Slide 1: Arrow Electronics Earnings Presentation First Quarter 2024
Arrow Electronics Earnings Presentation First Quarter 2024 May 2, 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 second quarter of fiscal 2024 suc
Slide 3: Sean Kerins, President and CEO
Sean Kerins President and CEO 3
Slide 4: Q1 2024 highlights
Q1 2024 highlights CONSOLIDATED SALES OPERATING MARGIN DILUTED EARNINGS PER SHARE $ 6.9 Billion 3.6 Percent $ 2.41 • Revenue in line with expectations and earnings per share above high end of guidance range • Additional Q1 2024 financial information: • $251 million operating income • $132 million ne
Slide 5: Global components
Global components • Cyclical correction continues and broader industrial market remains in decline, but seeing improvements in leading indicators • Book-to-bill ratios improved across all operating regions and are approaching parity • Backlog continues to trend down from expanded shortage levels • C
Slide 6: Enterprise computing solutions
Enterprise computing solutions • Infrastructure software, cloud-related solutions, and AI-enabled compute drove results • Growing recurring revenue patterns will lead to improved visibility, stickier relationships, and higher margins • Europe – year-over-year billings and gross profit dollar growth
Slide 7: Closing thoughts
Closing thoughts • Focused on the factors within our control: • Prudent management of cost structure • Effective working capital management • Strong operating cash flow generation • Remain invested in strategic growth priorities • Demand creation • Engineering services • Supply chain services • Inte
Slide 8: Raj Agrawal, Senior Vice President and CFO
Raj Agrawal Senior Vice President and CFO 8
Slide 9: Q1 2024 revenue ($6.9B consolidated)
Q1 2024 revenue ($6.9B consolidated) Global Components Enterprise Computing Solutions Asia Pacific 1.6 $ B 29% 0.9 $ 9% 1.9 B $ Americas B 18% $5.2 B $ 1.7 B Americas 24% 8% EMEA EMEA $0.8 B 7% 1.7 $ B 26% Revenue figures are GAAP and reflect year-on-year performance changes Amounts may not calculat
Slide 10: Q1 2024 financial metrics
Q1 2024 financial metrics Sales & Non-GAAP Gross Margin1 Non-GAAP Operating Expenses1 8.7 681 626 7.8 618 6.9 8.9% 12.7% 12.6% 12.5% 7.8% 8.0% Q1 '23 Q4 '23 Q1 '24 Q1 '23 Q4 '23 Q1 '24 Sales ($B) Gross Margin (%) Opex ($M) Opex (%) Non-GAAP Operating Income1 Non-GAAP Diluted EPS1 433 364 4.60 3.98 2
Slide 11: Working capital
Working capital Net Working Capital ($B) • Non-GAAP Return on Working Capital 12.2 (ROWC)1 was 14.5% in the first quarter, down 10.7 11.1 7.2 7.4 6.9 Accounts 950 basis points year on year. The decrease in 5.5 5.2 Receivable 4.8 ROWC related primarily to lower operating Inventory income in global co
Slide 12: Balance sheet and cash highlights
Balance sheet and cash highlights Operating Cashflow was $403M in Q1 Net Debt was $3.3B Repurchased ~$100M in shares 12
Slide 13: Q2 2024 guidance
Q2 2024 guidance Consolidated Sales $6.20 billion to $6.80 billion Global Components $4.60 billion to $5.00 billion Global ECS $1.60 billion to $1.80 billion Diluted Earnings Per Share* $1.65 to $1.85 Non-GAAP Diluted Earnings Per Share* $2.05 to $2.25 Interest and Other Expense, Net Approximately $
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 first-quarter overview
Consolidated first-quarter overview ($ in millions, except per share data) Q1 2023 IN Y/Y CHANGE IN Q1 2024 Q1 2023 Y/Y CHANGE CONSTANT CONSTANT Q4 2023 Q/Q CHANGE P&L Highlights* CURRENCY CURRENCY Sales $6,924 $8,736 -21% $8,746 -21% $7,849 -12% Gross Profit Margin 12.4% 12.7% -30 bps 12.8% -40 bps
Slide 17: Revenue history
Revenue history ($ in millions, may reflect rounding) YoY QoQ Q1’23 Q2’23 Q3 ’23 Q4’23 Q1’24 change change Global Components Total 6,856 6,683 6,245 5,636 5,191 -24% -8% Americas 2,233 2,067 1,870 1,785 1,597 -29% -11% Europe, Middle East & Africa 2,246 2,153 1,987 1,688 1,657 -26% -2% Asia Pacific
Slide 18: Operating income history
Operating income history Global Components ($M) Enterprise Computing Solutions ($M) $145 $146 $418 $424 $381 $388 $379 $386 $281 $288 $86 $87 $81 $82 $243 $73 $226 $71 $55 $56 Q1-'23 Q2-'23 Q3-'23* Q4-'23 Q1-'24 Q1-'23 Q2-'23 Q3-'23* Q4-'23 Q1-'24 GAAP Non-GAAP GAAP Non-GAAP * Q3-’23 operating incom
Slide 19: Certain Non-GAAP financial information
Certain Non-GAAP financial information In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States (“GAAP”), the company also provides certain non-GAAP financial information relating to sales, gross profit, operatin
Slide 20: Second-quarter 2024 GAAP to non-GAAP outlook reconciliation
Second-quarter 2024 GAAP to non-GAAP outlook reconciliation ($ in billions, except per share data) NON-GAAP SALES RECONCILIATION Quarter Ended Quarter Ended 29-Jun-24 1-Jul-23 % Change 29-Jun-24 30-Mar-24 % Change Global components sales, GAAP $ 4.60 - 5.00 $ 6.68 (31%) - (25%) $ 4.60 - 5.00 $ 5.19
Slide 21: Quarterly GAAP to non-GAAP reconciliation
Quarterly GAAP to non-GAAP reconciliation ($ in thousands, except per share data) Three months ended March 30, 2024 Three months ended March 30, 2024 Reported GAAP Intangible Restructuring, measure Amortization Expense Integration & Other (1) Impact of Wind Down (1) (2) Other (2) Non-GAAP measure (1
Slide 22: Return on working capital reconciliation
Return on working capital reconciliation ($ in thousands) Quarter QuarterEnded Ended Quarter Ended December 31, 2023 September 30, 2023 December October 1,31, 2022 2022 March 30, 2024 April 1, 2023 Numerator: Numerator: (unaudited) (unaudited) (unaudited) (unaudited) Numerator: Consolidated operatin
Slide 23: Return on invested capital reconciliation
Return on invested capital reconciliation ($ in thousands) Quarter Ended (1) Operating income, as reported, and non- March 30, 2024 April 1, 2023 GAAP operating income is adjusted for Numerator: noncontrolling interest and equity in earnings Consolidated operating income, as reported $ 185,917 $ 422
Slide 24: Non-GAAP segment reconciliation
Non-GAAP segment reconciliation ($ in thousands) Quarter Ended 4/1/2023 QuarterQuarter 7/1/2023 Ended Ended 9/30/2023 12/31/2023 3/30/2024 1 0/1 /202212/31/2022 1 2/31 /20224/1/2023 4/1 /2022 7/1/2023 7/19/30/2023 /2023 12/31/2023 9/30/2023 Global components operating income, as reported $ 417,539 $