Newsroom

Avnet Reports Fourth Quarter and Fiscal 2019 Financial Results

Quarterly sales of $4.7 billion within guidance despite macroeconomic headwinds and tariffs

Fiscal year sales rose 3%, SG&A expenses were reduced by $117 million, or 6%, and cash flow from continuing operations totaled $591 million

Category:

Thursday, August 8, 2019 1:05 pm MST

Dateline:

PHOENIX

Public Company Information:

NASDAQ:
AVT

.@Avnet announced results for Q4 & FY ended June 29, 2019 -- with quarterly sales of $4.7 billion and fiscal year sales up by 3%. Details at: https://ir.avnet.com

PHOENIX--(BUSINESS WIRE)--Avnet, Inc. (Nasdaq: AVT) today announced results for the fourth quarter and fiscal year ended June 29, 2019.

Fiscal Fourth Quarter Key Financial Metrics

  • Sales of $4.7 billion, which were in line with guidance, declined 7.5% from a year ago and 0.4% from the prior quarter. Sales guidance for the fiscal fourth quarter anticipated lower-than-historical seasonality and emerging macroeconomic headwinds across all geographies.
  • GAAP diluted loss per share from continuing operations, which includes $137 million of goodwill impairment expense, totaled $0.33; on an adjusted basis, diluted earnings per share was $0.95.
  • GAAP operating margin of (0.6)%, adjusted operating margin of 3.3%.
  • Selling, general and administrative (SG&A) expenses declined $40.6 million, or 8.1%, over the prior year quarter and benefited from the acceleration of planned cost optimization actions and a disciplined approach to spending while prioritizing investments to drive growth.
  • Cash flow from operations totaled $335 million, up sequentially from $269 million in the fiscal third quarter.
  • Returned $138 million to shareholders with $117 million in stock buybacks and dividends totaling $21 million.
  • Reduced revolving debt by $354 million with net debt of $1.2 billion at the end of the quarter.
  • Recorded a goodwill impairment totaling $137 million related to the Electronic Components operating group as a result of the declining macroeconomic environment and business outlook.
  • For the fiscal year ended June 29, 2019, Avnet generated cash flow from continuing operations totaling $591 million, repurchased nearly 13 million shares (more than 10%) of Avnet stock and reduced SG&A expenses by $117 million, or 6%, compared to a year ago.

CEO Commentary

“Avnet continued to execute well in our fiscal fourth quarter despite rapidly changing market conditions,” said Avnet CEO Bill Amelio. “We are pleased to have delivered revenues within our target range. We did see margin pressure that was greater than anticipated due to mix and the softening of customer demand, which were exacerbated by global trade tensions and associated tariffs. We remain committed to the multi-pronged strategy we laid out at our 2018 Investor Day, which regardless of market fluctuations, promises to deliver superior service, innovation and support to our customers, suppliers and partners, as well as enhance value for our shareholders long term.”

Key Financial Metrics

($ in millions, except per share data)

Fourth Quarter Results (GAAP)(2)

 

 

Jun – 19

 

Jun – 18

 

Change Y/Y

 

Mar – 19

 

Change Q/Q

Sales

 

$

4,680.9

 

 

$

5,059.2

 

 

(7.5)

%

 

$

4,698.8

 

 

(0.4)

%

Operating Income (Loss)

 

 

(30.0)

 

 

 

121.5

 

 

(124.7)

%

 

 

153.1

 

 

(119.6)

%

Operating Income (Loss) Margin

 

 

(0.6)

%

 

 

2.4

%

 

(304)

bps

 

 

3.3

%

 

(390)

bps

Diluted Earnings (Loss) Per Share

 

$

(0.33)

 

 

$

0.49

 

 

(167.3)

%

 

$

0.87

 

 

(137.9)

%

Fourth Quarter Results (Non-GAAP)(1)(2)

 

 

Jun – 19

 

Jun – 18

 

Change Y/Y

 

Mar – 19

 

Change Q/Q

Sales

 

$

4,680.9

 

 

$

5,059.2

 

 

(7.5)

%

 

$

4,698.8

 

 

(0.4)

%

Adjusted Operating Income

 

 

156.3

 

 

 

180.1

 

 

(13.3)

%

 

 

178.1

 

 

(12.3)

%

Adjusted Operating Income Margin

 

 

3.3

%

 

 

3.6

%

 

(22)

bps

 

 

3.8

%

 

(45)

bps

Adjusted Diluted Earnings Per Share

 

$

0.95

 

 

$

0.99

 

 

(4.0)

%

 

$

1.09

 

 

(12.8)

%

Segment and Geographical Mix(2)

 

 

Jun – 19

 

Jun – 18

 

Change Y/Y

 

Mar – 19

 

Change Q/Q

Electronic Components (EC) Sales

 

$

4,337.5

 

 

$

4,668.7

 

 

(7.1)

%

 

$

4,331.3

 

 

0.1

%

EC Operating Income Margin

 

 

3.3

%

 

 

3.4

%

 

(18)

bps

 

 

3.5

%

 

(29)

bps

Farnell Sales

 

$

343.4

 

 

$

390.5

 

 

(12.0)

%

 

$

367.5

 

 

(6.5)

%

Farnell Operating Income Margin

 

 

9.7

%

 

 

11.2

%

 

(153)

bps

 

 

12.4

%

 

(275)

bps

Americas Sales

 

$

1,266.3

 

 

$

1,339.2

 

 

(5.4)

%

 

$

1,297.2

 

 

(2.4)

%

EMEA Sales

 

 

1,638.5

 

 

 

1,779.6

 

 

(7.9)

%

 

 

1,740.9

 

 

(5.9)

%

Asia Sales

 

 

1,776.1

 

 

 

1,940.4

 

 

(8.5)

%

 

 

1,660.7

 

 

7.0

%

______________________

(1)

A reconciliation of non-GAAP financial measures to GAAP financial measures is presented in the “Non-GAAP Financial Information” section of this press release.

