Executive Summary
Avnet posted Q4 FY2024 revenue of $5.56 billion, down 15% year over year and 1% sequentially, with non-GAAP adjusted operating margin of 3.5% (EC margin 4.1%), and GAAP-like net income of $82.7 million ($0.92 per share). The quarter reflected ongoing macro softness across most end markets, with Asia showing early signs of stabilization and a potential bottoming in the market, while EMEA and the Americas remained undersupplied by demand in several segments. Management highlighted disciplined inventory and working capital actions as key drivers of cash flow, generating $274 million of operating cash flow and $248 million of free cash flow for the quarter. Management also reiterated a strategic pathway to accelerate growth through embedded solutions (Tria), IP&E strength in data centers, and the Farnell turnaround, supported by cost reductions and OpEx normalization. For FY2025, Avnet guided to roughly flat-to-down 5% revenue in Q1 (base case) and EPS of $0.80-$0.90, signaling cautious near-term visibility while emphasizing that Asia is expected to resume growth and that the company remains well positioned to benefit from AI-driven demand in data centers and embedded compute. The company continues to prioritize capital returns, including share repurchases (roughly 32 million shares repurchased since 2019) and dividends, while targeting inventory below $5 billion as a near-term objective.
Key Performance Indicators
QoQ: -1.60% | YoY:-15.13%
QoQ: -3.94% | YoY:-21.41%
QoQ: -4.65% | YoY:-32.10%
QoQ: -6.94% | YoY:-46.76%
QoQ: -6.12% | YoY:-45.88%
Key Insights
Revenue: $5.562B in Q4 FY2024; YoY change: -15.13%; QoQ change: -1.60%. Gross profit: $642.88M; gross margin: 11.56%; YoY margin change: -92 bps; QoQ: -28 bps. Operating income: $192.61M; operating margin: 3.46%; YoY: -32.10%; QoQ: -4.65%. Net income: $82.67M; net margin: 1.49%; YoY: -46.76%; QoQ: -6.94%. Diluted EPS: $0.92 (GAAP-like); diluted EPS excluding adjustments: $0.91; YoY: -45.88%; QoQ: -6.12%. EBITDA: $202.95M; EBITDA margin ~3.65%. Cash flow: CFO $274.25M; Free cash flow $247.99M; FC...
Financial Highlights
Revenue: $5.562B in Q4 FY2024; YoY change: -15.13%; QoQ change: -1.60%. Gross profit: $642.88M; gross margin: 11.56%; YoY margin change: -92 bps; QoQ: -28 bps. Operating income: $192.61M; operating margin: 3.46%; YoY: -32.10%; QoQ: -4.65%. Net income: $82.67M; net margin: 1.49%; YoY: -46.76%; QoQ: -6.94%. Diluted EPS: $0.92 (GAAP-like); diluted EPS excluding adjustments: $0.91; YoY: -45.88%; QoQ: -6.12%. EBITDA: $202.95M; EBITDA margin ~3.65%. Cash flow: CFO $274.25M; Free cash flow $247.99M; FCF yield ~4.46% of revenue. Balance sheet: cash $310.94M; total debt $3.127B; net debt $2.818B; total assets $12.259B; total stockholders’ equity $4.925B. Liquidity: current ratio 2.32; quick ratio 1.10; cash ratio 0.07. Key efficiency: DSO 71.0 days; DIO 100.0 days; DPO 61.2 days; CCC ~110 days. Returns: ROA 0.67%; ROE 1.68%; ROCE 2.47%. Capex: $26.3M in Q4; guidance for FY2025 Capex ~ $25–$35M per quarter. Shareholder returns: dividend $0.31 per share in Q4; buybacks ~$79M in Q4; guidance for ongoing buybacks and at least 5% reduction in shares outstanding in FY2025.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
5.56B |
-15.13% |
-1.60% |
| Gross Profit |
642.88M |
-21.41% |
-3.94% |
| Operating Income |
192.61M |
-32.10% |
-4.65% |
| Net Income |
82.67M |
-46.76% |
-6.94% |
| EPS |
0.92 |
-45.88% |
-6.12% |
Key Financial Ratios
operatingProfitMargin
3.46%
operatingCashFlowPerShare
$3.04
freeCashFlowPerShare
$2.75
dividendPayoutRatio
33.6%
Management Commentary
