— Cash Provided by Operating Activities of
$405 Million —
— Repurchased $150 Million of Common Stock
—
Arrow Electronics, Inc. (NYSE:ARW) today reported second-quarter
2019 sales of $7.34 billion, a decrease of 1 percent from sales of
$7.39 billion in the second quarter of 2018. Second-quarter sales,
as adjusted, increased 2 percent year over year. The company
reported a second-quarter net loss of $549 million, or $(6.48) per
share on a diluted basis, compared with net income of $170 million,
or $1.92 per share on a diluted basis, in the second quarter of
2018. Excluding certain items1, net income would have been $137
million, or $1.60 per share on a diluted basis, in the second
quarter of 2019, compared with net income of $194 million, or $2.19
per share on a diluted basis, in the second quarter of 2018. In the
second quarter of 2019, changes in foreign currencies negatively
impacted growth by approximately $148 million or 2 percent on sales
and $.06 or 2 percent on earnings per share on a diluted basis
compared to the second quarter of 2018.
Global components second-quarter sales of $5.27 billion were
flat year over year. Sales, as adjusted, increased 2 percent year
over year. Europe components sales decreased 2 percent year over
year. Sales in the region, as adjusted, increased 4 percent year
over year. Asia-Pacific components sales increased 4 percent year
over year. Americas components sales decreased 3 percent year over
year. Global components second-quarter operating loss was $562
million. Second-quarter operating income, excluding amortization of
intangibles expense, as adjusted, was $207 million.
“Despite facing challenging market conditions in the second
quarter, and an ongoing inventory correction, we are encouraged by
the significant progress we continue to make in executing our
long-term strategy,” said Michael J. Long, chairman, president, and
chief executive officer. “We are leveraging our integrated
solutions and expanded reach to drive innovation forward for our
customers, and remain committed to continuing to expand engineering
services and lead the convergence of information technology with
operational technology. We are confident that the steps we are
taking today to strengthen our focus on the key technology areas of
smart cities, smart homes, and smart connected vehicles, will not
only enhance shareholder value, but also improve people's
lives.”
Global enterprise computing solutions second-quarter sales of
$2.07 billion decreased 2 percent year over year. Sales, as
adjusted, increased 1 percent year over year. Europe enterprise
computing solutions sales decreased 3 percent year over year. Sales
in the region, as adjusted, increased 5 percent year over year.
Americas enterprise computing solutions sales decreased 1 percent
year over year. Sales in the region, as adjusted, were flat year
over year. Global enterprise computing solutions second-quarter
operating income was $98 million. Second-quarter operating income,
excluding amortization of intangibles expense, as adjusted, totaled
$101 million.
“Arrow is committed to capitalizing on opportunities available
to us, and to that end, we continue to align and evolve our
enterprise computing solutions business toward advanced,
higher-value software-led solutions,” said Mr. Long. “We are
pleased that our infrastructure software and security solutions
again produced healthy growth on a year-over-year basis in the
second quarter.”
“Second-quarter cash provided by operating activities was $405
million. As we advance our efforts to reduce working capital and
use our strong, countercyclical cash flow to position the company
for long-term profit acceleration when market conditions improve,
we also remain focused on preserving near-term profitability. We
have commenced our previously announced cost optimization program,
and are executing on our plan to drive efficiencies while
generating approximately $130 million in annualized cost savings,”
said Chris Stansbury, senior vice president and chief financial
officer. “We remain committed to returning excess cash to
shareholders. Consistent with this commitment, we returned
approximately $150 million to shareholders through our stock
repurchase program during the second quarter. At the end of the
quarter, we had approximately $539 million of remaining
authorization under our share repurchase program.”
1 A reconciliation of non-GAAP adjusted financial measures,
including sales, as adjusted, operating income, as adjusted, net
income attributable to shareholders, as adjusted, and net income
per share, as adjusted, to GAAP financial measures is presented in
the reconciliation tables included herein.
GUIDANCE
“Our third-quarter outlook excludes the financial results from
the PC and mobility asset disposition business. As we look to the
third quarter, we expect total sales to range between $6.850
billion and $7.250 billion, with global components sales between
$4.925 billion and $5.125 billion, and global enterprise computing
solutions sales between $1.925 billion and $2.125 billion. As a
result of this outlook, we expect earnings per share on a diluted
basis to range from $.97 to $1.09, and earnings per share on a
diluted basis, excluding certain items1, to range from $1.62 to
$1.74 per share. Our guidance assumes interest expense will total
approximately $54 million. Our guidance also assumes an average tax
rate at the high end of the long-term range of 23.5 percent to 25.5
percent, and average diluted shares outstanding of approximately 85
million. We are expecting the average USD-to-Euro exchange rate for
the third quarter to be approximately $1.12 to €1. We estimate
changes in foreign currencies will have a negative impact on growth
of approximately $90 million, or 1 percent on sales, and $.05, or 2
percent, on earnings per share on a diluted basis compared to the
third quarter of 2018,” said Mr. Stansbury.