(2)

Certain prior year amounts in the Company’s measurement of operating income have been recasted to reflect the adoption of new accounting standards during the first quarter of fiscal 2019.

CFO Commentary

“During the fourth fiscal quarter, we generated strong operating cash flow of $335 million and put the cash to work repurchasing stock and paying a dividend, in accordance with our capital allocation strategy,” stated Tom Liguori, Avnet Chief Financial Officer. “As we continue to monitor the prevailing market conditions, including current inventory corrections, we have pulled forward our three year $245 million cost reduction plan by accelerating $50 million of annual savings and efficiency improvements to be completed by the end of the first quarter of fiscal 2020, while still making investments in key growth areas including IoT and Farnell.”

Additional Fourth Quarter Fiscal 2019 Highlights and Key Developments

  • IoT pipeline rose 5% quarter over quarter to $630 million, and continues to expand to new markets including retail and healthcare.
  • Avnet’s distribution center and warehouse in Chandler, Arizona became an authorized Foreign Trade Zone (FTZ) increasing global logistics efficiency, improving cash flow, reducing customs related fees, and mitigating potential exposure from punitive tariffs that may be imposed on imports.
  • Farnell announced the launch of the new Raspberry Pi 4 Model B Computer, the most powerful Raspberry Pi model ever made.
  • Avnet’s community, Hackster.io reached 1 million members, bringing Avnet’s total community members, when combined with element14, to 1.6 million.
  • At Mobile World Congress Shanghai, Avnet showcased key parts of its end-to-end IoT solution including the highly scalable IoTConnect cloud-based software platform. We also highlighted our IoT connectivity solutions, all of which provide greater security while affording flexible cellular connectivity.
  • Farnell added more than 159,000 SKUs to its e-commerce site, providing customers access to a wider breadth of technology and products.

Awards and Notable Recognition Received During the Quarter

  • Avnet Silica received the Global Partner of the Year award from Xilinx, and was named 2018 EMEA Distributor of the Year from ON Semi.
  • Avnet Integrated was recognized as Supplier of the Year by GIRA and received the Supplier Appreciation and Dedicated Support award from Avaya.
  • Avnet Japan was named Microsoft’s FY19 Distributor MVP.
  • Avnet Abacus was named EMEA Distributor of the Year by both TE Connectivity and Molex.
  • NXP recognized Avnet Asia for delivering the Best Performance in Demand Creation.
  • Recognizing Avnet’s supply chain expertise and pioneering implementation of advanced digital technologies and processes, Supply & Demand Chain Executive magazine selected Avnet as a 2019 SDCE 100 Award recipient.
  • Farnell received the Gold award for Best Global Performance from TDK Epcos, and the Outstanding Performance award from Neutrik.

Outlook for the First Quarter of Fiscal 2020 Ending on September 28, 2019

 

 

Guidance Range

 

Midpoint

Sales

 

$4.4B - $4.7B

 

$4.55B

Non-GAAP Diluted EPS(1)

 

$0.60 - $0.70

 

$0.65

Estimated Annual Tax Rate

 

19% - 23%

 

21%

______________________

(1)

A reconciliation of non-GAAP guidance to GAAP guidance is presented in the “Non-GAAP Financial Information” section of this press release.

Avnet’s first quarter fiscal 2020 guidance reflects a sequential decline in sales in the Americas and EMEA regions and stable business trends in Asia, and continued pricing pressure in all businesses. It also reflects a full quarter of industry slowing, compared with a partial quarter of slowing in the immediately preceding quarter (4QFY19).

The above guidance is based upon market conditions existing as of today, and excludes any acquisitions, results of discontinued operations, amortization of intangibles, accelerated depreciation, any potential restructuring, integration, and other expenses and certain income tax adjustments including certain impacts of the recent tax law changes in the U.S. The above guidance also excludes any potential impact from recently announced U.S. tariffs on certain goods imported from China. The above guidance assumes 104 million average diluted shares outstanding and average U.S. Dollar to Euro and GBP currency exchange rates are as shown below:

 

 

 

Q1 Fiscal

 

 

 

 

 

 

2020

 

Q4 Fiscal

 

Q1 Fiscal

 

 

Guidance

 

2019

 

2019

USD to Euro

 

$1.12

 

$1.12

 

$1.16

USD to GBP

 

$1.23

 

$1.29

 

$1.30

Today’s Conference Call and Webcast Details

Avnet will host a quarterly teleconference and webcast today at 1:30 p.m. PDT/4:30 p.m. EDT to discuss the financial results and provide a corporate update. To participate in the live call, dial 877-407-8112 or 201-689-8840. To access the slides, visit Avnet’s Investor Relations web page at: https://ir.avnet.com/. A replay of the conference call will be available for 30 days, through September 9 at 5:00 p.m. EDT, and can be accessed by dialing: 877-660-6853 or 201-612-7415 and using Conference ID: 13692882. The live webcast will be available for 90 days.

