EX-99.1 2 q22021pressreleaseex991.htm EX-99.1

ARROW ELECTRONICS, INC. 9201 E. DRY CREEK ROAD CENTENNIAL, CO 80112 303-824-4000 |  | NEWS

Exhibit 99.1
Arrow Electronics Reports Second-Quarter 2021 Results
-- Record Sales, Gross Profit, and Earnings per Share --
-- Announces Additional $600 Million Share Repurchase Authorization --
CENTENNIAL, Colo.--(BUSINESS WIRE)-Aug 5, 2021--Arrow Electronics, Inc. (NYSE:ARW) today reported second-quarter 2021 sales of $8.56 billion, an increase of 30 percent from sales of $6.61 billion in the second quarter of 2020. Second-quarter net income was $241 million, or $3.23 per share on a diluted basis, compared with a net income of $133 million, or $1.68 per share on a diluted basis, in the second quarter of 2020. Non-GAAP net income 1 was $249 million, or $3.34 per share on a diluted basis, in the second quarter of 2021, compared with non-GAAP net income of $126 million, or $1.59 per share on a diluted basis, in the second quarter of 2020.
“Arrow reported record results this quarter, reflecting our constant efforts to capture new growth opportunities and harvest the benefits as leaders of information and operational technology innovation,” said Michael J. Long, chairman, president, and chief executive officer. “We believe that financial performance is directly linked to the value we deliver to customers and suppliers, making our achievement of the highest sales, gross profit and earnings per share for any quarter in Arrow’s history a true testament to the hard work and commitment of our team. We look forward to driving further success for our customers, as well as all our company’s stakeholders as we continue to advance our strategic priorities.”
Global components second-quarter sales of $6.61 billion reflected an increase of 40 percent year over year and non-GAAP sales increased 36 percent year over year. Asia-Pacific components second-quarter sales increased 49 percent year over year and non-GAAP sales in the region increased 47 percent year over year. Americas components second-quarter sales increased 32 percent year over year. Europe components second-quarter sales increased 33 percent year over year and non-GAAP sales in the region increased 22 percent year over year. Global components second-quarter operating income was $327 million, and second-quarter non-GAAP operating income was $339 million.
“Our commitment to helping customers bring innovative next-generation electronic products to market quickly is a key driver of our success,” continued Mr. Long. “Global components sales were above the high-end of our expectations for the fifth consecutive quarter resulting from our ability to secure additional inventory to meet strong demand.”
Global enterprise computing solutions second-quarter sales of $1.95 billion reflected an increase of 4 percent year over year and non-GAAP sales decreased 1 percent year over year. Europe enterprise computing solutions second-quarter sales increased 19 percent year over year and non-GAAP sales in the region increased 8 percent year over year. Americas enterprise computing solutions second-quarter sales decreased 5 percent year over year. Global enterprise computing solutions second-quarter operating income was $81 million, and second-quarter non-GAAP operating income was $83 million.
Mr. Long said, “We are seeing strong demand for complex software and cloud-based solutions, and our pipeline is healthy. Despite strong demand, second-quarter global enterprise computing solutions performance was in-line with our expectations as shifting spending priorities and some supply constraints stood in the way of capturing upside.”
“Enhancing shareholder value remains a top priority. With a strong balance sheet and liquidity position, our return on invested capital increased year over year for the fifth straight quarter,” said Chris Stansbury, senior vice president and chief financial officer. “We are pleased our strong financial returns, positive cash flow from operations, and the effective management of our balance sheet enabled us to deliver on our commitment to returning cash to shareholders through an additional $600 million repurchase authorization on July 21. During the second quarter, we repurchased a single-quarter record of approximately $250 million of shares through our stock repurchase program. Our current repurchase authorization stands at approximately $663 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.

