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Arrow Electronics Reports Second-Quarter 2021 Results

-- Record Sales, Gross Profit, and Earnings per Share --

-- Announces Additional $600 Million Share Repurchase Authorization --

Arrow Electronics, Inc. (NYSE:ARW) today reported second-quarter 2021 sales of $8.56 billion, an increase of 30 percent from sales of $6.61 billion in the second quarter of 2020. Second-quarter net income was $241 million, or $3.23 per share on a diluted basis, compared with a net income of $133 million, or $1.68 per share on a diluted basis, in the second quarter of 2020. Non-GAAP net income1 was $249 million, or $3.34 per share on a diluted basis, in the second quarter of 2021, compared with non-GAAP net income of $126 million, or $1.59 per share on a diluted basis, in the second quarter of 2020.

“Arrow reported record results this quarter, reflecting our constant efforts to capture new growth opportunities and harvest the benefits as leaders of information and operational technology innovation,” said Michael J. Long, chairman, president, and chief executive officer. “We believe that financial performance is directly linked to the value we deliver to customers and suppliers, making our achievement of the highest sales, gross profit and earnings per share for any quarter in Arrow’s history a true testament to the hard work and commitment of our team. We look forward to driving further success for our customers, as well as all our company’s stakeholders as we continue to advance our strategic priorities.”

Global components second-quarter sales of $6.61 billion reflected an increase of 40 percent year over year and non-GAAP sales increased 36 percent year over year. Asia-Pacific components second-quarter sales increased 49 percent year over year and non-GAAP sales in the region increased 47 percent year over year. Americas components second-quarter sales increased 32 percent year over year. Europe components second-quarter sales increased 33 percent year over year and non-GAAP sales in the region increased 22 percent year over year. Global components second-quarter operating income was $327 million, and second-quarter non-GAAP operating income was $339 million.

“Our commitment to helping customers bring innovative next-generation electronic products to market quickly is a key driver of our success,” continued Mr. Long. “Global components sales were above the high-end of our expectations for the fifth consecutive quarter resulting from our ability to secure additional inventory to meet strong demand.”

Global enterprise computing solutions second-quarter sales of $1.95 billion reflected an increase of 4 percent year over year and non-GAAP sales decreased 1 percent year over year. Europe enterprise computing solutions second-quarter sales increased 19 percent year over year and non-GAAP sales in the region increased 8 percent year over year. Americas enterprise computing solutions second-quarter sales decreased 5 percent year over year. Global enterprise computing solutions second-quarter operating income was $81 million, and second-quarter non-GAAP operating income was $83 million.

Mr. Long said, “We are seeing strong demand for complex software and cloud-based solutions, and our pipeline is healthy. Despite strong demand, second-quarter global enterprise computing solutions performance was in-line with our expectations as shifting spending priorities and some supply constraints stood in the way of capturing upside.”

“Enhancing shareholder value remains a top priority. With a strong balance sheet and liquidity position, our return on invested capital increased year over year for the fifth straight quarter,” said Chris Stansbury, senior vice president and chief financial officer. “We are pleased our strong financial returns, positive cash flow from operations, and the effective management of our balance sheet enabled us to deliver on our commitment to returning cash to shareholders through an additional $600 million repurchase authorization on July 21. During the second quarter, we repurchased a single-quarter record of approximately $250 million of shares through our stock repurchase program. Our current repurchase authorization stands at approximately $663 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.

THIRD-QUARTER 2021 OUTLOOK

  • Consolidated sales of $8.175 billion to $8.775 billion, with global components sales of $6.375 billion to $6.675 billion, and global enterprise computing solutions sales of $1.8 billion to $2.1 billion
  • Net income per share on a diluted basis of $3.24 to $3.40, and non-GAAP net income per share on a diluted basis1 of $3.42 to $3.58
  • Average tax rate of approximately 23.5 percent compared to the long-term range of 23 to 25 percent
  • Average diluted shares outstanding of 73 million
  • Interest expense of approximately $32 million
  • Expecting average USD-to-Euro exchange rate of $1.19 to €1; changes in foreign currencies to increase sales by approximately $40 million, and earnings per share on a diluted basis by $.02 compared to the third quarter of 2020

Third-Quarter 2021 Outlook

 

