SANTA ANA, Calif., April 28, 2011 /PRNewswire/ -- Ingram Micro Inc.
(NYSE: IM), the world’s largest technology distributor and
supply-chain services provider, today announced financial results
for the first quarter of 2011, which ended on April 2, 2011.
Worldwide sales were $8.72
billion, a first-quarter record and an 8 percent increase
from $8.10 billion reported in the
first quarter of last year. The translation effect of foreign
currencies had a positive impact of approximately two percentage
points on prior-year comparisons.
Net income was $56.3 million or
$0.34 per diluted share, compared
with $70.3 million or $0.42 per diluted share in the 2010 first
quarter. The year-over-year decline in income is primarily
attributable to difficulties transitioning to a new enterprise
system in Australia.
“During the quarter, we drove solid revenue growth across all
regions and continued to advance initiatives that further expand
and improve our global business,” said Gregory Spierkel, chief
executive officer, Ingram Micro Inc. “North America was the
standout region, generating its highest first-quarter sales in a
decade with strong operating leverage. Asia-Pacific sales
also hit a first-quarter high, while sales in Latin America returned to pre-recession
levels. Operating and net income, however, did not meet our
expectations largely due to complications with our ERP system
implementation in Australia. We’re
diligently addressing these issues to drive improved profitability
and performance as soon as possible. We are confident the
future benefits of the new system outweigh some of the hurdles we
are facing today.”
Additional First Quarter Highlights
Further detail can be found in the financial statements and
schedules attached to this news release or at
www.ingrammicro.com.
Regional Sales
- North America sales
increased 7 percent to $3.51 billion
(40 percent of total sales), compared with $3.29 billion reported in the year-ago quarter.
- Europe, Middle East and Africa (EMEA) sales grew 8 percent to
$2.88 billion (33 percent of total
sales), versus $2.67 billion in last
year’s first quarter. The translation effect of European
currencies did not have a material impact on year-over-year growth.
- Asia-Pacific sales rose
9 percent to $1.93 billion (22
percent of total sales) compared with $1.77
billion reported in the year-ago quarter. The
translation effect of regional currencies had a positive impact of
approximately five percentage points on year-over-year growth.
- Latin America sales
increased 10 percent to $407.0
million (5 percent of total sales), compared with
$370.2 million reported a year ago.
The translation effect of regional currencies had a positive
impact of approximately five percentage points on year-over-year
growth.
Gross Margin
Gross margin was 5.21 percent, a decrease of 24 basis points
versus the prior-year period. The year-over-year decline is
primarily attributable to operational disruptions as we
transitioned to a new enterprise system in Australia, as well as competitive pricing in
certain Asian markets, softer retail demand in Europe, and a greater mix of lower-margin
geographies due to accelerated growth in emerging markets such as
China and India.
Operating Expenses
Operating expenses totaled $354.0
million or 4.06 percent of sales, which includes a benefit
of approximately $5 million or 0.06
percent of sales related to a release of certain bad debt reserves
in North America. In the year-ago
quarter, operating expenses were $335.8
million or 4.15 percent of sales, which included a benefit
of $2.4 million or 0.03 percent of
sales related to the gain on the sale of real estate in
Germany.
Operating Income
Worldwide operating income totaled $100.1
million or 1.15 percent of total sales, compared with
$105.7 million or 1.31 percent of
total sales a year ago. Both periods include the benefits to
operating expenses that are noted above.
- North America operating
income was $59.1 million or 1.69
percent of North America sales.
The bad-debt reserve release provided a benefit of approximately
0.15 percent of the region’s sales. In the prior-year period,
operating income was $41.9 million or
1.27 percent of North America
sales.
- EMEA operating income was $32.1
million or 1.12 percent of EMEA sales, compared with
$34.9 million or 1.31 percent of EMEA
sales in the prior-year period, which included a benefit of
$2.4 million (0.09 percent of EMEA
sales) related to the gain on the sale of real estate in
Germany.
- Asia-Pacific operating
income was $8.2 million or 0.42
percent of Asia-Pacific sales,
compared with $26.5 million or 1.50
percent of Asia-Pacific sales in
the prior-year period. This year’s lower income is primarily
the result of the system-transition issues in Australia, which experienced a $21 million decline in operating income compared
with the prior year.