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THIRD-QUARTER 2021 OUTLOOK
•Consolidated sales of $8.175 billion to $8.775 billion, with global components sales of $6.375 billion to $6.675 billion, and global enterprise computing solutions sales of $1.8 billion to $2.1 billion
•Net income per share on a diluted basis of $3.24 to $3.40, and non-GAAP net income per share on a diluted basis 1 of $3.42 to $3.58
•Average tax rate of approximately 23.5 percent compared to the long-term range of 23 to 25 percent
•Average diluted shares outstanding of 73 million
•Interest expense of approximately $32 million
•Expecting average USD-to-Euro exchange rate of $1.19 to €1; changes in foreign currencies to increase sales by approximately $40 million, and earnings per share on a diluted basis by $.02 compared to the third quarter of 2020

Third-Quarter 2021 Outlook
| Reported GAAP measure | Intangible amortization expense | Restructuring & integration charges | Non-GAAP measure
Net income per diluted share | $3.24 - $3.40 | $.09 | $.09 | $3.42 - $3.58

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 third 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, operating income, net income attributable to shareholders, 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 adjusted GAAP measures 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 and the impact of notes receivable reserves and recoveries related to the AFS business (referred to as “AFS notes receivable reserves and recoveries”). Non-GAAP operating income excludes identifiable intangible asset amortization, restructuring, integration, and other charges, AFS notes receivable reserves and recoveries, impairment of long-lived assets, and the impact of wind down. Non-GAAP effective tax rate and non-GAAP net income attributable to shareholders excludes identifiable intangible asset amortization, restructuring, integration, and other charges, gain (loss) on investments, net, the impact of tax legislation changes, AFS notes receivable recoveries, the impact of impairments of long-lived assets, pension settlement loss, and the impact of wind down.

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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.

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ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
|  | Quarter Ended |  | Six Months Ended
|  | July 3, 2021 |  | June 27, 2020 |  | July 3, 2021 |  | June 27, 2020
Sales |  | $ | 8,562,631 |  |  | $ | 6,606,494 |  |  | $ | 16,948,550 |  |  | $ | 12,987,911 |
Cost of sales |  | 7,562,526 |  |  | 5,856,031 |  |  | 15,018,335 |  |  | 11,509,057 |
Gross profit |  | 1,000,105 |  |  | 750,463 |  |  | 1,930,215 |  |  | 1,478,854 |
Operating expenses: |  |  |  |  |  |  |  |
Selling, general, and administrative expenses |  | 602,084 |  |  | 501,470 |  |  | 1,176,651 |  |  | 1,035,309 |
Depreciation and amortization |  | 48,539 |  |  | 46,812 |  |  | 98,870 |  |  | 93,922 |
Impairments |  | 4,482 |  |  | 4,918 |  |  | 4,482 |  |  | 4,918 |
Restructuring, integration, and other charges |  | 4,478 |  |  | 650 |  |  | 10,187 |  |  | 9,788 |
|  | 659,583 |  |  | 553,850 |  |  | 1,290,190 |  |  | 1,143,937 |
Operating income |  | 340,522 |  |  | 196,613 |  |  | 640,025 |  |  | 334,917 |
Equity in earnings (losses) of affiliated companies |  | 190 |  |  | (283) |  |  | 1,034 |  |  | 247 |
Gain (loss) on investments, net |  | 6,726 |  |  | 10,901 |  |  | 9,519 |  |  | (5,909) |
Employee benefit plan expense, net |  | (1,438) |  |  | (1,173) |  |  | (2,668) |  |  | (2,282) |
Interest and other financing expense, net |  | (30,685) |  |  | (31,867) |  |  | (64,341) |  |  | (75,135) |
Income before income taxes |  | 315,315 |  |  | 174,191 |  |  | 583,569 |  |  | 251,838 |
Provision for income taxes |  | 74,113 |  |  | 40,854 |  |  | 135,139 |  |  | 68,746 |
Consolidated net income |  | 241,202 |  |  | 133,337 |  |  | 448,430 |  |  | 183,092 |
Noncontrolling interests |  | 561 |  |  | 533 |  |  | 1,468 |  |  | 785 |
Net income attributable to shareholders |  | $ | 240,641 |  |  | $ | 132,804 |  |  | $ | 446,962 |  |  | $ | 182,307 |
Net income per share: |  |  |  |  |  |  |  |
Basic |  | $ | 3.27 |  |  | $ | 1.69 |  |  | $ | 6.02 |  |  | $ | 2.29 |
Diluted |  | $ | 3.23 |  |  | $ | 1.68 |  |  | $ | 5.94 |  |  | $ | 2.28 |
Weighted-average shares outstanding: |  |  |  |  |  |  |  |
Basic |  | 73,693 |  |  | 78,677 |  |  | 74,294 |  |  | 79,527 |
Diluted |  | 74,611 |  |  | 79,226 |  |  | 75,197 |  |  | 80,113 |