Forward-Looking Statements

This document contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on management’s current expectations and are subject to uncertainty and changes in facts and circumstances. The forward-looking statements herein include statements addressing future financial and operating results of Avnet and may include words such as “will,” “anticipate,” “intend,” “estimate,” “forecast,” “expect,” “feel,” “believe,” “should,” and other words and terms of similar meaning in connection with any discussions of future operating or financial performance, business prospects or market conditions. Actual results may differ materially from the expectations contained in the forward-looking statements.

The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: Avnet’s ability to retain and grow market share and to generate additional cash flow, risks associated with any acquisition activities and the successful integration of acquired companies, implementing and maintaining IT systems, supplier losses and changes to supplier programs, an industry down-cycle in electronic components including semiconductors, declines in sales, changes in business conditions and the economy in general, changes in market demand and pricing pressures, any material changes in the allocation of product or price discounts by suppliers, and other competitive and/or regulatory factors affecting the businesses of Avnet generally.

More detailed information about these and other factors is set forth in Avnet’s filings with the Securities and Exchange Commission, including Avnet’s reports on Form 10-K, Form 10-Q and Form 8-K. Except as required by law, Avnet is under no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

About Avnet

Avnet is a global technology solutions provider with an extensive ecosystem delivering design, product, marketing and supply chain expertise for customers at every stage of the product lifecycle. We transform ideas into intelligent solutions, reducing the time, cost and complexities of bringing products to market. For nearly a century, Avnet has helped its customers and suppliers around the world realize the transformative possibilities of technology. Learn more about Avnet at www.avnet.com. (AVT_IR)

AVNET, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarters Ended

 

Years Ended

 

 

June 29,

 

June 30,

 

June 29,

 

June 30,

 

 

2019

 

2018

 

2019

 

2018

 

 

(Thousands, except per share data)

Sales

 

$

4,680,909

 

$

5,059,220

 

$

19,518,592

 

$

19,036,892

Cost of sales

 

 

4,085,784

 

 

4,400,588

 

 

17,032,490

 

 

16,509,708

Gross profit

 

 

595,125

 

 

658,632

 

 

2,486,102

 

 

2,527,184

Selling, general and administrative expenses

 

 

459,611

 

 

500,257

 

 

1,874,651

 

 

1,991,401

Goodwill Impairment expense

 

 

137,396

 

 

 

 

137,396

 

 

181,440

Restructuring, integration and other expenses

 

 

28,158

 

 

36,848

 

 

108,144

 

 

145,125

Operating (loss) income

 

 

(30,040)

 

 

121,527

 

 

365,911

 

 

209,218

Other income (expense), net

 

 

1,807

 

 

(3,526)

 

 

11,231

 

 

28,606

Interest and other financing expenses, net

 

 

(34,810)

 

 

(24,475)

 

 

(134,874)

 

 

(92,747)

Income (loss) from continuing operations before taxes

 

 

(63,043)

 

 

93,526

 

 

242,268

 

 

145,077

Income tax (benefit) expense

 

 

(27,915)

 

 

35,787

 

 

62,157

 

 

287,966

Income (loss) from continuing operations, net of tax

 

 

(35,128)

 

 

57,739

 

 

180,111

 

 

(142,889)

Income (loss) from discontinued operations, net of tax

 

 

3,292

 

 

876

 

 

(3,774)

 

 

(13,535)

Net (loss) income

 

$

(31,836)

 

$

58,615

 

$

176,337

 

$

(156,424)

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share - basic:

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.33)

 

$

0.49

 

$

1.64

 

$

(1.19)

Discontinued operations

 

 

0.03

 

 

0.01

 

 

(0.03)

 

 

(0.11)

Net (loss) income per share basic

 

$

(0.30)

 

$

0.50

 

$

1.61

 

$

(1.30)

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share - diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.33)

 

$

0.49

 

$

1.63

 

$

(1.19)

Discontinued operations

 

 

0.03

 

 

0.01

 

 

(0.04)

 

 

(0.11)

Net (loss) income per share diluted

 

$

(0.30)

 

$

0.50

 

$

1.59

 

$

(1.30)

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used to compute earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

105,615

 

 

116,948

 

 

109,820

 

 

119,909

Diluted

 

 

105,615

 

 

117,863

 

 

110,798

 

 

119,909

Cash dividends paid per common share

 

$

0.20

 

$

0.19

 

$

0.80

 

$

0.74

AVNET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

June 29,

 

June 30,

 

 

2019

 

2018

 

 

(Thousands)

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

546,105

 

$

621,125

Receivables, net

 

 

3,168,369

 

 

3,641,139

Inventories

 

 

3,008,424

 

 

3,141,822

Prepaid and other current assets

 

 

153,438

 

 

206,513

Total current assets

 

 

6,876,336

 

 

7,610,599

Property, plant and equipment, net

 

 

452,171

 

 

522,909

Goodwill

 

 

876,728

 

 

980,872

Intangible assets, net

 

 

143,520

 

 

219,913

Other assets

 

 

215,801

 

 

262,552

Total assets

 

$

8,564,556

 

$

9,596,845

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Short-term debt

 

$

300,538

 

$

165,380

Accounts payable

 

 

1,864,342

 

 

2,269,478

Accrued expenses and other

 

 

413,696

 

 

534,603

Total current liabilities

 

 

2,578,576

 

 

2,969,461

Long-term debt

 

 

1,419,922

 

 

1,489,219

Other liabilities

 

 

425,585

 

 

453,084

Total liabilities

 

 

4,424,083

 

 

4,911,764

Shareholders’ equity

 

 

4,140,473

 

 

4,685,081

Total liabilities and shareholders’ equity

 

