Avnet Stock Plunges 10% as Q2 Earnings Miss Estimates, Down Y/Y

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]