Reported GAAP measure

Intangible amortization expense

Restructuring & integration charges

Non-GAAP measure

Net income per diluted share

$3.24 - $3.40

$.09

$.09

$3.42 - $3.58

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 third 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, 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 and the impact of notes receivable reserves and recoveries related to the AFS business (referred to as “AFS notes receivable reserves and recoveries”). Non-GAAP operating income excludes identifiable intangible asset amortization, restructuring, integration, and other charges, AFS notes receivable reserves and recoveries, impairment of long-lived assets, and the impact of wind down. Non-GAAP effective tax rate and non-GAAP net income attributable to shareholders excludes identifiable intangible asset amortization, restructuring, integration, and other charges, gain (loss) on investments, net, the impact of tax legislation changes, AFS notes receivable recoveries, the impact of impairments of long-lived assets, pension settlement loss, and the impact of wind down.

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

 

Six Months Ended

 

 

July 3, 2021

 

June 27, 2020

 

July 3, 2021

 

June 27, 2020

 

 

 

 

 

 

 

 

 

Sales

 

$

8,562,631

 

 

$

6,606,494

 

 

$

16,948,550

 

 

$

12,987,911

 

Cost of sales

 

7,562,526

 

 

5,856,031

 

 

15,018,335

 

 

11,509,057

 

Gross profit

 

1,000,105

 

 

750,463

 

 

1,930,215

 

 

1,478,854

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling, general, and administrative expenses

 

602,084

 

 

501,470

 

 

1,176,651

 

 

1,035,309

 

Depreciation and amortization

 

48,539

 

 

46,812

 

 

98,870

 

 

93,922

 

Impairments

 

4,482

 

 

4,918

 

 

4,482

 

 

4,918

 

Restructuring, integration, and other charges

 

4,478

 

 

650

 

 

10,187

 

 

9,788

 

 

 

659,583

 

 

553,850

 

 

1,290,190

 

 

1,143,937

 

Operating income

 

340,522

 

 

196,613

 

 

640,025

 

 

334,917

 

Equity in earnings (losses) of affiliated companies

 

190

 

 

(283)

 

 

1,034

 

 

247

 

Gain (loss) on investments, net

 

6,726

 

 

10,901

 

 

9,519

 

 

(5,909)

 

Employee benefit plan expense, net

 

(1,438)

 

 

(1,173)

 

 

(2,668)

 

 

(2,282)

 

Interest and other financing expense, net

 

(30,685)

 

 

(31,867)

 

 

(64,341)

 

 

(75,135)

 

Income before income taxes

 

315,315

 

 

174,191

 

 

583,569

 

 

251,838

 

Provision for income taxes

 

74,113

 

 

40,854

 

 

135,139

 

 

68,746

 

Consolidated net income

 

241,202

 

 

133,337

 

 

448,430

 

 

183,092

 

Noncontrolling interests

 

561

 

 

533

 

 

1,468

 

 

785

 

Net income attributable to shareholders

 

$

240,641

 

 

$

132,804

 

 

$

446,962

 

 

$

182,307

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

3.27

 

 

$

1.69

 

 

$

6.02

 

 

$

2.29

 

Diluted

 

$

3.23

 

 

$

1.68

 

 

$

5.94

 

 

$

2.28

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

73,693

 

 

78,677

 

 

74,294

 

 

79,527

 

Diluted

 

74,611

 

 

79,226

 

 

75,197

 

 

80,113

 

ARROW ELECTRONICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands except par value)

(Unaudited)

 

 

 

 

 

July 3, 2021

 

December 31, 2020

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

244,070

 

 

$

373,615

 

Accounts receivable, net

8,846,715

 

 

9,205,343

 

Inventories

3,636,082

 

 

3,287,308

 

Other current assets

355,757

 

 

286,633

 

Total current assets

13,082,624

 

 

13,152,899

 

Property, plant, and equipment, at cost:

 

 

 

Land

5,691

 

 

7,940

 

Buildings and improvements

184,676

 

 

207,614

 

Machinery and equipment

1,530,544

 

 

1,553,371

 

 

1,720,911

 

 

1,768,925

 

Less: Accumulated depreciation and amortization

(993,500)

 

 

