Avnet Reports Fourth Quarter And Fiscal 2024 Financial Results

Fourth quarter sales of $5.6 billion and diluted EPS of $0.91

Adjusted diluted EPS of $1.22

Electronic Components operating margin of 4.1%

PHOENIX--(BUSINESS WIRE)--#Avnet--Avnet, Inc. (Nasdaq: AVT) today announced results for its fourth quarter and fiscal year 2024 ended June 29, 2024.

“We are pleased with our fiscal 2024 performance as we executed well, despite some challenging market conditions,” said Avnet Chief Executive Officer Phil Gallagher. “I want to thank our team for their focus on supporting our supplier and customer partners, growing market share, controlling costs, and managing working capital to drive operating cash flow. Their efforts enabled us to exceed the upper end of our fourth quarter sales and earnings guidance. We are well positioned entering into fiscal year 2025 and I am confident we have the right team and strategy in place to benefit from the eventual market recovery.”

Fiscal Fourth Quarter Key Financial Highlights:

• Sales of $5.6 billion, compared with $6.6 billion in the prior year quarter.
• Diluted earnings per share of $0.91, compared with $1.68 in the prior year quarter.
  • Adjusted diluted earnings per share of $1.22, compared with $2.06 in the prior year quarter.
• Operating income margin of 3.0%, compared with 4.3% in the prior year quarter.
  • Adjusted operating income margin of 3.5%.
  • Electronic Components operating income margin of 4.1%.
  • Farnell operating income margin of 4.0%.
• Generated $274 million of cash flow from operations.
• Returned $79 million to shareholders from share repurchases, representing 1.6% of shares outstanding.
• Returned $28 million to shareholders in dividends.

Fiscal 2024 Key Financial Highlights:

• Sales of $23.8 billion, compared with $26.5 billion in the prior year.
• Diluted earnings per share of $5.43, compared with $8.26 in the prior year.
  • Adjusted diluted earnings per share of $5.34, compared with $8.06 in the prior year.
• Operating income margin of 3.6%, compared with 4.5% in the prior year.
  • Adjusted operating income margin of 3.8%.
  • Electronic Components operating income margin of 4.3%.
  • Farnell operating income margin of 4.1%.
• Generated $690 million of cash flow from operations.
• Returned $165 million to shareholders from share repurchases, representing 3.6% of shares outstanding.
• Returned $112 million to shareholders in dividends.

Key Financial Metrics

($ in millions, except per share data)
Fourth Quarter Results (GAAP)
		Jun – 24				Jun – 23				Change Y/Y			Mar – 24				Change Q/Q
Sales		$	5,563.0			$	6,554.6			(15.1)	%		$	5,653.6			(1.6)	%
Operating Income		$	164.2			$	283.7			(42.1)	%		$	190.2			(13.7)	%
Operating Income Margin			3.0	%			4.3	%		(138)	bps			3.4	%		(41)	bps
Diluted Earnings Per Share (EPS)		$	0.91			$	1.68			(45.8)	%		$	0.97			(6.2)	%
Fourth Quarter Results (Non-GAAP)(1)
		Jun – 24				Jun – 23				Change Y/Y			Mar – 24				Change Q/Q
Adjusted Operating Income		$	193.4			$	312.6			(38.1)	%		$	202.7			(4.6)	%
Adjusted Operating Income Margin			3.5	%			4.8	%		(129)	bps			3.6	%		(11)	bps
Adjusted Diluted Earnings Per Share (EPS)		$	1.22			$	2.06			(40.8)	%		$	1.10			10.9	%
Segment and Geographical Mix
		Jun – 24				Jun – 23				Change Y/Y			Mar – 24				Change Q/Q
Electronic Components (EC) Sales		$	5,187.8			$	6,109.2			(15.1)	%		$	5,245.8			(1.1)	%
EC Operating Income Margin			4.1	%			5.1	%		(103)	bps			4.1	%		(8)	bps
Farnell Sales		$	375.2			$	445.4			(15.8)	%		$	407.8			(8.0)	%
Farnell Operating Income Margin			4.0	%			8.1	%		(406)	bps			4.0	%		3	bps
Americas Sales		$	1,353.8			$	1,732.7			(21.9)	%		$	1,403.4			(3.5)	%
EMEA Sales		$	1,920.3			$	2,450.6			(21.6)	%		$	2,053.1			(6.5)	%
Asia Sales		$	2,288.9			$	2,371.3			(3.5)	%		$	2,197.1			4.2	%

_______________
(1)		A reconciliation of non-GAAP financial measures to GAAP financial measures is presented in the “Non-GAAP Financial Information” section of this press release.

