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Arrow Electronics Reports Third-Quarter 2023 Results

-- Third-Quarter Earnings Per Share of $3.53; Non-GAAP Earnings Per Share of $4.14 –

-- Revenue of $8.01 billion in line with guidance --

Arrow Electronics, Inc. (NYSE:ARW) today reported third-quarter 2023 sales of $8.01 billion, a decrease of 14 percent year over year. Third-quarter net income was $199 million, or $3.53 per share on a diluted basis, compared with net income of $342 million, or $5.27 per share on a diluted basis, in the third quarter of 2022. Non-GAAP net income1 was $233 million, or $4.14 per share on a diluted basis, in the third quarter of 2023, compared with non-GAAP net income of $354 million, or $5.45 per share on a diluted basis, in the third quarter of 2022. Both GAAP and non-GAAP earnings per share in the third quarter of 2023 included a $0.87 benefit related to cash received from a legal settlement in the global components business, and a $0.31 impact for a charge taken to increase accounts receivable reserves associated with a customer in the global enterprise computing solutions (ECS) business.

“The company executed well amidst an inventory correction in the semiconductor market and a softer information technology market, delivering non-GAAP earnings per share at the high end of our guidance range,” said Sean Kerins, Arrow’s president, and chief executive officer.

Global components third-quarter sales of $6.25 billion reflected a decrease of 14 percent year over year. Europe components third-quarter sales increased 3 percent year over year, which was a 4 percent decline in constant currency. Asia-Pacific components third-quarter sales decreased 18 percent year over year. Americas components third-quarter sales decreased 24 percent year over year. Global components third-quarter operating income was $379 million, and third-quarter non-GAAP operating income was $386 million. These results include a $62 million benefit resulting from a legal settlement recorded as a decrease to operating expenses.

“With lead times normalizing, customer inventory remained elevated, impacting order velocity and top-line results across most vertical markets. Despite the market conditions, operating margins are meaningfully higher than in prior market corrections,” said Mr. Kerins. “We were encouraged by the level of demand creation activity in the quarter and the continued traction of our supply chain services offering.”

Global ECS third-quarter sales of $1.76 billion reflected a decrease of 10 percent year over year. Europe ECS third-quarter sales increased 2 percent year over year, which was a 5 percent decline in constant currency. Americas ECS third-quarter sales decreased 18 percent year over year. Global ECS third-quarter operating income was $55 million, and third-quarter non-GAAP operating income was $56 million. These results include a $22 million charge taken to increase accounts receivable reserves associated with a customer.

“The mix in our ECS business continued to shift toward software related to infrastructure and cybersecurity, as well as cloud solutions. As a result, the business produced year-on-year billings growth albeit with a decline in sales,” said Mr. Kerins.

“Non-GAAP earnings per share after adjusting for the legal settlement and accounts receivable item, was at the high end of our guidance range,” said Raj Agrawal, senior vice president and chief financial officer. “We were pleased to generate $322 million in cash flow from operations in the third quarter. Additionally, we repurchased approximately $200 million of shares during the third quarter and now have remaining purchase authorization of approximately $622 million.”

1 A reconciliation of non-GAAP financial measures to GAAP financial measures is presented in the reconciliation tables included herein.

FOURTH-QUARTER 2023 OUTLOOK

  • Consolidated sales of $7.50 billion to $8.10 billion, with global components sales of $5.40 billion to $5.80 billion, and global enterprise computing solutions sales of $2.10 billion to $2.30 billion
  • Net income per share on a diluted basis of $3.30 to $3.50, and non-GAAP net income per share on a diluted basis of $3.61 to $3.81
  • Average tax rate in the range of 23 to 25 percent
  • Average diluted shares outstanding of ~55 million
  • Interest expense in the range of approximately $90 million
  • Changes in foreign currencies expected to increase year-over-year growth in sales by $54 million, and earnings per share on a diluted basis by $0.02 compared to the fourth quarter of 2022
  • Changes in foreign currencies expected to decrease quarter-over-quarter growth in sales by $82 million and earnings per share on a diluted basis by $0.07 compared to the third quarter of 2023

Fourth-Quarter 2023 GAAP to non-GAAP Outlook Reconciliation

NON-GAAP SALES RECONCILIATION

 

 

Quarter Ended

 

 

 

Quarter Ended

 

 

 

 

December 31,

 

December 31,

 

 

 

December 31,

 

September 30,

 

 

(in billions)

 

2023

 

2022

 

% Change

 

2023

 

