Ingram Micro Holding Corporation(INGM) - 2025 Q2 - Quarterly Results

Executive Summary Ingram Micro delivered strong Q2 2025 results, exceeding guidance for net sales and non-GAAP EPS Key Financial Metrics Ingram Micro reported strong Q2 2025 results, with $12.8 billion net sales and $0.61 non-GAAP diluted EPS, exceeding guidance Key Financial Metrics (Q2 2025) | Metric | Q2 2025 Value | YoY Change | Guidance Range | Guidance Comparison | | :----- | :------------ | :--------- | :------------- | :------------------ | | Net Sales | $12,794 million | +10.9% | $11,765 - $12,165 million | Above high end | | Gross Profit | $839.2 million | N/A | $800 - $850 million | At upper end | | Net Income (GAAP) | $37.8 million | N/A | N/A | N/A | | Non-GAAP Net Income | $142.3 million | N/A | N/A | N/A | | Diluted EPS (GAAP) | $0.16 | N/A | N/A | N/A | | Non-GAAP Diluted EPS | $0.61 | N/A | $0.53 - $0.63 | At higher end | - Term loan credit facility amended in June to reduce interest rate by 50 basis points[3] - Divestiture of two non-core businesses expected to be completed in fiscal third quarter[3] - Quarterly dividend increased by 2.6% to $0.078 per share[3] Management Commentary Management emphasized strong Q2 sales growth across all regions and business lines, highlighting Xvantage's role and positive Q3 outlook - CEO Paul Bay reported net sales growth in all four geographic regions and across three primary lines of business[2] - The ransomware attack in early July had no impact on June quarter results, with the Xvantage digital experience platform accelerating recovery and strengthening business[2] - CFO Mike Zilis noted net sales above guidance, with gross profit and non-GAAP EPS toward the upper end, driven by strength in Asia-Pacific, client and endpoint solutions, and large enterprise customers[2] - Momentum in the advanced solutions business was encouraging, and the company expects continued year-over-year top-line growth in Q3 2025[2] Consolidated Fiscal Second Quarter 2025 Results This section details Ingram Micro's Q2 2025 consolidated financial performance, highlighting sales growth and profitability shifts Financial Performance Overview Q2 2025 consolidated results show significant net sales growth, but GAAP net income and operating income decreased, while non-GAAP metrics improved Consolidated Fiscal Second Quarter 2025 Results (Thirteen Weeks Ended) | Metric ($ in thousands, except per share data) | June 28, 2025 | June 29, 2024 | 2025 vs. 2024 Change | | :--------------------------------------------- | :------------ | :------------ | :------------------- | | Net sales | $12,793,956 | $11,541,439 | $1,252,517 | | Gross profit | $839,159 | $828,430 | $10,729 | | Income from operations | $142,816 | $181,128 | $(38,312) | | Net income | $37,826 | $54,585 | $(16,759) | | Adjusted Income from Operations | $200,827 | $218,006 | $(17,179) | | Adjusted EBITDA | $293,949 | $278,629 | $15,320 | | Non-GAAP Net Income | $142,330 | $120,431 | $21,899 | | Diluted EPS | $0.16 | $0.25 | N/A | | Non-GAAP Diluted EPS | $0.61 | $0.54 | N/A | Detailed Financial Highlights Net sales grew 10.9% to $12.8 billion, but gross margin declined to 6.56% due to mix shifts and write-downs, impacting operating income - Net sales increased by 10.9% to $12.8 billion, driven by growth across all geographic segments, with a 0.7% positive foreign currency impact[5] - Gross profit was $839.2 million, a slight increase from $828.4 million in the prior year[5] - Gross margin decreased to 6.56% (from 7.18%) due to a sales mix shift towards lower-margin client and endpoint solutions, server and storage products, large enterprise customers, and the Asia-Pacific region, plus a $10.5 million write-down for non-core operations[5] - Income from operations decreased to $142.8 million (from $181.1 million), and adjusted income from operations decreased to $200.8 million (from $218.0 million), primarily due to sales mix and $43.2 million in write-downs for planned divestitures (CloudBlue and a North America non-core business), expected to close in Q3 2025[5] - Adjusted EBITDA increased to $293.9 million from $278.6 million[5] Regional Fiscal Second Quarter 2025 Financial Highlights This section analyzes Ingram Micro's Q2 2025 financial performance across its North America, EMEA, Asia-Pacific, and Latin America regions North America North America net sales grew 13.7% to $5.0 billion, but operating income decreased significantly due to $43.2 million in write-downs North America Q2 2025 Financials | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Net Sales | $5.0 billion | $4.4 billion | +13.7% | | Income from Operations | $32.8 million | $63.8 