BusinessWire

Ingram Micro Reports 2020 Fiscal Third Quarter Financial Results

IRVINE, Calif.--(BUSINESS WIRE)--Ingram Micro Inc. today announced financial results for the 2020 fiscal third quarter ended Sept. 26, 2020. Ingram Micro continued to deliver solid financial results with a strong increase in profitability led by double-digit, year-over-year improvement across all lines of business. Worldwide 2020 third quarter net sales increased modestly over last year by 2.1 percent to $12.12 billion, with gross profit of $883 million, or 7.29 percent of sales. The company continued to generate stronger year-over-year profitability based on a better mix of higher margin sales, including for offerings supporting ongoing requirements for learn- and work-from-home IT needs, robust delivery of ecommerce logistics services, and increasing demand for the company’s leading Cloud solutions. These combined line of business improvements led to meaningful gross margin expansion – up 56 basis points – over the 2019 third quarter. The translation of foreign currencies compared to last year had a positive impact of approximately 0.5 percent on 2020 third quarter net sales. These financial results compare to net sales of $11.87 billion, gross profit of $799 million and gross margin of 6.73 percent for the 2019 third quarter. 2020 third quarter non-GAAP operating income was $265 million, or 2.19 percent of sales, a 62 basis-point increase over last year, with non-GAAP net income for the 2020 third quarter of $185 million. This compares to 2019 third quarter non-GAAP operating income of $186 million, or 1.57 percent of sales, and non-GAAP net income of $116 million. 2020 third quarter GAAP operating income was $248 million, or 2.05 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 $185 million. This compares to 2019 third quarter GAAP operating income of $160 million, or 1.35 percent of sales, and GAAP net income of $102 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 third quarter related to the COVID-19 pandemic was offset by strength in Technology Solutions and ecommerce and Cloud 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 nine months 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 third quarter and nine months ended Sept. 26, 2020 and Sept. 28, 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 for the nine months ended in 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 nine months ended non-GAAP net income also excludes the non-cash tax benefit of a research and development credit, reversal of a Spain reserve for an uncertain tax position 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)
 
 
September 26, December 28,

2020

2019

 
ASSETS
Current assets:
Cash and cash equivalents

$

1,365,994

$

671,821

Trade accounts receivable, net

 

7,021,394

 

7,903,900

Inventory

 

4,341,810

 

4,193,232

Other current assets

 

580,920

 

688,627

 
Total current assets

 

13,310,118

 

13,457,580

 
Property and equipment, net

 

457,646

 

455,440

Goodwill

 

952,231

 

946,953

Intangible assets, net

 

219,040

 

253,179

Other assets

 

338,638

 

360,296

 
Total assets

$

15,277,673

$

15,473,448

 
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable

$

7,943,183

$

8,088,974

Accrued expenses

 

943,747

 

1,065,307

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

 

84,298

 

142,437

 
Total current liabilities

 

8,971,228

 

9,296,718

 
Long-term debt, less current maturities

 

1,391,456

 

1,337,788

Other liabilities

 

168,283

 

169,289

 
Total liabilities

 

10,530,967

 

10,803,795

 
Stockholder's equity

 

4,746,706

 

4,669,653

 
Total liabilities and stockholder's equity

$

15,277,673

$

15,473,448

Ingram Micro Inc.
Consolidated Statements of Income
(Amounts in 000s)
(Unaudited)
 
 
Thirteen Weeks Ended
September 26, 2020 September 28, 2019
 
Net sales

$

12,116,740

 

$

11,869,975

 

Cost of sales

 

11,233,346

 

 

11,070,711

 

Gross profit

 

883,394

 

 

799,264

 

 
Operating expenses:
Selling, general and administrative

 

619,454

 

 

620,152

 

Amortization of intangible assets

 

15,852

 

 

18,732

 

 

635,306

 

 

638,884

 

 
Income from operations

 

248,088

 

 

160,380

 

 
Other (income) expense:
Interest income

 

(5,643

)

 

(3,765

)

Interest expense

 

19,892

 

 

26,601

 

Net foreign currency exchange gain

 

(4,413

)

 

(5,347

)

Other

 

(1,682

)

 

5,246

 

 

8,154

 

 

22,735

 

 
Income before income taxes

 

239,934

 

 

137,645

 

 
Provision for income taxes

 

55,212

 

 

35,814

 

 
Net income

$

184,722

 

$

101,831

 

Ingram Micro Inc.
Consolidated Statements of Income
(Amounts in 000s)
(Unaudited)
 
 
Thirty-nine Weeks Ended
September 26, 2020 September 28, 2019
 
Net sales

$

33,557,147

 

$

34,983,036

 

Cost of sales

 

31,057,123

 

 

32,602,494

 

Gross profit

 

2,500,024

 

 

2,380,542

 

 
Operating expenses:
Selling, general and administrative

 

1,857,447

 

 

1,878,129

 

Amortization of intangible assets

 

47,062

 

 

56,283

 

Reorganization costs

1,016

4,114

 

 

1,905,525

 

 

1,938,526

 

 
Income from operations

 

594,499

 

 

442,016

 

 
Other (income) expense:
Interest income

 

(15,347

)

 

(6,756

)

Interest expense

 

67,026

 

 

80,489

 

Net foreign currency exchange gain

 

(9,176

)

 

(22,357

)

Other

 

3,928

 

 

16,579

 

 

46,431

 

 

