Slide 1: Arrow Electronics Investor Presentation
Arrow Electronics Investor Presentation August 2024
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 2024 such
Slide 3: Agenda
Agenda 1. Overview 2. Business detail – global components 3. Business detail – global enterprise computing solutions 4. Financials 5. Additional information and financial tables 3
Slide 4: Overview
Overview AWOW
Slide 5: Our noble purpose
Our noble purpose We enable technology solutions that make a positive difference in people’s lives; we guide the power of innovation to make the world better. 5 55
Slide 6: Our history
Our history 2005 2024 1946 1986 1935 1979 1961 2011 Arrow Radio Incorporated Arrow goes Listed on 50+ Arrow expands Arrow moves Arrow tops opens on as Arrow public NYSE (ARW) acquisitions computer HQ from category in Radio Row Electronics and products New York to FORTUNE’s in New expansion business
Slide 7: Executive leadership & core values
Executive leadership & core values Ethical We believe in and behave with integrity and respect at all times, when everyone is watching and when no one is watching. Open-Minded and Courageous We believe in and behave with well-intended curiosity, welcoming Raj Agrawal Alan Bird Carine Jean-Claude div
Slide 8: Arrow Electronics at a glance
Arrow Electronics at a glance We enable technology solutions that make a positive difference in people’s lives; we guide the power of innovation to make the world better Global provider of products, services, and Centennial, CO ARW (NYSE) • solutions to industrial and commercial users of HEADQUARTER
Slide 9: We specialize in managing complexity
We specialize in managing complexity 85 Countries 39 Distribution & Value Added Centers 180 Sales Facilities 9
Slide 10: Arrow's approach to ESG
Arrow’s approach to ESG Board of Directors 2024 ESG GOALS • Continue to reduce Scope 1 and 2 emissions in 2024, supporting our multiyear goal to reduce Scope 1 and 2 emissions by 10% across all Arrow locations and fleet by the end of 2025 Compensation Audit Committee Corporate Governance • Set scien
Slide 11: Serving diverse end markets with enabling technology
Serving diverse end markets with enabling technology End Markets Arrow Technologies / Solutions Arrow Businesses* GLOBAL COMPONENTS SALES $ 25.4B Semiconductors IP&E Industrial / Automation Healthcare / Medical Engineering Supply Chain Services Services GLOBAL ENTERPRISE COMPUTING SOLUTIONS SALES Co
Slide 12: Business detail: Global components
Business detail Global components 12
Slide 13: Electronic components value chain overview
Electronic components value chain overview Components Manufacturers Distributors End Customers Original Equipment Manufacturers (OEMs) Original Component Franchise Obtain components from OCMs and Manufacturers (OCMs) Distributors distributors for use in end-product manufacturing Produce and sell com
Slide 14: Global components
Global components The foundation of the components business is the distribution of semiconductor components as well as interconnects, passives & electromechanical devices (IP&E) Global reach Hundreds of suppliers Semiconductors Thousands of customers No one customer accounts for > 2% of sales 180 sa
Slide 15: Global components
Global components Semiconductors • Arrow suppliers are the major device manufacturers who provide logic (CPUs, GPUs, FPGAs) and memory (DRAM, Flash) IP&E – interconnects, passives & electromechanical • A fragmented supplier base provides the non-active components in an electronic system. “interconne
Slide 16: Global components: Engineering Services
Global components Engineering Services We help customers (EMS companies and OEMs) get to market quickly, and enable our suppliers’ technology in the market Complex, custom solutions Turnkey R&D eInfochips services New Product Introductions Design Registrations Engineering Design Wins Service Centers
Slide 17: Global components: Supply Chain Services
Global components Supply Chain Services We manage highly complex, high-volume global supply chains for large OEMs and suppliers with our: • seasoned industry experts • best-in-class processes • world-class systems and infrastructure • extensive global footprint and reach 17
