Arrow Electronics Reports Third-Quarter 2021 Results

Rhea-AI Summary

Arrow Electronics reported third-quarter 2021 sales of $8.51 billion, up 18% from $7.23 billion in Q3 2020. Net income surged to $290 million, or $4.00 per share, compared to $166 million or $2.13 per share a year ago. Non-GAAP earnings were $4.04 per share. Global components sales rose 25% to $6.62 billion, while enterprise computing solutions fell 2% to $1.89 billion. The company expects Q4 sales between $8.55 billion and $9.15 billion, and net income per share of $4.19 to $4.35.

Positive

• Record third-quarter sales of $8.51 billion, an 18% increase year-over-year.
• Net income increased to $290 million, or $4.00 per share, compared to $166 million, or $2.13 per share in Q3 2020.
• Non-GAAP earnings per share rose to $4.04 from $2.08 year-over-year.
• Global components sales increased 25% to $6.62 billion.
• Strong profitability and positive cash flow enabled $250 million in share repurchases for two consecutive quarters.

Negative

• Global enterprise computing solutions sales decreased by 2% year-over-year to $1.89 billion.
• Anticipated ongoing supply challenges expected to affect component availability in the coming quarters.

-- Record Gross Profit, Operating Income, and Earnings per Share --

-- Third-Quarter Earnings Per Share of $4.00; Non-GAAP Earnings Per Share of $4.04 --

CENTENNIAL, Colo.--(BUSINESS WIRE)-- Arrow Electronics, Inc. (NYSE:ARW) today reported third-quarter 2021 sales of $8.51 billion, an increase of 18 percent from sales of $7.23 billion in the third quarter of 2020. Third-quarter net income was $290 million, or $4.00 per share on a diluted basis, compared with a net income of $166 million, or $2.13 per share on a diluted basis, in the third quarter of 2020. Non-GAAP net income¹ was $293 million, or $4.04 per share on a diluted basis, in the third quarter of 2021, compared with non-GAAP net income of $162 million, or $2.08 per share on a diluted basis, in the third quarter of 2020.

“Arrow’s unwavering commitment to our customers’ success continues to foster expanding opportunities for our own business in the areas of supply chain as a service, designed and engineered value-enhancing solutions, and secure management of mission-critical software workloads,” said Michael J. Long, chairman, president, and chief executive officer. “The value we deliver to customers and suppliers is inexorably linked to the value we capture for all of our stakeholders, which is enabling us to navigate through the near-term supply challenges. We expect component supply to remain well below demand in the coming quarters and through the better part of 2022.”

Global components third-quarter sales of $6.62 billion reflected an increase of 25 percent year over year and non-GAAP sales increased 24 percent year over year. Asia-Pacific components third-quarter sales increased 16 percent year over year and non-GAAP sales in the region increased 15 percent year over year. Americas components third-quarter sales increased 33 percent year over year. Europe components third-quarter sales increased 33 percent year over year and non-GAAP sales in the region increased 32 percent year over year. Global components third-quarter operating income was $385 million, and third-quarter non-GAAP operating income was $392 million.

“While global components sales were limited by product supply, we were able to attach higher value to those sales than ever before as shown by our margin expansion,” Mr. Long said. “Arrow has never worked harder to help alleviate our customers' and suppliers’ biggest problems with respect to getting components to manufacturing and products to market.”

Global enterprise computing solutions third-quarter sales of $1.89 billion reflected a decrease of 2 percent year over year and non-GAAP sales decreased 3 percent year over year. Europe enterprise computing solutions third-quarter sales increased 5 percent year over year and non-GAAP sales in the region increased 3 percent year over year. Americas enterprise computing solutions third-quarter sales decreased 6 percent year over year. Global enterprise computing solutions third-quarter operating income was $77 million, and third-quarter non-GAAP operating income was $79 million.

“Demand for complex IT solutions continues to grow, and we expect to see significant upside in this area when near-term project postponements and incompletions resulting from supply chain challenges are resolved,” said Mr. Long.