$

8,564,556

 

$

9,596,845

AVNET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

Years Ended

 

 

June 29, 2019

 

June 30, 2018

 

 

(Thousands)

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

176,337

 

$

(156,424)

Less: Loss from discontinued operations, net of tax

 

 

(3,774)

 

 

(13,535)

Income (loss) from continuing operations

 

 

180,111

 

 

(142,889)

 

 

 

 

 

 

 

Non-cash and other reconciling items:

 

 

 

 

 

 

Depreciation

 

 

97,160

 

 

143,397

Amortization

 

 

83,682

 

 

91,475

Deferred income taxes

 

 

33,801

 

 

(87,141)

Stock-based compensation

 

 

30,098

 

 

23,990

Goodwill impairment expense

 

 

137,396

 

 

181,440

Asset impairment expense

 

 

54,687

 

 

5,538

Other, net

 

 

(21,265)

 

 

43,845

Changes in (net of effects from businesses acquired and divested):

 

 

 

 

 

 

Receivables

 

 

464,981

 

 

(296,175)

Inventories

 

 

81,929

 

 

(308,663)

Accounts payable

 

 

(377,855)

 

 

409,608

Accrued expenses and other, net

 

 

(173,671)

 

 

189,060

Net cash flows provided by operating activities - continuing operations

 

 

591,054

 

 

253,485

Net cash flows used for operating activities - discontinued operations

 

 

(56,284)

 

 

Net cash flows provided by operating activities

 

 

534,770

 

 

253,485

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings (repayments) under accounts receivable securitization, net

 

 

122,300

 

 

(37,000)

Borrowings (repayments) under senior unsecured credit facility, net

 

 

(61,738)

 

 

8,850

Borrowings (repayments) under bank credit facilities and other debt, net

 

 

505

 

 

(97,954)

Repurchases of common stock

 

 

(568,712)

 

 

(323,516)

Dividends paid on common stock

 

 

(87,158)

 

 

(88,255)

Other, net

 

 

12,127

 

 

(4,018)

Net cash flows used for financing activities - continuing operations

 

 

(582,676)

 

 

(541,893)

Net cash flows used for financing activities

 

 

(582,676)

 

 

(541,893)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(122,690)

 

 

(155,873)

Acquisitions of businesses, net of cash acquired

 

 

(56,417)

 

 

(15,254)

Other, net

 

 

30,422

 

 

6,653

Net cash flows used for investing activities - continuing operations

 

 

(148,685)

 

 

(164,474)

Net cash flows provided by investing activities - discontinued operations

 

 

123,473

 

 

236,205

Net cash flows (used) provided by investing activities

 

 

(25,212)

 

 

71,731

Effect of currency exchange rate changes on cash and cash equivalents

 

 

(1,902)

 

 

1,418

Cash and cash equivalents:

 

 

 

 

 

 

— decrease

 

 

(75,020)

 

 

(215,259)

— at beginning of period

 

 

621,125

 

 

836,384

— at end of period

 

$

546,105

 

$

621,125

Non-GAAP Financial Information

In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company also discloses certain non-GAAP financial information including (i) adjusted operating income, (ii) adjusted operating expenses, (iii) adjusted other income (expense), (iv) adjusted income tax expense, (v) adjusted income from continuing operations, (vi) adjusted diluted earnings per share from continuing operations, and (vii) sales adjusted for the impact of acquisitions and other items (as defined in the Organic Sales section of this document).

There are also references to the impact of foreign currency in the discussion of the Company’s results of operations. When the U.S. Dollar strengthens and the stronger exchange rates of the current year are used to translate the results of operations of Avnet’s subsidiaries denominated in foreign currencies, the resulting impact is a decrease in U.S. Dollars of reported results. Conversely, when the U.S. Dollar weakens and the weaker exchange rates of the current year are used to translate the results of operations of Avnet’s subsidiaries denominated in foreign currencies, the resulting impact is an increase in U.S. Dollars of reported results. In the discussion of the Company’s results of operations, results excluding this impact are referred to as “constant currency.” Management believes organic sales and sales in constant currency are useful measures for evaluating current period performance as compared with prior periods and for understanding underlying trends. In order to determine the translation impact of changes in foreign currency exchange rates on sales, income or expense items for subsidiaries reporting in currencies other than the U.S. Dollar, the Company adjusts the average exchange rates used in current periods to be consistent with the average exchange rates in effect during the comparative period.

Management believes that operating income and operating expenses adjusted for restructuring, integration and other expenses, goodwill impairment expense and amortization of acquired intangible assets and other, are useful measures to help investors better assess and understand the Company’s operating performance. This is especially the case when comparing results with previous periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of Avnet’s normal operating results or non-cash in nature. Management analyzes operating income and operating expenses without the impact of these items as well as other income (expense) excluding certain amounts as an indicator of ongoing margin performance and underlying trends in the business. Management also uses these non-GAAP measures to establish operational goals and, in many cases, for measuring performance for compensation purposes. Management measures operating income for our reportable segments excluding restructuring, integration and other expenses, goodwill impairment expense and amortization of acquired intangible assets and other.

Additional non-GAAP metrics management uses is adjusted operating income margin, which is defined as adjusted operating income (as defined above) divided by sales.

