-- Record First-Quarter Sales, Operating
Income, Net Income and Earnings per Share -- --
First-Quarter Earnings Per Share of $2.72; Non-GAAP Earnings Per
Share of $2.84 --
Arrow Electronics, Inc. (NYSE:ARW) today reported first-quarter
2021 sales of $8.39 billion, an increase of 31 percent from sales
of $6.38 billion in the first quarter of 2020. First-quarter net
income was $206 million, or $2.72 per share on a diluted basis,
compared with a net income of $50 million, or $0.61 per share on a
diluted basis, in the first quarter of 2020. Non-GAAP net income1
was $216 million, or $2.84 per share on a diluted basis, in the
first quarter of 2021, compared with non-GAAP net income of $79
million, or $0.97 per share on a diluted basis, in the first
quarter of 2020.
“Arrow’s commitment to guiding innovation forward on behalf of
our customers and suppliers enabled us to deliver record results in
the quarter. I am incredibly impressed with our team’s execution as
we continued to help customers across key industries thrive and
benefit by delivering the products, services and solutions they
need,” said Michael J. Long, chairman, president, and chief
executive officer. “Our continually evolving business model has
adapted well to significant swings in demand and shifts in business
priorities over the last year, and we look forward to further
building on this strong momentum in the months ahead.”
Global components first-quarter sales of $6.44 billion reflected
an increase of 42 percent year over year. Asia-Pacific components
sales increased 88 percent year over year. Americas components
first-quarter sales increased 10 percent year over year. Europe
components first-quarter sales increased 20 percent year over year
and non-GAAP sales in the region increased 10 percent year over
year. Global components first-quarter operating income was $289
million and first-quarter non-GAAP operating income was $296
million.
“Strength and stability are the hallmarks of our global
components business. Sales were above the high-end of our
expectations for the fourth consecutive quarter, and, importantly,
we are realizing robust operating leverage on our sales growth,”
said Mr. Long. “We see current supply challenges as transitory and
expect more balance with demand in the coming quarters.”
Global enterprise computing solutions first-quarter sales of
$1.94 billion reflected an increase of 6 percent year over year and
non-GAAP sales increased 2 percent year over year. Europe
enterprise computing solutions first-quarter sales increased 13
percent year over year and non-GAAP sales in the region increased 4
percent year over year. Americas enterprise computing solutions
first-quarter sales increased 2 percent year over year. Global
enterprise computing solutions first-quarter operating income was
$77 million and first-quarter non-GAAP operating income was $80
million.
Mr. Long said, “First-quarter global enterprise computing
solutions sales were in-line with our prior outlook. We are seeing
early indications that spending priorities are shifting to more
complex projects with transformational business outcomes that are
well-suited for our enterprise capabilities.”
“Our financial returns continue to improve meaningfully,” said
Chris Stansbury, senior vice president and chief financial officer.
“Through our disciplined working capital management, we are
well-positioned to continue realizing operational leverage and
converting growing profits to free cash flow in future quarters. As
always, we remain committed to improving value to shareholders.
During the first quarter, we repurchased approximately $150 million
of shares through our stock repurchase program, ending the quarter
with approximately $313 million of remaining authorization. Our
balance sheet and liquidity position remain strong, and we are
pleased to report return on invested capital increased year over
year for the fourth straight quarter.”
1 A reconciliation of non-GAAP financial measures, including
sales, gross profit, operating income, net income attributable to
shareholders, and net income per share, to GAAP financial measures
is presented in the reconciliation tables included herein.