Theme: Strategy and growth levers. Quote: "In the quarter we achieved sales of $5.6 billion and adjusted operating margins of 3.5%, highlighted by a 4.1% operating margin in our Electronic Components business." (Phil Gallagher) - demonstrates consolidated execution and EC strength despite softness. Theme: Farnell turnaround and leadership. Quote: "Rebeca Obregon has been recently named President of Farnell... drive important synergies to accelerate Farnell's profitable growth." (Phil Gallagher) - signals strategic realignment and cross-functional execution. Theme: AI/data-center emphasis and embedded solutions. Quote: "IP&E continues to be a key focus... we recently announced the launch of the Tria brand for our business unit that's designed to manufacture embedded compute modules and systems." (Phil Gallagher) - highlights product and brand bets in embedded compute. Theme: Market outlook and Asia recovery. Quote: "As we enter fiscal year 2025, the prevailing belief is that the market correction seems to be in its last stages. Our Asia region appears to have bottomed..." (Phil Gallagher) - management framing of a stabilizing macro backdrop. Theme: Inventory and cash flow discipline. Quote: "This is a key focus area... we are navigating through this market and control what we can control" (Phil Gallagher) and Ken Jacobson: "working capital decreased $228 million sequentially... inventories down 5%... near-term goal to get inventories below $5 billion" - emphasis on cash flow optimization and balance-sheet discipline. Theme: Margin progression and cost actions. Quote: Ken Jacobson: "gross margin was down due to mix... OpEx actions are taking effect... expect gross margins to stabilize and improve through FY2025" - reflects margin trajectory despite near-term headwinds. Theme: Capital allocation emphasis. Quote: Ken Jacobson: "Share repurchases will continue to be an important part of our capital allocation priorities in fiscal 2025 and beyond" and Phil: "we are well positioned and remain focused on capitalizing on growth opportunities once the market improves" - signals prioritization of buybacks and deleveraging alongside growth investments.
In the quarter we achieved sales of $5.6 billion and adjusted operating margins of 3.5%, highlighted by a 4.1% operating margin in our Electronic Components business.
— Phil Gallagher
As we enter fiscal year 2025, the prevailing belief is that the market correction seems to be in its last stages. Our Asia region appears to have bottomed and we're awaiting signs for a similar bottoming or inflection point to manifest in the Americas and Europe.
— Phil Gallagher
Forward Guidance
Management provided Q1 FY2025 revenue guidance of $5.25B–$5.55B with diluted EPS guidance of $0.80–$0.90. The guide implies flat-to down roughly 0% to -5% sequentially, with weakness concentrated in Western regions and weaker Asia seasonal growth, while Asia is expected to be flat versus prior-year. The company notes near-term headwinds from variable compensation resets and stock-based compensation timing, offset by ongoing cost reductions at Farnell and EC. For the fiscal year, management reiterated a long-term view of AI-driven demand across data centers and embedded computing, supported by IP&E growth and the Tria embedded solutions initiative. They also reiterated an objective to reduce inventories below $5B, suggesting a gradual normalization of working capital through FY2025. Achievability: moderately constructive if Asia stabilizes and Western regions recover gradually; risk factors include persistent demand softness in Europe (EMEA) and broader macro volatility, potential further inflation in lead times, and pricing/margin pressure in select pockets. Key factors investors should monitor: (1) Asia demand inflection and the timing of a broader geographic recovery, (2) Farnell margin stabilization and the effectiveness of OpEx reductions, (3) progress toward the $5B inventory target and working capital discipline, (4) the ramp of embedded solutions (Tria) and data-center related IP&E sales, and (5) the pace and sustainability of share repurchases and dividend growth.