Financial Data and Key Metrics Changes - Consolidated sales for Q1 2025 were $6.8 billion, exceeding guidance and down 2% year-over-year, or flat on a constant currency basis [15] - Global Components sales were $4.8 billion, above guidance and down 1% sequentially, or flat in constant currency [16] - Enterprise Computing Solutions (ECS) sales were $2 billion, above guidance and up 18% year-over-year, or 19% higher in constant currency [16] - Non-GAAP gross margin for Q1 was 11.3%, down approximately 120 basis points year-over-year [17] - Non-GAAP diluted EPS for Q1 was $1.8, above the guided range [18] Business Line Data and Key Metrics Changes - Global Components business showed stronger-than-expected sales across all three regions, with notable momentum in EMEA [5][6] - ECS business delivered year-over-year growth in billings, gross profit, and operating income, with a backlog growth of over 50% year-over-year [11][12] Market Data and Key Metrics Changes - Book-to-bill ratios improved throughout the quarter and are now at or above parity in all three regions [8] - Customer inventory levels are trending towards replenishment, indicating a potential cyclical turning point in demand [9] Company Strategy and Development Direction - The company is focused on leveraging its global supply chain network to navigate trade complexities and mitigate tariff impacts [10] - Continued emphasis on value-added offerings, such as supply chain management and integration services, to enhance operating results [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving demand trends and a return to more normal seasonal patterns [9] - The company is preparing for a transitional Q2, with expectations of stronger trends in Asia and among larger OEM customers [20] Other Important Information - The company repurchased $50 million of shares in Q1, with a remaining repurchase authorization of approximately $275 million [19] - Cash flow from operations was $352 million in Q1, marking the seventh consecutive quarter of positive cash flow generation [19] Q&A Session Summary Question: Clarification on tariff impact on guidance - Management explained that the 2% to 4% increase in component sales due to tariffs is not included in the baseline guidance, as it reflects potential surcharges that may arise [24][28] Question: Customer inventory trends - Management indicated that while there are pockets of excess inventory, overall inventory levels are normalizing in line with demand signals [32][41] Question: ECS business performance and order acceleration - Management confirmed that the ECS outlook does not reflect any order acceleration, with steady growth expected in cloud and hybrid cloud technologies [47][48] Question: Visibility into future quarters - Management noted improving visibility into Q3 and Q4, driven by decreasing industry-wide inventory levels and growing backlog [56][58]

Financial Data and Key Metrics Changes - Consolidated sales for Q1 2025 were $6.8 billion, exceeding guidance and down 2% year-over-year, or flat on a constant currency basis [16] - Global Components sales were $4.8 billion, above guidance and down 1% sequentially, or flat in constant currency [16] - Enterprise Computing Solutions (ECS) sales were $2 billion, above guidance and 18% higher year-over-year, or 19% higher in constant currency [16] - Non-GAAP gross margin for Q1 was 11.3%, down approximately 120 basis points year-over-year [17] - Non-GAAP diluted EPS for Q1 was $1.8, above the guided range due to favorable sales results [18] Business Line Data and Key Metrics Changes - Global Components experienced stronger-than-expected sales across all three regions, with notable momentum in EMEA [5][6] - ECS delivered year-over-year growth in billings, gross profit, and operating income, with a backlog growth of over 50% year-over-year [12] - Global Components gross margin was 11.6%, while ECS gross margin was 10.8%, both on a non-GAAP basis [17] Market Data and Key Metrics Changes - Book-to-bill ratios improved throughout the quarter and are now at or above parity in all three regions [9] - Customer inventory levels are trending towards replenishment, indicating a potential cyclical turning point in demand [10] Company Strategy and Development Direction - The company is focused on leveraging its global supply chain network to mitigate the impacts of tariffs and improve supply chain visibility for customers [11] - The second quarter outlook reflects continued momentum in both business segments, with expectations for year-over-year growth in billings, gross profit, and operating income [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about modestly improving demand trends and the resilience of the company's teams during a cyclical correction [14] - The company anticipates stronger trends in Asia and across the larger OEM customer base as it moves into Q2 [10] Other Important Information - The company repurchased $50 million of shares in Q1, with a remaining repurchase authorization of approximately $275 million [19] - The impact of recent tariffs is uncertain, but the company has not factored them into its revenue guidance [20] Q&A Session Summary Question: Clarification on tariff impact on guidance - Management explained that the 2% to 4% increase in component sales due to tariffs is not included in the baseline guidance, as it reflects potential surcharges that could arise from tariffs [24][30] Question: Customer inventory trends - Management indicated that while there are pockets of excess inventory, overall inventory levels are normalizing in line with demand signals [33][41] Question: ECS business outlook - Management confirmed that the ECS outlook does not reflect any order acceleration and that growth is steady across cloud and traditional data center segments [48] Question: Visibility into future quarters - Management noted improving visibility into Q3 and Q4, driven by improved book-to-bill ratios and backlog growth [58]

