Avnet Inc. Files 10-Q for Period Ending Dec 28, 2024

TL;DR

AVT 10-Q filed: Financials for Q ending 12/28/24 are in. Check it out.

AI Summary

Avnet, Inc. filed its 10-Q for the period ending December 28, 2024. The filing details financial performance and operational updates for the company, which is involved in the wholesale of electronic parts and equipment. Key financial figures and business segments are presented within this report.

Why It Matters

This filing provides investors and analysts with a detailed look at Avnet's financial health and operational performance during the specified quarter, influencing investment decisions.

Risk Assessment

Risk Level: low — This is a routine quarterly filing providing standard financial disclosures and does not indicate any unusual risks.

Key Numbers

• 0000008858 — Central Index Key (Unique identifier for Avnet Inc. with the SEC.)
• 5065 — SIC Code (Standard Industrial Classification for Wholesale-Electronic Parts & Equipment, NEC.)

Key Players & Entities

• AVNET INC (company) — Filer of the 10-Q
• 20241228 (date) — End of the reporting period
• 20250131 (date) — Filing date of the 10-Q
• 2211 SOUTH 47TH STREET (address) — Avnet's business and mailing address
• PHOENIX, AZ (location) — City and State of Avnet's address

FAQ

Key Financial Figures

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

Filing Documents

• avt-20241228x10q.htm (10-Q) — 1545KB
• avt-20241228xex31d1.htm (EX-31.1) — 15KB
• avt-20241228xex31d2.htm (EX-31.2) — 15KB
• avt-20241228xex32d1.htm (EX-32.1) — 8KB
• avt-20241228xex32d2.htm (EX-32.2) — 8KB
• 0000008858-25-000009.txt ( ) — 6232KB
• avt-20241228.xsd (EX-101.SCH) — 33KB
• avt-20241228_cal.xml (EX-101.CAL) — 39KB
• avt-20241228_def.xml (EX-101.DEF) — 151KB
• avt-20241228_lab.xml (EX-101.LAB) — 329KB
• avt-20241228_pre.xml (EX-101.PRE) — 249KB
• avt-20241228x10q_htm.xml (XML) — 1147KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets at December 28, 2024, and June 29, 2024 2 Consolidated Statements of Operations for the second quarters and six months ended December 28, 2024, and December 30, 2023 3 Consolidated Statements of Comprehensive Income for the second quarters and six months ended December 28, 2024, and December 30, 2023 4 Consolidated Statements of Shareholders' Equity for the second quarters and six months ended December 28, 2024, and December 30, 2023 5 Consolidated Statements of Cash Flows for the six months ended December 28, 2024, and December 30, 2023 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 16

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 23

Controls and Procedures

Item 4. Controls and Procedures 24

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 24

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 28, June 29, 2024 2024 (Thousands, except share amounts) ASSETS Current assets: Cash and cash equivalents $ 172,136 $ 310,941 Receivables 4,421,428 4,391,187 Inventories 5,252,466 5,468,730 Prepaid and other current assets 226,326 199,694 Total current assets 10,072,356 10,370,552 Property, plant and equipment, net 564,348 568,169 Goodwill 773,656 780,984 Operating lease assets 202,617 208,971 Other assets 329,954 280,471 Total assets $ 11,942,931 $ 12,209,147 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt $ 2,604 $ 492,711 Accounts payable 3,626,333 3,345,510 Accrued expenses and other 523,628 573,055 Short-term operating lease liabilities 53,495 53,993 Total current liabilities 4,206,060 4,465,269 Long-term debt 2,567,379 2,406,629 Long-term operating lease liabilities 165,813 173,886 Other liabilities 159,776 237,859 Total liabilities 7,099,028 7,283,643 Commitments and contingencies (Note 6) Shareholders' equity: Common stock $ 1.00 par; authorized 300,000,000 shares; issued 86,326,061 shares and 89,045,996 shares, respectively 86,326 89,046 Additional paid-in capital 1,746,774 1,721,369 Retained earnings 3,541,790 3,601,812 Accumulated other comprehensive loss ( 530,987 ) ( 486,723 ) Total shareholders' equity 4,843,903 4,925,504 Total liabilities and shareholders' equity $ 11,942,931 $ 12,209,147 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 28, December 30, December 28, December 30, 2024 2023 2024 2023 (Thousands, except per share amounts) Sales $ 5,663,384 $ 6,204,914 $ 11,267,536 $ 12,540

