-- Cash Provided by Operating Activities of
$287 Million --
-- Repurchased $100 Million of Common Stock
--
Arrow Electronics, Inc. (NYSE:ARW) today reported third-quarter
2019 sales of $7.08 billion, a decrease of 6 percent from sales of
$7.49 billion in the third quarter of 2018. Third-quarter sales, as
adjusted, decreased 3 percent year over year. Third-quarter net
income of $92 million, or $1.10 per share on a diluted basis,
compared with net income of $177 million, or $1.99 per share on a
diluted basis, in the third quarter of 2018. Excluding certain
items1, net income would have been $155 million, or $1.86 per share
on a diluted basis, in the third quarter of 2019, compared with net
income of $191 million, or $2.15 per share on a diluted basis, in
the third quarter of 2018. In the third quarter of 2019, changes in
foreign currencies negatively impacted growth by approximately $103
million or 1 percent on sales and $.04 or 2 percent on earnings per
share on a diluted basis compared to the third quarter of 2018.
Global components third-quarter sales of $5.05 billion decreased
6 percent year over year. Sales, as adjusted, decreased 4 percent
year over year. Asia-Pacific components sales increased 4 percent
year over year. Sales in the region, as adjusted, increased 5
percent year over year. Europe components sales decreased 7 percent
year over year. Sales in the region, as adjusted, decreased 2
percent year over year. Americas components sales decreased 16
percent year over year. Sales in the region, as adjusted, decreased
15 percent year over year. Global components third-quarter
operating income was $172 million. Third-quarter operating income,
excluding amortization of intangibles expense, as adjusted, was
$217 million.
“Arrow’s focused execution contributed to our bottom-line
performance in the third quarter, despite continued challenging
demand conditions in the Americas and Europe,” said Michael J.
Long, chairman, president, and chief executive officer. “By
harnessing our internal efficiencies, we were able to realize
significant savings to reinvest in our omnichannel engineering
services, and strengthen our position as a consistent, reliable
provider of design, engineering and supply chain solutions. I am
confident that our diversified business model and forward-looking
approach to investing will not only allow us to emerge from the
current market correction in a position of strength, but also to
generate enhanced profits and returns well into the future.”
Global enterprise computing solutions third-quarter sales of
$2.03 billion decreased 4 percent year over year. Sales, as
adjusted, decreased 2 percent year over year. Europe enterprise
computing solutions sales decreased 6 percent year over year. Sales
in the region, as adjusted, were flat year over year. Americas
enterprise computing solutions sales decreased 3 percent year over
year. Sales in the region, as adjusted, decreased 2 percent year
over year. Global enterprise computing solutions third-quarter
operating income was $92 million. Third-quarter operating income,
excluding amortization of intangibles expense, as adjusted, was $95
million.
“We are pleased that enterprise computing solutions’ execution
in the marketplace drove 12 percent operating income growth in the
third quarter. Operating income growth demonstrates our success in
selling advanced, higher-value solutions utilizing next-generation
software and hardware architectures,” said Mr. Long.
“Third-quarter cash provided by operating activities was $287
million. Our robust cash flow was bolstered by our disciplined
working capital management, continued healthy profits from our
leading positions in the markets we serve, and efficiencies from
our previously announced cost optimization program,” said Chris
Stansbury, senior vice president and chief financial officer. “We
remain committed to returning excess cash to shareholders.
Accordingly, Arrow returned approximately $100 million to
shareholders through our stock repurchase program during the third
quarter. At the end of the quarter, we had approximately $439
million of remaining authorization under our share repurchase
program.”
GUIDANCE
Arrow Electronics’ fourth-quarter outlook excludes the financial
results from the PC and mobility asset disposition business.
