Ingram Micro Inc.
) reported first-quarter 2014 non-GAAP earnings (excluding
amortization of intangible assets, reorganization charges, LCD
settlement and foreign exchange gains) of 43 cents per share,
missing the Zacks Consensus Estimate of 47 cents per share.
However, earnings improved 4.5% on a year-over-year basis
primarily due to a higher revenue base, strategic investments and
improvement in the cloud and mobility business.
Ingram Micro's first-quarter revenues of $10.4 billion came in
line with the Zacks Consensus Estimate and increased 1.2% from
the year-ago quarter. The year-over-year improvement was
primarily due to better-than-expected growth in Europe and Latin
America, which partially offset a decline in BrightPoint revenues
primarily due to lower demand in the handset.
Geographically, revenues from North America increased 1.5% on a
year-over-year basis and came in at $3.92 billion. Revenues from
Europe increased 12.2% on a year-over-year basis to $2.99
billion. Moreover, revenues from Latin America were up 6.8% on a
year-over-year basis to $493.5 million. However, revenues from
Asia-Pacific and BrightPoint decreased 2.4% and 22.4% year over
year respectively, and came in at $2.14 billion and $830.1
Revenues from Europe were positively impacted by higher product
adoption. Moreover, strong performances from Australia and India
driven by growth across different product lines supported
revenues. Additionally, strong performance of its mobility
business helped revenues.
The company also reported that 16.0% of total revenue came from
) and 11.0% from
It is worth noting that Ingram Micro's acquisition of CloudBlue
and Shipwire will expand its supply chain capabilities, while the
acquisition of SoftCom will help to enhance its cloud-based
Ingram Micro's gross margin improved 18 basis points (bps) on a
year-over-year basis to 5.9%. The improvement was mainly
attributable to solid performances in the mobility business and
higher sales. Moreover, the acquisitions of CloudBlue, Shipwire
and SoftCom positively impacted gross margins.
Selling, general and administrative expenses increased 3.3% year
over year to $489.6 million. Ingram Micro reported an increase in
operating expense as a percentage of revenues (up 9 bps on a
year-over-year basis), which came in at 4.7%, primarily due to
continued investments across all of its operating regions and
higher costs related to its high margin business. The company's
non-GAAP operating margin increased 5 bps from the year-ago
quarter to 1.2% aided by contribution from high margin
Ingram Micro reported non-GAAP net income of $67.9 million or 43
cents per share compared with $63.2 million or 41 cents in the
year-ago quarter. Non-GAAP net income excludes the effect of
intangible assets, reorganization charges, LCD settlement and
foreign exchange gains.
Balance Sheet & Cash Flow
Ingram Micro exited the first-quarter with cash and cash
equivalents of $424.5 million, down from $674.4 million in the
previous quarter. Accounts receivable were $4.55 billion. Total
debt (including current portion) was $1.02 billion, up from
$846.2 million in the previous quarter.
The company reported cash used in operations of $426.4.0 million
in the first-quarter of 2014.
For the second-quarter of 2014, Ingram Micro expects a low to
mid-single digit year-over-year increase in revenues. Gross
margin is expected to grow in mid-single digit basis points on a
Ingram Micro's first-quarter results were tepid with the bottom
line missing the Zacks Consensus Estimate and the top line
matching the same. We believe that an improving IT spending trend
will help Ingram to post better results going forward. Moreover,
the company's focus on the high-margin market and strategic
acquisitions to increase market share are encouraging. The
BrightPoint acquisition is also expected to remain a key growth
driver for the company.
Ingram Micro has been striking distribution deals with a number
of original equipment manufacturers thus expanding its product
portfolio. Moreover, Ingram Micro's exposure in cloud computing
products is also expected to drive growth.
Though Ingram Micro's significant European exposure and a high
debt burden are concerns, we remain fairly optimistic on the
company's strategic relationships with network giants such as
Juniper Networks Inc.
Currently, Ingram Micro has a Zacks Rank #2 (Buy).
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