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05/07/2026 | Press release | Distributed by Public on 05/07/2026 05:06

Quarterly Report for Quarter Ending April 4, 2026 (Form 10-Q)

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

Information Relating to Forward-Looking Statements

This report includes "forward-looking statements," as the term is defined under the federal securities laws. Forward-looking statements are those statements which are not statements of historical or current fact. These forward-looking statements can be identified by forward-looking words such as "expects," "anticipates," "intends," "plans," "may," "will," "would," "could," "believes," "seeks," "projected," "potential," "estimates," and similar expressions. These forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which could cause actual results or facts to differ materially from such statements for a variety of reasons, including, but not limited to: unfavorable economic conditions or changes, including those that may occur in connection with recession, inflation, tax rates, foreign currency exchange rates, or the availability of capital; impacts of military conflict and sanctions; political instability and changes; trade protection measures, tariffs, increased trade tensions, trade agreements and policies, and other restrictions, duties, and value-added taxes, and the associated macroeconomic impacts; disruptions, shortages, or inefficiencies in the supply chain; non-compliance with certain laws, regulations, or executive orders, such as trade, export, antitrust, and anti-corruption laws, or regulatory restrictions relating to the company or its subsidiaries or the permissibility of third-parties to transact therewith; the inability to realize sufficient sales to cover non-cancellable purchase obligations under certain ECS distribution agreements; management transitions, including the company's search for a permanent CEO; the incurrence of unanticipated charges or failure to realize contemplated cost savings in connection with the Operating Expense Efficiency Plan; changes in product supply, pricing, and customer demand; increased profit-margin pressure resulting from industry conditions, competition, or other factors; changes in relationships with key suppliers; other vagaries in the Global Components and the Global ECS markets; changes to applicable laws, regulations, executive orders, or rules relating to government contractors and the resulting legal and reputational exposure, including but not limited to those relating to environmental, social, governance, cybersecurity, data privacy, and artificial intelligence issues; commercial disputes, patent infringement claims, product liability lawsuits, or other legal proceedings; foreign tax and other loss contingencies; failure, disruption, or compromise of the company's information systems or those of a third-party service provider, including unauthorized use or disclosure of company, supplier, or customer information; outbreaks, epidemics, pandemics, or public health crises; the effects of natural or man-made catastrophic events; and the company's ability to generate positive cash flow. For a further discussion of these and other factors that could cause the company's future results to differ materially from any forward-looking statements, see the section entitled "Risk Factors" in this Quarterly Report on Form 10-Q and the company's most recent Annual Report on Form 10-K, as well as in other filings the company makes with the Securities and Exchange Commission. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The company undertakes no obligation to update publicly or revise any of the forward-looking statements.

Certain Non-GAAP Financial Information

In addition to disclosing financial results that are determined in accordance with GAAP, the company also discloses certain non-GAAP financial information in the sections below captioned "Sales," "Gross Profit," "Operating Expenses," "Operating Income," "Income Tax," and "Net Income Attributable to Shareholders." Refer to these sections below for reconciliations of non-GAAP financial measures to the most directly comparable reported GAAP financial measures. Non-GAAP financial information includes the following:

●

Non-GAAP sales exclude the impact of changes in foreign currencies by retranslating prior period results at current period foreign exchange rates.

●

Non-GAAP gross profit excludes inventory recoveries related to the wind down of businesses within Global Components ("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 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) gain on investments, net, and tax adjustments related to wind down of a business.

Management believes that providing this additional information is useful to better assess and understand the company's operating performance and future prospects in the same manner as management, especially when comparing results with previous periods. Management typically monitors the business as adjusted for these items, in addition to GAAP results, to understand and compare operating results across accounting periods, for internal budgeting purposes, for short-term and long-term operating plans, and to evaluate the company's financial performance. However, analysis of results on a non-GAAP basis should be used as a complement to, and in conjunction with, data presented in accordance with GAAP. For a discussion of what is included within "Restructuring, integration, and other" refer to the similarly captioned sections of this item below.

