AVNET, INC. AND SUBSIDIARIES - FORM 10-Q
Avnet, Inc. reported its quarterly financial results for the period ended March 29, 2025. The company’s revenue increased by 4.5% to $6.3 billion, driven by growth in its Electronics Marketing segment. Gross profit margin expanded by 120 basis points to 12.1%, while operating income rose by 10.5% to $143.8 million. Net income attributable to Avnet shareholders increased by 12.2% to $93.5 million, or $1.12 per diluted share. The company’s cash and cash equivalents stood at $1.4 billion, with a debt-to-equity ratio of 0.45. Avnet’s financial performance was driven by its strategic initiatives, including the expansion of its digital capabilities and the growth of its high-revenue, high-margin businesses.
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 have operations in the Americas, EMEA, and Asia regions.
Recent developments have impacted Avnet’s operations, including changes in trade policies and tariffs, as well as a downturn in the electronic components industry. The company has taken measures to mitigate the impact of these changes, but they may continue to affect Avnet’s financial performance.
The global electronic components market is cyclical, and the industry is currently experiencing a downturn marked by decreased sales and lower operating income. Avnet’s inventories are also higher than historical levels as a result of this industry downturn.
Results of Operations
Sales:
- Q3 2025 sales were $5.32 billion, a 6.0% decrease from Q3 2024.
- YTD Q3 2025 sales were $16.58 billion, an 8.9% decrease from YTD Q3 2024.
- The decreases were primarily due to lower demand for electronic components in both the EC and Farnell operating groups.
Gross Profit:
- Q3 2025 gross profit was $588 million, a 12.2% decrease from Q3 2024.
- YTD Q3 2025 gross profit was $1.79 billion, a 15.7% decrease from YTD Q3 2024.
- The decreases were primarily due to the sales volume decreases and a decline in gross profit margin.
- Gross profit margin decreased by 78 basis points to 11.1% in Q3 2025 and by 87 basis points to 10.8% YTD Q3 2025, primarily due to geographic sales mix.
Selling, General and Administrative (SG&A) Expenses:
- Q3 2025 SG&A expenses decreased 6.8% from Q3 2024.
- YTD Q3 2025 SG&A expenses decreased 7.6% from YTD Q3 2024.
- The decreases were primarily due to lower variable operating expenses associated with the sales volume decreases, restructuring actions, and the impact of changes in foreign currency translation rates.
Restructuring, Integration, and Other Expenses:
- Q3 2025 restructuring, integration, and other expenses were $9.1 million.
- YTD Q3 2025 restructuring, integration, and other expenses were $39.3 million.
- These expenses were primarily related to severance, facility exit costs, and asset impairments as part of the company’s restructuring initiatives.
Operating Income:
- Q3 2025 operating income was $143.3 million, a 24.7% decrease from Q3 2024.
- YTD Q3 2025 operating income was $440.8 million, a 35.2% decrease from YTD Q3 2024.
- The decreases were primarily due to the lower sales and gross profit, partially offset by lower SG&A expenses.
Net Income:
- Q3 2025 net income was $87.9 million, a 1.0% decrease from Q3 2024.
- YTD Q3 2025 net income was $234.1 million, a 43.7% decrease from YTD Q3 2024.
- The decreases were primarily due to the lower operating income, partially offset by lower interest and other financing expenses, and a lower effective tax rate.
Liquidity and Capital Resources
Cash Flow:
- Net cash provided by operating activities was $585.0 million for YTD Q3 2025, an increase of $169.3 million from YTD Q3 2024.
- The increase was primarily due to improvements in working capital and other, partially offset by lower net income.
Financing Activities:
- Net debt repayments were $270.3 million for YTD Q3 2025.
- The company repurchased $253.5 million of common stock and paid $85.6 million in dividends during YTD Q3 2025.
Liquidity:
- The company held $188.9 million in cash and cash equivalents as of March 29, 2025.
- The company had $1.17 billion in total committed availability under its Credit Facility and Securitization Program as of March 29, 2025.
- Management believes the company’s ability to generate operating cash flows and available borrowing capacity will be sufficient to meet its future liquidity needs.
In summary, Avnet’s financial performance in Q3 and YTD Q3 2025 was impacted by the downturn in the electronic components industry, leading to lower sales, gross profit, and operating income. The company has taken actions to reduce costs and manage its liquidity, and believes it has sufficient resources to meet its future needs despite the challenging market conditions.
