tkal · Arrow Electronics Q3 2026: The Float Never Went Back. The Banks Paid for the Warehouse.

Arrow Electronics Q3 2026: The Float Never Went Back. The Banks Paid for the Warehouse.

Arrow added $1,366.4M of inventory in a record quarter, and suppliers funded 36.9% of it once the pass-through is netted out, while debt rose $581.4M. Our call: on December 31 inventory is at or above $7.31B and total debt is at or above $2.75B, because the stock is for orders past the December guide. Inventory at or below $6.62B refutes it. Our September call failed: receivables minus payables fell to $0.40B instead of rising above $1.22B.

Published November 5, 2026 · Post-print analysis · Arrow Electronics, Inc. · ARW · NYSE · Q3 2026, quarter ended October 3, 2026 · reported before the open November 5, 2026 · figures from the Form 8-K Ex. 99.1 and Form 10-Q filed the same day, and earlier filings · Committed analyst read, not advice · For analysts covering component distribution, IT distribution, memory pricing and the working capital that funds them

The setup

Arrow reported $10.72B of sales against a guide of $9.60B to $10.20B, and non-GAAP EPS of $6.22 against a guide of $4.83 to $5.03 and a $4.97 consensus (unverified, aggregator). It guided December to $7.00 to $7.20 against a $5.80 consensus (unverified, aggregator). The stock traded at $183.58 at midday, down 9.4% from $202.63, and Avnet was down 7.6% at $79.15 (unverified, market data, November 5 at 11:33 PT, not a close).

The tell is one line: inventory rose $1,366.4M in the quarter, 2.1 times the largest quarterly build in the nine quarters we pulled, and it ended at $7.31B, 25.8% above the $5.81B peak of the last upcycle in September 2023. Operating cash flow was −$441.4M, the lowest in those nine quarters. Debt rose $581.4M. This is a distributor that has stopped sitting out the warehouse.

Our call: on December 31, 2026, inventory is at or above $7.31B and total debt is at or above $2.75B. Management says the stock is for orders that ship in coming quarters. The December guide only has room for $407.4M more Components sales. Inventory at or below $6.62B says the data center half shipped on time and we are wrong.

First the grade, because the last page asked for one. On September 28 we wrote that the float would go back: receivables minus payables on October 3 would rise above $1.22B, and at or below $0.90B the narrow gap was how the program worked and we were wrong. It printed $0.40B. We were wrong. The cash and the debt moved the way we expected, by a different door, and the sections below keep those two things apart.

Of $10,717.7M in sales, $9,558.4M is cost of sales. A 10.8% gross margin leaves $1,159.3M; SG&A takes $688.2M, and $318.4M reaches shareholders.

The numbers

Sales

$10.72B

+39.0% Y/Y · +7.3% Q/Q

Non-GAAP EPS

$6.22

from $2.41

Components gross margin

11.1%

11.6% in Q2 · 12.1% in Q1

Inventory

$7.31B

+$1,366.4M Q/Q · +23.0%

Suppliers' net share of the build

36.9%

139.3% in Q2 · 169.1% in Q1

Operating cash flow

−$441.4M

from −$281.7M · $318.3M in Q2

Arrow Q3 2026 · $ millions unless stated

Line	Q3 26	Q2 26	Q3 25	Y/Y
Sales
Sales	10,717.7	9,992.2	7,712.5	+39.0%
Global Components	7,942.6	7,365.6	5,556.4	+42.9%
Americas Components	2,703.2	2,454.5	1,708.8	+58.2%
EMEA Components	2,037.0	1,938.8	1,443.6	+41.1%
Asia Components	3,202.5	2,972.3	2,403.9	+33.2%
Global ECS	2,775.1	2,626.6	2,156.1	+28.7%
ECS gross billings	5,935.6	5,856.3	5,190.0	+14.4%
Profit
Gross profit	1,159.3	1,125.2	835.3	+38.8%
Operating income	430.3	377.3	179.0	+140.4%
Components operating income	413.0	396.3	197.4	+109.3%
ECS operating income	98.2	85.4	63.7	+54.1%
Net income to shareholders	318.4	272.7	109.2	+191.6%
Non-GAAP diluted EPS ($)	6.22	5.45	2.41	+158.1%
Working capital and cash
Operating cash flow	−441.4	318.3	−281.7	worse
Inventories	7,306.0	5,939.6	4,728.0	+54.5%
Receivables	33,259.2	28,008.7	15,656.8	+112.4%
Payables	32,862.3	27,107.9	13,126.5	+150.4%
Working capital (company definition)	7,702.9	6,840.5	7,258.3	+6.1%
Total debt	2,752.0	2,170.6	3,129.5	−12.1%

