Arrow Electronics, Inc. (NYSE:ARW) today reported third-quarter 2021 sales of $8.51 billion, an increase of 18 percent from sales of $7.23 billion in the third quarter of 2020. Third-quarter net income was $290 million, or $4.00 per share on a diluted basis, compared with a net income of $166 million, or $2.13 per share on a diluted basis, in the third quarter of 2020. Non-GAAP net income1 was $293 million, or $4.04 per share on a diluted basis, in the third quarter of 2021, compared with non-GAAP net income of $162 million, or $2.08 per share on a diluted basis, in the third quarter of 2020.
“Arrow’s unwavering commitment to our customers’ success continues to foster expanding opportunities for our own business in the areas of supply chain as a service, designed and engineered value-enhancing solutions, and secure management of mission-critical software workloads,” said Michael J. Long, chairman, president, and chief executive officer. “The value we deliver to customers and suppliers is inexorably linked to the value we capture for all of our stakeholders, which is enabling us to navigate through the near-term supply challenges. We expect component supply to remain well below demand in the coming quarters and through the better part of 2022.”
Global components third-quarter sales of $6.62 billion reflected an increase of 25 percent year over year and non-GAAP sales increased 24 percent year over year. Asia-Pacific components third-quarter sales increased 16 percent year over year and non-GAAP sales in the region increased 15 percent year over year. Americas components third-quarter sales increased 33 percent year over year. Europe components third-quarter sales increased 33 percent year over year and non-GAAP sales in the region increased 32 percent year over year. Global components third-quarter operating income was $385 million, and third-quarter non-GAAP operating income was $392 million.
“While global components sales were limited by product supply, we were able to attach higher value to those sales than ever before as shown by our margin expansion,” Mr. Long said. “Arrow has never worked harder to help alleviate our customers' and suppliers’ biggest problems with respect to getting components to manufacturing and products to market.”
Global enterprise computing solutions third-quarter sales of $1.89 billion reflected a decrease of 2 percent year over year and non-GAAP sales decreased 3 percent year over year. Europe enterprise computing solutions third-quarter sales increased 5 percent year over year and non-GAAP sales in the region increased 3 percent year over year. Americas enterprise computing solutions third-quarter sales decreased 6 percent year over year. Global enterprise computing solutions third-quarter operating income was $77 million, and third-quarter non-GAAP operating income was $79 million.
“Demand for complex IT solutions continues to grow, and we expect to see significant upside in this area when near-term project postponements and incompletions resulting from supply chain challenges are resolved,” said Mr. Long.
“We are taking advantage of the current environment to enhance the returns profile of our business while further solidifying our balance sheet. Our return on invested capital increased year over year for the sixth straight quarter, and our leverage ratios are at the lowest levels in ten years,” said Chris Stansbury, senior vice president and chief financial officer. “Our strong profitability, positive cash flow from operations, and the effective management of our balance sheet enabled us to deliver on our commitment to return cash to shareholders through the repurchase of approximately $250 million of shares for the second consecutive quarter. Our current repurchase authorization stands at approximately $413 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 2021 OUTLOOK
- Consolidated sales of $8.55 billion to $9.15 billion, with global components sales of $6.35 billion to $6.65 billion, and global enterprise computing solutions sales of $2.2 billion to $2.5 billion
- Net income per share on a diluted basis of $4.19 to $4.35, and non-GAAP net income per share on a diluted basis1 of $4.37 to $4.53
- Average tax rate of approximately 23.5 percent compared to the long-term range of 23 to 25 percent
- Average diluted shares outstanding of 71 million
- Interest expense of approximately $32 million
- Expecting average USD-to-Euro exchange rate of $1.16 to €1; changes in foreign currencies to decrease sales by approximately $15 million, and earnings per share on a diluted basis by $.01 compared to the fourth quarter of 2020
Fourth-Quarter 2021 Outlook | ||||||||
Reported GAAP
|
Intangible amortization
|
Restructuring &
| Non-GAAP measure | |||||
Net income per diluted share | $4.19 - $4.35 | $.09 | $.09 | $4.37 - $4.53 | ||||
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 180,000 leading technology manufacturers and service providers. With 2020 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 2021, 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 and 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 COVID-19 pandemic, including actions taken to contain or treat COVID-19, 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, foreign currency fluctuation, 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 and 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, gross profit, operating income, income before income taxes, provision for income taxes, net income, 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 non-GAAP measures adjusted 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 notes receivable reserves and recoveries related to the AFS business (referred to as “AFS notes receivable reserves and recoveries”), identifiable intangible asset amortization, restructuring, integration, and other charges, impairments of long-lived assets, the impact of wind down, gains and losses on investments, the impact of tax legislation changes, and pension settlement gains and losses.
