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Arrow Electronics (ARW) Q2 Earnings & Revenues Top Estimates

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Arrow Electronics (ARW - Free Report) reported strong second-quarter 2021 results. The company’s adjusted earnings of $3.34 per share beat the Zacks Consensus Estimate of $2.91. The bottom line improved a whopping 110% on a year-over-year basis.

In the second quarter of 2021, the company reported revenues of $8.56 billion, up 30% from the year-ago quarter. The top line surpassed the consensus mark of $8.46 billion by a margin of 1.18%.

During this quarter this electronics maker witnessed an all-time record for quarterly revenues, gross profit and earnings per share on a diluted basis. The company’s Global Components sales saw growth across all regions with a whopping 49% upsurge from the Asia Pacific region.

Arrow Electronics has been witnessing increasing demand for electronic components and software, cloud and security solutions. However, supply chain constraints have been limiting its ability to capitalize on growing demand. In the Enterprise Computing Solutions (“ECS”) segment, spending priorities shifted toward workload management as firms started complicated and transformational projects.

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

Segmentary Details

Adjusted revenues from Global Components increased 40% year over year to $6.61 billion. Region-wise, the segment’s revenues from America surged 32% year over year. Adjusted sales from Europe increased 22% year over year. Global Components’ contribution from the Asia Pacific increased a whopping 49% to $3.1 billion.

Adjusted revenues from Global ECS were $1.95 billion, up 4% year over year. Region-wise, the segment’s adjusted revenues from the Americas fell 5%.

Global ECS’s contribution from Europe increased 19% on an adjusted basis.
Non-GAAP operating income from Global Components and Global ECS were $339 million and $83 million, respectively.

Margins

Arrow Electronics’ non-GAAP gross profit climbed 7.5% to $1 billion in this quarter from $930.1 million in the prior quarter.

Non-GAAP operating income increased by 14.1% to $358.8 in the April-June quarter from $314.5 million in the Jan-Mar quarter.

Balance Sheet and Cash Flow

Arrow Electronics exited the second quarter with cash and cash equivalents of $244.1 million compared with the previous quarter’s $227.7 million.

Long-term debt was $1.9 billion, flat with the previous quarter.

The NY-based electronic components distributor generated $281.4 million of cash in operating activities during the quarter.

In the second quarter of 2021, Arrow Electronics returned $250 million worth of shares to its shareholders through the stock-repurchase program. It has $663 million remaining under its current share repurchase authorization.

Guidance

For the third quarter of 2021, sales are estimated between $8.175 billion and $8.775 billion.

Global Components sales are projected at $6.375-$6.675 billion. Global ECS sales are anticipated to be $1.8-$2.1 billion.

Interest expenses will presumably be about $32 million. As a result, the company projects non-GAAP earnings per share at $3.42-$3.58.

The company expects changes in foreign currencies to increase third-quarter sales by approximately $40 million and earnings per share by 2 cents.

Zacks Rank and Key Picks

Arrow Electronics currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include:

Zovio Inc. (ZVO - Free Report) has a Zacks Rank #1 (Strong-Buy) and a long-term earnings growth rate of 20%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Blucora (BCOR - Free Report) has Zacks Rank #2 (Buy) and a long-term earnings growth rate of 15%.

Astronova (ALOT - Free Report) has Zacks Rank #2 and a long-term earnings growth rate of 12%.


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