EX-99.1 2 q32018pressreleaseexhibit9.htm EXHIBIT 99.1 Exhibit
ARROW ELECTRONICS. INC.
9201 E. DRY CREEKROAD
CENTENNIAL, CO 80112
303-824-4000
 
NEWS


Exhibit 99.1
Arrow Electronics Reports Third-Quarter 2018 Results
-- Record Third-Quarter Sales, Gross Profit, Operating Income, and Earnings Per Share --
-- Third-Quarter Cash Flow from Operations of $494 Million --
CENTENNIAL, Colo.--(BUSINESS WIRE)-Nov. 1, 2018--Arrow Electronics, Inc. (NYSE:ARW) today reported third-quarter 2018 sales of $7.49 billion, an increase of 9 percent from sales of $6.86 billion in the third quarter of 2017. Third-quarter net income of $177 million, or $1.99 per share on a diluted basis, compared with net income of $134 million, or $1.50 per share on a diluted basis, in the third quarter of 2017. Excluding certain items1, net income would have been $193 million, or $2.18 per share on a diluted basis, in the third quarter of 2018, compared with net income of $161 million, or $1.80 per share on a diluted basis, in the third quarter of 2017. Excluding certain items1, net income increased 20 percent year over year, and earnings per share on a diluted basis increased 21 percent year over year.
“Our investments in engineering and working capital are bearing fruit as evidenced by our results,” said Michael J. Long, chairman, president, and chief executive officer. “We are ahead of pace to deliver another record year in 2018.”
Global components third-quarter sales of $5.38 billion increased 11 percent year over year. Americas components sales increased 13 percent year over year. Europe components sales increased 11 percent year over year. Sales in the region, as adjusted, increased 13 percent year over year. Asia-Pacific components sales increased 8 percent year over year. Global components third-quarter operating income increased 28 percent year over year.
“This quarter we made significant advancements toward future high-growth opportunities in the areas of smart cities, edge computing, and artificial intelligence,” said Mr. Long. “These opportunities require all our capabilities across the enterprise to provide complete lifecycle solutions.”
Global enterprise computing solutions third-quarter sales of $2.11 billion increased 6 percent year over year. Sales, as adjusted, increased 9 percent year over year. Americas enterprise computing solutions sales increased 7 percent year over year. Sales in the region, as adjusted, increased 13 percent year over year. Europe enterprise computing solutions sales increased 3 percent year over year. Sales in the region, as adjusted, increased 2 percent year over year. Global enterprise computing solutions third-quarter operating income decreased 13 percent year over year and decreased 15 percent year over year excluding amortization of intangibles expense. Global enterprise computing solutions operating expenses included $6 million of expense related to prior period sales taxes abroad.
“Return on invested capital increased year over year for the fifth straight quarter. Third-quarter cash flow from operations was $494 million as our need to support growth through working capital investments moderated,” said Chris Stansbury, senior vice president and chief financial officer. “Our strong cash flow performance allowed us to reduce leverage during the quarter. We also remain committed to returning excess cash to shareholders. During the third quarter, we returned approximately $20 million to shareholders through our stock repurchase program. We had approximately $279 million of remaining authorization under our share repurchase program at the end of the third quarter.”
NINE-MONTH RESULTS
In the first nine months of 2018, Arrow’s sales of $21.76 billion increased 14 percent from sales of $19.02 billion in the first nine months of 2017. Net income for the first nine months of 2018 was $486 million, or $5.47 per share on a diluted basis, compared with net income of $349 million, or $3.88 per share on a diluted basis in the first nine months of 2017. Excluding certain items1, net income would have been $556 million, or $6.26 per share on a diluted basis, in the first nine months of 2018 compared with net income of $452 million, or $5.03 per share on a diluted basis, in the first nine months of 2017.







1 A reconciliation of non-GAAP adjusted financial measures, including sales, as adjusted, operating income, as adjusted, net income attributable to shareholders, as adjusted, and net income per share, as adjusted, to GAAP financial measures is presented in the reconciliation tables included herein.

