(US$ in millions, except EPS) |
Second Quarter Ended |
|||||
July 4, |
June 28, |
|||||
2015 |
2014 |
|||||
Net sales |
$10,553 |
1 |
$10,909 |
|||
Non-GAAP operating income |
$151 |
$146 |
||||
Non-GAAP operating margin |
1.43% |
1.34% |
||||
Operating income |
$2 |
2 |
$98 |
|||
Operating margin |
0.02% |
0.90% |
||||
Non-GAAP net income |
$88 |
$86 |
||||
Net income (loss) |
($34) |
$51 |
||||
Non-GAAP earnings per diluted share |
$0.55 |
1 |
$0.54 |
|||
Earnings per diluted share |
($0.22) |
2 |
$0.32 |
|||
1. The translation of foreign currencies negatively impacted 2015 second quarter net sales by 8% |
||||||
and non-GAAP earnings by 6 cents per diluted share, when compared to the 2014 second quarter. |
||||||
2. GAAP operating income and EPS for the 2015 second quarter was impacted by a non-cash impairment of |
||||||
internally developed software related to the company's decision to stop its global ERP deployment. |
||||||
A reconciliation of GAAP financial measures to non-GAAP financial measures is presented in the |
||||||
Supplementary Information section in this press release. |
Alain Monié,
Monié continued, "Over the past three years, we have successfully deployed capital to make important investments in acquisitions, building organic capabilities, improving our go-to-market motion and broadening our global presence. And our efforts have been rewarded by increasing profitability and earnings growth. From a liquidity standpoint, we also have sufficient access to capital to run and grow our business, and we will continue to make investments that evolve our model to deliver greater profitability, especially from service offerings. Based on our solid performance and confidence in our ability to deliver our long term targets, we have decided to implement a new capital allocation strategy that targets a return of one-third of our free cash flow to shareholders on an annual basis. This will be done through two vehicles: first, we are initiating a quarterly dividend of
Monié concluded, "As illustrated by our second quarter results and our guidance for the third quarter, our strategies are working, our performance is increasing and our commitment to deliver on our longer term targets is only stronger."
The Ingram Micro Board of Directors has declared a quarterly cash dividend of
Second Quarter Results of Operations
Worldwide second quarter sales were
2015 second quarter non-GAAP net income was
In addition to excluding reorganization, integration and other transition costs associated with the implementation of cost savings plans and recent acquisitions, non-GAAP operating income and non-GAAP earnings exclude a non-cash, pre-tax charge of
Key 2015 second quarter business highlights:
- Cash provided by operations for the 2015 second quarter was nearly
$570 million . - Working capital days at the end of the quarter were 27, a 4 day sequential decrease from the 2015 first quarter and in-line with last year.
- Since the announcement of the resumption of the company's share repurchase program in early
May 2015 throughJuly 28, 2015 ,Ingram Micro has repurchased 4.7 million shares for a total cost of$119 million dollars . - In
July 2015 ,Ingram Micro began taking actions globally on its previously announced cost savings program, including implementing lean corporate initiatives and further empowering individual countries where much of the actual business motion occurs. These actions are expected to enable the organization to get closer to customers and partners and support more rapid decision making at the country level, while producing additional efficiency and productivity gains. The company continues to expect to deliver annual global cost savings of$100 million in 2016. The company notified the majority of its impacted associates in July and expects to realize approximately$5 million of cost savings in the 2015 third quarter and$10 million of cost savings in the 2015 fourth quarter. Costs associated with these actions are now expected to be in the range of$50 to $60 million . - The company began its program to deploy a new global ERP system 7 years ago. Over that period, the business has significantly diversified and new technologies allow legacy systems and diverse applications to easily be connected in a modular way, which allows these legacy systems to be part of a flexible, powerful and efficient solution. After careful evaluation, the company has concluded that this combined systems strategy is more flexible and economical and better aligned with its evolving business model than a single global system. Accordingly, the company has stopped its global ERP deployment and recorded a non-cash, pre-tax charge related to an impairment of internally developed software.
