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Avnet Reports Second Quarter Fiscal 2022 Financial Results

01/26/2022

Second quarter sales of $5.9 billion, up 25.6% year over year with diluted EPS of $1.50

Second quarter adjusted diluted EPS of $1.51

Electronic Components and Farnell operating margins increased to 3.5% and 13.7%, respectively

Avnet, Inc. (Nasdaq: AVT) today announced results for its second quarter ended January 1, 2022.

Commenting on the Company’s financial results, Avnet Chief Executive Officer Phil Gallagher stated, “We’re pleased to have delivered another quarter of strong sales and margin expansion in both our Electronic Components and Farnell businesses, contributing to a solid first half to our fiscal year 2022. Our results reflect our team’s continued ability to execute, driving operating strength and organic growth across all regions, with a notable performance in the Americas. As we progress through the second half of fiscal year 2022, we expect to continue to benefit from the favorable demand environment as well as from our investments in e-commerce and in expanding customer relationships.”

Fiscal Second Quarter Key Financial Highlights:

  • Sales of $5.9 billion, up from $4.7 billion in the prior year and exceeding guidance.
    • On a constant currency basis, sales grew 27.4% year over year and 6.1% sequentially.
  • GAAP diluted earnings per share of $1.50, compared with $0.19 in the prior year.
    • Non-GAAP adjusted diluted earnings per share of $1.51, compared with $0.48 in the prior year.
  • Farnell operating margins increased 276 basis points sequentially to 13.7%.
  • Electronic Components operating margins increased 31 basis points sequentially to 3.5%, supported by growth across all regions.
  • Returned $23.7 million to shareholders in dividends, with the dividend payout increasing 14% year over year.

Key Financial Metrics

($ in millions, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter Results (GAAP)

 

 

Dec – 21

 

Dec – 20

 

Change Y/Y

 

Sep – 21

 

Change Q/Q

Sales

 

$

5,865.2

 

 

$

4,668.2

 

 

25.6

%

 

$

5,584.7

 

 

5.0

 

%

Operating Income

 

 

211.7

 

 

 

57.2

 

 

269.9

%

 

 

168.2

 

 

25.8

 

%

Operating Income Margin

 

 

3.6

%

 

 

1.2

%

 

238

bps

 

 

3.0

%

 

60

 

bps

Diluted Earnings Per Share (EPS)

 

$

1.50

 

 

$

0.19

 

 

689.5

%

 

$

1.10

 

 

36.4

 

%

Second Quarter Results (Non-GAAP)(1)

 

 

Dec – 21

 

Dec – 20

 

Change Y/Y

 

Sep – 21

 

Change Q/Q

Sales

 

$

5,865.2

 

 

$

4,668.2

 

 

25.6

%

 

$

5,584.7

 

 

5.0

 

%

Adjusted Operating Income

 

 

215.5

 

 

 

79.6

 

 

170.7

%

 

 

178.8

 

 

20.5

 

%

Adjusted Operating Income Margin

 

 

3.7

%

 

 

1.7

%

 

197

bps

 

 

3.2

%

 

47

 

bps

Adjusted Diluted Earnings Per Share (EPS)

 

$

1.51

 

 

$

0.48

 

 

214.6

%

 

$

1.22

 

 

23.8

 

%

Segment and Geographical Mix

 

 

Dec – 21

 

Dec – 20

 

Change Y/Y

 

Sep – 21

 

Change Q/Q

Electronic Components (EC) Sales

 

$

5,424.3

 

 

$

4,342.4

 

 

24.9

%

 

$

5,129.5

 

 

5.8

 

%

EC Operating Income Margin

 

 

3.5

%

 

 

2.4

%

 

109

bps

 

 

3.2

%

 

31

 

bps

Farnell Sales

 

$

440.9

 

 

$

325.8

 

 

35.3

%

 

$

455.2

 

 

(3.2

)

%

Farnell Operating Income Margin

 

 

13.7

%

 

 

4.5

%

 

917

bps

 

 

10.9

%

 

276

 

bps

Americas Sales

 

$

1,391.5

 

 

$

1,101.5

 

 

26.3

%

 

$

1,258.8

 

 

10.6

 

%

EMEA Sales

 

 

1,840.8

 

 

 

1,346.3

 

 

36.7

%

 

 

1,747.6

 

 

5.3

 

%

Asia Sales

 

 

2,632.9

 

 

 

2,220.4

 

 

18.6

%

 

 

2,578.3

 

 

2.1

 

%

________________________

(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.

