Earnings call transcript: Ingram Micro Q4 2024 earnings beat expectations
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Overview
The earnings call presents mixed signals. While there are strong investments in cloud and digital transformation, financials show flat net sales and declining margins, which are concerning. The Q&A reveals some uncertainties, particularly around tariffs and SMB market weakness. However, optimistic guidance for 2025 and shareholder returns through dividends and buybacks balance these negatives. With no market cap provided, a neutral sentiment is suggested as the stock may not react strongly in either direction.
Key Financial Performance
Net Sales $48,000,000,000, roughly flat versus 2023, up 0.3% on an FX neutral basis, impacted by macro headwinds.
Gross Profit $3,440,000,000 or 7.18% of net sales, down 20 basis points from last year due to line of business, product and geographic mix, and a stronger competitive environment.
Operating Expenses $2,450,000,000 or 5.1% of net sales, essentially flat from 2023, but included elevated OpEx associated with digital investments totaling $114,900,000, up from $69,800,000 in 2023.
Non-GAAP Net Income $627,900,000, with a diluted EPS of $2.79.
Adjusted EBITDA $1,320,000,000, down from $1,350,000,000 in 2023.
Q4 Net Sales $13,340,000,000, up 2.5% year over year in U.S. dollars and up 3.3% on an FX neutral basis.
Q4 Gross Profit $936,100,000 or 7.01% of net sales, down 51 basis points year over year, driven by mix factors and a competitive environment.
Q4 Operating Expenses $630,800,000 or 4.73% of net sales, compared to 4.65% in the same period last year, impacted by discrete charges related to a fraud matter in India.
Adjusted Income from Operations $305,200,000, with an adjusted income from operations margin of 2.29%, down from 2.86% year over year.
Q4 Non-GAAP Net Income $213,100,000, compared to $220,900,000 in the same period last year.
Q4 Adjusted EBITDA $418,100,000, compared to $435,400,000 in the comparable period last year.
Adjusted Free Cash Flow $443,300,000 for the full year.
Net Working Capital $4,100,000,000, down from $4,400,000,000 year over year.
Term Loan Repayment $483,000,000 during 2024, bringing total repayments to $1,560,000,000 since the beginning of 2022.
Interest Expense Lower by $41,800,000 year over year due to debt pay downs.
Q4 Stock-Based Compensation Charge $34,100,000 or 26 basis points of net sales related to the IPO.
Q1 Dividend $0.074 per share or $17,500,000, payable on March 25, 2025.
Share Repurchase Plan Up to $75,000,000 of common stock.
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Operating Highlights
Xvantage Platform: Ingram Micro has invested over $600 million in building capabilities and technologies in cloud, leading to the development of the AI-driven digital experience platform, Xvantage, which has been rolled out in 16 countries.
Client and Endpoint Solutions: Sales improved in client and endpoint solutions, driven by growth in desktop and notebook categories.
Cybersecurity Solutions: Xvantage enabled a leading cybersecurity vendor to reduce operational cycle time by over 80%, enhancing sales activities.
Geographic Growth: In Q4, Ingram Micro saw growth in Asia Pacific and Latin America, both up over 7% on an FX neutral basis, while North America returned to year-over-year growth.
Public Sector Sales: Sales to the public sector remained softer, with expectations for recovery in 2025.
India Market: India is experiencing a competitive environment impacting sales and margins, with a focus on selective business pursuit.
Operational Efficiencies: Ingram Micro is focused on driving operational excellence through targeted investments in automation and modernization of internal processes.
Cost Reductions: Restructuring initiatives in 2024 are expected to deliver annualized cost reductions of $85 million to $95 million.
Digital Transformation: Ingram Micro aims to be a leader in digital transformation, standardizing and modernizing operations with the Xvantage platform.
Focus on High-Margin Solutions: The company is accelerating growth in high-margin and complex solutions within Advanced Solutions and Cloud.
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Risk or Challenges
Macroeconomic Challenges: The company faced macroeconomic challenges throughout 2024, impacting overall performance and growth.
Competitive Environment: There is a heightened competitive environment affecting gross margins, particularly in India, where aggressive pricing pressures are noted.
Supply Chain Issues: The company is experiencing challenges in the networking segment, which has been down for several quarters, impacting overall sales.
Regulatory Issues: The company incurred discrete charges related to a fraud matter in India, impacting gross profit and operating expenses.
Operational Efficiency: Restructuring initiatives were undertaken to enhance organizational efficiency, with expected annualized cost reductions of $85 million to $95 million.
Market Volatility: The company anticipates continued volatility in the market, particularly in the public sector and small to medium-sized business segments.
Economic Factors: The company is monitoring economic conditions, including inflation and interest rates, which may impact customer spending and demand.
Investment in Digital Transformation: Ongoing investments in digital transformation (Xvantage) are expected to incur elevated operational expenses, impacting short-term profitability.
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Guidance & Outlook
Investment in Xvantage: Ingram Micro has invested over $600 million in building capabilities and technologies in cloud, with a focus on the AI-driven digital experience platform Xvantage, which has been rolled out in 16 countries.
Focus on Advanced Solutions and Cloud: The company aims to accelerate growth in high-margin and complex solutions within its Advanced Solutions and Cloud businesses, expanding recurring revenue.
Operational Excellence: Ingram Micro is driving operational excellence through targeted investments in automation and modernization of internal processes.
