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 March 30, 2024


☐	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)


9151 East Panorama Circle		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 53,229,856 shares of Common Stock outstanding as of April 25, 2024.

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
	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.

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 interests		(1,651)		4,652
Comprehensive (loss) income attributable to shareholders	$	(10,490)	$	277,544

See accompanying notes.

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ARROW ELECTRONICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands except par value)

(Unaudited)


	March 30,			December 31,
	2024		2023
ASSETS
Current assets:
Cash and cash equivalents	$	242,810	$	218,053
Accounts receivable, net		11,062,608		12,238,073
Inventories		4,797,053		5,187,225
Other current assets		798,591		684,126
Total current assets		16,901,062		18,327,477
Property, plant, and equipment, at cost:
Land		5,691		5,691
Buildings and improvements		196,291		195,579
Machinery and equipment		1,624,409		1,632,606
		1,826,391		1,833,876
Less: Accumulated depreciation and amortization		(1,309,303)		(1,303,136)
Property, plant, and equipment, net		517,088		530,740
Investments in affiliated companies		58,868		62,741
Intangible assets, net		119,274		127,440
Goodwill		2,054,536		2,050,426
Other assets		612,048		627,344
Total assets	$	20,262,876	$	21,726,168
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	8,940,313	$	10,070,015
Accrued expenses		1,474,605		1,463,915
Short-term borrowings, including current portion of long-term debt		945,698		1,653,954
Total current liabilities		11,360,616		13,187,884
Long-term debt		2,632,250		2,153,553
Other liabilities		500,672		507,424
Contingencies (Note L)
Equity:
Shareholders’ equity:
Common stock, par value $1:
Authorized - 160,000 shares in both 2024 and 2023
Issued - 57,955 and 57,691 shares in 2024 and 2023		57,955		57,691
Capital in excess of par value		565,166		553,340
Treasury stock (4,725 and 3,880 shares in 2024 and 2023, respectively), at cost		(405,663)		(297,745)
Retained earnings		5,873,818		5,790,217
Accumulated other comprehensive loss		(392,130)		(298,039)
Total shareholders’ equity		5,699,146		5,805,464
Noncontrolling interests		70,192		71,843
Total equity		5,769,338		5,877,307
Total liabilities and equity	$	20,262,876	$	21,726,168

See accompanying notes.

Table of Contents

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Quarter Ended
	March 30,		April 1,
	2024		2023
Cash flows from operating activities:
Consolidated net income	$	83,098	$	275,325
Adjustments to reconcile consolidated net income to net cash provided by operations:
Depreciation and amortization		41,727		46,679
Amortization of stock-based compensation		13,447		19,497
Equity in losses of affiliated companies		344		80
Deferred income taxes		(2,801)		(7,530)
Loss (gain) on investments, net		13		(10,311)
Other		1,189		1,321
Change in assets and liabilities, net of effects of acquired businesses:
Accounts receivable, net		1,057,676		1,701,889
Inventories		362,813		(199,521)
Accounts payable		(1,077,786)		(1,504,701)
Accrued expenses		21,053		(132,316)
Other assets and liabilities		(97,563)		33,392
Net cash provided by operating activities		403,210		223,804
Cash flows from investing activities:
Acquisition of property, plant, and equipment		(29,535)		(20,114)
Other		5,139		10,867
Net cash used for investing activities		(24,396)		(9,247)
Cash flows from financing activities:
Change in short-term and other borrowings		(709,675)		(146,050)
Proceeds from long-term bank borrowings, net		477,032		34,360
Net proceeds from note offering		—		498,600
Redemption of notes		—		(300,000)
Proceeds from exercise of stock options		2,929		5,934
Repurchases of common stock		(87,948)		(303,801)
Net cash used for financing activities		(317,662)		(210,957)
Effect of exchange rate changes on cash		(36,395)		25,039
Net increase in cash and cash equivalents		24,757		28,639
Cash and cash equivalents at beginning of period		218,053		176,915
Cash and cash equivalents at end of period	$	242,810	$	205,554

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, 2023	$	57,691	$	553,340	$	(297,745)	$	5,790,217	$	(298,039)	$	71,843	$	5,877,307
Consolidated net income (loss)		—		—		—		83,601		—		(503)		83,098
Other comprehensive loss		—		—		—		—		(94,091)		(1,148)		(95,239)
Amortization of stock-based compensation		—		13,447		—		—		—		—		13,447
Shares issued for stock-based compensation awards		264		(1,621)		4,286		—		—		—		2,929
Repurchases of common stock		—		—		(112,204)		—		—		—		(112,204)
Balance at March 30, 2024	$	57,955	$	565,166	$	(405,663)	$	5,873,818	$	(392,130)	$	70,192	$	5,769,338


									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

See accompanying notes.

Table of Contents

Index to Notes

ARROW ELECTRONICS, INC.

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, respectively.

Table of Contents

Index to Notes

ARROW ELECTRONICS, INC.

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 significant deterioration in customers’ credit risk as of March 30, 2024.

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Index to Notes

ARROW ELECTRONICS, INC.

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 consolidated statements of cash flows. The purchase price is paid in cash when the receivables are sold. Certain unsold receivables held by Arrow EMEA Funding Corp B.V. are pledged as collateral to unaffiliated financial institutions. These unsold receivables are included in “Accounts receivable, net” on the company’s consolidated balance sheets.

The company continues servicing the receivables which were sold and in exchange receives a servicing fee under the program. The company does not record a servicing asset or liability on the company’s consolidated balance sheets as the company estimates that the fee it receives to service these receivables approximates the fair market compensation to provide the servicing activities.

Other amounts related to the EMEA asset securitization program:


	March 30,		December 31,
(thousands)	2024		2023
Receivables sold to unaffiliated financial institutions that were uncollected	$	425,240	$	529,266
Collateralized accounts receivable held by Arrow EMEA funding Corp B.V.		911,615		805,788

Any accounts receivable held by Arrow EMEA Funding Corp B.V. would likely not be available to other creditors of the company in the event of bankruptcy or insolvency proceedings if there are outstanding balances under the EMEA asset securitization program. The assets of the special purpose entity cannot be used by the company for general corporate purposes. Additionally, the financial obligations of Arrow EMEA Funding Corp B.V. to the unaffiliated financial institutions under the program are limited to the assets it owns and there is no recourse to Arrow Electronics, Inc. for receivables that are uncollectible as a result of an account debtor’s insolvency or inability to pay.

