Ingram Micro Holding Corp Q4 FY2024 earnings call

Key Points

• Despite 2024 macro challenges, Q4 had ~3.5% year-over-year top-line growth FX-neutral, with Asia Pacific and Latin America up over 7% FX-neutral, and North America returning to growth.
• Strong performance in cloud, client and endpoint solutions; Advanced Solutions had networking slowness but server and storage growth. Large and enterprise customers strong, SMB and public sector softer.
• 2024 was pivotal: Return to public markets in Oct 2024, focus on cloud and digital strategy, divestiture of commerce and lifecycle business in 2022, focused on technology solutions and value-added services.
• Invested over $600M in cloud over decade, built Xvantage platform with over 29M lines of code, 20 intelligent engines, over 30 patents pending, rolled out in 16 countries. Example with large customer reduced operational cycle time by over 80% for cybersecurity quote.
• Won over 100 industry awards in 2024, ranked top 1% for sustainability by Ecovadis for second year, aligned around four guiding principles: be leader in digital, accelerate growth in high-margin solutions and recurring revenue, drive operational excellence, build future team.

Fiscal year 2024 net sales were $48.0 billion, roughly flat versus 2023, up 0.3% on an FX-neutral basis. In the fourth quarter, net sales were $13.34 billion, up 2.5% year-over-year in US dollars and 3.3% on an FX-neutral basis. Client and endpoint solutions saw sequential growth for the past three quarters. Advanced Solutions was impacted by networking slowness, but server and storage were up double digits year-over-year and sequentially. Regionally, North America net sales were up 3.0% in US dollars and 3.3% FX-neutral; EMEA net sales were down 1.5% year-over-year and 1.3% FX-neutral; Asia Pacific net sales were up 7.8% in US dollars and 7.7% FX-neutral; Latin America net sales were down 0.9% in US dollars but up 7.5% in constant currency. Revenue contribution: Client and endpoint solutions, cloud showed robust performance; Advanced Solutions had networking weakness but server and storage strength.

First Quarter 2025 Guidance

• Net sales expected in range of $11.43 to $11.83 billion, year-over-year growth of 2.6% at midpoint.
• Gross profit expected in range of $785 to $835 million.
• Non-GAAP diluted EPS expected in range of $0.51 to $0.61 per diluted share, based on weighted average shares outstanding of ~234.9 million and ~30% non-GAAP tax rate.
• India business expected to have temporarily impacted gross margin due to irrational competitive pricing on large contracts.
• Expect top-line growth to sustain in 2025, with factors like PC refresh, networking rebound, and AI/automation focus.

• India market faces irrational competitive pricing on large contracts, temporarily impacting gross margin.
• Macro-economic uncertainties could affect demand and pricing.
• Market mix factors, such as more lower-margin client and endpoint solutions sales, could impact gross margins in the short term.

Q: Michael Ng asked about large enterprise momentum and PC cycle.

A: Paul Bay said large enterprise growth was across regions, and there's momentum in notebook desktop refresh, including Windows refresh and aged systems.

Q: Erik Woodring asked about 1Q profitability guide and cost headwinds.

A: Michael Zilis said it's mainly margin factors from mix, including India competitive factors and market mix, with no notable one-offs besides margin impacts.

Q: Samik Chatterjee asked about tariffs and customer demand.

A: Paul Bay said tariffs are fluid, vendors are diversifying supply chains, and customers are looking at financing deals to offset potential price increases.

Q: Ruplu Bhattacharya asked about market growth and India strategy.

A: Paul Bay said North America stabilizing, Europe performing relatively well, Asia Pacific competitive with focus on quality revenue, and rebuilding teams in India. Michael Zilis added about balance sheet and selective deal participation.

Q: Surinder Singh asked about SMB market.

A: Paul Bay said SMB was down but early signs of recovery with advanced solutions and networking progress.

Q: Matt Niknam asked about public sector and working capital.

A: Paul Bay said public sector was soft globally but potential for recovery, Michael Zilis talked about working capital seasonality and free cash flow goals.

Q: Adam Tindle asked about operating income and Q1 guidance.

A: Michael Zilis discussed operating income impacts from India charges and Xvantage investment, and Q1 EBITDA trends.

Q: David Page asked about Xvantage and hyperscalers.

A: Paul Bay talked about Xvantage metrics like end-user engagement, customer reactivation, and self-service orders showing good progress.

Q: Amit Daryanani asked about growth acceleration and India size.

A: Paul Bay said no revenue guidance, but saw momentum in notebook desktop refresh and networking recovery, and India is a large business within Asia Pacific.

Q: Maggie Nolan asked about operating leverage.

A: Paul Bay said they announced 3.5% OpEx reduction globally and focus on getting efficiencies from Xvantage platform to drive operating leverage.