SANTA ANA, Calif., Oct. 25, 2012 /PRNewswire/ -- Ingram Micro
Inc. (NYSE: IM), the world's largest wholesale technology
distributor and a global leader in IT supply-chain, mobile device
lifecycle services and logistics solutions, today announced
financial results for the third quarter ended September 29, 2012.
Worldwide sales of $9.03 billion
were up 1 percent in U.S. dollars when compared with $8.90 billion in the third quarter last
year. The translation effect of foreign currencies had a
negative impact of 5 percent on worldwide sales growth as compared
with the prior year. The company experienced strong operating
leverage with operating income increasing by more than 8 percent to
$92.6 million, which includes
$7.6 million in restructuring and
acquisition-related costs as discussed below, when compared to 2011
third quarter operating income of $85.4
million.
Worldwide gross profit was $453.9
million (5.02 percent of total sales), compared with
$440.7 million (4.95 percent of total
sales) in the 2011 third quarter. Gross profit as a percentage of
revenue was up modestly from the prior year period due primarily to
double digit sales growth in North
America in the company's higher margin specialty business
and in Ingram Micro Logistics. However, 2012 third quarter gross
profit continues to be negatively impacted by significant sales
growth in tablets and other personal devices, the majority of which
are delivered to the market in a high velocity, yet lower cost to
serve, fulfillment model, as well as a continued competitive
selling environment, particularly in more commoditized product
lines.
2012 third quarter net income was $53.3
million, or 35 cents per
diluted share, which includes an aggregate net negative impact of
5 cents per diluted share for the
following items:
- A negative impact totaling approximately $5.3 million pretax, or 3
cents per diluted share, primarily related to restructuring
in Australia, New Zealand and in Europe. In conjunction with these cost cutting
actions, the company has also expanded its capabilities in lower
cost shared services centers serving each region. The combination
of these actions taken in the third quarter are expected to result
in annualized cost savings of more than $10
million in 2013, more than half of which will benefit
Australia's operating expense run
rate;
- A negative impact from acquisition costs totaling approximately
$2.3 million pretax, or 1 cent per diluted share, consisting primarily of
legal and other consultative services, associated with the
acquisition of Brightpoint, Inc.; and
- A negative impact from a net loss of $2.8 million pretax, or 1
cent per diluted share, due to the foreign-currency
translation impact on Euro-based inventory purchases in the
company's pan-European purchasing entity, which designates
the United States dollar as its
functional currency.
2011 third quarter net income was $23.3
million, or 15 cents per
diluted share, which included charges totaling $28.8 million, or 18
cents per diluted share, comprised of: a non-cash valuation
allowance of $24.8 million recorded
against the company's deferred tax assets in Brazil and a charge of $4.0 million after tax related primarily to the
termination of the company's interest rate swap associated with the
repayment of its term loan in September 2011.
Further detail can be found in the financial statements and
schedules attached to this news release or at
www.ingrammicro.com.
Key 2012 third quarter highlights:
- North America's sales grew by
5 percent, increasing year-over-year for the 11th
consecutive quarter, driven by growth in all U.S. divisions,
including solid growth in the U.S. broadline business, as well as
double-digit increases in the higher margin businesses of DBL,
physical security and Ingram Micro Logistics. While growing
share, the Canadian business declined modestly when compared to the
2011 third quarter, primarily due to soft market conditions and the
non-recurrence of a special promotional program by a large vendor
that drove strong Canadian sales last year.
- Latin America delivered
all-time record third quarter revenues, growing sales 11 percent in
U.S. dollars versus the prior year period, despite foreign exchange
headwinds of 8 percent.
- Asia Pacific performed well,
as the two largest contributors – China and India – each delivered double-digit growth in
local currencies. Total sales for the region were up 6 percent in
U.S. dollars and 10 percent in local currencies.
- In Europe, the company's three
anchor countries of Germany, the
UK and France all experienced
solid year-over-year sales growth in local currencies, offset
somewhat by continued weakness in other countries as the region as
a whole continues to experience challenging economic
conditions. Although 2012 third quarter sales for Europe were down in U.S. dollars by 9 percent,
sales grew by 1 percent in local currencies.
- During the third quarter, the company issued a 10-year,
$300 million bond with a 5 percent
annual coupon. The bridge financing commitment letter entered into
on June 29, 2012 was automatically
terminated when these bonds were issued.
- Working capital days were 26, within the company's targeted
range of 22 to 26 days.
