Arrow Electronics Reports Fourth-Quarter and Full-Year 2024 Results

-- Fourth-Quarter Sales Above High End of Guidance --

-- Fourth-Quarter Earnings Per Share of $1.86 and Non-GAAP Earnings Per Share of $2.97, Both Above High End of Guidance --

Arrow Electronics, Inc. (NYSE:ARW) today announced financial results for its fourth quarter and fiscal year ended Dec. 31, 2024.

"In the fourth quarter, the company executed well relative to our original expectations, generating total sales and earnings per share that were beyond the high end of our guidance ranges," said Sean Kerins, Arrow's president and chief executive officer.

"Reflecting on the past year, I believe that we were successful in taking several steps to strengthen our position in both segments," said Mr. Kerins. "In global components, we expanded our linecard and customer base, realigned the business for global consistency, and remained committed to our value-added service offerings that differentiate us. And in enterprise computing solutions, we've unified our go-to-market strategy in both regions, and we're poised to benefit from the growing demand trends in hybrid cloud and AI-related solutions."

In the fourth quarter of 2024, sales decreased 7 percent year over year. Changes in foreign currencies had negative impacts on growth of approximately $27 million on sales and $0.11 on earnings per share on a diluted basis compared to the fourth quarter of 2023.

Full-year 2024 sales decreased 16 percent year over year. Changes in foreign currencies had negative impacts on growth of approximately $33 million on sales and $0.13 on earnings per share on a diluted basis compared to 2023.

Global Components

"In our global components business, we continue to see incremental improvement in key leading indicators and, despite softer trends in the industrial and transportation markets, all three regions finished the quarter in line with or better than typical seasonal patterns," said Mr. Kerins.

In the fourth quarter of 2024, global component sales decreased 15 percent year over year and decreased 14 percent year over year on a constant currency basis. Americas components fourth-quarter sales decreased 10 percent year over year. EMEA² components fourth-quarter sales decreased 25 percent year over year. Asia-Pacific components fourth-quarter sales decreased 10 percent year over year.

Global Enterprise Computing Solutions

"In enterprise computing solutions, we delivered year-over-year billings, gross profit, and operating income growth," said Mr. Kerins. "This strong performance reflects our alignment to the higher growth demand trends across enterprise IT along with our improving execution in North America."

In the fourth quarter of 2024, global enterprise computing solutions ("ECS") sales increased 12 percent year over year. EMEA ECS fourth-quarter sales increased 22 percent year over year and increased 24 percent year over year on a constant currency basis. Americas ECS fourth-quarter sales increased 1 percent year over year and increased 2 percent year over year on a constant currency basis.

Other Financial Metrics

"During 2024, we generated over $1.1 billion in cash flow from operations and managed working capital efficiently, including lowering inventory by $1.1 billion compared to prior peak levels. The company also returned $250 million to shareholders through stock repurchases," said Raj Agrawal, Arrow's senior vice president and chief financial officer.

First-Quarter 2025 Outlook

• Consolidated sales of $5.98 billion to $6.58 billion, with global components sales of $4.35 billion to $4.75 billion, and global enterprise computing solutions sales of $1.63 billion to $1.83 billion
• Net income per share on a diluted basis of $0.98 to $1.18, and non-GAAP net income per share on a diluted basis of $1.30 to $1.50
• 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 decrease sales by approximately $138 million, and earnings per share on a diluted basis by $0.13 compared to the first quarter of 2024
• Changes in foreign currencies to decrease quarter-over-quarter growth in sales by $90 million and earnings per share on a diluted basis by $0.05 compared to the fourth quarter of 2024

Earnings Presentation

Please refer to the earnings presentation, that 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 fourth-quarter and full-year 2024 financial results on Feb. 6, 2025, 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/886513367. Shortly after the conclusion of the conference call, a webcast replay will be available on the Arrow website for one year.

About Arrow Electronics

Arrow Electronics guides innovation forward for thousands of leading technology manufacturers and service providers. With 2024 sales of $28 billion, Arrow's portfolio enables technology across major industries and markets. Learn more at arrow.com.

Key Business Metrics

Management uses gross billings as an operational metric to monitor operating performance of its global ECS reportable segment, including sales performance by geographic region, as it provides meaningful supplemental information to the reader in evaluating the overall performance of the global ECS business. The company uses this key metric to develop financial forecasts, make strategic decisions, and prepare and approve annual budgets. Gross billings represent amounts invoiced to customers for goods and services during a period and do not include the impact of recording sales on a net basis or sales adjustments, such as trade discounts and other allowances. The use of gross billings has certain limitations as an analytical tool and should not be considered in isolation or as a substitute for revenue.

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 first quarter of fiscal 2025 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, shortages 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; trade protection measures, tariffs, and other restrictions, duties, and value-added taxes; 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; future regulatory trends and the resulting legal and reputation exposure, including but not limited to those relating to environmental, social, governance, cybersecurity, data privacy, and artificial intelligence issues; 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 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; net gains and losses on investments; inventory write downs related to the wind down of businesses 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.