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ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except par value)
(Unaudited)
| July 3, 2021 |  | December 31, 2020
ASSETS |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 244,070 |  |  | $ | 373,615 |
Accounts receivable, net | 8,846,715 |  |  | 9,205,343 |
Inventories | 3,636,082 |  |  | 3,287,308 |
Other current assets | 355,757 |  |  | 286,633 |
Total current assets | 13,082,624 |  |  | 13,152,899 |
Property, plant, and equipment, at cost: |  |  |
Land | 5,691 |  |  | 7,940 |
Buildings and improvements | 184,676 |  |  | 207,614 |
Machinery and equipment | 1,530,544 |  |  | 1,553,371 |
| 1,720,911 |  |  | 1,768,925 |
Less: Accumulated depreciation and amortization | (993,500) |  |  | (969,320) |
Property, plant, and equipment, net | 727,411 |  |  | 799,605 |
Investments in affiliated companies | 68,937 |  |  | 76,358 |
Intangible assets, net | 214,261 |  |  | 233,819 |
Goodwill | 2,106,182 |  |  | 2,115,469 |
Other assets | 643,358 |  |  | 675,761 |
Total assets | $ | 16,842,773 |  |  | $ | 17,053,911 |
LIABILITIES AND EQUITY |  |  |
Current liabilities: |  |  |
Accounts payable | $ | 7,625,844 |  |  | $ | 7,937,889 |
Accrued expenses | 1,089,866 |  |  | 1,034,361 |
Short-term borrowings, including current portion of long-term debt | 356,986 |  |  | 158,633 |
Total current liabilities | 9,072,696 |  |  | 9,130,883 |
Long-term debt | 1,884,393 |  |  | 2,097,940 |
Other liabilities | 661,223 |  |  | 676,136 |
Commitments and contingencies |  |  |
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 | 1,175,470 |  |  | 1,165,850 |
Treasury stock (53,286 and 50,581 shares in 2021 and 2020, respectively), at cost | (3,134,484) |  |  | (2,776,821) |
Retained earnings | 7,126,713 |  |  | 6,679,751 |
Accumulated other comprehensive loss | (128,201) |  |  | (104,885) |
Total shareholders’ equity | 5,164,922 |  |  | 5,089,319 |
Noncontrolling interests | 59,539 |  |  | 59,633 |
Total equity | 5,224,461 |  |  | 5,148,952 |
Total liabilities and equity | $ | 16,842,773 |  |  | $ | 17,053,911 |

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ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Quarter Ended
| July 3, 2021 |  | June 27, 2020
Cash flows from operating activities: |  |  |
Consolidated net income | $ | 241,202 |  |  | $ | 133,337 |
Adjustments to reconcile consolidated net income to net cash provided by operations: |  |  |
Depreciation and amortization | 48,539 |  |  | 46,812 |
Amortization of stock-based compensation | 8,744 |  |  | 8,397 |
Equity in (earnings) losses of affiliated companies | (190) |  |  | 283 |
Deferred income taxes | (1,594) |  |  | 13,732 |
Impairments | 4,482 |  |  | 4,918 |
Gain on investments, net | (6,726) |  |  | (10,885) |
Other | 277 |  |  | 253 |
Change in assets and liabilities, net of effects of acquired and disposed businesses: |  |  |
Accounts receivable, net | (313,735) |  |  | (112,437) |
Inventories | (357,065) |  |  | (80,465) |
Accounts payable | 562,461 |  |  | 292,024 |
Accrued expenses | 79,459 |  |  | 102,369 |
Other assets and liabilities | 15,526 |  |  | 19,907 |
Net cash provided by operating activities | 281,380 |  |  | 418,245 |
Cash flows from investing activities: |  |  |
Acquisition of property, plant, and equipment | (20,929) |  |  | (31,571) |
Net cash used for investing activities | (20,929) |  |  | (31,571) |
Cash flows from financing activities: |  |  |
Change in short-term and other borrowings | (2,379) |  |  | 77,165 |
Proceeds from (repayments of) long-term bank borrowings, net | (20,433) |  |  | (123,113) |
Redemption of notes | — |  |  | (209,366) |
Proceeds from exercise of stock options | 15,226 |  |  | 1,750 |
Repurchases of common stock | (250,708) |  |  | (72,750) |
Settlement of forward-starting interest rate swap | — |  |  | (48,378) |
Other | (159) |  |  | (141) |
Net cash used for financing activities | (258,453) |  |  | (374,833) |
Effect of exchange rate changes on cash | 14,371 |  |  | (7,011) |
Net increase in cash and cash equivalents | 16,369 |  |  | 4,830 |
Cash and cash equivalents at beginning of period | 227,701 |  |  | 200,998 |
Cash and cash equivalents at end of period | $ | 244,070 |  |  | $ | 205,828 |

