Slide 1: Arrow Electronics Earnings Presentation Fourth Quarter & Full Year 2023
Arrow Electronics Earnings Presentation Fourth Quarter & Full Year 2023 February 8, 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 first quarter of fiscal 2024 such
Slide 3: Sean Kerins, President and CEO
Sean Kerins President and CEO 3
Slide 4: FY 2023 highlights
FY 2023 highlights CONSOLIDATED SALES OPERATING MARGIN DILUTED EARNINGS PER SHARE $ 33.1 Billion 4.8 Percent $ 17.12 • Results reflect resiliency amidst industry-wide inventory correction and a mixed information technology spending environment • Additional full-year 2023 financial information: • $1.
Slide 5: Q4 2023 highlights
Q4 2023 highlights CONSOLIDATED SALES OPERATING MARGIN DILUTED EARNINGS PER SHARE $ 7.8 Billion 4.6 Percent $ 3.98 • Revenue ahead of guidance midpoint and earnings per share above high end of guidance range • Additional Q4 2023 financial information: • $364 million operating income • $219 million n
Slide 6: Global components
Global components • Continued inventory correction along with softness in industrial markets driving results • However, encouraged by recent trends • Book-to-bill overall continued to hold steady with IP&E book-to- bill approaching parity • Pricing remained relatively stable - gross margins sequenti
Slide 7: Enterprise computing solutions
Enterprise computing solutions • Customers remain cautious with discretionary IT spending • Shift in mix to IT-as-a-Service is driving growing portfolio of recurring revenue • Europe – year-over-year billings and gross profit dollar growth • Strength in infrastructure software & networking • Benefic
Slide 8: Closing thoughts
Closing thoughts • Continued focus on prudent expense and working capital management given current market environment • Arrow is poised to benefit from large and growing markets • We remain committed to growth initiatives that will continue to differentiate Arrow: • Demand creation • Engineering ser
Slide 9: Raj Agrawal, Senior Vice President and CFO
Raj Agrawal Senior Vice President and CFO 9
Slide 10: FY 2023 revenue ($33.1B consolidated)
FY 2023 revenue ($33.1B consolidated) Global Components Enterprise Computing Solutions Asia Pacific 8.0 $ B 17% $ 4.2 14% 9.4 B $ B 19% Americas 7.7 Americas $25.4 B $ B 12% EMEA 8% EMEA $3.5 B 1% 8.1 $ B 6% Revenue figures are GAAP and year-on-year performance changes are as-reported Amounts may no
Slide 11: 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 12: Q4 2023 revenue ($7.8B consolidated)
Q4 2023 revenue ($7.8B consolidated) Global Components Enterprise Computing Solutions Asia Pacific 1.8 $ B 23% $ 1.1 18% 2.2 B $ Americas B 15% $5.6 B $ 2.2 B Americas 17% 11% EMEA EMEA $1.1 B 2% 1.7 $ B 14% Revenue figures are GAAP and year-on-year performance changes are as-reported Amounts may no
Slide 13: Q4 2023 financial metrics
Q4 2023 financial metrics Sales & Gross Margin Non-GAAP Operating Expenses1 9.3 673 8.0 7.8 600 626 12.9% 12.6% 8.0% 7.2% 7.5% 12.2% Q4 '22 Q3 '23 Q4 '23 Q4 '22 Q3 '23 Q4 '23 Sales ($B) Gross Margin (%) Opex ($M) Opex (%) Non-GAAP Operating Income1 Non-GAAP Diluted EPS1 533 5.69 4.14 3.98 379 364 5.