Slide 18: Business detail: Global enterprise computing solutions
Business detail Global enterprise computing solutions 18
Slide 19: Enterprise computing solutions value chain overview
Enterprise computing solutions value chain overview Makers of Technology Enterprise Computing Solutions Channel End Partners Customers IT DISTRIBUTION 19
Slide 20: Global enterprise computing solutions
Global enterprise computing solutions With access to hundreds of vendors, we enable our community of thousands of channel partners to deliver modern IT solutions for their customers. Software Infrastructure (Infrastructure, Data Hardware (Storage, Intelligence, Security) Compute, Networking) We deli
Slide 21: Global enterprise computing solutions: ArrowSphere
Global enterprise computing solutions Our ArrowSphere platform is at the center of our strategy Market We target enterprise and mid-market Enterprise and customers through channel partners on Mid-Market behalf of our suppliers Channel partners enjoy • Cloud and “everything-as-a-service” enablement •
Slide 22: Financials
ials Tarelare F AGW 22
Slide 23: FY 2023 financial metrics
FY 2023 financial metrics Sales & Gross Margin Non-GAAP Operating Expenses1 37.1 34.5 2.7 33.1 2.6 2.6 2.3 2.2 28.9 28.7 12.5% 13.0% 7.9% 12.2% 7.8% 7.7% 7.5% 7.3% 11.4% 11.1% 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Sales ($B) Gross Margin (%) Opex ($B) Opex (%) Non-GAAP Operating Income1
Slide 24: History of strong financial returns
History of strong financial returns Return on Working Capital (Non-GAAP)1 Return on Invested Capital (Non-GAAP)1 20.0% 30.0% 15.0% 20.0% 10.0% 10.0% 5.0% 0.0% 0.0% 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 (1) Refer to backup section of this document for comparable GAAP figures and a reconci
Slide 25: Disciplined approach to capital allocation
Disciplined approach to capital allocation $1,200 100 Capital priorities within the $1,000 90 framework of an investment- grade credit rating $800 80 $600 Invest in the business for organic growth 70 $400 Acquire companies that meet our value criteria to 60 $200 strategically accelerate growth $0 50
Slide 26: Thank You
Thank You For more information: email: investor@arrow.com
Slide 27: Additional information and financial tables
Additional information and financial tables
Slide 28: Our network in numbers: Q2 2024
Our network in numbers: Q2 2024 CONSOLIDATED SALES GROSS PROFIT AMERICAS COMPONENTS SALES $ 6.9B $ 0.8B 1.6B $ 24% 21% EMEA COMPONENTS SALES 19% 1.4B OPERATING INCOME $ 0.2B 33% GLOBAL COMPONENTS SALES $ 5.0B 46% ASIA PACIFIC COMPONENTS SALES $ NET INCOME $ 2.0B 18% 25% GLOBAL ENTERPRISE COMPUTING S
Slide 29: Q3 2024 guidance
Q3 2024 guidance Consolidated Sales $6.37 billion to $6.97 billion Global components $4.70 billion to $5.10 billion Global ECS $1.67 billion to $1.87 billion Diluted Earnings Per Share* $1.70 to $1.90 Non-GAAP Diluted Earnings Per Share* $2.10 to $2.30 Interest and other expense, net $70 million * A
Slide 30: Q2 2024 revenue ($6.9B consolidated)
Q2 2024 revenue ($6.9B consolidated) Global Components Enterprise Computing Solutions Asia Pacific 1.6 $ B 24% 1.0 $ 4% 2.0 B $ Americas B 18% $5.0 B $ 1.9 B Americas 25% 2% EMEA EMEA $0.9 B 8% 1.4 $ B 33% Revenue figures are GAAP and reflect year-on-year performance changes Amounts may not calculat
Slide 31: Q2 2024 financial metrics
Q2 2024 financial metrics Sales & Non-GAAP Gross Margin1 Non-GAAP Operating Expenses1 8.5 656 618 6.9 6.9 586 8.9% 8.5% 12.5% 12.5% 12.3% 7.7% Q2 '23 Q1 '24 Q2 '24 Q2 '23 Q1 '24 Q2 '24 Sales ($B) Gross Margin (%) Opex ($M) Opex (%) Non-GAAP Operating Income1 Non-GAAP Diluted EPS1 410 4.37 2.41 2.78
Slide 32: Working capital
Working capital Net Working Capital ($B) • Non-GAAP Return on Working Capital (ROWC)1 was 15.5% in the second quarter, 11.0 11.1 10.9 7.5 6.9 6.8 Accounts down 640 basis points year on year. The 5.5 Receivable 4.8 4.7 decrease in ROWC related primarily to lower Inventory operating income in global c
Slide 33: Q2 2024 balance sheet and cash highlights
