-- Full-Year Cash Provided by Operating
Activities of $858 Million --
-- Returned Approximately $390 Million to
Shareholders in 2019 --
Arrow Electronics, Inc. (NYSE:ARW) today reported fourth-quarter
2019 sales of $7.34 billion, a decrease of 7 percent from sales of
$7.92 billion in the fourth quarter of 2018. Fourth-quarter sales
as adjusted decreased 5%. The company reported fourth-quarter net
income of $112 million, or $1.36 per share on a diluted basis,
compared with net income of $231 million, or $2.63 per share on a
diluted basis, in the fourth quarter of 2018. Excluding certain
items1, net income would have been $181 million, or $2.20 per share
on a diluted basis, in the fourth quarter of 2019, compared with
net income of $227 million, or $2.59 per share on a diluted basis,
in the fourth quarter of 2018. In the fourth quarter of 2019,
changes in foreign currencies had negative impacts on growth of
approximately $65 million or 1 percent on sales and $.04 or 1
percent on earnings per share on a diluted basis compared to the
fourth quarter of 2018.
“Arrow’s commitment to delivering unmatched engineering and
design services to customers on behalf of our suppliers is serving
the company well during the ongoing industry correction,” said
Michael J. Long, chairman, president, and chief executive officer.
“Global components’ sales and margin performance continue to
demonstrate greater resiliency compared to past economic and
semiconductor industry corrections. As we prepare for economic
recovery, we continue to increase the scale of our Asia components
business, which we expect to lead to greater profit. Arrow is well
positioned to accelerate profit growth and expansion as soon as
demand from end-customers stabilizes and improves.”
Global components fourth-quarter sales of $4.74 billion
decreased 10 percent year over year. Sales, as adjusted, decreased
8 percent year over year. Asia-Pacific components sales increased 4
percent year over year. Europe components sales decreased 16
percent year over year. Sales in the region, as adjusted, decreased
12 percent year over year. Americas components sales decreased 19
percent year over year. Sales in the region, as adjusted, decreased
16 percent year over year. Global components fourth-quarter
operating income was $150 million. Fourth-quarter operating income,
excluding amortization of intangibles expense, as adjusted, was
$172 million.
“During the fourth quarter, and throughout 2019, Arrow’s
enterprise computing solutions focused on accelerating the
evolution toward selling advanced, next-generation software and
hardware architectures,” added Mr. Long. “We believe our line card
and capabilities are well positioned to assure mutual success for
suppliers, VARs and MSPs, and their customers as we begin the new
decade.”
Global enterprise computing solutions fourth-quarter sales of
$2.60 billion decreased 2 percent year over year. Global enterprise
computing solutions sales, as adjusted, decreased 1 percent year
over year. Europe sales increased 1 percent year over year. Sales
in the region, as adjusted, increased 4 percent year over year.
Americas sales decreased 4 percent year over year. Sales in the
region, as adjusted, decreased 3 percent year over year. Global
enterprise computing solutions fourth-quarter operating income was
$149 million. Fourth-quarter operating income, excluding
amortization of intangibles expense, as adjusted, was $156 million.
Fourth-quarter operating income as a percentage of sales increased
20 basis points year over year.
FULL-YEAR RESULTS
Full-year 2019 sales of $28.92 billion decreased 3 percent from
sales of $29.68 billion in 2018. Net loss for 2019 was $204
million, or $(2.44) per share, compared with net income of $716
million, or $8.10 per share on a diluted basis, in 2018. Excluding
certain items1, net income would have been $636 million, or $7.55
per share on a diluted basis, in 2019 compared with net income of
$778 million, or $8.79 per share on a diluted basis, in 2018. In
2019, changes in foreign currencies had negative impacts on growth
of approximately $513 million, or 2 percent on sales, and $.23, or
2 percent, on earnings per share on a diluted basis compared to
2018.