Ingram Micro continued its expansion into theMiddle East's high growth IT market through the acquisition of a 75 percent interest in the business assets of Arabian Applied Technology, the largest value-added technology solutions distributor inSaudi Arabia . The addition is expected to contribute revenue of approximately $200 million on a full year basis and the partial contribution this year is expected to be modestly accretive to Ingram Micro's earnings in 2015.Ingram Micro continued to broaden its mobility services expertise with the acquisition ofCANAI Group and Clarity Technology, adding services including retail, carrier and web-based trade-in processes, sustainable recovery, and reuse and recycling of electronic products, reverse logistics, repairs, parts and accessory management and diagnostics and repair avoidance. Revenue and earnings from these acquisitions are not expected to be material in 2015.Ingram Micro significantly expanded its global cloud presence inEurope andAsia Pacific , launching its latest cloud marketplace inAustralia ,Belgium ,Germany ,Italy ,New Zealand ,Spain andSweden . The company's automated Cloud Marketplace is now available for vendor partners and customers in 13 countries worldwide. The Ingram Micro Cloud Marketplace is an ecosystem of buyers, sellers and solutions that empowers channel partners and IT professionals to configure, provision and manage cloud technologies with confidence and ease. The Cloud Marketplace enables efficient management of the complete end-customer cloud subscription lifecycle from a single, automated platform, and offers an end-to-end portfolio of vetted cloud solutions that covers all major business categories including infrastructure, security, communication and collaboration, business applications and platform, and cloud management services.Ingram Micro companies received a number of vendor partner and industry awards including:- The company's Armada business, the largest value-added technology distributor in
Turkey , received the Cisco Distribution Partner of the Year Award. Armada was recognized for its high sales volumes, business developments in small and medium-sized enterprises and contributions to the development of IT sector in 2014. Ingram Micro's Aptec business in theMiddle East ,Turkey andAfrica received the VMware Distributor of the Year Award.Ingram Micro's Promark Technology business, one of the premier value added distributors in theUnited States , was named the 2014-2015 Distributor of the Year by Nutanix.- Ingram Micro Canada earned two distinct honors from
Staples, Inc. for its service excellence and new business contributions around the Staples Advantage Marketplace and Mobility: The Staples Advantage Technology Vendor Award andStaples Category Development Award. - Additionally,
Ingram Micro was named a multiple 2015 ChannelPro Readers' Choice Award winner, receiving four gold awards in the categories of Distributors for Best Cloud/MSP Service Offerings, Best Financing Options, Best Sales Support, and Best Training Programs; as well as one silver award for Best Hardware/Software. The wins represent the fourth consecutive year Ingram Micro has outperformed its competition to capture top honors across multiple categories.
- The company's Armada business, the largest value-added technology distributor in
Outlook
The following statements are based on the company's current expectations for the 2015 third quarter and exclude the amortization of intangible assets, charges associated with acquisition-related costs, reorganization, integration and transition costs and charges associated with expense reduction programs and the impact of foreign exchange gains or losses related to the translation effect on Euro-based inventory purchases in
For the 2015 third quarter,
Non-GAAP Disclosures
In addition to GAAP results,
The non-GAAP measures noted above are primary indicators that
Reconciliation of GAAP to non-GAAP financial measures for the periods presented is attached to the press release.
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 (877) 660-6853 or (201) 612-7415, conference ID "13611356."
