December 15th, 2015

Arrow Electronics Reports Third-Quarter 2020 Results

Arrow Electronics, Inc. (NYSE:ARW) today reported third-quarter 2020 sales of $7.23 billion, an increase of 2 percent from sales of $7.08 billion in the third quarter of 2019. Third-quarter net income was $166 million, or $2.13 per share on a diluted basis, compared with a net income of $92 million, or $1.10 per share on a diluted basis, in the third quarter of 2019. Non-GAAP net income1 was $162 million, or $2.08 per share on a diluted basis, in the third quarter of 2020, compared with non-GAAP net income of $155 million, or $1.86 per share on a diluted basis, in the third quarter of 2019.

“Our strong financial performance this quarter is a testament to the strength of our business model,” said Michael J. Long, chairman, president, and chief executive officer. “Arrow is a trusted provider of critical technology solutions, and we believe strong demand for the products and solutions we provide will endure and increase beyond the COVID-19 pandemic. Customers and suppliers are choosing to do more business with Arrow because of our growing engineering, design, supply chain management and hybrid cloud solution capabilities. The hard work of our talented team and their unwavering focus on providing customers with the products and solutions they need, when they need them, has allowed us to capitalize on opportunities leading to financial performance that was above our expectations.”

Global components third-quarter sales of $5.31 billion increased 5 percent year over year. Asia-Pacific components sales increased 29 percent year over year. Americas components sales decreased 13 percent year over year. Non-GAAP sales in the region decreased 10 percent year over year. Europe components sales decreased 8 percent year over year. Non-GAAP sales in the region decreased 12 percent year over year. Global components third-quarter operating income was $204 million. Third-quarter non-GAAP operating income was $208 million.

“Robust third-quarter global components sales demonstrate the vital role we play in the supply chains of manufacturing customers around the world,” continued Mr. Long. “Sales were above the high-end of our expectations driven by tremendous growth in Asia, where our business has doubled in size over the last five years due to our consistent investments in the region to support innovation and invention.”

Global enterprise computing solutions third-quarter sales of $1.92 billion decreased 5 percent year over year. Non-GAAP sales decreased 7 percent year over year. Europe enterprise computing solutions sales increased 6 percent year over year. Non-GAAP sales in the region increased 1 percent year over year. Americas enterprise computing solutions sales decreased 10 percent year over year. Global enterprise computing solutions third-quarter operating income was $83 million. Third-quarter non-GAAP operating income was $85 million.

“Third-quarter global enterprise computing solutions sales were near the high-end of our prior outlook, led by the cloud and security solutions that enable business continuity and remote working,” said Mr. Long. “We continue to be a source of stability for our customers and suppliers facing challenging market conditions.”

“Our financial results demonstrated the resilience of Arrow’s business model,” said Chris Stansbury, senior vice president and chief financial officer. “Third-quarter cash flow from operations was $275 million, driven by disciplined working capital management and healthy profitability from our leading positions in the markets we serve. As always, we remain committed to returning excess cash to shareholders. During the third quarter, we returned approximately $150 million to shareholders through our stock repurchase program, ending the quarter with approximately $563 million of remaining authorization under our share repurchase program. Our balance sheet and liquidity position remain strong, and we are pleased to report that return on invested capital increased year over year for the second straight quarter.”

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 2020 OUTLOOK

  • Consolidated sales of $7.45 billion to $8.05 billion, with global components sales of $5.1 billion to $5.4 billion, and global enterprise computing solutions sales of $2.35 billion to $2.65 billion
  • Net income per share on a diluted basis of $2.42 to $2.58, and non-GAAP net income per share on a diluted basis1 of $2.57 to $2.73
  • Average tax rate of approximately 23.5 percent compared to the long-term range of 23 to 25 percent
  • Average diluted shares outstanding of 77 million
  • Interest expense of approximately $33 million
  • Expecting average USD-to-Euro exchange rate of $1.16 to €1; changes in foreign currencies to increase sales by approximately $110 million, and earnings per share on a diluted basis by $.07 compared to the fourth quarter of 2019

Fourth-Quarter 2020 Outlook

Reported GAAP measure

Intangible amortization expense

Restructuring & integration charges

Non-GAAP measure

Net income per diluted share

$2.42 - $2.58

$.10

$.05

$2.57 - $2.73

Please refer to the CFO commentary, which can be found at investor.arrow.com, as a supplement to the company’s earnings release.

