Q4 2024 Earnings Summary
Reported on Feb 18, 2025 (Before Market Open)
Pre-Earnings Price$114.91Last close (Feb 5, 2025)
Post-Earnings Price$105.09Open (Feb 6, 2025)
Price Change
$-9.82(-8.55%)
- Management believes they are at the bottom of the inventory correction cycle, with a path to improvement over the full year, supported by declining inventories and expected normalization of order patterns.
- The company has reduced total inventories by over $1 billion from their peak, with inventory turns improving year-on-year in Q4, indicating effective inventory management and improved efficiency.
- Arrow Electronics has achieved significant cost savings, reducing annual expenses by at least $200 million since mid-2023, with plans for an additional $90 million to $100 million in savings, enhancing profitability.
- Dependence on Uncertain Broader Market Recovery: Arrow Electronics' recovery is heavily dependent on broader market conditions, particularly the return of the mass market, which is uncertain and beyond their control. CEO Sean Kerins stated, "The wildcard is the broader market overall. That one, we can't call and we can't control."
- Inventory Levels Taking Longer to Sell and Impacting Working Capital: Inventory levels increased in Q4 and are taking longer to sell, which may impact working capital and reflects slower demand. CEO Sean Kerins acknowledged, "We believe we've got a lot of good inventory. It's just taking longer to sell. That's really what we're up against."
- Limited Visibility and Difficulty Predicting Beyond 90 Days: The company has limited visibility beyond 90 days, which may hinder forecasting and future performance. CEO Sean Kerins mentioned, "It's a little difficult to call beyond, say, 90 days at a time."