Arrow Electronics, Inc. Files 10-Q for Period Ending March 30, 2024

TL;DR

<b>Arrow Electronics, Inc. has filed its Q1 2024 10-Q report, providing an update on its financial position and operational segments.</b>

AI Summary

ARROW ELECTRONICS, INC. (ARW) filed a Quarterly Report (10-Q) with the SEC on May 2, 2024. Arrow Electronics, Inc. filed a 10-Q report for the period ending March 30, 2024. The filing details financial information for the first quarter of 2024. Key financial statement components like Treasury Stock, Retained Earnings, Common Stock, and Additional Paid-In Capital are reported as of March 30, 2024, and December 31, 2023. The company utilizes hedging instruments including Interest Rate Swaps and Foreign Exchange Contracts. Operating segments, including Global ECS and Global Components across EMEA, Asia Pacific, and the Americas, are detailed for the periods ending March 30, 2024, and April 1, 2023.

Why It Matters

For investors and stakeholders tracking ARROW ELECTRONICS, INC., this filing contains several important signals. This 10-Q filing provides stakeholders with the latest financial performance and position of Arrow Electronics, Inc. for the first quarter of 2024, enabling informed investment and strategic decisions. The detailed breakdown of operating segments and financial instruments offers insights into the company's business structure, risk management strategies, and geographical performance.

Risk Assessment

Risk Level: low — ARROW ELECTRONICS, INC. shows low risk based on this filing. The filing is a standard quarterly report (10-Q) with no immediate red flags, indicating routine financial disclosure.

Analyst Insight

Monitor future filings for trends in segment performance and the impact of hedging strategies on financial results.

Key Numbers

• 2024-03-30 — Reporting Period End Date (10-Q Filing)
• 2024-05-02 — Filing Date (10-Q Filing)
• 2023-12-31 — Prior Period End Date (Balance Sheet Comparison)
• 2023-04-01 — Prior Year Quarter End Date (Segment Reporting Comparison)

Key Players & Entities

• ARROW ELECTRONICS, INC. (company) — Filer
• 9151 EAST PANORAMA CIRCLE (address) — Business and Mail Address
• CENTENNIAL (location) — Business and Mail City
• CO (location) — Business and Mail State
• 80112 (postal_code) — Business and Mail ZIP
• 303-824-4000 (phone_number) — Business Phone

FAQ

Industry Context

Arrow Electronics operates in the wholesale distribution of electronic components and enterprise computing solutions.

Regulatory Implications

The filing is a standard Form 10-Q, which is a quarterly report required by the SEC for publicly traded companies.

What Investors Should Do

1. Review the full 10-Q for detailed financial statements and segment performance data.
2. Analyze the company's use of hedging instruments for risk management.
3. Compare Q1 2024 results with prior periods to identify performance trends.

Key Dates

• 2024-03-30: Quarterly Period End — End of the reporting period for the 10-Q filing.
• 2024-05-02: Filing Date — Date the 10-Q report was officially filed with the SEC.

Year-Over-Year Comparison

This filing represents the quarterly update for March 30, 2024, compared to previous periods and the full fiscal year ending December 31, 2023.

Key Financial Figures

• $1 — ange on which registered Common Stock, $1 par value ARW New York Stock Exchan

Filing Documents

• arw-20240330x10q.htm (10-Q) — 1858KB
• arw-20240330xex10da.htm (EX-10.(A)) — 94KB
• arw-20240330xex31dia.htm (EX-31.IA) — 14KB
• arw-20240330xex31dib.htm (EX-31.IB) — 14KB
• arw-20240330xex32di.htm (EX-32.I) — 8KB
• arw-20240330xex32dii.htm (EX-32.II) — 8KB
• 0001558370-24-006456.txt (&nbsp;) — 7586KB
• arw-20240330.xsd (EX-101.SCH) — 45KB
• arw-20240330_cal.xml (EX-101.CAL) — 53KB
• arw-20240330_def.xml (EX-101.DEF) — 184KB
• arw-20240330_lab.xml (EX-101.LAB) — 424KB
• arw-20240330_pre.xml (EX-101.PRE) — 286KB
• arw-20240330x10q_htm.xml (XML) — 1399KB

Financial Statements

Financial Statements Consolidated Statements of Operations 3 Consolidated Statements of Comprehensive Income 4 Consolidated Balance Sheets 5 Consolidated Statements of Cash Flows 6 Consolidated Statements of Equity 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 24 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 34 Item 4.