Outlook for the First Quarter of Fiscal 2025 Ending on September 28, 2024

		Guidance Range		Midpoint
Sales		$5.25B – $5.55B		$5.40B
Diluted EPS (1)		$0.80 – $0.90		$0.85

_______________
(1)		A reconciliation of non-GAAP guidance to GAAP guidance is presented in the “Non-GAAP Financial Information” section of this press release.

The above guidance implies a sequential sales change of flat to down approximately 5% and assumes sales declines in the western regions and sales growth in Asia.

The above guidance also excludes restructuring, integration and other expenses, foreign currency gains and losses, and certain income tax adjustments. The above guidance assumes similar interest expense to the fourth quarter of fiscal 2024 and an effective tax rate of between 21% and 25%. The above guidance assumes 90 million average diluted shares outstanding and average currency exchange rates as shown in the table below:

		Q1 Fiscal
		2025		Q4 Fiscal		Q1 Fiscal
		Guidance		2024		2024
Euro to U.S. Dollar		$1.08		$1.08		$1.09
GBP to U.S. Dollar		$1.27		$1.26		$1.27

Today’s Conference Call and Webcast Details

Avnet will host a conference call and webcast today at 9:00 a.m. PT / Noon ET to discuss its financial results, provide a business update and answer questions.

• Live conference call: 877-407-8112 (domestic) or 201-689-8840 (international)
• Conference call replay available through August 15, 2024: 877-660-6853 or 201-612-7415 and using Conference ID: 13747493
• Live and archived webcast can be accessed via Avnet’s Investor Relations web page at: https://ir.avnet.com

Forward-Looking Statements

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 similar expressions. These forward-looking statements are subject to numerous assumptions, risks, and uncertainties. The following important factors, in addition to those discussed elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2023 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, could affect the Company’s future results of operations, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements: geopolitical events and military conflicts; pandemics and other health-related crises; competitive pressures among distributors of electronic components; an industry down-cycle in semiconductors, including supply shortages; relationships with key suppliers and allocations of products by suppliers, including increased non-cancellable/non-returnable orders; accounts receivable defaults; risks relating to the Company’s international sales and operations, including risks relating to repatriating cash, foreign currency fluctuations, inflation, duties and taxes, sanctions and trade restrictions, and compliance with international and U.S. laws; risks relating to acquisitions, divestitures, and investments; adverse effects on the Company’s supply chain, operations of its distribution centers, shipping costs, third-party service providers, customers, and suppliers, including as a result of issues caused by military conflicts, terrorist attacks, natural and weather-related disasters, pandemics and health related crises, warehouse modernization, and relocation efforts; risks related to cyber security attacks, other privacy and security incidents, and information systems failures, including related to current or future implementations, integrations, and upgrades; general economic and business conditions (domestic, foreign, and global) affecting the Company’s operations and financial performance and, indirectly, the Company’s credit ratings, debt covenant compliance, liquidity, and access to financing; constraints on employee retention and hiring; and legislative or regulatory changes.

Any forward-looking statement speaks only as of the date on which that statement is made. Except as required by law, the Company assumes no obligation to update any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made.

About Avnet

As a leading global technology distributor and solutions provider, Avnet has served customers’ evolving needs for more than a century. We support customers at each stage of a product’s lifecycle, from idea to design and from prototype to production. Our unique position at the center of the technology value chain enables us to accelerate the design and supply stages of product development so customers can realize revenue faster. Decade after decade, Avnet helps its customers and suppliers around the world realize the transformative possibilities of technology. Learn more about Avnet at www.avnet.com. (AVT_IR)

