ARW

Investment management company First Pacific Advisors recently released its “FPA Queens Road Small Cap Value Fund” second-quarter 2026 investor letter.  A copy of the letter can be downloaded here. The Fund returned 27.02% in the first half of 2026, outperforming the Russell 2000 Value Index’s 22.99% gain and the S&P 600 Index’s 23.90% return. Small-cap earnings growth also began accelerating relative to large caps, while the small-cap technology sector surged nearly 100% in 26H1. The fund’s technology holdings gained 72.39%, contributing 14.87 percentage points, compared with a 95.27% return and 7.10-point contribution from the benchmark’s technology sector. Excluding IT and cash, the Fund contributed 12.73% versus 15.89% for the Russell 2000 Value Index; on a fully invested basis, the figures were 16.62% and 17.59%, respectively. The portfolio continued to trim appreciated technology holdings amid the AI-driven rally, while maintaining a bottom-up approach and avoiding beaten-down SaaS stocks due to the widening range of AI-related outcomes. The fund also eliminated about $62 million in capital gains during Q2 and approximately $140 million year-to-date through July, while ending the quarter with 10.2% in cash. In addition, please check the Fund’s top five holdings to know its best picks in 2026. In its second-quarter 2026 investor letter, FPA Queens Road Small Cap Value Fund highlighted stocks like Arrow Electronics (NYSE:ARW). Arrow Electronics (NYSE:ARW) distributes electronic components and enterprise computing solutions while providing technology and supply-chain services to manufacturers and customers. The one-month return of Arrow Electronics (NYSE:ARW) was -10.49% while its shares traded between $101.79 and $237.33 over the last 52 weeks. On August 31, 2026, Arrow Electronics (NYSE:ARW) stock closed at approximately $203.92 per share, with a market capitalization of about $10.41 billion. FPA Queens Road Small Cap Value Fund stated the following regarding Arrow Electronics (NYSE:ARW) in its Q2 2026 investor letter: Photo by Sergei Starostin on Pexels Arrow Electronics (NYSE:ARW) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. As per our database, 61 hedge fund portfolios held Arrow Electronics (NYSE:ARW) at the end of the first quarter, which was 45 in the previous quarter. While we acknowledge the risk and potential of Arrow Electronics (NYSE:ARW) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. In another article, we covered Arrow Electronics (NYSE:ARW) and shared our outlook on the company's growth. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors. READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years Disclosure: None. This article is originally published at Insider Monkey.

Arrow Electronics’ Q2 results outperformed Wall Street’s expectations on both revenue and adjusted earnings, but the market reacted negatively. Management attributed the quarter’s strong performance to broad-based demand, disciplined expense management, and operating leverage, with particular strength in its global components segment. CEO William Austen highlighted positive trends in industrial, aerospace and defense, and transportation, noting that value-added services and execution on supply chain management were key contributors to margin expansion. Is now the time to buy ARW? Find out in our full research report (it’s free). Revenue: $9.99 billion vs analyst estimates of $9.54 billion (31.8% year-on-year growth, 4.7% beat) Adjusted EPS: $5.45 vs analyst estimates of $4.46 (22.2% beat) Revenue Guidance for Q3 CY2026 is $9.9 billion at the midpoint, above analyst estimates of $9.65 billion Adjusted EPS guidance for Q3 CY2026 is $4.93 at the midpoint, above analyst estimates of $4.68 Operating Margin: 3.8%, up from 2.5% in the same quarter last year Market Capitalization: $10.71 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Will Stein (Truist Securities) asked if the component cycle is in its early stages or closer to maturity. CEO William Austen and President Richard Marano responded that they view the current growth as being in the early innings, with broad-based demand and backlog momentum supporting further expansion. Will Stein (Truist Securities) inquired about the ECS segment’s guidance and the reported supplier contract loss. Interim CEO William Austen clarified that the affected revenue was $700 million, not $1.4 billion, and ECS margins are not expected to be materially impacted as the company pivots to higher-value offerings. Melissa Fairbanks (Raymond James) questioned inventory dynamics in automotive and whether customers are shifting to buffer inventory strategies. President Richard Marano explained that customers are gradually rebuilding inventory, but current trends remain rational and in line with a normal cycle. Melissa Fairbanks (Raymond James) followed up on customer behavior around prepositioning inventory and consignment. Marano responded that prepositioning and buffer strategies are in place but not excessive or panic-driven, reflecting normal supply chain management. Ruplu Bhattacharya (Bank of America) probed the ECS margin decline and future margin expectations. CFO Rajesh Agrawal quantified the charge’s impact and confirmed expectations for high ECS margins in Q4, with strong core business performance and healthy component margins likely to continue. In the coming quarters, the StockStory team will track (1) the execution and profitability of Arrow’s ECS business as it restructures key partner contracts, (2) the durability of demand in core segments like industrial, transportation, and aerospace, and (3) Arrow’s ability to maintain or expand margins through operational efficiency and product mix. The scale-up of value-added services and the adoption of new digital engineering platforms will also be important markers of progress. Arrow Electronics currently trades at $211.45, down from $222.29 just before the earnings. Is there an opportunity in the stock? See for yourself in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 4:30 p.m. ET Vice President of Investor Relations-Michael Nelson Interim President and Chief Executive Officer-Bill Austin Chief Financial Officer-Rajesh K. Agrawal President of Global Components-Richard J. Marano President of Global Enterprise Computing Solutions-Eric C. Nowak Operator: Good day. And welcome to the Arrow Electronics second quarter 2026 Earnings Call. Today's conference is being recorded. And at this time, I would like to turn the conference over to Michael Nelson, Arrow's Vice President of Investor Relations. Please go ahead. Michael Nelson: Thank you, operator. I would like to welcome everyone to the Arrow Electronics Second Quarter 26 Earnings Conference Call. Joining me on the call today is our Interim President and chief executive officer, Bill Austin, our chief financial officer, Rajesh K. Agrawal, our president of global components, Richard J. Marano, and our president of global enterprise computing solutions, Eric C. Nowak. During this call, we will make forward-looking statements, including statements about our business outlook, strategies, plans and projections regarding future financial results, which are based on our predictions and expectations as of today. Our actual results could differ materially due to a number of risks, including the risk factors and other factors described in this quarter's associated earnings release and our most recent annual report on Form 10-K and other filings with the SEC. We undertake no obligation to update publicly or revise any of the forward-looking statements as a result of new information or future events. As a reminder, some of the figures we will discuss on today's call are non GAAP measures which are not intended to be a substitute for our GAAP results. We have reconciled these non GAAP measures to the most directly comparable GAAP financial measures in this quarter's associated earnings release. You can access our earnings release at investor.arrow.com along with a replay of this call. We have also posted a slide presentation on this website to accompany our prepared remarks and encourage you to reference these slides during this webcast. Following our prepared remarks today, Bill, Rajesh, Rick, and Eric will be available to take your questions. I will now hand the call over to our Interim President and CEO, Bill Austin. William F. Austen: Thank you, Michael. And good afternoon, everyone. We appreciate you joining us for a discussion of second quarter 2026 results. Before turning to our results, I want to thank our team across the globe. Their commitment to serving our suppliers and customers is a key reason why Arrow delivered another strong quarter. Starting on Slide 3, we delivered excellent results in the second quarter. Total revenue of $10 billion increased 32% year over year and operating margin expanded 120 basis points year over year to 4%. Each of which exceeded expectations. The combination of broad-based demand, disciplined execution, and positive operating leverage resulted in non GAAP EPS of $5.45 representing a significant increase of 124% year over year. Our strong results this quarter were underpinned by 4 primary drivers. 1, sustained unit volume growth with incremental benefits from price inflation. 2, disciplined execution as we managed expenses and working capital against the backdrop of solid customer demand. 3, positive operating leverage resulting in year over year margin expansion and 4, favorable mix of higher margin value added services. Global components once again performed exceptionally well with strength across geographies, industry verticals and customer mix. Similarly, within ECS, we continue to benefit from long term secular demand trends around cloud, cybersecurity, infrastructure software, and AI driven workloads. While continuing to execute our strategy around higher value software and services. Rajesh will share more details on our financial performance in a moment. But first, I would like to spend a few minutes discussing several key themes from the quarter that reinforce our confidence in the sustainability of the business and growth strategy. First, our leading indicators continue to give us enhanced visibility and conviction in our operating model. Book to bill ratios improved further and remain well above parity while our backlog continues to build into 2027. Importantly, these leading indicators further strengthen our confidence in the durability of demand and sustainability of our growth trajectory. Second, our growth remains largely customer-demand driven. While we have seen incremental benefits from inflation, the primary driver of growth has been increased unit volume. Not only are we benefiting from ongoing AI investment trends, but we are also experiencing strength in industrial, aerospace and defense, and the reemergence of transportation. Third, growth is broad-based, and we are still in the early stages of a mass market upturn as backlog from our mass market customers continues to slowly ramp. Fourth, value added services remains a differentiator. With supply chain services once again contributing significantly to overall profitability. Encouragingly, these favorable demand signals are interconnected. With each contributing to a broader opportunity set across our portfolio. As we have highlighted previously, Arrow remains well positioned at the intersection of several attractive secular growth markets. Allowing us to benefit from their continued expansion. Finally, the quality of our growth continues to improve supported by a more favorable mix of customers and geographies, contribution from value added services, and ongoing productivity gains across the business. Combined with the structural changes we have made to reset our business model and our disciplined expense management, these factors are enabling us to deliver meaningful operating leverage and generate strong incremental returns. Turning to slide 4. I would like to briefly revisit 4 pillars of our investment thesis and why we believe Arrow remains uniquely positioned for long term growth and an attractive investment opportunity. I have discussed these pillars over the past several quarters, and you are starting to see the true strength of the business come through in our results. First, Arrow maintains a strong position in large and growing