Management also believes income tax expense, income from continuing operations and diluted earnings per share from continuing operations adjusted for the impact of the items described above and certain items impacting other income (expense) and income tax expense are useful to investors because they provide a measure of the Company’s net profitability on a more comparable basis to historical periods and provide a more meaningful basis for forecasting future performance. Adjustments to income tax expense and the effective income tax rate include the effect of changes in tax laws including recent tax law changes in the U.S., changes in valuation allowances and unrecognized tax benefits, income tax audit settlements and adjustments to the adjusted interim effective tax rate based upon the expected annual adjusted effective tax rate. Additionally, because of management’s focus on generating shareholder value, of which net profitability is a primary driver, management believes income from continuing operations and diluted earnings per share from continuing operations excluding the impact of these items provides an important measure of the Company’s net profitability for the investing public.

Any analysis of results and outlook on a non-GAAP basis should be used as a complement to, and in conjunction with, results presented in accordance with GAAP. All amounts below relate to Avnet’s continuing operations.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal

 

Quarters Ended

 

 

 

Year to Date

 

June 29,

 

March 30,

 

December 29,

 

September 29,

 

 

 

2019*

 

2019*

 

2019*

 

2018*

 

2018

 

 

 

($ in thousands, except per share amounts)

GAAP selling, general and administrative expenses - continuing operations

 

 

$

1,874,651

 

$

459,611

 

$

468,171

 

$

471,723

 

$

475,146

Amortization of intangible assets and other - continuing operations

 

 

 

(84,257)

 

 

(20,737)

 

 

(22,080)

 

 

(20,513)

 

 

(20,927)

Adjusted operating expenses - continuing operations

 

 

 

1,790,393

 

 

438,872

 

 

446,092

 

 

451,210

 

 

454,219

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income (loss) - continuing operations

 

 

$

365,911

 

$

(30,040)

 

$

153,085

 

$

96,050

 

$

146,816

Restructuring, integration and other expenses - continuing operations

 

 

 

108,144

 

 

28,158

 

 

2,939

 

 

62,260

 

 

14,788

Goodwill impairment expense - continuing operations

 

 

 

137,396

 

 

137,396

 

 

-

 

 

-

 

 

-

Amortization of intangible assets and other - continuing operations

 

 

 

84,257

 

 

20,737

 

 

22,080

 

 

20,513

 

 

20,927

Adjusted operating income - continuing operations

 

 

 

695,708

 

 

156,252

 

 

178,103

 

 

178,823

 

 

182,531

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income (loss) before income taxes- continuing operations

 

 

$

242,268

 

$

(63,043)

 

$

125,563

 

$

64,916

 

$

114,831

Restructuring, integration and other expenses - continuing operations

 

 

 

108,144

 

 

28,158

 

 

2,939

 

 

62,260

 

 

14,788

Goodwill impairment expense - continuing operations

 

 

 

137,396

 

 

137,396

 

 

-

 

 

-

 

 

-

Amortization of intangible assets and other - continuing operations

 

 

 

84,257

 

 

20,737

 

 

22,080

 

 

20,513

 

 

20,927

Other expenses - continuing operations

 

 

 

509

 

 

509

 

 

-

 

 

-

 

 

-

Adjusted income before income taxes - continuing operations

 

 

 

572,574

 

 

123,758

 

 

150,581

 

 

147,689

 

 

150,546

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income tax expense (benefit) - continuing operations

 

 

$

62,157

 

$

(27,915)

 

$

30,628

 

$

28,141

 

$

31,302

Restructuring, integration and other expenses - continuing operations

 

 

 

26,746

 

 

7,455

 

 

306

 

 

15,665

 

 

3,320

Goodwill impairment expense - continuing operations

 

 

 

18,566

 

 

18,566

 

 

-

 

 

-

 

 

-

Amortization of intangible assets and other - continuing operations

 

 

 

17,986

 

 

4,382

 

 

4,747

 

 

4,379

 

 

4,478

Other expenses - continuing operations

 

 

 

57

 

 

57

 

 

-

 

 

 

 

 

 

Income tax (expense) benefit items, net - continuing operations

 

 

 

(8,143)

 

 

20,896

 

 

(4,059)

 

 

(16,742)

 

 

(8,238)

Adjusted income tax expense - continuing operations

 

 

 

117,369

 

 

23,441

 

 

31,622

 

 

31,443

 

 

30,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income (loss) - continuing operations

 

 

$

180,111

 

$

(35,128)

 

$

94,935

 

$

36,775

 

$

83,529

Restructuring, integration and other expenses (net of tax) - continuing operations

 

 

 

81,398

 

 

20,703

 

 

2,633

 

 

46,595

 

 

11,468

Goodwill impairment expense (net of tax) - continuing operations

 

 

 

118,830

 

 

118,830

 

 

-

 

 

-

 

 

-

Amortization of intangible assets and other (net of tax) - continuing operations

 

 

 

66,271

 

 

16,355

 

 

17,333

 

 

16,134

 

 

16,449

Other expenses (net of tax) - continuing operations

 

 

 

452

 

 

452

 

 

-

 

 

-

 

 

-

Income tax expense (benefit) items, net - continuing operations

 

 

 

8,143

 

 

(20,896)

 

 

4,059

 

 

16,742

 

 

8,238

Adjusted income - continuing operations

 

 

 

455,205

 

 

100,316

 

 

118,960

 

 

116,246

 

 

119,684

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted earnings (loss) per share - continuing operations

 

 

$

1.63

 

$

(0.33)

 

$

0.87

 

$

0.33

 

$

0.72

Restructuring, integration and other expenses (net of tax) - continuing operations

 

 

 

0.74

 

 

0.20

 

 

0.02

 

 

0.42

 

 

0.10

Goodwill impairment expense (net of tax) - continuing operations

 

