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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 28, 2024
ARROW ELECTRONICS, INC.
(Exact Name of Registrant as Specified in Charter)
Registrant’s telephone number, including area code: (303) 824-4000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On October 31, 2024, Arrow Electronics, Inc. (the “Company”) issued a press release announcing its third quarter 2024 earnings. A copy of the press release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K.
The information in the press release attached as Exhibit 99.1 to this Current Report on Form 8-K is being furnished and shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such filing.
ITEM 2.05 COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES
On October 31, 2024, in response to evolving business needs and as part of an initiative to optimize operating expenses, the Company announced a multi-year restructuring plan (the “Operating Expense Efficiency Plan” or “the Plan”). The Plan is designed to improve operational efficiency through the following measures: (i) reorganizing and consolidating certain areas of the Company’s operations to centralize functions and streamline resources, with a focus on more cost-efficient regions; (ii) enhancing warehouse and logistics operations; (iii) investing in information technology to support automation and process improvements; (iv) consolidating the Company’s global real estate footprint; (v) reducing third-party spending; and (vi) winding down certain non-core businesses that are not aligned with the Company’s strategic objectives. Under the Plan, the Company expects to incur pre-tax restructuring charges of approximately $185 million, consisting of approximately $110 million of employee severance and other personnel cash expenditures; approximately $50 million of non-cash asset impairments, accelerated depreciation and inventory write-downs related to the wind-down of certain business operations; and approximately $25 million of other related cash expenditures. The Company expects to substantially complete the Plan by the end of fiscal year 2026, subject to, among other things, local legal and consultation requirements.
The estimate of the charges that the Company expects to incur in connection with the Plan, and the timing thereof, are subject to a number of assumptions, including local legal requirements in various jurisdictions, and actual amounts may differ materially from estimates. In addition, the Company may incur other charges not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of the Plan.
Forward-Looking Statements
This Current Report on Form 8-K includes “forward-looking statements,” as the term is defined under the federal securities laws. Forward-looking statements are those statements which are not statements of historical fact. These forward-looking statements can be identified by forward-looking words such as “expects,” “anticipates,” “intends,” “plans,” “may,” “will,” “believes,” “seeks,” “estimates,” and similar expressions and relate to, among other things, the timing of the Plan and the estimated charges the Company expects to incur in connection with the Plan. 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: local legal requirements in various jurisdictions; the incurrence of additional charges not currently contemplated due to unanticipated events that may occur during implementation of the Plan; the Company’s ability to effectively develop and deploy information technology solutions; negative impacts on the Company’s business operations or reputation or its ability to otherwise serve customers; and the Company’s ability to recruit and retain skilled and motivated personnel. For a further discussion of 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 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.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) EXHIBITS
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Exhibit Number |
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Description |
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Earnings press release issued by Arrow Electronics, Inc., dated October 31, 2024. |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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ARROW ELECTRONICS, INC. |
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Date: |
October 31, 2024 |
By: |
/s/ Carine Jean-Claude |
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Name: |
Carine Jean-Claude |
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Title: |
Senior Vice President, Chief Legal Officer and Secretary |
Exhibit 99.1
Arrow Electronics Reports Third-Quarter 2024 Results
-- Sales of $6.8 billion, at high-end of guidance range --
-- Third-Quarter Earnings Per Diluted Share of $1.88; Non-GAAP Earnings Per Diluted Share of $2.38 --
CENTENNIAL, Colo.--(BUSINESS WIRE)- Oct. 31, 2024--Arrow Electronics, Inc. (NYSE:ARW) today announced financial results for its third quarter of 2024.
“In the third quarter, the company continued to execute well in a challenging environment. While the cyclical correction continues in our global components business, we saw enterprise IT spending gain momentum,” said Sean Kerins, Arrow’s president and chief executive officer. “I am pleased that we delivered revenue above the midpoint of our guidance range and non-GAAP earnings per diluted share ahead of our expectations,” said Mr. Kerins.
Arrow Consolidated | ||||||||||||
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Quarter Ended |
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Nine Months Ended |
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September 28, |
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September 30, |
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September 28, |
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September 30, |
(in millions except per share data) |
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2024 |
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2023 |
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2024 |
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2023 |
Consolidated sales |
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$ |
6,823 |
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$ |
8,007 |
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$ |
20,640 |
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$ |
25,258 |
Net income attributable to shareholders |
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101 |
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199 |
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293 |
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709 |
Net income per diluted share |
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1.88 |
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3.53 |
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5.42 |
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12.28 |
Non-GAAP net income attributable to shareholders (1) |
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128 |
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233 |
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410 |
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757 |
Non-GAAP net income per diluted share |
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2.38 |
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4.14 |
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7.59 |
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13.12 |
In the third quarter of 2024, sales decreased 15 percent year over year. Changes in foreign currencies had a positive impact on growth of approximately $37 million on sales and $0.02 on earnings per share on a diluted basis compared to the third quarter of 2023.
