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    AVT
    Earnings call· Jun 2026(Q4 FY26)

    AVNET Q4 FY26 earnings call AVT

    Aug 5, 2026 Source

    Executive summary

    Avnet Q4 FY26 — Record Sales and EPS Driven by Broad-Based Demand Recovery

    Avnet delivered a record-breaking quarter, with strong top-line growth and significant margin expansion across both Electronic Components and Farnell segments. The demand recovery was broad-based across regions and end markets, supported by improving book-to-bills and extending lead times. The company is focused on disciplined execution and capital allocation, positioning itself to capitalize on long-term growth trends in the electronics industry, particularly those driven by AI and industrial automation.

    Highlights

    5

    • Record sales of $8.3 billion, up 48% YoY, exceeding guidance.

    • Adjusted diluted EPS of $2.28, a quarterly record, well above guidance.

    • Adjusted operating margin of 3.8%, an increase of over 70 basis points sequentially, marking the fourth consecutive quarter of expansion.

    • Inventory days improved to 71, the lowest in nearly 4 years, with EC inventory days below 65 and Farnell below 200.

    • Electronic Components operating margin reached 4.1%, its highest in over 2 years, with all regions improving sequentially and YoY.

    Concerns

    3

    • Memory pricing increases contributed approximately one-third of both sequential and year-over-year sales growth, potentially masking underlying unit volume trends.

    • Working capital increased $559 million sequentially, primarily due to increased accounts receivable driven by sales growth.

    • Inventory dollars grew 11% or $600 million, with over 50% driven by pricing, mainly memory-related.

    Guidance & targets

    12
    CategoryTargetConfidence
    Sales
    $9 billion to $9.3 billion
    high materiality
    High
    Adjusted diluted earnings per share
    $2.80 to $2.90
    high materiality
    High
    Interest expense
    similar compared to the previous quarter
    low materiality
    Medium
    Adjusted effective income tax rate
    between 21% and 25%
    low materiality
    Medium
    Diluted shares outstanding
    85 million shares
    low materiality
    Medium
    SG&A expenses as a percentage of gross profit
    below 60%
    medium materiality
    Medium
    Operating income growth rate
    approximately twice the rate of sales growth
    medium materiality
    Medium
    EPS growth rate
    approximately 3x as fast as sales
    medium materiality
    Medium
    Inventory days (EC)
    continue to improve
    low materiality
    Medium
    Inventory days (Farnell)
    remain around 200 days
    low materiality
    Medium
    Leverage target
    approximately 3x
    medium materiality
    High
    Farnell operating margin
    double-digit operating margins
    medium materiality
    Medium

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Electronic Components
    Record sales during the quarter. Operating margin increased 54 basis points sequentially, highest in over 2 years. All regions improved operating margin sequentially and year-over-year. Third consecutive quarter of operating margin expansion.
    		$7.4B49%17%4.1%
    Farnell
    Record sales during the quarter. Operating margin up nearly 400 basis points sequentially, highest in over 3 years. Seventh consecutive quarter of operating margin expansion. On track to reach double-digit operating margins before the end of 2027. Benefited from improving demand and a better mix of higher margin on-the-board components.
    		$900M29%10%9%
    Americas
    Highest sales growth regionally. Fourth consecutive quarter of year-on-year growth. All end markets showed sequential growth. Aerospace and defense, networking, and data center were the strongest end markets year-on-year. Industrial and defense leading revenue and growth.
    		—55%28%—
    Asia
    Reached another record high. Eighth consecutive quarter of year-on-year sales growth. Demand increased across all geographies and end markets, led by data center, transportation, networking, and industrial. Represented 47% of total sales.
    		$3.9B46%——
    EMEA
    Sales grew both sequentially and year-on-year for the third consecutive quarter. Seeing improvement with a mix of higher performing end markets such as data center and industrial, alongside markets with slower growth like transportation. Steady improvement in embedded business.
    		—44%——

    Operational metrics

    21
    Non-GAAP operating margin
    3.8%up 70 bps sequentially
    Q4 FY26

    Fourth consecutive quarter of adjusted operating income margin expansion.

