Arrow Electronics (ARW) announced that it is helping its long-time client, Oyika, in rolling out battery charging stations in Southeast Asian cities to enable a new generation of clean and silent electric motorcycles.Arrow has helped Oyika to develop a smart battery exchange system at convenience stores, which is managed with a mobile application. It will help Oyika to replace millions of petroleum-powered motorbikes in less time.Arrow is working on multiple areas of Oyika's integrated solution, such as des ...

Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2023 was $8 billion, down 14% year-over-year or down 15% in constant currency [13] - Non-GAAP diluted EPS for Q3 was $4.14, well above the high end of guidance, including an $0.87 benefit from a legal settlement and a $0.31 negative impact from an accounts receivable reserve [16] - Consolidated gross margin was 12.2%, down 30 basis points sequentially and 60 basis points year-over-year [13][14] Business Line Data and Key Metrics Changes - Global components sales were $6.2 billion, down 14% year-over-year or down 16% in constant currency, primarily due to softness in the Asia market [13] - Enterprise computing solutions sales were $1.8 billion, down 10% year-over-year or down 13% in constant currency, affected by product mix and softness in North America [13] - Global components operating margin was 6.2%, benefiting from a legal settlement, while enterprise computing solutions operating margin was 3.2%, impacted by an accounts receivable reserve [15] Market Data and Key Metrics Changes - Sales were soft across all regions, but there were pockets of strength in the Americas, particularly in design-related activity [9] - In Europe, there was improvement in interconnect, passive, and electromechanical components booking activity [9] - Asia showed relative momentum in transportation, networking, and communications, but a broader recovery is not yet confirmed [9] Company Strategy and Development Direction - The company remains optimistic about long-term growth prospects and is aligning its strategy accordingly [11] - Focus on engineering investments and supply chain services is expected to benefit structural margin health [8] - The company is navigating a cyclical correction in the global components business while maintaining strong supplier and customer relationships [6] Management's Comments on Operating Environment and Future Outlook - Management noted continued market softness but expressed confidence in resilience and ability to navigate challenges [5] - The macro environment could influence the speed of recovery, with expectations for corrections to take two to three quarters to play out [22] - The company anticipates better performance in 2024 as it transitions to a model that aligns with customer mix and demand [11] Other Important Information - Cash flow from operations was $322 million in Q3, with net debt remaining flat at $3.9 billion [18] - The company repurchased approximately $200 million in shares during the quarter, with remaining stock repurchase authorization at $622 million [18] Q&A Session Summary Question: Component guidance and regional expectations - Management indicated that corrections typically take two to three quarters to normalize, with inventory levels being a significant factor [22] Question: Operating margin sustainability - Management expressed confidence in sustaining margins around 5% despite regional mix changes and overall volume shortfalls [25] Question: Accounts receivable reserve reversal potential - Management noted that the reserve was an isolated situation and they are confident in collecting the owed amounts over time [32] Question: Inventory correction duration in the semiconductor market - Management stated that expectations for the duration of the correction have not changed, and inventory levels are expected to decline in Q4 [37] Question: Fourth quarter ECS margins and free cash flow expectations - Management expects typical fourth-quarter performance for ECS margins and continued cash generation in Q4 [41] Question: Pricing environment across different regions - Management noted that pricing remains stable, with some concessions in Asia, but overall input costs are expected to keep upward pressure on pricing [47] Question: Growth of margin-accretive initiatives - Management indicated that demand creation, IP&E, and supply chain services are becoming more material to the overall business mix compared to previous years [49]

