ARW

Arrow Electronics is one of the largest global distributors of electronic components and enterprise computing solutions — a high-volume, low-margin intermediary whose results track the semiconductor and IT spending cycle. FY2025 shows a clear recovery off the FY2024 trough: revenue rose 10.5% to $30.9B and net income jumped 45.7% to $571M, lifting diluted EPS 49.9% to $10.93. Gross margin (11.2%), operating margin (2.7%) and net margin (1.9%) are thin but normal for distribution; the model is about asset turns and scale, and ROE recovered to 8.7%.

The red flag is cash conversion. Operating cash flow collapsed 94.3% to just $64.0M as the revenue rebound forced a large working-capital build — current assets surged 39.4% to $25.7B and current liabilities rose 49.1% to $18.8B. For a distributor, a recovery year often consumes cash into inventory and receivables, so this is partly mechanical, but it leaves cash thin at $306M and pushed long-term debt up 11.2% to $3.08B. Buybacks were cut 39.0% to $162M, consistent with prioritizing the balance sheet during the rebuild.