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What changed in ARROW ELECTRONICS, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ARROW ELECTRONICS, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+315 added−309 removedSource: 10-K (2025-02-11) vs 10-K (2024-02-13)

Top changes in ARROW ELECTRONICS, INC.'s 2024 10-K

315 paragraphs added · 309 removed · 223 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe company’s commitment to rewarding employees fairly based on skills, experience, contribution/performance, internal equity, and the external market enables us to maximize employees’ return on their career investment. The company reviews its compensation and benefits programs and practices regularly to ensure they remain competitive and equitable.
Biggest changeThe company believes its compensation and benefits programs are aligned with the local external market to attract, grow, and retain talent. The company’s commitment to rewarding employees fairly based on professional performance, skills, experience, external market data, and pay relative to other similarly situated employees enables us to maximize employees’ return on their career investment.
Providing these services, primarily through the efforts of field application engineers (“FAEs”) generally leads to longer and more profitable relationships that benefit the company as well as the company’s suppliers and customers.
Providing these services, primarily through the efforts of field application engineers, generally leads to longer and more profitable relationships that benefit the company as well as the company’s suppliers and customers.
The company believes its deep capabilities and broad services are made possible by a broad group of professionals who understand its customers’ problems from numerous perspectives and curate forward-looking, comprehensive solutions. The company believes its employees’ diverse backgrounds, talents, experiences, and perspectives frame how its global network of engineers, suppliers, and manufacturers work together, and enhance value for customers.
The company believes its deep capabilities and broad services are made possible by a broad group of professionals who understand its customers’ problems from numerous perspectives and curate forward-looking, comprehensive solutions. The company believes its employees’ varied backgrounds, talents, experiences, and perspectives frame how its global network of engineers, suppliers, and manufacturers work together, and enhance value for customers.
A supplier electing to terminate a distribution agreement may be required to purchase from the company the total amount of its products carried in inventory. As of December 31, 2023, this type of repurchase arrangement covered approximately 60% of the company’s consolidated inventories.
A supplier electing to terminate a distribution agreement may be required to purchase from the company the total amount of its products carried in inventory. As of December 31, 2024, this type of repurchase arrangement covered approximately 60% of the company’s consolidated inventories.
Most of the company’s customers require delivery of their orders on schedules or volumes that are generally not available directly from manufacturers. 3 Table of Contents The company’s demand creation efforts are intended to promote the future sale of suppliers’ products through registered engineered designs and schematics showing the use of suppliers’ components in the company’s customers’ future products.
Most of the company’s customers require delivery of their orders on schedules or volumes that are generally not available directly from manufacturers. Demand creation efforts are intended to promote the future sale of suppliers’ products through registered engineered designs and schematics showing the use of suppliers’ components in the company’s customers’ future products.
Global ECS The company’s global ECS business is a leading value-added provider of comprehensive computing solutions and services. The Global ECS portfolio includes datacenter, cloud, security, and analytics solutions. Global ECS brings broad market access, extensive supplier relationships, scale, and resources to help its VARs and MSPs meet the needs of their end-customers.
Global ECS The company’s global ECS reportable segment is a leading value-added provider of comprehensive computing solutions and services. The global ECS portfolio includes datacenter, cloud, security, and analytics solutions. Global ECS brings broad market access, extensive supplier relationships, scale, and resources to help its VARs and MSPs meet the needs of their end-customers.
The company’s sales representatives provide end-to-end product offerings and solutions with an emphasis on helping customers introduce innovative products, reduce their time to market, and enhance their overall competitiveness. Substantially all of the company’s sales are made on an order-by- 4 Table of Contents order basis, rather than through long-term sales contracts.
The company’s sales representatives provide end-to-end product offerings and solutions with an emphasis on helping customers introduce innovative products, reduce their time to market, and enhance their overall competitiveness. Substantially all of the company’s sales are made on an order-by-order basis, rather than through long-term sales contracts.
Government Regulation The company is subject to, and endeavors to comply with, various government regulations in the United States and various foreign jurisdictions in which it operates. These regulations cover several diverse areas including trade compliance, anti-bribery, anti-corruption, money laundering, securities, environmental, and data and privacy protection.
Government Regulation The company is subject to, and endeavors to comply with, various government regulations in the United States and various foreign jurisdictions in which it operates. These regulations cover several diverse areas including trade compliance, antitrust, anti-bribery, anti-corruption, money laundering, securities, environmental, labor and employment, and data and privacy protection.
Human Capital Arrow’s business strategy is to be the premier, technology-centric, go-to-market and supply chain services company on the planet. The company’s talent strategy powers that business strategy through its people.
Human Capital Arrow’s business strategy is to be the premier, technology-centric, go-to-market and supply chain services company. The company’s talent strategy powers that business strategy through its people.
As of December 31, 2023, this type of arrangement covered approximately 55% of the company’s consolidated inventories. In addition, under the terms of many such agreements, the company has the right to return to the supplier, for credit, a defined portion of those inventory items purchased within a designated period of time.
As of December 31, 2024, this type of arrangement covered approximately 56% of the company’s consolidated inventories. In addition, under the terms of many such agreements, the company has the right to return to the supplier, for credit, a defined portion of those inventory items purchased within a designated period of time.
In addition, the company may conduct, or it may be required to conduct, internal investigations or face audits or investigations by one or more domestic or foreign government or regulatory agencies, which could be costly and time-consuming, and could divert management and key personnel from the company’s business operations.
In addition, the company may conduct, or it may be required to conduct, internal investigations or face audits or investigations by one or more domestic or foreign governments or regulatory agencies, which could be costly and time-consuming, and could damage the company’s reputation or could divert management and key personnel from the company’s business operations.
The company’s talent ecosystem spans 53 countries, with the strategic vision of excelling in the business to drive more scale, extending the company’s value, and winning in the market with the diversity of its people and the strength of its culture.
The company’s talent ecosystem spans 52 countries, with the strategic vision of excelling in the business to drive more scale, extending the company’s value, and winning in the market with the strength of its people and culture.
The company’s sales teams focus on an extensive portfolio of products and services to support customers’ material management and production needs, including connecting customers to the company’s FAEs that provide technical support and serve as a gateway to the company’s supplier partners.
The company’s sales teams focus on an extensive portfolio of products and services to support customers’ material management and production needs, including connecting customers to the company’s field application engineers that provide technical support and serve as a gateway to the company’s supplier partners.
Regulatory or 5 Table of Contents government authorities where the company operates may have enforcement powers that can subject the company to legal penalties or other measures and can impose changes or conditions in the way it conducts business.
Regulatory or government authorities where the company operates may have enforcement powers that can subject the company to legal penalties or other measures and can impose changes or conditions in the way it conducts business.
Available Information The company files its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements, and other documents with the U.S. Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934 (as amended, the “Exchange Act”).
Available Information The company files its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements, and other documents with the SEC under the Securities Exchange Act of 1934 (as amended, the “Exchange Act”).
A copy of any of the company’s filings with the SEC, or any of the agreements or other documents that constitute exhibits to those filings, can be obtained by request directed to the company at the following address and telephone number: 7 Table of Contents Arrow Electronics, Inc. 9201 East Dry Creek Road Centennial, Colorado 80112 (303) 824-4000 Attention: Corporate Secretary The company also makes these filings, and amendments to these filings, available, free of charge, through its Investor Relations website (investor.arrow.com/investors) as soon as reasonably practicable after the company files such materials with the SEC.
A copy of any of the company’s filings with the SEC, or any of the agreements or other documents that constitute exhibits to those filings, can be obtained by request directed to the company at the following address and telephone number: Arrow Electronics, Inc. 9151 East Panorama Circle Centennial, Colorado 80112 (303) 824-4000 Attention: Corporate Secretary The company also makes these filings, and amendments to these filings, available, free of charge, through its Investor Relations website (investor.arrow.com/investors) as soon as reasonably practicable after the company files such materials with the SEC.
Industrial customers range from major OEMs and CMs to small engineering and manufacturing firms, while commercial customers primarily include VARs, MSPs, and OEMs. No single customer accounted for more than 2% of the company’s 2023 consolidated sales.
Industrial customers range from major OEMs and EMS providers to small engineering and manufacturing firms, while commercial customers primarily include VARs, MSPs, and OEMs. No single customer accounted for more than 2% of the company’s 2024 consolidated sales.
However, certain parts of the company’s business, such as the company’s global ECS business, rely on a limited number of suppliers with the strategy of providing focused support, extensive product knowledge, and customized service to suppliers, MSPs, and VARs.
However, certain parts of the 5 Table of Contents company’s business, such as the company’s global ECS reportable segment, rely on a limited number of suppliers with the strategy of providing focused support, extensive product knowledge, and customized service to suppliers, MSPs, and VARs.
To achieve its objectives, the company seeks to capture significant opportunities to grow across products, markets, and geographies. To supplement its organic growth strategy, the company continually evaluates strategic acquisitions to broaden its product and value-added service offerings, increase its market penetration, and expand its geographic reach.
To achieve its objectives, the company seeks to capture significant opportunities to grow across products, markets, and geographies. To supplement its organic growth strategy, the company continually evaluates strategic acquisitions to broaden its product and value-added service offerings, increase its market penetration, and expand its geographic reach. The company is also committed to improving operational efficiency.
Increased government scrutiny of the company’s actions or enforcement could materially and adversely affect its business or damage its reputation.
Increased government scrutiny of the company’s actions or 6 Table of Contents enforcement could materially and adversely affect its business or damage its reputation.
In addition to demand creation, the company utilizes its sizable engineering resources to engage with customers in a variety of design engineering services, including software development, product design and integrated circuit design. Arrow’s integration services provide a full suite of product lifecycle solutions for our customers.
In addition to demand creation, 4 Table of Contents the company utilizes its sizable engineering resources to engage with customers in a variety of design engineering services, including software development, product design and integrated circuit design. Integration services are designed to provide a full suite of product lifecycle solutions for our customers.
Efforts towards fostering a diverse talent pipeline and supporting a diverse employee population are reflected in the company’s talent strategy through (a) internal talent development programs and retention initiatives that advance career opportunity for all employees, (b) hiring from a wide range of sources in support of a talent pool with a diverse set of experiences and skills, and, (c) training programs designed to emphasize and expand diversity and inclusion priorities that align to the company’s business strategy.
Efforts towards fostering a robust talent pipeline and supporting employee career opportunities are reflected in the company’s talent strategy through (a) internal talent development programs and retention initiatives that advance career opportunity for all employees, (b) hiring from a wide range of sources in support of a talent pool with a broad set of experiences and skills, and (c) training programs designed to emphasize principles that align to the company’s business strategy.
For 2023, approximately 77% of the company’s sales were from the global components reportable segment, and approximately 23% of the company’s sales were from the global ECS reportable segment. The financial information about the company’s reportable segments and geographic operations is found in Note 16 to the consolidated financial statements.
For 2024, approximately 72% of the company’s sales were from the global components reportable segment, and approximately 28% of the company’s sales were from the global ECS reportable segment. The financial information about the company’s reportable segments and geographic operations is found in Note 16 to the consolidated financial statements.
Information about the Executive Officers The following table sets forth the names, ages, and the positions held by each of the executive officers of the company as of February 13, 2024: ​ ​ ​ ​ ​ ​ Name Age Position Sean J. Kerins 61 President, Chief Executive Officer Rajesh K. Agrawal 58 Senior Vice President, Chief Financial Officer Carine L.
Information about the Executive Officers The following table sets forth the names, ages, and the positions held by each of the executive officers of the company as of February 11, 2025: ​ ​ ​ ​ ​ ​ Name Age Position Sean J. Kerins 62 President, Chief Executive Officer Rajesh K. Agrawal 59 Senior Vice President, Chief Financial Officer Carine L.
As such, the nature of the company’s business does not provide visibility of material forward-looking information from its customers and suppliers beyond a few months. One supplier accounted for approximately 10% of the company’s consolidated sales in 2023. The company believes that many of the products it sells are available from other sources at competitive prices.
As such, the nature of the company’s business does not provide visibility of material forward-looking information from its customers and suppliers beyond a few months. No single supplier accounted for more than 8% of the company’s consolidated sales in 2024. The company believes that many of the products it sells are available from other sources at competitive prices.
Talent Acquisition, Development, and Retention The company believes in work that elevates career opportunity for employees and views its employees as career investors. Employees bring their unique talents, experiences, and perspectives to the organization through their daily work.
The company believes in work that elevates career opportunities for employees and views its employees as career investors. Employees bring their unique talents, experiences, and perspectives to the organization through their daily work.
The company’s financial objectives are to grow sales faster than the market, increase the markets served, grow profits faster than sales, generate earnings per share growth in excess of competitors’ earnings per share growth and market expectations, grow earnings at a rate that provides the capital necessary to support the company’s business strategy, allocate and deploy capital effectively so that return on invested capital exceeds the company’s cost of capital, and increase return on invested capital.
The company’s long term financial objectives are to grow sales faster than the market, increase the markets served, grow profits faster than sales, generate earnings per share growth in excess of competitors’ earnings per share growth and market expectations, allocate and deploy capital effectively so that return on invested capital exceeds the company’s cost of capital, and increase return on invested capital.
Coupled with a range of services, solutions, and software, the company helps industrial and commercial customers introduce innovative products, reduce their time to market, and enhance their overall competitiveness. Arrow was incorporated in New York in 1946.
Coupled with a range of services, solutions, and software, the company helps industrial and commercial customers introduce innovative products, reduce their time to market, and enhance their overall competitiveness. Arrow was incorporated in New York in 1946. Arrow’s diverse worldwide customer base consists of OEMs, VARs, MSPs, EMS providers, and other commercial customers.
Zech 54 Senior Vice President, Chief Governance, Sustainability, and Human Resources Officer ​ Set forth below is a brief account of the business experience during the past five years of each executive officer of the company. Sean J. Kerins was appointed President, Chief Executive Officer in June 2022. Prior thereto, he served as Chief Operating Officer since December 2020.
Zech 55 Senior Vice President, Chief Governance, Sustainability, and Human Resources Officer ​ Set forth below is a brief account of the business experience during the past five years of each executive officer of the company. 8 Table of Contents Sean J. Kerins was appointed President, Chief Executive Officer in June 2022.
Prior thereto, he served as President, Global Enterprise Computing Solutions for more than five years. Rajesh K. Agrawal was appointed Senior Vice President, Chief Financial Officer in September 2022. Prior thereto, he served as Executive Vice President, Chief Financial Officer for The Western Union Company for more than five years. Carine L.
Prior thereto, he served as Chief Operating Officer since December 2020. Prior thereto, he served as President, Global Enterprise Computing Solutions for more than five years. Rajesh K. Agrawal was appointed Senior Vice President, Chief Financial Officer in September 2022.
Within the global ECS business for 2023, net sales of approximately 28% consist of storage, 20% consist of security, 17% consist of software applications, 14% consist of compute, 6% consist of data intelligence, 7% consist of networking, and 8% consist of other products and services. Customers and Suppliers The company and its affiliates serve thousands of industrial and commercial customers.
Within the global ECS reportable segment for 2024, sales of approximately 26% consist of storage, 20% consist of software applications, 18% consist of security, 16% consist of compute, 6% consist of data intelligence, 6% consist of networking, and 8% consist of other products and services. Customers and Suppliers The company and its affiliates serve thousands of industrial and commercial customers.
Within the global components business for 2023, net sales of approximately 79% consist of semiconductor products and related services; approximately 14% consist of IP&E products, such as capacitors, resistors, potentiometers, power supplies, relays, switches, and connectors; approximately 5% consist of computing and memory; and approximately 2% consist of other products and services.
Within the global components reportable segment for 2024, sales of approximately 76% consist of semiconductor products and related services; approximately 16% consist of IP&E products, such as capacitors, resistors, potentiometers, power supplies, relays, switches, and connectors; approximately 5% consist of computing and memory; and approximately 3% consist of other products and services.
Zech was appointed Senior Vice President, Chief Governance, Sustainability, and Human Resources Officer in February 2022. Prior thereto, she served as Senior Vice President and Chief Human Resources Officer of the company for more than five years. ​ 8 Table of Contents
Prior thereto, she served as Senior Vice President and Chief Human Resources Officer of the company for more than five years. ​ 9 Table of Contents
The company and its affiliates employed approximately 22,100 employees worldwide as of December 31, 2023.
The company and its affiliates employed approximately 21,520 employees worldwide as of December 31, 2024.
The following table shows the company’s approximate headcount by region: ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas EMEA Asia/Pacific Headcount 6,500 7,600 8,000 ​ Gender and Racial/Ethnic Diversity The company has long-standing goals for fostering diversity within the organization and strives to provide all employees with equal opportunities at all levels of the organization.
The following table shows the company’s approximate headcount by region: ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas EMEA Asia/Pacific Headcount 5,850 7,850 7,820 ​ Talent Acquisition, Development, and Retention The company has long-standing goals for fostering belonging across the organization and strives to provide all employees with equal opportunities at all levels of the organization.
Item 1. Business . Arrow Electronics, Inc. (the “company” or “Arrow”) is a global provider of products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions. The company has one of the world’s broadest portfolios of product offerings available from leading electronic components and enterprise computing solutions suppliers.
Item 1. Business . Arrow Electronics, Inc. (the “company” or “Arrow”) sources and engineers technology for thousands of leading manufacturers, service providers, and users of enterprise computing solutions. The company has one of the world’s broadest portfolios of product offerings available from leading electronic components and enterprise computing solutions suppliers.
Jean-Claude was appointed Senior Vice President, Chief Legal Officer and Secretary in June 2021. Prior thereto, she served as Vice President, Interim Chief Legal Officer and Secretary since December 2020. Prior thereto, she served as Vice President, Chief Compliance Officer for more than five years. Richard J. Marano was appointed President, Global Components in August 2023.
Prior thereto, he served as Executive Vice President, Chief Financial Officer for The Western Union Company for more than five years. Carine L. Jean-Claude was appointed Senior Vice President, Chief Legal Officer and Secretary in June 2021. Prior thereto, she served as Vice President, Interim Chief Legal Officer and Secretary since December 2020.
