(US$ in millions, except per share data) |
Third Quarter Ended |
||||||||
Oct. 3, |
Sept. 27, |
USD |
FX Neutral |
||||||
2015 |
2014 |
Change |
Change |
||||||
Net sales |
$10,516 |
$11,238 |
-6% |
2% |
|||||
Non-GAAP operating income |
$169 |
$161 |
5% |
15% |
|||||
Non-GAAP operating margin |
1.60% |
1.43% |
17 bps |
NA |
|||||
Operating income |
$119 |
$120 |
0% |
NA |
|||||
Operating margin |
1.14% |
1.07% |
7 bps |
NA |
|||||
Non-GAAP net income |
$103 |
$98 |
5% |
17% |
|||||
Net income |
$65 |
$72 |
-10% |
NA |
|||||
Non-GAAP earnings per diluted share |
$0.67 |
$0.62 |
8% |
21% |
|||||
Earnings per diluted share |
$0.42 |
$0.45 |
-7% |
NA |
|||||
A reconciliation of GAAP financial measures to non-GAAP financial measures is presented in the Supplementary Information section in this press release. |
|||||||||
"We had a great quarter, reflecting continued execution on our strategy," said
"Consistent with our strategy to expand in higher value and services areas," Monie said, "we recently announced our intent to acquire the commerce solutions business of
"In addition to strong execution across the business," Monie continued, "this quarter we continued to deliver on our commitment to return capital to shareholders, paying our first ever quarterly dividend and repurchasing more than
Third Quarter Results of Operations
Worldwide third quarter sales were
Non-GAAP operating income of
2015 third quarter non-GAAP net income was
Key 2015 third quarter business highlights:
Ingram Micro's commerce and fulfillment sales grew by double digits in the 2015 third quarter on a currency neutral basis. Following the close of the 2015 third quarter, the company announced its intention to significantly broaden its commerce and fulfillment solutions footprint inEurope with the acquisition ofDocdata , one of the leading European providers of order fulfillment, returns logistics and online payment services.Docdata provides critical commerce solutions to major retailers, brands and promising start-ups and currently handles between 125,000 and 250,000 orders on a daily basis, with major operations inGermany ,Netherlands and theUnited Kingdom .Docdata is expected to contribute in excess of $150 million in annual services revenue toIngram Micro and to contribute5 to 7 cents to 2016 non-GAAP earnings per share. Closing is expected toward the end of 2015 and is subject to customary closing conditions including regulatory approval andDOCDATA N.V. shareholder approval.- Last week, the company announced its intention to acquire
Sao Paulo, Brazil -based Grupo ACAO (ACAO), one ofLatin America's leading providers of critical value-add IT solutions. In addition to a portfolio of higher value products, including those from strategic vendors such asIBM ,Oracle ,Red Hat ,EMC andVMware , ACAO also provides integration services, sales support and financial services, with major operations inBrazil ,Colombia andArgentina . ACAO is expected to contribute in excess of$300 million in annual value-add solutions revenue toIngram Micro and contribute approximately4 cents to 2016 full year non-GAAP earnings per share. The transaction, which is subject to customary regulatory and other closing conditions, is expected to close late in the 2015 fourth quarter. Ingram Micro grew its Cloud business by more than 100 percent year-over-year on a constant currency basis in the 2015 third quarter, benefiting from the continued global expansion of its cloud marketplace. The company has recently expanded intoIndia ,Singapore andMalaysia andIngram Micro's automated Cloud Marketplace is now available for vendor partners and customers in 16 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 in one single integrated place. 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.- Working capital days at the end of the quarter were 25 days, a 2 day improvement both from the 2015 second quarter and last year's third quarter, resulting from the company's global working capital improvement program.
Ingram Micro repurchased 6.4 million shares during the 2015 third quarter for a total cost of$161 million . SinceMay 2015 , when the company resumed its repurchase program, it has repurchased more than 8 million shares for a total cost of$206 million .- The company realized approximately
$5 million in cost savings during the 2015 third quarter related to its previously announced cost savings program, which has included implementing lean corporate initiatives. The company continues to expect to realize$10 million ($40 million annual run rate) of total cost savings in the 2015 fourth quarter and is on-track to deliver annual global cost savings of$100 million in 2016. Ingram Micro expanded its strategic relationship withDell , as it was named an authorized Dell Federal distribution partner.
