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Arrow Electronics Reports Third-Quarter 2022 Results

-- Record Sales, Gross Profit, Operating Income, and Earnings Per Share --

-- Third-Quarter Earnings Per Share of $5.27; Non-GAAP Earnings Per Share of $5.45 --

Arrow Electronics, Inc. (NYSE:ARW) today reported third-quarter 2022 sales of $9.27 billion, an increase of 9 percent year over year, and an increase of 14 percent year over year on a constant currency basis1. Third-quarter net income was $342 million, or $5.27 per share on a diluted basis, compared with net income of $290 million, or $4.00 per share on a diluted basis, in the third quarter of 2021. Non-GAAP net income1 was $354 million, or $5.45 per share on a diluted basis, in the third quarter of 2022, compared with non-GAAP net income of $293 million, or $4.04 per share on a diluted basis, in the third quarter of 2021. In the third quarter of 2022, changes in foreign currencies reduced growth by approximately $380 million on sales and $0.17 on earnings per share on a diluted basis compared to the third quarter of 2021.

“I am pleased to report that this was our best third quarter ever. This is a product of strong performance by both our global components and global enterprise computing solutions businesses,” said Sean Kerins, president and chief executive officer. “The dedication and focused execution by our team helped us deliver strong quarterly sales, gross profit, operating income, and earnings per share while facing market conditions that remain challenging.”

Global components third-quarter sales of $7.30 billion reflected an increase of 10 percent year over year, and an increase of 15 percent year over year on a constant currency basis. Asia-Pacific components third-quarter sales decreased 3 percent year over year. Americas components third-quarter sales increased 21 percent year over year. Europe components third-quarter sales increased 21 percent year over year, and increased 41 percent year over year on a constant currency basis. Global components third-quarter operating income was $495 million, and third-quarter non-GAAP operating income was $501 million.

“Demand for electronic components and associated design, engineering, and supply chain services remained strong. While supply is improving modestly, it is still insufficient to support the backlog that has built over prior quarters. Customer service and support remains our priority and our teams continue to work tirelessly to support the deliveries needed by our customers,” said Mr. Kerins.

Global enterprise computing solutions ("ECS") third-quarter sales of $1.97 billion reflected an increase of 4 percent year over year, and an increase of 10 percent year over year on a constant currency basis. Europe enterprise computing solutions third-quarter sales increased 7 percent year over year, and increased 25 percent year over year on a constant currency basis. Americas enterprise computing solutions third-quarter sales increased 3 percent year over year. Global enterprise computing solutions third-quarter operating income was $84 million, and third-quarter non-GAAP operating income was $86 million.

“Global demand for more complex, enterprise IT content was healthy, and while supply constraints persist, we saw some benefit from our historically high backlog. We continue to see strength in cloud and software adoption. We are well positioned for the transition to IT-as-a-Service,” said Mr. Kerins.

“With strong profitability and effective balance sheet management, we continue to generate attractive returns on invested capital,” said Raj Agrawal, senior vice president and chief financial officer. “We delivered on our commitment to return cash to shareholders while also maintaining strong leverage ratios. We repurchased $259 million of shares in the third quarter of 2022, which is the most capital we have ever returned in a single quarter. Our current repurchase authorization stands at $629 million.”

1 A reconciliation of non-GAAP financial measures, including sales, gross profit, operating income, net income attributable to shareholders, and net income per share, to GAAP financial measures is presented in the reconciliation tables included herein.

FOURTH-QUARTER 2022 OUTLOOK

  • Consolidated sales of $8.95 billion to $9.55 billion, with global components sales of $6.80 billion to $7.10 billion, and global enterprise computing solutions sales of $2.15 billion to $2.45 billion
  • Net income per share on a diluted basis of $5.44 to $5.64, and non-GAAP net income per share on a diluted basis of $5.60 to $5.80
  • Average tax rate of approximately 23.5 percent compared to the long-term range of 23 to 25 percent
  • Average diluted shares outstanding of 62 million
  • Interest expense of approximately $62 million
  • Expecting the average USD-to-Euro exchange rate for the fourth quarter of 2022 to be $0.98 to €1 compared to $1.14 to €1 in the fourth quarter of 2021
  • Changes in foreign currencies to reduce year over year growth in sales by $420 million and earnings per share on a diluted basis by $0.25 compared to the fourth quarter of 2021
  • Changes in foreign currencies to reduce quarter over quarter growth in sales by $100 million and earnings per share on a diluted basis by $0.07 compared to the third quarter of 2022
  • On a constant currency basis, our fourth quarter guidance implies a sequential growth rate range of down 2% to down 6% for global components and up 11% to 26% for global enterprise computing solutions, when compared to the third-quarter of 2022