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 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.
A reconciliation of the company’s non-GAAP financial information to GAAP is set forth in the tables below.
ARROW ELECTRONICS, INC. | ||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(In thousands except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Quarter Ended | Nine Months Ended | |||||||||||||||
October 2, 2021 | September 26, 2020 | October 2, 2021 | September 26, 2020 | |||||||||||||
Sales | $ | 8,512,391 | $ | 7,231,260 | $ | 25,460,941 | $ | 20,219,171 | ||||||||
Cost of sales | 7,436,619 | 6,442,670 | 22,454,954 | 17,951,727 | ||||||||||||
Gross profit | 1,075,772 | 788,590 | 3,005,987 | 2,267,444 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general, and administrative expenses | 625,883 | 504,211 | 1,802,534 | 1,539,520 | ||||||||||||
Depreciation and amortization | 48,054 | 46,732 | 146,924 | 140,654 | ||||||||||||
Impairments | — | 2,305 | 4,482 | 7,223 | ||||||||||||
Restructuring, integration, and other charges (credits) | (3,030 | ) | (2,840 | ) | 7,157 | 6,948 | ||||||||||
670,907 | 550,408 | 1,961,097 | 1,694,345 | |||||||||||||
Operating income | 404,865 | 238,182 | 1,044,890 | 573,099 | ||||||||||||
Equity in earnings of affiliated companies | 1,151 | 61 | 2,185 | 308 | ||||||||||||
Gain (loss) on investments, net | 1,386 | 2,726 | 10,905 | (3,183 | ) | |||||||||||
Employee benefit plan (expense) credit, net | (1,256 | ) | 595 | (3,924 | ) | (1,687 | ) | |||||||||
Interest and other financing expense, net | (32,667 | ) | (30,461 | ) | (97,008 | ) | (105,596 | ) | ||||||||
Income before income taxes | 373,479 | 211,103 | 957,048 | 462,941 | ||||||||||||
Provision for income taxes | 82,929 | 44,707 | 218,068 | 113,453 | ||||||||||||
Consolidated net income | 290,550 | 166,396 | 738,980 | 349,488 | ||||||||||||
Noncontrolling interests | 523 | 336 | 1,991 | 1,121 | ||||||||||||
Net income attributable to shareholders | $ | 290,027 | $ | 166,060 | $ | 736,989 | $ | 348,367 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 4.05 | $ | 2.15 | $ | 10.04 | $ | 4.42 | ||||||||
Diluted | $ | 4.00 | $ | 2.13 | $ | 9.92 | $ | 4.39 | ||||||||
Weighted-average shares outstanding: | ||||||||||||||||
Basic | 71,671 | 77,390 | 73,426 | 78,807 | ||||||||||||
Diluted | 72,571 | 78,086 | 74,313 | 79,404 | ||||||||||||
ARROW ELECTRONICS, INC. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(In thousands except par value) | ||||||||
(Unaudited) | ||||||||
October 2, 2021 | December 31, 2020 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 215,932 | $ | 373,615 | ||||
Accounts receivable, net | 9,329,427 | 9,205,343 | ||||||
Inventories | 3,834,988 | 3,287,308 | ||||||
Other current assets | 345,317 | 286,633 | ||||||
Total current assets | 13,725,664 | 13,152,899 | ||||||
Property, plant, and equipment, at cost: | ||||||||
Land | 5,691 | 7,940 | ||||||
Buildings and improvements | 188,205 | 207,614 | ||||||
Machinery and equipment | 1,537,671 | 1,553,371 | ||||||
1,731,567 | 1,768,925 | |||||||
Less: Accumulated depreciation and amortization | (1,026,172 | ) | (969,320 | ) | ||||
Property, plant, and equipment, net | 705,395 | 799,605 | ||||||
Investments in affiliated companies | 69,022 | 76,358 | ||||||
Intangible assets, net | 204,458 | 233,819 | ||||||
Goodwill | 2,090,248 | 2,115,469 | ||||||