 

 

1.07

 

 

1.13

 

 

-

 

 

-

 

 

-

Amortization of intangible assets and other (net of tax) - continuing operations

 

 

 

0.60

 

 

0.15

 

 

0.16

 

 

0.14

 

 

0.14

Other expenses (net of tax) - continuing operations

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

Income tax expense (benefit) items, net - continuing operations

 

 

 

0.07

 

 

(0.20)

 

 

0.04

 

 

0.15

 

 

0.07

Adjusted diluted EPS - continuing operations

 

 

 

4.11

 

 

0.95

 

 

1.09

 

 

1.04

 

 

1.03

______________________

* May not foot/cross foot due to rounding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal

 

Quarters Ended

 

 

 

Year to Date

 

June 30,

 

March 31,

 

December 30,

 

September 30,

 

 

 

2018*

 

2018*

 

2018*

 

2017*

 

2017*

 

 

 

($ in thousands, except per share amounts)

GAAP selling, general and administrative expenses - continuing operations(1)

 

 

$

1,991,401

 

$

500,257

 

$

505,471

 

$

484,082

 

$

501,593

Amortization of intangible assets and other - continuing operations

 

 

 

(91,923)

 

 

(21,736)

 

 

(22,725)

 

 

(21,877)

 

 

(25,585)

Adjusted operating expenses - continuing operations(1)

 

 

 

1,899,478

 

 

478,521

 

 

482,746

 

 

462,204

 

 

476,007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income (loss) - continuing operations(1)

 

 

$

209,218

 

$

121,527

 

$

(58,494)

 

$

81,617

 

$

64,568

Restructuring, integration and other expenses - continuing operations

 

 

 

145,125

 

 

36,848

 

 

25,120

 

 

36,762

 

 

46,394

Goodwill impairment expense - continuing operations

 

 

 

181,440

 

 

-

 

 

181,440

 

 

-

 

 

-

Amortization of intangible assets and other - continuing operations

 

 

 

91,923

 

 

21,736

 

 

22,725

 

 

21,877

 

 

25,585

Adjusted operating income - continuing operations(1)

 

 

 

627,706

 

 

180,111

 

 

170,791

 

 

140,256

 

 

136,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP other income (expense), net - continuing operations(1)

 

 

$

28,606

 

$

(3,526)

 

$

9,862

 

$

3,349

 

$

18,921

Foreign currency (gain) loss and other expenses- continuing operations

 

 

 

(9,762)

 

 

(559)

 

 

137

 

 

546

 

 

(9,886)

Adjusted other income (expense), net - continuing operations(1)

 

 

 

18,844

 

 

(4,085)

 

 

9,999

 

 

3,895

 

 

9,035

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income (loss) before income taxes- continuing operations

 

 

$

145,077

 

$

93,526

 

$

(72,063)

 

$

62,140

 

$

61,474

Restructuring, integration and other expenses - continuing operations

 

 

 

145,125

 

 

36,848

 

 

25,120

 

 

36,762

 

 

46,394

Goodwill impairment expense - continuing operations

 

 

 

181,440

 

 

-

 

 

181,440

 

 

-

 

 

-

Amortization of intangible assets and other - continuing operations

 

 

 

91,923

 

 

21,736

 

 

22,725

 

 

21,877

 

 

25,585

Foreign currency (gain) loss and other expenses- continuing operations

 

 

 

(9,762)

 

 

(559)

 

 

137

 

 

546

 

 

(9,886)

Adjusted income before income taxes - continuing operations

 

 

 

553,803

 

 

151,551

 

 

157,359

 

 

121,325

 

 

123,567

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income tax expense - continuing operations

 

 

$

287,966

 

$

35,787

 

$

243,541

 

$

5,346

 

$

3,292

Restructuring, integration and other expenses - continuing operations

 

 

 

41,460

 

 

9,921

 

 

5,757

 

 

9,004

 

 

16,778

Amortization of intangible assets and other - continuing operations

 

 

 

18,556

 

 

4,376

 

 

4,575

 

 

4,405

 

 

5,200

Foreign currency (gain) loss and other expenses- continuing operations

 

 

 

(3,494)

 

 

(180)

 

 

33

 

 

84

 

 

(3,431)

Income tax (expense) benefit items, net - continuing operations

 

 

 

(218,444)

 

 

(14,549)

 

 

(218,810)

 

 

8,017

 

 

6,898

Adjusted income tax expense - continuing operations

 

 

 

126,044

 

 

35,355

 

 

35,096

 

 

26,856

 

 

28,737

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income (loss) - continuing operations

 

 

$

(142,889)

 

$

57,739

 

$

(315,604)

 

$

56,794

 

$

58,182

Restructuring, integration and other expenses (net of tax) - continuing operations

 

 

 

103,665

 

 

26,927

 

 

19,363

 

 

27,758

 

 

29,616

Goodwill impairment expense (net of tax) - continuing operations

 

 

 

181,440

 

 

-

 

 

181,440

 

 

-

 

 

-

Amortization of intangible assets and other (net of tax) - continuing operations

 

 

 

73,367

 

 

17,360

 

 

18,150

 

 

17,472

 

 

20,385

Foreign currency (gain) loss and other expenses (net of tax) - continuing operations

 

 

 

(6,268)

 

 

(379)

 

 

104

 

 

462

 

 

(6,455)

Income tax expense (benefit) items, net - continuing operations

 

 

 

218,444

 

 

14,549

 

 

218,810

 

 

(8,017)

 

 

(6,898)

Adjusted income - continuing operations

 

