ARROW ELECTRONICS (NYSE:ARW)
Historical Stock Chart
2 Years : From May 2011 to May 2013
Arrow Electronics, Inc. (NYSE:ARW) today reported first-quarter 2012 net
income of $113.6 million ($1.01 and $1.00 per share on a basic and
diluted basis, respectively) on sales of $4.89 billion, compared with
net income of $136.3 million ($1.18 and $1.16 per share on a basic and
diluted basis, respectively) on sales of $5.22 billion in the first
quarter of 2011. Cash flow from operations for the quarter ended March
31, 2012 was $250 million.
The company's results for the first quarters of 2012 and 2011 include a
number of items that impact their comparability. A complete
reconciliation of these items is provided under the heading “Certain
Non-GAAP Financial Information.” Excluding those items, on a non-GAAP
basis, net income for the quarter ended March 31, 2012, would have been
$119.8 million ($1.07 and $1.05 per share on a basic and diluted basis,
respectively) and net income for the quarter ended April 2, 2011, would
have been $146.0 million ($1.27 and $1.24 per share on a basic and
diluted basis, respectively).
“We executed well in the first quarter with sales and earnings per share
in line with our expectations. Cash flow generation was a bright spot in
the first quarter, as we generated $250 million in cash flow from
operations, with contributions from both business segments,” said
Michael J. Long, chairman, president, and chief executive officer.
“Our return on capital continues to be strong with return on invested
capital well in excess of our weighted average cost of capital,” said
Paul J. Reilly, executive vice president, finance and operations and
chief financial officer. “We continue to invest in businesses that will
provide above market growth opportunities over the long-term.”
Global enterprise computing solutions (“ECS”) first-quarter sales of
$1.54 billion increased 15 percent year over year. “We had very
impressive results in the first quarter with sales well above normal
seasonality, especially in our North American value-added distribution
business. Globally, we saw robust product line performance in storage,
software, and services, which each grew in excess of 20% year over
year,” said Mr. Long.
Global components first-quarter sales of $3.35 billion decreased 14
percent year over year. “The Americas region performed well while weaker
macroeconomic conditions in Asia and Europe have had a negative impact
on our results. Our global book-to-bill of 1.04 to 1 is at its highest
level in six quarters with sequential increases seen in all regions. Our
global teams remain committed to driving increased market share in all
regions while providing the highest possible level of service to our
customers,” Mr. Long said.
The company's results for the first quarters of 2012 and 2011 include
the items outlined below that impact their comparability:
-
restructuring, integration, and other charges of $8.2 million ($6.1
million net of related taxes or $.05 per share on both a basic and
diluted basis) in the first quarter of 2012 and $9.6 million ($7.2
million net of related taxes or $.06 per share on a both basic and
diluted basis) in the first quarter of 2011;
-
a charge of $5.9 million ($3.6 million net of related taxes or $.03
per share on both a basic and diluted basis) in connection with the
settlement of a legal matter in 2011; and
-
a gain on bargain purchase of $1.8 million ($1.1 million net of
related taxes or $.01 per share on both a basic and diluted basis).
GUIDANCE
“Looking ahead, we believe that total second-quarter sales will be
between $5.04 and $5.44 billion, with global components sales between
$3.37 and $3.57 billion and global enterprise computing solutions sales
between $1.67 and $1.87 billion. Earnings per share, on a diluted basis,
excluding any charges, are expected to be in the range of $1.08 to
$1.20. Our guidance assumes that the average Euro to USD exchange rate
for the first quarter is 1.31 to 1,” said Mr. Reilly.
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
120,000 original equipment manufacturers, contract manufacturers and
commercial customers through a global network of more than 390 locations
in 53 countries.
Certain Non-GAAP Financial Information
In addition to disclosing results that are determined in accordance with
Generally Accepted Accounting Principles (“GAAP”), the company provides
certain non-GAAP financial information relating to operating income, net
income attributable to shareholders and net income per basic and diluted
share, each as adjusted for certain charges, credits and losses that the
company believes impact the comparability of its results of operations.
These charges, credits and losses arise out of the company’s efficiency
enhancement initiatives, acquisitions, and settlement of certain legal
matters. A reconciliation of the company’s non-GAAP financial
information to GAAP is set forth in the table below.
