Group 1 - Henson Group has been awarded the Ingram Micro Managed Services Provider of the Year at the 2024 Ingram Micro ONE Innovation Summit for its exceptional expertise and innovation across multiple solution areas [1][3] - The award recognizes Henson Group's commitment to customer satisfaction and its role as an industry leader in providing cloud solutions [3][5] - Henson Group serves various industries, including financial services, retail, manufacturing, healthcare, and technology, and has helped over 1,000 companies [5][6] Group 2 - The company offers comprehensive cloud solutions, including Azure Spend Management, Azure Environment Monitoring & Tuning, and Azure Optimization [4][8] - Henson Group is a six-time Microsoft Partner of the Year and holds multiple Microsoft-certified competencies, including the exclusive Azure Expert MSP certification [6][8] - The leadership team emphasizes the importance of strong partnerships and the relentless pursuit of excellence in delivering cloud solutions that drive significant value for clients [6][8]

Core Insights - Ingram Micro (NYSE: INGM) is a recent IPO that has not received significant attention but possesses substantial scale and free cash flow generation capabilities [1] - The company plays an essential role in the tech service industry and has a resilient working capital model, particularly in adverse macroeconomic conditions [1] Company Overview - Ingram Micro has a strong position in the tech service industry, indicating its importance in the supply chain and technology distribution [1] - The company’s ability to generate free cash flow is a key strength, suggesting financial stability and potential for reinvestment or shareholder returns [1] Market Position - The working capital model of Ingram Micro is highlighted as particularly resilient, which may provide a competitive advantage during economic downturns [1] - The company’s scale allows it to navigate challenges in the tech service sector effectively [1]

Financial Data and Key Metrics Changes - In Q3 2024, the company reported net sales of $11.76 billion, a decrease of 1.4% year-over-year, primarily due to lower sales in North America and Latin America, partially offset by growth in Asia-Pacific [17][22] - Gross profit was $845.5 million, representing 7.19% of net sales, an increase of 2 basis points from the previous year, driven by a shift towards higher-margin cloud-based solutions [26] - Non-GAAP net income for the quarter was $159.2 million, compared to $148.6 million in the same period last year, with Q3 non-GAAP diluted EPS at $0.72 [32] Business Line Data and Key Metrics Changes - Client and endpoint solutions and advanced solutions faced macro headwinds, while cloud and other categories experienced double-digit growth [20][21] - The cloud segment has grown to a double-digit share of global gross profit, indicating a strategic shift towards higher-margin products [19] Market Data and Key Metrics Changes - North America net sales were $4.3 billion, down from $4.6 billion year-over-year, primarily due to declines in client and endpoint solutions [22] - EMEA net sales totaled $3.5 billion, a slight decrease of 0.1% year-over-year, while Asia-Pacific net sales increased by 8.8% to $3.2 billion, driven by strong growth in mobility distribution [24] Company Strategy and Development Direction - The company aims to transform into a platform company, focusing on customer-centric solutions and leveraging investments in AI and cloud technologies [9][10] - A significant investment of over $600 million has been made in the cloud business and marketplace over the past decade, alongside more than 40 acquisitions to enhance technical resources and market expertise [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the stabilization of the IT market, anticipating a rebound in PC and networking spending in 2025 [38] - The company forecasts Q4 2024 net sales in the range of $13.0 billion to $13.5 billion, representing approximately 2% year-over-year growth at the midpoint [39] Other Important Information - Adjusted free cash flow was negative $254.6 million for the quarter, typical for Q3 due to inventory investments for seasonal sales [35] - The company plans to initiate a quarterly cash dividend beginning in Q1 2025, reflecting confidence in financial stability [36] Q&A Session Summary Question: Expectations for a rebound in PC spend and networking in 2025 - Management noted that networking is expected to improve, and the PC refresh cycle has shown consistent improvement throughout the year [44][45] Question: Thoughts on product mix for Q4 and 2025 - Management indicated that while advanced solutions faced headwinds, they expect growth in servers, storage, and cybersecurity, with cloud continuing to show good growth [48][49] Question: Update on geographic expansion since becoming a public company - The company has focused on extending geographic reach and capitalizing on scale, with significant growth in emerging markets [53][55] Question: Operating margin expectations going into 2025 - Management highlighted ongoing cost reductions and investments in growth areas, expecting continued improvement in operating margins over time [57][59] Question: Competitive pricing dynamics in the market - Management acknowledged pockets of pricing pressure but stated it is not impacting the company globally [61]

