Newsroom

Avnet Reports Third Quarter Fiscal 2018 Results

Strategic Initiatives Continue to Drive Improved Financial Performance

Category:

Thursday, April 26, 2018 4:00 am MST

Dateline:

PHOENIX

Public Company Information:

NYSE:
AVT
"In the March quarter, revenue growth and our cost reduction initiatives combined to drive adjusted operating income margin up 43 basis points sequentially to 3.7%, the highest in four quarters"

PHOENIX--(BUSINESS WIRE)--Avnet, Inc. (NYSE:AVT) today announced results for the third quarter ended March 31, 2018.

Third Quarter Fiscal 2018 Highlights

  • Sales of $4.8 billion increased 6.1% sequentially and 8.0% year over year
    • Excluding supplier program changes, sales grew 7.3% year over year in constant currency
  • GAAP operating margin loss of (1.1%)
    • Non-GAAP adjusted operating income margin improved sequentially to 3.7%
  • GAAP diluted EPS loss of ($2.64) driven by goodwill impairment and tax reform
    • Non-GAAP adjusted diluted EPS of $1.02 exceeded the high end of guidance

CEO Commentary

“This quarter’s performance bolsters our confidence in our plan and execution ability during this important transition year at Avnet,” said Bill Amelio, CEO of Avnet. “We are successfully executing against our key priorities, including building out our unique end-to-end ecosystem, delivering new services and benefits to our evolving customer base, and creating ways to engage with new types of customers at every point in the product lifecycle. As a result, we are seeing both revenue growth and an improvement in our adjusted operating margin.”

 

Key Financial Metrics

($ in millions, except per share data)
   

Third Quarter Results (GAAP)

        Change        
Mar - 18 Mar - 17 Y/Y Dec - 17 Change Q/Q
Sales $ 4,795.1 $ 4,441.9 8.0 % $ 4,521.6 6.1 %
Operating (Loss) Income (54.4) 114.3 (147.6) % 87.0 (162.5) %
Operating (Loss) Income Margin (1.1) % 2.6 % (370) bps 1.9 % (305) bps
Diluted Earnings (Loss) Per Share $ (2.64) $ 0.69 (482.6) % $ 0.47 (661.7) %

Third Quarter Results (Non-GAAP)(1)

Change
Mar - 18 Mar - 17 Y/Y Dec - 17 Change Q/Q
Sales $ 4,795.1 $ 4,441.9 8.0 % $ 4,521.6 6.1 %
Adjusted Operating Income 174.9 172.3 1.5 % 145.7 20.1 %
Adjusted Operating Income Margin 3.7 % 3.9 % (23) bps 3.2 % 43 bps
Adjusted Diluted Earnings Per Share $ 1.02 $ 0.88 15.9 % $ 0.78 30.8 %

Segment and Geographical Mix

Change
Mar - 18 Mar - 17 Y/Y Dec - 17 Change Q/Q
Electronic Components Sales $ 4,404.1 $ 4,090.9 7.7 % $ 4,163.5 5.8 %
EC Operating Income Margin 3.6 % 3.8 % (25) bps 3.1 % 46 bps
Premier Farnell Sales $ 391.0 $ 351.0 11.4 % $ 358.1 9.2 %
PF Operating Income Margin 11.4 % 11.5 % (14) bps 10.0 % 140 bps
Americas Sales $ 1,276.4 $ 1,328.6 (3.9) % $ 1,210.2 5.5 %
EMEA Sales 1,812.3 1,615.9 12.2 % 1,506.0 20.3 %
Asia Sales 1,706.3 1,497.4 14.0 % 1,805.4 (5.5) %

________________________

(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

“In the March quarter, revenue growth and our cost reduction initiatives combined to drive adjusted operating income margin up 43 basis points sequentially to 3.7%, the highest in four quarters,” said Tom Liguori, CFO of Avnet. “While total working capital dollars increased to support our strong growth, net working capital days declined 7 days. As a result, we generated $77 million of cash from operations in the quarter. In addition, we increased our quarterly dividend by 5.5% and repurchased 1.7 million shares returning a total of $93 million of cash to shareholders. As we move into the June quarter our focus on cost management and continued improvement in our net working capital days positions us well for long-term growth in shareholder value.”

