Company Announcements

Arrow Electronics Reports First-Quarter 2022 Results

-- Record Sales, Gross Profit, Operating Income, and Earnings Per Share --
-- First-Quarter Earnings Per Share of $5.31; Non-GAAP Earnings Per Share of $5.43 --

CENTENNIAL, Colo.--(BUSINESS WIRE)--May 5, 2022-- Arrow Electronics, Inc. (NYSE:ARW) today reported first-quarter 2022 sales of $9.07 billion, an increase of 8 percent from sales of $8.39 billion in the first quarter of 2021. First-quarter net income was $365 million, or $5.31 per share on a diluted basis, compared with a net income of $206 million, or $2.72 per share on a diluted basis, in the first quarter of 2021. Non-GAAP net income1 was $373 million, or $5.43 per share on a diluted basis, in the first quarter of 2022, compared with non-GAAP net income of $216 million, or $2.84 per share on a diluted basis, in the first quarter of 2021.

“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. “At Arrow, we continue to enhance the solutions and services we provide as the markets we serve change at an increasingly rapid pace. Our record results this quarter demonstrate that we remain ahead of the curve, supported by the best team in the industry. We expect component supply to remain well below demand in the coming quarters and through the better part of 2022.”

Global components first-quarter sales of $7.20 billion reflected an increase of 12 percent year over year and non-GAAP sales increased 13 percent year over year. Asia-Pacific components first-quarter sales decreased 8 percent year over year. Americas components first-quarter sales increased 38 percent year over year. Europe components first-quarter sales increased 23 percent year over year and non-GAAP sales in the region increased 31 percent year over year. Global components first-quarter operating income was $499 million, and first-quarter non-GAAP operating income was $506 million.

“The current market environment has enabled the global components business to showcase our experience and industry knowledge that makes us uniquely positioned to help our customers navigate today’s challenges. This includes helping to mitigate production risks and facilitate a continuous stream of products to market,” said Mr. Long.

Global enterprise computing solutions ("ECS") first-quarter sales of $1.88 billion reflected a decrease of 3 percent year over year and non-GAAP sales decreased 1 percent year over year. Europe enterprise computing solutions first-quarter sales increased 5 percent year over year and non-GAAP sales in the region increased 11 percent year over year. Americas enterprise computing solutions first-quarter sales decreased 9 percent year over year. Global enterprise computing solutions first-quarter operating income was $86 million, and first-quarter non-GAAP operating income was $88 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.

“Our return on invested capital remains favorable, and our leverage ratios are near their lowest levels in ten years,” said Rick Seidlitz, vice president and interim principal financial officer. “Our strong profitability 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 fourth consecutive quarter, bringing total cash returned to shareholders over the last 12 months to approximately $1 billion. Our current repurchase authorization stands at approximately $513 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.

SECOND-QUARTER 2022 OUTLOOK

  • Consolidated sales of $9.04 billion to $9.64 billion, with global components sales of $7.29 billion to $7.59 billion, and global enterprise computing solutions sales of $1.75 billion to $2.05 billion
  • Net income per share on a diluted basis of $5.32 to $5.48, and non-GAAP net income per share on a diluted basis of $5.48 to $5.64
  • Average tax rate of approximately 23.5 percent compared to the long-term range of 23 to 25 percent
  • Average diluted shares outstanding of 67 million
  • Interest expense of approximately $36 million
  • Expecting average USD-to-Euro exchange rate of $1.08 to €1; changes in foreign currencies to decrease sales by approximately $300 million, and earnings per share on a diluted basis by $.20 compared to the second quarter of 2021

Second-Quarter 2022 Outlook

 

Reported GAAP
measure

Intangible amortization
expense

Restructuring &
integration charges

Non-GAAP measure

Net income per diluted share

$5.32 - $5.48

$.10

$.06

$5.48 to $5.64

Please refer to the CFO commentary, 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 comply with its disclosure obligations under Regulation Fair Disclosure.