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Index to Notes

ARROW ELECTRONICS, INC.

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 participate in these programs, the company seeks to secure improved standard payment terms with its suppliers. The company is not involved in negotiating terms of the arrangements between its suppliers and the financial institutions and has no economic interest in a supplier’s decision to enter into these agreements, or sell receivables from the company. The company’s rights and obligations to its suppliers, including amounts due, are not impacted by suppliers’ decisions to sell amounts under the arrangements. However, the company agrees to make all payments to the third-party financial institutions, and the company’s right to offset balances due from suppliers against payment obligations is restricted by the agreements for those payment obligations that have been sold by suppliers. As of March 30, 2024, and December 31, 2023, the company had $899.4 million and $1.1 billion, respectively, in obligations outstanding under these programs included in “Accounts payable” on the company’s consolidated balance sheets and all activity related to the obligations is presented within operating activities on the consolidated statements of cash flows.

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Index to Notes

ARROW ELECTRONICS, INC.

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
	$	2,632,250	$	2,153,553

(a)

Upon issuance of the 6.125% notes due March 2026, the company entered into an interest rate swap, which effectively converted the 6.125% notes to floating rate notes based on the secured overnight financing rate (“SOFR”) + 0.508%, or an effective interest rate of 5.83% as of March 30, 2024. In March 2024, the company received a notice from the swap counterparty to terminate the swap without penalty. The effective date of cancellation was April 1, 2024. Refer to Note H.

(b)	In April 2024, the company completed the sale of $500.0 million principal amount of 5.875% notes due April 2034. The net proceeds of the offering of $498.6 million were used for general corporate purposes and to repay the $500.0 million principal amount of its 6.125% notes due March 2026.

The 7.50% senior debentures are not redeemable prior to their maturity. All other notes may be called at the option of the company subject to “make whole” clauses with the exception of the 6.125% notes which were called at par in April 2024.

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Index to Notes

ARROW ELECTRONICS, INC.

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, due 2028		475,000		475,000
2.95% notes, due 2032		420,000		425,000

The carrying amount of the company’s other short-term borrowings, uncommitted lines of credit, revolving credit facility, 3.25% notes due in 2024, North American asset securitization program, commercial paper, and other obligations approximate their fair value.

The company has a $2.0 billion revolving credit facility maturing in September 2026. The facility may be used by the company for general corporate purposes including working capital in the ordinary course of business, letters of credit, repayment, prepayment or purchase of long-term indebtedness, acquisitions, and as support for the company’s commercial paper program, as applicable. Interest on borrowings under the revolving credit facility is calculated using a base rate or SOFR, plus a spread (1.08% at March 30, 2024), which is based on the company’s credit ratings, plus a credit spread adjustment of 0.10% or an effective interest rate of 6.44% at March 30, 2024. The facility fee, which is based on the company’s credit ratings, was 0.175% of the total borrowing capacity at March 30, 2024. The company had $50.0 million in outstanding borrowings under the revolving credit facility at March 30, 2024 and no outstanding borrowings under the revolving credit facility at December 31, 2023.

The company has a North American asset securitization program collateralized by accounts receivable of certain of its subsidiaries. The company may borrow up to $1.5 billion under the program which matures in September 2025. The program is conducted through Arrow Electronics Funding Corporation (“AFC”), a wholly-owned, bankruptcy remote subsidiary. The North American asset securitization program does not qualify for sale treatment. Accordingly, the accounts receivable and related debt obligation remain on the company’s consolidated balance sheets. Interest on borrowings is calculated using a base rate plus a spread (0.40% at March 30, 2024) plus a credit spread adjustment of 0.10% or an effective interest rate of 6.44% at March 30, 2024. The facility fee is 0.40% of the total borrowing capacity.

The company had $625.0 million and $198.0 million in outstanding borrowings under the North American asset securitization program at March 30, 2024 and December 31, 2023, respectively, which was included in “Long-term debt” on the company’s consolidated balance sheets. Total collateralized accounts receivable of approximately $2.3 billion and $2.7 billion were held by AFC and were included in “Accounts receivable, net” on the company’s consolidated balance sheets at March 30, 2024 and December 31, 2023, respectively. Any accounts receivable held by AFC would likely not be available to other creditors of the company in the event of bankruptcy or insolvency proceedings of the company before repayment of any outstanding borrowings under the North American asset securitization program.

Both the revolving credit facility and North American asset securitization program include 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.

Interest and dividend income of $19.5 million and $14.3 million for the first quarter of 2024 and 2023, respectively, were recorded in “Interest and other financing expense, net” within the company’s consolidated statements of operations.

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Index to Notes

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note H – Financial Instruments Measured at Fair Value

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The company utilizes a fair value hierarchy, which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The fair value hierarchy has three levels of inputs that may be used to measure fair value:

Level 1

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2

Quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable.

The following table presents assets (liabilities) measured at fair value on a recurring basis at March 30, 2024:


(thousands)	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Cash equivalents (a)	Cash and cash equivalents	$	10,689	$	—	$	—	$	10,689
Equity investments (b)	Other assets		53,211		—		—		53,211
Foreign exchange contracts designated as net investment hedges	Other assets / other current assets		—		53,778		—		53,778
		$	63,900	$	53,778	$	—	$	117,678

The following table presents assets (liabilities) measured at fair value on a recurring basis at December 31, 2023:


(thousands)	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Cash equivalents (a)	Cash and cash equivalents	$	8,729	$	—	$	—	$	8,729
Equity investments (b)	Other assets		57,625		—		—		57,625
Interest rate swap designated as fair value hedge	Other liabilities		—		(454)		—		(454)
Foreign exchange contracts designated as net investment hedges	Other assets / other current assets		—		47,245		—		47,245
		$	66,354	$	46,791	$	—	$	113,145

(a)	Cash equivalents include highly liquid investments with an original maturity of less than three months.

(b)

The company has an 8.4% equity ownership interest in Marubun Corporation and a portfolio of mutual funds with quoted market prices. The company recorded unrealized (losses) gains of ($3.6) million and $8.5 million for the first quarter of 2024 and 2023, respectively, on equity securities held at the end of the quarter.

Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to goodwill and identifiable intangible assets (refer to Note C). The company tests these assets for impairment if indicators of potential impairment exist or at least annually if indefinite-lived.