(969,320)

 

Property, plant, and equipment, net

727,411

 

 

799,605

 

Investments in affiliated companies

68,937

 

 

76,358

 

Intangible assets, net

214,261

 

 

233,819

 

Goodwill

2,106,182

 

 

2,115,469

 

Other assets

643,358

 

 

675,761

 

Total assets

$

16,842,773

 

 

$

17,053,911

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

7,625,844

 

 

$

7,937,889

 

Accrued expenses

1,089,866

 

 

1,034,361

 

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

356,986

 

 

158,633

 

Total current liabilities

9,072,696

 

 

9,130,883

 

Long-term debt

1,884,393

 

 

2,097,940

 

Other liabilities

661,223

 

 

676,136

 

Commitments and contingencies

 

 

 

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

1,175,470

 

 

1,165,850

 

Treasury stock (53,286 and 50,581 shares in 2021 and 2020, respectively), at cost

(3,134,484)

 

 

(2,776,821)

 

Retained earnings

7,126,713

 

 

6,679,751

 

Accumulated other comprehensive loss

(128,201)

 

 

(104,885)

 

Total shareholders’ equity

5,164,922

 

 

5,089,319

 

Noncontrolling interests

59,539

 

 

59,633

 

Total equity

5,224,461

 

 

5,148,952

 

Total liabilities and equity

$

16,842,773

 

 

$

17,053,911

 

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Quarter Ended

 

July 3, 2021

 

June 27, 2020

Cash flows from operating activities:

 

 

 

Consolidated net income

$

241,202

 

 

$

133,337

 

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

 

 

 

Depreciation and amortization

48,539

 

 

46,812

 

Amortization of stock-based compensation

8,744

 

 

8,397

 

Equity in (earnings) losses of affiliated companies

(190)

 

 

283

 

Deferred income taxes

(1,594)

 

 

13,732

 

Impairments

4,482

 

 

4,918

 

Gain on investments, net

(6,726)

 

 

(10,885)

 

Other

277

 

 

253

 

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

 

 

 

Accounts receivable, net

(313,735)

 

 

(112,437)

 

Inventories

(357,065)

 

 

(80,465)

 

Accounts payable

562,461

 

 

292,024

 

Accrued expenses

79,459

 

 

102,369

 

Other assets and liabilities

15,526

 

 

19,907

 

Net cash provided by operating activities

281,380

 

 

418,245

 

Cash flows from investing activities:

 

 

 

Acquisition of property, plant, and equipment

(20,929)

 

 

(31,571)

 

Net cash used for investing activities

(20,929)

 

 

(31,571)

 

Cash flows from financing activities:

 

 

 

Change in short-term and other borrowings

(2,379)

 

 

77,165

 

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

(20,433)

 

 

(123,113)

 

Redemption of notes

 

 

(209,366)

 

Proceeds from exercise of stock options

15,226

 

 

1,750

 

Repurchases of common stock

(250,708)

 

 

(72,750)

 

Settlement of forward-starting interest rate swap

 

 

(48,378)

 

Other

(159)

 

 

(141)

 

Net cash used for financing activities

(258,453)

 

 

(374,833)

 

Effect of exchange rate changes on cash

14,371

 

 

(7,011)

 

Net increase in cash and cash equivalents

16,369

 

 

4,830

 

Cash and cash equivalents at beginning of period

227,701

 

 

200,998

 

Cash and cash equivalents at end of period

$

244,070

 

 

$

205,828

 

 

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Six Months Ended

 

July 3, 2021

 

June 27, 2020

Cash flows from operating activities:

 

 

 

Consolidated net income

$

448,430

 

 

$

183,092

 

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

 

 

 

Depreciation and amortization

98,870

 

 

93,922

 

Amortization of stock-based compensation

21,967

 

 

22,317

 

Equity in earnings of affiliated companies

(1,034)

 

 

(247)

 

Deferred income taxes

12,069

 

 

46,345

 

Impairments

4,482

 

 

4,918

 

Loss (gain) on investments, net

(9,519)

 

 

5,925

 

Other

1,651

 

 

48

 

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

 

 

 

Accounts receivable, net

283,042

 

 

446,168

 

Inventories

(370,212)

 

 

52,927

 

