Avnet Fiscal Q4 2026 Earnings: Record Sales Lift Operating Margins

Avnet (Nasdaq: AVT) reported fiscal Q4 2026 revenue of $8.30 billion, up 47.7% year over year, while diluted EPS increased to $1.49 from $0.07. For the quarter ended June 27, 2026, growth extended across every Electronic Components region and Farnell, and adjusted operating margin reached 3.8%; however, full-year operating cash flow was negative as working capital absorbed cash.

Core financial results

Quarterly revenue also increased 16.5% sequentially, setting a company record. Adjusted operating income grew 122.5% year over year—considerably faster than revenue—while adjusted diluted EPS rose 181.5%.

Gross profit increased slightly more slowly than sales, but operating expenses did not rise at the same pace as revenue. That operating leverage supported substantial expansion in both GAAP and adjusted operating margins.

Adjusted results exclude restructuring, integration and other expenses, acquired intangible amortization, foreign-exchange items and certain tax adjustments, as applicable.

Business and segment performance

Electronic Components generated approximately 94% of total quarterly revenue and remained the primary growth driver. Its revenue rose 49.0%, while its operating margin expanded 107 basis points to 4.1%.

Farnell was smaller but recorded the larger margin improvement: revenue increased 29.4%, and operating margin more than doubled to 9.0%. Geographically, all three reported regions delivered double-digit growth, led by the Americas.

Operating leverage outweighed modest gross-margin compression

Gross margin declined modestly to approximately 10.4% from 10.6%, as gross profit growth of 45.7% trailed revenue growth. Nevertheless, selling, general and administrative expenses increased only about 21.4%, to $547.5 million, allowing more gross profit to flow through to operating income.

This difference explains why GAAP operating margin expanded even though gross margin edged lower. The adjusted margin improvement was also meaningful, but the gap between GAAP and adjusted results remained wide: restructuring, integration and other expenses were $86.5 million, compared with $69.1 million a year earlier. These adjustments accounted for most of the difference between GAAP EPS of $1.49 and adjusted EPS of $2.28.

Cash flow and balance sheet

Avnet’s stronger earnings did not translate into positive operating cash flow for the full fiscal year. Fiscal 2026 operating activities used $280.9 million of cash, compared with providing $724.5 million in fiscal 2025. Receivables absorbed $2.61 billion and inventory absorbed $918.3 million, only partly offset by a $2.61 billion cash contribution from higher accounts payable.

At June 27, 2026, receivables stood at $6.88 billion and inventory at $6.07 billion, both above the prior-year balances. Inventory efficiency improved despite the higher dollar balance: quarterly inventory days declined by six sequential days to 71, with Electronic Components below 65 days and Farnell below 200 days.

Cash and cash equivalents decreased to $155.4 million from $192.4 million. Total debt rose to approximately $3.21 billion from $2.66 billion, driven by short-term debt increasing to $734.0 million, while long-term debt declined to $2.48 billion. During fiscal 2026, Avnet spent $138.3 million on share repurchases and $114.4 million on dividends.

Fiscal Q1 2027 guidance

For the quarter ending October 3, 2026, Avnet expects the sales momentum to continue. The revenue midpoint implies approximately 10% sequential growth and assumes sales increases across all Electronic Components regions and Farnell.

The adjusted EPS outlook also assumes interest expense similar to fiscal Q4 2026. It excludes restructuring, integration and other expenses, foreign-currency gains and losses, and certain income-tax adjustments.

Management perspective

CEO Phil Gallagher said momentum was building across regions, end markets and customer segments. Management pointed to improving demand and accelerating mass-market activity as reasons for its confidence entering fiscal 2027, while emphasizing that profit growth exceeded the pace of sales growth during the quarter.

Risks investors should monitor

• Working-capital demands: Fiscal 2026 produced negative operating cash flow despite higher net income, with receivables and inventory consuming substantial cash. Continued growth without better cash conversion could maintain pressure on liquidity.
• Dependence on operating leverage: Quarterly operating-margin expansion relied on SG&A growing much more slowly than revenue. Gross margin itself declined slightly, making expense discipline important to sustaining profitability.
• Higher short-term borrowing: Cash declined while short-term debt rose sharply from the prior year. This increases the importance of converting receivables and inventory into cash.
• Broad execution embedded in guidance: The fiscal Q1 outlook assumes sequential sales growth across every Electronic Components region and Farnell, so the guidance depends on continued participation across the business rather than one isolated growth source.
• GAAP and adjusted earnings gap: Restructuring and related expenses remained significant, creating a material difference between reported and adjusted profitability.

Summary

Avnet’s fiscal Q4 2026 combined record revenue with broad regional and segment growth, while expense leverage drove operating profit and EPS higher at a faster rate than sales. The next quarter’s guidance calls for another sequential revenue increase, but investors will need to monitor whether stronger earnings begin converting into cash, whether gross margin stabilizes and whether growth remains broad enough to support the projected margin and EPS trajectory.

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