Key Business Metrics

Management uses gross billings as an operational metric to monitor the operating performance of Global ECS, including performance by geographic region, as it provides meaningful supplemental information in evaluating the overall performance of the Global ECS business. 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 specified period and does not include the impact of recording sales on a net basis or sales adjustments, such as trade discounts and other allowances. Refer to Note 1 - "Summary of Significant Accounting Policies" in the company's Annual Report on Form 10-K for the year ended December 31, 2025, 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.

Overview

The company 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. The company's revenues originate primarily from the sales of semiconductor products, IP&E components, and IT hardware and software. Equipped with a range of services, solutions, and tools, the company enables its suppliers to distribute their technologies and helps its industrial and commercial customers source, build, and leverage these technologies, reduce their time to market, grow their businesses, and enhance their overall competitiveness. The company is a trusted partner in a complex value chain and is uniquely positioned through its electronic components and IT content portfolios to enhance value and market opportunities for stakeholders.

The company has two reportable segments, Global Components and Global ECS. Global Components, enabled by an extensive portfolio of value-added capabilities and services, markets and distributes electronic components primarily to OEMs and EMS providers. Global ECS is a leading value-added provider of comprehensive computing solutions and services. Its portfolio includes datacenter, cloud, security, and analytics solutions. Global ECS offers broad market access, extensive supplier relationships, scale, and value-added solutions to enable its VARs and MSPs to meet the needs of their end-users. For the first quarter of 2026, approximately 70% and 30% of the company's sales were from Global Components and Global ECS, respectively.

The company's strategic initiatives include:

Global Components:

●

Shifting toward an increased mix of higher-margin value-added services, including engineering, integration and supply chain services by offering procurement, logistics, warehousing, and insights from data analytics, which generally leads to longer and more profitable relationships with the company's suppliers and customers.

●

Striving to further penetrate the market for IP&E, which tends to be a margin-accretive segment of the broader available market.

Global ECS:

●

Enabling customer cloud-based solutions through ArrowSphere, the company's cloud marketplace and management platform, which helps VARs and MSPs to manage, differentiate, and scale their cloud businesses while providing the business intelligence and tools that IT solution providers need to drive growth. ArrowSphere includes an AI-enabled digital go-to-market platform aimed at helping the company's channel partners sell and support a variety of cloud offerings at higher rates.

●

Providing value-added distribution services including sales and marketing, demand generation, support and managed services, digital platforms, and other services on behalf of certain suppliers.

Executive Summary


	Quarter Ended
	April 4,			March 29,
(millions except per share data)	2026			2025			Change
Consolidated sales	$	9,474		$	6,814		39.0	%
Global Components sales	$	6,640		$	4,778		39.0	%
Global ECS sales	$	2,833		$	2,036		39.1	%
Gross profit margin		11.5	%		11.4	%	10	bps
Non-GAAP gross profit margin		11.5	%		11.3	%	20	bps
Operating income	$	362		$	159		128.1	%
Operating income margin		3.8	%		2.3	%	150	bps
Non-GAAP operating income	$	401		$	179		124.2	%
Non-GAAP operating income margin		4.2	%		2.6	%	160	bps
Net income attributable to shareholders	$	235		$	80		194.9	%
Earnings per share attributable to shareholders - diluted	$	4.55		$	1.51		201.3	%
Non-GAAP net income attributable to shareholders	$	270		$	95		185.0	%
Non-GAAP earnings per share attributable to shareholders - diluted	$	5.22		$	1.80		190.0	%

The sum of sales by reportable segments may not agree to consolidated sales, as presented, due to rounding.

During the first quarter of 2026, changes in foreign currencies increased sales by approximately $273.5 million, operating income by $6.9 million, and earnings per share on a diluted basis by $0.07 compared to the year-earlier period.

