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Arrow Electronics (ARW) Q2 Earnings & Revenues Top Estimates

·5 min read

Arrow Electronics ARW reported impressive second-quarter 2022 results. The company’s adjusted earnings of $5.78 per share beat the Zacks Consensus Estimate of $5.57. The bottom line improved by a whopping 73% on a year-over-year basis.

In the second quarter of 2022, the company reported revenues of $9.46 billion, up 10% from the year-ago quarter. Excluding the impact of unfavorable currency exchange rates, sales increased 14%. The top line surpassed the Zacks Consensus Estimate by 1.22%.

Arrow Electronics has been witnessing the increasing demand for electronic components and software, cloud and security solutions. However, supply-chain constraints have been limiting its ability to capitalize on the growing demand.

Arrow Electronics, Inc. Price, Consensus and EPS Surprise

Arrow Electronics, Inc. Price, Consensus and EPS Surprise
Arrow Electronics, Inc. Price, Consensus and EPS Surprise

Arrow Electronics, Inc. price-consensus-eps-surprise-chart | Arrow Electronics, Inc. Quote

Segment Details

Adjusted revenues from Global Components increased 16% year over year to $7.46 billion. Region-wise, the segment’s revenues from America jumped 26% year over year. Adjusted sales from Europe increased 37% year over year. Global Components’ sales in the Asia Pacific region were up 1% on a year-over-year basis.

Adjusted revenues from Global Enterprise Computing Solutions (“ECS”) were $2 billion, up 8% year over year. Region-wise, the segment’s revenues from America fell 1%, while Europe’s revenues increased 21%.

The non-GAAP operating income from Global Components and Global ECS were $531 million and $86 million, respectively.

Margins

Arrow Electronics’ non-GAAP gross profit climbed 24% to $1.24 billion in the second quarter from the prior-year quarter’s $1 billion. Non-GAAP gross margin expanded 140 basis points (bps) year over year to 13.1%.

Non-GAAP operating income surged 51.7% to $544.2 million in the second quarter of 2022 from the year-ago quarter’s $358.8 million. Non-GAAP operating margin grew 160 bps to 5.8%.

Balance Sheet and Cash Flow

Arrow Electronics exited the second quarter with cash and cash equivalents of $225.6 million compared with the previous quarter’s $242.8 million.

The long-term debt was $2.86 billion, higher than $2.79 billion at the end of the first quarter of 2022.

The New York-based electronic components distributor used $82.6 million of cash for operating activities during the reported quarter. In the first six months of 2022, the company utilized $282.8 million worth operating cash flow.

In the second quarter of 2022, ARW returned $225 million worth of shares to its shareholders through the stock-repurchase program. It has $288 million remaining under its current share-repurchase authorization.

Guidance

For the third quarter of 2022, sales are estimated between $8.92 billion and $9.52 billion.

Global Components sales are projected to be $7.17-$7.47 billion. Global ECS sales are anticipated in the band of $1.75 billion to $2.05 billion.

Interest expenses will presumably be about $46 million. As a result, the company projects non-GAAP earnings per share (EPS) in the range of $5.27 to $5.43.

Arrow Electronics expects changes in foreign currencies to decrease third-quarter sales by approximately $350 million and EPS by 25 cents.

Zacks Rank & Key Picks

Arrow currently carries a Zacks Rank #3 (Hold). Shares of ARW have climbed 0.5% in the past year.

Some better-ranked stocks from the broader Computer and Technology sector are Taiwan Semiconductor TSM, Clearfield CLFD and Silicon Laboratories SLAB, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Taiwan Semiconductor's third-quarter 2022 earnings has been revised 10 cents northward to $1.70 per share over the past 30 days. For 2022, earnings estimates have moved 37 cents north to $6.30 per share in the past 30 days.

TSM's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 3.9%. Shares of the company have decreased 25.2% in the past year.

The Zacks Consensus Estimate for Clearfield's fourth-quarter fiscal 2022 earnings has been revised upward by 10 cents to 80 cents per share over the past seven days. For fiscal 2022, earnings estimates have moved 36 cents north to $3.13 per share in the past seven days.

Clearfield’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 33.9%. Shares of CLFD have soared 143% in the past year.

The Zacks Consensus Estimate for Silicon Laboratories’ third-quarter 2022 earnings has increased 22.9% to $1.02 per share over the past seven days. For 2022, earnings estimates have moved 14.2% up to $4.18 per share in the past seven days.

Silicon Laboratories’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 63.6%. Shares of SLAB have decreased 2.2% in the past year.


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