Global Components
“In our global components business, the broader ecosystem inventory correction persists. Given the market environment, we remain focused on our suppliers and customers while managing the operational factors within our control,” said Mr. Kerins.
Global Components | ||||||||||||
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Quarter Ended |
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Nine Months Ended |
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September 28, |
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September 30, |
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September 28, |
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September 30, |
(in millions) |
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2024 |
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2023 |
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2024 |
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2023 |
Global components sales |
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$ |
4,946 |
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$ |
6,245 |
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$ |
15,170 |
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$ |
19,784 |
Global components operating income |
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189 |
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379 |
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624 |
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1,178 |
Global components non-GAAP operating income |
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193 |
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386 |
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654 |
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1,198 |
In the third quarter of 2024, global components sales decreased 21 percent year over year. Americas components third-quarter sales decreased 12 percent year over year. EMEA components third-quarter sales decreased 35 percent year over year and decreased 36 percent year over year on a constant currency basis. Asia-Pacific components third-quarter sales decreased 15 percent year over year.
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1 |
Global Enterprise Computing Solutions
“We saw better momentum and strong sales growth in our global ECS business, highlighted by a healthy market for hybrid cloud solutions, steady market dynamics in Europe, and an improving trajectory for us in North America,” said Mr. Kerins.
Global Enterprise Computing Solutions (ECS) | ||||||||||||
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Quarter Ended |
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Nine Months Ended |
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September 28, |
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September 30, |
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September 28, |
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September 30, |
(in millions) |
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2024 |
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2023 |
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2024 |
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2023 |
Global ECS sales |
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$ |
1,877 |
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$ |
1,762 |
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$ |
5,471 |
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$ |
5,474 |
Global ECS operating income |
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76 |
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55 |
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250 |
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222 |
Global ECS non-GAAP operating income |
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77 |
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56 |
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253 |
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226 |
In the third quarter of 2024, global ECS sales increased 7 percent year over year and increased 6 percent year over year on a constant currency basis. EMEA ECS third-quarter sales increased 13 percent year over year and increased 11 percent year over year on a constant currency basis. Americas ECS third-quarter sales increased 2 percent year over year.
Other Financial Information
“In the third quarter, we reduced inventory levels by approximately $125 million, or $1.3 billion over the last 12 months. We also generated $81 million in cash flow from operations and repurchased $50 million of shares,” said Raj Agrawal, Arrow’s senior vice president and chief financial officer.
“In line with our ongoing efforts to simplify our operations, we are restructuring the business to drive additional cost savings,” said Mr. Agrawal.
In addition to actions taken to date, the company estimates total restructuring expenses over the next two years of $185 million, including costs of $135 million for efficiency initiatives, as well as costs of approximately $50 million to exit certain lines of non-core business. The company has identified opportunities to reduce annual operating expenses by the end of 2026 by approximately $90 million to $100 million, primarily related to reorganizing and consolidating certain areas of the company’s operations.
1 A reconciliation of non-GAAP financial measures to GAAP financial measures is presented in the reconciliation tables included herein.
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Fourth-Quarter 2024 Outlook
| ● | Consolidated sales of $6.67 billion to $7.27 billion, with global components sales of $4.50 billion to $4.90 billion, and global enterprise computing solutions sales of $2.17 billion to $2.37 billion |
| ● | Net income per share on a diluted basis of $1.35 to $1.55, and non-GAAP net income per share on a diluted basis of $2.48 to $2.68 |
| ● | Average tax rate in the range of 23 to 25 percent |
| ● | Interest expense of approximately $60 million to $65 million |