Derivative Instruments

The company uses various financial instruments, including derivative instruments, for purposes other than trading. Certain derivative instruments are designated at inception as hedges and measured for effectiveness both at inception and on an ongoing basis. Derivative instruments not designated as hedges are carried at fair value on the consolidated balance sheets with changes in fair value recognized in earnings.

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Index to Notes

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Interest Rate Swaps

The company manages the risk of variability in interest rates of future expected debt issuances by entering into various forward-starting interest rate swaps, designated as cash flow hedges. Changes in fair value of interest rate swaps designated as cash flow hedges are recorded in the shareholders’ equity section in the company’s consolidated balance sheets in “Accumulated other comprehensive loss” and will be reclassified into income over the life of the anticipated debt issuance or in the period the hedged forecasted cash flows are deemed no longer probable to occur. Reclassified gains and losses are recorded within the line item “Interest and other financing expense, net” in the consolidated statements of operations. The fair value of interest rate swaps are estimated using a discounted cash flow analysis on the expected cash flows of each derivative using observable inputs, including interest rate curves and credit spreads.

In June 2023, the company terminated its outstanding forward-starting interest rate swaps and received a cash payment of $56.7 million, which was reported in the “Cash flows from financing activities” section of the consolidated statements of cash flows. The forecasted transactions related to the swaps continued to be probable to occur by December 31, 2025, and the $56.7 million gain on the termination of the interest rate swaps remained in “Accumulated other comprehensive loss” on the company’s consolidated balance sheets at March 30, 2024. In April 2024, the forecasted bond issuance occurred, and the $56.7 million gain will be amortized to "Interest and other financing expense, net" in the company's consolidated statement of operations over the 10-year life of the bond.

The company occasionally enters into interest rate swap transactions, designated as fair value hedges, that convert certain fixed-rate debt to variable-rate debt in order to manage its targeted mix of fixed- and floating-rate debt. For qualifying interest rate fair value hedges, gains or losses on derivatives are included in “Interest and other financing expense, net” in the consolidated statements of operations. The change in fair value of the hedged item attributable to the risk being hedged is reported as an adjustment to its carrying value and is also included in “Interest and other financing expense, net”.

As of December 31, 2023, the company had one outstanding interest rate swap designated as a fair value hedge of its 6.125% notes due in March 2026, the terms of which were as follows:


		Notional Amount		Interest Rate due	Interest Rate due to
Trade Date	Maturity Date	(thousands)		from Counterparty	Counterparty
February 2023	March 2026	$	500,000	6.125%	SOFR+0.508%

The counterparty to the interest rate swap had the option to cancel the swaps after one year, without penalty. In March 2024, the counterparty cancelled the swap and the company de-designated the fair value hedging relationship.

Foreign Exchange Contracts

The company’s foreign currency exposure relates primarily to international transactions where the currency collected from customers can be different from the currency used to purchase the product. The company’s primary exposures to such transactions are denominated primarily in the following currencies: Euro, Indian Rupee, and Chinese Renminbi. The company enters into foreign exchange forward, option, or swap contracts (collectively, the “foreign exchange contracts”) to facilitate the hedging of foreign currency exposures resulting from inventory purchases and sales and mitigate the impact of changes in foreign currency exchange rates related to these transactions. Foreign exchange contracts generally have terms of no more than six months. The company does not enter into foreign exchange contracts for trading purposes. The risk of loss on a foreign exchange contract is the risk of nonperformance by the counterparties, which the company minimizes by limiting its counterparties to major financial institutions. The fair value of the foreign exchange contracts is estimated using foreign currency spot rates and forward rates quotes by third-party financial institutions. The notional amount of the foreign exchange contracts inclusive of foreign exchange contracts designated as a net investment hedge at March 30, 2024 and December 31, 2023 was $1.1 billion and $1.0 billion, respectively.

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Index to Notes

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Gains and losses related to non-designated foreign currency exchange contracts are recorded in “Cost of sales” on the company’s consolidated statements of operations. Gains and losses related to foreign currency exchange contracts designated as cash flow hedges are recorded in “Cost of sales,” “Selling, general, and administrative,” and “Interest and other financing expense, net” based upon the nature of the underlying hedged transaction, on the company’s consolidated statements of operations. Gains or losses on these contracts are deferred and recognized when the underlying future purchase or sale is recognized or when the corresponding asset or liability is revalued, and were not material to the financial statements for the periods presented.

At March 30, 2024 and December 31, 2023, the following foreign exchange contracts were designated as net investment hedges, hedging a portion of the company’s net investments in subsidiaries with Euro-denominated net assets:



Maturity Date	Notional Amount (thousands)
September 2024	EUR	50,000
April 2025	EUR	100,000
January 2028	EUR	100,000
Total	EUR	250,000

The change in the fair value of derivatives designated as net investment hedges are recorded in “foreign currency translation adjustment” (“CTA”) within “Accumulated other comprehensive loss” on the company’s consolidated balance sheets. Amounts excluded from the assessment of hedge effectiveness are included in “Interest and other financing expense, net” on the company’s consolidated statements of operations.

During the first quarter of 2023, a foreign exchange contract designated as a net investment hedge matured and the company received $10.7 million, which is reported in the “Cash flows from investing activities” section of the consolidated statements of cash flows.

The effects of derivative instruments on the company’s consolidated statements of operations and other comprehensive income are as follows:


		Quarter Ended
		March 30,		April 1,
(thousands)	Income Statement Line	2024		2023
Gain (Loss) Recognized in Income
Foreign exchange contracts, net investment hedge (a)	Interest Expense	$	1,804	$	2,048
Interest rate swaps, cash flow hedge	Interest Expense		(695)		(839)
Interest rate swap, fair value hedge (b)	Interest Expense		454		2,742
Total		$	1,563	$	3,951
Gain (Loss) Recognized in Other Comprehensive Income (Loss) before reclassifications, net of tax
Foreign exchange contracts, net investment hedge (c)		$	4,970	$	1,125
Interest rate swaps, cash flow hedge			—		(4,347)
Total		$	4,970	$	(3,222)

(a)	Represents derivative amounts excluded from the assessment of effectiveness for the net investment hedges reclassified from CTA to “Interest and other financing expenses, net”.

(b)	The cumulative amount of fair value hedging adjustments to the carrying value of hedged debt instruments totaled a loss of $0.4 million and $2.5 million for the first quarter of 2024 and 2023, respectively.

