Arrow Electronics Reports Third-Quarter 2023 Results

View all news Arrow Electronics Reports Third-Quarter 2023 Results November 02, 2023 -- Third-Quarter Earnings Per Share of $3.53; Non-GAAP Earnings Per Share of $4.14 – -- Revenue of $8.01 billion in line with guidance -- Arrow Electronics, Inc. (NYSE:ARW) today reported third-quarter 2023 sales of $8.01 billion, a decrease of 14 percent year over year. Third-quarter net income was $199 million, or $3.53 per share on a diluted basis, compared with net income of $342 million, or $5.27 per share on a diluted basis, in the third quarter of 2022. Non-GAAP net income1 was $233 million, or $4.14 per share on a diluted basis, in the third quarter of 2023, compared with non-GAAP net income of $354 million, or $5.45 per share on a diluted basis, in the third quarter of 2022. Both GAAP and non-GAAP earnings per share in the third quarter of 2023 included a $0.87 benefit related to cash received from a legal settlement in the global components business, and a $0.31 impact for a charge taken to increase accounts receivable reserves associated with a customer in the global enterprise computing solutions (ECS) business. “The company executed well amidst an inventory correction in the semiconductor market and a softer information technology market, delivering non-GAAP earnings per share at the high end of our guidance range,” said Sean Kerins, Arrow’s president, and chief executive officer. Global components third-quarter sales of $6.25 billion reflected a decrease of 14 percent year over year. Europe components third-quarter sales increased 3 percent year over year, which was a 4 percent decline in constant currency. Asia-Pacific components third-quarter sales decreased 18 percent year over year. Americas components third-quarter sales decreased 24 percent year over year. Global components third-quarter operating income was $379 million, and third-quarter non-GAAP operating income was $386 million. These results include a $62 million benefit resulting from a legal settlement recorded as a decrease to operating expenses. “With lead times normalizing, customer inventory remained elevated, impacting order velocity and top-line results across most vertical markets. Despite the market conditions, operating margins are meaningfully higher than in prior market corrections,” said Mr. Kerins. “We were encouraged by the level of demand creation activity in the quarter and the continued traction of our supply chain services offering.” Global ECS third-quarter sales of $1.76 billion reflected a decrease of 10 percent year over year. Europe ECS third-quarter sales increased 2 percent year over year, which was a 5 percent decline in constant currency. Americas ECS third-quarter sales decreased 18 percent year over year. Global ECS third-quarter operating income was $55 million, and third-quarter non-GAAP operating income was $56 million. These results include a $22 million charge taken to increase accounts receivable reserves associated with a customer. “The mix in our ECS business continued to shift toward software related to infrastructure and cybersecurity, as well as cloud solutions. As a result, the business produced year-on-year billings growth albeit with a decline in sales,” said Mr. Kerins. “Non-GAAP earnings per share after adjusting for the legal settlement and accounts receivable item, was at the high end of our guidance range,” said Raj Agrawal, senior vice president and chief financial officer. “We were pleased to generate $322 million in cash flow from operations in the third quarter. Additionally, we repurchased approximately $200 million of shares during the third quarter and now have remaining purchase authorization of approximately $622 million.” 