Slide 1: Second Quarter 2023 CFO Commentary
investor.arrow.com Second Quarter 2023 CFO Commentary
Slide 2: CFO Commentary
2 2 CFO Commentary As reflected in our earnings release, there are a number of items that impact the comparability of our results with those in the trailing quarter and prior-year comparable periods. The discussion of our results may exclude these items to give you a better sense of our operating re
Slide 3: Second-Quarter Summary
3 3 Second-Quarter Summary We continue to see customers migrate to solutions delivered on an as-a-service basis. Our ECS results reflect this trend as we saw relative strength in cloud, software and services, and improved operating margin year over year. Reflecting our confidence in our ability to g
Slide 4: Consolidated Overview Second Quarter 2023
4 Consolidated sales were $8.51 billion In line with the prior expectation of $8.42-$9.02 billion 4 Consolidated Overview Second Quarter 2023 * $ in millions, except per share data; may reflect rounding. Second-quarter diluted EPS of $4.12 in line with guidance and non-GAAP diluted EPS of $4.37 abov
Slide 5: Effective tax rate and diluted EPS
5 5 Effective tax rate was 23.3%, and non-GAAP effective tax rate was 23.1% Effective tax rate and non-GAAP effective tax rate were in line with the prior expectation and the target long- term range of 23% - 25% Diluted shares outstanding were 57 million In line with the prior expectation Non-GAAP d
Slide 6: Components Global
6 6 Components Global Second-quarter sales decreased 10% year over year Second-quarter sales decreased 10% year over year Lead times are improving Operating margin of 5.7% decreased 130 basis points year over year due to the shortage market conditions Non-GAAP operating margin of 5.8% decreased 130
Slide 7: Components Americas
7 7 Components As expected, the decline in revenue is primarily a function of the normalization of shortage market activities Strength in industrial and aerospace and defense verticals Sales ($ in millions) Americas Second-quarter sales decreased 17% year over year $2,479 $2,446 $2,327 $2,233 $2,067
Slide 8: Components Asia
8 8 Components Sales ($ in millions) Asia Sales declined year-over-year $3,174 $2,919 $2,543 $2,376 $2,463 Q2-'22 Q3-'22 Q4-'22 Q1-'23 Q2-'23 Sequential growth despite continued softness across most verticals
Slide 9: Components Europe
9 9 Components Strength in industrial, automotive and aerospace & defense Sales ($ in millions) Europe Second-quarter sales increased 19% year over year $1,808 $1,936 $1,957 $2,246 $2,153 Q2-'22 Q3-'22 Q4-'22 Q1-'23 Q2-'23
Slide 10: Enterprise Computing Solutions Global
10 10 Enterprise Computing Solutions Global Second-quarter sales decreased 8% year over year Operating income increased 3% year over year Return on working capital remains favorable Operating margin of 4.7% increased 50 basis points year over year Non-GAAP operating margin of 4.8% increased 50 basis
Slide 11: Enterprise Computing Solutions Americas
11 Gross profit dollars increased slightly year over year Relative strength in the public sector 11 Sales ($ in millions) Americas Sales decreased 14% year over year $1,161 $1,234 $1,404 $998 $1,001 Q2-'22 Q3-'22 Q4-'22 Q1-'23 Q2-'23 Enterprise Computing Solutions Gross profit dollars increased slig
Slide 12: Enterprise Computing Solutions Europe
12 12 Sales ($ in millions) Enterprise Computing Solutions Europe Second-quarter sales decreased 1% year over year $838 $732 $1,092 $883 $831 Q2-'22 Q3-'22 Q4-'22 Q1-'23 Q2-'23 Gross profit dollars increased 11% year over year Healthy demand growth for cyber-security solutions and other infrastructu
Slide 13: Cash Flow from Operations and Working Capital
13 131 Cash Flow from Operations Cash flow used for operating activities was ($127 million) in the second quarter and cash provided by operating activities was $347 million over the last 12 months. Working Capital The company reports return on working capital ("ROWC") and ROWC (non-GAAP) to provide
Slide 14: Outlook: Third Quarter 2023
14 14 Outlook: Third Quarter 2023 We estimate changes in foreign currencies to increase year-over-year growth in sales by $212 million and earnings per share on a diluted basis by $0.11 compared to the third quarter of 2022. We estimate changes in foreign currencies to increase quarter-over-quarter
Slide 15: Risk factors and forward-looking statements
15 15 Risk factors The discussion of the company’s business and operations should be read together with the risk factors contained in Item 1A of its most recent Annual Report on Form 10-K and each subsequently filed Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission, wh
Slide 16: Certain Non-GAAP Financial Information
16 The company believes that such non-GAAP financial information is useful to investors to assist in assessing and understanding the company’s operating performance. 16 Certain Non-GAAP Financial Information In addition to disclosing financial results that are determined in accordance with accountin
Slide 17: Third-Quarter 2023 GAAP to non-GAAP Outlook Reconciliation
($ in billions, except per share data) Third-Quarter 2023 GAAP to non-GAAP Outlook Reconciliation 17 NON-GAAP SALES RECONCILIATION Quarter Ended Quarter Ended September 30, 2023 October 1, 2022 % Change September 30, 2023 July 1, 2023 % Change Global components sales, GAAP $6.00-6.40 $ 7.30 (18%) -
Slide 18: Earnings Reconciliation
($ in thousands, except per share data) Earnings Reconciliation (1) Other includes (gain) loss on investments, net. (2) The sum of the components for non-GAAP diluted EPS may not agree to totals, as presented, due to rounding. (3) The items as shown in this table, represent the reconciling items for
Slide 19: Return on Working Capital Reconciliation
19 19 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 opera
Slide 20: Return on Invested Capital Reconciliation
20 20 Return on Invested Capital Reconciliation (1) Operating income, as reported, and non- GAAP operating income is adjusted for noncontrolling interest and equity in earnings of affiliated companies to include the pro-rata ownership of non-wholly owned subsidiaries. (2) The tax effect is calculate