(c)

Includes derivative gains (losses) excluded from the assessment of effectiveness for the net investment hedges and recognized in other comprehensive income, net of tax, of $0.2 million and ($1.7) million for the first quarter of 2024 and 2023, respectively, which were excluded from the assessment of effectiveness for the net investment hedges and recognized in other comprehensive income (loss), net of tax.

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Index to Notes

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Other

The carrying amount of “cash and cash equivalents”, “accounts receivable, net”, and “accounts payable” approximate their fair value due to the short maturities of these financial instruments.

Note I – Restructuring, Integration, and Other

Restructuring initiatives and integration costs are due to the company's continued efforts to lower costs, drive operational efficiency, integrate acquired businesses, and the consolidation of certain operations, as necessary. The following table presents the components of the restructuring, integration, and other:


	Quarter Ended
	March 30,		April 1,
(thousands)	2024		2023
Restructuring and integration (credits) charges	$	(364)	$	1,141
Other charges		47,220		1,419
	$	46,856	$	2,560

Other Charges

Other charges include $42.8 million related to termination of personnel as a part of operating expense reduction initiatives not related to exit or disposal activities. As of March 30, 2024, the accrued liabilities related to the operating expense reduction initiatives totaled $32.1 million and substantially all accrued amounts are expected to be spent in cash within one year.

Note J – Net Income per Share

Basic net income per share is computed by dividing net income attributable to shareholders by the weighted-average number of common shares outstanding for the period. Diluted net income per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. The dilutive effect of equity awards is calculated using the treasury stock method.

The following table presents the computation of net income per share on a basic and diluted basis:


	Quarter Ended
	March 30,		April 1,
(thousands except per share data)	2024		2023
Net income attributable to shareholders	$	83,601	$	273,750
Weighted-average shares outstanding - basic		54,251		58,731
Net effect of various dilutive stock-based compensation awards		564		748
Weighted-average shares outstanding - diluted		54,815		59,479
Net income per share:
Basic	$	1.54	$	4.66
Diluted (a)	$	1.53	$	4.60

(a) Equity awards excluded from diluted net income per share as their effect would have been anti-dilutive		—		128

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Index to Notes

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note K – Shareholders’ Equity

Accumulated Other Comprehensive (Loss) Income

The following table presents the changes in Accumulated other comprehensive (loss) income, excluding noncontrolling interests:


	Quarter Ended
	March 30,		April 1,
(thousands)	2024		2023
Foreign Currency Translation Adjustment and Other:
Other comprehensive (loss) income before reclassifications (a)	$	(98,172)	$	8,008
Amounts reclassified into income		45		200
Unrealized Gain on Foreign Exchange Contracts Designated as Net Investment Hedges, Net:
Other comprehensive income before reclassifications (b)		4,970		1,125
Amounts reclassified into income		(1,372)		(1,558)
Unrealized Gain on Interest Rate Swaps Designated as Cash Flow Hedges, Net:
Other comprehensive loss before reclassifications (b)		—		(4,347)
Amounts reclassified into income		529		638
Employee Benefit Plan Items, Net:
Amounts reclassified into income		(91)		(272)
Net change in Accumulated other comprehensive (loss) income	$	(94,091)	$	3,794

(a)	Foreign currency translation adjustment includes intra-entity foreign currency transactions that are of a long-term investment nature of $6.8 million and $5.6 million for the first quarter of 2024 and 2023, respectively.

(b)	For additional information related to net investment hedges and interest rate swaps refer to Note H.

Common Stock Outstanding Activity

The following tables set forth the activity in the number of shares outstanding:


	Common		Common
	Stock	Treasury	Stock
(thousands)	Issued	Stock	Outstanding
Common stock outstanding at December 31, 2023	57,691	3,880	53,811
Shares issued for stock-based compensation awards	264	(57)	321
Repurchases of common stock	—	902	(902)
Common stock outstanding at March 30, 2024	57,955	4,725	53,230


	Common		Common
	Stock	Treasury	Stock
(thousands)	Issued	Stock	Outstanding
Common stock outstanding at December 31, 2022	125,424	66,175	59,249
Shares issued for stock-based compensation awards	—	(313)	313
Repurchases of common stock	—	2,564	(2,564)
Common stock outstanding at April 1, 2023	125,424	68,426	56,998

During the year ended December 31, 2023, the company retired 67.7 million shares of treasury stock. Refer to Note 10 “Shareholders’ Equity” in the company’s Annual Report on Form 10-K for the year ended December 31, 2023.

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ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Share-Repurchase Program

The following table shows the company’s share-repurchase program as of March 30, 2024:


					Approximate
					Dollar Value of
	Dollar Value		Dollar Value of		Shares that May
	Approved for		Shares		Yet be Purchased
Share-Repurchase Details by Month of Board Approval (thousands)	Repurchase		Repurchased		Under the Program
September 2022	$	600,000	$	600,000	$	—
January 2023		1,000,000		524,590		475,410
Total (a)	$	1,600,000	$	1,124,590	$	475,410

(a)	The dollar value of shares repurchased includes an accrual of $0.7 million for excise taxes during the first quarter of 2024 which is recorded within “Treasury stock” on the company’s consolidated balance sheets.

The company repurchased 0.8 million shares of its common stock for $100.0 million and 2.6 million shares of its common stock for $300.2 million in the first quarter of 2024 and 2023, respectively, under the company’s share-repurchase program, excluding excise taxes. As of March 30, 2024, approximately $475.4 million remained available for repurchase under the share-repurchase program. The company’s share-repurchase program does not have an expiration date.

Note L – Contingencies

Environmental Matters

In connection with the purchase of Wyle Electronics (“Wyle”) in August 2000, the company entered into a settlement agreement under which, the company accepted responsibility for any potential subsequent costs incurred for environmental clean-up associated with any then-existing contamination or violation of environmental regulations. The company is aware of two facilities (in Huntsville, Alabama (the “Huntsville Site”) and Norco, California (the “Norco Site”)) at which contaminated soil and groundwater was identified and required environmental remediation.