| ● | Changes in foreign currencies to increase sales by approximately $60 million, and earnings per share on a diluted basis by $0.02 compared to the fourth quarter of 2023 |
| ● | Changes in foreign currencies to have no impact on growth in sales or earnings per share on a diluted basis compared to the third quarter of 2024 |
Fourth-Quarter 2024 GAAP to non-GAAP Outlook Reconciliation | ||||||||||||||||
NON-GAAP SALES RECONCILIATION | ||||||||||||||||
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Quarter Ended |
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Quarter Ended |
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December 31, |
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December 31, |
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December 31, |
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September 28, |
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(in billions) |
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2024 |
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2023 |
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% Change |
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2024 |
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2024 |
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% Change |
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Global components sales, GAAP |
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$ |
4.50 - 4.90 |
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$ |
5.64 |
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(20%) - (13%) |
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$ |
4.50 - 4.90 |
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$ |
4.95 |
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(9%) - (1%) |
Impact of changes in foreign currencies |
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— |
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0.04 |
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— |
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— |
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Global components sales, constant currency |
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$ |
4.50 - 4.90 |
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$ |
5.68 |
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(21%) - (14%) |
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$ |
4.50 - 4.90 |
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$ |
4.95 |
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(9%) - (1%) |
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Global ECS sales, GAAP |
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$ |
2.17 - 2.37 |
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$ |
2.21 |
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(2%) - 7% |
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$ |
2.17 - 2.37 |
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$ |
1.88 |
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15% - 26% |
Impact of changes in foreign currencies |
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— |
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0.02 |
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— |
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— |
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Global ECS sales, constant currency |
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$ |
2.17 - 2.37 |
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$ |
2.23 |
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(3%) - 6% |
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$ |
2.17 - 2.37 |
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$ |
1.88 |
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15% - 26% |
NON-GAAP EARNINGS RECONCILIATION | ||||||||||||
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Intangible amortization |
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Restructuring & |
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Reported GAAP measure |
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expense |
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integration charges |
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Non-GAAP measure |
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Net income per diluted share |
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$1.35 to $1.55 |
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$0.10 |
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$1.03 |
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$2.48 to $2.68 |
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 third-quarter 2024 financial results on Oct. 31, 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/487434328. 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 (NYSE:ARW) sources and engineers technology solutions for thousands of leading manufacturers and service providers. With global 2023 sales of $33 billion, Arrow’s portfolio enables technology across major industries and markets. 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
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3 |
fiscal 2024 such as sales, net income per diluted share, non-GAAP net income per diluted share, average tax rate, 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, the timing of the completion of the Operating Expense Efficiency Plan (the “Plan”) and Arrow’s estimated costs and expected operating expense reductions from the Plan, industry trends and expectations regarding market demand and conditions 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: the incurrence of additional charges not currently contemplated and failure to realize contemplated cost savings due to unanticipated events that may occur, including in connection with the implementation of the Plan; unfavorable economic conditions; disruptions or inefficiencies in the supply chain; political instability and changes; 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 and information system failures, including related to current or future implementations, integrations and upgrades; outbreaks, epidemics, pandemics, or public health crises; restructuring activities and impacts thereof; 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, operating income (including by business segment), income before income taxes, provision for income taxes, consolidated net income, noncontrolling interest, 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; write downs (reversals) to inventory related to the wind down of a business within the global components reportable segment (“impact of wind down”); loss on extinguishment of debt; 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. 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.