“As we look to the fourth quarter, we expect total sales to
range between $7.125 billion and $7.525 billion, with global
components sales between $4.625 billion and $4.825 billion, and
global enterprise computing solutions sales between $2.5 billion
and $2.7 billion. We expect earnings per share on a diluted basis
to range from $1.82 to $1.98, and earnings per share on a diluted
basis, excluding certain items1, to range from $2.10 to $2.26 per
share. Our guidance assumes interest and other expense will total
approximately $52 million, an average tax rate at the low end of
the updated long-term range of 23 percent to 25 percent, and
average diluted shares outstanding of approximately 83 million. We
are expecting the average USD-to-Euro exchange rate for the fourth
quarter to be approximately $1.10 to €1. We estimate changes in
foreign currencies will have negative impacts on growth of
approximately $100 million, or 1 percent on sales, and $.05, or 2
percent, on earnings per share on a diluted basis compared to the
fourth 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.
1 A reconciliation of non-GAAP adjusted financial measures,
including sales, as adjusted, gross profit, 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.
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 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 dispositions), the impact of the
company’s personal computer and mobility asset disposition business
(referred to as wind down), the impact of inventory write-downs
related to the digital business (referred to as "digital inventory
write-downs and recoveries"), and the impact of the notes
receivable reserves and inventory write-downs related to the AFS
business (referred to as “AFS notes receivable reserves and
recoveries” and “AFS inventory write-downs and recoveries”
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 reserves and recoveries and inventory write-downs
and recoveries, digital inventory write-downs and recoveries, the
impact of non-cash charges related to goodwill, trade names, 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
reserves and recoveries and inventory write-downs and recoveries,
digital inventory write-downs and recoveries, the impact of
non-cash charges related to goodwill, trade names, 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
Nine Months Ended
September 28, 2019
September 29, 2018
September 28, 2019
September 29, 2018
Sales
$
7,078,118
$
7,490,445
$
21,578,657
$
21,758,586
Cost of sales
6,279,277
6,566,667
19,103,219
19,033,044
Gross profit
798,841
923,778
2,475,438
2,725,542
Operating expenses:
Selling, general, and administrative
expenses
522,446
575,751
1,677,734
1,719,108
Depreciation and amortization
45,231
45,532
139,739
139,201
Loss on disposition of businesses, net
14,573
2,042
15,439
3,604
Impairments
253
—
698,246
—
Restructuring, integration, and other
charges
43,120
10,143
74,692
50,497
625,623
633,468
2,605,850
1,912,410
Operating income (loss)
173,218
290,310
(130,412
)
813,132
Equity in losses of affiliated
companies
(1,070
)
(652
)
(2,155
)
(808
)
Gain (loss) on investments, net
1,126
1,070
7,864
(3,945
)
Employee benefit plan expense
(1,071
)
(1,296
)
(3,349
)
(3,784
)
Interest and other financing expense,
net
(49,882
)
(54,205
)
(153,426
)
(160,187
)
Income (loss) before income taxes
122,321
235,227
(281,478
)
644,408
Provision for income taxes
29,340
57,054
30,878
155,325
Consolidated net income (loss)
92,981
178,173
(312,356
)
489,083
Noncontrolling interests
850
1,640
3,744
3,541
Net income (loss) attributable to
shareholders
$
92,131
$
176,533
$
(316,100
)
$
485,542
Net income (loss) per share:
Basic
$
1.11
$
2.02
$
(3.75
)
$
5.53
Diluted
$
1.10
$
1.99
$
(3.75
)
$
5.47
Weighted-average shares outstanding:
Basic
