UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-4482

ARROW ELECTRONICS, INC.

(Exact name of registrant as specified in its charter)


New York		11-1806155
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)


9201 East Dry Creek Road		80112
Centennial CO		(Zip Code)
(Address of principal executive offices)

(303) 824-4000

(Registrant’s telephone number, including area code)

No Changes

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of the exchange on which registered
Common Stock, $1 par value	ARW	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

There were 54,159,399 shares of Common Stock outstanding as of October 26, 2023.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share data)

(Unaudited)


	Quarter Ended				Nine Months Ended
	September 30,		October 1,		September 30,		October 1,
	2023		2022		2023		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 (Note K)		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

See accompanying notes.

Table of Contents

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Quarter Ended				Nine Months Ended
	September 30,		October 1,		September 30,		October 1,
	2023		2022		2023		2022
Consolidated net income	$	200,041	$	343,606	$	713,157	$	1,081,097
Other comprehensive loss:
Foreign currency translation adjustment and other, net of taxes		(108,846)		(202,716)		(98,904)		(473,826)
Unrealized gain on foreign exchange contracts designated as net investment hedges, net of taxes		4,077		11,347		(399)		25,023
Unrealized gain on interest rate swaps designated as cash flow hedges, net of taxes		519		7,303		2,257		27,187
Employee benefit plan items, net of taxes		(261)		117		(831)		305
Other comprehensive loss		(104,511)		(183,949)		(97,877)		(421,311)
Comprehensive income		95,530		159,657		615,280		659,786
Less: Comprehensive income (loss) attributable to noncontrolling interests		85		(878)		3,360		(1,475)
Comprehensive income attributable to shareholders	$	95,445	$	160,535	$	611,920	$	661,261

See accompanying notes.

Table of Contents

ARROW ELECTRONICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands except par value)

(Unaudited)


	September 30,			December 31,
	2023		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
Commitments and contingencies (Note K)
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

See accompanying notes.

Table of Contents

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended
	September 30,		October 1,
	2023		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

See accompanying notes.

Table of Contents

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)

(Unaudited)


									Accumulated
	Common		Capital in						Other
	Stock at Par		Excess of Par		Treasury		Retained		Comprehensive		Noncontrolling
	Value		Value		Stock		Earnings		Loss		Interests		Total
Balance at December 31, 2022	$	125,424	$	1,208,708	$	(4,637,345)	$	9,214,832	$	(365,262)	$	64,996	$	5,611,353
Consolidated net income		—		—		—		273,750		—		1,575		275,325
Other comprehensive income		—		—		—		—		3,794		3,077		6,871
Amortization of stock-based compensation		—		19,497		—		—		—		—		19,497
Shares issued for stock-based compensation awards		—		(25,071)		31,005		—		—		—		5,934
Repurchases of common stock		—		—		(318,800)		—		—		—		(318,800)
Balance at April 1, 2023	$	125,424	$	1,203,134	$	(4,925,140)	$	9,488,582	$	(361,468)	$	69,648	$	5,600,180
Consolidated net income		—		—		—		236,559		—		1,232		237,791
Other comprehensive income (loss)		—		—		—		—		2,372		(2,609)		(237)
Amortization of stock-based compensation		—		8,852		—		—		—		—		8,852
Shares issued for stock-based compensation awards		—		(8,922)		19,369		—		—		—		10,447
Repurchases of common stock		—		—		(202,417)		—		—		—		(202,417)
Distributions		—		—		—		—		—		(142)		(142)
Balance at July 1, 2023	$	125,424	$	1,203,064	$	(5,108,188)	$	9,725,141	$	(359,096)	$	68,129	$	5,654,474
Consolidated net income		—		—		—		198,659		—		1,382		200,041
Other comprehensive loss		—		—		—		—		(103,214)		(1,297)		(104,511)
Amortization of stock-based compensation		—		6,519		—		—		—		—		6,519
Shares issued for stock-based compensation awards		—		(3,795)		4,238		—		—		—		443
Repurchases of common stock		—		—		(203,491)		—		—		—		(203,491)
Balance at September 30, 2023	$	125,424	$	1,205,788	$	(5,307,441)	$	9,923,800	$	(462,310)	$	68,214	$	5,553,475