Accounts payable

(277,663)

 

 

(51,027)

 

Accrued expenses

83,102

 

 

71,043

 

Other assets and liabilities

(18,341)

 

 

9,679

 

Net cash provided by operating activities

276,844

 

 

885,110

 

Cash flows from investing activities:

 

 

 

Acquisition of property, plant, and equipment

(41,109)

 

 

(59,542)

 

Proceeds from sale of property, plant, and equipment

22,171

 

 

 

Other

 

 

(5,466)

 

Net cash used for investing activities

(18,938)

 

 

(65,008)

 

Cash flows from financing activities:

 

 

 

Change in short-term and other borrowings

(14,831)

 

 

(7,189)

 

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

134,241

(411,690)

Redemption of notes

(130,860)

 

 

(209,366)

 

Proceeds from exercise of stock options

41,317

 

 

3,730

 

Repurchases of common stock

(411,327)

 

 

(231,739)

 

Settlement of forward-starting interest rate swap

 

 

(48,378)

 

Other

(159)

 

 

(141)

 

Net cash used for financing activities

(381,619)

 

 

(904,773)

 

Effect of exchange rate changes on cash

(5,832)

 

 

(9,604)

 

Net decrease in cash and cash equivalents

(129,545)

 

 

(94,275)

 

Cash and cash equivalents at beginning of period

373,615

300,103

Cash and cash equivalents at end of period

$

244,070

 

 

205,828

 

ARROW ELECTRONICS, INC.

NON-GAAP SALES RECONCILIATION

(In thousands)

(Unaudited)

 

 

Quarter Ended

 

 

 

July 3, 2021

 

June 27, 2020

 

% Change

 

 

 

 

 

 

Consolidated sales, as reported

$

8,562,631

 

 

$

6,606,494

 

 

29.6

%

Impact of changes in foreign currencies

 

 

218,616

 

 

 

Non-GAAP consolidated sales

$

8,562,631

 

 

$

6,825,110

 

 

25.5

%

 

 

 

 

 

 

Global components sales, as reported

$

6,610,761

 

 

$

4,721,255

 

 

40.0

%

Impact of changes in foreign currencies

 

 

133,141

 

 

 

Non-GAAP global components sales

$

6,610,761

 

 

$

4,854,396

 

 

36.2

%

 

 

 

 

 

 

Americas components sales, as reported

$

1,970,756

 

 

$

1,488,901

 

 

32.4

%

Impact of changes in foreign currencies

 

 

637

 

 

 

Non-GAAP Americas components sales

$

1,970,756

 

 

$

1,489,538

 

 

32.3

%

 

 

 

 

 

 

Europe components sales, as reported

$

1,490,662

 

 

$

1,118,417

 

 

33.3

%

Impact of changes in foreign currencies

 

 

106,199

 

 

 

Non-GAAP Europe components sales

$

1,490,662

 

 

$

1,224,616

 

 

21.7

%

 

 

 

 

 

 

Asia components sales, as reported

$

3,149,343

 

 

$

2,113,937

 

 

49.0

%

Impact of changes in foreign currencies

 

 

26,305

 

 

 

Non-GAAP Asia components sales

$

3,149,343

 

 

$

2,140,242

 

 

47.1

%

 

 

 

 

 

 

Global ECS sales, as reported

$

1,951,870

 

 

$

1,885,239

 

 

3.5

%

Impact of changes in foreign currencies

 

 

85,475

 

 

 

Non-GAAP global ECS sales

$

1,951,870

 

 

$

1,970,714

 

 

(1.0)

%

 

 

 

 

 

 

Europe ECS sales, as reported

$

784,515

 

 

$

661,983

 

 

18.5

%

Impact of changes in foreign currencies

 

 

66,164

 

 

 

Non-GAAP Europe ECS sales

$

784,515

 

 

$

728,147

 

 

7.7

%

 

 

 

 

 

 

Americas ECS sales, as reported

$

1,167,355

 

 

$

1,223,256

 

 

(4.6)

%

Impact of changes in foreign currencies

 

 

19,311

 

 

 

Non-GAAP Americas ECS sales

$

1,167,355

 

 

$

1,242,567

 

 

(6.1)

%

ARROW ELECTRONICS, INC.