82,711
87,602
84,246
87,785
Diluted
83,397
88,608
84,246
88,759
ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except par
value)
(Unaudited)
September 28, 2019
December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
262,254
$
509,327
Accounts receivable, net
7,841,851
8,945,463
Inventories
3,503,481
3,878,678
Other current assets
232,062
274,832
Total current assets
11,839,648
13,608,300
Property, plant, and equipment, at
cost:
Land
7,746
7,882
Buildings and improvements
164,544
158,712
Machinery and equipment
1,438,600
1,425,933
1,610,890
1,592,527
Less: Accumulated depreciation and
amortization
(805,626
)
(767,827
)
Property, plant, and equipment, net
805,264
824,700
Investments in affiliated companies
85,399
83,693
Intangible assets, net
277,720
372,644
Goodwill
2,041,073
2,624,690
Other assets
640,607
270,418
Total assets
$
15,689,711
$
17,784,445
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
6,181,408
$
7,631,879
Accrued expenses
833,390
912,292
Short-term borrowings, including current
portion of long-term debt
356,843
246,257
Total current liabilities
7,371,641
8,790,428
Long-term debt
2,942,293
3,239,115
Other liabilities
631,530
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
1,143,830
1,135,934
Treasury stock (43,660 and 40,233 shares
in 2019 and 2018, respectively), at cost
(2,237,884
)
(1,972,254
)
Retained earnings
6,019,235
6,335,335
Accumulated other comprehensive loss
(359,786
)
(299,449
)
Total shareholders’ equity
4,690,819
5,324,990
Noncontrolling interests
53,428
51,376
Total equity
4,744,247
5,376,366
Total liabilities and equity
$
15,689,711
$
17,784,445
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
(Unaudited)
Quarter Ended
September 28, 2019
September 29, 2018
Cash flows from operating activities:
Consolidated net income (loss)
$
92,981
$
178,173
Adjustments to reconcile consolidated net
income to net cash provided by operations:
Depreciation and amortization
45,231
45,532
Amortization of stock-based
compensation
7,120
12,442
Equity in losses of affiliated
companies
1,070
652
Deferred income taxes
6,362
5,063
Impairments
253
—
Loss on disposition of businesses, net
14,573
2,042
(Gain) loss on investments, net
(884
)
(1,070
)
Other
(276
)
2,011
Change in assets and liabilities, net of
effects of acquired and disposed businesses:
Accounts receivable
21,355
(180,770
)
Inventories
64,468
43,867
Accounts payable
(3,013
)
412,422
Accrued expenses
270
15,693
Other assets and liabilities
37,264
(41,652
)
Net cash provided by operating
activities
286,774
494,405
Cash flows from investing activities:
Cash paid on disposition of businesses
(10,785
)
(2,278
)
Acquisition of property, plant, and
equipment
(31,444
)
(38,346
)
Other
(8,495
)
(3,000
)
Net cash used for investing activities
(50,724
)
(43,624
)
Cash flows from financing activities:
Change in short-term and other
borrowings
80,227
44,545
Repayments of long-term bank borrowings,
net
(215,937
)
(338,579
)
Proceeds from exercise of stock
options
2,088
1,934
Repurchases of common stock
(103,270
)
(20,622
)
Other
—
(1,018
)
Net cash used for financing activities
(236,892
)
(313,740
)
Effect of exchange rate changes on
cash
(6,893
)
6,631
Net increase (decrease) in cash and cash
equivalents
(7,735
)
143,672
Cash and cash equivalents at beginning of
period
269,989
330,519
Cash and cash equivalents at end of
period
$
262,254
$
474,191
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 28, 2019
September 29, 2018
Cash flows from operating activities:
Consolidated net income (loss)
$
(312,356
)
$
489,083
Adjustments to reconcile consolidated net
income (loss) to net cash provided by operations:
Depreciation and amortization
139,739
139,201
Amortization of stock-based
compensation
34,749
38,104
Equity in losses of affiliated
