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Arrow Electronics Reports Fourth-Quarter and Full-Year 2021 Results

2022-02-03 08:00 ET - News Release

-- Record Fourth-Quarter and Full-Year Sales, Gross Profit, Operating Income, and Earnings Per Share --

-- Fourth-Quarter Earnings Per Share of $5.26; Non-GAAP Earnings Per Share of $5.37 --


CENTENNIAL, Colo. -- (Business Wire)

Arrow Electronics, Inc. (NYSE:ARW) today reported fourth-quarter 2021 sales of $9.02 billion, an increase of 7 percent from sales of $8.45 billion in the fourth quarter of 2020. Fourth-quarter 2021 net income was $371 million, or $5.26 per share on a diluted basis, compared with net income of $236 million, or $3.08 per share on a diluted basis, in the fourth quarter of 2020.

Fourth-quarter 2021 non-GAAP1 sales increased 8 percent from 2020. Non-GAAP net income1 was $379 million, or $5.37 per share on a diluted basis, in the fourth quarter of 2021, compared with non-GAAP net income of $243 million, or $3.17 per share on a diluted basis, in the fourth quarter of 2020. In the fourth quarter of 2021, changes in foreign currencies had negative impacts on growth of approximately $73 million on sales and $.07 on earnings per share on a diluted basis compared to the fourth quarter of 2020.

“Our fourth quarter and full year results demonstrate how we are leveraging Arrow’s extensive experience, deep industry knowledge, and expertise in design, engineering, and supply chain to help customers manage through the current market challenges. Arrow is uniquely positioned in the market and customers new and old are increasingly turning to our team, enabling us to build on our relationships and do even more business,” said Michael J. Long, chairman, president, and chief executive officer. “Our organization has worked hard to capture these tremendous opportunities and deliver full-year earnings per share that were more than 75 percent higher than our previous record year.”

Global components fourth-quarter sales of $6.68 billion increased 13 percent year over year. Non-GAAP sales increased 14 percent year over year. Americas components sales increased 32 percent year over year. Asia-Pacific components sales were flat year over year. Europe components sales increased 17 percent year over year. Non-GAAP sales in the region increased 21 percent year over year. Global components fourth-quarter operating income was $430 million. Fourth-quarter non-GAAP operating income was $437 million.

“Our past investments in Arrow’s sales, engineering and supply chain services combined with the current, favorable pricing environment are proving effective for global components,” continued Mr. Long. “As a result of our focused execution, global components delivered the highest margin levels in decades.”

Global enterprise computing solutions fourth-quarter sales of $2.34 billion decreased 8 percent year over year. Non-GAAP sales decreased 6 percent year over year. Europe enterprise computing solutions sales decreased 6 percent year over year. Non-GAAP sales in the region decreased 3 percent year over year. Americas enterprise computing sales decreased 9 percent year over year. Global enterprise computing solutions fourth-quarter operating income was $155 million. Fourth-quarter non-GAAP operating income was $157 million.

“Global enterprise computing solutions is poised for continued success in 2022 as the need for a trusted partner to help customers navigate IT complexity and security has never been greater,” said Mr. Long.

FULL-YEAR RESULTS

Full-year 2021 sales of $34.48 billion increased 20 percent from sales of $28.67 billion in 2020. Net income for 2021 was $1.11 billion, or $15.10 per share on a diluted basis, compared with net income of $584 million, or $7.43 per share on a diluted basis, in 2020.

Full-year 2021 non-GAAP sales increased 19 percent year over year. Non-GAAP net incomewas $1.14 billion, or $15.50 per share on a diluted basis, in 2021 compared with non-GAAP net income of $610 million, or $7.75 per share on a diluted basis, in 2020. In 2021, changes in foreign currencies had positive impacts on growth of approximately $403 million on sales, and $.14 on earnings per share on a diluted basis compared to 2020.

“We delivered on our commitment to return cash to shareholders while reducing leverage ratios, having returned approximately $250 million through Arrow’s stock repurchase program during the fourth quarter and approximately $900 million throughout 2021, the most we have ever returned in a single year,” said Chris Stansbury, senior vice president and chief financial officer. “These repurchases reflect our confidence in the business and Arrow’s growth potential. With return on invested capital and return on working capital each at record levels, we are pleased to utilize our cash to further enhance shareholder value.”

