Arrow Electronics Reports First-Quarter 2024 Results

Earnings Presentation

Please refer to 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.

Webcast and Conference Call Information

Arrow Electronics will host a conference call to discuss first-quarter 2024 financial results on May 2, 2024, at 1:00 PM ET.

A live webcast of the conference call will be available via the events section of investor.arrow.com or by accessing the webcast link directly at https://events.q4inc.com/attendee/743613108. Shortly after the conclusion of the conference call, a webcast replay will be available on the Arrow website for one year.

About Arrow Electronics

Arrow Electronics guides innovation forward for thousands of leading technology manufacturers and service providers. With 2023 sales of $33 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 second quarter of fiscal 2024 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; breaches of security or privacy of business information; 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 the following non-GAAP metrics: sales, gross profit, operating income (including by business segment), 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. The foregoing non-GAAP measures are adjusted by certain of the following, as applicable: 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 wind down to inventory. 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. For further discussion of our non-GAAP measures and related adjustments, refer to the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company's most recent Quarterly Report on Form 10-Q and the company's most recent Annual Report on Form 10-K.

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

March 30, 2024

 

April 1, 2023

 

 

 

 

 

 

 

Sales

 

$

6,924,260

 

 

$

8,736,428

 

Cost of sales

 

 

6,066,434

 

 

 

7,622,606

 

Gross profit

 

 

857,826

 

 

 

1,113,822

 

Operating expenses:

 

 

 

 

 

 

Selling, general, and administrative

 

 

583,326

 

 

 

642,431

 

Depreciation and amortization

 

 

41,727

 

 

 

46,679

 

Restructuring, integration, and other

 

 

46,856

 

 

 

2,560

 

 

 

 

671,909

 

 

 

691,670

 

Operating income

 

 

185,917

 

 

 

422,152

 

Equity in losses of affiliated companies

 

 

(344

)

 

 

(80

)

Gain on investments, net

 

 

98

 

 

 

10,311

 

Employee benefit plan expense, net

 

 

(933

)

 

 

(853

)

Interest and other financing expense, net

 

 

(79,604

)

 

 

(79,658

)

Income before income taxes

 

 

105,134

 

 

 

351,872

 

Provision for income taxes

 

 

22,036

 

 

 

76,547

 

Consolidated net income

 

 

83,098

 

 

 

275,325

 

Noncontrolling interests

 

 

(503

)

 

 

1,575

 

Net income attributable to shareholders

 

$

83,601

 

 

$

273,750

 

Net income per share:

 

 

 

 

 

 

Basic

 

$

1.54

 

 

$

4.66

 

Diluted

 

$

1.53

 

 

$

4.60

 

Weighted-average shares outstanding:

 

 

 

 

 

 

Basic

 

 

54,251

 

 

 

58,731

 

Diluted

 

 

54,815

 

 

 

59,479

 

ARROW ELECTRONICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands except par value)

(Unaudited)

 

 

 

 

 

 

 

 

 

March 30, 2024

 

December 31, 2023

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

242,810

 

 

$

218,053

 

Accounts receivable, net

 

 

11,062,608

 

 

 

12,238,073

 

Inventories

 

 

4,797,053

 

 

 

5,187,225

 

Other current assets

 

 

798,591

 

 

 

684,126

 

Total current assets

 

 

16,901,062

 

 

 

18,327,477

 

Property, plant, and equipment, at cost:

 

 

 

 

 

 

Land

 

 

5,691

 

 

 

5,691

 

Buildings and improvements

 

 

196,291

 

 

 

195,579

 

Machinery and equipment

 

 

1,624,409

 

 

 

1,632,606

 

 

 

 

1,826,391

 

 

 

1,833,876

 

Less: Accumulated depreciation and amortization

 

 

(1,309,303

)

 

 

(1,303,136

)

Property, plant, and equipment, net

 

 

517,088

 

 

 

530,740

 

Investments in affiliated companies

 

 

58,868

 

 

 

62,741

 

Intangible assets, net

 

 

