Avnet Inc 10-Q for FY2024 Q2

Avnet Inc (AVT)

10-Q 2024-02-02 For: 2023-12-30

Added on April 09, 2026

About this 10-Q

Avnet Inc filed this 10-Q on February 2, 2024, covering the quarter ended December 30, 2023 (FY2024 Q2).

Headline figures

Quarter ended December 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $6.2B; down 7.6% from $6.72B a year earlier
Net income: $117.93M; down 51.6% from net income of $243.89M a year earlier
Diluted EPS: $1.28; down 51.3% from $2.63 a year earlier

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☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 30, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____


New York				11-1890605
(State or other jurisdiction				(IRS Employer
of incorporation or organization)				Identification No.)


2211 South 47th Street, Phoenix, Arizona		85034
(Address of principal executive offices)		(Zip Code)


Title of Each Class	Trading Symbol	Name of Each Exchange on Which registered:
Common stock, par value $1.00 per share	AVT	Nasdaq Global Select Market

Large Accelerated Filer ☑		Accelerated Filer ☐
Non-accelerated Filer ☐		Smaller Reporting Company ☐
Emerging Growth Company ☐

	Page No.
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Consolidated Balance Sheets at December 30, 2023, and July 1, 2023	2

Consolidated Statements of Operations for the second quarters and six months ended December 30, 2023, and December 31, 2022	3

Consolidated Statements of Comprehensive Income for the second quarters and six months ended December 30, 2023, and December 31, 2022	4

Consolidated Statements of Shareholders’ Equity for the second quarters and six months ended December 30, 2023, and December 31, 2022	5

Consolidated Statements of Cash Flows for the six months ended December 30, 2023, and December 31, 2022	6

Notes to Consolidated Financial Statements	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3. Quantitative and Qualitative Disclosures About Market Risk	24

Item 4. Controls and Procedures	24

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	25

Item 1A. Risk Factors	25

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 6. Exhibits	26

Signature Page	27


	December 30,		July 1,
	2023		2023

	(Thousands, except share
	amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	272,850	$	288,230
Receivables		4,508,742		4,763,788
Inventories		6,115,999		5,465,031
Prepaid and other current assets		241,371		233,804
Total current assets		11,138,962		10,750,853
Property, plant and equipment, net		563,758		441,557
Goodwill		787,007		780,629
Operating lease assets		227,145		221,698
Other assets		280,302		282,422
Total assets	$	12,997,174	$	12,477,159
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	696,329	$	70,636
Accounts payable		3,308,060		3,373,820
Accrued expenses and other		705,745		753,130
Short-term operating lease liabilities		55,424		51,792
Total current liabilities		4,765,558		4,249,378
Long-term debt		2,753,521		2,988,029
Long-term operating lease liabilities		191,521		190,621
Other liabilities		276,191		297,462
Total liabilities		7,986,791		7,725,490
Commitments and contingencies (Note 7)
Shareholders’ equity:
Common stock $1.00 par; authorized 300,000,000 shares; issued 89,760,434 shares and 91,504,053 shares, respectively		89,760		91,504
Additional paid-in capital		1,713,881		1,691,334
Retained earnings		3,564,195		3,378,212
Accumulated other comprehensive loss		(357,453)		(409,381)
Total shareholders’ equity		5,010,383		4,751,669
Total liabilities and shareholders’ equity	$	12,997,174	$	12,477,159


	Second Quarters Ended				Six Months Ended
	December 30,		December 31,		December 30,		December 31,
	2023		2022		2023		2022

	(Thousands, except per share amounts)
Sales	$	6,204,914	$	6,717,521	$	12,540,562	$	13,467,654
Cost of sales		5,498,730		5,933,421		11,086,273		11,915,381
Gross profit		706,184		784,100		1,454,289		1,552,273
Selling, general and administrative expenses		464,692		485,127		951,977		962,764
Restructuring, integration and other expenses		5,235		—		12,286		—
Operating income		236,257		298,973		490,026		589,509
Other (expense) income, net		(8,397)		1,476		(2,437)		1,800
Interest and other financing expenses, net		(74,302)		(59,020)		(145,098)		(104,118)
Gain on legal settlements and other		—		61,705		86,499		61,705
Income before taxes		153,558		303,134		428,990		548,896
Income tax expense		35,627		59,248		101,791		120,749
Net income	$	117,931	$	243,886	$	327,199	$	428,147

