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Arrow Electronics Reports Q1 Results

ENGLEWOOD, Colo. — 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.

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