“With our flexibility, Arrow was able to adapt to changing
market conditions in 2019,” said Chris Stansbury, senior vice
president and chief financial officer. “Fourth-quarter and
full-year 2019 cash flow provided by operating activities were $495
million and $858 million, respectively. Disciplined working capital
management, continued profitability from our leading positions in
the markets we serve, and efficiencies from our largely complete
cost optimization activities, were all key drivers in generating
our strong cash flow. We remain committed to returning excess cash
to shareholders, and returned approximately $100 million to
shareholders through our stock repurchase program during the fourth
quarter, and approximately $390 million in 2019. At the end of the
year, we had approximately $339 million of remaining authorization
under our share repurchase program.”
FIRST-QUARTER 2020 OUTLOOK
- Consolidated sales of $6.225 billion to $6.625 billion, with
global components sales of $4.55 billion to $4.75 billion, and
global enterprise computing solutions sales of $1.675 billion to
$1.875 billion
- Earnings per share on a diluted basis of $.99 to $1.29, and
earnings per share on a diluted basis, excluding certain items1 of
$1.29 to $1.39 per share, assuming an average tax rate of
approximately 24.5 percent compared to the long-term range of 23 to
25 percent, and average diluted shares outstanding of 82
million
- Interest expense of approximately $52 million
- Expecting average USD-to-Euro exchange rate of $1.12 to €1;
changes in foreign currencies to negatively impact sales growth by
approximately $30 million, and earnings per share on a diluted
basis by $.01 compared to the first quarter of 2019
“As we look to the first quarter, we are seeing some delays and
extended lead times of products manufactured in China due to
business and transportation shutdowns, as well as the extension of
the New Year Holiday week mandated by the Chinese government. The
situation in that region remains uncertain, and we are monitoring
conditions closely. Currently, we are not able to quantify the
potential impacts to our first-quarter outlook," said Mr.
Stansbury.
“Separately, our first quarter of 2020 will close on March 28,
2020, two days earlier than the first quarter of 2019, and three
days before the end of the calendar month. We expect this will
negatively impact sales by approximately $225 million, and earnings
per share on a diluted basis by approximately $.11 compared to the
first quarter of 2019. The earlier closing date will only impact
global enterprise computing solutions. Additionally, while the
second and third quarters of 2020 will close two days earlier than
the second and third quarters of 2019, we expect impacts to
year-over-year comparisons should be negligible. We anticipate the
fourth quarter of 2020 will benefit by the corresponding amounts
lost from the first quarter.”
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 175,000
leading technology manufacturers and service providers. With 2019
sales of $29 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, 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, changes in legal and regulatory matters,
non-compliance with certain regulations, such as export,
anti-trust, and anti-corruption laws, the company's ability to
generate cash flow, and disruptions in the company’s business due
to epidemics (such as the coronavirus). 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, 2019.
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 expenses
as 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 credits” and “AFS inventory write-downs and
recoveries,” respectively). Operating income is adjusted to exclude
identifiable intangible asset amortization, restructuring,
integration, and other charges, loss on disposition of businesses,
net, AFS notes receivable reserves and credits and inventory
write-downs and recoveries, digital inventory write-downs and
recoveries, the impact of non-cash charges related to goodwill,
trade names, and long-lived assets, and the impact of wind down.