Contacts |
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Investors: |
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Brad Windbigler, |
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Treasurer and Vice President, Investor Relations |
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720-654-9893 |
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Media: |
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John Hourigan, |
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Vice President, Public Affairs and Corporate Marketing |
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303-824-4586 |
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4 |
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
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Quarter Ended |
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Nine Months Ended |
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September 28, 2024 |
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September 30, 2023 |
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September 28, 2024 |
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September 30, 2023 |
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Sales |
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$ |
6,823,319 |
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$ |
8,007,019 |
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$ |
20,640,447 |
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$ |
25,257,963 |
Cost of sales |
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6,038,491 |
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7,027,422 |
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18,151,349 |
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22,098,495 |
Gross profit |
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784,828 |
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979,597 |
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2,489,098 |
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3,159,468 |
Operating expenses: |
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Selling, general, and administrative |
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534,508 |
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563,150 |
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1,670,429 |
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1,822,783 |
Depreciation and amortization |
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40,592 |
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45,005 |
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123,356 |
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137,948 |
Restructuring, integration, and other |
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34,466 |
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31,359 |
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121,859 |
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44,252 |
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609,566 |
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639,514 |
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1,915,644 |
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2,004,983 |
Operating income |
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175,262 |
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340,083 |
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573,454 |
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1,154,485 |
Equity in earnings of affiliated companies |
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1,002 |
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1,392 |
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1,912 |
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4,373 |
Gain (loss) on investments, net |
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3,757 |
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(6,159) |
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(760) |
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4,649 |
Loss on extinguishment of debt |
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— |
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— |
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(1,657) |
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— |
Employee benefit plan expense, net |
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(979) |
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(854) |
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(2,892) |
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(2,510) |
Interest and other financing expense, net |
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(62,947) |
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(82,180) |
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(209,442) |
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(246,672) |
Income before income taxes |
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116,095 |
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252,282 |
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360,615 |
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|
914,325 |
Provision for income taxes |
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15,198 |
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52,241 |
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66,996 |
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|
201,168 |
Consolidated net income |
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100,897 |
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200,041 |
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293,619 |
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713,157 |
Noncontrolling interests |
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330 |
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1,382 |
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|
753 |
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|
4,189 |
Net income attributable to shareholders |
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$ |
100,567 |
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$ |
198,659 |
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$ |
292,866 |
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$ |
708,968 |
Net income per share: |
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Basic |
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$ |
1.90 |
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$ |
3.57 |
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$ |
5.48 |
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$ |
12.43 |
Diluted |
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$ |
1.88 |
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$ |
3.53 |
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$ |
5.42 |
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$ |
12.28 |
Weighted-average shares outstanding: |
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Basic |
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53,010 |
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55,597 |
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53,476 |
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57,021 |
Diluted |
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53,475 |
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56,298 |
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53,999 |
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57,715 |
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5 |
ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except par value)
(Unaudited)
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September 28, 2024 |
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December 31, 2023 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
248,000 |
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$ |
218,053 |
Accounts receivable, net |
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11,726,601 |
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12,238,073 |
Inventories |
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4,529,655 |
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5,187,225 |
Other current assets |
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1,022,620 |
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|
684,126 |
Total current assets |
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17,526,876 |
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|
18,327,477 |
Property, plant, and equipment, at cost: |
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|
|
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Land |
|
|
5,691 |
|
|
5,691 |
Buildings and improvements |
|
|
193,315 |
|
|
195,579 |
Machinery and equipment |
|
|
1,648,708 |
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|
1,632,606 |
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|
|
1,847,714 |
|
|
1,833,876 |
Less: Accumulated depreciation and amortization |
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|
(1,354,179) |
|
|
(1,303,136) |
Property, plant, and equipment, net |
|
|
493,535 |
|
|
530,740 |
Investments in affiliated companies |
|
|
61,506 |
|
|
62,741 |
Intangible assets, net |
|
|
105,313 |
|
|
127,440 |
Goodwill |
|
|
2,084,160 |
|
|
2,050,426 |
Other assets |
|
|
663,259 |
|
|
627,344 |
Total assets |
|
$ |
20,934,649 |
|
$ |
21,726,168 |
LIABILITIES AND EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
9,392,389 |
|
$ |
10,070,015 |
Accrued expenses |
|
|
1,668,633 |
|
|
1,463,915 |
Short-term borrowings, including current portion of long-term debt |
|
|
909,826 |
|
|
1,653,954 |
Total current liabilities |
|
|
11,970,848 |
|
|
13,187,884 |
Long-term debt |
|
|
2,363,241 |
|
|
2,153,553 |
Other liabilities |
|
|
564,483 |
|
|
507,424 |
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
Common stock, par value $1: |
|
|
|
|
|
|
Authorized - 160,000 shares in both 2024 and 2023 |
|
|
|
|
|
|
Issued - 58,059 and 57,691 shares in 2024 and 2023, respectively |
|
|
58,059 |
|
|
57,691 |
Capital in excess of par value |
|
|
582,572 |
|
|
553,340 |
Treasury stock (5,472 and 3,880 shares in 2024 and 2023, respectively), at cost |
|
|
(506,157) |
|
|
(297,745) |
Retained earnings |
|
|
6,083,083 |
|
|
5,790,217 |
Accumulated other comprehensive loss |
|
|
(254,460) |
|
|
(298,039) |
Total shareholders’ equity |
|
|
5,963,097 |
|
|
5,805,464 |
Noncontrolling interests |
|
|
72,980 |
|
|
71,843 |
Total equity |
|
|
6,036,077 |
|
|
5,877,307 |
Total liabilities and equity |
|
$ |
20,934,649 |
|
$ |
21,726,168 |
|
|
6 |
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
Quarter Ended |
||||
|
|
September 28, 2024 |
|
September 30, 2023 |
||
Cash flows from operating activities: |
|
|
|
|
|
|
Consolidated net income |
|
$ |
100,897 |
|
$ |
200,041 |
Adjustments to reconcile consolidated net income to net cash provided by operations: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
40,592 |
|
|
45,005 |
Amortization of stock-based compensation |
|
|
8,487 |
|
|
6,519 |
Equity in earnings of affiliated companies |
|
|
(1,002) |
|
|
(1,392) |
Deferred income taxes |
|
|
(12,889) |
|
|
(19,639) |
Loss (gain) on investments, net |
|
|
(3,686) |
|
|
6,159 |
Other |
|
|
(670) |
|
|
1,092 |
Change in assets and liabilities, net of effects of acquired businesses: |
|
|
|
|
|
|
Accounts receivable, net |
|
|
(701,168) |
|
|
