Manufacturers

Arrow Announces 1Q 2022 Results, Names New President and CEO

Arrow Electronics, Inc. today reported first-quarter 2022 sales of $9.07 billion, an increase of 8 percent from sales of $8.39 billion in the first quarter of 2021. First-quarter net income was $365 million, or $5.31 per share on a diluted basis, compared with a net income of $206 million, or $2.72 per share on a diluted basis, in the first quarter of 2021. Non-GAAP net income1 was $373 million, or $5.43 per share on a diluted basis, in the first quarter of 2022, compared with non-GAAP net income of $216 million, or $2.84 per share on a diluted basis, in the first quarter of 2021.

“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. “At Arrow, we continue to enhance the solutions and services we provide as the markets we serve change at an increasingly rapid pace. Our record results this quarter demonstrate that we remain ahead of the curve, supported by the best team in the industry. We expect component supply to remain well below demand in the coming quarters and through the better part of 2022.”

Global components first-quarter sales of $7.20 billion reflected an increase of 12 percent year over year and non-GAAP sales increased 13 percent year over year. Asia-Pacific components first-quarter sales decreased 8 percent year over year. Americas components first-quarter sales increased 38 percent year over year. Europe components first-quarter sales increased 23 percent year over year and non-GAAP sales in the region increased 31 percent year over year. Global components first-quarter operating income was $499 million, and first-quarter non-GAAP operating income was $506 million.

“The current market environment has enabled the global components business to showcase our experience and industry knowledge that makes us uniquely positioned to help our customers navigate today’s challenges. This includes helping to mitigate production risks and facilitate a continuous stream of products to market,” said Mr. Long.

Global enterprise computing solutions (“ECS”) first-quarter sales of $1.88 billion reflected a decrease of 3 percent year over year and non-GAAP sales decreased 1 percent year over year. Europe enterprise computing solutions first-quarter sales increased 5 percent year over year and non-GAAP sales in the region increased 11 percent year over year. Americas enterprise computing solutions first-quarter sales decreased 9 percent year over year. Global enterprise computing solutions first-quarter operating income was $86 million, and first-quarter non-GAAP operating income was $88 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.

“Our return on invested capital remains favorable, and our leverage ratios are near their lowest levels in ten years,” said Rick Seidlitz, vice president and interim principal financial officer. “Our strong profitability 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 fourth consecutive quarter, bringing total cash returned to shareholders over the last 12 months to approximately $1 billion. Our current repurchase authorization stands at approximately $513 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.

SECOND-QUARTER 2022 OUTLOOK

  • Consolidated sales of $9.04 billion to $9.64 billion, with global components sales of $7.29 billion to $7.59 billion, and global enterprise computing solutions sales of $1.75 billion to $2.05 billion
  • Net income per share on a diluted basis of $5.32 to $5.48, and non-GAAP net income per share on a diluted basis of $5.48 to $5.64
  • Average tax rate of approximately 23.5 percent compared to the long-term range of 23 to 25 percent
  • Average diluted shares outstanding of 67 million
  • Interest expense of approximately $36 million
  • Expecting average USD-to-Euro exchange rate of $1.08 to €1; changes in foreign currencies to decrease sales by approximately $300 million, and earnings per share on a diluted basis by $.20 compared to the second quarter of 2021

Second-Quarter 2022 Outlook

Reported GAAP
measure

Intangible amortization
expense

Restructuring &
integration charges

Non-GAAP measure

Net income per diluted share

$5.32 – $5.48

$.10

$.06

$5.48 to $5.64

Meanwhile, Arrow announced Sean J. Kerins as president and chief executive officer (CEO), effective June 1, 2022, succeeding Long who, effective June 1, 2022, will become executive chairman of the Arrow board of directors. Additionally, Arrow Electronics, Inc. announced Kerins will join the Arrow board of directors effective following the Annual Meeting of Shareholders on May 11, 2022.

Kerins, a nearly 15-year veteran of Arrow, served as chief operating officer since December 2020. Prior to that he served as president of Arrow’s global enterprise computing solutions business since 2014, and previously president of the North American region for that business. Before joining Arrow in 2007, Kerins spent ten years at EMC in sales and professional services roles, as well as progressively senior roles at Coopers & Lybrand Consulting, also serving as an industrial engineer at General Motors.

Kerins holds a bachelor’s degree in engineering from Syracuse University and a Master of Business Administration degree from Northwestern University’s Kellogg School of Management.

“I am honored to lead this company into the future,” said Kerins. “It truly has been a privilege to work with Mike and the talented Arrow team for the past almost 15 years. I look forward to our continued focus on driving profitable growth and value creation for our shareholders, suppliers, customers, and employees.”

“Sean’s leadership and proven track record at Arrow make him the ideal executive to succeed Mike Long,” said Barry W. Perry, lead independent director of the Arrow board of directors. “Our commitment to multi-year succession planning provides continuity for our shareholders, customers, suppliers, and employees.”

“Further, we are pleased Mike will become executive chairman of the Arrow board of directors ensuring his decades-long leadership and mentorship at Arrow and extraordinary performance as chairman, president and CEO continue to inform Arrow’s strategy for the benefit of our shareholders,” said Perry.

“It has been an honor to work with the exceptional team at Arrow over the course of my career,” said Long. “Talent and succession management are central to our strategy. After a thoughtful and multi-year succession process, I am delighted Sean has been named president and CEO. I am confident in his leadership to guide Arrow into the future, and I look forward to continuing to serve on the Arrow board of directors.”

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