Business environment and other trends:

●

In the first quarter of 2026, the company continued to experience stronger demand trends as a result of sustained market strength in all regions within Global Components. As the market strength continues, the company is prioritizing profitable growth through careful management of mix, costs, and working capital and aligning investments with the pace of demand. Given the geopolitical and economic uncertainty, the company cannot currently predict whether this trend will continue or how it may impact future quarters.

●

In the first quarter of 2026, Global Components and Global ECS benefitted from increased demand related to AI, due to widespread rapid expansion of AI infrastructure. This increased demand is contributing to pockets of constrained inventory and extended lead times. The company expects the AI demand trend to continue in the coming quarters, but results will depend on future developments that are highly uncertain and cannot be predicted with confidence.

●

Within Global ECS, the company entered into certain non-cancellable multi-year purchase obligations through 2032, designating it as the exclusive partner for certain products and granting it the right to sell a broad set of IT solutions. In the first quarter of 2026, the company recorded a loss due to lower profit expectations on a certain underperforming contract which negatively impacted gross profit margins. The company is committed to focusing on optimizing, enhancing and scaling these offerings. Due to the length and expected variability in the margins related to these contracts, the long-term performance of the agreements cannot be reasonably estimated at this time, and the company is anticipating there could be additional losses in the coming quarters on certain agreements.

●

The company's global business continues to face uncertainty around ongoing developments related to U.S. and foreign tariff policies and is continuing to evaluate and further implement mitigating actions, including supply chain optimization and improved solutions around processing tariffs. Global Components continues to see a marginal increase in revenue and cost of sales due to price increases. Given the uncertain and evolving nature of U.S. and foreign tariff policies, the company cannot currently predict whether this trend will continue or how it may impact future quarters. Refer to Part I, Item 1A - Risk Factors in the company's Annual Report on Form 10-K for the year ended December 31, 2025, for further discussion related to tariffs and tariff drawbacks.

Results of Operations

Sales by reportable segment

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


		Quarter Ended
		April 4,			March 29,
(millions)		2026			2025			Change
Consolidated sales, as reported		$	9,474		$	6,814		39.0	%
Impact of changes in foreign currencies			-			274
Non-GAAP consolidated sales		$	9,474		$	7,088		33.7	%

Global Components sales, as reported		$	6,640		$	4,778		39.0	%
Impact of changes in foreign currencies			-			155
Non-GAAP Global Components sales		$	6,640		$	4,932		34.6	%

Global ECS sales, as reported		$	2,833		$	2,036		39.1	%
Impact of changes in foreign currencies			-			119
Non-GAAP Global ECS sales		$	2,833		$	2,155		31.5	%

The sum of the components for sales, as reported, and sales on a non-GAAP 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:


	Quarter Ended
	April 4,				March 29,
	2026				2025
(millions)	Sales		% of Sales		Sales		% of Sales		Change
Americas Components sales	$	2,312	24.4	%	$	1,569	23.0	%	47.4	%
EMEA Components sales		1,765	18.6	%		1,340	19.8	%	31.7	%
Asia/Pacific Components sales		2,563	27.1	%		1,869	27.3	%	37.1	%
Global Components sales	$	6,640	70.1	%	$	4,778	70.1	%	39.0	%

Americas ECS sales	$	1,185	12.5	%	$	910	13.4	%	30.2	%
EMEA ECS sales		1,648	17.4	%		1,126	16.5	%	46.3	%
Global ECS sales	$	2,833	29.9	%	$	2,036	29.9	%	39.1	%
Consolidated sales	$	9,474	100.0	%	$	6,814	100.0	%	39.0	%

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

The increase in Global Components sales compared to the year-earlier period, was primarily due to increased demand related to sustained market strength and AI related growth, most notably in the following verticals:

●

aerospace and defense, industrial, and transportation in the Americas region;

●

industrial, transportation, and aerospace and defense in the EMEA region; and

●

computing, industrial, consumer, and networking and communications in the Asia/Pacific region.

