Technology distributor and supply-chain services provider Ingram Micro has announced financial results for the 2011 fourth quarter and fiscal year ended Dec. 31, 2011.
Worldwide sales grew to $9.95 billion, the highest quarterly sales for the company since the fourth quarter of 2007. This compares with $9.88 billion reported in the fourth quarter of last year.
Worldwide gross profit was $554.3 million (5.57 per cent of total sales), compared with $559.9 million (5.66 per cent of total sales) in the 2010 fourth quarter. 2011 fourth quarter gross margin benefited by approximately 30 basis points from a favorable inventory position and pricing on hard disk drives. 2010 fourth quarter gross margin included a $9.1 million benefit, or approximately 9 basis points of sales, due to the partial release of the reserve for commercial taxes on software imports into Brazil.
Worldwide operating income for the 2011 fourth quarter was $176.1 million (1.77 per cent of total sales), compared with $167.3 million (1.69 percent of total sales) in the same period last year. The 2011 fourth quarter was negatively impacted by expense of $4.2 million, or 4 basis points of sales, related to reorganization charges associated with various cost-cutting initiatives implemented by the company during the quarter. The fourth quarter of 2010 included the 9 basis point favorable impact of the commercial tax reserve release noted above.
Net income was $104.9 million, or 68 cents per diluted share, including 2 cents per diluted share negative impact of the reorganization charges recorded in the quarter. This compares with net income of $115.0 million, or 71 cents per diluted share in the 2010 fourth quarter, which included a benefit of 5 cents per diluted share related to the release of a portion of the reserve for commercial taxes on software imports into Brazil.
Other key drivers of 2011 fourth quarter results:
North America operating margin of 214 basis points of sales was the highest in more than a decade, benefiting from solid execution across the business.
EMEA operating income reached an all-time high of $71.1 million, or 222 basis points of sales, driven in part by a favorable hard disk drive pricing and strength in the company’s SMB market.
Lowest level of operating expense as a percentage of revenue in more than a decade at 380 basis points of sales. As noted previously, operating expense includes a negative impact of 4 basis points from reorganization charges.
Working capital days were 22, at the low end of the company’s targeted range of 22 to 26 days.
Return on invested capital was 17.3 per cent for the quarter, significantly exceeding the company’s weighted average cost of capital.
2011 Fiscal Year
For the year ended Dec. 31, 2011, worldwide sales were $36.3 billion, an increase of 5 per cent over $34.6 billion for the 2010 year. Worldwide operating income for the 2011 full year was $458.6 million (1.26 per cent of total sales), compared with $484.4 million (1.40 per cent of total sales) for the 2010 year.
For the full year, net income was $244.2 million, or $1.53 per diluted share, which includes charges in the 2011 third quarter totaling $28.8 million, or 18 cents per diluted share, comprised of: a non-cash valuation allowance of $24.8 million recorded against the company’s deferred tax assets in Brazil, driven by the continuing losses generated in that business unit; and, a charge of $4.0 million after tax related primarily to the termination of the company’s interest rate swap associated with the repayment of its term loan in September 2011. 2010 full year net income was $318.1 million, or $1.94 per diluted share, which included a benefit of $9.1 million, or 5 cents per diluted share, related to the previously noted commercial tax reserve release.
For the full year 2012, the company currently expects revenue growth in-line with current IT spending forecasts of low to mid-single digit growth over 2011. For the 2012 first quarter, revenues are currently expected to be flat to slightly down compared to the year earlier period due to expected year-over-year declines in EMEA revenues driven primarily by continued uncertainty surrounding the European economy and current expectations for a year-over-year decline in Australia’s revenue contribution. First quarter 2012 gross margin is expected to trend down sequentially in-line with seasonal norms after removing the impact of hard disk drive pricing in the fourth quarter of 2011, which the company does not expect will provide meaningful additional benefit in the first quarter of 2012.