Financial Performance - Net sales for the thirteen weeks ended September 28, 2024, were $11,762,628, a decrease of 1.4% compared to $11,925,373 for the same period in 2023[9] - Gross profit for the thirteen weeks ended September 28, 2024, was $845,492, down from $854,844 in the prior year, reflecting a gross margin of approximately 7.2%[9] - Net income for the thirteen weeks ended September 28, 2024, was $76,969, a decrease of 11.3% from $86,783 in the same period last year[11] - Basic and diluted earnings per share for the thirteen weeks ended September 28, 2024, were $0.35, compared to $0.39 for the same period in 2023[9] - Operating expenses for the thirteen weeks ended September 28, 2024, were $627,318, slightly up from $623,352 in the prior year[9] - Income from operations for the thirteen weeks ended September 28, 2024, was $218,174, up from $212,402 in 2023, representing a 2.0% increase[82] Equity and Liabilities - Total stockholders' equity increased to $3,613,905 as of September 28, 2024, from $3,506,289 at December 30, 2023[7] - The company reported total liabilities and stockholders' equity of $18,562,723 as of September 28, 2024, compared to $18,420,314 at December 30, 2023[7] - Total debt decreased to $3,838,451 million from $3,923,608 million, with a significant repayment of $150,000 million on the Term Loan Credit Facility[65] Cash Flow and Capital Expenditures - Cash provided by operating activities for the quarter was $23,878,000, a decrease from $59,764,000 in the prior year, indicating a decline of approximately 60%[20] - Total capital expenditures for the quarter were $106,643,000, down from $164,986,000 in the same period last year, showing a reduction of about 35%[20] - Capital expenditures for the thirteen weeks ended September 28, 2024, totaled $36,972, a decrease of 39.2% from $60,779 in the same period of 2023[82] Foreign Currency and Adjustments - The company experienced a foreign currency translation adjustment gain of $85,371 for the thirteen weeks ended September 28, 2024, compared to a loss of $107,689 in the same period last year[11] - The company reported a foreign currency translation adjustment loss of $107,689,000 for the quarter ended September 30, 2023[16] - The company recorded a net foreign currency exchange loss of $9,322 for the thirteen weeks ended September 28, 2024, compared to a loss of $10,033 for the same period in 2023[51] Tax and Legal Matters - The effective tax rate for the Thirteen Weeks Ended September 28, 2024, was 35.4%, up from 27.9% for the same period in 2023[70] - The Brazilian subsidiary faces tax assessments totaling Brazilian Reais 40,606 ($7,460) in principal and penalties, with a reasonably possible loss of Brazilian Reais 764,917 ($140,530)[75] - The company has recorded a contingent liability related to a fine of €19,500 imposed by the French Competition Authority, with approximately $20,000 already paid[75] - The company is involved in various ongoing legal claims and investigations, which may materially affect its financial condition and results of operations[73] Market Strategy and Operations - The company plans to continue expanding its market presence and integrating new technologies into its platform[5] - The company is focused on retaining key personnel and adapting to industry changes, including supply constraints in technology categories[5] - The company operates in four geographic segments: North America, EMEA, Asia-Pacific, and Latin America, with segment profit measured by income from operations[78] Shareholder Returns - The company declared dividends of $10,462,000 in the previous year, which decreased to $6,174,000 in the current year, indicating a reduction of about 41%[20] - Cash dividends paid to minority interest stockholders were $6,174 for the thirty-nine weeks ended September 28, 2024, compared to $10,462 for the same period in 2023[34] Employee Compensation and Awards - The company recognized compensation expense for cash awards amounting to $6,087 for the thirteen weeks ended September 28, 2024, compared to $6,057 for the same period in 2023[44] - As of September 28, 2024, the unrecognized compensation costs related to cash awards were $39,328, expected to be recognized over a remaining weighted-average period of approximately 1.6 years[44] - Ingram Micro reported a total of 67,598 cash awards non-vested as of December 30, 2023, with 1,895 granted and 851 vested by March 30, 2024, resulting in 67,316 non-vested awards[43] Interest Rate Exposure - Company is exposed to interest rate changes on long-term debt, with a potential annual expense increase of approximately $8,817 or decrease of $12,600 for a 1% change in interest rates[143] - Each one-eighth percentage point change in interest rates would result in a change of approximately $5,825 in annual interest expense under the Term Loan Credit Facility and ABL Credit Facilities[143] - Company aims to finance its business at competitive interest rates while moderating exposure to interest cost volatility[143] - Following the cessation of LIBOR on June 30, 2023, the company amended agreements to establish a 5.317% upper limit on SOFR interest rates[143] Miscellaneous - The company revised its cash flow statement for the thirty-nine weeks ended September 30, 2023, to correct previously identified errors[39] - The company completed an IPO on October 25, 2024, issuing 11,600,000 shares at $22.00 per share, resulting in net proceeds of approximately $233,110 after expenses[87]