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 within the meaning of the Private Securities Litigation Reform Act, including statements relating to the expected benefits from acquisitions and our ability to enhance earnings power and the impact of foreign currency rates, 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) |
|||
July 4, |
January 3, |
||
2015 |
2015 |
||
ASSETS |
|||
Current assets: |
|||
Cash and cash equivalents |
$ 766,492 |
$ 692,777 |
|
Trade accounts receivable, net |
4,921,884 |
6,115,328 |
|
Inventory |
3,796,176 |
4,145,012 |
|
Other current assets |
646,761 |
532,406 |
|
Total current assets |
10,131,313 |
11,485,523 |
|
Property and equipment, net |
333,756 |
432,430 |
|
Goodwill |
555,927 |
532,483 |
|
Intangible assets, net |
328,678 |
318,689 |
|
Other assets |
64,235 |
62,318 |
|
Total assets |
$11,413,909 |
$12,831,443 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
Current liabilities: |
|||
Accounts payable |
$ 5,464,524 |
$ 6,522,369 |
|
Accrued expenses |
565,012 |
542,038 |
|
Short-term debt and current maturities of long-term debt |
86,204 |
372,026 |
|
Total current liabilities |
6,115,740 |
7,436,433 |
|
Long-term debt, less current maturities |
1,097,102 |
1,096,889 |
|
Other liabilities |
124,373 |
132,295 |
|
Total liabilities |
7,337,215 |
8,665,617 |
|
Stockholders' equity |
4,076,694 |
4,165,826 |
|
Total liabilities and stockholders' equity |
$11,413,909 |
$12,831,443 |
Ingram Micro Inc. |
|||
Consolidated Statement of Income (Loss) |
|||
(Amounts in 000s, except per share data) |
|||
(Unaudited) |
|||
Thirteen Weeks Ended |
|||
July 4, 2015 |
June 28, 2014 |
||
Net sales |
$10,553,278 |
$ 10,909,379 |
|
Cost of sales |
9,896,453 |
10,275,634 |
|
Gross profit |
656,825 |
633,745 |
|
Operating expenses: |
|||
Selling, general and administrative |
515,575 |
497,592 |
|
Amortization of intangible assets |
17,089 |
14,421 |
|
Reorganization costs |
6,236 |
23,513 |
|
Impairment of internally developed software |
115,856 |
- |
|
654,756 |
535,526 |
||
Income from operations |
2,069 |
98,219 |
|
Other expense (income): |
|||
Interest income |
(1,201) |
(1,312) |
|
Interest expense |
21,212 |
18,425 |
|
Net foreign currency exchange loss |
6,738 |
582 |
|
Other |
3,481 |
3,561 |
|
30,230 |
21,256 |
||
Income (loss) before income taxes |
(28,161) |
76,963 |
|
Provision for income taxes |
6,132 |
26,350 |
|
Net income (loss) |
$ (34,293) |
$ 50,613 |
|
Diluted earnings per share |
$ (0.22) |
$ 0.32 |
|
Diluted weighted average shares outstanding |
156,329 |
159,186 |
Ingram Micro Inc. |
|||
Consolidated Statement of Income |
|||
(Amounts in 000s, except per share data) |
|||
(Unaudited) |
|||
Twenty-six Weeks Ended |
|||
July 4, 2015 |
June 28, 2014 |
||
Net sales |
$ 21,197,704 |
$ 21,293,368 |
|
Cost of sales |
19,923,418 |
20,049,043 |
|
Gross profit |
1,274,286 |
1,244,325 |
|
Operating expenses: |
|||
Selling, general and administrative |
1,015,350 |
987,236 |
|
Amortization of intangible assets |
33,020 |
28,573 |
|
Reorganization costs |
10,276 |
61,937 |
|
Impairment of internally developed software |
115,856 |
- |
|
1,174,502 |
1,077,746 |
||
Income from operations |
99,784 |
166,579 |
|
Other expense (income): |