Jean-Claude 56 Senior Vice President, Chief Legal Officer and Secretary Richard J. Marano 59 President, Global Components Kristin D. Russell 53 President, Global Enterprise Computing Solutions Gretchen K.
Jean-Claude 57 Senior Vice President, Chief Legal Officer and Secretary Richard J. Marano 60 President, Global Components Eric C. Nowak 61 President, Global Enterprise Computing Solutions Gretchen K.
The company maintains over 180 sales facilities and 39 distribution and value-added centers, serving over 85 countries. The company has operations in each of the three largest electronics markets; the Americas; the Europe, Middle East, and Africa (“EMEA”); and the Asia/Pacific regions. Arrow’s business strategy is to be the premier, technology-centric, go-to-market and supply chain services company on the planet.
The company has operations in each of the three largest electronics markets; the Americas; the EMEA; and the Asia/Pacific regions. Arrow’s business strategy is to be the premier, technology-centric, go-to-market and supply chain services company.
The company is committed to helping employees receive a return on their investment, in the form of compounding knowledge, skills, abilities, and earnings opportunity as their careers grow within the company. The company supports employees through targeted curricula and tools focused on building skills and capabilities at each career stage.
The company is committed to helping employees receive a return on their investment, in the form of compounding knowledge, skills, abilities, and earnings opportunity as their careers grow within the company. Through early career talent programs focused on recent college graduates, Arrow grows employee capability from the ground up.
Expanded Human Capital Disclosure Additional human capital information is included in the company’s Environmental, Social, and Governance Report (“ESG Report”), which is available on the Arrow.com website. Information contained in the company’s ESG Report and website is not deemed part of, or incorporated by reference into, this Annual Report on Form 10-K.
Information contained in the company’s corporate stewardship and impact report, and website, is not deemed part of, or incorporated by reference into, this Annual Report on Form 10‑K.
Global ECS further supports customers by enabling their software and cloud solutions businesses through ArrowSphere, a software and cloud marketplace and management platform. ArrowSphere helps VARs and MSPs to manage, differentiate, and scale their as-a-service businesses. It simplifies the operational complexity of delivering hybrid multi-cloud solutions while providing the business intelligence that IT solution providers need to drive growth.
Global ECS further supports customers by enabling their software and cloud solutions businesses through ArrowSphere, a software and cloud marketplace and management platform. ArrowSphere can help VARs and MSPs to manage, differentiate, and scale their as-a-service businesses.
Prior thereto, he served as President, Americas Components since January 2020. Prior thereto, he served as Vice President, Sales, Americas Components for more than five years. Kristin D. Russell was appointed President, Global Enterprise Computing Solutions in December 2020. Prior thereto, she served as President, Global Services for more than five years. Gretchen K.
Prior thereto, she served as Vice President, Chief Compliance Officer for more than five years. Richard J. Marano was appointed President, Global Components in August 2023. Prior thereto, he served as President, Americas Components since January 2020. Prior thereto, he served as Vice President, Sales, Americas Components for more than five years. Eric C.
The company offers the convenience of accessing, from a single source, multiple technologies and products from its suppliers with rapid or scheduled deliveries.
Along with the help of value-added services and capabilities, such as new product component integration, also known as, demand creation, design engineering services, and supply chain management, the company offers the convenience of accessing, from a single source, multiple technologies and products from its suppliers with rapid or scheduled deliveries.
The company has two reportable segments, the global components business and the global enterprise computing solutions (“ECS”) business. The company distributes electronic components to OEMs and CMs through its global components reportable segment and provides enterprise computing solutions to VARs and MSPs through its global ECS reportable segment.
The company distributes electronic components to OEMs and EMS providers through its global components reportable segment and provides enterprise computing solutions to VARs and MSPs through its global ECS reportable segment. The company maintains over 140 sales facilities and 36 distribution and value-added centers, serving over 85 countries.
Services include design engineering from prototyping to volume production readiness, worldwide logistics and fulfillment capabilities, and scalable manufacturing and customer support.
Services include design engineering from prototyping to volume production readiness, worldwide logistics and fulfillment capabilities, and scalable manufacturing and customer support. Supply chain service offerings include procurement, logistics, warehousing, financial management, and insights from data analytics. Arrow provides logistics support and process and systems expertise to improve customer’s supply chain execution, visibility, resilience, and optimization.
By making software and cloud-based solutions available through ArrowSphere, suppliers benefit from greater subscription adoption, consumption, and utilization.
It can simplify the operational complexity of delivering hybrid multi-cloud solutions while providing the business intelligence that IT solution providers need to drive growth. By making software and cloud-based solutions available through ArrowSphere, suppliers can benefit from greater subscription adoption, consumption, and utilization.
Arrow also offers a suite of enterprise leadership training and development programs. These programs create value by growing employee capability, which in turn facilitates business growth, while also providing career growth opportunities for employees. For example, over 70% of open manager-level and above positions were filled internally during 2023 and 2022.
The company supports development for the global workforce through targeted curricula and tools focused on building skills and capabilities at each career stage. Arrow also offers a suite of enterprise leadership training and development programs. These programs create value by growing employee capability, which in turn facilitates business growth and career growth opportunities.
Arrow aggregates disparate sources of electronics components, infrastructure software, and IT hardware to increasingly provide complete solutions for customers on behalf of its suppliers. The company aims to accelerate its customers’ time to market, enable secure and consistent supply chains, and drive growth on behalf of its suppliers.
The company aims to help enable secure and consistent supply chains, and drive growth on behalf of its suppliers.
Global Components The company’s global components business markets and distributes electronic components enabled by a comprehensive range of value-added capabilities and services.
Global Components The company’s global components reportable segment markets and distributes electronic components enabled by a comprehensive range of value-added capabilities and services. The company utilizes its vast marketing, integration and global logistics footprint to provide customers with the ability to deliver the latest semiconductor and IP&E technologies to the market.
Arrow provides logistics support and process and systems expertise to improve customer’s supply chain execution, visibility, resilience, and optimization. The company’s supply chain services are intended to serve our customer’s direct supply chain and provide fee-based revenue opportunities.
The company’s supply chain services are intended to serve customers’ direct supply chain and provide fee-based revenue opportunities, targeting the most complex electronics supply chains in the world.
The company believes in rewards that improve performance outcomes for all and endorses a pay-for-performance philosophy via performance differentiation and rewarding employees through compensation and benefits. The company believes its compensation and benefits programs are aligned with the local external market to attract, grow, and retain talent.
For example, over 70% of open manager-level and above positions were filled internally during 2024 and 2023. 7 Table of Contents The company believes in rewards that improve performance outcomes and endorses a pay-for-performance philosophy via performance differentiation and rewarding employees through compensation and benefits.
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Arrow’s diverse worldwide customer base consists of original equipment manufacturers (“OEMs”), value-added resellers (“VARs”), managed service providers (“MSPs”), contract manufacturers (“CMs”), and other commercial customers. These customers include manufacturers of industrial equipment (such as machine tools, factory automation, and robotic equipment) and products serving industries ranging from industrial, automotive and transportation, telecommunications, and consumer electronics, among others.
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These customers include manufacturers of products serving industries including industrial, automotive and transportation, telecommunications, and consumer electronics, among others. The company has two reportable segments, global components and global ECS.
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The company guides innovation forward by helping its customers in the areas of industrial automation, edge computing, cloud computing, and smart and connected devices, homes, cities, and transportation to deliver new technologies that help to improve businesses’ performance and consumers’ lives.
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The company’s portfolio is designed to enable technology across major industries and markets including industrial automation, edge and cloud computing, smart and connected devices, and transportation to deliver new technologies. Arrow aggregates disparate sources of electronics components, infrastructure software, and IT hardware to engineer complete solutions for customers on behalf of its suppliers.
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The company utilizes its vast marketing, integration and global logistics footprint to provide customers with the ability to deliver the latest semiconductor and interconnect, passive and electromechanical (“IP&E”) technologies to the market along with the help of value-added services and capabilities such as new product component integration, also known as, demand creation, design engineering services, and supply chain management.
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Additional information relating to environmental liabilities is set forth under the heading “Environmental Matters” in Note 15, “Contingencies” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this 10-K and is incorporated herein by reference. ​ For further discussion of the matters discussed above related to government regulations and environmental liabilities refer to “Risk Factors” in Part I, Item 1A.
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Beyond integration and engineering services, and the traditional source of sales and profits tied to the buying and selling of electronic components, the global components business has been expanding its supply chain service offerings, including procurement, logistics, warehousing, financial management, and insights from data analytics. Through these services, the most complex electronics supply chains in the world are targeted.
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The company reviews its compensation and benefits programs and practices regularly to ensure they remain fair and competitive. Expanded Human Capital Disclosure Additional human capital information is included in the company’s reporting on its corporate stewardship and impact, which is available on the Arrow.com website.
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A liability for environmental remediation and other environmental costs is accrued when the company considers it probable that a liability has been incurred and the amount of loss can be reasonably estimated. Environmental costs and accruals are presently not material to the company’s operations, cash flows or financial position.
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Nowak was appointed President, Global Enterprise Computing Solutions in April 2024. Prior thereto, he served as President, EMEA Enterprise Computing Solutions for more than five years. Gretchen K. Zech was appointed Senior Vice President, Chief Governance, Sustainability, and Human Resources Officer in February 2022.
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Although there is no assurance that existing or future environmental laws applicable to the company’s operations or products will not have a material adverse effect on its operations, cash flows or financial condition, the company does not currently anticipate material capital expenditures for environmental control facilities. ​ See Risk Factors in Part I, Item 1A.
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Beginning in 2022, the annual incentive compensation plans for the company’s executives have included goals linked to the company’s diversity priorities. 6 Table of Contents Below are statistics related to gender and racial/ethnic diversity by employee population: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gender Diversity (Global) Underrepresented Race/Ethnicity (United States) ​ ​ (% female) ​ (% underrepresented race/ethnicity) ​ 2023 2022 Change 2023 2022 Change ​ Executives (a) 33.3 % 27.3 % 6.0 % 25.0 % 27.3 % (2.3) % Vice Presidents (a) 22.8 % 22.4 % 0.4 % 14.5 % 12.3 % 2.2 % Directors 30.9 % 29.9 % 1.0 % 17.1 % 17.9 % (0.8) % Managers 30.4 % 30.4 % — % 31.4 % 30.0 % 1.4 % Supervisors 47.6 % 50.3 % (2.7) % 37.2 % 40.2 % (3.0) % Total Leadership 33.3 % 34.1 % (0.8) % 26.5 % 26.5 % — % Individual Contributors 43.3 % 43.7 % (0.4) % 39.4 % 39.2 % 0.2 % Total Employee Population 41.7 % 42.0 % (0.3) % 37.1 % 36.9 % 0.2 % (a) Executives includes executive officers of the company, and non-executive officers who are members of the executive committee.
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Attracting and retaining early career talent enables Arrow to grow employee capability from the ground up. Through the company’s university intern and graduate programs, apprenticeship programs, and management trainee programs, Arrow builds a diverse talent pipeline.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAcquisitions involve numerous risks, including the following: ​ • effectively combining the acquired operations, technologies, or products; • unanticipated costs or assumed liabilities, including, but not limited to, those associated with combining and integrating operations, technologies, and facilities; • costs associated with regulatory actions or investigations; • the inability to retain and obtain required regulatory approvals, licenses, and permits: • not realizing the anticipated financial benefit from the acquired companies; • in the event the acquisition is funded with proceeds of indebtedness, increased interest costs; • diversion of management’s attention; • negative effects on existing customer and supplier relationships; • disruption due to the integration and rationalization of operations, products, technologies, and personnel; and • potential loss of key employees of the acquired companies. ​ The company has in the past, and may in the future, divest or reduce its investment in certain businesses or product lines from time to time.
Biggest changeAcquisitions and divestitures involve numerous risks, including: ​ • effectively combining the acquired operations, technologies, or products; • unanticipated costs or assumed or retained liabilities, including, but not limited to, those associated with combining and integrating operations, technologies, and facilities; • costs associated with regulatory actions or investigations; • difficulty identifying potential acquirers or other divestiture options on favorable terms; • the inability to retain and obtain required regulatory approvals, licenses, and permits; • delayed completion due to local consultation laws; • not realizing the anticipated financial benefit from the acquired companies; • in the event the acquisition is funded with proceeds of indebtedness, increased interest costs; • diversion of management’s attention; • negative effects on existing customer and supplier relationships; • disruption due to the integration and rationalization of operations, products, technologies, and personnel; • liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, data privacy and security issues, violations of laws, commercial disputes, tax liabilities, environmental issues and remediation expenditures, and other known and unknown liabilities; • change in the company’s effective tax rate; • difficulty separating assets or businesses (or portions thereof) from the company’s other businesses; • decrease in margins, loss of revenue, operating income, or disruption to customer relationships as a result of a divestiture; 13 Table of Contents • litigation or other claims in connection with an acquired company or a divestiture, including claims from terminated employees, customers, current or former equity holders, or other third parties; • significant costs associated with exit or disposal activities or related impairment charges; and • potential loss of key employees of the company or acquired companies. ​ If the company is not able to successfully manage any of these risks in relation to future acquisitions or divestitures, it could have a material adverse effect on the company’s business. ​ If the company fails to adequately invest successfully in and introduce digital, artificial intelligence (“AI”), and other technological developments, or its suppliers are not able to continue to offer competitive components and electronic computing solutions, it could materially adversely impact results.
The market for the company’s products and services is subject to rapid technological changes, evolving industry standards, changes in end-market demand, evolving customer expectations and demands, oversupply of product, and regulatory requirements, which can contribute to the decline in value or obsolescence of inventory.
The market for the company’s products and services is subject to rapid technological changes, evolving industry standards, changes in end-market demand, evolving customer expectations and demands, oversupply of product, and regulatory requirements, which can contribute to the decline in value or the obsolescence of the company’s inventory.
An increase in the company’s financing costs or loss of access to cost-effective capital resources could have a material adverse effect on the company’s business. ​ The agreements governing some of the company’s financing arrangements contain various covenants and restrictions that limit some of management’s discretion in operating the business and could prevent the company from engaging in some activities that may be beneficial to its business.
An increase in the company’s financing costs or loss of access to cost-effective capital resources could also have a material adverse effect on the company’s business. ​ The agreements governing some of the company’s financing arrangements contain various covenants and restrictions that limit some of management’s discretion in operating the business and could prevent the company from engaging in some activities that may be beneficial to its business.
Business Risks If the company is unable to maintain its relationships with its suppliers, if the suppliers materially change the terms of their existing agreements with the company or the company fails to abide by the terms of such agreements, if suppliers cease selling their products through distribution generally, or if supply chain shortages and other disruptions occur, the company’s business could be materially adversely affected.
If the company is unable to maintain its relationships with its suppliers, if the suppliers materially change the terms of their existing agreements with the company or the company fails to abide by the terms of such agreements, if suppliers cease selling their products through distribution generally, or if supply chain shortages and other disruptions occur, the company’s business could be materially adversely affected.
If the company were to lose any of its key executives, it may not be able to find a suitable replacement with comparable knowledge and experience in a timely manner, or if at all, at a similar level of remuneration and other benefits.
If the company were to lose any of its key executives or employees, it may not be able to find a suitable replacement with comparable knowledge and experience in a timely manner, or if at all, at a similar level of remuneration and other benefits.
A decline in general economic conditions, a substantial increase in market interest rates or persistence of a high market-interest rate environment, and increase in income tax rates, or the company’s inability to meet long-term working capital or operating income projections could impact future valuations of the company’s reporting units, and the company could be required to record an impairment charge in the future, which could impact the company’s consolidated balance sheets, as well as the company’s consolidated statements of operations.
A decline in general economic conditions, a substantial increase in market interest rates or persistence of a high market-interest rate environment, an increase in income tax rates, or the company’s inability to meet long-term working capital or operating income projections, in each case, could impact future valuations of the company’s reporting units, and the company could be required to record an impairment charge in the future, which could impact the company’s consolidated balance sheets, as well as the company’s consolidated statements of operations.
The company relies on the expertise and experience of certain key executives in developing business strategies, managing business operations, and cultivating new and maintaining existing relationships with customers and suppliers.
The company relies on the expertise and experience of certain key executives and employees in developing business strategies, managing business operations, and cultivating new and maintaining existing relationships with customers and suppliers.
Because the techniques used to cause these incidents and gain unauthorized access to, disable, or sabotage the company’s information technology systems and data stored on those systems change frequently and often are not recognized until launched, the company may 13 Table of Contents be unable to anticipate these techniques or to implement adequate preventive or protective measures to guard against them.
Because the techniques used to cause these incidents and gain unauthorized access to, disable, or sabotage the company’s information technology systems and data 15 Table of Contents stored on those systems change frequently and often are not recognized until launched, the company may be unable to anticipate them or to implement adequate preventive or protective measures to guard against them.
The company may not be able to effectively monitor the activities of all of its employees involved in regulated export or shipment activities, which may lead to the company’s failure to prevent violations of such regulations. ​ Non-compliance with the EAR, OFAC regulations, or other applicable export regulations can result in a wide range of penalties including the denial or restriction of export privileges, significant fines, criminal penalties, and the seizure of inventories, any of which could have a material adverse effect on the company’s business.
The company may not be able to effectively monitor the activities of all of its employees involved in regulated export or shipment activities, which may lead to the company’s failure to prevent violations of such regulations. 16 Table of Contents ​ Non-compliance with the EAR, OFAC regulations, or other applicable export regulations can result in a wide range of penalties including the denial or restriction of export privileges, significant fines, criminal penalties, and the seizure of inventories, any of which could have a material adverse effect on the company’s business.
The company’s ability to satisfy its cash needs depends on its ability to generate cash from operations and to access the financial markets, both of which are subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond its control. ​ The company’s ability to obtain external financing is affected by various factors, including general financial market conditions and the company’s debt ratings.