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GUIDANCE
“As we look to the fourth quarter, we believe that total sales will be between $7.7 billion and $8.1 billion, with global components sales between $5.175 billion and $5.375 billion, and global enterprise computing solutions sales between $2.525 billion and $2.725 billion. As a result of this outlook, we expect earnings per share on a diluted basis to be in the range of $2.21 to $2.37, and earnings per share on a diluted basis, excluding certain items1, to be in the range of $2.46 to $2.62 per share. Our guidance assumes an average tax rate of 23.5 percent to 25.5 percent, and average diluted shares outstanding are expected to be approximately 88 million. Guidance is based on an average USD-to-Euro exchange rate for the fourth quarter of approximately $1.16 to €1. At the midpoints of our fourth-quarter guidance ranges, full-year 2018 sales would total approximately $29.66 billion, and would grow 12 percent compared to full-year 2017. Full-year 2018 earnings per share, on a diluted basis, excluding certain items1, would total approximately $8.80 and would grow 17 percent compared to full-year 2017,” said Mr. Stansbury.
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 150,000 of the world’s leading manufacturers of technology used in homes, business and daily life. With 2017 sales of $26.6 billion, Arrow aggregates electronics and enterprise computing solutions for customers and suppliers in industrial and commercial markets. The company maintains a network of more than 345 locations serving over 80 countries. Learn more at FiveYearsOut.com.
Information Relating to Forward-Looking Statements
This press release includes forward-looking statements that 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: industry conditions, the company's implementation of its new enterprise resource planning system, 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, the effects of additional actions taken to become more efficient or lower costs, risks related to the integration of acquired businesses, changes in legal and regulatory matters, and the company’s ability to generate additional cash flow. Forward-looking statements are those statements which are not statements of historical fact. These forward-looking statements can be identified by forward-looking words such as "expects," "anticipates," "intends," "plans," "may," "will," "believes," "seeks," "estimates," and similar expressions. 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.
For a further discussion of factors to consider in connection with these forward-looking statements, investors should refer to Item 1A Risk Factors of the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2017.
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, operating income, net income attributable to shareholders, and net income per basic and diluted share. The company provides sales, income, or expense on a non-GAAP basis adjusted for the impact of changes in foreign currencies and the impact of acquisitions/dispositions by adjusting the company's operating results, including the amortization expense related to acquired/disposed intangible assets, as if the acquisitions/dispositions had occurred at the beginning of the earliest period presented (referred to as "impact of acquisitions" and "impact of dispositions"). Operating income, net income attributable to shareholders, and net income per basic and diluted share are adjusted to exclude identifiable intangible amortization, restructuring, integration, and other charges, and certain charges, credits, gains, and losses that the company believes impact the comparability of its results of operations. These charges, credits, gains, and losses arise out of the company’s efficiency enhancement initiatives, acquisitions/dispositions (including intangible assets amortization expense), and financing activities. A reconciliation of the company’s non-GAAP financial information to GAAP is set forth in the tables below.
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 this additional 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.

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ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
Nine Months Ended
 
 
September 29, 2018
 
September 30, 2017
 
September 29, 2018
 
September 30, 2017
 
 
 
 
(Adjusted)
 
 
 
(Adjusted)
Sales
 
$
7,490,445

 
$
6,856,108

 
$
21,758,586

 
$
19,015,114

Cost of sales
 
6,566,667

 
6,013,541

 
19,033,044

 
16,587,326

Gross profit
 
923,778

 
842,567

 
2,725,542

 
2,427,788

Operating expenses:
 
 
 
 
 
 
 
 
Selling, general, and administrative expenses
 
575,751

 
552,656

 
1,719,108

 
1,599,963

Depreciation and amortization
 
45,532

 
38,574

 
139,201

 
113,096

Loss on disposition of businesses, net
 
2,042

 
—

 
3,604

 
—

Restructuring, integration, and other charges
 
10,143

 
15,896

 
50,497

 
55,817

 
 
633,468

 
607,126

 
1,912,410

 
1,768,876

Operating income
 
290,310

 
235,441

 
813,132

 
658,912

Equity in earnings (losses) of affiliated companies
 
(652
)
 
1,216

 
(808
)
 
2,865

Gain (loss) on investments, net
 
1,070

 
(13,029
)
 
(3,945
)
 