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ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Six Months Ended
| July 3, 2021 |  | June 27, 2020
Cash flows from operating activities: |  |  |
Consolidated net income | $ | 448,430 |  |  | $ | 183,092 |
Adjustments to reconcile consolidated net income to net cash provided by operations: |  |  |
Depreciation and amortization | 98,870 |  |  | 93,922 |
Amortization of stock-based compensation | 21,967 |  |  | 22,317 |
Equity in earnings of affiliated companies | (1,034) |  |  | (247) |
Deferred income taxes | 12,069 |  |  | 46,345 |
Impairments | 4,482 |  |  | 4,918 |
Loss (gain) on investments, net | (9,519) |  |  | 5,925 |
Other | 1,651 |  |  | 48 |
Change in assets and liabilities, net of effects of acquired and disposed businesses: |  |  |
Accounts receivable, net | 283,042 |  |  | 446,168 |
Inventories | (370,212) |  |  | 52,927 |
Accounts payable | (277,663) |  |  | (51,027) |
Accrued expenses | 83,102 |  |  | 71,043 |
Other assets and liabilities | (18,341) |  |  | 9,679 |
Net cash provided by operating activities | 276,844 |  |  | 885,110 |
Cash flows from investing activities: |  |  |
Acquisition of property, plant, and equipment | (41,109) |  |  | (59,542) |
Proceeds from sale of property, plant, and equipment | 22,171 |  |  | — |
Other | — |  |  | (5,466) |
Net cash used for investing activities | (18,938) |  |  | (65,008) |
Cash flows from financing activities: |  |  |
Change in short-term and other borrowings | (14,831) |  |  | (7,189) |
Proceeds from (repayments of) long-term bank borrowings, net | 134,241 |  | (411,690) |
Redemption of notes | (130,860) |  |  | (209,366) |
Proceeds from exercise of stock options | 41,317 |  |  | 3,730 |
Repurchases of common stock | (411,327) |  |  | (231,739) |
Settlement of forward-starting interest rate swap | — |  |  | (48,378) |
Other | (159) |  |  | (141) |
Net cash used for financing activities | (381,619) |  |  | (904,773) |
Effect of exchange rate changes on cash | (5,832) |  |  | (9,604) |
Net decrease in cash and cash equivalents | (129,545) |  |  | (94,275) |
Cash and cash equivalents at beginning of period | 373,615 |  | 300,103 |
Cash and cash equivalents at end of period | $ | 244,070 |  |  | 205,828 |

