Arrow Electronics Inc. (ARW, Financial) filed Quarterly Report for the period ended 2012-09-29.
Arrow Electronics Inc has a market cap of $3.76 billion; its shares were traded at around $34.55 with a P/E ratio of 7.3 and P/S ratio of 0.2. Arrow Electronics Inc had an annual average earning growth of 8.8% over the past 10 years. GuruFocus rated Arrow Electronics Inc the business predictability rank of 3-star.
The company recorded gross profit of $662.7 million and $2.03 billion in the third quarter and first nine months of 2012, respectively, compared with $711.1 million and $2.20 billion in the year-earlier periods. The decrease in gross profit was primarily due to the aforementioned 4.3% and 5.9% decrease in sales during the third quarter and first nine months of 2012, respectively. Gross profit margins for the third quarter and first nine months of 2012 decreased by approximately 40 and 30 basis points, respectively, compared with the year-earlier periods. As discussed above, the prospective revision of the presentation of certain fulfillment contracts had no impact on gross profit dollars but positively impacted the gross profit margin percentage by approximately 50 and 20 basis points, respectively, for the third quarter and first nine months of 2012. Pro forma for acquisitions and excluding the impact of foreign currency and the prospective presentation of sales related to certain fulfillment contracts, gross profit margins decreased by approximately 110 and 80 basis points, respectively, for the third quarter and first nine months of 2012, principally due to increased competitive pricing pressure in both the company's business segments, and to a lessor extent, a change in mix of products.
Selling, general and administrative expenses decreased by $10.8 million, or 2.3%, in the third quarter of 2012 on a sales decrease of 4.3%, compared with the third quarter of 2011 and decreased by $53.4 million, or 3.8%, in the first nine months of 2012 on a sales decrease of 5.9%, compared with the first nine months of 2011. Selling, general and administrative expenses, as a percentage of sales were 9.2% and 9.1% for the third quarter and first nine months of 2012, respectively, compared with 9.0% and 8.9% in the year-earlier periods. The dollar decrease in selling, general and administrative expenses was primarily due to the company's efforts to streamline and simplify processes and to reduce expenses in response to the decline in sales. This was offset, in part, by selling, general and administrative expenses for certain recent acquisitions which have a higher operating cost structure relative to the company's other businesses which is offset by higher gross profit margins for those businesses. The effect of acquisitions on selling, general and administrative expenses for the third quarter and first nine months of 2012 was an increase of approximately $20 million and $40 million, respectively.
The company recorded operating income of $163.8 million, or 3.3% of sales, and $540.0 million, or 3.6% of sales, in the third quarter and first nine months of 2012, respectively, as compared with operating income of $209.2 million, or 4.0% of sales, and $676.7 million, or 4.2% of sales, in the year-earlier periods. Included in operating income for the third quarter and first nine months of 2012 were the previously discussed restructuring, integration, and other charges of $14.6 million and $36.2 million, respectively. Included in operating income for the third quarter and first nine months of 2011 were the previously discussed restructuring, integration, and other charges of $8.8 million and $23.7 million, respectively. Also included in operating income for the first nine months of 2011 was the previously discussed charge of $5.9 million related to the settlement of a legal matter.
The company recorded net income attributable to shareholders of $103.6 million and $331.6 million in the third quarter and first nine months of 2012, respectively, compared with net income attributable to shareholders of $132.2 million and $424.7 million in the year-earlier periods. Included in net income attributable to shareholders for the third quarter and first nine months of 2012 were the previously discussed restructuring, integration, and other charges of $8.6 million and $24.4 million, respectively. Included in net income attributable to shareholders for the third quarter and first nine months of 2011 were the previously discussed restructuring, integration, and other charges of $6.0 million and $16.8 million, respectively. Also included in net income attributable to shareholders for the first nine months of 2011 was the previously discussed charge of $3.6 million related to the settlement of a legal matter and a gain on bargain purchase of $1.1 million. Excluding the aforementioned items, the decrease in net income attributable to shareholders for the third quarter and first nine months of 2012 was primarily the result of a decrease in sales and a corresponding decrease in gross profit. Additionally, gross profit margins were negatively impacted principally due to increased competitive pricing pressure in both the company's business segments, and to a lessor extent, a change in mix of products. These decreases were offset, in part, by a reduction in selling, general and administrative expenses due to the company's efforts to streamline and simplify processes and to reduce expenses in response to the decline in sales.
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Arrow Electronics Inc has a market cap of $3.76 billion; its shares were traded at around $34.55 with a P/E ratio of 7.3 and P/S ratio of 0.2. Arrow Electronics Inc had an annual average earning growth of 8.8% over the past 10 years. GuruFocus rated Arrow Electronics Inc the business predictability rank of 3-star.