The increase in Global ECS sales compared to the year-earlier period, was primarily attributable to growth across most major technologies, most notably, cloud-based solutions and infrastructure software. Additionally, as a result of the timing of the quarter end, the first quarter of 2026 included four extra shipping days compared to the first quarter of 2025, which increased Global ECS sales.

The increase in consolidated sales compared to the year-earlier period was also impacted by changes in foreign currencies relative to the U.S. dollar.

Gross Billings

Following is an analysis of gross billings by geographic region for Global ECS:


		Quarter Ended
		April 4,			March 29,
(millions)		2026			2025			Change
Americas ECS gross billings		$	2,960		$	2,308		28.2	%
EMEA ECS gross billings			3,474			2,331		49.0	%
Global ECS gross billings		$	6,433		$	4,639		38.7	%

The sum of the components for Global ECS gross billings may not agree to totals, as presented, due to rounding.

Gross Profit

Following is an analysis of the company's gross profit by reportable segment:


		Quarter Ended
		April 4,			March 29,
(millions)		2026			2025			Change
Consolidated gross profit, as reported		$	1,090		$	774		40.9	%
Impact of wind down to inventory			(2)			(2)
Impact of changes in foreign currencies			-			33
Non-GAAP consolidated gross profit		$	1,088		$	804		35.3	%
Consolidated gross profit as a percentage of sales, as reported			11.5	%		11.4	%	10	bps
Non-GAAP consolidated gross profit as a percentage of sales			11.5	%		11.3	%	20	bps

Global Components gross profit, as reported		$	807		$	555		45.4	%
Impact of wind down to inventory			(2)			(2)
Impact of changes in foreign currencies			-			18
Non-GAAP Global Components gross profit		$	805		$	570		41.1	%
Global Components gross profit as a percentage of sales, as reported			12.1	%		11.6	%	50	bps
Non-GAAP Global Components gross profit as a percentage of sales			12.1	%		11.6	%	50	bps

Global ECS gross profit, as reported		$	284		$	219		29.5	%
Impact of changes in foreign currencies			-			15
Non-GAAP Global ECS gross profit		$	284		$	234		21.3	%
Global ECS gross profit as a percentage of sales, as reported			10.0	%		10.8	%	(80)	bps
Non-GAAP Global ECS gross profit as a percentage of sales			10.0	%		10.8	%	(80)	bps

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

Global Components gross profit margins increased during the first quarter of 2026, compared with the year-earlier period, driven by changes in sales discussed above. Global Components supply chain services offerings continued to have a positive impact on gross profit margins.

Global ECS gross profit margins decreased during 2026, compared with the year-earlier period, due to supplier mix and a $21.7 million loss related to underperformance of a certain non-cancellable multi-year purchase obligation.

Operating Expenses

Following is an analysis of the company's operating expenses as of:


		Quarter Ended
		April 4,			March 29,
(millions)		2026			2025			Change
Consolidated operating expenses, as reported		$	729		$	615		18.4	%
Identifiable intangible asset amortization			(5)			(5)
Restructuring, integration, and other			(37)			(17)
Impact of changes in foreign currencies			-			24
Non-GAAP consolidated operating expenses		$	687		$	617		11.4	%
Consolidated operating expenses as a percentage of sales			7.7	%		9.0	%	(130)	bps
Non-GAAP consolidated operating expenses as a percentage of non-GAAP sales			7.3	%		8.7	%	(140)	bps

Global Components operating expenses, as reported		$	443		$	384		15.6	%
Identifiable intangible asset amortization			(4)			(4)
Impact of changes in foreign currencies			-			14
Non-GAAP Global Components operating expenses		$	439		$	394		11.6	%
Global Components operating expenses as a percentage of sales			6.7	%		8.0	%	(130)	bps
Non-GAAP Global Components operating expenses as a percentage of non-GAAP sales			6.6	%		8.0	%	(140)	bps