[Cover Page](index=1&type=section&id=Cover%20Page) - This is a Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023, filed by Arrow Electronics, Inc.[2](index=2&type=chunk) - As of October 26, 2023, there were **54,159,399 shares of Common Stock outstanding**[5](index=5&type=chunk) [Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's Q3 2023 financial statements show sales and net income declines, increased inventories, and improved operating cash flow [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For Q3 2023, Arrow Electronics reported a **13.6% decrease in sales to $8.01 billion** and a **42.0% drop in net income to $198.7 million**, with diluted EPS falling to **$3.53** Consolidated Statements of Operations Highlights (Q3 & Nine Months) | Metric (In thousands, except per share data) | Q3 2023 | Q3 2022 | % Change | Nine Months 2023 | Nine Months 2022 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Sales** | $8,007,019 | $9,266,432 | -13.6% | $25,257,963 | $27,801,399 | -9.1% | | **Gross Profit** | $979,597 | $1,186,912 | -17.5% | $3,159,468 | $3,630,630 | -13.0% | | **Operating Income** | $340,083 | $502,694 | -32.3% | $1,154,485 | $1,545,898 | -25.3% | | **Net Income Attributable to Shareholders** | $198,659 | $342,399 | -42.0% | $708,968 | $1,077,482 | -34.2% | | **Diluted EPS** | $3.53 | $5.27 | -33.0% | $12.28 | $16.12 | -23.8% | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of September 30, 2023, **total assets were $20.64 billion**, driven by reduced accounts receivable and increased inventories, with **total debt at $4.20 billion** Balance Sheet Key Figures (In thousands) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $17,305,960 | $18,340,340 | | Accounts receivable, net | $10,663,164 | $12,322,717 | | Inventories | $5,805,520 | $5,319,369 | | **Total Assets** | $20,638,360 | $21,763,182 | | **Total Current Liabilities** | $11,936,031 | $12,389,604 | | Accounts payable | $9,090,554 | $10,460,419 | | Short-term borrowings | $1,588,662 | $589,883 | | **Long-term debt** | $2,615,001 | $3,182,964 | | **Total Shareholders' Equity** | $5,485,261 | $5,546,357 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first nine months of 2023, the company generated **$418.7 million in cash from operating activities**, a significant turnaround from the **$141.8 million used in 2022**, primarily due to decreased accounts receivable Cash Flow Summary (Nine Months Ended, In thousands) | Cash Flow Activity | Sep 30, 2023 | Oct 1, 2022 | | :--- | :--- | :--- | | Net cash provided by (used for) operating activities | $418,707 | $(141,764) | | Net cash used for investing activities | $(46,813) | $(33,975) | | Net cash (used for) provided by financing activities | $(214,749) | $455,827 | | **Net increase in cash and cash equivalents** | **$156,379** | **$111,791** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key notes detail accounting policies, segment performance, debt structure, and contingencies, highlighting sales declines and a significant legal settlement - **Goodwill totaled $2.02 billion** as of September 30, 2023, with **$869.1 million allocated to Global Components** and **$1.15 billion to Global ECS**[25](index=25&type=chunk) - The company has an EMEA asset securitization program with a capacity of up to **€600.0 million**, under which it sells interests in trade accounts receivable[31](index=31&type=chunk) - In Q1 2023, the company issued **$500.0 million of 6.125% notes due 2026** and repaid **$300.0 million of 4.50% notes due March 2023**[49](index=49&type=chunk) - During Q3 2023, the company received **$62.2 million in settlement funds** related to a capacitor price-fixing lawsuit, recorded as a reduction to SG&A expenses[93](index=93&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **13.6% consolidated sales decrease** in Q3 2023 to declines in both segments, while maintaining strong liquidity Consolidated Sales by Segment (Q3 2023 vs Q3 2022, in millions) | Segment | Q3 2023 Sales | Q3 2022 Sales | % Change | | :--- | :--- | :--- | :--- | | Global components | $6,245 | $7,300 | (14.5)% | | Global ECS | $1,762 | $1,966 | (10.4)% | | **Consolidated** | **$8,007** | **$9,266** | **(13.6)%** | - Global components sales declined due to softer demand in the Americas and Asia/Pacific, while the EMEA region saw growth, with