Net income attributable to shareholders as adjusted to exclude
identifiable intangible asset amortization, restructuring,
integration, and other charges, and loss on disposition of
businesses, net, AFS notes receivable reserves and credits and
inventory write-downs and recoveries, digital inventory write-downs
and recoveries, the impact of non-cash charges related to goodwill,
trade names, and long-lived assets, the impact of wind down,
pension settlements, net gains and losses on investments, and
certain tax adjustments including related interest expense. 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)
Quarter Ended
Year Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
(Unaudited)
(Unaudited)
Sales
$
7,338,190
$
7,918,182
$
28,916,847
$
29,676,768
Cost of sales
6,515,247
6,942,812
25,618,466
25,975,856
Gross profit
822,943
975,370
3,298,381
3,700,912
Operating expenses:
Selling, general, and administrative
expenses
513,878
583,943
2,191,612
2,303,051
Depreciation and amortization
50,051
47,183
189,790
186,384
Loss on disposition of businesses, net
5,813
—
21,252
3,604
Impairments
—
—
698,246
—
Restructuring, integration, and other
charges
15,093
9,864
89,785
60,361
584,835
640,990
3,190,685
2,553,400
Operating income
238,108
334,380
107,696
1,147,512
Equity in earnings (losses) of affiliated
companies
(610
)
(1,524
)
(2,765
)
(2,332
)
Gain (loss) on investments, net
3,967
(10,221
)
11,831
(14,166
)
Employee benefit plan expense
(21,500
)
(3,086
)
(24,849
)
(6,870
)
Interest and other financing expense,
net
(50,317
)
(54,584
)
(203,743
)
(214,771
)
Income (loss) before income taxes
169,648
264,965
(111,830
)
909,373
Provision for income taxes
57,460
32,474
88,338
187,799
Consolidated net income (loss)
112,188
232,491
(200,168
)
721,574
Noncontrolling interests
175
1,838
3,919
5,379
Net income (loss) attributable to
shareholders
$
112,013
$
230,653
$
(204,087
)
$
716,195
Net income (loss) per share:
Basic
$
1.37
$
2.66
$
(2.44
)
$
8.19
Diluted
$
1.36
$
2.63
$
(2.44
)
$
8.10
Weighted average shares outstanding:
Basic
81,613
86,559
83,568
87,476
Diluted
82,493
87,561
83,568
88,444
ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except par
value)
December 31, 2019
December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
300,103
$
509,327
Accounts receivable, net
8,482,687
8,945,463
Inventories
3,477,120
3,878,678
Other current assets
266,249
274,832
Total current assets
12,526,159
13,608,300
Property, plant, and equipment, at
cost:
Land
7,793
7,882
Buildings and improvements
173,370
158,712
Machinery and equipment
1,481,525
1,425,933
1,662,688
1,592,527
Less: Accumulated depreciation and
amortization
(859,578
)
(767,827
)
Property, plant, and equipment, net
803,110
824,700
Investments in affiliated companies
86,942
83,693
Intangible assets, net
271,903
372,644
Goodwill
2,061,322
2,624,690
Other assets
651,360
270,418
Total assets
$
16,400,796
$
17,784,445
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
7,046,221
$
7,631,879
Accrued expenses
880,507
912,292
Short-term borrowings, including current
portion of long-term debt
331,431
246,257
Total current liabilities
8,258,159
8,790,428
Long-term debt
2,640,129
3,239,115
Other liabilities
636,115
378,536
Equity:
Shareholders' equity:
Common stock, par value $1:
Authorized – 160,000 shares in both 2019
and 2018
Issued – 125,424 shares in both 2019 and
2018
125,424
125,424
Capital in excess of par value
1,150,006
1,135,934
Treasury stock (44,804 and 40,233 shares
in 2019 and 2018, respectively), at cost
(2,332,548
)
(1,972,254
)
Retained earnings
6,131,248
6,335,335
Accumulated other comprehensive loss
(262,211