Please refer to the CFO commentary, which can be found at
investor.arrow.com, as a supplement to the company’s earnings
release.
Arrow Electronics guides innovation forward for over 200,000
leading technology manufacturers and service providers. With 2018
sales of $30 billion, Arrow develops technology solutions that
improve business and daily life. Learn more at
fiveyearsout.com.
Information Relating to Forward-Looking
Statements
This press release includes forward-looking statements that are
subject to numerous assumptions, risks, and uncertainties, which
could cause actual results or facts to differ materially from such
statements for a variety of reasons, including, but not limited to:
industry conditions, the company's implementation of its new
enterprise resource planning system, changes in product supply,
pricing and customer demand, competition, other vagaries in the
global components and global enterprise computing solutions
markets, changes in relationships with key suppliers, increased
profit margin pressure, the effects of additional actions taken to
become more efficient or lower costs, risks related to the
integration of acquired businesses, changes in legal and regulatory
matters, and the company’s ability to generate additional cash
flow. Forward-looking statements are those statements which are not
statements of historical fact. These forward-looking statements can
be identified by forward-looking words such as "expects,"
"anticipates," "intends," "plans," "may," "will," "believes,"
"seeks," "estimates," and similar expressions. Shareholders and
other readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date on
which they are made. The company undertakes no obligation to update
publicly or revise any of the forward-looking statements.
For a further discussion of factors to consider in connection
with these forward-looking statements, investors should refer to
Item 1A Risk Factors of the company’s Annual Report on Form 10-K
for the year ended Dec. 31, 2018.
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, net
income attributable to shareholders, and net income per basic and
diluted share.
The company provides sales, gross profit, and operating expense
on a non-GAAP basis adjusted for the impact of changes in foreign
currencies (referred to as “impact of changes in foreign
currencies”) by re-translating prior period results at current
period foreign exchange rates, the impact of dispositions by
adjusting the company’s operating results for businesses disposed,
as if the dispositions had occurred at the beginning of the
earliest period presented (referred to as “impact of
dispositions”), the impact of the company's personal computer and
mobility asset disposition business (referred to as "impact of wind
down"), the impact of inventory reserves related to the digital
business (referred to as "impact of digital inventory reserve"),
and the impact of the notes receivable and inventory reserve
related to the AFS business (referred to as "AFS notes receivable
reserve" and "AFS inventory reserve," respectively). Operating
income is adjusted to exclude identifiable intangible asset
amortization, restructuring, integration, and other charges, and
loss on disposition of businesses, net, AFS notes receivable and
inventory reserve, digital inventory reserve, the impact of
non-cash charges related to goodwill, tradenames, and property,
plant and equipment, and the impact of wind down. Net income
attributable to shareholders, and net income per basic and diluted
share are adjusted to exclude identifiable intangible asset
amortization, restructuring, integration, and other charges, and
loss on disposition of businesses, net, AFS notes receivable and
inventory reserve, digital inventory reserve, the impact of
non-cash charges related to goodwill, tradenames, and property,
plant and equipment, the impact of wind down, and the impact of
U.S. tax reform. A reconciliation of the company’s non-GAAP
financial information to GAAP is set forth in the tables below.
The company believes that such non-GAAP financial information is
useful to investors to assist in assessing and understanding the
company’s operating performance and underlying trends in the
company’s business because management considers these items
referred to above to be outside the company’s core operating
results. This non-GAAP financial information is among the primary
indicators management uses as a basis for evaluating the company’s
financial and operating performance. In addition, the company’s
Board of Directors may use this non-GAAP financial information in
evaluating management performance and setting management
compensation.
The presentation of this additional non-GAAP financial
information is not meant to be considered in isolation or as a
substitute for, or alternative to, sales, operating income, net
income and net income per basic and diluted share determined in
accordance with GAAP. Analysis of results and outlook on a non-GAAP
basis should be used as a complement to, and in conjunction with,
data presented in accordance with GAAP.