Global ECS operating expenses, as reported		$	180		$	142		27.0	%
Identifiable intangible asset amortization			(1)			(1)
Impact of changes in foreign currencies			-			10
Non-GAAP Global ECS operating expenses		$	179		$	150		19.0	%
Global ECS operating expenses as a percentage of sales			6.4	%		7.0	%	(60)	bps
Non-GAAP Global ECS operating expenses as a percentage of non-GAAP sales			6.3	%		7.0	%	(70)	bps

Corporate operating expenses, as reported		$	106		$	90		17.2	%
Restructuring, integration, and other			(37)			(17)
Non-GAAP corporate operating expenses		$	69		$	73		(5.3)	%

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

Operating expenses increased during the first quarter of 2026 compared to the year-earlier period, primarily due to an increase in:

●

Global Components primarily due to increased employee related costs and higher sales incentives, in line with the increase in sales discussed above;

●

Global ECS primarily due to increased employee related costs, higher sales incentives, in line with the increase in sales discussed above, and costs to expand the business related to the multi-year non-cancellable purchase obligations discussed above;

●

corporate operating expenses primarily due to an increase in restructuring, integration and other charges (see discussion below) and an increase in employee related costs, partially offset by timing of stock-based compensation expense mainly due to certain awards granted in the current year; and

●

changes in foreign currencies relative to the U.S. dollar.

Restructuring, Integration, and Other

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


		Quarter Ended
		April 4,			March 29,
(millions)		2026			2025
Restructuring, integration and related costs
Operating Expense Efficiency Plan costs (a)		$	31		$	9
Other plans			2			1
Other expenses
Operating expense reduction costs not related to restructuring initiatives (b)			1			4
Other charges			3			3
Total		$	37		$	17

The sum of the components for restructuring, integration, and other may not agree to totals, as presented, due to rounding.

(a)	See details related to the Operating Expense Efficiency Plan discussed below.

(b)	These costs are primarily related to employee severance and benefit costs. As of April 4, 2026, the accrued liabilities related to these costs totaled $13.8 million and substantially all accrued amounts are expected to be spent in cash within two years.

Operating Expense Efficiency Plan

On October 31, 2024, in response to evolving business needs and as part of an initiative to optimize operating expenses, the company announced a multi-year restructuring plan (the "Operating Expense Efficiency Plan" or "the Plan"). The Plan is designed to improve operational efficiency through the following measures: (i) reorganizing and consolidating certain areas of the company's operations to centralize functions and streamline resources, with a focus on more cost-efficient regions; (ii) enhancing warehouse and logistics operations; (iii) investing in IT to support automation and process improvements; (iv) consolidating the company's global real estate footprint; (v) reducing third-party spending; and (vi) winding down certain non-core businesses that are not aligned with the company's strategic objectives. The company expects to substantially complete the Plan by the end of fiscal year 2026, subject to, among other things, local legal and consultation requirements.

Under the Plan, the company anticipates to incur pre-tax restructuring charges of approximately $200.0 million. While the composition of these costs will continue to evolve over time, the company currently expects to incur approximately $100.0 million of employee severance and other personnel cash expenditures; approximately $65.0 million of non-cash asset impairments, inventory (recoveries) write-downs and CTA write-offs related to the wind down of certain business operations; and approximately $35.0 million of other related cash expenditures. As a result of the company's philosophy of maximizing operating efficiencies through the centralization of certain functions, restructuring, integration, and related costs are included in the corporate line item for management and segment reporting as they are not attributable to the individual reportable segments.

As a result of the Plan, the company expects to reduce annual operating expenses by approximately $90.0 million to $100.0 million by the end of fiscal year 2026. The company is reinvesting a portion of these savings into various strategic initiatives as well as variable costs to support sales growth. The estimates of charges or savings related to the Plan could differ materially from actual charges or savings recognized.

Refer to Note I, "Restructuring, Integration, and Other" of the Notes to the Consolidated Financial Statements for further discussion of the company's restructuring and integration activities.