markets and plays a critical role in our 6 core markets of industrial, transportation, aerospace and defense, medical, consumer electronics, and data center. These end markets are supported by favorable secular trends that continue to create growth opportunities. Second, Arrow has differentiated capabilities driving profitable growth. We are benefiting from a richer mix of higher value service offerings including supply chain services, engineering and design services, and integration services. Notably, these offerings build upon our long standing strengths in our core distribution franchise. And represent a natural extension of the capabilities that have long differentiated Arrow in the marketplace. We continue to expand our suite of differentiated capabilities that deepen customer engagement and further differentiate Arrow. We recently introduced digital test drive, a new remote AI driven engineering platform that allows customers to evaluate hardware benchmark performance, and accelerate product development without the logistics and delays associated with physical evaluation of equipment. This expands our ability to support customers globally while increasing the efficiency and scalability of our engineering services. Additionally, our eInfochips business continues to strengthen its position as a leader in engineering services. Its differentiated silicon to cloud capabilities help customers navigate increasingly complex product life cycles. During the quarter, eInfochips was recognized in Gartner's emerging market quadrant for physical AI services. Reinforcing the strength of our technical capabilities in this rapidly evolving market. We also recently expanded our ECS experience centers providing partners access to more than 100 prebuilt hybrid infrastructure, cybersecurity, and AI solutions alongside our engineering expertise to accelerate solution development and deployment. Historically, these engagements have resulted in a proposal close rates of 90%. I am proud to share that Arrow recently earned 3 key Microsoft distinctions for our ECS business. Frontier distributor status, specializations in copilot, and Azure virtual desktop. Together, they validate our scale and expertise across AI, cloud, and the modern workplace. Strengthening our ability to help channel partners deploy scalable solutions through ArrowSphere and supporting continued growth in recurring cloud consumption. Third, Arrow has a diversified business model that provides financial flexibility supported by strong balance sheet and consistent free cash flow generation. The combination of our global components and ECS businesses is a strategic advantage allowing us to participate across the full technology life cycle. And fourth, our focused capital allocation strategy is designed to maximize shareholder value by deploying capital where we expect the highest long term risk adjusted returns. We will continue to reinvest in the business to drive organic growth evaluate disciplined M and A opportunities and return excess capital to shareholders while maintaining an investment grade credit rating. Turning to slide 5. We are very pleased with the strong results we delivered during the second quarter. Which reflect our team's disciplined execution and the progress we have made over the past several years. We continue to build on our traditional distribution DNA, all while expanding our higher margin value added services across both global components and ECS creating a broader portfolio of solutions that strengthen customer relationships and improve the quality of our earnings. We believe Arrow is uniquely positioned across both the hardware and software technology ecosystems, giving us the opportunity to participate broadly as our customers continue investing across the full technology life cycle. As we enter the second half of the year, our focus remains on improving the quality of our growth through strong execution and disciplined financial management. We continue to make targeted investments in opportunities supported by customer demand and attractive long term returns. While maintaining a highly efficient business model which we expect will drive additional positive operating leverage. We are confident in the direction of the business encouraged by the opportunities ahead, and remain focused on creating sustainable long term shareholder value. With that, I will turn it over to Rajesh to discuss our financial performance in more detail. Rajesh K. Agrawal: Thanks, Bill. On slide 6, sales for the second quarter increased $2.4 billion year over year to $10 billion exceeding our guidance range and up 32% versus the prior year. Or up 30% versus the prior year on a constant currency basis. Second quarter consolidated non GAAP gross margin as a percent of sales of 11.2% was flat versus the prior year. Our second quarter non GAAP operating expenses increased $88 million year over year to $719 million primarily driven by variable costs and FX. Importantly, non GAAP OpEx as a percent of gross profit declined 10.5 percentage points year over year to 64.1%. We continue to focus on disciplined profitable growth and our efforts around operational efficiency are driving substantial operating leverage in the business model. In the second quarter, non GAAP operating income increased $188 million year over year to $403 million Non GAAP operating margin rate expanded 120 basis points year over year to 4% of sales. Interest and other expenses was $37 million in the quarter as we benefited from lower average debt levels throughout the quarter and our non GAAP effective tax rate was 23%. Finally, non GAAP diluted EPS for the second quarter increased 124% year over year to $5.45 which was above our guidance range driven by a number of factors, including favorable sales volume, continued strength of our value added services, operational leverage from productivity initiatives, and lower interest expense. Turning to slide 7, let's take a closer look at our global components business. Global components sales increased $726 million sequentially to $7.4 billion in the second quarter. Above our guidance range and up 11% versus prior quarter. Global Components non GAAP operating income increased $32 million sequentially to $397 million up 9% from the prior quarter. Non GAAP operating margins modestly declined 10 basis points sequentially to 5.4% and were up 180 basis points versus the prior year and well ahead of expectations. The growth that we experienced in the second quarter was once again broad based across geographies industry verticals and customer segments underpinned by healthy trends in our leading indicators. Book to bill ratios continue to increase and remain well above 1 in all 3 regions. Overall, lead times continue to extend for certain technologies, but they remain lower than a pervasive shortage environment. Customer order patterns broadly are normal in size and pace, reflecting a rational market environment. Our backlog construct continues to grow and is building out the first half of 27, giving us visibility and confidence in the sustainability of the business' momentum. Encouragingly, the growth that we are seeing continues to be led by customer unit demand with some incremental lift from price inflation. Price inflation contributed roughly 1/3 of the sequential revenue growth in our global components business. Memory now represents a low double digit percentage of total segment revenue. Our strategy remains focused on profitable growth and our execution is driving a healthier business mix. First, while we continue to benefit from secular growth trends related to AI and data center, we are experiencing broad based demand across our portfolio rather than concentrated in a single market. Strength in aerospace and defense. Industrial, and the reemergence of transportation particularly in the West, are presenting tailwinds to our global components business. These are our 3 largest verticals globally. Second, book to bill ratios and backlog across our mass market segment continues to improve. And we believe there is still healthy runway. Third, interconnect passive and electromechanical components for IP&E continue to grow surpassing $1 billion in sales for the second consecutive quarter. Fourth, our value added services, primarily supply chain services, made another meaningful contribution to our overall second quarter operating income. These capabilities expand our addressable market deepen customer engagement, and increase the durability of our earnings. Lastly, we have remained disciplined with our cost and have added positive operating leverage to our model. This discipline is expected to drive continued flow through as the broader market grows and expands. Taking a closer look at each of the regions. In The Americas, sales growth was broad based, highlighted by strength in aerospace and defense, industrial, and transportation. In EMEA, the market was underpinned by strength in transportation and aerospace and defense. And finally, in Asia, sequential growth was driven by industrial, transportation, and demand for data center computing power. Turning to slide 8 and our global ECS business. In the second quarter, global ECS sales increased $332 million year over year to $2.6 billion above our guidance range and up 14% versus the prior year. Or up 13% year over year on a constant currency basis. Total ECS billings were $5.9 billion up 14% year over year. Our global ECS business is strategically positioned at the complex end of the IT stack where hybrid cloud and AI demand is driving healthy backlog growth of over 75% year over year finishing the second quarter at another all time high. We are experiencing strength across our portfolio of cloud, cybersecurity, data protection, data intelligence, and infrastructure software. Today, hardware solutions for on premise storage and compute remain constrained, by thin supply mostly due to memory and SSD shortages. However, our role in the middle of technology makers channel partners allows us to source, provision, manage, and scale alternatives that lean more on the software and public cloud solutions that we offer. And our single integrated ArrowSphere platform continues to help drive these efforts, unlocking deeper engagement and recurring revenue volumes. In the second quarter, we took a charge on certain underperforming multiyear contracts. With 1 of our partners. As a result, second quarter ECS non GAAP operating margins declined 100 basis points year over year due to the charge. As we have noted in prior quarters, we have been working through discussions with 1 of our strategic partners with whom also have these beyond distribution relationships. This is a highly valued relationship, and we wanted to ensure we reach the right outcome. Have now terminated 1 key element of our Beyond distribution agreement, with this partner and continue to work toward restructuring another. We believe these actions will help to get this part of the business on the right track. Both of us remain committed to achieving success going forward. Turning to the balance sheet on Slide 9. Net working capital declined sequentially in the second quarter by approximately $100 million ending the quarter at $6.8 billion Inventory grew sequentially by $217 million ending the second quarter at $5.9 billion Importantly, the financial metrics that we monitor continue to significantly improve. Return on working capital increased 10.9 percentage points year over year finishing the second quarter 23.6%. Likewise, return on invested capital increased 5.8 percentage points year over year finishing 13.9%. Working capital as a percent of sales declined in the second quarter to 17% and our cash conversion decreased year over year by 23 days. Cash flow from operating activities in the second quarter was $318 million taking us to over $1 billion of operating cash flow year to date. The strong cash generation is driven in part by timing effects from our supply chain services offering, which may partially unwind as the year progresses. This offering is largely working capital life because the inventory is typically consigned. But AR and AP cash flows within existing customer supplier relationships can create quarter end slings. In general, the countercyclical cash flow dynamics of our business model have not changed. Gross balance