260,749 |
Inventories |
|
|
169,211 |
|
|
(383,647) |
Accounts payable |
|
|
550,797 |
|
|
157,482 |
Accrued expenses |
|
|
(83,506) |
|
|
127,235 |
Other assets and liabilities |
|
|
13,495 |
|
|
(77,897) |
Net cash provided by operating activities |
|
|
80,558 |
|
|
321,707 |
Cash flows from investing activities: |
|
|
|
|
|
|
Acquisition of property, plant, and equipment |
|
|
(18,519) |
|
|
(20,670) |
Other |
|
|
10,677 |
|
|
— |
Net cash used for investing activities |
|
|
(7,842) |
|
|
(20,670) |
Cash flows from financing activities: |
|
|
|
|
|
|
Change in short-term and other borrowings |
|
|
549,451 |
|
|
603,693 |
Proceeds from (repayments of) long-term bank borrowings, net |
|
|
(613,449) |
|
|
(557,308) |
Net proceeds from note offering |
|
|
494,886 |
|
|
— |
Redemption of notes |
|
|
(500,000) |
|
|
— |
Proceeds from exercise of stock options |
|
|
585 |
|
|
443 |
Repurchases of common stock |
|
|
(51,051) |
|
|
(203,491) |
Other |
|
|
(899) |
|
|
— |
Net cash used for financing activities |
|
|
(120,477) |
|
|
(156,663) |
Effect of exchange rate changes on cash |
|
|
82,752 |
|
|
(51,462) |
Net increase in cash and cash equivalents |
|
|
34,991 |
|
|
92,912 |
Cash and cash equivalents at beginning of period |
|
|
213,009 |
|
|
240,382 |
Cash and cash equivalents at end of period |
|
$ |
248,000 |
|
$ |
333,294 |
|
|
7 |
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
Nine Months Ended |
||||
|
|
September 28, 2024 |
|
September 30, 2023 |
||
Cash flows from operating activities: |
|
|
|
|
|
|
Consolidated net income |
|
$ |
293,619 |
|
$ |
713,157 |
Adjustments to reconcile consolidated net income to net cash provided by operations: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
123,356 |
|
|
137,948 |
Amortization of stock-based compensation |
|
|
30,187 |
|
|
34,868 |
Equity in earnings of affiliated companies |
|
|
(1,912) |
|
|
(4,373) |
Deferred income taxes |
|
|
(20,287) |
|
|
(53,038) |
Loss on extinguishment of debt |
|
|
1,657 |
|
|
— |
Loss (gain) on investments, net |
|
|
1,077 |
|
|
(4,649) |
Other |
|
|
4,194 |
|
|
4,078 |
Change in assets and liabilities, net of effects of acquired businesses: |
|
|
|
|
|
|
Accounts receivable, net |
|
|
512,394 |
|
|
1,585,521 |
Inventories |
|
|
662,685 |
|
|
(525,020) |
Accounts payable |
|
|
(687,015) |
|
|
(1,355,777) |
Accrued expenses |
|
|
189,537 |
|
|
(88,348) |
Other assets and liabilities |
|
|
(305,543) |
|
|
(25,660) |
Net cash provided by operating activities |
|
|
803,949 |
|
|
418,707 |
Cash flows from investing activities: |
|
|
|
|
|
|
Acquisition of property, plant, and equipment |
|
|
(70,155) |
|
|
(57,775) |
Other |
|
|
17,129 |
|
|
10,962 |
Net cash used for investing activities |
|
|
(53,026) |
|
|
(46,813) |
Cash flows from financing activities: |
|
|
|
|
|
|
Change in short-term and other borrowings |
|
|
(595,069) |
|
|
802,032 |
Proceeds from (repayments of) long-term bank borrowings, net |
|
|
60,158 |
|
|
(566,734) |
Net proceeds from note offering |
|
|
989,564 |
|
|
496,268 |
Redemption of notes |
|
|
(1,000,000) |
|
|
(300,000) |
Proceeds from exercise of stock options |
|
|
5,353 |
|
|
16,824 |
Repurchases of common stock |
|
|
(214,352) |
|
|
(719,708) |
Settlement of forward-starting interest rate swap |
|
|
— |
|
|
56,711 |
Other |
|
|
(1,040) |
|
|
(142) |
Net cash used for financing activities |
|
|
(755,386) |
|
|
(214,749) |
Effect of exchange rate changes on cash |
|
|
34,410 |
|
|
(766) |
Net increase in cash and cash equivalents |
|
|
29,947 |
|
|
156,379 |
Cash and cash equivalents at beginning of period |
|
|
218,053 |
|
|
176,915 |
Cash and cash equivalents at end of period |
|
$ |
248,000 |
|
$ |
333,294 |
|
|
8 |
ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
|
|
Quarter Ended |
|
|
|
||||
|
|
September 28, 2024 |
|
September 30, 2023 |
|
% Change |
|
||
|
|
|
|
|
|
|
|
|
|
Consolidated sales, as reported |
|
$ |
6,823,319 |
|
$ |
8,007,019 |
|
(14.8) |
% |
Impact of changes in foreign currencies |
|
|
— |
|
|
36,708 |
|
|
|
Consolidated sales, constant currency |
|
$ |
6,823,319 |
|
$ |
8,043,727 |
|
(15.2) |
% |
|
|
|
|
|
|
|
|
|
|
Global components sales, as reported |
|
$ |
4,946,059 |
|
$ |
6,245,192 |
|
(20.8) |
% |
Impact of changes in foreign currencies |
|
|
— |
|
|
24,592 |
|
|
|
Global components sales, constant currency |
|
$ |
4,946,059 |
|
$ |
6,269,784 |
|
(21.1) |
% |
|
|
|
|
|
|
|
|
|
|
Americas components sales, as reported |
|
$ |
1,638,459 |
|
$ |
1,869,934 |
|
(12.4) |
% |
Impact of changes in foreign currencies |
|
|
— |
|
|
(809) |
|
|
|
Americas components sales, constant currency |
|
$ |
1,638,459 |
|
$ |
1,869,125 |
|
(12.3) |
% |
|
|
|
|
|
|
|
|
|
|
Asia components sales, as reported |
|
$ |
2,017,814 |
|
$ |
2,387,835 |
|
(15.5) |
% |
Impact of changes in foreign currencies |
|
|
— |
|
|
2,433 |
|
|
|
Asia components sales, constant currency |
|
$ |
2,017,814 |
|
$ |
2,390,268 |
|
(15.6) |
% |
|
|
|
|
|
|
|
|
|
|
EMEA components sales, as reported |
|
$ |
1,289,786 |
|
$ |
1,987,423 |
|
(35.1) |
% |
Impact of changes in foreign currencies |
|
|
— |
|
|
22,968 |
|
|
|
EMEA components sales, constant currency |
|
$ |
1,289,786 |
|
$ |
2,010,391 |
|
(35.8) |
% |
|
|
|
|
|
|
|
|
|
|
Global ECS sales, as reported |
|
$ |
1,877,260 |
|
$ |
1,761,827 |
|
6.6 |
% |
Impact of changes in foreign currencies |
|
|
— |
|
|
12,116 |
|
|
|
Global ECS sales, constant currency |
|
$ |
1,877,260 |
|
$ |
1,773,943 |
|
5.8 |
% |
|
|
|
|
|
|
|
|
|
|
Americas ECS sales, as reported |
|
$ |
1,033,115 |
|
$ |
1,015,924 |
|
1.7 |
% |
Impact of changes in foreign currencies |
|
|
— |
|
|
(645) |
|
|
|
Americas ECS sales, constant currency |
|
$ |
1,033,115 |
|
$ |
1,015,279 |
|
1.8 |
% |
|
|
|
|
|
|
|
|
|
|
EMEA ECS sales, as reported |
|
$ |
844,145 |
|
$ |
745,903 |
|
13.2 |
% |
Impact of changes in foreign currencies |
|
|
— |
|
|
12,761 |
|
|
|
EMEA ECS sales, constant currency |
|
$ |
844,145 |
|
$ |
758,664 |
|
11.3 |
% |
|
|
9 |
ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
|
|
Nine Months Ended |
|
|
|
||||
|
|
September 28, 2024 |
|
September 30, 2023 |
|
% Change |
|