NON-GAAP SALES RECONCILIATION

(In thousands)

(Unaudited)

 

 

Six Months Ended

 

 

 

July 3, 2021

 

June 27, 2020

 

% Change

 

 

 

 

 

 

Consolidated sales, as reported

$

16,948,550

 

 

$

12,987,911

 

 

30.5

%

Impact of changes in foreign currencies

 

 

421,289

 

 

 

Consolidated sales, as adjusted

$

16,948,550

 

 

$

13,409,200

 

 

26.4

%

 

 

 

 

 

 

Global components sales, as reported

$

13,054,014

 

 

$

9,271,856

 

 

40.8

%

Impact of changes in foreign currencies

 

 

263,439

 

 

 

Global components sales, as adjusted

$

13,054,014

 

 

$

9,535,295

 

 

36.9

%

 

 

 

 

 

 

Americas components sales, as reported

$

3,671,929

 

 

$

3,041,699

 

 

20.7

%

Impact of changes in foreign currencies

 

 

346

 

 

 

Americas components sales, as adjusted

$

3,671,929

 

 

$

3,042,045

 

 

20.7

%

 

 

 

 

 

 

Europe components sales, as reported

$

3,059,264

 

 

$

2,428,407

 

 

26.0

%

Impact of changes in foreign currencies

 

 

221,483

 

 

 

Europe components sales, as adjusted

$

3,059,264

 

 

$

2,649,890

 

 

15.4

%

 

 

 

 

 

 

Asia components sales, as reported

$

6,322,821

 

 

$

3,801,750

 

 

66.3

%

Impact of changes in foreign currencies

 

 

41,610

 

 

 

Asia components sales, as adjusted

$

6,322,821

 

 

$

3,843,360

 

 

64.5

%

 

 

 

 

 

 

Global ECS sales, as reported

$

3,894,536

 

 

$

3,716,055

 

 

4.8

%

Impact of changes in foreign currencies

 

 

157,850

 

 

 

Global ECS sales, as adjusted

$

3,894,536

 

 

$

3,873,905

 

 

0.5

%

 

 

 

 

 

 

Europe ECS sales, as reported

$

1,575,843

 

 

$

1,364,111

 

 

15.5

%

Impact of changes in foreign currencies

 

 

125,964

 

 

 

Europe ECS sales, as adjusted

$

1,575,843

 

 

$

1,490,075

 

 

5.8

%

 

 

 

 

 

 

Americas ECS sales, as reported

$

2,318,693

 

 

$

2,351,944

 

 

(1.4)

%

Impact of changes in foreign currencies

 

 

31,886

 

 

 

Americas ECS sales, as adjusted

$

2,318,693

 

 

$

2,383,830

 

 

(2.7)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

ARROW ELECTRONICS, INC.

NON-GAAP EARNINGS RECONCILIATION

(In thousands except per share data)

(Unaudited)

 

Three months ended July 3, 2021

 

Reported

GAAP

measure

Intangible

amortization

expense

Restructuring

& Integration

charges

AFS Reserves & Recoveries

Impairments

Impact of Wind Down

Other(1)

Non-GAAP

measure

Sales

$

8,562,631

 

$

 

$

 

$

 

$

 

$

 

$

 

$

8,562,631

 

Gross Profit

1,000,105

 

 

 

 

 

 

 

1,000,105

 

Operating income

340,522

 

9,316

 

4,478

 

 

4,482

 

 

 

358,798

 

Income before income taxes

315,315

 

9,316

 

4,478

 

 

4,482

 

 

(6,545)

 

327,046

 

Provision for income taxes

74,113

 

2,382

 

1,010

 

 

1,078

 

 

(1,575)

 

77,008

 

Consolidated net income

241,202

 

6,934

 

3,468

 

 

3,404

 

 

(4,970)

 

250,038

 

Noncontrolling interests

561

 

150

 

 

 

 

 

 

711

 

Net income attributable to shareholders

$

240,641

 

$

6,784

 

$

3,468

 

$

 

$

3,404

 

$

 

$

(4,970)

 

$

249,327

 

Net income per diluted share (3)

$

3.23

 

$

0.09

 

$

0.05

 

$

 

$

0.05

 

$

 

$

(0.07)

