Newsroom

Avnet Reports Second Quarter Fiscal 2020 Financial Results

Quarterly sales and EPS in line with guidance

Book to bill metrics at quarter end improved across all regions

Category:

Thursday, January 23, 2020 2:05 pm MST

Dateline:

PHOENIX

Public Company Information:

NASDAQ:
AVT
"Our cash flow from operations for the last four quarters now totals $948 million. Our capital allocation this quarter continued to reflect our strategy of using cash to grow the business through acquisition, returning cash to shareholders and managing our debt during the slowdown."

PHOENIX--(BUSINESS WIRE)--Avnet, Inc. (Nasdaq: AVT) today announced results for its second fiscal quarter ended December 28, 2019.

Second Quarter Key Financial Highlights:

  • Sales of $4.5 billion were in line with guidance.
  • GAAP diluted EPS from continuing operations totaled $0.05, compared with $0.33 a year ago.
    • Non-GAAP adjusted diluted EPS totaled $0.40 compared with $1.04 a year ago.
    • Foreign exchange rates negatively impacted adjusted diluted EPS by $0.02.
  • GAAP operating income totaled $46.5 million, compared with $96.1 million a year ago.
    • Adjusted operating income declined 54% year over year to $82.2 million.
  • GAAP operating income margin was 1.0%, compared with 1.9% a year ago.
    • Adjusted operating income margin was 1.8%, compared with 3.5% a year ago.
  • Achieved operating expense reduction goal of $50 million annually.
  • Cash flow from operations totaled $149 million, and totaled $948 million over the trailing four quarter period.
  • Returned $109 million to shareholders with $88 million in share repurchases and $21 million in dividends paid during the quarter.
  • Reduced revolving debt by $144 million with net debt of $1.20 billion at the end of the quarter.

CEO Commentary

“While our second quarter results reflected the ongoing correction the industry has experienced, we saw good signs of stabilization across key geographies,” said Avnet CEO Bill Amelio. “Meanwhile, our transformation initiatives are helping drive significant cost savings and our new way of doing business will keep us nimble and better equipped to serve our customers over the long term. This includes growing our electronics components customer and supplier base while continuing to expand our ecosystem and broaden our reach into new areas.”

Key Financial Metrics

($ in millions, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter Results (GAAP)

 

 

Dec – 19

 

Dec – 18

 

Change Y/Y

 

Sep – 19

 

Change Q/Q

Sales

 

$

4,534.8

 

 

$

5,049.0

 

 

(10.2)

%

 

$

4,630.0

 

 

(2.1)

%

Operating Income

 

 

46.5

 

 

 

96.1

 

 

(51.6)

%

 

 

62.7

 

 

(25.9)

%

Operating Income Margin

 

 

1.0

%

 

 

1.9

%

 

(88)

bps

 

 

1.4

%

 

(34)

bps

Diluted Earnings Per Share

 

$

0.05

 

 

$

0.33

 

 

(84.8)

%

 

$

0.40

 

 

(87.5)

%

Second Quarter Results (Non-GAAP)(1)

 

 

Dec – 19

 

Dec – 18

 

Change Y/Y

 

Sep – 19

 

Change Q/Q

Sales

 

$

4,534.8

 

 

$

5,049.0

 

 

(10.2)

%

 

$

4,630.0

 

 

(2.1)

%

Adjusted Operating Income

 

 

82.2

 

 

 

178.8

 

 

(54.0)

%

 

 

107.4

 

 

(23.5)

%

Adjusted Operating Income Margin

 

 

1.8

%

 

 

3.5

%

 

(173)

bps

 

 

2.3

%

 

(51)

bps

Adjusted Diluted Earnings Per Share

 

$

0.40

 

 

$

1.04

 

 

(61.5)

%

 

$

0.60

 

 

(33.3)

%

Segment and Geographical Mix

 

 

Dec – 19

 

Dec – 18

 

Change Y/Y

 

Sep – 19

 

Change Q/Q

Electronic Components (EC) Sales

 

$

4,203.6

 

 

$

4,680.7

 

 

(10.2)

%

 

$

4,294.2

 

 

(2.1)

%

EC Operating Income Margin

 

 

2.2

%

 

 

3.4

%

 

(117)

bps

 

 

2.6

%

 

(39)

bps

Farnell Sales

 

$

331.2

 

 

$

368.3

 

 

(10.1)

%

 

$

335.8

 

 

(1.4)

%

Farnell Operating Income Margin

 

 

6.0

%

 

 

10.8

%

 

(473)

bps

 

 

6.5

%

 

(46)

bps

Americas Sales

 

$

1,186.6

 

 

$

1,300.4

 

 

(8.8)

%

 

$

1,215.8

 

 

(2.4)

%

EMEA Sales

 

 

1,425.8

 

 

 

1,668.6

 

 

(14.6)

%

 

 

1,470.9

 

 

(3.1)

%

Asia Sales

 

 

1,922.4

 

 

 

2,080.0

 

 

(7.6)

%

 

 

1,943.3

 

 

(1.1)

%

________________________

(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.