Fourth-Quarter 2022 GAAP to non-GAAP Outlook Reconciliation

 

NON-GAAP SALES RECONCILIATION

 

 

Quarter Ended

 

 

 

Quarter Ended

 

 

 

(in billions)

December 31,

2022

 

December 31,

2021

 

% Change

 

December 31,

2022

 

October 1,

2022

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

Global components sales, GAAP

$6.80 – $7.10

 

$

6.68

 

 

2% - 6%

 

$6.80 – $7.10

 

$

7.30

 

 

(7%) - (3%)

Impact of changes in foreign currencies

 

 

(0.28

)

 

 

 

 

 

(0.07

)

 

 

Global components sales, constant currency

$6.80 – $7.10

 

$

6.40

 

 

6% - 11%

 

$6.80 – $7.10

 

$

7.23

 

 

(6%) - (2%)

 

 

 

 

 

 

 

 

 

 

 

 

Global ECS sales, GAAP

$2.15 – $2.45

 

$

2.34

 

 

(8%) - 5%

 

$2.15 – $2.45

 

$

1.97

 

 

9% - 24%

Impact of changes in foreign currencies

 

 

(0.14

)

 

 

 

 

 

(0.03

)

 

 

Global ECS sales, constant currency

$2.15 – $2.45

 

$

2.20

 

 

(2%) - 11%

 

$2.15 – $2.45

 

$

1.94

 

 

11% - 26%

 

 

 

 

 

 

 

 

 

 

 

 

NON-GAAP EARNINGS RECONCILIATION

 

Reported GAAP measure

Intangible amortization

expense

Restructuring &

integration charges

Non-GAAP measure

Net income per diluted share

$5.44 to $5.64

$0.10

$0.06

$5.60 to $5.80

Please refer to the CFO commentary, 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 comply with its disclosure obligations under Regulation Fair Disclosure.

Arrow Electronics guides innovation forward for over 220,000 leading technology manufacturers and service providers. With 2021 sales of $34 billion, Arrow develops technology solutions that improve business and daily life. Learn more at fiveyearsout.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 2022 such as sales, net income per diluted share, non-GAAP net income per diluted share, average tax rate, average diluted shares outstanding, interest expense, average USD-to-Euro exchange rate, impact to sales due to changes in foreign currencies, intangible amortization expense per diluted share, restructuring & integration charges per diluted share, and expectation regarding market demand. These 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: disruptions or inefficiencies in the supply chain, including any potential adverse effects of the ongoing global COVID-19 pandemic, impacts of the conflict in Ukraine, industry conditions, changes in product supply, pricing and customer demand, competition, other vagaries in the global components and the global enterprise computing solutions (“ECS”) markets, deteriorating economic conditions, including economic recession, inflation, tax rates, foreign currency exchange rates, or the availability of capital, 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, and the company's ability to generate 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, gross profit, 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, pension settlement loss and net gains and losses on investments. 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

 

October 1, 2022

 

October 2, 2021

 

October 1, 2022

 

October 2, 2021

 

 

 

 

 

 

 

 

Sales

$

9,266,432

 

 

$

8,512,391

 

 

$

27,801,399

 

 

$

25,460,941

 

Cost of sales

 

8,079,520

 

 

 

7,436,619

 

 

 

24,170,769

 

 

 

22,454,954

 

Gross profit

 

1,186,912

 

 

 

1,075,772

 

 

 

3,630,630

 

 

 

3,005,987

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general, and administrative expenses

 

634,353

 

 

 

625,883

 

 

 

1,931,918

 

 

 

1,802,534

 

Depreciation and amortization

 

46,230

 

 

 

48,054

 

 

 

141,787

 

 

 

146,924

 

Restructuring, integration, and other charges (credits)

 

3,635

 

 

 

(3,030

)

 

 

11,027

 

 

 

11,639

 

 

 

684,218

 

 

 

670,907

 

 

 

2,084,732

 

 

 

1,961,097

 

Operating income

 

502,694

 

 

 

404,865

 

 

 

1,545,898

 

