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    arrow electronics Credit Suisse 2008 Annual Technology Conference Presentation arrow electronics Credit Suisse 2008 Annual Technology Conference Presentation Presentation Transcript

    • Credit Suisse 2008 Annual Technology Conference December 4, 2008
    • SAFE HARBOR STATEMENT This presentation may include forward-looking statements, including statements addressing future financial results. These statements are subject to a number of risks and uncertainties that could cause actual results or facts to differ materially from such statements for a variety of reasons including, but not limited to: industry conditions, the company’s implementation of its new global financial system and the company’s planned implementation of its new enterprise resource planning system, changes in product supply, pricing and customer demand, competition, other vagaries in the global components and global ECS markets, changes in relationships with key suppliers, increased profit margin pressure, the effects of additional actions taken to become more efficient or lower costs, the company’s ability to generate additional cash flow and the other risks described from time to time in the company’s reports to the Securities and Exchange Commission (including the company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q). Forward-looking statements are those statements, which are not statements of historical fact. These forward- looking statements can be identified by forward-looking words such as quot;expects,quot; quot;anticipates,quot; quot;intends,quot; quot;plans,quot; quot;may,quot; quot;will,quot; quot;believes,quot; quot;seeks,quot; quot;estimates,quot; and similar expressions. 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. Credit Suisse 2008 Annual Technology Conference
    • WE POWER THE SUPPLY CHAIN Arrow is in the center of a $420Bn market. We touch all geographies, all technologies, and all end markets. We connect key players in unique, value enhancing and sustainable ways Percentage of Revenue OUR REACH from Arrow Businesses Worldwide Presence 31% OUR SERVICES Arrow = Value Added Services OUR PRODUCTS Unmatched Line Card 69% > 600 Suppliers OUR PRODUCTS Unmatched Line Card OUR CUSTOMERS Global Components Diverse Customer Base Global Enterprise Computing Solutions Credit Suisse 2008 Annual Technology Conference
    • ARROW STRATEGY AT A GLANCE GROW THE OPERATIONAL FINANCIAL SHARED BUSINESS EXCELLENCE STABILITY LEADERSHIP Grow Faster Than Flawless Execution Timeless Business Build The Arrow The Market Global Enterprise Model Team Resource Planning (ERP) Strategy for the Future – Strengthen Arrow – Build the Team Strategy Leadership Execution Credit Suisse 2008 Annual Technology Conference
    • WELL POSITIONED “TO WEATHER THE STORM” We have fundamentally changed the way our company is run Tech Bust Today $2-2.50 in downside scenario EARNINGS FLOOR $.15 (10% reduction in sales) Strongest balance sheet in 10 BALANCE SHEET $3Bn in net debt and 65% yrs, $1Bn in net debt, net net debt/cap debt/cap ~20% WORKING CAPITAL WC/Sales of 15% WC/Sales of 25% CASH FLOW Cash flow positive throughout Cash generation only in the cycle down cycles Muted cyclicality Volatile patterns SUPPLY CHAIN Credit Suisse 2008 Annual Technology Conference
    • IN PARTICULAR, SINCE THE LAST DOWNTURN IN THE TECH SECTOR, WE HAVE REDUCED OUR LEVERAGE AND INCREASED OUR LIQUIDITY Estimated 12/31/00 12/31/08 ($ millions) Cash $ 56 $ 340 Debt Short Term $ 1,832 $ 50 Long Term 1,725 1,200 Total $3,557 $1,250 - $2,307 Shareholders’ equity $1,914 $3,620 + $1,706 Debt to cap. - gross 65% 26% - net 65% 20% Debt to EBITDA - gross 4.1x 1.8x - net 4.0x 1.3x Available liquidity $ 270 $1,400 Credit Suisse 2008 Annual Technology Conference
    • THERE ARE NO REQUIRED RE-FINANCINGS UNTIL 2010 WHEN WE RENEW OUR A/R SECURITIZATION PROGRAM AND LONG TERM DEBT MATURES Maturity Schedule of Existing Debt (in millions) $1,100 1000 900 800 700 600 $800 500 $600 400 300 200 $395 $350 100 $200 $200 $65 0 Short- 2009 2010 2011 2012 2013 2014 2015+ Term Senior Debt Bank Term Loan Short -Term Debt Revolving Credit Facility = $800 A/R Securitization = $600 Credit Suisse 2008 Annual Technology Conference
    • CASH FLOW POSITIVE INDEPENDENT OF MARKET CONDITIONS We have generated cash for seven consecutive years totaling $4.5Bn Cumulative Operating Cash Flow ($MM) Capital Allocation Strategy Invest in the business $5,000 $4,500 Acquisitions to strategically $4,000 accelerate growth that meet $3,500 our value criteria $3,000 Evaluate options to return $2,500 value to shareholders $2,000 $1,500 Maintain investment grade $1,000 rating over the long-term 2001 2002 2003 2004 2005 2006 2007 2008 YTD Credit Suisse 2008 Annual Technology Conference
    • CONTINUED OPERATIONAL IMPROVEMENT ROIC*** as % of WACC Net Sales ($Bn) $16.9 $16.0 125% $13.6 15% $11.2 $10.6 CAGR $8.5 $7.3 40% 2002 2003 2004 2005 2006 2007 2008* 2002 LTM Q308 Diluted EPS** Cumulative Operating Cash Flow ($MM) $3.29 $2.94 $2.92 $2,967 $2.18 $2,521 $1.97 64% $1,671 CAGR $1,550 $1,148 $960 $0.74 $668 $0.15 2002 2003 2004 2005 2006 2007 2008* 2002 2003 2004 2005 2006 2007 2008* *Represents 2008 YTD performance plus Q4 First Call consensus estimate. **Represents GAAP measure adjusted to exclude the impact of restructuring and other items affecting comparability. Includes estimated amortization of intangible assets ***ROIC = Tax effected op. inc. and equity earnings of affiliates excluding restructuring and other charges – annualized minority interest/(Avg Debt + Avg Equity – Avg Cash over $150MM). Credit Suisse 2008 Annual Technology Conference
    • CURRENT ECONOMIC BACKDROP Greater customer cautiousness “Recessionary” like environment in North America and Europe + Limited availability to credit restraining growth Limited visibility beyond 30 days Asia/Pacific growth slowing from “heated” levels Arrow outlook Q4 sales below 2007 levels Profits estimated at healthy $0.60 to $0.68 in EPS Strong cash flow generation Manage business prudently Remain true to long-term vision Seize opportunities as they arise Credit Suisse 2008 Annual Technology Conference
    • WELL POSITIONED “TO WEATHER THE STORM” Our strong financial position is a competitive advantage Leading position in Asia/Pacific No customer, supplier or geographic dependency Great defensive play Strong cash in growth period; stronger in recessionary times Eliminated $230 million in fixed costs over past 5 years Balance sheet and capital structure remain strong High-quality assets with minimal risk of write-down Conservative debt maturity profile with next maturity ($200 million) not until 2010 Debt to capital near record low level Access to $1.4Bn in committed liquidity facilities Flexibility to adjust our cost structure in response to changing market conditions Credit Suisse 2008 Annual Technology Conference
    • Credit Suisse 2008 Annual Technology Conference December 4, 2008