SNX - Bonhoeffer Capital - Arrow Electronics: A High Margin Business With A Durable Moat

2024-06-02 07:35:00 ET

Summary

• Arrow Electronics is the largest authorized electronics components distributor, serving both OEM customers and suppliers.
• The company has a strong customer retention rate and generates industry-leading operating margins.
• Arrow Electronics has a solid growth strategy, including acquisitions, buybacks, and expansion into new markets.

The following segment was excerpted from this fund letter.

Arrow Electronics ( ARW )

Arrow Electronics ("ARW") is the world's largest authorized electronics components distributor (15% market share including larger shares in key markets) serving both electronics OEM customers and component suppliers. Most large component manufacturers buy directly from component suppliers. ARW has over 220,000 customers with a 90% customer retention rate and over 3,700 suppliers. ARW also distributes IT products such as servers, software, storage and computer security products. ARW has over 22,000 employees at over 219 sites located in 85 countries, including 39 distribution centers and 180 offices. Over 67% of its revenue is associated with products that include value-added services such as component design services and supply chain management services. The large portion of components associated with value-added services allows ARW to generate industry leading operating margins of 5.3%....

For further details see: