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Introduction & Market Context
Avnet Inc . (NASDAQ:AVT) presented its fourth quarter and fiscal year 2025 financial results on August 6, 2025, revealing a mixed performance characterized by regional disparities and margin pressures. The electronic components distributor reported modest revenue growth of 1% year-over-year, reaching $5.6 billion, while adjusted earnings per share declined significantly. The company’s stock was down 1.72% in pre-market trading to $51.00, extending its decline from the previous day’s close of $51.89.
The results come amid a challenging environment for electronic component distributors, with Avnet continuing to navigate regional demand fluctuations and margin pressures. The company’s performance follows a third quarter where it beat earnings expectations but faced similar challenges with declining sales and profitability.
Quarterly Performance Highlights
Avnet’s fourth quarter showed slight revenue growth of 1% year-over-year to $5.62 billion, with operating margin at 1.3% and adjusted operating margin at 2.5%. Diluted earnings per share came in at $0.07, while adjusted diluted EPS reached $0.81, representing a 34% decline from the same period last year.
As shown in the following quarterly highlights slide, the company saw increased demand in compute, transportation, and communication markets year-over-year, while lead times remained generally stable:
The company’s book-to-bill ratio showed modest sequential improvement, with Asia and EMEA regions above parity. This metric, which compares orders received to products shipped, suggests potential future growth in these regions.
Regional Performance Analysis
Avnet’s performance varied significantly by region, with strong growth in Asia offsetting weakness in Europe, the Middle East, and Africa (EMEA) and the Americas. The regional disparity is clearly illustrated in the revenue breakdown:
Asia led growth with an 18% year-over-year increase to $2.69 billion, while EMEA saw a substantial 17% decline to $1.60 billion. The Americas region experienced a more modest 2% decrease to $1.33 billion. This regional performance represents a continuation of trends seen in the third quarter, where EMEA weakness was also highlighted as a concern.
By segment, Electronic Components revenue grew 1% to $5.23 billion, while Farnell (Avnet’s high-service distribution business) increased 3% to $387 million. The company’s overall revenue mix shift toward Asia impacted gross margins, which came in at 10.6% for the quarter.
Profitability and Margin Challenges
Despite the slight revenue growth, Avnet’s profitability metrics showed significant pressure. Adjusted operating income declined to $143 million (2.5% margin) in Q4 FY25, down from $193 million (3.5% margin) in the same period last year, representing a 26% year-over-year decrease.
The following chart illustrates the downward trend in adjusted operating income over the past five quarters:
By segment, Electronic Components saw a 25% decline in adjusted operating income to $157 million, while Farnell showed improvement with a 10% increase to $17 million. The company’s SG&A expenses remained relatively flat year-over-year at $451 million but increased 4% sequentially due to foreign exchange impacts.
Adjusted diluted EPS fell 34% year-over-year to $0.81, as shown in the following slide:
Interest expense decreased to $58 million, down $6 million year-over-year and $3 million sequentially. The adjusted effective tax rate for the quarter was 23.0%.
Balance Sheet and Capital Allocation
Avnet continued to focus on balance sheet management and shareholder returns during the quarter. Inventory levels decreased to $5.2 billion, down $35 million sequentially as reported, or $185 million excluding foreign exchange impacts. Working capital days improved to 99 days, a reduction of 5 days compared to the previous quarter.
The company’s capital allocation strategy included $50 million in share repurchases and a $0.33 dividend, returning a total of $28 million to shareholders. The ongoing share repurchase program has reduced diluted shares outstanding from 91 million in Q4 FY24 to 85 million in Q4 FY25.
Avnet maintained $1.1 billion in available committed lines of credit, while its gross debt leverage stood at 3.4x. This financial flexibility provides the company with options to navigate the current challenging environment.
Forward Guidance and Outlook
Looking ahead to the first quarter of fiscal year 2026, Avnet provided guidance that suggests modest sequential improvement. The company expects sales between $5.55 billion and $5.85 billion, with a midpoint of $5.70 billion representing approximately 2% sequential growth. Adjusted diluted EPS is projected to be between $0.75 and $0.85, with a midpoint of $0.80.
The guidance assumes sales growth across all regions, with interest expense similar to Q4 FY25, an adjusted effective tax rate between 22% and 26%, and approximately 85 million average diluted shares outstanding. This outlook indicates that Avnet expects the current challenging environment to persist but anticipates some stabilization and modest improvement.
The company’s forward guidance aligns with statements made during the Q3 earnings call, where management emphasized Avnet’s ability to navigate supply chain complexities and leverage its global scale. However, investors appear to remain cautious, as reflected in the continued pressure on the stock price despite the company’s ability to deliver results in line with or exceeding expectations.
Full presentation:
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