-- Record Third-Quarter Sales of $5.94 billion
--
-- Earnings Per Share of $1.28; Non-GAAP
Earnings Per Share of $1.56 --
Arrow Electronics, Inc. (NYSE:ARW) today reported third-quarter
2016 net income of $118 million, or $1.28 per share on a diluted
basis, compared with net income of $109 million, or $1.15 per share
on a diluted basis, in the third quarter of 2015. Excluding certain
items1, net income would have been $143 million, or $1.56 per share
on a diluted basis, in the third quarter of 2016, compared with net
income of $133 million, or $1.40 per share on a diluted basis, in
the third quarter of 2015. Third-quarter sales of $5.94 billion
increased 4 percent from sales of $5.7 billion in the prior
year.
“Our strong execution drove record third-quarter sales for both
our global components and global enterprise computing solutions
businesses,” said Michael J. Long, chairman, president, and chief
executive officer. “Our results this quarter continue to show our
leadership position at the forefront of innovation for digital
commerce, cloud, and IoT.”
Global components third-quarter sales of $3.9 billion grew 6
percent year over year. Americas components sales were flat year
over year. Asia-Pacific components sales grew 16 percent year over
year. Europe components sales grew 2 percent year over year. “Our
investments in customer-facing sales and engineering resources over
the last two years contributed to our strong growth in the
Asia-Pacific region during the third quarter,” said Mr. Long.
Global enterprise computing solutions third-quarter sales of
$2.03 billion grew 1 percent year over year. Sales, as adjusted,
declined 1 percent year over year. Americas sales grew 6 percent
year over year. Sales in the region, as adjusted, grew 1 percent
year over year. Europe sales declined 10 percent year over year.
Sales in the region, as adjusted, declined 6 percent year over
year. “Enterprise computing solutions operating income grew 13
percent year over year, and we believe our profit growth shows the
increasing value we are delivering to customers and suppliers,”
added Mr. Long.
“Cash flow from operations was $24 million in the third quarter
and $680 million over the last 12 months as we continue to exceed
our cash flow target,” said Chris Stansbury, senior vice president
and chief financial officer. “During the quarter, we returned
approximately $117 million to shareholders through our stock
repurchase program. We had approximately $169 million of remaining
authorization under our share repurchase program at the end of the
third quarter.”
NINE-MONTH RESULTS
Arrow’s net income for the first nine months of 2016 was $358
million, or $3.87 per share on a diluted basis, compared with net
income of $339 million, or $3.52 per share on a diluted basis in
the first nine months of 2015. Excluding certain items1, net income
would have been $428 million, or $4.63 per share on a diluted
basis, in the first nine months of 2016 compared with net income of
$410 million, or $4.26 per share on a diluted basis, in the first
nine months of 2015. In the first nine months of 2016, sales of
$17.38 billion increased 5 percent from sales of $16.53 billion in
the first nine months of 2015.
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.
GUIDANCE
“As we look to the fourth quarter, we believe that total sales
will be between $6.3 billion and $6.7 billion, with global
components sales between $3.7 billion and $3.9 billion, and global
enterprise computing solutions sales between $2.6 billion and $2.8
billion. As a result of this outlook, we expect earnings per share
on a diluted basis, to be in the range of $1.68 to $1.84, and
earnings per share on a diluted basis, excluding any charges, to be
in the range of $1.92 to $2.08 per share. Our guidance assumes an
average tax rate in the range of 25 to 27 percent and average
diluted shares outstanding are expected to be 91 million. Due to
timing of some discreet items, we anticipate our fourth-quarter
average tax rate will be below our usual 27 to 29 percent range,
but full-year 2016 average tax rate will be within the 27 to 29
percent range. We are expecting the average USD-to-Euro exchange
rate for the fourth quarter to be approximately $1.11 to €1. At the
midpoints of our fourth-quarter guidance ranges, full-year 2016
earnings per share, on a diluted basis, excluding certain items1,
would total approximately $6.62 and grow 7 percent compared to
full-year 2015. Full-year 2016 sales would total approximately
$23.88 billion and would grow 3 percent compared to full-year
2015,” said Mr. Stansbury.
Please refer to the CFO commentary, which can be found at
investor.arrow.com, 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
serving over 85 countries.
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 enterprise computing solutions
markets, changes in relationships with key suppliers, increased
profit margin pressure, the effects of additional actions taken to
become more efficient or lower costs, risks related to the
integration of acquired businesses, changes in legal and regulatory
matters, 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.