The Ingram Micro Board of Directors has declared a quarterly cash dividend of
Outlook
The following statements are based on the company's current expectations for the 2015 fourth 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 fourth quarter, foreign exchange headwinds are expected to negatively impact worldwide revenue by approximately 6 percent, or by more than
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 "13619338."
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) |
|||
October 3, |
January 3, |
||
2015 |
2015 |
||
ASSETS |
|||
Current assets: |
|||
Cash and cash equivalents |
$ 945,317 |
$ 692,777 |
|
Trade accounts receivable, net |
4,938,021 |
6,115,328 |
|
Inventory |
3,668,590 |
4,145,012 |
|
Other current assets |
627,286 |
532,406 |
|
Total current assets |
10,179,214 |
11,485,523 |
|
Property and equipment, net |
356,665 |
432,430 |
|
Goodwill |
543,366 |
532,483 |
|
Intangible assets, net |
326,734 |
318,689 |
|
Other assets |
55,770 |
62,318 |
|
Total assets |
$11,461,749 |
$12,831,443 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
Current liabilities: |
|||
Accounts payable |
$ 5,622,480 |
$ 6,522,369 |
|
Accrued expenses |
585,950 |
542,038 |
|
Short-term debt and current maturities of long-term debt |
127,245 |
372,026 |
|
Total current liabilities |
6,335,675 |
7,436,433 |
|
Long-term debt, less current maturities |
1,097,189 |
1,096,889 |
|
Other liabilities |
113,219 |
132,295 |
|
Total liabilities |
7,546,083 |
8,665,617 |
|
Stockholders' equity |
3,915,666 |
4,165,826 |
|
Total liabilities and stockholders' equity |
$11,461,749 |
$12,831,443 |
Ingram Micro Inc. |
|||
Consolidated Statement of Income |
|||
(Amounts in 000s, except per share data) |
|||
(Unaudited) |
|||
Thirteen Weeks Ended |
|||
October 3, 2015 |
September 27, 2014 |
||
Net sales |
$ 10,515,880 |
$ 11,237,840 |
|
Cost of sales |
9,852,297 |
10,591,751 |
|
Gross profit |
663,583 |
646,089 |
|
Operating expenses: |
|||
Selling, general and administrative |
510,990 |
494,507 |
|
Amortization of intangible assets |
14,206 |
14,567 |
|
Reorganization costs |
18,958 |
17,300 |
|
544,154 |
526,374 |
||
Income from operations |
119,429 |
119,715 |
|
Other expense (income): |
|||
Interest income |
(991) |
(1,045) |
|
Interest expense |
18,429 |
16,659 |
|
Net foreign exchange loss (gain) |
12,264 |
(3,323) |
|
Other |
313 |
4,467 |
|
30,015 |
16,758 |
||
Income before income taxes |
89,414 |
102,957 |
|
Provision for income taxes |
24,492 |
30,723 |
|
Net income |
$ 64,922 |
$ 72,234 |
|
Diluted earnings per share |
$ 0.42 |
$ 0.45 |
|
Diluted weighted average shares outstanding |
154,742 |
159,543 |
Ingram Micro Inc. |
|||
Consolidated Statement of Income |
|||
(Amounts in 000s, except per share data) |
|||
(Unaudited) |
|||
Thirty-nine Weeks Ended |
|||
October 3, 2015 |
September 27, 2014 |
||
Net sales |
$ 31,713,584 |
$ 32,531,208 |
|
Cost of sales |
29,775,715 |
30,640,794 |
|
Gross profit |
1,937,869 |
1,890,414 |
|
Operating expenses: |
|||
Selling, general and administrative |
1,526,340 |
1,481,743 |
|
Amortization of intangible assets |
47,226 |
43,140 |
|
Reorganization costs |
29,234 |
79,237 |
|
Impairment of internally developed software |
115,856 |
