Introduction to Arrow Electronics, Inc.
Arrow at a glance
Founded:
1935
Ticker Symbol:
ARW (New York Stock Exchange)
Web Site:
www.arrow.com
2012 Sales:
$20.4 billion
Global Components:
$13.4 billion
ECS:
$7.0 billion
2012 Net Income*:
$488.4 million
2012 EPS*:
$4.40
Employees:
16,500
Locations:
Global network of more than 470 locations in 55
countries and territories
Corporate Headquarters: Englewood, Colorado
Customers:
100,000
Fortune 500 Rank:
133
*Represents GAAP measure adjusted to exclude the impact of restructuring and other items affecting comparability.
2
Arrow is…
A global provider of products, services and
solutions to industrial and commercial
users of electronic components and
enterprise computing solutions
Global customer base of more than100,000
Wireline and Wireless
Networking Infrastructure
Medical Imaging, Instrumentation
and Scientific Testing
Military and Aerospace
Medical Services
Electronic Manufacturing
Services
Machine Tools and
Industrial Controls
Enterprise Computing
GIDDINGS & LEWIS
No single customer represents more than 3% of revenue
Our vision is…
To be the premier
electronics company in
the world
Global strategy – drive growth in the core, services,
and high-growth product sets
Core
Businesses
Services
Arrow’s leadership
Michael J. Long
Chairman, President and
Chief Executive Officer
Peter S. Brown
Senior Vice President
and General Counsel
Andrew S. Bryant
President, Arrow Enterprise
Computing Solutions
Peter T. Kong
President,
Arrow Global Components
Vin Melvin
Vice President and
Chief Information Officer
M. Catherine Morris
Senior Vice President and Chief
Strategy Officer
Gretchen Zech
Senior Vice President, Global
Human Resources
Paul J. Reilly
Executive Vice President,
Finance and Operations,
and Chief Financial Officer
Business Segment Overview
Global components
Arrow Global Components
– Arrow Americas – 44% of components sales
– Arrow EMEA (Europe, Middle East, Africa) – 27% of components sales
– Arrow Asia-Pacific – 29% of components sales
Core Drivers
Differentiators
•
•
•
•
•
• Global strength and depth
• Design win performance
• Highest ranked level of customer
service
• Industry leading operating margins
• Financial resources
Broad line card
Broad customer base – 100,000+
Engineering focus
Demand creation
Value-added programs
Breakdown of 2012 Component Sales
•
•
•
•
66% Semiconductor
20% PEMCO (passive, electro-mechanical and connector)
9% Computing and memory
5% Other products and services
Powering the supply chain: global components
Design
System hardware, OS Configuration & development,
product specification, RoHS compliance,
complete solutions
Production
Prototype, manufacturing, integration,
breaking tape and reel, programming
Distribution
On-time delivery, direct fulfillment,
supply chain solutions, post sales/end of life,
quality and process control
Service
Local support, new online search/user interface,
materials management and logistics
Global components by region
Americas
Europe, Middle East, Africa
Asia-Pacific
2012 Sales: $5.9 billion
2012 Sales: $3.7 billion
2011 Sales: $3.8 billion
COUNTRIES
Argentina
Brazil
Canada
Mexico
United States
COUNTRIES
Austria
Belgium
Bulgaria
Czech Republic
Denmark
Egypt
Estonia
Finland
France
Germany
Greece
Hungary
Israel
Italy
COUNTRIES
Australia
China
Hong Kong
India
Indonesia
Japan
Korea
Malaysia
New Zealand
Philippines
Singapore
Taiwan
Thailand
Vietnam
www.arrownac.com
Netherlands
Norway
Poland
Portugal
Romania
Russian Federation
Slovakia
Slovenia
South Africa
Spain
Sweden
Switzerland
Turkey
Ukraine
United Kingdom
www.arroweurope.com
www.arrowasia.com
Market expertise
Aerospace and
Defense
Alternative Energy
Custom Logic
Lighting
Medical
Power
Supplies
Embedded
Computing
Machine-to-Machine
Industrial
Transportation/
Automotive
Enterprise computing solutions
Arrow Enterprise Computing Solutions (ECS)
– Arrow ECS is the global business group that provides enterprise and midrange
computing products, services and solutions to value-added resellers and system
integrators
– ECS Americas – 68% of ECS sales
– ECS Europe – 32% of ECS sales
Core Drivers
Differentiators
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Small and medium sized customers – 13,000
VAR partners
Business continuity
Server consolidation
Compliance/regulatory environment
Engineering and technical expertise
Education and training services
Enterprise Solutions Centers (Atlanta &
Minneapolis)
Financing programs
Business development & marketing
expertise
Innovation and investments
Customer service
Customer and OEM relations
Solutions focused
Non-compete relationship with reseller
customers
• Unparalleled line card
Enterprise computing solutions accounted for 35% of Arrow’s 2012 sales
Powering the supply chain: ECS
ECS by region
Americas
Europe, Middle East, Africa
2012 Sales: $4.8 billion
2012 Sales: $2.3 billion
COUNTRIES
Canada
United States
COUNTRIES
Austria
Belgium
Croatia
Czech Republic
Denmark
Estonia
Finland
France
Germany
Hungary
Iceland
Israel
Latvia
www.ecs.arrow.com
Lithuania
Luxembourg
Morocco
Netherlands
Norway
Poland
Portugal
Serbia
Slovenia
Spain
Sweden
Switzerland
United Kingdom
www.arrowecs.eu
Financial Overview
Investment considerations
Outstanding organic sales growth
Significant margin expansion
Committed to strong cash flow generation
Strategic expansion of the portfolio
17
Revenue growth – a balanced approach
2006 sales
of $13.6 billion
$21.4
18%
$20.4
$18.7
82%
$16.0
$16.8
$14.7
$13.6
2012 sales
of $20.4 billion
35%
65%
2006
Global components
Global ECS
2007
2008
2009
2010
2011
2012
($ in billions)
18
Industry-leading operating margin
5.0%
4.6%
4.5%
4.4%
4.0%
4.2%
3.8%
3.6%
3.0%
2.7%
2.5%
2.4%
2.6%
2.6%
2.5%
2.2%
2.1%
2.0%
1.0%
2006
2007
2008
Operating margin*
2009
2010
2011
2012
Peer margin
* Peer group includes AVT, IM, SNX, TECD, and WPG
19
Excellent record of cash flow generation
$4,000
$3,458
$3,500
$3,000
$2,783
$2,662
$2,500
$2,441
$2,000
$1,591
$1,500
$1,000
$500
$972
$121
$0
2006
2007
2008
2009
2010
2011
2012
($ in millions)
20
Superior returns on capital: 40% above WACC
200%
180%
160%
140%
120%
100%
80%
2006
2007
2008
ROIC as % of WACC
2009
2010
2011
2012
WACC
21
Capital allocation strategy
Invest in the business
Acquisitions that meet our value criteria to strategically
accelerate growth
Evaluate options to return value to shareholders
Maintain investment grade rating over the long-term
22
Outperforming the industry and our targets
5-Year Performance
Deliver to Commitments
Revenue Growth
Operating Margin Expansion
EPS Growth
Return on Working Capital
Operating Cash Flow
23
We have and will continue to invest in
businesses that lessen the exposure to
economic and technology cycles.
2010
2011
24