- Latin America operating
income was $6.3 million or 1.54
percent of Latin America sales,
compared with $6.4 million or 1.73
percent of Latin America sales in
the prior-year period.
Stock-based compensation expense was $5.7 million versus $4.0
million in the prior-year period. Stock-based
compensation is presented as a separate reconciling amount in the
company’s segment reporting in both periods and is not included in
the regional operating results, but is included in the total
worldwide operating results.
Interest and other expenses totaled $18.6 million versus $8.5
million in the year-ago period. The increase over the
prior-year period is largely due to two factors: higher
interest expense as a result of the $300
million in public debt issued in August 2010; and $4.2
million in incremental losses related to the
foreign-currency translation impact on Euro-based inventory
purchases in our pan-European entity, which designates the United States dollar as its functional
currency. This charge is a function of the timing of currency
fluctuations within the quarter and should be recovered as the
inventory is sold in the second quarter, similar to the company’s
experience in the third and fourth quarters of last year.
The effective tax rate was 30.8 percent compared with
27.7 percent in the 2010 first quarter. Under United States
accounting rules for income taxes, quarterly effective tax rates
may vary significantly depending on the actual operating results in
the various tax jurisdictions. The increase over the prior
year is primarily driven by the mix of earnings and losses across
operations, including losses in certain tax jurisdictions in which
the company is not able to record a tax benefit.
Total depreciation and amortization was $13.9 million, while capital
expenditures were $32.9
million.
Balance Sheet Highlights
- The balance of cash and cash equivalents at April 2, 2011 was $1.02
billion, compared with $1.16
billion at year-end 2010. Cash of approximately
$900,000 was used to purchase 46,000
shares of common stock during the quarter.
- Total debt at quarter-end was $657
million versus $636 million at
year-end 2010. Debt-to-capitalization was flat with year-end
at 16 percent.
- Inventory was $3.03 billion or 33
days on hand versus $2.91 billion or
29 days on hand at the end of 2010.
- Working capital days were 28 versus 22 at year-end 2010, with
the increase primarily attributable to higher levels of
inventory.
“Our performance in the quarter was mixed,” said William Humes, senior executive vice president
and chief financial officer. “We believe our revenue growth
outpaced overall IT spending and I’m pleased with our progress
toward developing adjacencies and new capabilities. Return on
invested capital also exceeded our weighted average cost of capital
for the seventh consecutive quarter. The system transition
issues in Australia, however,
dampened what otherwise would have been solid income performance.
Working capital days were also above our preferred range, as
softer retail demand decelerated inventory velocity.
Returning profitability and working capital to our target
levels is a priority. ”
Outlook
“In the second quarter,” said Spierkel, “we expect sales to grow
on a year-over year basis, building on the healthy revenues of last
year. Sequentially, sales should range from a modest
single-digit decline to flat with the first quarter. While
we continue to see progress in Australia, the remaining transition issues
will likely have an impact on the quarter. The competitive
environment in Asia-Pacific and
the softer retail demand in Europe
may also continue to have an effect on gross margins. We plan
to continue our investments in business expansion and improvements,
while effectively managing our operating expense leverage.
The goal for working capital is a return to our preferred
range of 22 to 26 days.”
Spierkel continued: “As we look beyond the second quarter, we
expect global demand to be relatively solid for the foreseeable
future, with third-party forecasts calling for annual IT spending
growth in the mid-single digits for the next few years. We
believe we have the right strategy to drive performance in our
business, with a good balance of operational excellence, expansion
into adjacent markets and development of new capabilities that give
us a first-mover advantage. Our transition to a new
enterprise system is critical to this strategy. Once the
implementation is complete in approximately three years, the new
system will bring us greater automation and efficiencies, enhanced
service for our customers and partners, better decision-making
through richer and quicker data, and the consistent platform
required to better operate as a truly global organization.
While we plan to continue making investments in our business,
we are committed to improving returns on invested capital and
repurchasing shares of common stock, with our eye on enhancing
shareholder returns. I am optimistic about the future and the
potential of our company.”
Conference Call and Webcast
Additional information about Ingram Micro's financial results
will be presented in a conference call with presentation slides
today at 5 p.m. ET. To listen
to the conference call webcast and view the accompanying
presentation slides, visit the company’s website at
www.ingrammicro.com (Investor Relations section). The
conference call is also accessible by telephone at (888) 455-0750
(toll-free within the United
States and Canada) or (210)
839-8501 (other countries), passcode “Ingram Micro.”