Source: Arrow Form 8-K Ex. 99.1 and Form 10-Q, November 5, 2026 (unaudited), and prior filings. Total debt = short-term borrowings + long-term debt. Notes ↓

Paid subscribers

The rest of this dive is for paid subscribers.

The headline numbers are above. The 13 sections below carry the mechanism, the peer read, the valuation work, and the dated tests that decide it.

Did suppliers fund the build?
Nine quarters: the level before the delta
The grade, in full
Global Components: the price came through, the margin did not
Global ECS: the sales number and the billings number
Where the beat came from
The funding stack
Connecting the dots
The December bar
Valuation
The strongest case against this read
What we'd watch
Bottom line

Unlock the full dive →

Not ready to pay? Get the free Monday issue and one full dive a week by email.

Already a subscriber? Sign in.

Sources

Notes. Net share of the build = (change in payables − change in receivables) ÷ change in inventories, a tkal construct. Balance sheet basis $504.0M ÷ $1,366.4M = 36.9%; cash flow basis $493.7M ÷ $1,375.5M = 35.9%; first quarter 169.1% ($1,110.4M ÷ $656.5M), second quarter 139.3% ($306.1M ÷ $219.7M), nine months 84.8% ($1,910.2M ÷ $2,251.8M); nine-month balance sheet changes: payables $15,478.5M, receivables $13,520.5M, inventories $2,224.1M. Components-only band assumes the whole build is Components and moves the $295.1M ECS asset rise to one side of the ledger: $799.1M ÷ $1,366.4M = 58.5%; $208.9M ÷ $1,366.4M = 15.3%. Quarter-by-quarter Components gross profit and operating income, ECS billings and ECS losses are derived from year-to-date figures where a quarter is not reported. ECS sales ÷ gross billings: 41.2%, 40.6%, 43.9%, 44.7%, 41.5%, 40.4%, 44.0%, 44.9%, 46.8% from Q3 2024. Inventory ÷ Components sales: 97.8%, 100.4%, 89.9%, 85.1%, 86.4%, 86.2%, 80.6%, 92.0% from Q4 2024. EPS at guided tax and interest: ($396.7M − $9.9M) × 0.76, less $0.2M noncontrolling interests, ÷ 51.6M diluted shares = $5.69. Enterprise value = market value + total debt − cash. The Q2 page quoted total debt of about $2.2B.
Arrow Electronics, Inc. — "Arrow Electronics Reports Record Quarterly Revenue and EPS" (Form 8-K, Exhibit 99.1), November 5, 2026 — primary source for every reported figure unless marked. Quarter ended October 3, 2026 vs September 27, 2025, $ thousands: sales 10,717,739 / 7,712,541; cost of sales 9,558,407 / 6,877,227; gross profit 1,159,332 / 835,314; SG&A 688,168 / 587,866; depreciation and amortization 35,873 / 32,793; restructuring, integration and other 5,034 / 35,648; operating income 430,257 / 179,007; equity in earnings 1,693 / 463; gain on investments 2,893 / 4,859; post-retirement expense (999) / (664); interest and other financing (40,138) / (54,875); income before taxes 393,706 / 128,790; provision for income taxes 75,175 / 19,528; net income to shareholders 318,375 / 109,193; diluted EPS 6.17 / 2.09; non-GAAP diluted EPS 6.22 / 2.41; diluted shares 51,615 / 52,141. Balance sheet October 3, 2026 vs December 31, 2025: cash 215,607 / 306,467; receivables 33,259,191 / 19,738,666; inventories 7,305,982 / 5,081,863; payables 32,862,316 / 17,383,796; short-term borrowings 110,497 / 341; long-term debt 2,641,483 / 3,084,715; total assets 45,047,295 / 29,078,138; shareholders' equity 7,188,568 / 6,584,712. Cash flow, quarter: operating (441,409) / (281,684); consolidated net income 318,531; receivables (5,294,432); inventories (1,375,531); payables 5,788,135; accrued expenses 228,429; other assets