Core Insights - Avnet reported quarterly earnings of $0.84 per share, exceeding the Zacks Consensus Estimate of $0.72 per share, but down from $1.10 per share a year ago, indicating a 23.64% year-over-year decline [1] - The company achieved revenues of $5.32 billion for the quarter, surpassing the Zacks Consensus Estimate by 0.46%, but down from $5.65 billion year-over-year, reflecting a 5.86% decrease [2] - Avnet has outperformed the S&P 500 year-to-date, with a decline of 2.1% compared to the S&P 500's decline of 5.5% [3] Earnings Performance - The company has surpassed consensus EPS estimates three times over the last four quarters [2] - The earnings surprise for the latest quarter was 16.67%, while the previous quarter saw a slight miss with an actual earnings of $0.87 against an expectation of $0.88, resulting in a surprise of -1.14% [1][2] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.91, with expected revenues of $5.46 billion, and for the current fiscal year, the EPS estimate is $3.41 on revenues of $22.02 billion [7] - The estimate revisions trend for Avnet is mixed, leading to a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6] Industry Context - The Electronics - Parts Distribution industry, to which Avnet belongs, is currently ranked in the top 36% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Avnet Third Quarter Fiscal Year 2025 Financial Results This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the financial condition, results of operations, and business of the Company. You can find many of these statements by looking for words like "believes," "projected", "plans," "expects," "anticipates," "should," "will," "may," "estimates," or simi ...

Financial Performance - Third quarter sales were $5.3 billion, a decrease of 6.0% year-over-year from $5.7 billion[4] - Diluted earnings per share (EPS) increased to $1.01, up 4.1% from $0.97 in the prior year quarter[4] - Adjusted diluted EPS was $0.84, down 23.6% from $1.10 in the prior year quarter[4] - Operating income margin was 2.7%, compared to 3.4% in the prior year quarter, reflecting a decrease of 66 basis points[4] - Net income for the nine months ended March 29, 2025, was $234,128 thousand, down from $416,033 thousand for the same period in 2024, representing a decrease of 43.7%[18] - GAAP diluted earnings per share for the nine months ended March 29, 2025, was $2.65, compared to $0.66 for the same period in 2024, showing a substantial increase[25] - Adjusted net income for the nine months ended March 29, 2025, was $231,260 thousand, compared to $81,804 thousand for the same period in 2024, reflecting a significant rise[25] - GAAP operating income for the fiscal year 2024 is $844,367,000, with adjusted operating income at $900,047,000[26] - The company reported a GAAP net income of $498,699,000 for the fiscal year 2024, with adjusted net income at $489,979,000[26] Cash Flow and Assets - Generated $141 million in cash flow from operations during the quarter[4] - Cash and cash equivalents decreased by $122,029 thousand, ending at $188,912 thousand[18] - Net cash flows provided by operating activities increased to $585,028 thousand from $415,730 thousand year-over-year, an increase of 40.7%[18] - Total assets decreased from $12,209,147 thousand to $11,712,330 thousand, a decline of approximately 4.1%[16] - Total current liabilities decreased from $4,465,269 thousand to $4,014,382 thousand, a reduction of approximately 10.1%[16] - Total liabilities decreased from $7,283,643 thousand to $6,827,363 thousand, a decline of approximately 6.2%[16] Sales Performance - Sales in Asia increased by 13.0% year-over-year, marking the third consecutive quarter of sales growth in the region[4] - Sales for Avnet in the third quarter of fiscal 2025 decreased by 6.0% year-over-year, with a constant currency change of -4.9%[28] - The Americas region experienced a 9.2% decline in sales year-over-year, while Asia saw a 13.0% decrease[28] - For the fourth quarter of fiscal 2024, Avnet's sales totaled $23,757.1 million, with operating income of $844.4 million[30] - Electronic Components sales for Avnet reached $15,523.6 million for the first nine months of fiscal 2025, with operating income of $551.2 million[29] Guidance and Projections - The guidance for the fourth quarter of fiscal 2025 projects sales between $5.15 billion and $5.45 billion, with a midpoint of $5.30 billion[6] - Adjusted diluted EPS guidance for the fourth quarter is between $0.65 and $0.75, with a midpoint of $0.70[6] - The company plans to maintain a similar interest expense to the third quarter and expects an adjusted effective tax rate between 21% and 25%[8] - Guidance for the fourth quarter of fiscal 2025 includes expected GAAP diluted earnings per share, with reconciliation provided for non-GAAP adjusted figures[31] - GAAP diluted earnings per share guidance ranges from $0.47 to $0.66[32] - Restructuring, integration, and other expenses (net of tax) are expected to be between $(0.18) and $(0.09)[32] Other Financial Metrics - The company reported a foreign currency loss of $16,820 thousand for the quarter ended March 29, 2025[25] - The company reported a foreign currency gain of $27,730,000 in the fiscal year 2024[26] - The company incurred restructuring, integration, and other expenses totaling $52,550,000 in the fiscal year 2024[26] - Adjusted diluted earnings per share for the fiscal year 2024 is $5.34, compared to GAAP diluted earnings per share of $5.43[26]