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ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
| Quarter Ended |  |
| July 3, 2021 |  | June 27, 2020 |  | % Change
Consolidated sales, as reported | $ | 8,562,631 |  |  | $ | 6,606,494 |  |  | 29.6 | %
Impact of changes in foreign currencies | — |  |  | 218,616 |  |  |
Non-GAAP consolidated sales | $ | 8,562,631 |  |  | $ | 6,825,110 |  |  | 25.5 | %
Global components sales, as reported | $ | 6,610,761 |  |  | $ | 4,721,255 |  |  | 40.0 | %
Impact of changes in foreign currencies | — |  |  | 133,141 |  |  |
Non-GAAP global components sales | $ | 6,610,761 |  |  | $ | 4,854,396 |  |  | 36.2 | %
Americas components sales, as reported | $ | 1,970,756 |  |  | $ | 1,488,901 |  |  | 32.4 | %
Impact of changes in foreign currencies | — |  |  | 637 |  |  |
Non-GAAP Americas components sales | $ | 1,970,756 |  |  | $ | 1,489,538 |  |  | 32.3 | %
Europe components sales, as reported | $ | 1,490,662 |  |  | $ | 1,118,417 |  |  | 33.3 | %
Impact of changes in foreign currencies | — |  |  | 106,199 |  |  |
Non-GAAP Europe components sales | $ | 1,490,662 |  |  | $ | 1,224,616 |  |  | 21.7 | %
Asia components sales, as reported | $ | 3,149,343 |  |  | $ | 2,113,937 |  |  | 49.0 | %
Impact of changes in foreign currencies | — |  |  | 26,305 |  |  |
Non-GAAP Asia components sales | $ | 3,149,343 |  |  | $ | 2,140,242 |  |  | 47.1 | %
Global ECS sales, as reported | $ | 1,951,870 |  |  | $ | 1,885,239 |  |  | 3.5 | %
Impact of changes in foreign currencies | — |  |  | 85,475 |  |  |
Non-GAAP global ECS sales | $ | 1,951,870 |  |  | $ | 1,970,714 |  |  | (1.0) | %
Europe ECS sales, as reported | $ | 784,515 |  |  | $ | 661,983 |  |  | 18.5 | %
Impact of changes in foreign currencies | — |  |  | 66,164 |  |  |
Non-GAAP Europe ECS sales | $ | 784,515 |  |  | $ | 728,147 |  |  | 7.7 | %
Americas ECS sales, as reported | $ | 1,167,355 |  |  | $ | 1,223,256 |  |  | (4.6) | %
Impact of changes in foreign currencies | — |  |  | 19,311 |  |  |
Non-GAAP Americas ECS sales | $ | 1,167,355 |  |  | $ | 1,242,567 |  |  | (6.1) | %

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ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
| Six Months Ended |  |
| July 3, 2021 |  | June 27, 2020 |  | % Change
Consolidated sales, as reported | $ | 16,948,550 |  |  | $ | 12,987,911 |  |  | 30.5 | %
Impact of changes in foreign currencies | — |  |  | 421,289 |  |  |
Consolidated sales, as adjusted | $ | 16,948,550 |  |  | $ | 13,409,200 |  |  | 26.4 | %
Global components sales, as reported | $ | 13,054,014 |  |  | $ | 9,271,856 |  |  | 40.8 | %
Impact of changes in foreign currencies | — |  |  | 263,439 |  |  |
Global components sales, as adjusted | $ | 13,054,014 |  |  | $ | 9,535,295 |  |  | 36.9 | %
Americas components sales, as reported | $ | 3,671,929 |  |  | $ | 3,041,699 |  |  | 20.7 | %
Impact of changes in foreign currencies | — |  |  | 346 |  |  |
Americas components sales, as adjusted | $ | 3,671,929 |  |  | $ | 3,042,045 |  |  | 20.7 | %
Europe components sales, as reported | $ | 3,059,264 |  |  | $ | 2,428,407 |  |  | 26.0 | %
Impact of changes in foreign currencies | — |  |  | 221,483 |  |  |
Europe components sales, as adjusted | $ | 3,059,264 |  |  | $ | 2,649,890 |  |  | 15.4 | %
Asia components sales, as reported | $ | 6,322,821 |  |  | $ | 3,801,750 |  |  | 66.3 | %
Impact of changes in foreign currencies | — |  |  | 41,610 |  |  |
Asia components sales, as adjusted | $ | 6,322,821 |  |  | $ | 3,843,360 |  |  | 64.5 | %
Global ECS sales, as reported | $ | 3,894,536 |  |  | $ | 3,716,055 |  |  | 4.8 | %
Impact of changes in foreign currencies | — |  |  | 157,850 |  |  |
Global ECS sales, as adjusted | $ | 3,894,536 |  |  | $ | 3,873,905 |  |  | 0.5 | %
Europe ECS sales, as reported | $ | 1,575,843 |  |  | $ | 1,364,111 |  |  | 15.5 | %
Impact of changes in foreign currencies | — |  |  | 125,964 |  |  |
Europe ECS sales, as adjusted | $ | 1,575,843 |  |  | $ | 1,490,075 |  |  | 5.8 | %
Americas ECS sales, as reported | $ | 2,318,693 |  |  | $ | 2,351,944 |  |  | (1.4) | %
Impact of changes in foreign currencies | — |  |  | 31,886 |  |  |
Americas ECS sales, as adjusted | $ | 2,318,693 |  |  | $ | 2,383,830 |  |  | (2.7) | %

