Ingram Micro Reports First Quarter Financial Results

IRVINE, Calif.--()--Ingram Micro Inc. today announced financial results for the first quarter ended Apr. 1, 2017.

First Quarter Results of Operations

Robust demand across the company’s largest countries helped drive worldwide 2017 first quarter sales of $10.40 billion, an increase of 11 percent in USD, with gross margin of 6.33 percent. This compares to sales of $9.34 billion and gross margin of 6.77 percent in the 2016 first quarter. The translation of foreign currencies versus last year had a negative impact of 2 percentage points on worldwide sales. Recent acquisitions contributed approximately 1 percentage point of growth to 2017 first quarter worldwide sales. 2017 first quarter non-GAAP operating income was $102 million, or 0.98 percent of revenue, and non-GAAP net income was $56 million. This compares to 2016 first quarter non-GAAP operating income of $101 million, or 1.08 percent of revenue, and non-GAAP net income of $53 million.

2017 first quarter gross margin, non-GAAP operating income and non-GAAP net income were impacted by a higher mix of sales of consumer focused product lines, particularly in international markets, as well as by strategic investments in the company’s cloud and commerce and fulfillment businesses and lower profit contribution from the company’s U.S. mobility business.

2017 first quarter GAAP operating income and net income was $41 million, or 0.39 percent of revenue, and $38 million, respectively, including:

  • The negative impact of approximately $39 million in restructuring, merger, acquisition and transition costs primarily related to retention payments and the vesting of restricted shares and stock options due to HNA Group’s acquisition of Ingram Micro;
  • The negative impact of $22 million in amortization expense; and
  • A non-cash tax benefit of $31 million primarily related to the reversal of a valuation allowance against certain deferred tax assets in Australia.

This compares to 2016 first quarter GAAP operating income and net income of $38 million, or 0.41 percent of revenue, and $2 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. These non-GAAP measures exclude charges associated with reorganization, merger, acquisitions, integration and transition costs, including those associated with the company’s previously announced cost savings programs, and the amortization of intangible assets. Non-GAAP net income also exclude 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. 2017 first quarter non-GAAP net income also excludes a non-cash tax benefit primarily related to the reversal of a valuation allowance against certain deferred tax assets in Australia.

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.

© 2017 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 Sheet
(Amounts in 000s)
(Unaudited)
 
 
April 1, December 31,
2017 2016
 
ASSETS
Current assets:
Cash and cash equivalents $ 451,383 $ 796,164
Restricted cash 41,150 64,916
Trade accounts receivable, net 5,496,947 6,354,905
Inventory 3,971,319 3,902,626
Other current assets   661,146   691,253
 
Total current assets 10,621,945 11,809,864
 
Property and equipment, net 385,813 381,876
Goodwill 913,792 904,920
Intangible assets, net 428,337 445,646
Other assets   213,163   176,643
 
Total assets $ 12,563,050 $ 13,718,949
 

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
Accounts payable $ 5,945,248 $ 7,174,946
Accrued expenses 710,924 856,627
Short-term debt and current maturities of long-term debt   636,870   559,773
 
Total current liabilities 7,293,042 8,591,346
 
Long-term debt, less current maturities 857,674 832,459
Other liabilities   184,113   181,393
 
Total liabilities 8,334,829 9,605,198
 
Stockholder's equity   4,228,221   4,113,751
 

Total liabilities and stockholder's equity

$ 12,563,050 $ 13,718,949
 
Ingram Micro Inc.
Consolidated Statement of Income
(Amounts in 000s)
(Unaudited)
 
 
Thirteen Weeks Ended
April 1, 2017 April 2, 2016
 
Net sales $ 10,402,939 $ 9,336,601
Cost of sales   9,744,311     8,704,905  
Gross profit   658,628     631,696  
 
Operating expenses:
Selling, general and administrative 557,623 540,482
Amortization of intangible assets 22,359 27,025
Reorganization costs 4,468 16,566
Merger related costs   33,674     9,220  
  618,124     593,293  
 
Income from operations   40,504     38,403  
 
Other expense (income):
Interest income (2,079 ) (1,141 )
Interest expense 26,163 20,472
Net foreign currency exchange (gain) loss (3,327 ) 8,527
Other   4,616     3,082  
  25,373     30,940  
 