1 A reconciliation of non-GAAP financial measures, including sales, sales for each segment and in each region, gross profit, operating income, income before income taxes, provision for income taxes, net income, net income attributable to shareholders, and net income per share, to GAAP financial measures is presented in the reconciliation tables included herein.

FIRST-QUARTER 2022 OUTLOOK

  • Consolidated sales of $8.35 billion to $8.95 billion, with global components sales of $6.675 billion to $6.975 billion, and global enterprise computing solutions sales of $1.675 billion to $1.975 billion
  • Net income per share on a diluted basis of $4.32 to $4.48, and non-GAAP net income per share on a diluted basis1 of $4.44 to $4.60
  • Average tax rate of approximately 23.5% percent compared to the long-term range of 23 to 25 percent
  • Average diluted shares outstanding of 69 million
  • Interest expense of approximately $35 million
  • Expecting average USD-to-Euro exchange rate of $1.13 to €1; changes in foreign currencies to decrease sales by approximately $160 million, and earnings per share on a diluted basis by $.10 compared to the first quarter of 2021

First-Quarter 2022 Outlook

 

Reported GAAP
measure

Intangible amortization
expense

Restructuring &
integration charges

Non-GAAP measure

Net income per diluted share

$4.32 to $4.48

$.10

$.02

$4.44 to $4.60

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 220,000 leading technology manufacturers and service providers. With 2021 sales of $34 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 first quarter of fiscal 2022, 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 & 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 coronavirus 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 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, gross profit, operating income, income before income taxes, provision for income taxes, net income, 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, net income per share on a diluted basis, effective tax rate, which are non-GAAP measures 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 notes receivable reserves and recoveries related to the AFS business (referred to as “AFS notes receivable reserves and recoveries”), identifiable intangible asset amortization, restructuring, integration, and other charges, impairments of long-lived assets, impact of the wind down of the company’s personal computer and mobility asset disposition business (referred to as “wind down”), gains and losses on investments, the impact of certain tax adjustments, and pension settlement gains and losses.

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)

 

 

 

 

 

 

Quarter Ended

 

Year Ended

 

December 31, 2021

 

December 31, 2020

 

December 31, 2021

 

December 31, 2020

 

(Unaudited)

 

(Unaudited)

 

 

 

 

Sales

$

9,016,077

 

 

$

8,454,192

 

 

$

34,477,018

 

 

$

28,673,363

 

Cost of sales

 

7,819,699

 

 

 

7,530,506

 

 

 

30,274,653

 

 

 

25,482,233

 

Gross profit

 

1,196,378

 

 

 

923,686

 

 

 

4,202,365

 

 

 

3,191,130

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general, and administrative expenses

 

632,496

 

 

 

547,530

 

 

 

2,435,030

 

 

 

2,087,050

 

Depreciation and amortization

 

48,196

 

 

 

48,404

 

 

 

195,120

 

 

 

189,058

 

Impairments

 

 

 

 

 

 

 

4,482

 

 

 

7,223

 

Restructuring, integration, and other charges

 

3,754

 

 

 

6,340

 

 

 

10,911

 

 

 

13,288

 

 

 

684,446

 

 

 

602,274

 

 

 

2,645,543

 

 

 

2,296,619

 

Operating income

 

511,932

 

 

 

321,412

 

 

 

1,556,822

 

 

 

894,511

 

Equity in earnings (losses) of affiliated companies

 

1,323

 

 

 

(839

)

 

 

3,508

 

 

 

(531

)

Gain on investments, net

 

2,046

 

 

 

8,531

 

 

 

12,951

 

 

 

5,348

 

Employee benefit plan expense, net

 

(1,256

)

 

 

(1,172

)

 

 

(5,180

)

 

 

(2,859

)

Interest and other financing expense, net

 

(34,719

)

 

 

(31,614

)

 

 

(131,727

)

 

 

(137,210

)

Income before income taxes

 

479,326

 

 

 

296,318

 

 

 

1,436,374

 

 

 

759,259

 

Provision for income taxes

 

107,838

 

 

 

59,342

 

 

 

325,906

 