The Company also completed the following acquisitions at the
beginning of the fourth quarter in support of its long-term growth
strategy to expand the company's business in high growth markets,
while increasing its services and solutions capabilities:
- On October 15, 2012, Ingram Micro
closed the BrightPoint acquisition and established itself as a
leading global provider of device lifecycle services and solutions
for the mobile industry; and
- The company broadened its geographic reach into the
Middle East and North Africa with the acquisition of certain
IT businesses of Dubai-based Aptec
Holdings Ltd, a leading value-added distributor in the
Middle East and Africa, with products and solutions covering
data center, storage, security, networking
and software categories, including technical
services.
"It is clear that the macroeconomic environment and mid-term
perspective are difficult, however, we executed well during the
quarter, with every region growing revenues in local currencies,"
said Alain Monie, president and
chief executive officer, Ingram Micro Inc. "We also experienced
excellent leverage in the model with overall operating income
increasing by more than 8 percent on 1 percent revenue
growth."
"Our position as the world's largest technology distributor
provides valuable differentiation, giving us the ability to execute
on our financial objectives despite challenging conditions," Monie
said. "Our industry-leading reach covers more than 145 countries
with the world's most comprehensive portfolio of IT products and
services, which enables us to capture revenue opportunities in
better performing regions such as Asia
Pacific and Latin America
and in markets including SMB and certain retail and e-tail segments
that many others cannot serve. This global reach and broad
portfolio of IT products and services make us a highly attractive
partner for vendors and customer alike."
"In addition to our financial execution," Monie continued, "we
are also executing on several of our stated strategic initiatives:
building out our mobility business through adding scale and high
value services with BrightPoint, while also expanding our reach
into the Middle East and
Africa with Aptec, all of which
provide our vendor partners and customers even broader integrated
IT/mobility offerings and a truly global platform."
Bill Humes, chief operating and
financial officer, commented: "We believe the combination of our
recent acquisitions and our ongoing organic investments back into
the business will ultimately benefit the company through a higher
mix of faster growing markets – both geographic and product related
– and the ability to offer higher margin products and services. To
help facilitate these strategic initiatives, we continue to take
what we believe are prudent and appropriate steps to provide a
solid capital structure through a combination of cash, public debt
and bank facilities. Our primary goal is to drive sustainable,
long-term shareholder value, and we are taking the appropriate
steps to do so."
Nine-Month Period
For the nine months ended
September 29, 2012, worldwide sales
were $26.45 billion, with gross
profit of $1.37 billion (5.20 percent
of total sales), compared with worldwide sales of $26.38 billion, with gross profit of $1.35 million (5.13 percent of total sales) for
last year's nine-month period. Nine-month net income for 2012
was $205 million, or $1.33 per diluted share, versus $139 million, or 86
cents per diluted share, for the 2011 nine-month period.
Outlook
For the traditional Ingram Micro business, the Company currently
expects 2012 fourth quarter sales to be relatively flat with the
2011 fourth quarter. While remaining under pressure, 2012 fourth
quarter gross margin is expected to increase sequentially over the
2012 third quarter in-line with historic seasonality, although the
company will not have the gross margin uplift from higher hard disk
drive pricing that benefited the 2011 fourth quarter. For
BrightPoint, October is typically one of the strongest months of
the year, as customers stock up for the holiday selling season.
Given that 2012 fourth quarter financial results will only include
a stub period for BrightPoint that excludes the first half of
October, the company currently expects BrightPoint to contribute
around $900 million in sales and to
be breakeven to slightly accretive to earnings per share in the
2012 fourth quarter, including an estimate of $9 million in quarterly amortization of
intangibles related to the BrightPoint acquisition, but excluding
one-time charges and integration costs.
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) 710-4011 (toll-free within the
United States and Canada)
or (913) 312-1466 (other countries), passcode "8549320."
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 (888) 203-1112 or (719) 457-0820
outside the United States and
Canada, passcode "8549320."
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 have made and expect
to continue to make investments in new businesses and initiatives,
including acquisitions, which could disrupt our business and have
an adverse effect on our operating results; (2) 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 earnings; (3) changes in macro-economic
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; (4) we
continually experience intense competition across all markets for
our products and services; (5) we operate a global business that
exposes us to risks associated with conducting business in multiple
jurisdictions; (6) our failure to adequately adapt to IT industry
changes could negatively impact our future operating results; (7)
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; (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 the 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
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. We also face a
variety of risks associated with our recently completed acquisition
of Brightpoint, Inc., including: management's ability to
execute its plans, strategies and objectives for future operations,
including the execution of integration plans; growth of the
mobility industry; uncertainties relating to litigation; and
other unknown, underestimated and/or undisclosed commitments or
liabilities; and our ability to achieve the expected
benefits and manage the costs of the transaction.
