Arrow Electronics, Inc.(NYSE:ARW) today reported third-quarter 2014 net income of$146.9 million, or$1.47per share on a diluted basis, compared with net income of$96.8 million, or$.95per share on a diluted basis in the third quarter of 2013. Excluding certain items1in the third quarters of both 2014 and 2013, net income would have been$140.2 million, or$1.40per share on a diluted basis, in the third quarter of 2014 compared with net income of$119.9 million, or$1.18per share on a diluted basis, in the third quarter of 2013. Third-quarter sales of$5.61 billionincreased 11 percent from sales of$5.05 billionin the prior year. Sales, as adjusted, increased 6 percent year over year.
“In the third quarter we again produced outstanding results and invested in our long-term strategic sales-related initiatives. Earnings per share of$1.40were above our expectations, with sales of$5.6 billionat the high end of our guidance. Both of our global components and enterprise computing solutions segments delivered sales and operating income growth. The stable, slow-growth demand environment for global components matched our expectations. Our focus on the higher value portion of the datacenter has aligned our enterprise computing solutions business with the faster growth areas of IT spending,” saidMichael J. Long, chairman, president, and chief executive officer.
Global components third-quarter sales of$3.73 billionincreased 8 percent year over year. Sales, as adjusted, grew 5 percent year over year.Americascomponents sales increased 2 percent year over year.Europecomponents sales grew 4 percent year over year, and the region grew year over year for the sixth consecutive quarter on an as-adjusted basis. Components sales in theAsia-Pacific regionincreased 18 percent year over year.
Global enterprise computing solutions third-quarter sales of$1.88 billiongrew 19 percent year over year. Sales, as adjusted, grew 7 percent year over year with growth in bothAmericasandEurope. Both regions continued to experience very strong growth in software and services, while storage and networking also delivered growth.
“Returns advanced over the prior year for the fourth consecutive quarter. Cash flow from operations on a trailing 12-month basis was$431 millionas we continue to exceed our cash flow target,” said Paul J. Reilly, executive vice president, finance and operations, and chief financial officer. “The strong management of our balance sheet and cash flow provided us with the opportunity to return approximately$50 millionto shareholders through our stock repurchase program in the third quarter, approximately$55 million, thus far, in the fourth quarter, and approximately$230 millionon a trailing 12-month basis.”
Arrow’s net income for the first nine months of 2014 was$381.9 million, or$3.80per share on a diluted basis, compared with net income of$264.6 million, or$2.53per share on a diluted basis in the first nine months of 2013. Excluding certain items1in both the first nine months of 2014 and 2013, net income would have been$408.6 million, or$4.06per share on a diluted basis, in the first nine months of 2014 compared with net income of$347.0 million, or$3.32per share on a diluted basis, in the first nine months of 2013. In the first nine months of 2014, sales of$16.4 billionincreased 8 percent from sales of$15.2 billionin the first nine months of 2013. Sales in the first nine months of 2014, as adjusted, increased 2 percent year over year.
“As we look to the fourth quarter, order patterns are unchanged and the supply chain remains well managed. We expect normal seasonality for our global components and enterprise computing solutions businesses. We believe that total sales will be between$6.1 billion and $6.5 billion, with global components sales between$3.4 billion and $3.6 billionand global enterprise computing solutions sales between$2.7 billion and $2.9 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$1.75to$1.87per share. Our guidance assumes an average tax rate in the range of 27 to 29 percent, average diluted shares outstanding are expected to be 99 million, and the average USD to Euro exchange rate for the fourth quarter is 1.25 to 1. At the midpoints of our fourth-quarter guidance ranges, full-year 2014 sales and earnings per share, on a diluted basis, excluding any charges would grow 6 percent and 17 percent, respectively, compared to full-year 2013, with returns increasing year over year, and cash flow from operations of approximately$450 million,” said Mr. Reilly.