- |
|
1,718,656 |
1,604,120 |
||
Income from operations |
219,213 |
286,294 |
|
Other expense (income): |
|||
Interest income |
(2,650) |
(3,782) |
|
Interest expense |
61,799 |
54,406 |
|
Net foreign exchange loss (gain) |
26,540 |
(1,153) |
|
Other |
7,256 |
13,011 |
|
92,945 |
62,482 |
||
Income before income taxes |
126,268 |
223,812 |
|
Provision for income taxes |
52,364 |
76,132 |
|
Net income |
$ 73,904 |
$ 147,680 |
|
Diluted earnings per share |
$ 0.47 |
$ 0.93 |
|
Diluted weighted average shares outstanding |
158,016 |
159,181 |
Ingram Micro Inc. |
|||||||
Consolidated Statement of Cash Flows |
|||||||
(Amounts in 000s) |
|||||||
(Unaudited) |
|||||||
Thirty-nine Weeks Ended |
|||||||
October 3, 2015 |
September 27, 2014 |
||||||
Cash flows from operating activities: |
|||||||
Net income |
$ 73,904 |
$ 147,680 |
|||||
Adjustments to reconcile net income to cash |
|||||||
provided (used) by operating activities: |
|||||||
Depreciation and amortization |
113,435 |
108,202 |
|||||
Stock-based compensation |
28,291 |
24,761 |
|||||
Excess tax benefit from stock-based compensation |
(4,334) |
(4,338) |
|||||
Loss on write-off of assets |
- |
8,302 |
|||||
Gain on sale of property and equipment |
(272) |
- |
|||||
Impairment of internally developed software |
115,856 |
- |
|||||
Noncash charges for interest and bond discount amortization |
2,212 |
1,769 |
|||||
Deferred income taxes |
1,553 |
(30,973) |
|||||
Changes in operating assets and liabilities, net of effects of acquisitions: |
|||||||
Trade accounts receivable |
1,078,501 |
566,097 |
|||||
Inventory |
400,880 |
(551,609) |
|||||
Other current assets |
(107,241) |
(30,350) |
|||||
Accounts payable |
(663,616) |
(603,481) |
|||||
Change in book overdrafts |
(70,825) |
166,361 |
|||||
Accrued expenses |
(2,463) |
(196,364) |
|||||
Cash provided (used) by operating activities |
965,881 |
(393,943) |
|||||
Cash flows from investing activities: |
|||||||
Capital expenditures |
(99,022) |
(52,369) |
|||||
Sale of marketable securities, net |
5,000 |
1,100 |
|||||
Proceeds from sale of property and equipment |
1,145 |
- |
|||||
Cost-based investment |
- |
(10,000) |
|||||
Acquisitions, net of cash acquired |
(100,855) |
(18,880) |
|||||
Cash used by investing activities |
(193,732) |
(80,149) |
|||||
Cash flows from financing activities: |
|||||||
Proceeds from exercise of stock options |
10,279 |
16,943 |
|||||
Repurchase of Class A Common Stock |
(205,608) |
- |
|||||
Excess tax benefit from stock-based compensation |
4,334 |
4,338 |
|||||
Other consideration for acquisitions |
(2,358) |
- |
|||||
Dividends paid to shareholders |
(15,196) |
- |
|||||
Net proceeds from (repayments of) revolving credit facilities |
(301,156) |
283,133 |
|||||
Cash provided (used) by financing activities |
(509,705) |
304,414 |
|||||
Effect of exchange rate changes on cash and cash equivalents |
(9,904) |
(6,892) |
|||||
Increase (decrease) in cash and cash equivalents |
252,540 |
(176,570) |
|||||
Cash and cash equivalents, beginning of period |
692,777 |
674,390 |
|||||
Cash and cash equivalents, end of period |
$ 945,317 |
$ 497,820 |
Ingram Micro Inc. |
||||||||||||
Supplementary Information |
||||||||||||
