CENTENNIAL, Colo. — Arrow Electronics, Inc. today reported first-quarter 2018 sales of $6.88 billion, an increase of 20 percent from sales of $5.74 billion in the first quarter of 2017. First-quarter net income of $139 million, or $1.56 per share on a diluted basis, compared with net income of $115 million, or $1.27 per share on a diluted basis, in the first quarter of 2017. Excluding certain items1, net income would have been $168 million, or $1.88 per share on a diluted basis, in the first quarter of 2018, compared with net income of $132 million, or $1.46 per share on a diluted basis, in the first quarter of 2017. Excluding certain items1, net income increased 27 percent year over year, and earnings per share on a diluted basis increased 29 percent year over year.
“We continue to expand our line card, our services, and the solutions we bring to the marketplace to capitalize on the exciting growth opportunities from IoT, industrial automation, and smart cities, homes, and vehicles,” said Michael J. Long, chairman, president, and chief executive officer. “We are delivering differentiated performance as evidenced by our fifth straight quarter of record results.”
Global components first-quarter sales of $4.93 billion increased 21 percent year over year. First-quarter sales, as adjusted, increased 16 percent year over year. Americas components sales increased 15 percent year over year. Sales in the region, as adjusted, increased 13 percent year over year. Asia-Pacific components sales increased 20 percent year over year. Europe components sales increased 32 percent year over year. Sales in the region, as adjusted, increased 16 percent year over year. Global components first-quarter operating income increased 32 percent year over year. “As we expected, we are capturing strong leverage on our growing sales,” said Mr. Long.
Global enterprise computing solutions first-quarter sales of $1.95 billion increased 16 percent year over year. First-quarter sales, as adjusted, increased 11 percent year over year. Americas enterprise computing solutions sales increased 9 percent year over year. Sales in the region, as adjusted, increased 12 percent year over year. Europe enterprise computing solutions sales increased 29 percent year over year. Sales in the region, as adjusted, increased 9 percent year over year. Global enterprise computing solutions first-quarter operating income grew 2 percent year over year and grew 1 percent year over year excluding amortization of intangibles expense. The divestiture of the systems integration business on March 2, 2018 resulted in an approximately $2 million unfavorable operating income comparison to the first quarter of 2017.
“Value-added resellers and managed service providers are moving their businesses to Arrow due to our leadership in newer technologies, including cloud, security, and software-defined data center solutions,” added Long.
“Return on invested capital increased year over year for the third straight quarter. First-quarter cash flow from operations was a seasonally negative $75 million. We expect the substantial investments we made to support our rapid growth, and our disciplined approach to working capital management, to drive further improvements in returns and cash flow 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 $319 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 billion and $7.4 billion, with global components sales between $5 billion and $5.2 billion, and global enterprise computing solutions sales between $2 billion and $2.2 billion. As a result of this outlook, we expect earnings per share on a diluted basis, to be in the range of $1.78 to $1.90, and earnings per share on a diluted basis, excluding certain items1, to be in the range of $2.08 to $2.20 per share. Our guidance assumes interest expense will be approximately $48 million. Our guidance also assumes an average tax rate of 23.5 percent to 25.5 percent and average diluted shares outstanding are expected to be approximately 89 million. We are expecting the average USD-to-Euro exchange rate for the second quarter to be approximately $1.23 to €1,” 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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