Thursday, information technology products distributor Ingram Micro Inc. (IM) reported a dip in third quarter earnings, as revenues declined from last year impacted by the weakened global economies.
The Santa Ana, California-based Ingram's third quarter net income declined to $42.31 million or $0.25 per share from $46.37 million or $0.27 per share in the previous year quarter. On average, seven analysts polled by Thomson Reuters expected the company to report earnings of $0.20 per share. Analysts' estimates typically exclude special items.
Ingram said latest quarter results included costs of approximately $0.04 per share related to expense-reduction programs, while the year-ago quarter included $0.02 per share.
In the preceding second quarter, Ingram recorded net income of $25.3 million or $0.15 per share, down from $58.9 million or $0.35 per share in the year ago quarter. Net sales declined 25% to $6.58 billion from $8.82 billion last year.
Net sales for the quarter under review decreased to $7.385 billion from $8.284 billion a year ago. Six Wall Street analysts estimated revenues of $6.65 billion.
Ingram said third-quarter sales continue to be impacted compared to the prior year, by the weakened global economies coupled with internal efforts to adjust the business mix toward more profitable accounts.
Segment wise, Ingram said its North America sales dipped 10% to $3.22 billion from $3.59 billion reported a year ago. The segment registered operating income of $30.4 million, down from $45.5 million last year.
Sales in the EMEA region declined 16% to $2.15 billion from $2.57 billion in the prior-year quarter. The translation impact of relatively weaker European currencies had a negative impact on prior-year comparisons of approximately 6% points. The segment posted an operating income of $13.6 million, compared to a loss of $4.7 million last year.
Asia-Pacific sales was $1.64 billion for the quarter, down 4% from $1.70 billion reported last year. Operating income for the segment was $21.4 million, compared to $25.4 million in the prior year period.
Latin America segment sales were $373 million, down 13% from $430 million reported a year ago. The segment had operating income of $4.7 million, compared to $6.6 million a year ago.
William Humes, senior executive vice president and chief financial officer said, "The solid financial results this quarter were delivered through the disciplined management of key areas of the business."
"While increasing sequential sales, we reduced expenses and maintained working capital days below our normal range. We ended the quarter with more than $1.2 billion of cash on hand, providing us with ample flexibility to continue pursuing growth opportunities as they emerge," Humes added.
Ingram said its operating expenses declined 11% to $338.7 million from $380.4 million last year. The translation impact of relatively weaker foreign currencies contributed approximately $12 million to the overall year-over-year decline in operating expenses.
Year-to-date, Ingram's net income declined to $95.1 million or $0.58 per share from $169.4 million or $0.99 per share a year ago, hurt by a goodwill impairment charge of $24.0 million after tax or $0.14 per share. In the year-ago period, net income included expense-reduction program costs of $0.05 per share.
Revenues for the nine-month period dipped 19% to $20.708 billion from $25.678 billion in the same period a year ago.
The company said two of its expense-reduction programs would be completed by the year-end, generating aggregate annualized savings of approximately $140 million compared to the first quarter of 2008.
For the balance of the year, Ingram anticipates year-over-year sales declines to be reduced to single-digit percentages, aided by improving demand and emphasis on a better customer engagement.
Among peers in the industry, Arrow Electronics Inc. (ARW) yesterday reported a sharp decline in third-quarter profit, reflecting restructuring and integration charges as well as a drop in sales. On an adjusted basis, earnings came in above analysts' estimate by four cents.
For the third quarter, net income attributable to shareholders dropped to $12.58 million or $0.10 per share from $76.07 million or $0.63 per share in the previous year. Excluding items, earnings decreased to $44.88 million or $0.37 a share from $83.70 million or $0.70 a share in the year-ago quarter.
Sales for the period decreased to $3.67 billion from $4.29 billion last year.
IM closed Thursday's trading at $17.48, up $0.53 or 3.13%, on a volume of about 1.56 million shares. For the past 52-week period, the stock traded between $8.65 and $18.79, on a 3-month volume of about 1.50 million shares.
For comments and feedback: editorial@rttnews.com