Additional Third Quarter Fiscal 2018 Highlights

  • Named a World’s Most Ethical Company for the fifth consecutive year by the Ethisphere Institute
  • Exited the quarter with a strong book-to-bill ratio in all regions, exceeding 1.1 in aggregate
  • Delivered sequential improvement in sales and operating margins in the Americas region
  • Increased digital sales annual run-rate, which now exceeds $850 million
  • Realized 70% of the $120 million annualized cost reduction program in FY18 through Q3
  • Reduced debt by $141 million
  • Accelerated growth with key suppliers, adding 11 new franchises to the Avnet line card
  • Successful implementation of the EMEA upgraded ERP system
  • Recorded $230 million provisional repatriation transition tax liability
  • Recorded $181 million goodwill impairment related to acquisitions prior to fiscal year 2011
 

Outlook for Fourth Quarter of Fiscal 2018 Ending on June 30, 2018

 
   

Guidance Range

   

Midpoint

Sales $4.65B - $4.95B $4.8B
Non-GAAP Diluted EPS(1) $0.91 - $1.01 $0.96
 

(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 excludes any results of discontinued operations, amortization of intangibles, accelerated depreciation, any potential restructuring, integration, and other expenses and certain income tax adjustments. The above guidance assumes 120 million average diluted shares outstanding and an adjusted tax rate of 21% to 25%. In addition, the above guidance assumes that the average U.S. Dollar to Euro currency exchange rate for the fourth quarter of fiscal 2018 is $1.23 to €1.00. This compares with an average exchange rate of $1.10 to the Euro in the fourth quarter of fiscal 2017.

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 ERP systems and transitioning to a global ERP system, supplier losses and changes to supplier programs, an industry down-cycle in 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.

Teleconference and Upcoming Events

Avnet will host a quarterly teleconference today at 11:00 a.m. Eastern Time. Financial information including financial statement reconciliations of non-GAAP to GAAP financial measures will be available through www.ir.avnet.com. Please log onto the site 15 minutes prior to the start of the event to register or download any necessary software. An archive copy of the teleconference will also be available after the call.

For a listing of Avnet’s upcoming events and other information, please visit Avnet’s Investor Relations website at www.ir.avnet.com.

About Avnet

From idea to design and from prototype to production, Avnet supports customers at each stage of a product’s lifecycle. A comprehensive portfolio of design and supply chain services makes Avnet the go-to guide for innovators who set the pace for technological change. 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.

Visit the Avnet Investor Relations website at www.ir.avnet.com or contact us at investorrelations@avnet.com. (AVT_IR)

 
AVNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
    Third Quarters Ended     Nine Months Ended
March 31,     April 1, March 31,     April 1,
2018 2017 2018 2017
(Thousands, except per share data)
Sales $ 4,795,093 $ 4,441,896 $ 13,977,672 $ 12,833,559
Cost of sales   4,141,556   3,811,910   12,109,120   11,094,733
Gross profit 653,537 629,986 1,868,552 1,738,826
Selling, general and administrative expenses 501,378 480,190 1,476,263 1,275,417
Goodwill Impairment expense 181,440 181,440
Restructuring, integration and other expenses   25,120   35,513   108,277   95,382
Operating (loss) income (54,401) 114,283 102,572 368,027
Other income (expense), net 8,384 19,439 24,725 (30,809)
Interest expense   (26,046)   (27,534)   (75,746)   (81,518)
Income (loss) from continuing operations before taxes (72,063) 106,188 51,551 255,700
Income tax expense   243,541   16,268   252,179   65,627
Income (loss) from continuing operations, net of tax (315,604) 89,920 (200,628) 190,073
Income (loss) from discontinued operations, net of tax   (4,462)   181,851   (14,411)   253,759
Net (loss) income $ (320,066) $ 271,771 $ (215,039) $ 443,832
 
