-- Non-GAAP Earnings Per Share of $1.40 --
-- 2015 Non-GAAP Earnings Per Share Expected to Be in Excess of $6.00 --
Centennial, Colo.--(BUSINESS WIRE)--Oct. 28, 2015-- Arrow Electronics, Inc. (NYSE:ARW) today reported third-quarter 2015 net income of $109.2 million, or $1.15 per share on a diluted basis, compared with net income of $146.9 million, or $1.47 per share on a diluted basis, in the third quarter of 2014. Excluding certain items1 in the third quarters of 2015 and 2014, net income would have been $133.4 million, or $1.40 per share on a diluted basis, in the third quarter of 2015, compared with net income of $140.2 million, or $1.40 per share on a diluted basis, in the third quarter of 2014. Third-quarter sales of $5.7 billion increased 2 percent from sales of $5.61 billion in the prior year. Third-quarter sales, adjusted for the impact of acquisitions and changes in foreign currencies, decreased 1 percent year over year. In the third quarter of 2015, changes in foreign currencies had negative impacts on growth of approximately $280 million on sales and $.07 or 5 percent on earnings per share on a diluted basis compared to the third quarter of 2014.
“Both our global components and enterprise computing solutions businesses continued to experience strong demand inEurope, while our Americas businesses broadly performed as we had anticipated. In Asia, the economic deterioration was worse than we expected,” said Michael J. Long, chairman, president, and chief executive officer. “We remain committed to continual productivity improvement, and have enhanced our ongoing efficiency initiatives to drive $40 million of expense savings on an annual basis. We are principally accelerating the integrations of some of our recent acquisitions, increasing automation across multiple functions enabled by our Unity enterprise resource planning tool, utilizing our enterprise strengths for greater purchasing leverage, and rationalizing our real estate footprint.”
Global components third-quarter sales of $3.69 billion declined 1 percent year over year. Third-quarter sales, as adjusted, declined 3 percent year over year. Americas components sales declined 4 percent year over year. Europecomponents sales grew 5 percent year over year. Sales in the region, as adjusted, grew 11 percent year over year. Asia-Pacific components sales declined 2 percent year over year. Core components sales in Asia declined 5 percent year over year.
Global enterprise computing solutions third-quarter sales of $2.01 billion grew 7 percent year over year. Sales, as adjusted, grew 1 percent year over year. Americas sales grew 11 percent year over year. Sales in the region, as adjusted, declined 4 percent year over year. Europe sales declined 3 percent year over year. Sales in the region, as adjusted, grew 15 percent year over year. “Enterprise computing solutions posted record third-quarter operating income and operating margins, with our software sales a greater percentage of our product mix,” added Mr. Long.
“Cash flow from operations on a trailing 12-month basis was $568 million as we continue to exceed our cash flow target,” said Paul J. Reilly, executive vice president, finance and operations, and chief financial officer. “During the quarter, we returned approximately $50 million to shareholders through our stock repurchase program, and approximately $307 million on a trailing 12-month basis. We had approximately $469 million of remaining authorization under our share repurchase programs at the end of the third quarter.”
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.
NINE-MONTH RESULTS
Arrow’s net income for the first nine months of 2015 was $339.2 million, or $3.52 per share on a diluted basis, compared with net income of $381.9 million, or $3.80 per share on a diluted basis in the first nine months of 2014. Excluding certain items1 in both the first nine months of 2015 and 2014, net income would have been $410.1 million, or $4.26 per share on a diluted basis, in the first nine months of 2015 compared with net income of $408.6 million, or $4.06 per share on a diluted basis, in the first nine months of 2014. In the first nine months of 2015, sales of $16.53 billion increased 1 percent from sales of $16.37 billion in the first nine months of 2014. Nine-month sales, adjusted for acquisitions and changes in foreign currencies, increased 2 percent year over year. For the first nine months of 2015, changes in foreign currencies had negative impacts on growth of approximately $950 million on sales and $.27 or 7 percent on earnings per share on a diluted basis compared to the first nine months of 2014.
GUIDANCE
“As we look to the fourth quarter, we believe that total sales will be between $6.15 billion and $6.55 billion, with global components sales between $3.45 billion and $3.65 billion, and 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 $1.75 to $1.91 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 95 million. We are expecting the average USD-to-Euro exchange rate for the fourth quarter to be approximately $1.12 to €1. Based on this assumption, changes in foreign currencies will have a negative impact of approximately $215 million or 3 percent on sales and $.08 or 4 percent on earnings per share on a diluted basis, respectively, when compared with the fourth quarter of 2014. At the midpoint of our fourth-quarter guidance range, full-year 2015 earnings per share, on a diluted basis, excluding any charges, would total approximately $6.08 and grow 3 percent compared to full-year 2014. Adjusted for the impact of changes in foreign currencies, earnings per share would grow 9 percent compared to full-year 2014,” said Mr. Reilly.
Please refer to the CFO commentary, which can be found at www.arrow.com/investor, as a supplement to the company’s earnings release.
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 56 countries.
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