||
|
|
|
|
|
|
|
|
|
|
Consolidated sales, as reported |
|
$ |
20,640,447 |
|
$ |
25,257,963 |
|
(18.3) |
% |
Impact of changes in foreign currencies |
|
|
— |
|
|
(6,154) |
|
|
|
Consolidated sales, constant currency |
|
$ |
20,640,447 |
|
$ |
25,251,809 |
|
(18.3) |
% |
|
|
|
|
|
|
|
|
|
|
Global components sales, as reported |
|
$ |
15,169,507 |
|
$ |
19,783,867 |
|
(23.3) |
% |
Impact of changes in foreign currencies |
|
|
— |
|
|
(24,213) |
|
|
|
Global components sales, constant currency |
|
$ |
15,169,507 |
|
$ |
19,759,654 |
|
(23.2) |
% |
|
|
|
|
|
|
|
|
|
|
Americas components sales, as reported |
|
$ |
4,807,991 |
|
$ |
6,169,949 |
|
(22.1) |
% |
Impact of changes in foreign currencies |
|
|
— |
|
|
(2,994) |
|
|
|
Americas components sales, constant currency |
|
$ |
4,807,991 |
|
$ |
6,166,955 |
|
(22.0) |
% |
|
|
|
|
|
|
|
|
|
|
Asia components sales, as reported |
|
$ |
5,975,729 |
|
$ |
7,226,871 |
|
(17.3) |
% |
Impact of changes in foreign currencies |
|
|
— |
|
|
(39,533) |
|
|
|
Asia components sales, constant currency |
|
$ |
5,975,729 |
|
$ |
7,187,338 |
|
(16.9) |
% |
|
|
|
|
|
|
|
|
|
|
EMEA components sales, as reported |
|
$ |
4,385,787 |
|
$ |
6,387,047 |
|
(31.3) |
% |
Impact of changes in foreign currencies |
|
|
— |
|
|
18,314 |
|
|
|
EMEA components sales, constant currency |
|
$ |
4,385,787 |
|
$ |
6,405,361 |
|
(31.5) |
% |
|
|
|
|
|
|
|
|
|
|
Global ECS sales, as reported |
|
$ |
5,470,940 |
|
$ |
5,474,096 |
|
(0.1) |
% |
Impact of changes in foreign currencies |
|
|
— |
|
|
18,059 |
|
|
|
Global ECS sales, constant currency |
|
$ |
5,470,940 |
|
$ |
5,492,155 |
|
(0.4) |
% |
|
|
|
|
|
|
|
|
|
|
Americas ECS sales, as reported |
|
$ |
2,904,933 |
|
$ |
3,014,544 |
|
(3.6) |
% |
Impact of changes in foreign currencies |
|
|
— |
|
|
(3,184) |
|
|
|
Americas ECS sales, constant currency |
|
$ |
2,904,933 |
|
$ |
3,011,360 |
|
(3.5) |
% |
|
|
|
|
|
|
|
|
|
|
EMEA ECS sales, as reported |
|
$ |
2,566,007 |
|
$ |
2,459,552 |
|
4.3 |
% |
Impact of changes in foreign currencies |
|
|
— |
|
|
21,243 |
|
|
|
EMEA ECS sales, constant currency |
|
$ |
2,566,007 |
|
$ |
2,480,795 |
|
3.4 |
% |
|
|
10 |
ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS RECONCILIATION
(In thousands except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 28, 2024 |
|
||||||||||||||||||||
|
|
Reported |
|
Intangible |
|
Restructuring, |
|
Impact of |
|
|
Non |
|
|
|
|
|
|
||||
|
|
GAAP |
|
amortization |
|
Integration |
|
Wind |
|
|
recurring |
|
|
|
Non-GAAP |
|
|||||
|
|
measure |
|
expense |
|
and other |
|
Down(1) |
|
|
tax items |
|
Other(2) |
|
measure |
|
|||||
Operating income |
|
$ |
175,262 |
|
$ |
7,308 |
|
$ |
34,466 |
|
$ |
(1,857) |
|
$ |
— |
$ |
— |
|
$ |
215,179 |
|
Income before income taxes |
|
|
116,095 |
|
|
7,308 |
|
|
34,466 |
|
|
(1,857) |
|
|
— |
|
(3,757) |
|
|
152,255 |
|
Provision for income taxes |
|
|
15,198 |
|
|
1,819 |
|
|
8,592 |
|
|
(444) |
|
|
— |
|
(902) |
|
|
24,263 |
|
Consolidated net income |
|
|
100,897 |
|
|
5,489 |
|
|
25,874 |
|
|
(1,413) |
|
|
— |
|
(2,855) |
|
|
127,992 |
|
Noncontrolling interests |
|
|
330 |
|
|
136 |
|
|
— |
|
|
— |
|
|
— |
|
— |
|
|
466 |
|
Net income attributable to shareholders |
|
$ |
100,567 |
|
$ |
5,353 |
|
$ |
25,874 |
|
$ |
(1,413) |
|
$ |
— |
$ |
(2,855) |
|
$ |
127,526 |
|
Net income per diluted share (4) |
|
$ |
1.88 |
|
$ |
0.10 |
|
$ |
0.48 |
|
$ |
(0.03) |
|
$ |
— |
$ |
(0.05) |
|
$ |
2.38 |
|
Effective tax rate (5) |
|
|
13.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15.9 |
% |
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2023 |
|
||||||||||||||||||||
|
|
Reported |
|
Intangible |
|
Restructuring, |
|
Impact of |
|
|
Non |
|
|
|
|
|
|
||||
|
|
GAAP |
|
amortization |
|
Integration |
|
Wind |
|
|
recurring |
|
|
|
Non-GAAP |
|
|||||
|
|
measure |
|
expense |
|
and other |
|
Down(1) |
|
|
tax items |
|
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 (4) |
|
$ |
3.53 |
|
$ |
0.10 |
|
$ |
0.43 |
|
$ |
— |
|
$ |
— |
$ |
0.08 |
|
$ |
4.14 |
|
Effective tax rate (5) |
|
|
20.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.2 |
% |
|
|
11 |
ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS RECONCILIATION
(In thousands except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 28, 2024 |
|
|||||||||||||||||||||
|
|
Reported |
|
Intangible |
|
Restructuring, |
|
Impact of |
|
|
Non |
|
|
|
|
|
|
|
||||
|
|
GAAP |
|
amortization |
|
Integration |
|
Wind |
|
|
recurring |
|
|
|
|
Non-GAAP |
|
|||||
|
|
measure |
|
expense |
|
and other |
|
Down(1) |
|
|
tax items |
|
|
Other(3) |
|
|
measure |
|
||||
Operating income |
|
$ |
573,454 |
|
$ |
22,310 |
|
$ |
121,859 |
|
$ |
10,229 |
|
$ |
— |
|
$ |
— |
|
$ |
727,852 |
|
Income before income taxes |
|
|
360,615 |
|
|
22,310 |
|
|
121,859 |
|
|
10,229 |
|
|
— |
|
|
2,417 |
|
|
517,430 |
|
Provision for income taxes |
|
|
66,996 |
|
|
5,562 |
|
|
30,820 |
|
|
2,447 |
|
|
— |
|
|
580 |
|
|
106,405 |
|
Consolidated net income |
|
|
293,619 |
|
|
16,748 |
|
|
91,039 |
|
|
7,782 |
|
|
— |
|
|
1,837 |
|
|
411,025 |
|
Noncontrolling interests |
|
|
753 |
|
|
406 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,159 |
|
Net income attributable to shareholders |
|
$ |
292,866 |
|
$ |
16,342 |
|
$ |
91,039 |
|
$ |
7,782 |
|
$ |
— |
|
$ |
1,837 |
|
$ |
409,866 |
|
Net income per diluted share (4) |
|
$ |
5.42 |
|
$ |
0.30 |
|
$ |
1.69 |
|
$ |
0.14 |
|
$ |
— |
|
$ |
0.03 |
|
$ |
7.59 |
|
Effective tax rate (5) |
|
|
18.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2023 |
|
|||||||||||||||||||||
|
|
Reported |
|
Intangible |
|
Restructuring, |
|
Impact of |
|
|
Non |
|
|
|
|
|
|
|||||
|
|
GAAP |
|
amortization |
|
Integration |
|
Wind |
|
|
recurring |
|
|
|
|
Non-GAAP |
|
|||||
|
|
measure |
|
expense |
|
and other |
|
Down(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 (4) |
|
$ |
12.28 |
|
$ |
0.30 |
|
$ |
0.58 |
|
$ |
— |
|
$ |
0.02 |
|
$ |
(0.06) |
|
$ |
13.12 |
|
Effective tax rate (5) |
|
|
22.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22.1 |
% |
(1) Includes write downs (reversals) of inventory related to the wind down of a business.