 

 

172,795

 

Consolidated net income

 

371,488

 

 

 

236,976

 

 

 

1,110,468

 

 

 

586,464

 

Noncontrolling interests

 

280

 

 

 

905

 

 

 

2,271

 

 

 

2,026

 

Net income attributable to shareholders

$

371,208

 

 

$

236,071

 

 

$

1,108,197

 

 

$

584,438

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

5.34

 

 

$

3.12

 

 

$

15.29

 

 

$

7.49

 

Diluted

$

5.26

 

 

$

3.08

 

 

$

15.10

 

 

$

7.43

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

69,556

 

 

 

75,701

 

 

 

72,472

 

 

 

77,992

 

Diluted

 

70,550

 

 

 

76,574

 

 

 

73,385

 

 

 

78,635

 

 

ARROW ELECTRONICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands except par value)

 

 

 

 

 

December 31, 2021

 

December 31, 2020

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

222,194

 

 

$

373,615

 

Accounts receivable, net

 

11,123,946

 

 

 

9,205,343

 

Inventories

 

4,201,965

 

 

 

3,287,308

 

Other current assets

 

345,218

 

 

 

286,633

 

Total current assets

 

15,893,323

 

 

 

13,152,899

 

Property, plant, and equipment, at cost:

 

 

 

Land

 

5,736

 

 

 

7,940

 

Buildings and improvements

 

186,097

 

 

 

207,614

 

Machinery and equipment

 

1,523,919

 

 

 

1,553,371

 

 

 

1,715,752

 

 

 

1,768,925

 

Less: Accumulated depreciation and amortization

 

(1,032,941

)

 

 

(969,320

)

Property, plant, and equipment, net

 

682,811

 

 

 

799,605

 

Investments in affiliated companies

 

63,695

 

 

 

76,358

 

Intangible assets, net

 

195,029

 

 

 

233,819

 

Goodwill

 

2,080,371

 

 

 

2,115,469

 

Other assets

 

620,311

 

 

 

675,761

 

Total assets

$

19,535,540

 

 

$

17,053,911

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

9,617,084

 

 

$

7,937,889

 

Accrued expenses

 

1,326,386

 

 

 

1,034,361

 

Short-term borrowings, including current portion of long-term debt

 

382,619

 

 

 

158,633

 

Total current liabilities

 

11,326,089

 

 

 

9,130,883

 

Long-term debt

 

2,244,443

 

 

 

2,097,940

 

Other liabilities

 

624,162

 

 

 

676,136

 

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

 

1,189,845

 

 

 

1,165,850

 

Treasury stock (57,358 and 50,581 shares in 2021 and 2020, respectively), at cost

 

(3,629,265

)

 

 

(2,776,821

)

Retained earnings

 

7,787,948

 

 

 

6,679,751

 

Accumulated other comprehensive loss

 

(191,657

)

 

 

(104,885

)

Total shareholders' equity

 

5,282,295

 

 

 

5,089,319

 

Noncontrolling interests

 

58,551

 

 

 

59,633

 

Total equity

 

5,340,846

 

 

 

5,148,952

 

Total liabilities and equity

$

19,535,540

 

 

$

17,053,911

 

 

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Quarter Ended

 

December 31, 2021

 

December 31, 2020

Cash flows from operating activities:

 

 

 

Consolidated net income

$

371,488

 

 

$

236,976

 

Adjustments to reconcile consolidated net income to net cash provided by operations:

 

 

 

Depreciation and amortization

 

48,196

 

 

 

48,404

 

Amortization of stock-based compensation

 

6,511

 

 

 

6,686

 

Equity in (earnings) losses of affiliated companies

 

(1,323

)

 

 

839

 

Deferred income taxes

 

15,395

 

 

 

(9,263

)

Gain on investments, net

 

(2,013

)

 

 

(8,531

)

Other

 

757

 

 

 

1,016

 

Change in assets and liabilities, net of effects of acquired and disposed businesses:

 

 

 

Accounts receivable, net

 

(1,846,887

)

 

 

(1,074,997

)

Inventories

 

(378,839

)

 

 

(16,248

)

Accounts payable

 

1,630,583

 

 

 

988,883

 

Accrued expenses

 

