Slide 1: Arrow Electronics Earnings Presentation Second Quarter 2023
Arrow Electronics Earnings Presentation Second 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 third quarter of fiscal 2023 such
Slide 3: Sean Kerins, President and CEO
Sean Kerins President and CEO 3
Slide 4: Q2 2023 highlights
Q2 2023 highlights CONSOLIDATED SALES OPERATING MARGIN DILUTED EARNINGS PER SHARE $ 8.5 Billion 4.8 Percent $ 4.37 • Delivered solid results in a softer semiconductor market and mixed information technology spending environment • Sales and earnings per share were within our guidance range • We remai
Slide 5: Global components
Global components • Semiconductor total addressable market is expected to decline in 2023(1) • However, some indicators are trending positive • Lead times have been improving • Pricing environment was largely stable • Book to bill, though below parity, continued to hold steady • Design related activ
Slide 6: Enterprise computing solutions
Enterprise computing solutions • Customers migrating to IT solutions delivered on an as-a-service basis drove relative strength in cloud, software, services • Europe – Cyber-security and other infrastructure software solutions remained healthy • Americas – Relative strength in public sector 6 IT – I
Slide 7: Closing Thoughts
Closing Thoughts • Key markets have promising growth prospects • Key trends: • Electrification of everything • Accelerated adoption of new technologies (e.g., electric vehicles, renewable energy, artificial intelligence) • IT delivered on an as-a-service basis • Committed to growth through different
Slide 8: Raj Agrawal, Senior Vice President and CFO
Raj Agrawal Senior Vice President and CFO 8
Slide 9: Q2 revenue ($8.5B consolidated)
Q2 23 revenue ($8.5B consolidated) Global Components Enterprise Computing Solutions Asia Pacific 2.1 $ B 17% 1.0 $ 2.5 B 14% $ Americas B 22% $6.7 B $ 1.8 B Americas 10% 8% EMEA EMEA $0.8 B 1% 2.2 $ B 19% Figures are GAAP with year-on-year performance as reported 9 Amounts may not calculate precisel
Slide 10: Financial metrics
Financial metrics Sales & Gross Margin Non-GAAP Operating Expenses1 9.5 8.7 8.5 681 692 656 13.1% 12.7% 12.5% 7.8% 7.7% 7.3% Q2 '22 Q1 '23 Q2 '23 Q2 '22 Q1 '23 Q2 '23 Sales ($B) Gross Margin (%) Opex ($M) Opex (%) Non-GAAP Operating Income1 Non-GAAP Diluted EPS1 544 5.78 4.60 4.37 433 410 66.9 5.8%
Slide 11: Working capital
Working capital Net Working Capital ($B) • Non-GAAP Return on Working Capital 11.0 (ROWC) was 21.9% in the second quarter, 10.9 10.7 6.6 7.2 7.5 Accounts down 1120 basis points year over year. The 4.9 5.5 5.5 Receivable decrease in ROWC related primarily to lower Inventory operating income due to no
Slide 12: Balance sheet and cash highlights
Balance sheet and cash highlights Operating Cashflow is $97M YTD Net Debt is $3.9B Total Liquidity is $2.1B including $240M in cash Repurchased ~$200M in shares 12 Figures are as of the end of Q2 2023
Slide 13: Q3 guidance
Q3 23 guidance Consolidated Sales $7.78 billion to $8.38 billion Global Components $6.00 billion to $6.40 billion Global ECS $1.78 billion to $1.98 billion Diluted Earnings Per Share* $3.25 to $3.45 Non-GAAP Diluted Earnings Per Share* $3.40 to $3.60 Interest and Other Expense, Net $85 million to $9
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: Revenue History
Revenue History $ in millions; may reflect rounding. Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Global Components Total 7,462 7,300 6,827 6,856 6,683 Americas 2,479 2,446 2,327 2,233 2,067 Europe, Middle East & Africa 1,808 1,936 1,957 2,246 2,153 Asia Pacific 3,174 2,919 2,543 2,376 2,463 Enterprise Computing S
Slide 17: Operating income history
Operating income history Global Components ($M) Enterprise Computing Solutions ($M) 17 See the reconciliation to comparable GAAP figures in the tables at the end of this presentation
Slide 18: 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 19: Third-quarter 2023 GAAP to non-GAAP outlook reconciliation
Third-quarter 2023 GAAP to non-GAAP outlook reconciliation ($ in billions, except per share data) NON-GAAP SALES RECONCILIATION Quarter Ended Quarter Ended Sep. 30, 2023 Oct. 1, 2022 % Change Sep. 30, 2023 July 1, 2023 % Change Global components sales, GAAP $6.00 - 6.40 $ 7.30 (18%) - (12%) $6.00 –
Slide 20: Second-quarter 2023 GAAP to non-GAAP reconciliation
Second-quarter 2023 GAAP to non-GAAP reconciliation ($ in thousands, except per share data) (1) Other includes gain on investments, net. (2) The sum of the components for non-GAAP Three months ended July 1, 2023 diluted EPS may not agree to totals, as Reported Intangible Restructuring GAAP amortizat
Slide 21: Return on working capital reconciliation
Return on working capital reconciliation ($ in thousands) QUARTER ENDED July 1, 2023 July 2, 2022 Numerator: (unaudited) (unaudited) Consolidated operating income, as reported $ 392,250 $ 532,828 x4 x4 Annualized consolidated operating income $ 1,569,000 $ 2,131,312 Non-GAAP consolidated operating i
Slide 22: Return on invested capital reconciliation
Return on invested capital reconciliation ($ in thousands) QUARTER ENDED (1) Operating income, as reported, and non- July 1, 2023 July 2, 2022 GAAP operating income is adjusted for Numerator: (unaudited) (unaudited) noncontrolling interest and equity in earnings Consolidated operating income, as rep
Slide 23: Non-GAAP segment reconciliation
Non-GAAP segment reconciliation Quarter Ended ($ in thousands) 7/2/2022 10/1/2022 12/31/2022 4/1/2023 7/1/2023 Global components operating income, as reported $ 524,494 $ 494,587 $ 442,702 $ 417,539 $ 381,314 Intangible assets amortization expense 6,739 6,691 6,702 6,745 6,679 Global components non-