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Electronics Production |

Arrow's net income up 59%

Arrow Electronics, Inc. reported second quarter 2006 net income of $92.8 million on sales of $3.44 billion, compared with net income of $58.4 million on sales of $2.77 billion in the second quarter of 2005.

The 24% increase in sales year-over-year included 14% organic growth and 10% growth as a result of acquisitions. The company's results for the second quarters of 2006 and 2005 include a number of items outlined below that impact their comparability. A reconciliation of these items is provided under the heading "Certain Non-GAAP Financial Information." Excluding those items, net income for the quarter ended June 30, 2006 would have been $94.7 million and net income for the quarter ended July 1, 2005 would have been $65.4 million. Included in the results for the second quarter of 2006 is $3.7 million related to the expensing of stock options in accordance with the provisions of Financial Accounting Standards Board Statement No. 123 (revised 2004), "Share Based Payment" ("FASB Statement No. 123(R)"). No such charge was recorded in 2005. Wall Street consensus, as reported by First Call, was $.73 on a diluted basis. Operating income in the second quarter of 2006 and 2005 was $163.1 million and $118.8 million, respectively. Excluding the items impacting comparability included in the reconciliation provided under the heading "Certain Non-GAAP Financial Information", second quarter 2006 operating income would have been $166.3 million, up 35% over last year's $123.6 million. Operating income as a percentage of sales, excluding the previously mentioned items, increased by 40 basis points year-over-year. "We once again had an excellent quarter as our ongoing initiatives, coupled with favorable conditions in the marketplace, led to record second quarter sales and earnings in excess of our expectations. We also delivered our highest second quarter return on invested capital in ten years," said William E. Mitchell, Chairman, President and Chief Executive Officer. "We continue on our path of consistent execution with 14 consecutive quarters of year-over-year sales growth, and we are very proud of our progress in driving operational excellence into all parts of our business." Worldwide components sales of $2.76 billion increased 6% sequentially and 27% over last year, while operating income increased 11% sequentially and 42% over last year. Sales on a pro forma basis, including Ultra Source Technology Corp. in the second quarter of 2005, increased 20% year-over-year. "Each of our components businesses around the world achieved sequential growth and impressive year-over-year increases in sales and operating income," stated Mr. Mitchell. "In North America, sales reached their highest level since the first quarter of 2001, while we drove operating expenses as a percentage of sales down 150 basis points year-over-year. Sales in Europe reached all-time highs while improving operating income almost 60% year-over-year, and Asia/Pacific sales broke records again with significant improvements in profitability," added Mr. Mitchell. Worldwide computer products sales increased 17% sequentially in this seasonally strong quarter, and increased 14% year-over-year. Sales for the Enterprise Computing Solutions business on a pro forma basis, including DNSint.com AG in the second quarter of 2005, decreased 2% year-over-year. "Our enterprise computing business continued to demonstrate solid profitability and returns. Growth was driven by strong performance in storage, industry standard servers, and our European enterprise business, offset by weakness in the broad proprietary server market and software in North America," said Mr. Mitchell.

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March 28 2024 10:16 am V22.4.20-2
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