217,358

 

 

 

57,330

 

Other assets and liabilities

 

(33,333

)

 

 

(31,089

)

Net cash provided by operating activities

 

27,893

 

 

 

200,006

 

Cash flows from investing activities:

 

 

 

Acquisition of property, plant, and equipment

 

(20,766

)

 

 

(34,030

)

Other

 

389

 

 

 

(627

)

Net cash used for investing activities

 

(20,377

)

 

 

(34,657

)

Cash flows from financing activities:

 

 

 

Change in short-term and other borrowings

 

28,924

 

 

 

(8,862

)

Repayment of long-term bank borrowings, net

 

(289,922

)

 

 

(135

)

Net proceeds from note offerings

 

495,134

 

 

 

 

Proceeds from exercise of stock options

 

2,044

 

 

 

15,074

 

Repurchases of common stock

 

(250,000

)

 

 

(98,985

)

Settlement of forward-starting interest rate swap

 

24,896

 

 

 

 

Net cash provided by (used for) financing activities

 

11,076

 

 

 

(92,908

)

Effect of exchange rate changes on cash

 

(12,330

)

 

 

74,155

 

Net increase in cash and cash equivalents

 

6,262

 

 

 

146,596

 

Cash and cash equivalents at beginning of period

 

215,932

 

 

 

227,019

 

Cash and cash equivalents at end of period

$

222,194

 

 

$

373,615

 

 

 

 

 

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

Year Ended

 

December 31, 2021

 

December 31, 2020

Cash flows from operating activities:

 

 

 

Consolidated net income (loss)

$

1,110,468

 

 

$

586,464

 

Adjustments to reconcile consolidated net income to net cash provided by operations:

 

 

 

Depreciation and amortization

 

195,120

 

 

 

189,058

 

Amortization of stock-based compensation

 

36,117

 

 

 

35,288

 

Equity in (earnings) losses of affiliated companies

 

(3,508

)

 

 

531

 

Deferred income taxes

 

24,749

 

 

 

29,713

 

Impairments

 

4,482

 

 

 

7,223

 

Gain on investments, net

 

(12,833

)

 

 

(5,333

)

Other

 

3,947

 

 

 

5,059

 

Change in assets and liabilities, net of effects of acquired and disposed businesses:

 

 

 

Accounts receivable, net

 

(2,109,159

)

 

 

(541,427

)

Inventories

 

(960,605

)

 

 

244,325

 

Accounts payable

 

1,766,912

 

 

 

760,883

 

Accrued expenses

 

391,941

 

 

 

86,484

 

Other assets and liabilities

 

(28,648

)

 

 

(38,425

)

Net cash provided by operating activities

 

418,983

 

 

 

1,359,843

 

Cash flows from investing activities:

 

 

 

Acquisition of property, plant, and equipment

 

(83,051

)

 

 

(123,585

)

Proceeds from sale of property, plant, and equipment

 

22,171

 

 

 

 

Cash paid for customer relationship intangible asset

 

 

 

 

(713

)

Other

 

762

 

 

 

(14,496

)

Net cash used for investing activities

 

(60,118

)

 

 

(138,794

)

Cash flows from financing activities:

 

 

 

Change in short-term and other borrowings

 

12,938

 

 

 

(95,017

)

Repayments of long-term bank borrowings, net

 

(687

)

 

 

(411,497

)

Redemption of notes

 

(130,860

)

 

 

(209,366

)

Net proceeds from note offering

 

495,134

 

 

 

 

Proceeds from exercise of stock options

 

46,982

 

 

 

21,037

 

Repurchases of common stock

 

(911,548

)

 

 

(483,735

)

Settlement of forward-starting interest rate swap

 

24,896

 

 

 

(48,378

)

Other

 

(159

)

 

 

(141

)

Net cash used for financing activities

 

(463,304

)

 

 

(1,227,097

)

Effect of exchange rate changes on cash

 

(46,982

)

 

 

79,560

 

Net increase (decrease) in cash and cash equivalents

 

(151,421

)

 

 

73,512

 

Cash and cash equivalents at beginning of year

 

373,615

 

 

 

300,103

 

Cash and cash equivalents at end of year

$

222,194

 

 

$

373,615

 

 

 

 

 

ARROW ELECTRONICS, INC.

