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Arrow Electronics Reports Q4 and Year-End 2017 Results

Arrow ElectronicsCENTENNIAL, Colo. —  Arrow Electronics, Inc. reported fourth-quarter 2017 sales of $7.63 billion, an increase of 18 percent from sales of $6.44 billion in the fourth quarter of 2016. Fourth-quarter net income of $54 million, or $0.60 per share on a diluted basis, compared with net income of $165 million, or $1.81 per share on a diluted basis, in the fourth quarter of 2016. Excluding certain items1, net income would have been $224 million, or $2.51 per share on a diluted basis, in the fourth quarter of 2017, compared with net income of $182 million, or $2.00 per share on a diluted basis, in the fourth quarter of 2016. In the fourth quarter of 2017, changes in foreign currencies had positive impacts on growth of approximately $190 million or 3 percent on sales and $0.09 or 5 percent on earnings per share on a diluted basis compared to the fourth quarter of 2016. In the fourth quarter of 2017 net income was negatively impacted by $125 million, or $1.40 per diluted share, related to U.S. tax legislation. In the fourth-quarter of 2017, net income, excluding certain items1, was positively impacted by $9 million, or $.10 per diluted share, due to tax reserve releases resulting in an effective tax rate that was below the low-end of our prior expected range.

“We are selling complete solutions enabling new entrant, mid-market, and large-scale customers to move quickly from idea to production. This is driving tremendous growth for our suppliers, and for Arrow, as evidenced by our record fourth quarter and full-year sales and operating income,” said Michael J. Long, chairman, president, and chief executive officer. “By making it easy for our customers and suppliers to capture growth, we have built unparalleled trust in the marketplace.”

Global components fourth-quarter sales of $4.94 billion grew 24 percent year over year. Fourth-quarter sales, as adjusted, grew 21 percent year over year. Americas components sales grew 25 percent year over year. Europe components sales grew 35 percent year over year. Sales in the region, as adjusted, grew 24 percent year over year. Asia-Pacific components sales grew 16 percent year over year. Sales in the region, as adjusted, grew 14 percent year over year. “Demand conditions remain strong around the world due to growing electronic content in the industrial and transportation end markets, and strong execution by our team,” said Long.

Global enterprise computing solutions fourth-quarter sales of $2.69 billion grew 10 percent year over year. Fourth-quarter sales, as adjusted, grew 6 percent year over year. Americas sales grew 5 percent year over year. Europe sales grew 19 percent year over year. Sales in the region, as adjusted, grew 8 percent year over year. “Fourth-quarter sales exceeded our expectation driven by new and expanded customer engagements, continued growth in our infrastructure software portfolio, and a return to growth for storage,” added Long.

FULL-YEAR RESULTS

Full-year 2017 sales of $26.81 billion increased 13 percent from sales of $23.83 billion in 2016. Net income for 2017 was $402 million, or $4.48 per share on a diluted basis, compared with net income of $523 million, or $5.68 per share on a diluted basis, in 2016. Excluding certain items1, net income would have been $679 million, or $7.56 per share on a diluted basis, in 2017 compared with net income of $610 million, or $6.63 per share on a diluted basis, in 2016. In 2017, changes in foreign currencies had positive impacts on growth of approximately $142 million, or 1 percent on sales, and $.07, or 1 percent, on earnings per share on a diluted basis compared to 2016.

“The investments we made to scale our business paid dividends in the fourth quarter. Operating income, excluding certain items, grew 21 percent compared to 18 percent sales growth, and cash flow from operations was $123 million despite continued investment in working capital,” said Chris Stansbury, senior vice president and chief financial officer. “In the fourth quarter we reduced net leverage for the second quarter in a row, and we returned approximately $25 million to shareholders through our stock repurchase program. In 2017 we returned approximately $161 million to shareholders through our stock repurchase program. We had approximately $359 million of remaining authorization under our share repurchase programs at the end of the year.”

GUIDANCE

“As we look to the first quarter, we believe that total sales will be between $6.4 billion and $6.8 billion, with global components sales between $4.7 billion and $4.9 billion, and global enterprise computing solutions sales between $1.7 billion and $1.9 billion. As a result of this outlook, we expect earnings per share on a diluted basis, to be in the range of $1.50 to $1.62, and earnings per share on a diluted basis, excluding any charges, to be in the range of $1.74 to $1.86 per share. Our guidance assumes an average tax rate in the range of 23.5 to 25.5 percent, down from our prior range of 27 to 29 percent due to U.S. tax legislation, and average diluted shares outstanding are expected to be 89 million. Our guidance assumes an increase in non-cash depreciation expense of $6 million related to the go-live on our Americas ERP system. We are expecting the average USD-to-Euro exchange rate for the first quarter to be approximately $1.22 to €1,” said Stansbury.

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