Arrow Component Sales Drive Big Q3 Net Income Increase

Arrow Electronics reported third quarter earnings Wednesday that increased nearly 10-fold from the year-ago quarter thanks in part to to strong strong component sales.

The Melville, N.Y.-based distributor reported net income of $118.5 million, or $1.00 per diluted share, on sales of $4.66 billion. The results compare to net income of $12.6 million, 10 cents per share, on $3.67 billion in the third quarter of 2009. Arrow's shares were trading at $30 in early afternoon-trading, up $1.58 per share or 5.6 percent.

"The positive momentum we have seen in our businesses during the first half of the year has continued with another quarter of terrific performance. Earnings per share came in well ahead of our expectations," said Mike Long, chairman, president, and chief executive officer, in a statement. "Our strategy to accelerate growth and gain market share through sales excellence, value-added services, and expansion of markets served is paying off."

Both quarters were impacted by a number of charges. Excluding those items, net income for the third quarter would have been $128 million or $1.08 per share, and $44.9 million or 37 cents per share in the year-ago quarter.

"The third quarter results once again demonstrate our ability to deliver industry-leading results and drive gross margin improvements," said Paul Reilly, executive vice president, finance and operations and chief financial officer. "Equally important, our returns continue to reflect our strategic accomplishments, with both our return on working capital and return on invested capital almost doubling year over year."

Next: Enterprise Computing Sales Increase 8 Percent

Arrow's global Enterprise Computing Solutions sales were $1.22 billion in the quarter, up 8 percent compared to last year.

"Storage, software, and industry-standard servers grew at very strong double-digits rates on a year-over-year basis," Long said in the statement. "We also saw terrific growth in some of our newer initiatives including security and networking."

Arrow's global components sales were $3.44 billion, a 35 percent increase year over year. "

For the current quarter, Arrow expects sales between $5 and $5.4 billion, with Enterprise Computing Sales between $1.68 and $1.88 billion. Earnings are expected to be between $1.22 and $1.32 per share, according to Reilly. Analysts had been forecasting earnings of $1.08 per share on $4.86 billion in sales for the current quarter.