Ingram Micro Reports 2020 Fiscal First Quarter Financial Results

May 4, 2020 8:00 AM EDT

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IRVINE, Calif.--(BUSINESS WIRE)-- Ingram Micro Inc. today announced financial results for the 2020 fiscal first quarter ended Mar. 28, 2020. Ingram Micro delivered solid performance with a strong increase in gross margin led by robust performance particularly across Technology Solutions and Commerce & Lifecycle Services, as the company continues to execute on its strategic focus on selling higher value solutions and services. Worldwide 2020 first quarter sales were $10.95 billion, a year-over-year decrease of $600 million, or 5 percent in USD, as the company focused on delivering a better mix of higher margin sales, as well as addressing increasing requirements for work-from-home solutions. The translation of foreign currencies compared to last year had a negative impact of approximately $200 million, or nearly 2%, on 2020 first quarter sales. 2020 first quarter gross profit was $800 million, with gross margin growing by 60 basis points to 7.26 percent. This compares to sales of $11.58 billion, gross profit of $770 million and gross margin of 6.66 percent for the 2019 first quarter. 2020 first quarter non-GAAP operating income was $160 million, or 1.45 percent of revenue, a 12 basis-point increase over last year, with non-GAAP net income for the 2020 first quarter of $100 million. This compares to 2019 first quarter non-GAAP operating income of $154 million, or 1.33 percent of revenue, and non-GAAP net income of $95 million. 2020 fiscal year GAAP operating income was $140 million, or 1.28 percent of revenue, and GAAP net income was $90 million, with the primary GAAP to non-GAAP difference made up of pre-tax amortization expense of $15 million. This compares to 2019 fiscal year GAAP operating income of $125 million, or 1.08 percent of revenue, and GAAP net income of $75 million.

The company said that it began to see a slowdown in demand in March of 2020 related to the COVID-19 pandemic, particularly in certain services and Advanced Solutions categories. In April, Technology Solutions and ecommerce solutions demand continued to be solid across many categories and geographies. However, the shutdown of many businesses around the world may negatively impact the company’s financial performance through the remainder of the second and third quarters of 2020.

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 two periods covered in this release. 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. 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. 2020 first quarter non-GAAP net income also excludes the non-cash tax benefit of a research and development credit. 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.

© 2020 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)
 
 

March 28,

 

December 28,

2020

 

2019

 
ASSETS
Current assets:
Cash and cash equivalents

$ 591,465

$ 671,821

Trade accounts receivable, net

6,814,254

7,903,900

Inventory

4,041,712

4,193,232

Other current assets

683,281

688,627

 
Total current assets

12,130,712

13,457,580

 
Property and equipment, net

451,710

455,440

Goodwill

941,536

946,953

Intangible assets, net

231,966

253,179

Other assets

310,117

360,296

 
Total assets

$ 14,066,041

$ 15,473,448

 
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable

$ 6,996,082

$ 8,088,974

Accrued expenses

860,366

1,065,307

Short-term debt and current maturities of long-term debt

159,695

142,437

 
Total current liabilities

8,016,143

9,296,718

 
Long-term debt, less current maturities

1,410,121

1,337,788

Other liabilities

161,255

169,289

 
Total liabilities

9,587,519

10,803,795

 
Stockholder's equity

4,478,522

4,669,653

 
Total liabilities and stockholder's equity

$ 14,066,041

$ 15,473,448

Ingram Micro Inc.
Consolidated Statements of Income
(Amounts in 000s)
(Unaudited)
 
 

Thirteen Weeks Ended

March 28, 2020

 

March 30, 2019

 
Net sales

$ 10,951,448

 

$ 11,575,516

 

Cost of sales

10,156,047

 

10,804,055

 

Gross profit

795,401

 

771,461

 

 
Operating expenses:
Selling, general and administrative

639,272

 

625,926

 

Amortization of intangible assets

15,463

 

19,708

 

Reorganization costs

205

 

303

 

654,940

 

645,937

 

