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Arrow Electronics Inc. (ARW - Free Report) reported better-then-expected first-quarter 2018 results. Both the top and the bottom lines topped the Zacks Consensus Estimate and improved on a year-over-year basis.
Arrow’s non-GAAP earnings of $1.88 per share came ahead of the Zacks Consensus Estimate of $1.82 per share. It also exceeded the guided range of $1.74-$1.86 (mid-point $1.80 per share). Moreover, earnings increased 28.8% from the year-ago quarter figure.
Quarter in Detail
Arrow’s revenues, on a reported basis, were $6.876 billion. On an adjusted basis, revenues were $6.848 billion. On a reported basis, the figure was up 19.9% and on an adjusted basis it was up 14.4% from the year-ago quarter. Quarterly revenues also surpassed the Zacks Consensus Estimate of $6.633 billion and came above the guided range of $6.4 billion and $6.8 billion (mid-point $6.6 billion).
On a reported basis, revenues from Global components increased 21.5% to $4.929 billion. On an adjusted basis, the figure grew 15.9%. Geographically, adjusted Global components revenues from Americas increased 12.8% and the reported figure increased 14.9% from the prior-year period. Revenues from Asia climbed 19.4%. On a reported basis, the figure increased 20.2%. Global components contribution from Europe rose approximately 15.9% on an adjusted basis and 32.2% on a reported basis from the year-ago quarter.
Revenues at Global Enterprise Computing Solutions (ECS) came in at $1.945 billion, up 16% year over year on a reported basis. On an adjusted basis, revenues increased 10.8% and totaled $1.918 billion. Adjusted ECS revenues from the Americas were up 11.9% while reported revenues were up 9.2% on a year-over-year basis. Reported ECS revenues from Europe increased 28.6% while adjusted revenues increased 9.2% from the year-ago period.
The company’s global components segment gained from industrial manufacturing and mass market customers during the quarter. Management stated that growth in electronic content is a major positive for the company. Additionally, strong demand from American and European aerospace and defense customers is a tailwind.
The Global ECS segment was backed by revival in hardware demand. Additionally, Value Added Resellers (VARS) are also showing interest in software-based solutions offered by Arrow Electronics.
Gross profit increased 14.2% to $868.9 million. On a year-over-year basis, operating expenses increased 11.4% but as a percentage of revenues decreased 70 basis points.
Arrow’s non-GAAP operating income was up 22.9% to $272.2 million on the back of increased operational efficiency. Non-GAAP operating margin of 3.98% was up 30 basis points. The company’s non-GAAP net income was $167.7 million compared with $132.1 million in the year-ago quarter.
Arrow exited the quarter with cash and cash equivalents of $548.6 million compared with $730.1 million reported in the previous quarter. Long-term debt was $3.533 billion compared with $2.933 billion at the end of the previous quarter. During the quarter, the company’s operating cash outflow was $75.07 million.
Arrow Electronics, Inc. Price, Consensus and EPS Surprise
For the second quarter of 2018, sales are expected between $7 billion and $7.4 billion (mid-point $7.2 billion). The Zacks Consensus Estimate is pegged at $7.07 billion. Global components sales are projected in the range of $5-$5.2 billion. Global enterprise computing solutions sales are estimated to be in the range of $2-$2.2 billion.
The company projects non-GAAP earnings per share in the range of $2.08-$2.20 per share (mid-point $2.14 per share). The Zacks Consensus Estimate is pegged at $2.02 per share.
Conclusion
Management is optimistic about the company’s expanding prominence in the fast growing industries like Internet of Things (IoT), industrial automation, smart vehicles, homes and cities.
Over the past year, the company has made several partnerships with the likes of International Business Machines and Ingenu in a bid to enhance its IoT capabilities, which will be beneficial for its financials going ahead.
Furthermore, the company’s inorganic additions are also proving worthy. The financial contribution of the acquisition of eInfochips that was completed in January 2018 was reflected in the Americas components segment in the just-reported quarter.
Management noted that operational efficiency helped the company increase earnings faster than revenues and they expect to sustain the momentum going forward.
Long-term EPS growth rate for Micron, Twitter and Lam Research is projected to be 10%, 17.7% and 23.1%, respectively.
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Arrow Electronics (ARW) Q1 Earnings Surpass Expectations
Arrow Electronics Inc. (ARW - Free Report) reported better-then-expected first-quarter 2018 results. Both the top and the bottom lines topped the Zacks Consensus Estimate and improved on a year-over-year basis.