The company believes that such non-GAAP financial information is useful
to investors to assist in assessing and understanding the company’s
operating performance and underlying trends in the company’s business
because management considers the charges, credits and losses referred to
above to be outside the company’s core operating results. This non-GAAP
financial information is among the primary indicators management uses as
a basis for evaluating the company’s financial and operating
performance. In addition, the company’s Board of Directors may use this
non-GAAP financial information in evaluating management performance and
setting management compensation.
The presentation of this additional non-GAAP financial information is
not meant to be considered in isolation or as a substitute for, or
alternative to, operating income, net income and net income per basic
and diluted share determined in accordance with GAAP. Analysis of
results and outlook on a non-GAAP basis should be used as a complement
to, and in conjunction with, data presented in accordance with GAAP.
ARROW ELECTRONICS, INC.
EARNINGS RECONCILIATION
(In thousands except per share data)
Quarter Ended
March 31,2012
April 2,2011
(Unaudited)
Operating income, as reported
$
187,449
$
219,168
Restructuring, integration, and other charges
8,243
9,607
Settlement of legal matter
-
5,875
Operating income, as adjusted
$
195,692
$
234,650
Net income attributable to shareholders, as reported
$
113,628
$
136,309
Restructuring, integration, and other charges
6,141
7,199
Settlement of legal matter
-
3,609
Gain on bargain purchase
-
(1,078
)
Net income attributable to shareholders, as adjusted
$
119,769
$
146,039
Net income per basic share, as reported
$
1.01
$
1.18
Restructuring, integration, and other charges
.05
.06
Settlement of legal matter
-
.03
Gain on bargain purchase
-
(.01
)
Net income per basic share, as adjusted
$
1.07
$
1.27
Net income per diluted share, as reported
$
1.00
$
1.16
Restructuring, integration, and other charges
.05
.06
Settlement of legal matter
-
.03
Gain on bargain purchase
-
(.01
)
Net income per diluted share, as adjusted
$
1.05
$
1.24
The sum of the components for basic and diluted net income per
share, as adjusted, may not agree to totals, as presented, due to
rounding.
Information Relating to Forward-Looking Statements
This press release includes forward-looking statements that are subject
to numerous assumptions, risks, and uncertainties, which could cause
actual results or facts to differ materially from such statements for a
variety of reasons, including, but not limited to: industry conditions,
the company’s implementation of its new enterprise resource planning
system, changes in product supply, pricing and customer demand,
competition, other vagaries in the global components and global ECS
markets, changes in relationships with key suppliers, increased profit
margin pressure, the effects of additional actions taken to become more
efficient or lower costs, and the company’s ability to generate
additional cash flow. Forward-looking statements are those statements,
which are not statements of historical fact. These forward-looking
statements can be identified by forward-looking words such as “expects,”
“anticipates,” “intends,” “plans,” “may,” “will,” “believes,” “seeks,”
“estimates,” and similar expressions. Shareholders and other readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date on which they are made. The
company undertakes no obligation to update publicly or revise any of the
forward-looking statements.