Outlook for the Third Quarter of Fiscal 2022 Ending on April 2, 2022

 

 

 

 

 

 

 

Guidance Range

 

Midpoint

Sales

 

$5.4B – $5.8B

 

$5.6B

Adjusted Diluted EPS(1)

 

$1.45 – $1.55

 

$1.50

________________________

(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 current market conditions and inventory availability and reflects traditional seasonality from the second fiscal quarter to the third fiscal quarter, primarily in the Asia region where sales traditionally decline due to Asia specific holidays. The above guidance also excludes amortization of intangibles, any potential restructuring, integration, and other expenses and certain income tax adjustments. The above guidance assumes an effective tax rate of between 20% and 24%. The above guidance assumes 100 million average diluted shares outstanding and average U.S. Dollar to Euro and GBP currency exchange rates are as shown below:

 

 

 

 

 

 

 

 

 

Q3 Fiscal

 

 

 

 

 

 

2022

 

Q2 Fiscal

 

Q3 Fiscal

 

 

Guidance

 

2022

 

2021

Euro

 

$1.13

 

$1.14

 

$1.20

GBP

 

$1.36

 

$1.35

 

$1.38

Today’s Conference Call and Webcast Details

Avnet will host a quarterly webcast and teleconference today at 1:30 p.m. PT and 4:30 p.m. ET to discuss its financial results and provide a corporate update. The webcast can be accessed via Avnet’s Investor Relations web page at: https://ir.avnet.com.

Those who would still like to participate in the live call can dial 877-407-8112 or 201-689-8840. A replay of the conference call will be available for 90 days, through April 26, 2022 at 5:00 p.m. ET, and can be accessed by dialing: 877-660-6853 or 201-612-7415 and using Conference ID: 13725008.

Forward-Looking Statements

This document contains 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, with respect to the financial condition, results of operations and business of the Company. You can find many of these statements by looking for words like “believes,” “projected”, “plans,” “expects,” “anticipates,” “should,” “will,” “may,” “estimates” or similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties. The following important factors, in addition to those discussed elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended July 3, 2021 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, could affect the Company’s future results of operations, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements: the scope and duration of the COVID-19 pandemic and its impact on global economic systems, access to financial markets and the Company’s employees, operations, customers, and supply chain; competitive pressures among distributors of electronic components; an industry down-cycle in semiconductors; relationships with key suppliers and allocations of products by suppliers; risks relating to the Company’s international sales and operations, including risks relating to the ability to repatriate cash, foreign currency fluctuations, inflation, duties and taxes, and compliance with international and U.S. laws; risks relating to acquisitions, divestitures and investments; adverse effects on the Company’s supply chain, operations of its distribution centers, shipping costs, third-party service providers, customers and suppliers, including as a result of issues caused by natural and weather-related disasters, pandemics and health related crisis, warehouse modernization and relocation efforts; risks related to cyber-attacks, other privacy and security incidents and information systems failures, including related to current or future implementations, integrations or upgrades; general economic and business conditions (domestic, foreign and global) affecting the Company’s operations and financial performance and, indirectly, the Company’s credit ratings, debt covenant compliance, liquidity and access to financing; constraints on employee retention and hiring; geopolitical events; and legislative or regulatory changes affecting the Company’s businesses.

Any forward-looking statement speaks only as of the date on which that statement is made. Except as required by law, the Company assumes no obligation to update any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made.

About Avnet

As a leading global technology distributor and solutions provider, Avnet has served customers’ evolving needs for an entire century. We support customers at each stage of a product’s lifecycle, from idea to design and from prototype to production. Our unique position at the center of the technology value chain enables us to accelerate the design and supply stages of product development so customers can realize revenue faster. Decade after decade, Avnet helps 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

 

 

January 1,

 

January 2,

 

January 1,

 

January 2,

 

 

2022

 

2021

 

2022

 

2021

 

 

(Thousands, except per share data)

Sales

 

$

5,865,217

 

 

$

4,668,172

 

 

$

11,449,912

 

 

$

9,391,232

 

Cost of sales

 

 

5,152,182

 