and liabilities (121,961); capex (26,877); long-term bank borrowings 586,630; short-term and other (7,076); repurchases (99,306); option proceeds 82; FX on cash (41,068); opening cash 244,631. Cash flow, nine months: operating 576,692; receivables (13,633,334); inventories (2,251,808); payables 15,543,508. Segments: Global Components sales 7,942,592 / 5,556,392, gross profit 878,761 / 609,101, operating income 413,032 / 197,355; Global ECS sales 2,775,147 / 2,156,149, gross profit 280,571 / 226,213, operating income 98,218 / 63,744; Americas Components 2,703,157 / 1,708,840; EMEA Components 2,036,976 / 1,443,607; Asia Components 3,202,459 / 2,403,945; nine months Global Components gross profit 2,542,012, operating income 1,172,826. ECS gross billings 5,935,569 / 5,189,972; nine months 18,225,187. Non-GAAP operating income 436,097; income before taxes 396,653; provision 75,477; Global ECS non-GAAP operating income 99,146; effective tax rate 19.0%; ECS purchase obligation losses $3.8 million, $52.1 million for nine months. Q4 guide: sales $11.55 billion to $12.15 billion; Global Components $8.15 billion to $8.55 billion; Global ECS $3.40 billion to $3.60 billion; diluted EPS $6.25 to $6.45; non-GAAP $7.00 to $7.20; restructuring $0.68; tax 23 percent to 25 percent; interest approximately $50 million.
Arrow — Form 10-Q for the quarter ended October 3, 2026, filed November 5, 2026 — Note E (supply chain services receivables "disproportionate to the fees"; gross receivables $33,407.7 million; allowance $148.5 million; EMEA sold and uncollected $519.3 million vs $379.0 million; factoring uncollected $216.2 million vs $279.8 million); Note F (supplier finance $1.1 billion vs $1.3 billion); Note G (North American securitization $638.0 million vs $970.0 million; limit raised to $1.75 billion from $1.5 billion; maturity August 2029; 4.76% rate; collateral about $4.1 billion vs $3.0 billion; interest and dividend income $21.4 million vs $9.9 million; 7.50% debentures due January 2027 moved to short-term); Note I and MD&A ($41.2 million subsequent-event contract termination charge); Note M (segment assets: Global Components $38,087.6 million vs $21,222.9 million; Global ECS $6,468.6 million vs $7,355.1 million); MD&A (working capital $7,703 million; 18.0% vs 23.5% of annualized sales; liquidity about $3.1 billion; uncommitted lines $160 million; corporate non-GAAP operating expenses $76 million; purchase obligations $33.5 billion, $14.3 billion in the rest of 2026, $7.2 billion in 2027, $3.0 billion in 2028, $2.2 billion in 2029, $1.5 billion in 2030, $5.3 billion in 2031 and after; $863.4 million left on the repurchase program; ECS margin explained by gross-basis EMEA mix).
Arrow — Q2 2026 results (Form 8-K, Exhibit 99.1), August 6, 2026 — quarter ended July 4, 2026, $ thousands: sales 9,992,237; gross profit 1,125,209; operating income 377,333; net income 272,711; Global Components sales 7,365,625, gross profit 856,503, operating income 396,275; Global ECS sales 2,626,612, gross profit 268,706, operating income 85,375; gross billings 5,856,295; Americas Components 2,454,521; EMEA Components 1,938,784; Asia Components 2,972,320; operating cash flow 318,349; receivables (2,058,576); inventories (219,734); payables 2,364,684; six months receivables (8,338,902), inventories (876,277), payables 9,755,373. ECS losses $26.6 million. Q3 guide: sales $9.60 billion to $10.20 billion, Global ECS $2.10 billion to $2.30 billion, non-GAAP EPS $4.83 to $5.03, tax 23 percent to 25 percent, interest approximately $50 million.