119,274

 

 

 

127,440

 

Goodwill

 

 

2,054,536

 

 

 

2,050,426

 

Other assets

 

 

612,048

 

 

 

627,344

 

Total assets

 

$

20,262,876

 

 

$

21,726,168

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

8,940,313

 

 

$

10,070,015

 

Accrued expenses

 

 

1,474,605

 

 

 

1,463,915

 

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

 

 

945,698

 

 

 

1,653,954

 

Total current liabilities

 

 

11,360,616

 

 

 

13,187,884

 

Long-term debt

 

 

2,632,250

 

 

 

2,153,553

 

Other liabilities

 

 

500,672

 

 

 

507,424

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

Common stock, par value $1:

 

 

 

 

 

 

Authorized - 160,000 shares in both 2024 and 2023

 

 

 

 

 

 

Issued - 57,955 and 57,691 shares in 2024 and 2023

 

 

57,955

 

 

 

57,691

 

Capital in excess of par value

 

 

565,166

 

 

 

553,340

 

Treasury stock (4,725 and 3,880 shares in 2024 and 2023, respectively), at cost

 

 

(405,663

)

 

 

(297,745

)

Retained earnings

 

 

5,873,818

 

 

 

5,790,217

 

Accumulated other comprehensive loss

 

 

(392,130

)

 

 

(298,039

)

Total shareholders’ equity

 

 

5,699,146

 

 

 

5,805,464

 

Noncontrolling interests

 

 

70,192

 

 

 

71,843

 

Total equity

 

 

5,769,338

 

 

 

5,877,307

 

Total liabilities and equity

 

$

20,262,876

 

 

$

21,726,168

 

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

March 30, 2024

 

April 1, 2023

Cash flows from operating activities:

 

 

 

 

 

 

Consolidated net income

 

$

83,098

 

 

$

275,325

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

41,727

 

 

 

46,679

 

Amortization of stock-based compensation

 

 

13,447

 

 

 

19,497

 

Equity in losses of affiliated companies

 

 

344

 

 

 

80

 

Deferred income taxes

 

 

(2,801

)

 

 

(7,530

)

Loss (gain) on investments, net

 

 

13

 

 

 

(10,311

)

Other

 

 

1,189

 

 

 

1,321

 

Change in assets and liabilities, net of effects of acquired businesses:

 

 

 

 

 

 

Accounts receivable, net

 

 

1,057,676

 

 

 

1,701,889

 

Inventories

 

 

362,813

 

 

 

(199,521

)

Accounts payable

 

 

(1,077,786

)

 

 

(1,504,701

)

Accrued expenses

 

 

21,053

 

 

 

(132,316

)

Other assets and liabilities

 

 

(97,563

)

 

 

33,392

 

Net cash provided by operating activities

 

 

403,210

 

 

 

223,804

 

Cash flows from investing activities:

 

 

 

 

 

 

Acquisition of property, plant, and equipment

 

 

(29,535

)

 

 

(20,114

)

Other

 

 

5,139

 

 

 

10,867

 

Net cash used for investing activities

 

 

(24,396

)

 

 

(9,247

)

Cash flows from financing activities:

 

 

 

 

 

 

Change in short-term and other borrowings

 

 

(709,675

)

 

 

(146,050

)

Proceeds from long-term bank borrowings, net

 

 

477,032

 

 

 

34,360

 

Net proceeds from note offering

 

 

 

 

 

498,600

 

Redemption of notes

 

 

 

 

 

(300,000

)

Proceeds from exercise of stock options

 

 

2,929

 

 

 

5,934

 

Repurchases of common stock

 

 

(87,948

)

 

 

(303,801

)

Net cash used for financing activities

 

 

(317,662

)

 

 

(210,957

)

Effect of exchange rate changes on cash

 

 

(36,395

)

 

 

25,039

 

Net increase in cash and cash equivalents

 

 

24,757

 

 

 

28,639

 

Cash and cash equivalents at beginning of period

 

 

218,053

 

 

 

176,915

 

Cash and cash equivalents at end of period

 

$

242,810

 

 

$

205,554

 

ARROW ELECTRONICS, INC.