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 fiscal year ended
December 31, 2011 and Form 10-Q for
the fiscal quarter ended June 30,
2012; other risks or uncertainties may be detailed from time
to time in Ingram Micro's future SEC filings.
About Ingram Micro Inc.
Ingram Micro is the world's
largest wholesale technology distributor and a global leader in IT
supply-chain, mobile device lifecycle services and logistics
solutions. 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
and mobile solutions, technical support, financial services and
product aggregation and distribution. The company is the only
global broad-based IT distributor, serving 145 countries on six
continents with the world's most comprehensive portfolio of IT
products and services. Visit www.ingrammicro.com.
© 2012 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)
|
|
|
|
|
|
|
|
|
|
September 29,
|
|
December 31,
|
|
2012
|
|
2011
|
|
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and
cash equivalents
|
$
1,156,076
|
|
$
891,403
|
Trade
accounts receivable, net
|
3,784,098
|
|
4,465,329
|
Inventory
|
3,338,513
|
|
2,942,164
|
Other
current assets
|
363,417
|
|
319,506
|
|
|
|
|
Total
current assets
|
8,642,104
|
|
8,618,402
|
|
|
|
|
Property
and equipment, net
|
353,353
|
|
323,261
|
Intangible
assets, net
|
65,374
|
|
73,330
|
Other
assets
|
133,755
|
|
131,523
|
|
|
|
|
Total
assets
|
$
9,194,586
|
|
$
9,146,516
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
4,411,990
|
|
$
4,893,437
|
Accrued
expenses
|
441,024
|
|
524,010
|
Short-term
debt and current maturities of long-term debt
|
159,979
|
|
92,428
|
|
|
|
|
Total
current liabilities
|
5,012,993
|
|
5,509,875
|
|
|
|
|
Long-term
debt, less current maturities
|
610,693
|
|
300,000
|
Other
liabilities
|
83,051
|
|
63,864
|
|
|
|
|
Total
liabilities
|
5,706,737
|
|
5,873,739
|
|
|
|
|
Stockholders' equity
|
3,487,849
|
|
3,272,777
|
|
|
|
|
Total
liabilities and stockholders' equity
|
$
9,194,586
|
|
$
9,146,516
|
Ingram
Micro Inc.
|
Consolidated Statement of Income
|
(Amounts in 000s, except per share
data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks
Ended
|
|
September 29, 2012
|
|
October
1, 2011
|
|
|
|
|
Net
sales
|
$
9,034,141
|
|
$
8,903,020
|
Cost of
sales
|
8,580,249
|
|
8,462,300
|
Gross
profit
|
453,892
|
|
440,720
|
|
|
|
|
Operating
expenses:
|
|
|
|
Selling,
general and administrative
|
355,975
|
|
354,185
|
Reorganization costs
|
5,268
|
|
1,156
|
|
361,243
|
|
355,341
|
|
|
|
|
Income
from operations
|
92,649
|
|
85,379
|
|
|
|
|
Interest
and other:
|
|
|
|
Interest
income
|
(1,445)
|
|
(1,432)
|
Interest
expense
|
14,946
|
|
13,048
|
Net
foreign currency exchange loss (gain)
|
2,204
|
|
(1,348)
|
Loss from
settlement of interest rate swap
|
|
|
|
and senior unsecured
term loan
|
-
|
|
5,624
|
Other
|
1,918
|
|
2,393
|
|
17,623
|
|
18,285
|
|
|
|
|
Income
before income taxes
|
75,026
|
|
67,094
|
|
|
|
|
Provision
for income taxes
|
21,715
|
|
43,768
|
|
|
|
|
Net
income
|
$
53,311
|
|
$
23,326
|
|
|
|
|
Diluted
earnings per share
|
$
0.35
|
|
$
0.15
|
|
|
|
|
Diluted
weighted average
|
|
|
|
shares
outstanding
|
152,816
|
|
156,767
|
Ingram
Micro Inc.