Core Insights - Arrow Electronics reported $6.81 billion in revenue for Q1 2025, a year-over-year decline of 1.6%, with EPS of $1.80 compared to $2.41 a year ago, indicating a significant drop in earnings [1] - The revenue exceeded the Zacks Consensus Estimate by 7.93%, while the EPS surprised by 22.45% over the consensus estimate [1] Financial Performance - The company’s shares returned +5.9% over the past month, outperforming the Zacks S&P 500 composite, which saw a -0.7% change [3] - Arrow Electronics holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3] Geographic Revenue Breakdown - Americas revenue was $2.48 billion, surpassing the $2.38 billion estimate [4] - Asia Pacific revenue was $1.87 billion, slightly above the $1.80 billion estimate, reflecting a -3.6% year-over-year change [4] - EMEA revenue reached $2.47 billion, exceeding the $2.14 billion estimate, with a -0.6% change year-over-year [4] - EMEA ECS sales were reported at $1.13 billion, significantly above the $865.11 million estimate, showing a +36.5% year-over-year increase [4] - Global ECS net sales were $2.04 billion, exceeding the $1.76 billion estimate, with a +17.5% year-over-year change [4] - Global components net sales were $4.78 billion, surpassing the $4.55 billion estimate, but reflecting an -8% year-over-year decline [4] Operating Income - Global ECS non-GAAP operating income was $78.24 million, above the $75.20 million estimate [4] - Global components non-GAAP operating income was $173.36 million, exceeding the $155.75 million estimate [4]

Core Viewpoint - Arrow Electronics reported quarterly earnings of $1.80 per share, exceeding the Zacks Consensus Estimate of $1.47 per share, but down from $2.41 per share a year ago, indicating a 25.37% year-over-year decline in earnings [1] - The company achieved revenues of $6.81 billion for the quarter, surpassing the Zacks Consensus Estimate by 7.93%, although this represents a slight decrease from $6.92 billion in the same quarter last year [2] Financial Performance - Arrow Electronics has consistently surpassed consensus EPS estimates over the last four quarters, with an earnings surprise of 22.45% in the latest report [1][2] - The company has also topped consensus revenue estimates four times in the past four quarters, demonstrating strong performance in revenue generation [2] Stock Performance and Outlook - Arrow Electronics shares have declined approximately 1.6% since the beginning of the year, while the S&P 500 has decreased by 5.3%, indicating relative outperformance [3] - The current consensus EPS estimate for the upcoming quarter is $2.21, with expected revenues of $6.59 billion, and for the current fiscal year, the EPS estimate is $10.20 on revenues of $27.13 billion [7] Industry Context - The Electronics - Parts Distribution industry, to which Arrow Electronics belongs, is currently ranked in the top 38% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Arrow Electronics' stock performance [5]