)
(299,449
)
Total shareholders' equity
4,811,919
5,324,990
Noncontrolling interests
54,474
51,376
Total equity
4,866,393
5,376,366
Total liabilities and equity
$
16,400,796
$
17,784,445
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
(Unaudited)
Quarter Ended
December 31, 2019
December 31, 2018
Cash flows from operating activities:
Consolidated net income
$
112,188
$
232,491
Adjustments to reconcile consolidated net
income to net cash provided by operations:
Depreciation and amortization
50,051
47,183
Amortization of stock-based
compensation
6,321
8,134
Equity in (earnings) losses of affiliated
companies
610
1,524
Deferred income taxes
15,196
(16,533
)
(Gain) loss on investment, net
(3,840
)
10,221
Loss on disposition of businesses, net
5,813
—
Pension settlement expense
20,111
—
Other
(155
)
3,142
Change in assets and liabilities, net of
effects of acquired and disposed businesses:
Accounts receivable
(578,059
)
(752,891
)
Inventories
40,448
(162,825
)
Accounts payable
827,614
764,726
Accrued expenses
43,649
96,946
Other assets and liabilities
(45,145
)
31,016
Net cash provided by operating
activities
494,802
263,134
Cash flows from investing activities:
Proceeds from (cash paid on) disposition
of businesses
(11,769
)
—
Acquisition of property, plant, and
equipment
(30,111
)
(30,439
)
Proceeds from sale of property, plant, and
equipment
—
5,421
Cash paid for customer relationship
intangible asset
(7,616
)
(20,000
)
Other
(4,127
)
(2,500
)
Net cash used for investing activities
(53,623
)
(47,518
)
Cash flows from financing activities:
Change in short-term and other
borrowings
(20,794
)
88,034
Proceeds from (repayment of) long-term
bank borrowings, net
(308,047
)
(114,120
)
Proceeds from exercise of stock
options
5,201
900
Repurchases of common stock
(100,009
)
(150,132
)
Net cash used for financing activities
(423,649
)
(175,318
)
Effect of exchange rate changes on
cash
20,319
(5,162
)
Net increase in cash and cash
equivalents
37,849
35,136
Cash and cash equivalents at beginning of
period
262,254
474,191
Cash and cash equivalents at end of
period
$
300,103
$
509,327
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
Year Ended
December 31, 2019
December 31, 2018
Cash flows from operating activities:
Consolidated net income (loss)
$
(200,168
)
$
721,574
Adjustments to reconcile consolidated net
income to net cash provided by operations:
Depreciation and amortization
189,790
186,384
Amortization of stock-based
compensation
41,070
46,238
Equity in (earnings) losses of affiliated
companies
2,765
2,332
Deferred income taxes
(50,288
)
1,236
(Gain) loss on investment, net
(11,462
)
14,166
Loss on disposition of businesses, net
21,252
3,604
Pension settlement expense
20,111
1,665
Impairments
698,246
—
Other
10,659
9,198
Change in assets and liabilities, net of
effects of acquired and disposed businesses:
Accounts receivable
338,849
(1,007,308
)
Inventories
383,058
(618,875
)
Accounts payable
(521,575
)
936,423
Accrued expenses
(27,475
)
112,123
Other assets and liabilities
(36,837
)
(136,070
)
Net cash provided by operating
activities
857,995
272,690
Cash flows from investing activities:
Cash consideration paid for acquired
businesses, net of cash acquired
—
(331,563
)
Proceeds from (cash paid on) disposition
of businesses
(13,094
)
32,013
Acquisition of property, plant, and
equipment
(143,191
)
(135,336
)
Proceeds from sale of property, plant and
equipment
—
5,421
Cash paid for customer relationship
intangible asset
(7,616
)
(20,000
)
Other
(9,682
)
(13,500
)
Net cash used for investing activities
(173,583
)
(462,965
)
Cash flows from financing activities:
Change in short-term and other
