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Arrow Electronics Reports Record First-Quarter 2016 Sales and Non-GAAP Earnings Per ShareArrow Electronics, Inc. (NYSE:ARW) today reported first-quarter 2016 net income of $106.2 million, or $1.14 per share on a diluted basis, compared with net income of $106.1 million, or $1.09 per share on a diluted basis, in the first quarter of 2015. Excluding certain items1, net income would have been $132.2 million, or $1.43 per share on a diluted basis, in the first quarter of 2016, compared with net income of $127.8 million, or $1.32 per share on a diluted basis, in the first quarter of 2015. First-quarter sales of $5.47 billion increased 9 percent from sales of $5 billion in the prior year. First-quarter sales, adjusted for the impact of acquisitions and changes in foreign currencies, increased 4 percent year over year. "We continued our strong momentum into 2016 by producing record first-quarter sales and earnings per share. Our global components and enterprise computing solutions businesses produced growth in all regions, delivering earnings per share of $1.43," said Michael J. Long, chairman, president, and chief executive officer. "We attribute our strong performance to our strategic investments in customer-facing talent and resources, as well as our focus on design and value-added services for global components and our solution-selling approach for enterprise computing solutions." Global components first-quarter sales of $3.68 billion grew 10 percent year over year. First-quarter sales, as adjusted, grew 4 percent year over year. Americas components sales grew 3 percent year over year. Europe components sales grew 15 percent year over year. Sales in the region, as adjusted, grew 9 percent year over year. Asia-Pacific components sales grew 15 percent year over year. Sales in the region, as adjusted, grew 2 percent year over year. "Europe has delivered six straight quarters of strong growth, and Americas returned to growth as we anticipated. In Asia, growth by our core small-to-medium-sized manufacturing customers was better than we anticipated," added Mr. Long. Global enterprise computing solutions first-quarter sales of $1.8 billion grew 9 percent year over year. First-quarter sales, as adjusted, grew 3 percent year over year. Americas sales grew 11 percent year over year. Sales in the region, as adjusted, grew 2 percent year over year. Europe sales grew 4 percent year over year. Sales in the region, as adjusted, grew 6 percent year over year. "Enterprise computing solutions posted record first-quarter sales, operating income, and operating margin," said Mr. Long. "First-quarter cash flow from operations was a negative $37 million. While seasonally negative, we showed substantial improvement when compared to the past three years. Trailing 12-month cash flow from operations was $860 million," said Paul J. Reilly, executive vice president, finance and operations, and chief financial officer. "Our strong balance sheet and cash flow allowed us to continue investing in organic growth, and provided us with the opportunity to deploy capital toward our strategic initiatives. We will continue to return excess capital to shareholders." 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 second quarter, we believe that total sales will be between $5.825 billion and $6.225 billion, with global components sales between $3.75 billion and $3.95 billion, and global enterprise computing solutions sales between $2.075 billion and $2.275 billion. As a result of this outlook, we expect earnings per share on a diluted basis, excluding any charges, to be in the range of $1.59 to $1.71 per share. Our guidance assumes an average tax rate in the range of 27 to 29 percent and average diluted shares outstanding are expected to be 93 million. We are expecting the average USD-to-Euro exchange rate for the first quarter to be approximately $1.13 to €1," said Mr. Reilly. 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.
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