 

 

4,156,919

 

 

 

10,077,185

 

 

 

8,363,899

 

Gross profit

 

 

713,035

 

 

 

511,253

 

 

 

1,372,727

 

 

 

1,027,333

 

Selling, general and administrative expenses

 

 

501,363

 

 

 

442,084

 

 

 

987,540

 

 

 

913,241

 

Restructuring, integration and other expenses

 

 

 

 

 

11,948

 

 

 

5,272

 

 

 

38,369

 

Operating income

 

 

211,672

 

 

 

57,221

 

 

 

379,915

 

 

 

75,723

 

Other income (expense), net

 

 

1,737

 

 

 

(1,333

)

 

 

1,327

 

 

 

(20,831

)

Interest and other financing expenses, net

 

 

(21,630

)

 

 

(21,485

)

 

 

(44,474

)

 

 

(43,787

)

Income before taxes

 

 

191,779

 

 

 

34,403

 

 

 

336,768

 

 

 

11,105

 

Income tax expense

 

 

40,958

 

 

 

15,240

 

 

 

74,629

 

 

 

10,831

 

Net income

 

$

150,821

 

 

$

19,163

 

 

$

262,139

 

 

$

274

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.52

 

 

$

0.19

 

 

$

2.64

 

 

$

0.00

 

Diluted

 

$

1.50

 

 

$

0.19

 

 

$

2.60

 

 

$

0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used to compute earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

99,032

 

 

 

98,937

 

 

 

99,340

 

 

 

98,917

 

Diluted

 

 

100,286

 

 

 

99,932

 

 

 

100,701

 

 

 

99,897

 

Cash dividends paid per common share

 

$

0.24

 

 

$

0.21

 

 

$

0.48

 

 

$

0.42

 

 

AVNET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

January 1,

 

July 3,

 

 

2022

 

2021

 

 

(Thousands)

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

167,818

 

$

199,691

Receivables

 

 

4,077,707

 

 

3,576,130

Inventories

 

 

3,542,723

 

 

3,236,837

Prepaid and other current assets

 

 

155,963

 

 

150,763

Total current assets

 

 

7,944,211

 

 

7,163,421

Property, plant and equipment, net

 

 

338,199

 

 

368,452

Goodwill

 

 

823,728

 

 

838,105

Intangible assets, net

 

 

19,271

 

 

28,539

Operating lease assets

 

 

248,020

 

 

265,988

Other assets

 

 

207,441

 

 

260,917

Total assets

 

$

9,580,870

 

$

8,925,422

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Short-term debt

 

$

350,000

 

$

23,078

Accounts payable

 

 

2,693,696

 

 

2,401,357

Accrued expenses and other

 

 

588,581

 

 

572,457

Short-term operating lease liabilities

 

 

56,228

 

 

58,346

Total current liabilities

 

 

3,688,505

 

 

3,055,238

Long-term debt

 

 

1,144,592

 

 

1,191,329

Long-term operating lease liabilities

 

 

221,294

 

 

239,838

Other liabilities

 

 

323,253

 

 

354,833

Total liabilities

 

 

5,377,644

 

 

4,841,238

Shareholders’ equity

 

 

4,203,226

 

 

4,084,184

Total liabilities and shareholders’ equity

 

$

9,580,870

 

$

8,925,422

 

 

 

 

 

 

 

AVNET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

Six Months Ended

 

 

January 1,
2022

 

January 2,
2021

 

 

(Thousands)

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

262,139

 

 

$

274

 

 

 

 

 

 

 

 

Non-cash and other reconciling items:

 

 

 

 

 

 

Depreciation

 

 

43,876

 

 

 

44,002

 

Amortization

 

 

8,964

 

 

 

30,474

 

Amortization of operating lease assets

 

 

27,426

 

 

 

28,111

 

Deferred income taxes

 

 

(4,451

)

 

 

(311

)

Stock-based compensation

 

 

19,556

 

 

 

15,331

 

Impairments

 

 

 

 

 

15,166

 

Other, net

 

 

10,281

 

 

 

17,004

 

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

 

 

 

 

 

 

Receivables

 

 

(558,702

)

 

 

(94,831

)

Inventories

 

 

(359,755

)

 

 

51,185

 

Accounts payable

 

 

328,574

 

 

 

130,768

 