For a further discussion of factors to consider in connection
with these forward-looking statements, investors should refer to
Item 1A Risk Factors of the company’s Annual Report on Form 10-K
for the year ended December 31, 2015.
Certain Non-GAAP Financial
Information
In addition to disclosing financial results that are determined
in accordance with accounting principles generally accepted in the
United States (“GAAP”), the company also provides certain non-GAAP
financial information relating to sales, operating income, net
income attributable to shareholders, and net income per basic and
diluted share. The company provides sales on a non-GAAP basis
adjusted for the impact of changes in foreign currencies and the
impact of acquisitions by adjusting the company's operating results
for businesses acquired, including the amortization expense related
to acquired intangible assets, as if the acquisitions had occurred
at the beginning of the earliest period presented (referred to as
"impact of acquisitions"). Operating income, net income
attributable to shareholders, and net income per basic and diluted
share are adjusted for certain charges, credits, gains, and losses
that the company believes impact the comparability of its results
of operations. These charges, credits, gains, and losses arise out
of the company’s efficiency enhancement initiatives, acquisitions
(including intangible assets amortization expense), loss on
prepayment of debt, and (gain)/loss on investments. A
reconciliation of the company’s non-GAAP financial information to
GAAP is set forth in the tables 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 these items
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, sales, 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. CONSOLIDATED STATEMENTS OF OPERATIONS (In
thousands except per share data) (Unaudited) Quarter
Ended Nine Months Ended
Oct. 1,2016
Sep. 26,2015
Oct. 1,2016
Sep. 26,2015
Sales $ 5,936,092 $ 5,698,304 $ 17,382,370 $ 16,530,678
Costs and expenses: Cost of sales 5,162,930 4,955,937 15,061,519
14,334,394 Selling, general, and administrative expenses 510,017
497,876 1,534,534 1,457,160 Depreciation and amortization 40,194
40,941 121,516 117,854 Restructuring, integration, and other
charges 24,267 17,756 61,161 51,099
5,737,408 5,512,510 16,778,730
15,960,507 Operating income 198,684 185,794 603,640 570,171 Equity
in earnings of affiliated companies 1,311 1,674 5,394 4,890 Gain on
sale of investment
- - - 2,008 Interest and other financing expense, net 37,229 35,409
111,828 100,959 Other expense, net - - -
4,443 Income before income taxes 162,766 152,059 497,206
471,667 Provision for income taxes 44,931 41,755
137,441 130,589 Consolidated net income 117,835
110,304 359,765 341,078 Noncontrolling interests 108
1,060 1,533 1,844 Net income attributable to
shareholders $ 117,727 $ 109,244 $ 358,232 $ 339,234 Net income per
share:
Basic
$ 1.29 $ 1.16 $ 3.92 $ 3.56 Diluted $ 1.28 $ 1.15 $ 3.87 $ 3.52
Weighted average shares outstanding: Basic 90,937 94,302 91,412
95,277 Diluted 91,938 95,363 92,487 96,302 ARROW
ELECTRONICS, INC. CONSOLIDATED BALANCE SHEETS (In thousands except
par value)
Oct. 1,2016
Dec. 31,2015
(Unaudited) ASSETS Current assets: Cash and cash equivalents $
384,415 $ 273,090 Accounts receivable, net 5,912,085 6,161,418
Inventories, net 2,605,408 2,466,490 Other current assets
289,356 285,473 Total current assets 9,191,264
9,186,471 Property, plant, and equipment, at cost: Land 23,864
23,547 Buildings and improvements 174,127 162,011 Machinery and
equipment 1,353,862 1,250,115 1,551,853 1,435,673
Less: Accumulated depreciation and amortization (801,340)
(735,495) Property, plant, and equipment, net 750,513
700,178 Investments in affiliated companies 89,059 73,376
Intangible assets, net 355,968 389,326 Goodwill 2,441,846 2,368,832
Other assets 309,393 303,747 Total assets $
13,138,043 $ 13,021,930 LIABILITIES AND EQUITY Current liabilities:
Accounts payable $ 4,747,227 $ 5,192,665 Accrued expenses 698,525