CFO Commentary

“Progress on key goals to manage costs and generate cash continued during the quarter as we generated $149 million of cash flow from operations and completed our $50 million annual cost reduction initiative,” stated Tom Liguori, Avnet Chief Financial Officer. “Our cash flow from operations for the last four quarters now totals $948 million. Our capital allocation this quarter continued to reflect our strategy of using cash to grow the business through acquisition, returning cash to shareholders and managing our debt during the slowdown.”

Additional Second Quarter Fiscal 2020 Highlights and Key Developments

  • Completed the construction of Farnell’s new state-of-the-art distribution center in Europe. This will enable significant SKU expansion as well as cost savings. Products will begin to ship from the center in early 2020.
  • Announced a new IoT Partner Program at the Consumer Electronics Show (CES) this month. The new program enables partners to leverage Avnet’s IoT Connect Platform and its ecosystem of experts to build and scale IoT solutions businesses. The program also enables developers to write to, and sell, solutions in the marketplace.
  • Launched MaaXBoard, a low-cost, production-ready qualified single board computer that is ideal for embedded computing and applications that leverage AI at the edge with reduced cost and time to market. MaaXBoard is based on the NXP i.MX 8M applications processor.
  • Launched Avnet Guardian 100, a new wireless edge module powered by Microsoft Azure Sphere that quickly and securely adds connectivity to existing equipment so that enterprise customers can confidently leverage the benefits of IoT to innovate and deliver a better customer experience.
  • Completed the acquisition of Witekio, which strengthens Avnet’s software and IoT capabilities at the device level.
  • Acquired Phoenics, a well-respected regional distributor that will complement Avnet as it adds additional customers and suppliers.
  • Continued to improve the customer experience by expanding E-payment options in Europe (PayPal) and China (WeChat Pay, Alipay and Union Pay).

Awards Received and Notable Client Wins During the Quarter

  • Added the leader in the 5G revolution to the list of customers that relies on Avnet for complete supply chain and new product solutions.
  • Added a global innovator of aerospace and defense solutions to Avnet’s customer base.
  • Named Avnet Asia Pacific a Top 10 International Branded Distributor for the 18th consecutive year by Electronics Supply & Manufacturing-China (ESM-China).
  • Panasonic named Farnell the “2019 High Service Distributor of the Year” (EMEA).
  • Received several awards for Farnell including “Innovator of the Year in 2019” (Germany) from Design & Elektronik magazine.
  • Received the Gold Superior Performance Award for Outstanding performance in OTD (on time delivery) and Quality by a leading aerospace and defense customer.

Outlook for the Third Quarter of Fiscal 2020 Ending on March 28, 2020

 

 

 

 

 

 

 

Guidance Range

 

Midpoint

Sales

 

$4.1B – $4.5B

 

$4.3B

Non-GAAP Diluted EPS(1)

 

$0.38 – $0.48

 

$0.43

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.

The above guidance is based upon market conditions existing as of today, and excludes amortization of intangibles, restructuring, integration, and other expenses and certain income tax adjustments. The above guidance assumes 100 million average diluted shares outstanding and average currency exchange rates are as shown below:

 

 

 

 

 

 

 

 

 

Q3 Fiscal

 

 

 

 

 

 

2020

 

Q2 Fiscal

 

Q3 Fiscal

 

 

Guidance

 

2020

 

2019

Euro

 

$1.11

 

$1.11

 

$1.14

GBP

 

$1.30

 

$1.28

 

$1.30

Today’s Conference Call and Webcast Details

Avnet will host a quarterly teleconference and webcast today at 2:30 p.m. MST/4:30 p.m. EST to discuss the financial results and provide a business update. To participate in the live call, dial 877-407-8112 or 201-689-8840. The slides can be accessed via Avnet’s Investor Relations web page at: www.ir.avnet.com, or from the following link Avnet Earnings Call Webcast and Slides. A replay of the conference call will be available for 30 days, through February 22 at 5:00 p.m. ET, and can be accessed by dialing: 877-660-6853 or 201-612-7415 and using Conference ID: 13697491. The 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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarters Ended

 

Six Months Ended

 

 

December 28,

 

December 29,

 

December 28,

 