Financial Performance - Consolidated sales for Q1 2025 were $6.814 billion, a decrease of 2% year-over-year, and flat on a constant currency basis[3] - Global components sales were $4.778 billion, down 8% year-over-year, and down 7% on a constant currency basis[5] - Global ECS sales increased to $2.036 billion, representing an 18% year-over-year growth and a 19% increase on a constant currency basis[8] - Net income attributable to shareholders was $80 million, with a diluted EPS of $1.51, compared to $84 million and $1.53 in Q1 2024[3] - Non-GAAP net income attributable to shareholders was $95 million, with a non-GAAP diluted EPS of $1.80, down from $132 million and $2.41 in Q1 2024[3] - For Q2 2025, the company expects GAAP sales of $4.80 billion to $5.20 billion for global components and $1.90 billion to $2.10 billion for global ECS[15] - Consolidated sales for the quarter ended March 29, 2025, were $6,814,017, a decrease of 1.6% compared to $6,924,260 for the same period in 2024[25] - Gross profit for the quarter was $773,992, down from $857,826 in the prior year, reflecting a decline of approximately 9.8%[25] - Operating income decreased to $158,553 from $185,917, representing a decline of 14.7% year-over-year[25] - Net income attributable to shareholders was $79,720, down 4.5% from $83,601 in the previous year[25] - For the three months ended March 29, 2025, consolidated net income was $95,077,000, a decrease from $131,490,000 for the same period in 2024, representing a decline of approximately 27.7%[41] - Operating income for the first quarter of 2025 was $158,553,000, down from $185,917,000 in the first quarter of 2024, reflecting a decrease of about 14.7%[41] Cash Flow and Capital Management - The company generated approximately $350 million in cash flow from operations and repurchased $50 million of shares in Q1 2025[9] - Total net working capital was reduced by approximately $340 million, and gross balance sheet debt decreased by approximately $280 million[9] - Cash and cash equivalents at the end of the period were $231,882, an increase from $188,807 at the beginning of the period[31] - The company reported a net cash provided by operating activities of $351,679, down from $403,210 in the previous year[31] Sales and Market Trends - Global Enterprise Computing Solutions (ECS) gross billings increased to $4,638,954, up 5.2% from $4,408,418 in the prior year[34] - EMEA ECS sales saw a significant increase of 36.5%, reaching $1,126,392 compared to $825,095 in the same quarter last year[38] - Global components sales decreased to $4,777,722,000 in Q1 2025 from $5,191,417,000 in Q1 2024, a decline of approximately 7.9%[45] - Global ECS sales increased to $2,036,295,000 in Q1 2025 from $1,732,843,000 in Q1 2024, representing a growth of approximately 17.5%[45] Tax and Liabilities - The average tax rate is projected to be in the range of 23% to 25% for Q2 2025[15] - The effective tax rate for the first quarter of 2025 was 22.6%, compared to 21.0% in the same quarter of 2024[41] - Total current liabilities slightly decreased to $12,603,036 from $12,636,162, a reduction of about 0.3%[28] Restructuring and Integration Costs - The company incurred restructuring and integration charges of $17,313,000 in Q1 2025, compared to $46,856,000 in Q1 2024, indicating a reduction in restructuring costs[46] - Corporate operating loss for Q1 2025 was $90,146,000, an improvement from a loss of $111,104,000 in Q1 2024[45] Profitability Metrics - Global components gross profit as a percentage of sales was 11.6% in Q1 2025, down from 12.4% in Q1 2024[49] - Non-GAAP operating income for global components in Q1 2025 was $173,356,000, down from $242,509,000 in Q1 2024, a decrease of about 28.5%[49] - Net income per diluted share for Q1 2025 was $1.80, compared to $2.41 in Q1 2024, a decrease of about 25.4%[41]

Core Insights - Edge Total Intelligence Inc. (edgeTI) has appointed immixGroup, a subsidiary of Arrow Electronics, as its first public sector distributor, targeting U.S. federal defense and civilian agencies [1][2] - The partnership aims to enhance the availability of edgeTI's Digital Twin platform, edgeCore™, to government agencies, facilitating a subscription pricing model based on the number of interfaces and concurrent users [2][3] Group 1: Partnership and Distribution - The agreement allows immixGroup to incorporate edgeTI's Digital Twin platform into its purchasing vehicles for federal agencies, creating new opportunities for value-added resellers [2][5] - This collaboration is expected to accelerate the adoption of edgeTI's solutions within government sectors, leveraging previous investments in channel development [3][4] Group 2: Product Features and Capabilities - edgeCore™ is recognized for its ability to securely integrate data sets, modernize operations, and improve situational awareness while reducing costs associated with traditional contracts [3][4] - The platform includes advanced features such as bidirectional data fabric, composable applications, AI orchestration, and zero-trust security capabilities [6] Group 3: Market Position and Recognition - edgeTI's Digital Twin solution has been acknowledged by Gartner® over 20 times in the past year, highlighting its industry-leading status [3] - The partnership with immixGroup positions edgeTI to better serve government agencies, which have a history of successful implementations in large enterprises [5][8]