Other assets | 635,673 | 675,761 | ||||||
Total assets | $ | 17,430,460 | $ | 17,053,911 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 8,005,207 | $ | 7,937,889 | ||||
Accrued expenses | 1,142,753 | 1,034,361 | ||||||
Short-term borrowings, including current portion of long-term debt | 353,915 | 158,633 | ||||||
Total current liabilities | 9,501,875 | 9,130,883 | ||||||
Long-term debt | 2,039,761 | 2,097,940 | ||||||
Other liabilities | 651,196 | 676,136 | ||||||
Equity: | ||||||||
Shareholders’ equity: | ||||||||
Common stock, par value $1: | ||||||||
Authorized - 160,000 shares in both 2021 and 2020 | ||||||||
Issued - 125,424 shares in both 2021 and 2020 | 125,424 | 125,424 | ||||||
Capital in excess of par value | 1,183,009 | 1,165,850 | ||||||
Treasury stock (55,370 and 50,581 shares in 2021 and 2020, respectively), at cost | (3,380,984 | ) | (2,776,821 | ) | ||||
Retained earnings | 7,416,740 | 6,679,751 | ||||||
Accumulated other comprehensive loss | (165,711 | ) | (104,885 | ) | ||||
Total shareholders’ equity | 5,178,478 | 5,089,319 | ||||||
Noncontrolling interests | 59,150 | 59,633 | ||||||
Total equity | 5,237,628 | 5,148,952 | ||||||
Total liabilities and equity | $ | 17,430,460 | $ | 17,053,911 | ||||
ARROW ELECTRONICS, INC. | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Quarter Ended | ||||||||
October 2, 2021 | September 26, 2020 | |||||||
Cash flows from operating activities: | ||||||||
Consolidated net income | $ | 290,550 | $ | 166,396 | ||||
Adjustments to reconcile consolidated net income to net cash provided by operations: | ||||||||
Depreciation and amortization | 48,054 | 46,732 | ||||||
Amortization of stock-based compensation | 7,639 | 6,285 | ||||||
Equity in earnings of affiliated companies | (1,151 | ) | (61 | ) | ||||
Deferred income taxes | (2,715 | ) | (7,369 | ) | ||||
Impairments | — | 2,305 | ||||||
Gain on investments, net | (1,301 | ) | (2,727 | ) | ||||
Other | 1,539 | 3,995 | ||||||
Change in assets and liabilities, net of effects of acquired and disposed businesses: | ||||||||
Accounts receivable, net | (545,314 | ) | 87,402 | |||||
Inventories | (211,554 | ) | 207,646 | |||||
Accounts payable | 413,992 | (176,973 | ) | |||||
Accrued expenses | 91,481 | (41,889 | ) | |||||
Other assets and liabilities | 23,026 | (17,015 | ) | |||||
Net cash provided by operating activities | 114,246 | 274,727 | ||||||
Cash flows from investing activities: | ||||||||
Acquisition of property, plant, and equipment | (21,176 | ) | (30,013 | ) | ||||
Other | 373 | (9,116 | ) | |||||
Net cash used for investing activities | (20,803 | ) | (39,129 | ) | ||||
Cash flows from financing activities: | ||||||||
Change in short-term and other borrowings | (1,155 | ) | (78,966 | ) | ||||
Proceeds from long-term bank borrowings, net | 154,994 | 328 | ||||||
Proceeds from exercise of stock options | 3,621 | 2,233 | ||||||
Repurchases of common stock | (250,221 | ) | (153,011 | ) | ||||
Net cash used for financing activities | (92,761 | ) | (229,416 | ) | ||||
Effect of exchange rate changes on cash | (28,820 | ) | 15,009 | |||||
Net increase (decrease) in cash and cash equivalents | (28,138 | ) | 21,191 | |||||
Cash and cash equivalents at beginning of period | 244,070 | 205,828 | ||||||
Cash and cash equivalents at end of period | $ | 215,932 | $ | 227,019 | ||||
ARROW ELECTRONICS, INC. | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Nine Months Ended | ||||||||
