Avnet Inc (AVT) Reports Q2 2024 Earnings: Sales Dip Amid Economic Challenges
Sales: Reported a decrease to $6.2 billion, a 7.6% year-over-year decline.
Operating Income: Dropped by 21% year-over-year to $236.3 million.
Diluted EPS: GAAP EPS at $1.28, a significant decrease from $2.63 the previous year.
Adjusted Diluted EPS: Non-GAAP EPS at $1.40, down 30% year-over-year.
Electronic Components Margin: Operating margin decreased to 4.3% from 4.7% year-over-year.
Balance Sheet: Total assets increased to $12.99 billion from $12.48 billion as of July 1, 2023.
Cash Flow: Operating activities resulted in a cash use of $83.6 million for the six months ended December 30, 2023.
On January 31, 2024, Avnet Inc (NASDAQ:AVT) released its 8-K filing, detailing the financial results for its second quarter ended December 30, 2023. The global distributor of electronic components reported a decrease in sales to $6.2 billion, a 7.6% year-over-year decline, and a 2.1% decrease from the previous quarter. Operating income also saw a significant drop to $236.3 million, a 21% decrease from the same period last year. Diluted earnings per share (EPS) on a GAAP basis were $1.28, down from $2.63 year-over-year, reflecting a 51.3% decrease. Adjusted diluted EPS, which excludes certain items, stood at $1.40, a 30% decrease from the previous year's $2.00.
Avnet's CEO, Phil Gallagher, commented on the results, stating, "We are pleased with the second quarter results, which were in line with our expectations. Our team continues to execute well despite the current economic environment and related challenges." He also expressed confidence in the company's ability to navigate through the upcoming quarters and remain optimistic about future growth opportunities.
We are confident that our strong competitive position and experience managing through many industry cycles will serve us well as we navigate through the next few quarters. We remain encouraged about future opportunities for growth across our end markets.
Financial Performance Analysis
The company's Electronic Components (EC) segment, which is a significant part of its business, reported sales of $5.8 billion, a 7.9% decrease year-over-year. The operating income margin for this segment also decreased to 4.3% from 4.7%. Farnell, another segment of Avnet's business, saw a 3.7% decrease in sales and a significant reduction in operating income margin from 9.0% to 4.0%. Geographically, sales in the Americas, EMEA, and Asia all experienced declines, with Asia facing the steepest drop of 10.0% year-over-year.
Avnet's balance sheet shows an increase in total assets to $12.99 billion, up from $12.48 billion as of July 1, 2023. The company's cash and cash equivalents decreased slightly to $272.85 million from $288.23 million. The cash flow from operating activities indicates a use of $83.6 million for the six months ended December 30, 2023, which could be a point of concern for liquidity management.
The company provided guidance for the third quarter of fiscal 2024, expecting sales between $5.55 billion and $5.85 billion and diluted EPS between $1.05 and $1.15. This guidance suggests a sequential sales decline and assumes typical seasonal patterns, including a decline in Asia due to the Lunar New Year holiday.
Looking Ahead
Avnet's performance in the second quarter of fiscal 2024 reflects the resilience of its business model amid economic challenges. While the company faces headwinds such as sales declines and margin pressures, its strategic position and management's experience provide a basis for cautious optimism. Investors and stakeholders will be watching closely to see how Avnet navigates the evolving market conditions and capitalizes on growth opportunities in the technology distribution and solutions space.
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Explore the complete 8-K earnings release (here) from Avnet Inc for further details.
This article first appeared on GuruFocus.
