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Arrow Electronics Reports Q1

MELVILLE, N.Y. — Arrow Electronics, Inc. (NYSE: ARW) today reported first-quarter 2011 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, compared with net income of $87.0 million ($.72 and $.71 per share on a basic and diluted basis, respectively) on sales of $4.24 billion in the first quarter of 2010.

The company's results for the first quarters of 2011 and 2010 include a number of items outlined below 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 April 2, 2011 would have been $146.0 million ($1.27 and $1.24 per share on a basic and diluted basis, respectively) and net income for the quarter ended April 3, 2010 would have been $92.6 million ($.77 and $.76 per share on a basic and diluted basis, respectively). Pro forma for acquisitions and excluding the impact of foreign exchange, sales increased 10% year over year.

“Our growth strategy and the related momentum we built throughout the second half of 2009 and 2010 have carried over into the first quarter of 2011, with the Arrow team generating the strongest first-quarter results in our history. Revenue and earnings per share came in well ahead of our expectations, driven by strength in both of our business segments,” said Michael J. Long, chairman, president, and chief executive officer. “We are focused on accelerating the growth in our core businesses, while expanding our geographic reach, product portfolio, and services capabilities. We are very optimistic about the long-term outlook for our businesses around the globe and believe there is immense opportunity in the technology industry.”

“Acquisitions were accretive to EPS and are tracking to our projections. Gross profit margin, operating expense as a percentage of sales, and operating income margin for our legacy businesses all showed significant improvement compared to last year,” said Paul J. Reilly, executive vice president, finance and operations and chief financial officer. “Our returns this quarter again demonstrated our unwavering commitment to creating shareholder value. Return on working capital and return on invested capital advanced 240 basis points and 190 basis points, respectively, to nearly 32% and to 14%.”

Global components sales of $3.89 billion increased 24 percent year over year. “We saw outstanding performance in all of our regions, with our core business showing very robust growth trends ahead of normal seasonality. Our recent acquisitions have complemented the core and are also driving growth in new markets and product sets. We are excited about the opportunities that lay ahead for global components and would expect to continue to outgrow the market with the strong start we have in 2011,” Mr. Long said.

Global enterprise computing solutions (“ECS”) sales of $1.34 billion increased 21 percent year over year, representing a record level of first-quarter revenue. “Sales were in line with the high end of normal seasonality, and we saw excellent year-over-year growth in industry-standard servers, storage, and services. We remain very optimistic about the outlook for the ECS business, as we have diversified into a number of faster growing markets, such as security, networking, and virtualization, and are well positioned to capitalize on the next wave of IT spending growth,” said Mr. Long.

The company's results for the first quarters of 2011 and 2010 include the items outlined below that impact their comparability:

  • restructuring, integration, and other charges of $9.6 million ($7.2 million net of related taxes or $.06 per share on both a basic and diluted basis) in 2011 and $7.4 million ($5.5 million net of related taxes or $.05 per share on a both basic and diluted basis) in 2010;
  • the company recorded 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
  • the company recognized 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) related to the acquisition of Nu Horizons Electronics in 2011. GUIDANCE
    “Looking ahead, we believe that total second-quarter sales will be between $5.55 and $5.95 billion, with global components sales between $4.0 and $4.2 billion and global enterprise computing solutions sales between $1.55 and $1.75 billion. Earnings per share, on a diluted basis, excluding any charges, are expected to be in the range of $1.30 to $1.40,” 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.

    {complink 453|Arrow Electronics Inc.}

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