Accrued expenses and other, net

 

 

(41,117

)

 

 

(29,779

)

Net cash flows (used) provided by operating activities

 

 

(263,209

)

 

 

207,394

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings under accounts receivable securitization, net

 

 

190,400

 

 

 

11,800

 

Borrowings (repayments) under senior unsecured credit facility, net

 

 

109,669

 

 

 

(239,430

)

Repayments under bank credit facilities and other debt, net

 

 

(1,550

)

 

 

(1,480

)

Repurchases of common stock

 

 

(45,570

)

 

 

 

Dividends paid on common stock

 

 

(47,642

)

 

 

(41,512

)

Other, net

 

 

(6,069

)

 

 

(2,301

)

Net cash flows provided (used) for financing activities

 

 

199,238

 

 

 

(272,923

)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(22,116

)

 

 

(30,022

)

Acquisitions of assets and businesses

 

 

 

 

 

(18,371

)

Other, net

 

 

68,270

 

 

 

725

 

Net cash flows provided (used) for investing activities

 

 

46,154

 

 

 

(47,668

)

Effect of currency exchange rate changes on cash and cash equivalents

 

 

(14,056

)

 

 

12,492

 

Cash and cash equivalents:

 

 

 

 

 

 

— decrease

 

 

(31,873

)

 

 

(100,705

)

— at beginning of period

 

 

199,691

 

 

 

477,038

 

— at end of period

 

$

167,818

 

 

$

376,333

 

 

 

 

 

 

 

 

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 before income taxes, (v) adjusted income tax expense (benefit), (vi) adjusted diluted earnings per share, 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 and intangible asset impairment expenses 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 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 most cases, for measuring performance for compensation purposes. Management measures operating income for its reportable segments excluding restructuring, integration and other expenses, goodwill and intangible asset impairment expenses 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 (benefit), net income and diluted earnings (loss) per share adjusted for the impact of the items described above and certain items impacting other income (expense) and income tax expense (benefit) 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 (benefit) and the effective income tax rate include the effect of changes in tax laws, certain 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 net income (loss) and diluted earnings (loss) per share 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

 

January 1,

 

October 2,

 

 

 

2022*

 

2022*

 

2021*

 

 

 

($ in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

GAAP selling, general and administrative expenses

 

 

$

987,540

 

 

$

501,363

 

 

$

486,178

 

Amortization of intangible assets and other

 

 

 

(9,035

)

 

 

(3,796

)

 

 

(5,239

)

Adjusted operating expenses

 

 

 

978,505

 

 

 

497,567

 

 

 

480,939

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income

 

 

$

379,915

 

 

$

211,672

 

 

$

168,243

 

Restructuring, integration and other expenses

 

 

 

5,272

 

 

 

-

 

 

 

5,272

 

Amortization of intangible assets and other

 

 

 

9,035

 

 

 

3,796

 

 

 

5,239

 

Adjusted operating income

 

 

 

394,222

 

 

 

215,468

 

 

 

178,754

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income before income taxes

 

 

$

336,768

 

 

$

191,779

 

 

$

144,990

 

Restructuring, integration and other expenses

 

 

 

5,272

 

 

 

-

 

 

 

5,272

 

Amortization of intangible assets and other

 

 

 

9,035

 

 

 

3,796

 

 

 

5,239

 

Other expenses

 

 

 

441

 

 

 

-

 

 

 

441

 

Adjusted income before income taxes

 

 

 

351,516

 

 

 

195,575

 

 

 

155,942

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income tax expense

 

 

$

74,629

 

 

$

40,958

 

 

$

33,672

 

Restructuring, integration and other expenses

 

 

 

1,012

 

 

 

-

 

 

 

1,012

 

Amortization of intangible assets and other

 

 

 

1,702

 

 

 

704

 

 

 

998

 

Other expenses

 

 

 

136

 

 

 

-

 

 

 

136

 

Income tax benefit (expense) items, net

 

 

 

(153

)

 

 

2,917

 

 

 

(3,070

)

Adjusted income tax expense

 

 

 

77,326

 

 

 

44,579

 

 

 

32,748

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income

 

 

$

262,139

 

 

$

150,821

 

 

$

111,318

 

Restructuring, integration and other expenses (net of tax)

 

 

 

4,260

 

 

 

-

 

 

