Press release

Ingram Micro Reports Record Revenues and Profits for 2018 Fiscal Year

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Ingram Micro Inc. today announced financial results for the 2018 fiscal
year ended Dec. 29, 2018. Ingram Micro delivered record revenues and
profits for the year, benefiting from growth across all lines of
business and strong global demand. Worldwide 2018 fiscal year sales were
$50.4 billion, an increase of $3.8 billion, or 8 percent in USD. 2018
fiscal year gross profit increased by $230 million to $3.2 billion, with
gross margin of 6.30 percent. This compares to sales of $46.7 billion,
gross profit of $2.9 billion and gross margin of 6.32 percent for the
2017 fiscal year. 2018 fiscal year non-GAAP operating income increased
by more than $100 million to $730 million, or 1.46 percent of revenue,
and non-GAAP net income for the 2018 fiscal year was up $80 million to
$460 million. This compares to 2017 fiscal year non-GAAP operating
income of $620 million, or 1.33 percent of revenue, and non-GAAP net
income of $380 million. 2018 fiscal year GAAP operating income and net
income were $550 million, or 1.09 percent of revenue, and $350 million,
respectively, including: the pre-tax negative impact of $90 million in
amortization expense and the pre-tax negative impact of $90 million in
restructuring, acquisition and transition costs primarily related to a
global reorganization program executed during the first quarter of 2018.
This compares to 2017 fiscal year GAAP operating income and net income
of $410 million, or 0.88 percent of revenue, and $200 million,
respectively.

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 fiscal year ended Dec. 29, 2018. 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 gain on the sale of
affiliates. 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. 2018 fiscal
year non-GAAP net income excludes non-cash tax benefits primarily
related to the intercompany sale of certain intangible assets and the
impact on U.S. tax reform repatriation tax, as well as additional tax
expense on the write-off of net operating loss carryforward of a
subsidiary and tax expense related to the foreign currency exchange gain
of another subsidiary. 2017 fiscal year non-GAAP operating income
further excludes merger costs and loss on sale of affiliates and 2017
non-GAAP net income also excludes a non-cash tax benefit primarily
related to the reversal of a valuation allowance against certain
deferred tax assets in Australia and an additional tax expense related
to the impact of the US tax reform. 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.

© 2019 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)
 
 
December 29, December 30,

 

  2018   2017
 
ASSETS
Current assets:
Cash and cash equivalents $ 533,949 $ 549,558
Restricted cash 14,379
Trade accounts receivable, net 7,756,983 7,626,191
Inventory 4,509,474 4,471,440
Other current assets   669,044   618,733
 
Total current assets 13,469,450 13,280,301
 
Property and equipment, net 421,008 417,439
Goodwill 938,407 990,372
Intangible assets, net 316,597 385,152
Other assets   317,318   299,879
 
Total assets $ 15,462,780 $ 15,373,143
 
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accounts payable $ 8,578,895 $ 7,760,380
Accrued expenses 835,474 881,672
Short-term debt and current maturities of long-term debt   175,215   127,512
 
Total current liabilities 9,589,584 8,769,564
 
Long-term debt, less current maturities 1,313,287 1,982,118
Other liabilities   163,806   298,904
 
Total liabilities 11,066,677 11,050,586
 
Stockholder’s equity   4,396,103   4,322,557
 
Total liabilities and stockholder’s equity $ 15,462,780 $ 15,373,143
 
Ingram Micro Inc.
Consolidated Statements of Income
(Amounts in 000s)
(Unaudited)
 
 
Thirteen Weeks Ended
December 29, 2018 December 30, 2017
 
Net sales $ 14,830,668 $ 13,784,599
Cost of sales   13,931,976     12,929,159  
Gross profit   898,692     855,440  
 
Operating expenses:
Selling, general and administrative 660,327 640,935
Amortization of intangible assets 21,708 22,676
Reorganization costs 2,913 3,709
Merger related costs 12,872
Loss on sale of affiliates       3,028  
  684,948     683,220  
 
Income from operations   213,744     172,220  
 
Other (income) expense:
Interest income (3,584 ) (8,394 )
Interest expense 27,652 25,730
Net foreign currency exchange gain (533 ) (7,489 )
Other   5,014     5,615  
  28,549     15,462  
 
Income before income taxes 185,195 156,758
 
Provision for income taxes   40,819     101,165  
 
Net income $ 144,376   $ 55,593  
 
Ingram Micro Inc.
Consolidated Statements of Income
(Amounts in 000s)
(Unaudited)
 
 
Fifty-two Weeks Ended
December 29, 2018 December 30, 2017
 
Net sales $ 50,436,670 $ 46,674,792
Cost of sales   47,258,304     43,725,552  
Gross profit   3,178,366     2,949,240  
 
Operating expenses:

 

 

 

 

Selling, general and administrative 2,489,257 2,341,483
Amortization of intangible assets 92,566 91,153
Reorganization costs 47,897 15,130
Merger related costs 89,785
(Gain) loss on sale of affiliates   (1,940 )   3,028  
  2,627,780     2,540,579  
 
Income from operations   550,586     408,661  
 
Other (income) expense:
Interest income (19,599 ) (17,337 )
Interest expense 106,360 102,936
Net foreign currency exchange gain (7,906 ) (17,862 )
Other   20,861     19,831  
  99,716     87,568  
 
Income before income taxes 450,870 321,093
 
Provision for income taxes   98,684     122,135  
 
Net income $ 352,186   $ 198,958  
 
Ingram Micro Inc.
Consolidated Statements of Cash Flows
(Amounts in 000s)
(Unaudited)
           