2023

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global components sales, GAAP

 

$

5.40 - 5.80

 

$

6.83

 

(21%) - (15%)

 

$

5.40 - 5.80

 

$

6.25

 

 

(14%) - (7%)

Impact of changes in foreign currencies

 

 

 

 

0.03

 

 

 

 

 

 

 

(0.06

)

 

 

Global components sales, constant currency

 

$

5.40 - 5.80

 

$

6.86

 

 

(21%) - (15%)

 

$

5.40 - 5.80

 

$

6.19

 

 

(13%) - (6%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global ECS sales, GAAP

 

$

2.10 - 2.30

 

$

2.50

 

 

(16%) - (8%)

 

$

2.10 - 2.30

 

$

1.76

 

 

19% - 31%

Impact of changes in foreign currencies

 

 

 

 

0.02

 

 

 

 

 

 

 

(0.02

)

 

 

Global ECS sales, constant currency

 

$

2.10 - 2.30

 

$

2.52

 

 

(17%) - (9%)

 

$

2.10 - 2.30

 

$

1.74

 

 

21% - 32%

 

 

 

 

 

 

 

 

 

NON-GAAP EARNINGS RECONCILIATION

 

 

 

 

Intangible amortization

 

Restructuring &

 

 

 

 

Reported GAAP measure

 

expense

 

integration charges

 

Non-GAAP measure

Net income per diluted share

 

$3.30 to $3.50

 

$0.10

 

$0.21

 

$3.61 to $3.81

CFO Commentary and Earnings Presentation

Please refer to the CFO commentary and the earnings presentation, which can be found at investor.arrow.com, as a supplement to the company’s earnings release. The company uses its website as a tool to disclose important information about the company and to comply with its disclosure obligations under Regulation Fair Disclosure.

Conference Call and Webcast Information

Arrow Electronics will host a conference call to discuss third-quarter 2023 financial results on Nov. 2, 2023, at 1:00 PM ET. Register online at https://conferencingportals.com/event/fEoxDDHd to obtain dial-in information for the live conference call. The conference call will also be available via live webcast at investor.arrow.com. Shortly after the conclusion of the conference call, a webcast replay will be available at investor.arrow.com.

About Arrow Electronics

Arrow Electronics guides innovation forward for over 210,000 leading technology manufacturers and service providers. With 2022 sales of $37 billion, Arrow develops technology solutions that help improve business and daily life. Learn more at arrow.com.

Information Relating to Forward-Looking Statements

This press release includes “forward-looking” statements, as the term is defined under the federal securities laws, including but not limited to statements regarding: Arrow’s future financial performance, including its outlook on financial results for the fourth quarter of fiscal 2023 such as sales, net income per diluted share, non-GAAP net income per diluted share, average tax rate, average diluted shares outstanding, interest and other expense, impact to sales due to changes in foreign currencies, intangible amortization expense per diluted share, restructuring & integration charges per diluted share, and expectations regarding market demand and shareholder returns. These and other forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which could cause actual results or facts to differ materially from such statements for a variety of reasons, including, but not limited to: unfavorable economic conditions; disruptions or inefficiencies in the supply chain; political instability; impacts of military conflict and sanctions; industry conditions; changes in product supply, pricing and customer demand; competition; other vagaries in the global components and the global ECS markets; deteriorating economic conditions, including economic recession, inflation, tax rates, foreign currency exchange rates, or the availability of capital; the effects of natural or man-made catastrophic events; changes in relationships with key suppliers; increased profit margin pressure; changes in legal and regulatory matters; non-compliance with certain regulations, such as export, antitrust, and anti-corruption laws; foreign tax and other loss contingencies; outbreaks, epidemics, pandemics, or public health crises; and the company's ability to generate positive cash flow. For a further discussion of these and other factors that could cause the company's future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in the company's most recent Quarterly Report on Form 10-Q and the company's most recent Annual Report on Form 10-K, as well as in other filings the company makes with the Securities and Exchange Commission. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The company undertakes no obligation to update publicly or revise any of the forward-looking statements.

