Arrow Electronics (ARW) Q3 Earnings Top Estimates, Sales Miss
Arrow Electronics ARW reported mixed third-quarter 2023 results. The company’s adjusted earnings of $4.14 per share beat the Zacks Consensus Estimate of $3.48. However, the bottom line declined 24% on a year-over-year basis due to lower revenues and unfavorable foreign currency exchange rates.
In the third quarter of 2023, ARW reported revenues of $8.01 billion, down 13.6% from the year-ago quarter. The top line missed the Zacks Consensus Estimate by 1% due to the adverse impact of foreign exchange rates.
With improving supply-chain constraints, the company continued to witness normalization in shortage market activities and was able to deliver an enhanced quarterly performance.
Arrow Electronics, Inc. Price, Consensus and EPS Surprise
Arrow Electronics, Inc. price-consensus-eps-surprise-chart | Arrow Electronics, Inc. Quote
Third-Quarter Details
Adjusted revenues from Global Components decreased 13% year over year to $6.24 billion. Our model estimates for Global Components sales were pegged at $6.23 billion, representing a 14.65% decline. Region-wise, the segment’s revenues from Europe increased 3%, while sales from the Americas and Asia-Pacific regions plunged 24% and 18%, respectively.
Adjusted revenues from Global Enterprise Computing Solutions (ECS) were $1.76 billion, dropped 12.6% year over year. Our model estimates for Global ECS sales were pegged at $1.85 billion, suggesting a 5.6% year-over-year fall. Region-wise, the segment’s revenues from America declined 18%, while sales from Europe increased 2%.
The non-GAAP operating income from Global Components and Global ECS was $386 million and $56 million, respectively.
Arrow Electronics’ non-GAAP operating income plunged 26.3% to $379.3 million in the third quarter of 2023 from the year-ago quarter’s $515 million. The non-GAAP operating margin shrunk 80 basis points to 4.7%.
Balance Sheet and Cash Flow
Arrow Electronics exited the third quarter with cash and cash equivalents of $333.3 million compared with the previous quarter’s $240.4 million.
The long-term debt was $2.61 billion, down from $3.67 billion at the end of the previous quarter.
The New York-based electronic component distributor generated $321.7 million in cash from operating activities in the reported quarter. During the first nine months of 2023, the company’s cash from operating activities was $418.7 million.
In the third quarter of 2023, ARW returned $200 million to its shareholders through share repurchases. It has approximately $622 million remaining under its current share repurchase authorization.
Fourth-Quarter 2023 Guidance
For the fourth quarter of 2023, sales are estimated between $7.5 billion and $8.1 billion.
Global Components sales are projected in the band of $5.4-$5.8 billion. Global ECS sales are anticipated between $2.1 billion and $2.3 billion.
Interest expenses are expected to be $90 million. As a result, the company projects non-GAAP earnings per share in the band of $3.61-$3.81.
Arrow Electronics expects changes in foreign currencies to increase fourth-quarter sales by $54 million and earnings per share by 7 cents on a quarter-over-quarter basis.
Zacks Rank & Stocks to Consider
Currently, Arrow Electronics carries a Zacks Rank #3 (Hold).
NetEase NTES, Upstart UPST and Ballard Power System BLDP are some better-ranked stocks that investors can consider in the broader sector. While NTES sports a Zacks Rank #1 (Strong Buy), UPST and BLDP carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of NetEase have gained 51.1% year to date. NTES is set to report its third-quarter 2023 results on Nov 16.
Shares of Upstart have rallied 107.5% year to date. UPST is slated to report its third-quarter 2023 results on Nov 7.
Shares of Ballard Power System have declined 26.3% year to date. BLDP is set to report its third-quarter 2023 results on Nov 7.
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