1 A reconciliation of non-GAAP financial measures to GAAP financial measures is presented in the reconciliation tables included herein. FOURTH-QUARTER 2023 OUTLOOK Consolidated sales of $7.50 billion to $8.10 billion, with global components sales of $5.40 billion to $5.80 billion, and global enterprise computing solutions sales of $2.10 billion to $2.30 billion Net income per share on a diluted basis of $3.30 to $3.50, and non-GAAP net income per share on a diluted basis of $3.61 to $3.81 Average tax rate in the range of 23 to 25 percent Average diluted shares outstanding of ~55 million Interest expense in the range of approximately $90 million Changes in foreign currencies expected to increase year-over-year growth in sales by $54 million, and earnings per share on a diluted basis by $0.02 compared to the fourth quarter of 2022 Changes in foreign currencies expected to decrease quarter-over-quarter growth in sales by $82 million and earnings per share on a diluted basis by $0.07 compared to the third quarter of 2023 Fourth-Quarter 2023 GAAP to non-GAAP Outlook Reconciliation NON-GAAP SALES RECONCILIATION Quarter Ended Quarter Ended December 31, December 31, December 31, September 30, (in billions) 2023 2022 % Change 2023 2023 % Change Global components sales, GAAP $ 5.40 - 5.80 $ 6.83 (21%) - (15%) $ 5.40 - 5.80 $ 6.25 (14%) - (7%) Impact of changes in foreign currencies — 0.03 — (0.06 ) Global components sales, constant currency $ 5.40 - 5.80 $ 6.86 (21%) - (15%) $ 5.40 - 5.80 $ 6.19 (13%) - (6%) Global ECS sales, GAAP $ 2.10 - 2.30 $ 2.50 (16%) - (8%) $ 2.10 - 2.30 $ 1.76 19% - 31% Impact of changes in foreign currencies — 0.02 — (0.02 ) Global ECS sales, constant currency $ 2.10 - 2.30 $ 2.52 (17%) - (9%) $ 2.10 - 2.30 $ 1.74 21% - 32% NON-GAAP EARNINGS RECONCILIATION Intangible amortization Restructuring & Reported GAAP measure expense integration charges Non-GAAP measure Net income per diluted share $3.30 to $3.50 $0.10 $0.21 $3.61 to $3.81 CFO Commentary and Earnings Presentation Please refer to the CFO commentary and the earnings presentation, which can be found at investor.arrow.com, as a supplement to the company’s earnings release. The company uses its website as a tool to disclose important information about the company and to comply with its disclosure obligations under Regulation Fair Disclosure. Conference Call and Webcast Information Arrow Electronics will host a conference call to discuss third-quarter 2023 financial results on Nov. 2, 2023, at 1:00 PM ET. Register online at https://conferencingportals.com/event/fEoxDDHd to obtain dial-in information for the live conference call. The conference call will also be available via live webcast at investor.arrow.com. Shortly after the conclusion of the conference call, a webcast replay will be available at investor.arrow.com. About Arrow Electronics Arrow Electronics guides innovation forward for over 210,000 leading technology manufacturers and service providers. With 2022 sales of $37 billion, Arrow develops technology solutions that help improve business and daily life. Learn more at arrow.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 fourth quarter of fiscal 2023 such as sales, net income per diluted share, non-GAAP net income per diluted share, average tax rate, average diluted shares outstanding, interest and other expense, impact to sales due to changes in foreign currencies, intangible amortization expense per diluted share, restructuring & integration charges per diluted share, and expectations regarding market demand and shareholder returns. These and other 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: unfavorable economic conditions; disruptions or inefficiencies in the supply chain; political instability; impacts of military conflict and sanctions; industry conditions; changes in product supply, pricing and customer demand; competition; other vagaries in the global components and the global ECS markets; deteriorating economic conditions, including economic recession, inflation, tax rates, foreign currency exchange rates, or the availability of capital; the effects of natural or man-made catastrophic events; changes in relationships with key suppliers; increased profit margin pressure; changes in legal and regulatory matters; non-compliance with certain regulations, such as export, antitrust, and anti-corruption laws; foreign tax and other loss contingencies; outbreaks, epidemics, pandemics, or public health crises; and the company's ability to generate positive 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 most recent Quarterly Report on Form 10-Q and the company's most recent Annual Report on Form 10-K, as well as in other filings the company makes 