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 (800) 678-3180 or (402) 220-3063
outside the United States and
Canada.
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 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 Ingram Micro's business,
financial condition and results of operations. Ingram Micro
disclaims any duty to update any forward-looking statements.
Important risk factors that could cause actual results to differ
materially from those discussed in the forward-looking statements
include, without limitation: (1) we are dependent on a variety of
information systems, which, if not properly functioning, or
unavailable, could adversely disrupt our business and harm our
reputation and net sales; (2) changes in macroeconomic conditions
may negatively impact a number of risk factors which, individually
or in the aggregate, could adversely affect our results of
operations, financial condition and cash flows; (3) we continually
experience intense competition across all markets for our products
and services; (4) we operate a global business that exposes us to
risks associated with conducting business in multiple
jurisdictions; (5) our failure to adequately adapt to IT industry
changes could negatively impact our future operating results; (6)
terminations of a supply or services agreement or a significant
change in supplier terms or conditions of sale could negatively
affect our operating margins, revenue or the level of capital
required to fund our operations; (7) we have made and expect to
continue to make investments in new business strategies and
initiatives, including acquisitions, which could disrupt our
business and have an adverse effect on our operating results; (8)
substantial defaults by our customers or the loss of significant
customers could have a negative impact on our business, results of
operations, financial condition or liquidity; (9) changes in, or
interpretations of, tax rules and regulations, changes in mix of
our business amongst different tax jurisdictions, and deterioration
of the performance of our business may adversely affect our
effective income tax rates or operating margins and we may be
required to pay additional taxes and/or tax assessments, as well as
record valuation allowances relating to our deferred tax assets;
(10) changes in our credit rating or other market factors such as
adverse capital and credit market conditions or reductions in cash
flow from operations may affect our ability to meet liquidity
needs, reduce access to capital, and/or increase our costs of
borrowing; (11) failure to retain and recruit key personnel would
harm our ability to meet key objectives; (12) we cannot predict
with certainty what loss we might incur as a result of litigation
matters and contingencies that we may be involved with from time to
time; (13) we may incur material litigation, regulatory or
operational costs or expenses, and may be frustrated in our
marketing efforts, as a result of new environmental regulations or
private intellectual property enforcement disputes; (14) we face a
variety of risks in our reliance on third-party service companies,
including shipping companies for the delivery of our products and
outsourcing arrangements; (15) changes in accounting rules could
adversely affect our future operating results; and (16) our
quarterly results have fluctuated significantly.
Ingram Micro has instituted in the past and continues to
institute changes to its strategies, operations and processes to
address these risk factors and to mitigate their impact on Ingram
Micro's results of operations and financial condition. However, no
assurances can be given that Ingram Micro will be successful in
these efforts. For a further discussion of significant factors to
consider in connection with forward-looking statements concerning
Ingram Micro, reference is made to Item 1A Risk Factors of Ingram
Micro's Annual Report on Form 10-K for the year ended January 1, 2011; other risks or uncertainties may
be detailed from time to time in Ingram Micro's future SEC
filings.
About Ingram Micro Inc.
As a vital link in the technology value chain, Ingram Micro
creates sales and profitability opportunities for vendors and
resellers through unique marketing programs, outsourced logistics,
technical and financial support, managed and cloud-based services,
and product aggregation and distribution. The company is the only
global broad-based IT distributor, serving more than 150 countries
on six continents with the world’s most comprehensive portfolio of
IT products and services. Visit www.ingrammicro.com.