Earnings (loss) per share - basic:
Continuing operations $ (2.64) $ 0.70 $ (1.66) $ 1.48
Discontinued operations   (0.04)   1.42   (0.12)   1.98
Net (loss) income per share basic $ (2.68) $ 2.12 $ (1.78) $ 3.46
 
Earnings (loss) per share - diluted:
Continuing operations $ (2.64) $ 0.69 $ (1.66) $ 1.46
Discontinued operations   (0.04)   1.41   (0.12)   1.95
Net (loss) income per share diluted $ (2.68) $ 2.10 $ (1.78) $ 3.41
 
Shares used to compute earnings per share:
Basic   119,601   128,487   120,895   127,973
Diluted   119,601   129,432   120,895   129,847
Cash dividends paid per common share $ 0.19 $ 0.18 $ 0.55 $ 0.52
 
 

AVNET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 
    March 31,     July 1,
2018 2017
(Thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 430,065 $ 836,384
Marketable securities 75,051 281,326
Receivables, net 3,552,531 3,337,624
Inventories 3,261,897 2,824,709
Prepaid and other current assets   305,067   253,765
Total current assets 7,624,611 7,533,808
Property, plant and equipment, net 520,922 519,575
Goodwill 1,026,542 1,148,347
Intangible assets, net 258,267 277,291
Other assets   281,588   220,568
Total assets $ 9,711,930 $ 9,699,589
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt $ 101,979 $ 50,113
Accounts payable 2,091,082 1,861,635
Accrued expenses and other   576,385   542,023
Total current liabilities 2,769,446 2,453,771
Long-term debt 1,488,706 1,729,212
Other liabilities   498,957   334,538
Total liabilities 4,757,109 4,517,521
Shareholders’ equity   4,954,821   5,182,068
Total liabilities and shareholders’ equity $ 9,711,930 $ 9,699,589
 
 
AVNET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
    Nine Months Ended
March 31, 2018     April 1, 2017
(Thousands)
Cash flows from operating activities:
Net (loss) income $ (215,039) $ 443,832
Less: Income (loss) from discontinued operations, net of tax   (14,411)   253,759
Income (loss) from continuing operations (200,628) 190,073
 
Non-cash and other reconciling items:
Depreciation 114,111 63,800
Amortization 69,860 34,185
Deferred income taxes (74,126) (15,562)
Stock-based compensation 18,427 41,778
Goodwill impairment expense 181,440
Other, net 30,305 10,563
Changes in (net of effects from businesses acquired and divested):
Receivables (98,147) (335,617)
Inventories (337,939) 86,103
Accounts payable 180,732 86,120
Accrued expenses and other, net   133,837   (20,977)
Net cash flows provided by operating activities - continuing operations   17,872   140,466
Net cash flows used by operating activities - discontinued operations     (325,096)
Net cash flows provided (used) by operating activities   17,872   (184,630)
 
Cash flows from financing activities:
Issuance of notes, net of issuance costs 296,374
Repayment of notes (530,800)
Repayments under accounts receivable securitization, net (47,000) (492,000)
Repayments under senior unsecured credit facility, net (99,971) (150,000)
Repayments under bank credit facilities and other debt, net (44,293) (18,386)
Borrowings of term loans 530,756
Repayments of term loans (511,358)
Repurchases of common stock (209,466) (124,598)
Dividends paid on common stock (66,198) (66,477)
Other, net   (2,738)   15,838
Net cash flows used for financing activities - continuing operations   (469,666)   (1,050,651)
Net cash flows provided by financing activities - discontinued operations     3,447
Net cash flows used for financing activities   (469,666)   (1,047,204)
 
