CENTENNIAL, Colo. — Arrow Electronics, Inc. today reported third-quarter 2019 sales of $7.08 billion, a decrease of 6 percent from sales of $7.49 billion in the third quarter of 2018. Third-quarter sales, as adjusted, decreased 3 percent year over year. Third-quarter net income of $92 million, or $1.10 per share on a diluted basis, compared with net income of $177 million, or $1.99 per share on a diluted basis, in the third quarter of 2018. Excluding certain items1, net income would have been $155 million, or $1.86 per share on a diluted basis, in the third quarter of 2019, compared with net income of $191 million, or $2.15 per share on a diluted basis, in the third quarter of 2018. In the third quarter of 2019, changes in foreign currencies negatively impacted growth by approximately $103 million or 1 percent on sales and $.04 or 2 percent on earnings per share on a diluted basis compared to the third quarter of 2018.
Global components third-quarter sales of $5.05 billion decreased 6 percent year over year. Sales, as adjusted, decreased 4 percent year over year. Asia-Pacific components sales increased 4 percent year over year. Sales in the region, as adjusted, increased 5 percent year over year. Europe components sales decreased 7 percent year over year. Sales in the region, as adjusted, decreased 2 percent year over year. Americas components sales decreased 16 percent year over year. Sales in the region, as adjusted, decreased 15 percent year over year. Global components’ third-quarter operating income was $172 million. Third-quarter operating income, excluding amortization of intangibles expense, as adjusted, was $217 million.
“Arrow’s focused execution contributed to our bottom-line performance in the third quarter, despite continued challenging demand conditions in the Americas and Europe,” said Michael J. Long, chairman, president, and chief executive officer. “By harnessing our internal efficiencies, we were able to realize significant savings to reinvest in our omnichannel engineering services, and strengthen our position as a consistent, reliable provider of design, engineering and supply chain solutions. I am confident that our diversified business model and forward-looking approach to investing will not only allow us to emerge from the current market correction in a position of strength, but also to generate enhanced profits and returns well into the future.”
Global enterprise computing solutions third-quarter sales of $2.03 billion decreased 4 percent year over year. Sales, as adjusted, decreased 2 percent year over year. Europe enterprise computing solutions sales decreased 6 percent year over year. Sales in the region, as adjusted, were flat year over year. Americas enterprise computing solutions sales decreased 3 percent year over year. Sales in the region, as adjusted, decreased 2 percent year over year. Global enterprise computing solutions third-quarter operating income was $92 million. Third-quarter operating income, excluding amortization of intangibles expense, as adjusted, was $95 million.
“We are pleased that enterprise computing solutions’ execution in the marketplace drove 12 percent operating income growth in the third quarter. Operating income growth demonstrates our success in selling advanced, higher-value solutions utilizing next-generation software and hardware architectures,” said Mr. Long.
“Third-quarter cash provided by operating activities was $287 million. Our robust cash flow was bolstered by our disciplined working capital management, continued healthy profits from our leading positions in the markets we serve, and efficiencies from our previously announced cost optimization program,” said Chris Stansbury, senior vice president and chief financial officer. “We remain committed to returning excess cash to shareholders. Accordingly, Arrow returned approximately $100 million to shareholders through our stock repurchase program during the third quarter. At the end of the quarter, we had approximately $439 million of remaining authorization under our share repurchase program.”
GUIDANCE
Arrow Electronics’ fourth-quarter outlook excludes the financial results from the PC and mobility asset disposition business.
“As we look to the fourth quarter, we expect total sales to range between $7.125 billion and $7.525 billion, with global components sales between $4.625 billion and $4.825 billion, and global enterprise computing solutions sales between $2.5 billion and $2.7 billion. We expect earnings per share on a diluted basis to range from $1.82 to $1.98, and earnings per share on a diluted basis, excluding certain items1, to range from $2.10 to $2.26 per share. Our guidance assumes interest and other expense will total approximately $52 million, an average tax rate at the low end of the updated long-term range of 23 percent to 25 percent, and average diluted shares outstanding of approximately 83 million. We are expecting the average USD-to-Euro exchange rate for the fourth quarter to be approximately $1.10 to €1. We estimate changes in foreign currencies will have negative impacts on growth of approximately $100 million, or 1 percent on sales, and $.05, or 2 percent, on earnings per share on a diluted basis compared to the fourth quarter of 2018,” said Mr. Stansbury.
Please refer to the CFO commentary, which can be found at investor.arrow.com, as a supplement to the company’s earnings release.
Tagged with Arrow, financial results