Arrow Electronics guides innovation forward for over 175,000 leading technology manufacturers and service providers. With 2019 sales of $29 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 2020, 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: potential adverse effects of the ongoing global coronavirus pandemic, including actions taken to contain or treat the coronavirus, industry conditions, changes in product supply, pricing and customer demand, competition, other vagaries in the global components and global enterprise computing solutions markets, changes in relationships with key suppliers, increased profit margin pressure, changes in legal and regulatory matters, non-compliance with certain regulations, such as export, anti-trust, 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 periodic reports on Form 10-K, the Form 10-Q and subsequent filings made 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 relating to sales, operating income, net income attributable to shareholders, and net income per basic and diluted share.

The company provides non-GAAP sales, gross profit, operating income, income before income taxes, provision for income taxes, net income, and net income per share on a diluted basis which are adjusted GAAP measures for the impact of changes in foreign currencies (referred to as "changes in foreign currencies") by re-translating prior period results at current period foreign exchange rates, the impact of dispositions by adjusting the company’s operating results for businesses disposed, as if the dispositions had occurred at the beginning of the earliest period presented (referred to as "dispositions"), the impact of the company’s personal computer and mobility asset disposition business (referred to as "wind down"), the impact of inventory write-downs and recoveries related to the digital business (referred to as “digital inventory write-downs and recoveries”), and the impact of notes receivable reserves and recoveries and inventory write-downs and recoveries related to the AFS business (referred to as “AFS notes receivable reserves and recoveries” and “AFS inventory write-downs and recoveries,” respectively). Non-GAAP operating income excludes identifiable intangible asset amortization, restructuring, integration, and other charges, loss on disposition of businesses, net, AFS notes receivable reserves and recoveries and inventory write-downs and recoveries, digital inventory write-downs and recoveries, the impact of non-cash charges related to goodwill, trade names, and long-lived assets, and the impact of wind down. Net income attributable to shareholders, and net income per basic and diluted share as adjusted to exclude identifiable intangible asset amortization, restructuring, integration, and other charges, loss on disposition of businesses, net, AFS notes receivable reserves and recoveries and inventory write-downs and recoveries, digital inventory write-downs and recoveries, net gains and losses on investments, the impact of non-cash charges related to goodwill, trade names, and long-lived assets, certain tax adjustments, pension settlement gain, and the impact of wind down. A reconciliation of the company’s non-GAAP financial information to GAAP is set forth in the tables below.

The company believes that such non-GAAP financial information is useful to investors to assist in assessing and understanding the company’s operating performance and underlying trends in the company’s business because management considers these items referred to above to be outside the company’s core operating results. This non-GAAP financial information is among the primary indicators management uses as a basis for evaluating the company’s financial and operating performance. In addition, the company’s Board of Directors may use this non-GAAP financial information in evaluating management performance and setting management compensation.

The presentation of this additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for, or alternative to, sales, operating income, net income and net income per basic and diluted share determined in accordance with GAAP. Analysis of results and outlook on a non-GAAP basis should be used as a complement to, and in conjunction with, data presented in accordance with GAAP.

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share data)

(Unaudited)

Quarter Ended

Nine Months Ended

September 26, 2020

September 28, 2019

September 26, 2020

September 28, 2019

Sales

$

7,231,260

$

7,078,118

$

20,219,171

$

21,578,657

Cost of sales

6,442,670

6,279,277

17,951,727

19,103,219

Gross profit

788,590

798,841

2,267,444

2,475,438

Operating expenses:

Selling, general, and administrative expenses

504,211

522,446

1,539,520

1,677,734

Depreciation and amortization

46,732

45,231

140,654

139,739

Loss on disposition of businesses, net

14,573

15,439

Impairments

2,305

253

7,223

698,246

Restructuring, integration, and other charges (credits)

(2,840)