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ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS RECONCILIATION
(In thousands except per share data)
(Unaudited)
Three months ended July 3, 2021
| Reported GAAP measure | Intangible amortization expense | Restructuring & Integration charges | AFS Reserves & Recoveries |  | Impairments | Impact of Wind Down |  | Other(1) | Non-GAAP measure
Sales | $ | 8,562,631 |  | $ | — |  | $ | — |  | $ | — |  |  | $ | — |  | $ | — |  |  | $ | — |  | $ | 8,562,631 |
Gross Profit | 1,000,105 |  | — |  | — |  | — |  |  | — |  | — |  |  | — |  | 1,000,105 |
Operating income | 340,522 |  | 9,316 |  | 4,478 |  | — |  |  | 4,482 |  | — |  |  | — |  | 358,798 |
Income before income taxes | 315,315 |  | 9,316 |  | 4,478 |  | — |  |  | 4,482 |  | — |  |  | (6,545) |  | 327,046 |
Provision for income taxes | 74,113 |  | 2,382 |  | 1,010 |  | — |  |  | 1,078 |  | — |  |  | (1,575) |  | 77,008 |
Consolidated net income | 241,202 |  | 6,934 |  | 3,468 |  | — |  |  | 3,404 |  | — |  |  | (4,970) |  | 250,038 |
Noncontrolling interests | 561 |  | 150 |  | — |  | — |  |  | — |  | — |  |  | — |  | 711 |
Net income attributable to shareholders | $ | 240,641 |  | $ | 6,784 |  | $ | 3,468 |  | $ | — |  |  | $ | 3,404 |  | $ | — |  |  | $ | (4,970) |  | $ | 249,327 |
Net income per diluted share (3) | $ | 3.23 |  | $ | 0.09 |  | $ | 0.05 |  | $ | — |  |  | $ | 0.05 |  | $ | — |  |  | $ | (0.07) |  | $ | 3.34 |
Effective tax rate (4) | 23.5 | % |  |  |  |  |  |  |  |  | 23.5 | %
Three months ended June 27, 2020
| Reported GAAP measure | Intangible amortization expense | Restructuring & Integration charges | AFS Reserves & Recoveries |  | Impairments | Impact of Wind Down |  | Other(2) | Non-GAAP measure
Sales | $ | 6,606,494 |  | $ | — |  | $ | — |  | $ | — |  |  | $ | — |  | $ | — |  |  | $ | — |  | $ | 6,606,494 |
Gross Profit | 750,463 |  | — |  | — |  | — |  |  | — |  | (10,696) |  |  | — |  | 739,767 |
Operating income | 196,613 |  | 9,734 |  | 650 |  | 197 |  |  | 4,918 |  | (11,824) |  |  | — |  | 200,288 |
Income before income taxes | 174,191 |  | 9,734 |  | 650 |  | 197 |  |  | 4,918 |  | (11,814) |  |  | (10,901) |  | 166,975 |
Provision for income taxes | 40,854 |  | 2,501 |  | 313 |  | 47 |  |  | 1,800 |  | (2,662) |  |  | (2,631) |  | 40,222 |
Consolidated net income | 133,337 |  | 7,233 |  | 337 |  | 150 |  |  | 3,118 |  | (9,152) |  |  | (8,270) |  | 126,753 |
Noncontrolling interests | 533 |  | 137 |  | — |  | — |  |  | — |  | — |  |  | — |  | 670 |
Net income attributable to shareholders | $ | 132,804 |  | $ | 7,096 |  | $ | 337 |  | $ | 150 |  |  | $ | 3,118 |  | $ | (9,152) |  |  | $ | (8,270) |  | $ | 126,083 |
Net income per diluted share (3) | $ | 1.68 |  | $ | 0.09 |  | $ | — |  | $ | — |  |  | $ | 0.04 |  | $ | (0.12) |  |  | $ | (0.10) |  | $ | 1.59 |
Effective tax rate (4) | 23.5 | % |  |  |  |  |  |  |  |  | 24.1 | %