|
Consolidated Statement of Income
|
(Amounts in 000s, except per share
data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Thirty-nine Weeks
Ended
|
|
September 29, 2012
|
|
October
1, 2011
|
|
|
|
|
Net
sales
|
$
26,447,417
|
|
$
26,375,757
|
Cost of
sales
|
25,073,238
|
|
25,021,733
|
Gross
profit
|
1,374,179
|
|
1,354,024
|
|
|
|
|
Operating
expenses:
|
|
|
|
Selling,
general and administrative
|
1,073,030
|
|
1,070,556
|
Reorganization costs
|
6,664
|
|
887
|
|
1,079,694
|
|
1,071,443
|
|
|
|
|
Income
from operations
|
294,485
|
|
282,581
|
|
|
|
|
Interest
and other:
|
|
|
|
Interest
income
|
(7,411)
|
|
(4,056)
|
Interest
expense
|
38,252
|
|
40,561
|
Net
foreign currency exchange loss (gain)
|
9,564
|
|
(1,313)
|
Loss from
settlement of interest rate swap
|
|
|
|
and senior unsecured
term loan
|
-
|
|
5,624
|
Other
|
7,006
|
|
9,444
|
|
47,411
|
|
50,260
|
|
|
|
|
Income
before income taxes
|
247,074
|
|
232,321
|
|
|
|
|
Provision
for income taxes
|
42,516
|
|
92,954
|
|
|
|
|
Net
income
|
$
204,558
|
|
$
139,367
|
|
|
|
|
Diluted
earnings per share
|
$
1.33
|
|
$
0.86
|
|
|
|
|
Diluted
weighted average
|
|
|
|
shares
outstanding
|
153,871
|
|
161,543
|
Ingram
Micro Inc.
|
Supplementary Information
|
Income
from Operations
|
(Amounts in 000s)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended September 29,
2012
|
|
|
|
|
|
Operating
|
|
Operating
|
|
|
|
Net
Sales
|
|
Income
|
|
Margin
|
|
|
|
|
|
|
|
|
North
America
|
|
|
$
3,972,208
|
|
$
66,935
|
|
1.69%
|
Europe
|
|
|
2,420,425
|
|
14,498
|
|
0.60%
|
Asia-Pacific
|
|
|
2,174,409
|
|
9,193
|
|
0.42%
|
Latin
America
|
|
|
467,099
|
|
9,263
|
|
1.98%
|
Stock-based compensation expense
|
|
-
|
|
(7,240)
|
|
-
|
|
|
|
|
|
|
|
|
Consolidated Total
|
|
|
$
9,034,141
|
|
$
92,649
|
|
1.03%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended October 1,
2011
|
|
|
|
|
|
Operating
|
|
Operating
|
|
|
|
Net
Sales
|
|
Income
|
|
Margin
|
|
|
|
|
|
|
|
|
North
America
|
|
|
$
3,769,733
|
|
$
64,247
|
|
1.70%
|
Europe
|
|
|
2,653,054
|
|
16,198
|
|
0.61%
|
Asia-Pacific
|
|
|
2,059,944
|
|
7,773
|
|
0.38%
|
Latin
America
|
|
|
420,289
|
|
6,241
|
|
1.48%
|
Stock-based compensation expense
|
|
-
|
|
(9,080)
|
|
-
|
|
|
|
|
|
|
|
|
Consolidated Total
|
|
|
$
8,903,020
|
|
$
85,379
|
|
0.96%
|
Ingram
Micro Inc.
|
Supplementary Information
|
Income
from Operations
|
(Amounts in 000s)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirty-nine Weeks Ended September 29,
2012
|
|
|
|
|
|
Operating
|
|
Operating
|
|
|
|
Net
Sales
|
|
Income
|
|
Margin
|
|
|
|
|
|
|
|
|
North
America
|
|
|
$
11,416,399
|
|
$
205,313
|
|
1.80%
|
Europe
|
|
|
7,527,622
|
|
51,412
|
|
0.68%
|
Asia-Pacific
|
|
|
6,162,273
|
|
38,447
|
|
0.62%
|
Latin
America
|
|
|
1,341,123
|
|
21,128
|
|
1.58%
|
Stock-based compensation expense
|
|
-
|
|
(21,815)
|
|
-
|
|
|
|
|
|
|
|
|
Consolidated Total
|
|
|
$
26,447,417
|
|
$
294,485
|
|
1.11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirty-nine Weeks Ended October 1,
2011
|
|
|
|
|
|
Operating
|
|
Operating
|
|
|
|
Net
Sales
|
|
Income
|
|
Margin
|
|
|
|
|
|
|
|
|
North
America
|
|
|
$
11,036,595
|
|
$
190,984
|
|
1.73%
|
Europe
|
|
|
8,169,408
|
|
65,195
|
|
0.80%
|
Asia-Pacific
|
|
|
5,955,784
|
|
32,482
|
|
0.55%
|
Latin
America
|
|
|
1,213,970
|
|
18,988
|
|
1.56%
|
Stock-based compensation expense
|
|
-
|
|
(25,068)
|
|
-
|
|
|
|
|
|
|
|
|
Consolidated Total
|
|
|
$
26,375,757
|
|
$
282,581
|
|
1.07%
|
(Logo: http://photos.prnewswire.com/prnh/20100107/IMLOGO)
SOURCE Ingram Micro Inc.