(8,784
)
Loss on extinguishment of debt
 
—

 
786

 
—

 
59,545

Employee benefit plan expense
 
1,296

 
1,850

 
3,784

 
5,547

Interest and other financing expense, net
 
54,205

 
40,111

 
160,187

 
120,898

Income before income taxes
 
235,227

 
180,881

 
644,408

 
467,003

Provision for income taxes
 
57,054

 
45,972

 
155,325

 
115,128

Consolidated net income
 
178,173

 
134,909

 
489,083

 
351,875

Noncontrolling interests
 
1,640

 
845

 
3,541

 
3,352

Net income attributable to shareholders
 
$
176,533

 
$
134,064

 
$
485,542

 
$
348,523

 
 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
 
Basic
 
$
2.02

 
$
1.52

 
$
5.53

 
$
3.92

Diluted
 
$
1.99

 
$
1.50

 
$
5.47

 
$
3.88

 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
87,602

 
88,453

 
87,785

 
88,870

Diluted
 
88,608

 
89,540

 
88,759

 
89,936



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ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except par value)
(Unaudited)
 
 
 
 
 
September 29, 2018
 
December 31, 2017
 
 
 
(Adjusted)
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
474,191

 
$
730,083

Accounts receivable, net
8,229,791

 
8,125,588

Inventories
3,722,808

 
3,302,518

Other current assets
292,641

 
256,028

Total current assets
12,719,431

 
12,414,217

Property, plant, and equipment, at cost:
 

 
 

Land
13,168

 
12,866

Buildings and improvements
159,754

 
160,664

Machinery and equipment
1,415,619

 
1,330,730

 
1,588,541

 
1,504,260

Less: Accumulated depreciation and amortization
(749,978
)
 
(665,785
)
Property, plant, and equipment, net
838,563

 
838,475

Investments in affiliated companies
85,175

 
88,347

Intangible assets, net
313,472

 
286,215

Goodwill
2,659,335

 
2,470,047

Other assets
362,049

 
361,966

Total assets
$
16,978,025

 
$
16,459,267

LIABILITIES AND EQUITY
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
6,886,217

 
$
6,756,830

Accrued expenses
797,088

 
841,675

Short-term borrowings, including current portion of long-term debt
158,153

 
356,806

Total current liabilities
7,841,458

 
7,955,311

Long-term debt
3,352,128

 
2,933,045

Other liabilities
482,397

 
572,971

Commitments and contingencies


 


Equity:
 

 
 

Shareholders' equity:
 

 
 

Common stock, par value $1:
 

 
 

Authorized - 160,000 shares in both 2018 and 2017, respectively
 

 
 

Issued - 125,424 shares in both 2018 and 2017, respectively
125,424

 
125,424

Capital in excess of par value
1,129,345

 
1,114,167

Treasury stock (38,251 and 37,733 shares in 2018 and 2017, respectively), at cost
(1,824,373
)
 
(1,762,239
)
Retained earnings
6,104,682

 
5,596,786

Accumulated other comprehensive loss
(283,051
)
 
(124,883
)
Total shareholders' equity
5,252,027

 
4,949,255

Noncontrolling interests
50,015

 
48,685

Total equity
5,302,042

 
4,997,940

Total liabilities and equity
$
16,978,025

 
$
16,459,267



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ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
 
 
Quarter Ended
 
 
September 29, 2018
 
September 30, 2017
Cash flows from operating activities:
 
 
 
(Adjusted)
Consolidated net income
 
$
178,173

 
$
134,909

Adjustments to reconcile consolidated net income to net cash provided by operations:
 
 
 
 
Depreciation and amortization
 
45,532

 
38,574

Amortization of stock-based compensation
 
12,442

 
8,910

Equity in (earnings) losses of affiliated companies
 
652

 
(1,216
)
Loss on extinguishment of debt
 
—

 
786

Deferred income taxes
 
5,063

 
1,437

Gain (loss) on investments, net
 
(1,070
)
 
10,254

Other
 
4,053

 
1,457

Change in assets and liabilities, net of effects of acquired and disposed businesses:
 
 
 
 
Accounts receivable
 
(180,770
)
 