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands except per share
data)
(Unaudited)
Quarter Ended
Six Months Ended
June 29, 2019
June 30, 2018
June 29, 2019
June 30, 2018
Sales
$
7,344,548
$
7,392,528
$
14,500,539
$
14,268,141
Cost of sales
6,529,639
6,459,708
12,823,942
12,466,377
Gross profit
814,909
932,820
1,676,597
1,801,764
Operating expenses:
Selling, general, and administrative
expenses
599,212
580,388
1,155,288
1,143,357
Depreciation and amortization
46,982
46,422
94,508
93,669
Loss on disposition of businesses, net
—
—
866
1,562
Impairments
697,993
—
697,993
—
Restructuring, integration, and other
charges
19,912
19,183
31,572
40,354
1,364,099
645,993
1,980,227
1,278,942
Operating income (loss)
(549,190
)
286,827
(303,630
)
522,822
Equity in earnings (losses) of affiliated
companies
382
517
(1,085
)
(156
)
Gain (loss) on investments, net
1,390
(2,563
)
6,738
(5,015
)
Employee benefit plan expense
1,139
1,257
2,278
2,488
Interest and other financing expense,
net
51,563
60,803
103,544
105,982
Income (loss) before income taxes
(600,120
)
222,721
(403,799
)
409,181
Provision (benefit) for income taxes
(52,369
)
51,681
1,538
98,271
Consolidated net income (loss)
(547,751
)
171,040
(405,337
)
310,910
Noncontrolling interests
1,215
1,125
2,894
1,901
Net income (loss) attributable to
shareholders
$
(548,966
)
$
169,915
$
(408,231
)
$
309,009
Net income (loss) per share:
Basic
$
(6.48
)
$
1.94
$
(4.80
)
$
3.52
Diluted
$
(6.48
)
$
1.92
$
(4.80
)
$
3.48
Weighted-average shares outstanding:
Basic
84,652
87,802
85,022
87,878
Diluted
84,652
88,652
85,022
88,841
ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except par
value)
(Unaudited)
June 29, 2019
December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
269,989
$
509,327
Accounts receivable, net
7,976,603
8,945,463
Inventories
3,596,613
3,878,678
Other current assets
267,151
274,832
Total current assets
12,110,356
13,608,300
Property, plant, and equipment, at
cost:
Land
7,873
7,882
Buildings and improvements
156,124
158,712
Machinery and equipment
1,443,901
1,425,933
1,607,898
1,592,527
Less: Accumulated depreciation and
amortization
(793,981
)
(767,827
)
Property, plant, and equipment, net
813,917
824,700
Investments in affiliated companies
86,157
83,693
Intangible assets, net
290,236
372,644
Goodwill
2,067,499
2,624,690
Other assets
656,204
270,418
Total assets
$
16,024,369
$
17,784,445
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
6,245,068
$
7,631,879
Accrued expenses
853,735
912,292
Short-term borrowings, including current
portion of long-term debt
279,158
246,257
Total current liabilities
7,377,961
8,790,428
Long-term debt
3,157,274
3,239,115
Other liabilities
666,419
378,536
Commitments and contingencies
Equity:
Shareholders’ equity:
Common stock, par value $1:
Authorized - 160,000 shares in both 2019
and 2018, respectively
Issued - 125,424 shares in both 2019 and
2018, respectively
125,424
125,424
Capital in excess of par value
1,136,649
1,135,934
Treasury stock (42,283 and 40,233 shares
in 2019 and 2018, respectively), at cost
(2,139,743
)
(1,972,254
)
Retained earnings
5,927,104
6,335,335
Accumulated other comprehensive loss
(280,709
)
(299,449
)
Total shareholders’ equity
4,768,725
5,324,990
Noncontrolling interests
53,990
51,376
Total equity
4,822,715
5,376,366
Total liabilities and equity
$
16,024,369
$
17,784,445
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
(Unaudited)
Quarter Ended
June 29, 2019
June 30, 2018
Cash flows from operating activities:
Consolidated net income (loss)
$
(547,751
)
$
171,040
Adjustments to reconcile consolidated net
income (loss) to net cash provided by (used for) operations:
Depreciation and amortization
46,982
46,422
Amortization of stock-based
compensation
8,539
12,619
Equity in losses of affiliated
companies
(382
)
(517
)
Deferred income taxes
(78,814
)
15,524
Impairments
697,993
—
(Gain) loss on investments, net
(1,390
)
2,563
Other
6,381
2,140
Change in assets and liabilities, net of
effects of acquired and disposed businesses:
Accounts receivable
(54,436
)
(863,490
)
Inventories
143,740
(239,297
)
Accounts payable
193,832
451,093
Accrued expenses
(21,102
)
21,571
Other assets and liabilities
11,826
(29,440
)
Net cash provided by (used for) operating
activities
405,418
(409,772
)
Cash flows from investing activities:
Cash consideration paid for acquired
businesses, net of cash acquired
—
(96
)
Proceeds from disposition of
businesses
9,460
—