|||
Interest income |
(1,659) |
(2,737) |
|
Interest expense |
43,370 |
37,747 |
|
Net foreign currency exchange loss |
14,276 |
2,170 |
|
Other |
6,943 |
8,544 |
|
62,930 |
45,724 |
||
Income before income taxes |
36,854 |
120,855 |
|
Provision for income taxes |
27,872 |
45,409 |
|
Net income |
$ 8,982 |
$ 75,446 |
|
Diluted earnings per share |
$ 0.06 |
$ 0.47 |
|
Diluted weighted average shares outstanding |
159,549 |
158,962 |
Ingram Micro Inc. |
|||||||
Consolidated Statement of Cash Flows |
|||||||
(Amounts in 000s) |
|||||||
(Unaudited) |
|||||||
Twenty-six Weeks Ended |
|||||||
July 4, 2015 |
June 28, 2014 |
||||||
Cash flows from operating activities: |
|||||||
Net income |
$ 8,982 |
$ 75,446 |
|||||
Adjustments to reconcile net income to cash provided (used) by operating activities: |
|||||||
Depreciation and amortization |
76,499 |
71,089 |
|||||
Stock-based compensation |
17,529 |
16,460 |
|||||
Excess tax benefit from stock-based compensation |
(4,149) |
(3,703) |
|||||
Loss on write-off of assets |
- |
8,302 |
|||||
Gain on sale of property and equipment |
(146) |
- |
|||||
Impairment of internally developed software |
115,856 |
- |
|||||
Noncash charges for interest and bond discount amortization |
1,510 |
1,181 |
|||||
Deferred income taxes |
6,117 |
(5,767) |
|||||
Changes in operating assets and liabilities, net of effects of acquisitions: |
|||||||
Trade accounts receivable |
1,173,852 |
593,179 |
|||||
Inventory |
328,530 |
(466,876) |
|||||
Other current assets |
(129,910) |
(49,659) |
|||||
Accounts payable |
(860,437) |
(568,496) |
|||||
Change in book overdrafts |
(84,010) |
78,263 |
|||||
Accrued expenses |
(23,299) |
(201,703) |
|||||
Cash provided (used) by operating activities |
626,924 |
(452,284) |
|||||
Cash flows from investing activities: |
|||||||
Capital expenditures |
(56,573) |
(40,897) |
|||||
Sale of marketable securities, net |
- |
1,100 |
|||||
Proceeds from sale of property and equipment |
359 |
- |
|||||
Cost-based investment |
- |
(10,000) |
|||||
Acquisitions, net of cash acquired |
(94,255) |
(17,367) |
|||||
Cash used by investing activities |
(150,469) |
(67,164) |
|||||
Cash flows from financing activities: |
|||||||
Proceeds from exercise of stock options |
6,267 |
11,511 |
|||||
Repurchase of Class A Common Stock |
(44,208) |
- |
|||||
Excess tax benefit from stock-based compensation |
4,149 |
3,703 |
|||||
Other consideration for acquisitions |
(2,358) |
- |
|||||
Net proceeds from (repayments of) revolving credit facilities |
(353,784) |
311,187 |
|||||
Cash provided (used) by financing activities |
(389,934) |
326,401 |
|||||
Effect of exchange rate changes on cash and cash equivalents |
(12,806) |
(10,652) |
|||||
Increase (decrease) in cash and cash equivalents |
73,715 |
(203,699) |
|||||
Cash and cash equivalents, beginning of period |
692,777 |
674,390 |
|||||
Cash and cash equivalents, end of period |
$ 766,492 |
$ 470,691 |
Ingram Micro Inc. |
||||||||||||||
Supplementary Information |
||||||||||||||
Income from Operations - Reconciliation of GAAP to Non-GAAP Information |
||||||||||||||
(Amounts in Millions) |
||||||||||||||
(Unaudited) |
||||||||||||||
Thirteen Weeks Ended July 4, 2015 |
||||||||||||||
