Arrow Electronics, Inc. (NYSE:ARW) Q4 2018 Earnings Conference Call Transcript

Feb 07, 2019 • 01:00 pm ET

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Arrow Electronics, Inc. (NYSE:ARW) Q4 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, everyone, and welcome to the Arrow Electronics Fourth Quarter and Year End 2018 Earnings Conference Call hosted by Steve O'Brien. My name is Leslie, and I'm your event manager. During the presentation, your lines will remain on listen-only. (Operator Instructions) I'd like to advise all parties that the conference is being recorded for replay purposes.

And now I'd like to hand you over to Steve. Please go ahead.

Executive
Steven O'Brien

Thanks, Leslie. And thank you all for joining us today. With us on the call today are Mike Long, Chairman, President and Chief Executive Officer; Chris Stansbury, Senior Vice President and Chief Financial Officer; Andy King, President, Global Components; and Sean Kerins, President, Global Enterprise Computing Solutions.

As a reminder, some of the figures discussed on today's call are non-GAAP. You can access our earnings release at investor.arrow.com, along with the CFO commentary, the non-GAAP earnings reconciliation and a webcast of this call. Please note, certain prior period figures have been adjusted for the adoption of new accounting standards. We will begin with a few minutes of prepared remarks, which will then be followed by a question-and-answer period.

I'll now hand the call to our Chairman, President and CEO, Mike Long.

Executive
Michael J. Long

Thank you, Steve. And thanks to all of you for taking the time to join us today. The fourth quarter was another strong quarter and it was capped off another great year for Arrow. We're helping customers create, make and manage their products at an unprecedented scale. We grew sales by more than $3 billion for the second consecutive year. Clearly, gained share over the last two years that market share is not our goal, making customers and suppliers successful is our goal. Market share is just an outcome.

Our strategy to be the foremost technology lifecycle solutions provider is working well. We achieved record fourth quarter and full year sales, gross profit, operating income and earnings per share. We delivered strong leverage in 2018, full year earnings per share grew 50% faster than sales. We're executing well and as I often do in our year end calls, I'd like to discuss our longer term strategy.

You have seen IoT allow Arrow to bring cross-enterprise solutions together to serve our customers. Now, the rise of edge computing is just as important. Companies are changing how they do business and how they run operations. Bridging the gap between IT systems and operational technology systems, it's totally the key. Arrow is helping customers tackle this complex challenge. Manufacturing plants and industrial machines have been digitized to increase efficiency. These systems use sensors, logic controllers, communication gateways and human machine interfaces. Collectively, these are operations technology or OT. Unlike when IT systems go down, OT failure can be catastrophic. We see this difference is the biggest gap in IT and OT. OT systems are islands of control and often do not interact with other parts of the organization.

As computing allows organizations to benefit immensely, by integrating the two worlds, companies need to