(445,515
)
Inventories
 
43,867

 
(111,181
)
Accounts payable
 
412,422

 
487,904

Accrued expenses
 
15,693

 
48,065

Other assets and liabilities
 
(41,652
)
 
(39,495
)
Net cash provided by operating activities
 
494,405

 
134,889

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Cash consideration paid for acquired businesses, net of cash acquired
 
—

 
(1,094
)
Proceeds from disposition of businesses
 
(2,278
)
 
—

Acquisition of property, plant, and equipment
 
(38,346
)
 
(47,691
)
Other
 
(3,000
)
 
533

Net cash used for investing activities
 
(43,624
)
 
(48,252
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Change in short-term and other borrowings
 
44,545

 
(54,697
)
Repayment of long-term bank borrowings, net
 
(338,579
)
 
(324,584
)
Proceeds from note offerings, net
 
—

 
492,519

Redemption of notes
 
—

 
2,214

Proceeds from exercise of stock options
 
1,934

 
726

Repurchases of common stock
 
(20,622
)
 
(25,462
)
Other
 
(1,018
)
 
(675
)
Net cash provided by (used for) financing activities
 
(313,740
)
 
90,041

Effect of exchange rate changes on cash
 
6,631

 
(12,257
)
Net increase in cash and cash equivalents
 
143,672

 
164,421

Cash and cash equivalents at beginning of period
 
330,519

 
419,918

Cash and cash equivalents at end of period
 
$
474,191

 
$
584,339


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ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
 
 
Nine Months Ended
 
 
September 29, 2018
 
September 30, 2017
Cash flows from operating activities:
 
 
 
(Adjusted)
Consolidated net income
 
$
489,083

 
$
351,875

Adjustments to reconcile consolidated net income to net cash provided by operations:
 
 
 
 
Depreciation and amortization
 
139,201

 
113,096

Amortization of stock-based compensation
 
38,104

 
30,301

Equity in (earnings) losses of affiliated companies
 
808

 
(2,865
)
Loss on extinguishment of debt
 
—

 
59,545

Deferred income taxes
 
17,769

 
13,262

Loss on investments, net
 
3,945

 
9,504

Other
 
9,660

 
7,415

Change in assets and liabilities, net of effects of acquired and disposed businesses:
 
 
 
 
Accounts receivable
 
(254,417
)
 
(26,286
)
Inventories
 
(456,050
)
 
(261,126
)
Accounts payable
 
171,697

 
(113,804
)
Accrued expenses
 
15,177

 
(42,267
)
Other assets and liabilities
 
(165,421
)
 
(136,871
)
Net cash provided by operating activities
 
9,556

 
1,779

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Cash consideration paid for acquired businesses, net of cash acquired
 
(331,563
)
 
(3,628
)
Proceeds from disposition of businesses
 
32,013

 
—

Acquisition of property, plant, and equipment
 
(104,897
)
 
(149,597
)
Proceeds from sale of property, plant, and equipment
 
—

 
24,433

Other
 
(11,000
)
 
(2,467
)
Net cash used for investing activities
 
(415,447
)
 
(131,259
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Change in short-term and other borrowings
 
104,158

 
(14,423
)
Proceeds from (repayments of) long-term bank borrowings, net
 
420,755

 
(82,766
)
Proceeds from note offerings, net
 
—

 
987,144

Redemption of notes
 
(300,000
)
 
(555,886
)
Proceeds from exercise of stock options
 
7,919

 
21,423

Repurchases of common stock
 
(93,173
)
 
(149,125
)
Purchase of shares from noncontrolling interest
 
—

 
(23,350
)
Other
 
(1,174
)
 
(1,620
)
Net cash provided by financing activities
 
138,485

 
181,397

Effect of exchange rate changes on cash
 
11,514

 
(1,898
)
Net increase (decrease) in cash and cash equivalents
 
(255,892
)
 
50,019

Cash and cash equivalents at beginning of period
 
730,083

 
534,320

Cash and cash equivalents at end of period
 
$
474,191

 
$
584,339



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ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
 
Quarter Ended
 
 
 
September 29, 2018
 
September 30, 2017
 
% Change
 
 
 
(Adjusted)
 
