Ingram Micro Q4 Profit Up 11%, Revenues Beat View, Plans Restructuring

(RTTNews) - Ingram Micro Inc. (IM), the world's largest wholesale technology distributor and a provider of supply-chain and mobile device lifecycle services, reported an 11 percent increase in profit for the fourth quarter on higher sales that offset an increase in one-time costs. Revenue for the quarter beat analysts' estimates.

Looking ahead, Ingram Micro currently expects a low double-digit sequential decline in revenue for the first quarter and low- to mid-single-digit growth in revenue for fiscal 2014. The company also announced a restructuring plan that targets annual savings of $80 million to $100 million in 2015.

Alain Monie, CEO of Ingram Micro 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."

The Santa Ana, California-based company's net income for the fourth quarter rose to $112.20 million or $0.71 per share from $101.35 million or $0.66 per share in the year-ago period.

The latest quarter's results include reorganization, integration and transition costs of $0.12 per share, amortization of intangible assets of $0.06 per share and a pan-Europe foreign exchange gain of $0.01 per share.

Adjusted earnings per share for the quarter were $0.88, compared to $0.75 in the prior-year quarter. On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $0.78 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter rose 4 percent to $11.83 billion from $11.38 billion in the prior-year period and beat analysts' consensus revenue estimate of $11.53 billion.

Gross margin for the quarter rose 19 basis points to 6.00 percent, while operating margin declined 2 basis points to 1.46 percent.

For fiscal 2013, Ingram Micro's net income increased to $310.58 million from $305.91 million last year, while earnings per share were flat with last year at $1.99. Adjusted earnings per share for the year were $2.37, compared to $2.04 in the prior year.

Net sales for the year rose 12 percent to $42.55 billion from $37.83 billion last year.

Analysts expected the company to earn $2.27 per share for the year on revenues of $42.23 billion.

Looking ahead to the first quarter, Ingram Micro 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. Street expects the company to report a 1.6 percent increase in revenues for the quarter from the prior-year period to $10.43 billion.

For fiscal 2014, Ingram Micro currently expects worldwide revenue to grow in the low-to mid-single-digits, in-line with overall global IT spending. Analysts expect a 3.2 percent increase in revenues to $43.59 billion.

Ingram Micro also announced a plan to proceed with a global organizational effectiveness program that involves three critical aspects - aligning and leveraging the company's infrastructure globally with its evolving businesses, opportunities and resources; simplifying the organization to enable the company to be more nimble; and maintaining investments in expertise and capabilities.

As a result, Ingram Micro projects annual savings between $80 million and $100 million in 2015. The company expects one-time restructuring, integration and other reorganization costs associated with these programs between $80 and $100 million, including $8 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 to be realized starting in the second half of 2014 and the full run rate of savings to be realized in 2015.

IM closed Thursday's trading at $25.95, up $0.74 or 2.94 percent on a volume of 2.00 million shares.