December 29,

 

 

2019

 

2018

 

2019

 

2018

 

 

(Thousands, except per share data)

Sales

 

$

4,534,806

 

$

5,048,980

 

$

9,164,814

 

$

10,138,859

Cost of sales

 

 

4,009,193

 

 

4,418,947

 

 

8,095,362

 

 

8,872,077

Gross profit

 

 

525,613

 

 

630,033

 

 

1,069,452

 

 

1,266,782

Selling, general and administrative expenses

 

 

464,873

 

 

471,723

 

 

921,377

 

 

946,868

Restructuring, integration and other expenses

 

 

14,265

 

 

62,260

 

 

38,863

 

 

77,048

Operating income

 

 

46,475

 

 

96,050

 

 

109,212

 

 

242,866

Other (expense) income, net

 

 

(485)

 

 

2,584

 

 

4,447

 

 

692

Interest and other financing expenses, net

 

 

(33,904)

 

 

(33,718)

 

 

(67,535)

 

 

(63,811)

Income from continuing operations before taxes

 

 

12,086

 

 

64,916

 

 

46,124

 

 

179,747

Income tax expense (benefit)

 

 

6,870

 

 

28,141

 

 

(844)

 

 

59,443

Income from continuing operations, net of tax

 

 

5,216

 

 

36,775

 

 

46,968

 

 

120,304

Loss from discontinued operations, net of tax

 

 

(1,548)

 

 

(374)

 

 

(1,548)

 

 

(179)

Net income

 

$

3,668

 

$

36,401

 

$

45,420

 

$

120,125

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share - basic:

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.05

 

$

0.33

 

$

0.46

 

$

1.07

Discontinued operations

 

 

(0.01)

 

 

(0.00)

 

 

(0.01)

 

 

(0.01)

Net income per share basic

 

$

0.04

 

$

0.33

 

$

0.45

 

$

1.06

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share - diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.05

 

$

0.33

 

$

0.45

 

$

1.06

Discontinued operations

 

 

(0.01)

 

 

(0.00)

 

 

(0.01)

 

 

(0.01)

Net income per share diluted

 

$

0.04

 

$

0.33

 

$

0.44

 

$

1.05

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used to compute earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

100,431

 

 

110,332

 

 

101,781

 

 

112,796

Diluted

 

 

101,302

 

 

111,462

 

 

102,839

 

 

113,967

Cash dividends paid per common share

 

$

0.21

 

$

0.20

 

$

0.42

 

$

0.40

 

 

 

 

 

 

 

 

 

 

 

 

 

AVNET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

December 28,

 

June 29,

 

 

2019

 

2019

 

 

(Thousands)

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

488,810

 

$

546,105

Receivables, net

 

 

2,977,773

 

 

3,168,369

Inventories

 

 

2,908,575

 

 

3,008,424

Prepaid and other current assets

 

 

161,343

 

 

153,438

Total current assets

 

 

6,536,501

 

 

6,876,336

Property, plant and equipment, net

 

 

431,410

 

 

452,171

Goodwill

 

 

916,058

 

 

876,728

Intangible assets, net

 

 

119,186

 

 

143,520

Operating lease assets

 

 

274,376

 

 

Other assets

 

 

247,581

 

 

215,801

Total assets

 

$

8,525,112

 

$

8,564,556

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Short-term debt

 

$

492,223

 

$

300,538

Accounts payable

 

 

1,802,484

 

 

1,864,342

Accrued expenses and other

 

 

398,486

 

 

413,696

Short-term operating lease liabilities

 

 

52,057

 

 

Total current liabilities

 

 

2,745,250

 

 

2,578,576

Long-term debt

 

 

1,194,115

 

 

1,419,922

Long-term operating lease liabilities

 

 

244,622

 

 

Other liabilities

 

 

383,792

 

 

425,585

Total liabilities

 

 

4,567,779

 

 

4,424,083

Shareholders’ equity

 

 

3,957,333

 

 

4,140,473

Total liabilities and shareholders’ equity

 

$

8,525,112

 

$

8,564,556

 

 

 

 

 

 

 

AVNET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

December 28, 2019

 

December 29, 2018

 

 

(Thousands)

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

45,420

 

$

120,125

Less: Loss from discontinued operations, net of tax

 

 

(1,548)

 

 

(179)

Income from continuing operations

 

 

46,968

 

 

120,304

 

 

 

 

 

 

 

Non-cash and other reconciling items:

 

 

 

 

 

 

Depreciation

 

 

49,822

 

 

48,124

Amortization

 

 

41,257

 

 

41,220

Amortization of operating lease asset

 

 

31,354

 

 

