Arrow Electronics Inc. ARWreported better-then-expected first-quarter 2018 results. Both the top and the bottom lines topped the Zacks Consensus Estimate and improved on a year-over-year basis.
Arrow’s non-GAAP earnings of $1.88 per share came ahead of the Zacks Consensus Estimate of $1.82 per share.
Quarter in Detail
Arrow’s revenues, on a reported basis, were $6.876 billion. On an adjusted basis, revenues were $6.848 billion. On a reported basis, the figure was up 19.9% and on an adjusted basis it was up 14.4% from the year-ago quarter. Quarterly revenues also surpassed the Zacks Consensus Estimate of $6.633 billion and came above the guided range of $6.4 billion and $6.8 billion (mid-point $6.6 billion).
On a reported basis, revenues from Global components increased 21.5% to $4.929 billion. On an adjusted basis, the figure grew 15.9%. Geographically, adjusted Global components revenues from Americas increased 12.8% and the reported figure increased 14.9% from the prior-year period. Revenues from Asia climbed 19.4%. On a reported basis, the figure increased 20.2%. Global components contribution from Europe rose approximately 15.9% on an adjusted basis and 32.2% on a reported basis from the year-ago quarter.
Revenues at Global Enterprise Computing Solutions (ECS) came in at $1.945 billion, up 16% year over year on a reported basis. On an adjusted basis, revenues increased 10.8% and totaled $1.918 billion. Adjusted ECS revenues from the Americas were up 11.9% while reported revenues were up 9.2% on a year-over-year basis. Reported ECS revenues from Europe increased 28.6% while adjusted revenues increased 9.2% from the year-ago period.
The company’s global components segment gained from industrial manufacturing and mass market customers during the quarter. Management stated that growth in electronic content is a major positive for the company. Additionally, strong demand from American and European aerospace and defense customers is a tailwind.
The Global ECS segment was backed by revival in hardware demand. Additionally, Value Added Resellers (VARS) are also showing interest in software-based solutions offered by Arrow Electronics.
Gross profit increased 14.2% to $868.9 million. On a year-over-year basis, operating expenses increased 11.4% but as a percentage of revenues decreased 70 basis points.
Arrow’s non-GAAP operating income was up 22.9% to $272.2 million on the back of increased operational efficiency. Non-GAAP operating margin of 3.98% was up 30 basis points. The company’s non-GAAP net income was $167.7 million compared with $132.1 million in the year-ago quarter.
Arrow exited the quarter with cash and cash equivalents of $548.6 million compared with $730.1 million reported in the previous quarter. Long-term debt was $3.533 billion compared with $2.933 billion at the end of the previous quarter. During the quarter, the company’s operating cash outflow was $75.07 million.