Arrow Electronics, Inc. · NYSE:ARW
Arrow Electronics — Q4 2022 Earnings Presentation
21 slides from Arrow Electronics's earnings presentation, Feb 2, 2023
Slide 1: Fourth Quarter and Full Year 2022 CFO Commentary
investor.arrow.com Fourth Quarter and Full Year 2022 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: Fourth-Quarter Summary
3 3 Fourth-Quarter Summary Arrow delivered record sales, gross profit, operating income and earnings per share on a diluted basis during the fourth quarter. Our dedicated teams helped us deliver strong results in both our global components and global enterprise computing solutions businesses in mark
Slide 4: Consolidated Overview Fourth Quarter 2022
4 Consolidated sales were $9.32 billion Above the mid-point of the prior expectation of $8.95-$9.55 billion Changes in foreign currencies reduced growth by $357 million on sales and $0.19 on earnings per share on a diluted basis, compared to the year earlier period. Below the prior expectation of a
Slide 5: Fourth Quarter 2022 tax rate and earnings per share
5 5 Effective tax rate was 24.8%, and non-GAAP effective tax rate was 24.8% Diluted shares outstanding were 62 million Diluted earnings per share were $5.66 Fourth Quarter 2022 Non-GAAP diluted earnings per share were $5.69 Effective tax rate and non-GAAP effective tax rate were in line with the pri
Slide 6: Components Global
6 6 Components Global Record quarterly sales and operating income Fourth-quarter sales increased 2.2% year over year. Sales increased 6.1% year over year on a constant currency basis Lead times were relatively stable compared to the prior quarter and remain significantly extended Bookings are below
Slide 7: Components Sales Americas
7 7 Components Sales ($ in millions) Americas $2,137 $2,341 $2,479 $2,446 $2,327 Q4-'21 Q1-'22 Q2-'22 Q3-'22 Q4-'22 Record fourth-quarter sales Fourth-quarter sales increased 8.9% year over year Growth in sales across most verticals year over year, particularly Industrial, Aerospace & Defense, Trans
Slide 8: Components Sales Asia
8 8 Components Sales ($ in millions) Asia $2,949 $2,932 $3,174 $2,919 $2,543 Q4-'21 Q1-'22 Q2-'22 Q3-'22 Q4-'22 Sales declined due to weakening demand in most major verticals year over year Demand will likely remain soft in the near term but our overall backlog in the region remains healthy Gross ma
Slide 9: Components Sales Europe
9 9 Components Sales ($ in millions) Europe $1,594 $1,927 $1,808 $1,936 $1,957 Q4-'21 Q1-'22 Q2-'22 Q3-'22 Q4-'22 Record fourth-quarter sales. Strong growth in operating margins year over year Fourth-quarter sales increased 22.8% year over year Fourth-quarter sales increased 37.6% year over year on
Slide 10: Enterprise Computing Solutions Global
10 10 Enterprise Computing Solutions Global Fourth-quarter sales increased 6.8% year over year Sales increased 12.1% year over year on a constant currency basis Operating income was flat year over year and increased 4% on a constant currency basis Return on working capital remains favorable Operatin
Slide 11: Enterprise Computing Solutions Americas Sales
11 11 Sales ($ in millions) Americas Enterprise computing solutions Americas sales increased 3.5% year over year $1,357 $1,048 $1,161 $1,234 $1,404 Q4-'21 Q1-'22 Q2-'22 Q3-'22 Q4-'22 Enterprise Computing Solutions Strong demand growth in enterprise software, compute, and security technologies year o
Slide 12: Enterprise Computing Solutions Europe Sales
12 12 Sales ($ in millions) Enterprise Computing Solutions Europe $980 $827 $838 $732 $1,092 Q4-'21 Q1-'22 Q2-'22 Q3-'22 Q4-'22 Record quarterly sales, gross profit and operating income Fourth-quarter sales increased 11.4% year over year Sales increased 24.0% year over year on a constant currency ba
Slide 13: Consolidated Overview Full Year 2022
13 Gross margin increased 80 basis points year over year Gross margin increased in both global components and global enterprise computing solutions year over year Consolidated Overview Full Year 2022 13 Record full-year sales, gross profit, operating margins, and earnings per share Consolidated full
Slide 14: Cash Flow, Working Capital and Share Repurchases
14 14 Repurchased $300 million of stock in the fourth quarter, bringing total cash returned to shareholders in 2022 to $1 billion. Cash Flow from Operations Cash flow provided by (used for) operating activities was $109 million in the fourth quarter and $(33) million in 2022. Working Capital The com
Slide 15: Outlook: First Quarter 2023
15 15 Outlook: First Quarter 2023 We are expecting the average USD-to-Euro exchange rate for the first quarter of 2023 to be $1.07 to €1 compared to $1.12 to €1 in the first-quarter of 2022. We estimate changes in foreign currencies to reduce year-over-year growth in sales by $182 million and earnin
Slide 16: Information Relating to Forward-Looking Statements
16 Information Relating to Forward-Looking Statements This presentation includes “forward-looking” statements, as the term is defined under the federal securities laws, including but not limited to statements regarding: Arrow’s future financial performance, including its outlook on financial results
Slide 17: Certain Non-GAAP Financial Information
17 The company believes that such non-GAAP financial information is useful to investors to assist in assessing and understanding the company’s operating performance. 17 Certain Non-GAAP Financial Information In addition to disclosing financial results that are determined in accordance with accountin
Slide 18: First-Quarter 2023 GAAP to non-GAAP Outlook Reconciliation
18 ($ in billions, except per share data) First-Quarter 2023 GAAP to non-GAAP Outlook Reconciliation 18 NON-GAAP SALES RECONCILIATION Quarter Ended Quarter Ended April 1, 2023 April 2, 2022 % Change April 1, 2023 December 31, 2022 % Change Global components sales, GAAP $6.55 - 6.85 $ 7.20 (9)% - (5)
Slide 19: 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 20: Return on Working Capital Reconciliation
20 20 Return on Working Capital Reconciliation (1) The year ended balance is an average balance based on the addition of the account balance at the end of the five most recently- ended quarters and dividing by five. ($ in thousands) QUARTER ENDED YEAR ENDED December 31, 2022 December 31, 2021 Decemb
Slide 21: Return on Invested Capital Reconciliation
21 21 Return on Invested Capital Reconciliation (1) Operating income, as reported, and non- GAAP operating income is adjusted for noncontrolling interest and equity in losses of affiliated companies to include the pro-rata ownership of non-wholly owned subsidiaries. (2) The tax effect is calculated