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ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS RECONCILIATION
(In thousands except per share data)
(Unaudited)
Six months ended July 3, 2021
| Reported GAAP measure | Intangible amortization expense | Restructuring & Integration charges | AFS Reserves & Recoveries |  | Impairments | Impact of Wind Down | Non-recurring tax items | Other(1) | Non-GAAP measure
Sales | $ | 16,948,550 |  | $ | — |  | $ | — |  | $ | — |  |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 16,948,550 |
Gross Profit | 1,930,215 |  | — |  | — |  | — |  |  | — |  | — |  | — |  | — |  | 1,930,215 |
Operating income | 640,025 |  | 18,642 |  | 10,187 |  | — |  |  | 4,482 |  | — |  | — |  | — |  | 673,336 |
Income before income taxes | 583,569 |  | 18,642 |  | 10,187 |  | — |  |  | 4,482 |  | — |  | — |  | (9,338) |  | 607,542 |
Provision for income taxes | 135,139 |  | 4,767 |  | 2,176 |  | — |  |  | 1,078 |  | — |  | — |  | (2,247) |  | 140,913 |
Consolidated net income | 448,430 |  | 13,875 |  | 8,011 |  | — |  |  | 3,404 |  | — |  | — |  | (7,091) |  | 466,629 |
Noncontrolling interests | 1,468 |  | 300 |  | — |  | — |  |  | — |  | — |  | — |  | — |  | 1,768 |
Net income attributable to shareholders | $ | 446,962 |  | $ | 13,575 |  | $ | 8,011 |  | $ | — |  |  | $ | 3,404 |  | $ | — |  | $ | — |  | $ | (7,091) |  | $ | 464,861 |
Net income per diluted share (3) | $ | 5.94 |  | $ | 0.18 |  | $ | 0.11 |  | $ | — |  |  | $ | 0.05 |  | $ | — |  | $ | — |  | $ | (0.09) |  | $ | 6.18 |
Effective tax rate (4) | 23.2 | % |  |  |  |  |  |  |  |  | 23.2 | %
Six months ended June 27, 2020
| Reported GAAP measure | Intangible amortization expense | Restructuring & Integration charges | AFS Reserves & Recoveries |  | Impairments | Impact of Wind Down | Non-recurring tax items | Other(2) | Non-GAAP measure
Sales | $ | 12,987,911 |  | $ | — |  | $ | — |  | $ | — |  |  | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | 12,987,911 |
Gross Profit | 1,478,854 |  | — |  | — |  | — |  |  | — |  | (10,696) |  | — |  | — |  | 1,468,158 |
Operating income | 334,917 |  | 19,689 |  | 9,788 |  | (723) |  |  | 4,918 |  | (11,824) |  | — |  | — |  | 356,765 |
Income before income taxes | 251,838 |  | 19,689 |  | 9,788 |  | (723) |  |  | 4,918 |  | (11,814) |  | — |  | 5,909 |  | 279,605 |
Provision for income taxes | 68,746 |  | 5,065 |  | 2,884 |  | (175) |  |  | 1,800 |  | (2,662) |  | (3,615) |  | 1,426 |  | 73,469 |
Consolidated net income | 183,092 |  | 14,624 |  | 6,904 |  | (548) |  |  | 3,118 |  | (9,152) |  | 3,615 |  | 4,483 |  | 206,136 |
Noncontrolling interests | 785 |  | 274 |  | — |  | — |  |  | — |  | — |  | — |  | — |  | 1,059 |
Net income attributable to shareholders | $ | 182,307 |  | $ | 14,350 |  | $ | 6,904 |  | $ | (548) |  |  | $ | 3,118 |  | $ | (9,152) |  | $ | 3,615 |  | $ | 4,483 |  | $ | 205,077 |
Net income per diluted share (3) | $ | 2.28 |  | $ | 0.18 |  | $ | 0.09 |  | $ | (0.01) |  |  | $ | 0.04 |  | $ | (0.11) |  | $ | 0.05 |  | $ | 0.06 |  | $ | 2.56 |
Effective tax rate (4) | 27.3 | % |  |  |  |  |  |  |  |  | 26.3 | %
(1) Other includes (gain) loss on investments, net and pension settlement loss.
(2) Other includes (gain) loss on investments, net
(3) In all periods presented the sum of the components for diluted EPS, as adjusted may not agree to totals, as presented, due to rounding.
(4) 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.

