Avnet Inc. Files 10-Q for Period Ending December 30, 2023

TL;DR

<b>Avnet Inc. has filed its quarterly report (10-Q) for the period ending December 30, 2023, detailing its financial performance and operational status.</b>

AI Summary

AVNET INC (AVT) filed a Quarterly Report (10-Q) with the SEC on February 2, 2024. Avnet Inc. filed its 10-Q report for the period ending December 30, 2023. The filing covers the second quarter of fiscal year 2024. The company's fiscal year ends on June 29th. Avnet Inc. is incorporated in New York. The company's primary business is wholesale of electronic parts and equipment.

Why It Matters

For investors and stakeholders tracking AVNET INC, this filing contains several important signals. This 10-Q filing provides investors and analysts with the latest financial data for Avnet Inc., crucial for understanding the company's performance in the current fiscal quarter. The detailed financial information within the report allows stakeholders to assess the company's revenue, profitability, and overall financial health, informing investment decisions.

Risk Assessment

Risk Level: medium — AVNET INC shows moderate risk based on this filing. The filing is a standard 10-Q, which provides a snapshot of financial health but does not contain significant new information that would drastically alter risk perception without further analysis of the detailed financial statements and management discussion.

Analyst Insight

Review the detailed financial statements and management's discussion and analysis within the 10-Q to identify any significant trends or changes in Avnet Inc.'s financial performance and outlook.

Key Numbers

• 20231230 — Period End Date (CONFORMED PERIOD OF REPORT)
• 20240202 — Filing Date (FILED AS OF DATE)
• 0629 — Fiscal Year End (FISCAL YEAR END)
• 2024 — Fiscal Quarter (Filing Values)

Key Players & Entities

• AVNET INC (company) — FILER
• AVT (company) — Ticker Symbol
• 20231230 (date) — CONFORMED PERIOD OF REPORT
• 20240202 (date) — FILED AS OF DATE
• 20240201 (date) — DATE AS OF CHANGE
• 0000008858 (company) — CENTRAL INDEX KEY
• 5065 (industry) — STANDARD INDUSTRIAL CLASSIFICATION
• NY (location) — STATE OF INCORPORATION

Forward-Looking Statements

• Avnet will continue to show stable or increasing retained earnings in the next quarter, reflecting ongoing profitability. (AVNET INC) — medium confidence, target: 2024-03-30

FAQ

Industry Context

Avnet Inc. operates in the wholesale distribution of electronic components and related products and services.

Regulatory Implications

The company is subject to standard SEC reporting requirements for public companies, including the filing of quarterly (10-Q) and annual (10-K) reports.

What Investors Should Do

1. Analyze the financial statements within the 10-Q for revenue trends, profitability, and cash flow.
2. Review the Management's Discussion and Analysis (MD&A) section for insights into operational performance and future outlook.
3. Compare key financial metrics to previous periods and industry benchmarks.

Key Dates

• 2023-12-30T00:00:00.000Z: Period End Date — End of the reporting quarter for the 10-Q filing.
• 2024-02-02T00:00:00.000Z: Filing Date — Date the 10-Q report was officially filed with the SEC.

Year-Over-Year Comparison

This is the 10-Q filing for the period ending December 30, 2023. Specific comparative data from the previous filing (likely a 10-Q for the quarter ending September 30, 2023, or an annual 10-K) is not detailed in this header information.

Key Financial Figures

• $1.00 — h registered: Common stock, par value $1.00 per share AVT Nasdaq Global Select

Filing Documents

• avt-20231230x10q.htm (10-Q) — 1400KB
• avt-20231230xex31d1.htm (EX-31.1) — 15KB
• avt-20231230xex31d2.htm (EX-31.2) — 15KB
• avt-20231230xex32d1.htm (EX-32.1) — 8KB
• avt-20231230xex32d2.htm (EX-32.2) — 8KB
• 0000008858-24-000008.txt (&nbsp;) — 6118KB
• avt-20231230.xsd (EX-101.SCH) — 33KB
• avt-20231230_cal.xml (EX-101.CAL) — 47KB
• avt-20231230_def.xml (EX-101.DEF) — 131KB
• avt-20231230_lab.xml (EX-101.LAB) — 326KB
• avt-20231230_pre.xml (EX-101.PRE) — 240KB
• avt-20231230x10q_htm.xml (XML) — 1195KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements (Unaudited)