SECOND-QUARTER 2021 OUTLOOK
- Consolidated sales of $8.1 billion to $8.7 billion, with global
components sales of $6.3 billion to $6.6 billion, and global
enterprise computing solutions sales of $1.8 billion to $2.1
billion
- Net income per share on a diluted basis of $2.67 to $2.83, and
non-GAAP net income per share on a diluted basis1 of $2.82 to
$2.98
- Average tax rate of approximately 23 percent compared to the
long-term range of 23 to 25 percent
- Average diluted shares outstanding of 75 million
- Interest expense of approximately $33 million
- Expecting average USD-to-Euro exchange rate of $1.18 to €1;
changes in foreign currencies to increase sales by approximately
$150 million, and earnings per share on a diluted basis by $.08
compared to the second quarter of 2020
Second-Quarter 2021 Outlook
Reported GAAP measure
Intangible amortization
expense
Restructuring & integration
charges
Non-GAAP measure
Net income per diluted share
$2.67 - $2.83
$.10
$.05
$2.82 - $2.98
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 180,000
leading technology manufacturers and service providers. With 2020
sales of $29 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, as the
term is defined under the federal securities laws, including but
not limited to statements regarding: Arrow’s future financial
performance, including its outlook on financial results for the
second quarter of fiscal 2021, such as sales, net income per
diluted share, non-GAAP net income per diluted share, average tax
rate, average diluted shares outstanding, interest expense, average
USD-to-Euro exchange rate, impact to sales due to changes in
foreign currencies, intangible amortization expense per diluted
share, restructuring and integration charges per diluted share, and
expectation regarding market demand. These forward-looking
statements 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: potential adverse effects of the
ongoing global COVID-19 pandemic, including actions taken to
contain or treat COVID-19, 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, foreign currency fluctuation, changes in
legal and regulatory matters, non-compliance with certain
regulations, such as export, anti-trust, and anti-corruption laws,
foreign tax and other loss contingencies, and the company's ability
to generate cash flow. For a further discussion of these and other
factors that could cause the company’s future results to differ
materially from any forward-looking statements, see the section
entitled “Risk Factors” in the company's periodic reports on Form
10-K and Form 10-Q and subsequent filings made with the Securities
and Exchange Commission. 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.
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 non-GAAP sales, gross profit, operating
income, income before income taxes, provision for income taxes, net
income, and net income per share on a diluted basis which are
adjusted GAAP measures 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 and the impact of notes receivable reserves and
recoveries related to the AFS business (referred to as “AFS notes
receivable reserves and recoveries”). Non-GAAP operating income
excludes identifiable intangible asset amortization, restructuring,
integration, and other charges, AFS notes receivable reserves and
recoveries. Non-GAAP effective tax rate excludes identifiable
intangible asset amortization, restructuring, integration, and
other charges, gain (loss) on investments, net, the impact of tax
legislation charges, and AFS notes receivable recoveries. Net
income attributable to shareholders, and net income per basic and
diluted share as adjusted to exclude identifiable intangible asset
amortization, restructuring, integration, and other charges, AFS
notes receivable reserves and recoveries, net gains and losses on
investments, and certain tax adjustments.
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 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.
A reconciliation of the company’s non-GAAP financial information
to GAAP is set forth in the tables below.
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands except per share
data)
(Unaudited)
Quarter Ended
April 3, 2021
March 28, 2020
Sales
$
8,385,919
$
6,381,417
Cost of sales
7,455,809
5,653,026
Gross profit
930,110
728,391
Operating expenses:
Selling, general, and administrative
expenses
574,567
533,839
Depreciation and amortization
50,331
47,110
Restructuring, integration, and other
charges
5,709
9,138
630,607