Acquisition of property, plant, and
equipment
(47,821
)
(31,816
)
Other
—
(3,500
)
Net cash used for investing activities
(38,361
)
(35,412
)
Cash flows from financing activities:
Change in short-term and other
borrowings
(66,112
)
77,995
(Payments) proceeds from long-term bank
borrowings, net
(216,046
)
157,948
Proceeds from exercise of stock
options
2,691
993
Repurchases of common stock
(146,999
)
(20,038
)
Other
(147
)
(156
)
Net cash provided by (used for) financing
activities
(426,613
)
216,742
Effect of exchange rate changes on
cash
(22,354
)
10,317
Net decrease in cash and cash
equivalents
(81,910
)
(218,125
)
Cash and cash equivalents at beginning of
period
351,899
548,644
Cash and cash equivalents at end of
period
269,989
330,519
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
(Unaudited)
Six Months Ended
June 29, 2019
June 30, 2018
Cash flows from operating activities:
Consolidated net income (loss)
$
(405,337
)
$
310,910
Adjustments to reconcile consolidated net
income (loss) to net cash provided by (used for) operations:
Depreciation and amortization
94,508
93,669
Amortization of stock-based
compensation
27,629
25,662
Equity in losses of affiliated
companies
1,085
156
Deferred income taxes
(71,846
)
12,706
Impairments
697,993
—
(Gain) loss on investments, net
(6,738
)
5,015
Other
11,956
5,605
Change in assets and liabilities, net of
effects of acquired and disposed businesses:
Accounts receivable
895,553
(73,647
)
Inventories
278,142
(499,917
)
Accounts payable
(1,346,176
)
(240,725
)
Accrued expenses
(71,394
)
(516
)
Other assets and liabilities
(28,956
)
(123,767
)
Net cash provided by (used for) operating
activities
76,419
(484,849
)
Cash flows from investing activities:
Cash consideration paid for acquired
businesses, net of cash acquired
—
(331,563
)
Proceeds from disposition of
businesses
9,460
34,291
Acquisition of property, plant, and
equipment
(81,636
)
(66,551
)
Other
2,940
(8,000
)
Net cash used for investing activities
(69,236
)
(371,823
)
Cash flows from financing activities:
Change in short-term and other
borrowings
(173,356
)
59,613
Proceeds from long-term bank borrowings,
net
118,977
759,334
Redemption of notes
—
(300,000
)
Proceeds from exercise of stock
options
9,622
5,985
Repurchases of common stock
(200,924
)
(72,551
)
Other
(147
)
(156
)
Net cash provided by (used for) financing
activities
(245,828
)
452,225
Effect of exchange rate changes on
cash
(693
)
4,883
Net decrease in cash and cash
equivalents
(239,338
)
(399,564
)
Cash and cash equivalents at beginning of
period
509,327
730,083
Cash and cash equivalents at end of
period
$
269,989
$
330,519
ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
Quarter Ended
June 29, 2019
June 30, 2018
% Change
Consolidated sales, as reported
$
7,344,548
$
7,392,528
(0.6
)%
Impact of changes in foreign
currencies
—
(147,506
)
Impact of dispositions and wind down
(77,914
)
(113,445
)
Consolidated sales, as adjusted
$
7,266,634
$
7,131,577
1.9
%
Global components sales, as reported
$
5,270,935
$
5,284,364
(0.3
)%
Impact of changes in foreign
currencies
—
(99,842
)
Impact of dispositions and wind down
(77,914
)
(100,372
)
Global components sales, as adjusted
$
5,193,021
$
5,084,150
2.1
%
Americas Components sales, as reported
$
1,876,799
$
1,937,882
(3.2
)%
Impact of changes in foreign
currencies
—
(1,611
)
Impact of dispositions and wind down
(60,860
)
(73,962
)
Americas Components sales, as adjusted
$
1,815,939
$
1,862,309
(2.5
)%
Europe components sales, as reported
$
1,415,888
$
1,447,972
(2.2
)%
Impact of changes in foreign
currencies
—
(81,728
)
Impact of dispositions and wind down
(17,054
)
(26,410
)
Europe components sales, as adjusted
$
1,398,834
$
1,339,834
4.4
%
Asia components sales, as reported
$
1,978,248
$
1,898,510
4.2
%
Impact of changes in foreign
currencies
—
(16,503
)
Asia components sales, as adjusted
$
1,978,248
$
1,882,007
5.1
%
Global ECS sales, as reported
$
2,073,613
$
2,108,164
(1.6
)%
Impact of changes in foreign
currencies
—
(47,664
)
Impact of dispositions
—
(13,073
)
Global ECS sales, as adjusted
$
2,073,613
$
2,047,427
1.3
%
Europe ECS sales, as reported
$
701,157
$
721,130
(2.8
)%
Impact of changes in foreign
currencies
—
(38,339
)
Impact of dispositions
—
(13,073
)
Europe ECS sales, as adjusted
$
701,157
$
669,718
4.7
%
Americas ECS sales, as reported
$
1,372,456
$
1,387,034
(1.1
)%
Impact of changes in foreign
currencies
—
(9,325
)
Americas ECS sales, as adjusted
$
1,372,456
$
1,377,709
(0.4
)%
ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
Six Months Ended
June 29, 2019
June 30, 2018
% Change
Consolidated sales, as reported
$
14,500,539
$
14,268,141
1.6
%
Impact of changes in foreign
currencies
—
(344,336
)
Impact of dispositions and wind down
(172,109
)
(261,608
)
Consolidated sales, as adjusted
$
14,328,430
$
13,662,197
4.9
%
Global components sales, as reported
$
10,462,862
$
10,214,296
2.4
%
Impact of changes in foreign
currencies
—
(229,563
)
Impact of dispositions and wind down
(160,968
)
(207,784
)
Global components sales, as adjusted
$
10,301,894
$
9,776,949
5.4
%
Americas Components sales, as reported
$
3,783,828
$
3,734,580
1.3
%
Impact of changes in foreign
currencies
—
(4,138
)
Impact of dispositions and wind down
(123,726
)
(152,354
)
Americas Components sales, as adjusted
$
3,660,102
$
3,578,088
2.3
%
Europe components sales, as reported
$
2,919,254
$
2,926,358
(0.2
)%
Impact of changes in foreign
currencies
—
(196,117
)
Impact of dispositions and wind down
(37,242
)
(55,430
)
Europe components sales, as adjusted
$
2,882,012
$
2,674,811
7.7
%
Asia components sales, as reported
$
3,759,780
$
3,553,358
5.8
%
Impact of changes in foreign
currencies
—
(29,308
)
Asia components sales, as adjusted
$
3,759,780
$
3,524,050
6.7
%
Global ECS sales, as reported
$
4,037,677
$
4,053,845
(0.4
)%
Impact of changes in foreign
currencies
—
(114,773
)
Impact of dispositions
(11,141
)
(53,824
)
Global ECS sales, as adjusted
$
4,026,536
$
3,885,248
3.6
%
Europe ECS sales, as reported
$
1,464,314
$
1,471,400
(0.5
)%
Impact of changes in foreign
currencies
—
(94,054
)
Impact of dispositions
(11,141
)
(26,331
)
Europe ECS sales, as adjusted
$
1,453,173
$
1,351,015
7.6
%
Americas ECS sales, as reported
$
2,573,363
$
2,582,445
(0.4
)%
Impact of changes in foreign
currencies
—
(20,719
)
Impact of dispositions
—
(27,493
)
Americas ECS sales, as adjusted
$
2,573,363
$
2,534,233
1.5
%
ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS
RECONCILIATION
(In thousands except per share
data)
(Unaudited)
Three months ended June 29,
2019
Reported GAAP measure
Intangible amortization
expense
Restructuring & Integration
charges
AFS Write Downs
Digital Write Downs
Impairments(1)
Impact of Wind Down(6)
Other(2)
Non-GAAP measure
Sales
$
7,344,548
$
—
$
—
$
—
$
—
$
—
$
(77,914
)
$
—
$
7,266,634
Gross Profit
814,909
—
—
1,868
20,114
—
4,305
—
841,196
Operating income
(549,190
)
8,665
19,906
15,851
20,114
623,085
104,219
—
242,650
Income before income taxes
(600,120
)
8,665
19,906
15,851
20,114
623,085
104,229
(1,390
)
190,340
Provision for income taxes
(52,369
)
2,463
4,865
3,910
4,962
64,246
24,730
(382
)
52,425
Consolidated net income
(547,751
)
6,202
15,041
11,941
15,152
558,839
79,499
(1,008
)
137,915
Noncontrolling interests
1,215
140
—
—
—
—
—
—
1,355
Net income attributable to
shareholders
$
(548,966
)
$
6,062
$
15,041
$
11,941
$
15,152
$
558,839
$
79,499
$
(1,008
)
$
136,560
Net income per diluted share(5)
$
(6.48
)
$
0.07
$
0.18
$
0.14
$
0.18
$
6.60
$
0.94
$
(0.01
)
$
1.60
Effective tax rate
8.7
%
27.5
%
Three months ended June 30,
2018
Reported GAAP measure
Intangible amortization
expense
Restructuring & Integration
charges
AFS Write Downs
Digital Write Downs
Impairments
Impact of Wind Down(6)
Other(2)
Non-GAAP measure
Sales
$
7,392,528
$
—
$
—
$
—
$
—
$
—
$
(100,372
)
$
—
$
7,292,156
Gross Profit
932,820
—
—
—
—
—
(17,079
)
—
915,741
Operating income
286,827
9,161
11,654
—
—
—
9,482
—
317,124
Income before income taxes
222,721
9,161
11,654
—
—
—
9,536
2,563
255,635
Provision for income taxes
51,681
2,540
2,893
—
—
—
2,545
631
60,290
Consolidated net income
171,040
6,621
8,761
—
—
—
6,991
1,932
195,345
Noncontrolling interests
1,125
149
—
—
—
—
—
—
1,274
Net income attributable to
shareholders
$
169,915
$
6,472
$
8,761
$
—
$
—
$
—
$
6,991
$
1,932
$
194,071
Net income per diluted share
$
1.92
$
0.07
$
0.10
$
—
$
—
$
—
$
0.08
$
0.02
$
2.19
Effective tax rate
23.2
%
23.6
%
ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS
RECONCILIATION
(In thousands except per share
data)
(Unaudited)
Six months ended June 29,
2019
Reported GAAP measure
Intangible amortization
expense
Restructuring & Integration
charges
AFS Write Downs
Digital Write Downs
Impairments(1)
Impact of Wind Down(6)
Other(3)
Non-GAAP measure
Sales
$
14,500,539
$
—
$
—
$
—
$
—
$
—
$
(160,968
)
$
—
$
14,339,571
Gross Profit
1,676,597
—
—
1,868
20,114
—
(3,822
)
—
1,694,757
Operating income
(303,630
)
17,807
30,992
15,851
20,114