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 2024 balances to correspond to the fiscal 2025 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 June 29, 2024. Recently issued accounting pronouncements In November 2023, the FASB issued ASU No. 2023-07, Segment reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU No. 2023-07") requiring enhanced segment disclosures primarily through increased disclosures about significant segment expenses. ASU No. 2023-07 will be effective for the Company in fiscal year 2025, and interim periods beginning in fiscal year 2026 with early adoption permitted. The Company is currently evaluating the impact of adopting ASU No. 2023-07 on its disclosures. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Tax Disclosures ("ASU No. 2023-09"), which updates

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The Company had the following activity in the allowance for credit losses during the first six months of fiscal 2025 and fiscal 2024: December 28, December 30, 2024 2023 (Thousands) Balance at beginning of the period $ 108,504 $ 112,843 Credit Loss Provisions 5,717 6,564 Credit Loss Recoveries 3 ( 940 ) Receivables Write Offs ( 2,371 ) ( 3,885 ) Foreign Currency Effect and Other ( 1,496 ) 1,225 Balance at end of the period $ 110,357 $ 115,807 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 (components) where the Company is acting as an agent on behalf of a customer or in some cases the component supplier. Given that these supply chain services involve purchasing, warehousing and providing logistics services for components as part of the services, the Company classifies the underlying components within inventories on the consolidated balance sheets. Components held for supply chain services where the Company is acting as an agent represented approximately 7 % of inventories as of December 28, 2024, and June 29, 2024. 3. Goodwill The following table presents the change in goodwill by reportable segment for the first six months of fiscal 2025. Electronic Components Farnell Total (Thousands) Carrying value at June 29, 2024 (1) $ 295,957 $ 485,027 $ 780,984 Foreign currency translation ( 2,686 ) ( 4,642 ) ( 7,328 ) Carrying value at December 28, 2024 (1) $ 293,271 $ 480,385 $ 773,656 (1) Includes accumulated impairments of $ 1,482,677 from prior fiscal years. 4. Debt Short-term debt consists of the following (carrying balances in

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Other short-term debt consists of various committed and uncommitted lines of credit and other forms of bank debt with financial institutions utilized primarily to support the ongoing working capital requirements of the Company, including its foreign operations. Long-term debt consists of the following (carrying balances in thousands): December 28, June 29, December 28, June 29, 2024 2024 2024 2024 Interest Rate Carrying Balance Revolving credit facilities: Accounts receivable securitization program (due December 2026) 5.21 % — $ 500,000 $ — Credit Facility (due August 2027) 5.19 % 5.05 % 406,808 745,480 Other long-term debt 4.74 % 4.74 % 20,834 22,748 Public notes due: April 2026 4.63 % 4.63 % 550,000 550,000 March 2028 6.25 % 6.25 % 500,000 500,000 May 2031 3.00 % 3.00 % 300,000 300,000 June 2032 5.50 % 5.50 % 300,000 300,000 Long-term debt before discount and debt issuance costs 2,577,642 2,418,228 Discount and debt issuance costs – unamortized ( 10,263 ) ( 11,599 ) Long-term debt $ 2,567,379 $ 2,406,629 In December 2024, the Company amended and extended for two years its trade accounts receivable securitization program (the "Securitization Program") in the United States with a group of financial institutions, which is now due in December 2026. 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 $ 500 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) As of December 28, 2024, the carrying value and fair value of the Company's total debt was $ 2.57 billion and $ 2.53 billion, respectively. At June 29, 2024, the carrying value and fair value of the Company's total debt was $ 2.90 billion and $ 2.85 billion, respectively. Fair value for public notes was estimated based on quoted market prices (Level 1) and, for other forms of debt, fair value approximates carrying value due to the market based variable nature of the interest rates on those debt facilities (Level 2). 5. 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 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 currency exchange contracts typically with maturities of less than 60 days , but no longer than one year ). The Company continues to have exposure to foreign currency risks to the extent they are not economically hedged. The fair value of forward foreign currency exchange contracts is based on Level 2 criteria under the ASC 820 fair value hierarchy. The Company's master netting and other similar arrangeme

