Avnet : Webcast (third quarter fiscal year 2025 earnings)

Published: 2025-05-01 08:46:10 ET AVT

Published on 05/01/2025 at 08:46

April 30, 2025

$5.3B

Revenue -6% Y/Y

2.7%

Operating Margin

2.9%

Adjusted Operating Margin (1)

$1.01

Diluted

EPS

$0.84

Adjusted

Diluted EPS (1)

Asia growth Y/Y offset by EMEA and the Americas

All verticals lower Y/Y

Lead times generally stable

Asia region at parity; Americas and EMEA approaching parity

Revenue

$5.65B

$5.56B

$5.60B

$5.66B

$5.32B

REGIONS

($M)

As reported

Constant currency

Americas

$1,274

(9%)

EMEA

$1,559

(24%)

(22%)

Asia

$2,482

13%

SEGMENTS

Electronic Components

$4,949

(6%)

(5%)

Farnell

$367

(10%)

(9%)

Q3 FY24

Q4 FY24

Q1 FY25

Q2 FY25

Q3 FY25

AVNET $5,315 (6%) (5%)

69.8% 74.1%

FY24

FY25

3.6% 3.5%

$203M $193M

3.0% 2.8% 2.9%

Adj Op Income(1) ($M)

Y/Y growth

Adj Op Margin(1)

Y/Y growth

SEGMENTS

Electronic Components

$172

-21%

3.5%

-65 bps

Farnell

$ 11

-33%

3.0%

-101 bps

Corporate Expenses

($30)

AVNET

$153

-25%

2.9%

-72 bps

$169M $159M $153M

Q3 FY24

Q4 FY24

Q1 FY25

Q2 FY25

Q3 FY25

Q/Q

$0.84 Adjusted diluted EPS (1) - down 24% Y/Y and down 3%

$0.84

$1.10

FY24

FY25

(1) Non-GAAP measure. See Appendices for Non-GAAP Definitions and GAAP to Non-GAAP reconciliation.

Inventory - $18M increase Q/Q due to impact of F/X;

$57M decrease Q/Q excluding F/X

104

WC days - up 2 days Q/Q

91M

87M

3.2x

Gross debt leverage

$1.2B

Available committed lines of credit

$101M

Share repurchases

$0.33

Dividend - returned $28M to shareholders

FY24

FY25

Outlook for Q4 FY25

(ending June 28, 2025)

Metric

Guidance Range

Midpoint

Sales

$5.15B - $5.45B

$5.30B

Adjusted Diluted EPS(1)

$0.65 - $0.75

$0.70

Based on current market conditions

Implies flat sequential sales at the midpoint and has the benefit of favorable foreign currency exchange rates primarily in EMEA. In constant currency, this sales guidance assumes lower sales in EMEA and relatively flat sales in the Americas and Asia

Assumes similar interest expense to Q3 FY25, an adjusted effective tax rate of between 21% and 25%, and approximately 86 million average diluted shares outstanding

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. See additional discussion, definitions and reconciliations of Non-GAAP measures included as Exhibit 99.1 to the Current Report on Form 8-K filed with the Securities Exchange Commission on April 30, 2025, which can be found on the Company's website at https://www.ir.avnet.com.

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 the 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.

Fiscal Year to Date

2025*

March 29,

2025

Quarters Ended

December 28, September 28,

2024 2024

($ in thousands, except per share amounts)

GAAP operating income

$ 440,802

$ 143,251

$ 155,327

$ 142,225

Restructuring, integration, and other expenses

39,255

9,110

3,794

26,351

Amortization of intangible assets

1,099

364

366

368

Adjusted operating income

481,156

152,725

159,487

168,944

GAAP other expense, net

$ (9,680)

$ (3,992)

$ (2,645)

$ (3,043)

Foreign currency loss

16,820

6,933

5,104

4,783

Adjusted other income, net

7,140

2,941

2,459

1,740

GAAP income before income taxes

$ 243,165

$ 78,144

$ 90,283

$ 74,738

Restructuring, integration, and other expenses

39,255

9,110

3,794

26,351

Amortization of intangible assets

1,099

364

366

368

Foreign currency loss

16,820

6,933

5,104

4,783

Adjusted income before income taxes

300,339

94,551

99,547

106,240

GAAP income tax expense (benefit)

$ 9,037

$ (9,775)

$ 3,030

$ 15,782

Restructuring, integration, and other expenses

10,274

2,475

1,142

6,657

Amortization of intangible assets

259

Foreign currency loss

5,004

1,762

1,630

1,612

Income tax expense items, net

44,504

27,199

17,007

298

Adjusted income tax expense

69,078

21,747

22,895

24,436

GAAP net income

$ 234,128

$ 87,919

$ 87,253

$ 58,956

Restructuring, integration, and other expenses (net of tax)

28,981

6,635

2,652

19,694

Amortization of intangible assets (net of tax)

839

278

280

281

Foreign currency loss (net of tax)

11,816

5,171

3,474

3,171

Income tax expense items, net

(44,504)

(27,199)

(17,007)

(298)

Adjusted net income

231,260

72,804

76,652

81,804

GAAP diluted earnings per share

$ 2.65

$ 1.01

$ 0.99

$ 0.66

Restructuring, integration, and other expenses (net of tax)

0.33

0.08

0.03

0.22

Amortization of intangible assets (net of tax)

0.01

0.00

Foreign currency loss (net of tax)

0.13

0.06

0.04

Income tax expense items, net

(0.50)

(0.31)

(0.19)

(0.00)

Adjusted diluted EPS

2.62

0.84

0.87

0.92

Quarters Ended

Fiscal Year

June 29,

March 30,

December 30,

September 30,

2024

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

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

878

Foreign currency loss (gain) and other, net

27,730

680

17,850

9,200

Gain on legal settlements and other

(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

203

Foreign currency loss (gain) and other, net

7,373

5,251

2,034

Gain on legal settlements and other

(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

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)

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

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

Adjusted diluted earnings per share guidance

0.65

0.75

Restructuring, integration, and other expenses (net of tax)

(0.18)

(0.09)

GAAP diluted earnings per share guidance

0.47

0.66

Disclaimer

Avnet Inc. published this content on April 29, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 01, 2025 at 12:45 UTC.