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. The company provides non-GAAP sales, operating income, income before income taxes, provision for income taxes, consolidated net income, noncontrolling interests, net income attributable to shareholders, effective tax rate and net income per share on a diluted basis, which are non-GAAP measures adjusted for the impact of changes in foreign currencies (referred to as “changes in foreign currencies” or “on a constant currency basis”) by re-translating prior-period results at current period foreign exchange rates, identifiable intangible asset amortization, restructuring, integration, and other charges, net gains and losses on investments, and impact of tax legislation changes. Management believes that providing this additional information is useful to the reader to better assess and understand the company’s operating performance and future prospects in the same manner as management, especially when comparing results with previous periods. Management typically monitors the business as adjusted for these items, in addition to GAAP results, to understand and compare operating results across accounting periods, for internal budgeting purposes, for short- and long-term operating plans, and to evaluate the company's financial performance. However, analysis of results on a non-GAAP basis should be used as a complement to, in conjunction with, and not as a substitute for, data presented in accordance with GAAP. ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data) (Unaudited) Quarter Ended Nine Months Ended September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022 Sales $ 8,007,019 $ 9,266,432 $ 25,257,963 $ 27,801,399 Cost of sales 7,027,422 8,079,520 22,098,495 24,170,769 Gross profit 979,597 1,186,912 3,159,468 3,630,630 Operating expenses: Selling, general, and administrative expenses 563,150 634,353 1,822,783 1,931,918 Depreciation and amortization 45,005 46,230 137,948 141,787 Restructuring, integration, and other charges 31,359 3,635 44,252 11,027 639,514 684,218 2,004,983 2,084,732 Operating income 340,083 502,694 1,154,485 1,545,898 Equity in earnings of affiliated companies 1,392 1,718 4,373 4,726 (Loss) gain on investments, net (6,159 ) (3,480 ) 4,649 (11,213 ) Employee benefit plan expense, net (854 ) (890 ) (2,510 ) (2,614 ) Interest and other financing expense, net (82,180 ) (50,936 ) (246,672 ) (123,427 ) Income before income taxes 252,282 449,106 914,325 1,413,370 Provision for income taxes 52,241 105,500 201,168 332,273 Consolidated net income 200,041 343,606 713,157 1,081,097 Noncontrolling interests 1,382 1,207 4,189 3,615 Net income attributable to shareholders $ 198,659 $ 342,399 $ 708,968 $ 1,077,482 Net income per share: Basic $ 3.57 $ 5.33 $ 12.43 $ 16.31 Diluted $ 3.53 $ 5.27 $ 12.28 $ 16.12 Weighted-average shares outstanding: Basic 55,597 64,228 57,021 66,055 Diluted 56,298 64,979 57,715 66,845 ARROW ELECTRONICS, INC. CONSOLIDATED BALANCE SHEETS (In thousands except par value) (Unaudited) September 30, 2023 December 31, 2022 ASSETS Current assets: Cash and cash equivalents $ 333,294 $ 176,915 Accounts receivable, net 10,663,164 12,322,717 Inventories 5,805,520 5,319,369 Other current assets 503,982 521,339 Total current assets 17,305,960 18,340,340 Property, plant, and equipment, at cost: Land 5,691 5,691 Buildings and improvements 185,790 184,211 Machinery and equipment 1,616,937 1,583,661 1,808,418 1,773,563 Less: Accumulated depreciation and amortization (1,272,214 ) (1,177,107 ) Property, plant, and equipment, net 536,204 596,456 Investments in affiliated companies 63,049 65,112 Intangible assets, net 134,811 159,137 Goodwill 2,021,987 2,027,626 Other assets 576,349 574,511 Total assets $ 20,638,360 $ 21,763,182 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 9,090,554 $ 10,460,419 Accrued expenses 1,256,815 1,339,302 Short-term borrowings, including current portion of long-term debt 1,588,662 589,883 Total current liabilities 11,936,031 12,389,604 Long-term debt 2,615,001 3,182,964 Other liabilities 533,853 579,261 Equity: Shareholders’ equity: Common stock, par value $1: Authorized - 160,000 shares in both 2023 and 2022 Issued - 125,424 shares in both 2023 and 2022 125,424 125,424 Capital in