Arrow Electronics today revealed its financial performance for the second quarter of 2024. We successfully navigated a shifting market landscape, achieving second-quarter sales and non-GAAP earnings per diluted share well above our forecasted ranges,” stated Sean Kerins, Arrow’s President and CEO.
Our value-added services in global components and improved momentum in enterprise computing solutions played a significant role in maintaining our operating margin stability during the quarter, added Kerins.
Financial Overview
For the quarter ended June 29, 2024, and six months ended July 1, 2024, Arrow reported the following:
- Consolidated Sales: $6.89 billion (Q2 2024), $8.52 billion (Q2 2023); $13.82 billion (six months 2024), $17.25 billion (six months 2023)
- Net Income Attributable to Shareholders: $109 million (Q2 2024), $237 million (Q2 2023); $192 million (six months 2024), $510 million (six months 2023)
- Net Income Per Diluted Share: $2.01 (Q2 2024), $4.12 (Q2 2023); $3.53 (six months 2024), $8.74 (six months 2023)
- Non-GAAP Net Income Attributable to Shareholders: $150 million (Q2 2024), $251 million (Q2 2023); $282 million (six months 2024), $524 million (six months 2023)
- Non-GAAP Net Income Per Diluted Share: $2.78 (Q2 2024), $4.37 (Q2 2023); $5.18 (six months 2024), $8.98 (six months 2023)
The second quarter of 2024 included a $0.29 benefit per share and a $20 million operating income benefit from the collection of aged receivables from a customer in the ECS segment. Sales for the quarter decreased by 19% year-over-year, with currency fluctuations negatively impacting sales by approximately $52.2 million and diluted earnings per share by $0.05 compared to Q2 2023.
Global Components
Kerins noted, “We’re observing incremental improvements in leading indicators, with book-to-bill ratios rising across all regions and sequential growth in bookings. While the automotive and broader industrial markets remain soft, we believe we are nearing the end of the industry’s cyclical correction.”
For global components:
- Sales: $5.03 billion (Q2 2024), $6.68 billion (Q2 2023); $10.22 billion (six months 2024), $13.54 billion (six months 2023)
- Operating Income (Reported): $210 million (Q2 2024), $381 million (Q2 2023); $436 million (six months 2024), $799 million (six months 2023)
- Non-GAAP Operating Income: $218 million (Q2 2024), $388 million (Q2 2023); $461 million (six months 2024), $812 million (six months 2023)
Sales decreased 25% year-over-year, with regional declines including a 24% decrease in the Americas, a 33% decrease in EMEA, and an 18% decrease in Asia-Pacific.
Global Enterprise Computing Solutions
Our ECS segment saw a year-over-year increase in billings as we continued to leverage the transition to IT as a service, with strong performance in EMEA and improving activity in North America, said Kerins.
For ECS:
- Sales: $1.86 billion (Q2 2024), $1.83 billion (Q2 2023); $3.59 billion (six months 2024), $3.71 billion (six months 2023)
- Operating Income (Reported): $103 million (Q2 2024), $86 million (Q2 2023); $174 million (six months 2024), $167 million (six months 2023)
- Non-GAAP Operating Income: $104 million (Q2 2024), $87 million (Q2 2023); $176 million (six months 2024), $170 million (six months 2023)
ECS sales grew 2% year-over-year, with an 8% increase in EMEA and a 4% decrease in the Americas.
Additional Financial Metrics
Raj Agrawal, Arrow’s Senior VP and CFO, noted, “In the second quarter, we aligned our working capital management with market conditions, reducing inventory by approximately $140 million. We also generated $320 million in cash flow from operations, providing capital allocation flexibility and enabling $50 million in share repurchases.”
Outlook for Third Quarter 2024
- Consolidated Sales Forecast: $6.37 billion to $6.97 billion
- Global Components Sales Forecast: $4.70 billion to $5.10 billion
- Global ECS Sales Forecast: $1.67 billion to $1.87 billion
- Net Income Per Share (Diluted): $1.70 to $1.90; Non-GAAP Net Income Per Share (Diluted): $2.10 to $2.30
- Average Tax Rate: 23% to 25%
- Interest Expense: Approximately $70 million
- Currency Impact: Expected to increase sales by about $7 million and have no effect on earnings per share compared to Q3 2023
Upcoming Events
Arrow Electronics will host a conference call to discuss these results on August 1, 2024, at 1:00 PM ET. The call will be available via webcast at Arrow’s Investor Relations page, and a replay will be accessible on the Arrow website for one year.
For more information, refer to the earnings presentation available at investor.arrow.com.
