OREANDA-NEWS. 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.