Ingram Micro Cost Cuts Boost Q2 Profit

"Despite increasingly competitive markets, we were able to achieve the highest second-quarter gross margin in a decade through pricing discipline, growth in higher-margin business units and improvement in our business mix," said CEO Greg Spierkel in a statement. "We continue to benefit from our decisions to diversify our profit streams through fee-for-service models and adjacent technologies, such as logistics and data capture/point-of-sale."

The Santa Ana, Calif.-based company earned $58.9 million, or 35 cents per share, on $8.82 billion in sales, which compares to earnings of $52.4 million, 30 cents per share, on $8.19 billion in the year-ago quarter. The results include about $5.5 million, or 3 cents per share, in costs related to expense-reduction programs.

Analysts had expected earnings of 35 cents per share, excluding costs, and $8.58 billion in sales, according to Thomson Financial.

In North America, the Santa Ana, Calif.-based distributor reported $3.52 billion in sales, a 7 percent increase that was driven primarily the acquisition of DBL Distributing, according to the company.

"We began to see some of the benefits of our cost-containment and mix-management actions," said William Humes, executive vice president and CFO, in a statement. "We made the tough decisions to reorganize where necessary and address rising transportation costs through freight-recovery programs, which will be implemented by the end of the third quarter. Our focus on working capital yielded solid progress, as evidenced by the increase in inventory velocity compared to earlier this year."

For the third quarter, Ingram Micro expects earnings between $52 million and $61 million, or 31 cents to 36 cents per share, and revenue between $8.5 billion and $8.8 billion. Analysts had projected earnings of 40 cents per share on $8.79 billion in sales.

"We expect the macroeconomic softness to continue into the third quarter," Spierkel said. "Solid growth is expected from Latin America, but sales growth in the other regions will be more modest."