-- Full-Year Cash Provided by Operating Activities of $858 Million --

-- Returned Approximately $390 Million to Shareholders in 2019 --

CENTENNIAL, Colo. — (BUSINESS WIRE) — February 6, 2020 — 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.