Arrow Electronics guides innovation forward for over 220,000 leading technology manufacturers and service providers. With 2021 sales of $34 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 the statements contained in quotes of Arrow's executives and statements regarding: Arrow’s future financial performance, including its outlook on financial results for the second quarter of fiscal 2022, 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 mitigate the impact of COVID-19, impacts of the conflict in Ukraine, industry conditions, changes in product supply, pricing and customer demand, the global supply chain disruption, economic conditions, inflationary pressures, competition, other vagaries in the global components and the 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, antitrust, 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 The company provides non-GAAP sales, gross profit, operating income, income before income taxes, provision for income taxes, net income, noncontrolling interests, net income attributable to shareholders, 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, identifiable intangible asset amortization, restructuring, integration, and other charges, and net gains and losses on investments. Management believes that providing this additional information is useful to the reader to better assess and understand the company’s operating performance, especially when comparing results with previous periods, primarily because management typically monitors the business adjusted for these items in addition to GAAP results. However, analysis of results 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

 

April 2, 2022

April 3, 2021

 

 

 

Sales

$

9,074,125

 

$

8,385,919

 

Cost of sales

 

7,866,621

 

 

7,455,809

 

Gross profit

 

1,207,504

 

 

930,110

 

Operating expenses:

 

 

Selling, general, and administrative expenses

 

643,925

 

 

574,567

 

Depreciation and amortization

 

48,305

 

 

50,331

 

Restructuring, integration, and other charges

 

4,898

 

 

5,709

 

 

 

697,128

 

 

630,607

 

Operating income

 

510,376

 

 

299,503

 

Equity in earnings of affiliated companies

 

843

 

 

844

 

Gain on investments, net

 

2,011

 

 

2,793

 

Employee benefit plan expense, net

 

(889

)

 

(1,230

)

Interest and other financing expense, net

 

(33,985

)

 

(33,656

)

Income before income taxes

 

478,356

 

 

268,254

 

Provision for income taxes

 

112,360

 

 

61,026

 

Consolidated net income

 

365,996

 

 

207,228

 

Noncontrolling interests

 

1,247

 

 

907

 

Net income attributable to shareholders

$

364,749

 

$

206,321

 

Net income per share:

 

 

Basic

$

5.38

 

$

2.76

 

Diluted

$

5.31

 

$

2.72

 

Weighted-average shares outstanding:

 

 

Basic

 

67,840

 

 

74,882

 

Diluted

 

68,749

 

 

75,794

 

ARROW ELECTRONICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands except par value)

(Unaudited)

 

 

 

 

April 2, 2022

December 31, 2021

 

 

 

ASSETS

 

 

Current assets:

 

 

Cash and cash equivalents

$

242,791

 

$

222,194

 

Accounts receivable, net

 

10,621,942

 

 

11,123,946

 

Inventories

 

4,645,116

 

 

4,201,965

 

Other current assets

 

431,635

 

 

345,218

 

Total current assets

 

15,941,484

 

 

15,893,323

 

Property, plant, and equipment, at cost:

 

 

Land

 

5,691

 

 

5,736

 

Buildings and improvements

 

185,000

 

 

186,097

 

Machinery and equipment

 

1,533,688

 

 

1,523,919

 

 

 

1,724,379

 

 

1,715,752

 

Less: Accumulated depreciation and amortization

 

(1,066,180

)

 

(1,032,941

)

Property, plant, and equipment, net

 

658,199

 

 

682,811

 

Investments in affiliated companies

 

65,239

 

 

63,695

 

Intangible assets, net

 

185,753

 

 

195,029

 

Goodwill

 

2,067,249

 

 

2,080,371

 

Other assets

 

594,929

 

 

620,311

 

Total assets

$

19,512,853

 

$

19,535,540

 

LIABILITIES AND EQUITY

 

 

Current liabilities:

 

 

Accounts payable

$

9,110,391

 

$

9,617,084

 

Accrued expenses

 

1,243,853

 

 

1,326,386

 

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

 

317,399

 

 

382,619

 

Total current liabilities

 

10,671,643

 

 

11,326,089

 

Long-term debt

 

2,790,819

 

 

2,244,443

 

Other liabilities

 

621,508

 

 

624,162

 

 

 

 

Equity:

 

 

Shareholders’ equity:

 

 

Common stock, par value $1:

 

 

Authorized - 160,000 shares in both 2022 and 2021

 

 

Issued - 125,424 shares in both 2022 and 2021

 

125,424

 

 

125,424

 

Capital in excess of par value

 

1,186,595

 

 

1,189,845

 

Treasury stock (58,987 and 57,358 shares in 2022 and 2021, respectively), at cost

 

(3,861,793

)

 

(3,629,265

)

Retained earnings

 

8,152,697

 

 

7,787,948

 

Accumulated other comprehensive loss

 

(232,969

)

 

(191,657

)

Total shareholders’ equity

 

5,369,954

 

 

5,282,295

 

Noncontrolling interests

 

58,929

 

 

58,551

 

Total equity

 

5,428,883

 

 

5,340,846

 