43,120

6,948

74,692

550,408

625,623

1,694,345

2,605,850

Operating income (loss)

238,182

173,218

573,099

(130,412)

Equity in earnings (losses) of affiliated companies

61

(1,070)

308

(2,155)

Gain (loss) on investments, net

2,726

1,126

(3,183)

7,864

Employee benefit plan (expense) credit

595

(1,071)

(1,687)

(3,349)

Interest and other financing expense, net

(30,461)

(49,882)

(105,596)

(153,426)

Income (loss) before income taxes

211,103

122,321

462,941

(281,478)

Provision for income taxes

44,707

29,340

113,453

30,878

Consolidated net income (loss)

166,396

92,981

349,488

(312,356)

Noncontrolling interests

336

850

1,121

3,744

Net income (loss) attributable to shareholders

$

166,060

$

92,131

$

348,367

$

(316,100)

Net income (loss) per share:

Basic

$

2.15

$

1.11

$

4.42

$

(3.75)

Diluted

$

2.13

$

1.10

$

4.39

$

(3.75)

Weighted-average shares outstanding:

Basic

77,390

82,711

78,807

84,246

Diluted

78,086

83,397

79,404

84,246

ARROW ELECTRONICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands except par value)

(Unaudited)

September 26, 2020

December 31, 2019

ASSETS

Current assets:

Cash and cash equivalents

$

227,019

$

300,103

Accounts receivable, net

7,958,675

8,482,687

Inventories

3,235,802

3,477,120

Other current assets

238,403

266,249

Total current assets

11,659,899

12,526,159

Property, plant, and equipment, at cost:

Land

7,818

7,793

Buildings and improvements

196,258

173,370

Machinery and equipment

1,528,735

1,481,525

1,732,811

1,662,688

Less: Accumulated depreciation and amortization

(938,956)

(859,578)

Property, plant, and equipment, net

793,855

803,110

Investments in affiliated companies

76,355

86,942

Intangible assets, net

241,293

271,903

Goodwill

2,074,282

2,061,322

Other assets

650,949

651,360

Total assets

$

15,496,633

$

16,400,796

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

6,849,252

$

7,046,221

Accrued expenses

899,326

880,507

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

166,128

331,431

Total current liabilities

7,914,706

8,258,159

Long-term debt

2,097,741

2,640,129

Other liabilities

646,414

636,115

Commitments and contingencies

Equity:

Shareholders’ equity:

Common stock, par value $1:

Authorized - 160,000 shares in both 2020 and 2019, respectively

Issued - 125,424 shares in both 2020 and 2019, respectively

125,424

125,424

Capital in excess of par value

1,157,149

1,150,006

Treasury stock (49,696 and 44,804 shares in 2020 and 2019, respectively), at cost

(2,689,876)

(2,332,548)

Retained earnings

6,443,680

6,131,248

Accumulated other comprehensive loss

(255,313)

(262,211)

Total shareholders’ equity

4,781,064

4,811,919

Noncontrolling interests

56,708

54,474

Total equity

4,837,772

4,866,393

Total liabilities and equity

$

15,496,633

$

16,400,796

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Quarter Ended

September 26, 2020

September 28, 2019

Cash flows from operating activities:

Consolidated net income

$

166,396

$

92,981

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

Depreciation and amortization

46,732

45,231

Amortization of stock-based compensation

6,285

7,120

Equity in (earnings) losses of affiliated companies

(61)

1,070

Deferred income taxes

(7,369)

6,362

Impairments

2,305

253

Loss on disposition of businesses, net

14,573

Gain on investments, net

(2,727)

(884)

Other

3,995

(276)

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

Accounts receivable, net

87,402

21,355

Inventories

207,646

64,468

Accounts payable

(176,973)

(3,013)

Accrued expenses

(41,889)

270

Other assets and liabilities

(17,015)

37,264

Net cash provided by operating activities

274,727

286,774

Cash flows from investing activities:

Cash paid on disposition of businesses

(10,785)

Acquisition of property, plant, and equipment

(30,013)

(31,444)

Other

(9,116)

(8,495)