Controls and Procedures

Controls and Procedures 34 Part II. Other Information Item 1.

Legal Proceedings

Legal Proceedings 35 Item 1A.

Risk Factors

Risk Factors 35 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35 Item 5. Other Information 35 Item 6. Exhibits 36 Signature 37 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data) (Unaudited) Quarter Ended March 30, April 1, 2024 2023 Sales $ 6,924,260 $ 8,736,428 Cost of sales 6,066,434 7,622,606 Gross profit 857,826 1,113,822 Operating expenses: Selling, general, and administrative 583,326 642,431 Depreciation and amortization 41,727 46,679 Restructuring, integration, and other 46,856 2,560 671,909 691,670 Operating income 185,917 422,152 Equity in losses of affiliated companies ( 344 ) ( 80 ) Gain on investments, net 98 10,311 Employee benefit plan expense, net ( 933 ) ( 853 ) Interest and other financing expense, net ( 79,604 ) ( 79,658 ) Income before income taxes 105,134 351,872 Provision for income taxes 22,036 76,547 Consolidated net income 83,098 275,325 Noncontrolling interests ( 503 ) 1,575 Net income attributable to shareholders $ 83,601 $ 273,750 Net income per share: Basic $ 1.54 $ 4.66 Diluted $ 1.53 $ 4.60 Weighted-average shares outstanding: Basic 54,251 58,731 Diluted 54,815 59,479 See accompanying notes. 3 Table of Contents ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) (Unaudited) Quarter Ended March 30, April 1, 2024 2023 Consolidated net income $ 83,098 $ 275,325 Other comprehensive income (loss): Foreign currency translation adjustment and other, net of taxes ( 99,275 ) 11,285 Gain (loss) on foreign exchange contracts designated as net investment hedges, net of taxes 3,598 (433) Gain (loss) on interest rate swaps designated as cash flow hedges, net of taxes 529 (3,709) Employee benefit plan items, net of taxes ( 91 ) (272) Other comprehensive (loss) income ( 95,239 ) 6,871 Comprehensive (loss) income ( 12,141 ) 282,196 Less: Comprehensive (loss) income attributable to noncontrolling in

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Index to Notes Page Note A. Basis of Presentation 9 Note B. Impact of Recently Issued Accounting Standards 9 Note C. Goodwill and Intangible Assets 10 Note D. Investments in Affiliated Companies 11 Note E. Accounts Receivable 11 Note F. Supplier Finance Programs 13 Note G. Debt 14 Note H. Financial Instruments Measured at Fair Value 16 Note I. Restructuring, Integration, and Other 19 Note J. Net Income per Share 19 Note K. Shareholders' Equity 20 Note L. Contingencies 21 Note M. Segment and Geographic Information 22 8 Table of Contents Index to Notes ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A – Basis of Presentation The accompanying consolidated financial statements of Arrow Electronics, Inc. (the "company") were prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and reflect all adjustments of a normal recurring nature, which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position and results of operations at, and for the periods presented. The consolidated results of operations for the interim periods are not necessarily indicative of results for the full year. These consolidated financial statements do not include all of the information or notes necessary for a complete presentation and, accordingly, should be read in conjunction with the company's audited consolidated financial statements and accompanying notes for the year ended December 31, 2023, as filed in the company's Annual Report on Form 10-K. Quarter End The company operates on a quarterly calendar that closes on the Saturday closest to the end of the calendar quarter, except for the fourth quarter, which closes on December 31, 2024. Reclassification Certain prior period amounts were reclassified to conform to the current period presentation. These reclassifications did not have a material impact on previously reported amounts. Note B – Impact of Recently Issued Accounting Standards In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). Upon adoption of ASU 2023-09, the company will disclose specific new categories in its income tax rate reconciliation and provide additional information for reconciling items above a quantitative threshold. The company will also disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes, and also disaggreg

