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Arrow Electronics Reports Record 3Q Sales

Arrow ElectronicsCENTENNIAL, Colo. — Arrow Electronics, Inc. today reported third-quarter 2018 sales of $7.49 billion, an increase of 9 percent from sales of $6.86 billion in the third quarter of 2017. Third-quarter net income of $177 million, or $1.99 per share on a diluted basis, compared with net income of $134 million, or $1.50 per share on a diluted basis, in the third quarter of 2017. Excluding certain items1, net income would have been $193 million, or $2.18 per share on a diluted basis, in the third quarter of 2018, compared with net income of $161 million, or $1.80 per share on a diluted basis, in the third quarter of 2017. Excluding certain items1, net income increased 20 percent year over year, and earnings per share on a diluted basis increased 21 percent year over year.

“Our investments in engineering and working capital are bearing fruit as evidenced by our results,” said Michael J. Long, chairman, president, and chief executive officer. “We are ahead of pace to deliver another record year in 2018.”

Global components third-quarter sales of $5.38 billion increased 11 percent year over year. Americas components sales increased 13 percent year over year. Europe components sales increased 11 percent year over year. Sales in the region, as adjusted, increased 13 percent year over year. Asia-Pacific components sales increased 8 percent year over year. Global components third-quarter operating income increased 28 percent year over year.

“This quarter we made significant advancements toward future high-growth opportunities in the areas of smart cities, edge computing, and artificial intelligence,” said Long. “These opportunities require all our capabilities across the enterprise to provide complete lifecycle solutions.”

Global enterprise computing solutions third-quarter sales of $2.11 billion increased 6 percent year over year. Sales, as adjusted, increased 9 percent year over year. Americas enterprise computing solutions sales increased 7 percent year over year. Sales in the region, as adjusted, increased 13 percent year over year. Europe enterprise computing solutions sales increased 3 percent year over year. Sales in the region, as adjusted, increased 2 percent year over year. Global enterprise computing solutions third-quarter operating income decreased 13 percent year over year and decreased 15 percent year over year excluding amortization of intangibles expense. Global enterprise computing solutions operating expenses included $6 million of expense related to prior period sales taxes abroad.

“Return on invested capital increased year over year for the fifth straight quarter. Third-quarter cash flow from operations was $494 million as our need to support growth through working capital investments moderated,” said Chris Stansbury, senior vice president and chief financial officer. “Our strong cash flow performance allowed us to reduce leverage during the quarter. We also remain committed to returning excess cash to shareholders. During the third quarter, we returned approximately $20 million to shareholders through our stock repurchase program. We had approximately $279 million of remaining authorization under our share repurchase program at the end of the third quarter.”

NINE-MONTH RESULTS

In the first nine months of 2018, Arrow’s sales of $21.76 billion increased 14 percent from sales of $19.02 billion in the first nine months of 2017. Net income for the first nine months of 2018 was $486 million, or $5.47 per share on a diluted basis, compared with net income of $349 million, or $3.88 per share on a diluted basis in the first nine months of 2017. Excluding certain items1, net income would have been $556 million, or $6.26 per share on a diluted basis, in the first nine months of 2018 compared with net income of $452 million, or $5.03 per share on a diluted basis, in the first nine months of 2017.

GUIDANCE

“As we look to the fourth quarter, we believe that total sales will be between $7.7 billion and $8.1 billion, with global components sales between $5.175 billion and $5.375 billion, and global enterprise computing solutions sales between $2.525 billion and $2.725 billion. As a result of this outlook, we expect earnings per share on a diluted basis to be in the range of $2.21 to $2.37, and earnings per share on a diluted basis, excluding certain items, to be in the range of $2.46 to $2.62 per share. Our guidance assumes an average tax rate of 23.5 percent to 25.5 percent, and average diluted shares outstanding are expected to be approximately 88 million. Guidance is based on an average USD-to-Euro exchange rate for the fourth quarter of approximately $1.16 to €1. At the midpoints of our fourth-quarter guidance ranges, full-year 2018 sales would total approximately $29.66 billion, and would grow 12 percent compared to full-year 2017. Full-year 2018 earnings per share, on a diluted basis, excluding certain items1, would total approximately $8.80 and would grow 17 percent compared to full-year 2017,” said Stansbury.

Please refer to the CFO commentary, which can be found at investor.arrow.com, as a supplement to the company’s earnings release.

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