sheet debt at the end of a second quarter declined sequentially by approximately $300 million and declined year over year by approximately $650 million finishing at $2.2 billion Our lower debt levels along with increased profitability has improved our adjusted leverage ratio by over a turn the past 12 months to 1.75x. Which provides us with increased financial flexibility Finally, we repurchased $43 million in shares in the second quarter. Now turning to Q3 guidance on Slide 10. We expect sales for the third quarter to be between $9.6 billion to $10.2 billion representing an increase of 28% year over year at the midpoint of the range. We expect global component sales to be between $7.5 billion and $7.9 billion representing sequential growth of 5% at the midpoint. In enterprise computing solutions, we expect sales to be between $2.1 billion and $2.3 billion which is up 2% year over year at the midpoint and reflects growing over a large partner addition last year. We are estimating a tax rate in the range of 23% to 25% and interest expense of approximately $50 million Our non GAAP diluted earnings per share is expected to be between $4.83 and $5.03 Details about the impacts of changes in foreign currencies can be found our earnings release. As we look to the balance of the year, we remain confident in the momentum we are seeing across the business and our ability to execute our strategy. At the same time, we recognize that a number of factors can influence the timing, and linearity of results from quarter to quarter. We expect global components to perform at or above seasonal trends in all of our regions for the remainder of the year. However, consistent with historical patterns in Q3, Asia is expected to be seasonally strong while EMEA is typically seasonally weaker. Additionally, our supply chain services expected to return to more normal profit levels in the third quarter. Overall, we are confident that our healthier business mix diversified business model, and financial discipline will enable Arrow to deliver additional operating leverage and drive significant earnings power. With that, I will now turn the call back over to Bill for some closing thoughts. William F. Austen: Turning to Slide 11. As we look ahead, we remain focused on disciplined execution, building on the operational momentum we have established, and further improving the quality of our growth. Leading indicators continue to reinforce our conviction that underlying demand is strong. Combined with the actions we have taken to enhance efficiency and optimize our operating model, we believe we are well positioned realize increasing levels of operating leverage. Our strategy is producing tangible results and strengthening our competitive position across our markets. As a result, we believe we are well positioned to capitalize on emerging opportunities and convert them into sustainable, profitable growth. We will continue investing in innovation and customer enablement to deepen relationships and expand our value proposition with a disciplined focus on allocating capital, to the highest return on investment opportunities. In parallel, we will strive to continue growing our portfolio of higher margin value added services across both global components and ECS, deepening customer engagement, and supporting more durable, higher quality earnings over time. Everyone at Arrow is proud of the progress we have made. Confident in the direction of the business, and remains committed to creating long term value for all of our stakeholders. Finally, I am excited to welcome Dee Merriweather as Arrow's new president and chief operating officer. Dee's extensive distribution experience and successful leadership of commercial, operational, and financial teams will further strengthen our organization. Just as importantly, she brings the humility, transparency, and purpose driven leadership that aligns with our culture and commitment to delivering value for all of our stakeholders. These additions strengthens our succession planning, and I will continue to serve as Arrow's interim CEO until a permanent CEO is named. With that, Rajesh, Rick, Eric, and I would be happy to take your questions. Operator, please open the call for questions. Operator: We will now begin the question and answer session. You would like to ask a question, please press 1 to raise your hand. To withdraw your question, press 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. And if you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Will Stein with Truist Securities. Will, please go ahead. William Stein: Hey, thank you for taking my question. Congrats on the good overall results and outlook. William F. Austen: Thanks. William Stein: I have a couple of quick questions. First, I think we are about 5 quarters into the component cycle in terms of expressing year over year growth it is a very robust growth level now. I think it is 2 quarters of 39% pushing 40% year over year growth. What inning would you say we are in, in terms of that dynamic? Are you seeing things that make you concerned that were in the sort of the last couple innings of that cycle? Think we are at the beginning still or, perhaps somewhere in the middle? William F. Austen: Will. Thanks for the question. it is Bill. You know, the starting pitcher is still in the game. Alright? We have not gone to the relief pitcher yet, so it is the early innings of the game. I would say, you know, we are in the second inning, you know, somewhere in that range. But, Rick is sitting here, and he is living it every day. So I am gonna turn it over to Rick. Richard J. Marano: Yeah. Yeah. Thanks. Thanks, Will, and thanks for the question. You know? And I will build on you know, Bill's response know, when we look at this recovery, it is really 3 different positions in the recovery cycle if you want to call it that. You have AI, which is not a recovery. AI is a market that is evolving and will continue to evolve. You have what is happening in Mil-Aero and then you have what is happening in the core business which is fundamentally the growth drivers to which we have always seen recoveries. Happen in the business. And as we said before, I kinda look at it and say it from this perspective. The growth in the core business is steady, All the indicators are strong. Backlog continues to build. And there is plenty of time left in the game. From my perspective as it builds. Yeah. that is really helpful. William Stein: Next, I wanna highlight sort of a question mark in the guidance. Your ECS guidance is below typical seasonality. It was a bit surprised by that. And related perhaps related to this, there was a report mid quarter noting that there was a departure of a supplier relationship I think this called out a $1.4 billion revenue level of business, but I think that might not have been perfectly accurate. And so I would like you to maybe set the record straight in terms of whether there was a loss, the timing of it, the sizing of it and whether that is perhaps what we are seeing in the Q3 guide. If it was not that, maybe elaborate on that. Thank you. William F. Austen: Yeah. Well, good great question, and thanks for bringing that up. It was a missed report. On the $1.4 billion. It was-- it is roughly half that, at $700 million on the revenue line to us. But Eric is here, and I will let Eric dive into that deeper if you would like. Eric C. Nowak: Yes. There would be no impact in terms of revenue and margin and profits for ECS with this loss of a contract, it is in fact it is a mutual agreement. Sometimes the strategy between the vendors and the distributors are diverging. And this was the case here. And basically, we are not a volume distributor or laptop or PC distributor. We are an infrastructure software hardware distributor in cloud. And we are focusing on this. And so, basically, these particular vendor wanted to have distributor that can do both. That is not our case. So we will focus on alternative solutions, and our partners will buy from us alternative solutions. And we do not expect any change at all in terms of the growth or whatsoever. Operator: And then, Will, just the other part of your question was the below seasonal guide that you referred to. Rajesh K. Agrawal: The growth rate in the in the quarter on a year over year basis is primarily the result of growing over a large partner addition last year. there is no change in trajectory of the overall business. We still expect to get to low double digit billings growth during the course of this full year. So it is really a grow over issue, for this particular, time frame. William F. Austen: Yeah. Just I will just add to that, Rajesh, for a moment. The ECS business the base business, the core business is quite strong. Our backlog is up 75% as Rajesh noted. In his script. And if you look at the product segment, the performance within the product segments, on a year over year basis. Storage is up 21%, compute is up 51%, business application is up 26%. So there is a really strong, healthy demand out there, and we are parked as we have always said, kind of right in the center of that ecosystem. So, the business is doing very well. William Stein: K. Thank you. William F. Austen: Thanks, bro. Operator: Your next question comes from the line of Melissa Dailey Fairbanks with Raymond James. Melissa Fairbanks: Hey, guys. William F. Austen: Hey, Melissa. Melissa Fairbanks: Thanks for taking my question. William F. Austen: Hello. How are you? Good to talk to you again. Melissa Fairbanks: Congrats on a great quarter. Dee welcome to Arrow. You are joining a great team, so I look forward to meeting you. I wanted to see if you might be able to comment on some of the things that we have heard from, some of your suppliers during this earnings season about how automotive OEMs are now beginning to pressure some of their tier ones. To maybe carry more inventory because we went way too far into the correct territory and things are too lean, and now we are seeing lead times. Extend. I am wondering if you are seeing any of those types of dynamics where this is going to be now we are back to normal, you know, kind of not just in case, but also not as lean as the just in time times were. Richard J. Marano: Yeah, Melissa. it is Rick. Thanks for the question. I will answer the question this way. I think if you kind of put the cycle into play, we went from a cycle where, obviously, we went through the pandemic, inventories got elevated, The cycle we went through, everyone bled off a lot of in inventory or held a lot of inventory and had to bleed it off. And then we have seen this progression of a really nice, slow recovery. And in that recovery, discipline has come back into the supply chain overall. Customers are now adding buffer inventory back into their supply chains. As well as giving us more visibility and extended visibility to what their MRPs are showing from a longer period of time. I do not think any 1 particular segment is reacting or acting much differently from an overall perspective, but I do think what is happening is some of the traditional vertical markets to which carried more inventory per se than others are building buffer inventory back into their mix. And as it relates to what they are seeing from a demand perspective. But I do not I do not consider it irrational in any way at this point in time. I do not. Melissa Fairbanks: Okay. Greg. Thanks, Rick. I appreciate that color. So just kind of building upon that, you are getting better visibility. Rajesh, I think you commented that you are now you have some visibility extending into 27. As lead times are extending, especially for some of the higher value products that are going to the data center or the IP&E stuff, Are you are any of your customers looking to preposition inventory and maybe having you manage that supply chain for them and then and then just put that inventory on consignment in place? I am wondering if that is a dynamic that is been happening. Richard J. Marano: No. it is Rick again, Melissa. I think that is the answer. As I said earlier, I do not see anything irrational from that perspective. I do not see or we do not see a lot of panic out there You know, lead times when you think about them overall, there are some lead times that are extending. Based off technology. Other lead times are extending based on demand. That