 

$

3.34

 

Effective tax rate (4)

23.5

%

 

 

 

 

 

 

23.5

%

 

 

 

 

 

 

 

 

 

Three months ended June 27, 2020

 

Reported

GAAP

measure

Intangible

amortization

expense

Restructuring

& Integration

charges

AFS Reserves & Recoveries

Impairments

Impact of Wind Down

Other(2)

Non-GAAP

measure

Sales

$

6,606,494

 

$

 

$

 

$

 

$

 

$

 

$

 

$

6,606,494

 

Gross Profit

750,463

 

 

 

 

 

(10,696)

 

 

739,767

 

Operating income

196,613

 

9,734

 

650

 

197

 

4,918

 

(11,824)

 

 

200,288

 

Income before income taxes

174,191

 

9,734

 

650

 

197

 

4,918

 

(11,814)

 

(10,901)

 

166,975

 

Provision for income taxes

40,854

 

2,501

 

313

 

47

 

1,800

 

(2,662)

 

(2,631)

 

40,222

 

Consolidated net income

133,337

 

7,233

 

337

 

150

 

3,118

 

(9,152)

 

(8,270)

 

126,753

 

Noncontrolling interests

533

 

137

 

 

 

 

 

 

670

 

Net income attributable to shareholders

$

132,804

 

$

7,096

 

$

337

 

$

150

 

$

3,118

 

$

(9,152)

 

$

(8,270)

 

$

126,083

 

Net income per diluted share (3)

$

1.68

 

$

0.09

 

$

 

$

 

$

0.04

 

$

(0.12)

 

$

(0.10)

 

$

1.59

 

Effective tax rate (4)

23.5

%

 

 

 

 

 

 

24.1

%

 

 

 

 

 

 

 

 

 

ARROW ELECTRONICS, INC.

NON-GAAP EARNINGS RECONCILIATION

(In thousands except per share data)

(Unaudited)

 

Six months ended July 3, 2021

 

Reported

GAAP

measure

Intangible

amortization

expense

Restructuring

& Integration

charges

AFS Reserves & Recoveries

Impairments

Impact of Wind Down

Non-recurring tax items

Other(1)

Non-GAAP

measure

Sales

$

16,948,550

 

$

 

$

 

$

 

$

 

$

 

$

 

$

 

$

16,948,550

 

Gross Profit

1,930,215

 

 

 

 

 

 

 

 

1,930,215

 

Operating income

640,025

 

18,642

 

10,187

 

 

4,482

 

 

 

 

673,336

 

Income before income taxes

583,569

 

18,642

 

10,187

 

 

4,482

 

 

 

(9,338)

 

607,542

 

Provision for income taxes

135,139

 

4,767

 

2,176

 

 

1,078

 

 

 

(2,247)

 

140,913

 

Consolidated net income

448,430

 

13,875

 

8,011

 

 

3,404

 

 

 

(7,091)

 

466,629

 

Noncontrolling interests

1,468

 

300

 

 

 

 

 

 

 

1,768

 

Net income attributable to shareholders

$

446,962

 

$

13,575

 

$

8,011

 

$

 

$

3,404

 

$

 

$

 

$

(7,091)

 

$

464,861

 

Net income per diluted share (3)

$

5.94

 

$

0.18

 

$

0.11

 

$

 

$

0.05

 

$

 

$

 

$

(0.09)

 

$

6.18

 

Effective tax rate (4)

23.2

%

 

 

 

 

 

 

 

23.2

%

 

 

 

 

 

 

 

 

 

 

Six months ended June 27, 2020

 

Reported

GAAP

measure

Intangible

amortization

expense

Restructuring

& Integration

charges

AFS Reserves & Recoveries

Impairments

Impact of Wind Down

Non-recurring tax items

Other(2)

Non-GAAP

measure

Sales

$

12,987,911

 

$

 

$

 

$

 

$

 

$

 

$

 

$

 

$

12,987,911

 

Gross Profit

1,478,854

 

 

 

 

 

(10,696)

 

 

 

1,468,158

 

Operating income

334,917

 

19,689

 

9,788

 

(723)

 

4,918

 

(11,824)

 

 

 

356,765

 

Income before income taxes

251,838

 

19,689

 