 

 

1,044,890

 

 

Equity in earnings of affiliated companies

 

1,718

 

 

 

1,151

 

 

 

4,726

 

 

 

2,185

 

Gain (loss) on investments, net

 

(3,480

)

 

 

1,386

 

 

 

(11,213

)

 

 

10,905

 

Employee benefit plan expense, net

 

(890

)

 

 

(1,256

)

 

 

(2,614

)

 

 

(3,924

)

Interest and other financing expense, net

 

(50,936

)

 

 

(32,667

)

 

 

(123,427

)

 

 

(97,008

)

Income before income taxes

 

449,106

 

 

 

373,479

 

 

 

1,413,370

 

 

 

957,048

 

Provision for income taxes

 

105,500

 

 

 

82,929

 

 

 

332,273

 

 

 

218,068

 

Consolidated net income

 

343,606

 

 

 

290,550

 

 

 

1,081,097

 

 

 

738,980

 

Noncontrolling interests

 

1,207

 

 

 

523

 

 

 

3,615

 

 

 

1,991

 

Net income attributable to shareholders

$

342,399

 

 

$

290,027

 

 

$

1,077,482

 

 

$

736,989

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

5.33

 

 

$

4.05

 

 

$

16.31

 

 

$

10.04

 

Diluted

$

5.27

 

 

$

4.00

 

 

$

16.12

 

 

$

9.92

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

 

64,228

 

 

 

71,671

 

 

 

66,055

 

 

 

73,426

 

Diluted

 

64,979

 

 

 

72,571

 

 

 

66,845

 

 

 

74,313

 

ARROW ELECTRONICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands except par value)

(Unaudited)

 

 

 

 

 

October 1, 2022

 

December 31, 2021

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

333,985

 

 

$

222,194

 

Accounts receivable, net

 

11,218,611

 

 

 

11,123,946

 

Inventories

 

5,083,378

 

 

 

4,201,965

 

Other current assets

 

495,145

 

 

 

345,218

 

Total current assets

 

17,131,119

 

 

 

15,893,323

 

Property, plant, and equipment, at cost:

 

 

 

Land

 

5,691

 

 

 

5,736

 

Buildings and improvements

 

184,091

 

 

 

186,097

 

Machinery and equipment

 

1,544,457

 

 

 

1,523,919

 

 

 

1,734,239

 

 

 

1,715,752

 

Less: Accumulated depreciation and amortization

 

(1,138,372

)

 

 

(1,032,941

)

Property, plant, and equipment, net

 

595,867

 

 

 

682,811

 

Investments in affiliated companies

 

66,358

 

 

 

63,695

 

Intangible assets, net

 

166,388

 

 

 

195,029

 

Goodwill

 

1,979,233

 

 

 

2,080,371

 

Other assets

 

566,764

 

 

 

620,311

 

Total assets

$

20,505,729

 

 

$

19,535,540

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

9,540,449

 

 

$

9,617,084

 

Accrued expenses

 

1,273,097

 

 

 

1,326,386

 

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

 

604,521

 

 

 

382,619

 

Total current liabilities

 

11,418,067

 

 

 

11,326,089

 

Long-term debt

 

3,187,025

 

 

 

2,244,443

 

Other liabilities

 

597,951

 

 

 

624,162

 

 

 

 

 

Equity:

 

 

 

Shareholders’ equity:

 

 

 

Common stock, par value $1:

 

 

 

Authorized - 160,000 shares in both 2022 and 2021

 

 

 

Issued - 125,424 shares in both 2022 and 2021

 

125,424

 

 

 

125,424

 

Capital in excess of par value

 

1,201,185

 

 

 

1,189,845

 

Treasury stock (63,324 and 57,358 shares in 2022 and 2021, respectively), at cost

 

(4,338,414

)

 

 

(3,629,265

)

Retained earnings

 

8,865,430

 

 

 

7,787,948

 

Accumulated other comprehensive loss

 

(607,878

)

 

 

(191,657

)

Total shareholders’ equity

 

5,245,747

 

 

 

5,282,295

 

Noncontrolling interests

 

56,939

 

 

 

58,551

 

Total equity

 

5,302,686

 

 

 

5,340,846

 

Total liabilities and equity

$

20,505,729

 

 

$

19,535,540

 

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Quarter Ended

 

October 1, 2022

 

October 2, 2021

Cash flows from operating activities:

