• Revenue: $5.3 billion, near the high end of guidance, down 6% year-over-year and sequentially.
• Adjusted EPS: $0.84, above guidance.
• Cash Flow from Operations: $141 million for the quarter.
• Gross Margin: 11.1%, down 78 basis points year-over-year, up 54 basis points sequentially.
• SG&A Expenses: $435 million, down 7% year-over-year.
• Adjusted Operating Income: $153 million with an operating margin of 2.9%.
• Electronic Components Operating Income: $172 million with a margin of 3.5%.
• Farnell Sales: Increased 6% sequentially, declined 10% year-over-year.
• Interest Expense: $61 million, decreased by $12 million year-over-year.
• Adjusted Effective Tax Rate: 23% for the quarter.
• CapEx: $27 million for the quarter.
• Share Repurchases: $101 million for the quarter, $251 million year-to-date.
• Book Value Per Share: Approximately $56, up $1 sequentially.
• Guidance for Q4 2025: Sales between $5.15 billion to $5.45 billion, EPS between $0.65 to $0.75.

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

Release Date: April 30, 2025

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

Positive Points

• Avnet Inc (NASDAQ:AVT) delivered financial results ahead of expectations for the third quarter, with sales of $5.3 billion near the high end of guidance and adjusted EPS of $0.84 above guidance.
• The company generated $141 million of cash flow from operations in the quarter, indicating strong cash management.
• The global book-to-bill ratio continues to improve, with the Asian region achieving parity and the Americas and EMEA approaching parity.
• Farnell, a part of Avnet Inc (NASDAQ:AVT), showed progress with a 6% sequential increase in sales and a 3% increase in operating income.
• Avnet Inc (NASDAQ:AVT) has implemented strategies to mitigate the impact of tariffs, leveraging global logistics and offering alternative solutions to minimize customer impact.

Negative Points

• Sales in EMEA declined 24% year-over-year, reflecting weak demand across the region.
• Electronic component sales declined 6% year-over-year and decreased 7% sequentially, indicating challenges in the core business segment.
• Gross margin of 11.1% was 78 basis points lower year-over-year, highlighting margin pressure.
• The company continues to face challenges with elevated inventory levels, despite efforts to optimize inventory composition.
• The macro environment in Europe remains challenging, impacting Farnell's performance despite recent improvements.

Q & A Highlights

Q: Can you explain the revenue guidance for the June quarter, which seems weaker compared to some suppliers? How does this affect inventory expectations? A: Kenneth Jacobson, CFO: The guidance reflects the current market conditions, particularly weakness in Europe. While Asia shows strength, the West remains weak. Inventory is being managed, with a $57 million reduction in constant currency, and further reductions of $100 million plus are expected.

Q: How are tariffs impacting your supply chain services and financial profile? A: Kenneth Jacobson, CFO: Our global scale helps mitigate tariff impacts. About 7% to 10% of our Americas business is from China, with some going to Mexico or Canada, avoiding tariffs. We aim to minimize tariffs and pass them through to customers if necessary.

Q: Farnell performed better than expected. Can you elaborate on the quarter's performance and future expectations? A: Philip Gallagher, CEO: We are encouraged by Farnell's progress, with improvements in operating margins. The focus is on continuous improvement, SKU expansion, and operational efficiency. Customer line items increased across all regions, indicating positive momentum.

Q: Are you considering a higher long-term inventory target given its strategic value? Why didn't inventory decrease more significantly? A: Philip Gallagher, CEO: Inventory is strategic, and we aim for the right returns rather than just reducing levels. Some inventory is strategic, and we continue to balance it with market needs. Kenneth Jacobson, CFO: Progress is being made, and inventory management is ongoing, with opportunities for further reductions.

Q: Have tariffs affected order patterns or activity in Asia? A: Philip Gallagher, CEO: There hasn't been significant change in order patterns due to tariffs, which was somewhat surprising. Some modest pull-ins were seen in Asia, but overall impact remains limited.

Q: What is your visibility into AI-driven components, and has anything changed in that area? A: Philip Gallagher, CEO: We have visibility, especially in Asia Pacific, with some benefits seen in ancillary products related to AI. It's a small percentage of our business, but we expect future opportunities in AI on the edge.

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