Certain Non-GAAP Financial Information

In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States (“GAAP”), the company also provides certain non-GAAP financial information. The company provides non-GAAP sales, operating income, income before income taxes, provision for income taxes, consolidated net income, noncontrolling interests, net income attributable to shareholders, effective tax rate and net income per share on a diluted basis, which are non-GAAP measures adjusted for the impact of changes in foreign currencies (referred to as “changes in foreign currencies” or “on a constant currency basis”) by re-translating prior-period results at current period foreign exchange rates, identifiable intangible asset amortization, restructuring, integration, and other charges, net gains and losses on investments, and impact of tax legislation changes. Management believes that providing this additional information is useful to the reader to better assess and understand the company’s operating performance and future prospects in the same manner as management, especially when comparing results with previous periods. Management typically monitors the business as adjusted for these items, in addition to GAAP results, to understand and compare operating results across accounting periods, for internal budgeting purposes, for short- and long-term operating plans, and to evaluate the company's financial performance. However, analysis of results on a non-GAAP basis should be used as a complement to, in conjunction with, and not as a substitute for, data presented in accordance with GAAP.

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Nine Months Ended

 

 

September 30, 2023

 

October 1, 2022

 

September 30, 2023

 

 

October 1, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

8,007,019

 

 

$

9,266,432

 

 

$

25,257,963

 

 

$

27,801,399

 

Cost of sales

 

 

7,027,422

 

 

 

8,079,520

 

 

 

22,098,495

 

 

 

24,170,769

 

Gross profit

 

 

979,597

 

 

 

1,186,912

 

 

 

3,159,468

 

 

 

3,630,630

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative expenses

 

 

563,150

 

 

 

634,353

 

 

 

1,822,783

 

 

 

1,931,918

 

Depreciation and amortization

 

 

45,005

 

 

 

46,230

 

 

 

137,948

 

 

 

141,787

 

Restructuring, integration, and other charges

 

 

31,359

 

 

 

3,635

 

 

 

44,252

 

 

 

11,027

 

 

 

 

639,514

 

 

 

684,218

 

 

 

2,004,983

 

 

 

2,084,732

 

Operating income

 

 

340,083

 

 

 

502,694

 

 

 

1,154,485

 

 

 

1,545,898

 

Equity in earnings of affiliated companies

 

 

1,392

 

 

 

1,718

 

 

 

4,373

 

 

 

4,726

 

(Loss) gain on investments, net

 

 

(6,159

)

 

 

(3,480

)

 

 

4,649

 

 

 

(11,213

)

Employee benefit plan expense, net

 

 

(854

)

 

 

(890

)

 

 

(2,510

)

 

 

(2,614

)

Interest and other financing expense, net

 

 

(82,180

)

 

 

(50,936

)

 

 

(246,672

)

 

 

(123,427

)

Income before income taxes

 

 

252,282

 

 

 

449,106

 

 

 

914,325

 

 

 

1,413,370

 

Provision for income taxes

 

 

52,241

 

 

 

105,500

 

 

 

201,168

 

 

 

332,273

 

Consolidated net income

 

 

200,041

 

 

 

343,606

 

 

 

713,157

 

 

 

1,081,097

 

Noncontrolling interests

 

 

1,382

 

 

 

1,207

 

 

 

4,189

 

 

 

3,615

 

Net income attributable to shareholders

 

$

198,659

 

 

$

342,399

 

 

$

708,968

 

 

$

1,077,482

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

3.57

 

 

$

5.33

 

 

$

12.43

 

 

$

16.31

 

Diluted

 

$

3.53

 

 

$

5.27

 

 

$

12.28

 

 

$

16.12

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

55,597

 

 

 

64,228

 

 

 

57,021

 

 

 

66,055

 

Diluted

 

 

56,298

 

 

 

64,979

 

 

 

57,715

 

 

 

66,845

 

ARROW ELECTRONICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands except par value)

(Unaudited)

 

 

 

 

 

 

 

 

 

September 30, 2023

 

December 31, 2022

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

333,294

 

 

$

176,915

 

Accounts receivable, net

 

 

10,663,164

 

 

 

12,322,717

 

Inventories

 

 

5,805,520

 

 

 

5,319,369

 

Other current assets

 

 

503,982

 

 

 

521,339

 

Total current assets

 

 

17,305,960

 

 

 

18,340,340

 

Property, plant, and equipment, at cost:

 

 

 

 

 

 

Land

 

 

5,691

 

 

 

5,691

 

Buildings and improvements

 

 

185,790

 

 

 

184,211

 

Machinery and equipment

 

 

1,616,937

 

 

 

1,583,661

 

 

 

 

1,808,418

 

 

 

1,773,563

 

Less: Accumulated depreciation and amortization

 

 

(1,272,214

)

 

 

(1,177,107

)

Property, plant, and equipment, net

 

 

536,204

 

 

 

596,456

 

Investments in affiliated companies

 

 

63,049

 