NON-GAAP SALES RECONCILIATION

(In thousands)

(Unaudited)

 

 

Quarter Ended

 

 

 

December 31, 2021

 

December 31, 2020

 

% Change

 

 

 

 

 

 

Consolidated sales, as reported

$

9,016,077

 

$

8,454,192

 

 

6.6

%

Impact of changes in foreign currencies

 

 

 

 

(73,179

)

 

 

Non-GAAP consolidated sales

$

9,016,077

 

 

$

8,381,013

 

 

7.6

%

 

 

 

 

 

 

Global components sales, as reported

$

6,679,577

 

 

$

5,923,094

 

 

12.8

%

Impact of changes in foreign currencies

 

 

 

 

(37,035

)

 

 

Non-GAAP global components sales

$

6,679,577

 

 

$

5,886,059

 

 

13.5

%

 

 

 

 

 

 

Americas components sales, as reported

$

2,137,386

 

 

$

1,625,458

 

 

31.5

%

Impact of changes in foreign currencies

 

 

 

 

(821

)

 

 

Non-GAAP Americas components sales

$

2,137,386

 

 

$

1,624,637

 

 

31.6

%

 

 

 

 

 

 

Asia components sales, as reported

$

2,948,594

 

 

$

2,935,181

 

 

0.5

%

Impact of changes in foreign currencies

 

 

 

 

5,886

 

 

 

Non-GAAP Asia components sales

$

2,948,594

 

 

$

2,941,067

 

 

0.3

%

 

 

 

 

 

 

Europe components sales, as reported

$

1,593,597

 

 

$

1,362,455

 

 

17.0

%

Impact of changes in foreign currencies

 

 

 

 

(42,100

)

 

 

Non-GAAP Europe components sales

$

1,593,597

 

 

$

1,320,355

 

 

20.7

%

 

 

 

 

 

 

Global ECS sales, as reported

$

2,336,500

 

 

$

2,531,098

 

 

(7.7

) %

Impact of changes in foreign currencies

 

 

 

 

(36,144

)

 

 

Non-GAAP global ECS sales

$

2,336,500

 

 

$

2,494,954

 

 

(6.4

) %

 

 

 

 

 

 

Americas ECS sales, as reported

$

1,356,598

 

 

$

1,483,637

 

 

(8.6

) %

Impact of changes in foreign currencies

 

 

 

 

4,320

 

 

 

Non-GAAP Americas ECS sales

$

1,356,598

 

 

$

1,487,957

 

 

(8.8

) %

 

 

 

 

 

 

Europe ECS sales, as reported

$

979,902

 

 

$

1,047,461

 

 

(6.4

) %

Impact of changes in foreign currencies

 

 

 

 

(40,464

)

 

 

Non-GAAP Europe ECS sales

$

979,902

 

 

$

1,006,997

 

 

(2.7

) %

 

 

 

 

 

 

ARROW ELECTRONICS, INC.

NON-GAAP SALES RECONCILIATION

(In thousands)

(Unaudited)

 

 

 

 

 

Year Ended

 

 

 

December 31, 2021

 

December 31, 2020

 

% Change

 

 

 

 

 

 

Consolidated sales, as reported

$

34,477,018

 

$

28,673,363

 

 

20.2

%

Impact of changes in foreign currencies

 

 

 

 

403,039

 

 

 

Non-GAAP consolidated sales

$

34,477,018

 

 

$

29,076,402

 

 

18.6

%

 

 

 

 

 

 

Global components sales, as reported

$

26,357,517

 

 

$

20,502,687

 

 

28.6

%

Impact of changes in foreign currencies

 

 

 

 

261,066

 

 

 

Non-GAAP global components sales

$

26,357,517

 

 

$

20,763,753

 

 

26.9

%

 

 

 

 

 

 

Americas components sales, as reported

$

7,827,866

 

 

$

6,183,119

 

 

26.6

%

Impact of changes in foreign currencies

 

 

 

 

(396

)

 

 

Non-GAAP Americas components sales

$

7,827,866

 

 

$

6,182,723

 

 

26.6

%

 

 

 

 

 

 

