AVT
$41.08
Avnet
($.32)
(.77%)
Earnings Details
1st Quarter September 2019
Thursday, October 24, 2019 4:05:00 PM
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Summary

Avnet Misses

Avnet (AVT) reported 1st Quarter September 2019 earnings of $0.60 per share on revenue of $4.6 billion. The consensus earnings estimate was $0.65 per share on revenue of $4.6 billion. The Earnings Whisper number was $0.66 per share. Revenue fell 9.0% compared to the same quarter a year ago.

The company said it expects second quarter earnings of $0.35 to $0.45 per share on revenue of $4.20 billion to $4.60 billion. The current consensus earnings estimate is $0.65 per share on revenue of $4.57 billion for the quarter ending December 31, 2019.

Avnet Inc, together with its subsidiaries is a value-added distributor of electronic components, enterprise computer & storage products, IT solutions & services and embedded systems.

Results
Reported Earnings
$0.60
Earnings Whisper
$0.66
Consensus Estimate
$0.65
Reported Revenue
$4.63 Bil
Revenue Estimate
$4.56 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Avnet Reports First Quarter Fiscal 2020 Financial Results

First quarter sales and EPS within guidance despite continued macroeconomic headwinds

Delivered strong cash flow from operations totaling $196 million in the quarter

PHOENIX--(BUSINESS WIRE)--Avnet, Inc. (Nasdaq: AVT) today announced results for the first quarter ended September 28, 2019.

Fiscal First Quarter Key Financials

  • Sales of $4.6 billion were in line with guidance, compared with $5.1 billion a year ago, as industry-wide softness over the past year has impacted historical seasonality, spanning all geographies.
  • GAAP diluted earnings per share from continuing operations totaled $0.40; on an adjusted basis, diluted earnings per share was $0.60.
  • GAAP operating income margin was 1.4%; adjusted operating income margin was 2.3%.
  • Cash flow from operations totaled $196 million.
  • Returned $133 million to shareholders including $112 million in stock buybacks and $21 million in dividends.

CEO Commentary

“In the first quarter we achieved results within our guidance by managing the business effectively as we worked through an ongoing industry-wide slowdown,” said Bill Amelio, Chief Executive Officer of Avnet. “While echoing the short-term caution in our industry, we took steps to position Avnet for long-term growth in our higher margin businesses. We further strengthened our capabilities by broadening our reach and offerings through a strategic IoT acquisition and by forming alliances around the world. We are confident these actions will benefit both our business and our shareholders by laying the groundwork for an accelerated, positive return on investment when the industry rebounds.”

Key Financial Metrics

($ in millions, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter Results (GAAP)

 

 

Sep – 19

 

Sep – 18

 

Change Y/Y

 

Jun – 19

 

Change Q/Q

Sales

 

$

4,630.0

 

 

$

5,089.9

 

 

(9.0)

%

 

$

4,680.9

 

 

(1.1)

%

Operating Income (Loss)

 

 

62.7

 

 

 

146.8

 

 

(57.3)

%

 

 

(30.0)

 

 

308.9

%

Operating Income (Loss) Margin

 

 

1.4

%

 

 

2.9

%

 

(152)

bps

 

 

(0.6)

%

 

200

bps

Diluted Earnings (Loss) Per Share

 

$

0.40

 

 

$

0.72

 

 

(44.4)

%

 

$

(0.33)

 

 

221.2

%

First Quarter Results (Non-GAAP)(1)

 

 

Sep – 19

 

Sep – 18

 

Change Y/Y

 

Jun – 19

 

Change Q/Q

Sales

 

$

4,630.0

 

 

$

5,089.9

 

 

(9.0)

%

 

$

4,680.9

 

 

(1.1)

%

Adjusted Operating Income

 

 

107.4

 

 

 

182.5

 

 

(41.2)

%

 

 

156.3

 

 

(31.3)

%

Adjusted Operating Income Margin

 

 

2.3

%

 

 

3.6

%

 