819,463 Short-term borrowings, including current portion of
long-term debt 77,348 44,024 Total current
liabilities 5,523,100 6,056,152 Long-term debt
2,704,851 2,380,575 Other liabilities 429,631 390,392 Equity:
Shareholders' equity: Common stock, par value $1: Authorized –
160,000 shares in both 2016 and 2015 Issued – 125,424 shares in
both 2016 and 2015 125,424 125,424 Capital in excess of par value
1,102,697 1,107,314 Treasury stock (35,838 and 34,501 shares in
2016 and 2015, respectively), at cost (1,590,818) (1,480,069)
Retained earnings 5,032,712 4,674,480 Accumulated other
comprehensive loss (244,511) (284,706) Total
shareholders' equity 4,425,504 4,142,443 Noncontrolling interests
54,957 52,368 Total equity 4,480,461
4,194,811 Total liabilities and equity $ 13,138,043 $ 13,021,930
ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF CASH
FLOWS (In thousands) (Unaudited) Quarter Ended
Oct. 1,2016
Sep. 26,2015
Cash flows from operating activities: Consolidated net income $
117,835 $ 110,304 Adjustments to reconcile consolidated net income
to net cash provided by (used for) operations: Depreciation and
amortization 40,194 40,941 Amortization of stock-based compensation
10,508 11,777 Equity in earnings of affiliated companies (1,311)
(1,674) Deferred income taxes 2,522 375 Excess tax benefits from
stock-based compensation arrangements (14) (21) Other 1,510 1,475
Change in assets and liabilities, net of effects of acquired
businesses: Accounts receivable (193,791) (22,871) Inventories
(95,184) 37,935 Accounts payable 93,313 (298,552) Accrued expenses
11,826 26,638 Other assets and liabilities 37,016
(14,821) Net cash provided by (used for) operating activities
24,424 (108,494) Cash flows from investing
activities: Cash consideration paid for acquired businesses
(23,473) (42,236) Acquisition of property, plant, and equipment
(38,005) (44,236) Other - - Net cash used for
investing activities (61,478) (86,472) Cash flows
from financing activities: Change in short-term and other
borrowings (35,670) (252) Proceeds from long-term bank borrowings,
net 87,000 204,300 Proceeds from exercise of stock options 1,842
248 Excess tax benefits from stock-based compensation arrangements
14 21 Repurchases of common stock (120,345) (50,177) Other -
(2,831) Net cash provided by(used for)financing activities
(67,159) 151,309 Effect of exchange rate changes on
cash (7,143) (19,320) Net decrease in cash and cash
equivalents (111,356) (62,977) Cash and cash equivalents at
beginning of period 495,771 399,721 Cash and cash
equivalents at end of period $ 384,415 $ 336,744 ARROW
ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In
thousands) (Unaudited) Nine Months Ended
Oct. 1,2016
Sep. 26,2015
Cash flows from operating activities: Consolidated net income $
359,765 $ 341,078 Adjustments to reconcile consolidated net income
to net cash provided by operations: Depreciation and amortization
121,516 117,854 Amortization of stock-based compensation 29,783
33,783 Equity in earnings of affiliated companies (5,394) (4,890)
Deferred income taxes 30,191 26,881 Gain on sale of investment -
(2,008) Excess tax benefits from stock-based compensation
arrangements (4,953) (5,863) Other 4,464 8,057 Change in assets and
liabilities, net of effects of acquired businesses: Accounts
receivable 335,455 1,056,282 Inventories (117,674) (44,890)
Accounts payable (513,365) (1,318,702) Accrued expenses (102,915)
(72,728) Other assets and liabilities (1,121)
(23,910) Net cash provided by operating activities 135,752
110,944 Cash flows from investing activities: Cash
consideration paid for acquired businesses (68,946) (512,910)
Acquisition of property, plant, and equipment (126,341) (113,056)
Other (12,000) 2,008 Net cash used for investing
activities (207,287) (623,958) Cash flows from
financing activities: Change in short-term and other borrowings
31,941 (4,069) Proceeds from long-term bank borrowings, net 320,000
238,700 Net proceeds from note offering - 688,162 Redemption of