(2) Other includes loss (gain) on investments, net.
(3) Other includes loss (gain) on investments, net and loss on extinguishment of debt.
(4) The sum of the components for non-GAAP diluted EPS, as adjusted may not agree to totals, as presented, due to rounding.
(5) The items as shown in this table, represent the reconciling items for the tax rate as reported and as a non-GAAP measure.
|
|
12 |
ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)
(Unaudited)
|
|
Quarter Ended |
|
Nine Months Ended |
||||||||
|
|
September 28, |
|
September 30, |
|
September 28, |
|
September 30, |
||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
Global components |
|
$ |
4,946,059 |
|
$ |
6,245,192 |
|
$ |
15,169,507 |
|
$ |
19,783,867 |
Global ECS |
|
|
1,877,260 |
|
|
1,761,827 |
|
|
5,470,940 |
|
|
5,474,096 |
Consolidated |
|
$ |
6,823,319 |
|
$ |
8,007,019 |
|
$ |
20,640,447 |
|
$ |
25,257,963 |
Operating income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
Global components (a) |
|
$ |
188,600 |
|
$ |
379,053 |
|
$ |
624,363 |
|
$ |
1,177,906 |
Global ECS (b) |
|
|
75,614 |
|
|
54,624 |
|
|
249,654 |
|
|
221,951 |
Corporate (c) |
|
|
(88,952) |
|
|
(93,594) |
|
|
(300,563) |
|
|
(245,372) |
Consolidated |
|
$ |
175,262 |
|
$ |
340,083 |
|
$ |
573,454 |
|
$ |
1,154,485 |
| (a) | Global components operating income includes a reversal of $1.9 million and charges of $10.2 million in inventory write downs related to the wind down of a business for the third quarter and first nine months of 2024. 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. |
| (b) | For the third quarter and first nine months of 2023, global ECS operating income includes charges of $21.9 million and $25.4 million, respectively, to increase the allowance for credit losses related to one customer. For the first nine months of 2024, global ECS operating income includes a reversal of $20.0 million for aged receivables that were collected, related to the same customer, which was taken during the second quarter of 2024. |
| (c) | Corporate operating loss includes restructuring, integration, and other charges of $34.5 million and $121.9 million for the third quarter and first nine months of 2024, respectively, and $31.4 million and $44.3 million for the third quarter and first nine months of 2023, respectively. |
NON-GAAP SEGMENT RECONCILIATION
|
|
Quarter Ended |
|
Nine Months Ended |
||||||||
|
|
September 28, |
|
September 30, |
|
September 28, |
|
September 30, |
||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||
Global components operating income, as reported |
|
$ |
188,600 |
|
$ |
379,053 |
|
$ |
624,363 |
|
$ |
1,177,906 |
Intangible assets amortization expense |
|
|
6,247 |
|
|
6,640 |
|
|
19,134 |
|
|
20,064 |
Impact of wind down to inventory |
|
|
(1,857) |
|
|
— |
|
|
10,229 |
|
|
— |
Global components non-GAAP operating income |
|
$ |
192,990 |
|
$ |
385,693 |
|
$ |
653,726 |
|
$ |
1,197,970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Global ECS operating income, as reported |
|
$ |
75,614 |
|
$ |
54,624 |
|
$ |
249,654 |
|
$ |
221,951 |
Intangible assets amortization expense |
|
|
1,061 |
|
|
1,223 |
|
|
3,176 |
|
|
3,687 |
Global ECS non-GAAP operating income |
|
$ |
76,675 |
|
$ |
55,847 |
|
$ |
252,830 |
|
$ |
225,638 |
14
|
|
13 |