Deferred income taxes

 

 

(15,518)

 

 

44,857

Stock-based compensation

 

 

14,503

 

 

17,077

Other, net

 

 

20,609

 

 

77,437

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

 

 

 

 

 

 

Receivables

 

 

185,598

 

 

193,520

Inventories

 

 

94,182

 

 

(209,582)

Accounts payable

 

 

(52,711)

 

 

(205,254)

Accrued expenses and other, net

 

 

(71,858)

 

 

(140,495)

Net cash flows provided (used) for operating activities - continuing operations

 

 

344,206

 

 

(12,792)

Net cash flows used for operating activities - discontinued operations

 

 

 

 

(56,284)

Net cash flows provided (used) for operating activities

 

 

344,206

 

 

(69,076)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings (repayments) under accounts receivable securitization, net

 

 

(35,400)

 

 

366,000

Repayments under bank credit facilities and other debt, net

 

 

(1,376)

 

 

(59,420)

Repayments under senior unsecured credit facility, net

 

 

(1,301)

 

 

(595)

Repurchases of common stock

 

 

(198,630)

 

 

(335,404)

Dividends paid on common stock

 

 

(42,426)

 

 

(44,701)

Other, net

 

 

(4,887)

 

 

15,200

Net cash flows used for financing activities - continuing operations

 

 

(284,020)

 

 

(58,920)

Net cash flows used for financing activities

 

 

(284,020)

 

 

(58,920)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(44,252)

 

 

(70,186)

Acquisitions of businesses, net of cash acquired

 

 

(51,509)

 

 

(62,514)

Other, net

 

 

(13,098)

 

 

963

Net cash flows used for investing activities - continuing operations

 

 

(108,859)

 

 

(131,737)

Net cash flows provided by investing activities - discontinued operations

 

 

 

 

123,473

Net cash flows used for investing activities

 

 

(108,859)

 

 

(8,264)

Effect of currency exchange rate changes on cash and cash equivalents

 

 

(8,622)

 

 

(2,699)

Cash and cash equivalents:

 

 

 

 

 

 

— decrease

 

 

(57,295)

 

 

(138,959)

— at beginning of period

 

 

546,105

 

 

621,125

— at end of period

 

$

488,810

 

$

482,166

 

 

 

 

 

 

 

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 significant 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 its 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

 

December 29,

 

September 29,

 

 

 

2020*

 

2019*

 

2019*

 

 

 

($ in thousands, except per share amounts)

GAAP selling, general and administrative expenses - continuing operations

 

 

$

921,377

 

$

464,873

 

$

456,503

Amortization of intangible assets and other - continuing operations

 

 

 

(41,532)

 

 

(21,454)

 

 

(20,078)

Adjusted operating expenses - continuing operations

 

 

 

879,844

 

 

443,419

 

 

436,426

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income - continuing operations

 

 

$

109,212

 

$

46,475

 

$

62,738

Restructuring, integration and other expenses - continuing operations

 

 

 

38,863

 

 

14,265

 

 

24,598

Amortization of intangible assets and other - continuing operations

 

 

 

41,532

 

 

21,454

 

 

20,078

Adjusted operating income - continuing operations

 

 

 

189,608

 

 

82,194

 

 

107,414

 

 

 

 

 

 

 

 

 

 

 

GAAP income before income taxes - continuing operations

 

 

$

46,124

 

$

12,086

 

$

34,038

Restructuring, integration and other expenses - continuing operations

 

 

 

38,863

 

 

14,265

 

 

24,598

Amortization of intangible assets and other - continuing operations

 

 

 

41,532

 

 

21,454

 

 

20,078

Other expenses - continuing operations

 

 

 

4,002

 

 

4,002

 

 

-

Adjusted income before income taxes - continuing operations

 

 

 

130,521

 

 

51,807

 

 

78,713

 

 

 

 

 

 

 

 

 

 

 

GAAP income tax expense (benefit) - continuing operations

 

 

$

(844)

 

$

6,870

 

$

(7,714)

Restructuring, integration and other expenses - continuing operations

 

 

 

9,617

 

 

3,377

 

 

6,240

Amortization of intangible assets and other - continuing operations

 

 

 

8,199

 

 

3,964

 

 

4,235

Other expenses - continuing operations

 

 

 

740

 

 

740

 

 

-

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

 

 

 

9,540

 

 

(4,071)

 

 

13,611

Adjusted income tax expense - continuing operations

 

 

 

27,252

 

 

10,880

 

 

16,372

 

 

 

 

 

 

 

 

 

 

 

GAAP income - continuing operations

 

 

$

46,968

 

$

5,216

 

