IntrinsicIntrinsic
← All summaries

AVNET INC

AVT
Financials & Chart →

Business Summary

Avnet, Inc. is a leading global electronic component technology distributor and solutions provider that has served customers' evolving needs for more than a century, founded in 1921. The company works with electronic component manufacturers in every major electronic component segment to serve customers in more than 140 countries, including startups, mid-sized businesses, enterprise-level original equipment manufacturers, electronic manufacturing services providers, and original design manufacturers. The electronic components industry is competitive, and the company's major competitors include Arrow Electronics, Future Electronics, World Peace Group, and WT Microelectronics for the Electronic Components operating group, and Mouser Electronics, Digi-Key Electronics, and RS Components for the Farnell operating group. There are also certain smaller, specialized competitors who generally focus on particular sectors or on narrower geographic locations, markets, or products.

One of Avnet's competitive strengths is the breadth and quality of the suppliers whose products it distributes. Products from one supplier were approximately 10% of consolidated sales during fiscal years 2025, 2024 and 2023. A key competitive factor in the electronic component distribution industry is the need to carry a sufficient amount and selection of inventory to meet customers' demand and various delivery requirements. The company enhances its competitive position by offering a variety of value-added services, such as design support, point of use replenishment, labelling, testing, assembly, programming, supply chain management, and materials management. A competitive advantage is the breadth of the company's supplier product line card, as many customers can simplify their procurement process and make all or substantially all of their required electronic component purchases from Avnet.

Avnet generates revenue through the distribution of electronic components and related solutions, operating through two primary operating groups: Electronic Components and Farnell. The Electronic Components group primarily supports high and medium-volume customers, marketing, selling, and distributing electronic components including semiconductors, IP&E components, and other integrated and embedded components, and offers an array of customer support options throughout the entire product lifecycle including turnkey and customized design, supply chain, programming, logistics, and post-sales services. The Farnell operating group primarily supports lower-volume customers that need electronic components quickly to develop, prototype, and test their products, distributing a comprehensive portfolio of kits, tools, electronic components, industrial automation components, and test and measurement products primarily through an e-commerce channel. Revenue is recognized at the point at which control of the underlying products are transferred to the customer, and the company estimates different forms of variable consideration at the time of sale based on historical experience, current conditions, and contractual obligations.

Within the Electronic Components operating group for 2025, net sales of approximately 82% consist of semiconductor products, approximately 16% consist of interconnect, passive, and electromechanical components, and approximately 2% consist of computers. The Electronic Components group offers design support through Avnet Design Solutions, providing engineers with technical design solutions, evaluation kits, and reference designs, and also offers supply chain solutions providing procurement support and warehousing and logistics services to OEMs, EMS providers, and electronic component manufacturers. Additionally, the group provides embedded solutions through Avnet Embedded and Avnet Integrated Solutions, including technical design, integration and assembly of embedded products, systems, and solutions for end markets including industrial and healthcare, as well as embedded display solutions and custom-built servers for software companies.

Within the Farnell operating group for 2025, net sales of approximately 14% consist of semiconductor products, approximately 47% consist of interconnect, passive, and electromechanical components, approximately 11% consist of single-board computers, and approximately 28% consist of other products and services, including test and measurement and maintenance, repair, and operations products. Farnell distributes new product introductions for its suppliers across their various product categories and serves engineers and entrepreneurs primarily through an e-commerce channel. For the company overall, major product categories include semiconductors with sales of $17,207.9 million in fiscal 2025, interconnect, passive and electromechanical components with sales of $3,976.9 million , computers with sales of $528.9 million , and other products with sales of $487.1 million .

