Arrow Electronics ( ARW Quick Quote ARW - Free Report) reported mixed second-quarter 2023 results. The company’s adjusted earnings of $4.37 per share beat the Zacks Consensus Estimate of $4.33. However, the bottom line declined 24.4% on a year-over-year basis due to lower revenues and unfavorable foreign currency exchange rates.
In the second quarter of 2023, ARW reported revenues of $8.51 billion, down 10% from the year-ago quarter. The top line missed the Zacks Consensus Estimate by 2% due to unfavorable foreign currency exchange rates.
With supply-chain constraints improving, the company continued to witness normalization in shortage market activities and was able to deliver an enhanced quarterly performance.
Adjusted revenues from Global Components decreased 10% year over year to $6.68 billion. Our model estimates for Global Components sales were pegged at $6.78 billion, indicating a 9.1% decline. Region-wise, the segment’s revenues from Europe jumped 19%, while sales from the Americas and Asia-Pacific regions plunged 17% and 22%, respectively.
Adjusted revenues from Global Enterprise Computing Solutions (ECS) were $1.83 billion, dropped 8% year over year. Our model estimates for Global ECS sales were pegged at $1.87 billion, suggesting a 6.6% year-over-year fall. Region-wise, the segment’s revenues from America and Europe declined 14% and 1%, respectively.
The non-GAAP operating income from Global Components and Global ECS was $388 million and $87 million, respectively.
Arrow Electronics’ non-GAAP operating income plunged 24.6% to $410.5 million in the second quarter of 2023 from the year-ago quarter’s $544.2 million. The non-GAAP operating margin shrunk 100 basis points to 4.8%.
Balance Sheet and Cash Flow
Arrow Electronics exited the second quarter with cash and cash equivalents of $240.4 million compared with the previous quarter’s $205.6 million.
The long-term debt was $3.67 billion, down from $3.72 billion at the end of the previous quarter.
The New York-based electronic component distributor used $126.8 million in cash from operating activities in the reported quarter. During the first half of 2023, the company’s cash from operating activities was $97 million.
In the second quarter of 2022, ARW returned $200 million to its shareholders through share repurchases. It has approximately $824 million remaining under its current share repurchase authorization.
Third-Quarter 2023 Guidance
For the third quarter of 2023, sales are estimated between $7.78 billion and $8.38 billion.
Global Components sales are projected in the band of $6.00-$6.40 billion. Global ECS sales are anticipated between $1.78 billion and $1.98 billion.
Interest expenses are expected in the range of $85-$90 million. As a result, the company projects non-GAAP earnings per share in the band of $3.40-$3.60.
Arrow Electronics expects changes in foreign currencies to increase third-quarter sales by $212 million and earnings per share by 11 cents on a quarter-over-quarter basis.
Zacks Rank & Stocks to Consider
Currently, Arrow Electronics carries a Zacks Rank #3 (Hold). Shares of ARW have gained 18.6% over the past year.
Some better-ranked stocks from the broader
Computer and Technology sector are Salesforce ( CRM Quick Quote CRM - Free Report) , NVIDIA Corporation ( NVDA Quick Quote NVDA - Free Report) and Meta Platforms ( META Quick Quote META - Free Report) . While NVIDIA sports a Zacks Rank #1 (Strong Buy), Salesforce and Meta carry a Zacks Rank #2 (Buy) each at present. You can see . the complete list of today's Zacks #1 Rank stocks here The Zacks Consensus Estimate for NVIDIA’s second-quarter fiscal 2024 earnings has been steady at 92 cents per share over the past 90 days. For fiscal 2024, earnings estimates have moved up by 13 cents to $7.79 in the past 30 days. NVDA's earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing twice, the average surprise being 0.26%. Shares of the company have soared 134.3% in the past year. The Zacks Consensus Estimate for Salesforce’s second-quarter fiscal 2024 earnings has been revised southward by a penny to $1.60 per share over the past 60 days. For fiscal 2024, earnings estimates have moved up by 4 cents to $7.44 in the past 60 days. CRM's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 15.5%. Shares of the company have gained 16.3% in the past year. The Zacks Consensus Estimate for Meta Platforms' third-quarter 2023 earnings has been revised upward by 15.1% to $3.44 per share over the past seven days. For 2023, earnings estimates have moved north by 7.9% to $12.94 in the past seven days. META’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, missing once, the average surprise being 19%. Shares of the company have surged 86.2% in the past year.