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

Notes to Consolidated Financial Statements 7

Management's Discussion and Analysis of Financial Condition and Results of Operations

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

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 24

Controls and Procedures

Item 4. Controls and Procedures 24

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 25

Risk Factors

Item 1A. Risk Factors 25

Unregistered Sales of Equity Securities and Use of Proceeds

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

Exhibits

Item 6. Exhibits 26 Signature Page 27 1 Table of Contents PART I FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements AVNET, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) 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 See notes to consolidated financial statements. 2 Table of Contents AVNET, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of presentation and new accounting pronouncements In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments necessary to present fairly Avnet, Inc. and its consolidated subsidiaries' (collectively, the "Company" or "Avnet") financial position, results of operations, comprehensive income, and cash flows. All such adjustments are of a normal recurring nature. Certain reclassifications have been made to fiscal 2023 balances to correspond to the fiscal 2024 consolidated financial statement presentation. Preparing financial statements in accordance with generally accepted accounting principles in the United States ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Actual results may differ from these estimates and assumptions. Interim results of operations do not necessarily indicate the results to be expected for the full fiscal year. The information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the fiscal year ended July 1, 2023. Recently adopted accounting pronouncements In September 2022, the FASB issued ASU No. 2022-04, Liabilities (subtopic 405-50): Supplier Finance Programs ("ASU No. 2022-04") to enhance the transparency of certain supplier finance programs to assist financial statement users in understanding the effect of such programs on a company's working capital, liquidity, and cash flows. The new guidance requires qualitative and quantitative disclosure sufficient to enable users of the financial statements to understand the nature, activity during the period, changes from period to period, and potential magnitude of such programs. The Company adopted this guidance in the first quarter of fiscal 2024, e

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 2. Working capital Receivables The Company's receivables and allowance for credit losses were as follows: December 30, July 1, 2023 2023 (Thousands) Receivables $ 4,624,549 $ 4,876,631 Allowance for Credit Losses $ ( 115,807 ) $ ( 112,843 ) The Company had the following activity in the allowance for credit losses during the first six months of fiscal 2024 and fiscal 2023: 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 Inventories The Company's inventories are primarily comprised of electronic components purchased from the Company's suppliers, which are available for sale to customers in the normal course of the Company's electronic component distribution business. Classified within inventories are electronic components held for supply chain service engagements where the Company is acting as an agent on behalf of an Original Equipment Manufacturer or in some cases the component supplier. Components held for supply chain services where the Company is acting as an agent represented approximately 10 % of inventories as of December 30, 2023, and approximately 8 % of inventories as of July 1, 2023. 8 Table of Contents AVNET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 3. Goodwill The following table presents the change in goodwill by reportable segment for the first six months ended December 30, 2023. 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 (1) Includes accumulated impairments of $ 1,482,677 from prior fiscal years. 4. Debt Short-term debt consists of the following (carrying balances in thousands): December 30, July 1, December 30, July 1, 2023 2023 2023 2023 Interest Rate Carrying Balance Revolving credit facilities: Accounts receivable securitization program (due December 2024) 6.20 % — $ 614,400 $ — Other short-term debt 5.63 % 5.08 % 81,929 70,636 Short-term debt $ 696,329 $ 70,636 The Company has a trade accounts receivable securitization program (the "Securitization Program") in the United States with a group of financial institutions. The Securitization Program allows the Company to transfer, on an ongoing revolving basis, an undivided interest in a designated pool of trade accounts receivable, to provide security or collateral for borrowings of up to $ 700 million. The Securitization Program does not qualify for off balance sheet accounting treatment and any borrowings under the Securitization Program are recorded as debt in the consolidated balance sheets. Under the Securitization Program, the Company legally sells and isolates certain U.S. trade accounts receivable into a wholly owned and consolidated bankruptcy remote special purpose entity. Such receivables, which are recorded within "Receivables" in the consolidated balance sheets, totaled $ 1.16 billion and $ 1.27 billion at December 30, 2023, and July 1, 2023, respectively. The Securitization Program contains certain covenan

