Manufacturers

Arrow Electronics Reports 3Q 2022 Results

Arrow Electronics Reports 3Q 2022 Results

CENTENNIAL, Colo.Arrow Electronics, Inc. (NYSE:ARW) today reported third-quarter 2022 sales of $9.27 billion, an increase of 9 percent year over year, and an increase of 14 percent year over year on a constant currency basis1. Third-quarter net income was $342 million, or $5.27 per share on a diluted basis, compared with net income of $290 million, or $4.00 per share on a diluted basis, in the third quarter of 2021. Non-GAAP net income1 was $354 million, or $5.45 per share on a diluted basis, in the third quarter of 2022, compared with non-GAAP net income of $293 million, or $4.04 per share on a diluted basis, in the third quarter of 2021. In the third quarter of 2022, changes in foreign currencies reduced growth by approximately $380 million on sales and $0.17 on earnings per share on a diluted basis compared to the third quarter of 2021.

“I am pleased to report that this was our best third quarter ever. This is a product of strong performance by both our global components and global enterprise computing solutions businesses,” said Sean Kerins, president and chief executive officer. “The dedication and focused execution by our team helped us deliver strong quarterly sales, gross profit, operating income, and earnings per share while facing market conditions that remain challenging.”

Global components third-quarter sales of $7.30 billion reflected an increase of 10 percent year over year, and an increase of 15 percent year over year on a constant currency basis. Asia-Pacific components third-quarter sales decreased 3 percent year over year. Americas components third-quarter sales increased 21 percent year over year. Europe components third-quarter sales increased 21 percent year over year, and increased 41 percent year over year on a constant currency basis. Global components third-quarter operating income was $495 million, and third-quarter non-GAAP operating income was $501 million.

“Demand for electronic components and associated design, engineering, and supply chain services remained strong. While supply is improving modestly, it is still insufficient to support the backlog that has built over prior quarters. Customer service and support remains our priority and our teams continue to work tirelessly to support the deliveries needed by our customers,” said Mr. Kerins.

Global enterprise computing solutions (“ECS”) third-quarter sales of $1.97 billion reflected an increase of 4 percent year over year, and an increase of 10 percent year over year on a constant currency basis. Europe enterprise computing solutions third-quarter sales increased 7 percent year over year, and increased 25 percent year over year on a constant currency basis. Americas enterprise computing solutions third-quarter sales increased 3 percent year over year. Global enterprise computing solutions third-quarter operating income was $84 million, and third-quarter non-GAAP operating income was $86 million.

“Global demand for more complex, enterprise IT content was healthy, and while supply constraints persist, we saw some benefit from our historically high backlog. We continue to see strength in cloud and software adoption. We are well positioned for the transition to IT-as-a-Service,” said Mr. Kerins.

“With strong profitability and effective balance sheet management, we continue to generate attractive returns on invested capital,” said Raj Agrawal, senior vice president and chief financial officer. “We delivered on our commitment to return cash to shareholders while also maintaining strong leverage ratios. We repurchased $259 million of shares in the third quarter of 2022, which is the most capital we have ever returned in a single quarter. Our current repurchase authorization stands at $629 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 2022 OUTLOOK

  • Consolidated sales of $8.95 billion to $9.55 billion, with global components sales of $6.80 billion to $7.10 billion, and global enterprise computing solutions sales of $2.15 billion to $2.45 billion
  • Net income per share on a diluted basis of $5.44 to $5.64, and non-GAAP net income per share on a diluted basis of $5.60 to $5.80
  • Average tax rate of approximately 23.5 percent compared to the long-term range of 23 to 25 percent
  • Average diluted shares outstanding of 62 million
  • Interest expense of approximately $62 million
  • Expecting the average USD-to-Euro exchange rate for the fourth quarter of 2022 to be $0.98 to €1 compared to $1.14 to €1 in the fourth quarter of 2021
  • Changes in foreign currencies to reduce year over year growth in sales by $420 million and earnings per share on a diluted basis by $0.25 compared to the fourth quarter of 2021
  • Changes in foreign currencies to reduce quarter over quarter growth in sales by $100 million and earnings per share on a diluted basis by $0.07 compared to the third quarter of 2022
  • On a constant currency basis, our fourth quarter guidance implies a sequential growth rate range of down 2% to down 6% for global components and up 11% to 26% for global enterprise computing solutions, when compared to the third-quarter of 2022

Read the full earnings report here.

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