Income before income taxes 15,131 7,463
 
(Benefit from) Provision for income taxes   (22,722 )   5,564  
 
Net income $ 37,853   $ 1,899  
 
Ingram Micro Inc.
Consolidated Statement of Cash Flows
(Amounts in 000s)
(Unaudited)
         
 
Thirteen Weeks Ended
April 1, 2017 April 2, 2016
 
Cash flows from operating activities:
Net income $ 37,853 $ 1,899
Adjustments to reconcile net income to cash (used) provided by operating activities:
Depreciation and amortization 49,204 51,906
Stock-based compensation 3,191 8,033
(Paid) unpaid Merger related costs (79,620 ) 9,220
Excess tax benefit from stock-based compensation - (552 )
Unrealized gain on marketable securities, net (2,081 ) -
Gain on sale of property and equipment (369 ) (580 )
Noncash charges for interest and bond discount amortization 1,311 705
Deferred income taxes (33,959 ) 468

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

Trade accounts receivable 939,970 1,070,033
Inventory (21,398 ) (31,763 )
Other current assets 42,616 47,932
Accounts payable (1,202,591 ) (594,950 )
Change in book overdrafts (113,085 ) (210,101 )
Accrued expenses   (57,180 )   (77,676 )
Cash provided (used) provided by operating activities   (436,138 )   274,574  
 
Cash flows from investing activities:
Capital expenditures (34,811 ) (23,720 )
Movements from restricted cash 23,766 -
Realized gain on marketable securities, net (109 ) -
Proceeds from sale of property and equipment 326 343
Acquisitions and earn-out payments, net of cash acquired   -     (66,505 )
Cash used by investing activities   (10,828 )   (89,882 )
 
Cash flows from financing activities:
Proceeds from exercise of stock options - 2,879
Excess tax benefit from stock-based compensation - 552
Equity contribution from Parent 37,500 -
Settlement of stock-based awards due to Merger (22,145 ) -
Other consideration for acquisitions (1,070 ) -
Net proceeds from (repayments of) revolving and other credit facilities   89,435     (13,214 )
Cash provided (used) by financing activities   103,720     (9,783 )
 
Effect of exchange rate changes on cash and cash equivalents   (1,535 )   14,008  
 
Increase (decrease) in cash and cash equivalents (344,781 ) 188,917
 
Cash and cash equivalents, beginning of period   796,164     935,267  
 
Cash and cash equivalents, end of period $ 451,383   $ 1,124,184  
 
Ingram Micro Inc.
Supplementary Information
Income from Operations - Reconciliation of GAAP to Non-GAAP Information
(Amounts in Millions)
(Unaudited)
     
 
Thirteen Weeks Ended
April 1, 2017 April 2, 2016
 
Net Sales $ 10,403.0   $ 9,336.6  
 
GAAP Operating Income $ 40.5 $ 38.4
Reorganization, integration and transition costs 5.7 26.7
Amortization of intangible assets 22.4 27.0
Merger related costs   33.7     9.2  
 
Non-GAAP Operating Income $ 102.3   $ 101.3  
 
 
 
GAAP Operating Margin 0.39 % 0.41 %
Non-GAAP Operating Margin 0.98 % 1.08 %
 
Ingram Micro Inc.
Supplementary Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(Amounts in Millions)
(Unaudited)
 
 

Thirteen Weeks Ended
April 1, 2017

 
Net Income
 
As Reported Under GAAP $ 37.9
Reorganization, integration and transition costs 4.3
Amortization of intangible assets 16.8
Merger related costs 25.3
Pan-Europe foreign currency exchange loss 1.8
Reversal of a valuation allowance against certain deferred tax assets in Australia   (30.6 )
 
Non-GAAP Financial Measure $ 55.5  
 
 

Thirteen Weeks Ended
April 2, 2016

 
Net Income
 
As Reported Under GAAP $ 1.9
Reorganization, integration and transition costs 20.0
Amortization of intangible assets 20.2
Merger related costs 6.9
Pan-Europe foreign currency exchange loss   3.6  
 
Non-GAAP Financial Measure $ 52.6  
 
 
Note: Amounts above are net of applicable income taxes.

Contacts

Ingram Micro Inc.
Damon Wright, (714) 382-5013
damon.wright@ingrammicro.com

Contacts

Ingram Micro Inc.
Damon Wright, (714) 382-5013
damon.wright@ingrammicro.com