Ingram Micro Holding Corporation

Greetings. Welcome to Ingram Micro Fourth Quarter and Fiscal 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Willa McMahon, Vice President, Investor Relations. Thank you. You may begin.

Thank you, operator. I'm here today with Paul Bay, Ingram Micro's CEO, and Mike Zylis, our CFO. Before I turn the call over to Paul, let me remind you that today's discussion contains forward-looking statements within the meaning of the federal securities laws, including predictions, estimates, projections, or other statements about future events, statements about our strategy, demand, plans, and positioning, growth, cash flow, capital allocation, and stockholder returns, as well as our expectations for future fiscal periods. Actual results may differ materially from those mentioned in these forward-looking statements because of risks and uncertainties discussed in today's earnings release and in our filings with the SEC. We do not intend to update any forward-looking statements. During this call, we will reference certain non-GAAP financial information. Reconciliations of non-GAAP results to GAAP results are included in our earnings press release and the related form 8K available on the SEC's website or on our investor relations website. With that, I'll turn the call over to Paul.

Good afternoon and thank you for joining today's call. Despite the macroeconomic challenges we saw throughout 2024, we exited Q4 with a return to year-over-year top-line growth of nearly 3.5% on an FX-neutral basis within our guidance range. We saw particular strength in Asia Pacific and Latin America, both up over 7% on an FX-neutral basis, and I'm excited that North America returned to year-over-year growth. From a mixed perspective, we continue to see robust performance in cloud and in client and endpoint solutions, which both grew over year over year and quarter over quarter. Advanced solutions was impacted by slowness in networking, but server and storage were each up double digits versus the prior year and sequentially. In terms of the customer category, we saw strength in sales to large and enterprise customers, while small and medium-sized businesses, along with public sector, remain softer. Considering these dynamics, we believe the return to top-line growth we saw in Q4 will sustain in 2025. Client and endpoint solution sales improved, consistent with the growth we are now seeing in desktop and notebook categories. We also expect to see networking continue to rebound from the challenging year-over-year comparisons that continued throughout 2024. Lastly, we see more end users and vendors sharpening their focus on evolving automation use cases, including the use of AI, where we are helping our customers and partners navigate a rapidly changing IT landscape. We will continue to forge the path with AI and automation, and we look forward to sharing the data with you in the coming quarters that demonstrates our progress as we become increasingly digital. 2024 was a pivotal year for Ingram Micro. We celebrated our return to the public markets in October. But more importantly, we also do so as a different company than we were when we went private in 2016. Since that time, we have made strong progress on our cloud and digital strategy. And since the divestiture of our commerce and lifecycle business in 2022, we are even more focused on technology solutions and related value-added services. Since our founding 45 years ago, Ingram Micro has created a technology infrastructure that enables our over 1,500 vendor partners and more than 160,000 customers across 57 countries to connect, communicate, and grow. Today, we have taken this foundational infrastructure and digitized it with the goal of becoming a leading business-to-business platform for the global technology ecosystem. To do this, we have invested more than $600 million in over roughly a decade in building our capabilities and technologies in cloud. This was the foundation for our AI-driven digital experience platform, XVantage, where we have now been investing for the last two years. XVantage is built upon more than 29 million lines of code, 20 intelligent engines, all surrounded by more than 30 patents pending. We have rolled out XVantage, the XVantage platform, in 16 countries, with further deployments still to come. In addition to enabling real-time interaction, frictionless quoting, and data insights into a single platform, XVantage allows for more seamless provisioning of Ingram Micro's own more profitable service offering, coupled with product sales, as a result of bringing together a complete solution, including hardware, software, services, and cloud. XVantage creates value for both our customers and our vendor partners. One example with a large customer of ours is in the transformation we have enabled with a leading cybersecurity vendor. Using Xantage, the technology solutions provider was able to reduce its operational cycle time by over 80%, decreasing the average time required to create a ready-to-order, complex cybersecurity quote from more than two hours down to 10 minutes or less. They were able to redeploy half of the team dedicated to those cybersecurity solutions to proactive sales, activities including cross and upselling, as well as renewal and growth initiatives related to subscriptions and licenses. Ingram Micro is also empowering small and medium businesses, such as a managed service provider, or MSP, that is using our platform to adopt self-coding and ordering to help transform their decades-old sales processes and better manage their opportunity pipeline. The time savings and ease of use we provide drove improved service level agreements with their end users and provided the MSP with the ability to shift resources to proactive sales and business development activities. With the help of our platform, the customer is able to separate sales and operational tasks and achieve more than a 60% increase in sales activities without hiring additional resources. Industry analysts are also noticing the value of Ingram Micro X Vantage platform. In a recent article, IDC's Vice President for Channels and Alliances summarized what works and what doesn't in partner programs. The article describes Ingram Micro's ability to help IT providers stand out from the crowd, noting that vendors that figure out how to personalize their portals and content by Ingram Micro's expanded platform will have a distinct advantage. In 2024, we won over 100 industry awards, including AWS Global Partner of the Year. and AWS Innovation Partner of the Year for the LATAM region, for helping empower thousands of channel partners to create more value on AWS. We were also named HPE's Global Distributor of the Year for the second year in a row. During 2024, we also saw continued success with our global sustainability efforts, ranking in the top 1% for sustainability by Ecovados for the second year in a row. These external recognitions underscore our commitment to optimizing the human touch while we become increasingly digital. Turning to 2025, aligning the company around continued progress of four guiding principles. Let me walk you through each one briefly. The first is to be a leader in digital, which has been the center of our ongoing transformation. Internally, with our vendor partners and our customers, we are standardizing and modernizing the way we all work, serve, and support the industry through improved and human-enabled processes. With the X-Standard platform driving innovation and our supply chain backbone providing strength and stability. Second is accelerating the growth of the high-margin and more complex solutions that sit in our advanced solutions and cloud businesses, along with expanding recurring revenues. The path to success here is growing profitable operating income through sales, focus, and execution. Third is driving operational excellence to create efficiencies through targeted investments in automation, the simplification and modernization of our internal go-to-market and business processes, operations and supply chain solutions, and digital technologies to create a high-performing global platform operating model. And fourth, building the anger micro team of the future by developing our current talent pool and providing associates with paths to expand their skill sets and provide the best solutions, user experience, and return on investment to our partners and our customers. Entering 2025, these four guiding principles are driving continued innovation and differentiation on the platform. Looking to the year, we are excited about the return to growth on the top line, which we believe is sustainable in 2025. We are confident we are taking the right and necessary steps to address the challenges in India that Mike will discuss here shortly. At the global level, the technology and operational investments we have made position us and our customer and vendor partners to gain efficiencies and drive growth as well as we continue to roll out XVantage globally. And as always, we remain committed to driving quality of revenue There's a lot to look forward to this year. With that, I'll turn the call over to Mike.