590,087
Operating income
299,503
138,304
Equity in earnings of affiliated
companies
844
530
Gain (loss) on investments, net
2,793
(16,810
)
Employee benefit plan (expense) credit
(1,230
)
(1,109
)
Interest and other financing expense,
net
(33,656
)
(43,268
)
Income before income taxes
268,254
77,647
Provision for income taxes
61,026
27,892
Consolidated net income
207,228
49,755
Noncontrolling interests
907
252
Net income attributable to
shareholders
$
206,321
$
49,503
Net income (loss) per share:
Basic
$
2.76
$
0.62
Diluted
$
2.72
$
0.61
Weighted-average shares outstanding:
Basic
74,882
80,407
Diluted
75,794
81,108
ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except par
value)
(Unaudited)
April 3, 2021
December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
227,701
$
373,615
Accounts receivable, net
8,503,010
9,205,343
Inventories
3,275,389
3,287,308
Other current assets
360,968
286,633
Total current assets
12,367,068
13,152,899
Property, plant, and equipment, at
cost:
Land
5,691
7,940
Buildings and improvements
177,615
207,614
Machinery and equipment
1,521,489
1,553,371
1,704,795
1,768,925
Less: Accumulated depreciation and
amortization
(957,257
)
(969,320
)
Property, plant, and equipment, net
747,538
799,605
Investments in affiliated companies
77,330
76,358
Intangible assets, net
223,848
233,819
Goodwill
2,101,938
2,115,469
Other assets
655,838
675,761
Total assets
$
16,173,560
$
17,053,911
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
7,045,759
$
7,937,889
Accrued expenses
985,928
1,034,361
Short-term borrowings, including current
portion of long-term debt
361,327
158,633
Total current liabilities
8,393,014
9,130,883
Long-term debt
1,903,848
2,097,940
Other liabilities
662,252
676,136
Commitments and contingencies
Equity:
Shareholders’ equity:
Common stock, par value $1:
Authorized - 160,000 shares in both 2021
and 2020
Issued - 125,424 shares in both 2021 and
2020
125,424
125,424
Capital in excess of par value
1,166,554
1,165,850
Treasury stock (51,426 and 50,581 shares
in 2021 and 2020, respectively), at cost
(2,898,830
)
(2,776,821
)
Retained earnings
6,886,072
6,679,751
Accumulated other comprehensive loss
(123,461
)
(104,885
)
Total shareholders’ equity
5,155,759
5,089,319
Noncontrolling interests
58,687
59,633
Total equity
5,214,446
5,148,952
Total liabilities and equity
$
16,173,560
$
17,053,911
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
(Unaudited)
Quarter Ended
April 3, 2021
March 28, 2020
Cash flows from operating activities:
Consolidated net income
$
207,228
$
49,755
Adjustments to reconcile consolidated net
income to net cash provided by operations:
Depreciation and amortization
50,331
47,110
Amortization of stock-based
compensation
13,223
13,920
Equity in (earnings) losses of affiliated
companies
(844
)
(530
)
Deferred income taxes
13,663
32,613
Gain on investments, net
(2,793
)
16,810
Other
1,374
(205
)
Change in assets and liabilities, net of
effects of acquired and disposed businesses:
Accounts receivable, net
596,777
558,605
Inventories
(13,147
)
133,392
Accounts payable
(840,124
)
(343,051
)
Accrued expenses
3,643
(31,326
)
Other assets and liabilities
(33,867
)
(10,228
)
Net cash provided by operating
activities
(4,536
)
466,865
Cash flows from investing activities:
Acquisition of property, plant, and
equipment
(20,180
)
(27,971
)
Proceeds from sale of property, plant, and
equipment
22,171
—
Other
—
(5,466
)
Net cash used for investing activities
1,991
(33,437
)
Cash flows from financing activities:
Change in short-term and other
borrowings
(12,452
)
(84,354
)
Proceeds from (repayments of) long-term
bank borrowings, net
154,674
(288,577
)
Redemption of notes
(130,860
)
—
Proceeds from exercise of stock
options
26,091
1,980
Repurchases of common stock
(160,619
)
(158,989
)
Net cash used for financing activities
(123,166
)
(529,940
)
Effect of exchange rate changes on
cash
(20,203
)
(2,593
)
Net increase (decrease) in cash and cash
equivalents
(145,914
)
(99,105
)
Cash and cash equivalents at beginning of
period
373,615
300,103
Cash and cash equivalents at end of
period
$
227,701
$
200,998
ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
Quarter Ended
April 3, 2021
March 28, 2020
% Change
Consolidated sales, as reported
$
8,385,919
$
6,381,417
31.4
%
Impact of changes in foreign
currencies
—
202,672
Non-GAAP consolidated sales
$
8,385,919
$
6,584,089
27.4
%
Global components sales, as reported
$
6,443,253
$
4,550,601
41.6
%
Impact of changes in foreign
currencies
—
130,299