AVNET, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
		Fourth Quarters Ended								Years Ended
		June 29,				July 1,				June 29,				July 1,
		2024				2023				2024				2023
		(Thousands, except per share data)
Sales		$	5,562,977			$	6,554,608			$	23,757,129			$	26,536,881
Cost of sales			4,920,097				5,736,586				20,990,687				23,354,738
Gross profit			642,880				818,022				2,766,442				3,182,143
Selling, general and administrative expenses			450,274				506,322				1,869,525				1,967,305
Restructuring, integration, and other expenses			28,417				28,038				52,550				28,038
Operating income			164,189				283,662				844,367				1,186,800
Other income (expense), net			1,409				6,456				(15,736	)			9,908
Interest and other financing expenses, net			(64,274	)			(75,056	)			(282,867	)			(250,869	)
Gain on legal settlements and other			—				(24,669	)			86,499				37,037
Income before taxes			101,324				190,393				632,263				982,876
Income tax expense			18,659				35,138				133,564				212,048
Net income		$	82,665			$	155,255			$	498,699			$	770,828
Earnings per share:
Basic		$	0.92			$	1.70			$	5.51			$	8.37
Diluted		$	0.91			$	1.68			$	5.43			$	8.26
Shares used to compute earnings per share:
Basic			90,092				91,493				90,567				92,043
Diluted			91,122				92,626				91,837				93,368
Cash dividends paid per common share		$	0.31			$	0.29			$	1.24			$	1.16

AVNET, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
		June 29,				July 1,
		2024				2023
		(Thousands)
ASSETS
Current assets:
Cash and cash equivalents		$	310,941			$	288,230
Receivables			4,391,187				4,763,788
Inventories			5,468,730				5,465,031
Prepaid and other current assets			199,694				233,804
Total current assets			10,370,552				10,750,853
Property, plant and equipment, net			568,169				441,557
Goodwill			780,984				780,629
Operating lease assets			208,971				221,698
Other assets			280,471				282,422
Total assets		$	12,209,147			$	12,477,159
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt		$	492,711			$	70,636
Accounts payable			3,345,510				3,373,820
Accrued expenses and other			573,055				753,130
Short-term operating lease liabilities			53,993				51,792
Total current liabilities			4,465,269				4,249,378
Long-term debt			2,406,629				2,988,029
Long-term operating lease liabilities			173,886				190,621
Other liabilities			237,859				297,462
Total liabilities			7,283,643				7,725,490
Shareholders’ equity			4,925,504				4,751,669
Total liabilities and shareholders’ equity		$	12,209,147			$	12,477,159

AVNET, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
		Years Ended
		June 29, 2024				July 1, 2023
		(Thousands)
Cash flows from operating activities:
Net income		$	498,699			$	770,828
Non-cash and other reconciling items:
Depreciation and amortization			86,708				88,613
Amortization of operating lease assets			53,796				54,392
Deferred income taxes			(9,749	)			(37,060	)
Stock-based compensation			33,496				38,781
Other, net			15,800				52,142
Changes in (net of effects from businesses acquired and divested):
Receivables			316,218				(461,117	)
Inventories			(51,203	)			(1,173,124	)
Accounts payable			4,496				(75,943	)
Accrued expenses and other, net			(258,277	)			28,785
Net cash flows provided by (used for) operating activities			689,984				(713,703	)
Cash flows from financing activities:
Issuance of notes, net of discounts			—				498,615
Borrowings (repayments) under accounts receivable securitization, net			(140,700	)			258,000
Borrowings under senior unsecured credit facility, net			(43,277	)			728,182
Borrowings (repayments) under bank credit facilities and other debt, net			27,491				(96,209	)
Repurchases of common stock			(162,723	)			(221,730	)
Dividends paid on common stock			(111,963	)			(106,325	)
Other, net			(2,627	)			(5,777	)
Net cash flows (used for) provided by financing activities			(433,799	)			1,054,756
Cash flows from investing activities:
Purchases of property, plant and equipment			(226,478	)			(194,674	)
Other, net			994				(16,877	)
Net cash flows used for investing activities			(225,484	)			(211,551	)
Effect of currency exchange rate changes on cash and cash equivalents			(7,990	)			5,035
Cash and cash equivalents:
— increase			22,711				134,537
— at beginning of period			288,230				153,693
— at end of period		$	310,941			$	288,230

Non-GAAP Financial Information

In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company also discloses certain non-GAAP financial information including (i) adjusted operating income, (ii) adjusted other income (expense), (iii) adjusted income before income taxes, (iv) adjusted income tax expense (benefit), and (v) adjusted diluted earnings per share.