 

 

 

Consolidated net income

$

343,606

 

 

$

290,550

 

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

 

 

 

Depreciation and amortization

 

46,230

 

 

 

48,054

 

Amortization of stock-based compensation

 

3,773

 

 

 

7,639

 

Equity in earnings of affiliated companies

 

(1,718

)

 

 

(1,151

)

Deferred income taxes

 

8,152

 

 

 

(2,715

)

Loss (gain) on investments, net

 

3,480

 

 

 

(1,301

)

Other

 

307

 

 

 

1,539

 

Change in assets and liabilities:

 

 

 

Accounts receivable, net

 

(594,767

)

 

 

(545,314

)

Inventories

 

(255,871

)

 

 

(211,554

)

Accounts payable

 

482,061

 

 

 

413,992

 

Accrued expenses

 

132,636

 

 

 

91,481

 

Other assets and liabilities

 

(26,823

)

 

 

23,026

 

Net cash provided by (used for) operating activities

 

141,066

 

 

 

114,246

 

Cash flows from investing activities:

 

 

 

Acquisition of property, plant, and equipment

 

(18,536

)

 

 

(21,176

)

Proceeds from collections of notes receivable

 

263

 

 

 

373

 

Net cash used for investing activities

 

(18,273

)

 

 

(20,803

)

Cash flows from financing activities:

 

 

 

Change in short-term and other borrowings

 

(19,506

)

 

 

(1,155

)

Proceeds (payments) from long-term bank borrowings, net

 

328,268

 

 

 

154,994

 

Proceeds from exercise of stock options

 

762

 

 

 

3,621

 

Repurchases of common stock

 

(241,291

)

 

 

(250,221

)

Net cash provided by (used for) financing activities

 

68,233

 

 

 

(92,761

)

Effect of exchange rate changes on cash

 

(82,637

)

 

 

(28,820

)

Net increase (decrease) in cash and cash equivalents

 

108,389

 

 

 

(28,138

)

Cash and cash equivalents at beginning of period

 

225,596

 

 

 

244,070

 

Cash and cash equivalents at end of period

$

333,985

 

 

$

215,932

 

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended

 

October 1, 2022

 

October 2, 2021

Cash flows from operating activities:

 

 

 

Consolidated net income

$

1,081,097

 

 

$

738,980

 

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

 

 

 

Depreciation and amortization

 

141,787

 

 

 

146,924

 

Amortization of stock-based compensation

 

35,009

 

 

 

29,606

 

Equity in earnings of affiliated companies

 

(4,726

)

 

 

(2,185

)

Deferred income taxes

 

1,468

 

 

 

9,354

 

Loss (gain) on investments, net

 

11,213

 

 

 

(10,820

)

Other

 

2,673

 

 

 

7,672

 

Change in assets and liabilities:

 

 

 

Accounts receivable, net

 

(628,974

)

 

 

(262,272

)

Inventories

 

(1,011,763

)

 

 

(581,766

)

Accounts payable

 

166,602

 

 

 

136,329

 

Accrued expenses

 

192,759

 

 

 

174,583

 

Other assets and liabilities

 

(128,909

)

 

 

4,685

 

Net cash provided by (used for) operating activities

 

(141,764

)

 

 

391,090

 

Cash flows from investing activities:

 

 

 

Acquisition of property, plant, and equipment

 

(54,780

)

 

 

(62,285

)

Proceeds from sale of property, plant, and equipment

 

 

 

 

22,171

 

Proceeds from collections of notes receivable

 

20,805

 

 

 

373

 

Net cash used for investing activities

 

(33,975

)

 

 

(39,741

)

Cash flows from financing activities:

 

 

 

Change in short-term and other borrowings

 

276,516

 

 

 

(15,986

)

Proceeds from long-term bank borrowings, net

 

1,238,268

 

 

 

289,235

 

Redemption of notes

 

(350,000

)

 

 

(130,860

)

Proceeds from exercise of stock options

 

16,434

 

 

 

44,938

 

Repurchases of common stock

 

(725,254

)

 

 

(661,548

)

Other

 

(137

)

 

 

(159

)

Net cash provided by (used for) financing activities

 

455,827

 

 

 

(474,380

)

Effect of exchange rate changes on cash

 

(168,297

)

 

 

(34,652

)

Net increase (decrease) in cash and cash equivalents

 

111,791

 

 

 

(157,683

)

Cash and cash equivalents at beginning of period

 

222,194

 

 

 

373,615

 

Cash and cash equivalents at end of period

$

333,985

 

 

$

215,932

 

ARROW ELECTRONICS, INC.