Impairment |
||||||||||||||
Internally |
||||||||||||||
North America |
Europe |
Asia-Pacific |
Latin America |
Stock-based |
Developed |
Consolidated |
||||||||
Net Sales |
$ 4,618.5 |
$ 2,855.0 |
$ 2,481.5 |
$ 598.3 |
$ - |
$ - |
$ 10,553.3 |
|||||||
GAAP Operating Income |
$ 80.6 |
$ 11.4 |
$ 30.9 |
$ 6.1 |
$ (11.0) |
$ (115.9) |
$ 2.1 |
|||||||
Reorganization, integration and transition costs |
8.6 |
4.7 |
0.4 |
1.7 |
- |
- |
15.4 |
|||||||
Amortization of intangible assets |
10.3 |
4.8 |
1.8 |
0.2 |
- |
- |
17.1 |
|||||||
Impairment of internally developed software |
- |
- |
- |
- |
- |
115.9 |
115.9 |
|||||||
Non-GAAP Operating Income |
$ 99.5 |
$ 20.9 |
$ 33.1 |
$ 8.0 |
$ (11.0) |
$ - |
$ 150.5 |
|||||||
GAAP Operating Margin |
1.75% |
0.40% |
1.25% |
1.01% |
0.02% |
|||||||||
Non-GAAP Operating Margin |
2.15% |
0.73% |
1.33% |
1.33% |
1.43% |
|||||||||
Thirteen Weeks Ended June 28, 2014 |
||||||||||||||
North America |
Europe |
Asia-Pacific |
Latin America |
Stock-based |
Consolidated |
|||||||||
Net Sales |
$ 4,611.0 |
$3,417.7 |
$ 2,359.1 |
$ 521.6 |
$ - |
$ 10,909.4 |
||||||||
GAAP Operating Income |
$ 72.1 |
$ 3.1 |
$ 23.7 |
$ 8.0 |
$ (8.6) |
$ 98.2 |
||||||||
Reorganization, integration and transition costs |
16.8 |
15.4 |
1.2 |
0.1 |
- |
33.5 |
||||||||
Amortization of intangible assets |
9.9 |
2.9 |
1.4 |
0.2 |
- |
14.4 |
||||||||
Non-GAAP Operating Income |
$ 98.7 |
$ 21.4 |
$ 26.3 |
$ 8.3 |
$ (8.6) |
$ 146.2 |
||||||||
GAAP Operating Margin |
1.56% |
0.09% |
1.00% |
1.53% |
0.90% |
|||||||||
Non-GAAP Operating Margin |
2.14% |
0.63% |
1.12% |
1.59% |
1.34% |
Ingram Micro Inc. |
||||||||||||||
Supplementary Information |
||||||||||||||
Income from Operations - Reconciliation of GAAP to Non-GAAP Information |
||||||||||||||
(Amounts in Millions) |
||||||||||||||
(Unaudited) |
||||||||||||||
Twenty-six Weeks Ended July 4, 2015 |
||||||||||||||
Impairment |
||||||||||||||
Internally |
||||||||||||||
North America |
Europe |
Asia-Pacific |
Latin America |
Stock-based |
Developed |
Consolidated |
||||||||
Net Sales |
$ 9,060.1 |
$5,929.2 |
$ 5,025.7 |
$ 1,182.7 |
$ - |
$ - |
$ 21,197.7 |
|||||||
GAAP Operating Income |
$ 134.9 |
$ 18.3 |
$ 62.6 |
$ 17.4 |
$ (17.5) |
$ (115.9) |
$ 99.8 |
|||||||
Reorganization, integration and transition costs |
14.3 |
8.2 |
2.3 |
2.3 |
- |
- |
27.1 |
|||||||
Amortization of intangible assets |
20.7 |
8.1 |
3.7 |
0.4 |
- |
- |
32.9 |
|||||||
Impairment of internally developed software |
- |
- |
- |
- |
- |
115.9 |
115.9 |
|||||||
Non-GAAP Operating Income |
$ 169.9 |
$ 34.6 |
$ 68.6 |
$ 20.1 |
$ (17.5) |
$ - |
$ 275.7 |
|||||||
GAAP Operating Margin |
1.49% |
0.31% |
1.25% |
1.47% |
0.47% |
|||||||||
Non-GAAP Operating Margin |
1.88% |
0.58% |
1.36% |
1.70% |
1.30% |
|||||||||
Twenty-six Weeks Ended June 28, 2014 |
||||||||||||||
North America |
Europe |
Asia-Pacific |
Latin America |
Stock-based |
Consolidated |
|||||||||
Net Sales |
$ 8,753.1 |
$ 6,877.0 |
$ 4,648.2 |
$ 1,015.1 |
$ - |
$ 21,293.4 |
||||||||
GAAP Operating Income (Loss) |
$ 133.8 |
$ (8.1) |
$ 40.5 |
$ 17.0 |
$ (16.5) |
$ 166.6 |
||||||||
Reorganization, integration and transition costs |
29.9 |
46.2 |
3.8 |
0.6 |
- |
80.5 |
||||||||
Amortization of intangible assets |