67,955

 

 
Income before income taxes

 

548,068

 

 

374,061

 

 
Provision for income taxes

 

129,901

 

 

99,076

 

 
Net income

$

418,167

 

$

274,985

 

Ingram Micro Inc.
Consolidated Statements of Cash Flows
(Amounts in 000s)
(Unaudited)
 
 
Thirty-nine Weeks Ended
September 26, 2020 September 28, 2019
 
Cash flows from operating activities:
Net income

$

418,167

 

$

274,985

 

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

 

142,362

 

 

148,078

 

Gain on marketable securities, net

 

(306

)

 

(7,413

)

Gain on sale of property and equipment

 

(1,309

)

 

(950

)

Revaluation of other consideration for acquisitions

 

224

 

 

(449

)

Noncash charges for interest and bond discount amortization

 

1,984

 

 

1,465

 

Deferred income taxes

 

19,171

 

 

(1,106

)

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

 

823,546

 

 

864,322

 

Inventory

 

(181,476

)

 

74,048

 

Other assets

 

81,751

 

 

(39,189

)

Accounts payable

 

30,146

 

 

(1,057,097

)

Change in book overdrafts

 

(140,251

)

 

(66,890

)

Accrued expenses

 

(122,888

)

 

(34,841

)

Cash provided by operating activities

 

1,071,121

 

 

154,963

 

 
Cash flows from investing activities:
Capital expenditures

 

(100,283

)

 

(125,558

)

Sale (purchase) of marketable securities, net

 

630

 

 

(2,174

)

Proceeds from sale of property and equipment

 

1,498

 

 

2,996

 

Acquisitions, net of cash acquired

 

(24,880

)

 

(9,038

)

Cash used by investing activities

 

(123,035

)

 

(133,774

)

 
Cash flows from financing activities:
Other consideration for acquisitions

 

(124

)

 

(1,967

)

Dividends paid to shareholders

 

(259,656

)

 

(188,512

)

Net proceeds from revolving and other credit facilities

 

457

 

 

58,115

 

Cash used by financing activities

 

(259,323

)

 

(132,364

)

 
Effect of exchange rate changes on cash and cash equivalents

 

5,410

 

 

(8,313

)

 
Increase (decrease) in cash and cash equivalents

 

694,173

 

 

(119,488

)

 
Cash and cash equivalents, beginning of period

 

671,821

 

 

533,949

 

 
Cash and cash equivalents, end of period

$

1,365,994

 

$

414,461

 

Ingram Micro Inc.
Supplementary Information
Income from Operations - Reconciliation of GAAP to Non-GAAP Information
(Amounts in Millions)
(Unaudited)
 
 
Thirteen Weeks Ended
September 26, 2020 September 28, 2019
 
Net Sales

$

12,116.7

 

$

11,870.0

 

 
GAAP Operating Income

$

248.1

 

$

160.4

 

Reorganization, integration and transition costs

 

1.1

 

 

7.1

 

Amortization of intangible assets

 

15.9

 

 

18.7

 

 
Non-GAAP Operating Income

$

265.1

 

$

186.2

 

 
 
 
GAAP Operating Margin

 

2.05

%

 

1.35

%

Non-GAAP Operating Margin

 

2.19

%

 

1.57

%

 
 
 
Thirty-nine Weeks Ended
September 26, 2020 September 28, 2019
 
Net Sales

$

33,557.1

 

$

34,983.0

 

 
GAAP Operating Income

$

594.5

 

$

442.0

 

Reorganization, integration and transition costs

 

4.7

 

 

29.6

 

Amortization of intangible assets

 

47.1

 

 

56.3

 

Settlement of a class action lawsuit

 

-

 

 

(4.2

)

 
Non-GAAP Operating Income

$

646.3

 

$

523.7

 

 
 
 
GAAP Operating Margin

 

1.77

%

 

1.26

%

Non-GAAP Operating Margin

 

1.93

%

 

1.50

%

Ingram Micro Inc.
Supplementary Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(Amounts in Millions)
(Unaudited)
 
 
Thirteen Weeks Ended
September 26, 2020 September 28, 2019
 
Net Income Net Income
 
As Reported Under GAAP

$

184.7

 

$

101.8

 

Reorganization, integration and transition costs

 

0.8

 

 

4.7

 

Amortization of intangible assets

 

11.5

 

 

12.5

 

Pan-Europe foreign currency exchange gain

 

(2.4

)

 

(3.3

)

Tax benefit on research and development credit

 

(1.5

)

 

-

 

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

 

(8.0

)

 

-

 

 
Non-GAAP Financial Measure

$

185.1

 

$

115.7

 

 
 
 
Thirty-nine Weeks Ended
September 26, 2020 September 28, 2019
 
Net Income Net Income
 
As Reported Under GAAP

$

418.2

 

$

275.0

 

Reorganization, integration and transition costs

 

3.1

 

 

20.8

 

Amortization of intangible assets

 

31.3

 

 

39.7

 

Settlement of a class action lawsuit

 

-

 

 

(2.9

)

Pan-Europe foreign currency exchange gain

 

(2.1

)

 

(2.6

)

Tax benefit on research and development credit

 

(3.2

)

 

-

 

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

 

(11.4

)

 

-

 

 
Non-GAAP Financial Measure

$

435.9

 

$

330.0

 

 
 
 
Note: Amounts above are net of applicable income taxes.

 


Contacts

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