are it is you know, that is basically putting on them, but nothing irrational from my perspective overall. Prepositioning of inventory or buffers or bonds you know, established by customers are relatively normal. From what we would see in a normal cycle. So I do not see that necessarily panic out there in any way, shape, or form. Driven either by price or by, you know, end market demand at this point. Melissa Fairbanks: Perfect. Very much, guys. I appreciate it. Richard J. Marano: Thanks, Melissa. William F. Austen: Thank you. Operator: Your next question comes from the line of Ruplu Bhattacharya from Bank of America. Ruplu Bhattacharya: Hi, Ruplu? William F. Austen: Hi. Ruplu Bhattacharya: Thanks for taking my-- hi. Thanks for taking my questions. Hi, Rajesh. Rajesh K. Agrawal: I want to start with the ECS billings. Ruplu Bhattacharya: Looks like in the second quarter, EMEA had very strong billings, 22% year on year change. Americas was more in the mid single digit range. Can you talk about what drove the difference in performance between the 2 regions? William F. Austen: I am gonna hand it over to our expert here, Eric. Eric C. Nowak. Eric C. Nowak: Yes. As we already explained, we aligned the strategies of America to Europe some, let's say, quarters ago now. And so, basically, this strategy around hybrid cloud and AI in the mid market and much more software and much more mid market. that is also now each completely global. We are deploying our ArrowSphere platform now in The US. And so, basically, we are up and running and for years and years in Europe, and so we are taking profit of this. In The US, it is now taking, it is ramping up. But, of course, we still need a couple of quarters to be at the same level. Ruplu Bhattacharya: Okay. Thanks for the details there. Rajesh, can I ask a follow-up on margins? So on ECS, there was 100-bps year on year decline. You said there was a charge. Can you quantify like how much was the year on year impact from the charge? Then how should we think about ECS segment margins as we go through the rest of the year? Typically, the fourth quarter sees a big jump. Are you still expecting that? And then on the on the similar question on the core business, In components, should we expect that you can maintain healthy 5% plus margins? What are the puts and takes if you can give us any details you can? Rajesh K. Agrawal: Yeah. Absolutely. We did take a charge, and ECS business that impacted the margins within ECS by a 100 basis points. that is that equates to $27 million. Had it not been for the charges, you know, the margins would have been at well over 4% charge relates to something we have been working on with 1 of our key partners to restructure and change the economics around some of the Beyond distribution contracts. And 1 key point of progress we made was we terminated 1 key aspect of the Beyond distribution relationship with this partner. And, we are working to restructure the other 1 that has been causing us some issues. We still have a great relationship with this partner, so we wanna make sure that we work it out in the right way. But I think we are on the right path there. I do expect some more charges in the second half of the year, probably at a lesser pace than what we saw in the second quarter. But we get behind the restructure, I think we will be on a on a good path there. And as Bill had mentioned earlier, the core business continues to perform really well, so no concerns at all there. And Ruplu, on your point around the fourth quarter seasonality, we will expect to see very high margins again in the ECS business in the fourth quarter as we always do. We get, you know, double the volume. We get margin expansion because we are leveraging the OpEx. And so I would not expect to see anything different there. Remember, though, that we had 4 extra ship days in the first quarter of this year, which will be 4 less in the fourth quarter of this year. But other than that, the dynamic should be exactly the same. With respect to components, know, we have been operating at around 5.5% margins in the first half of the year. So we are really pleased with the margin expansion And, you know, in our guide for the third quarter, we do believe that Asia will continue to have strong growth. And our supply chain services offering will step down a little to a more normalized level of profit, but I would be surprised if we did not get to 5% margins again in the third quarter. And so we are on a different path now. The margin will ebb and flow for components. But we are in a great place. You know, all the conditions that have gotten us here thus far, like, the right kind of geographic mix, the mass market customer coming back, value added service and the leverage we are getting on the cost structure, all those conditions will continue to be in place, and they are not changing anytime soon. So we feel pretty good about the margin profile in components. Ruplu Bhattacharya: Okay. Rajesh, thanks for all the details there. I am gonna try and sneak 1 more higher level question, and this is for Bill or Rajesh or anybody who wants to chime in. Right now, it seems like everything is going really well. I mean, the you know, you have good backlog. You have increasing visibility, end markets are strong. Can you just talk about like as component costs are increasing, are you concerned at all whether it is in the ECS segment or in the component segment that end market demand can decline or there could be some destruction of demand. And what risk mitigation are you taking so that if that happens, how would you react to that? Thanks for taking my questions. Really appreciate it. William F. Austen: that is a good question, Ruplu. it is Bill. Good to talk to you. No. We do not see, demand destruction in either the global components business or the ECS business, we see that the fundamentals in the market are quite strong. Whether it is whether it is on the component side or the E or the software side ECS. And if you think through what Rick had said in his comment, there are 3 upward graphs that are taking place. 1 is AI, 1 is aerospace and defense, and the other is the mass market, and they are all trending up and to the right. And if you build those 3 graphs on top of each other, the market has expanded, and that is what we are benefiting from. And we see the continued expansion of that market. So when you look in market and you say, oh, these companies now do not they do not have the ability to get storage. They do not have the ability to get compute on prem. It has to go to the cloud. That perfectly fits in with what Eric's business does in supporting those businesses with enterprise wide software. So we are really sitting at we have always called it the crossroads of, you know, the intersection of all of these secular demands that are going up into the right. So we really feel good, and we do not see that the demand is going to be destroyed. Ruplu Bhattacharya: Okay. Thanks for all the details. Appreciate it. William F. Austen: Thanks, Ruplu. Operator: There are no further questions at this time. I will now turn the call back to Bill Austin for closing remarks. William F. Austen: Thank you, operator, and thanks, everybody for joining us today. And everybody here is excited that Dee is going to be joining us. Over the sometime in early September. I think it is September 8. She will be here. Excited to have her joining us. She has great background. She's got great qualifications to come and join us in this distribution business. And then until that time, that the board says that the succession planning process has completed, I will continue to be the interim CEO I am not going anywhere. I will be here until the board says that it is time to end the process. So thanks for joining, and we look forward to talking with all of you over the course of the next several weeks and months. Take care, everybody. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in Arrow Electronics, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Arrow Electronics wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,943!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,382,819!* Now, it’s worth noting Stock Advisor’s total average return is 983% — a market-crushing outperformance compared to 216% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 14, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Arrow Electronics (ARW) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was underpinned by four primary drivers: sustained unit volume growth, disciplined execution of expenses and working capital, positive operating leverage, and a favorable mix of higher-margin value-added services. Management attributes the 32% year-over-year revenue growth primarily to increased unit volume, though price inflation contributed approximately one-third of sequential growth in Global Components. Strategic positioning at the intersection of hardware and software ecosystems allowed the company to capture demand for cloud and infrastructure software as on-premise hardware remained supply-constrained. Operating margin expansion of 120 basis points was fueled by positive operating leverage and a deliberate shift toward higher-margin value-added services, including supply chain and engineering services. The Global Components segment saw broad-based strength across all geographies, with a notable reemergence of the transportation vertical, particularly in Western markets. The company is leveraging its 'ArrowSphere' platform to drive recurring cloud consumption, helping channel partners deploy scalable AI and hybrid infrastructure solutions. Management expressed high conviction in the durability of demand, citing book-to-bill ratios well above parity and a backlog that now extends into the first half of 2027. Q3 guidance assumes Global Components will perform at or above seasonal trends, with seasonal strength in Asia offsetting typical weakness in EMEA. The company expects to achieve low double-digit billings growth for the full year in the ECS segment, despite a Q3 growth-over comparison against a large partner addition from the prior year. Supply chain services are expected to return to 'more normal' profit levels in the third quarter following a period of outsized contribution. Management anticipates continued operating leverage flow-through as the mass-market customer segment continues its slow ramp-up from the early innings of the current cycle. A $27 million charge was taken in the ECS segment related to underperforming multi-year 'Beyond Distribution' contracts with a strategic partner. Management terminated one key element of a strategic partner agreement and is restructuring another to improve the long-term economic profile of the relationship. Inventory grew by $217 million sequentially to $5.9 billion, though management noted that supply chain services inventory is typically consigned and working-capital light. The company reported a $700 million revenue impact from the mutual termination of a supplier relationship where strategic goals regarding volume distribution (PCs/laptops) diverged. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management characterized the recovery as being in the 'early innings' (specifically the second inning), with the starting pitcher still in the game. The recovery is distinct from AI, which is viewed as an evolving market rather than a cyclical recovery, while core business growth remains steady with building backlog. Management corrected reports of a $1.4 billion loss, stating the actual revenue impact is roughly half that amount at $700 million. The departure was a mutual agreement because Arrow focuses on high-value infrastructure and cloud rather than high-volume PC/laptop distribution. Management dismissed concerns of demand destruction, stating that customers are rationally adding buffer inventory back into supply chains following the pandemic-era volatility. Lead times are extending for certain technologies due to demand rather than panic, and customer order patterns remain normal in size and pace. Management expressed confidence in maintaining margins around the 5% level, supported by a healthier business mix and productivity gains. While margins may 'ebb and flow' due to geographic mix and service timing, the structural cost improvements are expected to persist.