In fiscal 2024, the company initiated a restructuring plan to reduce SG&A expenses including within the Farnell operating group, and these efforts continued in fiscal 2025 and included EC Americas and EC EMEA. As a result of these restructuring initiatives, the company incurred $56.1 million for restructuring expenses consisting of severance and other employee-related expenses of $32.2 million for reduction of over 400 employees across the company, $5.6 million of facility exit costs primarily related to an office closure in the Americas, $14.9 million of asset impairments, and $3.4 million of other restructuring costs primarily related to software licenses not in use. The company also recorded $14.5 million of integration costs, a benefit of $6.0 million for changes in estimates for costs associated with prior year restructuring actions, and $43.7 million of other costs primarily related to the estimated contingent liability associated with an ongoing consumption tax audit in Mexico. During fiscal 2025, the company repurchased $303.5 million of common stock under the share repurchase plan and paid cash dividends to shareholders of $1.32 per share , or $113.3 million . In August 2024, the Board of Directors approved an increase in the company's existing share repurchase plan, authorizing the repurchase of up to an aggregate of $600 million of common stock.

Avnet's sales for fiscal 2025 were $22,200.8 million , a decrease of $1,556 million , or 6.6% , from fiscal 2024 sales of $23,757.1 million . Gross profit in fiscal 2025 was $2,384.9 million , a decrease of $381.5 million , or 13.8% , from fiscal 2024 gross profit of $2,766.4 million . Gross profit margin decreased to 10.7% in fiscal 2025, or 90 basis points from fiscal 2024 gross profit margin of 11.6% . Operating income for fiscal 2025 was $514.3 million , a decrease of $330.1 million or 39.1% , from fiscal 2024 operating income of $844.4 million . Net income in fiscal 2025 was $240.2 million , or earnings per share on a diluted basis of $2.75 , compared with fiscal 2024 net income of $498.7 million , or earnings per share on a diluted basis of $5.43 . Net cash provided by operating activities was $724.5 million during fiscal 2025, compared to $690.0 million during fiscal 2024.

Business Outlook

The company expects sales in the first quarter of fiscal 2026 to be approximately 2% growth across all regions from the fourth quarter of fiscal 2025 sales.

The company's operations subject it to tariffs and other trade protection measures, and the U.S. administration has instituted certain changes in trade policies that include higher tariffs on imports into the U.S. and other measures affecting trade between the U.S. and other countries from which the company imports. The company employs and continues to develop systems and other measures to mitigate the impact of tariffs, including selective supply chain, logistics, and pricing actions, and also has contingency plans to respond to a range of economic scenarios. The company's management continues to monitor and evaluate the changing tariff situation, as well as the overall environment in the electronic components industry, but despite these efforts, the company may not be able to fully mitigate the impact of changes in trade policies or an economic downturn.

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 a combination of elevated customer inventory levels and lower underlying demand for electronic components, and the duration of the current downturn is uncertain. The company's inventories relative to its sales are higher than they have historically been as a result of this industry downturn, and the company has and may in the future purchase additional inventories from electronic component suppliers, even in an industry downturn, if the company believes the purchase will benefit the company's financial or strategic business objectives.

The company's inventories relative to its sales are higher than they have historically been as a result of the industry downturn. The company has and may in the future purchase additional inventories from electronic component suppliers, even in an industry downturn, if the company believes the purchase will benefit the company's financial or strategic business objectives. The company expects to continue to purchase sufficient inventory to meet its customers' demands in fiscal year 2026, some of which relates to outstanding purchase orders at the end of fiscal 2025.

The company's cost of sales, substantially all of which related to the underlying purchase of inventories, was $19.8 billion during fiscal 2025, and the company had $5.2 billion of inventories as of June 28, 2025. Outstanding purchase orders with suppliers may be non-cancellable/non-returnable at the point such orders are issued or may become non-cancellable at some point in the future, typically within 30 days to 90 days from the requested delivery date of inventories.

During fiscal 2026 the company may use cash for investing and financing activities including the payment of cash dividends and capital expenditures for distribution centers and information systems including digital tools and capabilities. The company may also use cash in fiscal 2026 for share repurchases and for acquisitions. As of June 28, 2025, the company may repurchase up to an aggregate of $364.1 million of shares of the company's common stock through the share repurchase program approved by the Board of Directors. The company has historically paid quarterly cash dividends on shares of its common stock, and during the fourth quarter of fiscal 2025, the Board of Directors approved a dividend of $0.33 per share , which resulted in $27.7 million of dividend payments during the quarter.

