Electronics Production | October 23, 2007
Arrow reports sales Growth of 17%
Arrow Electronics, Inc today reported third quarter 2007 net income of $98.3 million ($.80 and $.79 per share on a basic and diluted basis, respectively) on sales of $4.03 billion, compared with net income of $85.9 million ($.70 per share on both a basic and diluted basis) on sales of $3.45 billion in the third quarter of 2006.
Arrow's sales increased 17 percent year over year. On a pro forma basis, sales increased 4 percent year over year as acquisitions also benefited sales growth. The company's results for the third quarters of 2007 and 2006 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 September 30, 2007 would have been $95.0 million ($.77 and $.76 per share on a basic and diluted basis, respectively) and net income for the quarter ended September 30, 2006, would have been $87.0 million ($.71 per share on both a basic and diluted basis). "We performed well in a market that was challenging. Our level of sales, as well as working capital to sales, remained near record levels and we generated the highest level of cash flow for a third quarter in six years and the highest return on working capital for a third quarter in seven years, all while we continued to invest in the long-term future of Arrow," said William E. Mitchell, chairman, president and chief executive officer of Arrow Electronics, Inc. Global enterprise computing solutions ("ECS") sales of $1.17 billion increased 97 percent year over year and decreased 8 percent sequentially in the seasonally soft third quarter. Year-over-year growth was aided by the impact of the acquisitions of KeyLink Systems Group, Alternative Technology, Inc. and the storage and security distribution business of InTechnology plc. On a pro forma basis, sales increased 15 percent year over year. "We again outgrew the market with strong double-digit performance in industry standard servers, storage, software, and services, as well as modest growth in proprietary servers. While we achieved strong top-line performance with revenue near the high end of our guidance, our mix of products and investments in the business to accelerate future growth had an unfavorable impact on profitability this quarter. We expect to continue to outgrow the market and return to more normal levels of profitability in the fourth quarter," said Mr. Mitchell. Global components sales of $2.86 billion increased 3 percent compared with the second quarter and were flat year over year as the well-publicized weakness within the large EMS customer base continued. "We again gained market share on a worldwide basis and added to our industry leading position in the face of an increasingly more competitive market in all regions this quarter. We were particularly pleased with our success in Asia Pacific, where we generated record operating income dollars for a third quarter as earnings increased 173 percent year over year. We had good success with efficiency initiatives to drive down our operating expenses worldwide going forward, and we will continue to invest in strategic opportunities to build for the future," Mr. Mitchell said.
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