Net cash used for investing activities

(39,129)

(50,724)

Cash flows from financing activities:

Change in short-term and other borrowings

(78,966)

80,227

Proceeds from (repayments of) long-term bank borrowings, net

328

(215,937)

Proceeds from exercise of stock options

2,233

2,088

Repurchases of common stock

(153,011)

(103,270)

Net cash used for financing activities

(229,416)

(236,892)

Effect of exchange rate changes on cash

15,009

(6,893)

Net increase (decrease) in cash and cash equivalents

21,191

(7,735)

Cash and cash equivalents at beginning of period

205,828

269,989

Cash and cash equivalents at end of period

$

227,019

$

262,254

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Nine Months Ended

September 26, 2020

September 28, 2019

Cash flows from operating activities:

Consolidated net income (loss)

$

349,488

$

(312,356)

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

Depreciation and amortization

140,654

139,739

Amortization of stock-based compensation

28,602

34,749

Equity in (earnings) losses of affiliated companies

(308)

2,155

Deferred income taxes

38,976

(65,484)

Impairments

7,223

698,246

Loss on disposition of businesses, net

15,439

Loss (gain) on investments, net

3,198

(7,622)

Other

4,043

10,814

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

Accounts receivable, net

533,570

916,908

Inventories

260,573

342,610

Accounts payable

(228,000)

(1,349,189)

Accrued expenses

29,154

(71,124)

Other assets and liabilities

(7,336)

8,308

Net cash provided by operating activities

1,159,837

363,193

Cash flows from investing activities:

Cash paid on disposition of businesses

(1,325)

Acquisition of property, plant, and equipment

(89,555)

(113,080)

Other

(14,582)

(5,555)

Net cash used for investing activities

(104,137)

(119,960)

Cash flows from financing activities:

Change in short-term and other borrowings

(86,155)

(93,129)

Repayments of long-term bank borrowings, net

(411,362)

(96,960)

Redemption of notes

(209,366)

Proceeds from exercise of stock options

5,963

11,710

Repurchases of common stock

(384,750)

(304,194)

Settlement of forward-starting interest rate swap

(48,378)

Other

(141)

(147)

Net cash used for financing activities

(1,134,189)

(482,720)

Effect of exchange rate changes on cash

5,405

(7,586)

Net decrease in cash and cash equivalents

(73,084)

(247,073)

Cash and cash equivalents at beginning of period

300,103

509,327

Cash and cash equivalents at end of period

$

227,019

$

262,254

ARROW ELECTRONICS, INC.

NON-GAAP SALES RECONCILIATION

(In thousands)

(Unaudited)

Quarter Ended

September 26, 2020

September 28, 2019

% Change

Consolidated sales, as reported

$

7,231,260

$

7,078,118

2.2

%

Impact of changes in foreign currencies

96,749

Impact of wind down

(60,130)

Non-GAAP consolidated sales

$

7,231,260

$

7,114,737

1.6

%

Global components sales, as reported

$

5,307,737

$

5,048,880

5.1

%

Impact of changes in foreign currencies

67,317

Impact of wind down

(60,130)

Non-GAAP global components sales

$

5,307,737

$

5,056,067

5.0

%

Americas Components sales, as reported

$

1,515,962

$

1,738,710

(12.8)

%

Impact of changes in foreign currencies

(409)

Impact of wind down

(46,998)

Non-GAAP Americas Components sales

$

1,515,962

$

1,691,303

(10.4)

%

Europe components sales, as reported

$

1,196,672

$

1,304,109

(8.2)

%

Impact of changes in foreign currencies

64,000

Impact of wind down

(13,132)

Non-GAAP Europe components sales

$

1,196,672

$

1,354,977

(11.7)

%

Asia components sales, as reported

$

2,595,103

$

2,006,061

29.4

%

Impact of changes in foreign currencies

3,726

Non-GAAP Asia components sales

$

2,595,103

$

2,009,787

29.1

%

Global ECS sales, as reported

$

1,923,523

$

2,029,238

(5.2)

%

Impact of changes in foreign currencies

29,432

Non-GAAP global ECS sales

$

1,923,523

$

2,058,670

(6.6)

%

Europe ECS sales, as reported

$

649,732

$

610,324

6.5

%

Impact of changes in foreign currencies

30,545

Non-GAAP Europe ECS sales

$

649,732

$

640,869

1.4

%

Americas ECS sales, as reported

$

1,273,791

$

1,418,914

(10.2)

%

Impact of changes in foreign currencies

(1,113)

Non-GAAP Americas ECS sales

$

1,273,791

$

1,417,801

(10.2)

%

ARROW ELECTRONICS, INC.