Q2 2024 balance sheet and cash highlights Operating Cashflow was $320M in Q2 Net Debt was $3.1B Repurchased $50M in shares 33
Slide 34: Revenue history
Revenue history ($ in millions, may reflect rounding) YoY QoQ Q2’23 Q3 ’23 Q4’23 Q1’24 Q2’24 change change Global Components Total $6,683 $6,245 $5,636 $5,191 $5,032 -25% -3% Americas 2,067 1,870 1,785 1,597 1,573 -24% -2% Europe, Middle East & Africa 2,153 1,987 1,688 1,657 1,439 -33% -13% Asia Pac
Slide 35: Operating income history
Operating income history Global Components ($M) Enterprise Computing Solutions ($M) $145 $146 $381 $388 $379 $386 $103 $104 $281 $288 $86 $87 $243 $73 $226 $71 $210 $218 $55 $56 Q2-'23 Q3-'23* Q4-'23 Q1-'24 Q2-'24 Q2-'23 Q3-'23* Q4-'23 Q1-'24 Q2-'24** GAAP Non-GAAP GAAP Non-GAAP * Q3-’23 operating i
Slide 36: Certain Non-GAAP financial information
Certain Non-GAAP financial information In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States (“GAAP”), the company also provides certain non-GAAP financial information relating to sales, gross profit, operatin
Slide 37: Third-quarter 2024 GAAP to non-GAAP outlook reconciliation
Third-quarter 2024 GAAP to non-GAAP outlook reconciliation ($ in billions, except per share data) NON-GAAP SALES RECONCILIATION Quarter Ended Quarter Ended 28-Sep-24 30-Sep-23 % Change 28-Sep-24 29-Jun-24 % Change Global components sales, GAAP $ 4.70 - 5.10 $ 6.25 (25%) - (18%) $ 4.70 - 5.10 $ 5.03
Slide 38: Quarterly GAAP to non-GAAP reconciliation
Quarterly GAAP to non-GAAP reconciliation ($ in thousands, except per share data) Three months ended June 29, 2024 Intangible (1) Includes write downs of inventory Reported GAAP Amortization Restructuring & Impact of Wind Down Non- recurring tax measure Expense Integration charges (1) items Other (2
Slide 39: Full-year GAAP to non-GAAP reconciliation
Full-year GAAP to non-GAAP reconciliation ($ in thousands, except per share data) Year ended December 31, 2023 (1) Includes charges to increase the Intangible environmental remediation reserves in the Reported GAAP Amortization Restructuring & Non- recurring tax amount of $23.3 million for the year
Slide 40: Full-year GAAP to non-GAAP reconciliation (cont.)
Full-year GAAP to non-GAAP reconciliation (cont.) ($ in thousands, except per share data) (1) Other includes gain on investments, net Year ended December 31, 2021 and pension settlement gain. Intangible Restructuring & Reported GAAP Amortization Integration AFS Reserves & Non- recurring tax Impact o
Slide 41: Gross profit reconciliation
Gross profit reconciliation ($ in thousands) Quarter Ended 7/1/2023 9/30/2023 12/31/2023 3/30/2024 6/29/2024 Consolidated Gross Profit, as reported $ 1,066,049 $ 979,597 $ 989,550 $ 857,826 $ 846,444 Impact of wind down to inventory - - - 10,459 1,627 Consolidated non-GAAP gross profit $ 1,066,049 $
Slide 42: Return on working capital reconciliation
Return on working capital reconciliation ($ in thousands) Quarter Ended June 29, 2024 July 1, 2023 Numerator: Consolidated operating income, as reported $ 212,275 $ 392,250 x4 x4 Annualized consolidated operating income $ 849,100 $ 1,569,000 Non-GAAP consolidated operating income $ 261,895 $ 410,491
Slide 43: Return on invested capital reconciliation
Return on invested capital reconciliation ($ in thousands) Quarter Ended June 29, 2024 July 1, 2023 (1) Operating income, as reported, and non- GAAP operating income is adjusted for Numerator: noncontrolling interest and equity in earnings Consolidated operating income, as reported $ 212,275 $ 392,2
Slide 44: Annual ROWC and ROIC reconciliation
Annual ROWC and ROIC reconciliation ($ in thousands) 2023 2022 2021 2020 2019 Numerator: Consolidated operating income, as reported $ 1,471,164 $ 2,068,494 $ 1,556,822 $ 894,511 $ 107,696 (1) Operating income, as reported, and non- Equity in earnings of affiliated companies (1) 6,407 7,664 3,508 (53
Slide 45: Non-GAAP segment reconciliation
Non-GAAP segment reconciliation ($ in thousands) Quarter Ended 7/1/2023 9/30/2023 12/31/2023 3/30/2024 6/29/2024 Global components operating income, as reported $ 381,314 $ 379,053 $ 281,260 $ 225,562 $ 210,201 Intangible assets amortization expense 6,679 6,640 6,436 6,488 6,399 Impact of wind down