623,085
114,415
866
519,500
Income before income taxes
(403,799
)
17,807
30,992
15,851
20,114
623,085
114,572
(5,872
)
412,750
Provision for income taxes
1,538
5,003
7,576
3,910
4,962
64,246
27,258
(5,203
)
109,290
Consolidated net income
(405,337
)
12,804
23,416
11,941
15,152
558,839
87,314
(669
)
303,460
Noncontrolling interests
2,894
282
—
—
—
—
—
—
3,176
Net income attributable to
shareholders
$
(408,231
)
$
12,522
$
23,416
$
11,941
$
15,152
$
558,839
$
87,314
$
(669
)
$
300,284
Net income per diluted share(5)
$
(4.80
)
$
0.15
$
0.28
$
0.14
$
0.18
$
6.57
$
1.03
$
(0.01
)
$
3.50
Effective tax rate
(0.4
)%
26.5
%
Six months ended June 30,
2018
Reported GAAP measure
Intangible amortization
expense
Restructuring & Integration
charges
AFS Write Downs
Digital Write Downs
Impairments
Impact of Wind Down(6)
Other(4)
Non-GAAP measure
Sales
$
14,268,141
$
—
$
—
$
—
$
—
$
—
$
(207,784
)
$
—
$
14,060,357
Gross Profit
1,801,764
—
—
—
—
—
(36,747
)
—
1,765,017
Operating income
522,822
19,877
28,560
—
—
—
14,828
1,562
587,649
Income before income taxes
409,181
19,877
28,560
—
—
—
14,928
6,577
479,123
Provision for income taxes
98,271
5,471
7,575
—
—
—
4,092
1,413
116,822
Consolidated net income
310,910
14,406
20,985
—
—
—
10,836
5,164
362,301
Noncontrolling interests
1,901
302
—
—
—
—
—
—
2,203
Net income attributable to
shareholders
$
309,009
$
14,104
$
20,985
$
—
$
—
$
—
$
10,836
$
5,164
$
360,098
Net income per diluted share(5)
$
3.48
$
0.16
$
0.24
$
—
$
—
$
—
$
0.12
$
0.06
$
4.05
Effective tax rate
24.0
%
24.4
%
(1) Impairments include goodwill
impairments of $570,175, tradename impairments of $46,000, and
$6,910 in impairment charges related to various other fixed
assets.
(2) Other includes gain (loss) on
investments, net
(3) Other includes loss on disposition of
businesses, net and gain (loss) on investments, net and impact of
Tax Act.
(4) Other includes loss on disposition of
businesses, net and gain (loss) on investments, net.
(5) For the three months and six months
ended June 29, 2019, the non-GAAP net income per diluted share
calculation includes 649 thousand shares and 758 thousand shares,
respectively, that were excluded from the GAAP net income per
diluted share calculation. Additionally, in all periods presented
the sum of the components for diluted EPS, as adjusted may not
agree to totals, as presented, due to rounding.
(6) Amounts for restructuring,
integration, and other charges, and identifiable intangible asset
amortization related to the personal computer and mobility asset
disposition business are included in “impact of wind down”
above.
ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)
(Unaudited)
Quarter Ended
Six Months Ended
June 29, 2019
June 30, 2018
June 29, 2019
June 30, 2018
Sales:
Global components
$
5,270,935
$
5,284,364
$
10,462,862
$
10,214,296
Global ECS
2,073,613
2,108,164
4,037,677
4,053,845
Consolidated
$
7,344,548
$
7,392,528
$
14,500,539
$
14,268,141
Operating income (loss):
Global components
$
(561,878
)
$
253,840
$
(327,346
)
$
483,386
Global ECS
98,388
109,417
185,106
193,223
Corporate (a)
(85,700
)
(76,430
)
(161,390
)
(153,787
)
Consolidated
$
(549,190
)
$
286,827
$
(303,630
)
$
522,822
(a)
Includes restructuring, integration, and
other charges of $19.9 million and $31.6 million for the second
quarter and first six months of 2019, and $19.2 million and $40.4
million for the second quarter and first six months of 2018,
respectively.
NON-GAAP SEGMENT
RECONCILIATION
Quarter Ended
Six Months Ended
June 29, 2019
June 30, 2018
June 29, 2019
June 30, 2018
Global components operating income, as
reported
$
(561,878
)
$
253,840
$
(327,346
)
$
483,386
Intangible assets amortization expense
(b)
5,807
5,900
12,060
11,695
Impairments
623,085
—
623,085
—
Impact of wind-down (b)
104,213
1,953
113,835
3,034
AFS notes receivable reserve
15,851
—
15,851
—
Digital inventory reserve
20,114
—
20,114
—
Global components operating income, as
adjusted
$
207,192
$
261,693
$
457,599
$
498,115
Global ECS operating income, as
reported
$
98,388
$
109,417
$
185,106
$
193,223
Intangible assets amortization expense
2,858
3,261
5,747
8,182
Global ECS operating income, as
adjusted
$
101,246
$
112,678
$
190,853
$
201,405
(b)
Impact of wind down includes intangible
asset amortization expense related to the personal computer and
mobility asset disposition business. Impact of wind down excludes
restructuring, integration, and other charges as they are reported
on the corporate entity.
ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS RECONCILIATIONS
ADJUSTED FOR WIND DOWN
(In thousands except per share
data)
(Unaudited)
Below are previously reported non-GAAP
earnings reconciliations for the years 2017, 2018 and 2019 adjusted
to exclude the personal computer and mobility asset disposition
business (referred to as "impact of wind down").
Three months ended March 30,
2019
Reported GAAP measure
Intangible amortization
expense
Restructuring & Integration
charges
AFS Write Downs
Digital Write Downs
Impairments(1)
Impact of Wind Down(8)
Other(2)
Non-GAAP measure
Sales
$
7,155,991
$
—
$
—
$
—
$
—
$
—
$
(83,054
)
$
—
7,072,937
Gross Profit
861,688
—
—
—
—
—
(8,127
)
—
853,561
Operating income
245,560
9,142
11,086
—
—
—
10,196
866
276,850
Income before income taxes
196,321
9,142
11,086
—
—
—
10,343
(4,482
)
222,410
Provision for income taxes
53,907
2,540
2,711
—
—
—
2,528
(4,821
)
56,865
Consolidated net income
142,414
6,602
8,375
—
—
—
7,815
339
165,545
Noncontrolling interests
1,679
142
—
—
—
—
—
—
1,821
Net income attributable to
shareholders
$
140,735
$
6,460
$
8,375
$
—
$
—
$
—
$
7,815
$
339
$
163,724
Net income per diluted share(4)
$
1.63
$
0.07
$
0.10
$
—
$
—
$
—
$
0.09
$
—
$
1.90
Effective tax rate
27.5
%
25.6
%
ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS
RECONCILIATION
(In thousands except per share
data)
(Unaudited)
Three months ended March 31,
2018
Reported GAAP measure
Intangible amortization
expense
Restructuring & Integration
charges
Impact of Tax Reform
Impact of Wind Down(8)
Other(5)
Non-GAAP measure
Sales
$
6,875,613
$
—
$
—
$
—
$
(107,412
)
$
—
$
6,768,201
Gross profit
868,944
—
—
—
(19,668
)
—
849,276
Operating income
235,995
10,716
16,906
—
5,346
1,562
270,525
Income before income taxes
186,460
10,716
16,906
—
5,392
4,014
223,488
Provision for income taxes
46,590
2,931
4,682
—
1,547
782
56,532
Consolidated net income
139,870
7,785
12,224
—
3,845
3,232
166,956
Noncontrolling interests
776
153
—
—
—
—
929
Net income attributable to
shareholders
$
139,094
$
7,632
$
12,224
$
—
$
3,845
$
3,232
$
166,027
Net income per diluted share(4)
$
1.56
$
0.09
$
0.14
$
—
$
0.04
$
0.04
$
1.86
Effective tax rate
25.0
%
25.3
%
Three months ended June 30,
2018
Reported GAAP measure
Intangible amortization
expense
Restructuring & Integration
charges
Impact of Tax Reform
Impact of Wind Down(8)
Other(3)
Non-GAAP measure
Sales
$
7,392,528
$
—
$
—
$
—
$
(100,372
)
$
—
$
7,292,156
Gross profit
932,820
—
—
—
(17,079
)
—
915,741
Operating income
286,827
9,161
11,654
—
9,482
—
317,124
Income before income taxes
222,721
9,161
11,654
—
9,536
2,563
255,635
Provision for income taxes
51,681
2,540
2,893
—
2,545
631
60,290
Consolidated net income
171,040
6,621
8,761
—
6,991
1,932
195,345
Noncontrolling interests
1,125
149
—
—
—
—
1,274
Net income attributable to
shareholders
$
169,915
$
6,472
$
8,761
$
—
$
6,991
$
1,932
$
194,071
Net income per diluted share
$
1.92
$
0.07
$
0.10
$
—
$
0.08
$
0.02
$
2.19
Effective tax rate
23.2
%
23.6
%
Three months ended September 30,
2018
Reported GAAP measure
Intangible amortization
expense
Restructuring & Integration
charges
Impact of Tax Reform
Impact of Wind Down(8)
Other(5)
Non-GAAP measure
Sales
$
7,490,445
$
—
$
—
$
—
$
(104,958
)
$
—
$
7,385,487
Gross profit
923,778
—
—
—
(17,397
)
—
906,381
Operating income
290,310
8,845
9,611
—
611
2,042
311,419
Income before income taxes
235,227
8,845
9,611
—
633
972
255,288
Provision for income taxes
57,054
2,539
2,454
—
304
240
62,591
Consolidated net income
178,173
6,306
7,157
—
329
732
192,697
Noncontrolling interests
1,640
145
—
—
—
—
1,785
Net income attributable to
shareholders
$
176,533
$
6,161
$
7,157
$
—
$
329
$
732
$
190,912
Net income per diluted share
$
1.99
$
0.07
$
0.08
$
—
$
—
$
0.01
$
2.15
Effective tax rate
24.3
%
24.5
%
Three months ended December 31,
2018
Reported GAAP measure
Intangible amortization
expense
Restructuring & Integration
charges
Impact of Tax Reform
