Arrow Electronics saw a 14 percent sales gain and met financial analysts' earnings expectations before special charges for the fourth quarter.
The Melville, N.Y.-based distributor reported earnings of $47.7 million, or 40 cents per diluted share, on sales of $2.72 billion for the quarter ended Dec. 31, 2004, up from a profit of $26 million on $2.43 billion in revenue a year earlier.
The results include restructuring charges of $2.2 million net of taxes, or 2 cents per share, as well as a $1.4 million charge related to the exit of several facilities from past acquisitions and a $10 million impairment charge related to cost in excess of net assets of companies acquired. Without the charges, Arrow would have earned $59.9 million, or 50 cents per share.
"Our ongoing commitment to operational excellence and continuous process improvement drove a nearly doubling of net income when compared to last year's fourth quarter," Arrow President and CEO William Mitchell said in a statement.
Worldwide computer products sales rose about 12 percent to $733 million ,and operating income as a percentage of sales came in at 5.7 percent, a 110 basis-point improvement for that division vs. last year's fourth quarter.
Arrow doesn't break out revenue for its North American Computer Products group--which includes MOCA, SBM, Support Net and Arrow Enterprise Storage Solutions--but Mitchell said Arrow NACP grew earnings for the 14th consecutive quarter.
Arrow also announced plans to cut its costs by $50 million, including $40 million this year. "We have undertaken several actions to better optimize the use of our mainframe, reduce real estate costs, be more efficient in our distribution centers and further improve processes enabling our employees to be more productive," Mitchell said in the statement. "We remain committed to being best-in-class in all that we do." The restructuring charges associated with those actions will be approximately $7.5 million in 2005, he said.
For the first quarter, Arrow expects earnings of between 52 cents and 56 cents per share and revenue of between $2.73 billion and $2.83 billion, excluding charges. Analysts had projected earnings of 49 cents and revenue of $2.77 billion for the first quarter.
For the 2004 fiscal year, Arrow earned $207.5 million, or $1.75 per share, on $10.65 billion in sales. In 2003, the distributor had net income of $25.7 million, or 25 cents per share, on $8.53 billion in revenue.
"We have accomplished much over the past year. Earnings grew at a faster pace than sales. Our ongoing focus on operational efficiency and effectiveness has positioned us to better serve our customers and suppliers at a lower cost," Mitchell said in the statement.