October 2, 2021 | September 26, 2020 | |||||||
Cash flows from operating activities: | ||||||||
Consolidated net income | $ | 738,980 | $ | 349,488 | ||||
Adjustments to reconcile consolidated net income to net cash provided by operations: | ||||||||
Depreciation and amortization | 146,924 | 140,654 | ||||||
Amortization of stock-based compensation | 29,606 | 28,602 | ||||||
Equity in earnings of affiliated companies | (2,185 | ) | (308 | ) | ||||
Deferred income taxes | 9,354 | 38,976 | ||||||
Impairments | 4,482 | 7,223 | ||||||
Loss (gain) on investments, net | (10,820 | ) | 3,198 | |||||
Other | 3,190 | 4,043 | ||||||
Change in assets and liabilities, net of effects of acquired and disposed businesses: | ||||||||
Accounts receivable, net | (262,272 | ) | 533,570 | |||||
Inventories | (581,766 | ) | 260,573 | |||||
Accounts payable | 136,329 | (228,000 | ) | |||||
Accrued expenses | 174,583 | 29,154 | ||||||
Other assets and liabilities | 4,685 | (7,336 | ) | |||||
Net cash provided by operating activities | 391,090 | 1,159,837 | ||||||
Cash flows from investing activities: | ||||||||
Acquisition of property, plant, and equipment | (62,285 | ) | (89,555 | ) | ||||
Proceeds from sale of property, plant, and equipment | 22,171 | — | ||||||
Other | 373 | (14,582 | ) | |||||
Net cash used for investing activities | (39,741 | ) | (104,137 | ) | ||||
Cash flows from financing activities: | ||||||||
Change in short-term and other borrowings | (15,986 | ) | (86,155 | ) | ||||
Proceeds from (repayments of) long-term bank borrowings, net | 289,235 | (411,362 | ) | |||||
Redemption of notes | (130,860 | ) | (209,366 | ) | ||||
Proceeds from exercise of stock options | 44,938 | 5,963 | ||||||
Repurchases of common stock | (661,548 | ) | (384,750 | ) | ||||
Settlement of forward-starting interest rate swap | — | (48,378 | ) | |||||
Other | (159 | ) | (141 | ) | ||||
Net cash used for financing activities | (474,380 | ) | (1,134,189 | ) | ||||
Effect of exchange rate changes on cash | (34,652 | ) | 5,405 | |||||
Net decrease in cash and cash equivalents | (157,683 | ) | (73,084 | ) | ||||
Cash and cash equivalents at beginning of period | 373,615 | 300,103 | ||||||
Cash and cash equivalents at end of period | $ | 215,932 | 227,019 | |||||
ARROW ELECTRONICS, INC. | ||||||||||
NON-GAAP SALES RECONCILIATION | ||||||||||
(In thousands) | ||||||||||
(Unaudited) | ||||||||||
Quarter Ended | ||||||||||
October 2, 2021 | September 26, 2020 | % Change | ||||||||
Consolidated sales, as reported | $ | 8,512,391 | $ | 7,231,260 | 17.7 | % | ||||
Impact of changes in foreign currencies | — | 54,931 | ||||||||
Non-GAAP consolidated sales | $ | 8,512,391 | $ | 7,286,191 | 16.8 | % | ||||
Global components sales, as reported | $ | 6,623,926 | $ | 5,307,737 | 24.8 | % | ||||
Impact of changes in foreign currencies | — | 34,663 | ||||||||
Non-GAAP global components sales | $ | 6,623,926 | $ | 5,342,400 | 24.0 | % | ||||
Americas components sales, as reported | $ | 2,018,551 | $ | 1,515,962 | 33.2 | % | ||||
Impact of changes in foreign currencies | — | 78 | ||||||||
Non-GAAP Americas components sales | $ | 2,018,551 | $ | 1,516,040 | 33.1 | % | ||||
Asia components sales, as reported | $ | 3,009,390 | $ | 2,595,103 | 16.0 | % | ||||
Impact of changes in foreign currencies | — | 18,496 | ||||||||
Non-GAAP Asia components sales | $ | 3,009,390 | $ | 2,613,599 | 15.1 | % | ||||
