-- Third-Quarter Earnings Per Share of $3.53; Non-GAAP Earnings Per Share of $4.14 –
-- Revenue of $8.01 billion in line with guidance --

CENTENNIAL, Colo. — (BUSINESS WIRE) — November 2, 2023 — Arrow Electronics, Inc. (NYSE: ARW) today reported third-quarter 2023 sales of $8.01 billion, a decrease of 14 percent year over year. Third-quarter net income was $199 million, or $3.53 per share on a diluted basis, compared with net income of $342 million, or $5.27 per share on a diluted basis, in the third quarter of 2022. Non-GAAP net income¹ was $233 million, or $4.14 per share on a diluted basis, in the third quarter of 2023, compared with non-GAAP net income of $354 million, or $5.45 per share on a diluted basis, in the third quarter of 2022. Both GAAP and non-GAAP earnings per share in the third quarter of 2023 included a $0.87 benefit related to cash received from a legal settlement in the global components business, and a $0.31 impact for a charge taken to increase accounts receivable reserves associated with a customer in the global enterprise computing solutions (ECS) business.

“The company executed well amidst an inventory correction in the semiconductor market and a softer information technology market, delivering non-GAAP earnings per share at the high end of our guidance range,” said Sean Kerins, Arrow’s president, and chief executive officer.

Global components third-quarter sales of $6.25 billion reflected a decrease of 14 percent year over year. Europe components third-quarter sales increased 3 percent year over year, which was a 4 percent decline in constant currency. Asia-Pacific components third-quarter sales decreased 18 percent year over year. Americas components third-quarter sales decreased 24 percent year over year. Global components third-quarter operating income was $379 million, and third-quarter non-GAAP operating income was $386 million. These results include a $62 million benefit resulting from a legal settlement recorded as a decrease to operating expenses.

“With lead times normalizing, customer inventory remained elevated, impacting order velocity and top-line results across most vertical markets. Despite the market conditions, operating margins are meaningfully higher than in prior market corrections,” said Mr. Kerins. “We were encouraged by the level of demand creation activity in the quarter and the continued traction of our supply chain services offering.”

Global ECS third-quarter sales of $1.76 billion reflected a decrease of 10 percent year over year. Europe ECS third-quarter sales increased 2 percent year over year, which was a 5 percent decline in constant currency. Americas ECS third-quarter sales decreased 18 percent year over year. Global ECS third-quarter operating income was $55 million, and third-quarter non-GAAP operating income was $56 million. These results include a $22 million charge taken to increase accounts receivable reserves associated with a customer.

“The mix in our ECS business continued to shift toward software related to infrastructure and cybersecurity, as well as cloud solutions. As a result, the business produced year-on-year billings growth albeit with a decline in sales,” said Mr. Kerins.

“Non-GAAP earnings per share after adjusting for the legal settlement and accounts receivable item, was at the high end of our guidance range,” said Raj Agrawal, senior vice president and chief financial officer. “We were pleased to generate $322 million in cash flow from operations in the third quarter. Additionally, we repurchased approximately $200 million of shares during the third quarter and now have remaining purchase authorization of approximately $622 million.”

¹ A reconciliation of non-GAAP financial measures to GAAP financial measures is presented in the reconciliation tables included herein.

FOURTH-QUARTER 2023 OUTLOOK

• Consolidated sales of $7.50 billion to $8.10 billion, with global components sales of $5.40 billion to $5.80 billion, and global enterprise computing solutions sales of $2.10 billion to $2.30 billion
• Net income per share on a diluted basis of $3.30 to $3.50, and non-GAAP net income per share on a diluted basis of $3.61 to $3.81
• Average tax rate in the range of 23 to 25 percent
• Average diluted shares outstanding of ~55 million
• Interest expense in the range of approximately $90 million
• Changes in foreign currencies expected to increase year-over-year growth in sales by $54 million, and earnings per share on a diluted basis by $0.02 compared to the fourth quarter of 2022
• Changes in foreign currencies expected to decrease quarter-over-quarter growth in sales by $82 million and earnings per share on a diluted basis by $0.07 compared to the third quarter of 2023