Company Overview - Avnet (AVT) shares increased by 11.8% to close at $46.41, following a broader market rally after US President Donald Trump's announcement to pause reciprocal tariffs for 90 days, although a baseline tariff of 10% on imports remains in effect [1] - The company is expected to report quarterly earnings of $0.72 per share, reflecting a year-over-year decline of 34.6%, with revenues projected at $5.29 billion, down 6.4% from the previous year [2] - The consensus EPS estimate for Avnet has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [3] Industry Context - Avnet operates within the Zacks Electronics - Parts Distribution industry, where another company, Wesco International (WCC), saw a 15.8% increase in its stock price, closing at $153.86, despite a -16% return over the past month [3] - Wesco International's consensus EPS estimate for its upcoming report is $2.23, which is a 3% decrease from the previous year, and it also holds a Zacks Rank of 3 (Hold) [4]

Core Viewpoint - Avnet's recent earnings report indicates a mixed performance, with revenues surpassing estimates but earnings falling short, reflecting challenging market conditions and a downward trend in estimates leading into the next quarter [2][3][11]. Financial Performance - Avnet reported non-GAAP earnings of 87 cents per share for Q2 fiscal 2025, missing the Zacks Consensus Estimate by 1.14% and declining 38% year over year [2]. - Revenues for the second quarter reached $5.7 billion, exceeding the consensus mark by 2.01% and aligning with management's guidance, but down 9% year over year [3]. - The Electronic Components segment generated revenues of $5.32 billion, down 8.5% year over year but up 1.2% sequentially [4]. - Farnell sales decreased by 12% year over year to $345.6 million [4]. Regional Performance - Year-over-year sales increased by 8.4% in Asia to $2.71 billion, while EMEA sales fell by 25.1% to $1.58 billion and Americas sales declined by 13.8% to $1.37 billion [5]. Operating Income and Margins - Adjusted operating income was $159.5 million, down 34.2% year over year, with the Electronic Components segment's operating income declining 27% to $182 million [5][6]. - The adjusted operating margin shrank to 2.8%, a decrease of 110 basis points from the previous year [6]. Balance Sheet and Cash Flow - As of December 28, 2024, Avnet had cash and cash equivalents of $172.1 million, down from $267.5 million at the end of September 2024 [7]. - Long-term debt increased to $2.57 billion from $2.43 billion in the previous quarter [7]. - The company generated $338 million in cash from operational activities during the fiscal second quarter [7]. Shareholder Returns - Avnet repurchased approximately $51 million worth of shares, representing 1.1% of shares outstanding, and returned $29 million to shareholders in dividends [8]. Future Guidance - For Q3 fiscal 2025, Avnet anticipates revenues between $5.05 billion and $5.35 billion, indicating a sequential decline of 6% to 11% [9]. - Expected non-GAAP earnings for the next quarter are projected to be between 65 and 75 cents per share [10]. Estimate Trends - There has been a downward trend in estimates, with the consensus estimate shifting down by 34.17% over the past month [11]. VGM Scores - Avnet has an average Growth Score of C, a Momentum Score of F, and a Value Score of A, placing it in the top 20% for the value investment strategy [12]. Overall Outlook - Estimates for Avnet are trending downward, and the company holds a Zacks Rank of 3 (Hold), suggesting an expectation of in-line returns in the coming months [13].

