Growing Through Acquisitions...

(RTTNews) - Ingram Micro Inc. (IM) continues to drive efficiencies across its core business and benefit from prior investments in the faster-growing, higher margin areas. The company also continues to strengthen its position with vendor partners and customers through acquisition.

The Stock On Our Radar

Ingram Micro distributes information technology or IT products, commerce and fulfillment services and mobile device lifecycle services worldwide. The company operates in North America, Europe, Asia-Pacific, and Latin America.

In Focus

For the fourth quarter of 2015, foreign exchange headwinds are expected to negatively impact worldwide revenue by about 6%, or by more than $800 million, and to negatively impact non-GAAP earnings per share by 10 cents when compared to the 2014 fourth quarter.

Ingram Micro currently expects fourth quarter revenue to reflect a historic seasonal sequential increase in the mid- to high teens over the 2015 third quarter and to be between $12.0 billion and $12.6 billion.

Non-GAAP earnings per share for the fourth quarter are projected to be in the range of $1.00 - $1.07, which includes the negative impact of 10 cents related to currency movement when compared with the fourth quarter last year, and reflects an increase of 12% - 19% over the 2014 fourth quarter on a currency neutral basis.

Analysts polled by Thomson Reuters expect earnings of $1.04 per share on revenue of $12.38 billion for the fourth quarter. Analysts' estimate typically exclude certain special items.

The company also now expects to generate more than $1 billion in operating cash flow for the full year, up from earlier expectations of $700 million in cash flow from operations for the 2015 full year, even as it deploys capital to support revenue growth in its seasonally strongest fourth quarter.

Latest Q3 Performance

The just bygone third quarter saw a 10% decline in net income totaling $65 million versus $72 million reported last year. On a per share basis, earnings fell 7% to $0.42 from $0.45 last year.

Non-GAAP net income was $103 million or $0.67 per share compared to $98 million or $0.62 per share in the same period of last year.

Net sales amounted to $10.5 billion, 6% lower than the previous year's sales of $11.2 million. On a currency neutral basis, sales rose 2%. Excluding the negative impact related to the company exiting portions of its North American mobility distribution business, worldwide third quarter sales were up about 5% on a currency neutral basis.

Non-GAAP operating income of $169 million was up 5% in U.S. dollars, or up 15% on a currency neutral basis, over last year. Non-GAAP operating margin of 1.60% grew 17 basis points over last year, the highest level for a third quarter in more than a decade.

"We had a great quarter, reflecting continued execution on our strategy," said Alain Monie, Ingram Micro CEO. "We drove strong operating leverage while continuing to build our capabilities in key strategic areas such as advanced solutions, lifecycle services, commerce and fulfillment solutions and cloud."

Further, the company noted that it remained focused on generating strong returns on capital, which resulted in expanded margins, with non-GAAP operating margin reaching the highest level for a third quarter in more than a decade, a 21% increase in non-GAAP earnings per share on a currency neutral basis versus last year and $340 million in operating cash flow for the quarter.

The company ended the quarter with cash balance of nearly $1 billion and net debt of $280 million. During the quarter, HP represented 14%, Apple 12% and Cisco 10% of total sales.

Growth Through Acquisitions

June 14, 2015, Ingram Micro acquired a 75% majority interest in Arabian Applied Technology, the largest value-added technology distributor in Saudi Arabia for a payment of $5,200, net of cash acquired.

March 16, 2015, the company acquired all of the outstanding shares of Tech Data Peru S.A.C. and Tech Data Chile S.A. for a cash payment of $15,979, net of cash acquired, and the assumption of debt of $43,658.

The company also acquired 97.5% of the outstanding shares of Anovo Expansion SAS, a global provider of device lifecycle services, for a payment of $68,123, net of cash acquired, plus assumption of debt of $32,486, on February 27, 2015.

In addition, during the thirty-nine weeks ended October 3, 2015, Ingram Micro completed two small but strategic acquisitions for cash aggregating $1,880, and an estimated future earn-out payment of $613.

During the thirty-nine weeks ended October 3, 2015, the company bought an additional 21% of the outstanding shares of Armada Computer Systems for $8,838. As of October 3, 2015, Ingram Micro owned 79% of the outstanding shares, and recorded minority interest of $9,125 in other liabilities on the consolidated balance sheet for the remaining 21% of the outstanding shares.

Last month, the company completed acquisitions of Grupo ACAO, one of Latin America's leading providers of critical value-added IT solutions; certain assets from Parallels Holdings Ltd., including the Odin Service Automation platform, associated cloud management technologies, intellectual property and the Odin brand; and DOCdata Nederland B.V. and DOCdata International B.V., the e-commerce fulfillment activities of DOCDATA N.V.

Grupo AÇÃO acquisition is expected to contribute about $0.04 per share to non-GAAP earnings in 2016.