 

 

65,112

 

Intangible assets, net

 

 

134,811

 

 

 

159,137

 

Goodwill

 

 

2,021,987

 

 

 

2,027,626

 

Other assets

 

 

576,349

 

 

 

574,511

 

Total assets

 

$

20,638,360

 

 

$

21,763,182

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

9,090,554

 

 

$

10,460,419

 

Accrued expenses

 

 

1,256,815

 

 

 

1,339,302

 

Short-term borrowings, including current portion of long-term debt

 

 

1,588,662

 

 

 

589,883

 

Total current liabilities

 

 

11,936,031

 

 

 

12,389,604

 

Long-term debt

 

 

2,615,001

 

 

 

3,182,964

 

Other liabilities

 

 

533,853

 

 

 

579,261

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

Common stock, par value $1:

 

 

 

 

 

 

Authorized - 160,000 shares in both 2023 and 2022

 

 

 

 

 

 

Issued - 125,424 shares in both 2023 and 2022

 

 

125,424

 

 

 

125,424

 

Capital in excess of par value

 

 

1,205,788

 

 

 

1,208,708

 

Treasury stock (71,269 and 66,175 shares in 2023 and 2022, respectively), at cost

 

 

(5,307,441

)

 

 

(4,637,345

)

Retained earnings

 

 

9,923,800

 

 

 

9,214,832

 

Accumulated other comprehensive loss

 

 

(462,310

)

 

 

(365,262

)

Total shareholders’ equity

 

 

5,485,261

 

 

 

5,546,357

 

Noncontrolling interests

 

 

68,214

 

 

 

64,996

 

Total equity

 

 

5,553,475

 

 

 

5,611,353

 

Total liabilities and equity

 

$

20,638,360

 

 

$

21,763,182

 

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

September 30, 2023

 

October 1, 2022

Cash flows from operating activities:

 

 

 

 

 

 

Consolidated net income

 

$

200,041

 

 

$

343,606

 

Adjustments to reconcile consolidated net income to net cash provided by operations:

 

 

 

 

 

 

Depreciation and amortization

 

 

45,005

 

 

 

46,230

 

Amortization of stock-based compensation

 

 

6,519

 

 

 

3,773

 

Equity in earnings of affiliated companies

 

 

(1,392

)

 

 

(1,718

)

Deferred income taxes

 

 

(19,639

)

 

 

8,152

 

Loss on investments, net

 

 

6,159

 

 

 

3,480

 

Other

 

 

1,092

 

 

 

307

 

Change in assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

260,749

 

 

 

(594,767

)

Inventories

 

 

(383,647

)

 

 

(255,871

)

Accounts payable

 

 

157,482

 

 

 

482,061

 

Accrued expenses

 

 

127,235

 

 

 

132,636

 

Other assets and liabilities

 

 

(77,897

)

 

 

(26,823

)

Net cash provided by operating activities

 

 

321,707

 

 

 

141,066

 

Cash flows from investing activities:

 

 

 

 

 

 

Acquisition of property, plant, and equipment

 

 

(20,670

)

 

 

(18,536

)

Proceeds from collections of notes receivable

 

 

 

 

 

263

 

Net cash used for investing activities

 

 

(20,670

)

 

 

(18,273

)

Cash flows from financing activities:

 

 

 

 

 

 

Change in short-term and other borrowings

 

 

603,693

 

 

 

(19,506

)

(Repayments of) proceeds from long-term bank borrowings, net

 

 

(557,308

)

 

 

328,268

 

Proceeds from exercise of stock options

 

 

443

 

 

 

762

 

Repurchases of common stock

 

 

(203,491

)

 

 

(241,291

)

Net cash (used for) provided by financing activities

 

 

(156,663

)

 

 

68,233

 

Effect of exchange rate changes on cash

 

 

(51,462

)

 

 

(82,637

)

Net increase in cash and cash equivalents

 

 

92,912

 

 

 

108,389

 

Cash and cash equivalents at beginning of period

 

 

240,382

 

 

 

225,596

 

Cash and cash equivalents at end of period

 

$

333,294

 

 

$

333,985

 

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

September 30, 2023

 

October 1, 2022

Cash flows from operating activities:

 

 

 

 

 

 

Consolidated net income

 

$

713,157

 

 

$

1,081,097

 

Adjustments to reconcile consolidated net income to net cash provided by (used for) operations:

 

 

 

 

 

 

Depreciation and amortization

 

 

137,948

 

 

 

141,787

 

