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AVNET INC (AVT)·Q4 2025 Earnings Summary

Executive Summary

  • Avnet delivered Q4 FY25 sales of $5.62B and adjusted EPS of $0.81, both above the high end of company guidance and above S&P Global consensus; revenue beat by $0.26B (+4.8%) and EPS beat by $0.09 (≈+13%)* .
  • Results reflected strong Asia demand (+17.6% Y/Y) with book-to-bill above parity in Asia and EMEA, but mix shift to Asia and EMEA weakness compressed gross margin to 10.6% (−99 bps Y/Y) and operating margin to 1.3% (GAAP) .
  • Farnell returned to Y/Y sales and operating margin growth (4.3%), with sequential and Y/Y operating margin improvement; management targets a path back to double‑digit operating margins over time .
  • Q1 FY26 guidance calls for sales of $5.55–$5.85B (midpoint $5.70B) and adjusted EPS of $0.75–$0.85 (midpoint $0.80), assuming growth across all regions, 22–26% adjusted tax rate, and 85M diluted shares .
  • Cash generation and capital returns remain solid ($139M CFFO; $50M buybacks; $28M dividends in Q4), and the Board raised the quarterly dividend by 6% to $0.35 post‑quarter, signaling confidence in cash flows .

What Went Well and What Went Wrong

What Went Well

  • Asia strength and orders: Asia revenue grew 17.6% Y/Y and 8.4% Q/Q; book‑to‑bill moved above parity in Asia and EMEA; backlog and turns improved. CEO: “book to bill… above parity… [backlog] is growing again” .
  • Beat guidance and consensus: “surpass the high end of our fourth‑quarter sales and earnings guidance,” driven by steady Asia and Farnell return to Y/Y growth .
  • Farnell stabilization: Farnell delivered Y/Y and Q/Q sales growth with operating margin at 4.3% (+129 bps Q/Q; +25 bps Y/Y) on higher single board computer sales and cost actions; management reiterates continuous improvement .

What Went Wrong

  • Margin pressure from mix: Gross margin fell to 10.6% (−99 bps Y/Y; −49 bps Q/Q) and EC op margin to 3.0% (−105 bps Y/Y; −48 bps Q/Q) due to higher Asia mix and EMEA declines .
  • EMEA weakness: EMEA sales declined 16.7% Y/Y (constant currency −20.6%), limiting consolidated margins; Americas declined 2% Y/Y .
  • GAAP EPS compression: GAAP diluted EPS fell to $0.07 (−92% Y/Y; −93% Q/Q) on $69M restructuring/integration/other, FX, and tax items, highlighting reliance on non‑GAAP EPS this quarter .

Financial Results

Quarterly Trend – Headline Metrics

MetricQ2 2025Q3 2025Q4 2025
Sales ($USD Billions)$5.663 $5.315 $5.618
GAAP Diluted EPS ($)$0.99 $1.01 $0.07
Adjusted Diluted EPS ($)$0.87 $0.84 $0.81
Operating Income Margin (%)2.7% 2.7% 1.3%
Adjusted Operating Income Margin (%)2.8% 2.9% 2.5%

Q4 FY25 vs Prior Periods and vs Estimates

MetricQ4 2024Q3 2025Q4 2025Consensus (Q4 2025)*
Sales ($USD Billions)$5.563 $5.315 $5.618 $5.362*
Adjusted Diluted EPS ($)$1.22 $0.84 $0.81 $0.72*
GAAP Diluted EPS ($)$0.91 $1.01 $0.07 —

Values with asterisks are from S&P Global consensus. Values retrieved from S&P Global.*

Segment Results (Sales and Margins)

MetricQ4 2024Q3 2025Q4 2025
Electronic Components Sales ($USD Millions)$5,187.8 $4,948.7 $5,231.3
EC Operating Income Margin (%)4.1% 3.5% 3.0%
Farnell Sales ($USD Millions)$375.2 $366.7 $386.5
Farnell Operating Income Margin (%)4.0% 3.0% 4.3%

Regional Mix (Sales)

Region Sales ($USD Millions)Q4 2024Q3 2025Q4 2025
Americas$1,353.8 $1,274.2 $1,327.0
EMEA$1,920.3 $1,559.0 $1,599.7
Asia$2,288.9 $2,482.2 $2,691.1