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note C – Goodwill and Intangible Assets Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. The company tests goodwill and other indefinite-lived intangible assets for impairment annually as of the first day of the fourth quarter, or more frequently if indicators of potential impairment exist. Goodwill of companies acquired, allocated to the company's reportable segments, is as follows: Global (thousands) Components Global ECS Total Balance as of December 31, 2023 (a) $ 875,194 $ 1,175,232 $ 2,050,426 Acquisitions 17,275 — 17,275 Foreign currency translation adjustment ( 3,959 ) ( 9,206 ) ( 13,165 ) Balance as of March 30, 2024 (a) $ 888,510 $ 1,166,026 $ 2,054,536 (a) The total carrying value of goodwill as of March 30, 2024, and December 31, 2023 in the table above is reflected net of $ 1.6 billion of accumulated impairment charges, of which $ 1.3 billion was recorded in the global components reportable segment and $ 301.9 million was recorded in the global enterprise computing solutions ("ECS") reportable segment. Intangible assets, net, are comprised of the following as of March 30, 2024: Gross Carrying Accumulated (thousands) Amount Amortization Net Customer relationships $ 257,263 $ ( 160,240 ) $ 97,023 Amortizable trade name 73,359 ( 51,108 ) 22,251 $ 330,622 $ ( 211,348 ) $ 119,274 Intangible assets, net, are comprised of the following as of December 31, 2023: Gross Carrying Accumulated (thousands) Amount Amortization Net Customer relationships $ 258,337 $ ( 156,141 ) $ 102,196 Amortizable trade name 73,811 ( 48,567 ) 25,244 $ 332,148 $ ( 204,708 ) $ 127,440 During the first quarter of 2024 and 2023, the company recorded amortization expense related to identifiable intangible assets of $ 7.5 million and $ 8.0 million, respe

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note D – Investments in Affiliated Companies The company owns a 50 % interest in two joint ventures with Marubun Corporation (collectively "Marubun/Arrow") and a 50 % interest in one other joint venture. These investments are accounted for using the equity method. The following table presents the company's investment in affiliated companies: March 30, December 31, (thousands) 2024 2023 Marubun/Arrow $ 46,810 $ 50,779 Other 12,058 11,962 $ 58,868 $ 62,741 The equity in losses of affiliated companies consists of the following: Quarter Ended March 30, April 1, (thousands) 2024 2023 Marubun/Arrow $ ( 534 ) $ ( 397 ) Other 190 317 $ ( 344 ) $ ( 80 ) Under the terms of various joint venture agreements, the company is required to pay its pro-rata share of the third-party debt of the joint ventures in the event that the joint ventures are unable to meet their obligations. There were no outstanding borrowings under the third-party debt agreements of the joint ventures as of March 30, 2024, and December 31, 2023. Note E – Accounts Receivable Accounts receivable, net, consists of the following: March 30, December 31, (thousands) 2024 2023 Accounts receivable $ 11,207,057 $ 12,384,553 Allowance for credit losses ( 144,449 ) ( 146,480 ) Accounts receivable, net $ 11,062,608 $ 12,238,073 The following table is a rollforward for the company's allowance for credit losses: Quarter Ended March 30, April 1, (thousands) 2024 2023 Balance at beginning of period $ 146,480 $ 93,397 Charged to income 2,879 14,991 Translation adjustments ( 861 ) 388 Write-offs ( 4,049 ) ( 5,083 ) Balance at end of period $ 144,449 $ 103,693 The company monitors the current credit condition of its customers in estimating the expected credit losses and has not experienced significant changes in customers' payment trends or

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) EMEA Asset Securitization The company has an EMEA asset securitization program under which it continuously sells its interest in designated pools of trade accounts receivable of certain of its subsidiaries in the EMEA region at a discount to a special purpose entity, which in turn sells certain of the receivables to unaffiliated financial institutions and conduits administered by such unaffiliated financial institutions ("unaffiliated financial institutions") on a monthly basis. The company may sell up to 600.0 million under the EMEA asset securitization program, which matures in December 2025, subject to extension in accordance with its terms. In February 2024, the company amended provisions in the EMEA asset securitization program to update certain financial ratios. The program is conducted through Arrow EMEA Funding Corp B.V., an entity structured to be bankruptcy remote. The company is deemed the primary beneficiary of Arrow EMEA Funding Corp B.V. as the company has both the power to direct the activities that most significantly impact the entity's economic performance and the obligation to absorb losses or the right to receive the benefits that could potentially be significant to the entity from the transfer of the trade accounts receivable into the special purpose entity. Accordingly, Arrow EMEA Funding Corp B.V. is included in the company's consolidated financial statements. Sales of accounts receivable to unaffiliated financial institutions under the EMEA asset securitization program: Quarter Ended March 30, April 1, (thousands) 2024 2023 EMEA asset securitization, sales of accounts receivable $ 539,880 $ 817,833 Receivables sold to unaffiliated financial institutions under the program are excluded from "Accounts receivable, net" on the company's consolidated balance sheets, and cash receipts are reflected in the "Cash provided by operating activities" section of the consolidat