Operating Income

Following is an analysis of the company's operating income by reportable segment:


		Quarter Ended
		April 4,			March 29,
(millions)		2026			2025			Change
Consolidated operating income, as reported		$	362		$	159		128.1	%
Identifiable intangible asset amortization			5			5
Restructuring, integration, and other			37			17
Impact of wind down to inventory			(2)			(2)
Non-GAAP consolidated operating income		$	401		$	179		124.2	%
Consolidated operating income as a percentage of sales			3.8	%		2.3	%	150	bps
Non-GAAP consolidated operating income as a percentage of sales			4.2	%		2.6	%	160	bps

Global Components operating income, as reported		$	364		$	171		112.1	%
Identifiable intangible asset amortization			4			4
Impact of wind down to inventory			(2)			(2)
Non-GAAP Global Components operating income		$	365		$	173		110.6	%
Global Components operating income as a percentage of sales			5.5	%		3.6	%	190	bps
Non-GAAP Global Components operating income as a percentage of sales			5.5	%		3.6	%	190	bps

Global ECS operating income, as reported		$	104		$	77		34.2	%
Identifiable intangible asset amortization			1			1
Non-GAAP Global ECS operating income		$	105		$	78		33.8	%
Global ECS operating income as a percentage of sales			3.7	%		3.8	%	(10)	bps
Non-GAAP Global ECS operating income as a percentage of sales			3.7	%		3.8	%	(10)	bps

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

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

The increase in consolidated operating income as a percentage of sales for the first quarter of 2026 compared to the year-earlier period relates primarily to the changes in sales and gross profit margins discussed above.

Interest and Other Financing Expense, Net

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


		Quarter Ended
		April 4,			March 29,
(millions)		2026			2025
Interest and other financing expense, net		$	(48)		$	(56)

The decrease in interest and other financing expenses, net for the first quarter of 2026 compared to the year-earlier period is primarily related to reduced interest cost as a result of additional cash within cash pooling accounts. Refer to the section below titled "Liquidity and Capital Resources" for more information on changes in borrowings.

Income Tax

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

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


		Quarter Ended
		April 4,		March 29,
		2026		2025
Effective income tax rate		23.2	%	22.6	%
Identifiable intangible asset amortization		0.1	%	0.1	%
Restructuring, integration, and other		(0.1)	%	0.2	%
Loss on investments, net		(0.1)	%	-	%
Impact of wind down to inventory		(0.1)	%	-	%
Non-GAAP effective income tax rate		23.0	%	22.9	%

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

The year-over-year change in the effective tax rate for 2026 was primarily driven by a shift in jurisdictional mix of earnings, the impact of foreign currency exchange rate fluctuations in certain locations, the tax treatment of stock-based compensation, and adjustments to reserves for uncertain tax positions.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted, significantly amending U.S. federal tax law, including changes to international tax provisions, expensing of research and experimental expenditures, depreciation, and interest deduction rules. The company does not expect the OBBBA to have a material impact on its effective tax rate.

Net Income Attributable to Shareholders

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


		Quarter Ended
		April 4,			March 29,
(millions)		2026			2025
Net income attributable to shareholders, as reported		$	235		$	80
Identifiable intangible asset amortization*			5			5
Restructuring, integration, and other			37			17
Loss on investments, net			6			-
Impact of wind down to inventory			(2)			(2)
Tax effect of adjustments above			(10)			(5)
Non-GAAP net income attributable to shareholders		$	270		$	95

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

* For the first quarter of 2025, identifiable intangible asset amortization excludes amortization attributable to the noncontrolling interests.

The increase in net income attributable to shareholders in the first quarter of 2026 compared to the year-earlier period relates primarily to changes in sales and gross margins as discussed above.