NON-GAAP SALES RECONCILIATION

(In thousands)

(Unaudited)

 

Quarter Ended

 

 

 

October 1, 2022

 

October 2, 2021

 

% Change

 

 

 

 

 

 

Consolidated sales, as reported

$

9,266,432

 

$

8,512,391

 

 

8.9

%

Impact of changes in foreign currencies

 

 

 

(379,717

)

 

 

Consolidated sales, constant currency

$

9,266,432

 

$

8,132,674

 

 

13.9

%

 

 

 

 

 

 

Global components sales, as reported

$

7,300,347

 

$

6,623,926

 

 

10.2

%

Impact of changes in foreign currencies

 

 

 

(273,237

)

 

 

Global components sales, constant currency

$

7,300,347

 

$

6,350,689

 

 

15.0

%

 

 

 

 

 

 

Americas components sales, as reported

$

2,445,647

 

$

2,018,551

 

 

21.2

%

Impact of changes in foreign currencies

 

 

 

(3,252

)

 

 

Americas components sales, constant currency

$

2,445,647

 

$

2,015,299

 

 

21.4

%

 

 

 

 

 

 

Asia components sales, as reported

$

2,918,873

 

$

3,009,390

 

 

(3.0

)%

Impact of changes in foreign currencies

 

 

 

(45,046

)

 

 

Asia components sales, constant currency

$

2,918,873

 

$

2,964,344

 

 

(1.5

)%

 

 

 

 

 

 

Europe components sales, as reported

$

1,935,827

 

$

1,595,985

 

 

21.3

%

Impact of changes in foreign currencies

 

 

 

(224,939

)

 

 

Europe components sales, constant currency

$

1,935,827

 

$

1,371,046

 

 

41.2

%

 

 

 

 

 

 

Global ECS sales, as reported

$

1,966,085

 

$

1,888,465

 

 

4.1

%

Impact of changes in foreign currencies

 

 

 

(106,480

)

 

 

Global ECS sales, constant currency

$

1,966,085

 

$

1,781,985

 

 

10.3

%

 

 

 

 

 

 

Americas ECS sales, as reported

$

1,234,158

 

$

1,203,663

 

 

2.5

%

Impact of changes in foreign currencies

 

 

 

(5,696

)

 

 

Americas ECS sales, constant currency

$

1,234,158

 

$

1,197,967

 

 

3.0

%

 

 

 

 

 

 

Europe ECS sales, as reported

$

731,927

 

$

684,802

 

 

6.9

%

Impact of changes in foreign currencies

 

 

 

(100,784

)

 

 

Europe ECS sales, constant currency

$

731,927

 

$

584,018

 

 

25.3

%

 

 

 

 

 

 

ARROW ELECTRONICS, INC.

NON-GAAP SALES RECONCILIATION

(In thousands)

(Unaudited)

 

Nine Months Ended

 

 

 

October 1, 2022

 

October 2, 2021

 

% Change

 

 

 

 

 

 

Consolidated sales, as reported

$

27,801,399

 

$

25,460,941

 

 

9.2

%

Impact of changes in foreign currencies

 

 

 

(821,785

)

 

 

Consolidated sales, constant currency

$

27,801,399

 

$

24,639,156

 

 

12.8

%

 

 

 

 

 

 

Global components sales, as reported

$

21,960,974

 

$

19,677,940

 

 

11.6

%

Impact of changes in foreign currencies

 

 

 

(565,254

)

 

 

Global components sales, constant currency

$

21,960,974

 

$

19,112,686

 

 

14.9

%

 

 

 

 

 

 

Americas components sales, as reported

$

7,265,552

 

$

5,690,480

 

 

27.7

%

Impact of changes in foreign currencies

 

 

 

(5,974

)

 

 

Americas components sales, constant currency

$

7,265,552

 

$

5,684,506

 

 

27.8

%

 

 

 

 

 

 

Asia components sales, as reported

$

9,024,188

 

$

9,332,211

 

 

(3.3

)%

Impact of changes in foreign currencies

 

 

 

(69,024

)

 

 

Asia components sales, constant currency

$

9,024,188

 