Cash flows from investing activities:
Purchases of property, plant and equipment (112,217) (107,960)
Acquisitions of businesses, net of cash acquired (18,621) (801,164)
Other, net   7,020   18,404
Net cash flows used for investing activities - continuing operations   (123,818)   (890,720)
Net cash flows provided by investing activities - discontinued operations   153,933   2,235,384
Net cash flows provided by investing activities   30,115   1,344,664
Effect of currency exchange rate changes on cash and cash equivalents 15,360 (15,075)
Cash and cash equivalents:
— (decrease) increase (406,319) 97,755
— at beginning of period   836,384   1,031,478
— at end of period $ 430,065 $ 1,129,233
 

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 other income (expense), (iii) adjusted income tax expense, (iv) adjusted income from continuing operations, (v) adjusted diluted earnings per share, and (vi) 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 “excluding the impact of changes in foreign currency exchange rates” or “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 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 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.

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 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. 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.

 
    Fiscal     Quarters Ended
Year to Date March 31,     December 30,     September 30,
2018* 2018* 2017* 2017*
($ in thousands, except per share amounts)
GAAP operating income (loss) - continuing operations $ 102,572 $ (54,401) $ 87,018 $ 69,955
Restructuring, integration and other expenses - continuing operations 108,277 25,120 36,762 46,394
Goodwill impairment expense - continuing operations 181,440 181,440 - -
Amortization of intangible assets and other - continuing operations   70,187   22,725   21,877   25,585
Adjusted operating income (loss) - continuing operations 462,476 174,884 145,657 141,934
 
GAAP other income (expense), net - continuing operations $ 24,725 $ 8,384 $ 762 $ 15,579
Foreign currency (gain) loss - continuing operations   (9,203)   137   546   (9,886)
Adjusted other income (expense), net - continuing operations 15,521 8,521 1,308 5,692
 
GAAP income (loss) before income taxes- continuing operations $ 51,551 $ (72,063) $ 62,140 $ 61,474
Restructuring, integration and other expenses - continuing operations 108,277 25,120 36,762 46,394
Goodwill impairment expense - continuing operations 181,440 181,440 - -
Amortization of intangible assets and other - continuing operations 70,187 22,725 21,877 25,585
Foreign currency (gain) loss - continuing operations   (9,203)   137   546   (9,886)
Adjusted income (loss) before income taxes - continuing operations 402,251 157,359 121,325 123,567
 
GAAP income tax expense (benefit) - continuing operations $ 252,179 $ 243,541 $ 5,346 $ 3,292
Restructuring, integration and other expenses - continuing operations 31,539 5,757 9,004 16,778
Amortization of intangible assets and other - continuing operations 14,180 4,575 4,405 5,200
Foreign currency (gain) loss - continuing operations (3,314) 33 84 (3,431)
Discrete income tax (expense) benefit items, net - continuing operations   (203,895)   (218,810)   8,017   6,898
Adjusted income tax expense - continuing operations 90,689 35,096 26,856 28,737
 
GAAP income (loss) - continuing operations $ (200,628) $ (315,604) $ 56,794 $ 58,182
Restructuring, integration and other expenses (net of tax) - continuing operations 76,737 19,363 27,758 29,616
Goodwill impairment expense - continuing operations (net of tax) 181,440 181,440 - -
Amortization of intangible assets and other (net of tax) - continuing operations 56,007 18,150 17,472 20,385
Foreign currency (gain) loss (net of tax) - continuing operations (5,889) 104 462 (6,455)
Discrete income tax expense (benefit) items, net - continuing operations   203,895   218,810   (8,017)   (6,898)
Adjusted income (loss) - continuing operations 311,562 122,263 94,469 94,829
 