companies
2,155
808
Deferred income taxes
(65,484
)
17,769
Impairments
698,246
—
Loss on disposition of businesses, net
15,439
3,604
(Gain) loss on investments, net
(7,622
)
3,945
Other
10,814
6,056
Change in assets and liabilities, net of
effects of acquired and disposed businesses:
Accounts receivable
916,908
(254,417
)
Inventories
342,610
(456,050
)
Accounts payable
(1,349,189
)
171,697
Accrued expenses
(71,124
)
15,177
Other assets and liabilities
8,308
(165,421
)
Net cash provided by operating
activities
363,193
9,556
Cash flows from investing activities:
Cash consideration paid for acquired
businesses, net of cash acquired
—
(331,563
)
Proceeds from (cash paid on) disposition
of a businesses
(1,325
)
32,013
Acquisition of property, plant, and
equipment
(113,080
)
(104,897
)
Other
(5,555
)
(11,000
)
Net cash used for investing activities
(119,960
)
(415,447
)
Cash flows from financing activities:
Change in short-term and other
borrowings
(93,129
)
104,158
Proceeds from (repayments of) long-term
bank borrowings, net
(96,960
)
420,755
Redemption of notes
—
(300,000
)
Proceeds from exercise of stock
options
11,710
7,919
Repurchases of common stock
(304,194
)
(93,173
)
Other
(147
)
(1,174
)
Net cash provided by (used for) financing
activities
(482,720
)
138,485
Effect of exchange rate changes on
cash
(7,586
)
11,514
Net decrease in cash and cash
equivalents
(247,073
)
(255,892
)
Cash and cash equivalents at beginning of
period
509,327
730,083
Cash and cash equivalents at end of
period
$
262,254
$
474,191
ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
Quarter Ended
September 28, 2019
September 29, 2018
% Change
Consolidated sales, as reported
$
7,078,118
$
7,490,445
(5.5
)%
Impact of changes in foreign
currencies
—
(103,498
)
Impact of dispositions and wind down
(60,130
)
(116,316
)
Consolidated sales, as adjusted
$
7,017,988
$
7,270,631
(3.5
)%
Global components sales, as reported
$
5,048,880
$
5,381,078
(6.2
)%
Impact of changes in foreign
currencies
—
(67,659
)
Impact of dispositions and wind down
(60,130
)
(104,958
)
Global components sales, as adjusted
$
4,988,750
$
5,208,461
(4.2
)%
Americas Components sales, as reported
$
1,738,710
$
2,060,920
(15.6
)%
Impact of changes in foreign
currencies
—
(145
)
Impact of dispositions and wind down
(46,998
)
(79,598
)
Americas Components sales, as adjusted
$
1,691,712
$
1,981,177
(14.6
)%
Europe components sales, as reported
$
1,304,109
$
1,399,435
(6.8
)%
Impact of changes in foreign
currencies
—
(60,123
)
Impact of dispositions and wind down
(13,132
)
(25,360
)
Europe components sales, as adjusted
$
1,290,977
$
1,313,952
(1.7
)%
Asia components sales, as reported
$
2,006,061
$
1,920,723
4.4
%
Impact of changes in foreign
currencies
—
(7,391
)
Asia components sales, as adjusted
$
2,006,061
$
1,913,332
4.8
%
Global ECS sales, as reported
$
2,029,238
$
2,109,367
(3.8
)%
Impact of changes in foreign
currencies
—
(35,839
)
Impact of dispositions
—
(11,358
)
Global ECS sales, as adjusted
$
2,029,238
$
2,062,170
(1.6
)%
Europe ECS sales, as reported
$
610,324
$
651,648
(6.3
)%
Impact of changes in foreign
currencies
—
(30,579
)
Impact of dispositions
—
(11,358
)
Europe ECS sales, as adjusted
$
610,324
$
609,711
0.1
%
Americas ECS sales, as reported
$
1,418,914
$
1,457,719
(2.7
)%
Impact of changes in foreign
currencies
—
(5,260
)
Americas ECS sales, as adjusted
$
1,418,914
$
1,452,459
(2.3
)%
ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
Nine Months Ended
September 28, 2019
September 29, 2018
% Change
Consolidated sales, as reported
$
21,578,657
$
21,758,586
(0.8
)%
Impact of changes in foreign
currencies
—
(447,833
)
Impact of dispositions and wind down
(232,239
)
(377,924
)
Consolidated sales, as adjusted
$
21,346,418
$
20,932,829
2.0
%
