• Revenue: $5.6 billion, down 12% year over year, up 1% sequentially.

• Adjusted EPS: $0.92, above guidance.

• Cash Flow from Operations: Over $100 million generated in the quarter.

• Gross Margin: 10.8%, down 97 basis points year over year and 72 basis points sequentially.

• SG&A Expenses: $439 million, down 10% year over year and 3% sequentially.

• Adjusted Operating Income: $169 million with an operating margin of 3%.

• Interest Expense: $64 million, decreased by $6 million year over year.

• Adjusted Effective Tax Rate: 23%.

• Inventory Days: Improved by 3 days sequentially to 101 days.

• Cash Used for CapEx: $32 million.

• Dividend Increase: Approximately 6% to $0.33 per share.

• Share Repurchase: Approximately $100 million worth of shares, more than 2% of shares outstanding.

• Book Value per Share: Improved to approximately $56 per share.

• Guidance for Q2 FY2025: Sales between $5.4 billion to $5.7 billion; EPS between $0.80 to $0.90.

• Warning! GuruFocus has detected 7 Warning Signs with AVT.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Avnet Inc (NASDAQ:AVT) achieved sales of more than $5.6 billion and adjusted EPS of $0.92, both above the high end of their guidance.

• The company generated over $100 million of cash flow from operations in the quarter.

• Sales in the Asia region increased 14% sequentially and 6% year on year, driven by strength in server, data center, and communications end markets.

• Avnet Inc (NASDAQ:AVT) reported a modest increase in their turns business, which is usually a good indicator of future demand.

• The company expanded its e-commerce presence in Asia-Pac, including a new team in Japan, indicating growth potential in the region.

Negative Points

• Avnet Inc (NASDAQ:AVT) experienced a 12% year-over-year decline in sales, with significant declines in EMEA (28%) and the Americas (16%).

• Farnell sales declined 80% year over year and 8% sequentially, impacted by the EMEA macroenvironment.

• Gross margin decreased to 10.8%, the lowest in several years, primarily due to a sales mix shift from Asia and lower margins at Farnell.

• The global book-to-bill ratio remains below parity, indicating ongoing challenges in demand.

• Inventory levels increased, driven by foreign currency exchange rates, and the company aims to reduce inventory days to the 80s by the end of the fiscal year.

Q & A Highlights

Q: Can you elaborate on the year-over-year growth in Asia, excluding data center opportunities? A: Philip Gallagher, CEO: The growth in Asia is not solely driven by data centers. We are seeing increases in consumer, communication, compute, and even aerospace sectors. The industrial sector in Asia is not as down as it is in Europe and the Americas.