19.6 |
5.7 |
2.8 |
0.4 |
- |
28.6 |
||||||||
LCD class action settlement |
(6.6) |
- |
- |
- |
- |
(6.6) |
||||||||
Non-GAAP Operating Income |
$ 176.7 |
$ 43.8 |
$ 47.1 |
$ 18.0 |
$ (16.5) |
$ 269.1 |
||||||||
GAAP Operating Margin |
1.53% |
(0.12%) |
0.87% |
1.67% |
0.78% |
|||||||||
Non-GAAP Operating Margin |
2.02% |
0.64% |
1.01% |
1.77% |
1.26% |
Ingram Micro Inc. |
|||||
Supplementary Information |
|||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
|||||
(Amounts in Millions, except per share data) |
|||||
(Unaudited) |
|||||
Thirteen Weeks Ended July 4, 2015 |
|||||
Diluted |
|||||
Net Income (Loss) |
Earnings per Share (a) |
||||
As Reported Under GAAP |
$ (34.3) |
$ (0.22) |
|||
Reorganization, integration and transition costs |
8.9 |
0.06 |
|||
Amortization of intangible assets |
12.6 |
0.08 |
|||
Impairment of internally developed software |
99.7 |
0.64 |
|||
Pan-Europe foreign exchange loss |
0.8 |
0.00 |
|||
Share dilution (b) |
- |
(0.01) |
|||
Non-GAAP Financial Measure |
$ 87.7 |
$ 0.55 |
|||
Thirteen Weeks Ended June 28, 2014 |
|||||
Diluted |
|||||
Net Income |
Earnings per Share (a) |
||||
As Reported Under GAAP |
$ 50.6 |
$ 0.32 |
|||
Reorganization, integration and transition costs |
25.9 |
0.16 |
|||
Amortization of intangible assets |
10.3 |
0.06 |
|||
Pan-Europe foreign exchange gain |
(0.4) |
(0.00) |
|||
Non-GAAP Financial Measure |
$ 86.4 |
$ 0.54 |
(a) |
Per share impact is calculated by dividing net income amount by the diluted weighted average shares outstanding of 156.3 and 159.2 for the thirteen weeks ended July 4, 2015 and June 28, 2014, respectively. |
|||||
(b) |
Share dilution reflects impact of 3.2 common stock equivalents that are excluded from GAAP diluted weighted average shares because they are antidilutive with respect to the GAAP net loss. |
Ingram Micro Inc. |
|||||
Supplementary Information |
|||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
|||||
(Amounts in Millions, except per share data) |
|||||
(Unaudited) |
|||||
Twenty-six Weeks Ended July 4, 2015 |
|||||
Diluted |
|||||
Net Income |
Earnings per Share (a) |
||||
As Reported Under GAAP |
$ 9.0 |
$ 0.06 |
|||
Reorganization, integration and transition costs |
19.9 |
0.13 |
|||
Amortization of intangible assets |
23.9 |
0.15 |
|||
Impairment of internally developed software |
99.7 |
0.62 |
|||
Pan-Europe foreign exchange loss |
3.4 |
0.02 |
|||
Non-GAAP Financial Measure |
$ 155.9 |
$ 0.98 |
|||
Twenty-six Weeks Ended June 28, 2014 |
|||||
Diluted |
|||||
Net Income |
Earnings per Share (a) |
||||
As Reported Under GAAP |
$ 75.4 |
$ 0.47 |
|||
Reorganization, integration and transition costs |
64.8 |
0.41 |
|||
Amortization of intangible assets |
20.4 |
0.13 |
|||
LCD class action settlement |
(4.7) |
(0.03) |
|||
Pan-Europe foreign exchange gain |
(1.6) |
(0.01) |
|||
Non-GAAP Financial Measure |
$ 154.3 |
$ 0.97 |
(a) |
Per share impact is calculated by dividing net income amount by the diluted weighted average shares outstanding of 159.5 and 159.0 for the twenty-six weeks ended July 4, 2015 and June 28, 2014, respectively. |
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SOURCE
Investors, Damon Wright, (714) 382-5013, damon.wright@ingrammicro.com