KPIs and Cash/Capital

KPI (Q4 FY25)Value
Cash From Operations ($USD Millions)$139
Book-to-Bill (EMEA, Asia)Above 1.0 (“above parity”)
Inventory Change Q/Q (reported / ex-FX)−$35M / −$185M
Inventory Reduction Y/Y (constant currency)−$414M
Share Repurchases ($M; % shares)$50; 1.3% of shares
Dividends Paid ($M; $/sh)$28; $0.33
Gross Leverage (quarter-end)3.4x
Return on Working Capital (ROWC)9.4%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
SalesQ1 FY26n/a$5.55B–$5.85B (midpt $5.70B) New
Adjusted Diluted EPSQ1 FY26n/a$0.75–$0.85 (midpt $0.80) New
Adjusted Effective Tax RateQ1 FY26n/a22%–26% New
Interest Expense AssumptionQ1 FY26n/aSimilar to Q4 FY25 New
Avg Diluted SharesQ1 FY26n/a85M New
FX AssumptionsQ1 FY26n/aEUR/USD 1.16; GBP/USD 1.33 New
GAAP EPS BridgeQ1 FY26n/aAdj $0.75–$0.85 less $(0.10)–$(0.20) ⇒ GAAP $0.65 New
Operating ExpensesQ1 FY26Merit increases paused FY25Merit pay increases resumed; ~$8–$10M Q1 run-rate included Raised OpEx
DividendSept 26, 2025 Pay Date$0.33/sh $0.35/sh (6% increase) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4 FY25)Trend
Asia demand & mixAsia +8.4% Y/Y (Q2); +13.0% Y/Y (Q3), while EMEA down sharply Asia +17.6% Y/Y; fourth consecutive Y/Y growth; mix shift toward Asia pressured margins Improving Asia; mix headwind persists
EMEA trajectoryEMEA −25.1% Y/Y (Q2); −24.1% Y/Y (Q3) EMEA −16.7% Y/Y; book‑to‑bill >1; cautious optimism for improvement Early stabilization signs
Gross margin driversAdjusted OI margin 2.8% (Q2), 2.9% (Q3) amid regional shifts Gross margin 10.6% (−99 bps Y/Y) on Asia mix and FX; EC OM 3.0% Pressured but broadly stable by region
Farnell turnaround & digitalOM 1.0% (Q2); 3.0% (Q3) amid rightsizing OM 4.3%; ~70% activity and 50%+ revenue via digital; aiming for ≥10% OM over time Sequential improvement
Tariffs & regulatory—Tariff billings minimal: <3% of Americas sales; <1% global; processes adjusted Manageable exposure
Inventory & cashInventory down $362M Q/Q in Q2; strong CFFO Inventory −$185M ex‑FX Q/Q; CFFO $139M; ROWC 9.4% Continued optimization

Management Commentary

  • Strategic positioning and execution: “We managed costs effectively and made progress on working capital optimization to enhance operating cash flow… [and] surpassed the high end of our fourth‑quarter sales and earnings guidance” .
  • Demand and order momentum: “Book to bill… improved across all regions… Europe and Asia… above parity… backlog… is growing again… turns business… increased across all regions” .
  • Margin and regional dynamics: “Gross margin… 10.6%… mainly due to a higher mix of Asia sales… EC operating margin… decline… due to the sales mix shift to Asia and… decline in EMEA” .
  • Farnell improvement path: “Operating income margin was 4.3%… first year on year improvement… continuous improvement… target back into double digit operating margins” .
  • OpEx and investments: “We… invest in our people by providing merit pay increases… think about it being $8–$10M… in the run rate” .

Q&A Highlights

  • EMEA recovery and demand: Management cited “more optimism” with bookings starting to improve; backlog building modestly, with profitability importance emphasized .
  • Inventory trajectory: Expect “modest decline next quarter” in EC inventories, offset partially by Farnell; aim to return to mid‑80s days of inventory while maintaining “appropriate SKUs” .
  • Asia growth and margin mix: Asia expected to remain strong, historically leading recoveries; regional mix shift is the primary driver of consolidated margin pressure; improvement should come as the West recovers .
  • Farnell margin normalization: Digital engagement (~70% activity; 50%+ revenue) and “Power of One” synergies to drive steady margin expansion toward double digits over time .
  • Tariffs and costs: Tariff billings were immaterial (<3% of Americas; <1% global); interest expense declined on lower borrowings; Q1 guidance includes merit‑driven OpEx step‑up .

Estimates Context

  • Q4 FY25 revenue of $5.62B beat S&P Global consensus of $5.36B by $0.26B (+4.8%); adjusted diluted EPS of $0.81 beat $0.72 by $0.09 (~+13%) .
  • Four estimates in the quarter for revenue and EPS; beats likely drive upward revisions to near‑term revenue run‑rate and reinforce Q1 FY26 guide midpoints*.
MetricQ4 2025 Consensus*Q4 2025 Actual
Revenue ($USD Billions)$5.362*$5.618
Primary/Adjusted EPS ($)$0.72*$0.81
# of EstimatesRev: 4*; EPS: 4*—

Values with asterisks are from S&P Global consensus. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Execution beat: Avnet outperformed both internal guidance and Street consensus on revenue and adjusted EPS, with momentum from Asia and Farnell stabilization—an upside narrative into early FY26 *.
  • Mix vs margin: Asia‑led growth supports top‑line but compresses consolidated gross/operating margins; a recovery in EMEA/Americas is key to margin re‑expansion .
  • Farnell as margin lever: Sequential and Y/Y margin gains at Farnell (4.3%) plus digital/channel upgrades provide a credible path toward higher consolidated margins over time .
  • Cash discipline: Strong CFFO, continued inventory optimization, and reduced leverage (3.4x) underpin capital returns, evidenced by buybacks and the post‑quarter 6% dividend increase .
  • Q1 FY26 setup: Guide implies ~+2% sequential sales at midpoint with growth across all regions; OpEx merits embedded; tax 22–26%; watch mix and EMEA recovery pace .
  • Tariff/FX manageable: Minimal tariff pass‑throughs and explicit FX assumptions in guidance reduce surprise risk; interest expense expected similar to Q4 .
  • Stock drivers: Sustained above‑parity book‑to‑bill, continued Asia strength, and demonstrable Farnell margin expansion are likely the key catalysts for estimate revisions and sentiment.
Notes: All company figures and quotes are from Avnet’s Q4 FY25 press release and earnings call transcript unless otherwise noted. Consensus figures are from S&P Global and marked with an asterisk.