excess of par value 1,205,788 1,208,708 Treasury stock (71,269 and 66,175 shares in 2023 and 2022, respectively), at cost (5,307,441 ) (4,637,345 ) Retained earnings 9,923,800 9,214,832 Accumulated other comprehensive loss (462,310 ) (365,262 ) Total shareholders’ equity 5,485,261 5,546,357 Noncontrolling interests 68,214 64,996 Total equity 5,553,475 5,611,353 Total liabilities and equity $ 20,638,360 $ 21,763,182 ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Quarter Ended September 30, 2023 October 1, 2022 Cash flows from operating activities: Consolidated net income $ 200,041 $ 343,606 Adjustments to reconcile consolidated net income to net cash provided by operations: Depreciation and amortization 45,005 46,230 Amortization of stock-based compensation 6,519 3,773 Equity in earnings of affiliated companies (1,392 ) (1,718 ) Deferred income taxes (19,639 ) 8,152 Loss on investments, net 6,159 3,480 Other 1,092 307 Change in assets and liabilities: Accounts receivable, net 260,749 (594,767 ) Inventories (383,647 ) (255,871 ) Accounts payable 157,482 482,061 Accrued expenses 127,235 132,636 Other assets and liabilities (77,897 ) (26,823 ) Net cash provided by operating activities 321,707 141,066 Cash flows from investing activities: Acquisition of property, plant, and equipment (20,670 ) (18,536 ) Proceeds from collections of notes receivable — 263 Net cash used for investing activities (20,670 ) (18,273 ) Cash flows from financing activities: Change in short-term and other borrowings 603,693 (19,506 ) (Repayments of) proceeds from long-term bank borrowings, net (557,308 ) 328,268 Proceeds from exercise of stock options 443 762 Repurchases of common stock (203,491 ) (241,291 ) Net cash (used for) provided by financing activities (156,663 ) 68,233 Effect of exchange rate changes on cash (51,462 ) (82,637 ) Net increase in cash and cash equivalents 92,912 108,389 Cash and cash equivalents at beginning of period 240,382 225,596 Cash and cash equivalents at end of period $ 333,294 $ 333,985 ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine Months Ended September 30, 2023 October 1, 2022 Cash flows from operating activities: Consolidated net income $ 713,157 $ 1,081,097 Adjustments to reconcile consolidated net income to net cash provided by (used for) operations: Depreciation and amortization 137,948 141,787 Amortization of stock-based compensation 34,868 35,009 Equity in earnings of affiliated companies (4,373 ) (4,726 ) Deferred income taxes (53,038 ) 1,468 (Gain) loss on investments, net (4,649 ) 11,213 Other 4,078 2,673 Change in assets and liabilities: Accounts receivable, net 1,585,521 (628,974 ) Inventories (525,020 ) (1,011,763 ) Accounts payable (1,355,777 ) 166,602 Accrued expenses (88,348 ) 192,759 Other assets and liabilities (25,660 ) (128,909 ) Net cash provided by (used for) operating activities 418,707 (141,764 ) Cash flows from investing activities: Acquisition of property, plant, and equipment (57,775 ) (54,780 ) Proceeds from collections of notes receivable 237 20,805 Proceeds from settlement of net investment hedge 10,725 — Net cash used for investing activities (46,813 ) (33,975 ) Cash flows from financing activities: Change in short-term and other borrowings 802,032 276,516 (Repayments of) proceeds from long-term bank borrowings, net (566,734 ) 1,238,268 Net proceeds from note offering 496,268 — Redemption of notes (300,000 ) (350,000 ) Proceeds from exercise of stock options 16,824 16,434 Repurchases of common stock (719,708 ) (725,254 ) Settlement of forward-starting interest rate swap 56,711 — Other (142 ) (137 ) Net cash (used for) provided by financing activities (214,749 ) 455,827 Effect of exchange rate changes on cash (766 ) (168,297 ) Net increase in cash and cash equivalents 156,379 111,791 Cash and cash equivalents at beginning of period 176,915 222,194 Cash and cash equivalents at end of period $ 333,294 $ 333,985 ARROW ELECTRONICS, INC. NON-GAAP SALES RECONCILIATION (In thousands) (Unaudited) Quarter Ended September 30, 2023 October 1, 2022 % Change Consolidated sales, as reported $ 8,007,019 $ 9,266,432 (13.6 )% Impact of changes in foreign currencies — 145,732 Consolidated sales, constant currency $ 8,007,019 $ 9,412,164 (14.9 )% Global components sales, as reported $ 6,245,192 $ 7,300,347 (14.5 )% Impact of changes in foreign currencies — 96,433 Global components sales, constant currency $ 6,245,192 $ 7,396,780 (15.6 )% Americas components sales, as reported $ 1,869,934 $ 2,445,647 (23.5 )% Impact of changes in foreign currencies — 32 Americas components sales, constant currency $ 1,869,934 $ 2,445,679 (23.5 )% Asia components sales, as reported $ 2,387,835 $ 2,918,873 (18.2 )% Impact of changes in foreign currencies — (27,584 ) Asia components sales, constant currency $ 2,387,835 $ 2,891,289 (17.4 )% Europe components sales, as reported $ 1,987,423 $ 1,935,827 2.7 % Impact of changes in foreign currencies — 123,985 Europe components sales, constant currency $ 1,987,423 $ 2,059,812 (3.5 )% Global ECS sales, as reported $ 1,761,827 $ 1,966,085 (10.4 )% Impact of changes in foreign currencies — 49,299 Global ECS sales, constant currency $ 1,761,827 $ 2,015,384 (12.6 )% Americas ECS sales, as reported $ 1,015,924 $ 1,234,158 (17.7 )% Impact of changes in foreign currencies — (3,105 ) Americas ECS sales, constant currency $ 1,015,924 $ 1,231,053 (17.5 )% Europe ECS sales, as reported $ 745,903 $ 731,927 1.9 % Impact of changes in foreign currencies — 52,404 Europe ECS sales, constant currency $ 745,903 $ 784,331 (4.9 )% ARROW ELECTRONICS, INC. NON-GAAP SALES RECONCILIATION (In thousands) (Unaudited) Nine Months Ended September 30, 2023 October 1, 2022 % Change Consolidated sales, as reported $ 25,257,963 $ 27,801,399 (9.1 )% Impact of changes in foreign currencies — (74,613 ) Consolidated sales, constant currency $ 25,257,963 $ 27,726,786 (8.9 )% Global components sales, as reported $ 19,783,867 $ 21,960,974 (9.9 )% Impact of changes in foreign currencies — (68,284 ) Global components sales, constant currency $ 19,783,867 $ 21,892,690 (9.6 )% Americas components sales, as reported $ 6,169,949 $ 7,265,552 (15.1 )% Impact of changes in foreign currencies — (2,265 ) Americas components sales, constant currency $ 6,169,949 $ 7,263,287 (15.1 )% Asia components sales, as reported $ 7,226,871 $ 9,024,188 (19.9 )% Impact of changes in foreign currencies — (115,290 ) Asia components sales, constant currency $ 7,226,871 $ 8,908,898 (18.9 )% Europe components sales, as reported $ 6,387,047 $ 5,671,234 12.6 % Impact of changes in foreign currencies — 49,271 Europe components sales, constant currency $ 6,387,047 $ 5,720,505 11.7 % Global ECS sales, as reported $ 5,474,096 $ 5,840,425 (6.3 )% Impact of changes in foreign currencies — (6,329 ) Global ECS sales, constant currency $ 5,474,096 $ 5,834,096 (6.2 )% Americas ECS sales, as reported $ 3,014,544 $ 3,442,803 (12.4 )% Impact of changes in foreign currencies — (19,051 ) Americas ECS sales, constant currency $ 3,014,544 $ 3,423,752 (12.0 )% Europe ECS sales, as reported $ 2,459,552 $ 2,397,622 2.6 % Impact of changes in foreign currencies — 12,722 Europe ECS sales, constant currency $ 2,459,552 $ 2,410,344 2.0 % ARROW ELECTRONICS, INC. NON-GAAP EARNINGS RECONCILIATION (In thousands except per share data) (Unaudited) Three months ended September 30, 2023 Reported Intangible Restructuring GAAP amortization & Integration Non-GAAP measure expense charges(1) Other(2) measure Operating income $ 340,083 $ 7,863 $ 31,359 $ — $ 379,305 Income before income taxes 252,282 7,863 31,359 6,159 297,663 Provision for income taxes 52,241 1,959 7,321 1,476 62,997 Consolidated net income 200,041 5,904 24,038 4,683 234,666 Noncontrolling interests 1,382 138 — — 1,520 Net income attributable to shareholders $ 198,659 $ 5,766 $ 24,038 $ 4,683 $ 233,146 Net income per diluted share (3) $ 3.53 $ 0.10 $ 0.43 $ 0.08 $ 4.14 Effective tax rate (4) 20.7 % 21.2 % Three months ended October 1, 2022 Reported Intangible Restructuring GAAP amortization & Integration Non-GAAP measure expense charges(1) Other(2) measure Operating income $ 502,694 $ 8,674 $ 3,635 $ — $ 515,003 Income before income taxes 449,106 8,674 3,635 3,480 464,895 Provision for income taxes 105,500 2,219 892 841 109,452 Consolidated net income 343,606 6,455 2,743 2,639 355,443 Noncontrolling interests 1,207 125 — — 1,332 Net income attributable to shareholders $ 342,399 $ 6,330 $ 2,743 $ 2,639 $ 354,111 Net income per diluted share (3) $ 5.27 $ 0.10 $ 0.04 $ 0.04 $ 5.45 Effective tax rate (4) 23.5 % 23.5 % ARROW ELECTRONICS, INC. NON-GAAP EARNINGS RECONCILIATION (In thousands except per share data) (Unaudited) Nine months ended September 30, 2023 Reported Intangible Restructuring GAAP amortization & Integration Non-recurring Non-GAAP measure expense charges(1) tax items Other(2) measure Operating income $ 1,154,485 $ 23,751 $ 44,252 $ — $ — $ 1,222,488 Income before income taxes 914,325 23,751 44,252 — (4,649 ) 977,679 Provision for income taxes 201,168 5,961 10,638 (942 ) (1,114 ) 215,711 Consolidated net income 713,157 17,790 33,614 942 (3,535 ) 761,968 Noncontrolling interests 4,189 408 — — — 4,597 Net income attributable to shareholders $ 708,968 $ 17,382 $ 33,614 $ 942 $ (3,535 ) $ 757,371 Net income per diluted share (3) $ 12.28 $ 0.30 $ 0.58 $ 0.02 $ (0.06 ) $ 13.12 Effective tax rate (4) 22.0 % 22.1 % Nine months ended October 1, 2022 Reported Intangible Restructuring GAAP amortization & Integration Non-recurring Non-GAAP measure expense charges(1) tax items Other(2) measure Operating income $ 1,545,898 $ 26,522 $ 11,027 $ — $ — $ 1,583,447 Income before income taxes 1,413,370 26,522 11,027 — 11,213 1,462,132 Provision for income taxes 332,273 6,792 2,459 — 2,711 344,235 Consolidated net income 1,081,097 19,730 8,568 — 8,502 1,117,897 Noncontrolling interests 3,615 398 — — — 4,013 Net income attributable to shareholders $ 1,077,482 $ 19,332 $ 8,568 $ — $ 8,502 $ 1,113,884 Net income per diluted share (3) $ 16.12 $ 0.29 $ 0.13 $ — $ 0.13 $ 16.66 Effective tax rate (4) 23.5 % 23.5 % ____________________ (1) Includes charges to increase the environmental remediation reserves in the amount of $20.9 million and $23.3 million for third quarter and first nine months of 2023, respectively and $1.9 million and $2.2 million for the third quarter and first nine months of 2022, respectively. (2) Other includes (gain) loss on investments, net. (3) The sum of the components for non-GAAP 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 and as a non-GAAP measure. ARROW ELECTRONICS, INC. SEGMENT INFORMATION (In thousands) (Unaudited) Quarter Ended Nine Months Ended September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022 Sales: Global components $ 6,245,192 $ 7,300,347 $ 19,783,867 $ 21,960,974 Global ECS 1,761,827 1,966,085 5,474,096 5,840,425 Consolidated $ 8,007,019 $ 9,266,432 $ 25,257,963 $ 27,801,399 Operating income (loss): Global components (a) $ 379,053 $ 494,587 $ 1,177,906 $ 1,518,423 Global ECS (b) 54,624 83,976 221,951 253,744 Corporate (c) (93,594 ) (75,869 ) (245,372 ) (226,269 ) Consolidated $ 340,083 $ 502,694 $ 1,154,485 $ 1,545,898 (a) Global components operating income includes $62.2 million in settlement charges recorded as a reduction to operating expense for the third quarter and first nine months of 2023. Charges to increase the allowance for credit losses increased $16.8 million and $11.0 million for the third quarter and first nine months of 2023, respectively, relative to the year-earlier periods. (b) Global ECS operating income includes charges to increase the allowance for credit losses, which increased by $20.0 million and $26.8 million for the third quarter and first nine months of 2023, respectively, relative to the year-earlier periods. (c) Corporate operating loss includes restructuring, integration, and other charges of $31.4 million and $44.3 million for the third quarter and first nine months of 2023, respectively, and $3.6 million and $11.0 million for the third quarter and first nine months of 2022, respectively. NON-GAAP SEGMENT RECONCILIATION Quarter Ended Nine Months Ended September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022 Global components operating income, as reported $ 379,053 $ 494,587 $ 1,177,906 $ 1,518,423 Intangible assets amortization expense 6,640 6,691 20,064 20,303 Global components non-GAAP operating income $ 385,693 $ 501,278 $ 1,197,970 $ 1,538,726 Global ECS operating income, as reported $ 54,624 $ 83,976 $ 221,951 $ 253,744 Intangible assets amortization expense 1,223 1,983 3,687 6,219 Global ECS non-GAAP operating income $ 55,847 $ 85,959 $ 225,638 $ 259,963 Source: Arrow Electronics Categories: Press Releases View all news