notes - (254,313) Proceeds from exercise of stock options 16,686
14,722 Excess tax benefits from stock-based compensation
arrangements 4,953 5,863 Repurchases of common stock (167,178)
(206,601) Other (3,000) (5,831) Net cash provided by
financing activities 203,402 476,633 Effect of
exchange rate changes on cash (20,542) (27,230) Net
increase (decrease) in cash and cash equivalents 111,325 (63,611)
Cash and cash equivalents at beginning of period 273,090
400,355 Cash and cash equivalents at end of period $ 384,415
$ 336,744 ARROW ELECTRONICS, INC. NON-GAAP SALES
RECONCILIATION (In thousands) (Unaudited) Quarter
Ended
Oct. 1,2016
Sep. 26,2015
% Change Consolidated sales, as reported $ 5,936,092 $
5,698,304 4.2% Impact of changes in foreign currencies - (32,830)
Impact of acquisitions 1,387 73,098 Consolidated
sales, as adjusted $ 5,937,479 $ 5,738,572 3.5% Global
components sales, as reported $ 3,904,447 $ 3,692,051 5.8% Impact
of changes in foreign currencies - (8,287) Impact of acquisitions
1,387 10,532 Global components sales, as adjusted $
3,905,834 $ 3,694,296 5.7% Europe components sales, as
reported $ 1,008,135 $ 992,623 1.6% Impact of changes in foreign
currencies - (10,411) Impact of acquisitions - 5,825
Europe components sales, as adjusted $ 1,008,135 $ 988,037 2.0%
Asia components sales, as reported $ 1,436,316 $ 1,241,190
15.7% Impact of changes in foreign currencies - 1,691 Impact of
acquisitions - - Asia components sales, as adjusted $
1,436,316 $ 1,242,881 15.6% Global ECS sales, as reported $
2,031,645 $ 2,006,253 1.3% Impact of changes in foreign currencies
- (24,543) Impact of acquisitions - 62,567 Global ECS
sales, as adjusted $ 2,031,645 $ 2,044,277 (0.6%) Europe ECS
sales, as reported $ 539,932 $ 599,128 (9.9%) Impact of changes in
foreign currencies - (26,725) Impact of acquisitions -
- Europe ECS sales, as adjusted $ 539,932 $ 572,403 (5.7%)
Americas ECS sales, as reported $ 1,491,713 $ 1,407,125 6.0%
Impact of changes in foreign currencies - 2,182 Impact of
acquisitions - 62,567 Americas ECS sales, as adjusted
$ 1,491,713 $ 1,471,874 1.3% ARROW ELECTRONICS, INC. NON-GAAP SALES
RECONCILIATION (In thousands) (Unaudited)
Nine Months Ended
Oct. 1,2016
Sep. 26,2015
% Change Consolidated sales, as reported $ 17,382,370 $
16,530,678 5.2% Impact of changes in foreign currencies - (111,315)
Impact of acquisitions 48,148 614,020 Consolidated
sales, as adjusted $ 17,430,518 $ 17,033,383 2.3% Global
components sales, as reported $ 11,413,348 $ 10,736,989 6.3% Impact
of changes in foreign currencies - (52,310) Impact of acquisitions
9,711 333,703 Global components sales, as adjusted $
11,423,059 $ 11,018,382 3.7% Europe components sales, as
reported $ 3,123,258 $ 2,902,619 7.6% Impact of changes in foreign
currencies - (23,407) Impact of acquisitions -
104,491 Europe components sales, as adjusted $ 3,123,258 $
2,983,703 4.7% Asia components sales, as reported $
3,912,613 $ 3,504,969 11.6% Impact of changes in foreign currencies
- (24,297) Impact of acquisitions - 211,745 Asia
components sales, as adjusted $ 3,912,613 $ 3,692,417 6.0%
Global ECS sales, as reported $ 5,969,022 $ 5,793,689 3.0% Impact
of changes in foreign currencies - (59,006) Impact of acquisitions
38,437 280,317 Global ECS sales, as adjusted $
6,007,459 $ 6,015,000 (0.1%) Europe ECS sales, as reported $
1,867,715 $ 1,859,069 0.5% Impact of changes in foreign currencies
- (41,268) Impact of acquisitions - - Europe ECS
sales, as adjusted $ 1,867,715 $ 1,817,801 2.7% Americas ECS
sales, as reported $ 4,101,307 $ 3,934,620 4.2% Impact of changes
in foreign currencies - (17,737) Impact of acquisitions
38,437 280,317 Americas ECS sales, as adjusted $ 4,139,744 $
4,197,200 (1.4%) ARROW ELECTRONICS, INC. NON-GAAP EARNINGS
RECONCILIATION (In thousands except per share data) (Unaudited)
Three months ended October 1, 2016
ReportedGAAPmeasure
Intangibleamortizationexpense
Restructuring& Integrationcharges
Other*
Non-GAAPmeasure