GAAP diluted earnings (loss) per share - continuing operations $ (1.66) $ (2.64) $ 0.47 $ 0.47
Restructuring, integration and other expenses (net of tax) - continuing operations 0.63 0.16 0.23 0.24
Goodwill impairment expense - continuing operations (net of tax) 1.50 1.52 - -
Amortization of intangible assets and other (net of tax) - continuing operations 0.47 0.15 0.14 0.16
Foreign currency (gain) loss (net of tax) - continuing operations (0.05) - - (0.05)
Discrete income tax expense (benefit) items, net - continuing operations   1.69   1.83   (0.07)   (0.06)
Adjusted diluted EPS - continuing operations 2.58 1.02 0.78 0.76

________________________

* May not foot due to rounding

 
 
        Fiscal Year 2017
Quarters Ended
Fiscal July 1,     April 1,     December 31,     October 1,
2017* 2017* 2017* 2016* 2016*
($ in thousands, except per share amounts)
GAAP selling, general and administrative expenses - continuing operations $ 1,770,627 $ 495,210 $ 480,190 $ 431,555 $ 363,672
Amortization of intangible assets and other - continuing operations   (54,526)   (19,822)   (22,497)   (9,829)   (2,378)
Adjusted operating expenses - continuing operations 1,716,101 475,388 457,693 421,726 361,294
 
GAAP operating income - continuing operations $ 461,400 $ 93,373 $ 114,283 $ 124,230 $ 129,514
Restructuring, integration and other expenses - continuing operations 137,415 42,033 35,513 30,400 29,469
Amortization of intangible assets and other - continuing operations   54,526   19,822   22,497   9,829   2,378
Adjusted operating income - continuing operations 653,341 155,228 172,293 164,459 161,361
 
GAAP other (expense) income, net - continuing operations $ (44,305) $ (13,495) $ 19,439 $ (36,514) $ (13,734)
Unrealized (gain) loss on marketable securities and other - continuing operations 765 14,624 (13,859) - -
Acquisition related FX hedging and financing costs - continuing operations   43,707   - - 32,700 11,007
Adjusted other (expense) income, net - continuing operations 167 1,129 5,580 (3,814) (2,727)
 
GAAP income before income taxes- continuing operations $ 310,404 $ 54,705 $ 106,188 $ 60,968 $ 88,544
Restructuring, integration and other expenses - continuing operations 137,415 42,033 35,513 30,400 29,469
Amortization of intangible assets and other - continuing operations 54,526 19,822 22,497 9,829 2,378
Unrealized (gain) loss on marketable securities and other - continuing operations 765 14,624 (13,859) - -
Acquisition related FX hedging and financing costs - continuing operations   43,707   -   -   32,700   11,007
Adjusted income before income taxes - continuing operations 546,817 131,184 150,339 133,897 131,398
 
GAAP income tax expense (benefit) - continuing operations $ 47,053 $ (18,574) $ 16,268 $ 28,503 $ 20,856
Restructuring, integration and other expenses - continuing operations 45,403 16,324 12,455 7,378 9,246
Amortization of intangible assets and other - continuing operations 14,670 6,654 5,077 2,342 597
Unrealized (gain) loss on marketable securities and other - continuing operations 1,381 6,812 (5,431) - -
Acquisition related FX hedging and financing costs - continuing operations 6,968 - - 4,230 2,738
Discrete income tax benefit (expense) items, net - continuing operations   14,695   14,987   7,712   (9,369)   1,365
Adjusted income tax expense - continuing operations 130,170 26,203 36,081 33,084 34,802
 
GAAP income - continuing operations $ 263,351 $ 73,279 $ 89,920 $ 32,465 $ 67,688
Restructuring, integration and other expenses (net of tax) - continuing operations 92,012 25,709 23,058 23,022 20,223
Amortization of intangible assets and other (net of tax) - continuing operations 39,856 13,168 17,420 7,487 1,781
Unrealized (gain) loss on marketable securities and other (net of tax) - continuing operations (616) 7,812 (8,428) - -
Acquisition related FX hedging and financing costs (net of tax) - continuing operations 36,739 - - 28,470 8,269
Discrete income tax expense (benefit) items, net - continuing operations   (14,695)   (14,987)   (7,712)   9,369   (1,365)
Adjusted income - continuing operations 416,647 104,981 114,258 100,813 96,596
 