Financial Performance - Semiconductor products and related services accounted for approximately 53%, 60%, and 60% of the company's consolidated sales in 2024, 2023, and 2022, respectively[57]. - The semiconductor market downturn has adversely affected the company's financial results throughout 2024, with potential for further material adverse effects if conditions worsen[59]. - The company's effective tax rate may fluctuate due to changes in the geographic distribution of earnings and tax laws, potentially impacting financial results[72]. - The current cyclical downturn in semiconductor markets could have a material adverse effect on the company's profitability and stock price[59]. - Ongoing economic weakness and uncertainty, particularly in the semiconductor market, have resulted in decreased net revenue and increased expenses[123]. Operational Risks - The global components reportable segment experienced a cyclical downturn in 2023, characterized by declining sales due to elevated customer inventory levels, which continued throughout 2024[58]. - The company began a multi-year Operating Expense Efficiency Plan in 2024 aimed at improving operational efficiency, which could face challenges such as employee morale and operational disruptions[69]. - The company faces significant risks if it fails to invest in digital and AI technologies, which could adversely impact sales and customer retention[79]. - The company relies on non-cancellable multi-year distribution agreements within its ECS reportable segment, which could pose risks if sufficient IT solutions are not sold to cover purchase obligations[65]. - The company is vulnerable to cybersecurity incidents that could disrupt operations and damage its reputation, with potential significant costs associated with such events[89]. - The company relies on its internal information systems for daily operations, and any failures could materially adversely affect its business[87]. Supplier and Market Dependency - Approximately 65% of the company's sales in 2024, 2023, and 2022 came from operations outside the United States, exposing the company to various international risks[70]. - One supplier accounted for approximately 8% of the company's consolidated sales in 2024, highlighting the risk of dependency on a limited number of suppliers[60]. - Sales are dependent on supplier innovations in components and electronic computing solutions, with competitive pressures potentially affecting business performance[80]. - The company faces operational risks related to attracting and retaining key executive and employee talent, which could materially affect its business[81]. Regulatory and Compliance Risks - The company is subject to complex export regulations, and non-compliance could result in severe penalties and impact business operations[97]. - Non-compliance with privacy and data protection laws could lead to substantial financial penalties and damage to the company's reputation[93]. - Environmental laws and regulations may impose liabilities on the company, potentially leading to significant costs for compliance and remediation[101]. - The company is exposed to potential liabilities and increased costs related to environmental, social, and governance (ESG) compliance, which may strain resources[112]. Economic and Geopolitical Factors - Economic downturns and geopolitical tensions, particularly between the U.S. and China, could negatively impact demand for the company's products and services[124]. - Political developments, trade disputes, and public health crises may negatively impact demand for the company's products and services due to its international operations[124]. - Trade barriers and tariffs could decrease demand for the company's products and increase operational costs, adversely affecting profitability[99]. Financial Stability and Liquidity - The company has over $2.8 billion in committed and undrawn liquidity, along with $188.8 million in cash on hand as of December 31, 2024[115]. - The company's ability to generate cash from operations and access financial markets is subject to various external factors, including economic conditions and regulatory changes[116]. - If the company's leverage ratios exceed thresholds set by credit rating agencies, it may face a downgrade below investment grade, impacting financing costs and operational flexibility[117]. Management and Strategic Risks - Management transitions in 2024 may create uncertainty and impact the company's ability to execute its strategies effectively[85]. - The company faces risks associated with potential acquisitions, divestitures, or joint ventures, which may negatively impact financial results if not managed effectively[76]. - Failure to maintain effective internal controls could result in inaccurate financial reporting and regulatory scrutiny, adversely affecting the company's business[125].

Core Insights - Arrow Electronics (ARW) shares declined by 2.5% to close at $106.98 following disappointing Q4 2024 results, with adjusted earnings of $2.38 per share, beating estimates by 10.41% but down 25.4% year over year [1][2] Financial Performance - Q4 2024 revenues were reported at $7.28 billion, a decrease of 7.2% year over year, yet this figure surpassed the Zacks Consensus Estimate by 4.09% [2] - Global Component sales fell by 14.6% year over year to $4.81 billion, with EMEA revenues down 24.9%, Americas down 10.1%, and Asia-Pacific down 9.8% at constant currency [3] - Global Enterprise Computing Solutions (ECS) revenues increased by 11.6% year over year to $2.47 billion, with a 12.4% increase at constant currency [3] Operating Metrics - Non-GAAP operating income for Global Components was $173 million, down 39.9% year over year, while Global ECS saw an increase to $161 million, up 10.3% [5] - Overall non-GAAP operating income decreased by 24.8% year over year to $273.7 million, with the operating margin shrinking by 90 basis points to 3.8% [5] Balance Sheet and Cash Flow - Cash and cash equivalents at the end of Q4 were $188.8 million, down from $248 million in the previous quarter, while long-term debt decreased to $2.77 billion from $2.36 billion [6] - Operating cash flow for Q4 2024 was $326 million, and the company returned $50 million to shareholders through share repurchases [6] Guidance - For Q1 2025, sales are projected between $5.98 billion and $6.58 billion, with Global Components sales expected between $4.35 billion and $4.75 billion, and Global ECS sales anticipated between $1.63 billion and $1.83 billion [7] - Non-GAAP earnings are expected to be in the range of $1.30 to $1.50 per share [8] Market Position - Arrow Electronics currently holds a Zacks Rank 3 (Hold), with better-ranked stocks in the sector including Arista Networks (Rank 1), Twilio (Rank 1), and DoorDash (Rank 2) [9]