Europe components sales, as reported | $ | 1,595,985 | $ | 1,196,672 | 33.4 | % | ||||
Impact of changes in foreign currencies | — | 16,089 | ||||||||
Non-GAAP Europe components sales | $ | 1,595,985 | $ | 1,212,761 | 31.6 | % | ||||
Global ECS sales, as reported | $ | 1,888,465 | $ | 1,923,523 | (1.8 | )% | ||||
Impact of changes in foreign currencies | — | 20,268 | ||||||||
Non-GAAP global ECS sales | $ | 1,888,465 | $ | 1,943,791 | (2.8 | )% | ||||
Americas ECS sales, as reported | $ | 1,203,663 | $ | 1,273,791 | (5.5 | )% | ||||
Impact of changes in foreign currencies | — | 5,769 | ||||||||
Non-GAAP Americas ECS sales | $ | 1,203,663 | $ | 1,279,560 | (5.9 | )% | ||||
Europe ECS sales, as reported | $ | 684,802 | $ | 649,732 | 5.4 | % | ||||
Impact of changes in foreign currencies | — | 14,499 | ||||||||
Non-GAAP Europe ECS sales | $ | 684,802 | $ | 664,231 | 3.1 | % | ||||
ARROW ELECTRONICS, INC. | ||||||||||
NON-GAAP SALES RECONCILIATION | ||||||||||
(In thousands) | ||||||||||
(Unaudited) | ||||||||||
Nine Months Ended | ||||||||||
October 2, 2021 | September 26, 2020 | % Change | ||||||||
Consolidated sales, as reported | $ | 25,460,941 | $ | 20,219,171 | 25.9 | % | ||||
Impact of changes in foreign currencies | — | 476,218 | ||||||||
Non-GAAP Consolidated sales | $ | 25,460,941 | $ | 20,695,389 | 23.0 | % | ||||
Global components sales, as reported | $ | 19,677,940 | $ | 14,579,593 | 35.0 | % | ||||
Impact of changes in foreign currencies | — | 298,100 | ||||||||
Non-GAAP Global components sales | $ | 19,677,940 | $ | 14,877,693 | 32.3 | % | ||||
Americas components sales, as reported | $ | 5,690,480 | $ | 4,557,661 | 24.9 | % | ||||
Impact of changes in foreign currencies | — | 425 | ||||||||
Non-GAAP Americas components sales | $ | 5,690,480 | $ | 4,558,086 | 24.8 | % | ||||
Asia components sales, as reported | $ | 9,332,211 | $ | 6,396,853 | 45.9 | % | ||||
Impact of changes in foreign currencies | — | 60,105 | ||||||||
Non-GAAP Asia components sales | $ | 9,332,211 | $ | 6,456,958 | 44.5 | % | ||||
Europe components sales, as reported | $ | 4,655,249 | $ | 3,625,079 | 28.4 | % | ||||
Impact of changes in foreign currencies | — | 237,570 | ||||||||
Non-GAAP Europe components sales | $ | 4,655,249 | $ | 3,862,649 | 20.5 | % | ||||
Global ECS sales, as reported | $ | 5,783,001 | $ | 5,639,578 | 2.5 | % | ||||
Impact of changes in foreign currencies | — | 178,118 | ||||||||
Non-GAAP Global ECS sales | $ | 5,783,001 | $ | 5,817,696 | (0.6 | )% | ||||
Americas ECS sales, as reported | $ | 3,522,356 | $ | 3,625,735 | (2.9 | )% | ||||
Impact of changes in foreign currencies | — | 37,655 | ||||||||
Non-GAAP Americas ECS sales | $ | 3,522,356 | $ | 3,663,390 | (3.8 | )% | ||||
Europe ECS sales, as reported | $ | 2,260,645 | $ | 2,013,843 | 12.3 | % | ||||
Impact of changes in foreign currencies | — | 140,463 | ||||||||
Non-GAAP Europe ECS sales | $ | 2,260,645 | $ | 2,154,306 | 4.9 | % | ||||
ARROW ELECTRONICS, INC. | ||||||||||||||||||||||||||||||
NON-GAAP EARNINGS RECONCILIATION | ||||||||||||||||||||||||||||||
(In thousands except per share data) | ||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||
Three months ended October 2, 2021 | ||||||||||||||||||||||||||||||
Reported GAAP measure | Intangible amortization expense | Restructuring & Integration charges | AFS Reserves & Recoveries | Impairments | Impact of Wind Down | 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 | % | ||||||||||||||||||||||||||