 

 

427,759

 

 

116,196

 

 

122,263

 

 

94,469

 

 

94,829

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted earnings (loss) per share - continuing operations

 

 

$

(1.19)

 

$

0.49

 

$

(2.64)

 

$

0.47

 

$

0.47

Restructuring, integration and other expenses (net of tax) - continuing operations

 

 

 

0.86

 

 

0.23

 

 

0.16

 

 

0.23

 

 

0.24

Goodwill impairment expense (net of tax) - continuing operations

 

 

 

1.52

 

 

-

 

 

1.52

 

 

-

 

 

-

Amortization of intangible assets and other (net of tax) - continuing operations

 

 

 

0.61

 

 

0.15

 

 

0.15

 

 

0.14

 

 

0.16

Foreign currency (gain) loss and other expenses (net of tax) - continuing operations

 

 

 

(0.05)

 

 

-

 

 

-

 

 

-

 

 

(0.05)

Income tax expense (benefit) items, net - continuing operations

 

 

 

1.82

 

 

0.12

 

 

1.83

 

 

(0.07)

 

 

(0.06)

Adjusted diluted EPS - continuing operations

 

 

 

3.57

 

 

0.99

 

 

1.02

 

 

0.78

 

 

0.76

______________________

(1) Certain prior year amounts in the Company’s measurement of operating income have been recasted to reflect the adoption of new accounting standards during fiscal 2019.

* May not foot/cross foot due to rounding

Organic Sales

Organic sales is defined as sales adjusted for the impact of significant acquisitions, divestitures and other items by adjusting Avnet’s prior and current (if necessary) periods to include the sales of acquired businesses and exclude the sales of divested businesses as if the acquisitions and divestitures had occurred at the beginning of the earliest period presented. Organic sales is measured on a sales from continuing operations basis. Organic sales in constant currency is defined as organic sales (as defined above) excluding the impact of changes in foreign currency exchange rates.

The following tables present reported and organic sales growth rates for the fourth quarter and full year of fiscal 2019 compared to fiscal 2018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarters Ended

 

 

 

 

 

 

 

 

As Reported

 

 

Sales

 

Sales

 

As Reported

 

and Organic

 

 

as Reported

 

as Reported

 

and

 

Year-Year %

 

 

and Organic

 

and Organic

 

Organic

 

Change in

 

 

Fiscal

 

Fiscal

 

Year-Year

 

Constant

 

 

2019 (1)

 

2018

 

% Change

 

Currency

 

 

(Dollars in millions)

Avnet

 

$

4,680.9

 

$

5,059.2

 

(7.5)

%

 

(5.2)

%

Avnet by region

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

1,266.3

 

$

1,339.2

 

(5.4)

%

 

(5.4)

%

EMEA

 

 

1,638.5

 

 

1,779.6

 

(7.9)

 

 

(2.2)

 

Asia

 

 

1,776.1

 

 

1,940.4

 

(8.5)

 

 

(7.9)

 

Avnet by segment

 

 

 

 

 

 

 

 

 

 

 

 

EC

 

$

4,337.5

 

$

4,668.7

 

(7.1)

%

 

(4.9)

%

Farnell

 

 

343.4

 

 

390.5

 

(12.0)

 

 

(8.8)

 

______________________

(1) Sales from the acquisition of Softweb were not material during fiscal 2019.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Years Ended

 

 

 

 

 

 

 

 

 

 

As Reported

 

 

Sales

 

Sales

 

As Reported

 

and Organic

 

 

as Reported

 

as Reported

 

and

 

Year-Year %

 

 

and Organic

 

and Organic

 

Organic

 

Change in

 

 

Fiscal

 

Fiscal

 

Year-Year

 

Constant

 

 

2019 (1)

 

2018

 

% Change

 

Currency

 

 

(Dollars in millions)

Avnet

 

$

19,518.6

 

$

19,036.9

 

2.5

%

 

4.4

%

Avnet by region

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

5,135.8

 

$

5,011.4

 

2.5

%

 

2.5

%

EMEA

 

 

6,762.9

 

 

6,790.9

 

(0.4)

 

 

4.2

 

Asia

 

 

7,619.9

 

 

7,234.6

 

5.3

 

 

5.8

 

Avnet by segment

 

 

 

 

 

 

 

 

 

 

 

 

EC

 

$

18,060.3

 

$

17,543.6

 

3.0

%

 

4.8

%

Farnell

 

 

1,458.3

 

 

1,493.3

 

(2.4)

 

 

0.5

 

______________________

(1) Sales from the acquisition of Softweb were not material during fiscal 2019.

Sales from suppliers lost as a result of supplier channel changes were $2.3 million, $0.5 million and $3.3 million in the fourth quarter of fiscal 2018 for the Americas, EMEA and Asia regions, respectively.

Sales from suppliers lost as a result of supplier channel changes were $36.8 million, $45.1 million and $45.8 million in fiscal 2018 for the Americas, EMEA and Asia regions, respectively.