NON-GAAP SALES RECONCILIATION

(In thousands)

(Unaudited)

Nine Months Ended

September 26, 2020

September 28, 2019

% Change

Consolidated sales, as reported

$

20,219,171

$

21,578,657

(6.3)

%

Impact of changes in foreign currencies

(41,938)

Impact of wind down and dispositions

(232,239)

Non-GAAP consolidated sales

$

20,219,171

$

21,304,480

(5.1)

%

Global components sales, as reported

$

14,579,593

$

15,511,742

(6.0)

%

Impact of changes in foreign currencies

(21,453)

Impact of wind down

(221,098)

Non-GAAP global components sales

$

14,579,593

$

15,269,191

(4.5)

%

Americas Components sales, as reported

$

4,557,661

$

5,522,538

(17.5)

%

Impact of changes in foreign currencies

(4,169)

Impact of wind down

(170,724)

Non-GAAP Americas Components sales

$

4,557,661

$

5,347,645

(14.8)

%

Europe components sales, as reported

$

3,625,079

$

4,223,363

(14.2)

%

Impact of changes in foreign currencies

(5,049)

Impact of wind down

(50,374)

Non-GAAP Europe components sales

$

3,625,079

$

4,167,940

(13.0)

%

Asia components sales, as reported

$

6,396,853

$

5,765,841

10.9

%

Impact of changes in foreign currencies

(12,235)

Non-GAAP Asia components sales

$

6,396,853

$

5,753,606

11.2

%

Global ECS sales, as reported

$

5,639,578

$

6,066,915

(7.0)

%

Impact of changes in foreign currencies

(20,485)

Impact of dispositions

(11,141)

Non-GAAP global ECS sales

$

5,639,578

$

6,035,289

(6.6)

%

Europe ECS sales, as reported

$

2,013,843

$

2,074,638

(2.9)

%

Impact of changes in foreign currencies

(3,117)

Impact of dispositions

(11,141)

Non-GAAP Europe ECS sales

$

2,013,843

$

2,060,380

(2.3)

%

Americas ECS sales, as reported

$

3,625,735

$

3,992,277

(9.2)

%

Impact of changes in foreign currencies

(17,368)

Non-GAAP Americas ECS sales

$

3,625,735

$

3,974,909

(8.8)

%

ARROW ELECTRONICS, INC.

NON-GAAP EARNINGS RECONCILIATION

(In thousands except per share data)

(Unaudited)

Three months ended September 26, 2020

Reported

GAAP

measure

Intangible

amortization

expense

Restructuring

& Integration

charges

AFS Reserves & Recoveries

Digital Write Downs & Recoveries

Impairments(1)

Impact of Wind Down

Non-recurring tax items

Other(2)

Non-GAAP

measure

Sales

$

7,231,260

$

$

$

$

$

$

$

$

$

7,231,260

Gross Profit

788,590

(475)

788,115

Operating income

238,182

9,352

(2,840)

(233)

2,305

(2,487)

244,279

Income before income taxes

211,103

9,352

(2,840)

(233)

2,305

(2,478)

(4,495)

212,714

Provision for income taxes

44,707

2,396

(665)

(56)

556

(583)

4,887

(1,090)

50,152

Consolidated net income

166,396

6,956

(2,175)

(177)

1,749

(1,895)

(4,887)

(3,405)

162,562

Noncontrolling interests

336

146

482

Net income attributable to shareholders

$

166,060

$

6,810

$

(2,175)

$

(177)

$

$

1,749

$

(1,895)

$

(4,887)

$

(3,405)

162,080

Net income per diluted share(7)