Amortization of stock-based compensation

 

 

34,868

 

 

 

35,009

 

Equity in earnings of affiliated companies

 

 

(4,373

)

 

 

(4,726

)

Deferred income taxes

 

 

(53,038

)

 

 

1,468

 

(Gain) loss on investments, net

 

 

(4,649

)

 

 

11,213

 

Other

 

 

4,078

 

 

 

2,673

 

Change in assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

1,585,521

 

 

 

(628,974

)

Inventories

 

 

(525,020

)

 

 

(1,011,763

)

Accounts payable

 

 

(1,355,777

)

 

 

166,602

 

Accrued expenses

 

 

(88,348

)

 

 

192,759

 

Other assets and liabilities

 

 

(25,660

)

 

 

(128,909

)

Net cash provided by (used for) operating activities

 

 

418,707

 

 

 

(141,764

)

Cash flows from investing activities:

 

 

 

 

 

 

Acquisition of property, plant, and equipment

 

 

(57,775

)

 

 

(54,780

)

Proceeds from collections of notes receivable

 

 

237

 

 

 

20,805

 

Proceeds from settlement of net investment hedge

 

 

10,725

 

 

 

 

Net cash used for investing activities

 

 

(46,813

)

 

 

(33,975

)

Cash flows from financing activities:

 

 

 

 

 

 

Change in short-term and other borrowings

 

 

802,032

 

 

 

276,516

 

(Repayments of) proceeds from long-term bank borrowings, net

 

 

(566,734

)

 

 

1,238,268

 

Net proceeds from note offering

 

 

496,268

 

 

 

 

Redemption of notes

 

 

(300,000

)

 

 

(350,000

)

Proceeds from exercise of stock options

 

 

16,824

 

 

 

16,434

 

Repurchases of common stock

 

 

(719,708

)

 

 

(725,254

)

Settlement of forward-starting interest rate swap

 

 

56,711

 

 

 

 

Other

 

 

(142

)

 

 

(137

)

Net cash (used for) provided by financing activities

 

 

(214,749

)

 

 

455,827

 

Effect of exchange rate changes on cash

 

 

(766

)

 

 

(168,297

)

Net increase in cash and cash equivalents

 

 

156,379

 

 

 

111,791

 

Cash and cash equivalents at beginning of period

 

 

176,915

 

 

 

222,194

 

Cash and cash equivalents at end of period

 

$

333,294

 

 

$

333,985

ARROW ELECTRONICS, INC.

NON-GAAP SALES RECONCILIATION

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

 

 

September 30, 2023

 

October 1, 2022

 

% Change

 

 

 

 

 

 

 

 

 

Consolidated sales, as reported

 

$

8,007,019

 

$

9,266,432

 

 

(13.6

)%

Impact of changes in foreign currencies

 

 

 

 

 

145,732

 

 

 

Consolidated sales, constant currency

 

$

8,007,019

 

 

$

9,412,164

 

 

(14.9

)%

 

 

 

 

 

 

 

 

 

Global components sales, as reported

 

$

6,245,192

 

 

$

7,300,347

 

 

(14.5

)%

Impact of changes in foreign currencies

 

 

 

 

 

96,433

 

 

 

Global components sales, constant currency

 

$

6,245,192

 

 

$

7,396,780

 

 

(15.6

)%

 

 

 

 

 

 

 

 

 

Americas components sales, as reported

 

$

1,869,934

 

 

$

2,445,647

 

 

(23.5

)%

Impact of changes in foreign currencies

 

 

 

 

 

32

 

 

 

Americas components sales, constant currency

 

$

1,869,934

 

 

$

2,445,679

 

 

(23.5

)%

 

 

 

 

 

 

 

 

 

Asia components sales, as reported

 

$

2,387,835

 

 

$

2,918,873

 

 

(18.2

)%

Impact of changes in foreign currencies

 

 

 

 

 

(27,584

)

 

 

Asia components sales, constant currency

 

$

2,387,835

 

 

$

2,891,289

 

 

(17.4

)%

 

 

 

 

 

 

 

 

 

Europe components sales, as reported

 

$

1,987,423

 

 

$

1,935,827

 

 

2.7

%

Impact of changes in foreign currencies

 

 

 

 

 

123,985

 

 

 

Europe components sales, constant currency

 

$

1,987,423

 

 

$

2,059,812

 

 

(3.5

)%

 

 

 

 

 

 

 

 

 

Global ECS sales, as reported

 

$

1,761,827

 

 

$

1,966,085

 