Talent Development: The company is focused on developing its current talent pool to provide the best solutions and user experience.
Sustainability Efforts: Ingram Micro ranked in the top 1% for sustainability by EcoVadis for the second consecutive year.
2025 Revenue Growth: Ingram Micro expects a return to top-line growth in 2025, with a forecast of net sales in Q1 2025 ranging from $11.43 billion to $11.83 billion, representing year-over-year growth of 2.6% at the midpoint.
Gross Profit Expectations: For Q1 2025, gross profit is expected to be in the range of $785 million to $835 million.
Non-GAAP EPS Guidance: Non-GAAP diluted EPS for Q1 2025 is expected to be in the range of $0.51 to $0.61.
Operational Efficiency: The company aims to reduce operating expenses as a percentage of net sales below 5% over the long term.
Cost Reduction Initiatives: Restructuring initiatives in 2024 are expected to deliver annualized cost reductions in the range of $85 million to $95 million.
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Shareholder Return Plan
Quarterly Cash Dividend: $0.074 per share, totaling $17,500,000, payable on March 25, 2025, to shareholders of record on March 11, 2025.
Share Repurchase Plan: A one-year share repurchase plan approved for up to $75,000,000 of the company’s common stock.
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Key Q&A
Q:Could you talk a little bit about why large enterprise is outperforming? Are you seeing any sophisticated buying ahead of tariffs?
A:The purchasing in our large enterprise business was across all regions, not just North America. We saw growth in client endpoint solutions, advanced solutions, and cloud. The refresh momentum is primarily driven by Windows and AI PCs.
Q:What are you hearing from your customers and what do you see in your pipeline that gives you enough confidence to say you can return to top line growth in 2025?
A:We see strength in endpoint client solutions and expect networking to improve. IDC predicts an 8% growth in 2025 after a negative 6% in 2024. Our leading indicators from large vendors show signs of improvement.
Q:Can you help me just understand if there are any one-time costs embedded in your 1Q profitability guide?
A:There are no notable one-time costs; the guidance reflects margin factors, particularly competitive pressures in India.
Q:How are you thinking about and how are customers sort of relaying what probably changed in terms of demand if tariffs were to sort of impact?
A:The tariff situation is fluid. We typically pass through tariffs and don’t bear those costs. The impact on demand will depend on price elasticity and customer tolerance.
Q:Is the SMB market weaker than you’re anticipating?
A:Yes, SMB was down double digits for most quarters, but we see early signs of recovery as we move into 2025.
Q:Is there a change in the expectation for the year of how you’re going to drive operating leverage?
A:We are focused on driving efficiencies through Xvantage and have announced a 3.5% reduction in OpEx globally.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer regarding the specific impact of tariffs on demand and pricing strategies, using vague language about the fluidity of the situation without providing concrete data or examples.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
America North
Bank America
Beig CEO
CEO Ingram
CFO Ingram
Client
EBIT
Europe
Goldman Sachs
India factor
Micro Morgan
Micro Silas
Micro afternoon
Micro couple
Nagy Goldman
SMB
Silas CFO
Stanley question
Vantage
Windows
Xvantage
challenge
color
dollar line
ease use
end business
folk
follow
income dollar
metric
nature
piece
side
sign
solution strength
sort
tariff
user engagement
INGM Transcript
Ingram Micro Holding Corporation (INGM) Q3 2025 Earnings Call Transcript
Unknown10-31
The earnings call reveals mixed financial performance: strong revenue growth but declining margins and adjusted free cash flow outflow. While the company maintains a positive outlook, the ransomware incident and uncertainties in AI impact create caution. Q&A insights suggest stable margins and solid cash flow expectations, but management's lack of clarity on AI and cash flow guidance tempers optimism. Overall, the sentiment is neutral, balancing positive growth and operational performance with concerns over margins and guidance clarity.
Ingram Micro Holding Corporation (INGM) Q2 2025 Earnings Call Transcript
Unknown8-7
The earnings call presents a mixed picture: while there is a record revenue growth of 16.2% and positive advancements in server and networking, the guidance for the next quarter is moderate at 3-5%. The Q&A highlights uncertainties in government subsidies and AI revenue impact, and management's evasive answers create some uncertainty. The positive financial performance is offset by cautious guidance and unclear responses, suggesting a neutral stock price reaction.
Ingram Micro Holding Corporation (NYSE:INGM) Q4 2024 Earnings Call Transcript
Positive3-5
The earnings call summary shows strong performance in key areas like Asia Pacific and Latin America, and a robust product performance in cloud and endpoint solutions. The Q&A highlights confidence in 2025 growth and a $200 million share repurchase program, which are positive signals. However, risks like macroeconomic challenges and competitive pricing in India are noted, but the overall outlook remains positive due to strong financial metrics and optimistic guidance.
Earnings call transcript: Ingram Micro Q4 2024 earnings beat expectations
Unknown3-4
The earnings call presents mixed signals. While there are strong investments in cloud and digital transformation, financials show flat net sales and declining margins, which are concerning. The Q&A reveals some uncertainties, particularly around tariffs and SMB market weakness. However, optimistic guidance for 2025 and shareholder returns through dividends and buybacks balance these negatives. With no market cap provided, a neutral sentiment is suggested as the stock may not react strongly in either direction.
INGM Slides
Frequently Asked Questions
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