Earnings per share:
Basic	$	1.31	$	2.67	$	3.60	$	4.62
Diluted	$	1.28	$	2.63	$	3.54	$	4.55

Shares used to compute earnings per share:
Basic		90,253		91,192		90,874		92,621
Diluted		91,792		92,755		92,485		94,195
Cash dividends paid per common share	$	0.31	$	0.29	$	0.62	$	0.58


									Accumulated
	Common		Common		Additional				Other		Total
	Stock-		Stock-		Paid-In		Retained		Comprehensive		Shareholders’
	Shares		Amount		Capital		Earnings		(Loss) Income		Equity

	(Thousands)
Balance, July 1, 2023		91,504	$	91,504	$	1,691,334	$	3,378,212	$	(409,381)	$	4,751,669
Net income		—		—		—		209,268		—		209,268
Other comprehensive loss		—		—		—		—		(93,761)		(93,761)
Cash dividends		—		—		—		(28,320)		—		(28,320)
Repurchases of common stock		(559)		(559)		—		(26,484)		—		(27,043)
Stock-based compensation		39		39		10,731		—		—		10,770
Balance, September 30, 2023		90,984		90,984		1,702,065		3,532,676		(503,142)		4,822,583
Net income		—		—		—		117,931		—		117,931
Other comprehensive income		—		—		—		—		145,689		145,689
Cash dividends		—		—		—		(27,817)		—		(27,817)
Repurchases of common stock		(1,255)		(1,255)		—		(58,595)		—		(59,850)
Stock-based compensation		31		31		11,816		—		—		11,847
Balance, December 30, 2023		89,760	$	89,760	$	1,713,881	$	3,564,195	$	(357,453)	$	5,010,383


	Electronic
	Components		Farnell		Total

	(Thousands)
Carrying value at July 1, 2023 ⁽¹⁾	$	296,829	$	483,800	$	780,629
Foreign currency translation		2,045		4,333		6,378
Carrying value at December 30, 2023 ⁽¹⁾	$	298,874	$	488,133	$	787,007


Fiscal Year
Remainder of fiscal 2024	$	33,028
2025		57,085
2026		46,490
2027		28,901
2028		22,718
Thereafter		101,473
Total future operating lease payments		289,695
Total imputed interest on operating lease liabilities		(42,750)
Total operating lease liabilities	$	246,945


			Facility
	Severance		Exit Costs		Total

	(Thousands)
Balance at July 1, 2023	$	15,507	$	504	$	16,011
Fiscal 2024 restructuring expenses		2,790		—		2,790
Cash payments		(1,928)		—		(1,928)
Other, principally foreign currency translation		115		2		117
Balance at December 30, 2023	$	16,484	$	506	$	16,990


	Quarter Ended				Six Months Ended
	December 30, 2023
			Sales				Sales
			Year-Year %				Year-Year %
	Sales		Change in		Sales		Change in
	Year-Year %		Constant		Year-Year %		Constant
	Change		Currency		Change		Currency
Avnet	(7.6)	%	(8.7)	%	(6.9)	%	(8.3)	%
Avnet by region
Americas	(5.5)	%	(5.5)	%	(5.9)	%	(5.9)	%
EMEA	(6.3)		(10.2)		0.8		(4.3)
Asia	(10.0)		(9.4)		(13.4)		(12.7)
Avnet by operating group
EC	(7.9)	%	(8.9)	%	(7.2)	%	(8.5)	%
Farnell	(3.7)		(6.0)		(2.4)		(4.9)


				Total Number of	Approximate Dollar
	Total	Average		Shares Purchased	Value of Shares That
	Number	Price		as Part of Publicly	May Yet Be
	of Shares	Paid per		Announced Plans	Purchased under the
Period	Purchased	Share		or Programs	Plans or Programs
October 1 – October 28	558,000	$	47.43	558,000	$	265,005,000
October 29 – November 25	544,900	$	46.62	544,900	$	239,603,000
November 26 – December 30	151,514	$	46.99	151,514	$	232,484,000

Exhibit
Number		Exhibit

31.1*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		XBRL - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*		XBRL Taxonomy Extension Schema Document.