As successor-in-interest to Wyle, the company is the beneficiary of various Wyle insurance policies that covered liabilities arising out of operations at Norco and Huntsville. To date, the company has recovered approximately $47.3 million from certain insurance carriers relating to environmental clean-up matters at the Norco and Huntsville sites, and continues to pursue additional recoveries from one insurer related solely to the Huntsville site. The company has not recorded a receivable for any potential future insurance recoveries related to the Norco and Huntsville environmental matters, as the realization of the claims for recovery are not deemed probable at this time.

Costs are recorded for environmental matters when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Environmental liabilities are included in “Accrued expenses” and “Other liabilities” on the company’s consolidated balance sheets. The company has determined that there is no amount within the environmental liability ranges discussed below that is a better estimate than any other amount, and therefore has recorded the accruals at the minimum amount of the ranges. The liabilities were estimated based on current costs and are not discounted. The costs related to these environmental matters (referred to as “environmental costs”) include remediation, project management, regulatory oversight, and investigative and feasibility study activities.

The company expects the liabilities associated with such ongoing remediation to be resolved over an extended period of time and the accruals for environmental liabilities are adjusted periodically as facts and circumstances change, assessment and remediation efforts progress, or as additional technical or legal information becomes available. Environmental liabilities are difficult to assess and estimate due to various unknown factors such as the timing and extent of remediation,

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Index to Notes

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

comprehensive computing solutions and services. The global ECS portfolio of computing solutions includes datacenter, cloud, security, and analytics solutions. Global ECS brings broad market access, extensive supplier relationships, scale, and resources to help its value-added resellers (“VARs”) and managed service providers (“MSPs”) meet the needs of their end-users.

As a result of the company’s philosophy of maximizing operating efficiencies through the centralization of certain functions, operating income for the reportable segments excludes unallocated corporate overhead costs, depreciation on corporate fixed assets, and restructuring, integration, and other costs, as they are not attributable to the individual reportable segments and are included in the corporate line item.

Sales, by reportable segment by geographic area, are as follows:


	Quarter Ended
	March 30,		April 1,
(thousands)	2024		2023
Sales:
Components:
Americas	$	1,596,692	$	2,233,453
EMEA		1,656,507		2,246,145
Asia/Pacific		1,938,218		2,376,195
Global components	$	5,191,417	$	6,855,793

ECS:
Americas	$	907,748	$	998,114
EMEA		825,095		882,521
Global ECS	$	1,732,843	$	1,880,635
Consolidated	$	6,924,260	$	8,736,428

Operating income (loss), by reportable segment, are as follows:


	Quarter Ended
	March 30,		April 1,
(thousands)	2024		2023
Operating income (loss):
Global components (a)	$	225,562	$	417,539
Global ECS		71,459		81,099
Corporate (b)		(111,104)		(76,486)
Consolidated	$	185,917	$	422,152

(a)	Global components operating income includes charges of $10.5 million in inventory write downs related to the wind down of a business.

(b)

Corporate operating income (loss) includes restructuring, integration, and other charges of $46.9 million and $2.6 million for the first quarter of 2024 and 2023, respectively. Restructuring, integration, and other charges for the first quarter of 2024 include charges of $42.8 million related to termination of personnel as a part of operating expense reduction initiatives. Refer to Note I.

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

Information Relating to Forward-Looking Statements

This report includes “forward-looking statements,” as the term is defined under the federal securities laws. Forward-looking statements are those statements which are not statements of historical fact. These forward-looking statements can be identified by forward-looking words such as “expects,” “anticipates,” “intends,” “plans,” “may,” “will,” “believes,” “seeks,” “estimates,” and similar expressions. 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: 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 enterprise computing solutions (“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; breaches of security or privacy of business information; 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 this 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 discloses certain non-GAAP financial information in the sections below captioned “Sales”, “Gross Profit”, “Operating Expenses”, “Operating Income”, “Income Tax”, and “Net Income Attributable to Shareholders”. Refer to these sections below for reconciliations of non-GAAP financial measures to the most directly comparable reported GAAP financial measures. Non-GAAP financial information includes the following:

●

Non-GAAP sales (referred to as “sales on a constant currency basis”) exclude the impact of changes in foreign currencies by retranslating prior period results at current period foreign exchange rates.

●

Non-GAAP gross profit excludes inventory write downs related to the wind down of a business within the global components reportable segment (“impact of wind down to inventory”) and impact of changes in foreign currencies.

●

Non-GAAP operating expenses exclude identifiable intangible asset amortization, restructuring, integration, and other, and the impact of changes in foreign currencies.

●

Non-GAAP operating income excludes identifiable intangible asset amortization, restructuring, integration, and other, and impact of wind down to inventory.

●

Non-GAAP effective tax rate and non-GAAP net income attributable to shareholders exclude identifiable intangible asset amortization, restructuring, integration, and other, impact of wind down to inventory, and gain on investments, net.

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-term 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, and in conjunction with, data presented in accordance with GAAP. For a discussion of what is included within “Restructuring, integration, and other” and “Gain on investments, net” refer to the similarly captioned sections of this item below.

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Executive Summary


	Quarter Ended
	March 30,			April 1,
(millions except per share data)	2024			2023			Change
Consolidated sales	$	6,924		$	8,736		(20.7)	%
Global components sales	$	5,191		$	6,856		(24.3)	%
Global ECS sales	$	1,733		$	1,881		(7.9)	%
Gross profit margin		12.4	%		12.7	%	(30)	bps
Non-GAAP gross profit margin		12.5	%		12.7	%	(20)	bps
Operating income	$	186		$	422		(56.0)	%
Operating income margin		2.7	%		4.8	%	(210)	bps
Non-GAAP operating income	$	251		$	433		(42.0)	%
Non-GAAP operating income margin		3.6	%		5.0	%	(140)	bps
Net income attributable to shareholders	$	84		$	274		(69.5)	%
Earnings per share attributable to shareholders - diluted	$	1.53		$	4.60		(66.7)	%
Non-GAAP net income attributable to shareholders	$	132		$	274		(51.8)	%
Non-GAAP earnings per share attributable to shareholders - diluted	$	2.41		$	4.60		(47.6)	%

Business environment and other trends:

●

During the first quarter of 2024, the global components reportable segment continued to experience a cyclical downturn characterized by elevated customer inventory levels, and a challenging global macroeconomic environment, contributing to lower demand for the company’s products. These trends could continue throughout 2024 and the duration and severity of the current downturn are highly uncertain.