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) The EMEA asset securitization program includes terms and conditions that limit the incurrence of additional borrowings and require that certain financial ratios be maintained at designated levels. As of March 30, 2024, the company was in compliance with all such financial covenants. Factoring In the normal course of business, certain of the company's subsidiaries have factoring agreements to sell, with limited or no recourse, selected trade accounts receivable to financial institutions and accounts for these transactions as sales of the related receivables. The receivables are excluded from "Accounts receivable, net" on the company's consolidated balance sheets and cash receipts are reflected as "Cash provided by operating activities" on the consolidated statements of cash flows. The company typically does not retain financial or legal interests in these receivables. Factoring fees for the sales of accounts receivables are included in "Interest and other financing expense, net" in the consolidated statements of operations. The company continues servicing the receivables which were sold. Sales of trade accounts receivable under the company's factoring programs: Quarter Ended March 30, April 1, (thousands) 2024 2023 Sales of accounts receivable under the factoring programs $ 208,560 $ 382,278 Other amounts under the company's factoring programs: March 30, December 31, (thousands) 2024 2023 Receivables sold under the factoring programs that were uncollected $ 259,236 $ 375,940 Note F – Supplier Finance Programs At the request of certain of the company's suppliers, the company has entered into agreements ("supplier finance programs") with third-party finance providers, which facilitate the participating suppliers' ability to sell their receivables from the company to the third-party financial institutions, at the sole discretion of the suppliers. For agreeing to partic

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note G – Debt Short-term borrowings, including current portion of long-term debt, consist of the following: March 30, December 31, (thousands) 2024 2023 3.25 % notes, due September 2024 $ 499,505 $ 499,224 Commercial paper 427,763 1,121,882 Other short-term borrowings 18,430 32,848 $ 945,698 $ 1,653,954 The company has $ 500.0 million in uncommitted lines of credit. There were no outstanding borrowings under the uncommitted lines of credit at March 30, 2024 and December 31, 2023. These borrowings were provided on a short-term basis and their maturity was agreed upon between the company and the lender. The uncommitted lines of credit had a weighted-average effective interest rate of 5.82 % and 5.83 % at March 30, 2024 and December 31, 2023, respectively. The company has a commercial paper program, and the maximum aggregate balance of commercial paper outstanding may not exceed the borrowing capacity of $ 1.2 billion. Amounts outstanding under the commercial paper program are backstopped by available commitments under the company's revolving credit facility. There were $ 427.8 million in outstanding borrowings under this program at March 30, 2024 and $ 1.1 billion in outstanding borrowings at December 31, 2023. The commercial paper program had an effective interest rate of 5.80 % and 5.90 % at March 30, 2024 and December 31, 2023, respectively. Long-term debt consists of the following: March 30, December 31, (thousands) 2024 2023 Revolving Credit Facility $ 50,000 $ — North American asset securitization program 625,000 198,000 4.00 % notes, due 2025 349,245 349,061 6.125 % notes, due 2026 (a) (b) 498,343 497,661 7.50 % senior debentures, due 2027 110,205 110,184 3.875 % notes, due 2028 497,264 497,098 2.95 % notes, due 2032 495,172 495,039 Other obligations with various interest rates and due dates 7,021 6,510 $ 2,632,2

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) The estimated fair market value of long-term debt, using quoted market prices, is as follows: March 30, December 31, (thousands) 2024 2023 4.00 % notes, due 2025 $ 344,500 $ 343,500 6.125 % notes, due 2026 499,500 502,000 7.50 % senior debentures, due 2027 116,000 117,000 3.875 % notes,

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