Liquidity and Capital Resources

Management believes that the company's current cash availability, its current borrowing capacity under its revolving credit facility and asset securitization programs, and its expected ability to generate future operating cash flows are sufficient to meet its projected cash flow needs for the next 12 months and the foreseeable future. The company's current committed and undrawn liquidity stands at approximately $3.2 billion in addition to $286.5 million of cash on hand at April 4, 2026. The company also may issue debt or equity securities in the future, and management believes the company will have adequate access to the capital markets, if needed. The company continually evaluates its liquidity requirements and may seek to amend its existing borrowing capacity or access the financial markets as deemed necessary.

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

The following table presents selected financial information related to liquidity:


		April 4,			December 31,
(millions)		2026			2025			Change
Working capital		$	6,944		$	7,437		$	(493)
Cash and cash equivalents			287			306			(19)
Short-term debt			113			-			113
Long-term debt			2,352			3,085			(733)

Working Capital

The company maintains a significant investment in working capital, which the company defines as accounts receivable, net, plus inventories less accounts payable. The decrease in working capital during the first quarter of 2026, compared to the year-earlier period, was primarily attributable to the timing of settlements, most notably within the Global Components supply chain services offerings. Refer to Note E "Accounts Receivable" of the Notes to the Consolidated Financial Statements. The decrease in working capital is partially offset by higher inventory purchases to support future growth.

Working capital as a percentage of sales, which is defined as working capital divided by annualized quarterly sales, decreased to 18.3% for the first quarter of 2026, compared to 23.3% in the year-earlier period. The decrease in working capital as a percentage of sales was primarily due to increased sales.

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments, which are readily convertible into cash, with original maturities of three months or less. At April 4, 2026 and December 31, 2025, the company had cash and cash equivalents of $286.5 million and $306.5 million, respectively, of which $264.2 million and $241.6 million, respectively, were held outside the United States.

The company has $5.7 billion of undistributed earnings of its foreign subsidiaries which it deems indefinitely reinvested, and recognizes that it may be subject to additional foreign taxes and U.S. state income taxes if it reverses its indefinite reinvestment assertion on these foreign earnings. The company also has $2.2 billion of foreign earnings that are not deemed permanently reinvested and are available for distribution in future periods as of April 4, 2026.

Revolving Credit Facilities and Debt

The following tables summarize the company's credit facilities:


					Outstanding Borrowings
		Borrowing			April 4,			December 31,
(millions)		Capacity			2026			2025
North American asset securitization program		$	1,500		$	300		$	970
Revolving credit facility			2,000			48			-
Commercial paper program (a)			1,200			-			-
Uncommitted lines of credit			400			-			-

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


		Average Daily Balance Outstanding
		Quarter Ended						Effective Interest Rate
		April 4,			March 29,			April 4,		March 29,
(millions)		2026			2025			2026		2025
North American asset securitization program		$	772		$	552		4.16	%	4.82	%
Revolving credit facility			46			1		4.77	%	5.47	%
Commercial paper program			351			348		4.04	%	4.79	%
Uncommitted lines of credit			166			263		4.08	%	4.82	%

The company also has an EMEA asset securitization program under which it continuously sells its interest in designated pools of trade accounts receivable of certain of its subsidiaries in the EMEA region. Receivables sold under the program are excluded from "Accounts receivable, net" and no corresponding liability is recorded on the company's consolidated balance sheets. During the first quarter of 2026 and 2025, the average daily balance outstanding under the EMEA asset securitization program was $347.5 million and $307.9 million, respectively. Refer to Note E "Accounts Receivable" of the Notes to the Consolidated Financial Statements for further discussion.