    Non-GAAP gross profit margin
    10.4%up 5 bps sequentially, down 14 bps YoY
    Q4 FY26

    Gross profit dollar grew at approximately the same rate as sales growth (46% YoY).

    SG&A expenses as percentage of gross profit dollars
    63%vs 70% last quarter, vs 76% a year ago
    Q4 FY26

    SG&A expenses were $548 million, up $96 million YoY and $29 million sequentially, primarily from higher incentive compensation, freight, and logistics costs.

    SG&A expenses as percentage of gross profit dollars
    56%vs 62% last quarter, vs 68% a year ago
    Q4 FY26

    Specific to the Electronic Components business.

    Non-GAAP EPS
    $2.28grew 3.8x greater than sales YoY, grew 3.3x greater than sales sequentially
    Q4 FY26

    Quarterly record, well above guidance.

    Working capital days
    69 daysdecreased 7 days sequentially
    Q4 FY26

    Working capital increased $559 million sequentially, primarily due to increased accounts receivable.

    Inventory days
    71 daysimproved from 77 days last quarter
    Q4 FY26

    Lowest level in nearly 4 years.

    Inventory days
    below 65 days
    Q4 FY26

    Electronic Components inventory days improved.

    Inventory days
    below 200 days
    Q4 FY26

    Farnell inventory days improved.

    Inventory dollars
    up $600Mup 11%
    Q4 FY26

    Inventory increase.

    Inventory net of accounts payable
    decreased by $821Msequentially
    Q4 FY26

    Compared to last quarter.

    Return on working capital
    19%
    Q4 FY26

    Exceeding near-term target of 16%.

    Cash used for capital expenditures
    $17M
    Q4 FY26

    During the quarter.

    Gross leverage
    3.2xdown from 3.6x in Q3
    Q4 FY26

    Ended the quarter with.

    Available committed borrowing capacity
    $1.2B
    Q4 FY26

    Ended the quarter with.

    Share repurchases
    $138Mrepresenting 3.2% of shares outstanding
    FY26

    Total for the fiscal year.

    Dividends paid
    $114M
    FY26

    Total for the fiscal year, including $29 million for Q4 FY26.

    IP&E sales
    approaching $5B
    FY26

    For the full fiscal year, IP&E sales were a record.

    Memory pricing impact on sales growth
    1/3
    Q4 FY26

    Attributable to pricing increases in the memory product category.

    Memory pricing impact on GP dollar growth
    1/3
    Q4 FY26

    Approximately one-third of GP dollar growth also came from pricing.

    Farnell SKU count growth
    2% to 3%
    YoY

    SKU count actually year-on-year is up.

    Industry KPIs

    7
    MetricValueDetails
    Orders book to billsolidly above 1
    Segment revenue growth$7.4BUSD
    Content per device per vehicle—
    Order visibility backlog policyhealthy and extending
    Supply demand imbalance lead timestightening
    End market revenue mix organic growthdouble digits%
    Operating margin incremental leverage4.1%%

    Orderbook & backlog

    1
    Backloghealthy and extendingQ4 FY26

    Provides better visibility well into fiscal year 2027.

    Deals & partnerships

    1
    General MotorsRecognition as a Creative Supplier of the Year

    Recognized for relationship, innovation, and supply chain support, reinforcing value to customers through global reach, industry expertise, and creative supply chain solutions.

    Risks & headwinds

    3
    Memory pricing increasesQ4 FY26

    approximately one-third of both sequential and year-over-year sales growth

    Mitigation: Management passes pricing through to customers, gaining ASP and GP dollar upside. Expects additional price increases from other suppliers in months ahead, but also some deflation in other portfolio areas.

    Supply environment tightening and extended lead timesQ4 FY26 and months ahead

    Lead times moving higher across most component categories (semiconductors, interconnect, passive, electromechanical)

    Mitigation: Avnet is investing in inventory to ensure positioning to capture growth opportunities. Working with suppliers and customers on forecasting to manage inventory levels and avoid oversupply.

    Potential for demand destruction due to rising component costsNear term

    Discussed, not quantified

    Mitigation: Management is not currently seeing demand disruption. They monitor for inflated demand and cancellation rates, and currently see nothing abnormal.

