|
Diluted earnings per share |
$ 0.16 |
$ 0.32 |
|
Diluted weighted average |
|||
shares outstanding |
159,000 |
154,557 |
Ingram Micro Inc. |
|||||||
Consolidated Statement of Cash Flows |
|||||||
(Amounts in 000s) |
|||||||
(Unaudited) |
|||||||
Thirteen Weeks Ended |
|||||||
March 29, 2014 |
March 30, 2013 |
||||||
Cash flows from operating activities: |
|||||||
Net income |
$ 24,833 |
$ 49,759 |
|||||
Adjustments to reconcile net income to cash |
|||||||
used by operating activities: |
|||||||
Depreciation and amortization |
34,219 |
29,992 |
|||||
Stock-based compensation |
7,886 |
7,416 |
|||||
Excess tax benefit from stock-based compensation |
(2,210) |
(748) |
|||||
Noncash charges for interest and bond discount amortization |
587 |
608 |
|||||
Deferred income taxes |
4,526 |
19,586 |
|||||
Changes in operating assets and liabilities: |
|||||||
Trade accounts receivable |
896,266 |
926,539 |
|||||
Inventory |
(184,173) |
(232,082) |
|||||
Other current assets |
(107,723) |
(9,365) |
|||||
Accounts payable |
(985,564) |
(867,171) |
|||||
Change in book overdrafts |
32,255 |
(65,713) |
|||||
Accrued expenses |
(147,332) |
(40,622) |
|||||
Cash used by operating activities |
(426,430) |
(181,801) |
|||||
Cash flows from investing activities: |
|||||||
Capital expenditures |
(22,320) |
(15,431) |
|||||
Investment in (sale of) marketable trading securities, net |
(50) |
650 |
|||||
Cost-based investment |
(10,000) |
- |
|||||
Cash used by investing activities |
(32,370) |
(14,781) |
|||||
Cash flows from financing activities: |
|||||||
Proceeds from exercise of stock options |
23,014 |
11,718 |
|||||
Excess tax benefit from stock-based compensation |
2,210 |
748 |
|||||
Net proceeds from revolving credit facilities |
173,075 |
147,795 |
|||||
Cash provided by financing activities |
198,299 |
160,261 |
|||||
Effect of exchange rate changes on cash and cash equivalents |
10,622 |
3,804 |
|||||
Decrease in cash and cash equivalents |
(249,879) |
(32,517) |
|||||
Cash and cash equivalents, beginning of period |
674,390 |
595,147 |
|||||
Cash and cash equivalents, end of period |
$ 424,511 |
$ 562,630 |
Ingram Micro Inc. |
||||||||||||||
Supplementary Information |
||||||||||||||
Income from Operations - Reconciliation of GAAP to Non-GAAP Information |
||||||||||||||
(Amounts in Millions) |
||||||||||||||
(Unaudited) |
||||||||||||||
Thirteen Weeks Ended March 29, 2014 |
||||||||||||||
North America |
Europe |
Asia-Pacific |
Latin America |
Brightpoint |
Stock-based compensation |
Consolidated Total |
||||||||
Net Sales |
$ 3,924.8 |
$2,994.4 |
$ 2,141.2 |
$ 493.5 |
$ 830.1 |
$ - |
$ 10,384.0 |
|||||||
GAAP Operating Income |
$ 52.8 |
$ (7.2) |
$ 12.7 |
$ 9.0 |
$ 8.9 |
$ (7.9) |
68.4 |
|||||||
Reorganization, integration and transition costs |
12.8 |
29.2 |
2.6 |
0.5 |
2.0 |
- |
47.0 |
|||||||
Amortization of intangible assets |
4.3 |
0.6 |
0.4 |
0.2 |
8.6 |
- |
14.1 |
|||||||
LCD class action settlement |
(6.6) |
- |
- |
- |
- |
- |
(6.6) |
|||||||
Non-GAAP Operating Income |
$ 63.3 |
$ 22.6 |
$ 15.7 |
$ 9.7 |
$ 19.5 |
$ (7.9) |
$ 122.9 |
|||||||
GAAP Operating Margin |
1.35% |
(0.24%) |
0.60% |
1.82% |
1.07% |
0.66% |
||||||||
Non-GAAP Operating Margin |
1.61% |
0.75% |
0.74% |
1.96% |
2.35% |
1.18% |
||||||||
Thirteen Weeks Ended March 30, 2013 |
||||||||||||||
North America |
Europe |
Asia-Pacific |
Latin America |
Brightpoint |
Stock-based compensation |
Consolidated Total |
||||||||
Net Sales |
$ 3,867.8 |
$2,669.0 |
$ 2,194.5 |
$ 462.0 |
$ 1,069.2 |
$ - |
$ 10,262.4 |
|||||||
GAAP Operating Income |
$ 55.6 |
$ 13.9 |
$ 13.8 |
$ 5.6 |
$ 9.3 |
$ (7.4) |
$ 90.8 |
|||||||
Reorganization, integration and transition costs |
2.5 |
2.6 |
3.3 |
0.0 |
4.9 |
- |
13.2 |
|||||||
Amortization of intangible assets |
1.8 |
0.5 |
0.2 |
0.2 |
9.1 |
- |
11.8 |
|||||||
Non-GAAP Operating Income |
$ 59.8 |
$ 17.0 |
$ 17.3 |
$ 5.8 |
$ 23.2 |
$ (7.4) |
$ 115.8 |
|||||||
GAAP Operating Margin |
1.44% |
0.52% |
0.63% |
1.20% |
0.87% |
0.88% |
||||||||
Non-GAAP Operating Margin |
1.55% |
0.64% |
0.79% |
1.25% |
2.17% |
1.13% |
Ingram Micro Inc. |
|||||
Supplementary Information |
|||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
|||||
(Amounts in Millions, except per share data) |
|||||
(Unaudited) |
|||||
Thirteen Weeks Ended March 29, 2014 |
|||||
Diluted |
|||||
Net Income |
Earnings per Share (a) |
||||
As Reported Under GAAP |
$ 24.8 |
$ 0.16 |
|||
Reorganization, integration and transition costs |
38.9 |
0.24 |
|||
Amortization of intangible assets |
10.1 |
0.06 |
|||
LCD class action settlement |
(4.7) |
(0.03) |
|||
Pan-Europe foreign exchange gain |
(1.2) |
(0.01) |
|||
Non-GAAP Financial Measure |
$ 67.9 |
$ 0.43 |
|||
Thirteen Weeks Ended March 30, 2013 |
|||||
Diluted |
|||||
Net Income |
Earnings per Share (a) |
||||
As Reported Under GAAP |
$ 49.8 |
$ 0.32 |
|||
Reorganization, integration and transition costs |
8.7 |
0.06 |
|||
Amortization of intangible assets |
7.7 |
0.05 |
|||
Pan-Europe foreign exchange gain |
(3.0) |
(0.02) |
|||
Non-GAAP Financial Measure |
$ 63.1 |
$ 0.41 |
|||
(a) |
Per share impact is calculated by dividing net income amount by the diluted weighted average shares outstanding of 159,000 and 154,557 for the thirteen weeks ended March 29, 2014 and March 30, 2013, respectively. |
|||||
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SOURCE
Damon Wright,(714) 382-5013, damon.wright@ingrammicro.com