GAAP diluted EPS - continuing operations $ 2.05 $ 0.59 $ 0.69 $ 0.25 $ 0.52
Restructuring, integration and other expenses (net of tax) - continuing operations 0.73 0.21 0.18 0.18 0.16
Amortization of intangible assets and other (net of tax) - continuing operations 0.32 0.11 0.14 0.06 0.01
Unrealized (gain) loss on marketable securities and other (net of tax) - continuing operations (0.01) 0.06 (0.07) - -
Acquisition related FX hedging and financing costs (net of tax) - continuing operations 0.28 - - 0.22 0.06
Discrete income tax expense (benefit) items, net - continuing operations   (0.13)   (0.13)   (0.06)   0.07   (0.01)
Adjusted diluted EPS - continuing operations 3.24 0.84 0.88 0.77 0.74

________________________

* May not 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 table presents reported and organic sales growth rates for the third quarter and first nine months of fiscal 2018 compared to fiscal 2017.

 
    Third Quarter Ended     Nine Months Ended
        Organic         Organic
Year-Year % Year-Year %
As Reported Organic Change in As Reported Organic Change in
and Organic Year-Year Constant and Organic Year-Year Constant
Fiscal 2018 % Change Currency Fiscal 2018 % Change Currency
(Dollars in millions)
Avnet $ 4,795.1 8.0 % 2.4 % $ 13,977.7 5.8 % 2.5 %
Avnet by region
Americas $ 1,276.4 (3.9) % (3.9) % $ 3,672.2 (7.9) % (7.9) %
EMEA 1,812.3 12.2 (1.9) 5,011.3 12.8 3.5
Asia 1,706.3 14.0 12.8 5,294.2 10.6 10.6
Avnet by segment
EC $ 4,404.1 7.7 % 2.2 % $ 12,874.9 5.4 % 2.3 %
PF 391.0 11.4 3.5 1,102.8 10.4 5.8
 

The following table presents the reconciliation of reported sales to organic sales for the third quarter and first nine months of fiscal 2017.

 
    Third Quarter    
Ended Nine Months Ended
As Reported Sales as         Organic
and Organic Reported Sales from Sales
Fiscal 2017 Fiscal 2017 Acquisitions (1) Fiscal 2017
(Dollars in millions)
Avnet $ 4,441.9 $ 12,833.6 $ 378.4 $ 13,211.9
Avnet by region
Americas $ 1,328.6 $ 3,831.7 $ 154.5 $ 3,986.1
EMEA 1,615.9 4,261.9 178.9 4,440.8
Asia 1,497.4 4,740.0 45.0 4,785.0
Avnet by segment
EC $ 4,090.9 $ 12,213.4 $ $ 12,213.4
PF 351.0 620.2 378.4 998.5

________________________

(1) Includes Premier Farnell acquired on October 17, 2016, which has operations in each Avnet region.

 

Sales from suppliers lost as a result of supplier channel changes were $52.2 million, $86.0 million and $74.0 million in the third quarter of fiscal 2017 for the Americas, EMEA and Asia regions, respectively compared to sales of $4.0 million, $0.5 million and $2.9 million in the third quarter of fiscal 2018 for the Americas, EMEA and Asia regions, respectively.