 
Consolidated sales, as reported
$
7,490,445

 
$
6,856,108

 
9.3
%
Impact of changes in foreign currencies
—

 
(50,425
)
 
 
Impact of acquisitions
—

 
35,540

 
 
Impact of dispositions
—

 
(56,277
)
 
 
Consolidated sales, as adjusted
$
7,490,445

 
$
6,784,946

 
10.4
%
 
 
 
 
 
 
Global components sales, as reported
$
5,381,078

 
$
4,864,361

 
10.6
%
Impact of changes in foreign currencies
—

 
(32,310
)
 
 
Impact of acquisitions
—

 
21,475

 
 
Global components sales, as adjusted
$
5,381,078

 
$
4,853,526

 
10.9
%
 
 
 
 
 
 
Americas Components sales, as reported
$
2,060,920

 
$
1,816,772

 
13.4
%
Impact of changes in foreign currencies
—

 
(3,585
)
 
 
Impact of acquisitions
—

 
21,475

 
 
Americas Components sales, as adjusted
$
2,060,920

 
$
1,834,662

 
12.3
%
 
 
 
 
 
 
Europe components sales, as reported
$
1,399,435

 
$
1,262,048

 
10.9
%
Impact of changes in foreign currencies
—

 
(24,379
)
 
 
Impact of acquisitions
—

 
—

 
 
Europe components sales, as adjusted
$
1,399,435

 
$
1,237,669

 
13.1
%
 
 
 
 
 
 
Asia components sales, as reported
$
1,920,723

 
$
1,785,541

 
7.6
%
Impact of changes in foreign currencies
—

 
(4,346
)
 
 
Impact of acquisitions
—

 
—

 
 
Asia components sales, as adjusted
$
1,920,723

 
$
1,781,195

 
7.8
%
 
 
 
 
 
 
Global ECS sales, as reported
$
2,109,367

 
$
1,991,747

 
5.9
%
Impact of changes in foreign currencies
—

 
(18,115
)
 
 
Impact of acquisitions
—

 
14,065

 
 
Impact of dispositions
—

 
(56,277
)
 
 
Global ECS sales, as adjusted
$
2,109,367

 
$
1,931,420

 
9.2
%
 
 
 
 
 
 
Europe ECS sales, as reported
$
651,648

 
$
634,038

 
2.8
%
Impact of changes in foreign currencies
—

 
(6,577
)
 
 
Impact of acquisitions
—

 
14,065

 
 
Impact of dispositions
—

 
(1,001
)
 
 
Europe ECS sales, as adjusted
$
651,648

 
$
640,525

 
1.7
%
 
 
 
 
 
 
Americas ECS sales, as reported
$
1,457,719

 
$
1,357,709

 
7.4
%
Impact of changes in foreign currencies
—

 
(11,538
)
 
 
Impact of acquisitions
—

 
—

 
 
Impact of dispositions
—

 
(55,276
)
 
 
Americas ECS sales, as adjusted
$
1,457,719

 
$
1,290,895

 
12.9
%


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ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
 
Nine Months Ended
 
 
 
September 29, 2018
 
September 30, 2017
 
% Change
 
 
 
(Adjusted)
 
 
Consolidated sales, as reported
$
21,758,586

 
$
19,015,114

 
14.4
%
Impact of changes in foreign currencies
—

 
358,294

 
 
Impact of acquisitions
—

 
110,752

 
 
Impact of dispositions
(27,493
)
 
(171,563
)
 
 
Consolidated sales, as adjusted
$
21,731,093

 
$
19,312,597

 
12.5
%
 
 
 
 
 
 
Global components sales, as reported
$
15,595,374

 
$
13,385,514

 
16.5
%
Impact of changes in foreign currencies
—

 
233,172

 
 
Impact of acquisitions
—

 
63,475

 
 
Global components sales, as adjusted
$
15,595,374

 
$
13,682,161

 
14.0
%
 
 
 
 
 
 
Americas Components sales, as reported
$
5,795,500

 
$
5,080,558

 
14.1
%
Impact of changes in foreign currencies
—

 
(2,997
)
 
 
Impact of acquisitions
—

 
63,475

 
 
