Avnet Reports 5.3% Revenue Growth but Declines in Net Income in Q1 Fiscal 2026

Avnet, Inc. reported its financial results for the first quarter of fiscal 2026, revealing a revenue increase of 5.3% to $5.90 billion, up from $5.60 billion in the same period last year. The company's gross profit rose to $614.8 million, reflecting a slight increase of 1.2% year-over-year. However, net income decreased to $51.7 million, or $0.61 per diluted share, compared to $59.0 million, or $0.66 per diluted share, in the prior year. The decline in net income was attributed to higher selling, general, and administrative expenses, which increased by 5.9% to $464.4 million, and a higher effective tax rate of 32.6%, up from 21.1% in the previous year.

In terms of operational performance, Avnet's Electronic Components segment generated $5.50 billion in sales, a 4.6% increase from the prior year, driven primarily by demand in the Asia region. Conversely, the Farnell segment saw a more significant growth of 14.9%, reaching $398.9 million, largely due to increased demand for single board computers and electronic components. The company noted that while sales improved in the Americas and Asia, the EMEA region experienced a slight decline.

Avnet's balance sheet showed total assets of $12.41 billion as of September 27, 2025, an increase from $12.12 billion at the end of the previous fiscal year. The company’s total liabilities also rose to $7.57 billion, up from $7.11 billion, primarily due to an increase in long-term debt, which now stands at $2.80 billion. The company issued $650 million in convertible senior notes during the quarter, with net proceeds used to reduce existing debt and repurchase shares. The total number of shares outstanding decreased to 81.33 million, reflecting the company's ongoing share repurchase program.

Looking ahead, Avnet anticipates a modest sales increase of approximately 2% in the second quarter of fiscal 2026 compared to the first quarter. The company continues to navigate challenges in the electronic components market, including elevated customer inventory levels and fluctuating demand. Management remains focused on strategic initiatives to enhance operational efficiency and mitigate the impacts of market volatility, including potential adjustments to inventory levels and supply chain management.

Overall, while Avnet experienced revenue growth in the first quarter, the decline in net income and rising expenses highlight the ongoing challenges in the electronic components industry. The company’s proactive measures, including debt management and share repurchases, aim to position it favorably for future growth amidst a fluctuating market landscape.