borrowings
(113,923
)
192,192
Proceeds from (repayments of) long-term
bank borrowings, net
(405,007
)
306,635
Redemption of notes
—
(300,000
)
Proceeds from exercise of stock
options
16,911
8,819
Repurchases of common stock
(404,203
)
(243,305
)
Other
(147
)
(1,174
)
Net cash provided by (used for) financing
activities
(906,369
)
(36,833
)
Effect of exchange rate changes on
cash
12,733
6,352
Net decrease in cash and cash
equivalents
(209,224
)
(220,756
)
Cash and cash equivalents at beginning of
period
509,327
730,083
Cash and cash equivalents at end of
period
$
300,103
$
509,327
ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
Quarter Ended
December 31, 2019
December 31, 2018
% Change
Consolidated sales, as reported
$
7,338,190
$
7,918,182
(7.3
)%
Impact of changes in foreign
currencies
—
(65,384
)
Impact of dispositions and wind down
(19,375
)
(118,184
)
Consolidated sales, as adjusted
$
7,318,815
$
7,734,614
(5.4
)%
Global components sales, as reported
$
4,738,993
$
5,261,477
(9.9
)%
Impact of changes in foreign
currencies
—
(40,608
)
Impact of dispositions and wind down
(19,375
)
(102,965
)
Global components sales, as adjusted
$
4,719,618
$
5,117,904
(7.8
)%
Americas components sales, as reported
$
1,644,757
$
2,021,033
(18.6
)%
Impact of changes in foreign
currencies
—
(214
)
Impact of dispositions and wind down
(19,239
)
(78,246
)
Americas components sales, as adjusted
$
1,625,518
$
1,942,573
(16.3
)%
Europe components sales, as reported
$
1,189,016
$
1,407,429
(15.5
)%
Impact of changes in foreign
currencies
—
(36,312
)
Impact of dispositions and wind down
(136
)
(24,719
)
Europe components sales, as adjusted
$
1,188,880
$
1,346,398
(11.7
)%
Asia components sales, as reported
$
1,905,220
$
1,833,015
3.9
%
Impact of changes in foreign
currencies
—
(4,082
)
Asia components sales, as adjusted
$
1,905,220
$
1,828,933
4.2
%
Global ECS sales, as reported
$
2,599,197
$
2,656,705
(2.2
)%
Impact of changes in foreign
currencies
—
(24,776
)
Impact of dispositions
—
(15,219
)
Global ECS sales, as adjusted
$
2,599,197
$
2,616,710
(0.7
)%
Europe ECS sales, as reported
$
959,449
$
954,343
0.5
%
Impact of changes in foreign
currencies
—
(20,834
)
Impact of dispositions
—
(15,219
)
Europe ECS sales, as adjusted
$
959,449
$
918,290
4.5
%
Americas ECS sales, as reported
$
1,639,748
$
1,702,362
(3.7
)%
Impact of changes in foreign
currencies
—
(3,942
)
Americas ECS sales, as adjusted
$
1,639,748
$
1,698,420
(3.5
)%
ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
Year Ended
December 31, 2019
December 31, 2018
% Change
Consolidated sales, as reported
$
28,916,847
$
29,676,768
(2.6
)%
Impact of changes in foreign
currencies
—
(513,217
)
Impact of dispositions and wind down
(251,614
)
(496,108
)
Consolidated sales, as adjusted
$
28,665,233
$
28,667,443
flat
Global components sales, as reported
$
20,250,735
$
20,856,851
(2.9
)%
Impact of changes in foreign
currencies
—
(337,828
)
Impact of dispositions and wind down
(240,473
)
(415,707
)
Global components sales, as adjusted
$
20,010,262
$
20,103,316
(0.5
)%
Americas components sales, as reported
$
7,167,295
$
7,816,533
(8.3
)%
Impact of changes in foreign
currencies
—
(4,496
)
Impact of dispositions and wind down
(189,963
)
(310,198
)
Americas components sales, as adjusted
$
6,977,332
$
7,501,839
(7.0
)%
Europe components sales, as reported
$
5,412,379
$
5,733,222
(5.6
)%
Impact of changes in foreign
currencies
—
(292,551
)
Impact of dispositions and wind down
(50,510
)
(105,509
)
Europe components sales, as adjusted
$
5,361,869
$
5,335,162
0.5
%
Asia components sales, as reported
$
7,671,061
$
7,307,096
5.0
%