 

4,260

 

Amortization of intangible assets and other (net of tax)

 

 

 

7,333

 

 

 

3,092

 

 

 

4,241

 

Other expenses (net of tax)

 

 

 

305

 

 

 

-

 

 

 

305

 

Income tax (benefit) expense items, net

 

 

 

153

 

 

 

(2,917

)

 

 

3,070

 

Adjusted net income

 

 

 

274,190

 

 

 

150,996

 

 

 

123,194

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted earnings per share

 

 

$

2.60

 

 

$

1.50

 

 

$

1.10

 

Restructuring, integration and other expenses (net of tax)

 

 

 

0.04

 

 

 

-

 

 

 

0.04

 

Amortization of intangible assets and other (net of tax)

 

 

 

0.07

 

 

 

0.03

 

 

 

0.04

 

Other expenses (net of tax)

 

 

 

0.00

 

 

 

-

 

 

 

0.00

 

Income tax (benefit) expense items, net

 

 

 

0.00

 

 

 

(0.03

)

 

 

0.03

 

Adjusted diluted EPS

 

 

 

2.72

 

 

 

1.51

 

 

 

1.22

 

________________________
* May not foot/cross foot due to rounding.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarters Ended

 

Fiscal Year

 

July 3,

 

April 3,

 

January 2,

 

October 3,

 

2021*

 

2021

 

2021

 

2021

 

2020

 

($ in thousands, except per share amounts)

GAAP selling, general and administrative expenses

$

1,874,831

 

 

$

498,497

 

 

$

463,092

 

 

$

442,084

 

 

$

471,158

 

Amortization of intangible assets and other

 

(41,245

)

 

 

(5,370

)

 

 

(5,283

)

 

 

(10,417

)

 

 

(20,175

)

Adjusted operating expenses

 

1,833,586

 

 

 

493,127

 

 

 

457,809

 

 

 

431,667

 

 

 

450,983

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income

$

281,408

 

 

$

118,001

 

 

$

87,684

 

 

$

57,221

 

 

$

18,502

 

Restructuring, integration and other expenses

 

84,391

 

 

 

28,449

 

 

 

17,574

 

 

 

11,948

 

 

 

26,420

 

Amortization of intangible assets and other

 

41,245

 

 

 

5,370

 

 

 

5,283

 

 

 

10,417

 

 

 

20,175

 

Adjusted operating income

 

407,044

 

 

 

151,820

 

 

 

110,541

 

 

 

79,586

 

 

 

65,097

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income (loss) before income taxes

$

172,929

 

 

$

91,701

 

 

$

70,121

 

 

$

34,403

 

 

$

(23,297

)

Restructuring, integration and other expenses

 

84,391

 

 

 

28,449

 

 

 

17,574

 

 

 

11,948

 

 

 

26,420

 

Amortization of intangible assets and other

 

41,245

 

 

 

5,370

 

 

 

5,283

 

 

 

10,417

 

 

 

20,175

 

Other expenses - equity investment impairments and other

 

20,413

 

 

 

5,139

 

 

 

-

 

 

 

51

 

 

 

15,223

 

Adjusted income before income taxes

 

318,978

 

 

 

130,659

 

 

 

92,978

 

 

 

56,819

 

 

 

38,521

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income tax expense (benefit)

$

(20,185

)

 

$

6,346

 

 

$

(37,363

)

 

$

15,240

 

 

$

(4,408

)

Restructuring, integration and other expenses

 

17,468

 

 

 

6,172

 

 

 

4,118

 

 

 

2,577

 

 

 

4,601

 

Amortization of intangible assets and other

 

9,099

 

 

 

1,025

 

 

 

1,008

 

 

 

2,037

 

 

 

5,029

 

Other expenses - equity investment impairments and other

 

90

 

 

 

38

 

 

 

-

 

 

 

26

 

 

 

26

 

Income tax benefit (expense) items, net

 

41,275

 

 

 

4,091

 

 

 

50,682

 

 

 

(10,788

)

 

 

(2,710

)

Adjusted income tax expense

 

47,747

 

 

 

17,672

 

 

 

18,445

 

 

 

9,092

 

 

 

2,538

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income (loss)

$

193,114

 

 

$

85,355

 

 

$

107,484

 

 

$

19,163

 

 

$

(18,889

)

