Avnet Surpasses Expectations with Strong Third Quarter Results
Avnet, a leading global electronics distributor and solutions provider, has announced its financial results for the third quarter fiscal year 2025. The company delivered sales of $5.3 billion, near to the high end of its guidance, and adjusted earnings per share (EPS) of $0.84 above guidance.
The strong performance was driven by slightly better-than-expected results in Asia and Farnell, offsetting expected weaknesses in the West, with Europe presenting the most challenging market conditions. The company's semiconductor and industrial products & equipment (IP&E) lead times and pricing continue to be stable for most technologies.
Avnet's global book-to-bill ratio has continued to improve, with its Asian region achieving parity in the quarter and the Americas and European, Middle East and Africa (EMEA) regions approaching parity. The company's IP&E book-to-bill ratio remains above parity, indicating a strong demand for industrial products.
However, the company's backlog continues to be lower due to shorter lead times and customers still in the destocking mode. Cancellations have remained at normal levels, as customers work through elevated inventories. While Avnet's inventory is down marginally after accounting for foreign currency, the company emphasizes that its diverse supplier mix is a strategic asset and an important part of its value proposition.
Turning to electronic components results, Avnet reported a decline in sales on a sequential basis and year-on-year basis due to economic and geopolitical factors. However, Asia was the only region with year-on-year sales growth, driven by strong demand from industrial, communications, and transportation end markets.
The company's aerospace and defense end market showed growth on a year-on-year basis, while other verticals were down sequentially. In the Americas, sequential growth was seen in the transportation and compute end markets, but other verticals were down. Avnet does not see any meaningful increase in shipments ahead of anticipated tariff increases.
Phil Gallagher, Avnet's CEO, stated that the company is pleased with its performance, particularly given the challenging market conditions. Ken Jacobson, CFO, noted that the results were driven by a combination of factors, including better-than-expected performance in Asia and Farnell, and a stable semiconductor and IP&E business.
Avnet's strong financial performance is a testament to its ability to navigate complex markets and deliver value to its customers. The company continues to optimize its inventory composition and reduce core inventory levels where needed, while remaining prepared to meet customer demand as the destocking process runs its course.