There are also references to the impact of foreign currency in the discussion of the Company’s results of operations. When the U.S. Dollar strengthens and the stronger exchange rates of the current year are used to translate the results of operations of Avnet’s subsidiaries denominated in foreign currencies, the resulting impact is a decrease in U.S. Dollars of reported results. Conversely, when the U.S. Dollar weakens and the weaker exchange rates of the current year are used to translate the results of operations of Avnet’s subsidiaries denominated in foreign currencies, the resulting impact is an increase in U.S. Dollars of reported results. In the discussion of the Company’s results of operations, results excluding this impact are referred to as “constant currency.” Management believes sales in constant currency is a useful measure for evaluating current period performance as compared with prior periods and for understanding underlying trends. In order to determine the translation impact of changes in foreign currency exchange rates on sales, income or expense items for subsidiaries reporting in currencies other than the U.S. Dollar, the Company adjusts the average exchange rates used in current periods to be consistent with the average exchange rates in effect during the comparative period.

Management believes that operating income adjusted for restructuring, integration and other expenses, and amortization of acquired intangible assets, is a useful measure to help investors better assess and understand the Company’s operating performance. This is especially the case when comparing results with previous periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of Avnet’s normal operating results or non-cash in nature. Management analyzes operating income without the impact of these items as an indicator of ongoing margin performance and underlying trends in the business. Management also uses these non-GAAP measures to establish operational goals and, in most cases, for measuring performance for compensation purposes. Management measures operating income for its reportable segments excluding restructuring, integration and other expenses, and amortization of acquired intangible assets and other.

Management also believes income tax expense (benefit), net income and diluted earnings per share adjusted for the impact of the items described above, gain on legal settlements and other, foreign currency gains and losses and certain items impacting income tax expense (benefit) are useful to investors because they provide a measure of the Company’s net profitability on a more comparable basis to historical periods and provide a more meaningful basis for forecasting future performance. Adjustments to income tax expense (benefit) and the effective income tax rate include the effect of changes in tax laws, certain changes in valuation allowances and unrecognized tax benefits, income tax audit settlements and adjustments to effective tax rate based upon the expected long-term adjusted effective tax rate. Additionally, because of management’s focus on generating shareholder value, of which net profitability is a primary driver, management believes net income and diluted earnings per share excluding the impact of these items provides an important measure of the Company’s net profitability for the investing public.

Additional non-GAAP metrics management uses are adjusted operating income margin, which is defined as adjusted operating income divided by sales and the adjusted effective income tax rate, which is defined as adjusted income tax expense divided by adjusted income before income taxes.

Any analysis of results and outlook on a non-GAAP basis should be used as a complement to, and in conjunction with, results presented in accordance with GAAP.

						Quarters Ended
		Fiscal Year				June 29,				March 30,				December 30,				September 30,
		2024*				2024*				2024*				2023				2023
		($ in thousands, except per share amounts)
GAAP operating income		$	844,367			$	164,189			$	190,151			$	236,257			$	253,769
Restructuring, integration, and other expenses			52,550				28,417				11,847				5,235				7,051
Amortization of intangible assets			3,130				828				712				712				878
Adjusted operating income			900,047				193,434				202,710				242,204				261,698
GAAP other (expense) income, net		$	(15,736	)		$	1,409			$	(14,707	)		$	(8,397	)		$	5,960
Foreign currency loss (gain) and other, net			27,730				680				17,850				9,200				—
Adjusted other (expense) income, net			11,994				2,089				3,143				803				5,960
GAAP income before income taxes		$	632,263			$	101,324			$	101,948			$	153,558			$	275,432
Restructuring, integration, and other expenses			52,550				28,417				11,847				5,235				7,051
Amortization of intangible assets			3,130				828				712				712				878
Foreign currency loss (gain) and other, net			27,730				680				17,850				9,200				—
Gain on legal settlements and other			(86,499	)			—				—				—				(86,499	)
Adjusted income before income taxes			629,174				131,249				132,357				168,705				196,862
GAAP income tax expense		$	133,564			$	18,659			$	13,114			$	35,627			$	66,164
Restructuring, integration, and other expenses			13,000				7,251				2,772				1,274				1,703
Amortization of intangible assets			700				185				156				156				203
Foreign currency loss (gain) and other, net			7,373				88				5,251				2,034				—
Gain on legal settlements and other			(20,434	)			—				—				—				(20,434	)
Income tax expense items, net			4,992				(6,489	)			10,472				1,399				(390	)
Adjusted income tax expense			139,195				19,694				31,765				40,490				47,246
GAAP net income		$	498,699			$	82,665			$	88,834			$	117,931			$	209,268
Restructuring, integration, and other expenses (net of tax)			39,550				21,166				9,075				3,961				5,348
Amortization of intangible assets (net of tax)			2,430				643				556				556				675
Foreign currency loss (gain) and other, net (net of tax)			20,357				592				12,599				7,166				—
Gain on legal settlements and other (net of tax)			(66,065	)			—				—				—				(66,065	)
Income tax expense items, net			(4,992	)			6,489				(10,472	)			(1,399	)			390
Adjusted net income			489,979				111,555				100,592				128,215				149,616
GAAP diluted earnings per share		$	5.43			$	0.91			$	0.97			$	1.28			$	2.25
Restructuring, integration, and other expenses (net of tax)			0.43				0.23				0.10				0.04				0.06
Amortization of intangible assets (net of tax)			0.03				0.01				0.01				0.01				0.01
Foreign currency loss (gain) and other, net (net of tax)			0.22				0.01				0.14				0.08				—
Gain on legal settlements and other (net of tax)			(0.72	)			—				—				—				(0.71	)
Income tax expense items, net			(0.05	)			0.07				(0.11	)			(0.01	)			0.00
Adjusted diluted EPS			5.34				1.22				1.10				1.40				1.61
_______________
* May not foot/cross foot due to rounding.