Restructuring, integration and other expenses (net of tax)

 

66,923

 

 

 

22,277

 

 

 

13,456

 

 

 

9,371

 

 

 

21,819

 

Amortization of intangible assets and other (net of tax)

 

32,146

 

 

 

4,345

 

 

 

4,275

 

 

 

8,380

 

 

 

15,146

 

Other expenses - equity investment impairments and other (net of tax)

 

20,323

 

 

 

5,101

 

 

 

-

 

 

 

25

 

 

 

15,197

 

Income tax (benefit) expense items, net

 

(41,275

)

 

 

(4,091

)

 

 

(50,682

)

 

 

10,788

 

 

 

2,710

 

Adjusted net income

 

271,231

 

 

 

112,987

 

 

 

74,533

 

 

 

47,727

 

 

 

35,983

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted earnings (loss) per share

$

1.93

 

 

$

0.85

 

 

$

1.07

 

 

$

0.19

 

 

$

(0.19

)

Restructuring, integration and other expenses (net of tax)

 

0.67

 

 

 

0.22

 

 

 

0.13

 

 

 

0.09

 

 

 

0.22

 

Amortization of intangible assets and other (net of tax)

 

0.32

 

 

 

0.04

 

 

 

0.04

 

 

 

0.09

 

 

 

0.15

 

Other expenses - equity investment impairments and other (net of tax)

 

0.20

 

 

 

0.05

 

 

 

-

 

 

 

0.00

 

 

 

0.15

 

Income tax (benefit) expense items, net

 

(0.41

)

 

 

(0.04

)

 

 

(0.50

)

 

 

0.11

 

 

 

0.03

 

Adjusted diluted EPS

 

2.71

 

 

 

1.12

 

 

 

0.74

 

 

 

0.48

 

 

 

0.36

 

________________________
* May not foot/cross foot due to rounding and differences in average diluted shares between quarterly periods compared to the fiscal year to date.

Sales of TI Products

In December 2020, the termination of the Company’s electronic components distribution agreement with Texas Instruments (“TI”) was completed. Sales of TI products by quarter are outlined in the following table:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter

 

First Quarter

 

Fourth Quarter

 

Third Quarter

 

Second Quarter

 

 

January 1,

 

October 2,

 

July 3,

 

April 3,

 

January 2,

 

 

2022

 

2021

 

2021

 

2021

 

2021

 

(in millions)

Sales of TI Products

 

$

-

 

$

-

 

$

-

 

$

1.7

 

$

49.6

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 periods (if necessary) 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. Additionally, fiscal 2021 sales are adjusted for the estimated impact of the extra week of sales in the first quarter of fiscal 2021 due to the 14-week fiscal first quarter and the 53-week fiscal year. Organic sales in constant currency is defined as organic sales (as defined above) excluding the impact of changes in foreign currency exchange rates.

As a result of declining sales due to the termination of the TI distribution agreement discussed further above, organic sales growth rates have also been adjusted to exclude sales of TI products.

Reported sales were the same as organic sales for the second quarter and first six months of fiscal 2022. The following table presents the reconciliation of reported sales to organic sales for the second quarter and first six months of fiscal 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six Months Ended

 

 

Sales

 

 

 

 

Organic

 

 

 

 

Estimated

 

 

 

 

 

 

 

Organic

 

 

As Reported

 

 

 

Sales

 

Sales

 

Extra

 

Organic

 

 

 

Sales

 

 

and Organic

 

TI Sales

 

Adj for TI

 

As Reported

 

Week in

 

Sales

 

TI Sales

 

Adj for TI

 

 

Q2-Fiscal

 

Q2-Fiscal

 

Q2-Fiscal

 

Q2-Fiscal

 

Fiscal

 

Q2-Fiscal

 

Q2-Fiscal

 

Q2-Fiscal

 

 

2021

 

2021(1)

 

2021(1)

 

2021

 

2021(2)

 

2021

 

2021(1)

 

2021(1)

 

 

(in millions)

Avnet

 

$

4,668.2

 

$

49.6

 

$

4,618.6

 

$

9,391.2

 

$

306.0

 

$

9,085.2

 

$

290.6

 

$

8,794.6

Avnet by region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

1,101.5

 

$

14.0

 

$

1,087.5

 

$

2,307.1

 

