Avnet moved $7.1 billion of revenue through its distribution business over nine months and produced just $9.8 million of operating cash. That is the strange part of a filing that otherwise shows a sharp increase in reported earnings: net income rose 52.8% to $94.3 million, and operating income climbed 40.6%.
The business sold more and earned more. It also converted almost none of that improvement into cash. Operating cash flow was $63.7 million in the comparable nine-month period, making the latest figure an 84.6% decline.
Management attributes the profit growth mainly to higher sales across its EC and Farnell operating groups. Farnell's increase came primarily from volume, not meaningful component-price increases. The margin picture is more restrained: gross margin slipped from 10.5% to 10.4% even as operating margin expanded from 2.3% to 2.9%.
Avnet describes the pressure inside gross profit this way:
"Gross profit for the first nine months of fiscal 2026 increased $225.6 million, or 12.6% from the first nine months of fiscal 2025.This increase in gross profit is primarily due to sales increases in both operating groups previously discussed, partially offset by declines in gross profit margin in the EC operating group, which was driven by a higher percentage of sales coming from the lower margin Asia region and from differences in product and customer mix in the Western regions."
Avnet, Form 10-Q, May 1, 2026
In plain English, volume did the heavy lifting while geography and mix took a small bite out of each sales dollar. The company does not disclose a specific cause for the 84.6% decline in operating cash flow in the supplied discussion.
The balance sheet shows where the cash did not stay. Inventory rose 3.2% to $5.5 billion and accounts receivable increased 4.9% to $5.5 billion, both compared with the prior-year period. Cash fell 29.4% to $202.4 million. Those are observations, not explanations, and they highlight the earnings-to-cash gap.
Avnet also spent more on capital equipment, with capex up 42.2% to $56.8 million. Stock compensation rose 38.5% to $35.7 million, although diluted shares were essentially unchanged at 82.9 million. The cash statement included $85.6 million of dividends during the nine months, the same total as a year earlier.
The filing's second excerpt concerns gross margin:
"For the first nine months of fiscal 2026, gross margin decreased by 37 basis points to 10.4% when compared to the first nine months of fiscal 2025. EC gross profit margin decreased year over year largely due to the factors discussed previously."
Avnet, Form 10-Q, May 1, 2026
Avnet is therefore growing from a thin-margin base, and the latest annual history supplies some context. Revenue fell from $26.5B in fiscal 2023 to $22.2B in fiscal 2025, while operating margin declined from 4.5% to 2.3%. The latest nine months interrupt that pattern on operating income, but not on gross margin.
The stock closed at $95.96 on August 13, down 1.4% that day and up 79.9% over 12 months. At 34.9x earnings, the market context puts more attention on whether higher sales become durable earnings and cash, rather than merely larger transactions passing through the warehouse.
The next report's operating cash flow number will provide a comparison point, starting with whether it has moved materially above or below the latest $9.8 million.
Source: Avnet Form 10-Q filed May 1, 2026, covering the nine months ended March 28, 2026.