Asia components sales, as reported

$

12,280,805

 

 

$

9,332,034

 

 

31.6

%

Impact of changes in foreign currencies

 

 

 

 

65,991

 

 

 

Non-GAAP Asia components sales

$

12,280,805

 

 

$

9,398,025

 

 

30.7

%

 

 

 

 

 

 

Europe components sales, as reported

$

6,248,846

 

 

$

4,987,534

 

 

25.3

%

Impact of changes in foreign currencies

 

 

 

 

195,471

 

 

 

Non-GAAP Europe components sales

$

6,248,846

 

 

$

5,183,005

 

 

20.6

%

 

 

 

 

 

 

Global ECS sales, as reported

$

8,119,501

 

 

$

8,170,676

 

 

(0.6

) %

Impact of changes in foreign currencies

 

 

 

 

141,973

 

 

 

Non-GAAP global ECS sales

$

8,119,501

 

 

$

8,312,649

 

 

(2.3

) %

 

 

 

 

 

 

Americas ECS sales, as reported

$

4,878,954

 

 

$

5,109,372

 

 

(4.5

) %

Impact of changes in foreign currencies

 

 

 

 

41,974

 

 

 

Non-GAAP Americas ECS sales

$

4,878,954

 

 

$

5,151,346

 

 

(5.3

) %

 

 

 

 

 

 

Europe ECS sales, as reported

$

3,240,547

 

 

$

3,061,304

 

 

5.9

%

Impact of changes in foreign currencies

 

 

 

 

99,999

 

 

 

Non-GAAP Europe ECS sales

$

3,240,547

 

 

$

3,161,303

 

 

2.5

%

 

ARROW ELECTRONICS, INC.

NON-GAAP EARNINGS RECONCILIATION

(In thousands except per share data)

(Unaudited)

 

Three months ended December 31, 2021

 

Reported
GAAP
measure

Intangible
amortization
expense

Restructuring
& Integration
charges

AFS Reserves &
Recoveries

Impact of Wind
Down

Other(1)

Non-GAAP
measure

Sales

$

9,016,077

 

$

$

 

$

 

$

 

$

 

$

9,016,077

 

Gross Profit

 

1,196,378

 

 

 

 

 

 

 

 

 

 

 

1,196,378

 

Operating income

 

511,932

 

 

9,086

 

3,754

 

 

 

 

 

 

 

 

524,772

 

Income before income taxes

 

479,326

 

 

9,086

 

3,754

 

 

 

 

 

 

(2,046

)

 

490,120

 

Provision for income taxes

 

107,838

 

 

2,337

 

854

 

 

 

 

 

 

(492

)

 

110,537

 

Consolidated net income

 

371,488

 

 

6,749

 

2,900

 

 

 

 

 

 

(1,554

)

 

379,583

 

Noncontrolling interests

 

280

 

 

143

 

 

 

 

 

 

 

 

 

423

 

Net income attributable to shareholders

$

371,208

 

$

6,606

$

2,900

 

$

 

$

 

$

(1,554

)

$

379,160

 

Net income per diluted share(4)

$

5.26

 

$

0.09

$

0.04

 

$

 

$

 

$

(0.02

)

$

5.37

 

Effective tax rate

 

22.5

%

 

 

 

 

 

 

22.6

%

 

 

 

 

 

 

 

 

Three months ended December 31, 2020

 

Reported
GAAP
measure

Intangible
amortization
expense

Restructuring
& Integration
charges

AFS Reserves &
Recoveries

Impact of Wind
Down

Other(1)

Non-GAAP
measure

Sales

$

8,454,192

 

$

$

 

$

 

$

 

$

 

$

8,454,192

 

Gross Profit

 

923,686

 

 

 

 

 

 

 

(33

)

 

 

 

923,653

 

Operating income

 

321,412

 

 

9,376

 

6,340

 

 

(840

)

 

(417

)

 

 

 

335,871

 

Income before income taxes

 

296,318

 

 

9,376

 

6,340

 

 

(840

)

 

(412

)

 

(8,531

)

 

302,251

 

Provision for income taxes

 

59,342

 

 

2,405

 

(918

)

 

(201

)

 

102

 

 

(2,053

)

 

58,677

 

Consolidated net income

 

