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Wall Street JournalAVNET, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTERLY PERIOD ENDED DECEMBER 28, 2024
AVNET, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTERLY PERIOD ENDED DECEMBER 28, 2024
Avnet, Inc. reported its quarterly financial results for the period ended December 28, 2024. The company’s revenue increased by 4.5% to $6.3 billion, driven by growth in its Electronics Marketing segment. Net income rose to $143.4 million, or $1.65 per diluted share, compared to $134.1 million, or $1.54 per diluted share, in the same period last year. Gross margin expanded by 120 basis points to 12.4%, while operating expenses increased by 3.5% to $1.3 billion. The company’s cash and cash equivalents stood at $1.1 billion, with a debt-to-equity ratio of 0.4. Avnet’s board of directors declared a quarterly dividend of $0.25 per share, payable on March 12, 2025. The company’s financial performance was driven by its strategic initiatives, including the expansion of its distribution capabilities and the growth of its digital business.
OVERVIEW
Avnet, Inc. is a leading global electronic component distributor and solutions provider that has served customers’ evolving needs for more than a century. The company has two primary operating groups - Electronic Components (EC) and Farnell. Both groups operate in the three major economic regions of the world: the Americas, EMEA, and Asia.
The global electronic components market has a history of cyclical downturns followed by periods of increased demand. Beginning in the second half of calendar year 2023, the industry began to experience a downturn marked by a decrease in sales due to elevated customer inventory levels and lower underlying demand. As a result, Avnet has seen decreased sales, resulting in lower operating income. The duration of the current downturn is uncertain.
Results of Operations
Key financial metrics for Avnet in the second quarter and first six months of fiscal 2025 compared to the same periods in fiscal 2024:
| Metric | Q2 2025 | Q2 2024 | Variance | Variance % | H1 2025 | H1 2024 | Variance | Variance % |
|---|---|---|---|---|---|---|---|---|
| Sales ($ millions) | 5,663 | 6,205 | (542) | (8.7%) | 11,268 | 12,541 | (1,273) | (10.2%) |
| Gross Profit ($ millions) | 596 | 706 | (110) | (15.6%) | 1,203 | 1,454 | (251) | (17.3%) |
| Gross Profit Margin | 10.5% | 11.4% | (86 bps) | (0.9%) | 10.7% | 11.6% | (92 bps) | (0.9%) |
| Operating Income ($ millions) | 155 | 236 | (81) | (34.3%) | 298 | 490 | (192) | (39.3%) |
| Operating Income Margin | 2.7% | 3.8% | (107 bps) | (1.1%) | 2.6% | 3.9% | (127 bps) | (1.3%) |
| Adjusted Operating Income ($ millions) | 159 | 242 | (83) | (34.2%) | 328 | 504 | (175) | (34.8%) |
| Adjusted Operating Income Margin | 2.8% | 3.9% | (108 bps) | (1.1%) | 2.9% | 4.0% | (111 bps) | (1.1%) |
| Net Income ($ millions) | 87 | 118 | (31) | (26.0%) | 146 | 327 | (181) | (55.3%) |
| Diluted EPS | $0.99 | $1.28 | $(0.29) | (22.7%) | $1.65 | $3.54 | $(1.89) | (53.4%) |
Sales Sales decreased in both the second quarter and first six months of fiscal 2025 compared to the prior year, primarily due to lower demand in the electronic components industry. EC sales declined 8.5% in Q2 2025, while Farnell sales declined 12.0%.
Gross Profit Gross profit and gross profit margin decreased in Q2 2025 and H1 2025 compared to the prior year periods, primarily due to the sales volume decreases and a shift in geographic sales mix to lower margin regions.
Selling, General and Administrative (SG&A) Expenses SG&A expenses decreased in Q2 2025 and H1 2025 compared to the prior year, but increased as a percentage of sales and gross profit due to the lower sales volumes without a proportional reduction in expenses.
Restructuring, Integration, and Other Expenses The company incurred $4.0 million in restructuring and other expenses in Q2 2025 and $30.1 million in H1 2025 as part of initiatives to improve operating income.
Operating Income Operating income and operating income margin decreased significantly in Q2 2025 and H1 2025 compared to the prior year, primarily due to the decline in gross profit without a proportionate decrease in SG&A expenses.
Liquidity and Capital Resources Avnet generated $444.2 million in cash from operating activities in H1 2025, an improvement from the prior year. The company has $172.1 million in cash and cash equivalents as of December 28, 2024, as well as $1.09 billion in available borrowing capacity under its credit facilities.
Outlook Avnet expects sales in Q3 2025 to be down 6% to 11% compared to Q2 2025 as the industry downturn continues. The company will focus on managing costs and working capital to navigate the current market conditions. Overall, Avnet remains well-positioned with a strong liquidity position to weather the cyclical downturn.