NON-GAAP SALES RECONCILIATION

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

 

 

March 30, 2024

 

April 1, 2023

 

% Change

 

 

 

 

 

 

 

 

 

Consolidated sales, as reported

 

$

6,924,260

 

$

8,736,428

 

 

(20.7

)%

Impact of changes in foreign currencies

 

 

 

 

 

9,370

 

 

 

Consolidated sales, constant currency

 

$

6,924,260

 

 

$

8,745,798

 

 

(20.8

)%

 

 

 

 

 

 

 

 

 

Global components sales, as reported

 

$

5,191,417

 

 

$

6,855,793

 

 

(24.3

)%

Impact of changes in foreign currencies

 

 

 

 

 

(4,163

)

 

 

Global components sales, constant currency

 

$

5,191,417

 

 

$

6,851,630

 

 

(24.2

)%

 

 

 

 

 

 

 

 

 

Americas components sales, as reported

 

$

1,596,692

 

 

$

2,233,453

 

 

(28.5

)%

Impact of changes in foreign currencies

 

 

 

 

 

(672

)

 

 

Americas components sales, constant currency

 

$

1,596,692

 

 

$

2,232,781

 

 

(28.5

)%

 

 

 

 

 

 

 

 

 

Asia components sales, as reported

 

$

1,938,218

 

 

$

2,376,195

 

 

(18.4

)%

Impact of changes in foreign currencies

 

 

 

 

 

(24,636

)

 

 

Asia components sales, constant currency

 

$

1,938,218

 

 

$

2,351,559

 

 

(17.6

)%

 

 

 

 

 

 

 

 

 

Europe components sales, as reported

 

$

1,656,507

 

 

$

2,246,145

 

 

(26.3

)%

Impact of changes in foreign currencies

 

 

 

 

 

21,145

 

 

 

Europe components sales, constant currency

 

$

1,656,507

 

 

$

2,267,290

 

 

(26.9

)%

 

 

 

 

 

 

 

 

 

Global ECS sales, as reported

 

$

1,732,843

 

 

$

1,880,635

 

 

(7.9

)%

Impact of changes in foreign currencies

 

 

 

 

 

13,533

 

 

 

Global ECS sales, constant currency

 

$

1,732,843

 

 

$

1,894,168

 

 

(8.5

)%

 

 

 

 

 

 

 

 

 

Americas ECS sales, as reported

 

$

907,748

 

 

$

998,114

 

 

(9.1

)%

Impact of changes in foreign currencies

 

 

 

 

 

(830

)

 

 

Americas ECS sales, constant currency

 

$

907,748

 

 

$

997,284

 

 

(9.0

)%

 

 

 

 

 

 

 

 

 

Europe ECS sales, as reported

 

$

825,095

 

 

$

882,521

 

 

(6.5

)%

Impact of changes in foreign currencies

 

 

 

 

 

14,363

 

 

 

Europe ECS sales, constant currency

 

$

825,095

 

 

$

896,884

 

 

(8.0

)%

ARROW ELECTRONICS, INC.

NON-GAAP EARNINGS RECONCILIATION

(In thousands except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 30, 2024

 

 

Reported
GAAP
measure

Intangible
amortization
expense

 

Restructuring,
Integration
and other

Impact of
Wind Down (1)

 

Other (2)

 

Non-GAAP
measure

Gross Profit

 

$

857,826

 

$

 

$

$

10,459

 

$

 

 

$

868,285

 

Operating income

 

 

185,917

 

 

7,546

 

 

 

46,856

 

 

10,459

 

 

 

 

 

 

250,778

 

Income before income taxes

 

 

105,134

 

 

7,546

 

 

 

46,856

 

 

10,459

 

 

 

(98

)

 

 

169,897

 

Provision for income taxes

 

 

22,036

 

 

1,879

 

 

 

12,014

 

 

2,502

 

 

 

(24

)

