First quarter sales of $6.3 billion and diluted EPS of $2.25

Adjusted diluted EPS of $1.61 exceeded guidance

Electronic Components operating margin of 4.6% increased 38 basis points year over year

Avnet, Inc. (NASDAQ:AVT) today announced results for its first quarter ended September 30, 2023.

Commenting on the Company's financial results, Avnet Chief Executive Officer Phil Gallagher stated, "We delivered better-than-expected results in the first quarter thanks to the strong performance of our Electronic Components business. Our team's continued execution and flexibility are resonating with both our customer and supplier partners, especially in today's market conditions. We remain focused on the things we can control, and are confident that our resiliency and adaptability will keep us on our path to driving profitable growth and value for all of our stakeholders in the long term."

Fiscal First Quarter Key Financial Highlights:

Sales of $6.3 billion decreased 6.1% year over year from $6.8 billion.
- On a constant currency basis, sales decreased 7.8% year over year and decreased 2.9% sequentially.
Diluted earnings per share of $2.25, compared with $1.93 in the prior year quarter.
- Adjusted diluted earnings per share of $1.61, compared with $2.00 in the prior year quarter.
- A gain on legal settlement benefitted GAAP diluted earnings per share by $0.71 for the quarter.
Operating income margin of 4.0%, decreased 29 basis points year over year.
- Adjusted operating income margin of 4.1%, decreased 22 basis points year over year.
- Electronic Components operating income margin of 4.6%, increased 38 basis points year over year.
- Farnell operating income margin of 4.2% decreased 389 basis points sequentially.
Returned $28.3 million to shareholders in dividends during the quarter.
Returned $27.0 million to shareholders in the quarter from share repurchases.

Key Financial Metrics

($ in millions, except per share data)

First Quarter Results (GAAP)
	Sep – 23			Sep – 22			Change Y/Y		Jun – 23			Change Q/Q
Sales	$	6,335.6		$	6,750.1		(6.1	)%	$	6,554.6		(3.3	)%
Operating Income	$	253.8		$	290.5		(12.7	)%	$	283.7		(10.5	)%
Operating Income Margin		4.0	%		4.3	%	(29	)bps		4.3	%	(32	)bps
Diluted Earnings Per Share (EPS)	$	2.25		$	1.93		16.6	%	$	1.68		33.9	%
First Quarter Results (Non-GAAP)⁽¹⁾
	Sep – 23			Sep – 22			Change Y/Y		Jun – 23			Change Q/Q
Adjusted Operating Income	$	261.7		$	293.3		(10.8	)%	$	312.6		(16.3	)%
Adjusted Operating Income Margin		4.1	%		4.4	%	(22	)bps		4.8	%	(64	)bps
Adjusted Diluted Earnings Per Share (EPS)	$	1.61		$	2.00		(19.5	)%	$	2.06		(21.8	)%
Segment and Geographical Mix
	Sep – 23			Sep – 22			Change Y/Y		Jun – 23			Change Q/Q
Electronic Components (EC) Sales	$	5,914.4		$	6,324.2		(6.5	)%	$	6,109.2		(3.2	)%
EC Operating Income Margin		4.6	%		4.2	%	38	bps		5.1	%	(47	)bps
Farnell Sales	$	421.2		$	425.9		(1.1	)%	$	445.4		(5.4	)%
Farnell Operating Income Margin		4.2	%		12.1	%	(792	)bps		8.1	%	(389	)bps
Americas Sales	$	1,573.5		$	1,678.9		(6.3	)%	$	1,732.7		(9.2	)%
EMEA Sales	$	2,308.0		$	2,129.5		8.4	%	$	2,450.6		(5.8	)%
Asia Sales	$	2,454.1		$	2,941.7		(16.6	)%	$	2,371.3		3.5	%

_______________
(1)		A reconciliation of non-GAAP financial measures to GAAP financial measures is presented in the "Non-GAAP Financial Information" section of this press release.

Outlook for the Second Quarter of Fiscal 2024 Ending on December 30, 2023

	Guidance Range	Midpoint
Sales	$6.00B – $6.30B	$6.15B
Adjusted Diluted EPS	$1.35 – $1.45	$1.40

The above guidance is based upon current market conditions and implies a sequential sales decline of 1% to 5% and assumes a seasonal decline in sales from the western regions primarily due to holidays.

