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Arrow Reports Record Q1 Sales

Arrow ElectronicsCENTENNIAL, Colo. — Arrow Electronics, Inc. today reported first-quarter 2019 sales of $7.16 billion, an increase of 4 percent from sales of $6.88 billion in the first quarter of 2018. First-quarter net income of $141 million or $1.63 per share on a diluted basis, compared with net income of $139 million, or $1.56 per share on a diluted basis, in the first quarter of 2018. Excluding certain items1, net income would have been $158 million, or $1.84 per share on a diluted basis, in the first quarter of 2019, compared with net income of $168 million, or $1.88 per share on a diluted basis, in the first quarter of 2018. In the first quarter of 2019, changes in foreign currencies had negative impacts on growth of approximately $197 million or 3 percent on sales and $.09 or 5 percent on earnings per share on a diluted basis compared to the first quarter of 2018.

Global components first-quarter sales of $5.19 billion increased 5 percent year over year. Sales, as adjusted, increased 8 percent year over year. Americas components sales increased 6 percent year over year. Europe components sales increased 2 percent year over year. Sales in the region, as adjusted, increased 10 percent year over year. Asia-Pacific components sales increased 8 percent year over year. Global components first-quarter operating income increased 2 percent year over year. Operating income, as adjusted, increased 6 percent year over year.

“Higher sales volumes in the first quarter allowed us to leverage our operating expenses, assure profitability, and will lead to higher cash flow in the coming quarters,” said Michael J. Long, chairman, president, and chief executive officer. “The demand environment changed in the first quarter with customers in all regions adjusting their inventories by purchasing fewer high-value components, and more tightly managing their working capital and cash.”

Global enterprise computing solutions first-quarter sales of $1.96 billion increased 1 percent year over year. Sales, as adjusted, increased 6 percent year over year. Americas enterprise computing solutions sales were flat year over year. Sales in the region, as adjusted, increased 4 percent year over year. Europe enterprise computing solutions sales increased 2 percent year over year. Sales in the region, as adjusted, increased 10 percent year over year. Global enterprise computing solutions first-quarter operating income increased 3 percent year over year and increased 1 percent year over year excluding amortization of intangibles expense. Global enterprise computing solutions operating income excluding amortization of intangibles expense, as adjusted, increased 3 percent year over year.

“Enterprise computing solutions returned to profitable growth in the first quarter from our efforts to better align with next-generation hardware and software technologies, and to capture incremental business from nontraditional systems integrator and operational technology provider customers,” said Long.

“First-quarter cash flow from operations was negative $329 million. We expect to adjust our working capital investments to current market conditions and drive further improvements to cash flow and in returns in the coming quarters,” said Chris Stansbury, senior vice president and chief financial officer. “We remain committed to returning excess cash to shareholders. During the first quarter, we returned approximately $40 million to shareholders through our stock repurchase program. We had approximately $689 million of remaining authorization under our share repurchase program at the end of the first quarter.”

GUIDANCE

“As we look to the second quarter, we believe that total sales will be between $7.525 billion and $7.925 billion, with global components sales between $5.5 billion and $5.7 billion, and global enterprise computing solutions sales between $2.025 billion and $2.225 billion. As a result of this outlook, we expect earnings per share on a diluted basis to be in the range of $1.71 to $1.83, and earnings per share on a diluted basis, excluding certain items1, to be in the range of $1.94 to $2.06 per share. Our guidance assumes interest expense will total approximately $57 million. Our guidance also assumes an average tax rate at the high end of the long-term range of 23.5 percent to 25.5 percent, and average diluted shares outstanding of approximately 86 million. We are expecting the average USD-to-Euro exchange rate for the second quarter to be approximately $1.12 to €1. We estimate changes in foreign currencies will have a negative impact on growth of approximately $138 million, or 2 percent on sales, and $.07, or 3 percent, on earnings per share on a diluted basis compared to the second quarter of 2018,” said Stansbury.

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