million | -48.6% | | Income from Operations Margin | 0.66% | 1.46% | -80 bps | - Sales growth was primarily driven by server and storage products, as well as client and endpoint solutions (notebooks and desktops) in the United States[6] - Income from operations includes $43.2 million in write-down impacts from held-for-sale accounting for two non-core assets[7] - Income from operations margin was impacted by 87 basis points from the held-for-sale accounting, partially offset by lower SG&A expenses due to prior year restructuring and efficiencies in lower-cost-to-serve businesses[8] EMEA EMEA net sales grew 4.8% to $3.5 billion, with improved operating income and margin driven by reduced SG&A and operating leverage EMEA Q2 2025 Financials | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Net Sales | $3.5 billion | N/A | +4.8% | | Income from Operations | $55.7 million | $52.6 million | +5.9% | | Income from Operations Margin | 1.60% | 1.58% | +2 bps | - Foreign currency translation had a 5% positive impact on year-over-year net sales[9] - Growth was led by client and endpoint solutions (desktops, notebooks, components), advanced solutions (specialty and server sales), cloud-based solutions, and other services[9] - Improved income from operations margin was primarily due to reduced SG&A costs and better operating leverage, partially offset by a mix shift to lower-margin client and endpoint solutions[10] Asia-Pacific Asia-Pacific net sales rose 16.2% to $3.5 billion, but operating income and margin declined due to market shifts and competition Asia-Pacific Q2 2025 Financials | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Net Sales | $3.5 billion | $3.0 billion | +16.2% | | Income from Operations | $43.6 million | $61.3 million | -28.9% | | Income from Operations Margin | 1.25% | 2.05% | -80 bps | - Growth was driven by client and endpoint solutions, particularly mobility distribution (smartphones) and consumer electronics, partially offset by a decline in advanced solutions (servers)[12] - Foreign currency translation had a 1% negative impact on year-over-year net sales[12] - The decrease in income from operations margin was due to a shift towards the lower-margin China market, higher concentration of mobility sales, and heightened competition in India[13] Latin America Latin America net sales grew 0.8% to $0.9 billion, with improved operating income and margin despite currency headwinds and mix shifts Latin America Q2 2025 Financials | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Net Sales | $0.9 billion | $0.8 billion | +0.8% | | Income from Operations | $25.1 million | $23.3 million | +7.7% | | Income from Operations Margin | 2.94% | 2.75% | +19 bps | - Sales growth was led by client and endpoint solutions (smartphones and tablets) and cloud-based solutions, offset by declines in advanced solutions (servers, specialty products, networking)[14] - Foreign currency translation had a 6% negative impact on year-over-year net sales[14] - Improved income from operations margin was a result of decreased SG&A expenses as a percentage of net sales, partially offset by softer gross margins due to sales mix shifts[15] Fiscal Third Quarter 2025 Outlook This section outlines Ingram Micro's financial projections and key assumptions for the fiscal third quarter of 2025 Q3 2025 Guidance Ingram Micro projects Q3 2025 net sales between $11.875 billion and $12.375 billion, with non-GAAP diluted EPS between $0.61 and $0.73 Fiscal Third Quarter 2025 Guidance (Thirteen Weeks Ended September 27, 2025) | Metric ($ in millions, except per share data) | Low | High | | :-------------------------------------------- | :---- | :---- | | Net sales | $11,875 | $12,375 | | Gross profit | $815 | $875 | | Non-GAAP Diluted EPS | $0.61 | $0.73 | - The Q3 2025 guidance assumes an effective tax rate of approximately 30% on a non-GAAP basis and 235.5 million diluted shares outstanding[16] Dividend Increase and Payment Ingram Micro's board approved a 2.6% increase in the quarterly cash dividend to $0.078 per share Quarterly Dividend Details The board declared a $0.078 per share cash dividend, a 2.6% increase, payable September 2, 2025, to stockholders of record August 19, 2025 - The quarterly cash dividend increased by 2.6% to $0.078 per share from $0.076 per share[17] - The dividend is payable on September 2, 2025, to stockholders of record as of August 19, 2025[17] Earnings Call Details This section provides information regarding the Q2 2025 earnings call, including access details for investors Q2 2025 Earnings Call Information Ingram Micro hosted its Q2 2025 earnings call on August 6, 2025, with webcast and telephonic