Joining the chorus of positive earnings reports ringing from the distribution sector, Arrow Electronics Inc. today posted record fourth-quarter sales of $2.5 billion, as the company increased its net income to $44 million.
Boosting sales from $2.2 billion in the year-ago quarter, Arrow reported a 36% jump in net income from $32.3 million in the fourth quarter of 1998. Earnings per share rose to 46 cents, from 34 cents last year.
For the year, Arrow's net income was $140.6 million on sales of $9.3 billion, excluding a second-quarter special charge of $24.6 million associated with the company's acquisition and integration of Bell Industries and Richey Electronics. Comparable year-ago net income was $145.8 million on sales of $8.3 billion. Net income for the year, including the special charge, was $124.2 million.
Based largely on the strength of its components sales, the Melville, N.Y., distributor said its fourth-quarter operating margin climbed to 4.4%, compared with 4% in the fourth quarter of 1998 and 3.9% in the third quarter of 1999.
"Our fourth-quarter results clearly indicate that the long-awaited recovery in our industry is at hand, as evidenced by our dramatic 36% year-over-year increase in net income and a healthy increase of 20% over the third quarter," said Stephen P. Kaufman, Arrow's chairman and chief executive.
Fourth-quarter operating income within Arrow's global components business surged by 50% year-over-year, Kaufman said, adding that "operating margins in our components businesses were up in all regions on a sequential basis."
End-user concern over Y2K did slow Arrow's computer-systems business in the quarter, although the company said its Gates/Arrow systems and PC components business still posted operating income of 1.4% on sales of $500 million.
"Having successfully completed the integration of Bell and Richey earlier in the year, we are now realizing substantially all of the expected savings from those acquisitions," said Francis M. Scricco, Arrow's president and chief operating officer.
"Additionally, our full suite of supply-chain management tools continues to gain acceptance among customers, with this segment growing 45% year-on-year in North America and global revenue approaching $2 billion," he said.