Sep 1, 2020   SOURCE: BusinessWire

Ingram Micro Reports 2020 Fiscal Second Quarter Financial Results

Ingram Micro Inc. today announced financial results for the 2020 fiscal second quarter ended June 27, 2020. Ingram Micro delivered solid results with a strong increase in profitability led by robust performance in Technology Solutions and Commerce & Lifecycle Services. Worldwide 2020 second quarter sales were $10.49 billion, with gross profit of $821 million, or 7.83 percent of sales. The company continued to deliver stronger profitability based on a better mix of higher margin sales, including solutions addressing requirements for work-from-home IT needs, which led to continued gross margin expansion – up 81 basis points over the 2019 second quarter – despite a year-over-year decrease in second quarter sales of 9 percent in USD. The translation of foreign currencies compared to last year had a negative impact of approximately 2.4 percent on 2020 second quarter sales. This compares to sales of $11.53 billion, gross profit of $810 million and gross margin of 7.02 percent for the 2019 second quarter. 2020 second quarter non-GAAP operating income was $223 million, or 2.12 percent of sales, a 53 basis-point increase over last year, with non-GAAP net income for the 2020 second quarter of $150 million. This compares to 2019 second quarter non-GAAP operating income of $184 million, or 1.59 percent of sales, and non-GAAP net income of $119 million. 2020 second quarter GAAP operating income was $206 million, or 1.96 percent of sales (with the primary GAAP to non-GAAP difference made up of pre-tax amortization expense of $16 million), and GAAP net income was $142 million. This compares to 2019 second quarter GAAP operating income of $156 million, or 1.35 percent of sales, and GAAP net income of $97 million.

Impact of COVID-19

The company has benefited from its broad portfolio of products and solutions as a decrease in demand for certain services and Advanced Solutions offerings during the second quarter related to the COVID-19 pandemic, was offset by strength in Technology Solutions and ecommerce solutions demand across multiple categories and geographies as businesses and consumers shifted spending patterns in the work-from-home and shelter-in-place environment. While profitability has been strong during the first half of fiscal 2020, the shutdown of many businesses around the world could have a negative impact on the company’s financial performance through the remainder of the fiscal year.

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 second quarter and six months ended June 27, 2020 and June 29, 2019 as 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. These non-GAAP financial measures also exclude a benefit in the second quarter of 2019 related to the receipt of an LCD flat panel class action settlement. 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 six months ended non-GAAP net income also excludes the non-cash tax benefit of a research and development credit, reversal of a Spain UTP reserve upon a favorable court ruling, less non-deductible meal and entertainment in the US, and reduced US tax expense as a result of higher expected foreign tax credit utilization. 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)

June 27,

 

December 28,

2020

 

2019

 
ASSETS
Current assets:
Cash and cash equivalents

$

697,716

$

671,821

Trade accounts receivable, net

 

7,141,696

 

7,903,900

Inventory

 

4,693,040

 

4,193,232

Other current assets

 

626,428

 

688,627

 
Total current assets

 

13,158,880

 

13,457,580

 
Property and equipment, net

 

455,753

 

455,440

Goodwill

 

945,009

 

946,953

Intangible assets, net

 

231,517

 

253,179

Other assets

 

328,288

 

360,296

 
Total assets

$

15,119,447

$

15,473,448

 
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable

$

7,610,188

$

8,088,974

Accrued expenses

 

884,839

 

1,065,307

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

 

95,837

 

142,437

 
Total current liabilities

 

8,590,864

 

9,296,718

 
Long-term debt, less current maturities

 

1,768,671

 

1,337,788

Other liabilities

 

160,743

 

169,289

 
Total liabilities

 

10,520,278

 

10,803,795

 
Stockholder's equity

 

4,599,169

 

