Arrow Disappoints in 1Q - Analyst Blog
May 02 2012 - 01:54AM
Zacks
Arrow Electronics
(ARW) posted an adjusted net income of $119.8 million or $1.05 per
share in the first quarter of 2012 compared to $146.0 million or
$1.24 per share in the previous year quarter and $157.3 million or
$1.38 per share in the last quarter.
The results missed the Zacks
Consensus Estimate of $1.07.
Revenues
Arrow reported sales of $4.89
billion, down 6.3% year over year and 10.1% sequentially, barely
missing the Zacks Consensus Estimate of $4.91 billion.
On a segmental basis, Global
component sales were $3.35 billion, down 13.9% year over year and
2.6% sequentially, facing enervations arising from the weakened
European market which further deteriorated owing to slowing demands
from the Chinese economy.
Revenues from Global enterprise
computing solutions (ECS) came in at $1.54 billion, rising 14.9%
year over year but down 23% sequentially. The annual rise was
attributable to strength in sales from the American and European
regions.
Margins
Gross margin came in at 13.9%
versus 13.8% in the year-ago quarter and 13.7% in the previous
quarter.
Operating margin came in at 3.8%
compared to 4.2% in the previous year quarter and 4.5% in the
previous quarter.
Balance Sheet and Cash
Flows
Arrow ended the quarter with cash
and cash equivalents of $739.7 million, up from $396.9 million at
the end of the previous quarter. As of March 31, 2011,
long-term debt was $2.25 billion, rising from $1.93 billion in the
previous quarter.
During the quarter, the company
generated $250.3 million of cash from operating activities and used
$22.3 million for capital expenditure.
During the first quarter of 2012,
Arrow repurchased 1.2 million shares for $50 million and the
company currently has $100 million remaining in its current buyback
program.
Guidance
Going forward, management expects
sales in the second quarter of 2012 to come between $5.04 billion
and $5.44 billion.
Global components sales are
projected between $3.37 billion and $3.57 billion. Global
enterprise computing solutions sales are estimated between
$1.67 billion and $1.87 billion. Earnings per share (excluding any
one-time charges) are projected around $1.08 to $1.20 per
share.
The company currently retains a
Zacks #2 Rank, which translates into a short-term ‘Buy’ rating. We
also maintain a long-term ‘Neutral’ recommendation on the
stock.
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