 

(10.4

)%

Impact of changes in foreign currencies

 

 

 

 

 

49,299

 

 

 

Global ECS sales, constant currency

 

$

1,761,827

 

 

$

2,015,384

 

 

(12.6

)%

 

 

 

 

 

 

 

 

 

Americas ECS sales, as reported

 

$

1,015,924

 

 

$

1,234,158

 

 

(17.7

)%

Impact of changes in foreign currencies

 

 

 

 

 

(3,105

)

 

 

Americas ECS sales, constant currency

 

$

1,015,924

 

 

$

1,231,053

 

 

(17.5

)%

 

 

 

 

 

 

 

 

 

Europe ECS sales, as reported

 

$

745,903

 

 

$

731,927

 

 

1.9

%

Impact of changes in foreign currencies

 

 

 

 

 

52,404

 

 

 

Europe ECS sales, constant currency

 

$

745,903

 

 

$

784,331

 

 

(4.9

)%

ARROW ELECTRONICS, INC.

NON-GAAP SALES RECONCILIATION

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

 

 

 

September 30, 2023

 

October 1, 2022

 

% Change

 

 

 

 

 

 

 

 

 

Consolidated sales, as reported

 

$

25,257,963

 

$

27,801,399

 

 

(9.1

)%

Impact of changes in foreign currencies

 

 

 

 

 

(74,613

)

 

 

Consolidated sales, constant currency

 

$

25,257,963

 

 

$

27,726,786

 

 

(8.9

)%

 

 

 

 

 

 

 

 

 

Global components sales, as reported

 

$

19,783,867

 

 

$

21,960,974

 

 

(9.9

)%

Impact of changes in foreign currencies

 

 

 

 

 

(68,284

)

 

 

Global components sales, constant currency

 

$

19,783,867

 

 

$

21,892,690

 

 

(9.6

)%

 

 

 

 

 

 

 

 

 

Americas components sales, as reported

 

$

6,169,949

 

 

$

7,265,552

 

 

(15.1

)%

Impact of changes in foreign currencies

 

 

 

 

 

(2,265

)

 

 

Americas components sales, constant currency

 

$

6,169,949

 

 

$

7,263,287

 

 

(15.1

)%

 

 

 

 

 

 

 

 

 

Asia components sales, as reported

 

$

7,226,871

 

 

$

9,024,188

 

 

(19.9

)%

Impact of changes in foreign currencies

 

 

 

 

 

(115,290

)

 

 

Asia components sales, constant currency

 

$

7,226,871

 

 

$

8,908,898

 

 

(18.9

)%

 

 

 

 

 

 

 

 

 

Europe components sales, as reported

 

$

6,387,047

 

 

$

5,671,234

 

 

12.6

%

Impact of changes in foreign currencies

 

 

 

 

 

49,271

 

 

 

Europe components sales, constant currency

 

$

6,387,047

 

 

$

5,720,505

 

 

11.7

%

 

 

 

 

 

 

 

 

 

Global ECS sales, as reported

 

$

5,474,096

 

 

$

5,840,425

 

 

(6.3

)%

Impact of changes in foreign currencies

 

 

 

 

 

(6,329

)

 

 

Global ECS sales, constant currency

 

$

5,474,096

 

 

$

5,834,096

 

 

(6.2

)%

 

 

 

 

 

 

 

 

 

Americas ECS sales, as reported

 

$

3,014,544

 

 

$

3,442,803

 

 

(12.4

)%

Impact of changes in foreign currencies

 

 

 

 

 

(19,051

)

 

 

Americas ECS sales, constant currency

 

$

3,014,544

 

 

$

3,423,752

 

 

(12.0

)%

 

 

 

 

 

 

 

 

 

Europe ECS sales, as reported

 

$

2,459,552

 

 

$

2,397,622

 

 

2.6

%

Impact of changes in foreign currencies

 

 

 

 

 

12,722

 

 

 

Europe ECS sales, constant currency

 

$

2,459,552

 

 

$

2,410,344

 

 

2.0

%

ARROW ELECTRONICS, INC.