Core Insights - Avnet's international revenue performance is crucial for assessing its financial resilience and growth prospects [1][2][3] Group 1: Revenue Performance - The total revenue for Avnet in the quarter was $5.66 billion, reflecting an 8.7% decline year over year [4] - Asia contributed $2.71 billion, accounting for 47.88% of total revenue, surpassing the consensus estimate of $2.32 billion by 17.11% [5] - EMEA generated $1.58 billion, representing 27.95% of total revenue, which was below the expected $1.87 billion by 15.31% [6] Group 2: Future Revenue Forecasts - Analysts project total revenue of $5.38 billion for the current fiscal quarter, indicating a 4.9% decline from the previous year [7] - For the full year, total revenue is expected to be $22.17 billion, a decrease of 6.7% compared to last year, with Asia and EMEA projected to contribute 43.9% ($9.73 billion) and 32.9% ($7.3 billion) respectively [8] Group 3: Market Dynamics - Avnet's reliance on international markets presents both opportunities and challenges, making it essential to monitor international revenue trends for future projections [9] - The complexities of global interdependence and geopolitical issues are critical factors influencing earnings forecasts for companies with international operations [10]

Group 1 - The previous investment thought on Avnet (NASDAQ: AVT) was a hold rating due to uncertainty about when the business would emerge from the downcycle [1] - The investment approach focuses on long-term investments while incorporating short-term shorts to uncover alpha opportunities [1] - The analysis is based on bottom-up evaluation, emphasizing the fundamental strengths and weaknesses of individual companies [1] Group 2 - The investment duration is medium to long-term, aiming to identify companies with solid fundamentals, sustainable competitive advantages, and growth potential [1]

Financial Performance - Sales for Q2 2025 were $5.66 billion, a decrease of $541.5 million or 8.7% compared to Q2 2024 sales of $6.20 billion[80] - Gross profit for Q2 2025 was $596 million, down $110 million or 15.6% from Q2 2024[83] - Operating income for Q2 2025 was $155 million, a decline of $81 million or 34.3% compared to $236 million in Q2 2024[76] - Adjusted operating income for Q2 2025 was $159 million, down $83 million or 34.2% from $242 million in Q2 2024[76] - Net income for Q2 2025 was $87 million, a decrease of $31 million or 26.0% compared to $118 million in Q2 2024[76] - Operating income for the second quarter of fiscal 2025 was $155.3 million, a decrease of $80.9 million or 34.3% year over year, with an operating income margin of 2.7%[94] - Adjusted operating income for the first six months of fiscal 2025 was $328.4 million, a decrease of $175.5 million or 34.8% from the prior year[96] - Net income for the second quarter of fiscal 2025 was $87.3 million, or $0.99 per share on a diluted basis, compared to $117.9 million, or $1.28 per share in the same quarter of fiscal 2024[103] Expenses and Costs - SG&A expenses for Q2 2025 were $437 million, a decrease of $28 million or 6.0% from Q2 2024[86] - The Company incurred restructuring, integration, and other expense costs of $30.1 million in the first six months of fiscal 2025, with an after-tax impact of $22.3 million or $0.25 per share on a diluted basis[92] Taxation - The effective tax rate for Q2 2025 was 3.4%, significantly lower than 23.2% in Q2 2024[76] - Income tax expenses for the first six months of fiscal 2025 were $18.8 million, reflecting an effective tax rate of 11.4%, down from 23.7% in the prior year[102] Future Projections - The Company expects sales in Q3 2025 to decline by 6% to 11% compared to Q2 2025[74] Cash Flow and Debt - Net cash provided by operating activities was $444.2 million for the first six months of fiscal 2025, a significant increase of $527.7 million compared to the prior year[106] - The Company had net repayments of debt totaling $307.7 million during the first six months of fiscal 2025, compared to $362.1 million of net borrowing in the same period of the prior year[107] - The Company held cash and cash equivalents of $172.1 million as of December 28, 2024, down from $310.9 million as of June 29, 2024[113] - The Company repurchased $152.2 million of common stock under the share repurchase plan during the first six months of fiscal 2025, compared to $86.0 million in the same period of the prior year[107] Sales Breakdown - EC sales for Q2 2025 were $5.32 billion, down $494.3 million or 8.5% from Q2 2024[81] - Farnell sales for Q2 2025 were $345.6 million, reflecting a decrease of $47.2 million or 12.0% compared to the same period in the prior year[82] Borrowing Capacity - The Company has a combined total borrowing capacity of $2.00 billion under the Credit Facility and the Securitization Program, with approximately $1.09 billion of total committed availability as of December 28, 2024[116]