Non-GAAP global components sales
$
6,443,253
$
4,680,900
37.6
%
Americas Components sales, as reported
$
1,701,173
$
1,552,798
9.6
%
Impact of changes in foreign
currencies
—
(290
)
Non-GAAP Americas Components sales
$
1,701,173
$
1,552,508
9.6
%
Europe components sales, as reported
$
1,568,602
$
1,309,990
19.7
%
Impact of changes in foreign
currencies
—
115,285
Non-GAAP Europe components sales
$
1,568,602
$
1,425,275
10.1
%
Asia components sales, as reported
$
3,173,478
$
1,687,813
88.0
%
Impact of changes in foreign
currencies
—
15,304
Non-GAAP Asia components sales
$
3,173,478
$
1,703,117
86.3
%
Global ECS sales, as reported
$
1,942,666
$
1,830,816
6.1
%
Impact of changes in foreign
currencies
—
72,373
Non-GAAP global ECS sales
$
1,942,666
$
1,903,189
2.1
%
Europe ECS sales, as reported
$
791,328
$
702,128
12.7
%
Impact of changes in foreign
currencies
—
59,801
Non-GAAP Europe ECS sales
$
791,328
$
761,929
3.9
%
Americas ECS sales, as reported
$
1,151,338
$
1,128,688
2.0
%
Impact of changes in foreign
currencies
—
12,572
Non-GAAP Americas ECS sales
$
1,151,338
$
1,141,260
0.9
%
ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS
RECONCILIATION
(In thousands except per share
data)
(Unaudited)
Three months ended April 3,
2021
Reported
GAAP
measure
Intangible
amortization
expense
Restructuring
& Integration
charges
AFS Reserves & Recoveries
Non-recurring tax items
Other(1)
Non-GAAP
measure
Sales
$
8,385,919
$
—
$
—
$
—
$
—
$
—
$
8,385,919
Gross Profit
930,110
—
—
—
—
—
930,110
Operating income
299,503
9,326
5,709
—
—
—
314,538
Income before income taxes
268,254
9,326
5,709
—
—
(2,793
)
280,496
Provision for income taxes
61,026
2,385
1,166
—
—
(672
)
63,905
Consolidated net income
207,228
6,941
4,543
—
—
(2,121
)
216,591
Noncontrolling interests
907
150
—
—
—
—
1,057
Net income attributable to
shareholders
$
206,321
$
6,791
$
4,543
$
—
$
—
$
(2,121
)
215,534
Net income per diluted share
$
2.72
$
0.09
$
0.06
$
—
$
—
$
(0.03
)
$
2.84
Effective tax rate (2)
22.7
%
22.8
%
Three months ended March 28,
2020
Reported
GAAP
measure
Intangible
amortization
expense
Restructuring
& Integration
charges
AFS Reserves & Recoveries
Non-recurring tax items
Other(1)
Non-GAAP
measure
Sales
$
6,381,417
$
—
$
—
$
—
$
—
$
—
$
6,381,417
Gross Profit
728,391
—
—
—
—
—
728,391
Operating income
138,304
9,955
9,138
(920
)
—
—
156,477
Income before income taxes
77,647
9,955
9,138
(920
)
—
16,810
112,630
Provision for income taxes
27,892
2,564
2,571
(222
)
(3,615
)
4,057
33,247
Consolidated net income
49,755
7,391
6,567
(698
)
3,615
12,753
79,383
Noncontrolling interests
252
137
—
—
—
—
389
Net income attributable to
shareholders
$
49,503
$
7,254
$
6,567
$
(698
)
$
3,615
$
12,753
$
78,994
Net income per diluted share
$
0.61
$
0.09
$
0.08
$
(0.01
)
$
0.04
$
0.16
$
0.97
Effective tax rate (2)
35.9
%
29.5
%
(1) Other includes (gain) loss on
investments, net.
(2) The items as shown in this table,
represent the reconciling items for the tax rate as reported by
GAAP measure and as a non-GAAP measure.
ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)
(Unaudited)
Quarter Ended
April 3, 2021
March 28, 2020
Sales:
Global components
$
6,443,253
$
4,550,601
Global ECS
1,942,666
1,830,816
Consolidated
$
8,385,919
$
6,381,417
Operating income (loss):
Global components
$
289,383
$
164,767
Global ECS (a)
77,359
42,433
Corporate (b)
(67,239
)
(68,896
)
Consolidated
$
299,503
$
138,304
(a)
Includes reserves and other adjustments of
approximately $29.9 million primarily related to foreign tax and
other loss contingencies for the first quarter of 2020. These
reserves are principally associated with transactional taxes on
activity from several prior years, not significant to any one
year.
(b)
Includes restructuring, integration, and
other charges of $5.7 million for the first quarter of 2021, and
$9.1 million for the first quarter of 2020, respectively.
NON-GAAP SEGMENT
RECONCILIATION
Quarter Ended
April 3, 2021
March 28, 2020
Global components operating income (loss),
as reported
$
289,383
$
164,767
Intangible assets amortization expense
7,004
7,380
AFS notes receivable reserve
(recoveries)
—
(920
)
Global components non-GAAP operating
income
$
296,387
$
171,227
Global ECS operating income, as
reported
$
77,359
$
42,433
Intangible assets amortization expense
2,322
2,575
Global ECS non-GAAP operating income
$
79,681
$
45,008
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210506005317/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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