The above guidance also excludes restructuring, integration and other expenses, amortization of intangibles, and certain income tax adjustments. The above guidance assumes similar interest expense to the fourth quarter and an effective tax rate of between 22% and 26%. The above guidance assumes 92 million average diluted shares outstanding and average currency exchange rates as shown in the table below:

	Q2 Fiscal
	2024	Q1 Fiscal	Q2 Fiscal
	Guidance	2024	2023
Euro to U.S. Dollar	$1.06	$1.09	$1.02
GBP to U.S. Dollar	$1.22	$1.27	$1.17

Today's Conference Call and Webcast Details

Avnet will host a conference call and webcast today at 1:30 p.m. PT / 4:30 p.m. ET to discuss its financial results, provide a business update and answer questions.

Live conference call: 877-407-8112 (domestic) or 201-689-8840 (international)
Conference call replay available through November 8, 2023: 877-660-6853 or 201-612-7415 and using Conference ID: 13741421
Live and archived webcast can be accessed via Avnet's Investor Relations web page at: https://ir.avnet.com

Forward-Looking Statements

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the financial condition, results of operations, and business of the Company. You can find many of these statements by looking for words like "believes," "projected," "plans," "expects," "anticipates," "should," "will," "may," "estimates," or similar expressions. These forward-looking statements are subject to numerous assumptions, risks, and uncertainties. The following important factors, in addition to those discussed elsewhere in the Company's Annual Report on Form 10-K for the fiscal year ended July 1, 2023 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, could affect the Company's future results of operations, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements: geopolitical events and military conflicts; pandemics and other health-related crises; competitive pressures among distributors of electronic components; an industry down-cycle in semiconductors, including supply shortages; relationships with key suppliers and allocations of products by suppliers, including increased non-cancellable/non-returnable orders; accounts receivable defaults; risks relating to the Company's international sales and operations, including risks relating to repatriating cash, foreign currency fluctuations, inflation, duties and taxes, sanctions and trade restrictions, and compliance with international and U.S. laws; risks relating to acquisitions, divestitures, and investments; adverse effects on the Company's supply chain, operations of its distribution centers, shipping costs, third-party service providers, customers, and suppliers, including as a result of issues caused by military conflicts, terrorist attacks, natural and weather-related disasters, pandemics and health-related crises, warehouse modernization, and relocation efforts; risks related to cyber security attacks, other privacy and security incidents, and information systems failures, including related to current or future implementations, integrations, and upgrades; general economic and business conditions (domestic, foreign, and global) affecting the Company's operations and financial performance and, indirectly, the Company's credit ratings, debt covenant compliance, liquidity, and access to financing; constraints on employee retention and hiring; and legislative or regulatory changes.

Any forward-looking statement speaks only as of the date on which that statement is made. Except as required by law, the Company assumes no obligation to update any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made.

About Avnet

As a leading global technology distributor and solutions provider, Avnet has served customers' evolving needs for more than a century. Decade after decade, Avnet helps its customers and suppliers around the world realize the transformative possibilities of technology. Learn more about Avnet at www.avnet.com. (AVT_IR)

AVNET, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	First Quarters Ended
	September 30,			October 1,
	2023			2022
	(Thousands, except per share data)
Sales	$	6,335,648		$	6,750,133
Cost of sales		5,587,542			5,981,960
Gross profit		748,106			768,173
Selling, general and administrative expenses		487,286			477,636
Restructuring, integration and other expenses		7,051			—
Operating income		253,769			290,537
Other income, net		5,960			323
Interest and other financing expenses, net		(70,796	)		(45,098	)
Gain on legal settlements and other		86,499			—
Income before taxes		275,432			245,762
Income tax expense		66,164			61,501
Net income	$	209,268		$	184,261

Earnings per share:
Basic	$	2.29		$	1.96
Diluted	$	2.25		$	1.93

Shares used to compute earnings per share:
Basic		91,495			94,051
Diluted		93,178			95,636
Cash dividends paid per common share	$	0.31		$	0.29

AVNET, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	September 30,		July 1,
	2023		2023
	(Thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	278,679	$	288,230
Receivables		4,679,691		4,763,788
Inventories		5,755,051		5,465,031
Prepaid and other current assets		197,720		233,804
Total current assets		10,911,141		10,750,853
Property, plant and equipment, net		470,971		441,557
Goodwill		759,848		780,629
Operating lease assets		220,657		221,698
Other assets		283,845		282,422
Total assets	$	12,646,462	$	12,477,159