The company’s ability to satisfy its cash needs depends on its ability to generate cash from operations and to access the financial markets, both of which are subject to general economic, financial, competitive, legislative, regulatory, and other factors that may be beyond its control. ​ The company’s ability to obtain external financing is affected by various factors, including general financial market conditions, the company’s debt ratings, and the company’s financial performance.
Although many of the company’s suppliers provide the company with certain protections from the loss in value of inventory (such as price protection and certain rights of return), the company cannot be sure that such protections will fully compensate it for the loss in value, that the suppliers will choose to, or be able to, honor such agreements, or that the company will be able to continue to secure such protections in the future.
Although many of the company’s suppliers provide the company with certain protections from the loss in value of inventory (such as price protection and certain rights of return), the company cannot be sure that (i) such protections will fully compensate it for the loss in value, (ii) the suppliers will choose to, or be able to, honor such agreements, or (iii) the company will be able to continue to secure such protections in the future.
The company may not be able to adequately anticipate, prevent, or mitigate damage resulting from criminal and other illegal or fraudulent activities committed against it or as a result of misconduct or other improper activities by its employees or contractors. Global businesses are facing increasing risks of criminal, illegal, and other fraudulent acts.
The company may not be able to adequately anticipate, prevent, or mitigate damage resulting from criminal and other illegal or fraudulent activities committed against it or as a result of misconduct or other improper activities by its employees or contractors. Global businesses are facing increasing operational risks, including potential criminal, illegal, and other fraudulent acts.
The company’s distribution process also includes the use of third parties that operate outside of the company’s direct control. Noncompliance with applicable import, export, and other laws and regulations by these third parties may result in substantial liability to the company and harm the company’s reputation. 14 Table of Contents Further, the company is also subject to the U.S.
The company’s distribution process also includes the use of third parties that operate outside of the company’s direct control. Noncompliance with applicable import, export, and other laws and regulations by these third parties may result in substantial liability to the company and harm the company’s reputation. Further, the company is also subject to the U.S.
The company’s actual or perceived failure to comply with federal, state, or international privacy related or data protection laws and regulations could result in proceedings against the company by governmental entities or others, which could have a material adverse effect on its business. ​ Regulatory and Legal Risks Products sold by the company may be found to be defective and, as a result, warranty and/or product liability claims may be asserted against the company, which may have a material adverse effect on the company.
The company’s actual or perceived failure to comply with federal, state, or international privacy related or data protection laws and regulations could result in damage to the company’s reputation as well as proceedings against the company by governmental entities or others, which could have a material adverse effect on its business. ​ Regulatory and Legal Risks Products sold or designed by the company may be found to be defective and, as a result, warranty and/or product liability claims may be asserted against the company, which may have a material adverse effect on the company.
The company is subject to environmental laws and regulations and sustainability initiatives, and may be impacted by climate change, in ways that could materially adversely affect its business.
The company is subject to environmental laws and regulations, and may be impacted by climate change, in ways that could materially adversely affect its business.
This circumstance would have a material adverse effect on the company’s financial position and results of operations. 17 Table of Contents The company’s goodwill and identifiable intangible assets could become impaired, which could reduce the value of its assets and reduce its net income in the year in which the write-off occurs.
This circumstance would have a material adverse effect on the company’s financial position and results of operations. The company’s goodwill and identifiable intangible assets could become impaired, which could reduce the value of its assets and reduce its net income in the year in which the write-off occurs.
Increasing consolidation in the industries where the company’s suppliers operate may occur as companies combine to achieve further economies of scale and other synergies, which could result in reduced supplies, as companies seek to eliminate duplicative product lines, and increased prices, which could have a material adverse effect on the company’s business.
Increasing consolidation in the industries 10 Table of Contents where the company’s suppliers operate may occur as companies combine to achieve further economies of scale and other synergies, which could result in reduced supplies, as companies seek to eliminate duplicative product lines and services, and increased prices, which could have a material adverse effect on the company’s business.
Any failure to attract, retain, motivate, and develop key executive and employee talent may materially and adversely affect the company’s business. The company’s success depends, to a significant extent, on the capability, expertise, and continued services of its key executives.
Any failure to attract, retain, motivate, and develop key executive and employee talent may materially and adversely affect the company’s business. The company’s success depends, to a significant extent, on the capability, expertise, and continued service of its key executives and employees.
The company’s revenues originate primarily from the sales of semiconductor, IP&E (Interconnect, Passive & Electromechanical), and IT hardware and software products, the sales of which are traditionally cyclical and may be impacted by shortages and other disruptions in the global supply chain. ​ The semiconductor industry historically has experienced fluctuations in product supply and demand, often associated with changes in technology and manufacturing capacity and significant economic market upturns and downturns.
Business Risks The company’s revenues originate primarily from the sales of semiconductor, IP&E, and IT hardware and software products, the sales of which are traditionally cyclical and may be impacted by shortages and other disruptions in the global supply chain. ​ The semiconductor industry historically has experienced fluctuations in product supply and demand, often associated with changes in technology and manufacturing capacity and significant economic market upturns and downturns.
In 2023, 2022, and 2021, approximately 66%, 65%, and 66%, respectively, of the company’s sales came from its operations outside the United States.
In 2024, 2023, and 2022, approximately 65%, 66%, and 65%, respectively, of the company’s sales came from its operations outside the United States.
Further, the company’s ability to avoid such liabilities pursuant to defective product provisions in its supplier agreements may be limited as a result of differing factors, such as the inability to exclude such damages due to the laws of some of the countries where the company does business.
Further, the company’s ability to avoid such liabilities pursuant to defective product provisions in its supplier agreements may be limited as a result of differing factors, such as the inability to exclude such damages due to third party contractual provisions or the laws of some of the countries where the company does business.
These third parties could include organizations in the company’s supply chain, which if subject to an incident, could adversely impact the company’s ability to deliver its goods and services. ​ Failure to maintain satisfactory compliance with certain privacy and data protections laws and regulations may subject us to substantial negative financial consequences and civil or criminal penalties. ​ Global privacy legislation, enforcement, and policy activity are also rapidly expanding and creating a complex compliance environment.
These third parties could include organizations in the company’s supply chain, which if subject to an incident, could adversely impact the company’s ability to service its customers and suppliers. ​ Failure to maintain satisfactory compliance with certain privacy and data protections laws and regulations may subject the company to substantial negative financial consequences and civil or criminal penalties. ​ Global privacy legislation, enforcement, and policy activity are also rapidly expanding and creating a complex compliance environment.
The company operates in a highly competitive international environment. The company competes with other large multinational and national electronic components and enterprise computing solutions distributors, as well as numerous other smaller, specialized competitors who generally focus on narrower market sectors, products, or industries. The company also competes for customers with its suppliers.
The company competes for both customers and suppliers in a highly competitive international environment against other large multinational and national electronic components and enterprise computing solutions distributors, as well as numerous other smaller, specialized competitors who generally focus on narrower market sectors, products, or industries.
As a result, the company could experience a material loss to the extent that controls and other measures implemented to address these threats fail to prevent or detect such acts.
As a result, the company could experience a material loss if its controls and other measures implemented to address these threats fail to prevent or detect such acts.
Sales of semiconductor products and related services represented approximately 60%, 60%, and 57%, of the company’s consolidated sales in 2023, 2022, and 2021, respectively. The sale of the company’s IP&E products closely tracks the semiconductor market.
Sales of semiconductor products and related services represented approximately 53%, 60%, and 60%, of the company’s consolidated sales in 2024, 2023, and 2022, respectively. The sale of the company’s IP&E products closely tracks the semiconductor market.
Cybersecurity and Privacy Risk Cybersecurity incidents as well as ransomware may hurt the company’s business, damage its reputation, increase its costs, and cause losses.
Cybersecurity and Privacy Risk Cybersecurity incidents may hurt the company’s business, damage its reputation, increase its costs, and cause losses.
In addition, misconduct by its employees or contractors may include intentional or negligent failures to comply with the applicable laws and regulations in the United States and abroad, safeguard personally identifiable information, report financial information or data accurately, or disclose unauthorized activities to the company.
In addition, misconduct by its employees or contractors may include intentional or negligent failures to comply with applicable laws and regulations, safeguard personally identifiable information, report financial information or data 18 Table of Contents accurately, or disclose unauthorized activities to the company.
Political developments impacting international trade, trade disputes and increased tariffs, particularly between the United States and China; and political instability, such as armed conflicts (including the conflicts in Russia, Belarus, and Ukraine, and 18 Table of Contents Israel and the Gaza Strip), each, or collectively may negatively impact markets and cause weaker macroeconomic conditions, weakening demand for the company’s products and services, particularly due to the company’s extensive international operations and business.
Political developments impacting international trade, trade disputes and increased tariffs, particularly between the United States and China; political instability, such as armed conflicts (including the conflicts in Russia, Belarus, and Ukraine, in Israel and the Gaza Strip, and in Syria); and the effects of epidemics, pandemics, and other public health crises each, or collectively may negatively impact markets and cause weaker macroeconomic conditions, weakening demand for the company’s products and services, particularly due to the company’s extensive international operations and business.
Global, regional, and local economic weakness and uncertainty could have a material adverse effect on the company’s financial performance. The company’s business and financial performance depend on worldwide economic conditions and the demand for technology products and services in the markets in which the company competes.
General Risks Global, regional, and local economic weakness and uncertainty, including because of epidemics and pandemics, could have a material adverse effect on the company’s financial performance. The company’s business and financial performance depend on worldwide economic conditions and the demand for technology products and services in the markets in which the company competes.
Any downgrade in the company’s current debt rating or tightening of credit availability could impair the company’s ability to obtain additional financing; redeem existing indebtedness or renew existing credit facilities on acceptable terms, if at all; negatively impact the price of the company’s common stock; increase its interest payments under existing debt agreements; and have other negative implications on its business, many of which are beyond the company’s control.
Any downgrade in the company’s current debt rating or tightening of credit availability could impair the company’s ability to obtain additional financing on favorable terms, redeem existing indebtedness or renew existing credit facilities on favorable terms, negatively impact the price of the company’s common stock; increase its interest payments under existing debt agreements; and have other negative implications on its business.
Ongoing economic weakness, uncertainty in markets throughout the world, and other adverse economic conditions may result in decreased net revenue, gross margin, earnings, growth rates or cash flows, and increased expenses and difficulty managing inventory levels, collecting customer receivables, and accurately forecasting revenue, gross margin, cash flows and expenses.
Ongoing economic weakness, uncertainty in markets throughout the world, and other adverse economic conditions, such as the recent downturn in the semiconductor market, have and may continue to result in decreased net revenue, gross margin, earnings, growth rates or cash flows, and increased expenses and difficulty managing inventory levels, collecting customer receivables, and accurately forecasting revenue, gross margin, cash flows and expenses.
Any infringement or indemnification claim brought against the company, regardless of the duration, outcome, or size of damage award, could: • result in substantial cost to the company; • divert management’s attention and resources; • be time consuming to defend; • result in substantial damage awards; or • cause product shipment delays.
Any infringement or indemnification claim brought against the company, regardless of the duration, outcome, or size of damage award, could result in substantial cost to the company, including potential for damage awards; be time consuming and costly to defend; or cause product shipment delays.
Any such actions could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of the company’s consolidated financial statements, which could cause the market price of its common stock to decline or limit the company’s access to capital.
Any such actions could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of the company’s consolidated 21 Table of Contents financial statements, which could cause the market price of its common stock to decline or limit the company’s access to capital. Item 1B. Unresolved Staff Comments . None.
Additionally, these directives and regulations may result in the company having non-compliant inventory that may be less readily salable or have to be written off.
Additionally, these directives and regulations may result in the company having non-compliant inventory that (i) may be less readily salable or (ii) the company may need to write off.
For example, sales of products from one of the company’s suppliers accounted for approximately 10% of the company’s consolidated sales in 2023.
For example, sales of products from one of the company’s suppliers accounted for approximately 8% of the company’s consolidated sales in 2024.
Any new legislation could impact the company’s tax obligations in countries where it does business and result in increased taxation of our international earnings, but should not have an adverse impact on its business. ​ Changes to U.S. or foreign tax laws could have broader implications, including impacts to the economy, currency markets, inflation, or competitive dynamics, which are difficult to predict, and may negatively impact the company.
Any new tax legislation could impact the company’s tax obligations in the countries where it operates, leading to increased taxation of its international earnings. ​ Moreover, changes to U.S. or foreign tax laws could have broader implications, including indirect effects on the economy, currency markets, inflation, or competitive dynamics, which are difficult to predict and may negatively impact the company.
As the company continues to expand its business into new areas in order to stay competitive in the market, the company may encounter increased competition from its current and/or new competitors, making it difficult to retain or increase its market share.
As the company continues to expand its business into new areas in order to stay competitive in the market, the company may encounter increased competition from its current and/or new competitors, making it difficult to retain or increase its market share. Further, supplier consolidation may result in suppliers with greater scale, market presence, and purchasing power.
Accordingly, the company’s revenues and profitability, particularly in its global components reportable segment, may be adversely affected by weakness in the semiconductor market, which the company has experienced during 2023.
Accordingly, the company’s revenues and profitability, particularly in its global components reportable segment, may be, and have been, adversely affected by weakness in the semiconductor market.
For example, economic uncertainty or adverse economic conditions resulting from the impacts of and responses to pandemics and other public health issues, natural disasters, changes in global, national, or regional economies, inflation, governmental policies, political unrest, military action and armed conflicts, terrorist activities, political and social turmoil, civil unrest, and other crises could result in significant or sustained disruption of global financial markets, thereby reducing the company’s access to capital. ​ Further, any increase in the company’s level of debt or deterioration of its operating results may cause a reduction in its current debt ratings.
For example, economic uncertainty or adverse economic conditions resulting from the impacts of and responses to pandemics and other public health issues, natural disasters, changes in global, national, or regional economies, inflation, governmental policies, political unrest, military action and armed conflicts, terrorist activities, political and social turmoil, civil unrest, and other crises could result in significant or sustained disruption of global financial markets, thereby reducing the company’s access to capital. ​ If the company’s leverage ratios or other measures tracked by credit rating agencies exceed thresholds generally permitted by such agencies for an investment grade credit rating for an extended period of time it may cause a reduction in the company’s current debt ratings to a level below investment grade.
Further, new executives may have different backgrounds, experiences, and perspectives from those individuals who previously served in these roles and thus may have different views on the issues that will determine the company’s future, potentially resulting in employee, customer, and supplier uncertainty. ​ The company relies heavily on its internal information systems, which, if not properly functioning, could materially adversely affect the company’s business.
Further, new executives may have different backgrounds, experiences, and perspectives from those individuals who previously served in these roles and thus may have different views on the issues that will determine the company’s future, potentially resulting in employee, customer, and supplier uncertainty.
As a result of the significant extent of the company’s international sales and number of foreign locations, its operations are subject to a variety of risks inherent in international operations, including the following: ​ 10 Table of Contents • import and export regulations that could erode profit margins or restrict exports; • the burden and cost of compliance with international laws, regulations, treaties, and technical standards, including, without limitation, with respect to tax; • potential restrictions on transfers of funds; • trade protection measures, import and export tariffs and other restrictions, duties, and value-added taxes; • transportation delays and interruptions; • uncertainties arising from local business practices and cultural considerations; • foreign laws that potentially discriminate against or disfavor companies headquartered outside the relevant jurisdiction; • stringent antitrust regulations in local jurisdictions; • volatility associated with sovereign debt of certain international economies; • various jurisdictions’ environmental protection laws and regulations, including those related to climate change; • potential social unrest, military conflicts, government shutdowns and disruptions, and other geopolitical risks and uncertainties; and • currency fluctuations. ​ Refer to “Foreign Currency Exchange Risk” in Item 7.A Quantitative and Qualitative Disclosures About Market Risk for a further discussion of the company’s description of the impacts of foreign currency exchange rates on the company’s results and projections. ​ Further, the impact of lower gross margins in certain regions could have a material adverse effect on the company’s business.
As a result of the significant extent of the company’s international business and operations, the company is subject to a variety of risks, including the following: ​ • import and export regulations that could erode profit margins or restrict exports; • the burden and cost of compliance with international laws, regulations, treaties, and technical standards, including, without limitation, with respect to tax; • potential restrictions on transfers of funds; • trade protection measures, import and export tariffs and other restrictions, duties, and value-added taxes; • transportation delays and interruptions; • uncertainties arising from local business practices and cultural considerations; • foreign laws that potentially discriminate against or disfavor companies headquartered outside the relevant jurisdiction; • stringent antitrust regulations in local jurisdictions; • volatility associated with sovereign debt of certain international economies; • various jurisdictions’ environmental protection laws and regulations, including those related to climate change and sustainability disclosures; • non-compliance with local laws; • potential social unrest, military conflicts, government shutdowns and disruptions, and other geopolitical risks and uncertainties; and • currency fluctuations. ​ See also “ The company is subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws, anti-bribery laws, and anti-money laundering laws and regulations, as well as tariffs and trade protectionism.
Further, the company may be unable to borrow additional amounts under the relevant credit facility, and as a result may be unable to make acquisitions, fund share repurchases, or meet other financial obligations, and the lenders thereunder may be able to accelerate the company’s obligations under the credit facility.
Further, the company may be unable to borrow additional amounts under the relevant credit facility or under its other credit facilities (in the event of a cross- 20 Table of Contents default), and as a result may be unable to make acquisitions, fund share repurchases, or meet other financial obligations.
Such tax 11 Table of Contents developments could further increase uncertainty and have a material adverse impact on the company’s cash flows, effective tax rate and financial results. ​ Additionally, the company’s tax returns are subject to periodic audits by U.S. and foreign tax authorities.
Such tax developments could further increase uncertainty and have a material adverse impact on the company’s cash flows, effective tax rate, and financial results. ​ The company is regularly audited by U.S. and foreign tax authorities.
