Arrow Electronics (ARW) Q2 2024 earnings summary

Executive summary

• Q2 2024 consolidated sales were $6.9 billion, down 19% year-over-year but above guidance, with non-GAAP EPS of $2.78 and GAAP EPS of $2.01, both including a $0.29 benefit from ECS receivables recovery.

• Net income attributable to shareholders was $109 million, down 54% year-over-year.

• Global components sales fell 24.7–25% year-over-year, while ECS sales grew 1.6–2%, driven by EMEA outperformance and a $20 million credit loss reversal.

• Bookings and backlog improved sequentially, with normalized cancellation activity and reduced inventory.

• Management expects a stronger second half, with stabilization in components and ECS seasonality.

Financial highlights

• Gross margin was 12.3%, down 20 basis points year-over-year; non-GAAP operating margin was 3.8%.

• Non-GAAP operating income was $262 million; GAAP operating income was $212 million.

• Cash flow from operations was $320 million in Q2; $1.3 billion over the last 12 months.

• Inventory at quarter end was $4.7 billion, down $140 million from Q1; inventory reduced by $1.2 billion over nine months.

• $50 million in shares were repurchased in Q2; $425 million remains authorized.

Outlook and guidance

• Q3 2024 sales expected between $6.37 billion and $6.97 billion; global components $4.70–$5.10 billion; ECS $1.67–$1.87 billion.

• Non-GAAP diluted EPS guidance: $2.10–$2.30; GAAP EPS: $1.70–$1.90.

• Tax rate expected at 23–25%; interest expense ~$70 million.

• Foreign currency impact expected to be minimal.

• Capital expenditures for 2024 projected at $100 million.