236,976

 

 

6,971

 

7,258

 

 

(639

)

 

(514

)

 

(6,478

)

 

243,574

 

Noncontrolling interests

 

905

 

 

148

 

 

 

 

 

 

 

 

 

1,053

 

Net income attributable to shareholders

$

236,071

 

$

6,823

$

7,258

 

$

(639

)

$

(514

)

$

(6,478

)

$

242,521

 

Net income per diluted share(4)

$

3.08

 

$

0.09

$

0.09

 

$

(0.01

)

$

(0.01

)

$

(0.08

)

$

3.17

 

Effective tax rate

 

20.0

%

 

 

 

 

 

19.4

%

 

ARROW ELECTRONICS, INC.

NON-GAAP EARNINGS RECONCILIATION

(In thousands except per share data)

(Unaudited)

 

Year ended December 31, 2021

 

Reported
GAAP
measure

Intangible
amortization
expense

Restructuring
& Integration
charges

AFS Reserves &
Recoveries

Impairments

Impact of Wind
Down

Non-recurring
tax items

Other(3)

Non-GAAP
measure

Sales

$

34,477,018

 

$

$

$

 

$

$

 

$

 

$

 

$

34,477,018

 

Gross Profit

 

4,202,365

 

 

 

 

 

 

 

 

 

 

 

 

 

4,202,365

 

Operating income

 

1,556,822

 

 

36,930

 

10,911

 

 

 

4,482

 

 

 

 

 

 

 

1,609,145

 

Income before income taxes

 

1,436,374

 

 

36,930

 

10,911

 

 

 

4,482

 

 

 

 

 

(12,770

)

 

1,475,927

 

Provision for income taxes

 

325,906

 

 

9,457

 

2,341

 

 

 

1,078

 

 

 

 

 

(3,073

)

 

335,709

 

Consolidated net income

 

1,110,468

 

 

27,473

 

8,570

 

 

 

3,404

 

 

 

 

 

(9,697

)

 

1,140,218

 

Noncontrolling interests

 

2,271

 

 

590

 

 

 

 

 

 

 

 

 

 

 

2,861

 

Net income attributable to shareholders

$

1,108,197

 

$

26,883

$

8,570

$

 

$

3,404

$

 

$

 

$

(9,697

)

$

1,137,357

 

Net income per diluted share(4)

$

15.10

 

$

0.37

$

0.12

$

 

$

0.05

$

 

$

 

$

0.13

 

$

15.50

 

Effective tax rate

 

22.7

%

 

 

 

 

 

 

 

 

22.7

%

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2020

 

Reported
GAAP
measure

Intangible
amortization
expense

Restructuring
& Integration
charges

AFS Reserves &
Recoveries

Impairments

Impact of Wind
Down

Non-recurring
tax items(2)

Other(3)

Non-GAAP
measure

Sales

$

28,673,363

 

$

$

$

 

$

$

 

$

 

$

 

$

28,673,363

 

Gross Profit

 

3,191,130

 

 

 

 

 

 

 

(11,204

)

 

 

 

 

 

3,179,926

 

Operating income

 

894,511

 

 

38,417

 

13,288

 

(1,796

)

 

7,223

 

(14,728

)

 

 

 

 

 

936,915

 

Income (loss) before income taxes

 

759,259

 

 

38,417

 

13,288

 

(1,796

)

 

7,223

 

(14,704

)

 

 

 

(7,117

)

 

794,570

 

Provision for income taxes

 

172,795

 

 

9,866

 

1,301

 

(432

)

 

2,356

 

(3,143

)

 

1,272

 

 

(1,717

)

 

182,298

 

Consolidated net income (loss)

 

586,464

 

 

28,551

 

11,987

 

(1,364

)

 

4,867

 

(11,561

)

 

(1,272

)

 

(5,400

)

 

612,272

 

Noncontrolling interests

 

2,026

 

 

568

 

 

 

 

 

 

 

 

 

 

 

2,594

 

Net income (loss) attributable to shareholders

$

584,438

 

$

27,983

$

11,987

$

(1,364

)

$

4,867

$

(11,561

)

$

(1,272

)

$

(5,400

)

$

609,678

 

Net income (loss) per diluted share(4)

$

7.43

 

$

0.36

$

0.15

$

(0.02

)

$

0.06

$

(0.15

)

$

0.02

 

$

(0.07

)

$

7.75

 

Effective tax rate

 

22.8

%

 

 

 

 

 

 

 

 

22.9

%

 

 

 

 

 

 

 

 

 

 

(1) Other includes gain on investments, net.