Restrictions on immigration or changes in immigration laws could limit the company’s access to qualified and skilled professionals, increase the cost of doing business, or otherwise disrupt operations. ​ Additionally, management transitions, such as the company's transition to a new president of the global components business in 2023, may create uncertainty, divert resources and management attention, or impact public or market perception, any of which could negatively impact the company's ability to operate effectively or execute its strategies and result in an adverse impact on its business.
Additionally, management transitions, such as the company’s transitions in 2024 to a new president of global ECS and new chief strategy officer, may create uncertainty, divert resources and management attention, or impact public or market perception, any of which could negatively impact the company's ability to operate effectively or execute its strategies and result in an adverse impact on its business.
Additionally, long-term climate change impacts, including the frequency and magnitude of severe weather events, and natural disasters, may significantly impact the company’s operations and business, either directly or indirectly, by adversely affecting the price and availability of energy, and the supply of other services or materials throughout the company’s supply chain, any of which could have a material adverse effect on the company’s business.
The discovery of contamination for which the company is responsible, the enactment of new laws and regulations, or changes in how existing regulations are enforced, could require the company to incur costs for compliance or subject it to unexpected liabilities. 17 Table of Contents Additionally, long-term climate change impacts, including the frequency and magnitude of severe weather events, and natural disasters, may significantly impact the company’s operations and business, either directly or indirectly, by adversely affecting the price and availability of energy, and the supply of other services or materials throughout the company’s supply chain, any of which could have a material adverse effect on the company’s business.
Other competitive factors include rapid technological changes, product availability, credit availability, speed of delivery, ability to tailor solutions to changing customer needs, quality and depth of product lines and training, and increasing demand for customer service and support. The company also faces competition from companies in the logistics and product fulfillment, catalog distribution, e-commerce, and supply chain services markets.
Other competitive factors include rapid technological changes, product availability, credit availability, speed of delivery, ability to tailor solutions to changing customer needs, quality and depth of product lines and training, and increasing demand for customer service and support.
As part of the company’s history and growth strategy, it has acquired other businesses, and continues to evaluate strategic opportunities to acquire additional businesses from time to time.
From time to time, the company has, and may continue to evaluate potential acquisitions, divestitures, joint ventures, or other strategic transactions that could further the company’s strategic objectives. As part of the company’s history and growth strategy, it has acquired other businesses and continues to evaluate strategic opportunities to acquire additional businesses from time to time.
Expectations relating to environmental, social, and governance considerations and related disclosures expose the company to potential liabilities, increased costs, reputational harm, and other adverse effects on the Company’s business. ​ Investors, customers, and other stakeholders are placing substantial emphasis on environmental, social, and governance factors, and the company may be unable to meet investor expectations in this regard.
Expectations and regulations relating to environmental, social, and governance (“ESG”) and corporate responsibility matters, and related disclosures, expose the company to potential liabilities, increased costs, reputational harm, and other adverse effects on the Company’s business. ​ Investors, customers, regulators, governments, and other stakeholders continue to place emphasis on ESG and other corporate stewardship considerations, and the company may fail to meet third-party expectations in this regard.
The company sells its components at prices that are significantly lower than the cost of the equipment or other goods in which they are incorporated. As a result, the company may face claims for damages (such as consequential damages) that are disproportionate to the revenues and profits it receives from the components involved in the claims.
As a result, the company may face claims for damages (such as consequential damages) that are disproportionate to the revenues and profits it receives from the components involved in such claims.
In the event of non-compliance, the company can face serious consequences, which can harm its business. The company is subject to export control and import laws and regulations, including the U.S. Export Administration Regulations (“EAR”), U.S. Customs regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls (“OFAC”).
In the event of non-compliance, the company can face serious consequences, which can harm its business. The company is subject to complex and evolving laws and regulations worldwide that differ among jurisdictions and affect our operations, including the U.S. EAR, U.S. Customs regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s OFAC.
From time to time, third parties (including certain companies in the business of acquiring patents not for the purpose of developing technology but with the intention of aggressively seeking licensing revenue from purported infringers) may assert patent, copyright and/or other intellectual property rights to technologies that are important to the company’s business, and the company may not be able to seek indemnification from its suppliers for itself and its customers against such claims.
Third parties (including companies which acquire patents for the purpose of seeking artificial licensing revenue and not actually developing technology) may assert patent, copyright and/or other intellectual property rights to technologies that are important to the company’s business, for which the company may not be able to obtain indemnification.
In addition, the company is exposed to potential liability for technology that it develops itself or when it combines multiple technologies of its suppliers for which it may have limited or no indemnification protections.
In addition, the company is exposed to potential liability either for technology it develops or when it combines multiple technologies of its suppliers for which the company may have limited or no indemnification protection. The company may also be required to indemnify and defend a customer in the event it becomes a target of intellectual property litigation.
The company’s information technology systems could be subject to significant cyber security and privacy incidents, including, but not limited to, invasion, inducement (fraudulent or otherwise) by third parties to obtain information from employees, customers, or suppliers; cyber-attacks; ransom demands; or cybersecurity breaches caused by third parties as well as employees and others with authorized access. ​ Any such incident, whether successful or unsuccessful, could result in, without limitation, disruption to the company’s operations; loss or compromise of, or damage to, the company’s or any of its customers’ or suppliers’ data, confidential information; significant legal, regulatory, and financial exposure; damage to the company’s reputation; significant costs related to rebuilding internal systems, managing company brand and reputation, litigation, damages, responding to regulatory inquiries, and taking other remedial steps; loss of competitive advantage; and a loss of confidence in the security of the company’s information technology systems.
While cybersecurity incidents have not caused any material interruption to the company’s business, strategy, results of operations, or financial condition, there can be no assurance that such incidents will not have a material adverse impact on the company in the future. ​ Any such incident, whether successful or unsuccessful, could result in, without limitation, disruption to the company’s operations; loss or compromise of, or damage to, the company’s or any of its customers’ or suppliers’ data, confidential information; significant legal, regulatory, and financial exposure; damage to the company’s reputation; significant costs related to rebuilding internal systems, managing company brand and reputation, litigation, fines, damages, responding to regulatory inquiries, and taking other remedial steps; loss of competitive advantage; and a loss of confidence in the security of the company’s information technology systems, any of which could have an adverse impact on the company’s business, including by impairing the company’s ability to sell its products and services.
The company requires cash or committed liquidity facilities for general corporate purposes, such as funding its ongoing working capital, acquisitions, capital expenditure needs, refinancing indebtedness, and returning capital to shareholders. The company’s committed and undrawn liquidity stands at over $2.2 billion in addition to $218.1 million of cash on hand at December 31, 2023.
The company requires cash or committed liquidity facilities for general corporate purposes, such as funding its ongoing working capital, acquisitions, capital expenditure needs, refinancing indebtedness, returning capital to shareholders and funding costs and expenses in implementing the Operating Expense Efficiency Plan.
The company’s current global operations reside on multiple technology platforms. The size and complexity of the company’s computer systems make them potentially vulnerable to breakdown, malicious intrusion, and ransom attack. Failure to properly or adequately address any unaccounted for or unforeseen issues could impact the company’s ability to perform necessary business operations, which could materially adversely affect the company’s business.
The size and complexity of the company’s information systems make them vulnerable to breakdown, defective software updates from the company’s information-technology vendors, failure to keep software updated and current, and ransomware attacks. Failure to properly or adequately address such issues could impact the company’s ability to perform necessary business operations, which could materially adversely affect the company’s business.
If the company is unable to maintain and enhance its digital platforms to keep pace with competitors and align with evolving customer and supplier expectations and demands, it could adversely impact the company’s sales revenues and ability to retain existing, and attract new, customers. 12 Table of Contents ​ The company’s sales are also partially dependent on continued innovations in components and electronic computing solutions by its suppliers, the competitiveness of its suppliers’ offerings, and the company’s ability to partner with new and emerging technology providers.
If the company is unable to maintain and enhance its digital platforms, cloud platforms, and artificial intelligence related tools to keep pace with competitors and align with evolving customer and supplier expectations and demands, it could adversely impact the company’s sales revenues and ability to retain existing, and attract new, customers.
Significant or numerous cancellations, reductions, delays in orders by customers, loss of customers, changes in pricing and sourcing, and/or customer defaults on payments could materially adversely affect the company’s business. ​ The company’s non-U.S. sales represent a significant portion of its revenues, and consequently, the company is exposed to risks associated with operating internationally.
Significant or numerous cancellations, 11 Table of Contents reductions, or delays in orders by customers, loss of customers, changes in pricing and sourcing, and/or customer defaults on payments could materially adversely affect the company’s business. ​ If the company is unable to implement its Operating Expense Efficiency Plan effectively, it could materially adversely impact financial results.
Further, if an event of default under any of the company’s existing debt agreements occurred or became imminent, alternative sources of capital may be more expensive than the costs incurred under the company’s existing credit facilities.
If the company does not have access to capital under its existing credit facilities due to such an event, alternative sources of capital may be more expensive than the costs incurred under the company’s existing credit facilities.
Further, royalty or license arrangements may not be available at all, which would then require the company to stop selling certain products or using certain technologies, which could negatively affect the company’s ability to compete effectively.
Moreover, in the event of an adverse determination, the company may be required to seek royalty or license arrangements, which may not be available on commercially reasonable terms or may be unavailable entirely. In such circumstance, the company would be required to stop selling certain products or technologies, which could negatively affect the company’s ability to compete effectively.
The company may also incur significant costs associated with exit or disposal activities, related impairment charges, or both. ​ Further, the company has made, and may continue to make acquisitions of, or investments in new services or technologies to expand its current service offerings and product lines.
Additionally, the company has made, and may continue to make, acquisitions of, or investments in new services or technologies to expand its current service offerings and product lines, which may involve risks that may differ from those traditionally associated with the company’s core distribution business.
Whether or not the company is successful in defending against such actions, it could incur substantial costs, including legal fees, and divert the attention of management in defending itself against them. 16 Table of Contents Financial Risks The company may not have adequate or cost-effective liquidity or capital resources, which could have a material adverse impact on its ability to maintain cash necessary to operate its business.
Whether or not the company is successful in defending against such actions, it could incur substantial costs, including legal fees, and divert the attention of management in defending itself against them.
Certain of the company’s products and services include intellectual property owned primarily by the company’s third-party suppliers and, to a lesser extent, the company itself. Substantial litigation and threats of litigation regarding intellectual property rights exist in the semiconductor/integrated circuit, software and some service industries.
Moreover, any insurance or indemnification rights that the company has may be insufficient or unavailable to protect the company against potential loss exposures. Certain of the company’s products and services include intellectual property owned primarily by the company’s third-party suppliers and, to a lesser extent, the company itself, and risk of litigation regarding these intellectual property rights exists.
A prolongation or worsening of the current weakness in semiconductor markets, or a future cyclical downturn in the technology industry, could have a material adverse effect on the company’s business and negatively impact its ability to maintain historical profitability levels. 9 Table of Contents The competitive pressures the company faces, such as pricing and margin reductions, could have a material adverse effect on the company’s business.
The current cyclical downturn in semiconductor markets and the technology industry has adversely impacted the company’s business and financial results throughout 2024, and a further prolongation or worsening of such conditions in the future could have a material adverse effect on the company’s business, profitability, and, consequently, stock price.
There is also significant competition within each market sector and geography that creates pricing and margin pressure and continuous demand for the company to improve service and product offerings.
Such robust competition broadly, and within each market sector and geography, creates pricing and margin pressure and continuous demand for the company to improve service and product offerings. Additionally, some of the company’s competitors may have more extensive customer and/or supplier bases than the company in one or more of its market sectors.
Therefore, the company is not fully protected from a decline in the value of the company’s inventory, and such decline could have a material adverse effect on the company’s business. ​ The company’s lack of long-term sales contracts may have a material adverse effect on its business.
Therefore, the company is not fully protected from a decline in the value of the company’s inventory, and such decline could have a material adverse effect on the company’s business. ​ The company, within its ECS reportable segment, has multi-year distribution agreements under which it has non-cancellable payment obligations through 2030, giving the company the right to sell a broad set of IT solutions.
Further, when relying on contractual liability exclusions, the company could lose customers if their claims are not addressed to their satisfaction. The company is subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws, anti-bribery laws, and anti-money laundering laws and regulations.
The company is subject to laws and regulations that could have a negative impact on our business, including, without limitation, U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws, anti-bribery laws, and anti-money laundering laws and regulations, as well as tariffs and trade protectionism.
Further, economic weakness could cause a decline in spending in information technology, which could reduce demand for semiconductors and other products and related services and thereby have a negative impact on the company’s ECS business.
This downturn continued throughout 2024, and its duration and severity, and the related adverse impacts on the company’s results of operations, remain uncertain and difficult to predict. Additionally, economic weakness could cause a decline in spending in information technology, which could reduce demand for semiconductor-related products and services, thereby negatively impacting the company’s ECS reportable segment.
Refer to Note 1 of the Notes to the Consolidated Financial Statements for a further discussion of the company’s determination of the value of its deferred tax assets and liabilities and uncertain tax positions. ​ The estimated effects of applicable tax laws, including current interpretation of the U.S.
For further details on the company’s deferred tax assets and liabilities and uncertain tax positions, refer to Note 1 of the Notes to the Consolidated Financial Statements. ​ In recent years, numerous domestic and international tax proposals have been issued and enacted which have increased the tax burden on large multinational companies.
Under the terms of any additional external financing, the company may incur higher financing expenses and become subject to additional restrictions and covenants. For example, the company’s existing debt agreements contain restrictive covenants, including covenants requiring compliance with specified financial ratios, and a failure to comply with these or any other covenants may result in an event of default.
Under the terms of any additional external financing, the company may incur higher financing expenses and become subject to additional onerous restrictions and covenants that may adversely impact the company’s operations and ability to pursue strategic initiatives.
A failure to adequately meet these various stakeholder expectations and standards may result in reputational damage, the loss of business, diluted market valuation, an inability to attract customers or an inability to attract and retain top talent. ​ In addition, a number of the company’s customers have adopted, or may adopt, procurement policies that may impose sustainability standards on suppliers.
The company has made statements about various ESG-related standards, policies, and targets, and a number of the company’s customers and suppliers require adherence to environmental and human rights policies. Failing to meet such standards adopted by or imposed on the company may result in reputational damage, loss of business, or potential liability.
The company’s effective tax rate may be adversely impacted by, among other things, changes in the geographic mix of earnings that are subject to income taxes both in the U.S. and various foreign jurisdictions. Tax regulations governing each jurisdiction impact statutory tax rates, deferred tax assets and liabilities, valuation allowances on deferred tax assets, and ultimately income taxes payable.
The company’s effective tax rate may be adversely affected by fluctuations in the geographic distribution of earnings, which may subject earnings to different or multiple statutory tax rates. Shifts in the business environment or changes in tax laws and regulations in each jurisdiction in which the company operates may also adversely affect the company’s effective tax rate.
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The size of the company’s competitors varies across market sectors, as do the resources the company has allocated to the sectors in which it does business. Therefore, some of the company’s competitors may have a more extensive customer and/or supplier base than the company in one or more of its market sectors.
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During 2023, the company’s global components reportable segment entered a cyclical downturn characterized by declining sales due to elevated customer inventory levels, which were largely a result of the normalization of shortages in electronic components markets towards the end of 2022.
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Further, the enterprise computing solutions industry has recently experienced, and continues to experience increased consolidation, resulting in companies with greater scale, market presence, and purchasing power. As a result, competition among enterprise computing distributors has increased. Declines in value of the company’s inventory could materially adversely affect its business.
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The competitive pressures the company faces, such as pricing and margin reductions, could have a material adverse effect on the company’s business.
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For example, the company’s gross margins in the components business in the Asia/Pacific region tend to be lower than those in other markets in which the company sells products and services.
Added
The company also faces competition from its own suppliers and from companies in the logistics and product fulfillment, catalog distribution, e-commerce, design services, and supply chain services markets. Reduced pricing power and reduced margins, as well as a failure to adequately address evolving customer demand and otherwise respond to these competitive factors, could adversely impact the company’s results of operations.
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If sales in this market increase as a percentage of overall sales, consolidated gross margins will be lower. ​ Changes in the company’s global mix of earnings, and changes in tax law and policy, could cause fluctuations in the company’s effective tax rate, and could materially adversely impact results.
Added
As a result, distributors such as the company may experience difficulty maintaining favorable pricing and margins and experience related adverse impacts on operating results. Declines in value of the company’s inventory, or pre-paid IT Solutions, could materially adversely affect its business.
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Tax Cuts and Jobs Act of 2017 and the Inflation Reduction Act of 2022, have been incorporated into the company’s financial results. However, the U.S.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeDepending on the threat or incident, the company may utilize third-parties under retainer for assistance in investigating and addressing cybersecurity incidents or threats. ​ 19 Table of Contents Senior security leadership meets regularly with the company’s risk-management team and internal and external auditors to evaluate the effectiveness of the company’s systems, controls, and management processes with respect to cybersecurity risks.
Biggest changeThe company’s senior security leadership conducts periodic, in-depth reviews with the company’s enterprise risk management team and internal and external auditors to evaluate the effectiveness of the company’s cybersecurity systems, controls, and management processes. ​ The company conducts a security assessment for potential suppliers and service providers , which includes detailed interviews, questionnaires, and cyber-risk scoring.
To date, there have not been any cybersecurity threats or incidents that have materially affected, or are reasonably likely to materially affect, the company, including its financial condition, results of operations, or business strategies. ​ Governance ​ The Board of Directors of the company (the “Board”), primarily through its Audit Committee, oversees the company’s cybersecurity program.
To date, the company is not aware of any cybersecurity threats or incidents that have materially affected, or are reasonably likely to materially affect, the company, including its financial condition, results of operations, or business strategies. ​ Governance ​ The Board of Directors of the company (the “Board”), primarily through its Audit Committee , oversees the company’s cybersecurity program.
