Arrow Electronics (NYSE:ARW), Inc., a leading global provider of electronic components and enterprise computing solutions, has announced the issuance and sale of $500 million in aggregate principal amount of 5.150% notes due 2029. The notes were sold in a public offering, which took place on Wednesday, under an effective registration statement previously filed with the Securities and Exchange Commission.
The offering was facilitated through an underwriting agreement with BofA Securities, Inc., Goldman Sachs (NYSE:GS) & Co. LLC, Mizuho Securities USA LLC, and Scotia Capital (USA) Inc., acting as the representatives for the underwriters. The notes are unsecured and rank equally with Arrow's other unsubordinated debt.
Interest on the notes will be paid semiannually at a rate of 5.150% per annum, with the first payment due on February 21, 2025, and continuing every August 21 and February 21 thereafter until maturity on August 21, 2029. Arrow Electronics may redeem the notes, in whole or in part, at any time at the applicable redemption price outlined in the indenture.
The indenture includes customary covenants that, among other things, limit the company's ability to incur liens, engage in sale/lease-back transactions, and consolidate, merge, or sell substantially all of its assets. Additionally, in the event of a Change of Control Triggering Event, as defined in the indenture, Arrow Electronics is required to offer to repurchase the notes at 101% of their principal amount, plus accrued and unpaid interest.
The notes were issued under an indenture with U.S. Bank Trust Company, National Association, as trustee, and the terms of the notes are further detailed in the supplemental indenture and the form of the note, which are incorporated by reference in the registration statement.
This financial move comes as Arrow Electronics continues to position itself for future growth and operational expansion. The information about this transaction is based on a press release statement.
In other recent news, Arrow Electronics reported a successful second quarter in 2024, with total revenue reaching $6.9 billion and non-GAAP earnings per share of $2.78, surpassing market expectations.
The company's Global Components and Enterprise Computing Solutions (ECS) segments showed notable performance, with the former experiencing accelerated bookings and the latter driven by robust demand for cloud and AI-related solutions. Arrow Electronics anticipates a stronger second half of the year, backed by improving conditions and seasonal trends.
The company is strategically investing in inventory, especially in the IP&E area, to support future growth while managing costs and debt ratios effectively. Arrow Electronics' Q3 sales are projected to be between $6.37 billion and $6.97 billion, with non-GAAP diluted EPS estimated at $2.10 to $2.30. The company's cash use priorities include organic growth, M&A, share repurchases, and debt management.
In addition, the company generated strong operating cash flow, with $320 million in Q2 and $1.3 billion over the last 12 months. Inventory levels reduced by $1.2 billion in the past nine months. The company has also repurchased nearly $400 million of stock over the past year. These are the recent developments in the company.
InvestingPro Insights
Arrow Electronics, Inc. (ARW) has recently made a strategic financial move with the sale of $500 million in notes. This decision aligns with insights from InvestingPro, indicating that management has been focused on enhancing shareholder value through aggressive share buybacks and showcasing a high shareholder yield. Moreover, Arrow Electronics is recognized as a prominent player in the Electronic Equipment, Instruments & Components industry, and despite analysts anticipating a sales decline in the current year, the company is expected to remain profitable.
InvestingPro Data reveals a market capitalization of $6.97 billion and a P/E ratio that stands at 12.26, suggesting a reasonable valuation in the market. The company's strong free cash flow yield, as implied by its valuation, further substantiates its financial health. With a price close to its 52-week high and a fair value estimate by analysts at $134.5, compared to InvestingPro's fair value of $154.44, there appears to be potential upside for investors.
For those seeking comprehensive investment analysis, InvestingPro offers additional tips, including insights on Arrow Electronics' revenue valuation multiples and gross profit margins. There are a total of 13 additional InvestingPro Tips available for ARW, which can provide investors with a deeper understanding of the company's financial nuances and market position. To access these tips, visit: https://www.investing.com/pro/ARW
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