The company expects to redeem the $550.0 million of 4.63% Notes due April 2026 either through the issuance of new debt or from available borrowing capacity under the Credit Facility. As of June 28, 2025, the combined availability under the Credit Facility and the Securitization Program was $1.09 billion . The company's ability to satisfy its cash needs and implement its capital allocation strategy depends on its ability to generate cash from operations and to access the financial markets, both of which are subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond the company's control.

The company's sales are subject to risks from changes in customer product demands and consumption models, which may cause a decline in billings. The semiconductor industry experiences periodic fluctuations in product supply and demand, and during fiscal 2025, 2024, and 2023, sales of semiconductors represented approximately 78% , 80% , and 81% of the company's consolidated sales, respectively, and the company's sales closely follow the strength or weakness of the semiconductor industry. Geopolitical uncertainty, including from military conflicts, health-related crises, and international trade disputes, has led to shortages, extended lead times, and unpredictability in the supply of certain semiconductors and other electronic components.

Risk Factors

The company faces material risks from changes in customer product demands and consumption models, as sales of semiconductors represented approximately 78% of consolidated sales in fiscal 2025 and the company's sales closely follow the strength or weakness of the semiconductor industry. Disruptions to key supplier relationships pose a significant risk, as one supplier accounted for approximately 10% of consolidated billings in fiscal 2025 and supplier contracts are generally terminable at will upon notice. The company's international operations expose it to risks, with approximately 77% of sales in fiscal 2025 coming from operations outside the United States, subjecting the company to foreign currency fluctuations, trade restrictions, and complex tax laws. The company's inventories of $5.2 billion as of June 28, 2025 are subject to value decline due to technological change and market conditions, and supplier protections may not fully compensate for losses. Additionally, the company's accounts receivable of $4.3 billion represent a significant portion of working capital, and an economic downturn could adversely affect the company's ability to collect receivables.

Management Priorities

Management's message in the filing emphasizes the company's position as a leading global electronic component technology distributor and solutions provider that has served customers for more than a century. The forward-looking statements include the expectation that sales in the first quarter of fiscal 2026 will be approximately 2% growth across all regions from the fourth quarter of fiscal 2025 sales. The strategic priorities emphasized for the period ahead include continuing to monitor and evaluate the changing tariff situation and the overall environment in the electronic components industry, employing systems and other measures to mitigate the impact of tariffs including selective supply chain, logistics, and pricing actions, and maintaining contingency plans to respond to a range of economic scenarios. Management also emphasizes the company's ability to generate operating cash flows through the liquidation of working capital and available borrowing capacity to meet future liquidity needs.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Major Products
  2. [2] Item 1, Business — Major Products
  3. [3] Item 1, Business — Major Products
  4. [4] Item 1, Business — Major Products
  5. [5] Item 7, MD&A — Restructuring, Integration and Other Expenses
  6. [6] Item 7, MD&A — Restructuring, Integration and Other Expenses
  7. [7] Item 7, MD&A — Restructuring, Integration and Other Expenses
  8. [8] Item 7, MD&A — Restructuring, Integration and Other Expenses
  9. [9] Item 7, MD&A — Restructuring, Integration and Other Expenses
  10. [10] Item 7, MD&A — Restructuring, Integration and Other Expenses
  11. [11] Item 7, MD&A — Restructuring, Integration and Other Expenses
  12. [12] Item 7, MD&A — Restructuring, Integration and Other Expenses
  13. [13] Item 7, MD&A — Liquidity and Capital Resources
  14. [14] Item 8, Note 3 — Shareholders' Equity
  15. [15] Item 7, MD&A — Liquidity and Capital Resources
  16. [16] Item 8, Note 3 — Shareholders' Equity
  17. [17] Item 7, MD&A — Results of Operations
  18. [18] Item 7, MD&A — Results of Operations
  19. [19] Item 7, MD&A — Results of Operations
  20. [20] Item 7, MD&A — Results of Operations
  21. [21] Item 7, MD&A — Results of Operations
  22. [22] Item 7, MD&A — Gross Profit
  23. [23] Item 7, MD&A — Gross Profit
  24. [24] Item 7, MD&A — Gross Profit
  25. [25] Item 7, MD&A — Results of Operations
  26. [26] Item 7, MD&A — Results of Operations
  27. [27] Item 7, MD&A — Results of Operations
  28. [28] Item 7, MD&A — Results of Operations
  29. [29] Item 7, MD&A — Operating Income
  30. [30] Item 7, MD&A — Operating Income
  31. [31] Item 7, MD&A — Operating Income
  32. [32] Item 7, MD&A — Net Income
  33. [33] Item 7, MD&A — Net Income
  34. [34] Item 7, MD&A — Net Income
  35. [35] Item 7, MD&A — Net Income
  36. [36] Item 7, MD&A — Cash Flows
  37. [37] Item 7, MD&A — Cash Flows
  38. [38] Item 7, MD&A — Industry outlook
  39. [39] Item 7, MD&A — Liquidity and Capital Resources
  40. [40] Item 7, MD&A — Liquidity and Capital Resources
  41. [41] Item 7, MD&A — Liquidity and Capital Resources
  42. [42] Item 7, MD&A — Liquidity and Capital Resources
  43. [43] Item 7, MD&A — Liquidity and Capital Resources
  44. [44] Item 7, MD&A — Liquidity and Capital Resources
  45. [45] Item 7, MD&A — Liquidity and Capital Resources
  46. [46] Item 1A, Risk Factors — Changes in customer needs and consumption models
  47. [47] Item 1A, Risk Factors — Changes in customer needs and consumption models
  48. [48] Item 1A, Risk Factors — Changes in customer needs and consumption models
  49. [49] Item 1A, Risk Factors — Changes in customer needs and consumption models
  50. [50] Item 1A, Risk Factors — Disruptions to key supplier and customer relationships
  51. [51] Item 1A, Risk Factors — Risks related to international operations
  52. [52] Item 8, Consolidated Balance Sheets
  53. [53] Item 8, Consolidated Balance Sheets
  54. [54] Item 7, MD&A — Industry outlook
  55. [55] Item 8, Consolidated Statements of Operations
  56. [56] Item 8, Consolidated Statements of Operations
  57. [57] Item 8, Consolidated Statements of Operations
  58. [58] Item 8, Consolidated Statements of Operations
  59. [59] Item 8, Consolidated Statements of Operations
  60. [60] Item 8, Consolidated Statements of Operations
  61. [61] Item 8, Consolidated Statements of Operations
  62. [62] Item 8, Consolidated Statements of Operations
  63. [63] Item 7, MD&A — Results of Operations
  64. [64] Item 7, MD&A — Results of Operations
  65. [65] Item 7, MD&A — Results of Operations
  66. [66] Item 7, MD&A — Results of Operations
  67. [67] Item 7, MD&A — Income Tax
  68. [68] Item 7, MD&A — Income Tax
  69. [69] Item 8, Consolidated Statements of Cash Flows
  70. [70] Item 8, Consolidated Statements of Cash Flows
  71. [71] Item 8, Consolidated Balance Sheets
  72. [72] Item 8, Consolidated Balance Sheets
  73. [73] Item 8, Note 7 — Debt
  74. [74] Item 8, Note 7 — Debt
  75. [75] Item 7, MD&A — Operating Income
  76. [76] Item 7, MD&A — Operating Income
  77. [77] Item 7, MD&A — Operating Income
  78. [78] Item 7, MD&A — Operating Income

Analysis on 6/21/2026