Americas Components sales, as adjusted
$
5,795,500

 
$
5,141,036

 
12.7
%
 
 
 
 
 
 
Europe components sales, as reported
$
4,325,793

 
$
3,572,720

 
21.1
%
Impact of changes in foreign currencies
—

 
211,822

 
 
Impact of acquisitions
—

 
—

 
 
Europe components sales, as adjusted
$
4,325,793

 
$
3,784,542

 
14.3
%
 
 
 
 
 
 
Asia components sales, as reported
$
5,474,081

 
$
4,732,236

 
15.7
%
Impact of changes in foreign currencies
—

 
24,347

 
 
Impact of acquisitions
—

 
—

 
 
Asia components sales, as adjusted
$
5,474,081

 
$
4,756,583

 
15.1
%
 
 
 
 
 
 
Global ECS sales, as reported
$
6,163,212

 
$
5,629,600

 
9.5
%
Impact of changes in foreign currencies
—

 
125,122

 
 
Impact of acquisitions
—

 
47,277

 
 
Impact of dispositions

(27,493
)
 
(171,563
)
 
 
Global ECS sales, as adjusted
$
6,135,719

 
$
5,630,436

 
9.0
%
 
 
 
 
 
 
Europe ECS sales, as reported
$
2,123,048

 
$
1,870,003

 
13.5
%
Impact of changes in foreign currencies
—

 
129,234

 
 
Impact of acquisitions
—

 
47,277

 
 
Impact of dispositions

—

 
(2,883
)
 
 
Europe ECS sales, as adjusted
$
2,123,048

 
$
2,043,631

 
3.9
%
 
 
 
 
 
 
Americas ECS sales, as reported
$
4,040,164

 
$
3,759,597

 
7.5
%
Impact of changes in foreign currencies
—

 
(4,112
)
 
 
Impact of acquisitions
—

 
—

 
 
Impact of dispositions

(27,493
)
 
(168,680
)
 
 
Americas ECS sales, as adjusted
$
4,012,671

 
$
3,586,805

 
11.9
%


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ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS RECONCILIATION
(In thousands except per share data)
(Unaudited)
 
Three months ended September 29, 2018
 
Reported
GAAP
measure
 
Intangible
amortization
expense
 
Restructuring
& Integration
charges
 
Other*
 
Non-GAAP
measure
Operating income
$
290,310

 
$
11,620

 
$
10,143

 
$
2,042

 
$
314,115

Income before income taxes
235,227

 
11,620

 
10,143

 
972

 
257,962

Provision for income taxes
57,054

 
3,206

 
2,561

 
240

 
63,061

Consolidated net income
178,173

 
8,414

 
7,582

 
732

 
194,901

Noncontrolling interests
1,640

 
145

 
—

 
—

 
1,785

Net income attributable to shareholders
$
176,533

 
$
8,269

 
$
7,582

 
$
732

 
$
193,116

Net income per diluted share
$
1.99

 
$
0.09

 
$
0.09

 
$
0.01

 
$
2.18

Effective tax rate
24.3
%
 

 

 

 
24.4
%
 
 
 
 
 
 
 
 
 
 
Three months ended September 30, 2017 (Adjusted)
 
Reported
GAAP
measure
 
Intangible
amortization
expense
 
Restructuring
& Integration
charges
 
Other**
 
Non-GAAP
measure
Operating income
235,441


12,645


15,896


—


263,982

Income before income taxes
180,881


12,645


15,896


13,815


223,237

Provision for income taxes
45,972


4,474


5,319


5,328


61,093

Consolidated net income
134,909


8,171


10,577


8,487


162,144

Noncontrolling interests
845


146


—


—


991

Net income attributable to shareholders
$
134,064


8,025


10,577


8,487


161,153

Net income per diluted share
$
1.50


$
0.09


$
0.12


$
0.09


$
1.80

Effective tax rate
25.4
%







27.4
%
 
 
 
 
 
 
 
 
 