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


(millions)		Activity		Date		Notional Amount
Uncommitted lines of credit		Decrease in Capacity		February 2026		$	100
4.00% notes, due April 2025		Repaid		April 2025		$	350

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

Cash Flows

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


		Quarter Ended
		April 4,			March 29,
(millions)		2026			2025			Change
Net cash provided by operating activities		$	700		$	352		$	348
Net cash used for investing activities			(32)			(25)			(7)
Net cash used for financing activities			(649)			(342)			(307)

Cash Flows from Operating Activities

The net amount of cash provided by the company's operating activities during the first quarter of 2026 and 2025 was $699.8 million and $351.7 million, respectively. The change in cash provided by operating activities during 2026, compared to the year-earlier period, relates primarily to changes in income from operations and timing of settlement of

accrued expenses and other assets and liabilities. The fluctuations in both "Accounts receivable, net" and "Accounts payable" are primarily related to the Global Components supply chain services offerings and are typically correlated as the company acts as an intermediary in the transaction and remits payments to the supplier upon receipt from the customer. Refer to Note E "Accounts Receivable" of the Notes to the Consolidated Financial Statements.

Cash Flows from Investing Activities

The net amount of cash used for investing activities for the first quarter of 2026 and 2025 was $32.1 million and $25.0 million, respectively. The change in cash used for investing activities compared to the year-earlier period remained flat.

Cash Flows from Financing Activities

The net amount of cash used for financing activities during the first quarter of 2026 and 2025 was $648.7 million and $342.1 million, respectively. The change in cash used for financing activities relates primarily due to an increase in repayments of long-term borrowings, net in 2026.

Capital Expenditures

Capital expenditures for the first quarter of 2026 and 2025 were $32.1 million and $25.0 million, respectively. The company expects capital expenditures to be approximately $100.0 million for fiscal year 2026.

Share Repurchase Program

The company repurchased 0.2 million shares of its common stock for $25.0 million and 0.5 million shares of its common stock for $49.9 million in the first quarter of 2026 and 2025, respectively, under its share repurchase program, excluding excise taxes. As of April 4, 2026, approximately $147.9 million remained available for repurchase under the share repurchase program. The share repurchase authorization does not have an expiration date and the pace of the repurchase activity will depend on factors such as the company's working capital needs, cash requirements for acquisitions, debt repayment obligations or repurchases of debt, share price, and economic and market conditions. The share repurchase program may be accelerated, suspended, delayed, or discontinued at any time subject to the approval of the company's Board of Directors.

Contractual Obligations

The company has contractual obligations for short-term and long-term debt, interest on short-term and long-term debt, purchase obligations, operating leases, and other sources and uses of capital that are summarized in the sections titled "Contractual Obligations" and "Additional Capital Requirements and Sources" in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in the company's Annual Report on Form 10-K for the year ended December 31, 2025.

Refer to the section above titled "Revolving Credit Facilities and Debt" for updates to the company's short-term and long-term debt obligations. Refer to the section above titled "Restructuring, Integration, and Other" for updates related to discussion of planned restructuring costs. Refer to Note H "Financial Instruments Measured at Fair Value" of the Notes to Consolidated Financial Statements for further discussion on hedging activities.

As of April 4, 2026, the company had purchase obligations of $26.0 billion, which 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 with $13.8 billion expected to be paid in the nine months of 2026, $4.0 billion in 2027, $2.5 billion in 2028, $2.0 billion in 2029, $1.6 billion in 2030, and $1.2 billion in 2031.

With the exception of the item noted above, there were no other material changes to "Contractual Obligations" and "Additional Capital Requirements and Sources" of the company as of April 4, 2026.

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 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. The company has established detailed policies and control procedures intended to ensure the appropriateness of such estimates and assumptions and their consistent application from period to period. 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.

There have been no significant changes to the company's critical accounting estimates for the quarter ended April 4, 2026. For more information, refer to the section titled "Critical Accounting Estimates" in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in the company's Annual Report on Form 10-K for the year ended December 31, 2025.

Impact of Recently Issued Accounting Standards

See Note B "Impact of Recently Issued Accounting Standards" of the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements, including the anticipated dates of adoption and the effects on the company's consolidated financial position and results of operations.

Arrow Electronics Inc. published this content on May 07, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 07, 2026 at 11:17 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]