Total liabilities and equity

$

19,512,853

 

$

19,535,540

 

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Quarter Ended

 

April 2, 2022

April 3, 2021

Cash flows from operating activities:

 

 

Consolidated net income

$

365,996

 

$

207,228

 

Adjustments to reconcile consolidated net income to net cash used for operations:

 

 

Depreciation and amortization

 

48,305

 

 

50,331

 

Amortization of stock-based compensation

 

17,351

 

 

13,223

 

Equity in earnings of affiliated companies

 

(843

)

 

(844

)

Deferred income taxes

 

1,352

 

 

13,663

 

Gain on investments, net

 

(2,011

)

 

(2,793

)

Other

 

686

 

 

1,374

 

Change in assets and liabilities:

 

 

Accounts receivable, net

 

430,710

 

 

596,777

 

Inventories

 

(460,902

)

 

(13,147

)

Accounts payable

 

(477,825

)

 

(840,124

)

Accrued expenses

 

(43,641

)

 

3,643

 

Other assets and liabilities

 

(79,426

)

 

(33,867

)

Net cash used for operating activities

 

(200,248

)

 

(4,536

)

Cash flows from investing activities:

 

 

Acquisition of property, plant, and equipment

 

(19,270

)

 

(20,180

)

Proceeds from sale of property, plant, and equipment

 

 

 

22,171

 

Proceeds from collections of notes receivable

 

20,169

 

 

 

Net cash provided by investing activities

 

899

 

 

1,991

 

Cash flows from financing activities:

 

 

Change in short-term and other borrowings

 

(14,293

)

 

(12,452

)

Proceeds from long-term bank borrowings, net

 

845,000

 

 

154,674

 

Redemption of notes

 

(350,000

)

 

(130,860

)

Proceeds from exercise of stock options

 

11,302

 

 

26,091

 

Repurchases of common stock

 

(264,431

)

 

(160,619

)

Net cash provided by (used for) financing activities

 

227,578

 

 

(123,166

)

Effect of exchange rate changes on cash

 

(7,632

)

 

(20,203

)

Net increase (decrease) in cash and cash equivalents

 

20,597

 

 

(145,914

)

Cash and cash equivalents at beginning of period

 

222,194

 

 

373,615

 

Cash and cash equivalents at end of period

$

242,791

 

$

227,701

 

ARROW ELECTRONICS, INC.

NON-GAAP SALES RECONCILIATION

(In thousands)

(Unaudited)

 

Quarter Ended

 

 

April 2, 2022

April 3, 2021

% Change

 

 

 

 

Consolidated sales, as reported

$

9,074,125

$

8,385,919

 

8.2

%

Impact of changes in foreign currencies

 

 

(151,551

)

 

Non-GAAP consolidated sales

$

9,074,125

$

8,234,368

 

10.2

%

 

 

 

 

Global components sales, as reported

$

7,199,075

$

6,443,253

 

11.7

%

Impact of changes in foreign currencies

 

 

(100,301

)

 

Non-GAAP global components sales

$

7,199,075

$

6,342,952

 

13.5

%

 

 

 

 

Americas components sales, as reported

$

2,340,543

$

1,701,173

 

37.6

%

Impact of changes in foreign currencies

 

 

(772

)

 

Non-GAAP Americas components sales

$

2,340,543

$

1,700,401

 

37.6

%

 

 

 

 

Asia components sales, as reported

$

2,931,529

$

3,173,478

 

(7.6

) %

Impact of changes in foreign currencies

 

 

(630

)

 

Non-GAAP Asia components sales

$

2,931,529

$

3,172,848

 

(7.6

) %

 

 

 

 

Europe components sales, as reported

$

1,927,003

$

1,568,602

 

22.8

%

Impact of changes in foreign currencies

 

 

(98,899

)

 

Non-GAAP Europe components sales

$

1,927,003

$

1,469,703

 

31.1

%

 

 

 

 

Global ECS sales, as reported

$

1,875,050

$

1,942,666

 

(3.5

) %

Impact of changes in foreign currencies

 

 

(51,250

)

 

Non-GAAP global ECS sales

$

1,875,050

$

1,891,416

 

(0.9

) %

 

 

 

 

Americas ECS sales, as reported

$

1,047,849

$

1,151,338

 

(9.0

) %

Impact of changes in foreign currencies

 

 

(2,453

)

 

Non-GAAP Americas ECS sales

$

1,047,849

$

1,148,885

 

(8.8

) %

 

 

 

 

Europe ECS sales, as reported

$

827,201

$

791,328

 

4.5

%

Impact of changes in foreign currencies

 

 

(48,797

)

 

Non-GAAP Europe ECS sales

$

827,201

$

742,531

 

11.4

%

ARROW ELECTRONICS, INC.

