Ingram Micro Inc.
) reported first-quarter 2013 earnings per share of 41 cents,
missing the Zacks Consensus Estimate of 43 cents. The results
were 6.8% lower than 44 cents reported in the year-earlier
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Ingram Micro's first quarter revenues of $10.3 billion increased
18.8% from $8.6 billion in the year-ago quarter and were slightly
above the Zacks Consensus Estimate of $10.1 billion. Effect of
currency translation was nominal. Geographical contributions were
decent barring Europe. Apart from this, additional contributions
from the Brightpoint and Aptec Holdings acquisitions were the
Revenue contribution from North America increased 7.2% year over
year to $3.87 billion. The improvement can be attributed to
strong performances in all the U.S. divisions (especially in
advanced computing and specialty divisions), partially offset by
a soft Canadian business. Europe, Middle East and Africa (EMEA)
contributed $2.67 billion, up 0.8% from the year-ago quarter.
Difficult macro environment and competitive pressures continued
to count on European revenue contributions, though higher
contribution from the small and medium business sector was a
The Asia-Pacific region generated $2.19 billion in sales, up
12.6% from $1.95 billion in the year-ago quarter. The improvement
was attributed to strong regional performances in India, China
and Australia as well as strong contribution from Aptec Holdings.
Latin America sales grew 7.0% year over year to $462.0 million.
Gross profit increased 25.2% from the year-ago quarter to $585.3
million. Gross margin was 5.7%, up from 5.4% in the year-ago
quarter. The improvement was mainly attributable to solid
performances in the mobility business, which was inherited from
Brightpoint. This was partially offset by an adverse effect of a
higher mix of lower margin products (such as tablets).
Selling, general and administrative expenses increased 31.7% year
over year to $474.1 million. Operating margin of 0.9% dropped 30
basis points year over year.
Ingram Micro reported net income of $49.8 million or 32 cents per
share, compared with $90.0 million or 44 cents in the year-ago
quarter. Excluding certain pre-tax one-time items, adjusted net
income was 41 cents per share compared with 43 cents in the
Balance Sheet and Share Repurchase
Ingram Micro exited the first quarter with cash and cash
equivalents of $562.6 million, down from $595.1 million in the
previous quarter. Accounts receivable decreased 17.4%
sequentially to $4.51 billion. Inventories were $3.81 billion, up
from $3.59 billion in the prior quarter. Total debt balance was
$1.20 billion, up from $1.05 billion in the previous quarter.
For the second quarter of 2013, the IT distributor expects
revenues to be up 1.0%-4.0% sequentially. The company expects
gross margin to be flat to slightly up sequentially. The company
is positive on strong contribution from higher margin businesses,
growth in emerging markets, synergies from acquired units and
recovery in Australian market share.
The company seems very positive about BrightPoint. It expects the
same to drive annual cost synergies of at least $55.0 million for
2014 and accretion to non-GAAP earnings per share of at least 34
cents in 2013 and 51 cents in 2014.
We find Ingram Micro's first quarter results modest with the
bottom line missing the Zacks Consensus Estimate and the top line
beating the same marginally. The company has provided a cautious
second quarter outlook. But we believe that the improving IT
spending trend will help Ingram to post better results ahead.
Moreover, management's commentary of focusing more on the
high-margin market and on strategic acquisitions to grow market
share is encouraging.
The ongoing integration of BrightPoint seems to be pretty quick
and the contribution is encouraging. Expected cost synergies and
sizable contributions going forward could make BrightPoint a key
driver for growth.
We remain fairly optimistic about Ingram Micro's strategic
relationship with network giant
Juniper Networks Inc.
), as well as tech giants such as
) and Microsoft Corp.
However, the company's significant European exposure and a high
debt burden are concerns.
Currently, Ingram Micro has a Zacks Rank #3 (Hold).