replay options available - The earnings call was held on Wednesday, August 6, 2025, at 2:00 p.m. Pacific time (5:00 p.m. Eastern time)[18] - A live webcast was accessible from the Ingram Micro investor relations website (https://ir.ingrammicro.com)[18](index=18&type=chunk) - A telephonic replay was available through November 3, 2025, via specified numbers and access code[19] About Ingram Micro This section provides an overview of Ingram Micro's position as a global IT ecosystem leader and its Xvantage digital platform Company Overview Ingram Micro is a leading global IT ecosystem technology company, connecting manufacturers and cloud providers via its AI-powered Xvantage platform - Ingram Micro is a leading technology company in the global information technology ecosystem, reaching nearly 90% of the global population[20] - The company connects technology manufacturers and cloud providers to a diversified base of business-to-business technology experts[20] - Ingram Micro Xvantage™ is an AI-powered digital platform offering a comprehensive business-to-consumer-like experience, including hardware and cloud subscriptions, personalized recommendations, instant pricing, order tracking, and billing automation[20] - The company also provides technology services such as financing, specialized marketing, lifecycle management, and technical pre- and post-sales professional support[20] Use of Non-GAAP Financial Measures This section explains the purpose and limitations of Ingram Micro's non-GAAP financial measures for performance evaluation Purpose and Limitations of Non-GAAP Measures Non-GAAP measures offer insights into business trends and acquired business impact, but are supplementary to GAAP and may not be comparable - Non-GAAP financial measures (e.g., adjusted income from operations, adjusted EBITDA, non-GAAP net income, non-GAAP EPS) are used to evaluate business and underlying trends, providing meaningful comparisons and an alternate view of acquired businesses' impact[21] - These measures are primary indicators used internally by management to conduct and measure business performance[21] - A material limitation is that non-GAAP measures may not be comparable to similarly titled items from other companies[21] - Non-GAAP measures should be considered a supplement to, not a substitute for or superior to, corresponding GAAP measures[21] Safe Harbor Statement This section outlines the inherent risks and uncertainties associated with forward-looking statements in the report Forward-Looking Statements and Risk Factors This release contains forward-looking statements subject to risks and uncertainties, with actual results potentially differing materially from expectations - The release contains forward-looking statements concerning strategy, plans, projections, and intentions, identifiable by words like 'believes,' 'expects,' 'may,' 'will,' 'should,' 'seeks,' 'intends,' 'plans,' 'estimates,' or 'anticipates'[22] - Forward-looking statements are not guarantees of future performance and are subject to difficult-to-predict risks, uncertainties, assumptions, or changes in circumstances[22] - Actual results may vary materially from expectations due to factors such as general economic conditions, market size estimates, acquisition integration, Xvantage deployment, key personnel retention, competition, inflation, market volatility, supply constraints, litigation, global business laws, geopolitical issues, financing efforts, customer/supplier relationships, intellectual property, service security, and the company's ownership structure[23] - The company undertakes no obligation to publicly update or review any forward-looking statement, except as required by applicable securities laws[22] Results of Operations - Financial Statements This section presents Ingram Micro's condensed consolidated balance sheets, statements of income, and cash flows for Q2 2025 Condensed Consolidated Balance Sheets As of June 28, 2025, total assets increased to $19.45 billion, with notable changes in inventory and short-term debt Condensed Consolidated Balance Sheets (Amounts in thousands) | ASSETS | June 28, 2025 | December 28, 2024 | | :------------------------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $856,668 | $918,401 | | Trade accounts receivable | $9,150,672 | $9,448,354 | | Inventory | $5,509,732 | $4,699,483 | | Total current assets | $16,461,959 | $15,801,177 | | Total assets | $19,453,234 | $18,779,690 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Accounts payable | $10,049,387 | $10,005,824 | | Short-term debt and current maturities of long-term debt | $690,801 | $184,860 | | Total current liabilities | $11,805,964 | $11,306,531 | | Total liabilities | $15,405,588 | $15,045,815 | | Total stockholders' equity | $4,047,646 | $3,733,875 | Condensed Consolidated Statements of Income Q2 2025 saw increased net sales, but declining gross profit margin, operating income, and net income due to expenses and currency loss Condensed Consolidated Statements of Income (Thirteen Weeks Ended) | Metric ($ in thousands) | June 28, 2025 | June 29, 2024 | | :---------------------- | :------------ | :------------ | | Net sales | $12,793,956 | $11,541,439 | | Cost of sales | $11,954,797 | $10,713,009 | | Gross profit | $839,159 | $828,430 | | Selling, general and administrative | $696,322 | $647,442 | | Income from operations | $142,816 | $181,128 | | Interest expense | $72,884 | $86,924 | | Net foreign currency exchange loss | $20,611 | $6,937 | | Income before income taxes | $59,885 | $83,163 | | Net income | $37,826 | $54,585 | | Diluted earnings per share | $0.16 | $0.25 | Condensed Consolidated Statements of Cash Flows Cash used in operating activities was $(298.0 million), a significant decrease, driven by working capital changes, while financing activities turned positive Condensed Consolidated Statements of Cash Flows (Thirteen Weeks Ended) | Metric ($ in thousands) | June 28, 2025 | June 29, 2024 | | :---------------------- | :------------ | :------------ | | Net income | $37,826 | $54,585 | | Cash (used in) provided by operating activities | $(297,960) | $401,184 | | Cash provided by investing activities | $58,427 | $22,960 | | Cash provided by (used in) financing activities | $176,214 | $(314,179) | | Effect of exchange rate changes on cash and cash equivalents | $38,350 | $(38,780) | | Decrease in cash and cash equivalents | $(24,969) | $71,185 | | Cash and cash equivalents at end of period | $856,668 | $928,762 | - The shift from cash provided to cash used in operating activities was largely driven by changes in working capital, specifically a decrease in trade accounts receivable and a significant increase in inventory[32] - Financing activities saw a positive cash flow primarily due to net proceeds from revolving and other credit facilities, contrasting with net repayments in the prior year[32] Supplemental Information - Reconciliation of Non-GAAP Financial Measures This section provides definitions and reconciliations of Ingram Micro's non-GAAP financial measures to their most directly comparable GAAP equivalents Definitions of Non-GAAP Measures This section defines key non-GAAP measures like Adjusted Income from Operations, Adjusted EBITDA, and Non-GAAP Net Income, detailing their adjustments - Adjusted Income from Operations adds back amortization of intangibles, restructuring costs, integration and transition costs, and advisory fees to income from operations[34] - Adjusted EBITDA adjusts EBITDA for restructuring costs, foreign currency gains/losses, integration/transition costs, advisory fees, cash-based compensation, stock-based compensation, and other credit agreement items[34] - Non-GAAP Net Income adjusts net income for amortization of intangibles, restructuring costs, foreign currency gains/losses, integration/transition costs, advisory fees, cash-based compensation, stock-based compensation, other items, and related tax impacts[35] - Adjusted Free Cash Flow adjusts net income for depreciation and amortization, other non-cash items, changes in working capital, proceeds from factored receivables, and capital expenditures[35] Reconciliation of Income from Operations to Adjusted Income from Operations Adjusted Income from Operations decreased to $200.8 million in Q2 2025, primarily due to higher integration and transition costs Reconciliation of Income from Operations to Adjusted Income from Operations (Thirteen Weeks Ended) | Metric ($ in thousands) | June 28, 2025 | June 29, 2024 | | :---------------------- | :------------ | :------------ | | Income from operations | $142,816 | $181,128 | | Amortization of intangibles | $21,867 | $21,704 | | Restructuring costs | $21 | $(140) | | Integration and transition costs | $36,123 | $9,064 | | Advisory fee | — | $6,250 | | Adjusted Income from Operations | $200,827 | $218,006 | Reconciliation of Net Income to Adjusted EBITDA Adjusted EBITDA increased to $293.9 million in Q2 2025, driven by adjustments for integration, transition, and stock-based compensation Reconciliation of Net Income to Adjusted EBITDA (Thirteen Weeks Ended) | Metric ($ in thousands) | June 28, 2025 | June 29, 2024 | | :---------------------- | :------------ | :------------ | | Net income | $37,826 | $54,585 | | EBITDA | $172,654 | $206,231 | | Restructuring costs | $21 | $(140) | | Net foreign