$

2.13

$

0.09

$

(0.03)

$

$

$

0.02

$

(0.02)

$

(0.06)

$

(0.04)

$

2.08

Effective tax rate

21.2

%

23.6

%

Three months ended September 28, 2019

Reported

GAAP

measure

Intangible

amortization

expense(3)

Restructuring

& Integration

charges(3)

AFS Reserves & Recoveries

Digital Write Downs & Recoveries

Impairments

Impact of Wind Down(3)

Non-recurring tax items

Other(4)

Non-GAAP

measure

Sales

$

7,078,118

$

$

$

$

$

$

(60,130)

$

$

$

7,017,988

Gross Profit

798,841

1,101

(3,541)

796,401

Operating income

173,218

10,265

31,087

(664)

1,101

711

36,917

252,635

Income before income taxes

122,321

10,265

31,087

(664)

1,101

711

36,842

(1,126)

200,537

Provision for income taxes

29,340

2,860

8,922

(178)

272

3,753

(249)

44,720

Consolidated net income

92,981

7,405

22,165

(486)

829

711

33,089

(877)

155,817

Noncontrolling interests

850

138

988

Net income attributable to shareholders

$

92,131

$

7,267

$

22,165

$

(486)

$

829

$

711

$

33,089

$

$

(877)

$

154,829

Net income per diluted share(7)

$

1.10

$

0.09

$

0.27

$

(0.01)

$

0.01

$

0.01

$

0.40

$

$

(0.01)

$

1.86

Effective tax rate

24.0

%

22.3

%

ARROW ELECTRONICS, INC.

NON-GAAP EARNINGS RECONCILIATION

(In thousands except per share data)

(Unaudited)

Nine months ended September 26, 2020

Reported GAAP measure

Intangible amortization expense

Restructuring & Integration charges

AFS Reserves & Recoveries

Digital Write Downs & Recoveries

Impairments(1)

Impact of Wind Down

Non-recurring tax items

Other(2)

Non-GAAP measure

Sales

$

20,219,171

$

$

$

$

$

$

$

$

$

20,219,171

Gross Profit

2,267,444

(11,171)

2,256,273

Operating income

573,099

29,041

6,948

(956)

7,223

(14,311)

601,044

Income before income taxes

462,941

29,041

6,948

(956)

7,223

(14,292)

1,414

492,319

Provision for income taxes

113,453

7,461

2,219

(231)

2,356

(3,245)

1,272

336

123,621

Consolidated net income

349,488

21,580

4,729

(725)

4,867

(11,047)

(1,272)

1,078

368,698

Noncontrolling interests

1,121

420

1,541

Net income attributable to shareholders

$

348,367

$

21,160

$

4,729

$

(725)

$

$

4,867

$

(11,047)

$

(1,272)

$

1,078

$

367,157

Net income per diluted share(7)

$

4.39

$

0.27

$

0.06

$

(0.01)

$

$

0.06

$

(0.14)

$

(0.02)

$

0.01

$

4.62

Effective tax rate

24.5

%

25.1

%

Nine months ended September 28, 2019

Reported GAAP measure

Intangible amortization expense(3)

Restructuring & Integration charges(3)

AFS Reserves & Recoveries

Digital Write Downs & Recoveries

Impairments(5)

Impact of Wind Down(3)

Non-recurring tax items

Other(6)

Non-GAAP measure

Sales

$

21,578,657

$

$

$

$

$

$

(221,098)

$

$

$

21,357,559

Gross Profit

2,475,438

1,868

21,215

(7,363)

2,491,158

Operating income (loss)

(130,412)

28,072

62,079

15,187

21,215

623,796

151,332

866

772,135

Income (loss) before income taxes

(281,478)

28,072

62,079

15,187

21,215

623,796

151,414

(6,998)

613,287

Provision for income taxes

30,878

7,863

16,498

3,732

5,234

64,246

31,011

(3,502)

(1,950)

154,010

Consolidated net income (loss)

(312,356)

20,209

45,581

11,455

15,981

559,550

120,403

3,502

(5,048)

