Arrow Electronics Reports Second-Quarter 2024 Results

-- Sales of $6.9 billion, exceeding guidance --

-- Second-Quarter Earnings Per Diluted Share of $2.01; Non-GAAP Earnings Per Diluted Share of $2.78 --

Arrow Electronics, Inc. (NYSE:ARW) today announced financial results for its second quarter of 2024.

"We continued to execute well in an evolving market environment, delivering second-quarter sales and non-GAAP earnings per diluted share comfortably ahead of our guided ranges," said Sean Kerins, Arrow's president and chief executive officer.

"In addition, our value-added offerings in global components as well as better momentum in enterprise computing solutions contributed to our overall operating margin stability in the quarter," said Mr. Kerins.

Both GAAP and non-GAAP earnings per share in the second quarter of 2024 include a $0.29 benefit and a $20 million operating income benefit related to the collection of certain aged receivables related to one customer in the ECS segment. In the second quarter of 2024, sales decreased 19 percent year over year. Changes in foreign currencies had a negative impact on growth of approximately $52.2 million on sales and $0.05 on earnings per share on a diluted basis compared to the second quarter of 2023.

Global Components

"Across many of the segments in which we compete, we're seeing signs of incremental improvement in leading indicators, with book-to-bill ratios advancing across all regions and bookings growing sequentially. Though the automotive and broader industrial markets are still experiencing softness, we now believe we're in the later stages of the industry's cyclical correction," said Mr. Kerins.

In the second quarter of 2024, global components sales decreased 25 percent year over year. Americas components second-quarter sales decreased 24 percent year over year. EMEA components second-quarter sales decreased 33 percent year over year and decreased 32 percent year over year on a constant currency basis. Asia-Pacific components second-quarter sales decreased 18 percent year over year and decreased 17 percent year over year on a constant currency basis.

Global Enterprise Computing Solutions

"Our enterprise computing solutions business delivered year-over-year billings growth as we continued to capitalize on the market's transition to IT as a service. We benefited from another solid quarter in EMEA along with improving activity levels in North America," said Mr. Kerins.

In the second quarter of 2024, global ECS sales increased 2 percent year over year. EMEA ECS second-quarter sales increased 8 percent year over year and increased 9 percent year over year on a constant currency basis. Americas ECS second-quarter sales decreased 4 percent year over year and decreased 3 percent year over year on a constant currency basis.

Other Financial Metrics

"In the second quarter, we managed our working capital in line with market conditions, reducing inventory levels by approximately $140 million, or $1.2 billion over the last nine months," said Raj Agrawal, Arrow's senior vice president and chief financial officer. "We also generated $320 million in cash flow from operations, providing us capital allocation flexibility, and enabling $50 million in share repurchases during the quarter."

¹ A reconciliation of non-GAAP financial measures to GAAP financial measures is presented in the reconciliation tables included herein.

Third-Quarter 2024 Outlook

• Consolidated sales of $6.37 billion to $6.97 billion, with global components sales of $4.70 billion to $5.10 billion, and global enterprise computing solutions sales of $1.67 billion to $1.87 billion
• Net income per share on a diluted basis of $1.70 to $1.90, and non-GAAP net income per share on a diluted basis of $2.10 to $2.30
• Average tax rate in the range of 23 to 25 percent
• Interest expense of approximately $70 million
• Changes in foreign currencies to increase sales by approximately $7 million, and to have no impact on earnings per share on a diluted basis compared to the third quarter of 2023
• Changes in foreign currencies to increase quarter-over-quarter growth in sales by $30 million and earnings per share on a diluted basis by $0.02 compared to the second quarter of 2024

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 second-quarter 2024 financial results on August 1, 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/244342075. 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 2023 sales of $33 billion, Arrow develops technology solutions that help improve business and daily life. 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 third quarter of 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, 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: 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; 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, 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; impact of wind down to inventory; 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.