Ingram Micro Inc. ( IM ) reported third-quarter 2014 non-GAAP earnings (excluding amortization of intangible assets and reorganization charges) of 62 cents per share, which came in line with the Zacks Consensus Estimate. On a year-over-year basis, earnings increased 16.9%.
Ingram Micro's third-quarter revenues of $11.24 billion beat the Zacks Consensus Estimate of $10.92 billion and increased 10.7% from the year-ago quarter. The company's Technology and other solutions revenues increased 5% year over year to $9.3 billion while its mobility business generated revenues of $2 billion, a year-over-year increase of 50%.
Geographically, revenues from North America increased 19.3% on a year-over-year basis and came in at $5.13 billion. Revenues from Europe increased 9.3% year over year to $3.20 billion. Moreover, revenues from Latin America were up 17% year over year to $524.9 million. However, revenues from Asia-Pacific decreased 3.7% to $2.38 billion year over year.
Ingram Micro's gross margin came in 5.8% compared with 5.9% in the year-ago quarter. The company's operating expenses increased 11.6% year over year to $494.4 million. However, as a percentage of revenues, expenses were up 4 basis points (bps). The company also witnessed 0.6% increase in non-GAAP operating income which came in at $160.8 million, while margins were down 15 bps to 1.43%.
Ingram Micro reported non-GAAP net income of $98.5 million or 62 cents per share compared with $83.1 million or 53 cents in the year-ago quarter. Non-GAAP net income excludes the effect of intangible assets and reorganization charges.
Balance Sheet & Cash Flow
Ingram Micro exited the third quarter with cash and cash equivalents of $497.8 million compared with $470.7 million in the previous quarter. Accounts receivable were $4.86 billion. Total debt (including current portion) was $1.13 billion as against $1.16 billion in the previous quarter.
For the fourth quarter of 2014, Ingram Micro expects its revenues to increase 8% to 12% year over year and non-GAAP earnings to range between 95 cents and $1.02 per share (mid-point 99 cents). The Zacks Consensus Estimate is pegged at 98 cents.
Ingram Micro reported modest third-quarter results and guided affirmatively. We believe that an improving IT spending trend will help Ingram post better results, going forward. Moreover, the company's focus on the high-margin market and strategic acquisitions to increase market share are encouraging.
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 expected to drive growth.
Though Ingram Micro's significant European exposure and a high debt burden are the concerns, we remain fairly optimistic about its strategic relationships with network giants such as Juniper Networks Inc. ( JNPR ), Cisco ( CSCO ) and International Business Machines Corp ( IBM ). However, its debt burden remains the headwind.
Currently, Ingram Micro has a Zacks Rank #4 (Sell).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.