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ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)
(Unaudited)
| Quarter Ended |  | Six Months Ended
| July 3, 2021 |  | June 27, 2020 |  | July 3, 2021 |  | June 27, 2020
Sales: |  |  |  |  |  |  |
Global components | $ | 6,610,761 |  |  | $ | 4,721,255 |  |  | $ | 13,054,014 |  |  | $ | 9,271,856 |
Global ECS | 1,951,870 |  |  | 1,885,239 |  |  | 3,894,536 |  |  | 3,716,055 |
Consolidated | $ | 8,562,631 |  |  | $ | 6,606,494 |  |  | $ | 16,948,550 |  |  | $ | 12,987,911 |
Operating income (loss): |  |  |  |  |  |  |
Global components (a) | $ | 327,036 |  |  | $ | 181,836 |  |  | $ | 616,419 |  |  | $ | 346,603 |
Global ECS (b) | 81,099 |  |  | 72,921 |  |  | 158,458 |  |  | 115,354 |
Corporate (c) | (67,613) |  |  | (58,144) |  |  | (134,852) |  |  | (127,040) |
Consolidated | $ | 340,522 |  |  | $ | 196,613 |  |  | $ | 640,025 |  |  | $ | 334,917 |

(a)Global components operating income includes $8.2 million and $12.5 million related to proceeds from legal settlements for the second quarter and first six months of 2021.
(b)Includes reserves and other adjustments of approximately $29.9 million primarily related to foreign tax and other loss contingencies for the first six months of 2020. These reserves are principally associated with transactional taxes on activity from several prior years, not significant to any one year.
(c)Includes restructuring, integration, and other charges of $4.5 million and $10.2 million for the second quarter and first six months of 2021, respectively, and $0.7 million and $9.8 million for the second quarter and first six months of 2020, respectively.

NON-GAAP SEGMENT RECONCILIATION
| Quarter Ended |  | Six Months Ended
| July 3, 2021 |  | June 27, 2020 |  | July 3, 2021 |  | June 27, 2020
Global components operating income, as reported | $ | 327,036 |  |  | $ | 181,836 |  |  | $ | 616,419 |  |  | $ | 346,603 |
Intangible assets amortization expense | 6,995 |  |  | 7,259 |  |  | 13,999 |  |  | 14,639 |
Impairments | 4,482 |  |  | — |  |  | 4,482 |  |  | — |
Impact of wind down | — |  |  | (11,824) |  |  | — |  |  | (11,824) |
AFS notes receivable reserve (recoveries) | — |  |  | 197 |  |  | — |  |  | (723) |
Global components non-GAAP operating income | $ | 338,513 |  |  | $ | 177,468 |  |  | $ | 634,900 |  |  | $ | 348,695 |
Global ECS operating income, as reported | $ | 81,099 |  |  | $ | 72,921 |  |  | $ | 158,458 |  |  | $ | 115,354 |
Intangible assets amortization expense | 2,321 |  |  | 2,475 |  |  | 4,643 |  |  | 5,050 |
Impairments | — |  |  | 4,918 |  |  | — |  |  | 4,918 |
Global ECS non-GAAP operating income | $ | 83,420 |  |  | $ | 80,314 |  |  | $ | 163,101 |  |  | $ | 125,322 |

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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