Historical Segment Financial Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year 2019

 

 

 

 

Quarters Ended

 

 

 

 

Fourth Quarter

 

Third Quarter

 

Second Quarter

 

First Quarter

 

 

Fiscal Year

 

June 29,

 

March 30,

 

December 29,

 

September 29,

 

 

2019*

 

2019

 

2019

 

2018

 

2018

 

 

(in millions)

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronic Components

 

$

18,060.3

 

$

4,337.5

 

$

4,331.3

 

$

4,680.7

 

$

4,710.8

Farnell

 

 

1,458.3

 

 

343.4

 

 

367.5

 

 

368.3

 

 

379.1

Avnet sales

 

$

19,518.6

 

$

4,680.9

 

$

4,698.8

 

$

5,049.0

 

$

5,089.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronic Components

 

$

614.9

 

$

141.1

 

$

153.3

 

$

158.6

 

$

161.9

Farnell

 

 

159.3

 

 

33.2

 

 

45.7

 

 

39.6

 

 

40.8

 

 

 

774.2

 

 

174.3

 

 

199.0

 

 

198.2

 

 

202.7

Corporate expenses

 

 

(78.5)

 

 

(18.0)

 

 

(20.9)

 

 

(19.4)

 

 

(20.2)

Restructuring, integration and other expenses

 

 

(108.1)

 

 

(28.2)

 

 

(2.9)

 

 

(62.3)

 

 

(14.8)

Goodwill impairment expense

 

 

(137.4)

 

 

(137.4)

 

 

-

 

 

-

 

 

-

Amortization of acquired intangible assets and other

 

 

(84.3)

 

 

(20.7)

 

 

(22.1)

 

 

(20.5)

 

 

(20.9)

Avnet operating income (loss)

 

$

365.9

 

$

(30.0)

 

$

153.1

 

$

96.0

 

$

146.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales by geographic area:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

5,135.8

 

$

1,266.3

 

$

1,297.2

 

$

1,300.4

 

$

1,271.8

EMEA

 

 

6,762.9

 

 

1,638.5

 

 

1,740.9

 

 

1,668.6

 

 

1,714.9

Asia

 

 

7,619.9

 

 

1,776.1

 

 

1,660.7

 

 

2,080.0

 

 

2,103.2

Avnet sales

 

$

19,518.6

 

$

4,680.9

 

$

4,698.8

 

$

5,049.0

 

$

5,089.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year 2018

 

 

 

 

Quarters Ended

 

 

 

 

Fourth Quarter

 

Third Quarter

 

Second Quarter

 

First Quarter

 

 

Fiscal Year

 

June 30,

 

March 31,

 

December 30,

 

September 30,

 

 

2018*

 

2018

 

2018*

 

2017

 

2017

 

 

(in millions)

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronic Components

 

$

17,543.6

 

$

4,668.7

 

$

4,404.1

 

$

4,163.5

 

$

4,307.2

Farnell

 

 

1,493.3

 

 

390.5

 

 

391.0

 

 

358.1

 

 

353.7

Avnet sales

 

$

19,036.9

 

$

5,059.2

 

$

4,795.1

 

$

4,521.6

 

$

4,660.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronic Components

 

$

587.3

 

$

160.1

 

$

157.7

 

$

129.9

 

$

139.6

Farnell

 

 

152.0

 

 

43.7

 

 

42.2

 

 

33.5

 

 

32.6

 

 

 

739.3

 

 

203.8

 

 

199.9

 

 

163.4

 

 

172.2

Corporate expenses(1)

 

 

(111.7)

 

 

(23.8)

 

 

(29.2)

 

 

(23.1)

 

 

(35.6)

Restructuring, integration and other expenses

 

 

(145.1)

 

 

(36.8)

 

 

(25.1)

 

 

(36.8)

 

 

(46.4)

Goodwill impairment expense

 

 

(181.4)

 

 

-

 

 

(181.4)

 

 

-

 

 

-

Amortization of acquired intangible assets and other

 

 

(91.9)

 

 

(21.7)

 

 

(22.7)

 

 

(21.9)

 

 

(25.6)

Avnet operating income (loss)(1)

 

$

209.2

 

$

121.5

 

$

(58.5)

 

$

81.6

 

$

64.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales by geographic area:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

5,011.4

 

$

1,339.2

 

$

1,276.4

 

$

1,210.2

 

$

1,185.5

EMEA

 

 

6,790.9

 

 

1,779.6

 

 

1,812.3

 

 

1,506.0

 

 

1,693.0

Asia

 

 

7,234.6

 

 

1,940.4

 

 

1,706.3

 

 

1,805.4

 

 

1,782.4

Avnet sales

 

$

19,036.9

 

$

5,059.2

 

$

4,795.1

 

$

4,521.6

 

$

4,660.9

______________________

(1) Certain prior year amounts in the Company’s measurement of operating income have been recasted to reflect the adoption of new accounting standards during fiscal 2019.

* May not foot/cross foot due to rounding

Guidance Reconciliation

The following table presents the reconciliation of non-GAAP adjusted diluted earnings per share guidance to the expected GAAP diluted earnings per share guidance for the first quarter of fiscal 2020.

 

 

 

 

 

 

 

 

 

Low End of

 

High End of

 

 

Guidance Range

 

Guidance Range

 

 

 

 

 

 

 

Adjusted diluted earnings per share guidance

 

$

0.60

 

$

0.70

Restructuring, integration and other expense (net of tax)

 

 

(0.24)

 

 

(0.16)

Amortization of intangibles and other (net of tax)

 

 

(0.17)

 

 

(0.15)

Income tax expense adjustments

 

 

(0.05)

 

 

0.05

GAAP diluted earnings per share guidance

 

$

0.14

 

$

0.44

 

Contact:

Investor Relations Contacts

Joe Burke, 480-643-7431
Joseph.Burke@avnet.com

Ina McGuinness, 480-643-7053
investorrelations@avnet.com

Media Relations Contact

Maureen O’Leary, 480-643-7499
Maureen.OLeary@avnet.com