Three months ended September 26, 2020 | ||||||||||||||||||||||||||||||
Reported GAAP measure | Intangible amortization expense | Restructuring & Integration charges | AFS Reserves & Recoveries | Impairments | Impact of Wind Down | Other(3) | 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 | ) | 3,797 | 50,152 | |||||||||||||||||||
Consolidated net income | 166,396 | 6,956 | (2,175 | ) | (177 | ) | 1,749 | (1,895 | ) | (8,292 | ) | 162,562 | ||||||||||||||||||
Noncontrolling interests | 336 | 146 | — | — | — | — | — | 482 | ||||||||||||||||||||||
Net income attributable to shareholders | $ | 166,060 | $ | 6,810 | $ | (2,175 | ) | $ | (177 | ) | $ | 1,749 | $ | (1,895 | ) | $ | (8,292 | ) | $ | 162,080 | ||||||||||
Net income per diluted share (4) | $ | 2.13 | $ | 0.09 | $ | (0.03 | ) | $ | — | $ | 0.02 | $ | (0.02 | ) | $ | (0.11 | ) | $ | 2.08 | |||||||||||
Effective tax rate (5) | 21.2 | % | 23.6 | % | ||||||||||||||||||||||||||
ARROW ELECTRONICS, INC. | |||||||||||||||||||||||||||||
NON-GAAP EARNINGS RECONCILIATION | |||||||||||||||||||||||||||||
(In thousands except per share data) | |||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||
Nine months ended October 2, 2021 | |||||||||||||||||||||||||||||
Reported GAAP measure | Intangible amortization expense | Restructuring & Integration charges | AFS Reserves & Recoveries | Impairments | Impact of Wind Down | 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 | 7,157 | — | 4,482 | — | — | 1,084,373 | |||||||||||||||||||||
Income before income taxes | 957,048 | 27,844 | 7,157 | — | 4,482 | — | (10,724 | ) | 985,807 | ||||||||||||||||||||
Provision for income taxes | 218,068 | 7,120 | 1,487 | — | 1,078 | — | (2,581 | ) | 225,172 | ||||||||||||||||||||
Consolidated net income | 738,980 | 20,724 | 5,670 | — | 3,404 | — | (8,143 | ) | 760,635 | ||||||||||||||||||||
Noncontrolling interests | 1,991 | 447 | — | — | — | — | — | 2,438 | |||||||||||||||||||||
Net income attributable to shareholders | $ | 736,989 | $ | 20,277 | $ | 5,670 | $ | — | $ | 3,404 | $ | — | $ | (8,143 | ) | $ | 758,197 | ||||||||||||
Net income per diluted share (4) | $ | 9.92 | $ | 0.27 | $ | 0.08 | $ | — | $ | 0.05 | $ | — | $ | (0.11 | ) | $ | 10.20 | ||||||||||||
Effective tax rate (5) | 22.8 | % | 22.8 | % | |||||||||||||||||||||||||
Nine months ended September 26, 2020 | |||||||||||||||||||||||||||||
Reported GAAP measure | Intangible amortization expense | Restructuring & Integration charges | AFS Reserves & Recoveries | Impairments | Impact of Wind Down | Other(3) | 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 | ) | 1,608 | 123,621 | |||||||||||||||||||
Consolidated net income | 349,488 | 21,580 | 4,729 | (725 | ) | 4,867 | (11,047 | ) | (194 | ) | 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 | ) | $ | (194 | ) | $ | 367,157 | ||||||||||
Net income per diluted share (4) | $ | 4.39 | $ | 0.27 | $ | 0.06 | $ | (0.01 | ) | $ | 0.06 | $ | (0.14 | ) | $ | — | $ | 4.62 | |||||||||||
Effective tax rate (5) | 24.5 | % | 25.1 | % | |||||||||||||||||||||||||
(1) Other includes gain on investments, net. | |||||||||||||||||||||||||||||
(2) Other includes gain on investments, net and pension settlement loss. | |||||||||||||||||||||||||||||
