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Ingram Micro Reports First Quarter EarningsSANTA ANA, Calif., May 4, 2015 /PRNewswire/ -- Ingram Micro Inc. (NYSE: IM) today announced financial results for the first quarter ended Apr. 4, 2015.
Alain Monie, Ingram Micro CEO, commented, "As illustrated by growth in excess of 10 percent on a currency neutral basis, we experienced healthy demand across our geographic regions. Asia Pacific and Latin America were clear standouts, as strong revenues were complemented by solid increases in profitability. As anticipated, our sales mix in Europe improved over the 2014 fourth quarter, with lower contribution from consumer markets leading to modest year-over-year improvement in the profitability of our European core business. In mobility, we had good growth across all regions, while cloud and supply chain solutions continued to grow at robust rates." Monie added, "We continue to generate significant revenue momentum as we expand our capabilities globally, including in our higher margin cloud and supply chain solutions, which is an important element of leveraging our customer, vendor and global infrastructure basis to achieve our longer-term financial targets. Additionally, to ensure we maintain the trajectory towards our 2016 financial targets, we are taking cost actions globally, which are expected to result in annualized savings of approximately $100 million in 2016. One-time costs associated with these actions are expected to be in a similar range." Monie said, "We manage a complex and broad portfolio of interconnected businesses and operations, and we remain committed to taking the decisions necessary to ensure we maintain our trajectory towards our longer-term financial objectives. "Additionally," Monie concluded, "With now good progress on our strategic initiatives, we plan to resume share repurchases opportunistically under our existing $400 million authorization, which has approximately $124 million in remaining available capacity." First Quarter Results of Operations Driven by solid demand across all regions, worldwide first quarter sales increased year-over-year by $260 million to $10.6 billion, up 2.5 percent in U.S. dollars and up more than 10 percent on a currency neutral basis. Non-GAAP operating income was up 2 percent, or 9 percent on a currency neutral basis, over last year. Lower contribution from North America and Europe was more than offset by strong performance in Asia Pacific and Latin America. In addition to increased strategic investments in cloud and supply chain solutions, lower contribution from North America was driven by lower mobility gross margins related to higher Verizon channel sales than last year, as well as lower than anticipated resale pricing of returned handsets in the secondary market. The company said it is addressing the areas of the mobility business that are not currently performing as expected, and will either improve the profitability or exit those portions of the business. European profits were impacted by the strengthening U.S. dollar versus the euro, as well as by continued strategic investments in cloud, supply chain solutions and mobility. Asia Pacific and Latin America delivered solid operating leverage benefiting from good uptake in advanced solutions and share gains in certain markets. 2015 first quarter non-GAAP net income was $68 million, with non-GAAP earnings of 43 cents per diluted share, flat when compared to the 2014 first quarter, and up 9 percent on a currency neutral basis, as the translation of foreign currencies compared to the 2014 same period negatively impacted 2015 first quarter non-GAAP earnings by 4 cents per diluted share. Key 2015 first quarter business highlights:
Outlook The following statements are based on the company's current expectations for the 2015 second quarter and exclude the amortization of intangible assets, charges associated with acquisition-related costs, reorganization, integration and transition costs and charges associated with expense reduction programs and 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. These statements are forward-looking and actual results may differ materially. For the 2015 second quarter, Ingram Micro currently expects consolidated sales to grow high-single digits in local currency and to be relatively flat in U.S. dollars when compared to the 2014 second quarter. Non-GAAP earnings per diluted share for the 2015 second quarter are expected to be in the range of 50 to 58 cents, which includes a negative impact of 4 cents related to currency movement, when compared with the second quarter last year. Non-GAAP Disclosures In addition to GAAP results, Ingram Micro is reporting non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP earnings per diluted share. These non-GAAP measures exclude charges associated with reorganization, integration and transition costs, including those associated with the company's previously announced organizational effectiveness program and integration of BrightPoint, as well as acquisition-related costs and the amortization of intangible assets. These non-GAAP financial measures also exclude a benefit related to the receipt of an LCD flat panel class action settlement in 2014. Non-GAAP net income and non-GAAP earnings per diluted share also exclude 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. 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 similar 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 and may not be comparable to similarly titled measures used by other companies. Reconciliation of GAAP to non-GAAP financial measures for the periods presented are attached to the press release. 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 (877) 869-3847 (toll-free within the United States and Canada) or (201) 689-8261 (other countries). 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 (877) 660-6853 or (201) 612-7415, conference ID "13604955." About Ingram Micro Inc. 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 within the meaning of the Private Securities Litigation Reform Act, including statements relating to the expected benefits from acquisitions and our ability to enhance earnings power and the impact of foreign currency rates, 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) changes in macro-economic conditions, including from currency movements, can affect our business and results of operations; (2) our acquisition and investment strategies may not produce the expected benefits and our cost reduction programs may not produce the anticipated benefits, each of which may adversely affect results of operations; (3) we are dependent on a variety of information systems, which, if not properly functioning, and available, or if we experience system security breaches, data protection breaches or other cyber-attacks, could adversely disrupt our business and harm our reputation and net sales; (4) failure to retain and recruit key personnel would harm our ability to meet key objectives; (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 industry changes could negatively impact our future operating results; (7) we continually experience intense competition across all markets for our products and services; (8) termination of a key 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; (9) substantial defaults by our customers or the loss of significant customers could negatively impact our business, results of operations, financial condition or liquidity; (10) 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; (11) our goodwill and identifiable intangible assets could become impaired, which could reduce the value of our assets and reduce our net income in the year in which the write-off occurs; (12) 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; (13) we cannot predict the outcome of litigation matters and other contingencies that we may be involved with from time to time; (14) we may become involved in intellectual property disputes that could cause us to incur substantial costs, divert the efforts of management or require us to pay substantial damages or licensing fees; (15) our failure to comply with the requirements of environmental regulations could adversely affect our business; (16) 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; (17) changes in accounting rules could adversely affect our future operating results; and (18) our quarterly results have fluctuated significantly. There are additional contingencies associated with each of the above identified risks. For example, in connection with our acquisition strategy, we risk failing to realize the anticipated benefits of an acquisition due to, among other things, the unsuccessful integration of an acquired business. Despite its global presence, Ingram Micro may fail to proactively identify and tap into emerging markets and geographies. We have historically instituted, and will continue to institute, changes to our strategies, operations and processes in an effort to address and mitigate risks; however, there are no assurances 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 our SEC filings, and specifically to Item 1A-Risk Factors, of our latest Annual Report on Form 10K. © 2014 Ingram Micro Inc. All rights reserved. Ingram Micro and the registered Ingram Micro logo are trademarks used under license by Ingram Micro Inc.
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