4,669,653

 
Total liabilities and stockholder's equity

$

15,119,447

$

15,473,448

Ingram Micro Inc.
Consolidated Statements of Income
(Amounts in 000s)
(Unaudited)
Thirteen Weeks Ended
June 27, 2020 June 29, 2019
 
Net sales

$

10,488,959

 

$

11,537,545

 

Cost of sales

 

9,667,730

 

 

10,727,728

 

Gross profit

 

821,229

 

 

809,817

 

 
Operating expenses:
Selling, general and administrative

 

599,532

 

 

631,931

 

Amortization of intangible assets

 

15,747

 

 

17,843

 

Reorganization costs

 

-

 

 

3,931

 

 

615,279

 

 

653,705

 

 
Income from operations

 

205,950

 

 

156,112

 

 
Other (income) expense:
Interest income

 

(5,262

)

 

(638

)

Interest expense

 

22,491

 

 

26,850

 

Net foreign currency exchange loss (gain)

 

2,651

 

 

(5,940

)

Other

 

(1,149

)

 

4,964

 

 

18,731

 

 

25,236

 

 
Income before income taxes

 

187,219

 

 

130,876

 

 
Provision for income taxes

 

45,103

 

 

34,257

 

 
Net income

$

142,116

 

$

96,619

 

Ingram Micro Inc.
Consolidated Statements of Income
(Amounts in 000s)
(Unaudited)
Twenty-six Weeks Ended
June 27, 2020 June 29, 2019
 
Net sales

$

21,440,407

 

$

23,113,061

 

Cost of sales

 

19,823,777

 

 

21,531,783

 

Gross profit

 

1,616,630

 

 

1,581,278

 

 
Operating expenses:
Selling, general and administrative

 

1,239,009

 

 

1,257,857

 

Amortization of intangible assets

 

31,210

 

 

37,551

 

Reorganization costs

 

-

 

 

4,234

 

 

1,270,219

 

 

1,299,642

 

 
Income from operations

 

346,411

 

 

281,636

 

 
Other (income) expense:
Interest income

 

(9,704

)

 

(2,991

)

Interest expense

 

47,134

 

 

53,888

 

Net foreign currency exchange gain

 

(4,763

)

 

(17,010

)

Other

 

5,610

 

 

11,333

 

 

38,277

 

 

45,220

 

 
Income before income taxes

 

308,134

 

 

236,416

 

 
Provision for income taxes

 

74,689

 

 

63,262

 

 
Net income

$

233,445

 

$

173,154

 

Ingram Micro Inc.
Consolidated Statements of Cash Flows
(Amounts in 000s)
(Unaudited)
Twenty-six Weeks Ended
June 27, 2020 June 29, 2019
 
Cash flows from operating activities:
Net income

$

233,445

 

$

173,154

 

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

 

93,598

 

 

97,668

 

Loss (gain) on marketable securities, net

 

2,375

 

 

(7,210

)

Gain on sale of property and equipment

 

(887

)

 

(439

)

Revaluation of other consideration for acquisitions

 

224

 

 

-

 

Noncash charges for interest and bond discount amortization

 

1,322

 

 

1,178

 

Deferred income taxes

 

22,710

 

 

583

 

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

 

616,782

 

 

1,168,517

 

Inventory

 

(578,757

)

 

(58,345

)

Other current assets

 

38,671

 

 

(26,019

)

Accounts payable

 

(103,562

)

 

(1,162,919

)

Change in book overdrafts

 

(223,252

)

 

(131,991

)

Accrued expenses

 

(178,472

)

 

(58,321

)

Cash used by operating activities

 

(75,803

)

 

(4,144

)

 
Cash flows from investing activities:
Capital expenditures

 

(68,375

)

 

(80,773

)

Sale (purchase) of marketable securities, net

 

489

 

 

(2,586

)

Proceeds from sale of property and equipment

 

643

 

 

1,084

 

Acquisitions, net of cash acquired

 

(23,366

)

 

(1,381

)

Cash used by investing activities

 

(90,609

)