Income from Operations - Reconciliation of GAAP to Non-GAAP Information |
||||||||||||
(Amounts in Millions) |
||||||||||||
(Unaudited) |
||||||||||||
Thirteen Weeks Ended October 3, 2015 |
||||||||||||
North America |
Europe |
Asia-Pacific |
Latin America |
Stock-based |
Consolidated |
|||||||
Net Sales |
$ 4,477.1 |
$2,928.5 |
$ 2,528.1 |
$ 582.2 |
$ - |
$ 10,515.9 |
||||||
GAAP Operating Income |
$ 88.7 |
$ 2.6 |
$ 31.8 |
$ 7.1 |
$ (10.8) |
$ 119.4 |
||||||
Reorganization, integration and transition costs |
14.3 |
7.7 |
7.0 |
1.3 |
- |
30.3 |
||||||
Amortization of intangible assets |
8.1 |
3.2 |
2.0 |
0.9 |
- |
14.2 |
||||||
Estimated settlement of employee related taxes |
- |
4.7 |
- |
- |
- |
4.7 |
||||||
Non-GAAP Operating Income |
$ 111.1 |
$ 18.2 |
$ 40.8 |
$ 9.3 |
$ (10.8) |
$ 168.6 |
||||||
GAAP Operating Margin |
1.98% |
0.09% |
1.26% |
1.21% |
1.14% |
|||||||
Non-GAAP Operating Margin |
2.48% |
0.62% |
1.61% |
1.59% |
1.60% |
|||||||
Thirteen Weeks Ended September 27, 2014 |
||||||||||||
North America |
Europe |
Asia-Pacific |
Latin America |
Stock-based |
Consolidated |
|||||||
Net Sales |
$ 5,134.3 |
$3,200.4 |
$ 2,378.2 |
$ 524.9 |
$ - |
$ 11,237.8 |
||||||
GAAP Operating Income |
$ 85.7 |
$ 2.1 |
$ 31.0 |
$ 9.2 |
$ (8.3) |
$ 119.7 |
||||||
Reorganization, integration and transition costs |
9.9 |
15.4 |
0.7 |
0.5 |
- |
26.5 |
||||||
Amortization of intangible assets |
10.0 |
3.0 |
1.4 |
0.2 |
- |
14.6 |
||||||
Non-GAAP Operating Income |
$ 105.6 |
$ 20.5 |
$ 33.1 |
$ 9.9 |
$ (8.3) |
$ 160.8 |
||||||
GAAP Operating Margin |
1.67% |
0.07% |
1.30% |
1.75% |
1.07% |
|||||||
Non-GAAP Operating Margin |
2.06% |
0.64% |
1.39% |
1.89% |
1.43% |
Ingram Micro Inc. |
||||||||||||||
Supplementary Information |
||||||||||||||
Income from Operations - Reconciliation of GAAP to Non-GAAP Information |
||||||||||||||
(Amounts in Millions) |
||||||||||||||
(Unaudited) |
||||||||||||||
Thirty-nine Weeks Ended October 3, 2015 |
||||||||||||||
North America |
Europe |
Asia-Pacific |
Latin America |
Stock-based |
Impairment of |
Consolidated |
||||||||
Net Sales |
$ 13,537.2 |
$ 8,857.8 |
$ 7,553.9 |
$ 1,764.7 |
$ - |
$ - |
$ 31,713.6 |
|||||||
GAAP Operating Income |
$ 223.6 |
$ 20.9 |
$ 94.4 |
$ 24.5 |
$ (28.3) |
$ (115.9) |
$ 219.2 |
|||||||
Reorganization, integration and transition costs |
28.6 |
15.9 |
9.3 |
3.5 |
- |
- |
57.3 |
|||||||
Amortization of intangible assets |
28.9 |
11.3 |
5.7 |
1.3 |
- |
- |
47.2 |
|||||||
Estimated settlement of employee related taxes |
- |
4.7 |
- |
- |
- |
- |
4.7 |
|||||||
Impairment of internally developed software |
- |
- |
- |
- |
- |
115.9 |
115.9 |
|||||||
Non-GAAP Operating Income |
$ 281.1 |
$ 52.8 |
$ 109.4 |
$ 29.3 |
$ (28.3) |
$ - |
$ 444.3 |
|||||||
GAAP Operating Margin |
1.65% |
0.24% |
1.25% |
1.39% |
0.69% |
|||||||||
Non-GAAP Operating Margin |
2.08% |
0.60% |
1.45% |
1.66% |
1.40% |
|||||||||
Thirty-nine Weeks Ended September 27, 2014 |
||||||||||||||
North America |
Europe |
Asia-Pacific |
Latin America |
Stock-based |
Consolidated |
|||||||||
Net Sales |
$ 13,887.4 |
$10,077.4 |
$ 7,026.5 |
$ 1,539.9 |
$ - |
$ 32,531.2 |
||||||||
GAAP Operating Income (Loss) |
$ 219.5 |
$ (6.0) |
$ 71.4 |
$ 26.2 |
$ (24.8) |
$ 286.3 |
||||||||