$

77.0

 

$

2,230.1

 

$

82.5

 

$

2,147.6

EMEA

 

 

1,346.3

 

 

20.8

 

 

1,325.5

 

 

2,827.0

 

 

97.0

 

 

2,730.0

 

 

123.7

 

 

2,606.3

Asia

 

 

2,220.4

 

 

14.8

 

 

2,205.6

 

 

4,257.1

 

 

132.0

 

 

4,125.1

 

 

84.4

 

 

4,040.7

Avnet by segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EC

 

$

4,342.4

 

$

49.6

 

$

4,292.8

 

$

8,724.5

 

$

284.0

 

$

8,440.5

 

$

290.6

 

$

8,149.9

Farnell

 

 

325.8

 

 

 

 

325.8

 

 

666.7

 

 

22.0

 

 

644.7

 

 

 

 

644.7

________________________

(1)

Sales adjusted for the impact of the termination of the TI distribution contract.

(2)

The impact of the additional week of sales in the first quarter of fiscal 2021 is estimated.

The following table presents reported and organic sales growth rates for the second quarter and first six months of fiscal 2022 compared to fiscal 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six Months Ended

 

 

 

 

 

 

 

Organic

 

 

 

 

 

 

 

 

 

 

 

Organic

 

 

 

 

 

Sales

 

Sales

 

 

 

 

Sales

 

 

 

 

Organic

 

Sales

 

 

 

 

 

As Reported

 

Adj for TI

 

 

 

 

As Reported

 

 

 

 

Sales

 

Adj for TI

 

 

Sales

 

Year-Year %

 

Year-Year %

 

Sales

 

Year-Year %

 

Organic

 

Year-Year %

 

Year-Year %

 

 

As Reported

 

Change in

 

Change in

 

As Reported

 

Change in

 

Sales

 

Change in

 

Change in

 

 

Year-Year

 

Constant

 

Constant

 

Year-Year

 

Constant

 

Year-Year

 

Constant

 

Constant

 

 

% Change

 

Currency

 

Currency(1)

 

% Change

 

Currency

 

% Change

 

Currency

 

Currency(1)

Avnet

 

25.6

%

 

27.4

%

 

28.8

%

 

21.9

%

 

22.4

%

 

26.0

%

 

26.5

%

 

30.7

%

Avnet by region

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

26.3

%

 

26.3

%

 

28.0

%

 

14.9

%

 

14.9

%

 

18.8

%

 

18.8

%

 

23.4

%

EMEA

 

36.7

 

 

41.7

 

 

43.9

 

 

26.9

 

 

28.2

 

 

31.4

 

 

32.7

 

 

39.1

 

Asia

 

18.6

 

 

19.4

 

 

20.2

 

 

22.4

 

 

22.7

 

 

26.3

 

 

26.7

 

 

29.3

 

Avnet by segment

 

 

 

 

 

 

 

 

 

 

 

 

EC

 

24.9

%

 

26.8

%

 

28.2

%

 

21.0

%

 

21.6

%

 

25.0

%

 

25.6

%

 

30.1

%

Farnell

 

35.3

 

 

35.8

 

 

35.8

 

 

34.4

 

 

32.8

 

 

39.0

 

 

37.3

 

 

37.3

 

________________________

(1)

Sales growth rates excluding the impact of the termination of the TI distribution agreement.

Historical Segment Financial Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal 2022

 

 

 

 

Quarters Ended

 

 

Fiscal

 

Second Quarter

 

First Quarter

 

 

Year to Date

 

January 1,

 

October 2,

 

 

2022*

 

2022

 

2021*

 

 

(in millions)

Sales:

 

 

 

 

 

 

 

 

 

Electronic Components

 

$

10,553.8

 

 

$

5,424.3

 

 

$

5,129.5

 

Farnell

 

 

896.1

 

 

 

440.9

 

 

 

455.2

 

Avnet sales

 

$

11,449.9

 

 

$

5,865.2

 

 

$

5,584.7

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

Electronic Components

 

$

351.4

 

 

$

188.9

 

 

$

162.4

 

Farnell

 

 

109.8

 

 

 

60.2

 

 

 

49.6

 

 

 

 

461.2

 

 

 

249.1

 

 

 

212.0

 

Corporate expenses

 

 

(66.9

)

 

 

(33.6

)