●

Customers of the company’s global ECS reportable segment continue shifting preferences away from traditional, and on-premises solutions, and towards more “as a service” and cloud-based, or hybrid, solutions. These changes in product mix impact sales as an increased proportion of the company's revenue is recorded on a net basis compared to a gross basis. Refer to Note 1 “Summary of Significant Accounting Policies” in the company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Results of Operations

Sales by reportable segment

Following is an analysis of the company’s sales by reportable segment:


	Quarter Ended
	March 30,		April 1,
(millions)	2024		2023		Change
Consolidated sales, as reported	$	6,924	$	8,736	(20.7)	%
Impact of changes in foreign currencies		—		9
Consolidated sales, constant currency	$	6,924	$	8,746	(20.8)	%

Global components sales, as reported	$	5,191	$	6,856	(24.3)	%
Impact of changes in foreign currencies		—		(4)
Global components sales, constant currency	$	5,191	$	6,852	(24.2)	%

Global ECS sales, as reported	$	1,733	$	1,881	(7.9)	%
Impact of changes in foreign currencies		—		14
Global ECS sales, constant currency	$	1,733	$	1,894	(8.5)	%

The sum of the components for sales, as reported, and sales on a constant currency basis may not agree to totals, as presented, due to rounding.

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Reportable segment sales by geographic region

Following is an analysis of the company’s reportable segment sales by geographic region:


	Quarter Ended
	March 30,				April 1,
	2024				2023
(millions)	Sales		% of Sales		Sales		% of Sales		Change
Americas components sales	$	1,597	23.1	%	$	2,233	25.6	%	(28.5)	%
EMEA components sales		1,657	23.9	%		2,246	25.7	%	(26.3)	%
Asia/Pacific components sales		1,938	28.0	%		2,376	27.2	%	(18.4)	%
Global components sales	$	5,191	75.0	%	$	6,856	78.5	%	(24.3)	%

Americas ECS sales	$	908	13.1	%	$	998	11.4	%	(9.1)	%
EMEA ECS sales		825	11.8	%		883	10.1	%	(6.5)	%
Global ECS sales	$	1,733	25.0	%	$	1,881	21.5	%	(7.9)	%
Consolidated sales	$	6,924	100.0	%	$	8,736	100.0	%	(20.7)	%

The sum of the components for sales by geographic region and consolidated sales may not agree to totals, as presented, due to rounding.

During the first quarter of 2024, global components sales decreased compared to the year-earlier period primarily due to the following impacts:

●

sales declines in the Americas region primarily due to decreased demand for most major verticals, particularly industrial and communications;

●

sales declines in the EMEA region primarily due to decreased demand for the industrial and transportation verticals;

●

sales declines in the Asia/Pacific region primarily due to decreased demand for the industrial vertical.

During the first quarter of 2024, global ECS sales decreased in both regions compared to the year-earlier period primarily due to a shift in sales mix towards products such as software as-a-service and cloud-based solutions where sales are recorded on a net basis and somewhat softer demand in the Americas region.

Substantially all of the company’s sales are made on an order-by-order basis, rather than through long-term sales contracts. As such, the nature of the company’s business does not provide for the visibility of material forward-looking information from its customers and suppliers beyond a few months.

Gross Profit

Following is an analysis of the company’s consolidated gross profit:


	Quarter Ended
	March 30,			April 1,
(millions)	2024			2023			Change
Gross profit, as reported	$	858		$	1,114		(23.0)	%
Impact of wind down to inventory		10			—
Impact of changes in foreign currencies		—			1
Non-GAAP gross profit	$	868		$	1,115		(22.1)	%
Gross profit as a percentage of sales, as reported		12.4	%		12.7	%	(30)	bps
Non-GAAP gross profit as a percentage of sales		12.5	%		12.8	%	(30)	bps

The sum of the components for non-GAAP gross profit may not agree to totals, as presented, due to rounding.

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The decrease in gross profit related primarily to declining demand and gross profit margins for the first quarter of 2024.

●

Global components gross profit margins decreased during the first quarter of 2024, compared with the year-earlier period, due to product mix shifting toward lower margin products. Global components supply chain services offerings continued to have a positive impact on gross margins.

●

Global ECS gross profit margins increased during the first quarter of 2024, compared with the year-earlier period, due to product mix shifting towards a higher proportion of revenue recognized on a net basis in the current year partially offset by softer margins in the Americas region as the company works to optimize the customer mix and supplier line card to better serve the mid-market.

Operating Expenses

Following is an analysis of the company’s consolidated operating expenses:


	Quarter Ended
	March 30,			April 1,
(millions)	2024			2023			Change
Operating expenses, as reported	$	672		$	692		(2.9)	%
Identifiable intangible asset amortization		(8)			(8)
Restructuring, integration, and other		(47)			(3)
Impact of changes in foreign currencies		—			1
Non-GAAP operating expenses	$	618		$	682		(9.5)	%
Operating expenses as a percentage of sales		9.7	%		7.9	%	180	bps
Non-GAAP operating expenses as a percentage of sales, constant currency		8.9	%		7.8	%	110	bps

The sum of the components for non-GAAP operating expenses may not agree to totals, as presented, due to rounding.

The declines in operating expenses for the first quarter of 2024, relative to the year-earlier period, were primarily related to lower variable costs, primarily sales incentives, in line with the decrease in sales discussed above, partially offset by a $44.3 million increase in restructuring, integration and other (see discussion below).

Restructuring, Integration, and Other

Restructuring initiatives and integration costs are due to the company’s continued efforts to lower costs, drive operational efficiency, integrate acquired businesses, and consolidate certain operations, as necessary. The company recorded restructuring, integration, and other charges as follows:


	Quarter Ended
	March 30,		April 1,
(millions)	2024		2023
Restructuring and integration charges	$	-	$	1
Other charges		47		2
Total	$	47	$	3

Other charges for the first quarter of 2024, include $42.8 million in charges related to the termination of personnel as a part of the operating expense reduction initiatives.