Slide 14: Working capital
Working capital Net Working Capital ($B) • Non-GAAP Return on Working Capital 12.3 12.2 (ROWC)1 was 19.8% in the fourth quarter, 10.7 7.2 7.4 7.4 Accounts down 990 basis points year on year. The 5.3 5.8 5.2 Receivable decrease in ROWC related primarily to lower Inventory operating income in global c
Slide 15: Balance sheet and cash highlights
Balance sheet and cash highlights Operating Cashflow • $287M in Q4 • $705M in FY 2023 Net Debt was $3.6B Total Liquidity was $2.4B including $218M in cash Shares Repurchased • ~$50M in Q4 • ~$750M in FY 2023 15
Slide 16: Q1 2024 guidance
Q1 2024 guidance Consolidated Sales $6.70 billion to $7.30 billion Global Components $5.00 billion to $5.40 billion Global ECS $1.70 billion to $1.90 billion Diluted Earnings Per Share* $1.95 to $2.15 Non-GAAP Diluted Earnings Per Share* $2.20 to $2.40 Interest and Other Expense, Net Approximately $
Slide 17: Thank You Q&A
Thank You Q&A AGW
Slide 18: Additional information and financial tables
Additional information and financial tables 18
Slide 19: Consolidated fourth-quarter overview
Consolidated fourth-quarter overview ($ in millions, except per share data) Q4 2023Q3 2023 Y/Y CHANGE Y/Y CHANGE Y/Y CHANGE Y/Y CHANGE IN Q/QCHANGE Q/Q CHANGE IN CONSTANT CONSTANT P&L Highlights* CURRENCY CURRENCY P&L Highlights Sales $8,007 (1 4)% (1 5)% (6)% Sales $7,849 -16% -17% -2% Gross Profit
Slide 20: Consolidated full-year overview
Consolidated full-year overview ($ in millions, except per share data) FULL YEAR 2023 Y/Y CHANGE Y/Y CHANGE IN CONSTANT CURRENCY P&L Highlights Sales $33,107 -11% -11% Gross Profit Margin 12.5% -50 bps -50 bps Operating Income $1,471 -29% -29% Operating Margin 4.4% -120 bps -120 bps Non-GAAP Operati
Slide 21: Revenue history
Revenue history ($ in millions, may reflect rounding) Q4 ‘23 Q4 ‘23 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Y/Y Q/Q Comment Change Change Global Components Total 6,827 6,856 6,683 6,245 5,636 -17% -10% Year on year reduction due to normalizing shortage Americas 2,327 2,233 2,067 1,870 1,785 -23% -5% market, w
Slide 22: Operating income history
Operating income history Global Components ($M) Enterprise Computing Solutions ($M) $155 $156 $145 $146 $443 $449 $418 $424 $381 $388 $379 $386 $281 $288 $86 $87 $81 $82 $55 $56 Q4-'22 Q1-'23 Q2-'23 Q3-'23* Q4-'23 Q4-'22 Q1-'23 Q2-'23 Q3-'23* Q4-'23 GAAP Non-GAAP GAAP Non-GAAP * Q3-’23 operating inc
Slide 23: Certain Non-GAAP financial information
Certain Non-GAAP financial information In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States (“GAAP”), the company also provides certain non-GAAP financial information relating to sales, operating income (incl
Slide 24: First-quarter 2024 GAAP to non-GAAP outlook reconciliation
First-quarter 2024 GAAP to non-GAAP outlook reconciliation ($ in billions, except per share data) NON-GAAP SALES RECONCILIATION Quarter Ended Quarter Ended 30-Mar-24 1-Apr-23 % Change 30-Mar-24 31-Dec-23 % Change Global components sales, GAAP $ 5.00 - 5.40 $ 6.86 (27%) - (21%) $ 5.00 - 5.40 $ 5.64 (
Slide 25: Non-GAAP fourth-quarter sales reconciliation
Non-GAAP fourth-quarter sales reconciliation ($ in thousands) Quarter Ended NON-GAAP SALES RECONCILIATION 31-Dec-23 31-Dec-22 % Change Quarter Ended Consolidated sales, as reported $ 7,849,157 $ 30-Sep-23 1 -Oct-229,323,023 % Change-15.8% Impact of changes in foreign currencies - 126,441 Consolidate
Slide 26: Non-GAAP full-year sales reconciliation
Non-GAAP full-year sales reconciliation ($ in thousands) Year Ended 31-Dec-23 31-Dec-22 % Change Consolidated sales, as reported $ 33,107,120 $ 37,124,422 -10.8% Impact of changes in foreign currencies - 51,829 Consolidated sales, constant currency $ 33,107,120 $ 37,176,251 -10.9% Global components
Slide 27: Quarterly GAAP to non-GAAP reconciliation
Quarterly GAAP to non-GAAP reconciliation ($ in thousands, except per share data) Three months ended December 31, 2023 Intangible Amortization Restructuring & Integration (1) Includes charges to increase the Reported GAAP measure Expense charges (1) Other (2) Non-GAAP measure environmental remediati
Slide 28: 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 $23.3 million for the year
Slide 29: Full-year GAAP to non-GAAP reconciliation (cont.)
Full-year GAAP to non-GAAP reconciliation (cont.) ($ in thousands, except per share data) Year ended December 31, 2021 Intangible Restructuring & Reported GAAP Amortization Integration AFS Reserves & Non- recurring tax Impact of Wind Non-GAAP (1) Other includes gain on investments, net measure Expen
Slide 30: Return on working capital reconciliation
Return on working capital reconciliation ($ in thousands) Quarter QuarterEnded Ended December 31, 2023 September 30, 2023 December October 1,31, 2022 2022 Numerator: Numerator: (unaudited) (unaudited) (unaudited) (unaudited) Consolidated Consolidatedoperating operating income, as reported income, as
Slide 31: Return on invested capital reconciliation
Return on invested capital reconciliation ($ in thousands) Quarter QuarterEnded Ended December (1) Operating income, as reported, and non- September31, 30,2023 2023 December October 31, 2022 1, 2022 GAAP operating income is adjusted for Numerator: Numerator: noncontrolling interest and equity in ear
Slide 32: Non-GAAP segment reconciliation
Non-GAAP segment reconciliation ($ in thousands) QuarterQuarter EndedEnded 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 Globalcomponents Global components operating operating income, income, as reported as reported $ 494,587 $442,702 $ 442,702