Financial Data and Key Metrics Changes - Consolidated sales for Q4 2024 were $7.3 billion, down 7% year-over-year but above guidance [24] - Non-GAAP earnings per share for Q4 were $2.97, exceeding the high end of the guidance range [11][28] - Non-GAAP gross margin for Q4 was 11.7%, down approximately 90 basis points year-over-year but up 20 basis points sequentially [26] - Non-GAAP operating income for Q4 was $274 million, representing 3.8% of sales [28] Business Line Data and Key Metrics Changes - Global components sales were $4.8 billion, down 3% from the prior quarter [24] - Enterprise computing solutions (ECS) sales were $2.5 billion, up 12% year-over-year [25] - ECS billings grew 10% in Q4 compared to the same period last year [25] - Global components gross margin was 11.4%, while ECS gross margin was 12.4% [26] Market Data and Key Metrics Changes - Book-to-bill ratio is near parity globally, with two of three operating regions exiting Q4 at or near one-to-one [16] - Inventory levels across the ecosystem are slowly declining, indicating a potential recovery [16][60] - The Americas saw gains in industrial markets, while the automotive sector experienced softness [14] Company Strategy and Development Direction - The company is focused on strengthening its global components business and aligning its go-to-market strategy in ECS [10][22] - Emphasis on hybrid cloud and AI-related solutions, particularly in the mid-market [10] - Plans to expand supplier and customer base and enhance value-added services [18][21] Management's Comments on Operating Environment and Future Outlook - Management believes the company is in the later stages of the semiconductor industry's cyclical correction [15][56] - Cautious optimism for an improving trajectory in 2025, driven by declining inventory levels and market recovery [18][22] - Confidence in the long-term outlook for the semiconductor industry despite a prolonged downturn in the components business [22] Other Important Information - Net working capital declined by approximately $170 million in Q4, ending at $6.7 billion [29] - Cash flow from operations was $326 million in Q4 and $1.1 billion for the full year [30] - The company repurchased $50 million of shares in Q4, with a remaining authorization of approximately $325 million [31] Q&A Session Summary Question: Any pull-ins in the December quarter due to potential tariff activity or price increases? - Management did not see any material pull-ins affecting Q4 sales numbers [38] Question: Observations on pricing environment and inventory management? - Management noted stable gross margins and that transactional margins have held up well [40] Question: Insights on intra-quarter demand and its impact on Q1? - Management indicated stable demand patterns and expects gradual improvement as inventories decline [48] Question: Confidence in the inventory correction phase? - Management believes inventory levels are declining and sees a path to improvement throughout the year [56] Question: Specific components still in excess in inventory? - Management reported no significant excess in any particular component type, with overall inventory management being effective [60] Question: Margin progression expectations for Q1? - Management expects relatively stable gross margins but anticipates a seasonal decline in ECS due to its lowest quarter in Q1 [62][64] Question: Target inventory levels and current inventory dynamics? - Management focuses on inventory turns and working capital as a percentage of sales, indicating a return to pre-pandemic levels [73]

Core Insights - Arrow Electronics reported revenue of $7.28 billion for the quarter ended December 2024, a decrease of 7.2% year-over-year, with EPS at $2.97 compared to $3.98 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $7 billion by 4.09%, and the EPS surpassed the consensus estimate of $2.69 by 10.41% [1] Financial Performance - Year-over-year revenue changes indicate a decline in key segments: - Americas Components sales were $1.60 billion, down 10.1% from the previous year [4] - Europe Components sales were $1.26 billion, down 25.2% year-over-year [4] - Asia Components sales were $1.95 billion, down 10% year-over-year [4] - Positive growth was noted in other segments: - Europe ECS sales increased by 22.4% to $1.31 billion [4] - Americas ECS sales rose by 1.4% to $1.16 billion [4] - Global ECS net sales reached $2.47 billion, an increase of 11.6% year-over-year, while Global Components net sales were $4.81 billion, down 14.6% [4] Market Performance - Arrow Electronics' shares returned 2.5% over the past month, outperforming the Zacks S&P 500 composite's 2.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]