(127)

bps

 

 

3.3

%

 

(102)

bps

Adjusted Diluted Earnings Per Share

 

$

0.60

 

 

$

1.03

 

 

(41.7)

%

 

$

0.95

 

 

(36.8)

%

Segment and Geographical Mix

 

 

Sep – 19

 

Sep – 18

 

Change Y/Y

 

Jun – 19

 

Change Q/Q

Electronic Components (EC) Sales

 

$

4,294.2

 

 

$

4,710.8

 

 

(8.8)

%

 

$

4,337.5

 

 

(1.0)

%

EC Operating Income Margin

 

 

2.6

%

 

 

3.4

%

 

(83)

bps

 

 

3.3

%

 

(65)

bps

Farnell Sales

 

$

335.8

 

 

$

379.1

 

 

(11.4)

%

 

$

343.4

 

 

(2.2)

%

Farnell Operating Income Margin

 

 

6.5

%

 

 

10.8

%

 

(427)

bps

 

 

9.7

%

 

(318)

bps

Americas Sales

 

$

1,215.8

 

 

$

1,271.8

 

 

(4.4)

%

 

$

1,266.3

 

 

(4.0)

%

EMEA Sales

 

 

1,470.9

 

 

 

1,714.9

 

 

(14.2)

%

 

 

1,638.5

 

 

(10.2)

%

Asia Sales

 

 

1,943.3

 

 

 

2,103.2

 

 

(7.6)

%

 

 

1,776.1

 

 

9.4

%

___________________________

(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

“The $196 million of cash flow from operations Avnet generated this quarter brings our total operating cash flow for the last three quarters to nearly $800 million, enabling us to continue our share repurchase and dividend programs as well as broaden our internal capabilities with acquisitions, including our pending purchase of Witekio,” said Tom Liguori, Chief Financial Officer of Avnet. “We are on track to pull forward $50 million of operating expense reductions that are part of our $245 million cost reduction plan. We expect to have the $50 million fully implemented by the end of the March quarter. These actions, along with others we have put in place, will help us achieve improved operating income margins when industry growth returns to previous levels.”

Additional First Quarter Fiscal 2020 Highlights and Key Developments

  • The Board approved a $500 million increase in Avnet’s share repurchase authorization and a 5% increase in Avnet’s quarterly cash dividend to $0.21 per share.
  • Working capital days improved 4 days sequentially, contributing to the strong operating cash flow performance.
  • Announced the pending acquisition of Witekio, which will strengthen Avnet’s software and IoT capabilities at the device level.
  • Avnet announced its distribution relationship with Texas Instruments will be ended by December 2020. As a result, Avnet will implement $35 million in incremental annual cost reductions as the decline in TI product sales occur.
  • Formed a strategic alliance with Trusted Objects to secure the industrial IoT through an end-to-end security solution for low-power devices, reinforcing Avnet’s strategy of streamlining and scaling IoT security.
  • Formed a strategic partnership with Schneider Electric, the leader in digital transformation of energy management and automation.
  • Introduced Avnet’s RFSoC Development Kit using the Xilinx Zynq UltraScale+, which enables wireless system architects to accelerate the path to production in wireless.
  • Adopted the new lease accounting standard that has resulted in Avnet’s balance sheet now reflecting a $279 million operating lease asset and a $301 million operating lease liability.

Awards and Notable Recognition Received During the Quarter

  • Avnet Asia, Avnet Silica and EBV Elektronik received the Nexperia Gold Billionaires award.
  • Avnet India was awarded the Highest Achievement in Business Growth year over year for Enterprise Business by Western Digital India.
  • Avnet Silica was named Distributor of the Year by ELEKTRONIK magazine for passive components and Delivery Performance.