The Audit Committee may provide updates to the Board on the substance of these reports and any recommendations for improvements that the Audit Committee deems appropriate. ​ At the management level, the CIO and CSO receive regular reports from the company’s cybersecurity department, both historical and real-time, about the company’s global cybersecurity status.
The Audit Committee may provide updates to the Board on the substance of these reports and any recommendations for enhancements that the Audit Committee deems appropriate. ​ The CIO and CSO receive regular reports from the company’s cybersecurity department , both historical and real-time, about the company’s global cybersecurity status.
The company’s Chief Information Officer (“CIO”) and Chief Security Officer (“CSO”) regularly report to the Audit Committee on the current state of the company’s cybersecurity program (including the current threat landscape, cybersecurity risks, and any significant incidents).
The company’s CIO and CSO regularly report to the Audit Committee on the current state of the company’s cybersecurity program (including the current threat landscape, cybersecurity risks, and any significant incidents).
If management determines a material cybersecurity incident has occurred, the company’s policies require management to promptly inform the Board. ​ Under the direction of the CIO, the CSO is responsible for global cybersecurity and business continuity, which includes security architecture, security operations, incident response, IT risk and compliance, and security awareness and training.
If management determines a cybersecurity incident is material, the company’s incident response plan and its disclosure controls and procedures set forth the process for any required disclosures and require management to promptly inform the Board. ​ Under the direction of the CIO, the CSO is responsible for global cybersecurity and business continuity, which includes security architecture, security operations, incident response, IT risk and compliance, physical security, fraud and security awareness and training.
Additionally, the company reviews third-party suppliers on an ongoing basis post-engagement to identify any changes in their security risk profile, including the occurrence of cybersecurity events affecting such suppliers. ​ The company describes whether and how risks from identified cybersecurity threats have materially affected or are reasonably likely to materially affect the company under the heading “Cybersecurity incidents as well as ransomware may hurt the company’s business, damage its reputation, increase its costs, and cause losses,” included as part of the company’s risk factor disclosures in Item 1A of this Annual Report on Form 10-K.
This process extends beyond initial engagement, with ongoing monitoring to identify emerging security risks or changes in suppliers’ risk profiles. ​ The company describes whether and how risks from identified cybersecurity threats have materially affected or are reasonably likely to materially affect the company under the heading “Cybersecurity incidents may hurt the company’s business, damage its reputation, increase its costs, and cause losses,” included as part of the company’s risk factor disclosures in Item 1A of this Annual Report on Form 10-K.
The CSO has over 25 years of security experience and maintains certifications in risk, information security, and audit, among other disciplines. The other members of the company’s security organization also have extensive cybersecurity, business, and technology experience and hold certifications in their area of expertise.
The CSO has over 20 years of security experience and holds a degree in IT and cybersecurity, along with maintaining certifications in risk, information security, data privacy, legal investigations, and audit, among other disciplines. The other members of the company’s security organization also have extensive cybersecurity, business, and technology experience and all hold certifications in their area of expertise.
The company has established written policies and procedures to ensure that significant cybersecurity incidents are immediately investigated, addressed through the coordination of various internal departments, and publicly reported (to the extent required by applicable law).
The company believes this approach enables the CIO and CSO to monitor the company's global security status and to identify and assess potential threats. The company has established written policies and procedures to ensure that cybersecurity incidents are immediately investigated, addressed through the coordination of various internal departments, and publicly reported (to the extent required by applicable law).
Item 1C. Cybersecurity . Risk Management and Strategy ​ The company continuously monitors its information systems to assess, identify, and manage risks from vulnerabilities and assess cybersecurity threats. The company’s process for identifying and assessing material risks from cybersecurity threats operates alongside the company’s broader overall risk assessment process.
Item 1C. Cybersecurity . Risk Management and Strategy ​ The company maintains a multi-layered approach to cybersecurity risk management which leverages technology and human oversight. The company uses active and passive methods designed to continuously monitor information systems and assess, identify, and manage potential vulnerabilities and threats.
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The company monitors risks through active (e.g., penetration tests and vulnerability scans) and passive (e.g., end-point protection) methods and addresses system alerts on a constant basis.
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This digital-security management process is integrated into the company’s broader enterprise risk management framework. ​ The company utilizes active monitoring techniques (e.g., penetration testing), designed to leverage multiple sources of threat intelligence and vulnerability scanning complemented by endpoint protection and network systems.
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The company’s cybersecurity team immediately investigates system alerts that may indicate the presence of a cybersecurity threat or incident and escalates information regarding the threat or incident as necessary to address it in a timely manner. The company also maintains an incident response plan, which sets forth processes the company will follow to address a significant cybersecurity threat or incident.
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The company has a rapid-response protocol designed to investigate system alerts of potential cybersecurity threats, and the company’s incident response plan provides a structured approach to inter-departmental assessment, mitigation, and resolution of cybersecurity threats.
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The incident response plan, among other things, provides for inter-departmental coordination and management of cybersecurity threats or incidents to quickly assess the impact, mitigate risks to information systems, and work to resolve vulnerabilities.
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The company conducts regular tabletop exercises to test and fortify the controls of its cybersecurity incident response program. ​ The company maintains strategic relationships with third-party cybersecurity experts and coordinates with various law-enforcement partners, each of whom may be engaged to provide additional investigative and remediation support.
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The company also engages third-party cybersecurity experts to assess its processes and suggest improvements, which are reviewed with the company’s executive leadership. ​ The company also maintains procedures for screening and evaluating third-party providers prior to granting access to the company’s information systems.
Added
The company’s security organization assesses the severity and priority of incidents on a rolling basis, with escalations of 22 Table of Contents cybersecurity incidents provided to the management team.
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The company assesses each such prospective supplier’s system security in light of the product or service to be provided to the company. The security team analyzes high-value or high-risk third-party suppliers through interviews and surveys prior to engagement.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties . The company has its principal executive offices located in Centennial, Colorado under a lease expiring in 2024. The company leases eight major warehouses and logistics centers with approximately 2.8 million square feet of space located in Reno, Nevada, two in the Phoenix, Arizona area, Hong Kong, Shenzhen, China, Johor Bahru, Malaysia, Zapopan, Mexico, and Venlo, Netherlands.
Biggest changeItem 2. Properties . The company has its principal executive offices located in Centennial, Colorado under a lease expiring in 2032. The company leases nine major warehouses and logistics centers with approximately 3.0 million square feet of space located in Reno, Nevada, three in the Phoenix, Arizona area, Hong Kong, Shenzhen, China, Johor Bahru, Malaysia, Zapopan, Mexico, and Venlo, Netherlands.
The company has 31 smaller distribution centers with approximately 1.0 million square feet of space located throughout the Americas, EMEA, and Asia/Pacific regions. The company believes its facilities are well maintained and suitable for company operations, and does not anticipate significant difficulty in renewing its leases as they expire or securing replacement facilities.
The company has 27 smaller distribution centers with approximately 827.9 thousand square feet of space located throughout the Americas, EMEA, and Asia/Pacific regions. The company believes its facilities are well maintained and suitable for company operations, and does not anticipate significant difficulty in renewing its leases as they expire or securing replacement facilities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings . See Note 15, Contingencies, to the consolidated financial statements included in Part II, Item 8 of this 10-K for information regarding certain legal proceedings in which the company is involved. 20 Table of Contents Item 4. Mine Safety Disclosures . Not applicable. PART II
Biggest changeItem 3. Legal Proceedings . The information set forth under the heading “Environmental Matters” in Note 15, “Contingencies” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this 10-K is incorporated herein by reference. Item 4. Mine Safety Disclosures . Not applicable. PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 21 ​ ​ ​ ​ PART II ​ Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 21 Item 6. [Reserved] 23 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 24 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 38 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 23 ​ ​ ​ ​ PART II ​ Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 23 Item 6. [Reserved] 26 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 43 Item 8.
Financial Statements and Supplementary Data 40 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 78
Financial Statements and Supplementary Data 45 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 84

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeTotal return indices reflect reinvestment of dividends and are weighted on the basis of market capitalization at the time of each reported data point. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2018 2019 2020 2021 2022 2023 Arrow Electronics 100 123 141 195 152 177 Peer Group 100 130 138 203 182 235 S&P 400 MidCap Stock Index 100 124 139 171 146 167 ​ 22 Table of Contents Issuer Purchases of Equity Securities The following table shows the share-repurchase activity for the quarter ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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) October 1 through October 28, 2023 — ​ $ — — ​ $ 621,586 October 29 through November 25, 2023 375,753 ​ 119.76 375,753 ​ 576,154 November 26 through December 31, 2023 — ​ — — ​ 576,154 Total 375,753 ​ ​ 375,753 ​ (a) Average price paid per share excludes 1% excise tax on share repurchases.
Biggest changeTotal return indices reflect reinvestment of dividends and are weighted on the basis of market capitalization at the time of each reported data point. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2019 2020 2021 2022 2023 2024 Arrow Electronics 100 115 158 123 144 133 Peer Group 100 106 157 140 181 213 S&P 400 MidCap Stock Index 100 114 142 123 144 164 ​ 25 Table of Contents Issuer Purchases of Equity Securities The following table shows the share-repurchase activity for the quarter ended December 31, 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) September 29 through October 26, 2024 — ​ $ — — ​ $ 374,557 October 27 through November 23, 2024 — ​ — — ​ 374,557 November 24 through December 31, 2024 419,432 ​ 119.21 419,432 ​ 324,063 Total 419,432 ​ ​ 419,432 ​ (a) Average price paid per share excludes 1% excise tax on share repurchases.
During 2023, the companies included in the Peer Group are Avnet, Inc., CDW Corp., Celestica Inc., Flex Ltd., HP Enterprise Co., HP Inc., Jabil Inc., TD Synnex, and WESCO International, Inc. The graph assumes $100 invested on December 31, 2018 in the company, the S&P 400 MidCap Stock Index, and the Peer Group.
During 2024, the companies included in the Peer Group are Avnet, Inc., CDW Corp., Celestica Inc., Flex Ltd., HP Enterprise Co., HP Inc., Jabil Inc., TD Synnex, and WESCO International, Inc. The graph assumes $100 invested on December 31, 2019 in the company, the S&P 400 MidCap Stock Index, and the Peer Group.
Equity Compensation Plan Information The following table summarizes information, as of December 31, 2023, relating to the Omnibus Incentive Plan, which was approved by the company’s shareholders and under which cash-based awards, non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units, covered employee annual incentive awards, and other stock-based awards may be granted. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ ​ ​ Securities to be ​ Weighted- ​ ​ ​ ​ Issued Upon ​ Average Exercise ​ ​ ​ ​ Exercise of ​ Price of ​ Number of ​ ​ Outstanding ​ Outstanding ​ Securities ​ ​ Options, ​ Options, ​ Remaining ​ ​ Warrants and ​ Warrants and ​ Available for Plan Category Rights Rights Future Issuance Equity compensation plans approved by security holders 1,436,332 ​ $ 102.53 5,041,938 Total 1,436,332 ​ $ 102.53 5,041,938 ​ ​ 21 Table of Contents Performance Graph The following graph compares the performance of the company’s common stock for the periods indicated with the performance of the Standard & Poor’s MidCap 400 Index (“S&P 400 MidCap Stock Index”) and the average performance of a group consisting of the company’s peer companies (“Peer Group”) on a line-of-business basis.
Record Holders On February 4, 2025, there were approximately 1,211 shareholders of record of the company’s common stock. 23 Table of Contents Equity Compensation Plan Information The following table summarizes information, as of December 31, 2024, relating to the Omnibus Incentive Plan, which was approved by the company’s shareholders and under which cash-based awards, non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units, covered employee annual incentive awards, and other stock-based awards may be granted. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ ​ ​ Securities to be ​ Weighted- ​ ​ ​ ​ Issued Upon ​ Average Exercise ​ ​ ​ ​ Exercise of ​ Price of ​ Number of ​ ​ Outstanding ​ Outstanding ​ Securities ​ ​ Options, ​ Options, ​ Remaining ​ ​ Warrants and ​ Warrants and ​ Available for Plan Category Rights Rights Future Issuance Equity compensation plans approved by security holders 1,400,128 ​ $ 101.34 4,437,722 Total 1,400,128 ​ $ 101.34 4,437,722 ​ ​ 24 Table of Contents Performance Graph The following graph compares the performance of the company’s common stock for the periods indicated with the performance of the S&P 400 MidCap Stock Index and the average performance of a group consisting of the company’s peer companies (“Peer Group”) on a line-of-business basis.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . Market Information The company’s common stock is listed on the NYSE (trading symbol: “ARW”). Record Holders On February 6, 2024, there were approximately 1,246 shareholders of record of the company’s common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . Market Information The company’s common stock is listed on the NYSE (trading symbol: “ARW”).
As of December 31, 2023, the total authorized dollar value of shares available for repurchase was $2.8 billion of which $2.2 billion has been utilized, while the $576.2 million in the table represents the remaining amount available for repurchase under the program. ​
(b) The company’s share-repurchase program does not have an expiration date. As of December 31, 2024, the total authorized dollar value of shares available for repurchase was $1.6 billion of which $1.3 billion has been utilized, while the $324.1 million in the table represents the remaining amount available for repurchase under the program. ​
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(b) On January 31, 2023, the company’s Board of Directors approved a $1.0 billion increase to the company’s share-repurchase program. The company’s share-repurchase program does not have an expiration date.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

71 edited+37 added−43 removed14 unchanged
Biggest changeOperating Expenses Following is an analysis of the company’s consolidated operating expenses for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 2022 Change Operating expenses, as reported ​ $ 2,678 ​ $ 2,768 (3.3) % Identifiable intangible asset amortization ​ (31) ​ (35) Restructuring, integration, and other charges ​ (84) ​ (14) Impact of changes in foreign currencies ​ — ​ 6 Non-GAAP operating expenses ​ $ 2,563 ​ $ 2,726 (6.0) % Operating expenses as a percentage of sales ​ 8.1 % 7.5 % 60 bps Non-GAAP operating expenses as a percentage of non-GAAP sales ​ 7.7 % 7.3 % 40 bps The sum of the components for non-GAAP operating expenses may not agree to totals, as presented, due to rounding.
Biggest changeCorporate operating expenses increased during 2024 compared to the year-earlier period primarily due to the following: ● an increase of $59.0 million due to higher restructuring, integration and other charges (see discussion below). ​ ​ 33 Table of Contents Following is an analysis of the company’s consolidated operating expenses for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 2022 ​ Change Consolidated operating expenses, as reported ​ $ 2,678 ​ $ 2,768 ​ (3.3) % Identifiable intangible asset amortization ​ (31) ​ (35) ​ Restructuring, integration, and other ​ (84) ​ (14) ​ Impact of changes in foreign currencies ​ — ​ 6 ​ Non-GAAP consolidated operating expenses ​ $ 2,563 ​ $ 2,726 ​ (6.0) % Consolidated operating expenses as a percentage of sales, as reported ​ 8.1 % 7.5 % ​ 60 bps Non-GAAP consolidated operating expenses as a percentage of sales ​ 7.7 % 7.3 % ​ 40 bps ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Global components operating expenses, as reported ​ $ 1,740 ​ $ 1,944 ​ (10.5) % Identifiable intangible asset amortization ​ (27) ​ (27) ​ Impact of changes in foreign currencies ​ — ​ 2 ​ Non-GAAP global components operating expenses ​ $ 1,713 ​ $ 1,919 ​ (10.7) % Global components operating expenses as a percentage of sales ​ 6.8 % 6.8 % ​ 10 bps Non-GAAP global components operating expenses as a percentage of sales ​ 6.7 % 6.7 % ​ — bps ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Global ECS operating expenses, as reported ​ $ 583 ​ $ 523 ​ 11.4 % Identifiable intangible asset amortization ​ (5) ​ (8) ​ Impact of changes in foreign currencies ​ — ​ 4 ​ Non-GAAP global ECS operating expenses ​ $ 578 ​ $ 520 ​ 11.3 % Global ECS operating expenses as a percentage of sales ​ 7.6 % 6.3 % ​ 130 bps Non-GAAP global ECS operating expenses as a percentage of sales ​ 7.5 % 6.2 % ​ 130 bps ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Corporate operating expenses, as reported ​ $ 355 ​ $ 301 ​ ​ 17.9 % Restructuring, integration, and other ​ (84) ​ (14) ​ ​ ​ Non-GAAP corporate operating expenses ​ $ 271 ​ $ 287 ​ ​ (5.6) % The sum of the components of consolidated operating expenses may not agree to totals, as presented, due to rounding.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
The company is a trusted partner in a complex value chain and is uniquely positioned through its electronics components and IT content portfolios to increase value for stakeholders. The company has two reportable segments, the global components business and the global ECS business.
The company is a trusted partner in a complex value chain and is uniquely positioned through its electronics components and IT content portfolios to increase value for stakeholders. The company has two reportable segments, the global components reportable segment and the global ECS reportable segment.
If the carrying amount of the reporting unit is less than its fair value, no impairment exists. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.
If the carrying amount of the reporting unit is less than its fair value, no impairment exists. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.
The company’s strategic initiatives include the following: ● Offering a variety of value-added services in the global components business, including demand creation, design, engineering, global marketing and integration services to promote the future sale of suppliers’ products, which generally lead to longer and more profitable relationships with its suppliers and customers. ● Providing global supply chain service offerings such as procurement, logistics, warehousing, and insights from data analytics. ● Enabling customer cloud solutions through the global ECS business’ cloud marketplace and management platform, ArrowSphere, which helps VARs and MSPs to manage, differentiate, and scale their cloud businesses while providing the business intelligence that IT solution providers need to drive growth.
The company’s strategic initiatives include the following: ● Offering a variety of value-added services in the global components reportable segment , including demand creation, design, engineering, global marketing and integration services to promote the future sale of suppliers’ products, which generally lead to longer and more profitable relationships with its suppliers and customers. ● Providing global supply chain service offerings such as procurement, logistics, warehousing, and insights from data analytics within the global components reportable segment . ● Enabling customer cloud solutions through the global ECS reportable segments ’ cloud marketplace and management platform, ArrowSphere, which helps VARs and MSPs to manage, differentiate, and scale their cloud businesses while providing the business intelligence that IT solution providers need to drive growth.