						Quarters Ended
		Fiscal Year				July 1,				April 1,				December 31,				October 1,
		2023*				2023*				2023				2022				2022
		($ in thousands, except per share amounts)
GAAP operating income		$	1,186,800			$	283,662			$	313,629			$	298,973			$	290,537
Restructuring, integration, and other expenses			28,038				28,038				—				—				—
Amortization of intangible assets			6,053				878				876				1,541				2,759
Adjusted operating income			1,220,891				312,578				314,505				300,514				293,296
GAAP income before income taxes		$	982,876			$	190,393			$	243,587			$	303,134			$	245,762
Restructuring, integration, and other expenses			28,038				28,038				—				—				—
Amortization of intangible assets			6,053				878				876				1,541				2,759
Gain on legal settlements and other			(37,037	)			24,669				—				(61,705	)			—
Adjusted income before income taxes			979,931				243,978				244,463				242,970				248,521
GAAP income tax expense		$	212,048			$	35,138			$	56,161			$	59,248			$	61,501
Restructuring, integration, and other expenses			6,007				6,007				—				—				—
Amortization of intangible assets			1,360				207				203				345				605
Gain on legal settlements and other			(8,711	)			5,828				—				(14,539	)			—
Income tax expense items, net			16,453				5,583				3,529				12,287				(4,946	)
Adjusted income tax expense			227,157				52,763				59,893				57,341				57,160
GAAP net income		$	770,828			$	155,255			$	187,426			$	243,886			$	184,261
Restructuring, integration, and other expenses (net of tax)			22,031				22,031				—				—				—
Amortization of intangible assets (net of tax)			4,693				671				673				1,196				2,154
Gain on legal settlements and other (net of tax)			(28,326	)			18,841				—				(47,166	)			—
Income tax expense items, net			(16,453	)			(5,583	)			(3,529	)			(12,287	)			4,946
Adjusted net income			752,774				191,215				184,570				185,629				191,361
GAAP diluted earnings per share		$	8.26			$	1.68			$	2.03			$	2.63			$	1.93
Restructuring, integration, and other expenses (net of tax)			0.24				0.24				—				—				—
Amortization of intangible assets (net of tax)			0.05				0.01				0.01				0.01				0.02
Gain on legal settlements and other (net of tax)			(0.31	)			0.20				—				(0.51	)			—
Income tax expense items, net			(0.18	)			(0.06	)			(0.04	)			(0.13	)			0.05
Adjusted diluted EPS			8.06				2.06				2.00				2.00				2.00
_______________
* May not foot/cross foot due to rounding.

Contacts

Investor Relations Contact
InvestorRelations@Avnet.com

Media Relations Contact
Jeanne Forbis, 480-643-7499
Jeanne.Forbis@Avnet.com

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