Outlook for the Second Quarter of Fiscal 2020 Ending on December 28, 2019

 

 

 

 

 

 

 

Guidance Range

 

Midpoint

Sales

 

$4.2B$4.6B

 

$4.4B

Non-GAAP Diluted EPS(1)

 

$0.35$0.45

 

$0.40

Estimated Annual Tax Rate

 

19% – 23%

 

21%

___________________________

(1)

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

Avnet’s second quarter fiscal 2020 guidance reflects a sequential decline in sales in the Americas and EMEA regions and stable business trends in Asia, and continued pricing pressure in all businesses.

The above guidance is based upon market conditions existing as of today, and excludes any acquisitions, results of discontinued operations, amortization of intangibles, accelerated depreciation, any potential restructuring, integration, and other expenses and certain income tax adjustments including certain impacts of the recent tax law changes in the U.S. The above guidance assumes 102 million average diluted shares outstanding and average U.S. Dollar to Euro and GBP currency exchange rates are as shown below:

 

 

 

 

 

 

 

 

 

Q2 Fiscal

 

 

 

 

 

 

2020

 

Q1 Fiscal

 

Q2 Fiscal

 

 

Guidance

 

2020

 

2019

USD to Euro

 

$1.10

 

$1.11

 

$1.14

USD to GBP

 

$1.26

 

$1.23

 

$1.29

Today’s Conference Call and Webcast Details

To participate in the live call, dial 877-407-8112 or 201-689-8840. To access the slides, follow the webcast link below. The slides can also be accessed via Avnet’s Investor Relations web page at: www.ir.avnet.com. A replay of the conference call will be available for 30 days, through November 24 at 5:00 p.m. ET, and can be accessed by dialing: 877-660-6853 or 201-612-7415 and using Conference ID: 13695085. The live webcast can be accessed from the following link: Avnet Earnings Call Webcast and Slides and 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)

 

 

 

 

 

 

 

 

 

First Quarters Ended

 

 

September 28,

 

September 29,

 

 

2019

 

2018

 

 

(Thousands, except per share data)

Sales

 

$

4,630,009

 

$

5,089,879

Cost of sales

 

 

4,086,170

 

 

4,453,129

Gross profit

 

 

543,839

 

 

636,750

Selling, general and administrative expenses

 

 

456,503

 

 

475,146

Restructuring, integration and other expenses

 

 

24,598

 

 

14,788

Operating income

 

 

62,738

 

 

146,816

Other income (expense), net

 

 

4,931

 

 

(1,892)

Interest and other financing expenses, net

 

 

(33,631)

 

 

(30,093)

Income from continuing operations before taxes

 

 

34,038

 

 

114,831

Income tax (benefit) expense

 

 

(7,714)

 

 

31,302

Income from continuing operations, net of tax

 

 

41,752

 

 

83,529

Income from discontinued operations, net of tax

 

 

 

 

195

Net income

 

$

41,752

 

$

83,724

 

 

 

 

 

 

 

Earnings per share - basic:

 

 

 

 

 

 

Continuing operations

 

$

0.40

 

$

0.73

Discontinued operations

 

 

 

 

Net income per share basic

 

$

0.40

 

$

0.73

 

 

 

 

 

 

 

Earnings per share - diluted:

 

 

 

 

 

 

Continuing operations

 

$

0.40

 

$

0.72

Discontinued operations

 

 

 

 

Net income per share diluted

 

$

0.40

 

$

0.72

 

 

 

 

 

 

 

Shares used to compute earnings per share:

 

 

 

 

 

 

Basic

 

 

103,130

 

 

115,260

Diluted

 

 

104,377

 

 

116,471

Cash dividends paid per common share

 

$

0.21

 

$

0.20

 

 

 

 

 

 

 

AVNET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

September 28,

 

June 29,

 

 

2019

 

2019

 

 

(Thousands)

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

664,108

 

$

546,105

Receivables, net

 

 

3,129,387

 

 

3,168,369

Inventories

 

 

3,025,980

 

 

3,008,424

Prepaid and other current assets

 

 

169,471

 

 

153,438

Total current assets

 

 

6,988,946

 

 

6,876,336

Property, plant and equipment, net

 

 

437,467

 

 

