Arrow Electronics Reports 14.8% Decline in Q3 Sales, Announces Restructuring Plan

Arrow Electronics, Inc. reported a significant decline in financial performance for the quarter and nine months ended September 28, 2024, compared to the same periods in the previous year. Consolidated sales for the third quarter were $6,823 million, a decrease of 14.8% from $8,007 million in Q3 2023. For the nine months, sales fell 18.3% to $20,640 million from $25,258 million. The decline was primarily driven by a downturn in the global components segment, attributed to high customer inventory levels and a challenging macroeconomic environment.

Gross profit for Q3 2024 was $785 million, down from $980 million in Q3 2023, reflecting a decrease of 19.9%. For the nine months, gross profit decreased to $2,489 million from $3,159 million. Operating income also saw a substantial drop, with Q3 operating income at $175 million, down 48.5% from $340 million in the prior year. For the nine-month period, operating income fell to $573 million from $1,154 million, indicating a 50.3% decrease.

Net income attributable to shareholders for Q3 2024 was $101 million, a decline of 49.4% from $199 million in Q3 2023. For the nine months, net income dropped to $293 million from $709 million, representing a 58.7% decrease. Basic net income per share for Q3 2024 was $1.90, down from $3.57, while for the nine months, it fell to $5.48 from $12.43.

In response to the declining performance, Arrow Electronics announced a multi-year restructuring plan on October 31, 2024, called the "Operating Expense Efficiency Plan." This plan aims to optimize operating expenses and is expected to incur pre-tax restructuring charges of approximately $185 million. The company anticipates reducing annual operating expenses by $90 million to $100 million by the end of fiscal year 2026.

The global components segment, which accounts for approximately 72% of sales, experienced a 20.8% decline in Q3 sales to $4,946 million, and a 23.3% decline for the nine months to $15,170 million. Conversely, the global ECS segment saw a slight increase in Q3 sales to $1,877 million, up 6.5% from the previous year, while nine-month sales remained relatively stable at $5,471 million.

Arrow Electronics also reported a decrease in total assets to $20,934 million as of September 28, 2024, down from $21,726 million at the end of 2023. Total current liabilities decreased to $11,970 million from $13,188 million, while total equity increased to $6,036 million from $5,877 million. The company’s cash and cash equivalents rose to $248 million from $218 million at the end of 2023.