Arrow Electronics, Inc. (NYSE:ARW) today reported first-quarter 2014 net income of $107.1 million, or $1.06 per share on a diluted basis, compared with net income of $77.9 million, or $.72 per share on a diluted basis in the first quarter of 2013. Excluding certain items1 in both the first quarters of 2014 and 2013, net income of $124.0 million, or $1.22 per share on a diluted basis, in the first quarter of 2014 compared with net income of $103.1 million, or $.96 per share on a diluted basis, in the first quarter of 2013. First quarter sales of $5.08 billion increased 5 percent from sales of $4.85 billion in the prior year. Sales, as adjusted, decreased 1 percent year over year.
“We continued to execute on our strategic initiatives in the first quarter. Earnings per share of $1.22 were above the midpoint of our guidance, while sales of $5.1 billion were slightly below our expectations. Global components delivered good growth. Business conditions for enterprise computing solutions were mixed; however, demand improved in April. We were pleased with the profitability performance across our businesses that resulted in 28 percent earnings-per-share growth,” said Michael J. Long, chairman, president, and chief executive officer.
Global components first-quarter sales of $3.42 billion increased 7 percent year over year. Sales, as adjusted, grew 4 percent year over year. Americas sales increased 1 percent year over year. European sales grew 12 percent year over year. Sales in Europe, as adjusted, grew 7 percent, the fourth consecutive quarter of year-over-year growth for the region on an as-adjusted basis. Sales in the Asia-Pacific region increased 12 percent year over year, with strength in the core business.
Global enterprise computing solutions first-quarter sales of $1.66 billion were flat year over year. Sales, as adjusted, decreased 11 percent year over year, as storage and servers experienced lower demand globally. Trends in the Americas and Europe were consistent, characterized by growth in our software and security product lines.
“With $124 million in cash flow from operations in the first 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 $75 million to shareholders through our stock repurchase program.”
“As we look to the second quarter, we would expect market conditions for our global components business to remain consistent with the first quarter. We expect some recovery in the markets served by our enterprise computing solutions business. We believe that total sales will be between $5.45 billion and $5.85 billion, with global components sales between $3.45 billion and $3.65 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, excluding any charges to be in the range of $1.35 to $1.47 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 101 million, and the average USD to Euro exchange rate for the second quarter is 1.38 to 1,” said Mr. Reilly.
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.
Please refer to the CFO commentary as a supplement to the company’s earnings release, which can be found at www.arrow.com/investor.
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.