Ingram Micro Australia is celebrating hitting budget as globally the company delivered a record-breaking fourth quarter ending December 28, 2013.
It delivered record gross profit, revenue and earnings for the quarter.
The company notes in its statement around the results : "Australia achieved the company's target for non-GAAP [generally accepted accounting principles] operating profitability in the 2013 fourth quarter, improving more than $12 million from the operating loss in last year's fourth quarter."
But the Australian effort was just part of massive quarter for the distributor. Worldwide sales were an all-time record $US11.8 billion, up 4 per cent in US dollars, when compared with $US11.4 billion in the fourth quarter last year.
Worldwide gross profit was $US710 million (6 per cent of total sales), compared with $US661 million (5.81 per cent of total sales) in the 2012 fourth quarter.
Operating income was $US173 million (1.46 per cent of total sales), compared with 2012 fourth quarter operating income of $US168 million (1.48 per cent of total sales). 2013 fourth quarter net income was $US112 million, or $US0.71 per diluted share. This compares with 2012 fourth quarter net income of $US101 million, or $US0.66 per diluted share.
"The fourth quarter marked a strong close to a year where we executed well on our key strategic and financial objectives," Ingram Micro CEO, Alain Monie, said. "We successfully balanced revenue growth with margin and earnings improvement and drove solid operating leverage across the business. The end result of our focus and steady course is evident in our fourth quarter and full year results, which demonstrate excellent progress along the trajectory towards our 2015 financial targets and helped us deliver strong shareholder value for the year."
Non-GAAP operating income for the 2013 fourth quarter was $US211 million (1.78 per cent of total sales). This compares with non-GAAP operating income for the 2012 fourth quarter of $US189 million (1.66 per cent of total sales).
2013 fourth quarter non-GAAP net income was $US139 million, or $US0.88 per diluted share, compared with non-GAAP net income of $US115 million, or $US0.75 per diluted share, in the 2012 fourth quarter.
The effective tax rate for the 2013 fourth quarter was 27 per cent, lower than the company originally anticipated due largely to the recognition of net discrete tax benefits during the quarter, which benefited GAAP and non-GAAP earnings per diluted share by approximately $US0.04
Non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP earnings per diluted share are financial measures that exclude the amortisation of intangible assets and charges associated with reorganisation, integration and transition costs.
For the 2013 year, these non-GAAP financial measures also exclude a benefit related to the receipt of $US29.5 million from a LCD flat panel class action settlement and the impact of a $US5.0 million reserve recorded for estimated potential charges related to indirect tax declarations in Europe.
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 and a net discrete tax benefit of $US28.5 million in 2012, primarily related to the write-off of the historical tax basis of the investment the company had maintained in one of its Latin American subsidiary holding companies. These non-GAAP financial measures are reconciled to their most directly comparable GAAP measures in the Supplementary Information section of this release.
The company listed the following ey 2013 fourth quarter business highlights:
- The company's mobility business was accretive to 2013 fourth quarter non-GAAP earnings per diluted share by$US0.11 cents. This brings total accretion from the mobility business for the 2013 full year to $US0.35, above the company's target of $US0.34 that was initially established upon announcement of the acquisition of BrightPoint in July 2012.
- Ingram Micro Mobility added new OEM distribution agreements in Europe, Asia Pacific and Latin America and won new logistics contracts in all regions.
- Australia achieved the company's target for non-GAAP operating profitability in the 2013 fourth quarter, improving more than $12 million from the operating loss in last year's fourth quarter.
- Ingram Micro added global enterprise IT asset disposition, onsite data destruction and e-waste recycling services for large enterprise customers, retail customers and OEMs, increasing its supply chain capabilities and solutions offerings with the acquisition of CloudBlue Technologies.
- The company expanded its capabilities in the e-commerce logistics market with the acquisition of Shipwire, enhancing its ability to accelerate growth in the rapidly expanding e-commerce fulfilment industry, while also better enabling Ingram Micro Logistics (IML) to meet the e-commerce needs of large retailers with significantly reduced onboarding time, cost and complexity.
- Leveraging the company's existing strong presence in distribution, Ingram Micro Mobility announced that it expanded into Latin America and now offers a full suite of wireless device lifecycle services in the region.
- Based on its current ability to reach an extensive network of mobile devices and accessories resellers, Ingram Micro Mobility was named a core distributor of Samsung Mobile smartphone and tablet accessory products in the United States.
- Cash flow from operations for the 2013 fourth quarter was $US353 million, bringing total 2013 full year cash flow from operations to $US466 million. This compares to 2012 fourth quarter and full year cash flow from operations of $US81 million and $US46 million, respectively.
In order to further enhance its ability to innovate and respond to market needs with greater speed and efficiency, the company also announced its plan to proceed with a global organisational effectiveness program that involves three critical aspects:
- Aligning and leveraging the company's infrastructure globally with its evolving businesses, opportunities and resources;
- De-layering and simplifying the organisation to enable the company to be more nimble, responsive and collaborative; and
- Maintaining investments in expertise and capabilities to continue to transform the company's business mix in faster growing, higher margin businesses.
As a result of the alignment and de-layering programs, the company expects annual savings between $US80 and $US100 million. One-time restructuring, integration and other reorganisation costs associated with these programs are expected to be between $US80 and $US100 million, which includes $US8 million in costs associated with implementation of initiatives that occurred in the fourth quarter of 2013.
The majority of the costs are expected to be incurred in the first half of 2014. The company anticipates the majority of the cost savings beginning to occur in the second half of 2014 and the full run rate of savings to be realiSed in 2015.
Monie said, "Our company is proactively accompanying great changes in the technology industry and evolving its business composition and structure accordingly. As we explore and execute on our various initiatives for growth and stronger profitability, the overall objective of our organisational effectiveness programs -- which we have been working at developing over the past few months -- is to streamline and focus our resources to run our businesses faster, smarter and better to capture the tremendous opportunities we have already started to invest in, while generating greater, sustainable shareholder value."
For the 2014 year, the company currently expects worldwide revenue to grow in the low- to mid-single-digits, in-line with overall global IT spending. The company also expects to drive solid non-GAAP operating leverage in 2014, as additional investments into the business are more than offset by continued execution, operational improvement and benefits from earlier investments, as well as the favorable impact in the second half of 2014 from the company's organisational effectiveness programs.
For the 2014 first quarter, the company currently expects a low double-digit sequential decline in worldwide revenue and a high-teen basis point sequential decline in gross margin, both in-line with recent historical seasonality.
The company also said that it is continuing its organic investments, which also now include investments into recently acquired businesses to leverage Ingram Micro's global reach. Diluted weighted average shares outstanding for the 2014 first quarter are expected to be 158.5 million.