NON-GAAP EARNINGS RECONCILIATION

(In thousands except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 30, 2023

 

 

Reported

Intangible

 

Restructuring

 

 

 

 

 

 

 

 

GAAP

amortization

 

& Integration

 

 

 

 

Non-GAAP

 

 

measure

expense

 

charges(1)

 

Other(2)

 

measure

Operating income

 

$

340,083

 

$

7,863

 

$

31,359

 

$

 

$

379,305

 

Income before income taxes

 

 

252,282

 

 

7,863

 

 

 

31,359

 

 

 

6,159

 

 

 

297,663

 

Provision for income taxes

 

 

52,241

 

 

1,959

 

 

 

7,321

 

 

 

1,476

 

 

 

62,997

 

Consolidated net income

 

 

200,041

 

 

5,904

 

 

 

24,038

 

 

 

4,683

 

 

 

234,666

 

Noncontrolling interests

 

 

1,382

 

 

138

 

 

 

 

 

 

 

 

 

1,520

 

Net income attributable to shareholders

 

$

198,659

 

$

5,766

 

 

$

24,038

 

 

$

4,683

 

 

$

233,146

 

Net income per diluted share (3)

 

$

3.53

 

$

0.10

 

 

$

0.43

 

 

$

0.08

 

 

$

4.14

 

Effective tax rate (4)

 

 

20.7

%

 

 

 

 

 

 

 

 

 

 

21.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended October 1, 2022

 

 

Reported

Intangible

 

Restructuring

 

 

 

 

 

 

 

 

GAAP

amortization

 

& Integration

 

 

 

 

Non-GAAP

 

 

measure

expense

 

charges(1)

 

Other(2)

 

measure

Operating income

 

$

502,694

 

$

8,674

 

$

3,635

 

$

 

$

515,003

 

Income before income taxes

 

 

449,106

 

 

8,674

 

 

 

3,635

 

 

 

3,480

 

 

 

464,895

 

Provision for income taxes

 

 

105,500

 

 

2,219

 

 

 

892

 

 

 

841

 

 

 

109,452

 

Consolidated net income

 

 

343,606

 

 

6,455

 

 

 

2,743

 

 

 

2,639

 

 

 

355,443

 

Noncontrolling interests

 

 

1,207

 

 

125

 

 

 

 

 

 

 

 

 

1,332

 

Net income attributable to shareholders

 

$

342,399

 

$

6,330

 

 

$

2,743

 

 

$

2,639

 

 

$

354,111

 

Net income per diluted share (3)

 

$

5.27

 

$

0.10

 

 

$

0.04

 

 

$

0.04

 

 

$

5.45

 

Effective tax rate (4)

 

 

23.5

%

 

 

 

 

 

 

 

 

 

 

23.5

%

ARROW ELECTRONICS, INC.

NON-GAAP EARNINGS RECONCILIATION

(In thousands except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2023

 

 

Reported

Intangible

 

Restructuring

 

 

 

 

 

 

 

 

 

 

 

GAAP

amortization

 

& Integration

 

Non-recurring

 

 

 

 

Non-GAAP

 

 

measure

expense

 

charges(1)

 

tax items

 

Other(2)

 

measure

Operating income

 

$

1,154,485

 

$

23,751

 

$

44,252

 

$

 

 

$

 

 

$

1,222,488

 

Income before income taxes

 

 

914,325

 

 

23,751

 

 

 

44,252

 

 

 

 

 

 

(4,649

)

 

 

977,679

 

Provision for income taxes

 

 

201,168

 

 

5,961

 

 

 

10,638

 

 

 

(942

)

 

 

(1,114

)

 

 

215,711

 

Consolidated net income

 

 

713,157

 

 

17,790

 

 

 

33,614

 

 

 

942

 

 

 

(3,535

)

 

 

761,968

 

Noncontrolling interests

 

 

4,189

 

 

408

 

 

 

 

 

 

 

 

 

 

 

 

4,597

 

Net income attributable to shareholders

 

$

708,968

 

$

17,382

 

 

$

33,614

 

 

$

942

 

 

$

(3,535

)

 

$

757,371

 

Net income per diluted share (3)

 

$

12.28

 

$

0.30

 

 

$

0.58

 

 

$

0.02

 

 

$

(0.06

)

 

$

13.12

 

Effective tax rate (4)

 

 

22.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

22.1

%

Nine months ended October 1, 2022

 

 

Reported

Intangible

 

Restructuring

 

 

 

 

 

 

 

 

 

 

 

GAAP

amortization

 

& Integration

 

Non-recurring

 

 

 

 

Non-GAAP

 

 

measure

expense

 

charges(1)

 

tax items

 

Other(2)

 

measure

Operating income

 

$

1,545,898

 

$

26,522

 

$

11,027

 

$

 

$

 

$

1,583,447

 

Income before income taxes

 

 

1,413,370

 

 

26,522

 

 

 

11,027

 