“We are taking advantage of the current environment to enhance the returns profile of our business while further solidifying our balance sheet. Our return on invested capital increased year over year for the sixth straight quarter, and our leverage ratios are at the lowest levels in ten years,” said Chris Stansbury, senior vice president and chief financial officer. “Our strong profitability, positive cash flow from operations, and the effective management of our balance sheet enabled us to deliver on our commitment to return cash to shareholders through the repurchase of approximately $250 million of shares for the second consecutive quarter. Our current repurchase authorization stands at approximately $413 million.”

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.

FOURTH-QUARTER 2021 OUTLOOK

• Consolidated sales of $8.55 billion to $9.15 billion, with global components sales of $6.35 billion to $6.65 billion, and global enterprise computing solutions sales of $2.2 billion to $2.5 billion
• Net income per share on a diluted basis of $4.19 to $4.35, and non-GAAP net income per share on a diluted basis¹ of $4.37 to $4.53
• Average tax rate of approximately 23.5 percent compared to the long-term range of 23 to 25 percent
• Average diluted shares outstanding of 71 million
• Interest expense of approximately $32 million
• Expecting average USD-to-Euro exchange rate of $1.16 to €1; changes in foreign currencies to decrease sales by approximately $15 million, and earnings per share on a diluted basis by $.01 compared to the fourth quarter of 2020

Fourth-Quarter 2021 Outlook
		Reported GAAP measure		Intangible amortization expense		Restructuring & integration charges		Non-GAAP measure
Net income per diluted share		$4.19 - $4.35		$.09		$.09		$4.37 - $4.53

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 fourth 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, 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, and net income per share on a diluted basis, 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, the impact of wind down, gains and losses on investments, the impact of tax legislation changes, 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)
(Unaudited)
		Quarter Ended								Nine Months Ended
		October 2, 2021				September 26, 2020				October 2, 2021				September 26, 2020
Sales		$	8,512,391			$	7,231,260			$	25,460,941			$	20,219,171
Cost of sales		7,436,619				6,442,670				22,454,954				17,951,727
Gross profit		1,075,772				788,590				3,005,987				2,267,444
Operating expenses:
Selling, general, and administrative expenses		625,883				504,211				1,802,534				1,539,520
Depreciation and amortization		48,054				46,732				146,924				140,654
Impairments		—				2,305				4,482				7,223
Restructuring, integration, and other charges (credits)		(3,030		)		(2,840		)		7,157				6,948
		670,907				550,408				1,961,097				1,694,345
Operating income		404,865				238,182				1,044,890				573,099
Equity in earnings of affiliated companies		1,151				61				2,185				308
Gain (loss) on investments, net		1,386				2,726				10,905				(3,183		)
Employee benefit plan (expense) credit, net		(1,256		)		595				(3,924		)		(1,687		)
Interest and other financing expense, net		(32,667		)		(30,461		)		(97,008		)		(105,596		)
Income before income taxes		373,479				211,103				957,048				462,941
Provision for income taxes		82,929				44,707				218,068				113,453
Consolidated net income		290,550				166,396				738,980				349,488
Noncontrolling interests		523				336				1,991				1,121
Net income attributable to shareholders		$	290,027			$	166,060			$	736,989			$	348,367
Net income per share:
Basic		$	4.05			$	2.15			$	10.04			$	4.42
Diluted		$	4.00			$	2.13			$	9.92			$	4.39
Weighted-average shares outstanding:
Basic		71,671				77,390				73,426				78,807
Diluted		72,571				78,086				74,313				79,404

ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except par value)
(Unaudited)
		October 2, 2021				December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents		$	215,932			$	373,615
Accounts receivable, net		9,329,427				9,205,343
Inventories		3,834,988				3,287,308
Other current assets		345,317				286,633
Total current assets		13,725,664				13,152,899
Property, plant, and equipment, at cost:
Land		5,691				7,940
Buildings and improvements		188,205				207,614
Machinery and equipment		1,537,671				1,553,371
		1,731,567				1,768,925
Less: Accumulated depreciation and amortization		(1,026,172		)		(969,320		)
Property, plant, and equipment, net		705,395				799,605
Investments in affiliated companies		69,022				76,358
Intangible assets, net		204,458				233,819
Goodwill		2,090,248				2,115,469
Other assets		635,673				675,761
Total assets		$	17,430,460			$	17,053,911
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	8,005,207			$	7,937,889
Accrued expenses		1,142,753				1,034,361
Short-term borrowings, including current portion of long-term debt		353,915				158,633
Total current liabilities		9,501,875				9,130,883
Long-term debt		2,039,761				2,097,940
Other liabilities		651,196				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		1,183,009				1,165,850
Treasury stock (55,370 and 50,581 shares in 2021 and 2020, respectively), at cost		(3,380,984		)		(2,776,821		)
Retained earnings		7,416,740				6,679,751
Accumulated other comprehensive loss		(165,711		)		(104,885		)
Total shareholders’ equity		5,178,478				5,089,319
Noncontrolling interests		59,150				59,633
Total equity		5,237,628				5,148,952
Total liabilities and equity		$	17,430,460			$	17,053,911

ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
		Quarter Ended
		October 2, 2021				September 26, 2020
Cash flows from operating activities:
Consolidated net income		$	290,550			$	166,396
Adjustments to reconcile consolidated net income to net cash provided by operations:
Depreciation and amortization		48,054				46,732
Amortization of stock-based compensation		7,639				6,285
Equity in earnings of affiliated companies		(1,151		)		(61		)
Deferred income taxes		(2,715		)		(7,369		)
Impairments		—				2,305
Gain on investments, net		(1,301		)		(2,727		)
Other		1,539				3,995
Change in assets and liabilities, net of effects of acquired and disposed businesses:
Accounts receivable, net		(545,314		)		87,402
Inventories		(211,554		)		207,646
Accounts payable		413,992				(176,973		)
Accrued expenses		91,481				(41,889		)
Other assets and liabilities		23,026				(17,015		)
Net cash provided by operating activities		114,246				274,727
Cash flows from investing activities:
Acquisition of property, plant, and equipment		(21,176		)		(30,013		)
Other		373				(9,116		)
Net cash used for investing activities		(20,803		)		(39,129		)
Cash flows from financing activities:
Change in short-term and other borrowings		(1,155		)		(78,966		)
Proceeds from long-term bank borrowings, net		154,994				328
Proceeds from exercise of stock options		3,621				2,233
Repurchases of common stock		(250,221		)		(153,011		)
Net cash used for financing activities		(92,761		)		(229,416		)
Effect of exchange rate changes on cash		(28,820		)		15,009
Net increase (decrease) in cash and cash equivalents		(28,138		)		21,191
Cash and cash equivalents at beginning of period		244,070				205,828
Cash and cash equivalents at end of period		$	215,932			$	227,019

ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
		Nine Months Ended
		October 2, 2021				September 26, 2020
Cash flows from operating activities:
Consolidated net income		$	738,980			$	349,488
Adjustments to reconcile consolidated net income to net cash provided by operations:
Depreciation and amortization		146,924				140,654
Amortization of stock-based compensation		29,606				28,602
Equity in earnings of affiliated companies		(2,185		)		(308		)
Deferred income taxes		9,354				38,976
Impairments		4,482				7,223
Loss (gain) on investments, net		(10,820		)		3,198
Other		3,190				4,043
Change in assets and liabilities, net of effects of acquired and disposed businesses:
Accounts receivable, net		(262,272		)		533,570
Inventories		(581,766		)		260,573
Accounts payable		136,329				(228,000		)
Accrued expenses		174,583				29,154
Other assets and liabilities		4,685				(7,336		)
Net cash provided by operating activities		391,090				1,159,837
Cash flows from investing activities:
Acquisition of property, plant, and equipment		(62,285		)		(89,555		)
Proceeds from sale of property, plant, and equipment		22,171				—
Other		373				(14,582		)
Net cash used for investing activities		(39,741		)		(104,137		)
Cash flows from financing activities:
Change in short-term and other borrowings		(15,986		)		(86,155		)
Proceeds from (repayments of) long-term bank borrowings, net		289,235				(411,362		)
Redemption of notes		(130,860		)		(209,366		)
Proceeds from exercise of stock options		44,938				5,963
Repurchases of common stock		(661,548		)		(384,750		)
Settlement of forward-starting interest rate swap		—				(48,378		)
Other		(159		)		(141		)
Net cash used for financing activities		(474,380		)		(1,134,189		)
Effect of exchange rate changes on cash		(34,652		)		5,405
Net decrease in cash and cash equivalents		(157,683		)		(73,084		)
Cash and cash equivalents at beginning of period		373,615				300,103
Cash and cash equivalents at end of period		$	215,932			227,019

ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
		Quarter Ended
		October 2, 2021			September 26, 2020			% Change
Consolidated sales, as reported		$	8,512,391		$	7,231,260		17.7	%
Impact of changes in foreign currencies		—			54,931
Non-GAAP consolidated sales		$	8,512,391		$	7,286,191		16.8	%
Global components sales, as reported		$	6,623,926		$	5,307,737		24.8	%
Impact of changes in foreign currencies		—			34,663
Non-GAAP global components sales		$	6,623,926		$	5,342,400		24.0	%
Americas components sales, as reported		$	2,018,551		$	1,515,962		33.2	%
Impact of changes in foreign currencies		—			78
Non-GAAP Americas components sales		$	2,018,551		$	1,516,040		33.1	%
Asia components sales, as reported		$	3,009,390		$	2,595,103		16.0	%
Impact of changes in foreign currencies		—			18,496
Non-GAAP Asia components sales		$	3,009,390		$	2,613,599		15.1	%
Europe components sales, as reported		$	1,595,985		$	1,196,672		33.4	%
Impact of changes in foreign currencies		—			16,089
Non-GAAP Europe components sales		$	1,595,985		$	1,212,761		31.6	%
Global ECS sales, as reported		$	1,888,465		$	1,923,523		(1.8	)%
Impact of changes in foreign currencies		—			20,268
Non-GAAP global ECS sales		$	1,888,465		$	1,943,791		(2.8	)%
Americas ECS sales, as reported		$	1,203,663		$	1,273,791		(5.5	)%
Impact of changes in foreign currencies		—			5,769
Non-GAAP Americas ECS sales		$	1,203,663		$	1,279,560		(5.9	)%
Europe ECS sales, as reported		$	684,802		$	649,732		5.4	%
Impact of changes in foreign currencies		—			14,499
Non-GAAP Europe ECS sales		$	684,802		$	664,231		3.1	%

ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
		Nine Months Ended
		October 2, 2021			September 26, 2020			% Change
Consolidated sales, as reported		$	25,460,941		$	20,219,171		25.9	%
Impact of changes in foreign currencies		—			476,218
Non-GAAP Consolidated sales		$	25,460,941		$	20,695,389		23.0	%
Global components sales, as reported		$	19,677,940		$	14,579,593		35.0	%
Impact of changes in foreign currencies		—			298,100
Non-GAAP Global components sales		$	19,677,940		$	14,877,693		32.3	%
Americas components sales, as reported		$	5,690,480		$	4,557,661		24.9	%
Impact of changes in foreign currencies		—			425
Non-GAAP Americas components sales		$	5,690,480		$	4,558,086		24.8	%
Asia components sales, as reported		$	9,332,211		$	6,396,853		45.9	%
Impact of changes in foreign currencies		—			60,105
Non-GAAP Asia components sales		$	9,332,211		$	6,456,958		44.5	%
Europe components sales, as reported		$	4,655,249		$	3,625,079		28.4	%
Impact of changes in foreign currencies		—			237,570
Non-GAAP Europe components sales		$	4,655,249		$	3,862,649		20.5	%
Global ECS sales, as reported		$	5,783,001		$	5,639,578		2.5	%
Impact of changes in foreign currencies		—			178,118
Non-GAAP Global ECS sales		$	5,783,001		$	5,817,696		(0.6	)%
Americas ECS sales, as reported		$	3,522,356		$	3,625,735		(2.9	)%
Impact of changes in foreign currencies		—			37,655
Non-GAAP Americas ECS sales		$	3,522,356		$	3,663,390		(3.8	)%
Europe ECS sales, as reported		$	2,260,645		$	2,013,843		12.3	%
Impact of changes in foreign currencies		—			140,463
Non-GAAP Europe ECS sales		$	2,260,645		$	2,154,306		4.9	%

ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS RECONCILIATION
(In thousands except per share data)
(Unaudited)
Three months ended October 2, 2021
		Reported GAAP measure				Intangible amortization expense			Restructuring & Integration charges				AFS Reserves & Recoveries				Impairments			Impact of Wind Down				Other(1)				Non-GAAP measure
Sales		$	8,512,391			$	—		$	—			$	—			$	—		$	—			$	—			$	8,512,391
Gross Profit		1,075,772				—			—				—				—			—				—				1,075,772
Operating income		404,865				9,202			(3,030		)		—				—			—				—				411,037
Income before income taxes		373,479				9,202			(3,030		)		—				—			—				(1,386		)		378,265
Provision for income taxes		82,929				2,353			(689		)		—				—			—				(334		)		84,259
Consolidated net income		290,550				6,849			(2,341		)		—				—			—				(1,052		)		294,006
Noncontrolling interests		523				147			—				—				—			—				—				670
Net income attributable to shareholders		$	290,027			$	6,702		$	(2,341	)		$	—			$	—		$	—			$	(1,052	)		$	293,336
Net income per diluted share (3)		$	4.00			$	0.09		$	(0.03	)		$	—			$	—		$	—			$	(0.01	)		$	4.04
Effective tax rate (4)		22.2		%																								22.3		%
Three months ended September 26, 2020
		Reported GAAP measure				Intangible amortization expense			Restructuring & Integration charges				AFS Reserves & Recoveries				Impairments			Impact of Wind Down				Other(3)				Non-GAAP measure
Sales		$	7,231,260			$	—		$	—			$	—			$	—		$	—			$	—			$	7,231,260
Gross Profit		788,590				—			—				—				—			(475		)		—				788,115
Operating income		238,182				9,352			(2,840		)		(233		)		2,305			(2,487		)		—				244,279
Income before income taxes		211,103				9,352			(2,840		)		(233		)		2,305			(2,478		)		(4,495		)		212,714
Provision for income taxes		44,707				2,396			(665		)		(56		)		556			(583		)		3,797				50,152
Consolidated net income		166,396				6,956			(2,175		)		(177		)		1,749			(1,895		)		(8,292		)		162,562
Noncontrolling interests		336				146			—				—				—			—				—				482
Net income attributable to shareholders		$	166,060			$	6,810		$	(2,175	)		$	(177	)		$	1,749		$	(1,895	)		$	(8,292	)		$	162,080
Net income per diluted share (4)		$	2.13			$	0.09		$	(0.03	)		$	—			$	0.02		$	(0.02	)		$	(0.11	)		$	2.08
Effective tax rate (5)		21.2		%																								23.6		%

ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS RECONCILIATION
(In thousands except per share data)
(Unaudited)
Nine months ended October 2, 2021
		Reported GAAP measure				Intangible amortization expense			Restructuring & Integration charges			AFS Reserves & Recoveries				Impairments			Impact of Wind Down				Other(2)				Non-GAAP measure
Sales		$	25,460,941			$	—		$	—		$	—			$	—		$	—			$	—			$	25,460,941
Gross Profit		3,005,987				—			—			—				—			—				—				3,005,987
Operating income		1,044,890				27,844			7,157			—				4,482			—				—				1,084,373
Income before income taxes		957,048				27,844			7,157			—				4,482			—				(10,724		)		985,807
Provision for income taxes		218,068				7,120			1,487			—				1,078			—				(2,581		)		225,172
Consolidated net income		738,980				20,724			5,670			—				3,404			—				(8,143		)		760,635
Noncontrolling interests		1,991				447			—			—				—			—				—				2,438
Net income attributable to shareholders		$	736,989			$	20,277		$	5,670		$	—			$	3,404		$	—			$	(8,143	)		$	758,197
Net income per diluted share (4)		$	9.92			$	0.27		$	0.08		$	—			$	0.05		$	—			$	(0.11	)		$	10.20
Effective tax rate (5)		22.8		%																							22.8		%
Nine months ended September 26, 2020
		Reported GAAP measure				Intangible amortization expense			Restructuring & Integration charges			AFS Reserves & Recoveries				Impairments			Impact of Wind Down				Other(3)				Non-GAAP measure
Sales		$	20,219,171			$	—		$	—		$	—			$	—		$	—			$	—			$	20,219,171
Gross Profit		2,267,444				—			—			—				—			(11,171		)		—				2,256,273
Operating income		573,099				29,041			6,948			(956		)		7,223			(14,311		)		—				601,044
Income before income taxes		462,941				29,041			6,948			(956		)		7,223			(14,292		)		1,414				492,319
Provision for income taxes		113,453				7,461			2,219			(231		)		2,356			(3,245		)		1,608				123,621
Consolidated net income		349,488				21,580			4,729			(725		)		4,867			(11,047		)		(194		)		368,698
Noncontrolling interests		1,121				420			—			—				—			—				—				1,541
Net income attributable to shareholders		$	348,367			$	21,160		$	4,729		$	(725	)		$	4,867		$	(11,047	)		$	(194	)		$	367,157
Net income per diluted share (4)		$	4.39			$	0.27		$	0.06		$	(0.01	)		$	0.06		$	(0.14	)		$	—			$	4.62
Effective tax rate (5)		24.5		%																							25.1		%
(1) Other includes gain on investments, net.
(2) Other includes gain on investments, net and pension settlement loss.
(3) Other includes (gain) loss on investments, net, non-recurring tax items, and pension settlement gain.
(4) In all periods presented the sum of the components for diluted EPS, as adjusted may not agree to totals, as presented, due to rounding.
(5) 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								Nine Months Ended
		October 2, 2021				September 26, 2020				October 2, 2021				September 26, 2020
Sales:
Global components		$	6,623,926			$	5,307,737			$	19,677,940			$	14,579,593
Global ECS		1,888,465				1,923,523				5,783,001				5,639,578
Consolidated		$	8,512,391			$	7,231,260			$	25,460,941			$	20,219,171
Operating income (loss):
Global components (a)		$	385,353			$	203,603			$	1,001,772			$	550,206
Global ECS (b)		76,793				82,529				235,251				197,883
Corporate (c)		(57,281		)		(47,950		)		(192,133		)		(174,990		)
Consolidated		$	404,865			$	238,182			$	1,044,890			$	573,099