Refer to Note 14. Additional Capital Requirements and Sources Recent and expected other capital requirements and sources, in addition to the above matters, also include the items described below: ● Employee Benefit Plans : The company maintains an unfunded executive pension plan under which the company will pay supplemental pension benefits to certain employees upon retirement.
Additional Capital Requirements and Sources Recent and expected other capital requirements and sources, in addition to the above matters, also include the items described below: ● Employee Benefit Plans : The company maintains an unfunded executive pension plan under which the company will pay supplemental pension benefits to certain employees upon retirement.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . This section of the Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . This section of the Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Refer to the section below titled “Liquidity and Capital Resources” for more information on changes in borrowings. Income Tax The company records a provision for income taxes for the anticipated tax consequences of the reported financial results of operations using the asset and liability method.
Refer to the section below titled “Liquidity and Capital Resources” for more information on changes in borrowings. 36 Table of Contents Income Tax The company records a provision for income taxes for the anticipated tax consequences of the reported financial results of operations using the asset and liability method.
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 company’s principal uses of liquidity include cash used in 37 Table of Contents 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 company does not retain financial or legal interests in these receivables, and, accordingly, they are accounted for as sales of the related receivables and the receivables are removed from the company’s consolidated balance sheets. Refer to Note 4 for further discussion of the company’s factoring arrangements.
The company does not retain financial or legal interests in these receivables, and, accordingly, they are accounted for as sales of the related receivables and the receivables are removed from the company’s consolidated balance sheets. Refer to Note 4, “Accounts Receivable” of the Notes to the Consolidated Financial Statements for further discussion of the company’s factoring arrangements.
The company’s committed and undrawn liquidity stands at over $2.2 billion in addition to $218.1 million of cash on hand at December 31, 2023. 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’s committed and undrawn liquidity stands at over $2.8 billion in addition to $188.8 million of cash on hand at December 31, 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 change in cash provided by operating activities during 2023, 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 decreased demand growth due to lower investment in working capital.
The change in cash provided by operating activities during 2024, compared to the year-earlier period, relates primarily to the company’s historical counter-cyclical cash flow as the company generates cash flow in periods of decreased demand growth due to lower investment in working capital primarily due to lower inventory.
The company has $4.8 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.
As of December 31, 2024, the company has $5.4 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.
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 2023 and 2022, the average daily balance outstanding under the EMEA asset securitization program was $626.4 million and $472.7 million, respectively.
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 2024 and 2023, the average daily balance outstanding under the EMEA asset securitization program was $394.8 million and $626.4 million, respectively.
A determination of the reserves required, if any, is made after careful analysis. The reserves may change in the future due to new developments impacting the probability of a loss, the estimate of such loss, and the probability of recovery of such loss from third parties.
A determination of the reserves required, if any, is made after careful analysis. Significant judgments are made when determining if these reserves may change in the future due to new developments impacting the probability of a loss, the estimate of such loss, and the probability of recovery of such loss from third parties.
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. 24 Table of Contents For a discussion of what is included within “Restructuring, integration, and other charges” and “Gain (loss) on investments, net” refer to the similarly captioned sections of this item below.
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 “(Loss) gain on investments, net” refer to the similarly captioned sections of this item below.
The company evaluates its estimates on an ongoing basis. The company bases its estimates on historical experience and on various other assumptions that are believed reasonable under the circumstances; the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
The company bases its estimates on historical experience and on various other assumptions that are believed reasonable under the circumstances; the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
As of December 31, 2023, the company had designated $114.9 million in assets to cover the ongoing costs of SERP payouts for both current and former executives. The projected benefit obligation at December 31, 2023 and 2022, was $88.1 million and $84.1 million, respectively.
As of December 31, 2024, the company had designated $115.7 million in assets to cover the ongoing costs of SERP payouts for both current and former executives. The projected benefit obligation at December 31, 2024 and 2023, was $83.0 million and $88.1 million, respectively.
Contractual Obligations The company has contractual obligations for short-term and long-term debt, interest on short-term and long-term debt, purchase obligations, and operating leases. ● At December 31, 2023, the company had $3.8 billion of total debt outstanding, $1.7 billion of which matures in the next twelve months. The remaining debt has maturity dates in 2025 through 2032.
Contractual Obligations The company has contractual obligations for short-term and long-term debt, interest on short-term and long-term debt, purchase obligations, and operating leases. ● At December 31, 2024, the company had $3.1 billion of total debt outstanding, $350.0 million of which matures in the next twelve months. The remaining debt has maturity dates in 2026 through 2034.
The following table presents the company's effective income tax rate deviation from the non-GAAP effective tax rate for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ Effective income tax rate, as reported ​ ​ 21.9 % ​ 23.8 % Identifiable intangible asset amortization ​ ​ 0.1 ​ ​ 0.1 ​ Restructuring, integration, and other charges ​ ​ 0.1 ​ ​ — ​ Impact of tax legislation changes ​ ​ (0.1) ​ ​ — ​ Non-GAAP effective income tax rate ​ ​ 22.0 % ​ 23.8 % The sum of the components for non-GAAP effective income tax rate may not agree to totals, as presented, due to rounding.
The following table presents the company's effective income tax rate and non-GAAP effective tax rate for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ Effective income tax rate ​ ​ 19.6 % ​ 21.9 % Identifiable intangible asset amortization ​ ​ 0.3 ​ ​ 0.1 ​ Restructuring, integration, and other ​ ​ 1.2 ​ ​ 0.1 ​ Impact of wind down to inventory ​ ​ 0.7 ​ ​ — ​ Impact of tax legislation changes ​ ​ — ​ ​ (0.1) ​ Non-GAAP effective income tax rate ​ ​ 21.8 % ​ 22.0 % The sum of the components for non-GAAP effective income tax rate may not agree to totals, as presented, due to rounding.
The company’s financial objectives are to grow sales faster than the market, increase the markets served, grow profits faster than sales, generate earnings per share growth in excess of competitors’ earnings per share growth and market expectations, grow earnings per share at a rate that provides the capital necessary to support the company’s business strategy, allocate and deploy capital effectively so that return on invested capital exceeds the company’s cost of capital, and increase return on invested capital.
The company’s long-term financial objectives are to grow sales faster than the market, increase the markets served, grow profits faster than sales, generate earnings per share growth in excess of competitors’ earnings per share growth and market 28 Table of Contents expectations, allocate and deploy capital effectively so that return on invested capital exceeds the company’s cost of capital, and increase return on invested capital.
The company expects capital expenditures to be approximately $90.0 million for fiscal year 2024. Share-Repurchase Program The company repurchased 6.1 million shares of common stock for $745.9 million and 9.3 million shares of common stock for $1.0 billion in 2023 and 2022, respectively, under the share-repurchase program, excluding excise taxes.
The company expects capital expenditures to be approximately $100.0 million for fiscal year 2025. 39 Table of Contents Share-Repurchase Program The company repurchased 2.0 million shares of common stock for $250.0 million and 6.1 million shares of common stock for $745.9 million in 2024 and 2023, respectively, under its share-repurchase program, excluding excise taxes.
Management estimates the allowance for credit losses using relevant available information about expected credit losses and an age-based reserve model. Inputs to the model include information about historical credit losses, customer credit ratings, past events, current conditions, and reasonable and supportable forecasts.
The following components of the consolidated financial statements contain critical accounting estimates: Trade Accounts Receivable Management estimates the allowance for credit losses using relevant available information about expected credit losses and an age-based reserve model. Inputs to the model include information about historical credit losses, customer credit ratings, past events, current conditions, and reasonable and supportable forecasts.
Gross Profit Following is an analysis of the company’s consolidated gross profit for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 2022 Change Consolidated gross profit, as reported ​ $ 4,149 ​ $ 4,837 (14.2) % Impact of changes in foreign currencies ​ — ​ 8 Consolidated gross profit, constant currency ​ $ 4,149 ​ $ 4,844 (14.4) % Consolidated gross profit as a percentage of sales, as reported ​ 12.5 % 13.0 % (50) bps Consolidated gross profit as a percentage of sales, constant currency ​ 12.5 % 13.0 % (50) bps The sum of the components for gross profit on a constant currency basis may not agree to totals, as presented, due to rounding.
Following is an analysis of the company’s consolidated gross profit for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 2022 Change Consolidated gross profit, as reported ​ $ 4,149 ​ $ 4,837 (14.2) % Impact of changes in foreign currencies ​ — ​ 8 ​ Non-GAAP consolidated gross profit ​ $ 4,149 ​ $ 4,844 (14.4) % Consolidated gross profit as a percentage of sales, as reported ​ 12.5 % 13.0 % (50) bps Non-GAAP consolidated gross profit as a percentage of sales ​ 12.5 % 13.0 % (50) bps ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Global components gross profit, as reported ​ $ 3,199 ​ $ 3,905 (18.1) % Non-GAAP global components gross profit ​ $ 3,199 ​ $ 3,905 (18.1) % Global components gross profit as a percentage of sales, as reported ​ 12.6 % 13.6 % (100) bps Non-GAAP global components gross profit as a percentage of sales ​ 12.6 % 13.6 % (100) bps ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Global ECS gross profit, as reported ​ $ 950 ​ $ 932 2.0 % Impact of changes in foreign currencies ​ — ​ 8 ​ Non-GAAP global ECS gross profit ​ $ 950 ​ $ 939 1.1 % Global ECS gross profit as a percentage of sales, as reported ​ 12.4 % 11.2 % 120 bps Non-GAAP global ECS gross profit as a percentage of sales ​ 12.4 % 11.2 % 120 bps The sum of the components for non-GAAP gross profit may not agree to totals, as presented, due to rounding.
The following table presents selected financial information related to liquidity at December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 2022 Change Working capital ​ $ 7,355 ​ $ 7,182 ​ $ 173 Cash and cash equivalents ​ 218 ​ 177 ​ 41 Short-term debt ​ 1,654 ​ 590 ​ 1,064 Long-term debt ​ 2,154 ​ 3,183 ​ (1,029) ​ Working Capital The company maintains a significant investment in working capital which the company defines as accounts receivable, net, plus inventories less accounts payable. ​ Working capital, as a percentage of sales, which is defined as working capital divided by annualized quarterly sales, increased to 23.4% at December 31, 2023 compared to 19.3% at December 31, 2022.
The following table presents selected financial information related to liquidity at December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2024 2023 Change Working capital ​ $ 6,693 ​ $ 7,355 ​ $ (662) Cash and cash equivalents ​ 189 ​ 218 ​ (29) Short-term debt ​ 350 ​ 1,654 ​ (1,304) Long-term debt ​ 2,774 ​ 2,154 ​ 620 ​ Working Capital The company maintains a significant investment in working capital which the company defines as accounts receivable, net, plus inventories less accounts payable. ​ Working capital, as a percentage of sales, which is defined as working capital divided by annualized quarterly sales, decreased to 23.0% at December 31, 2024 compared to 23.4% at December 31, 2023.
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”.
Certain Non-GAAP Financial Information In addition to disclosing financial results that are determined in accordance with 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”.
The company’s global components business, enabled by a comprehensive range of value-added capabilities and services, markets, and distributes electronic components to original equipment manufacturers (“OEMs”) and contract manufacturers (“CMs”). The company’s global ECS business is a leading value-added provider of comprehensive computing solutions and services. The global ECS portfolio of computing solutions includes datacenter, cloud, security, and analytics solutions.
The company’s global components reportable segment, enabled by a comprehensive range of value-added capabilities and services, markets, and distributes electronic components to OEMs and EMS providers. The company’s global ECS reportable segment is a leading value-added provider of comprehensive computing solutions and services. Its portfolio of computing solutions includes datacenter, cloud, security, and analytics solutions.
The company estimates the fair value of a reporting unit using the income approach. For the purposes of the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate.
(a) Within the global components reportable segment, the Asia/Pacific reporting unit’s goodwill was previously fully impaired. The company estimates the fair value of a reporting unit using the income approach. For the purposes of the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate.
The company’s effective tax rate deviates from the statutory U.S. federal income tax rate mainly due to the mix of foreign taxing jurisdictions in which the company operates and where its foreign subsidiaries generate taxable income, among other things.
The company’s effective tax rate deviates from the statutory U.S. federal income tax rate predominantly due to the variety of foreign taxing jurisdictions where it operates, and its foreign subsidiaries generate taxable income.
The company has $2.1 billion of foreign earnings that are not deemed permanently reinvested and are available for distribution in future periods as of December 31, 2023. 31 Table of Contents Revolving Credit Facilities and Debt The following table summarizes the company’s credit facilities by category at December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Borrowing ​ Outstanding borrowings (millions) capacity 2023 2022 North American asset securitization program ​ $ 1,500 ​ $ 198 ​ $ 1,235 Revolving credit facility ​ 2,000 ​ — ​ — Commercial paper program (a) ​ 1,200 ​ 1,122 ​ 173 Uncommitted lines of credit ​ 500 ​ — ​ 78 (a) Amounts outstanding under the commercial paper program are backstopped by available commitments under the company’s revolving credit facility. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Daily Balance Outstanding ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ Effective Interest Rate ​ ​ ​ December 31, ​ December 31, ​ ​ December 31, ​ December 31, ​ (millions) 2023 2022 ​ 2023 ​ 2022 ​ North American asset securitization program ​ $ 1,092 ​ $ 1,004 ​ ​ 5.85 % 4.86 % Revolving credit facility ​ 131 ​ 182 ​ ​ 6.42 % 4.79 % Commercial paper program ​ 774 ​ 498 ​ ​ 5.90 % 5.15 % Uncommitted lines of credit ​ 178 ​ 7 ​ ​ 5.83 % 5.22 % ​ The company also has an EMEA asset securitization program under which it continuously sells its interest in designated pools of trade accounts receivables of certain of its subsidiaries in the EMEA region.
Revolving Credit Facilities and Debt The following table summarizes the company’s credit facilities by category at December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Borrowing ​ Outstanding borrowings (millions) capacity 2024 2023 North American asset securitization program ​ $ 1,500 ​ $ 633 ​ $ 198 Revolving credit facility ​ 2,000 ​ 30 ​ — Commercial paper program (a) ​ 1,200 ​ — ​ 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Daily Balance Outstanding ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ Effective Interest Rate ​ ​ ​ December 31, ​ December 31, ​ ​ December 31, ​ December 31, ​ (millions) 2024 2023 ​ 2024 ​ 2023 ​ North American asset securitization program ​ $ 567 ​ $ 1,092 ​ ​ 4.83 % 5.85 % Revolving credit facility ​ 3 ​ 131 ​ ​ 5.48 % 6.42 % Commercial paper program ​ 435 ​ 774 ​ ​ 5.21 % 5.90 % Uncommitted lines of credit ​ 280 ​ 178 ​ ​ 5.18 % 5.83 % ​ 38 Table of Contents 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.
The company has one of the world’s broadest portfolios of product offerings available from leading electronic components and enterprise computing solutions suppliers, coupled with a range of services, solutions, and tools that enables its suppliers to distribute their technologies and help its industrial and commercial customers to source, build upon, and leverage these technologies to grow their businesses, reduce their time to market, and enhance their overall competitiveness.
Coupled with a range of services, solutions, and tools, the company enables its suppliers to distribute their technologies and help its industrial and commercial customers source, build, and leverage these technologies, reduce their time to market, grow their businesses, and enhance their overall competitiveness.
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.
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: the incurrence of additional charges not currently contemplated and failure to realize contemplated cost savings due to unanticipated events that may occur, including in connection with the implementation of the company’s restructuring plan; unfavorable economic conditions; disruptions, shortages, or inefficiencies in the supply chain; political instability and changes; impacts of military conflict and sanctions; industry conditions; changes in product supply, pricing and customer demand; trade protection measures, tariffs, and other restrictions, duties, and value-added taxes; competition; other vagaries in the global components and the global ECS markets; deteriorating economic conditions, including economic recession, inflation, tax rates, foreign currency exchange rates, or the availability of capital; the effects of natural or man-made catastrophic events; changes in relationships with key suppliers; increased profit margin pressure; changes in legal and regulatory matters; non-compliance with certain regulations, such as export, antitrust, and anti-corruption laws; foreign tax and other loss contingencies; breaches of security or privacy of business information and information system failures, including related to current or future implementations, integrations and upgrades; outbreaks, epidemics, pandemics, or public health crises; future regulatory trends and the resulting legal and reputation exposure, including but not limited to those relating to environmental, social, governance, cybersecurity, data privacy, and artificial intelligence issues; and the company’s ability to generate positive cash flow.
Refer to Note 4 “Accounts Receivable” of the Notes to the Consolidated Financial Statements for further discussion.
Refer to Note 8 “Income Taxes” of the Notes to Consolidated Financial Statements for further discussion.
Cash Flows The following table summarizes the company’s cash flows by category for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 2022 Change Net cash provided by (used for) operating activities ​ $ 705 ​ $ (33) ​ $ 738 Net cash used for investing activities ​ (72) ​ (58) ​ (14) Net cash (used for) provided by financing activities ​ (666) ​ 110 ​ (776) 32 Table of Contents Cash Flows from Operating Activities The net amount of cash provided by the company’s operating activities during 2023 was $705.4 million and the net amount of cash used for the company’s operating activities during 2022 was $33.1 million.
Cash Flows The following table summarizes the company’s cash flows by category for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2024 2023 Change Net cash provided by operating activities ​ $ 1,130 ​ $ 705 ​ $ 425 Net cash used for investing activities ​ (94) ​ (72) ​ (22) Net cash used for financing activities ​ (957) ​ (666) ​ (291) ​ Cash Flows from Operating Activities The net amount of cash provided by the company’s operating activities during 2024 and 2023 was $1.1 billion and $705.4 million, respectively.