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt	$	68,601	$	70,636
Accounts payable		3,445,711		3,373,820
Accrued expenses and other		722,409		753,130
Short-term operating lease liabilities		53,657		51,792
Total current liabilities		4,290,378		4,249,378
Long-term debt		3,101,903		2,988,029
Long-term operating lease liabilities		186,745		190,621
Other liabilities		244,853		297,462
Total liabilities		7,823,879		7,725,490
Shareholders' equity		4,822,583		4,751,669
Total liabilities and shareholders' equity	$	12,646,462	$	12,477,159

AVNET, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	First Quarters Ended
	September 30, 2023			October 1, 2022
	(Thousands)
Cash flows from operating activities:
Net income	$	209,268		$	184,261

Non-cash and other reconciling items:
Depreciation		20,639			19,640
Amortization		878			2,755
Amortization of operating lease assets		13,271			13,141
Deferred income taxes		5,575			(7,296	)
Stock-based compensation		9,355			8,924
Other, net		(20,171	)		8,224
Changes in (net of effects from businesses acquired and divested):
Receivables		30,190			(419,852	)
Inventories		(371,604	)		(559,044	)
Accounts payable		111,489			120,938
Accrued expenses and other, net		(50,184	)		(16,840	)
Net cash flows used for operating activities		(41,294	)		(645,149	)

Cash flows from financing activities:
Borrowings (repayments) under accounts receivable securitization, net		(92,100	)		152,200
Borrowings under senior unsecured credit facility, net		243,613			701,987
Repayments under bank credit facilities and other debt, net		(133	)		(85,432	)
Repurchases of common stock		(24,324	)		(152,408	)
Dividends paid on common stock		(28,320	)		(26,998	)
Other, net		1,414			(964	)
Net cash flows provided by financing activities		100,150			588,385

Cash flows from investing activities:
Purchases of property, plant and equipment		(76,089	)		(28,208	)
Other, net		300			7,303
Net cash flows used for investing activities		(75,789	)		(20,905	)
Effect of currency exchange rate changes on cash and cash equivalents		7,382			4,857
Cash and cash equivalents:
— decrease		(9,551	)		(72,812	)
— at beginning of period		288,230			153,693
— at end of period	$	278,679		$	80,881

Non-GAAP Financial Information

In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States ("GAAP"), the Company also discloses certain non-GAAP financial information including (i) adjusted operating income, (ii) adjusted operating expenses, (iii) adjusted other income (expense), (iv) adjusted income before income taxes, (v) adjusted income tax expense (benefit), and (vi) adjusted diluted earnings per share.

There are also references to the impact of foreign currency in the discussion of the Company's results of operations. When the U.S. Dollar strengthens and the stronger exchange rates of the current year are used to translate the results of operations of Avnet's subsidiaries denominated in foreign currencies, the resulting impact is a decrease in U.S. Dollars of reported results. Conversely, when the U.S. Dollar weakens and the weaker exchange rates of the current year are used to translate the results of operations of Avnet's subsidiaries denominated in foreign currencies, the resulting impact is an increase in U.S. Dollars of reported results. In the discussion of the Company's results of operations, results excluding this impact are referred to as "constant currency." Management believes sales in constant currency is a useful measure for evaluating current period performance as compared with prior periods and for understanding underlying trends. In order to determine the translation impact of changes in foreign currency exchange rates on sales, income or expense items for subsidiaries reporting in currencies other than the U.S. Dollar, the Company adjusts the average exchange rates used in current periods to be consistent with the average exchange rates in effect during the comparative period.

Management believes that operating income and operating expenses adjusted for restructuring, integration and other expenses, and amortization of acquired intangible assets and other, are useful measures to help investors better assess and understand the Company's operating performance. This is especially the case when comparing results with previous periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of Avnet's normal operating results or non-cash in nature. Management analyzes operating income and operating expenses without the impact of these items as an indicator of ongoing margin performance and underlying trends in the business. Management also uses these non-GAAP measures to establish operational goals and, in most cases, for measuring performance for compensation purposes. Management measures operating income for its reportable segments excluding restructuring, integration and other expenses, and amortization of acquired intangible assets and other.

