Arrow Electronics, Inc. EBITDA jumped on 194% and EBITDA Margin increased on 2.7 pp from 1.4% to 4.1%
02/04/2021 • About Arrow Electronics, Inc. (
$ARW) • By InTwits
Arrow Electronics, Inc. reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 4.1% in 2020, 1.4% in 2019, 4.5% in 2018, 4.1% in 2017, 4.4% in 2016
- Arrow Electronics, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.6%.
- The company has business model with average profitability: ROIC is 11.3%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.9x while industry average is -0.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Arrow Electronics, Inc.'s Revenue decreased slightly on 0.84%. Annual revenue decline showed slowdown in 20Q4 - revenue jumped on 15.2%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 2.7 pp from 1.4% to 4.1% in 2020.
Gross Margin showed almost no change in 2020. Gross Margin followed a declining trend at -0.58 pp per annum in the last 5 years. SG&A as a % of Revenue showed almost no change in 2020. SG&A as a % of Revenue declined at -0.34 pp per annum in 2016-2020.
Net Income margin increased on 2.7 pp from -0.71% to 2.0% in 2020.
Investments (CAPEX, working capital and M&A)
In 2020 Arrow Electronics, Inc. had CAPEX/Revenue of 0.43%. Arrow Electronics, Inc.'s CAPEX/Revenue showed almost no change from 2017 to 2020. For the last three years the average CAPEX/Revenue was 0.46%.
Return on investment
The company operates at low ROIC (11.3%) and ROE (11.8%). ROIC increased on 9.9 pp from 1.4% to 11.3% in 2020. ROE surged on 15.8 pp from -4.0% to 11.8% in 2020.
Leverage (Debt)
Debt level is 1.9x Net Debt / EBITDA and 2.2x Debt / EBITDA. Net Debt / EBITDA dropped on 5.6x from 7.5x to 1.9x in 2020. Debt dropped on 21.1% while cash surged on 24.5%.
Arrow Electronics, Inc. has no short term refinancing risk: cash is higher than short term debt (162.9%).
Valuation and dividends
The company's trades at EV/EBITDA 8.5x and P/E 13.2x.
Management team
The company's CEO is Michael J Long "Mike". Michael J Long "Mike" has 11 years tenure with the company. The company's CFO is Christopher D Stansbury "Chris". Christopher D Stansbury "Chris" has 2 years tenure at the company.
Financial and operational results
FY ended 12/31/2020
Arrow Electronics, Inc. ($ARW) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 23,488 | 26,555 | 29,677 | 28,917 | 28,673 | -0.8% |
| Gross Profit | 3,144 | 3,357 | 3,701 | 3,298 | 3,191 | -3.3% |
| SG&A | 2,047 | 2,162 | 2,303 | 2,192 | 2,087 | -4.8% |
| EBITDA | 1,036 | 1,099 | 1,334 | 399 | 1,173 | 193.7% |
| EBIT | 877 | 946 | 1,148 | | | |
| Tax | 191 | 287 | 188 | | | |
| Net Income | 523 | 402 | 716 | -204 | 584 | |
Balance Sheet
|
|---|