the Americas decline linked to decreased shortage market activity and softer demand in transportation, communications, and computing verticals[117](index=117&type=chunk)[120](index=120&type=chunk) - Global ECS sales decreased due to a product mix shift from hardware to more software and cloud solutions, where a higher proportion of revenue is recognized on a net fee (agency) basis[117](index=117&type=chunk) - Operating expenses decreased, partly due to a **$62.2 million legal settlement**, partially offset by a **$36.8 million increase in the allowance for credit losses** in Q3 2023 compared to the prior year[122](index=122&type=chunk)[115](index=115&type=chunk) - The company believes its current cash, borrowing capacity, and future operating cash flows are sufficient to meet its needs for the next 12 months, with over **$1.9 billion in committed and undrawn liquidity**[138](index=138&type=chunk) - The company repurchased **5.7 million shares for $700.9 million** in the first nine months of 2023, with approximately **$621.6 million remaining available** under the share-repurchase program as of September 30, 2023[154](index=154&type=chunk)[84](index=84&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company states that there were no material changes in its market risk exposures compared to its 2022 Annual Report on Form 10-K - There were no material changes in market risk for changes in foreign currency exchange rates and interest rates from the information provided in the company's Annual Report on Form 10-K for the year ended December 31, 2022[160](index=160&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective as of September 30, 2023**[162](index=162&type=chunk) - There were no changes in the company's internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[163](index=163&type=chunk) [Part II. Other Information](index=52&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference information on contingencies and legal matters detailed in Note K of the financial statements - Information regarding legal proceedings is set forth in Note K, "Contingencies," in the Notes to Consolidated Financial Statements[166](index=166&type=chunk) [Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) The company reports no material changes to its risk factors from those disclosed in its 2022 Annual Report on Form 10-K - There have been no material changes to the company's risk factors from those discussed in the Annual Report on Form 10-K for the year ended December 31, 2022[167](index=167&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2023, the company repurchased approximately **1.55 million shares**, with **$621.6 million remaining available** under its **$1.0 billion** authorized program Share Repurchase Activity (Q3 2023) | Period | Total Shares Purchased (thousands) | Average Price Paid per Share | | :--- | :--- | :--- | | July 30 - Aug 26, 2023 | 660,594 | $128.67 | | Aug 27 - Sep 30, 2023 | 892,440 | $128.86 | | **Total** | **1,553,034** | **N/A** | - On January 31, 2023, the Board of Directors approved a **$1.0 billion increase** to the share-repurchase program, with **$621.6 million remaining available** for repurchase as of September 30, 2023[169](index=169&type=chunk) [Other Information](index=52&type=section&id=Item%205.%20Other%20Information) The company reports that no directors or officers adopted, amended, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q3 2023 - During the quarter ended September 30, 2023, no directors or officers adopted, amended, or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement[170](index=170&type=chunk) [Exhibits](index=53&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the 10-Q report, including amendments to credit agreements, executive compensation plans, and required certifications - Exhibits filed include an amendment to the EMEA Funding Corp B.V. agreement, forms of executive retention and severance agreements, and CEO/CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906[172](index=172&type=chunk) [Signature](index=54&type=section&id=Signature) - The report was signed on **November 2, 2023**, by Rajesh K. Agrawal, Senior Vice President and Chief Financial Officer, and Richard A. Seidlitz, Vice President, Corporate Controller, and Principal Accounting Officer[178](index=178&type=chunk)

