Arrow reports record sales

By Suzanne Deffree, Managing Editor, News -- 2/7/2008

Arrow Electronics Inc finished 2007 strong with record sales in the year’s final quarter of $4.42 billion, a 26% year-over-year jump.

The Q4 sales were accompanied by net income of $114 million, compared with net income of $128.1 million in the year-ago quarter, and contributed strongly to the distributor’s full-year revenue of $16 billion, a $2.4 billion climb on 2006’s sales. Full-year net income was $407.8 million, up from 2006’s net income of $388.3 million.

"We finished 2007 with outstanding performance in the fourth quarter. Sales, working capital to sales, and return on working capital were all at record levels, and exceptional cash flow generation of $220 million in the fourth quarter brought 2007 operating cash flow to $851 million," said William E. Mitchell, chairman, president and CEO, in a statement today. "Our operating margin was again at an industry leading level and our balance sheet is at its strongest level in 10 years. We are doing this while continuing to invest in important initiatives that will take us to even greater levels of growth and profitability."

Arrow’s global enterprise computing solutions (ECS) group saw Q4 sales of $1.61 billion, which increased 111% year over year. Arrow said the growth was aided by the impact of its acquisitions of KeyLink Systems Group, Alternative Technology, and the storage and security distribution business of InTechnology.

"Execution on our strategic objectives in 2007 has resulted in a much stronger organization with broader geographic reach into 22 countries, increased market share in the fast growing product segments of software and storage, and a more robust customer and supplier base. Arrow ECS is now the world's largest distributor of enterprise storage and security and virtualization software, and with increased scale, scope and capabilities, our strategy is resonating with our customers and suppliers," added Mitchell.

Arrow’s global components Q4 sales of $2.81 billion increased 3% year over year. While the business group’s growth was far less than ESC’s growth on a percentage, the Melville, NY-based company noted that it saw its first increase in daily run rate since Q3 2006 in North America and book to bill was above one in each of the regions in which Arrow operates.

“As we continued along the path to building best-in-class global capabilities and leveraging our global scale, we moved closer to our financial targets for the global components business in the fourth quarter. Operating income grew at more than three times the rate of sales growth and we reduced the amount of working capital needed to support sales by 160 basis points year over year. Our strategic initiatives around the world continue to take hold and we look forward to additional progress in the upcoming year," Mitchell said.

Looking to Q1, Arrow said it expects normal seasonality in both of its businesses to result in lower total sales for the quarter. The company predicted total Q1 sales will be between $3.925 and $4.225 billion, with global component sales between $2.775 and $2.975 billion and ESC sales between $1.15 and $1.25 billion.

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