Arrow’s non-GAAP earnings of $1.88 per share came ahead of the Zacks Consensus Estimate of $1.82 per share. It also exceeded the guided range of $1.74-$1.86 (mid-point $1.80 per share). Moreover, earnings increased 28.8% from the year-ago quarter figure.
Quarter in Detail
Arrow’s revenues, on a reported basis, were $6.876 billion. On an adjusted basis, revenues were $6.848 billion. On a reported basis, the figure was up 19.9% and on an adjusted basis it was up 14.4% from the year-ago quarter. Quarterly revenues also surpassed the Zacks Consensus Estimate of $6.633 billion and came above the guided range of $6.4 billion and $6.8 billion (mid-point $6.6 billion).
On a reported basis, revenues from Global components increased 21.5% to $4.929 billion. On an adjusted basis, the figure grew 15.9%. Geographically, adjusted Global components revenues from Americas increased 12.8% and the reported figure increased 14.9% from the prior-year period. Revenues from Asia climbed 19.4%. On a reported basis, the figure increased 20.2%. Global components contribution from Europe rose approximately 15.9% on an adjusted basis and 32.2% on a reported basis from the year-ago quarter.
Revenues at Global Enterprise Computing Solutions (ECS) came in at $1.945 billion, up 16% year over year on a reported basis. On an adjusted basis, revenues increased 10.8% and totaled $1.918 billion. Adjusted ECS revenues from the Americas were up 11.9% while reported revenues were up 9.2% on a year-over-year basis. Reported ECS revenues from Europe increased 28.6% while adjusted revenues increased 9.2% from the year-ago period.
The company’s global components segment gained from industrial manufacturing and mass market customers during the quarter. Management stated that growth in electronic content is a major positive for the company. Additionally, strong demand from American and European aerospace and defense customers is a tailwind.
The Global ECS segment was backed by revival in hardware demand. Additionally, Value Added Resellers (VARS) are also showing interest in software-based solutions offered by Arrow Electronics.
Gross profit increased 14.2% to $868.9 million. On a year-over-year basis, operating expenses increased 11.4% but as a percentage of revenues decreased 70 basis points.
Arrow’s non-GAAP operating income was up 22.9% to $272.2 million on the back of increased operational efficiency. Non-GAAP operating margin of 3.98% was up 30 basis points. The company’s non-GAAP net income was $167.7 million compared with $132.1 million in the year-ago quarter.
Arrow exited the quarter with cash and cash equivalents of $548.6 million compared with $730.1 million reported in the previous quarter. Long-term debt was $3.533 billion compared with $2.933 billion at the end of the previous quarter. During the quarter, the company’s operating cash outflow was $75.07 million.
Arrow Electronics, Inc. Price, Consensus and EPS Surprise
Arrow Electronics, Inc. Price, Consensus and EPS Surprise | Arrow Electronics, Inc. Quote
Guidance
For the second quarter of 2018, sales are expected between $7 billion and $7.4 billion (mid-point $7.2 billion). The Zacks Consensus Estimate is pegged at $7.07 billion. Global components sales are projected in the range of $5-$5.2 billion. Global enterprise computing solutions sales are estimated to be in the range of $2-$2.2 billion.
The company projects non-GAAP earnings per share in the range of $2.08-$2.20 per share (mid-point $2.14 per share). The Zacks Consensus Estimate is pegged at $2.02 per share.
Conclusion
Management is optimistic about the company’s expanding prominence in the fast growing industries like Internet of Things (IoT), industrial automation, smart vehicles, homes and cities.
Over the past year, the company has made several partnerships with the likes of International Business Machines and Ingenu in a bid to enhance its IoT capabilities, which will be beneficial for its financials going ahead.
Furthermore, the company’s inorganic additions are also proving worthy. The financial contribution of the acquisition of eInfochips that was completed in January 2018 was reflected in the Americas components segment in the just-reported quarter.
Management noted that operational efficiency helped the company increase earnings faster than revenues and they expect to sustain the momentum going forward.
Zacks Rank and Stocks to Consider
Currently, Arrow carries a Zacks Rank #3 (Hold).
Some of the better-ranked stocks in the broader technology sector are Micron Technology, Inc. (MU - Free Report) , Twitter, Inc. and Lam Research Corporation (LRCX - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term EPS growth rate for Micron, Twitter and Lam Research is projected to be 10%, 17.7% and 23.1%, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>