									Accumulated
	Common		Capital in						Other
	Stock at Par		Excess of Par		Treasury		Retained		Comprehensive		Noncontrolling
	Value		Value		Stock		Earnings		Loss		Interests		Total
Balance at December 31, 2021	$	125,424	$	1,189,845	$	(3,629,265)	$	7,787,948	$	(191,657)	$	58,551	$	5,340,846
Consolidated net income		—		—		—		364,749		—		1,247		365,996
Other comprehensive loss		—		—		—		—		(41,312)		(869)		(42,181)
Amortization of stock-based compensation		—		17,351		—		—		—		—		17,351
Shares issued for stock-based compensation awards		—		(20,601)		31,903		—		—		—		11,302
Repurchases of common stock		—		—		(264,431)		—		—		—		(264,431)
Balance at April 2, 2022	$	125,424	$	1,186,595	$	(3,861,793)	$	8,152,697	$	(232,969)	$	58,929	$	5,428,883
Consolidated net income		—		—		—		370,334		—		1,161		371,495
Other comprehensive loss		—		—		—		—		(193,045)		(2,136)		(195,181)
Amortization of stock-based compensation		—		13,885		—		—		—		—		13,885
Shares issued for stock-based compensation awards		—		(1,950)		6,320		—		—		—		4,370
Repurchases of common stock		—		—		(225,032)		—		—		—		(225,032)
Distributions		—		—		—		—		—		(137)		(137)
Balance at July 2, 2022	$	125,424	$	1,198,530	$	(4,080,505)	$	8,523,031	$	(426,014)	$	57,817	$	5,398,283
Consolidated net income		—		—		—		342,399		—		1,207		343,606
Other comprehensive loss		—		—		—		—		(181,864)		(2,085)		(183,949)
Amortization of stock-based compensation		—		3,773		—		—		—		—		3,773
Shares issued for stock-based compensation awards		—		(1,118)		1,880		—		—		—		762
Repurchases of common stock		—		—		(259,789)		—		—		—		(259,789)
Balance at October 1, 2022	$	125,424	$	1,201,185	$	(4,338,414)	$	8,865,430	$	(607,878)	$	56,939	$	5,302,686

See accompanying notes.

Table of Contents

ARROW ELECTRONICS, INC.

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, 2022, 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, 2023.

Note B – Impact of Recently Issued Accounting Standards

In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50) Disclosure of Supplier Finance Program Obligations (“ASU No. 2022-04”). ASU No. 2022-04 requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, and potential magnitude. Effective January 1, 2023, the company adopted the provisions of ASU No. 2022-04 on a retrospective basis. As a result, the company disclosed key terms and amounts outstanding under its supplier finance programs (refer to Note F).

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 business segments, is as follows:


	Global
(thousands)	Components		Global ECS		Total
Balance as of December 31, 2022 (a)	$	873,003	$	1,154,623	$	2,027,626
Foreign currency translation adjustment		(3,875)		(1,764)		(5,639)
Balance as of September 30, 2023 (a)	$	869,128	$	1,152,859	$	2,021,987

(a)

The total carrying value of goodwill as of September 30, 2023, and December 31, 2022 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 business segment and $302.9 million was recorded in the global enterprise computing solutions (“ECS”) business segment.

Table of Contents

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Intangible assets, net, are comprised of the following as of September 30, 2023:


	Gross
	Carrying		Accumulated
(thousands)	Amount		Amortization		Net
Customer relationships	$	263,968	$	(157,138)	$	106,830
Amortizable trade name		74,006		(46,025)		27,981
	$	337,974	$	(203,163)	$	134,811

Intangible assets, net, are comprised of the following as of December 31, 2022:


	Gross
	Carrying		Accumulated
(thousands)	Amount		Amortization		Net
Customer relationships	$	268,180	$	(144,655)	$	123,525
Amortizable trade name		74,011		(38,399)		35,612
	$	342,191	$	(183,054)	$	159,137

During the third quarter of 2023 and 2022, the company recorded amortization expense related to identifiable intangible assets of $7.9 million and $8.7 million, respectively. During the first nine months of 2023 and 2022, amortization expense related to identifiable intangible assets was $23.8 million and $26.5 million, respectively.

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:


Part I.	Financial Information

	Item 1.	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	8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33

	Item 4.	Controls and Procedures	34

Part II.	Other Information

	Item 1.	Legal Proceedings	35

	Item 1A.	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

September 30,

December 31,

(thousands)

Marubun/Arrow