Arrow Sparkles in Fourth Quarter, Optimistic for 2010

Arrow Electronics confirmed the upturn in the fortunes of the world components market by reporting fourth quarter results ahead of expectations.

Net income of $63.1 million on sales of $4.20 billion, compared with a net loss of $871.9 million on sales of $4.09 billion in the fourth quarter of 2008, primarily due to a non-cash impairment charge.  

"We ended the year on a very positive note, with sales, EPS, and cash flow well above our expectations. Our results reflect the exceptional work of our employees around the globe and demonstrate our commitment to our strategic priorities despite the external economic pressures of the past year," said Michael J. Long (pictured), chairman, president, and chief executive officer. "Although 2009 was a challenging year, we have made great strides to accelerate our sales excellence strategy, advance our industry-leading position, simplify our business processes, and strengthen our financial base. I am confident that we will leverage the momentum from the third and fourth quarters to maximise sales and profitable growth while taking advantage of opportunities in the market."

Global components sales of $2.59 billion increased 6 percent year over year. "Strong performance in global components was driven by better-than-expected performance in all of our core geographies. North America and Europe have continued to show improving sales trends, with both regions delivering sales growth well ahead of normal seasonality. Asia Pacific continued to grow, with sales increasing more than 25 per cent year over year. We have made great strides to further simplify and unify global components in all regions, and we are confident that we will outperform the market," Long said.

Arrow's net income for 2009 was $123.5 million ($1.03 per share on both a basic and diluted basis) on sales of $14.68 billion, compared with a net loss of $613.7 million ($5.08 per share on both a basic and diluted basis) on sales of $16.76 billion in 2008. Cash flow from operations for the year ended December 31, 2009 was nearly $850 million.

Net income for 2009 includes restructuring, integration, and other charges of $105.5 million primarily related to initiatives taken by the company to improve operating efficiencies and a loss on prepayment of debt of $5.3 million related to the repurchase of $130.5 million principal amount of its 9.15% senior notes due 2010. Excluding these items, net income would have been $202.5 million ($1.69 and $1.68 per share on a basic and diluted basis, respectively) for 2009.

"Looking ahead, we believe that total first-quarter sales will be between $3.675 and $4.275 billion, with global components sales between $2.675 and $3.075 billion and global enterprise computing solutions sales between $1.0 and $1.2 billion. Earnings per share, on a diluted basis, excluding any charges, are expected to be in the range of $.50 to $.62," said Paul J Reilly, executive vice president and chief financial officer of Arrow Electronics.