 
Income from operations

140,461

 

125,524

 

 
Other (income) expense:
Interest income

(4,442

)

(2,353

)

Interest expense

24,643

 

27,038

 

Net foreign currency exchange gain

(7,414

)

(11,070

)

Other

6,759

 

6,369

 

19,546

 

19,984

 

 
Income before income taxes

120,915

 

105,540

 

 
Provision for income taxes

29,586

 

29,005

 

 
Net income

$ 91,329

 

$ 76,535

 

Ingram Micro Inc.
Consolidated Statements of Cash Flows
(Amounts in 000s)
(Unaudited)
 
Thirteen Weeks Ended
March 28, 2020 March 30, 2019
 
Cash flows from operating activities:
Net income

$ 91,329

 

$ 76,535

 

Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization

46,533

 

48,598

 

Loss (gain) on marketable securities, net

8,906

 

(5,309

)

(Gain) loss on sale of property and equipment

(358

)

20

 

Revaluation of other consideration for acquisitions

224

 

-

 

Noncash charges for interest and bond discount amortization

660

 

578

 

Deferred income taxes

35,358

 

(549

)

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

882,436

 

1,189,276

 

Inventory

37,407

 

(91,181

)

Other current assets

(18,744

)

641

 

Accounts payable

(544,938

)

(874,940

)

Change in book overdrafts

(337,665

)

(94,607

)

Accrued expenses

(189,709

)

(43,094

)

Cash provided by operating activities

11,439

 

205,968

 

 
Cash flows from investing activities:
Capital expenditures

(33,670

)

(42,953

)

Purchase of marketable securities, net

(905

)

(2,095

)

Proceeds from sale of property and equipment

569

 

337

 

Acquisitions, net of cash acquired

(18,260

)

-

 

Cash used by investing activities

(52,266

)

(44,711

)

 
Cash flows from financing activities:
Other consideration for acquisitions

-

 

(1,600

)

Dividends paid to shareholders

(124,785

)

(82,710

)

Net proceeds from (repayments of) revolving and other credit facilities

118,568

 

(53,499

)

Cash used by financing activities

(6,217

)

(137,809

)

 
Effect of exchange rate changes on cash and cash equivalents

(33,312

)

(3,471

)

 
(Decrease) increase in cash and cash equivalents

(80,356

)

19,977

 

 
Cash and cash equivalents, beginning of period

671,821

 

533,949

 

 
Cash and cash equivalents, end of period

$ 591,465

 

$ 553,926

 

Ingram Micro Inc.
Supplementary Information
Income from Operations - Reconciliation of GAAP to Non-GAAP Information
(Amounts in Millions)
(Unaudited)
 
 
Thirteen Weeks Ended
March 28, 2020 March 30, 2019
 
Net Sales

$ 10,951.4

 

$ 11,575.5

 

 
GAAP Operating Income

$ 140.5

 

$ 125.5

 

Reorganization, integration and transition costs

2.5

 

8.4

 

Amortization of intangible assets

15.5

 

19.7

 

 
Non-GAAP Operating Income

$ 158.5

 

$ 153.6

 

 
 
 
GAAP Operating Margin

1.28

%

1.08

%

Non-GAAP Operating Margin

1.45

%

1.33

%

Ingram Micro Inc.
Supplementary Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(Amounts in Millions)
(Unaudited)
 
 
Thirteen Weeks Ended
March 28, 2020 March 30, 2019
 
Net Income Net Income
 
As Reported Under GAAP

$ 91.3

 

$ 76.5

 

Reorganization, integration and transition costs

1.6

 

6.3

 

Amortization of intangible assets

10.1

 

14.8

 

Pan-Europe foreign currency exchange gain

(0.2

)

(2.5

)

Tax benefit on research and development credit

(1.7

)

-

 

 
Non-GAAP Financial Measure

$ 101.1

 

$ 95.1

 

Note: Amounts above are net of applicable income taxes.

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

 

Source: Ingram Micro Inc.



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