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Operating Income

Following is an analysis of the company’s consolidated operating income, and operating income for the company’s two reportable segments:


	Quarter Ended
	March 30,			April 1,
(millions)	2024			2023			Change
Consolidated operating income, as reported	$	186		$	422		(56.0)	%
Identifiable intangible asset amortization		8			8
Restructuring, integration, and other		47			3
Impact of wind down to inventory		10			—
Non-GAAP consolidated operating income	$	251		$	433		(42.0)	%
Consolidated operating income as a percentage of sales		2.7	%		4.8	%	(210)	bps
Non-GAAP consolidated operating income as a percentage of sales		3.6	%		5.0	%	(140)	bps

Global components operating income, as reported	$	226		$	418		(46.0)	%
Identifiable intangible asset amortization		6			7
Impact of wind down to inventory		10			—
Non-GAAP global components operating income	$	243		$	424		(42.8)	%
Global components operating income as a percentage of sales		4.3	%		6.1	%	(180)	bps
Non-GAAP global components operating income as a percentage of sales		4.7	%		6.2	%	(150)	bps

Global ECS operating income, as reported	$	71		$	81		(11.9)	%
Identifiable intangible asset amortization		1			1
Non-GAAP global ECS operating income	$	73		$	82		(11.9)	%
Global ECS operating income as a percentage of sales		4.1	%		4.3	%	(20)	bps
Non-GAAP global ECS operating income as a percentage of sales		4.2	%		4.4	%	(20)	bps

The sum of the components of consolidated operating income do not agree to totals, as presented, because unallocated corporate amounts are not included in the table above. Refer to Note M “Segment and Geographic Information” of the Notes to the Consolidated Financial Statements for further discussion.

The decrease in consolidated operating income as a percentage of sales for the first quarter of 2024 relates primarily to the changes in sales and gross profit margins discussed above.

Gain on Investments, Net

Gain on investments, net is primarily related to the changes in fair value of assets related to the Arrow SERP pension plan, which consist primarily of life insurance policies and mutual fund assets, as well as changes in the fair value of the company’s investment in Marubun Corporation, refer to Note H “Financial Instruments Measured at Fair Value” of the Notes to the Consolidated Financial Statements.

Interest and Other Financing Expense, Net

The company recorded net interest and other financing expense as follows:


	Quarter Ended
	March 30,		April 1,
(millions)	2024		2023
Interest and other financing expense, net	$	(80)	$	(80)

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Interest expenses were mostly flat compared to the year-earlier period. Refer to the section below titled “Liquidity and Capital Resources” for more information on changes in borrowings.

Income Tax

Income taxes for the interim periods presented have been included in the accompanying consolidated financial statements on the basis of an estimated annual effective tax rate. The determination of the consolidated provision for income taxes requires management to make certain judgments and estimates. Changes in the estimated level of annual pre-tax earnings, tax laws, and changes resulting from tax audits can affect the overall effective income tax rate, which impacts the level of income tax expense and net income. Judgments and estimates related to the company’s projections and assumptions are inherently uncertain, therefore, actual results could differ from projections.

Following is an analysis of the company’s consolidated effective income tax rate:


	Quarter Ended
	March 30,		April 1,
	2024		2023
Effective income tax rate	21.0	%	21.8	%
Identifiable intangible asset amortization	0.2	%	0.1	%
Restructuring, integration, and other	1.2	%	0.1	%
Impact of wind down to inventory	0.3	%	—	%
Gain on investments, net	—	%	(0.1)	%
Non-GAAP effective income tax rate	22.6	%	21.8	%

The sum of the components for non-GAAP effective income tax rate may not agree to totals, as presented, due to rounding.

The change in the effective tax rate for the first quarter of 2024, compared to the year-earlier period, is primarily due to the changes in the mix of tax jurisdictions where taxable income is generated, tax law changes, utilization of tax credits in certain jurisdictions, and liabilities for uncertain tax positions.

Net Income Attributable to Shareholders

Following is an analysis of the company’s consolidated net income attributable to shareholders:


	Quarter Ended
	March 30,		April 1,
(millions)	2024		2023
Net income attributable to shareholders, as reported	$	84	$	274
Identifiable intangible asset amortization*		7		8
Restructuring, integration, and other		47		3
Gain on investments, net		—		(10)
Impact of wind down to inventory		10		—
Tax effect of adjustments above		(16)		—
Non-GAAP net income attributable to shareholders	$	132	$	274

The sum of the components for non-GAAP net income attributable to shareholders may not agree to totals, as presented, due to rounding.

* Identifiable intangible asset amortization excludes amortization attributable to the noncontrolling interest.

The decrease in net income attributable to shareholders in the first quarter of 2024 compared to the year-earlier period, relates primarily to changes in sales and gross margins as discussed above.

Liquidity and Capital Resources

Management believes that the company’s current cash availability, its current borrowing capacity under its revolving credit facility and asset securitization programs, and its expected ability to generate future operating cash flows are sufficient to meet its projected cash flow needs for the next 12 months and the foreseeable future. The company’s current committed

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and undrawn liquidity stands at over $2.4 billion in addition to $242.8 million of cash on hand at March 30, 2024. The company also may issue debt or equity securities in the future and management believes the company will have adequate access to the capital markets, if needed. The company continually evaluates its liquidity requirements and would seek to amend its existing borrowing capacity or access the financial markets as deemed necessary.

The company’s principal sources of liquidity are existing cash and cash equivalents, cash generated from operations and cash provided by its revolving credit facilities and debt. The company’s principal uses of liquidity include cash used in operations, investments to grow working capital, scheduled interest and principal payments on its borrowings, and the return of cash to shareholders through share repurchases.

The following table presents selected financial information related to liquidity:


	March 30,		December 31,
(millions)	2024		2023		Change
Working capital	$	6,919	$	7,355	$	(436)
Cash and cash equivalents		243		218		25
Short-term debt		946		1,654		(708)
Long-term debt		2,632		2,154		478

Working Capital

The company maintains a significant investment in working capital which the company defines as accounts receivable, net, plus inventories less accounts payable. The change in working capital during the first quarter of 2024, was primarily attributable to decreases in inventory.

Working capital as a percentage of sales, which is defined as working capital divided by annualized quarterly sales, increased to 25.0% for the first three months of 2024, compared to 20.6% in the year-earlier period. The increase was primarily due to lower sales.

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments, which are readily convertible into cash, with original maturities of three months or less. At March 30, 2024 and December 31, 2023, the company had cash and cash equivalents of $242.8 million and $218.1 million, respectively, of which $231.0 million and $160.0 million, respectively, were held outside the United States.

The company has $4.9 billion of undistributed earnings of its foreign subsidiaries which it deems indefinitely reinvested, and recognizes that it may be subject to additional foreign taxes and U.S. state income taxes, if it reverses its indefinite reinvestment assertion on these foreign earnings. The company also has $2.1 billion of foreign earnings that are not deemed permanently reinvested and are available for distribution in future periods as of March 30, 2024.