459,277

Noncontrolling interests

3,744

420

4,164

Net income (loss) attributable to shareholders

$

(316,100)

$

19,789

$

45,581

$

11,455

$

15,981

$

559,550

$

120,403

$

3,502

$

(5,048)

$

455,113

Net income (loss) per diluted share(7)

$

(3.75)

$

0.23

$

0.54

$

0.14

$

0.19

$

6.64

$

1.43

$

0.04

$

(0.06)

$

5.36

Effective tax rate

(11.0)

%

25.1

%

(1) Impairments includes $2,305 and $7,223 in impairment charges related to various other long-lived assets unrelated to the personal computer and mobility asset disposition business for the third quarter and first nine months of 2020, respectively.

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

(3) Amounts for restructuring, integration, and other charges, identifiable intangible asset amortization, loss on disposition of businesses, net, and impairments related to the personal computer and mobility asset disposition business are included in “impact of wind down” above.

(4) Other includes gain on investments, net.

(5) Impairments include goodwill impairments of $570,175, tradename impairments of $46,000, and $7,621 in impairment charges related to various other long-lived assets.

(6) Other includes loss on disposition of businesses, net and gain on investments, net.

(7) For the nine months ended September 28, 2019, the non-GAAP net income per diluted share calculation includes 727 thousand shares that were excluded from the GAAP net income per diluted share calculation. Additionally, in all periods presented the sum of the components for non-GAAP diluted EPS may not agree to totals, as presented, due to rounding.

 

ARROW ELECTRONICS, INC.

SEGMENT INFORMATION

(In thousands)

(Unaudited)

Quarter Ended

Nine Months Ended

September 26, 2020

September 28, 2019

September 26, 2020

September 28, 2019

Sales:

Global components

$

5,307,737

$

5,048,880

$

14,579,593

$

15,511,742

Global ECS

1,923,523

2,029,238

5,639,578

6,066,915

Consolidated

$

7,231,260

$

7,078,118

$

20,219,171

$

21,578,657

Operating income (loss):

Global components

$

203,603

$

171,591

$

550,206

$

(159,993)

Global ECS (a)

82,529

92,375

197,883

277,481

Corporate (b)

(47,950)

(90,748)

(174,990)

(247,900)

Consolidated

$

238,182

$

173,218

$

573,099

$

(130,412)

(a)

Includes reserves and other adjustments of approximately $29.9 million primarily related to foreign tax and other loss contingencies for the first nine months of 2020. These reserves are principally associated with transactional taxes on activity from several prior years, not significant to any one year.

(b)

Includes restructuring, integration, and other charges (credits) of $(2.8) million and $6.9 million for the third quarter and first nine months of 2020, and $31.1 million and $62.7 million for the third quarter and first nine months of 2019, respectively. Also includes $2.3 million of impairment charges related to various long-lived assets for the third quarter and first nine months of 2020.

NON-GAAP SEGMENT RECONCILIATION

Quarter Ended

Nine Months Ended

September 26, 2020

September 28, 2019

September 26, 2020

September 28, 2019

Global components operating income (loss), as reported

$

203,603

$

171,591

$

550,206

$

(159,993)

Intangible assets amortization expense (c)

7,014

7,398

21,653

19,458

Impairments (c)

711

623,796

Impact of wind down (c)

(2,487)

36,917

(14,311)

150,752

AFS notes receivable reserve (recoveries)

(233)

(664)

(956)

15,187

Digital inventory reserve

1,101

21,215

Global components non-GAAP operating income

$

207,897

$

217,054

$

556,592

$

670,415

Global ECS operating income, as reported

$

82,529

$

92,375

$

197,883

$

277,481

Intangible assets amortization expense

2,338

2,866

7,388

8,613

Impairments

4,918

Global ECS non-GAAP operating income

$

84,867

$

95,241

$

210,189

$

286,094

(c)

For the third quarter and first nine months of 2019, impact of wind down includes restructuring, integration, and other charges, identifiable intangible asset amortization, loss on dispositions of businesses, net, and impairments related to the personal computer and mobility asset disposition business.

Contacts:

Steven O’Brien
Vice President, Investor Relations
303-824-4544

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