(3) Other includes (gain) loss on investments, net, non-recurring tax items, and pension settlement gain. | |||||||||||||||||||||||||||||
(4) In all periods presented the sum of the components for 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 by GAAP measure and as a non-GAAP measure. | |||||||||||||||||||||||||||||
ARROW ELECTRONICS, INC. | ||||||||||||||||
SEGMENT INFORMATION | ||||||||||||||||
(In thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Quarter Ended | Nine Months Ended | |||||||||||||||
October 2, 2021 | September 26, 2020 | October 2, 2021 | September 26, 2020 | |||||||||||||
Sales: | ||||||||||||||||
Global components | $ | 6,623,926 | $ | 5,307,737 | $ | 19,677,940 | $ | 14,579,593 | ||||||||
Global ECS | 1,888,465 | 1,923,523 | 5,783,001 | 5,639,578 | ||||||||||||
Consolidated | $ | 8,512,391 | $ | 7,231,260 | $ | 25,460,941 | $ | 20,219,171 | ||||||||
Operating income (loss): | ||||||||||||||||
Global components (a) | $ | 385,353 | $ | 203,603 | $ | 1,001,772 | $ | 550,206 | ||||||||
Global ECS (b) | 76,793 | 82,529 | 235,251 | 197,883 | ||||||||||||
Corporate (c) | (57,281 | ) | (47,950 | ) | (192,133 | ) | (174,990 | ) | ||||||||
Consolidated | $ | 404,865 | $ | 238,182 | $ | 1,044,890 | $ | 573,099 | ||||||||
(a) | Global components operating income includes $12.5 million and $2.4 million related to proceeds from legal settlements for the first nine months of 2021 and 2020, respectively, and $4.5 million in impairment charges related to various long lived assets for the first nine months of 2021. | |
(b) | Global ECS operating income for the first nine months of 2020 includes $4.9 million in impairment charges related to various long-lived assets, and reserves and other adjustments of approximately $29.9 million primarily related to foreign tax and other loss contingencies. These reserves are principally associated with transactional taxes on activity from several prior years, not significant to any one year. | |
(c) | Corporate operating income includes restructuring, integration, and other charges (credits) of $(3.0) million and $7.2 million for the third quarter and first nine months of 2021, respectively, and $(2.8) million and $6.9 million for the third quarter and first nine months of 2020, respectively, and $2.3 million of impairment charges related to long-lived assets for the third quarter and first nine months of 2020. |
NON-GAAP SEGMENT RECONCILIATION | ||||||||||||||
Quarter Ended | Nine Months Ended | |||||||||||||
October 2, 2021 | September 26, 2020 | October 2, 2021 | September 26, 2020 | |||||||||||
Global components operating income, as reported | $ | 385,353 | $ | 203,603 | $ | 1,001,772 | $ | 550,206 | ||||||
Intangible assets amortization expense | 6,974 | 7,014 | 20,973 | 21,653 | ||||||||||
Impairments | — | — | 4,482 | — | ||||||||||
Impact of wind down | — | (2,487 | ) | — | (14,311 | ) | ||||||||
AFS notes receivable recoveries | — | (233 | ) | — | (956 | ) | ||||||||
Global components non-GAAP operating income | $ | 392,327 | $ | 207,897 | $ | 1,027,227 | $ | 556,592 | ||||||
Global ECS operating income, as reported | $ | 76,793 | $ | 82,529 | $ | 235,251 | $ | 197,883 | ||||||
Intangible assets amortization expense | 2,228 | 2,338 | 6,871 | 7,388 | ||||||||||
Impairments | — | — | — | 4,918 | ||||||||||
Global ECS non-GAAP operating income | $ | 79,021 | $ | 84,867 | $ | 242,122 | $ | 210,189 | ||||||
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