Avnet Reports Fourth Quarter and Fiscal 2023 Financial Results

Avnet, Inc. (Nasdaq: AVT) today announced results for its fourth quarter and fiscal year ended July 1, 2023.

Commenting on the Company’s financial results, Avnet Chief Executive Officer Phil Gallagher stated, “Our strong financial results in fiscal 2023 demonstrate the dedication and commitment of our employees in driving profitable growth. With the breadth of our supplier line card, our diversified customer base and the strength of the end markets they serve, we are well-positioned to capitalize on the industry growth expected over the next several years. Although we can’t control near-term market conditions, our team will continue to focus on executing well in the market.”

Fiscal Fourth Quarter Key Financial Highlights:

• Sales of $6.6 billion up 2.9% year over year from $6.4 billion.
  • On a constant currency basis, sales increased 2.9% year over year.
• Diluted earnings per share of $1.68, compared with $2.51 in the prior year quarter.
  • Adjusted diluted earnings per share of $2.06, compared with $2.07 in the prior year quarter.
  • Higher interest expense negatively impacted year-over-year adjusted diluted earnings per share by $0.39.
• Operating income margin of 4.3%, decreased 14 basis points year over year.
  • Adjusted operating income margin of 4.8%, increased 26 basis points year over year.
  • Year-over-year adjusted operating income grew three times greater than sales.
• Electronic Components operating income margin of 5.1%, increased 77 basis points year over year.
• Farnell operating income margin of 8.1% decreased 90 basis points sequentially.
• Generated $234.5 million of cash flow from operations during the quarter.
• Returned $26.5 million to shareholders in dividends during the quarter.

Fiscal 2023 Key Financial Highlights:

• Sales of $26.5 billion up 9.2% year over year from $24.3 billion.
  • On a constant currency basis, sales increased 13.4% year over year.
• Diluted earnings per share of $8.26, compared with $6.94 in the prior year.
  • Adjusted diluted earnings per share of $8.06, compared with $6.93 in the prior year.
  • Higher interest expense negatively impacted year over year adjusted diluted earnings per share by $1.24.
• Operating income margin of 4.5%, increased 61 basis points year over year.
  • Adjusted operating income margin of 4.6%, increased 55 basis points year over year.
  • Year-over-year adjusted operating income grew more than 2.5 times greater than sales.
• Electronic Components operating income margin of 4.8%, increased 89 basis points year over year.
• Farnell operating income margin of 9.5% decreased 388 basis points year over year.
• Returned $106 million to shareholders in dividends during the fiscal year.
• Returned $213 million to shareholders in the fiscal year from share repurchases, representing 5.3% of outstanding shares.

Key Financial Metrics

($ in millions, except per share data)

Outlook for the First Quarter of Fiscal 2024 Ending on September 30, 2023

The above guidance is based upon current market conditions and implies a sequential growth rate range of down 2% to down 6% and assumes a mix shift in sales to Asia from the Western regions.

The above guidance also excludes restructuring, integration and other expenses, amortization of intangibles, gains on legal settlements and certain income tax adjustments. The above guidance assumes similar interest expense to the fourth quarter and an effective tax rate of between 22% and 26%. The above guidance assumes 93 million average diluted shares outstanding and average currency exchange rates as shown in the table below:

Today’s Conference Call and Webcast Details

Avnet will host a conference call and webcast today at 1:30 p.m. PT / 4:30 p.m. ET to discuss its financial results, provide a business update and answer questions.

• Live conference call: 877-407-8112 (domestic) or 201-689-8840 (international)
• Conference call replay available through August 23, 2023: 877-660-6853 or 201-612-7415 and using Conference ID: 13740210
• Live and archived webcast can be accessed via Avnet’s Investor Relations web page at: https://ir.avnet.com

Forward-Looking Statements

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the financial condition, results of operations, and business of the Company. You can find many of these statements by looking for words like “believes,” “projected,” “plans,” “expects,” “anticipates,” “should,” “will,” “may,” “estimates,” or similar expressions. These forward-looking statements are subject to numerous assumptions, risks, and uncertainties. The following important factors, in addition to those discussed elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended July 2, 2022 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, could affect the Company’s future results of operations, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements: geopolitical events and military conflicts; pandemics and other health-related crises; competitive pressures among distributors of electronic components; an industry down-cycle in semiconductors, including supply shortages; relationships with key suppliers and allocations of products by suppliers, including increased non-cancellable/non-returnable orders; accounts receivable defaults; risks relating to the Company’s international sales and operations, including risks relating to repatriating cash, foreign currency fluctuations, inflation, duties and taxes, sanctions and trade restrictions, and compliance with international and U.S. laws; risks relating to acquisitions, divestitures, and investments; adverse effects on the Company’s supply chain, operations of its distribution centers, shipping costs, third-party service providers, customers, and suppliers, including as a result of issues caused by military conflicts, terrorist attacks, natural and weather-related disasters, pandemics and health-related crises, warehouse modernization, and relocation efforts; risks related to cyber security attacks, other privacy and security incidents, and information systems failures, including related to current or future implementations, integrations, and upgrades; general economic and business conditions (domestic, foreign, and global) affecting the Company’s operations and financial performance and, indirectly, the Company’s credit ratings, debt covenant compliance, liquidity, and access to financing; constraints on employee retention and hiring; and legislative or regulatory changes.

Any forward-looking statement speaks only as of the date on which that statement is made. Except as required by law, the Company assumes no obligation to update any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made.

About Avnet

As a leading global technology distributor and solutions provider, Avnet has served customers’ evolving needs for more than a century. Decade after decade, Avnet helps its customers and suppliers around the world realize the transformative possibilities of technology. Learn more about Avnet at www.avnet.com. (AVT_IR)