Arrow — Q4 2025 results (Form 8-K, Exhibit 99.1), February 5, 2026 — Global Components sales 5,882,277, gross profit 647,154, operating income 219,158; Global ECS sales 2,864,153, operating income 187,884; ECS non-GAAP operating income $189 million; operating income 294,077; operating cash flow 199,950 and 326,464 a year earlier; non-GAAP EPS 4.39, full year 11.02 and 10.56.
Arrow Forms 10-Q and 10-K, September 2024 to July 2026 — purchase obligations $14.9 billion (September 2025), $21.3 billion (December 2025), $26.0 billion (April 2026), $30.3 billion (July 2026, $4.2 billion in 2031 and after); gross billings by quarter, $ millions: 4,560; 6,087; 4,639; 5,140; 5,190; 7,081; 6,433; segment assets at April $28,970.8 million and $6,628.1 million, at July $31,725.4 million and $6,173.4 million; short-term borrowings $117.5 million and long-term debt $2,053.0 million at July 4, 2026; $10.8 million and $3,118.7 million at September 27, 2025; ECS losses $21.7 million in Q1 2026; Global Components operating income $1,459.2 million in 2023; liquidity about $3.5 billion at July; working capital 17.1% of annualized sales at July; supplier finance $1.0 billion at July; uncommitted lines cut to $160 million from $560 million.
Arrow — current report (Item 5.02), October 15, 2026 — Eric Nowak to retire end of March 2027 and step down as President, Global ECS on December 31, 2026; Rodney Clark to start November 9, 2026.
SEC XBRL balance series, quarter ends September 28, 2024 to October 3, 2026, $ billions: receivables 11.73, 13.03, 12.42, 15.27, 15.66, 19.74, 25.96, 28.01, 33.26; inventories 4.53, 4.71, 4.80, 4.75, 4.73, 5.08, 5.72, 5.94, 7.31; payables 9.39, 11.05, 10.87, 13.21, 13.13, 17.38, 24.74, 27.11, 32.86. September 30, 2023 inventory $5.81 billion.
Arrow Q3 2026 earnings call transcript, November 5, 2026 (third-party), and a second third-party copy — nearly half of the inventory build data center activity in Arrow Intelligence Solutions; large orders that did not ship within the quarter; most Components growth from price; little memory price assumed in the fourth quarter; days sales and days payable each up about 100 days; backlog into mid-2027; value-added services about 30% of operating profit last year; adjusted leverage 1.9x; return on working capital 22.6%; ECS hardware mix. unverified pending the official transcript; both copies are partial and carry transcription errors.
Robinhood market data and earnings feed — ARW $183.58 at 11:33 PT on November 5, 2026, previous close $202.63, 52-week high $249.43 (October 5, 2026), 50.9M shares; AVT $79.15, previous close $85.68; consensus non-GAAP EPS $4.97 (Q3) and $5.80 (Q4); next report February 4, 2027, not confirmed by the company. unverified market data, not filing figures.
tkal — Arrow Q2 2026, the open call graded here; WT Micro Q3 2026 (inventory NT$190.44B or about US$5.91B, payables NT$187.81B, receivables NT$37.38B, 98.6%); Avnet Q1 FY27 (inventory $8,175.1M from $6,069.4M, payables $7,842.4M from $6,054.3M, receivables $7,758.0M from $6,883.0M, cash flow payables $1,810.2M, receivables $893.3M, inventories $2,121.7M, 85.3%); Insight Q3 2026 and CDW Q3 2026 for the IT channel; SK hynix 3Q26 (80% margin) and Micron Q4 FY26 ($12.3B deposits) for the rope figures.

Arrow Electronics Q3 2026: The Float Never Went Back. The Banks Paid for the Warehouse.

The setup

The numbers

The rest of this dive is for paid subscribers.

This is one print. The pipeline runs every week.