Impact of changes in foreign
currencies
—
(40,781
)
Asia components sales, as adjusted
$
7,671,061
$
7,266,315
5.6
%
Global ECS sales, as reported
$
8,666,112
$
8,819,917
(1.7
)%
Impact of changes in foreign
currencies
—
(175,389
)
Impact of dispositions
(11,141
)
(80,401
)
Global ECS sales, as adjusted
$
8,654,971
$
8,564,127
1.1
%
Europe ECS sales, as reported
$
3,034,087
$
3,077,391
(1.4
)%
Impact of changes in foreign
currencies
—
(145,468
)
Impact of dispositions
(11,141
)
(52,908
)
Europe ECS sales, as adjusted
$
3,022,946
$
2,879,015
5.0
%
Americas ECS sales, as reported
$
5,632,025
$
5,742,526
(1.9
)%
Impact of changes in foreign
currencies
—
(29,921
)
Impact of dispositions
—
(27,493
)
Americas ECS sales, as adjusted
$
5,632,025
$
5,685,112
(0.9
)%
ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS
RECONCILIATION
(In thousands except per share
data)
(Unaudited)
Three months ended December 31,
2019
Reported GAAP measure
Intangible amortization
expense
Restructuring & Integration
charges
AFS Write Downs
Digital Write Downs
Impact of Wind Down(6)
Tax adjustments(7)
Other(1)
Non-GAAP measure
Sales
$
7,338,190
$
—
$
—
$
—
$
—
$
(19,375
)
$
—
$
—
$
7,318,815
Gross Profit
822,943
—
—
—
1,117
5,388
—
—
829,448
Operating income
238,108
14,311
16,350
2,850
1,117
10,912
—
1,002
284,650
Income before income taxes
169,648
14,311
16,350
2,850
1,117
10,942
—
17,919
233,137
Provision for income taxes
57,460
4,050
3,042
607
156
(18,380
)
1,806
2,700
51,441
Consolidated net income
112,188
10,261
13,308
2,243
961
29,322
(1,806
)
15,219
181,696
Noncontrolling interests
175
138
—
—
—
—
—
—
313
Net income attributable to
shareholders
$
112,013
$
10,123
$
13,308
$
2,243
$
961
$
29,322
$
(1,806
)
$
15,219
$
181,383
Net income per diluted share(5)
$
1.36
$
0.12
$
0.16
$
0.03
$
0.01
$
0.36
$
(0.02
)
$
0.18
$
2.20
Effective tax rate
33.9
%
22.1
%
Three months ended December 31,
2018
Reported GAAP measure
Intangible amortization
expense
Restructuring & Integration
charges
AFS Write Downs
Digital Write Downs
Impact of Wind Down(6)
Tax adjustments(7)
Other(2)
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
—
—
1,635
28,323
3,025
73,015
Consolidated net income
232,491
6,721
6,340
—
—
2,479
(28,323
)
8,861
228,569
Noncontrolling interests
1,838
142
—
—
—
—
—
—
1,980
Net income attributable to
shareholders
$
230,653
$
6,579
$
6,340
$
—
$
—
$
2,479
$
(28,323
)
$
8,861
$
226,589
Net income per diluted share(5)
$
2.63
$
0.08
$
0.07
$
—
$
—
$
0.03
$
(0.32
)
$
0.10
$
2.59
Effective tax rate
12.3
%
24.2
%
NON-GAAP EARNINGS
RECONCILIATION
(In thousands except per share
data)
(Unaudited)
Year ended December 31, 2019
Reported GAAP measure
Intangible amortization
expense
Restructuring & Integration
charges
AFS Write Downs
Digital Write Downs
Impairments(4)
Impact of Wind Down(6)
Tax adjustments(7)
Other(1)
Non-GAAP measure
Sales
$
28,916,847
$
—
$
—
$
—
$
—
$
—
$
(240,473
)
$
—
$
—
$
28,676,374
Gross Profit
3,298,381
—
—
1,868
22,332
—
(1,975
)
—
—
3,320,606
Operating income
107,696
42,383
78,429
18,037
22,332
623,796
162,244
—
1,868
1,056,785
Income before income taxes
(111,830
)
42,383
78,429
18,037
22,332
623,796
162,356
—
10,921
846,424
Provision for income taxes
88,338
11,913
19,540
4,339
5,390
64,246
12,631
(1,696
)
750
205,451
Consolidated net income
(200,168
)
30,470
58,889
13,698
16,942
559,550
149,725
1,696
10,171
640,973
Noncontrolling interests
3,919
558
—
—
—
—
—
—
—
4,477
Net income attributable to
shareholders
$
(204,087
)
$
29,912
$
58,889
$
13,698
$
16,942
$
559,550
$
149,725
$
1,696
$
10,171
$
636,496
Net income per diluted share(5)
$
(2.44
)
$
0.36
$
0.70
$
0.16
$
0.20
$
6.70
$
1.79
$
0.02
$
0.12
$