Global components sales, as reported
$
15,511,742
$
15,595,374
(0.5
)%
Impact of changes in foreign
currencies
—
(297,220
)
Impact of dispositions and wind down
(221,098
)
(312,742
)
Global components sales, as adjusted
$
15,290,644
$
14,985,412
2.0
%
Americas Components sales, as reported
$
5,522,538
$
5,795,500
(4.7
)%
Impact of changes in foreign
currencies
—
(4,284
)
Impact of dispositions and wind down
(170,724
)
(231,952
)
Americas Components sales, as adjusted
$
5,351,814
$
5,559,264
(3.7
)%
Europe components sales, as reported
$
4,223,363
$
4,325,793
(2.4
)%
Impact of changes in foreign
currencies
—
(256,237
)
Impact of dispositions and wind down
(50,374
)
(80,790
)
Europe components sales, as adjusted
$
4,172,989
$
3,988,766
4.6
%
Asia components sales, as reported
$
5,765,841
$
5,474,081
5.3
%
Impact of changes in foreign
currencies
—
(36,699
)
Asia components sales, as adjusted
$
5,765,841
$
5,437,382
6.0
%
Global ECS sales, as reported
$
6,066,915
$
6,163,212
(1.6
)%
Impact of changes in foreign
currencies
—
(150,613
)
Impact of dispositions
(11,141
)
(65,182
)
Global ECS sales, as adjusted
$
6,055,774
$
5,947,417
1.8
%
Europe ECS sales, as reported
$
2,074,638
$
2,123,048
(2.3
)%
Impact of changes in foreign
currencies
—
(124,634
)
Impact of dispositions
(11,141
)
(37,689
)
Europe ECS sales, as adjusted
$
2,063,497
$
1,960,725
5.2
%
Americas ECS sales, as reported
$
3,992,277
$
4,040,164
(1.2
)%
Impact of changes in foreign
currencies
—
(25,979
)
Impact of dispositions
—
(27,493
)
Americas ECS sales, as adjusted
$
3,992,277
$
3,986,692
0.1
%
ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS
RECONCILIATION
(In thousands except per share
data)
(Unaudited)
Three months ended September 28,
2019
Reported GAAP measure
Intangible amortization
expense
Restructuring & Integration
charges
AFS Write Downs
Digital Write Downs
Impairments
Impact of Wind Down(6)
Other(1)
Non-GAAP measure
Sales
$
7,078,118
$
—
$
—
$
—
$
—
$
—
$
(60,130
)
$
—
$
7,017,988
Gross Profit
798,841
—
—
—
1,101
—
(3,541
)
—
796,401
Operating income
173,218
10,265
31,087
(664
)
1,101
711
36,917
—
252,635
Income before income taxes
122,321
10,265
31,087
(664
)
1,101
711
36,842
(1,126
)
200,537
Provision for income taxes
29,340
2,860
8,922
(178
)
272
—
3,753
(249
)
44,720
Consolidated net income
92,981
7,405
22,165
(486
)
829
711
33,089
(877
)
155,817
Noncontrolling interests
850
138
—
—
—
—
—
—
988
Net income attributable to
shareholders
$
92,131
$
7,267
$
22,165
$
(486
)
$
829
$
711
$
33,089
$
(877
)
$
154,829
Net income per diluted share
$
1.10
$
0.09
$
0.27
$
(0.01
)
$
0.01
$
0.01
$
0.40
$
(0.01
)
$
1.86
Effective tax rate
24.0
%
22.3
%
Three months ended September 29,
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
$
7,490,445
$
—
$
—
$
—
$
—
$
—
$
(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
%
ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS
RECONCILIATION
(In thousands except per share
data)
(Unaudited)
Nine months ended September 28,
2019
Reported GAAP measure
Intangible amortization
expense
Restructuring & Integration
charges
AFS Write Downs
Digital Write Downs
Impairments(4)
Impact of Wind Down(6)
Other(3)
Non-GAAP measure
Sales
$
21,578,657
$
—
$
—
$
—
$
—
$
—
$
(221,098
)
$
—
$
21,357,559
Gross Profit
2,475,438
—
—
1,868
21,215
—
(7,363
)
—
2,491,158
Operating income
(130,412
)
28,072
62,079
15,187
21,215
623,796
151,332
866
772,135
Income before income taxes
(281,478
)
28,072
62,079
15,187
21,215
623,796
151,414
(6,998
)
613,287
Provision for income taxes
30,878
7,863
16,498
3,732
5,234
64,246
31,011
(5,452
)
154,010
Consolidated net income
(312,356
)
20,209
45,581
11,455
15,981
559,550
120,403
(1,546
)
459,277
Noncontrolling interests
3,744
420
—
—
—
—
—
—
4,164
Net income attributable to
shareholders
$
(316,100
)
$
19,789