Interested in Arrow Electronics, Inc.? Here are five stocks we like better. Arrow Electronics delivered a strong second quarter, with revenue rising 32% year over year to $10 billion and non-GAAP EPS surging 124% to $5.45, above guidance. Growth reflected broad demand, higher volumes, pricing, value-added services and operating leverage. Global Components sales increased 11% sequentially to $7.4 billion, supported by improving book-to-bill ratios, growing backlog and demand from aerospace, defense, industrial, transportation and data-center markets. ECS sales rose 14% year over year to $2.6 billion, though margins were pressured by a $27 million charge related to underperforming multiyear contracts. Arrow generated $318 million in quarterly operating cash flow, reduced gross debt to $2.2 billion and improved adjusted leverage to 1.75 times. The company forecast third-quarter sales of $9.6 billion to $10.2 billion and non-GAAP EPS of $4.83 to $5.03, while expecting additional but smaller ECS contract charges. Arrow Electronics (NYSE:ARW) reported second-quarter 2026 revenue of $10 billion, up 32% from a year earlier and 30% on a constant-currency basis, as broad-based demand, higher unit volumes, price inflation and value-added services supported growth across its businesses. Non-GAAP diluted earnings per share rose 124% year over year to $5.45, exceeding the company’s guidance range. Non-GAAP operating income increased $188 million to $403 million, while operating margin expanded 120 basis points to 4% of sales. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth Interim President and Chief Executive Officer Bill Austen said the results reflected “broad-based demand, disciplined execution, and positive operating leverage.” He cited sustained unit-volume growth, expense and working-capital management, favorable mix and supply-chain services as key contributors. Arrow’s Global Components segment generated $7.4 billion in second-quarter sales, up $726 million sequentially, or 11% from the prior quarter. Segment non-GAAP operating income rose $32 million sequentially to $397 million. Operating margin was 5.4%, down 10 basis points sequentially but up 180 basis points from a year earlier. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High Chief Financial Officer Raj Agrawal said book-to-bill ratios increased and remained above one in each of the company’s three regions, while backlog continued to build into the first half of 2027. He said approximately one-third of Global Components’ sequential revenue growth came from price inflation, with customer unit demand accounting for the remainder. Growth was broad-based across geographies, verticals and customer segments, according to the company. Arrow identified aerospace and defense, industrial and transportation as its three largest Global Components verticals globally. Sales in the Americas were supported by aerospace and defense, industrial and transportation; EMEA was supported by transportation and aerospace and defense; and Asia benefited from industrial, transportation and data-center computing demand. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Rick Marano, president of Global Components, said the company views the market recovery as still being in its early stages. He distinguished between AI, which he described as an evolving market rather than a recovery, military and aerospace activity, and the company’s core distribution business. Marano also said Arrow was seeing customers restore buffer inventory, but characterized the activity as disciplined rather than excessive. “I don’t see anything irrational from that perspective,” he said, adding that the company was not seeing panic-driven pre-positioning of inventory. Interconnect, passive and electromechanical components, or IP&E, exceeded $1 billion in sales for the second consecutive quarter. Memory represented a low double-digit percentage of Global Components revenue, Agrawal said. Global Enterprise Computing Solutions, or ECS, recorded second-quarter sales of $2.6 billion, an increase of $332 million, or 14%, from a year earlier. On a constant-currency basis, ECS sales rose 13%. Total ECS billings increased 14% to $5.9 billion, while backlog climbed more than 75% year over year to an all-time high. Arrow said it saw demand across cloud, cybersecurity, data protection, data intelligence and infrastructure software. The company said on-premise storage and compute hardware remained constrained by limited supply, primarily due to memory and SSD shortages, which supported demand for software and public-cloud alternatives offered through its ArrowSphere platform. ECS non-GAAP operating margin declined 100 basis points year over year after Arrow recorded a charge tied to underperforming multiyear contracts with one partner. Agrawal said the charge totaled $27 million and that ECS margins would have been above 4% without it. The company terminated one key element of a beyond-distribution agreement with the partner and is working to restructure another element. Agrawal said Arrow expects additional charges in the second half of the year, though at a lower pace than in the second quarter. He added that the company still expects ECS to show its typically strong fourth-quarter margin profile as higher volumes leverage operating expenses. During the question-and-answer session, Eric Nowak, president of ECS, said a mutually agreed contract loss would have no impact on ECS revenue, margins or profits. Austen said reports that the business involved $1.4 billion in revenue were inaccurate, placing the amount at roughly $700 million in revenue to Arrow. Cash flow from operating activities was $318 million in the quarter, bringing year-to-date operating cash flow above $1 billion. Net working capital declined by about $100 million sequentially to $6.8 billion, while inventory increased $217 million to $5.9 billion. Gross debt fell about $300 million from the prior quarter and about $650 million from a year earlier to $2.2 billion. Arrow’s adjusted leverage ratio improved to 1.75 times. The company repurchased $43 million of shares during the quarter. For the third quarter, Arrow forecast total sales of $9.6 billion to $10.2 billion and non-GAAP diluted EPS of $4.83 to $5.03. At the midpoint, the sales outlook implies 28% year-over-year growth. Global Components sales are expected to be $7.5 billion to $7.9 billion, representing 5% sequential growth at the midpoint. ECS sales are expected to be $2.1 billion to $2.3 billion, up 2% year over year at the midpoint. Arrow expects a non-GAAP tax rate of 23% to 25% and interest expense of about $50 million. Agrawal said Global Components is expected to perform at or above seasonal trends in all regions through the rest of the year, although Asia is expected to be seasonally strong in the third quarter while EMEA is typically weaker. He also said supply-chain services profit is expected to return to more normal levels in the third quarter. Austen also announced that Dee Merriwether will join Arrow as president and chief operating officer in early September. Austen said he will remain interim CEO until the board completes its succession-planning process and appoints a permanent chief executive. Arrow Electronics (NYSE: ARW) is a global provider of products, services and solutions to industrial and commercial users of electronic components and enterprise computing solutions. The company offers a broad portfolio of semiconductors, passives, connectors, electromechanical devices and embedded solutions, serving customers across diverse end markets including automotive, communications, computing, aerospace, defense and healthcare. Through its extensive supplier relationships, Arrow enables design engineers to identify and procure components required for the development of new electronic systems and devices. In addition to component distribution, Arrow delivers value-added services such as design engineering support, supply chain management, global logistics and technical training. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Arrow Electronics Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Total Revenue: $10 billion, up 32% year-over-year (up 30% on a constant currency basis). Non-GAAP Operating Margin: 4%, expanded 120 basis points year-over-year. Non-GAAP EPS: $5.45, up 124% year-over-year. Non-GAAP Gross Margin: 11.2% of sales, flat versus the prior year. Non-GAAP Operating Expenses: $719 million, up $88 million year-over-year; OpEx as a percent of gross profit declined 10.5 percentage points to 64.1%. Non-GAAP Operating Income: $403 million, up $188 million year-over-year. Interest and Other Expenses: $37 million in the second quarter. Non-GAAP Effective Tax Rate: 23%. Global Components Sales: $7.4 billion, up 11% sequentially; non-GAAP operating income of $397 million, up 9% sequentially; non-GAAP operating margin of 5.4%, up 180 basis points year-over-year. Global ECS Sales: $2.6 billion, up 14% year-over-year (up 13% on a constant currency basis); total ECS billings of $5.9 billion, up 14% year-over-year. ECS Non-GAAP Operating Margin: Declined 100 basis points year-over-year due to a charge on underperforming multiyear contracts. Net Working Capital: Declined sequentially by approximately $100 million to $6.8 billion. Inventory: Grew sequentially by $217 million to $5.9 billion. Return on Working Capital: 23.6%, up 10.9 percentage points year-over-year. Return on Invested Capital: 13.9%, up 5.8 percentage points year-over-year. Cash Flow from Operating Activities: $318 million in the second quarter; over $1 billion year-to-date. Gross Balance Sheet Debt: $2.2 billion, down approximately $300 million sequentially and $650 million year-over-year. Adjusted Leverage Ratio: 1.75 times, improved by over a turn over the past 12 months. Share Repurchases: $43 million in the second quarter. Q3 2026 Guidance: Sales between $9.6 billion and $10.2 billion; Global Component sales between $7.5 billion and $7.9 billion; ECS sales between $2.1 billion and $2.3 billion; non-GAAP diluted EPS between $4.83 and $5.03. Warning! GuruFocus has detected 10 Warning Signs with ARW. Is ARW fairly valued? Test your thesis with our free DCF calculator. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Total revenue of $10 billion increased 32% year-over-year, with non-GAAP EPS of $5.45 up 124% year-over-year, both exceeding expectations. Operating margin expanded 120 basis points year-over-year to 4%, driven by positive operating leverage and disciplined expense management. Book-to-bill ratios improved and remain well above parity, with backlog building into 2027, providing strong visibility and confidence in demand sustainability. Growth is broad-based across geographies, industry verticals, and customer segments, with strength in aerospace and defense, industrial, and transportation, and the reemergence of the mass market. Value-added services, including supply chain services and engineering services, continue to differentiate Arrow and contribute significantly to profitability, with new initiatives like Digital Test Drive and expanded ECS experience centers. ECS backlog grew over 75% year-over-year to an all-time high, driven by strong demand in cloud, cybersecurity, and AI-related workloads. Balance sheet improved with net working capital down sequentially, return on working capital up 10.9 percentage points year-over-year to 23.6%, and adjusted leverage ratio down to 1.75 times. Q3 guidance implies 28% year-over-year revenue growth at the midpoint, with Global Components expected to perform at or above seasonal trends. The company repurchased $43 million in shares in Q2, reflecting a disciplined capital allocation strategy. New President and COO Dee Merriwether brings extensive distribution experience, strengthening succession planning and leadership. ECS non-GAAP operating margins declined 100 basis points year-over-year due to a $27 million charge related to underperforming multiyear contracts with a strategic partner. The company expects additional charges in the second half of the year related to restructuring beyond-distribution agreements, though at a lesser pace. ECS Q3 guidance is below typical seasonality, partly due to growing over a large partner addition last year, which may concern investors. The loss of a $700 million revenue contract with a partner (mutually agreed) could impact future revenue, though the company downplays the impact. Supply chain services profits are expected to return to more normal levels in Q3, potentially reducing sequential profitability. Memory and SSD shortages are constraining on-premise hardware supply in ECS, which could limit growth in certain segments. Price inflation contributed roughly one third of sequential revenue growth in Global Components, raising concerns about sustainability if inflation moderates. Interest expense is expected to increase to approximately $50 million in Q3, up from $37 million in Q2, which could pressure earnings. The company's interim CEO situation and ongoing succession planning may create uncertainty for investors. Operating cash flow benefits from timing effects in supply chain services may partially unwind as the year progresses, affecting cash generation. Q: What inning are we in regarding the current Components cycle, and are there concerns about it nearing its end? A: Bill Austen (Interim President and CEO) compared the cycle to a baseball game, stating, "The starting pitcher is still in the game... we're in the second inning." Rick Marano (President of Global Components) elaborated that the recovery is driven by three distinct areas: AI (an evolving market), mil-aero, and the core business. He noted that growth in the core business is steady, all indicators are strong, and backlog continues to build, indicating there is "plenty of time left in the game." Q: Can you clarify the reported loss of a supplier relationship and its impact on the ECS guidance? A: Bill Austen corrected the report, stating the revenue impact is roughly half of the reported $1.4 billion, at $700 million. Eric Nowak (President of Global Enterprise Computing Solutions) clarified that the loss is a mutual agreement due to diverging strategies, as Arrow is not a volume laptop/PC distributor but focuses on infrastructure software, hardware, and cloud. He confirmed there will be no impact on revenue, margin, or profits for ECS. Raj Agrawal (CFO) added that the below-seasonal Q3 guide is primarily a "grow-over issue" from a large partner addition last year, with no change in the overall business trajectory. Q: Are you seeing customers add buffer inventory back into their supply chains, and is this leading to any irrational behavior? A: Rick Marano (President of Global Components) confirmed that customers are adding buffer inventory and providing extended visibility into their MRPs. However, he emphasized that this is not irrational, stating, "I don't consider it irrational in any way at this point in time." He noted that while some traditional vertical markets are building buffer inventory, there is no panic or abnormal prepositioning of inventory, and lead time extensions are based on technology and demand, not irrational behavior. Q: Can you quantify the charge impacting ECS margins and provide expectations for segment margins going forward? A: Raj Agrawal (CFO) quantified the charge at $27 million, which impacted ECS margins by 100 basis points. Without it, margins would have been well over 4%. He expects some more charges in the second half of the year, but at a lesser pace. He confirmed that Q4 should see the typical high margins due to double volume and OpEx leverage. For Components, he expects margins to remain around 5% in Q3, supported by geographic mix, mass market recovery, value-added services, and cost leverage. Q: Are you concerned about potential demand destruction due to increasing component costs? A: Bill Austen (Interim President and CEO) stated they do not see demand destruction in either Global Components or ECS. He highlighted three upward trends: AI, aerospace and defense, and the mass market, all trending up and to the right. He noted that supply constraints in on-prem storage and compute are pushing demand to cloud solutions, which perfectly aligns with ECS's enterprise-wide software offerings, positioning Arrow at the intersection of these secular demands. Q: What drove the difference in ECS billings performance between the Americas and EMEA regions? A: Eric Nowak (President of Global Enterprise Computing Solutions) explained that the strategy around hybrid cloud, AI, and the mid-market has been aligned globally. The ArrowSphere platform has been deployed in Europe for years and is now ramping up in the U.S. He noted that while the U.S. is up and running, it still needs a couple of quarters to reach the same level of maturity as Europe, explaining the stronger billings growth in EMEA. Q: How is the company managing the balance between growth and disciplined expense management? A: Raj Agrawal (CFO) highlighted that non-GAAP OpEx as a percent of gross profit declined 10.5 percentage points year-over-year to 64.1%. This operational efficiency is driving substantial operating leverage, with non-GAAP operating income increasing $188 million year-over-year to $403 million. The company remains focused on disciplined, profitable growth, which is reflected in the 120 basis point year-over-year expansion in operating margin to 4%. Q: Can you provide more detail on the strength within the ECS product segments? A: Bill Austen (Interim President and CEO) provided specific year-over-year growth figures for ECS product segments: security is up 21%, compute is up 51%, and business applications are up 26%. He emphasized that the core ECS business is quite strong, with backlog up 75% year-over-year, and that Arrow is positioned in the center of a healthy demand ecosystem. Q: What is the outlook for the Global Components business in the third quarter and the remainder of the year? A: Raj Agrawal (CFO) guided for Global Components sales between $7.5 billion and $7.9 billion in Q3, representing 5% sequential growth at the midpoint. He expects the business to perform at or above seasonal trends in all regions, with Asia expected to be seasonally strong and EMEA typically weaker. He also noted that Supply Chain Services is expected to return to more normal profit levels in Q3, but overall, the company expects to deliver additional operating leverage. Q: How is the company's balance sheet and cash flow performing, and what is the capital allocation strategy? A: Raj Agrawal (CFO) reported strong cash generation with over $1 billion of operating cash flow year-to-date. Gross debt declined sequentially by $300 million to $2.2 billion, and the adjusted leverage ratio improved to 1.75 times. Return on working capital increased to 23.6%, and return on invested capital improved to 13.9%. The company repurchased $43 million in shares in Q2 and remains focused on reinvesting in the business, evaluating disciplined M&A, and returning excess capital to shareholders while maintaining an investment-grade credit rating. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Arrow Electronics ARW reported second-quarter 2026 non-GAAP earnings of $5.45 per share, surpassing the company's previously issued guidance of $4.32-$4.52. The bottom line increased 124% year over year and beat the Zacks Consensus Estimate by 22.47%.In the second quarter, ARW reported revenues of $9.99 billion, which rose 32% year over year and beat the consensus mark by 5.74%. The figure also came in above the company's earlier guided range of $9.15-$9.75 billion. At constant currency, revenues increased 30% year over year. Changes in foreign currencies had a positive impact of $93.5 million on sales and 9 cents on earnings per share compared with the second quarter of 2025.On a GAAP basis, ARW reported earnings of $5.26 per share, up 47% year over year, while net income attributable to shareholders rose 45% year over year to $273 million. Non-GAAP net income attributable to shareholders was $283 million, up 122% year over year. Arrow Electronics, Inc. price-consensus-eps-surprise-chart | Arrow Electronics, Inc. Quote Global ComponentsIn the second quarter of 2026, Global Components sales increased 39% year over year on a reported basis and 38% on a constant currency basis to $7.37 billion.Region-wise, revenues from the Americas increased 44% year over year on a reported basis. EMEA revenues rose 36% year over year on a reported basis and 32% at constant currency. Asia-Pacific revenues increased 38% year over year on a reported basis and 37% at constant currency.Global Enterprise Computing Solutions (ECS)Global ECS revenues were $2.63 billion, which increased 14% year over year on a reported basis and 13% at constant currency. Global ECS gross billings rose 14% year over year to $5.86 billion.Region-wise, the segment's EMEA revenues grew 20% year over year on a reported basis and 17% at constant currency. Americas ECS revenues increased 8% year over year on a reported basis. The Global Components segment reported a non-GAAP gross margin of 11.6%, up 40 basis points year over year, while the Global ECS segment's gross margin contracted 100 basis points to 10.2% year over year. Global ECS operating income for the quarter included a $26.6 million loss related to the underperformance of certain non-cancellable multi-year purchase obligations against a 21.7 million loss of the same nature in the first quarter of 2026.The non-GAAP operating income from Global Components and Global ECS was $397 million and $86 million, respectively. Global Components' non-GAAP operating income increased 110% year over year, while Global ECS' non-GAAP operating income decreased 12% year over year.Arrow Electronics' non-GAAP operating income rose to $403 million in the second quarter of 2026, up 87% year over year. The non-GAAP operating margin expanded approximately 120 basis points year over year to 4.0%. Within segments, Global Components' non-GAAP operating margin expanded approximately 180 basis points year over year to 5.4%, while Global ECS' non-GAAP operating margin contracted 100 basis points year over year to 3.3%. As of July 4, 2026, cash and cash equivalents totaled $245 million, down from $287 million as of April 4, 2026.Long-term debt was $2.05 billion, down from $2.35 billion at the end of the previous quarter.In the reported quarter, cash flow from operations swung to a positive $318 million compared with cash used for operations of $206 million in the second quarter of 2025, primarily reflecting the timing of cash flows within the company's supply chain services offering.In the second quarter of 2026, ARW repurchased $43 million of shares. During the quarter, Arrow's board of directors authorized a new $1 billion share repurchase program, effective May 12, 2026, replacing the company's previous repurchase authorization. Management also pointed to book-to-bill ratios remaining well above parity during the quarter, with backlog continuing to build in both size and duration across the business. For the third quarter of 2026, sales are estimated between $9.6 billion and $10.2 billion.Global Components sales are projected between $7.50 billion and $7.90 billion. Global ECS sales are anticipated to be between $2.10 billion and $2.30 billion.Interest expenses are expected to be approximately $50 million. The average tax rate is expected to range from 23% to 25%.ARW anticipates GAAP earnings of $4.72-$4.92 per share and non-GAAP earnings of $4.83-$5.03 per share.Changes in foreign currencies are expected to decrease sales by approximately $27 million and earnings per share by 1 cent compared to the third quarter of 2025. On a sequential basis, foreign-currency changes are expected to decrease sales by approximately $50 million and earnings per share by 4 cents compared to the second quarter of 2026. Arrow Electronics currently carries a Zacks Rank #3 (Hold).Kimball Electronics KE, Quantum QMCO and Lumentum LITE are among the better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Currently, Kimball Electronics sports a Zacks Rank #1 (Strong Buy), while Quantum and Lumentum carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here. Kimball Electronics shares have inched up 1.8% in the past six months. KE is scheduled to report its fiscal fourth-quarter 2026 results on Aug. 13. Quantum's shares have surged 96% in the past six months. QMCO is scheduled to report its fiscal first-quarter 2027 results on Aug. 10, 2026. Lumentum shares have gained 48.9% in the past six months. LITE is slated to report its fiscal fourth-quarter 2026 results on Aug. 11. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Arrow Electronics, Inc. (ARW) : Free Stock Analysis Report Lumentum Holdings Inc. (LITE) : Free Stock Analysis Report Kimball Electronics, Inc. (KE) : Free Stock Analysis Report Quantum Corporation (QMCO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Arrow Electronics, Inc. ARW used its second-quarter 2026 earnings call to emphasize that the recovery in electronic components remains in its early stages, supported by broadening demand, rising book-to-bill ratios and backlog extending into 2027. Management also highlighted improving operating leverage and higher-value services while addressing questions around ECS margins, supplier relationships and the durability of demand. Interim president and CEO William Austen characterized the Components recovery as being around the second inning, signaling management sees substantial runway remaining. Global Components president Richard Marano separated the opportunity into AI, aerospace and defense, and core business recovery. He said core growth remains steady, with strong indicators and a growing backlog. The backdrop supported Global Components' sales growth of 39% year over year to $7.37 billion. Management said unit demand remained the primary growth driver, while price inflation accounted for roughly one-third of sequential segment revenue growth. Austen stressed that demand was not concentrated in AI. Industrial, aerospace and defense, and transportation contributed to momentum, while mass-market customers remained in the earlier stages of recovery. Marano said book-to-bill ratios were well above 1 across all three regions, with backlog building into the first half of 2027. Customer ordering remained normal in size and pace despite some lengthening of lead times. That demand backdrop helped ARW’s second-quarter consolidated revenues reach $9.99 billion, up 32% year over year and beating the Zacks Consensus Estimate of $9.45 billion. Non-GAAP earnings of $5.45 per share also topped the $4.45 consensus. Arrow Electronics, Inc. price-consensus-eps-surprise-chart | Arrow Electronics, Inc. Quote CFO Rajesh Agrawal said non-GAAP operating margin expanded 120 basis points year over year to 4%, while non-GAAP operating expenses as a percentage of gross profit fell 10.5 percentage points. Management attributed the earnings improvement to stronger sales volume, value-added services, productivity initiatives and lower interest expense. Supply chain services again made a meaningful contribution to Components profitability. Agrawal cautioned that supply chain services profits should normalize in the third quarter. Even so, he said he would be surprised if Components margins did not reach 5% again in the period. ECS sales rose 14% year over year to $2.63 billion, while backlog increased more than 75% to another record. Management cited strength across cloud, cybersecurity, data protection, data intelligence and infrastructure software. The segment absorbed a $27 million charge tied to underperforming multiyear arrangements with a strategic partner, reducing ECS margin by 100 basis points. Agrawal expects additional charges in the second half, but at a slower pace. A BofA Securities analyst pressed management on the margin outlook. Agrawal said fourth-quarter ECS margins should again benefit from substantially higher seasonal volume and operating-expense leverage. A Truist Securities analyst asked about a reported supplier relationship departure. Austen clarified that the associated revenues were roughly $700 million, rather than the reported $1.4 billion. Global ECS president Eric Nowak said the agreement ended mutually because of differing strategies and that management does not expect an impact on ECS revenues, margins or profits. A Raymond James analyst also questioned whether customers were rebuilding inventories as lead times extended. Marano said customers were adding normal buffer inventory and providing greater visibility, but management was not seeing panic buying or irrational ordering. For the third quarter, management expects sales of $9.6 billion to $10.2 billion and non-GAAP earnings of $4.83-$5.03. Global Components sales are projected at $7.5-$7.9 billion, while ECS sales are expected at $2.1-$2.3 billion. Management’s broader focus remains on disciplined expenses, higher-margin value-added services and investments tied to customer demand and attractive returns. Austen also emphasized continued efforts to improve the quality and durability of earnings. ARW currently carries a Zacks Rank #3 (Hold), indicating a more neutral near-term earnings-revisions signal. Its Value Score of A, Growth Score of B, Momentum Score of B and VGM Score of A reflect favorable characteristics across the Style Score framework. The Style Scores are designed to complement the Zacks Rank, with A and B representing stronger grades. However, the Zacks framework places greater emphasis on Rank #1 (Strong Buy) and 2 (Buy) stocks when paired with favorable Style Scores. ARW's Zacks Rank can change as analyst estimates are revised following the newly reported results. You can see the complete list of today’s Zacks #1 Rank stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Arrow Electronics, Inc. (ARW) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Global electronics components and solutions distributor Arrow Electronics (NYSE:ARW) beat Wall Street’s revenue expectations in Q2 CY2026, with sales up 31.8% year on year to $9.99 billion. Guidance for next quarter’s revenue was optimistic at $9.9 billion at the midpoint, 2.6% above analysts’ estimates. Its non-GAAP profit of $5.45 per share was 22.5% above analysts’ consensus estimates. Is now the time to buy Arrow Electronics? Find out in our full research report. Revenue: $9.99 billion vs analyst estimates of $9.54 billion (31.8% year-on-year growth, 4.7% beat) Adjusted EPS: $5.45 vs analyst estimates of $4.45 (22.5% beat) Revenue Guidance for Q3 CY2026 is $9.9 billion at the midpoint, above analyst estimates of $9.65 billion Adjusted EPS guidance for Q3 CY2026 is $4.93 at the midpoint, above analyst estimates of $4.68 Operating Margin: 3.8%, up from 2.5% in the same quarter last year Free Cash Flow was $297.2 million, up from -$224.5 million in the same quarter last year Market Capitalization: $11.6 billion Founded as a single retail store, Arrow Electronics (NYSE:ARW) provides electronic components and enterprise computing solutions to businesses globally. A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Unfortunately, Arrow Electronics’s 1.9% annualized revenue growth over the last five years was sluggish. This fell short of our benchmarks and is a rough starting point for our analysis. Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Arrow Electronics’s annualized revenue growth of 10% over the last two years is above its five-year trend, suggesting its demand recently accelerated. We can better understand the company’s revenue dynamics by analyzing its most important segments, Components and ECS, which are 73.7% and 26.3% of revenue. Over the last two years, Arrow Electronics’s Components revenue (electronic component sales) averaged 13.6% year-on-year growth while its ECS revenue (computing solutions and services) averaged 20.9% growth. This quarter, Arrow Electronics reported wonderful year-on-year revenue growth of 31.8%, and its $9.99 billion of revenue exceeded Wall Street’s estimates by 4.7%. Company management is currently guiding for a 28.4% year-on-year increase in sales next quarter. Looking further ahead, sell-side analysts expect revenue to grow 12% over the next 12 months, an improvement versus the last two years. This projection is particularly noteworthy for a company of its scale and implies its newer products and services will fuel better top-line performance. ONE MORE THING: The $21 AI Application Stock Wall Street Forgot. While Wall Street obsesses over who’s building AI, one company is already using it to print money. And nobody’s paying attention. AI chip stocks trade at ridiculous valuations. This company processes a trillion consumer signals monthly using AI and trades at a third of the price. The gap won’t last. The institutions will figure it out. You need to see this first. Read the FREE Report Before They Notice. Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development. Arrow Electronics was profitable over the last five years but held back by its large cost base. Its average operating margin of 4.1% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point. Looking at the trend in its profitability, Arrow Electronics’s operating margin decreased by 2.1 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Arrow Electronics’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers. In Q2, Arrow Electronics generated an operating margin profit margin of 3.8%, up 1.3 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead. Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions. Arrow Electronics’s EPS grew at 8.9% compounded annual growth rate over the last five years, higher than its 1.9% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve. We can take a deeper look into Arrow Electronics’s earnings to better understand the drivers of its performance. A five-year view shows that Arrow Electronics has repurchased its stock, shrinking its share count by 30.5%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings. Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business. For Arrow Electronics, its two-year annual EPS growth of 14.6% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history. In Q2, Arrow Electronics reported adjusted EPS of $5.45, up from $2.43 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Arrow Electronics’s full-year EPS to grow 14.9% from $17.47 to $20.07. We were impressed by how significantly Arrow Electronics blew past analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. Investors were likely hoping for more, and shares traded down 4.2% to $213.00 immediately after reporting. Is Arrow Electronics an attractive investment opportunity right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.