7.55
Effective tax rate
(79.0
)%
24.3
%
Year ended December 31, 2018
Reported GAAP measure
Intangible amortization
expense
Restructuring & Integration
charges
AFS Write Downs
Digital Write Downs
Impairments
Impact of Wind Down(6)
Tax adjustments(7)
Other(3)
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
—
—
—
6,031
28,323
4,678
252,428
Consolidated net income
721,574
27,433
34,482
—
—
—
13,644
(28,323
)
14,757
783,567
Noncontrolling interests
5,379
589
—
—
—
—
—
—
—
5,968
Net income attributable to
shareholders
$
716,195
$
26,844
$
34,482
$
—
$
—
$
—
$
13,644
$
(28,323
)
$
14,757
777,599
Net income per diluted share(5)
$
8.10
$
0.30
$
0.39
$
—
$
—
$
—
$
0.15
$
(0.32
)
$
0.17
$
8.79
Effective tax rate
20.7
%
24.4
%
(1)
Other includes loss on disposition of
businesses, net, gain (loss) on investments, net, interest related
to uncertain tax position related to the Tax Act and pension
settlement.
(2)
Other includes gain (loss) on investments,
net, and pension settlement.
(3)
Other includes loss on disposition of
businesses, net, gain (loss) on investments, net, and pension
settlement.
(4)
Impairments include goodwill impairments
of $570,175, tradename impairments of $46,000, and $7,621 in
impairment charges related to various other long-lived assets.
(5)
For the year ended December 31, 2019, the
non-GAAP net income per diluted share calculation includes 752
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, certain tax adjustments, and
impairments related to the personal computer and mobility asset
disposition business are included in “impact of wind down”
above.
(7)
Includes income tax expense related to
repatriation of foreign earnings and the Tax Act.
ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)
(Unaudited)
Quarter Ended
Year Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
Sales:
Global components
$
4,738,993
$
5,261,477
$
20,250,735
$
20,856,851
Global ECS
2,599,197
2,656,705
8,666,112
8,819,917
Consolidated
$
7,338,190
$
7,918,182
$
28,916,847
$
29,676,768
Operating income (loss):
Global components
$
149,794
$
252,313
$
(10,199
)
$
1,007,638
Global ECS
148,711
152,195
426,192
427,605
Corporate (a)
(60,397
)
(70,128
)
(308,297
)
(287,731
)
Consolidated
$
238,108
$
334,380
$
107,696
$
1,147,512
(a)
Includes restructuring, integration, and other charges of $16.4
million and $79.0 million for the fourth quarter and year ended
December 31, 2019 and $11.1 million and $49.3 million for the
fourth quarter and year ended December 31, 2018, respectively. Also
included is a net loss on disposition of $1.0 million and $1.9
million for the fourth quarter and year ended December 31, 2019 and
$3.6 million for the year ended December 31, 2018,
respectively.
NON-GAAP SEGMENT
RECONCILIATION
Quarter Ended
Year Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
Global components operating income, as
reported
$
149,794
$
252,313
$
(10,199
)
$
1,007,638
Intangible assets amortization expense
(b)
7,135
6,600
26,594
24,226
Impairments (b)
—
—
623,796
—
Impact of wind-down (b)
10,912
5,733
161,664
8,846
AFS notes receivable reserve
2,850
—
18,037
—
Digital inventory reserve
1,117
—
22,332
—
Global components operating income, as
adjusted
$
171,808
$
264,646
$
842,224
$
1,040,710
Global ECS operating income, as
reported
$
148,711
$
152,195
$
426,192
$
427,605
Intangible assets amortization expense
7,176
2,893
15,789
13,989
Global ECS operating income, as
adjusted
$
155,887
$
155,088
$
441,981
$
441,594
(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/20200206005263/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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