$

41,752

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

 

 

 

29,246

 

 

10,888

 

 

18,358

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

 

 

 

33,333

 

 

17,490

 

 

15,843

Other expenses (net of tax) - continuing operations

 

 

 

3,262

 

 

3,262

 

 

-

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

 

 

 

(9,540)

 

 

4,071

 

 

(13,611)

Adjusted income - continuing operations

 

 

 

103,269

 

 

40,928

 

 

62,341

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted earnings per share - continuing operations

 

 

$

0.45

 

$

0.05

 

$

0.40

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

 

 

 

0.29

 

 

0.11

 

 

0.18

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

 

 

 

0.32

 

 

0.17

 

 

0.15

Other expenses (net of tax) - continuing operations

 

 

 

0.03

 

 

0.03

 

 

-

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

 

 

 

(0.09)

 

 

0.04

 

 

(0.13)

Adjusted diluted EPS - continuing operations

 

 

 

1.00

 

 

0.40

 

 

0.60

________________________

* May not foot due to rounding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

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 in constant currency is defined as organic sales (as defined above) excluding the impact of changes in foreign currency exchange rates.

The following table presents reported and organic sales growth rates for the second quarter of fiscal 2020 compared to fiscal 2019.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second 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

 

 

2020

 

2019

 

% Change

 

Currency

 

 

(Dollars in millions)

Avnet

 

$

4,534.8

 

$

5,049.0

 

(10.2)

%

 

(9.4)

%

Avnet by region

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

1,186.6

 

$

1,300.4

 

(8.8)

%

 

(8.8)

%

EMEA

 

 

1,425.8

 

 

1,668.6

 

(14.6)

 

 

(12.1)

 

Asia

 

 

1,922.4

 

 

2,080.0

 

(7.6)

 

 

(7.7)

 

Avnet by operating group

 

 

 

 

 

 

 

 

 

 

 

 

EC

 

$

4,203.6

 

$

4,680.7

 

(10.2)

%

 

(9.5)

%

Farnell

 

 

331.2

 

 

368.3

 

(10.1)

 

 

(9.1)

 

Historical Segment Financial Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year 2020

 

 

 

 

 

Quarters Ended

 

 

 

 

Second Quarter

 

First Quarter

 

 

Fiscal Year

 

December 28,

 

September 28,

 

 

2020*

 

2019

 

2019

 

 

(in millions)

Sales:

 

 

 

 

 

 

 

 

 

Electronic Components

 

$

8,497.8

 

$

4,203.6

 

$

4,294.2

Farnell

 

 

667.0

 

 

331.2

 

 

335.8

Avnet sales

 

$

9,164.8

 

$

4,534.8

 

$

4,630.0

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

Electronic Components

 

$

205.4

 

$

93.1

 

$

112.3

Farnell

 

 

41.8

 

 

20.0

 

 

21.8

 

 

 

247.2

 

 

113.1

 

 

134.1

Corporate expenses

 

 

(57.6)

 

 

(30.9)

 

 

(26.7)

Restructuring, integration and other expenses

 

 

(38.9)

 

 

(14.3)

 

 

(24.6)

Amortization of acquired intangible assets and other

 

 

(41.5)

 

 

(21.4)

 

 

(20.1)

Avnet operating income

 

$

109.2

 

$

46.5

 

$

62.7

 

 

 

 

 

 

 

 

 

 

Sales by geographic area:

 

 

 

 

 

 

 

 

 

Americas

 

$

2,402.3

 

$

1,186.6

 

$

1,215.8

EMEA

 

 

2,896.8

 

 

1,425.8

 

 

1,470.9

Asia

 

 

3,865.7

 

 

1,922.4

 

 

1,943.3

Avnet sales

 

$

9,164.8

 

$

4,534.8

 

$

4,630.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

________________________

* 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 third quarter of fiscal 2020.

 

 

 

 

 

 

 

 

 

Low End of

 

High End of

 

 

Guidance Range

 

Guidance Range

 

 

 

 

 

 

 

Adjusted diluted earnings per share guidance

 

$

0.38

 

$

0.48

Restructuring, integration and other expense (net of tax)

 

 

(0.12)

 

 

(0.06)

Amortization of intangibles and other (net of tax)

 

 

(0.18)

 

 

(0.15)

Income tax expense adjustments

 

 

(0.05)

 

 

0.05

GAAP diluted earnings per share guidance

 

$

0.03

 

$

0.32

 

Contact:

Investor Relations Contacts

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

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

Media Relations Contact

Jeanne Forbis, 480-643-7499
jeanne.forbis@avnet.com

Multimedia Files:

Preview image

$Cashtags