 
Nine months ended September 29, 2018
 
Reported
GAAP
measure
 
Intangible
amortization
expense
 
Restructuring
& Integration
charges
 
Other*
 
Non-GAAP
measure
Operating income
$
813,132

 
37,095

 
50,497

 
3,604

 
904,328

Income before income taxes
644,408

 
37,095

 
50,497

 
7,549

 
739,549

Provision for income taxes
155,325

 
10,021

 
12,785

 
1,653

 
179,784

Consolidated net income
489,083

 
27,074

 
37,712

 
5,896

 
559,765

Noncontrolling interests
3,541

 
447

 
—

 
—

 
3,988

Net income attributable to shareholders
$
485,542

 
26,627

 
37,712

 
5,896

 
555,777

Net income per diluted share
5.47

 
0.30

 
0.42

 
0.07

 
6.26

Effective tax rate
24.1
%
 
 
 
 
 
 
 
24.3
%
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2017 (Adjusted)
 
Reported
GAAP
measure
 
Intangible
amortization
expense
 
Restructuring
& Integration
charges
 
Other**
 
Non-GAAP
measure
Operating income
$
658,912

 
37,909

 
55,817

 
—

 
752,638

Income before income taxes
467,003

 
37,909

 
55,817

 
68,329

 
629,058

Provision for income taxes
115,128

 
13,423

 
17,892

 
26,357

 
172,800

Consolidated net income
351,875

 
24,486

 
37,925

 
41,972

 
456,258

Noncontrolling interests
3,352

 
554

 
—

 
—

 
3,906

Net income attributable to shareholders
$
348,523

 
23,932

 
37,925

 
41,972

 
452,352

Net income per diluted share ***
3.88

 
0.27

 
0.42

 
0.47

 
5.03

Effective tax rate
24.7
%
 
 
 
 
 
 
 
27.5
%
 
 
 
 
 
 
 
 
 
 
* Other includes loss on disposition of businesses and gain (loss) on investments, net.
** Other includes gain (loss) on investments, net and loss on extinguishment of debt.
*** The sum of the components for diluted EPS, as adjusted may not agree to totals, as presented, due to rounding.

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ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)
(Unaudited)
 
 
 
 
 
Quarter Ended
 
Nine Months Ended
 
September 29, 2018
 
September 30, 2017
 
September 29, 2018
 
September 30, 2017
Sales:
 
 
(Adjusted)
 
 
 
(Adjusted)
Global components
$
5,381,078

 
$
4,864,361

 
$
15,595,374

 
$
13,385,514

Global ECS
2,109,367

 
1,991,747

 
6,163,212

 
5,629,600

Consolidated
$
7,490,445

 
$
6,856,108

 
$
21,758,586

 
$
19,015,114

Operating income (loss):
 
 
 
 
 
 
 
Global components
$
271,939

 
$
212,993

 
$
755,325

 
$
583,690

Global ECS
82,187

 
94,005

 
275,410

 
282,955

Corporate (a)
(63,816
)
 
(71,557
)
 
(217,603
)
 
(207,733
)
Consolidated
$
290,310

 
$
235,441

 
$
813,132

 
$
658,912


(a)
Includes restructuring, integration, and other charges of $10.1 million and $50.5 million for the third quarter and first nine months of 2018, and $15.9 million and $55.8 million for the third quarter and first nine months of 2017, respectively. Also included in the third quarter and first nine months of 2018 was a net loss on the disposition of businesses of $2.0 million and $3.6 million, respectively.

NON-GAAP SEGMENT RECONCILIATION
 
 
 
 
 
Quarter Ended
 
Nine Months Ended
 
September 29, 2018
 
September 30, 2017
 
September 29, 2018
 
September 30, 2017
 
 
 
(Adjusted)
 
 
 
(Adjusted)
Global components operating income, as reported
$
271,939

 
$
212,993

 
$
755,325

 
$
583,690

Intangible assets amortization expense
8,706

 
6,984

 
25,999

 
21,210

Global components operating income, as adjusted
$
280,645

 
$
219,977

 
$
781,324

 
$
604,900

Global ECS operating income, as reported
$
82,187

 
$
94,005

 
$
275,410

 
$
282,955

Intangible assets amortization expense
2,914

 
5,661

 
11,096

 
16,699

Global ECS operating income, as adjusted
$
85,101

 
$
99,666

 
$
286,506

 
$
299,654





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




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


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