Slide 1: Arrow Electronics Earnings Presentation Third Quarter 2024
Arrow Electronics Earnings Presentation Third Quarter 2024 October 31, 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 fourth quarter of fiscal 2024 suc
Slide 3: Sean Kerins, President and CEO
Sean Kerins President and CEO 3
Slide 4: Q3 2024 highlights
Q3 2024 highlights CONSOLIDATED SALES OPERATING MARGIN1 DILUTED EARNINGS PER SHARE1 $ 6.8 Billion 3.2 Percent $ 2.38 • Revenue above midpoint of guidance range and earnings per share exceeded high end of guidance range • Additional Q3 2024 financial information: • $215 million operating income1 • $1
Slide 5: Global components
Global components • Leading indicators remained relatively stable • Regional third-quarter perspectives: • APAC – Mixed patterns, but stability overall; continued IP&E revenue growth with relative strength in Transportation • Americas – Grew sequentially with strength across several verticals lead b
Slide 6: Enterprise computing solutions
Enterprise computing solutions • Continued strength in EMEA and improving execution in North America drove year-over-year revenue and gross profit dollar growth • Pivot to more hybrid cloud solutions and realignment of North American business leading to better outcomes: • Growing backlog • More recu
Slide 7: Closing thoughts
Closing thoughts • In Global Components we remain focused on our strategic priorities: • Supply chain services • Demand creation • Engineering services • IP&E • In Enterprise Computing Solutions: • ArrowSphere becoming central to go-to-market • Expanding customer base • Growing recurring revenue 7
Slide 8: Raj Agrawal, Senior Vice President and CFO
Raj Agrawal Senior Vice President and CFO 8
Slide 9: Q3 2024 revenue ($6.8B consolidated)
Q3 2024 revenue ($6.8B consolidated) Global Components Enterprise Computing Solutions Asia Pacific 1.6 $ B 12% 1.0 $ 2% 2.0 B $ Americas B 15% $4.9 B $ 1.9 B Americas 21% 7% EMEA EMEA $0.8 B 13% 1.3 $ B 35% Revenue figures are GAAP and reflect year-on-year performance changes Amounts may not calcula
Slide 10: Q3 2024 financial metrics
Q3 2024 financial metrics Sales & Non-GAAP Gross Margin1 Non-GAAP Operating Expenses1 8.0 600 586 6.9 6.8 568 12.2% 12.3% 8.5% 8.3% 11.5% 7.5% Q3 '23 Q2 '24 Q3 '24 Q3 '23 Q2 '24 Q3 '24 Sales ($B) Gross Margin (%) Opex ($M) Opex (%) Non-GAAP Operating Income1 Non-GAAP Diluted EPS1 379 4.14 2.78 262 2
Slide 11: Working capital
Working capital Net Working Capital ($B) • Non-GAAP Return on Working Capital 11.7 (ROWC)1 was 12.5% in the third quarter, down 10.7 10.9 7.4 6.8 6.9 Accounts 810 basis points year on year. The decrease in 5.8 Receivable 4.7 4.5 ROWC related primarily to lower operating Inventory income in Global Co
Slide 12: Q3 2024 balance sheet and cash highlights
Q3 2024 balance sheet and cash highlights Operating Cashflow was $81M in Q3 Net Debt was $3.0B Repurchased $50M in shares 12
Slide 13: Q4 2024 guidance
Q4 2024 guidance Consolidated Sales $6.67 billion to $7.27 billion Global components $4.50 billion to $4.90 billion Global ECS $2.17 billion to $2.37 billion Diluted Earnings Per Share (1) $1.35 to $1.55 Non-GAAP Diluted Earnings Per Share (1) $2.48 to $2.68 Interest and other expense, net $60 milli
Slide 14: Thank You Q&A
Thank You Q&A ANOW
Slide 15: Additional information and financial tables
