Arrow Electronics ARW reported impressive first-quarter 2022 results. The company’s adjusted earnings of $5.43 per share beat the Zacks Consensus Estimate of $4.53. The bottom line improved by a whopping 91% on a year-over-year basis.
In the first quarter of 2022, the company reported revenues of $9.07 billion, up 8% from the year-ago quarter. Excluding the impact of unfavorable currency exchange rates, sales increased 10.2%. The top line also surpassed the consensus mark of $8.67 billion.
Arrow Electronics has been witnessing the increasing demand for electronic components and software, cloud and security solutions. However, supply-chain constraints have been limiting its ability to capitalize on the growing demand.
Arrow Electronics, Inc. Price, Consensus and EPS Surprise
Arrow Electronics, Inc. price-consensus-eps-surprise-chart | Arrow Electronics, Inc. Quote
Segment Details
Adjusted revenues from Global Components increased 13.5% year over year to $7.2 billion. Region-wise, the segment’s revenues from America jumped 37.6% year over year. Adjusted sales from Europe increased 31.1% year over year. Global Components’ sales in the Asia Pacific region were down 7.6% on a year-over-year basis.
Adjusted revenues from Global Enterprise Computing Solutions (“ECS”) came in at $1.88 billion, down 0.9% year over year. Region-wise, the segment’s revenues from America fell 8.8%, while Europe’s revenues increased 11.4%.
The non-GAAP operating income from Global Components and Global ECS were $506 million and $88 million, respectively.
Margins
Arrow Electronics’ non-GAAP gross profit climbed 29.8% to $1.21 billion in the first quarter from the prior-year quarter’s $930.1 million. The non-GAAP gross margin expanded 220 basis points (bps) year over year to 13.3%.
The non-GAAP operating income surged 66.7% to $524.3 million in the January-March 2022 quarter from the year-ago quarter’s $314.5 million. The non-GAAP operating margin grew 200 bps to 5.8%.
Balance Sheet and Cash Flow
Arrow Electronics exited the first quarter with cash and cash equivalents of $242.8 million compared with the previous quarter’s $222.2 million.
The long-term debt was $2.79 billion, higher than $2.24 billion at the end of the fourth quarter of 2021.
The New York-based electronic components distributor used $200.2 million of cash for operating activities during the first quarter. In the first quarter of 2022, ARW returned $264.4 million worth of shares to its shareholders through the stock-repurchase program. It has $513 million remaining under its current share-repurchase authorization.
Guidance
For the second quarter of 2022, sales are estimated between $9.04 billion and $9.64 billion.
Global Components sales are projected in the range of $7.29-$7.59 billion. Global ECS sales are anticipated in the band of $1.75-$2.05 billion.
Interest expenses will presumably be about $36 million. As a result, the company projects non-GAAP earnings per share (EPS) in the range of $5.48-$5.64.
Arrow Electronics expects changes in foreign currencies to decrease second-quarter sales by approximately $300 million and EPS by 20 cents.
Zacks Rank & Stocks to Consider
Arrow Electronics currently carries a Zacks Rank #4 (Sell). Shares of ARW have rallied 5.9% in the past year.
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