Arrow Electronics Inc. (NYSE:ARW) today reported fourth quarter 2013 net income of $134.8 million, or $1.32 per share on a diluted basis, compared with net income of $174.7 million, or $1.62 per share on a diluted basis in the fourth quarter of 2012. Excluding certain items in both the fourth quarters of 2013 and 20121, net income of$172.0 million, or$1.69 per share on a diluted basis, in the fourth quarter of 2013 compared with net income of$139.7 million, or$1.29 per share on a diluted basis, in the fourth quarter of 2012.
Fourth quarter sales of $6.15 billion increased 14 percent from sales of $5.40 billion in the prior year. Sales, as adjusted, increased 8 percent year over year.
“An outstanding fourth quarter capped off a good year for Arrow. Both sales and non-GAAP earnings per share were ahead of our expectations, and we, again, generated strong cash flow. Operating margins grew in both businesses year over year, and we posted record operating income in the fourth quarter,” said Michael J. Long, chairman, president, and chief executive officer.
Global components fourth-quarter sales of $3.44 billion increased 8 percent year over year. Sales, as adjusted, increased 6 percent year over year. Sales in the Asia-Pacific region increased 9 percent year over year, with significant contributions from China. In the Americas, sales increased 3 percent year over year. European sales, as adjusted, were up 10 percent year over year.
Global enterprise computing solutions (“ECS”) fourth-quarter sales of $2.72 billion increased 23 percent year over year. Sales, as adjusted, increased 12 percent year over year, as storage, software, and services advanced at double digit growth rates globally. In the Americas, sales grew 19 percent year over year as our value-added service offering creates a differentiated value proposition for our suppliers and customers. In Europe sales, as adjusted, advanced 5 percent year over year.
Arrow’s net income for 2013 was $399.4 million, or $3.85 per share on a diluted basis, compared with net income of $506.3 million, or $4.56 per share on a diluted basis in 2012. Excluding certain items in both 2013 and 20121, net income of $519.0 million, or $5.01 per share on a diluted basis, in 2013 compared with net income of $517.8 million, or $4.66 per share on a diluted basis, in 2012.
2013 sales of $21.36 billion increased 5 percent from sales of $20.41 billion in 2012. Sales, as adjusted, increased 3 percent year over year.
“We were able to drive current year results, with operating income, as adjusted, up $14 million year over year to $823 million. We also invested in our future, funding organic growth programs and completing acquisitions to accelerate our strategy, as well as return significant capital to our shareholders, said Mr. Long.”
1 A reconciliation of non-GAAP adjusted financial measures including sales, as adjusted, operating income, as adjusted, net income attributable to shareholders, as adjusted, and net income per share, as adjusted to GAAP financial measures is presented in the reconciliation tables included herein.
“With $451 million in cash flow from operations in 2013, 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 do both strategic acquisitions and return approximately $350 million to shareholders through our stock repurchase program in 2013.”
We expect no meaningful change to the markets we serve in the first quarter of 2014.
“As we look to the first quarter, we believe that total sales will be between $5.1 billion and $5.5 billion, with global components sales between $3.3 billion and $3.5 billion and global enterprise computing solutions sales between $1.8 billion and $2.0 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 $1.14 to $1.26 per share. Our guidance assumes an average tax rate in the range of 27 to 29 percent, average diluted shares outstanding are expected to be 102 million, and the average USD to Euro exchange rate for the first quarter is 1.35 to 1,” said Mr. Reilly.
Arrow Electronics (www.arrow.com) is a global provider of products, services and solutions to industrial and commercial users of electronic components and enterprise computing solutions. Arrow serves as a supply channel partner for more than 100,000 original equipment manufacturers, contract manufacturers and commercial customers through a global network of more than 460 locations in 58 countries.