Revolving Credit Facilities and Debt

The following tables summarize the company’s credit facilities by category:


			Outstanding Borrowings
	Borrowing		March 30,		December 31,
(millions)	Capacity		2024		2023
North American asset securitization program	$	1,500	$	625	$	198
Revolving credit facility		2,000		50		—
Commercial paper program (a)		1,200		428		1,122
Uncommitted lines of credit		500		—		—

(a)	Amounts outstanding under the commercial paper program are backstopped by available commitments under the company’s revolving credit facility.

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	Average Daily Balance Outstanding
	Three Months Ended				Effective Interest Rate
	March 30,		April 1,		March 30,		April 1,
(millions)	2024		2023		2024		2023
North American asset securitization program	$	724	$	1,291	6.44	%	5.30	%
Revolving credit facility		5		274	6.44	%	5.88	%
Commercial paper program		657		762	5.80	%	5.90	%
Uncommitted lines of credit		287		11	5.82	%	5.41	%

The company also 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. Receivables sold under the program are excluded from “Accounts receivable, net” and no corresponding liability is recorded on the company’s consolidated balance sheets. During the first three months of 2024 and 2023, the average daily balance outstanding under the EMEA asset securitization program was $457.1 million and $636.4 million, respectively. Refer to Note E “Accounts Receivable” of the Notes to the Consolidated Financial Statements for further discussion.

The following table summarizes recent events impacting the company’s capital resources:


(millions)	Activity	Date	Notional Amount
5.875% notes, due April 2034	Issued	April 2024	$	500
6.125% notes, due March 2026	Repaid	April 2024	$	500
Uncommitted lines of credit	Increase in Capacity	May 2023	$	300
4.50% notes, due March 2023	Repaid	March 2023	$	300
6.125% notes, due March 2026 (a)	Issued	March 2023	$	500

(a)

Upon issuance of the 6.125% notes due March 2026, the company entered into an interest rate swap, which effectively converted the 6.125% notes to floating rate notes based on SOFR + 0.508%. In March 2024, the company received a notice from the swap counterparty to terminate the swap. The effective date of cancellation was April 1, 2024. See “Interest Rate Swaps” under Note H “Financial Instruments Measured at Fair Value” of the Notes to the Consolidated Financial Statements for further discussion.

Refer to Note G “Debt” of the Notes to the Consolidated Financial Statements for further discussion of the company’s short-term and long-term debt and available financing.

Cash Flows

The following table summarizes the company’s cash flows by category for the periods presented:


	March 30,		April 1,
(millions)	2024		2023		Change
Net cash provided by operating activities	$	403	$	224	$	179
Net cash used for investing activities		(24)		(9)		(15)
Net cash used for financing activities		(318)		(211)		(107)

Cash Flows from Operating Activities

The net amount of cash provided by the company’s operating activities during the first three months of 2024 and 2023 was $403.2 million and $223.8 million, respectively. The change in cash provided by operating activities during 2024, compared to the year-earlier period, related primarily to the company’s historical counter-cyclical cash flow as the company generates cash flow in periods of lower demand due to reduced investments in working capital.

Cash Flows from Investing Activities

The net amount of cash used for investing activities during the first three months of 2024 and 2023 was $24.4 million and $9.2 million, respectively.

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PART II. OTHER INFORMATION

Item 1.Legal Proceedings

The information set forth in Note L “Contingencies” in Notes to Consolidated Financial Statements in Item 1 Part I of this Report, is incorporated herein by reference.

Item 1A.Risk Factors

There have been no material changes to the company’s risk factors from those discussed in Part I, Item 1A - Risk Factors in the company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

The following table shows the share-repurchase activity for the quarter ended March 30, 2024:


					Approximate
				Total Number of	Dollar Value of
				Shares	Shares that May
	Total			Purchased as	Yet be
	Number of	Average		Part of Publicly	Purchased
	Shares	Price Paid		Announced	Under the
(thousands except share and per share data)	Purchased	per Share (a)		Program	Programs (b)
January 1 through January 27, 2024	—	$	—	—	$	576,154
January 28 through February 24, 2024	—		—	—		576,154
February 25 through March 30, 2024	802,225		124.65	802,225		475,410
Total	802,225			802,225

(a)	Average price paid per share excludes 1% excise tax on stock repurchases.

(b)

The company’s share-repurchase program does not have an expiration date. As of March 30, 2024, the total authorized dollar value of shares available for repurchase was $1.6 billion of which $1.1 billion has been utilized, while the $475.4 million in the table represents the remaining amount available for repurchase under the program.

Item 5.Other Information

Trading Arrangements

During the quarter ended March 30, 2024, none of the company’s directors or officers adopted, amended, or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement”, as those terms are defined in Regulation S-K, Item 408.


		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


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	9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34

	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



Exhibit Number		Exhibit

10(a)*		Amendment No. 6 to Receivables Transfer Agreement, dated as of February 08, 2024, and made among Arrow EMEA Funding Corp B.V., as the SPV, BNP Paribas, as administrative agent and a purchaser agent, ING Belgium S.A./N.V., as a purchaser agent, U.S. Bank Trustees Limited, as the security trustee, Elavon Financial Services DAC, as paying agent, and Arrow Electronics, Inc.

4(a)		Indenture, dated as of March 1, 2024, between Arrow Electronics, Inc. and U.S. Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the company’s Registration Statement under the Securities Act of 1933 on Form S-3 dated March 1, 2024, Commission File No. 1-4482).

31(i)(A)*		Certification of Chief Executive Officer pursuant to Rule 13A-14(a)/15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31(i)(B)*		Certification of Chief Financial Officer pursuant to Rule 13A-14(a)/15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32(i)**		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32(ii)**		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101*		Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.

104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

		ARROW ELECTRONICS, INC.

Date:	May 2, 2024	By:	/s/ Rajesh K. Agrawal
			Rajesh K. Agrawal
			Senior Vice President and Chief Financial Officer
			(Duly Authorized Officer and Principal Financial Officer)

			/s/ Yun Cho
			Yun Cho
			Vice President, Corporate Controller, and Chief Accounting Officer
			(Principal Accounting Officer)

Quarter Ended

March 30,

April 1,

(millions)

Gain on investments, net