Arrow Electronics (ARW) Q2 Earnings Beat, Revenues Fall Y/Y

Core Insights - Arrow Electronics reported second-quarter 2024 adjusted earnings of $2.78 per share, exceeding the Zacks Consensus Estimate by 28.7%, but reflecting a 36.4% decline year-over-year due to lower revenues and unfavorable foreign currency exchange rates [1] - Revenues for the second quarter were $6.89 billion, down 19% from the previous year, yet beating the Zacks Consensus Estimate by 5.91% [1] Second-Quarter Details - Global Component sales decreased 25% year-over-year to $5.03 billion, primarily due to ongoing semiconductor inventory correction, with EMEA revenues down 33%, Americas down 24%, and Asia-Pacific down 18% [2] - Global Enterprise Computing Solutions (ECS) revenues increased 2% year-over-year to $1.86 billion, with a 4% decline in America but an 8% increase in Europe [2] - Non-GAAP operating income for Global Components and Global ECS was $218 million and $104 million, respectively, while overall non-GAAP operating income fell 36% to $262 million, with a non-GAAP operating margin of 3.8% [2] Balance Sheet and Cash Flow - At the end of the second quarter, cash and cash equivalents were $213 million, down from $242.8 million in the previous quarter, while long-term debt decreased to $2.48 billion from $2.63 billion [3] - The company generated $320.18 million in cash from operating activities and returned $50 million to shareholders through share repurchases, with approximately $425 million remaining under its current share repurchase authorization [3] Third-Quarter 2024 Guidance - For the third quarter of 2024, sales are estimated to be between $6.37 billion and $6.97 billion, with Global Components sales projected between $4.7 billion and $5.1 billion, and Global ECS sales anticipated between $1.67 billion and $1.87 billion [4] - Interest expenses are expected to be $70 million, with projected non-GAAP earnings per share in the range of $2.1 to $2.3, and anticipated foreign currency changes to increase sales by $30 million and earnings per share by 2 cents quarter-over-quarter [4] Zacks Rank & Stocks to Consider - Arrow Electronics currently holds a Zacks Rank 4 (Sell) [5] - Other stocks in the Computer and Technology sector with better rankings include DigitalOcean (Rank 1), Shopify and Analog Devices (both Rank 2) [5]