Arrow Electronics(ARW) - 2025 Q2 - Quarterly Results

Arrow Electronics Q2 2025 Earnings Release Financial Highlights The company reported strong Q2 2025 results with sales and GAAP EPS exceeding guidance, though non-GAAP results declined - Consolidated sales, segment sales, and earnings per share all surpassed the high end of the company's guidance for Q2 2025[2][3] Consolidated Financial Results (Q2 2025 vs Q2 2024) | (in millions except per share data) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Consolidated sales | $7,580 | $6,893 | 10% | | Net income attributable to shareholders | $188 | $109 | 73% | | Net income per diluted share | $3.59 | $2.01 | 79% | | Non-GAAP net income attributable to shareholders | $127 | $150 | (15)% | | Non-GAAP net income per diluted share | $2.43 | $2.78 | (13)% | - Changes in foreign currencies had a positive year-over-year impact, increasing sales by approximately $123.3 million and diluted EPS by $0.07[4] Business Segment Performance Both Global Components and Global ECS segments reported sales above guidance, with ECS showing particularly strong top-line growth Global Components The Global Components segment sales grew 5% year-over-year, driven by the Americas and Asia, despite a decline in operating income - The company observed sequential growth across all three operating regions, and leading indicators suggest a modest cyclical recovery is in progress[5] Global Components Financials (Q2 2025 vs Q2 2024) | (in millions) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Global components sales | $5,285 | $5,032 | 5% | | Global components operating income | $187 | $210 | (11)% | | Global components non-GAAP operating income | $189 | $218 | (13)% | - Regional Sales Performance (YoY): - Americas: +9% - Asia-Pacific: +6% - EMEA: -1% (-6% in constant currency)[5] Global Enterprise Computing Solutions (ECS) The Global ECS segment delivered robust 23% year-over-year sales growth, fueled by strong performance in EMEA and its Arrowsphere platform - The company saw year-over-year growth in billings and gross profit, with robust growth in its IT as-a-service backlog and continued adoption of its digital platform, Arrowsphere[7] Global ECS Financials (Q2 2025 vs Q2 2024) | (in millions) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Global ECS sales | $2,295 | $1,861 | 23% | | Global ECS operating income | $97 | $103 | (5)% | | Global ECS non-GAAP operating income | $98 | $104 | (6)% | - Regional Sales Performance (YoY): - EMEA: +39% (+31% in constant currency) - Americas: +9%[8] Other Financial Information The company improved operational efficiency, enhanced returns on capital, and continued its share repurchase program in Q2 2025 - Key operational improvements in Q2 include increased inventory turns, a reduced cash conversion cycle, and improved returns on capital[9] - The company repurchased $50 million of its shares during the second quarter[9] Third-Quarter 2025 Outlook The company projects Q3 2025 consolidated sales between $7.30 billion and $7.90 billion and non-GAAP EPS of $2.16 to $2.36 Q3 2025 Guidance | Metric | Q3 2025 Outlook | | :--- | :--- | | Consolidated sales | $7.30B - $7.90B | | - Global components sales | $5.30B - $5.70B | | - Global ECS sales | $2.00B - $2.20B | | GAAP diluted EPS | $1.49 - $1.69 | | Non-GAAP diluted EPS | $2.16 - $2.36 | | Interest expense | Approx. $65M | | Average tax rate | 23% - 25% | - Foreign currency changes are expected to increase Q3 2025 sales by approximately $135 million and diluted EPS by $0.11 compared to Q3 2024[15] Financial Statements The financial statements show increased sales but lower operating income, with a significant use of cash from operations Consolidated Statements of Operations Sales rose 10% year-over-year, but operating income declined, while a large gain on investments boosted net income Q2 2025 Statement of Operations Highlights (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Sales | $7,579,947 | $6,892,868 | | Gross Profit | $848,657 | $846,444 | | Operating Income | $190,586 | $212,275 | | Gain on investments, net | $103,976 | $(4,615) | | Net income attributable to shareholders | $187,749 | $108,698 | Consolidated Balance Sheets Total assets grew to $24.3 billion, driven by a significant increase in accounts receivable and a corresponding rise in liabilities Balance Sheet Highlights (in thousands) | Line Item | June 28, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current assets | $20,846,420 | $18,401,413 | | Accounts receivable, net | $15,271,349 | $13,030,991 | | Inventories | $4,749,431 | $4,709,706 | | Total assets | $24,252,578 | $21,757,707 | | Total current liabilities | $14,978,258 | $12,636,162 | | Accounts payable | $13,213,323 | $11,047,470 | | Total shareholders' equity | $6,333,890 | $5,761,151 | Consolidated Statements of Cash Flows The company experienced a significant negative swing in operating cash flow, primarily due to a large increase in accounts receivable Q2 2025 Cash Flow Highlights (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash (used for) provided by operating activities | $(205,896) | $320,181 | | Net cash provided by (used for) investing activities | $106,240 | $(20,788) | | Net cash used for financing activities | $(73,832) | $(317,247) | | Net decrease in cash and cash equivalents | $(9,912) | $(29,801) | Supplemental and Non-GAAP Information This section reconciles GAAP to non-GAAP metrics, adjusting for items like amortization and restructuring to clarify core performance - Management uses non-GAAP financial measures to better assess operating performance by excluding items like intangible amortization, restructuring charges, and foreign currency impacts[19][21] Q2 2025 GAAP to Non-GAAP Reconciliation Highlights (in millions) | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Operating income | $190.6 | $24.8 | $215.4 | | Net income attributable to shareholders | $187.7 | $(60.4) | $127.4 | | Net income per diluted share | $3.59 | $(1.16) | $2.43 | - Global ECS Gross Billings, a key operational metric, increased 15% year-over-year to $5.14 billion in Q2 2025[35]