 

(83,656

)

 
Cash flows from financing activities:
Other consideration for acquisitions

 

(124

)

 

(1,967

)

Dividends paid to shareholders

 

(178,192

)

 

(131,067

)

Net proceeds from revolving and other credit facilities

 

395,536

 

 

152,680

 

Cash provided by financing activities

 

217,220

 

 

19,646

 

 
Effect of exchange rate changes on cash and cash equivalents

 

(24,913

)

 

3,203

 

 
Increase (decrease) in cash and cash equivalents

 

25,895

 

 

(64,951

)

 
Cash and cash equivalents, beginning of period

 

671,821

 

 

533,949

 

 
Cash and cash equivalents, end of period

$

697,716

 

$

468,998

 

Ingram Micro Inc.
Supplementary Information
Income from Operations - Reconciliation of GAAP to Non-GAAP Information
(Amounts in Millions)
(Unaudited)
Thirteen Weeks Ended
June 27, 2020 June 29, 2019
 
Net Sales

$

10,489.0

 

$

11,537.5

 

 
GAAP Operating Income

$

206.0

 

$

156.1

 

Reorganization, integration and transition costs

 

1.1

 

 

14.1

 

Amortization of intangible assets

 

15.7

 

 

17.8

 

Settlement of a class action lawsuit

 

-

 

 

(4.2

)

 
Non-GAAP Operating Income

$

222.8

 

$

183.8

 

 
 
 
GAAP Operating Margin

 

1.96

%

 

1.35

%

Non-GAAP Operating Margin

 

2.12

%

 

1.59

%

 
 
 
Twenty-six Weeks Ended
June 27, 2020 June 29, 2019
 
Net Sales

$

21,440.4

 

$

23,113.1

 

 
GAAP Operating Income

$

346.4

 

$

281.6

 

Reorganization, integration and transition costs

 

3.5

 

 

22.4

 

Amortization of intangible assets

 

31.2

 

 

37.6

 

Settlement of a class action lawsuit

 

-

 

 

(4.2

)

 
Non-GAAP Operating Income

$

381.1

 

$

337.4

 

 
 
 
GAAP Operating Margin

 

1.62

%

 

1.22

%

Non-GAAP Operating Margin

 

1.78

%

 

1.46

%

Ingram Micro Inc.
Supplementary Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(Amounts in Millions)
(Unaudited)
Thirteen Weeks Ended
June 27, 2020 June 29, 2019
Net Income Net Income
 
As Reported Under GAAP

$

142.1

 

$

96.6

 

Reorganization, integration and transition costs

 

0.7

 

 

9.7

 

Amortization of intangible assets

 

9.7

 

 

12.5

 

Settlement of a class action lawsuit

 

-

 

 

(2.9

)

Pan-Europe foreign currency exchange loss

 

0.5

 

 

3.2

 

Tax benefit on Spain UTP reversal, non-deductible meal and entertainment expenses and foreign tax credit utilization

 

(3.4

)

 

-

 

 
Non-GAAP Financial Measure

$

149.6

 

$

119.1

 

 
 
Twenty-six Weeks Ended
June 27, 2020 June 29, 2019
Net Income Net Income
 
As Reported Under GAAP

$

233.4

 

$

173.2

 

Reorganization, integration and transition costs

 

2.3

 

 

16.1

 

Amortization of intangible assets

 

19.8

 

 

27.2

 

Settlement of a class action lawsuit

 

-

 

 

(2.9

)

Pan-Europe foreign currency exchange gain

 

0.3

 

 

0.6

 

Tax benefit on research and development credit

 

(1.7

)

 

-

 

Tax benefit on Spain UTP reversal, non-deductible meal and entertainment expenses and foreign tax credit utilization

 

(3.4

)

 

-

 

 
Non-GAAP Financial Measure

$

250.7

 

$

214.2

 

Note: Amounts above are net of applicable income taxes.