Additional information and financial tables 15
Slide 16: Consolidated third-quarter overview
Consolidated third-quarter overview ($ in millions, except per share data) Q3 2024 Q3 2023 Y/Y CHANGE Q3 2023 IN Y/Y CHANGE IN Q2 2024 Q/Q CHANGE CONSTANT CONSTANT CURRENCY CURRENCY P&L Highlights Sales $6,823 $8,007 -15% $8,044 -15% $6,893 -1% Gross Profit Margin 11.5% 12.2% -70 bps 12.2% -70 bps 1
Slide 17: Revenue history
Revenue history ($ in millions, may reflect rounding) YoY YoY QoQ QoQ Q2’23 Q3 ’23 Q3 Q4’23 ’23 Q4’23 Q1’24 Q2’24 Q1’24 Q3’24 Q2’24 change change change change Global Components Total $6,245 $5,636 $5,191 $5,032 $4,946 -21% -2% $6,683 $6,245 $5,636 $5,191 $5,032 -25% -3% Americas 1,870 1,785 1,597 1
Slide 18: Operating income history
Operating income history Global Components ($M) Enterprise Computing Solutions ($M) $145 $146 $379 $386 $103 $104 $281 $288 $243 $73 $76 $77 $226 $71 $210 $218 $189 $193 $55 $56 Q3-'23* Q4-'23 Q1-'24 Q2-'24 Q3-'24 Q3-'23* Q4-'23 Q1-'24 Q2-'24** Q3-'24 GAAP Non-GAAP GAAP Non-GAAP * Q3-’23 operating i
Slide 19: Certain Non-GAAP financial information
Certain Non-GAAP financial information In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States (“GAAP”), the company also provides certain non-GAAP financial information relating to sales, gross profit, operatin
Slide 20: Fourth-quarter 2024 GAAP to non-GAAP outlook reconciliation
Fourth-quarter 2024 GAAP to non-GAAP outlook reconciliation ($ in billions, except per share data) NON-GAAP SALES RECONCILIATION Quarter Ended Quarter Ended 31-Dec-24 31-Dec-23 % Change 31-Dec-24 28-Sep-24 % Change Global components sales, GAAP $ 4.50 - 4.90 $ 5.64 (20%) - (13%) $ 4.50 - 4.90 $ 4.95
Slide 21: Quarterly GAAP to non-GAAP reconciliation
Quarterly GAAP to non-GAAP reconciliation ($ in thousands, except per share data) Three Three Three months months months ended ended September September ended June 29,28, 2024 28, 2024 2024 Intangible Reported GAAP Intangible Amortization Restructuring & Impact of Wind Down Non- recurring tax (1) In
Slide 22: Gross profit and operating expense reconciliation
Gross profit and operating expense reconciliation ($ in thousands) Quarter Ended 9/30/2023 12/31/2023 3/30/2024 6/29/2024 9/28/2024 Consolidated Gross Profit $ 979,597 $ 989,550 $ 857,826 $ 846,444 $ 784,828 Impact of wind down to inventory - - 10,459 1,627 (1,857) Consolidated non-GAAP Gross Profit
Slide 23: Return on working capital reconciliation
Return on working capital reconciliation ($ in thousands) Quarter Ended September 28, 2024 September 30, 2023 Numerator: Consolidated operating income, as reported $ 175,262 $ 340,083 x4 x4 Annualized consolidated operating income $ 701,048 $ 1,360,332 Non-GAAP consolidated operating income $ 215,17
Slide 24: Return on invested capital reconciliation
Return on invested capital reconciliation ($ in thousands) Quarter Ended September 28, 2024 September 30, 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 $ 175,
Slide 25: Non-GAAP segment reconciliation
Non-GAAP segment reconciliation ($ in thousands) Quarter Ended 9/30/2023 12/31/2023 3/30/2024 6/29/2024 9/28/2024 Global components operating income, as reported $ 379,053 $ 281,260 $ 225,562 $ 210,201 $ 188,600 Intangible assets amortization expense 6,640 6,436 6,488 6,399 6,247 Impact of wind down