$

9,263,187

 

 

(2.6

)%

 

 

 

 

 

 

Europe components sales, as reported

$

5,671,234

 

$

4,655,249

 

 

21.8

%

Impact of changes in foreign currencies

 

 

 

(490,256

)

 

 

Europe components sales, constant currency

$

5,671,234

 

$

4,164,993

 

 

36.2

%

 

 

 

 

 

 

Global ECS sales, as reported

$

5,840,425

 

$

5,783,001

 

 

1.0

%

Impact of changes in foreign currencies

 

 

 

(256,531

)

 

 

Global ECS sales, constant currency

$

5,840,425

 

$

5,526,470

 

 

5.7

%

 

 

 

 

 

 

Americas ECS sales, as reported

$

3,442,803

 

$

3,522,356

 

 

(2.3

) %

Impact of changes in foreign currencies

 

 

 

(15,459

)

 

 

Americas ECS sales, constant currency

$

3,442,803

 

$

3,506,897

 

 

(1.8

) %

 

 

 

 

 

 

Europe ECS sales, as reported

$

2,397,622

 

$

2,260,645

 

 

6.1

%

Impact of changes in foreign currencies

 

 

 

(241,072

)

 

 

Europe ECS sales, constant currency

$

2,397,622

 

$

2,019,573

 

 

18.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ARROW ELECTRONICS, INC.

NON-GAAP EARNINGS RECONCILIATION

(In thousands except per share data)

(Unaudited)

 

Three months ended October 1, 2022

 

Reported

GAAP

measure

 

Intangible

amortization

expense

 

Restructuring

& Integration

charges

 

Other(1)

 

Non-GAAP

measure

Sales

$

9,266,432

 

 

$

 

$

 

 

$

 

 

$

9,266,432

 

Gross Profit

 

1,186,912

 

 

 

 

 

 

 

 

 

 

 

1,186,912

 

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

%

 

 

 

 

 

 

 

 

 

 

Three months ended October 2, 2021

 

Reported

GAAP

measure

 

Intangible

amortization

expense

 

Restructuring

& Integration

charges (credits)

 

Other(1)

 

Non-GAAP

measure

Sales

$

8,512,391

 

 

$

 

$

 

 

$

 

 

$

8,512,391

 

Gross Profit

 

1,075,772

 

 

 

 

 

 

 

 

 

 

 

1,075,772

 

Operating income

 

404,865

 

 

 

9,202

 

 

(3,030

)

 

 

 

 

 

411,037

 

Income before income taxes

 

373,479

 

 

 

9,202

 

 

(3,030

)

 

 

(1,386

)

 

 

378,265

 

Provision for income taxes

 

82,929

 

 

 

2,353

 

 

(689

)

 

 

(334

)

 

 

84,259

 

Consolidated net income

 

290,550

 

 

 

6,849

 

 

(2,341

)

 

 

(1,052

)

 

 

294,006

 

Noncontrolling interests

 

523

 

 

 

147

 

 

 

 

 

 

 

 

670

 

Net income attributable to shareholders

$

290,027

 

 

$

6,702

 

$

(2,341

)

 

$

(1,052

)

 

$

293,336

 

Net income per diluted share (3)

$

4.00

 

 

$

0.09

 

$

(0.03

)

 

$

(0.01

)

 

$

4.04

 

Effective tax rate (4)

 

22.2

%

 

 

 

 

 

 

 

 

22.3

%

 

 

 

 

 

 

 

 

 

 

ARROW ELECTRONICS, INC.

NON-GAAP EARNINGS RECONCILIATION

(In thousands except per share data)

(Unaudited)

Nine months ended October 1, 2022

 

 

 

 

 

 

 

 

 

 

 

Reported

GAAP

measure

 

Intangible

amortization

expense

 

Restructuring

& Integration

charges

 

Other(1)

 

Non-GAAP

measure

Sales

$

27,801,399

 

 

$

 

$

 

$

 

 

$

27,801,399

 

Gross Profit

 

3,630,630

 

 

 

 

 

 

 

 

 

 

3,630,630

 

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

%

 

 

 

 

 

 

 

 

 

 

Nine months ended October 2, 2021

 

Reported

GAAP

measure

 

Intangible

amortization

expense

 

Restructuring

& Integration

charges(5)

 

Other(2)

 

Non-GAAP

measure

Sales

$

25,460,941

 

 

$

 