Global components supply chain services offerings continued to have a positive impact on gross margins. ● The increase in global ECS gross profit margins during 2023, compared with the year-earlier period, related primarily to product mix shifting towards a higher proportion of revenue recognized on a net basis in the current year.
Global ECS gross profit margins increased during 2023, compared with the year-earlier period, due to product mix shifting towards a higher proportion of revenue recognized on a net basis.
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. For 2023, approximately 77% and 23% of the company’s sales were from the global components business and the global ECS business, respectively.
Global ECS brings broad market access, extensive supplier relationships, scale, and resources to help its VARs and MSPs meet the needs of their end-users. For 2024, approximately 72% and 28% of the company’s sales were from the global components reportable segment and the global ECS reportable segment, respectively.
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.
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.
The decrease in gross profit for 2023 related to declines in sales and gross profit margins for the global components business, partially offset by increases in gross profit margins from the global ECS business. ● The decrease in global components gross profit margins during 2023, compared with the year-earlier period, related primarily to declines in shortage market activity in the Americas region and product mix shifting toward lower margin products within the Asia/Pacific region.
Global components gross profit margins decreased during 2023, compared with the year-earlier period, due to declines in shortage market activity in the Americas region and product mix shifting toward lower margin products within the Asia/Pacific region. Global components supply chain services offerings continued to have a positive impact on gross margins.
Cash Flows from Investing Activities The net amount of cash used for investing activities during 2023 and 2022 was $72.3 million and $57.7 million, respectively. The change in cash used for investing activities related primarily to proceeds from the settlement of the net investment hedge in 2023 offset by the proceeds from collections of notes receivable during 2022.
Cash Flows from Investing Activities The net amount of cash used for investing activities during 2024 and 2023 was $94.4 million and $72.3 million, respectively. The change in cash used for investing activities related primarily to amounts paid for businesses acquired in 2024.
The assumptions included in the income approach include forecasted revenues, gross profit margins, operating income margins, working capital, perpetual growth rates, income tax rates, and long-term discount rates, among others, all of which require significant judgments by management. Actual results may differ from those assumed in the company’s forecasts.
The assumptions included in the income approach include forecasted revenues, gross profit margins, operating income margins, working capital, perpetual growth rates, income tax rates, and long-term discount rates, among others, all of which require significant judgments by management. The company also reconciles its discounted cash flow analysis to its current market capitalization allowing for a reasonable control premium.
Non-GAAP financial information includes the following: ● Non-GAAP sales and non-GAAP gross profit (referred to as “sales on a constant currency basis” and “gross profit on a constant currency basis”) excludes the impact of changes in foreign currencies by retranslating prior period results at current period foreign exchange rates. ● Non-GAAP operating expenses excludes identifiable intangible asset amortization, restructuring, integration, and other charges, and the impact of changes in foreign currencies. ● Non-GAAP operating income excludes identifiable intangible asset amortization and restructuring, integration, and other charges. ● Non-GAAP effective tax rate and non-GAAP net income attributable to shareholders exclude identifiable intangible asset amortization, restructuring, integration, and other charges, gain (loss) on investments, net, and the impact of tax legislation changes.
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. ● N on-GAAP gross profit excludes inventory write downs related to the wind down of businesses 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, loss on extinguishment of debt, (loss) gain on investments, net, and the impact of certain tax legislation changes. 27 Table of Contents 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.
Refer to Note 16 “Segment and Geographic Information” of the Notes to the Consolidated Financial Statements for further discussion.
(c) Refer to Note 15, “Contingencies” of the Notes to the Consolidated Financial Statements for further discussion of environmental liabilities.
If the company increased the discount rates used by 100 basis points, the fair value of all reporting units would still exceed their carrying values by more than 8%.
Discount rates are one of the more significant assumptions used in the income approach. If the company increased the discount rates used by 100 basis points, the fair value of all reporting units would still exceed their carrying values by more than 24%. 42 Table of Contents Actual results may differ from those assumed in the company’s forecasts.
Critical Accounting Estimates The company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires the company to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosure of contingent assets and liabilities.
The preparation of these consolidated financial statements requires the company to make significant estimates and judgments that have had or are reasonably likely to have a material impact on the reported amounts of assets, liabilities, revenues, and expenses and related disclosure of contingent assets and liabilities.
Operating Income Following is an analysis of the company’s consolidated operating income, and operating income for the company’s two reportable segments for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 2022 Change Consolidated operating income, as reported ​ $ 1,471 ​ $ 2,068 (28.9) % Identifiable intangible asset amortization ​ 31 ​ 35 Restructuring, integration, and other charges ​ 84 ​ 14 Non-GAAP consolidated operating income ​ $ 1,586 ​ $ 2,117 (25.1) % Consolidated operating income as a percentage of sales, as reported ​ 4.4 % 5.6 % (120) bps Non-GAAP consolidated operating income, as a percentage of sales ​ 4.8 % 5.7 % (90) bps ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Global components operating income, as reported ​ $ 1,459 ​ $ 1,961 (25.6) % Identifiable intangible asset amortization ​ 27 ​ 27 Non-GAAP global components operating income ​ $ 1,486 ​ $ 1,988 (25.3) % Global components operating income as a percentage of sales ​ 5.7 % 6.8 % (110) bps Non-GAAP global components operating income as a percentage of sales ​ 5.8 % 6.9 % (110) bps ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Global ECS operating income, as reported ​ $ 367 ​ $ 409 (10.2) % Identifiable intangible asset amortization ​ 5 ​ 8 Non-GAAP global ECS operating income ​ $ 372 ​ $ 417 (10.7) % Global ECS operating income as a percentage of sales ​ 4.8 % 4.9 % (10) bps Non-GAAP global ECS operating income as a percentage of sales ​ 4.8 % 5.0 % (20) bps The sum of the components of consolidated operating income do not agree to totals, as presented, because operating income for the corporate segment is not included in the table above.
The estimates of charges or savings related to the Plan could differ materially from actual charges or savings recognized. ​ Refer to Note 9, “Restructuring, Integration, and Other” of the Notes to the Consolidated Financial Statements for further discussion of the company’s restructuring and integration activities. ​ 35 Table of Contents Operating Income Following is an analysis of the company’s consolidated operating income, and operating income for the company’s two reportable segments for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2024 2023 Change Consolidated operating income, as reported ​ $ 769 ​ $ 1,471 (47.8) % Identifiable intangible asset amortization ​ 30 ​ 31 Restructuring, integration, and other ​ 143 ​ 84 Impact of wind down to inventory ​ 61 ​ — Non-GAAP consolidated operating income ​ $ 1,002 ​ $ 1,586 (36.9) % Consolidated operating income as a percentage of sales, as reported ​ 2.8 % 4.4 % (160) bps Non-GAAP consolidated operating income, as a percentage of sales ​ 3.6 % 4.8 % (120) bps ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Global components operating income, as reported ​ $ 741 ​ $ 1,459 (49.2) % Identifiable intangible asset amortization ​ 25 ​ 27 Impact of wind down to inventory ​ 61 ​ — Non-GAAP global components operating income ​ $ 827 ​ $ 1,486 (44.3) % Global components operating income as a percentage of sales ​ 3.7 % 5.7 % (200) bps Non-GAAP global components operating income as a percentage of sales ​ 4.1 % 5.8 % (170) bps ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Global ECS operating income, as reported ​ $ 410 ​ $ 367 11.7 % Identifiable intangible asset amortization ​ 4 ​ 5 Non-GAAP global ECS operating income ​ $ 414 ​ $ 372 11.4 % Global ECS operating income as a percentage of sales ​ 5.2 % 4.8 % 40 bps Non-GAAP global ECS operating income as a percentage of sales ​ 5.2 % 4.8 % 40 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.
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 December 31, 2023 and 2022, the company had cash and cash equivalents of $218.1 million and $176.9 million, respectively, of which $160.0 million and $160.8 million, respectively, were held outside the United States.
At December 31, 2024 and 2023, the company had cash and cash equivalents of $188.8 million and $218.1 million, respectively, of which $164.0 million and $160.0 million, respectively, were held outside the United States.
Receivables that do not share risk characteristics are evaluated on an individual basis. Inventories Inventories are stated at the lower of cost or net realizable value. Write-downs of inventories to market value are based upon contractual provisions governing price protection, stock rotation rights, and obsolescence, as well as assumptions about future demand and market conditions.
Write-downs of inventories to net realizable value for excess or obsolete inventories are based upon contractual provisions governing supplier price protections and stock rotation rights, the age of inventories, inventory turnover, as well as assumptions about future demand and market conditions.
Interest and Other Financing Expense, Net ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 ​ 2022 Interest and other financing expense, net ​ $ (329) ​ $ (186) The increase for 2023 primarily relates to higher interest rates on outstanding borrowings and floating rate credit facilities.
Interest and Other Financing Expense, Net The company recorded net interest and other financing expense as follows: ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2024 ​ 2023 Interest and other financing expense, net ​ $ (270) ​ $ (329) The decreases in interest and other financing expenses, net for 2024 primarily related to lower interest rates and lower average daily borrowings on floating rate credit facilities.
The sum of the components for non-GAAP net income attributable to shareholders may not agree to totals, as presented, due to rounding. ​ The decrease in net income attributable to shareholders in 2023 compared to the year-earlier period relates primarily to the changes in sales, gross margins, operating expenses, and interest expense discussed above. 30 Table of Contents 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.
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.
Cash Flows from Financing Activities The net amount of cash used for financing activities during 2023 was $666.2 million and the net amount of cash provided by financing activities in 2022 was $109.8 million.
Cash Flows from Financing Activities The net amount of cash used for financing activities was $956.8 million during 2024 compared to $666.2 million used for financing activities in 2023. The change in cash used for financing activities was primarily due to higher redemption of notes partially offset by lower share repurchases in 2024.
Net Income Attributable to Shareholders Following is an analysis of the company’s consolidated net income attributable to shareholders for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 2022 Net income attributable to shareholders, as reported ​ $ 904 ​ $ 1,427 Identifiable intangible asset amortization (a) ​ 30 ​ 34 Restructuring, integration, and other charges ​ 84 ​ 14 (Gain) loss on investments, net ​ (19) ​ 3 Tax effect of adjustments above ​ (23) ​ (13) Impact of tax legislation changes ​ ​ 1 ​ ​ — Non-GAAP net income attributable to shareholders ​ $ 977 ​ $ 1,465 (a) Identifiable intangible asset amortization also excludes amortization related to the noncontrolling interest.
Net Income Attributable to Shareholders Following is an analysis of the company’s consolidated net income attributable to shareholders for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2024 2023 Net income attributable to shareholders, as reported ​ $ 392 ​ $ 904 Identifiable intangible asset amortization * ​ 29 ​ 30 Restructuring, integration, and other ​ 143 ​ 84 Loss (gain) on investment ​ 5 ​ (19) Impact of wind down to inventory ​ ​ 61 ​ ​ — Loss on extinguishment of debt ​ ​ 2 ​ ​ — Tax effect of adjustments above ​ (63) ​ (23) Impact of tax legislation changes ​ ​ — ​ ​ 1 Non-GAAP net income attributable to shareholders ​ $ 568 ​ $ 977 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 2024 compared to the year-earlier period relates primarily to changes in sales, gross margins, operating expenses, interest and other financing expenses, net, and income tax as discussed above.
Refer to Note 1, “Summary of Significant Accounting Policies” to the consolidated financial statements for further discussion of the company’s revenue recognition policies. ​ ​ ​ 26 Table of Contents Results of Operations Sales by reportable segment Following is an analysis of the company’s sales by reportable segment for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 2022 Change Consolidated sales, as reported ​ $ 33,107 ​ $ 37,124 (10.8) % Impact of changes in foreign currencies ​ — ​ 52 ​ Consolidated sales, constant currency ​ $ 33,107 ​ $ 37,176 (10.9) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Global components sales, as reported ​ $ 25,420 ​ $ 28,788 (11.7) % Impact of changes in foreign currencies ​ — ​ 8 ​ Global components sales, constant currency ​ $ 25,420 ​ $ 28,796 (11.7) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Global ECS sales, as reported ​ $ 7,687 ​ $ 8,336 (7.8) % Impact of changes in foreign currencies ​ — ​ 44 ​ Global ECS sales, constant currency ​ $ 7,687 ​ $ 8,381 (8.3) % 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. ​ Reportable segment sales by geographic region ​ Following is an analysis of the company’s reportable segment sales by geographic region for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ ​ ​ (millions) ​ Sales ​ % of Sales ​ Sales ​ % of Sales ​ % Change Americas components sales ​ $ 7,955 ​ 24.0 % ​ $ 9,593 ​ 25.8 % ​ (17.1) % EMEA components sales ​ ​ 8,075 ​ 24.4 % ​ ​ 7,628 ​ 20.5 % ​ 5.9 % Asia/Pacific components sales ​ ​ 9,390 ​ 28.4 % ​ ​ 11,567 ​ 31.2 % ​ (18.8) % Global components sales ​ $ 25,420 ​ 76.8 % ​ $ 28,788 ​ 77.5 % ​ (11.7) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas ECS sales ​ $ 4,160 ​ 12.6 % ​ $ 4,847 ​ 13.1 % ​ (14.2) % EMEA ECS sales ​ ​ 3,527 ​ 10.6 % ​ ​ 3,489 ​ 9.4 % ​ 1.1 % Global ECS sales ​ $ 7,687 ​ 23.2 % ​ $ 8,336 ​ 22.5 % ​ (7.8) % Consolidated sales ​ $ 33,107 ​ 100.0 % ​ $ 37,124 ​ 100.0 % ​ (10.8) % During 2023, global components sales decreased compared to the year-earlier period primarily due to the following impacts: ● sales declined in the Americas region primarily due to decreases in shortage market activity; ● sales declined in the Asia/Pacific region primarily due to softer demand across most verticals; ● partially offset by growth in the EMEA region for the first three quarters of 2023 across most major verticals, with the fourth quarter results declining relative to the prior year.
Refer to the “Restructuring, Integration, and Other” section below. ​ ​ ​ 29 Table of Contents Results of Operations Sales by reportable segment Following is an analysis of the company’s sales by reportable segment for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2024 2023 Change Consolidated sales, as reported ​ $ 27,923 ​ $ 33,107 (15.7) % Impact of changes in foreign currencies ​ — ​ (33) ​ Consolidated sales, constant currency ​ $ 27,923 ​ $ 33,074 (15.6) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Global components sales, as reported ​ $ 19,983 ​ $ 25,420 (21.4) % Impact of changes in foreign currencies ​ — ​ (35) ​ Global components sales, constant currency ​ $ 19,983 ​ $ 25,385 (21.3) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Global ECS sales, as reported ​ $ 7,940 ​ $ 7,687 3.3 % Impact of changes in foreign currencies ​ — ​ 2 ​ Global ECS sales, constant currency ​ $ 7,940 ​ $ 7,689 3.3 % 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. ​ Reportable segment sales by geographic region ​ Following is an analysis of the company’s reportable segment sales by geographic region for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ ​ ​ (millions) ​ Sales ​ % of Sales ​ Sales ​ % of Sales ​ % Change Americas components sales ​ $ 6,412 ​ 23.0 % ​ $ 7,955 ​ 24.0 % ​ (19.4) % EMEA components sales ​ ​ 5,648 ​ 20.2 % ​ ​ 8,075 ​ 24.4 % ​ (30.1) % Asia/Pacific components sales ​ ​ 7,923 ​ 28.4 % ​ ​ 9,390 ​ 28.4 % ​ (15.6) % Global components sales ​ $ 19,983 ​ 71.6 % ​ $ 25,420 ​ 76.8 % ​ (21.4) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas ECS sales ​ $ 4,067 ​ 14.6 % ​ $ 4,160 ​ 12.6 % ​ (2.2) % EMEA ECS sales ​ ​ 3,873 ​ 13.8 % ​ ​ 3,527 ​ 10.6 % ​ 9.8 % Global ECS sales ​ $ 7,940 ​ 28.4 % ​ $ 7,687 ​ 23.2 % ​ 3.3 % Consolidated sales ​ $ 27,923 ​ 100.0 % ​ $ 33,107 ​ 100.0 % ​ (15.7) % The sum of the components for sales by geographic region and consolidated sales may not agree to totals, as presented, due to rounding.
Refer to Note 6, “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.
Refer to Note 6, “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. ● Amounts related to total interest on long-term debt at December 31, 2024 totaled $598.4 million, with $110.5 million expected to be paid within the next 12 months.
Adjustments to historical loss information are made for differences in current receivable-specific risk characteristics such as changes in the economic and industry environment, or other relevant factors. Expected credit losses are estimated on a collective (pool) basis, when similar risk characteristics exist, based on customer credit ratings, which include both externally acquired as well as internally determined credit ratings.
Adjustments to historical loss information are made for differences in current receivable-specific risk characteristics such as changes in the economic and industry environment, or other relevant factors. These adjustments as well as other inputs such as the identification of credit risk pools, and age-based allowances require significant judgment and are inherently uncertain.
The decreases were offset partially by lower variable costs, in line with the decrease in sales discussed above and $62.2 million in legal settlements recorded as a decrease to operating expense. ● The decrease in global ECS operating income for 2023 relates primarily to lower sales and increases in charges taken for the allowance for credit losses of $24.0 million, partially offset by increase in gross profit margins. 29 Table of Contents Gain (Loss) on Investments, Net ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 ​ 2022 Gain (loss) on investments, net ​ $ 19 ​ $ (3) Gains and losses on investments are primarily related to the changes in fair value of assets related to the Arrow supplemental executive retirement plan (“SERP”) pension plan, which consists 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 7 “Financial Instruments Measured at Fair Value”.
Refer to Note 16 “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 during 2024 relates primarily to the changes in sales, gross profit margins and operating expenses discussed above. ​ (Loss) Gain on Investments, Net ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2024 ​ 2023 (Loss) gain on investments, net ​ $ (5) ​ $ 19 (Loss) 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 7 “Financial Instruments Measured at Fair Value” of the Notes to the Consolidated Financial Statements.