(2) Includes income tax (expense) benefit related to legislation changes and other non-recurring tax adjustments.

(3) Other includes gain on investments, net and pension settlement gain.

(4) In all periods presented the sum of the components for non-GAAP diluted EPS may not agree to totals, as presented, due to rounding.

 

ARROW ELECTRONICS, INC.

SEGMENT INFORMATION

(In thousands)

(Unaudited)

 

 

 

 

 

Quarter Ended

 

Year Ended

 

December 31, 2021

 

December 31, 2020

 

December 31, 2021

 

December 31, 2020

Sales:

 

 

 

 

 

 

 

Global components

$

6,679,577

 

 

$

5,923,094

 

 

$

26,357,517

 

 

$

20,502,687

 

Global ECS

 

2,336,500

 

 

 

2,531,098

 

 

 

8,119,501

 

 

 

8,170,676

 

Consolidated

$

9,016,077

 

 

$

8,454,192

 

 

$

34,477,018

 

 

$

28,673,363

 

Operating income (loss):

 

 

 

 

 

 

 

Global components (a)

$

430,415

 

 

$

230,127

 

 

$

1,432,187

 

 

$

780,333

 

Global ECS (b)

 

154,852

 

 

 

155,880

 

 

 

390,103

 

 

 

353,763

 

Corporate (c)

 

(73,335

)

 

 

(64,595

)

 

 

(265,468

)

 

 

(239,585

)

Consolidated

$

511,932

 

 

$

321,412

 

 

$

1,556,822

 

 

$

894,511

 

(a)

Global components operating income for the years 2021 and 2020 includes $12.5 million and $2.4 million, respectively, related to proceeds from legal settlements.

(b)

Global ECS operating income for 2020 includes reserves and other adjustments of approximately $29.9 million primarily related to foreign tax and other loss contingencies for the year ended. These reserves are principally associated with transactional taxes on activity from several prior years, not significant to any one year.

(c)

Corporate operating income includes restructuring, integration, and other charges of $3.8 million and $10.9 million for the fourth quarter and year ended December 31, 2021, respectively, and $6.3 million and $13.3 million for the fourth quarter and year ended December 31, 2020, respectively. Also included are impairment charges of $2.3 million related to various long-lived assets for the year ended December 31, 2021.

NON-GAAP SEGMENT RECONCILIATION

 

 

 

 

 

Quarter Ended

 

Year Ended

 

December 31, 2021

 

December 31, 2020

 

December 31, 2021

 

December 31, 2020

Global components operating income (loss), as reported

$

430,415

 

$

230,127

 

 

$

1,432,187

 

$

780,333

 

Intangible assets amortization expense (a)

 

6,942

 

 

7,011

 

 

 

27,915

 

 

28,664

 

Impairments (a)

 

 

 

 

 

 

4,482

 

 

 

Impact of wind-down (a)

 

 

 

(417

)

 

 

 

 

(14,728

)

AFS notes receivable reserve (recoveries) and inventory write-downs

 

 

 

(840

)

 

 

 

 

(1,796

)

Global components non-GAAP operating income

$

437,357

 

$

235,881

 

 

$

1,464,584

 

$

792,473

 

Global ECS operating income, as reported

$

154,852

 

$

155,880

 

 

$

390,103

 

$

353,763

 

Intangible assets amortization expense

 

2,144

 

 

2,365

 

 

 

9,015

 

 

9,753

 

Impairments

 

 

 

 

 

 

 

 

4,918

 

Global ECS non-GAAP operating income

$

156,996

 

$

158,245

 

 

$

399,118

 

$

368,434

 

Category: Investor Relations

Contacts:

Contact: Steven O’Brien,
Vice President, Investor Relations
303-824-4544

Media Contact: John Hourigan,
Vice President, Global Communications
303-824-4586

Source: Arrow Electronics

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