currency exchange loss | $20,611 | $6,937 | | Integration, transition and operational improvement costs | $82,799 | $34,349 | | Advisory fee | — | $6,250 | | Cash-based compensation expense | $5,475 | $6,805 | | Stock-based compensation expense | $6,325 | — | | Other | $6,064 | $18,197 | | Adjusted EBITDA | $293,949 | $278,629 | Reconciliation of Net Income to ROIC ROIC decreased to 2.2% in Q2 2025 from 3.5% in the prior year, reflecting lower net income despite increased invested capital Reconciliation of Net Income to ROIC (Thirteen Weeks Ended) | Metric ($ in thousands) | June 28, 2025 | June 29, 2024 | | :---------------------- | :------------ | :------------ | | Net income | $37,826 | $54,585 | | Invested capital | $6,921,324 | $6,164,473 | | Return on Invested Capital | 2.2% | 3.5% | Reconciliation of Net Income to Adjusted ROIC Adjusted ROIC declined to 8.4% in Q2 2025 from 10.3% in the prior year, despite increased adjusted net income and invested capital Reconciliation of Net Income to Adjusted ROIC (Thirteen Weeks Ended) | Metric ($ in thousands) | June 28, 2025 | June 29, 2024 | | :---------------------- | :------------ | :------------ | | Net income | $37,826 | $54,585 | | Adjusted net income | $144,596 | $159,144 | | Invested Capital | $6,921,324 | $6,164,473 | | Adjusted Return on Invested Capital | 8.4% | 10.3% | Reconciliation of Net Income to Non-GAAP Net Income Non-GAAP Net Income rose to $142.3 million in Q2 2025, driven by pre-tax adjustments for integration, transition, and stock-based compensation Reconciliation of Net Income to Non-GAAP Net Income (Thirteen Weeks Ended) | Metric ($ in thousands) | June 28, 2025 | June 29, 2024 | | :---------------------- | :------------ | :------------ | | Net income | $37,826 | $54,585 | | Amortization of intangibles | $21,867 | $21,704 | | Restructuring costs | $21 | $(140) | | Net foreign currency exchange loss | $20,611 | $6,937 | | Integration, transition and operational improvement costs | $82,799 | $34,349 | | Advisory fee | — | $6,250 | | Cash-based compensation expense | $5,475 | $6,805 | | Stock-based compensation expense | $6,325 | — | | Other items | $4,218 | $15,450 | | Tax impact of pre-tax adjustments | $(36,608) | $(23,894) | | Other miscellaneous tax adjustments | $(204) | $(1,615) | | Non-GAAP Net Income | $142,330 | $120,431 | Reconciliation of Net Income to Adjusted Free Cash Flow Adjusted Free Cash Flow was $(262.8 million) in Q2 2025, a significant decrease due to increased working capital investment Reconciliation of Net Income to Adjusted Free Cash Flow (Thirteen Weeks Ended) | Metric ($ in thousands) | June 28, 2025 | June 29, 2024 | | :---------------------- | :------------ | :------------ | | Net Income | $37,826 | $54,585 | | Depreciation and amortization | $49,950 | $46,198 | | Other non-cash items and changes to non-working capital assets/liabilities | $(87,637) | $(115,095) |\n| Changes in working capital | $(298,099) | $415,496 | | Cash (used in) provided by operating activities | $(297,960) | $401,184 | | Capital expenditures | $(35,224) | $(33,109) | | Proceeds from deferred purchase price of factored receivables | $70,414 | $59,455 | | Adjusted free cash flow | $(262,770) | $427,530 | Reconciliation of GAAP EPS to Non-GAAP EPS Non-GAAP diluted EPS increased to $0.61 in Q2 2025, despite lower GAAP EPS, due to significant operational and compensation adjustments Reconciliation of GAAP EPS to Non-GAAP EPS (Thirteen Weeks Ended) | Metric | June 28, 2025 (Dollars per share) | June 29, 2024 (Dollars per share) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Basic and Diluted EPS - GAAP | $0.16 | $0.25 | | Amortization of intangibles | $0.09 | $0.10 | | Restructuring costs | $0.00 | $0.00 | | Net foreign currency exchange loss | $0.09 | $0.03 | | Integration, transition and operational improvement costs | $0.35 | $0.15 | | Advisory fee | — | $0.03 | | Cash-based compensation expense | $0.02 | $0.03 | | Stock-based compensation expense | $0.03 | — | | Other items | $0.02 | $0.07 | | Tax impact of pre-tax adjustments | $(0.15) | $(0.11) | | Other miscellaneous tax adjustments | — | $(0.01) | | Non-GAAP Basic and Diluted EPS | $0.61 | $0.54 | - Non-GAAP diluted EPS for Q2 2025 includes an impact of 2.3 percentage points of the effective tax rate related primarily to heightened withholding taxes on Latin America export business, translating to approximately $0.02 per diluted share[11] - The company is unable to provide a reconciliation of forward-looking GAAP diluted EPS to non-GAAP diluted EPS due to the difficulty in predicting and estimating certain information and its dependence on future events outside of control[43]