| Cash | 534 | 730 | 509 | 300 | 374 | 24.5% |
| Accounts Receivable | 6,747 | 8,126 | 8,945 | | | |
| Inventory | 2,856 | 3,303 | 3,879 | | | |
| Accounts Payable | 5,774 | 6,757 | 7,632 | | | |
| Short Term Debt | 94 | 357 | 246 | 388 | 229 | -40.8% |
| Long Term Debt | 2,696 | 2,933 | 3,239 | 2,892 | 2,359 | -18.4% |
Cash flow
|
|---|
| Capex | 165 | 204 | 135 | 143 | 124 | -13.7% |
| Acquisitions | 65 | 4 | 332 | | | |
Ratios
|
|---|
| Revenue growth | 0.9% | 13.1% | 11.8% | -2.6% | -0.8% | |
| EBITDA growth | 5.7% | 6.1% | 21.3% | -70.1% | 193.7% | |
|
|---|
| Gross Margin | 13.4% | 12.6% | 12.5% | 11.4% | 11.1% | -0.3% |
| EBITDA Margin | 4.4% | 4.1% | 4.5% | 1.4% | 4.1% | 2.7% |
| EBIT Margin | 3.7% | 3.6% | 3.9% | | |
| SG&A, % of revenue | 8.7% | 8.1% | 7.8% | 7.6% | 7.3% | -0.3% |
| Net Income Margin | 2.2% | 1.5% | 2.4% | -0.7% | 2.0% | 2.7% |
| CAPEX, % of revenue | 0.7% | 0.8% | 0.5% | 0.5% | 0.4% | -0.1% |
|
|---|
| ROIC | 12.5% | 12.1% | 13.3% | 1.4% | 11.3% | 9.9% |
| ROE | 12.2% | 8.6% | 13.9% | -4.0% | 11.8% | 15.8% |
| Net Debt/EBITDA | 2.2x | 2.3x | 2.2x | 7.5x | 1.9x | -5.6x |
People
|
|---|
| Insider ownership | 0.8% | 0.8% | 0.8% | | | |
| Employees | 18,700 | 18,800 | 20,100 | | | |
| Revenue/Employee, th. $ | 1,256 | 1,412 | 1,476 | | | |
Arrow Electronics, Inc. ($ARW) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 6,381 | 6,606 | 7,231 | 8,454 | | -10.8% | -10.0% | 2.2% | 15.2% |
| EBITDA | 185 | 243 | 285 | 370 | | -42.0% | - | 14.7% | 19.3% |
| Net Income | 50 | 133 | 166 | 236 | | -64.8% | - | 80.2% | 110.8% |
Balance Sheet
|
|---|
| Cash | 201 | 206 | 227 | 374 | | -42.9% | -23.8% | -13.4% | 24.5% |
| Short Term Debt | 377 | 244 | 166 | 229 | | 82.0% | -26.4% | -60.1% | -40.8% |
| Long Term Debt | 2,223 | 2,098 | 2,098 | 2,359 | | -42.7% | -39.5% | -34.9% | -18.4% |
Ratios
|
|---|
| Gross Margin | 11.4% | 11.4% | 10.9% | 10.9% | | -0.6% | 0.3% | -0.4% | -0.3% |
| EBITDA Margin | 2.9% | 3.7% | 3.9% | 4.4% | | -1.6% | 10.2% | 0.4% | 0.2% |
| Net Income Margin | 0.8% | 2.0% | 2.3% | 2.8% | | -1.2% | 9.5% | 1.0% | 1.3% |
Peers in Technology Distributors
Below you can find Arrow Electronics, Inc. benchmarking vs. other companies in Technology Distributors industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Galaxy Next Generation Inc ($GAXY) | - | 3.7% | - | - | 23.3% |
| Wayside Technology Group, Inc. ($WSTG) | - | -61.6% | 13.0% | 15.1% | 20.5% |
| Insight Enterprises, Inc. ($NSIT) | - | 22.2% | 5.6% | 9.2% | 7.9% |
| Synnex Corporation ($SNX) | - | 21.2% | 17.6% | 18.5% | 3.9% |
| CDW Corporation ($CDW) | - | 6.1% | 9.5% | 11.0% | 2.4% |
| |
|---|
| Median (8 companies) | 5.3% | 4.2% | 8.3% | 14.5% | 3.1% |
|---|