Additional non-GAAP metrics management uses is adjusted operating income margin, which is defined as adjusted operating income (as defined above) divided by sales.

Management also believes income tax expense (benefit), net income and diluted earnings per share adjusted for the impact of the items described above, gain on legal settlements and other, and certain items impacting other income (expense) and income tax expense (benefit) are useful to investors because they provide a measure of the Company's net profitability on a more comparable basis to historical periods and provide a more meaningful basis for forecasting future performance. Adjustments to income tax expense (benefit) and the effective income tax rate include the effect of changes in tax laws, certain changes in valuation allowances and unrecognized tax benefits, income tax audit settlements and adjustments to effective tax rate based upon the expected long-term adjusted effective tax rate. Additionally, because of management's focus on generating shareholder value, of which net profitability is a primary driver, management believes net income and diluted earnings per share excluding the impact of these items provides an important measure of the Company's net profitability for the investing public.

Any analysis of results and outlook on a non-GAAP basis should be used as a complement to, and in conjunction with, results presented in accordance with GAAP.

	Fiscal 2024
	First Quarter
	September 30, 2023
	*($ in thousands, except per share amounts)*
GAAP selling, general and administrative expenses	$	487,286
Amortization of intangible assets and other		(878	)
Adjusted operating expenses		486,408

GAAP operating income	$	253,769
Restructuring, integration and other expenses		7,051
Amortization of intangible assets and other		878
Adjusted operating income		261,698

GAAP income before income taxes	$	275,432
Restructuring, integration and other expenses		7,051
Amortization of intangible assets and other		878
Gain on legal settlements and other		(86,499	)
Adjusted income before income taxes		196,862

GAAP income tax expense	$	66,164
Restructuring, integration and other expenses		1,703
Amortization of intangible assets and other		203
Gain on legal settlements and other		(20,434	)
Income tax expense items, net		(390	)
Adjusted income tax expense		47,246

GAAP net income	$	209,268
Restructuring, integration and other expenses (net of tax)		5,348
Amortization of intangible assets and other (net of tax)		675
Gain on legal settlements and other (net of tax)		(66,065	)
Income tax expense items, net		390
Adjusted net income		149,616

GAAP diluted earnings per share	$	2.25
Restructuring, integration and other expenses (net of tax)		0.06
Amortization of intangible assets and other (net of tax)		0.01
Gain on legal settlements and other (net of tax)		(0.71	)
Income tax expense items, net		0.00
Adjusted diluted EPS		1.61

				Quarters Ended
	Fiscal Year			July 1,			April 1,			December 31,			October 1,
	2023*			2023*			2023			2022			2022
	*($ in thousands, except per share amounts)*
GAAP selling, general and administrative expenses	$	1,967,305		$	506,322		$	498,219		$	485,127		$	477,636
Amortization of intangible assets and other		(6,053	)		(878	)		(876	)		(1,541	)		(2,759	)
Adjusted operating expenses		1,961,252			505,444			497,343			483,586			474,877

GAAP operating income	$	1,186,800		$	283,662		$	313,629		$	298,973		$	290,537
Restructuring, integration and other expenses		28,038			28,038			—			—			—
Amortization of intangible assets and other		6,053			878			876			1,541			2,759
Adjusted operating income		1,220,891			312,578			314,505			300,514			293,296

GAAP income before income taxes	$	982,876		$	190,393		$	243,587		$	303,134		$	245,762
Restructuring, integration and other expenses		28,038			28,038			—			—			—
Amortization of intangible assets and other		6,053			878			876			1,541			2,759
Gain on legal settlements and other		(37,037	)		24,669			—			(61,705	)		—
Adjusted income before income taxes		979,931			243,978			244,463			242,970			248,521

GAAP income tax expense	$	212,048		$	35,138		$	56,161		$	59,248		$	61,501
Restructuring, integration and other expenses		6,007			6,007			—			—			—
Amortization of intangible assets and other		1,360			207			203			345			605
Gain on legal settlements and other		(8,711	)		5,828			—			(14,539	)		—
Income tax expense items, net		16,453			5,583			3,529			12,287			(4,946	)
Adjusted income tax expense		227,157			52,763			59,893			57,341			57,160