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The locations and fair values of the Company's derivative financial instruments in the Company's consolidated balance sheets are as follows: December 28, June 29, 2024 2024 (Thousands) Economic hedges Prepaid and other current assets $ 10,067 $ 12,116 Accrued expenses and other $ 14,274 $ 16,957 Cross-currency swap Other liabilities — $ 16,241 Other assets $ 4,634 — The locations of derivative financial instruments on the Company's consolidated statements of operations are as follows: Second Quarters Ended Six Months Ended December 28, December 30, December 28, December 30, 2024 2023 2024 2023 (Thousands) Economic hedges Other expense, net $ ( 11,712 ) $ ( 18,631 ) $ 12,325 $ ( 20,733 ) Cross currency swap Interest and other financing expense, net $ 1,298 $ 1,223 $ 1,999 $ 2,236 6. Commitments and contingencies From time to time, the Company may become a party to, or be otherwise involved in, various lawsuits, claims, investigations, and other legal proceedings arising in the ordinary course of conducting its business. While litigation is subject to inherent uncertainties, management does not anticipate that any such matters will have a material adverse effect on the Company's financial condition, liquidity, or results of operations. The Company is also currently subject to various pending and potential legal matters and investigations relating to compliance with governmental laws and regulations. For certain of these matters, it is not possible to determine the ultimate outcome, and the Company cannot reasonably estimate the maximum potential exposure or the range of possible loss, particularly regarding matters in early stages. The Company currently believes that the resolution of such matters will not have a material adverse effect on the Company's financial position or liquidity but could possibly be mater

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 7 . Income taxes The below discussion of the effective tax rate for the periods presented in the consolidated statements of operations is in comparison to the 21% U.S. statutory federal income tax rate. The Company's effective tax rate on its income before taxes was 3.4 % in the second quarter of fiscal 2025. During the second quarter of fiscal 2025, the Company's effective tax rate was favorably impacted primarily by increases in tax attribute carryforwards. During the second quarter of fiscal 2024, the Company's effective tax rate on its income before taxes was 23.2 %. During the second quarter of fiscal 2024, the Company's effective tax rate was unfavorably impacted primarily by (i) increases to unrecognized tax benefit reserves, (ii) U.S. state taxes, partially offset by (iii) the mix of income in lower tax foreign jurisdictions. For the first six months of fiscal 2025, the Company's effective tax rate on its income before taxes was 11.4 %. The effective tax rate for the first six months of fiscal 2025 was favorably impacted primarily by (i) increases in tax attribute carryforwards, partially offset by (ii) the mix of income in higher tax jurisdictions, and (iii) increases to valuation allowances. During the first six months of fiscal 2024, the Company's effective tax rate on its income before taxes was 23.7 %. The effective tax rate for the first six months of fiscal 2024 was unfavorably impacted primarily by (i) increases to unrecognized tax benefit reserves, (ii) U.S. state taxes, and (iii) the mix of income in higher tax foreign jurisdictions. The Pillar Two rules published by the Organization for Economic Co-operation and Development (OECD) are effective for the Company in fiscal year 202

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