Impact of Wind Down(8)
Other(6)
Non-GAAP measure
Sales
$
7,918,182
$
—
$
—
$
—
$
(102,965
)
$
—
$
7,815,217
Gross profit
975,370
—
—
—
(16,947
)
—
958,423
Operating income
334,380
9,493
11,126
—
4,471
—
359,470
Income before income taxes
264,965
9,493
11,126
—
4,114
11,886
301,584
Provision for income taxes
32,474
2,772
4,786
28,323
1,635
3,025
73,015
Consolidated net income
232,491
6,721
6,340
(28,323
)
2,479
8,861
228,569
Noncontrolling interests
1,838
142
—
—
—
—
1,980
Net income attributable to
shareholders
$
230,653
$
6,579
$
6,340
$
(28,323
)
$
2,479
$
8,861
$
226,589
Net income per diluted share
$
2.63
$
0.08
$
0.07
$
(0.32
)
$
0.03
$
0.10
$
2.59
Effective tax rate
12.3
%
24.2
%
ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS
RECONCILIATION
(In thousands except per share
data)
(Unaudited)
Twelve months ended December 31,
2018
Reported GAAP measure
Intangible amortization
expense
Restructuring & Integration
charges
Impact of Tax Reform
Impact of Wind Down(8)
Other(7)
Non-GAAP measure
Sales
$
29,676,768
$
—
$
—
$
—
$
(415,707
)
$
—
$
29,261,061
Gross profit
3,700,912
—
—
—
(71,091
)
—
3,629,821
Operating income
1,147,512
38,215
49,297
—
19,910
3,604
1,258,538
Income before income taxes
909,373
38,215
49,297
—
19,675
19,435
1,035,995
Provision for income taxes
187,799
10,782
14,815
28,323
6,031
4,678
252,428
Consolidated net income
721,574
27,433
34,482
(28,323
)
13,644
14,757
783,567
Noncontrolling interests
5,379
589
—
—
—
—
5,968
Net income attributable to
shareholders
$
716,195
$
26,844
$
34,482
$
(28,323
)
$
13,644
$
14,757
$
777,599
Net income per diluted share
$
8.10
$
0.30
$
0.39
$
(0.32
)
$
0.15
$
0.17
$
8.79
Effective tax rate
20.7
%
24.4
%
Twelve months ended December 31,
2017 (Adjusted)
Reported GAAP measure
Intangible amortization
expense
Restructuring & Integration
charges
Impact of Tax Reform
Impact of Wind Down(8)
Other(7)
Non-GAAP measure
Sales
$
26,554,563
$
—
$
—
$
—
$
(387,953
)
$
—
$
26,166,610
Gross profit
3,356,968
—
—
—
(80,834
)
—
3,276,134
Operating income
945,736
38,684
71,707
—
10,045
21,000
1,087,172
Income before income taxes
693,917
38,684
71,707
—
10,254
103,828
918,390
Provision for income taxes
286,541
13,790
21,753
(124,748
)
6,597
40,070
244,003
Consolidated net income
407,376
24,894
49,954
124,748
3,657
63,758
674,387
Noncontrolling interests
5,200
701
—
—
—
—
5,901
Net income attributable to
shareholders
$
402,176
$
24,193
$
49,954
$
124,748
$
3,657
$
63,758
$
668,486
Net income per diluted share
$
4.48
$
0.27
$
0.56
$
1.39
$
0.04
$
0.71
$
7.45
Effective tax rate
41.3
%
26.6
%
(1) Impairments for the three months ended
June 29, 2019 include goodwill impairments of $570,175, tradename
impairments of $46,000, and $6,910 in impairment charges related to
various other fixed assets.
(2) Other includes loss on disposition of
businesses, net and gain (loss) on investments, net and impact of
Tax Act.
(3) Other includes gain (loss) on
investments, net
(4) The sum of the components for diluted
EPS, as adjusted may not agree to totals, as presented, due to
rounding.
(5) Other includes gain (loss) on
investments, net and loss on disposition of businesses, net.
(6) Other includes gain (loss) on
investments, net and pension settlement.
(7) Other includes loss on disposition of
businesses, net and gain (loss) on investments, net and pension
settlement.
(8) Amounts for restructuring,
integration, and other charges, and identifiable intangible asset
amortization related to the personal computer and mobility asset
disposition business are included in “impact of wind down”
above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190801005300/en/
Steven O’Brien Vice President, Investor Relations
303-824-4544
Media Contact: John Hourigan, Vice President, Global
Communications 303-824-4586
Arrow Electronics (NYSE:ARW)
Historical Stock Chart
From Dec 2024 to Jan 2025
Arrow Electronics (NYSE:ARW)
Historical Stock Chart
From Jan 2024 to Jan 2025