NON-GAAP EARNINGS RECONCILIATION

(In thousands except per share data)

(Unaudited)

 

Three months ended April 2, 2022

 

Reported

GAAP

measure

Intangible

amortization

expense

Restructuring

& Integration

charges

Other(1)

Non-GAAP

measure

Sales

$9,074,125

 

$

$

$

 

$9,074,125

 

Gross Profit

 

1,207,504

 

 

 

 

 

 

1,207,504

 

Operating income

 

510,376

 

 

9,018

 

4,898

 

 

 

524,292

 

Income before income taxes

 

478,356

 

 

9,018

 

4,898

 

(2,011

)

 

490,261

 

Provision for income taxes

 

112,360

 

 

2,310

 

1,205

 

(486

)

 

115,389

 

Consolidated net income

 

365,996

 

 

6,708

 

3,693

 

(1,525

)

 

374,872

 

Noncontrolling interests

 

1,247

 

 

140

 

 

 

 

1,387

 

Net income attributable to shareholders

$364,749

 

$6,568

$3,693

($1,525

)

$373,485

 

Net income per diluted share (3)

$5.31

 

$0.10

$0.05

($0.02

)

$5.43

 

Effective tax rate (2)

 

23.5

%

 

 

 

 

23.5

%

 

 

 

 

 

 

Three months ended April 3, 2021

 

Reported

GAAP

measure

Intangible

amortization

expense

Restructuring

& Integration

charges

Other(1)

Non-GAAP

measure

Sales

$8,385,919

 

$

$

$

 

$8,385,919

 

Gross Profit

 

930,110

 

 

 

 

 

 

930,110

 

Operating income

 

299,503

 

 

9,326

 

5,709

 

 

 

314,538

 

Income before income taxes

 

268,254

 

 

9,326

 

5,709

 

(2,793

)

 

280,496

 

Provision for income taxes

 

61,026

 

 

2,385

 

1,166

 

(672

)

 

63,905

 

Consolidated net income

 

207,228

 

 

6,941

 

4,543

 

(2,121

)

 

216,591

 

Noncontrolling interests

 

907

 

 

150

 

 

 

 

1,057

 

Net income attributable to shareholders

$206,321

 

$6,791

$4,543

($2,121

)

$215,534

 

Net income per diluted share

$2.72

 

$0.09

$0.06

($0.03

)

$2.84

 

Effective tax rate (2)

 

22.7

%

 

 

 

 

22.8

%

 

 

 

 

 

 

(1) Other includes gain on investments, net.

(2) 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.

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

ARROW ELECTRONICS, INC.

SEGMENT INFORMATION

(In thousands)

(Unaudited)

 

 

 

Quarter Ended

 

April 2, 2022

April 3, 2021

Sales:

 

 

Global components

$

7,199,075

 

$

6,443,253

 

Global ECS

 

1,875,050

 

 

1,942,666

 

Consolidated

$

9,074,125

 

$

8,385,919

 

Operating income (loss):

 

 

Global components (a)

$

499,342

 

$

289,383

 

Global ECS

 

85,798

 

 

77,359

 

Corporate (b)

 

(74,764

)

 

(67,239

)

Consolidated

$

510,376

 

$

299,503

 

(a)

Global components operating income includes $4.3 million related to proceeds from legal settlements for the first quarter of 2021.

(b)

Corporate operating income includes restructuring, integration, and other charges of $4.9 million for the first quarter of 2022 and $5.7 million for the first quarter of 2021.

NON-GAAP SEGMENT RECONCILIATION

 

 

 

Quarter Ended

 

April 2, 2022

April 3, 2021

 

 

 

Global components operating income, as reported

$

499,342

$

289,383

Intangible assets amortization expense

 

6,873

 

7,004

Global components non-GAAP operating income

$

506,215

$

296,387

 

 

 

Global ECS operating income, as reported

$

85,798

$

77,359

Intangible assets amortization expense

 

2,145

 

2,322

Global ECS non-GAAP operating income

$

87,943

$

79,681

 

Contact:

Richard Seidlitz,
Vice President, Principal Accounting Officer, Interim Principal Financial Officer
303-305-4936

Media Contact:

John Hourigan,
Vice President, Global Communications
303-824-4586

Source: Arrow Electronics