 

 

(33.3

)

Restructuring, integration and other expenses

 

 

(5.3

)

 

 

-

 

 

 

(5.3

)

Amortization of acquired intangible assets and other

 

 

(9.0

)

 

 

(3.8

)

 

 

(5.2

)

Avnet operating income

 

$

379.9

 

 

$

211.7

 

 

$

168.2

 

 

 

 

 

 

 

 

 

 

 

Sales by geographic area:

 

 

 

 

 

 

 

 

 

Americas

 

$

2,650.3

 

 

$

1,391.5

 

 

$

1,258.8

 

EMEA

 

 

3,588.4

 

 

 

1,840.8

 

 

 

1,747.6

 

Asia

 

 

5,211.2

 

 

 

2,632.9

 

 

 

2,578.3

 

Avnet sales

 

$

11,449.9

 

 

$

5,865.2

 

 

$

5,584.7

 

________________________
* May not foot/cross foot due to rounding.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year 2021

 

 

 

 

Quarters Ended

 

 

 

 

Fourth Quarter

 

Third Quarter

 

Second Quarter

 

First Quarter

 

 

Fiscal Year

 

July 3,

 

April 3,

 

January 2,

 

October 3,

 

 

2021*

 

2021

 

2021

 

2021

 

2020

 

 

(in millions)

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronic Components

 

$

18,030.5

 

 

$

4,785.3

 

 

$

4,520.6

 

 

$

4,342.4

 

 

$

4,382.2

 

Farnell

 

 

1,504.2

 

 

 

441.4

 

 

 

396.1

 

 

 

325.8

 

 

 

340.9

 

Avnet

 

$

19,534.7

 

 

$

5,226.7

 

 

$

4,916.7

 

 

$

4,668.2

 

 

$

4,723.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronic Components

 

$

454.8

 

 

$

147.8

 

 

$

118.6

 

 

$

103.9

 

 

$

84.4

 

Farnell

 

 

86.9

 

 

 

36.5

 

 

 

23.9

 

 

 

14.6

 

 

 

12.0

 

 

 

 

541.7

 

 

 

184.3

 

 

 

142.5

 

 

 

118.5

 

 

 

96.4

 

Corporate expenses

 

 

(134.7

)

 

 

(32.5

)

 

 

(31.9

)

 

 

(39.0

)

 

 

(31.3

)

Restructuring, integration and other expenses

 

 

(84.4

)

 

 

(28.4

)

 

 

(17.6

)

 

 

(11.9

)

 

 

(26.4

)

Amortization of acquired intangible assets and other

 

 

(41.2

)

 

 

(5.4

)

 

 

(5.3

)

 

 

(10.4

)

 

 

(20.2

)

Avnet operating income

 

$

281.4

 

 

$

118.0

 

 

$

87.7

 

 

$

57.2

 

 

$

18.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales by geographic area:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

4,662.5

 

 

$

1,194.4

 

 

$

1,161.0

 

 

$

1,101.5

 

 

$

1,205.7

 

EMEA

 

 

6,149.9

 

 

 

1,737.3

 

 

 

1,585.6

 

 

 

1,346.3

 

 

 

1,480.7

 

Asia

 

 

8,722.3

 

 

 

2,295.0

 

 

 

2,170.1

 

 

 

2,220.4

 

 

 

2,036.7

 

Avnet

 

$

19,534.7

 

 

$

5,226.7

 

 

$

4,916.7

 

 

$

4,668.2

 

 

$

4,723.1

 

________________________
* 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 2022.

 

 

 

 

 

 

 

 

 

Low End of

 

High End of

 

 

Guidance Range

 

Guidance Range

 

 

 

 

 

 

 

Adjusted diluted earnings per share guidance

 

$

1.45

 

 

$

1.55

 

Restructuring, integration and other expense (net of tax)

 

 

(0.01

)

 

 

(0.02

)

Amortization of intangibles and other (net of tax)

 

 

(0.03

)

 

 

(0.04

)

Income tax expense adjustments

 

 

(0.03

)

 

 

0.03

 

GAAP diluted earnings per share guidance

 

$

1.38

 

 

$

1.52

 

 

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

Media Relations Contact
Jeanne Forbis, 480-643-7499
Jeanne.Forbis@Avnet.com

Source: Avnet

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