© 2011 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
|
|
(Dollars in
000s)
|
|
(Unaudited)
|
|
|
|
|
|
|
April
2,
|
January
1,
|
|
|
2011
|
2011
|
|
|
|
|
|
ASSETS
|
|
|
|
Current assets:
|
|
|
|
Cash and cash
equivalents
|
$ 1,018,882
|
$ 1,155,551
|
|
Trade accounts receivable,
net
|
3,741,617
|
4,138,629
|
|
Inventory
|
3,026,955
|
2,914,525
|
|
Other current
assets
|
354,109
|
381,383
|
|
|
|
|
|
Total current
assets
|
8,141,563
|
8,590,088
|
|
|
|
|
|
Property and equipment,
net
|
272,676
|
247,395
|
|
Intangible assets,
net
|
83,838
|
81,992
|
|
Other assets
|
163,589
|
164,557
|
|
|
|
|
|
Total assets
|
$ 8,661,666
|
$ 9,084,032
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$ 4,033,900
|
$ 4,593,694
|
|
Accrued
expenses
|
495,242
|
536,218
|
|
Short-term debt and
current maturities of long-term debt
|
130,363
|
105,274
|
|
|
|
|
|
Total current
liabilities
|
4,659,505
|
5,235,186
|
|
|
|
|
|
Long-term debt, less
current maturities
|
526,626
|
531,127
|
|
Other
liabilities
|
79,911
|
76,537
|
|
|
|
|
|
Total
liabilities
|
5,266,042
|
5,842,850
|
|
|
|
|
|
Stockholders'
equity
|
3,395,624
|
3,241,182
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$ 8,661,666
|
$ 9,084,032
|
|
|
|
|
Ingram Micro
Inc.
|
|
Consolidated
Statement of Income
|
|
(In 000s,
except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Thirteen
|
|
Thirteen
|
|
|
Weeks
Ended
|
|
Weeks
Ended
|
|
|
April 2,
2011
|
|
April 3,
2010
|
|
|
|
|
|
|
Net sales
|
$
8,723,712
|
|
$
8,095,954
|
|
|
|
|
|
|
Cost of sales
|
8,269,640
|
|
7,654,492
|
|
Gross profit
|
454,072
|
|
441,462
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
Selling, general and
administrative
|
354,287
|
|
335,942
|
|
Reorganization
credits
|
(269)
|
|
(169)
|
|
|
354,018
|
|
335,773
|
|
|
|
|
|
|
Income from
operations
|
100,054
|
|
105,689
|
|
|
|
|
|
|
Interest and other
|
18,649
|
|
8,457
|
|
|
|
|
|
|
Income before income
taxes
|
81,405
|
|
97,232
|
|
|
|
|
|
|
Provision for income
taxes
|
25,095
|
|
26,904
|
|
|
|
|
|
|
Net income
|
$
56,310
|
|
$
70,328
|
|
|
|
|
|
|
Diluted earnings per
share
|
$
0.34
|
|
$
0.42
|
|
|
|
|
|
|
Diluted weighted
average
|
|
|
|
|
shares
outstanding
|
164,444
|
|
168,511
|
|
|
|
|
|
Ingram Micro
Inc.
|
|
Supplementary
Information
|
|
Income from
Operations
|
|
(Dollars in
000s)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Thirteen
Weeks Ended April 2, 2011
|
|
|
|
|
Operating
|
|
Operating
|
|
|
Net
Sales
|
|
Income
|
|
Margin
|
|
|
|
|
|
|
|
|
North America
|
$ 3,506,433
|
|
$ 59,148
|
|
1.69%
|
|
EMEA
|
2,876,233
|
|
32,082
|
|
1.12%
|
|
Asia-Pacific
|
1,933,996
|
|
8,214
|
|
0.42%
|
|
Latin America
|
407,050
|
|
6,267
|
|
1.54%
|
|
Stock-based compensation
expense
|
-
|
|
(5,657)
|
|
-
|
|
|
|
|
|
|
|
|
Consolidated
Total
|
$ 8,723,712
|
|
$ 100,054
|
|
1.15%
|
|
|
|
|
|
|
|
|
|
Thirteen
Weeks Ended April 3, 2010
|
|
|
|
|
Operating
|
|
Operating
|
|
|
Net
Sales
|
|
Income
|
|
Margin
|
|
|
|
|
|
|
|
|
North America
|
$ 3,291,986
|
|
$ 41,916
|
|
1.27%
|
|
EMEA
|
2,665,410
|
|
34,862
|
|
1.31%
|
|
Asia-Pacific
|
1,768,399
|
|
26,527
|
|
1.50%
|
|
Latin America
|
370,159
|
|
6,415
|
|
1.73%
|
|
Stock-based compensation
expense
|
-
|
|
(4,031)
|
|
-
|
|
|
|
|
|
|
|
|
Consolidated
Total
|
$ 8,095,954
|
|
$ 105,689
|
|
1.31%
|
|
|
|
|
|
|
|
(Logo:
http://photos.prnewswire.com/prnh/20100107/IMLOGO)
SOURCE Ingram Micro Inc.