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Long-term debt consists of the following (carrying balances in thousands): 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 The Company has a five-year $ 1.50 billion revolving credit facility (the "Credit Facility") with a syndicate of banks, which expires in August 2027. It consists of revolving credit facilities and the issuance of up to $ 200.0 million of letters of credit and up to $ 300.0 million of loans in certain approved currencies. As of December 30, 2023, and July 1, 2023, there were $ 0.9 million in letters of credit issued under the Credit Facility. Under the Credit Facility, the Company may select from various interest rate options, currencies, and maturities. The Credit Facility contains certain covenants, including various limitations on debt incurrence, share repurchases, dividends, investments, and capital expenditures. The Credit Facility also includes a financial covenant requiring the Company to maintain a leverage ratio not to exceed a certain threshold, which the Company was in compliance with as of December 30, 2023, and July 1, 2023. As of December 30, 2023, the carrying value and fair value of the Company's total debt was $ 3.45 billion and $ 3.42 billion, respectively. At July 1, 2023, the carrying valu

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Future minimum operating lease payments as of December 30, 2023, are as follows (in thousands): 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 Other information pertaining to operating leases consists of the following: 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 6. Derivative financial instruments Many of the Company's subsidiaries purchase and sell products in currencies other than their functional currencies, which subjects the Company to the risks associated with fluctuations in currency exchange rates. This foreign currency exposure relates primarily to international transactions where the currency collected from customers can be different from the currency used to purchase from suppliers. The Company's foreign operations transactions are denominated primarily in the following currencies: U.S. Dollar, Euro, British Pound, Japanese Yen, Chinese Yuan, Taiwan Dollar, Canadian Dollar, and Mexican Peso. The Company also, to a lesser extent, has foreign operations transactions in other EMEA and Asian foreign currencies. The Company uses economic hedges to reduce this risk utilizing natural hedging ( i.e. , offsetting receivables and payables in the same foreign currency) and creating offsetting positions using derivative financial instruments (primarily forward foreign exchange contra

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) In fiscal 2023, the Company entered into a fixed-to-fixed rate cross currency swap (the "cross-currency swap") with a notional amount of $ 500.0 million, or 472.6 million, that is set to mature in March 2028. The Company designated this derivative contract as a net investment hedge of its European operations and elected the spot method for measuring hedge effectiveness. Changes in fair value of the cross-currency swap is presented in "Accumulated other comprehensive loss" in the consolidated balance sheets. Amounts related to the cross-currency swap recognized directly in net income represent net periodic interest settlements and accruals, which are recognized in "Interest and other financing expenses, net," on the consolidated statements of operations. The fair value of the cross-currency swaps is based on Level 2 criteria under the ASC 820 fair value hierarchy. The Company uses these derivative financial instruments to manage risks associated with foreign currency exchange rates and interest rates. The Company does not enter derivative financial instruments for trading or speculative purposes and monitors the financial stability and credit standing of its counterparties. The locations and fair values of the Company's derivative financial instruments in the Company's consolidated balance sheets are as follows: December 30, July 1, 2023 2023 (Thousands) Economic hedges Prepaid and other current assets $ 58,127 $ 69,104 Accrued expenses and other $ 59,424 $ 68,594 Cross-currency swap Other liabilities $ 35,240 $ 22,849 The locations of derivative financial instruments on the Company's consolidated statements of operations are as follows: Second Quarters Ended Six Months Ended December 30, December 31, December 30, December 31, 2023 2022 2023 2022 (Thousands) Economic hedges Other (expense) income, net $ ( 18,631 ) $ 11,543 $ (20,733)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) As of December 30, 2023, and July 1, 2023, the Company had aggregate estimated liabilities of $ 22.7 million classified within accrued expenses and other for such compliance-related matters that were reasonably estimable as of such dates. Gain on Legal Settlements and Other During the first six months of fiscal 2024 and the first six months of fiscal 2023, the Company recorded a gain on legal settlements and other of $ 86.5 million and $ 61.7 million, respectively, in connection with the settlement of claims filed against certain manufacturers of capacitors. 8 . Income taxes The below discussion of the effective tax rate for the periods presented in the cons

View Full Filing

View this 10-Q filing on SEC EDGAR