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
Quarter Ended
March 31,2012
April 2,2011
Sales
$
4,889,529
$
5,223,003
Costs and expenses:
Cost of sales
4,208,950
4,500,495
Selling, general and administrative expenses
455,837
464,920
Depreciation and amortization
29,050
22,938
Restructuring, integration, and other charges
8,243
9,607
Settlement of legal matter
-
5,875
4,702,080
5,003,835
Operating income
187,449
219,168
Equity in earnings of affiliated companies
2,184
1,213
Gain on bargain purchase
-
1,755
Interest and other financing expense, net
27,132
25,767
Income before income taxes
162,501
196,369
Provision for income taxes
48,778
59,872
Consolidated net income
113,723
136,497
Noncontrolling interests
95
188
Net income attributable to shareholders
$
113,628
$
136,309
Net income per share:
Basic
$
1.01
$
1.18
Diluted
$
1.00
$
1.16
Average number of shares outstanding:
Basic
112,002
115,215
Diluted
114,077
117,428
ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except par value)
March 31,2012
December 31,2011
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
739,708
$
396,887
Accounts receivable, net
4,207,647
4,482,117
Inventories
2,011,442
1,963,910
Other current assets
210,854
181,677
Total current assets
7,169,651
7,024,591
Property, plant and equipment, at cost:
Land
23,925
23,790
Buildings and improvements
149,936
147,215
Machinery and equipment
962,053
934,558
1,135,914
1,105,563
Less: Accumulated depreciation and amortization
(572,395
)
(549,334
)
Property, plant and equipment, net
563,519
556,229
Investments in affiliated companies
63,487
60,579
Intangible assets, net
420,728
392,763
Cost in excess of net assets of companies acquired
1,615,210
1,473,333
Other assets
306,153
321,584
Total assets
$
10,138,748
$
9,829,079
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
3,160,135
$
3,264,088
Accrued expenses
608,652
660,996
Short-term borrowings, including current portion of long-term
debt
30,554
33,843
Total current liabilities
3,799,341
3,958,927
Long-term debt
2,250,463
1,927,823
Other liabilities
280,142
267,069
Equity:
Shareholders' equity:
Common stock, par value $1:
Authorized – 160,000 shares in 2012 and 2011
Issued – 125,424 and 125,382 shares in 2012 and 2011, respectively
125,424
125,382
Capital in excess of par value
1,062,542
1,076,275
Treasury stock (13,877 and 13,568 shares in 2012 and 2011,
respectively), at cost
(456,672
)
(434,959
)
Retained earnings
2,886,585
2,772,957
Foreign currency translation adjustment
206,585
158,550
Other
(19,511
)
(29,393
)
Total shareholders' equity
3,804,953
3,668,812
Noncontrolling interests
3,849
6,448
Total equity
3,808,802
3,675,260
Total liabilities and equity
$
10,138,748
$
9,829,079
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Quarter Ended
March 31,2012
April 2,2011
Cash flows from operating activities:
Consolidated net income
$
113,723
$
136,497
Adjustments to reconcile consolidated net income to net cash provided
by (used for) operations:
Depreciation and amortization
29,050
22,938
Amortization of stock-based compensation
7,255
10,357
Equity in earnings of affiliated companies
(2,184
)
(1,213
)
Deferred income taxes
18,961
(1,057
)
Restructuring, integration, and other charges
6,141
7,199
Settlement of legal matter
-
3,609
Excess tax benefits from stock-based compensation arrangements
(4,947
)
(5,728
)
Other
(1,457
)
(361
)
Change in assets and liabilities, net of effects of acquired businesses:
Accounts receivable
334,014
278,549
Inventories
(24,357
)
37,981
Accounts payable
(135,198
)
(574,003
)
Accrued expenses
(64,564
)
(43,109
)
Other assets and liabilities
(26,102
)
(51,328
)
Net cash provided by (used for) operating activities
250,335
(179,669
)
Cash flows from investing activities:
Cash consideration paid for acquired businesses
(160,543
)
(379,013
)
Acquisition of property, plant and equipment
(22,253
)
(18,177
)
Net cash used for investing activities
(182,796
)
(397,190
)
Cash flows from financing activities:
Change in short-term and other borrowings
(9,074
)
(3,900
)
Proceeds from long-term bank borrowings, net
329,700
190,800
Proceeds from exercise of stock options
10,138
27,150
Excess tax benefits from stock-based compensation arrangements
4,947
5,728
Repurchases of common stock
(57,684
)
(46,447
)
Net cash provided by financing activities
278,027
173,331
Effect of exchange rate changes on cash
(2,745
)
(1,491
)
Net increase (decrease) in cash and cash equivalents
342,821
(405,019
)
Cash and cash equivalents at beginning of period
396,887
926,321
Cash and cash equivalents at end of period
$
739,708
$
521,302
ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)
(unaudited)
Quarter Ended
March 31,2012
April 2,2011
Sales:
Global components
$
3,349,554
$
3,886,600
Global ECS
1,539,975
1,336,403
Consolidated
$
4,889,529
$
5,223,003
Operating income (loss):
Global components
$
170,708
$
228,881
Global ECS
55,487
39,080
Corporate (a)
(38,746
)
(48,793
)
Consolidated
$
187,449
$
219,168
(a)
Includes restructuring, integration, and other charges of $8.2
million and $9.6 million for the first quarters of 2012 and 2011,
respectively. Also included in the first quarter of 2011 is a charge
of $5.9 million related to the settlement of a legal matter.
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