Q4 2026 Avnet Inc Earnings Call Transcript
Key Points
- Avnet Inc (AVT) delivered record fourth-quarter sales of $8.3 billion, exceeding guidance, with broad-based growth across all regions and end markets.
- The company achieved a record adjusted operating margin of 3.8%, with Electronic Components reaching 4.1% and Farnell hitting 9%, both showing consecutive quarterly expansion.
- Book-to-bill ratios are solidly above 1.0 in all regions, and the backlog is healthy and extending, providing better visibility well into fiscal year 2027.
- Inventory days improved to 71, the lowest level in nearly four years, and return on working capital exceeded the near-term target at 19%.
- Management expects continued operating leverage, with SG&A as a percentage of gross profit expected to improve to below 60% before the end of fiscal 2027, and EPS growth projected at approximately 3 times the rate of sales growth.
- Avnet Inc (AVT) noted that approximately one-third of both sequential and year-over-year sales growth was attributable to memory price increases, which may not be sustainable.
- Gross profit margin declined 14 basis points year-over-year, and Electronic Components gross margin was down 25 basis points year-over-year due to regional mix and pricing dynamics.
- The company used $291 million of cash flow from operations in the quarter to support sales growth, and anticipates using cash in the first quarter to fund accelerating growth, primarily in accounts receivable.
- Gross leverage remains elevated at 3.2 times, though improving, and the company is prioritizing debt reduction over other capital allocation options in the near term.
- Management acknowledged potential risks from customers building safety stock or double-ordering due to extended lead times and price increases, which could lead to demand volatility or a pause in orders.
Welcome to the Avnet fourth quarter fiscal year 2026 earnings call.
I would now like to turn the floor over to Lisa Mueller, Director of Investor Relations for Avnet. Please go ahead.
Thank you operator. I'd like to welcome everyone to Avnet's fourth quarter fiscal year 2026 earnings conference call. This morning, Avnet released financial results for the fourth quarter of fiscal year 2026 and the release is available on the Investor Relations section of Avnet's website, along with a slide presentation which you may access at your convenience. As a reminder, some of the information contained in the news release and on this conference call contain forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict.
Such forward-looking statements are not a guarantee of performance, and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are
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