Highlight of Business Operations:
Consolidated sales for the third quarter and first nine months of 2012 decreased by $224.5 million, or 4.3%, and $947.4 million, or 5.9%, respectively, compared with the year-earlier periods. The decrease for the third quarter and first nine months of 2012 was driven by a decrease in the global components business segment sales of $276.7 million, or 7.6%, and $1.24 billion, or 10.8%, respectively, offset, in part, by an increase in the global ECS business segment sales of $52.2 million, or 3.4%, and $288.1 million, or 6.3%, respectively, compared with the year-earlier periods. The prospective revision in presentation of sales of certain fulfillment contracts negatively impacted the sales growth in the third quarter and first nine months of 2012 by approximately 3.4% and 1.1%, respectively. The translation of the company's international financial statements into U.S. dollars resulted in a decrease in consolidated sales of 3.1% and 2.7% for the third quarter and first nine months of 2012, respectively, compared with the year-earlier periods, due to a stronger U.S. dollar. Pro forma for acquisitions and excluding the impact of foreign currency and the prospective presentation of sales related to certain fulfillment contracts, the company's consolidated sales were flat for the third quarter of 2012, compared to the year-earlier period. Pro forma for acquisitions and excluding the impact of foreign currency and the prospective presentation of sales related to certain fulfillment contracts, the company's consolidated sales decreased by 3.4%, for the first nine months of 2012, compared to the year-earlier period, principally due to weaker economic conditions in the Americas, EMEA (defined as Europe, the Middle East, and Africa), and Asia Pacific regions.The company recorded gross profit of $662.7 million and $2.03 billion in the third quarter and first nine months of 2012, respectively, compared with $711.1 million and $2.20 billion in the year-earlier periods. The decrease in gross profit was primarily due to the aforementioned 4.3% and 5.9% decrease in sales during the third quarter and first nine months of 2012, respectively. Gross profit margins for the third quarter and first nine months of 2012 decreased by approximately 40 and 30 basis points, respectively, compared with the year-earlier periods. As discussed above, the prospective revision of the presentation of certain fulfillment contracts had no impact on gross profit dollars but positively impacted the gross profit margin percentage by approximately 50 and 20 basis points, respectively, for the third quarter and first nine months of 2012. Pro forma for acquisitions and excluding the impact of foreign currency and the prospective presentation of sales related to certain fulfillment contracts, gross profit margins decreased by approximately 110 and 80 basis points, respectively, for the third quarter and first nine months of 2012, principally due to increased competitive pricing pressure in both the company's business segments, and to a lessor extent, a change in mix of products.
Selling, general and administrative expenses decreased by $10.8 million, or 2.3%, in the third quarter of 2012 on a sales decrease of 4.3%, compared with the third quarter of 2011 and decreased by $53.4 million, or 3.8%, in the first nine months of 2012 on a sales decrease of 5.9%, compared with the first nine months of 2011. Selling, general and administrative expenses, as a percentage of sales were 9.2% and 9.1% for the third quarter and first nine months of 2012, respectively, compared with 9.0% and 8.9% in the year-earlier periods. The dollar decrease in selling, general and administrative expenses was primarily due to the company's efforts to streamline and simplify processes and to reduce expenses in response to the decline in sales. This was offset, in part, by selling, general and administrative expenses for certain recent acquisitions which have a higher operating cost structure relative to the company's other businesses which is offset by higher gross profit margins for those businesses. The effect of acquisitions on selling, general and administrative expenses for the third quarter and first nine months of 2012 was an increase of approximately $20 million and $40 million, respectively.
The company recorded operating income of $163.8 million, or 3.3% of sales, and $540.0 million, or 3.6% of sales, in the third quarter and first nine months of 2012, respectively, as compared with operating income of $209.2 million, or 4.0% of sales, and $676.7 million, or 4.2% of sales, in the year-earlier periods. Included in operating income for the third quarter and first nine months of 2012 were the previously discussed restructuring, integration, and other charges of $14.6 million and $36.2 million, respectively. Included in operating income for the third quarter and first nine months of 2011 were the previously discussed restructuring, integration, and other charges of $8.8 million and $23.7 million, respectively. Also included in operating income for the first nine months of 2011 was the previously discussed charge of $5.9 million related to the settlement of a legal matter.
The company recorded net income attributable to shareholders of $103.6 million and $331.6 million in the third quarter and first nine months of 2012, respectively, compared with net income attributable to shareholders of $132.2 million and $424.7 million in the year-earlier periods. Included in net income attributable to shareholders for the third quarter and first nine months of 2012 were the previously discussed restructuring, integration, and other charges of $8.6 million and $24.4 million, respectively. Included in net income attributable to shareholders for the third quarter and first nine months of 2011 were the previously discussed restructuring, integration, and other charges of $6.0 million and $16.8 million, respectively. Also included in net income attributable to shareholders for the first nine months of 2011 was the previously discussed charge of $3.6 million related to the settlement of a legal matter and a gain on bargain purchase of $1.1 million. Excluding the aforementioned items, the decrease in net income attributable to shareholders for the third quarter and first nine months of 2012 was primarily the result of a decrease in sales and a corresponding decrease in gross profit. Additionally, gross profit margins were negatively impacted principally due to increased competitive pricing pressure in both the company's business segments, and to a lessor extent, a change in mix of products. These decreases were offset, in part, by a reduction in selling, general and administrative expenses due to the company's efforts to streamline and simplify processes and to reduce expenses in response to the decline in sales.
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