452,171

Goodwill

 

 

858,656

 

 

876,728

Intangible assets, net

 

 

120,139

 

 

143,520

Operating lease assets

 

 

278,570

 

 

Other assets

 

 

229,559

 

 

215,801

Total assets

 

$

8,913,337

 

$

8,564,556

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Short-term debt

 

$

638,402

 

$

300,538

Accounts payable

 

 

2,025,518

 

 

1,864,342

Accrued expenses and other

 

 

418,230

 

 

413,696

Short-term operating lease liabilities

 

 

55,149

 

 

Total current liabilities

 

 

3,137,299

 

 

2,578,576

Long-term debt

 

 

1,191,975

 

 

1,419,922

Long-term operating lease liabilities

 

 

245,406

 

 

Other liabilities

 

 

380,586

 

 

425,585

Total liabilities

 

 

4,955,266

 

 

4,424,083

Shareholders’ equity

 

 

3,958,071

 

 

4,140,473

Total liabilities and shareholders’ equity

 

$

8,913,337

 

$

8,564,556

 

 

 

 

 

 

 

AVNET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

First Quarters Ended

 

 

September 28, 2019

 

September 29, 2018

 

 

(Thousands)

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

41,752

 

$

83,724

Less: Income from discontinued operations, net of tax

 

 

 

 

195

Income from continuing operations

 

 

41,752

 

 

83,529

 

 

 

 

 

 

 

Non-cash and other reconciling items:

 

 

 

 

 

 

Depreciation

 

 

24,669

 

 

25,389

Amortization

 

 

19,911

 

 

20,810

Amortization of operating lease asset

 

 

15,839

 

 

Deferred income taxes

 

 

(3,970)

 

 

36,830

Stock-based compensation

 

 

7,218

 

 

9,044

Other, net

 

 

8,034

 

 

14,994

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

 

 

 

 

 

 

Receivables

 

 

(6,703)

 

 

(19,292)

Inventories

 

 

(64,194)

 

 

(269,649)

Accounts payable

 

 

189,746

 

 

95,119

Accrued expenses and other, net

 

 

(36,660)

 

 

(81,753)

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

 

 

195,642

 

 

(84,979)

Net cash flows provided (used) for operating activities

 

 

195,642

 

 

(84,979)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings (repayments) under accounts receivable securitization, net

 

 

110,800

 

 

(40,000)

Repayments under senior unsecured credit facility, net

 

 

(1,100)

 

 

(1,217)

Repayments under bank credit facilities and other debt, net

 

 

(745)

 

 

(50,330)

Repurchases of common stock

 

 

(110,805)

 

 

(149,094)

Dividends paid on common stock

 

 

(21,451)

 

 

(22,932)

Other, net

 

 

548

 

 

17,328

Net cash flows used for financing activities - continuing operations

 

 

(22,753)

 

 

(246,245)

Net cash flows used for financing activities

 

 

(22,753)

 

 

(246,245)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(29,864)

 

 

(41,007)

Other, net

 

 

(12,515)

 

 

65

Net cash flows used for investing activities - continuing operations

 

 

(42,379)

 

 

(40,942)

Net cash flows provided by investing activities - discontinued operations

 

 

 

 

120,000

Net cash flows (used) provided by investing activities

 

 

(42,379)

 

 

79,058

Effect of currency exchange rate changes on cash and cash equivalents

 

 

(12,507)

 

 

(3,107)

Cash and cash equivalents:

 

 

 

 

 

 

— increase (decrease)

 

 

118,003

 

 

(255,273)

— at beginning of period

 

 

546,105

 

 

621,125

— at end of period

 

$

664,108

 

$

365,852

 

 

 

 

 

 

 

Non-GAAP Financial Information

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

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

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

 

 

 

 

 

 

Quarter Ended

 

 

September 28, 2019*

 

 

($ in thousands, except per share amounts)

GAAP selling, general and administrative expenses - continuing operations

 

$

456,503

Amortization of intangible assets and other - continuing operations

 