(a)		Global components operating income includes $12.5 million and $2.4 million related to proceeds from legal settlements for the first nine months of 2021 and 2020, respectively, and $4.5 million in impairment charges related to various long lived assets for the first nine months of 2021.
(b)		Global ECS operating income for the first nine months of 2020 includes $4.9 million in impairment charges related to various long-lived assets, and reserves and other adjustments of approximately $29.9 million primarily related to foreign tax and other loss contingencies. 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 (credits) of $(3.0) million and $7.2 million for the third quarter and first nine months of 2021, respectively, and $(2.8) million and $6.9 million for the third quarter and first nine months of 2020, respectively, and $2.3 million of impairment charges related to long-lived assets for the third quarter and first nine months of 2020.

NON-GAAP SEGMENT RECONCILIATION
		Quarter Ended							Nine Months Ended
		October 2, 2021			September 26, 2020				October 2, 2021			September 26, 2020
Global components operating income, as reported		$	385,353		$	203,603			$	1,001,772		$	550,206
Intangible assets amortization expense		6,974			7,014				20,973			21,653
Impairments		—			—				4,482			—
Impact of wind down		—			(2,487		)		—			(14,311		)
AFS notes receivable recoveries		—			(233		)		—			(956		)
Global components non-GAAP operating income		$	392,327		$	207,897			$	1,027,227		$	556,592
Global ECS operating income, as reported		$	76,793		$	82,529			$	235,251		$	197,883
Intangible assets amortization expense		2,228			2,338				6,871			7,388
Impairments		—			—				—			4,918
Global ECS non-GAAP operating income		$	79,021		$	84,867			$	242,122		$	210,189

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211104005295/en/

Steven O’Brien,

Vice President, Investor Relations

303-824-4544

John Hourigan,

Vice President, Global Communications

303-824-4586

Source: Arrow Electronics, Inc.

FAQ

What were Arrow Electronics' earnings for Q3 2021?

Arrow Electronics reported a net income of $290 million, or $4.00 per share for Q3 2021.

How much did Arrow Electronics' sales increase in Q3 2021?

Sales increased by 18% to $8.51 billion in Q3 2021 compared to Q3 2020.

What is Arrow Electronics' outlook for the fourth quarter of 2021?

Arrow Electronics projects Q4 2021 sales between $8.55 billion and $9.15 billion.

What were Arrow Electronics' non-GAAP earnings per share for Q3 2021?

Non-GAAP earnings per share were $4.04 for Q3 2021.

What challenges is Arrow Electronics facing in the supply chain?

The company expects component supply to remain below demand for the near term.