 

 

 

 

 

11,213

 

 

 

1,462,132

 

Provision for income taxes

 

 

332,273

 

 

6,792

 

 

 

2,459

 

 

 

 

 

 

2,711

 

 

 

344,235

 

Consolidated net income

 

 

1,081,097

 

 

19,730

 

 

 

8,568

 

 

 

 

 

 

8,502

 

 

 

1,117,897

 

Noncontrolling interests

 

 

3,615

 

 

398

 

 

 

 

 

 

 

 

 

 

 

 

4,013

 

Net income attributable to shareholders

 

$

1,077,482

 

$

19,332

 

 

$

8,568

 

 

$

 

 

$

8,502

 

 

$

1,113,884

 

Net income per diluted share (3)

 

$

16.12

 

$

0.29

 

 

$

0.13

 

 

$

 

 

$

0.13

 

 

$

16.66

 

Effective tax rate (4)

 

 

23.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

23.5

%

____________________

(1) Includes charges to increase the environmental remediation reserves in the amount of $20.9 million and $23.3 million for third quarter and first nine months of 2023, respectively and $1.9 million and $2.2 million for the third quarter and first nine months of 2022, respectively.

(2) Other includes (gain) loss on investments, net.

(3) The sum of the components for non-GAAP diluted EPS, as adjusted may not agree to totals, as presented, due to rounding.

(4) The items as shown in this table, represent the reconciling items for the tax rate as reported and as a non-GAAP measure.

ARROW ELECTRONICS, INC.

SEGMENT INFORMATION

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Nine Months Ended

 

 

September 30, 2023

 

October 1, 2022

 

September 30, 2023

 

October 1, 2022

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

Global components

 

$

6,245,192

 

 

$

7,300,347

 

 

$

19,783,867

 

 

$

21,960,974

 

Global ECS

 

 

1,761,827

 

 

 

1,966,085

 

 

 

5,474,096

 

 

 

5,840,425

 

Consolidated

 

$

8,007,019

 

 

$

9,266,432

 

 

$

25,257,963

 

 

$

27,801,399

 

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Global components (a)

 

$

379,053

 

 

$

494,587

 

 

$

1,177,906

 

 

$

1,518,423

 

Global ECS (b)

 

 

54,624

 

 

 

83,976

 

 

 

221,951

 

 

 

253,744

 

Corporate (c)

 

 

(93,594

)

 

 

(75,869

)

 

 

(245,372

)

 

 

(226,269

)

Consolidated

 

$

340,083

 

 

$

502,694

 

 

$

1,154,485

 

 

$

1,545,898

 

(a)

Global components operating income includes $62.2 million in settlement charges recorded as a reduction to operating expense for the third quarter and first nine months of 2023. Charges to increase the allowance for credit losses increased $16.8 million and $11.0 million for the third quarter and first nine months of 2023, respectively, relative to the year-earlier periods.

(b)

Global ECS operating income includes charges to increase the allowance for credit losses, which increased by $20.0 million and $26.8 million for the third quarter and first nine months of 2023, respectively, relative to the year-earlier periods.

(c)

Corporate operating loss includes restructuring, integration, and other charges of $31.4 million and $44.3 million for the third quarter and first nine months of 2023, respectively, and $3.6 million and $11.0 million for the third quarter and first nine months of 2022, respectively.

NON-GAAP SEGMENT RECONCILIATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Nine Months Ended

 

 

September 30, 2023

 

October 1, 2022

 

September 30, 2023

 

October 1, 2022

Global components operating income, as reported

 

$

379,053

 

$

494,587

 

$

1,177,906

 

$

1,518,423

Intangible assets amortization expense

 

 

6,640

 

 

 

6,691

 

 

 

20,064

 

 

 

20,303

 

Global components non-GAAP operating income

 

$

385,693

 

 

$

501,278

 

 

$

1,197,970

 

 

$

1,538,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global ECS operating income, as reported

 

$

54,624

 

 

$

83,976

 

 

$

221,951

 

 

$

253,744

 

Intangible assets amortization expense

 

 

1,223

 

 

 

1,983

 

 

 

3,687

 

 

 

6,219

 

Global ECS non-GAAP operating income

 

$

55,847

 

 

$

85,959

 

 

$

225,638

 

 

$

259,963

 

 

Contacts

Investors:

Anthony Bencivenga,

Vice President, Investor Relations

303-566-7456

Media:

John Hourigan,

Vice President, Public Affairs and Corporate Marketing

303-824-4586

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