$
45,581
$
11,455
$
15,981
$
559,550
$
120,403
$
(1,546
)
$
455,113
Net income per diluted share(5)
$
(3.75
)
$
0.23
$
0.54
$
0.14
$
0.19
$
6.64
$
1.43
$
(0.02
)
$
5.36
Effective tax rate
(11.0
)%
25.1
%
Nine months ended September 29,
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
$
21,758,586
$
—
$
—
$
—
$
—
$
—
$
(312,742
)
$
—
$
21,445,844
Gross Profit
2,725,542
—
—
—
—
—
(54,144
)
—
2,671,398
Operating income
813,132
28,722
38,171
—
—
—
15,439
3,604
899,068
Income before income taxes
644,408
28,722
38,171
—
—
—
15,561
7,549
734,411
Provision for income taxes
155,325
8,010
10,029
—
—
—
4,396
1,653
179,413
Consolidated net income
489,083
20,712
28,142
—
—
—
11,165
5,896
554,998
Noncontrolling interests
3,541
447
—
—
—
—
—
—
3,988
Net income attributable to
shareholders
$
485,542
$
20,265
$
28,142
$
—
$
—
$
—
$
11,165
$
5,896
$
551,010
Net income per diluted share(5)
$
5.47
$
0.23
$
0.32
$
—
$
—
$
—
$
0.13
$
0.07
$
6.21
Effective tax rate
24.1
%
24.4
%
(1)
Other includes gain (loss) on
investments, net
(2)
Other includes loss on
disposition of businesses, net and gain (loss) on investments,
net.
(3)
Other includes loss on
disposition of businesses, net, gain (loss) on investments, net,
and impact of tax act.
(4)
Impairments include goodwill
impairments of $570,175, tradename impairments of $46,000, and
$7,621 in impairment charges related to various other fixed
assets.
(5)
For the nine months ended
September 28, 2019, the non-GAAP net income per diluted share
calculation includes 727 thousand shares 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, identifiable intangible asset
amortization, loss on disposition of businesses, net, and
impairments 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
Nine Months Ended
September 28, 2019
September 29, 2018
September 28, 2019
September 29, 2018
Sales:
Global components
$
5,048,880
$
5,381,078
$
15,511,742
$
15,595,374
Global ECS
2,029,238
2,109,367
6,066,915
6,163,212
Consolidated
$
7,078,118
$
7,490,445
$
21,578,657
$
21,758,586
Operating income (loss):
Global components
$
171,591
$
271,939
$
(159,993
)
$
755,325
Global ECS
92,375
82,187
277,481
275,410
Corporate (a)
(90,748
)
(63,816
)
(247,900
)
(217,603
)
Consolidated
$
173,218
$
290,310
$
(130,412
)
$
813,132
(a)
Includes restructuring,
integration, and other charges of $31,086 and $62,658 for the third
quarter and first nine months of 2019 and $10,143 and $50,497 for
the third quarter and first nine months of 2018, respectively. Also
includes a loss on disposition of business of $866 for the first
nine months of 2019.
NON-GAAP SEGMENT
RECONCILIATION
Quarter Ended
Nine Months Ended
September 28, 2019
September 29, 2018
September 28, 2019
September 29, 2018
Global components operating income, as
reported
$
171,591
$
271,939
$
(159,993
)
$
755,325
Intangible assets amortization expense
(b)
7,398
5,931
19,458
17,626
Impairments (b)
711
—
623,796
—
Impact of wind-down (b)
36,917
79
150,752
3,113
AFS notes receivable reserve
(664
)
—
15,187
—
Digital inventory reserve
1,101
—
21,215
—
Global components operating income, as
adjusted
$
217,054
$
277,949
$
670,415
$
776,064
Global ECS operating income, as
reported
$
92,375
$
82,187
$
277,481
$
275,410
Intangible assets amortization expense
2,866
2,914
8,613
11,096
Global ECS operating income, as
adjusted
$
95,241
$
85,101
$
286,094
$
286,506
(b)
Restructuring, integration, and
other charges, identifiable intangible asset amortization, loss on
disposition of businesses, net, and impairments 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/20191031005280/en/
Steven O’Brien Vice President, Investor Relations 303-824-4544
Media Contact: John Hourigan Vice President, Global Communications
303-824-4586
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