Arrow Electronics, Inc (NYSE:ARW) Q2 2023 Earnings Conference Call August 3, 2023 1:00 PM ET Company Participants Anthony Bencivenga - Vice President, Investor Relations Sean Kerins - President and Chief Executive Officer Raj Agrawal - Chief Financial Officer Conference Call Participants Matt Sheerin - Stifel Melissa Fairbanks - Raymond James Joe Quatrochi - Wells Fargo Ruplu Bhattacharya - Bank of America William Stein - Truist Securities Operator Hello. My name is Chris and I’ll be your conference operato ...

Arrow Electronics, Inc. (NYSE:ARW) Q1 2023 Earnings Conference Call May 4, 2023 1:00 PM ET Company Participants Raj Agrawal - Senior Vice President & Chief Financial Officer Anthony Bencivenga - Vice President-Investor Relations Sean Kerins - President & Chief Executive Officer Conference Call Participants Matt Sheerin - Stifel Joe Quatrochi - Wells Fargo Ruplu Bhattacharya - Bank of America Toshiya Hari - Goldman Sachs William Stein - Truist Securities Operator Hello, and thank you for standing by. My nam ...

Sales and Market Dependence - In 2022, sales of semiconductor products and related services represented approximately 60% of the company's consolidated sales, showing a trend of 60%, 57%, and 54% over the past three years[58]. - Approximately 65% of the company's sales in 2022 originated from international operations, indicating a significant reliance on non-U.S. markets[62]. - Sales of semiconductor products represented approximately 60% of the company's consolidated sales in 2022, indicating a significant reliance on this market[58]. Supply Chain and Operational Risks - The company faces risks from a limited number of suppliers, with one supplier accounting for approximately 13% of consolidated sales in 2022, which could adversely affect business if supplier relationships change[56]. - The global semiconductor shortages have led to increased non-cancellable orders from suppliers, limiting the company's ability to adjust inventory levels during market downturns[55]. - The company is vulnerable to supply chain disruptions, particularly due to semiconductor shortages, which could adversely affect financial results[55]. - A substantial portion of the company's inventory is purchased from suppliers with non-exclusive agreements, which can be cancelled on short notice, increasing operational risk[55]. Financial Performance and Economic Conditions - The company's revenues are subject to fluctuations due to cyclical demand in the semiconductor industry, which could impact profitability during economic downturns[58]. - Economic uncertainty, including impacts from the COVID-19 pandemic and geopolitical events, could disrupt the company's access to capital and financial markets[97]. - Global economic weakness and uncertainty may lead to decreased net revenue and increased expenses, affecting financial performance[107]. - The company's ability to generate cash from operations is subject to various external factors, including economic conditions and market demand[96]. - The company may incur impairment charges on goodwill or identifiable intangible assets if their fair values decline below carrying values[102]. - Future economic conditions, including interest rate increases and tax rate changes, could necessitate impairment charges, affecting consolidated balance sheets and operations[103]. Competitive Environment - The company operates in a highly competitive environment, facing pricing and margin pressures from both large multinational competitors and smaller specialized firms[59]. - The company's gross margins in the Asia/Pacific region are generally lower than in other markets, which could negatively impact overall consolidated gross margins if sales in this region increase[66]. - The company faces competitive pressures from both large multinational and smaller specialized competitors, which could lead to pricing and margin reductions[59]. Regulatory and Compliance Risks - The company is exposed to risks associated with changes in tax laws and policies, which could materially impact its effective tax rate and financial results[67]. - Non-compliance with export and import regulations could result in significant penalties, including fines and restrictions on export capabilities, adversely affecting the company's operations[85]. - Environmental laws and regulations may impose liabilities on the company for contamination, which could lead to unexpected costs and operational disruptions[88]. - The company may be liable for environmental remediation costs related to properties it owns or operates, which could impact its financial condition[88]. - The effectiveness of internal controls is critical; weaknesses could lead to inaccurate financial reporting and potential sanctions from regulatory authorities[104]. Geopolitical Risks - The ongoing conflict between Ukraine and Russia may adversely affect the company's operations and financial condition due to export restrictions and sanctions imposed by various countries[77]. - The company is actively monitoring the conflict in Ukraine to assess its impact on its business and its relationships with vendors, suppliers, and customers[78]. - The ongoing conflict between Ukraine and Russia has led to sanctions and export restrictions that could adversely affect the company's operations and financial condition[77]. Cybersecurity and Technology Risks - Cyber security incidents, including ransomware attacks, could lead to significant legal, regulatory, and financial exposure, damaging the company's reputation and increasing operational costs[79][80]. - Cybersecurity incidents could result in significant legal and financial exposure, damaging the company's reputation and operations[79]. - The company is subject to rapid technological changes and must continuously innovate to meet customer expectations, impacting its sales and earnings growth[72]. Financial Position and Debt Management - As of December 31, 2022, the company had cash and cash equivalents of $176.9 million and access to a committed revolving credit line of $2.0 billion[96]. - The company had $1.2 billion in outstanding borrowings under its North American asset securitization program as of December 31, 2022[96]. - The company may face increased financing costs or restrictions due to covenants in existing debt agreements, impacting its operational flexibility[99]. - The company may incur higher financing expenses and face additional restrictions under new external financing arrangements[99]. - Any increase in the company's debt level or deterioration in operating results could lead to a reduction in its current debt ratings[98]. - The backlog of tariff drawback applications has resulted in slow refunds from the U.S. government, potentially impacting the company's business[84]. Employee and Internal Risks - The company faces risks related to employee misconduct, which could lead to legal or regulatory sanctions and harm its reputation[94]. - The company relies heavily on its internal information systems, and any failure could materially impact its business operations[76]. - The lack of long-term sales contracts means the company is vulnerable to order cancellations and delays, which could adversely affect its business[61].

Arrow Electronics, Inc. (NYSE:ARW) Q4 2022 Results Conference Call February 2, 2023 1:00 PM ET Company Participants Richard Seidlitz - VP Corporate Controller and Chief Accounting Officer Sean Kerins - President and CEO Rajesh Agrawal - SVP and CFO Conference Call Participants Ruplu Bhattacharya - Bank of America Matt Sheerin - Stifel Jim Suva - Citigroup William Stein - Truist Securities Joe Quatrochi - Wells Fargo Operator Good day. My name is Rob, and I will be your conference operator today. At this tim ...

Arrow Electronics, Inc. (NYSE:ARW) Q3 2022 Earnings Conference Call November 3, 2022 1:00 PM ET Company Participants Richard Seidlitz - VP Corporate Controller and Chief Accounting Officer Sean Kerins - President and CEO Rajesh Agrawal - SVP and CFO Conference Call Participants Matt Sheerin - Stifel Melissa Fairbanks - Raymond James & Associates Ruplu Bhattacharya - Bank of America Jim Suva - Citigroup Operator Good day, and welcome to Arrow Electronics Third Quarter 2022 Earnings Conference Call. Please no ...

Arrow Electronics, Inc. (NYSE:ARW) Q2 2022 Earnings Conference Call August 4, 2022 1:00 PM ET Company Participants Richard Seidlitz - Interim Principal Financial Officer Sean Kerins - President, & CEO Conference Call Participants Jim Suva - Citi Nikolay Todorov - Longbow Research Joseph Quatrochi - Wells Fargo William Stein - Truist Securities Ruplu Bhattacharya - Bank of America Melissa Fairbanks - Raymond James Operator Good afternoon, and welcome to the Arrow Electronics Second Quarter 2022 Earnings Conf ...