Ingram Micro Reports 2020 Fiscal Second Quarter Financial Results

IRVINE, Calif.–(BUSINESS WIRE)–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, 2020June 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, 2020June 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, 2020June 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, 2020June 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, 2020June 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, 2020June 29, 2019
Net IncomeNet 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, 2020June 29, 2019
Net IncomeNet 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.

Contacts

Ingram Micro Inc. 
Damon Wright 
(714) 382-5013 
[email protected]

INGRAM MICRO INC

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