Refer to Note 9, “Restructuring, Integration, and Other Charges” and Note 15, “Contingencies” of the Notes to the Consolidated Financial Statements for further discussion of the company’s restructuring and integration activities.
Refer to Note 9, “Restructuring, Integration, and Other” of the Notes to the Consolidated Financial Statements for further discussion of the company’s restructuring activities. ● Sales of trade receivables : In the normal course of business, certain of the company’s subsidiaries have agreements to sell, without recourse, selected trade receivables to financial institutions.
The declines in operating expenses for 2023, relative to the year-earlier periods, were primarily related to lower variable costs, in line with the decrease in sales discussed above, and $62.2 million in settlement funds received in connection with certain legal matters, which were recorded as a reduction of operating expenses.
Global components operating expenses decreased during 2023 compared to the year-earlier period primarily due to the following: ● a decrease of $125.6 million in employee-related costs primarily due to cost reduction initiatives and lower sales incentives; and ● a decrease of $62.2 million due to legal settlement benefits recognized in connection with certain legal matters in 2023.
Refer to Note 13. ● Environmental liabilities : The company is involved in certain ongoing environmental cleanup activities and legal proceedings, which are inherently uncertain with respect to outcomes. Refer to Note 15. ● Hedging activities : The company has entered into certain foreign exchange forward contracts designated as net investment hedges.
Refer to Note 15, “Contingencies” of the Notes to the Consolidated Financial Statements for further discussion of the company’s environmental liabilities. ● Hedging activities : The company has entered into certain foreign exchange forward contracts designated as net investment hedges.
The following table presents the components of the restructuring, integration, and other charges for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 ​ 2022 Restructuring and integration charges ​ $ 9 ​ $ 7 Other charges ​ ​ 75 ​ ​ 7 ​ ​ $ 84 ​ $ 14 For 2023, other charges include $29.4 million related to early lease terminations, $23.3 million related to an increase in environmental liabilities, and personnel charges of $19.1 million related to operating expense reduction initiatives.
Corporate operating expenses increased during 2023 compared to the year-earlier period primarily due to the following: ● an increase of $70.2 million due to higher restructuring, integration and other charges related to cost reduction initiatives. 34 Table of Contents Restructuring, Integration, and Other The following table presents the components of the restructuring, integration, and other charges for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2024 ​ 2023 Restructuring, integration and related costs ​ ​ ​ ​ ​ ​ Operating Expense Efficiency Plan costs (a) ​ $ 10 ​ $ — Other plans ​ ​ 4 ​ ​ 9 Other expenses ​ ​ ​ ​ ​ ​ Operating expense reduction costs not related to restructuring initiatives (b) ​ 85 ​ ​ 19 Increases to environmental remediation liabilities (c) ​ ​ 1 ​ ​ 23 Early lease termination costs ​ ​ 7 ​ ​ 29 Consulting costs (d) ​ ​ 25 ​ ​ — Other charges ​ ​ 11 ​ ​ 3 Total ​ $ 143 ​ $ 84 The sum of the components for restructuring, integration, and other may not agree to totals, as presented, due to rounding.
The following table summarizes recent events impacting the company’s capital resources: ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) Activity Date Notional amount 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 3.50% notes, due April 2022 Repaid February 2022 ​ $ 350 North American asset securitization program Increase in Capacity September 2022 ​ $ 250 EMEA asset securitization program Increase in Capacity September 2022 ​ € 200 (a) Upon issuance of the 6.125% notes due March 2026, the company entered into an interest rate swap, which effectively converts the 6.125% notes to floating rate notes based on SOFR + 0.508%, or an effective interest rate of 5.87%.
The following table summarizes recent events impacting the company’s capital resources: ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) Activity Date Notional amount 3.25% notes, due September 2024 ​ Repaid ​ September 2024 ​ $ 500 5.15% notes, due August 2029 ​ Issued ​ August 2024 ​ $ 500 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 ​ Issued ​ March 2023 ​ $ 500 ​ Refer to Note 6, “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.
As of the date of the company’s 2023 annual impairment test, the fair value of all reporting units exceeded their carrying values by more than 19%. Refer to Note 2. Discount rates are one of the more significant assumptions used in the income approach.
As of the first day of the fourth quarters of 2024, 2023, and 2022, the company’s annual impairment testing did not indicate impairment at any of the company’s reporting units. As of the date of the company’s 2024 annual impairment test, the fair value of all reporting units exceeded their carrying values by more than 38%.
During 2023, the global components business entered a cyclical downturn characterized by declining sales due to elevated customer inventory levels, which were largely a result of the normalization of shortages in electronic components markets towards the end of 2022. In addition, a challenging macroeconomic environment in the Asia/Pacific region contributed to lower demand for the company’s products.
During 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.
To supplement its organic growth strategy, the company continually evaluates strategic acquisitions to broaden its product and value-added service offerings, increase its market penetration, and expand its geographic reach. 25 Table of Contents Executive Summary ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions except per share data) ​ 2023 ​ 2022 ​ Change Consolidated sales ​ $ 33,107 ​ $ 37,124 ​ (10.8) % Global components sales ​ ​ 25,420 ​ ​ 28,788 ​ (11.7) % Global ECS sales ​ ​ 7,687 ​ ​ 8,336 ​ (7.8) % Gross profit margin ​ ​ 12.5 % ​ 13.0 % (50) bps Operating income ​ ​ 1,471 ​ ​ 2,068 ​ (28.9) % Operating income margin ​ ​ 4.4 % ​ 5.6 % (120) bps Non-GAAP operating income ​ ​ 1,586 ​ ​ 2,117 ​ (25.1) % Non-GAAP operating income margin ​ ​ 4.8 % ​ 5.7 % (90) bps Net income attributable to shareholders ​ ​ 904 ​ ​ 1,427 ​ (36.7) % Earnings per share attributable to shareholders - diluted ​ ​ 15.84 ​ ​ 21.80 ​ (27.3) % Non-GAAP net income attributable to shareholders ​ ​ 977 ​ ​ 1,465 ​ (33.3) % Non-GAAP earnings per share attributable to shareholders - diluted ​ $ 17.12 ​ $ 22.38 ​ (23.5) % Activity impacting both GAAP and non-GAAP net income attributable to shareholders included : ● $62.2 million in legal settlements related to claims filed by the company which were recorded as a decrease to operating expenses during 2023.
Executive Summary ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions except per share data) ​ 2024 ​ 2023 ​ Change ​ Consolidated sales ​ $ 27,923 ​ $ 33,107 ​ (15.7) % Global components sales ​ ​ 19,983 ​ ​ 25,420 ​ (21.4) % Global ECS sales ​ ​ 7,940 ​ ​ 7,687 ​ 3.3 % Gross profit margin ​ ​ 11.8 % ​ 12.5 % (70) bps Non-GAAP gross profit margin ​ ​ 12.0 % ​ 12.5 % (50) bps Operating income ​ ​ 769 ​ ​ 1,471 ​ (47.8) % Operating income margin ​ ​ 2.8 % ​ 4.4 % (160) bps Non-GAAP operating income ​ ​ 1,002 ​ ​ 1,586 ​ (36.9) % Non-GAAP operating income margin ​ ​ 3.6 % ​ 4.8 % (120) bps Net income attributable to shareholders ​ ​ 392 ​ ​ 904 ​ (56.6) % Earnings per share attributable to shareholders - diluted ​ ​ 7.29 ​ ​ 15.84 ​ (54.0) % Non-GAAP net income attributable to shareholders ​ ​ 568 ​ ​ 977 ​ (41.9) % Non-GAAP earnings per share attributable to shareholders - diluted ​ $ 10.56 ​ $ 17.12 ​ (38.3) % ​ Business environment and other trends: ● During 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.
Refer to Note 6. ● Purchase obligations of $7.4 billion represent an estimate of non-cancellable inventory purchase orders and other contractual obligations related to information technology and facilities as of December 31, 2023 with $5.9 billion expected to be paid within the next 12 months and $1.1 billion in 2025. 33 Table of Contents ● Non-cancellable inventory purchase orders have decreased in comparison with the year-earlier period, primarily due to reductions in lead times, normalization of shortage market activities, and a decline in demand.
Refer to Note 6, “Debt” of the Notes to the Consolidated Financial Statements for further discussion of the company’s interest on short-term and long-term debt and available financing. ● Purchase obligations of $8.3 billion represent an estimate of non-cancellable inventory purchase orders, future payments under IT distribution arrangements, and other contractual obligations related to information technology and facilities as of December 31, 2024 with $5.7 billion expected to be paid within the next 12 months, $1.2 billion in 2026, $642.2 million in 2027, and $487.2 million in 2028.
See Note 15, “Contingencies” of the Notes to the Consolidated Financial Statements for further discussion; ● Increases of $37.4 million in charges taken to increase the allowance for credit losses during 2023, when compared to the year-earlier period, primarily due to the aging of receivables of certain customers.
Global ECS operating expenses increased during 2023 compared to the year-earlier period primarily due to the following: ● an increase of $25.4 million in charges taken for allowance for credit losses related to one customer; and ● an increase of $32.0 million in employee-related costs.
The company believes its global ECS business is well positioned to support customers through these transitions; however, 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.
These trends are likely to continue in 2025 and the duration and severity of the current downturn remain uncertain. ● Within the company’s global ECS reportable segment, in certain periods, changes in the mix of sales of IT solutions impact the proportion of the company’s revenue that is recorded on a net basis compared to a gross basis.
To achieve its objectives, the company seeks to capture significant opportunities to grow across products, markets, and geographies.
To achieve its objectives, the company seeks to capture significant opportunities to grow across products, markets, and geographies. To supplement its organic growth strategy, the company continually evaluates strategic acquisitions to broaden its product and value-added service offerings, increase its market penetration, and expand its geographic reach. The company is also committed to improving operational efficiency.
If assumptions about future demand change and/or actual market conditions are less favorable than those projected by the company, additional write-downs of inventories may be required. Due to the large number of transactions and the complexity of managing the process around price protections and stock rotations, estimates are made regarding adjustments to the book cost of inventories.
Due to the large number of products, markets, and transactions, and the complexity of managing the process around price protections and stock rotations, there is a high degree of judgment required for estimates made regarding demand for age-based inventory and future market conditions, after considering supplier protection provisions.
During 2023, global ECS sales decreased compared to the year-earlier period primarily due to the following impacts: ● sales declined in the Americas region primarily due to a softer IT spending market environment, resulting in a decrease in demand, particularly for storage, security, and compute; ● sales increased in the EMEA region primarily due to strong demand, largely offset by a shift in sales mix towards products such as software-as-a-service and cloud where more sales are recorded on a net basis.
Global ECS gross profit margins decreased during 2024, compared with the year-earlier period, due to 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, and a shift in sales mix towards more sales recognized on a gross basis in both the Americas and EMEA regions, relative to 2023.
As of December 31, 2023, all such contracts were in an asset position in the amount of $47.2 million. Refer to Note 7. ● Sales of trade receivables : In the normal course of business, certain of the company’s subsidiaries have agreements to sell, without recourse, selected trade receivables to financial institutions.
As of December 31, 2024, all such contracts were in an asset position in the amount of $53.7 40 Table of Contents million.
Additionally, limitations on cancelation terms with many vendors have normalized. Many of the company’s non-cancellable purchase orders are backed by customer purchase orders with Arrow, that are also non-cancellable. ● Amounts related to future lease payments for operating lease obligations at December 31, 2023 totaled $320.8 million, with $83.6 million expected to be paid within the next 12 months.
In January 2025, the company entered into new multi-year distribution agreements which increased its non-cancellable purchase obligations by $2.8 billion with payments of $288.7 million in 2025, $495.7 million in 2026, $563.0 million in 2027, $598.6 million in 2028, $639.1 million in 2029, and $228.2 million in 2030. ● Amounts related to future lease payments for operating lease obligations at December 31, 2024 totaled $301.0 million, with $77.6 million expected to be paid within the next 12 months.
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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.
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Key Business Metrics Management uses gross billings as an operational metric to monitor operating performance of its global ECS reportable segment, including sales performance by geographic region, as it provides meaningful supplemental information in evaluating the overall performance of the global ECS business.
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Overview The company is a global provider of products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions.
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The company uses this key metric to develop financial forecasts, make strategic decisions, and prepare and approve annual budgets. Gross billings represent amounts invoiced to customers for goods and services during a period and do not include the impact of recording sales on a net basis or sales adjustments, such as trade discounts and other allowances.
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See Note 4, “Accounts Receivables” of the Notes to the Consolidated Financial Statements for further discussion. ● During 2023, changes in foreign currencies had a positive impact of $51.8 million on sales.
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Refer to Note 1 “Summary of Significant Accounting Policies” to the consolidated financial statements for further discussion of the company’s revenue recognition policies. The use of gross billings has certain limitations as an analytical tool and should not be considered in isolation or as a substitute for revenue.
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Business environment and other trends : ● The global components business, along with the global market for electronics components, has historically experienced cyclical downturns, followed by periods of stronger growth in demand.
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Overview Arrow sources and engineers technology for thousands of leading manufacturers, services providers, and users of enterprise computing solutions. The company has one of the world’s broadest portfolios of product offerings available from leading electronic components and enterprise computing solutions suppliers.
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These trends have resulted in higher levels of inventory on the company’s balance sheet, decreased sales, and have increased the company’s investments in working capital as a percentage of sales. These trends could continue in 2024 and as inventory levels normalize, the company expects demand to improve, however, the duration and severity of the current downturn are highly uncertain.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThis increased sales and operating income by $51.8 million and $1.4 million respectively, for 2023, compared with the year-earlier period, based on 2022 sales and operating income re-translated at average foreign currency exchange rates for 2023. These exposures may change over time and changes in foreign currency exchange rates could materially impact the company’s financial results in the future.
Biggest changeDuring 2024, the U.S dollar strengthened against certain other currencies. This decreased sales and operating income by $33.4 million and $6.8 million respectively, for 2024, compared with the year-earlier period, based on 2023 sales and operating income re-translated at average foreign currency exchange rates for 2024.
This was determined by considering the impact of a hypothetical interest rate on the company’s average outstanding balance of floating rate debt during 2023. In the event of a change in the economic environment, which may adversely impact interest rates, the company could likely take actions to mitigate potential negative exposure to changes in interest rates.
This was determined by considering the impact of a hypothetical interest rate on the company’s average outstanding balance of floating rate debt during 2024. In the event of a change in the economic environment, which may adversely impact interest rates, the company could likely take actions to mitigate potential negative exposure to changes in interest rates.
However, due to the uncertainty of the specific actions that might be taken and their possible effects, the sensitivity analysis assumes no changes in the company’s financial structure. ​ ​ ​ 39 Table of Contents
However, due to the uncertainty of the specific actions that might be taken and their possible effects, the sensitivity analysis assumes no changes in the company’s financial structure. ​ ​ ​ 44 Table of Contents
The fair value of the foreign exchange contracts are estimated using foreign currency spot rates and forward rates quoted 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 December 31, 2023 and 2022, was $1.0 billion and $1.3 billion, respectively.
The fair value of the foreign exchange contracts are estimated using foreign currency spot rates and forward rates quoted 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 December 31, 2024 and 2023, was $1.1 billion and $1.0 billion, respectively.
These amounts were determined by considering the impact of a hypothetical foreign exchange rate on the sales and operating income of the company’s international operations. 38 Table of Contents Interest Rate Risk The company’s interest expense, in part, is sensitive to the general level of interest rates in North America, Europe, and the Asia/Pacific region.
These amounts were determined by considering the impact of a hypothetical foreign exchange rate on the sales and operating income of the company’s international operations. Interest Rate Risk The company’s interest expense, in part, is sensitive to the general level of interest rates in North America, Europe, and the Asia/Pacific region.
The company historically has managed its exposure to interest rate risk through the proportion of fixed-rate and floating-rate debt in its total debt portfolio. Additionally, the company may, at times, utilize interest rate swaps in order to manage its targeted mix of fixed- and floating-rate debt.
The company historically has managed its exposure to interest rate risk through the proportion of 43 Table of Contents fixed-rate and floating-rate debt in its total debt portfolio. Additionally, the company may, at times, utilize interest rate swaps in order to manage its targeted mix of fixed- and floating-rate debt.
During 2023, the average outstanding balance on the company’s floating rate debt was $2.2 billion, and a one percentage point change in average interest rates would have caused net interest and other financing expense during 2023 to increase by $21.7 million.
During 2024, the average outstanding balance on the company’s floating rate debt was $1.3 billion, and a one percentage point change in average interest rates would have caused net interest and other financing expense during 2024 to increase by $12.9 million.
At December 31, 2023, 64% of the company’s debt was subject to fixed rates and 36% was subject to floating rates.
At December 31, 2024, 78% of the company’s debt was subject to fixed rates and 22% was subject to floating rates.
As a large global organization, the company’s consolidated results of operations and financial position are impacted by changes in foreign currency exchange rates through the translation of the company’s international financial statements into U.S. dollar.
The company’s consolidated results of operations and financial position are also impacted by changes in foreign currency exchange rates through the translation of the company’s international financial statements into U.S. dollar. The company’s non-U.S. dollar results of operations are negatively impacted during periods when the U.S. dollar strengthens and positively impacted during periods when the U.S. dollar weakens.
For example, sales and operating income would decrease by approximately $863.8 million and $51.0 million, respectively, if the U.S. dollar strengthened by another 10% against the Euro.
These exposures may change over time and changes in foreign currency exchange rates could materially impact the company’s financial results in the future. For example, sales and operating income would decrease by approximately $637.6 million and $25.3 million, respectively, if the U.S. dollar strengthened by another 10% against the Euro.
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The company’s non-U.S. dollar results of operations are negatively impacted during periods when the U.S. dollar strengthens and positively impacted during periods when the U.S. dollar weakens. During 2023, the U.S dollar weakened against most other currencies.

Other ARW 10-K year-over-year comparisons