Core Viewpoint - Avnet (AVT) reported lower-than-expected second-quarter fiscal 2025 results, with non-GAAP earnings of 87 cents per share, missing the Zacks Consensus Estimate by 1.14% and reflecting a 38% year-over-year decline in the bottom line [1] Financial Performance - Revenues for the second quarter reached $5.7 billion, exceeding the consensus mark by 2.01% and aligning with management's guidance of $5.4-$5.7 billion, although this represents a 9% decrease year-over-year due to challenging market conditions, particularly in Europe [3][6] - The Electronic Components segment generated revenues of $5.32 billion, down 8.5% year-over-year but up 1.2% sequentially, while Farnell sales fell 12% year-over-year to $345.6 million [5][6] - Adjusted operating income was $159.5 million, a 34.2% decline year-over-year, with the Electronic Components segment's adjusted operating income down 27% to $182 million and Farnell's down 78% to $3 million [6][7] Margin Analysis - The adjusted operating margin shrank by 110 basis points to 2.8% compared to the previous year, with the Electronic Components segment's margin contracting 85 basis points to 3.4% and Farnell's margin declining 299 basis points to 1% [7] Balance Sheet and Cash Flow - As of December 28, 2024, Avnet had cash and cash equivalents of $172.1 million, down from $267.5 million at the end of September 30, 2024, and long-term debt increased to $2.57 billion from $2.43 billion [9] - The company generated $338 million in cash from operational activities during the fiscal second quarter [9] Future Guidance - For the third quarter of fiscal 2025, Avnet anticipates revenues between $5.05 billion and $5.35 billion, with a midpoint of $5.20 billion, which is below the Zacks Consensus Estimate of $5.59 billion, indicating a potential year-over-year decline of 1.1% [11] - Non-GAAP earnings are expected to be in the range of 65-75 cents per share, compared to the consensus estimate of $1.09, suggesting a year-over-year decline of 0.9% [11][12]

Core Viewpoint - Avnet, Inc. has released its financial results for the second quarter of fiscal year 2025, indicating key performance metrics and insights into the company's operations and market position [3]. Financial Results - The financial results for Q2 fiscal year 2025 are available on Avnet's Investor Relations website, along with a slide presentation for further details [3]. - All results provided in the earnings call will be non-GAAP measures, with a full reconciliation available in the press release [5]. Company Leadership - The conference call featured key participants including Joseph Burke (Vice President, Treasurer & Investor Relations), Philip Gallagher (Chief Executive Officer), and Ken Jacobson (Chief Financial Officer) [1][2]. Conference Call Details - The earnings conference call took place on January 29, 2025, at 11:00 AM ET, providing a platform for discussing the company's performance and future outlook [1].