Operating income $ 198,684 $ 13,893 $ 24,267 $ - $ 236,844 Income
before income taxes 162,766 13,893 24,267 - 200,926 Provision for
income taxes 44,931 4,959 7,439 - 57,329 Consolidated net income
117,835 8,934 16,828 - 143,597
Noncontrolling interests
108 347 - - 455 Net income attributable to shareholders $ 117,727 $
8,587 $ 16,828 $ - $ 143,142 Net income per diluted share 1.28 .09
.18 - 1.56 Effective tax rate 27.6% 28.5%
Three months ended September 26, 2015
ReportedGAAPmeasure
Intangibleamortizationexpense
Restructuring& Integrationcharges
Other*
Non-GAAPmeasure
Operating income $ 185,794 14,269 17,756 - 217,819 Income before
income taxes 152,059 14,269 17,756 - 184,084 Provision for income
taxes 41,755 2,748 5,114 - 49,617 Consolidated net income 110,304
11,521 12,642 - 134,467
Noncontrolling interests
1,060 - - - 1,060 Net income attributable to shareholders $ 109,244
11,521 12,642 - 133,407 Net income per diluted share 1.15 .12 .13 -
1.40 Effective tax rate 27.5% 27.0%
Nine months ended October 1, 2016
ReportedGAAPmeasure
Intangibleamortizationexpense
Restructuring& Integrationcharges
Other*
Non-GAAPmeasure
Operating income $ 603,640 41,252 61,161 - 706,053 Income before
income taxes 497,206 41,252 61,161 - 599,619 Provision for income
taxes 137,441 12,357 19,242 - 169,040 Consolidated net income
359,765 28,895 41,919 - 430,579
Noncontrolling interests
1,533 940 - - 2,473 Net income attributable to shareholders $
358,232 27,955 41,919 - 428,106 Net income per diluted share 3.87
.30 .45 - 4.63 Effective tax rate 27.6% 28.2%
Nine months ended September 26, 2015
ReportedGAAPmeasure
Intangibleamortizationexpense
Restructuring& Integrationcharges
Other*
Non-GAAPmeasure
Operating income $ 570,171 39,293 51,099 - 660,563 Income before
income taxes 471,667 39,293 51,099 2,435 564,494 Provision for
income taxes 130,589 7,574 12,993 1,373 152,529 Consolidated net
income 341,078 31,719 38,106 1,062 411,965
Noncontrolling interests
1,844 - - - 1,844 Net income attributable to shareholders $ 339,234
31,719 38,106 1,062 410,121 Net income per diluted share 3.52 .33
.40 .01 4.26 Effective tax rate 27.7% 27.0%
*Other includes gain/loss on sale of
investments and loss on prepayment of debt.
ARROW ELECTRONICS, INC. SEGMENT INFORMATION (In thousands)
(Unaudited) Quarter Ended Nine Months Ended
Oct. 1,2016
Sep. 26,2015
Oct. 1,2016
Sep. 26,2015
Sales: Global components $ 3,904,447 $ 3,692,051 $ 11,413,348 $
10,736,989 Global ECS 2,031,645 2,006,253
5,969,022 5,793,689 Consolidated $ 5,936,092 $ 5,698,304 $
17,382,370 $ 16,530,678 Operating income (loss): Global
components $ 175,507 $ 164,744 $ 524,662 $ 499,456 Global ECS
96,181 84,233 283,792 250,144 Corporate (a) (73,004)
(63,183) (204,814) (179,429) Consolidated $ 198,684 $
185,794 $ 603,640 $ 570,171 (a) Includes restructuring,
integration, and other charges of $24.3 million and $61.2 million
for the third quarter and nine months ended 2016 and $17.8 million
and $51.1 million for the third quarter and nine months ended 2015,
respectively.
NON-GAAP SEGMENT RECONCILIATION
Quarter Ended Nine Months Ended
Oct. 1,2016
Sep. 26,2015
Oct. 1,2016
Sep. 26,2015
Global components operating income, as reported $ 175,507 $ 164,744
$ 524,662 $ 499,456 Intangible assets amortization expense
7,679 7,540 24,124 20,468 Global components
operating income, as adjusted $ 183,186 $ 172,284 $ 548,786 $
519,924 Global ECS operating income, as reported $ 96,181 $
84,233 $ 283,792 $ 250,144 Intangible assets amortization expense
6,214 6,729 17,128 18,825 Global ECS
operating income, as adjusted $ 102,395 $ 90,962 $ 300,920 $
268,969
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161103005505/en/
Arrow Electronics, Inc.Steven O’Brien, 303-824-4544Director,
Investor RelationsorMedia Contact:John Hourigan, 303-824-4586Vice
President, Global Communications
Arrow Electronics (NYSE:ARW)
Historical Stock Chart
From Aug 2024 to Sep 2024
Arrow Electronics (NYSE:ARW)
Historical Stock Chart
From Sep 2023 to Sep 2024