Slide 1: Arrow Electronics Earnings Presentation Third Quarter 2023
Arrow Electronics Earnings Presentation Third Quarter 2023
Slide 2: Safe harbor
Safe harbor This presentation 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 2023 suc
Slide 3: Sean Kerins, President and CEO
Sean Kerins President and CEO 3
Slide 4: Q3 2023 highlights
Q3 2023 highlights CONSOLIDATED SALES OPERATING MARGIN DILUTED EARNINGS PER SHARE $ 8.0 Billion 4.7 Percent $ 4.14 • Revenue in line with guidance and earnings per share at high end of guidance • Results reflect strong execution amidst correction in semiconductor market and mixed information technol
Slide 5: Global components
Global components • Softer demand across several verticals as customers report elevated inventory levels • However, some indicators reflect underlying health • Lead times are now largely normalized • Book to bill, though below parity, continued to hold steady • Pricing remains relatively stable • Fo
Slide 6: Enterprise computing solutions
Enterprise computing solutions • Modest year-on-year billings growth with changing product mix – specifically strength in infrastructure software, cybersecurity, and cloud adoption • Europe – cyber-security and infrastructure software solutions remained healthy • Strong software & cloud portfolio •
Slide 7: Closing Thoughts
Closing Thoughts • Optimistic regarding long-term growth prospects • Confident in strategy and ability to execute • Believe we are well positioned as demand conditions improve 7
Slide 8: Raj Agrawal, Senior Vice President and CFO
Raj Agrawal Senior Vice President and CFO 8
Slide 9: Q3 revenue ($8.0B consolidated)
Q3 23 revenue ($8.0B consolidated) Global Components Enterprise Computing Solutions Asia Pacific 1.9 $ B 24% $ 1.0 2.4 B 17% $ Americas B 17% $6.2 B $ 1.8 B Americas 16% 13% EMEA EMEA $0.7 B 5% 2.0 $ B 4% Revenue figures are GAAP and year-on-year performance changes are at constant currency Amounts
Slide 10: Financial metrics
Financial metrics Sales & Gross Margin Non-GAAP Operating Expenses1 9.3 656 8.5 672 8.0 600 12.8% 7.7% 7.5% 12.5% 7.3% 12.2% Q3 '22 Q2 '23 Q3 '23 Q3 '22 Q2 '23 Q3 '23 Sales ($B) Gross Margin (%) Opex ($M) Opex (%) Non-GAAP Operating Income1 Non-GAAP Diluted EPS1 515 5.45 4.37 4.14 410 379 65.0 5.6%
Slide 11: Working capital
Working capital Net Working Capital ($B) • Non-GAAP Return on Working Capital 11.2 11.0 (ROWC) was 20.6% in the third quarter, down 10.7 6.8 7.5 7.4 Accounts 990 basis points year on year. The decrease in 5.1 5.5 5.8 Receivable ROWC related primarily to lower operating Inventory income due to normal
Slide 12: Balance sheet and cash highlights
Balance sheet and cash highlights Operating Cashflow was $322M in Q3 Net Debt was $3.9B Total Liquidity was $2.3B including $333M in cash Repurchased ~$200M in shares 12 Figures are as of the end of Q3 2023
Slide 13: Q4 guidance
Q4 23 guidance Consolidated Sales $7.50 billion to $8.10 billion Global Components $5.40 billion to $5.80 billion Global ECS $2.10 billion to $2.30 billion Diluted Earnings Per Share* $3.30 to $3.50 Non-GAAP Diluted Earnings Per Share* $3.61 to $3.81 Interest and Other Expense, Net Approximately $90
Slide 14: Thank You Q&A
Thank You Q&A AGW
Slide 15: Additional information and financial tables
Additional information and financial tables 15
Slide 16: Consolidated Overview
Consolidated Overview ($ in millions, except per share data) Q3 2023 Y/Y CHANGE Y/Y CHANGE Q/Q CHANGE IN CONSTANT P&L Highlights* CURRENCY Sales $8,007 (14)% (15)% (6)% Gross Profit Margin 12.2% -60 bps -60 bps -30 bps Operating Income $340 (32)% (33)% (13)% Operating Margin 4.2% -120 bps -120 bps -
Slide 17: Revenue History
Revenue History Y/Y Q /Q Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Comment $ in millions; may reflect rounding. Change Change Global Components Total 7,300 6,827 6,856 6,683 6,245 (14)% (7)% Year on year reduced volumes due to normalizing Americas 2,446 2,327 2,233 2,067 1,870 (24)% (10)% shortage market, with
Slide 18: Operating income history
Operating income history Global Components ($M) Enterprise Computing Solutions ($M) $155 $156 $495 $501 $443 $449 $418 $424 $381 $388 $379 $386 $84 $86 $86 $87 $81 $82 $55 $56 Q3-'22 Q4-'22 Q1-'23 Q2-'23 Q3-'23 Q3-'22 Q4-'22 Q1-'23 Q2-'23 Q3-'23 GAAP Non-GAAP GAAP Non-GAAP Q3-’23 operating income in
Slide 19: Certain Non-GAAP financial information
Certain Non-GAAP financial information In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States (“GAAP”), the company also provides certain non-GAAP financial information relating to sales, operating income, oper
Slide 20: Fourth-quarter 2023 GAAP to non-GAAP outlook reconciliation
Fourth-quarter 2023 GAAP to non-GAAP outlook reconciliation ($ in billions, except per share data) NON-GAAP SALES RECONCILIATION Quarter Ended Quarter Ended 31-Dec-23 31-Dec-22 % Change 31-Dec-23 30-Sep-23 % Change Global components sales, GAAP $5.40 - 5.80 $ 6.83 (21%) - (15%) $5.40 - 5.80 $ 6.25 (
Slide 21: Non-GAAP sales reconciliation
Non-GAAP sales reconciliation ($ in thousands) NON-GAAP SALES RECONCILIATION Quarter Ended 30-Sep-23 1-Oct-22 % Change Consolidated sales, as reported $ 8,007,019 $ 9,266,432 -13.6 % Impact of changes in foreign currencies — 145,732 Consolidated sales, constant currency $ 8,007,019 $ 9,412,164 -14.9
Slide 22: Third-quarter 2023 GAAP to non-GAAP reconciliation
Third-quarter 2023 GAAP to non-GAAP reconciliation ($ in thousands, except per share data) Three months ended September 30, 2023 (1) Includes charges to increase the Restructuring & Intangible Integration environmental remediation reserves in the Amortization Non-GAAP Reported GAAP measure Expense c
Slide 23: Return on working capital reconciliation
Return on working capital reconciliation ($ in thousands) Quarter Ended September 30, 2023 October 1, 2022 Numerator: (unaudited) (unaudited) Consolidated operating income, as reported $ 340,083 $ 502,694 x4 x4 Annualized consolidated operating income $ 1,360,332 $ 2,010,776 Non-GAAP consolidated op
Slide 24: Return on invested capital reconciliation
Return on invested capital reconciliation ($ in thousands) Quarter Ended (1) Operating income, as reported, and non- September 30, 2023 October 1, 2022 GAAP operating income is adjusted for Numerator: noncontrolling interest and equity in earnings Consolidated operating income, as reported $ 340,083
Slide 25: Non-GAAP segment reconciliation
Non-GAAP segment reconciliation ($ in thousands) Quarter Ended 10/1/2022 12/31/2022 4/1/2022 7/1/2023 9/30/2023 Global components operating income, as reported $ 494,587 $ 442,702 $ 417,539 $ 381,314 $ 379,053 Intangible assets amortization expense 6,691 6,702 6,745 6,679 6,640 Global components non