9,788

 

(723)

 

4,918

 

(11,814)

 

 

5,909

 

279,605

 

Provision for income taxes

68,746

 

5,065

 

2,884

 

(175)

 

1,800

 

(2,662)

 

(3,615)

 

1,426

 

73,469

 

Consolidated net income

183,092

 

14,624

 

6,904

 

(548)

 

3,118

 

(9,152)

 

3,615

 

4,483

 

206,136

 

Noncontrolling interests

785

 

274

 

 

 

 

 

 

 

1,059

 

Net income attributable to shareholders

$

182,307

 

$

14,350

 

$

6,904

 

$

(548)

 

$

3,118

 

$

(9,152)

 

$

3,615

 

$

4,483

 

$

205,077

 

Net income per diluted share (3)

$

2.28

 

$

0.18

 

$

0.09

 

$

(0.01)

 

$

0.04

 

$

(0.11)

 

$

0.05

 

$

0.06

 

$

2.56

 

Effective tax rate (4)

27.3

%

 

 

 

 

 

 

 

26.3

%

 

 

 

 

 

 

 

 

 

 

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

(2) Other includes (gain) loss on investments, net

(3) In all periods presented the sum of the components for diluted EPS, as adjusted may not agree to totals, as presented, due to rounding.

(4) 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

 

Six Months Ended

 

July 3, 2021

 

June 27, 2020

 

July 3, 2021

 

June 27, 2020

Sales:

 

 

 

 

 

 

 

Global components

$

6,610,761

 

 

$

4,721,255

 

 

$

13,054,014

 

 

$

9,271,856

 

Global ECS

1,951,870

 

 

1,885,239

 

 

3,894,536

 

 

3,716,055

 

Consolidated

$

8,562,631

 

 

$

6,606,494

 

 

$

16,948,550

 

 

$

12,987,911

 

Operating income (loss):

 

 

 

 

 

 

 

Global components (a)

$

327,036

 

 

$

181,836

 

 

$

616,419

 

 

$

346,603

 

Global ECS (b)

81,099

 

 

72,921

 

 

158,458

 

 

115,354

 

Corporate (c)

(67,613)

 

 

(58,144)

 

 

(134,852)

 

 

(127,040)

 

Consolidated

$

340,522

 

 

$

196,613

 

 

$

640,025

 

 

$

334,917

 

(a)

Global components operating income includes $8.2 million and $12.5 million related to proceeds from legal settlements for the second quarter and first six months of 2021.

(b)

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

(c)

Includes restructuring, integration, and other charges of $4.5 million and $10.2 million for the second quarter and first six months of 2021, respectively, and $0.7 million and $9.8 million for the second quarter and first six months of 2020, respectively.

NON-GAAP SEGMENT RECONCILIATION

 

 

 

 

 

Quarter Ended

 

Six Months Ended

 

July 3, 2021

 

June 27, 2020

 

July 3, 2021

 

June 27, 2020

 

 

 

 

 

 

 

 

Global components operating income, as reported

$

327,036

 

 

$

181,836

 

 

$

616,419

 

 

$

346,603

 

Intangible assets amortization expense

6,995

 

 

7,259

 

 

13,999

 

 

14,639

 

Impairments

4,482

 

 

 

 

4,482

 

 

 

Impact of wind down

 

 

(11,824)

 

 

 

 

(11,824)

 

AFS notes receivable reserve (recoveries)

 

 

197

 

 

 

 

(723)

 

Global components non-GAAP operating income

$

338,513

 

 

$

177,468

 

 

$

634,900

 

 

$

348,695

 

 

 

 

 

 

 

 

 

Global ECS operating income, as reported

$

81,099

 

 

$

72,921

 

 

$

158,458

 

 

$

115,354

 

Intangible assets amortization expense

2,321

 

 

2,475

 

 

4,643

 

 

5,050

 

Impairments

 

 

4,918

 

 

 

 

4,918

 

Global ECS non-GAAP operating income

$

83,420

 

 

$

80,314

 

 

$

163,101

 

 

$

125,322

 

 

Contacts

Steven O’Brien,

Vice President, Investor Relations

303-824-4544

Media Contact:

John Hourigan,

Vice President, Global Communications

303-824-4586

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