Ingram Micro's fourth quarter sales have dropped 19 per cent in US dollars and 13 per cent on currency neutral terms when compared with the 2014 fourth quarter. However, there were mitigating circumstances.
In a statement the company said that, as highlighted on the company's 2015 third quarter earnings call, last year's fiscal fourth quarter benefited from approximately US$900 million related to an additional week of sales and also benefited from approximately US$500 million in North American mobility distribution business that the company elected to exit this year due to profitability levels that did not meet the company's objectives.
The company also had negotiated a favourable change in contract terms for some of its high volume European fulfillment business, which led to recognising the revenue on a net basis versus a gross basis as it did last year. This had a negative impact of about $US300 million on 2015 fourth quarter worldwide sales.
Worldwide fourth quarter sales were US$11.3 billion compared to the US$14 billion recorded in the 2014 fourth quarter.
This follows it sale last week for US$6 billion to Tianjin Tianhai Investment Company and this week's announcement that president and COO, Paul Read, will step down.
However, Ingram Micro CEO, Alain Monié, put an upbeat spin on the situation in the company's earnings statement.
"We had a solid close to a strong year of execution, and we are pleased with the progress we are making against our strategic initiatives," Monié said.
"We are excited about our pending transaction to join HNA Group, as we will have the opportunity to even better serve our vendor and customer partners and help them achieve their business objectives.
"Upon the closing of the transaction announced last week, we expect to have the ability to accelerate our investments, both organically and through M&A, to enhance and add to our capabilities in high value IT solutions, mobility lifecycle services, commerce and fulfillment solutions and Cloud, while also continuing to extend our geographic reach."
Fourth quarter results of operations
Cash flow from operations for the 2015 fourth quarter was US$500 million, bringing total cash flow from operations for the 2015 full year to US$1.5 billion. Cash flow benefited from the reduction in revenues and strong global execution on the company's working capital improvement program, which helped reduce working capital days at the end of the 2015 fourth quarter to 21, a 4 day improvement from the 2015 third quarter and year-over-year.
2015 fourth quarter non-GAAP operating margin was 2.11 per cent, up from 1.77 per cent last year. 2015 fourth quarter non-GAAP operating income of US$239 million was down only modestly when compared to non-GAAP operating income of US$247 million in the year earlier period, despite significant foreign currency headwinds and one less week of sales as noted above. GAAP operating income for the 2015 fourth quarter was US$196 million, or 1.73 per cent of sales, compared to US$201 million, or 1.44 per cent of sales, in the 2014 fourth quarter.
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