    What to watch in Q1 FY27

    5

    Q1 FY27 Sales Guidance Achievement

    Q1 FY27
    Current$8.3 billion (Q4 FY26 actual)
    Target$9.0 billion to $9.3 billion

    Why it matters

    Verifies the continued strength of broad-based demand recovery and the company's ability to execute on its positive outlook.

    We're guiding sales in the range of $9 billion to $9.3 billion

    Q&A highlights

    6

    Can you elaborate on pricing dynamics, especially memory pricing's impact on the Q1 FY27 guide and the EBIT impact from memory pricing in Q4 FY26? Are other commodities seeing price increases?

    Management confirmed broader price increases beyond memory, though more modest. Memory pricing contributed about one-third of GP dollar growth, similar to its sales impact. The Q1 guide assumes modest price increases. They pass pricing through to customers, gaining ASP and GP dollar upside, but not necessarily percentage margin. Some deflation is also occurring in other parts of the portfolio.

    “I would say then the guide assumed modest or minor price increases going into next quarter, we'll continue to monitor the situation and give clarity there. From a -- how much the impact EBIT or operating income we would say about 1/3 of that GP dollar growth also came from pricing.”

    asked by Joseph Quatrochi · answered by Ken Jacobson

    2 min read6 chapters

    Detailed Narrative

    01

    Broad-Based Demand Recovery and Market Conditions

    Avnet experienced a broad-based demand recovery across all regions and end markets in Q4 FY26, leading to record sales. This improvement is not tied to a single end market or trend, but reflects a wider recovery. Book-to-bills are solidly above 1 in all regions, backlog is healthy and extending into FY27, and customer demand visibility has strengthened. The supply environment continued to tighten, with lead times moving higher across most component categories, including semiconductors and IP&E products.

    02

    Impact of AI and Edge Applications

    Artificial intelligence is a significant catalyst, with Avnet benefiting from sales into data centers and technologies supporting AI infrastructure. The impact of AI is broadening, accelerating demand for power management, connectivity, automation, and other enabling technologies across various applications. New demand is also emerging from customers deploying AI at the edge, such as robotics, drones, and autonomous systems, which are areas where Avnet's supplier line card and expertise create value.

    03

    Electronic Components Performance

    The Electronic Components business delivered record sales, with all three regions (Americas, Asia, EMEA) growing double digits year-over-year and sequentially. Americas sales growth was the highest, marking its fourth consecutive quarter of YoY growth, driven by aerospace and defense, networking, and data center. Asia achieved its eighth consecutive quarter of YoY sales growth, led by data center, transportation, networking, and industrial. EMEA also saw sequential and YoY growth for the third consecutive quarter, with improvement in higher-performing end markets like data center and industrial.

    04

    Farnell's Continued Progress

    Farnell showed continued progress, benefiting from improving demand and execution against its strategy. The business achieved record sales and a 9% operating margin, its highest in over three years. The PowerOne initiatives are creating opportunities, and Farnell is on track to reach double-digit operating margins before the end of calendar year 2027. The improvement was partly due to a better mix of higher-margin on-the-board components.

    05

    Operational Efficiency and Capital Allocation

    Avnet demonstrated strong operating leverage, with adjusted operating income growing 2.6x greater than sales. SG&A expenses as a percentage of gross profit dollars improved to 63% (56% for EC), and the company expects this to fall below 60% by the end of FY27. Inventory days improved significantly, and return on working capital exceeded the near-term target of 16%. The company is prioritizing funding accelerating growth and supporting its dividend, while also making progress towards its 3x leverage target by year-end CY26.

    06

    Supply Chain Solutions and Integrated Offerings

    The Supply Chain Solutions business is gaining momentum, with large OEM customers increasingly turning to Avnet for complex supply chain navigation. Avnet Integrated Solutions provides complete technology solutions, including system assembly and rack integration, supporting growth in data center markets. These differentiated capabilities highlight Avnet's value beyond traditional component distribution and its participation in high-growth areas where complexity is increasing.

    AI-generated summary of the company’s earnings call. Not investment advice.