Arrow Electronics, Inc. (NYSE:ARW) today reported second-quarter 2014 net income of $127.9 million, or $1.27 per share on a diluted basis, compared with net income of $89.9 million, or $.86 per share on a diluted basis in the second quarter of 2013. Excluding certain items1 in the second quarters of both 2014 and 2013, net income would have been$144.3 million, or$1.43 per share on a diluted basis, in the second quarter of 2014 compared with net income of$124.0 million, or$1.19 per share on a diluted basis, in the second quarter of 2013. Second-quarter sales of$5.68 billion increased 7 percent from sales of$5.31 billion in the prior year. Sales, as adjusted, increased 1 percent year over year.
“We delivered strong results in the second quarter as we continued to accomplish our strategic objectives. Earnings per share of $1.43 and sales of $5.7 billion were above the midpoints of our guidance. Global components, as well as the software and services portions of enterprise computing solutions, again delivered growth. Business conditions for the hardware portion of enterprise computing solutions improved from the first quarter as we anticipated,” said Michael J. Long, chairman, president, and chief executive officer.
Global components second-quarter sales of $3.57 billion increased 5 percent year over year. Sales in that segment, as adjusted, grew 2 percent year over year. Americas components sales increased 2 percent year over year. European components sales grew 9 percent year over year, or 3 percent as adjusted, marking the fifth consecutive quarter of year-over-year growth for the region on an as-adjusted basis. Components sales in the Asia-Pacific region increased 5 percent year over year.
Global enterprise computing solutions second-quarter sales of $2.11 billion grew 10 percent year over year. Sales in that segment, as adjusted, declined 1 percent year over year. The Americas and Europe continued to experience growth in infrastructure, security and virtualization software product lines, offset by a decline in proprietary servers.
“With $159 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 $50 million to shareholders through our stock repurchase program.”
Arrow’s net income for the first six months of 2014 was $235.0 million, or $2.33 per share on a diluted basis, compared with net income of $167.8 million, or $1.58 per share on a diluted basis in the first six months of 2013. Excluding certain items1 in both the first six months of 2014 and 2013, net income would have been $268.3 million, or $2.66 per share on a diluted basis, in the first six months of 2014 compared with net income of $227.1 million, or $2.14 per share on a diluted basis, in the first six months of 2013. In the first six months of 2014, sales of $10.76 billion increased 6 percent from sales of $10.16 billion in the first six months of 2013.
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.
“As we look to the third quarter, we would expect market conditions for our global components and enterprise computing solutions businesses to remain consistent with the second quarter. We believe that total sales will be between $5.25 billion and $5.65 billion, with global components sales between $3.55 billion and $3.75 billion and global enterprise computing solutions sales between $1.7 billion and $1.9 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 $1.26 to $1.38 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 100 million,” said Mr. Reilly.