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document.

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document.


	Six Months Ended
	December 30,		December 31,
	2023		2022

	(Thousands)
Cash flows from operating activities:
Net income	$	327,199	$	428,147

Non-cash and other reconciling items:
Depreciation and amortization		42,727		43,705
Amortization of operating lease assets		26,205		26,414
Deferred income taxes		12,599		(15,581)
Stock-based compensation		19,951		21,338
Other, net		27,181		7,199
Changes in (net of effects from businesses acquired and divested):
Receivables		287,320		(469,650)
Inventories		(610,008)		(686,884)
Accounts payable		(78,082)		(341,210)
Accrued expenses and other, net		(138,667)		20,021
Net cash flows used for operating activities		(83,575)		(966,501)

Cash flows from financing activities:
Borrowings under accounts receivable securitization, net		58,600		352,200
Borrowings under senior unsecured credit facility, net		272,747		1,132,245
Borrowings under bank credit facilities and other debt, net		30,752		47,712
Repurchases of common stock		(86,027)		(221,282)
Dividends paid on common stock		(56,138)		(53,304)
Other, net		2,665		(1,048)
Net cash flows provided by financing activities		222,599		1,256,523

Cash flows from investing activities:
Purchases of property, plant and equipment		(158,088)		(111,436)
Other, net		373		(16,279)
Net cash flows used for investing activities		(157,715)		(127,715)

Effect of currency exchange rate changes on cash and cash equivalents		3,311		8,778

Cash and cash equivalents:
— (decrease) increase		(15,380)		171,085


	December 30,		December 31,
	2023		2022

	(Thousands)
Balance at beginning of the period	$	112,843	$	113,902
Credit Loss Provisions		6,564		4,803
Credit Loss Recoveries		(940)		(456)
Receivables Write Offs		(3,885)		(12,476)
Foreign Currency Effect and Other		1,225		732
Balance at end of the period	$	115,807	$	106,505


	December 30,		July 1,		December 30,		July 1,
	2023		2023		2023		2023

	Interest Rate				Carrying Balance
Revolving credit facilities:
Accounts receivable securitization program	—		5.99	%	$	—	$	555,800
Credit Facility	5.62	%	4.85	%		1,091,696		796,552
Other long-term debt	4.74	%	—			24,899		—
Public notes due:
April 2026	4.63	%	4.63	%		550,000		550,000
May 2031	3.00	%	3.00	%		300,000		300,000
June 2032	5.50	%	5.50	%		300,000		300,000
March 2028	6.25	%	6.25	%		500,000		500,000
Long-term debt before discount and debt issuance costs						2,766,595		3,002,352
Discount and debt issuance costs – unamortized						(13,074)		(14,323)
Long-term debt					$	2,753,521	$	2,988,029


		Six Months Ended
		December 30,			December 31,
		2023			2022
Operating Lease Term and Discount Rate
Weighted-average remaining lease term in years		7.8			8.4
Weighted-average discount rate		3.8	%		3.8	%

Supplemental Cash Flow Information (in thousands)
Cash paid for operating lease liabilities	$	28,073		$	28,463
Operating lease assets obtained from new operating lease liabilities	$	30,399		$	29,640

*	Filed herewith.
**	Furnished herewith. The information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liability under that section, and shall not be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

	AVNET, INC.


	By:	/s/ KENNETH A. JACOBSON
		Kenneth A. Jacobson
		Chief Financial Officer


	/s/ PHILIP R. GALLAGHER
	Philip R. Gallagher
	Chief Executive Officer


	/s/ KENNETH A. JACOBSON
	Kenneth A. Jacobson
	Chief Financial Officer