GAAP net income	$	770,828		$	155,255		$	187,426		$	243,886		$	184,261
Restructuring, integration and other expenses (net of tax)		22,031			22,031			—			—			—
Amortization of intangible assets and other (net of tax)		4,693			671			673			1,196			2,154
Gain on legal settlements and other (net of tax)		(28,326	)		18,841			—			(47,166	)		—
Income tax expense items, net		(16,453	)		(5,583	)		(3,529	)		(12,287	)		4,946
Adjusted net income		752,774			191,215			184,570			185,629			191,361

GAAP diluted earnings per share	$	8.26		$	1.68		$	2.03		$	2.63		$	1.93
Restructuring, integration and other expenses (net of tax)		0.24			0.24			—			—			—
Amortization of intangible assets and other (net of tax)		0.05			0.01			0.01			0.01			0.02
Gain on legal settlements and other (net of tax)		(0.31	)		0.20			—			(0.51	)		—
Income tax expense items, net		(0.18	)		(0.06	)		(0.04	)		(0.13	)		0.05
Adjusted diluted EPS		8.06			2.06			2.00			2.00			2.00
_______________
^* May not foot/cross foot due to rounding.

Sales in Constant Currency

The following table presents reported sales growth rates and sales growth rates in constant currency for the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023.

	Quarter Ended
	September 30, 2023
			Sales				Sales
			Year-Year %				Sequential %
	Sales		Change in		Sales		Change in
	Year-Year		Constant		Sequential		Constant
	% Change		Currency		% Change		Currency
Avnet	(6.1	)%	(7.8	)%	(3.3	)%	(2.9	)%
Avnet by region
Americas	(6.3	)%	(6.3	)%	(9.2	)%	(9.2	)%
EMEA	8.4		1.9		(5.8	)	(5.5	)
Asia	(16.6	)	(15.8	)	3.5		4.4
Avnet by segment
EC	(6.5	)%	(8.1	)%	(3.2	)%	(2.7	)%
Farnell	(1.1	)	(3.8	)	(5.4	)	(5.4	)

Historical Segment Financial Information

	Fiscal 2024
	First Quarter
	September 30,
	2023*
	*(in millions)*
Sales:
Electronic Components	$	5,914.4
Farnell		421.2
Avnet sales	$	6,335.6

Operating income:
Electronic Components	$	272.8
Farnell		17.7
		290.5
Corporate expenses		(28.7	)
Restructuring, integration and other expenses		(7.1	)
Amortization of acquired intangible assets and other		(0.9	)
Avnet operating income	$	253.8

Sales by geographic area:
Americas	$	1,573.5
EMEA		2,308.0
Asia		2,454.1
Avnet sales	$	6,335.6
_______________
* May not foot due to rounding.

				Quarters Ended
	Fiscal			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
	Year			July 1,			April 1,			December 31,			October 1,
	2023*			2023*			2023			2022			2022
	*(in millions)*
Sales:
Electronic Components	$	24,802.6		$	6,109.2		$	6,059.6		$	6,309.5		$	6,324.2
Farnell		1,734.3			445.4			455.0			408.0			425.9
Avnet sales	$	26,536.9		$	6,554.6		$	6,514.6		$	6,717.5		$	6,750.1

Operating income:
Electronic Components	$	1,179.6		$	310.4		$	305.2		$	296.7		$	267.3
Farnell		165.5			36.1			40.9			36.9			51.6
		1,345.1			346.5			346.1			333.6			318.9
Corporate expenses		(124.2	)		(33.9	)		(31.6	)		(33.1	)		(25.6	)
Restructuring, integration and other expenses		(28.0	)		(28.0	)		—			—			—
Amortization of acquired intangible assets and other		(6.1	)		(0.9	)		(0.9	)		(1.5	)		(2.8	)
Avnet operating income	$	1,186.8		$	283.7		$	313.6		$	299.0		$	290.5

Sales by geographic area:
Americas	$	6,807.7		$	1,732.7		$	1,714.9		$	1,681.2		$	1,678.9
EMEA		9,229.4			2,450.6			2,393.4			2,255.9			2,129.5
Asia		10,499.8			2,371.3			2,406.3			2,780.4			2,941.7
Avnet sales	$	26,536.9		$	6,554.6		$	6,514.6		$	6,717.5		$	6,750.1
_______________
* May not foot/cross foot due to rounding.

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Avnet Reports First Quarter 2024 Financial Results