 

(20,078)

Adjusted operating expenses - continuing operations

 

 

436,426

 

 

 

 

GAAP operating income - continuing operations

 

$

62,738

Restructuring, integration and other expenses - continuing operations

 

 

24,598

Amortization of intangible assets and other - continuing operations

 

 

20,078

Adjusted operating income - continuing operations

 

 

107,414

 

 

 

 

GAAP income before income taxes- continuing operations

 

$

34,038

Restructuring, integration and other expenses - continuing operations

 

 

24,598

Amortization of intangible assets and other - continuing operations

 

 

20,078

Adjusted income before income taxes - continuing operations

 

 

78,713

 

 

 

 

GAAP income tax expense (benefit) - continuing operations

 

$

(7,714)

Restructuring, integration and other expenses - continuing operations

 

 

6,240

Amortization of intangible assets and other - continuing operations

 

 

4,235

Income tax benefit items, net - continuing operations

 

 

13,611

Adjusted income tax expense - continuing operations

 

 

16,372

 

 

 

 

GAAP income - continuing operations

 

$

41,752

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

 

 

18,358

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

 

 

15,843

Income tax benefit items, net - continuing operations

 

 

(13,611)

Adjusted income - continuing operations

 

 

62,341

 

 

 

 

GAAP diluted earnings per share - continuing operations

 

$

0.40

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

 

 

0.18

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

 

 

0.15

Income tax benefit items, net - continuing operations

 

 

(0.13)

Adjusted diluted EPS - continuing operations

 

 

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 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 first quarter of fiscal 2020 compared to fiscal 2019.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First 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

 

$

4,630.0

 

$

5,089.9

 

(9.0)

%

 

(7.8)

%

Avnet by region

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

1,215.8

 

$

1,271.8

 

(4.4)

%

 

(4.4)

%

EMEA

 

 

1,470.9

 

 

1,714.9

 

(14.2)

 

 

(10.5)

 

Asia

 

 

1,943.3

 

 

2,103.2

 

(7.6)

 

 

(7.7)

 

Avnet by segment

 

 

 

 

 

 

 

 

 

 

 

 

EC

 

$

4,294.2

 

$

4,710.8

 

(8.8)

%

 

(7.7)

%

Farnell

 

 

335.8

 

 

379.1

 

(11.4)

 

 

(9.0)

 

Historical Segment Financial Information

 

 

First Quarter

 

 

September 28,

 

 

2019

 

 

(in millions)

Sales:

 

 

 

Electronic Components

 

$

4,294.2

Farnell

 

 

335.8

Avnet sales

 

$

4,630.0

 

 

 

 

Operating income:

 

 

 

Electronic Components

 

$

112.3

Farnell

 

 

21.8

 

 

 

134.1

Corporate expenses

 

 

(26.7)

Restructuring, integration and other expenses

 

 

(24.6)

Amortization of acquired intangible assets and other

 

 

(20.1)

Avnet operating income

 

$

62.7

 

 

 

 

Sales by geographic area:

 

 

 

Americas

 

$

1,215.8

EMEA

 

 

1,470.9

Asia

 

 

1,943.3

Avnet sales

 

$

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 second quarter of fiscal 2020.

 

 

 

 

 

 

 

 

 

Low End of

 

High End of

 

 

Guidance Range

 

Guidance Range

 

 

 

 

 

 

 

Adjusted diluted earnings per share guidance

 

$

0.35

 

$

0.45

Restructuring, integration and other expense (net of tax)

 

 

(0.10)

 

 

(0.07)

Amortization of intangibles and other (net of tax)

 

 

(0.16)

 

 

(0.14)

Income tax expense adjustments

 

 

(0.05)

 

 

0.05

GAAP diluted earnings per share guidance

 

$

0.04

 

$

0.29

 

Investor Relations Contacts

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

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

Media Relations Contact

Heather Vana, 480-643-8299
heather.vana@avnet.com

Source: Avnet, Inc.