| Arrow Electronics, Inc. ($ARW) | - | 13.1% | 11.8% | -2.6% | -0.8% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Galaxy Next Generation Inc ($GAXY) | 70.0% | 61.4% | - | 6.1% | 51.0% |
| EACO Corp ($EACO) | 29.3% | 28.5% | 28.5% | 27.7% | 27.2% |
| ADDvantage Technologies Group, Inc. ($AEY) | 32.2% | 30.4% | 23.7% | 16.5% | 23.3% |
| CDW Corporation ($CDW) | 16.6% | 16.5% | 16.7% | 16.9% | 17.4% |
| PC Connection, Inc. ($CNXN) | 13.8% | 13.1% | 15.2% | 16.0% | 16.2% |
| |
|---|
| Median (8 companies) | 14.2% | 16.9% | 16.3% | 15.4% | 16.8% |
|---|
| Arrow Electronics, Inc. ($ARW) | 13.4% | 12.6% | 12.5% | 11.4% | 11.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| CDW Corporation ($CDW) | 7.7% | 7.6% | 7.7% | 8.3% | 9.0% |
| EACO Corp ($EACO) | 4.7% | 4.5% | 5.9% | 6.4% | 6.6% |
| Synnex Corporation ($SNX) | 3.6% | 3.9% | 3.9% | 5.0% | 5.7% |
| Insight Enterprises, Inc. ($NSIT) | 3.4% | 3.3% | 4.1% | 4.0% | 4.4% |
| PC Connection, Inc. ($CNXN) | 3.4% | 3.1% | 3.7% | 4.6% | 3.5% |
| |
|---|
| Median (8 companies) | 3.4% | 3.5% | 4.0% | 4.6% | 3.9% |
|---|
| Arrow Electronics, Inc. ($ARW) | 4.4% | 4.1% | 4.5% | 1.4% | 4.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| EACO Corp ($EACO) | 0.3% | 5.5% | 0.8% | 0.8% | 3.0% |
| ADDvantage Technologies Group, Inc. ($AEY) | 0.8% | 0.4% | 0.3% | 1.1% | 1.2% |
| CDW Corporation ($CDW) | 0.5% | 0.5% | 0.5% | 1.3% | 0.9% |
| Synnex Corporation ($SNX) | 0.9% | 0.6% | 0.6% | 0.6% | 0.8% |
| Galaxy Next Generation Inc ($GAXY) | 0.0% | 15.1% | - | 0.0% | 0.8% |
| |
|---|
| Median (8 companies) | 0.4% | 0.5% | 0.5% | 0.8% | 0.8% |
|---|
| Arrow Electronics, Inc. ($ARW) | 0.7% | 0.8% | 0.5% | 0.5% | 0.4% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| CDW Corporation ($CDW) | 18.8% | 20.1% | 23.1% | 26.0% | 23.5% |
| EACO Corp ($EACO) | 22.2% | 16.1% | 21.2% | 23.0% | 14.6% |
| Insight Enterprises, Inc. ($NSIT) | 20.7% | 19.3% | 20.0% | 14.7% | 13.7% |
| Synnex Corporation ($SNX) | 13.5% | 13.7% | 9.6% | 11.6% | 11.7% |
| PC Connection, Inc. ($CNXN) | 18.6% | 16.6% | 17.0% | 19.6% | 11.2% |
| |
|---|
| Median (8 companies) | 12.1% | 9.9% | 11.2% | 19.0% | 11.7% |
|---|
| Arrow Electronics, Inc. ($ARW) | 12.5% | 12.1% | 13.3% | 1.4% | 11.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| CDW Corporation ($CDW) | 2.8x | 2.7x | 2.4x | 2.2x | 1.6x |
| Synnex Corporation ($SNX) | 1.2x | 2.1x | 3.9x | 2.4x | 1.3x |
| Insight Enterprises, Inc. ($NSIT) | -0.9x | 0.9x | 0.2x | 2.7x | 1.1x |
| EACO Corp ($EACO) | -0.7x | 1.2x | 0.5x | 0.5x | 1.0x |
| PC Connection, Inc. ($CNXN) | -0.5x | -0.6x | -0.9x | -0.6x | -0.9x |
| |
|---|
| Median (6 companies) | 0.1x | 0.9x | 0.5x | 1.4x | 1.1x |
|---|
| Arrow Electronics, Inc. ($ARW) | 2.2x | 2.3x | 2.2x | 7.5x | 1.9x |
