CENTENNIAL, Colo. — Arrow Electronics, Inc. reported second-quarter 2015 net income of $123.9 million, or $1.28 per share on a diluted basis, compared with net income of $127.9 million, or $1.27 per share on a diluted basis, in the second quarter of 2014. Excluding certain items1 in the second quarters of 2015 and 2014, net income would have been $148.9 million, or $1.54 per share on a diluted basis, in the second quarter of 2015, compared with net income of $144.3 million, or $1.43 per share on a diluted basis, in the second quarter of 2014. Second-quarter sales of $5.83 billion increased 3 percent from sales of $5.68 billion in the prior year. Second-quarter sales, adjusted for the impact of acquisitions and changes in foreign currencies, also increased 3 percent year over year. In the second quarter of 2015, changes in foreign currencies had negative impacts on growth of $350 million on sales and $.10 or 7 percent on earnings per share on a diluted basis compared to the second quarter of 2014.
“Second-quarter sales exceeded the midpoint of our expectations. Excluding the impacts from changes in foreign currencies, EPS advanced nearly 16 percent year over year, with both our global components and enterprise computing solutions segments delivering sales growth and expanded operating margins. Both businesses continued to experience strong demand in Europe. Our focus on selling comprehensive solutions resulted in record second-quarter operating income and operating margin for our enterprise computing solutions business,” said Michael J. Long, chairman, president, and chief executive officer.
Global components second-quarter sales of $3.7 billion grew 4 percent year over year. Second-quarter sales, adjusted for acquisitions and changes in foreign currencies, grew 3 percent year over year. Americas components sales were flat year over year. Core components sales in the Americas grew 3 percent year over year. Europe components sales were flat year over year. Sales in the region, as adjusted, grew 11 percent year over year. Asia-Pacific components sales grew 11 percent year over year. Sales in the region, as adjusted, grew 4 percent year over year.
Global enterprise computing solutions second-quarter sales of $2.13 billion grew 2 percent year over year, adjusted for acquisitions and changes in foreign currencies. Sales, as reported, grew 1 percent year over year. Americas sales grew 9 percent year over year. Sales in the region, as adjusted, declined 1 percent year over year. Core enterprise computing solutions sales in the Americas region were flat year over year. Europe sales grew 8 percent on an as-adjusted basis. Sales in the region, as reported, declined 13 percent year over year. Both Americas and Europe experienced strong software growth.
“With $461 million in cash flow from operations in the second quarter, we again meaningfully exceeded our cash flow target,” said Paul J. Reilly, executive vice president, finance and operations, and chief financial officer. “The highly effective management of our balance sheet and related strong cash flow provided us with the opportunity to both deploy capital toward our strategic initiatives and return approximately $78 million to shareholders through our stock repurchase program.”
Six Month Results
Arrow’s net income for the first six months of 2015 was $230.0 million, or $2.37 per share on a diluted basis, compared with net income of $235.0 million, or $2.33 per share on a diluted basis in the first six months of 2014. Excluding certain items1 in both the first six months of 2015 and 2014, net income would have been $276.7 million, or $2.86 per share on a diluted basis, in the first six months of 2015 compared with net income of $268.3 million, or $2.66 per share on a diluted basis, in the first six months of 2014. In the first six months of 2015, sales of $10.83 billion increased 1 percent from sales of $10.76 billion in the first six months of 2014. Six-month sales, adjusted for acquisitions and changes in foreign currencies, increased 3 percent year over year.
Guidance
“As we look to the third quarter, we believe that total sales will be between $5.55 billion and $5.95 billion, with global components sales between $3.65 billion and $3.85 billion, and global enterprise computing solutions sales between $1.9 billion and $2.1 billion. As a result of this outlook, we expect earnings per share on a diluted basis, excluding any charges, to be in the range of $1.40 to $1.52 per share. Our guidance assumes an average tax rate in the range of 27 to 29 percent and average diluted shares outstanding are expected to be 95.5 million. We are expecting the average USD to Euro exchange rate for the third quarter to be approximately $1.08 to €1. Based on this assumption, the weaker Euro will have a negative impact of $280 million or 5 percent on sales and $.08 or 6 percent on earnings per share on a diluted basis, respectively, when compared with the third quarter of 2014, and a negative impact of $40 million or 1 percent on sales and $.01 or 1 percent on earnings per share on a diluted basis, respectively, when compared with the second quarter of 2015,” said Mr. Reilly.
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