--Total Revenue of $10.0 billion, up 32% Year-over-Year, Above High End of Guidance-- --Diluted earnings Per Share of $5.26 and Non-GAAP Earnings Per Share of $5.45, Both Above High End of Guidance-- CENTENNIAL, Colo., August 06, 2026--(BUSINESS WIRE)--Arrow Electronics, Inc. (NYSE:ARW) today announced financial results for its second quarter of 2026. "Arrow delivered another strong quarter, underpinned by meaningful year-over-year growth in revenue, profit margin and earnings per share, all of which exceeded expectations," said Bill Austen, Arrow’s interim president and chief executive officer. "Both our Global Components and Global Enterprise Computing Solutions businesses continue to demonstrate strong strategic execution, supported by healthy demand across regions, end markets and customer segments. Book-to-bill ratios remain well above parity, and our backlog continues to build in both size and duration." "Our results are the tangible outcome of the dedication, effort, decisions, and tradeoffs put forward by everyone at Arrow. The results also reinforce our belief in the strength of our business and our ability to continue delivering profitable growth. Together with our higher-margin, value-added offerings, scalable operating model and focused capital allocation strategy, we believe Arrow is well positioned to create long-term value for our suppliers, customers and shareholders." In the second quarter of 2026, sales increased 32 percent year over year and increased 30 percent year over year on a constant currency basis. Changes in foreign currencies had a positive impact on growth of $93.5 million on sales and $0.09 on earnings per share on a diluted basis compared to the second quarter of 2025. In the second quarter of 2026, Global Components sales increased 39 percent year over year and increased 38 percent year over year on a constant currency basis. Americas Components second-quarter sales increased 44 percent year over year. EMEA Components second-quarter sales increased 36 percent year over year and increased 32 percent year over year on a constant currency basis. Asia-Pacific Components second-quarter sales increased 38 percent year over year and increased 37 percent year over year on a constant currency basis. In the second quarter of 2026, Global ECS sales increased 14 percent year over year and increased 13 percent year over year on a constant currency basis. Global ECS gross billings increased 14 percent year over year. Global ECS second-quarter operating income and non-GAAP operating income decreased 12 percent year over year. EMEA ECS second-quarter sales increased 20 percent year over year and increased 17 percent year over year on a constant currency basis. Americas ECS second-quarter sales increased 8 percent year over year. Other Financial Information In the second quarter of 2026, Arrow generated $318 million of cash flow from operations partly due to the timing of cash flows within Global Components supply chain services offerings. Arrow also repurchased $43 million of shares in the second quarter of 2026. 1 A reconciliation of non-GAAP financial measures to GAAP financial measures is presented in the reconciliation tables included herein. Third-Quarter 2026 Outlook Consolidated sales of $9.60 billion to $10.20 billion, with Global Components sales of $7.50 billion to $7.90 billion, and Global ECS sales of $2.10 billion to $2.30 billion Net income per share on a diluted basis of $4.72 to $4.92, and non-GAAP net income per share on a diluted basis of $4.83 to $5.03 Average tax rate in the range of 23 percent to 25 percent Interest expense of approximately $50 million Changes in foreign currencies to decrease sales by approximately $27 million, and earnings per share on a diluted basis by $0.01 compared to the third quarter of 2025 Changes in foreign currencies to decrease quarter-over-quarter growth in sales by $50 million, and earnings per share on a diluted basis to decrease by $0.04 compared to the second quarter of 2026 Earnings Presentation Please refer to the earnings presentation, which can be found at investor.arrow.com, as a supplement to the company’s earnings release. The company may use this website as a means of disclosing material, non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor the website noted above, in addition to following the company’s press releases, SEC filings, and public conference calls and webcasts. Webcast and Conference Call Information Arrow Electronics will host a conference call to discuss second-quarter 2026 financial results on Aug. 6, 2026, at 4:30 p.m. ET. A live webcast of the conference call will be available via the events section of investor.arrow.com or by accessing the webcast link directly at https://events.q4inc.com/attendee/235232794. Shortly after the conclusion of the conference call, a webcast replay will be available on the Arrow website for one year. About Arrow Electronics Arrow Electronics (NYSE:ARW) sources and engineers technology solutions for thousands of leading manufacturers and service providers. With global 2025 sales of $30.9 billion, Arrow’s portfolio enables technology across major industries and markets. Learn more at arrow.com. Key Business Metrics Management uses gross billings as an operational metric to monitor operating performance of its Global ECS reportable segment, including sales performance by geographic region, as it provides meaningful supplemental information in evaluating the overall performance of the Global ECS business. The company uses this key metric to develop financial forecasts, make strategic decisions, and prepare and approve annual budgets. Gross billings represent amounts invoiced to customers for goods and services during a specified period and do not include the impact of recording sales on a net basis or sales adjustments, such as trade discounts and other allowances. The use of gross billings has certain limitations as an analytical tool and should not be considered in isolation or as a substitute for revenue. Information Relating to Forward-Looking Statements This press release includes "forward-looking statements," as the term is defined under the federal securities laws. Forward-looking statements are those statements which are not statements of historical or current fact. These forward-looking statements can be identified by forward-looking words such as "expects," "anticipates," "intends," "plans," "may," "will," "would," "could," "believes," "seeks," "projected," "potential," "estimates," and similar expressions. These forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which could cause actual results or facts to differ materially from such statements for a variety of reasons, including, but not limited to: unfavorable economic conditions or changes, including those that may occur in connection with recession, inflation, tax rates, foreign currency exchange rates, or the availability of capital; impacts of military conflict and sanctions; political instability and changes; trade protection measures, tariffs, increased trade tensions, trade agreements and policies, and other restrictions, duties, and value-added taxes, and the associated macroeconomic impacts; disruptions, shortages, or inefficiencies in the supply chain; non-compliance with certain laws, regulations, or executive orders, such as trade, export, antitrust, and anti-corruption laws, or regulatory restrictions relating to the company or its subsidiaries or the permissibility of third-parties to transact therewith; the inability to realize sufficient sales to cover non-cancellable purchase obligations under certain ECS distribution agreements; changes in relationships with key suppliers; management transitions, including the company’s search for a permanent CEO; changes in product supply, pricing, and customer demand; increased profit-margin pressure resulting from industry conditions, competition, or other factors; other vagaries in the Global Components and the Global ECS markets; changes to applicable laws, regulations, executive orders, or rules relating to government contractors and the resulting legal and reputational exposure, including but not limited to those relating to environmental, social, governance, cybersecurity, data privacy, and artificial intelligence issues; commercial disputes, patent infringement claims, product liability lawsuits, or other legal proceedings; foreign tax and other loss contingencies; failure, disruption, or compromise of the company’s information systems or those of a third-party service provider, including unauthorized use or disclosure of company, supplier, or customer information; outbreaks, epidemics, pandemics, or public health crises; the effects of natural or man-made catastrophic events; and the company’s ability to generate positive cash flow. For a further discussion of these and other factors that could cause the company's future results to differ materially from any forward-looking statements, see the section entitled "Risk Factors" in the company's most recent Quarterly Report on Form 10-Q and the company's most recent Annual Report on Form 10-K, as well as in other filings the company makes with the Securities and Exchange Commission. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The company undertakes no obligation to update publicly or revise any of the forward-looking statements. Certain Non-GAAP Financial Information In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States ("GAAP"), the company also provides certain non-GAAP financial information. The company provides the following non-GAAP metrics: sales, gross profit, operating income (including by business segment), income before income taxes, provision for income taxes, consolidated net income, noncontrolling interests, net income attributable to shareholders, effective tax rate, and net income per share on a diluted basis. The foregoing non-GAAP measures are adjusted by certain of the following, as applicable: impact of changes in foreign currencies (referred to as "changes in foreign currencies" or "on a constant currency basis") by re-translating prior-period results at current period foreign exchange rates; identifiable intangible asset amortization; restructuring, integration, and other; net gains (losses) on investments; inventory recoveries related to the wind down of a business within Global Components ("impact of wind down"); tax adjustments related to the wind down of a business; and employee severance and benefits costs not related to restructuring initiative presented in cost of sales. Management believes that providing this additional information is useful to the reader to better assess and understand the company’s operating performance and future prospects in the same manner as management, especially when comparing results with previous periods. Management typically monitors the business as adjusted for these items, in addition to GAAP results, to understand and compare operating results across accounting periods, for internal budgeting purposes, for short- and long-term operating plans, and to evaluate the company's financial performance. However, analysis of results on a non-GAAP basis should be used as a complement to, in conjunction with, and not as a substitute for, data presented in accordance with GAAP. ___________________________ (1) Includes recoveries of inventory related to the wind down of a business. (2) Other includes gain on investments, net. (3) Other includes gain on investments, net, non-recurring tax items, and employee severance and benefits costs not related to restructuring initiative presented in cost of sales. (4) Includes restructuring, integration, and other charges, and tax adjustments related to the wind down of a business. (5) The sum of the components for non-GAAP diluted EPS, as adjusted may not agree to totals, as presented, due to rounding. (6) The items as shown in this table, represent the reconciling items for the tax rate as reported and as a non-GAAP measure. View source version on businesswire.com: https://www.businesswire.com/news/home/20260806513437/en/ Contacts Investors:Michael Nelson,Vice President, Investor Relations720-654-9893 Media:John Hourigan,Vice President, Public Affairs and Corporate Marketing303-824-4586

Arrow Electronics (ARW) came out with quarterly earnings of $5.45 per share, beating the Zacks Consensus Estimate of $4.45 per share. This compares to earnings of $2.43 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +22.47%. A quarter ago, it was expected that this electronics maker would post earnings of $2.81 per share when it actually produced earnings of $5.22, delivering a surprise of +85.77%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Arrow Electronics, which belongs to the Zacks Electronics - Parts Distribution industry, posted revenues of $9.99 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 5.74%. This compares to year-ago revenues of $7.58 billion. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Arrow Electronics shares have added about 105.9% since the beginning of the year versus the S&P 500's gain of 12.8%. While Arrow Electronics has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Arrow Electronics was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $3.94 on $8.76 billion in revenues for the coming quarter and $19.15 on $37.06 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Electronics - Parts Distribution is currently in the top 4% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the broader Zacks Computer and Technology sector, Owlet, Inc. (OWLT), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 11. This company is expected to post quarterly earnings of $0.05 per share in its upcoming report, which represents a year-over-year change of +200%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Owlet, Inc.'s revenues are expected to be $31.3 million, up 19.9% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Arrow Electronics, Inc. (ARW) : Free Stock Analysis Report Owlet, Inc. (OWLT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research