 

 

38,407

 

Consolidated net income

 

 

83,098

 

 

5,667

 

 

 

34,842

 

 

7,957

 

 

 

(74

)

 

 

131,490

 

Noncontrolling interests

 

 

(503

)

 

135

 

 

 

 

 

 

 

 

 

 

 

(368

)

Net income attributable to shareholders

 

$

83,601

 

$

5,532

 

 

$

34,842

 

$

7,957

 

 

$

(74

)

 

$

131,858

 

Net income per diluted share (3)

 

$

1.53

 

$

0.10

 

 

$

0.64

 

$

0.15

 

 

$

 

 

$

2.41

 

Effective tax rate (4)

 

 

21.0

%

 

 

 

 

 

 

 

 

 

 

 

 

22.6

%

Three months ended April 1, 2023

 

 

Reported
GAAP
measure

Intangible
amortization
expense

Restructuring,
Integration
and other

Impact of
Wind Down

 

Other (2)

 

Non-GAAP
measure

Gross Profit

 

$

1,113,822

 

$

 

$

 

$

 

$

 

 

$

1,113,822

Operating income

 

 

422,152

 

 

7,980

 

 

2,560

 

 

 

 

 

 

 

432,692

 

Income before income taxes

 

 

351,872

 

 

7,980

 

 

2,560

 

 

 

 

(10,311

)

 

 

352,101

 

Provision for income taxes

 

 

76,547

 

 

2,010

 

 

720

 

 

 

 

(2,471

)

 

 

76,806

 

Consolidated net income

 

 

275,325

 

 

5,970

 

 

1,840

 

 

 

 

(7,840

)

 

 

275,295

 

Noncontrolling interests

 

 

1,575

 

 

134

 

 

 

 

 

 

 

 

 

1,709

 

Net income attributable to shareholders

 

$

273,750

 

$

5,836

 

$

1,840

 

$

 

$

(7,840

)

 

$

273,586

 

Net income per diluted share (3)

 

$

4.60

 

$

0.10

 

$

0.03

 

$

 

$

(0.13

)

 

$

4.60

 

Effective tax rate (4)

 

 

21.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

21.8

%

_________________________

(1)

Includes write downs of inventory related to the wind down of a business.

(2)

Other includes gain 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

 

 

March 30, 2024

 

April 1, 2023

Sales:

 

 

 

 

 

 

Global components

 

$

5,191,417

 

 

$

6,855,793

 

Global ECS

 

 

1,732,843

 

 

 

1,880,635

 

Consolidated

 

$

6,924,260

 

 

$

8,736,428

 

Operating income (loss):

 

 

 

 

 

 

Global components (a)

 

$

225,562

 

 

$

417,539

 

Global ECS

 

 

71,459

 

 

 

81,099

 

Corporate (b)

 

 

(111,104

)

 

 

(76,486

)

Consolidated

 

$

185,917

 

 

$

422,152

 

(a)

Global components operating income includes charges of $10.5 million in inventory write downs related to the wind down of a business.

(b)

Corporate operating income (loss) includes restructuring, integration, and other charges of $46.9 million and $2.6 million for the first quarter of 2024 and 2023, respectively. Restructuring, integration, and other charges for the first quarter of 2024 include charges of $42.8 million related to termination of personnel as a part of operating expense reduction initiatives.

NON-GAAP SEGMENT RECONCILIATION

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

March 30, 2024

 

April 1, 2023

Global components operating income, as reported

 

$

225,562

 

$

417,539

Intangible assets amortization expense

 

 

6,488

 

 

 

6,745

 

Impact of wind down to inventory

 

 

10,459

 

 

 

 

Global components non-GAAP operating income

 

$

242,509

 

 

$

424,284

 

 

 

 

 

 

 

 

Global ECS operating income, as reported

 

$

71,459

 

 

$

81,099

 

Intangible assets amortization expense

 

 

1,058

 

 

 

1,235

 

Global ECS non-GAAP operating income

 

$

72,517

 

 

$

82,334

 


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