New Verizon Partnership, Cloud Expansion Yield Sales, Profit Boom for Ingram

An equipment and services agreement with Verizon dealers and strengthened relationships with cloud vendors drove double-digit revenue and profit growth for Ingram Micro.

The Santa Ana, Calif.-based distributor said net income excluding restructuring and amortization charges rose 12 percent from $139 million to $156 million, or 98 cents per share. This still, though, fell short of analyst projections of 99 cents per share.

Sales for the most recent quarter, which ended Jan. 3, jumped 18 percent from $11.83 billion to $13.96 billion, handily beating analysts' estimates of $12.89 billion.

[RELATED: Verizon Adds Ingram Micro to Help Drive Massive Partner Expansion]

Ingram Micro, however, had a 14-week fourth quarter in 2014, as compared with a 13-week quarter in 2013. The additional selling week benefited worldwide sales by some 7 percent, the company said.

"We've invested in the balance sheet, and it's delivered solid returns and will continue to deliver solid returns," Alain Monie, Ingram Micro CEO, said during the earnings call.

North America enjoyed great success in the quarter with 28 percent growth in sales to $6.04 billion. The Technology Solutions unit contributed low double-digit growth on the strength of networking and security sales.

But what really drove sales activity in North America was Ingram Micro's mobility business, which enjoyed year-over-year growth of more than 200 percent, due in large part to an April 2014 agreement with four of Verizon's largest national dealers.

"Some of the investments we're making have started to come through," Paul Read, Ingram Micro's COO, said during the earnings call.

The agreement was initially oriented around distributing handsets, Monie said, but has expanded to encompass the provisioning of supply chain services such as device life-cycle management and forward and reverse logistics.

Although the agreement has greatly benefited Ingram Micro's top line, the additional handset sales took a 0.1 percent bite out of overall gross margins.

Read said he expects the gross margin impact in the coming quarter to be just 0.05 percent as the agreement generates more services-related revenue and seasonal consumer business declines.

Ingram Micro further strengthened its ties to the telecom vendor last week when it was added to Verizon Enterprise Solutions' partner program.

Ingram Micro's mobility business has also been helped by a healthy demand for wearable technologies and new contract wins, according to Bill Humes, the distributor's CFO.

The distributor's $840 million acquisition of BrightPoint in October 2012 has also facilitated Ingram Micro's expansion of mobility offerings to Canada, France, Latin America and Asia-Pacific, Monie said.

NEXT: How Has Ingram Micro Doubled Its Cloud Revenue?

Cloud was another highlight for the distributor, with annual revenue and the number of solution provider partners more than doubling between 2013 and 2014.

Monie said Ingram Micro is working to take its cloud offering global, working with Microsoft to support its cloud solution provider network and adding SoftLayer services from IBM.

Ingram Micro is also investing in a cloud automation platform, Monie said, to ensure that cloud offerings are available to customers in an easy and seamless way even as the number of cloud vendors working with Ingram Micro continues to increase.

Sales in Europe grew on an annual basis by just 3.4 percent to $4.18 billion due to weakening exchange rates and economic uncertainty.

The European mobility business saw low double-digit sales growth, while strong areas in the Technology Solutions business included networking, storage and point-of-sale offerings.

Asia-Pacific saw impressive 24.3 percent year-over-year sales growth to $2.96 billion, with both Technology Solutions and mobility seeing solid double-digit growth.

Ingram Micro saw robust handset and accessory sales in India, a revenue increase in China for the first time in several quarters and some early sales traction across Southeast Asia.

As government policies make it increasingly difficult for American OEMs to operate in China, Read said Ingram Micro has strengthened its partnerships with Chinese OEMs and is attempting to help them also achieve success outside China.

Latin America saw sales increase 12.1 percent to $763.7 million due to strong Advanced Solutions and small- and midsize-business sales in Mexico.

Hewlett-Packard continues to be Ingram Micro's largest vendor, accounting for 12 percent of total sales, but Apple is quickly gaining ground with 11 percent of overall sales in the most recent quarter.

Investors sent Ingram Micro's stock down 5.8 percent during after-hours trading to $25.64 per share based on a weaker 2015 earnings outlook. The distributor's results were announced after the market closed Thursday.

The company projects first-quarter 2015 revenue of between $10.4 billion and $10.7 billion, below analyst predictions of $10.84 billion. Net income is expected to be between $62.3 million and $73.2 million, or 40 to 47 cents per share, well below analyst estimates of $85.7 billion.

PUBLISHED FEB. 26, 2015