 
Fifty-two Weeks Ended
December 29, 2018 December 30, 2017
 
Cash flows from operating activities:
Net income $ 352,186 $ 198,958
Adjustments to reconcile net income to cash provided (used) by
operating activities:
Depreciation and amortization 208,983 202,926
Share-based compensation 29,639 28,056
Unpaid merger related costs 54,262
Loss (gain) on marketable securities, net 2,737 (8,215 )
Gain on sale of property and equipment (1,831 ) (3,244 )
(Gain) loss on sale of affiliates (1,940 ) 3,028
Impairment of property and equipment 1,802
Revaluation of other consideration for acquisitions 1,930

(3,162

)

Noncash charges for interest and bond discount amortization 3,783 4,223
Deferred income taxes

(26,361

) (44,177 )

 

Changes in operating assets and liabilities, net of effects of
acquisitions:
Trade accounts receivable (380,866 ) (915,120 )
Inventory (179,745 ) (388,553 )
Other current assets

(100,016

) 2,435
Accounts payable 1,214,136 257,586
Change in book overdrafts (98,738 ) (91,398 )
Accrued expenses  

(120,935

)  

63,000

 
Cash provided (used) by operating activities   904,764     (639,395 )
 
Cash flows from investing activities:
Capital expenditures (136,853 ) (139,647 )
Movements from restricted cash 14,379 50,537
Sale of marketable securities, net 3,442 1,280
Proceeds from sale of property and equipment 711 3,654
Proceeds from sale of affiliates 1,318 10,025
Return of investment 2,361 4,350
Acquisitions, net of cash acquired   (3,424 )   (82,748 )
Cash used by investing activities   (118,066 )   (152,549 )
 
Cash flows from financing activities:
Redemption of senior unsecured notes (300,000 )
Equity contribution from Parent 37,500
Settlement of stock-based awards due to Merger (13,520 ) (48,997 )
Other consideration for acquisitions (7,479 ) (20,138 )
Dividends paid to shareholders (182,505 ) (105,758 )
Net (repayments of) proceeds from revolving and other credit
facilities
  (584,966 )   983,376  
Cash (used) provided by financing activities   (788,470 )   545,983  
 
Effect of exchange rate changes on cash and cash equivalents   (13,837 )   (645 )
 
Decrease in cash and cash equivalents (15,609 ) (246,606 )
 
Cash and cash equivalents, beginning of year   549,558     796,164  
 
Cash and cash equivalents, end of year $ 533,949   $ 549,558  
 
Ingram Micro Inc.
Supplementary Information
Income from Operations – Reconciliation of GAAP to Non-GAAP
Information
(Amounts in Millions)
(Unaudited)
     
 
Thirteen Weeks Ended
December 29, 2018 December 30, 2017
 
Net Sales $ 14,830.7   $ 13,784.6  
 
GAAP Operating Income $ 213.7 $ 172.2
Reorganization, integration and transition costs 23.5 6.0
Amortization of intangible assets 21.7 22.7
Merger related costs 12.9
Loss on sale of affiliates       3.0  
 
Non-GAAP Operating Income $ 258.9   $ 216.8  
 
 
 
GAAP Operating Margin 1.44 % 1.25 %
Non-GAAP Operating Margin 1.75 % 1.57 %
 
 
Fifty-two Weeks Ended
December 29, 2018 December 30, 2017
 
Net Sales $ 50,436.7   $ 46,674.8  
 
GAAP Operating Income $ 550.6 $ 408.7
Reorganization, integration and transition costs 93.3 29.7
Amortization of intangible assets 92.6 91.2
Merger related costs 89.8
(Gain) loss on sale of affiliates   (1.9 )   3.0  
 
Non-GAAP Operating Income $ 734.6   $ 622.4  
 
 
 
GAAP Operating Margin 1.09 % 0.88 %
Non-GAAP Operating Margin 1.46 % 1.33 %
 
Ingram Micro Inc.
Supplementary Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(Amounts in Millions)
(Unaudited)
 
 
Thirteen Weeks Ended
December 29, 2018 December 30, 2017
 
Net Income Net Income
 
As Reported Under GAAP $ 144.4 $ 55.6
Reorganization, integration and transition costs 18.3 4.0
Amortization of intangible assets 17.0 15.1
Loss on sale of affiliates 2.0
Merger related costs 8.6
Pan-Europe foreign currency exchange loss (gain) 2.0 (0.3 )
Tax impact on US tax reform repatriation tax (8.5 )
Tax impact on intercompany sale of certain intangible assets (11.3 )
Tax impact on the write-off of net operating loss carryforward of a
subsidiary
2.8
Tax impact on a subsidiary’s foreign currency exchange gain 3.1
Impact of US tax reform       55.6  
 
Non-GAAP Financial Measure $ 167.8   $ 140.6  
 
 
Fifty-two Weeks Ended
December 29, 2018 December 30, 2017
 
Net Income Net Income
 
As Reported Under GAAP $ 352.2 $ 199.0
Reorganization, integration and transition costs 70.1 20.8
Amortization of intangible assets 69.5 63.7
(Gain) loss on sale of affiliates (1.5 ) 2.0
Merger related costs 63.7
Pan-Europe foreign currency exchange loss 0.7 2.4
Tax impact on US tax reform repatriation tax (12.5 )
Tax impact on intercompany sale of certain intangible assets (26.6 )
Tax impact on the write-off of net operating loss carryforward of a
subsidiary
2.8
Tax impact on a subsidiary’s foreign currency exchange gain 3.1
Reversal of a valuation allowance against certain deferred tax
assets in Australia
(30.6 )
Impact of US tax reform       55.6  
 
Non-GAAP Financial Measure $ 457.8   $ 376.6  
 
 
Note: Amounts above are net of applicable income taxes.