Financial Performance - Net sales for the fiscal third quarter 2024 were $11.8 billion, a decrease of 1.4% compared to $11.9 billion in the prior fiscal third quarter[6]. - Gross profit was $845.5 million, down from $854.8 million in the prior fiscal third quarter, with a gross margin of 7.19%, slightly up from 7.17%[6][7]. - Net income on a GAAP basis was $77.0 million, or $0.35 per diluted share, compared to $86.8 million, or $0.39 per diluted share in the prior year[5][11]. - Non-GAAP net income was $159.2 million, or $0.72 per diluted share, compared to $148.6 million, or $0.67 per diluted share in the prior year[5][11]. - Income from operations was $218.2 million, an increase from $212.4 million in the prior fiscal third quarter, with an income from operations margin of 1.85%[9][10]. - Adjusted EBITDA was $331.6 million, compared to $314.0 million in the prior fiscal third quarter[10]. - Net income for the thirteen weeks ended September 28, 2024, was $76,969, a decrease of 11.3% from $86,783 in the prior year[34]. - Basic and diluted earnings per share for Class A and Class B shares were $0.35 for the thirteen weeks ended September 28, 2024, down from $0.39 in the same period of 2023[34]. - Adjusted Income from Operations for the thirteen weeks ended September 28, 2024, was $253,949,000, down 4.3% from $265,481,000 in the prior year[47]. - Adjusted EBITDA for the thirty-nine weeks ended September 28, 2024, was $900,573,000, down 1.9% from $917,702,000 for the same period in 2023[48]. - Adjusted net income for the thirty-nine weeks ended September 28, 2024, was $506,929,000, a decrease of 6.3% from $540,740,000 for the same period in 2023[51]. Cash Flow and Operations - Cash used in operations was $277.0 million, with adjusted free cash flow at $(254.6) million, an improvement from $(281.5) million in the prior fiscal third quarter[8]. - Year-to-date cash provided by operations was $23.9 million, with adjusted free cash flow at $106.1 million, compared to $59.8 million and $6.5 million in the same period in 2023[13]. - Cash provided by operating activities was $(277,040,000) for the thirteen weeks ended September 28, 2024, compared to $(256,008,000) for the same period in 2023[36]. - Cash and cash equivalents at the end of the period were $849,472,000, a slight decrease from $864,627,000 at the end of the same period in 2023[38]. - Cash and cash equivalents as of September 28, 2024, were $(849,472,000), slightly improved from $(864,627,000) as of September 30, 2023[49]. - Adjusted free cash flow for the thirty-nine weeks ended September 28, 2024, was $106,112,000, compared to $6,473,000 for the same period in 2023[55]. Assets and Liabilities - Total current assets increased to $15,481,854 as of September 28, 2024, compared to $15,354,317 as of December 30, 2023[32]. - Total liabilities stood at $14,948,818 as of September 28, 2024, slightly up from $14,914,025 at the end of the previous year[31]. - Retained earnings increased to $1,254,283 as of September 28, 2024, compared to $1,079,776 at the end of 2023, reflecting a growth of approximately 16.2%[33]. - The company reported a total of $2,643,807 in additional paid-in capital as of September 28, 2024, down from $2,655,776 at the end of 2023[33]. - Long-term debt as of September 28, 2024, was $3,344,033,000, a decrease from $3,619,081,000 as of September 30, 2023[49]. Future Outlook - For the fiscal fourth quarter 2024, the company expects net sales between $13.0 billion and $13.5 billion, with non-GAAP diluted EPS guidance of $0.85 to $0.98[22]. - The company provided forward-looking estimates of non-GAAP diluted EPS for fiscal Q4 2024, but cannot reconcile these to GAAP diluted EPS due to uncertainties[58]. - A one-time charge of $32.4 million ($0.14 per share) will impact GAAP diluted EPS in October 2024, related to the conversion of the participation plan to share-based compensation[58]. - The charge mentioned will be excluded from calculations of non-GAAP diluted EPS, Adjusted EBITDA, and non-GAAP net income[58]. Strategic Focus - The company is focused on expanding its technical reach and scope through its Xvantage platform, aiming for profitable growth and quality of net sales[5]. - The company continues to focus on integrating acquisitions and expanding its market presence, despite facing various risks and uncertainties[29].