$

 

$

 

 

$

25,460,941

 

Gross Profit

 

3,005,987

 

 

 

 

 

 

 

 

 

 

3,005,987

 

Operating income

 

1,044,890

 

 

 

27,844

 

 

11,639

 

 

 

 

 

1,084,373

 

Income before income taxes

 

957,048

 

 

 

27,844

 

 

11,639

 

 

(10,724

)

 

 

985,807

 

Provision for income taxes

 

218,068

 

 

 

7,120

 

 

2,565

 

 

(2,581

)

 

 

225,172

 

Consolidated net income

 

738,980

 

 

 

20,724

 

 

9,074

 

 

(8,143

)

 

 

760,635

 

Noncontrolling interests

 

1,991

 

 

 

447

 

 

 

 

 

 

 

2,438

 

Net income attributable to shareholders

$

736,989

 

 

$

20,277

 

$

9,074

 

$

(8,143

)

 

$

758,197

 

Net income per diluted share (3)

$

9.92

 

 

$

0.27

 

$

0.12

 

$

(0.11

)

 

$

10.20

 

Effective tax rate (4)

 

22.8

%

 

 

 

 

 

 

 

 

22.8

%

 

 

 

 

 

 

 

 

 

 

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

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

(3) The sum of the components for 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 by GAAP measure and as a non-GAAP measure.

(5) Restructuring & Integration charges include impairment related to various long-lived assets.

ARROW ELECTRONICS, INC.

SEGMENT INFORMATION

(In thousands)

(Unaudited)

 

 

 

 

 

Quarter Ended

 

Nine Months Ended

 

October 1, 2022

 

October 2, 2021

 

October 1, 2022

 

October 2, 2021

Sales:

 

 

 

 

 

 

 

Global components

$

7,300,347

 

 

$

6,623,926

 

 

$

21,960,974

 

 

$

19,677,940

 

Global ECS

 

1,966,085

 

 

 

1,888,465

 

 

 

5,840,425

 

 

 

5,783,001

 

Consolidated

$

9,266,432

 

 

$

8,512,391

 

 

$

27,801,399

 

 

$

25,460,941

 

Operating income (loss):

 

 

 

 

 

 

 

Global components (a)

$

494,587

 

 

$

385,353

 

 

$

1,518,423

 

 

$

1,001,772

 

Global ECS

 

83,976

 

 

 

76,793

 

 

 

253,744

 

 

 

235,251

 

Corporate (b)

 

(75,869

)

 

 

(57,281

)

 

 

(226,269

)

 

 

(192,133

)

Consolidated

$

502,694

 

 

$

404,865

 

 

$

1,545,898

 

 

$

1,044,890

 

(a)

Global components operating income includes $12.5 million related to proceeds from legal settlements for the first nine months of 2021. Global components operating income for the first nine months of 2021 includes $4.5 million in restructuring, integration, and other charges.

(b)

Corporate operating income includes restructuring, integration, and other charges (credits) of $3.6 million and $11.0 million for the third quarter and first nine months of 2022, respectively, and $(3.0) million and $7.2 million for the third quarter and first nine months of 2021, respectively.

 

NON-GAAP SEGMENT RECONCILIATION

 

 

 

 

 

Quarter Ended

 

Nine Months Ended

 

October 1, 2022

 

October 2, 2021

 

October 1, 2022

 

October 2, 2021

 

 

 

 

 

 

 

 

Global components operating income, as reported

$

494,587

 

$

385,353

 

$

1,518,423

 

$

1,001,772

Intangible assets amortization expense

 

6,691

 

 

6,974

 

 

20,303

 

 

20,973

Restructuring, integration, and other charges

 

 

 

 

 

 

 

4,482

Global components non-GAAP operating income

$

501,278

 

$

392,327

 

$

1,538,726

 

$

1,027,227

 

 

 

 

 

 

 

 

Global ECS operating income, as reported

$

83,976

 

$

76,793

 

$

253,744

 

$

235,251

Intangible assets amortization expense

 

1,983

 

 

2,228

 

 

6,219

 

 

6,871

Global ECS non-GAAP operating income

$

85,959

 

$

79,021

 

$

259,963

 

$

242,122

 

Contacts

Richard Seidlitz,

Vice President, Principal Accounting Officer

303-305-4936

Media Contact:

John Hourigan,

Vice President, Global Communications

303-824-4586

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