 

Historical Segment Financial Information

 
    Fiscal     Third Quarter     Second Quarter     First Quarter
Year to Date March 31, December 30, September 30,
2018* 2018* 2017 2017
(in millions)
Sales:
Electronic Components $ 12,874.9 $ 4,404.1 $ 4,163.5 $ 4,307.2
Premier Farnell   1,102.8   391.0   358.1   353.7
Avnet sales $ 13,977.7 $ 4,795.1 $ 4,521.6 $ 4,660.9
 
Operating income:
Electronic Components $ 427.2 $ 157.7 $ 129.9 $ 139.6
Premier Farnell   114.8   44.4   35.6   34.8
542.0 202.1 165.5 174.4
Corporate expenses (79.5) (27.2) (19.8) (32.4)
Restructuring, integration and other expenses (108.3) (25.1) (36.8) (46.4)
Goodwill impairment expense (181.4) (181.4) - -
Amortization of acquired intangible assets and other   (70.2)   (22.7)   (21.9)   (25.6)
Avnet operating income (loss) $ 102.6 $ (54.4) $ 87.0 $ 70.0
 
Sales by geographic area:
Americas $ 3,672.2 $ 1,276.4 $ 1,210.2 $ 1,185.5
EMEA 5,011.3 1,812.3 1,506.0 1,693.0
Asia   5,294.2   1,706.3   1,805.4   1,782.4
Avnet sales $ 13,977.7 $ 4,795.1 $ 4,521.6 $ 4,660.9

________________________

* May not foot due to rounding

 
 
    Fiscal Year 2017
Quarters Ended
    Fourth Quarter     Third Quarter     Second Quarter     First Quarter
Fiscal Year July 1, April 1, December 31, October 1,
2017 2017 2017 2016 2016
(in millions)
Sales:
Electronic Components $ 16,474.1 $ 4,260.7 $ 4,090.9 $ 4,004.3 $ 4,118.1
Premier Farnell (1)   965.9   345.7   351.0   269.2   -
Avnet sales $ 17,440.0 $ 4,606.4 $ 4,441.9 $ 4,273.6 $ 4,118.1
 
Operating income:
Electronic Components $ 661.0 $ 152.4 $ 156.8 $ 166.7 $ 185.1
Premier Farnell (1)   99.8   35.5   40.3   24.0   -
760.8 187.9 197.1 190.7 185.1
Corporate expenses (2) (107.5) (32.7) (24.9) (26.3) (23.7)
Restructuring, integration and other expenses (137.4) (42.0) (35.5) (30.4) (29.5)
Amortization of acquired intangible assets and other   (54.5)   (19.8)   (22.5)   (9.8)   (2.4)
Avnet operating income $ 461.4 $ 93.4 $ 114.3 $ 124.2 $ 129.5
 
Sales by geographic area:
Americas $ 5,163.9 $ 1,332.2 $ 1,328.6 $ 1,252.6 $ 1,250.5
EMEA 5,912.9 1,651.0 1,615.9 1,380.7 1,265.3
Asia   6,363.2   1,623.2   1,497.4   1,640.3   1,602.3
Avnet sales $ 17,440.0 $ 4,606.4 $ 4,441.9 $ 4,273.6 $ 4,118.1

________________________

(1) Premier Farnell was acquired on October 17, 2016.

(2) Prior to the divestiture of the Technology Solutions business in Q3 FY17, a portion of Corporate support expenses were classified within discontinued operations.

 

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 fourth quarter of fiscal 2018.

 
    Low End of     High End of
Guidance Range (1) Guidance Range
 
Adjusted diluted earnings per share guidance $ 0.91 $ 1.01
Restructuring, integration and other expense (net of tax) (1) (0.22) (0.14)
Amortization of intangibles and other (net of tax) (0.16) (0.14)
Income tax expense adjustments   0.04   0.07
GAAP diluted earnings per share guidance $ 0.57 $ 0.80

________________________

(1) Includes accelerated depreciation.

 

Contact:

Avnet, Inc.
Investor Relations Contact
Vincent Keenan, 480-643-7053
Investor Relations
investorrelations@avnet.com
Media Relations Contact
Maureen O’Leary, 480-643-7499
Corporate Communications
maureen.oleary@avnet.com