Reorganization, integration and transition costs |
39.7 |
61.6 |
4.5 |
1.1 |
- |
106.9 |
||||||||
Amortization of intangible assets |
29.6 |
8.7 |
4.3 |
0.6 |
- |
43.2 |
||||||||
LCD class action settlement |
(6.6) |
- |
- |
- |
- |
(6.6) |
||||||||
Non-GAAP Operating Income |
$ 282.2 |
$ 64.3 |
$ 80.2 |
$ 27.9 |
$ (24.8) |
$ 429.8 |
||||||||
GAAP Operating Margin |
1.58% |
(0.06%) |
1.02% |
1.70% |
0.88% |
|||||||||
Non-GAAP Operating Margin |
2.03% |
0.64% |
1.14% |
1.81% |
1.32% |
Ingram Micro Inc. |
|||||
Supplementary Information |
|||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
|||||
(Amounts in Millions, except per share data) |
|||||
(Unaudited) |
|||||
Thirteen Weeks Ended October 3, 2015 |
|||||
Diluted |
|||||
Net Income |
Earnings per Share (a) |
||||
As Reported Under GAAP |
$ 64.9 |
$ 0.42 |
|||
Reorganization, integration and transition costs |
22.4 |
0.15 |
|||
Amortization of intangible assets |
10.5 |
0.07 |
|||
Estimated settlement of employee related taxes |
3.5 |
0.02 |
|||
Pan-Europe foreign exchange loss |
1.7 |
0.01 |
|||
Non-GAAP Financial Measure |
$ 103.0 |
$ 0.67 |
|||
Thirteen Weeks Ended September 27, 2014 |
|||||
Diluted |
|||||
Net Income |
Earnings per Share (a) |
||||
As Reported Under GAAP |
$ 72.2 |
$ 0.45 |
|||
Reorganization, integration and transition costs |
20.3 |
0.13 |
|||
Amortization of intangible assets |
10.2 |
0.06 |
|||
Pan-Europe foreign exchange gain |
(4.4) |
(0.02) |
|||
Non-GAAP Financial Measure |
$ 98.3 |
$ 0.62 |
|||
(a) |
Per share impact is calculated by dividing net income amount by the diluted weighted average shares outstanding of 154.7 and 159.5 for the thirteen weeks ended October 3, 2015 and September 27, 2014, respectively. |
Ingram Micro Inc. |
|||||
Supplementary Information |
|||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
|||||
(Amounts in Millions, except per share data) |
|||||
(Unaudited) |
|||||
Thirty-nine Weeks Ended October 3, 2015 |
|||||
Diluted |
|||||
Net Income |
Earnings per Share (a) |
||||
As Reported Under GAAP |
$ 73.9 |
$ 0.47 |
|||
Reorganization, integration and transition costs |
42.1 |
0.27 |
|||
Amortization of intangible assets |
34.4 |
0.22 |
|||
Estimated settlement of employee related taxes |
3.5 |
0.02 |
|||
Impairment of internally developed software |
99.7 |
0.63 |
|||
Pan-Europe foreign exchange loss |
5.2 |
0.03 |
|||
Non-GAAP Financial Measure |
$ 258.8 |
$ 1.64 |
|||
Thirty-nine Weeks Ended September 27, 2014 |
|||||
Diluted |
|||||
Net Income |
Earnings per Share (a) |
||||
As Reported Under GAAP |
$ 147.7 |
$ 0.93 |
|||
Reorganization, integration and transition costs |
85.1 |
0.54 |
|||
Amortization of intangible assets |
30.6 |
0.19 |
|||
LCD class action settlement |
(4.7) |
(0.03) |
|||
Pan-Europe foreign exchange gain |
(6.1) |
(0.04) |
|||
Non-GAAP Financial Measure |
$ 252.6 |
$ 1.59 |
|||
(a) |
Per share impact is calculated by dividing net income amount by the diluted weighted average shares outstanding of 158.0 and 159.2 for the thirty-nine weeks ended October 3, 2015 and September 27, 2014, respectively. |
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SOURCE
Investors: Damon Wright, (714) 382-5013, damon.wright@ingrammicro.com