Earnings Per Share in Line with
ExpectationsStrong Cash Flow from Operations
Avnet, Inc. (NYSE:AVT) today announced results for the third
quarter fiscal year 2016 ended April 2, 2016.
Q3 Fiscal 2016 Results
Third
Quarters Ended April 2, 2016 March 28, 2015
Change $ in millions, except per share data
Sales $ 6,174.7 $ 6,736.9 (8.3 ) % Constant Currency (1) (6.9 ) %
GAAP Operating Income 181.6 203.7 (10.9 ) % Adjusted
Operating Income (2) 205.2 230.4 (10.9 ) % GAAP Net Income
123.5 121.5 1.6 % Adjusted Net Income (2) 132.6 143.5 (7.6 ) %
GAAP Diluted EPS $ 0.94 $ 0.88 6.8 % Adjusted Diluted EPS
(2) $ 1.01 $ 1.04 (2.9 ) % (1) Year-over-year
sales growth rate excluding the impact of changes in foreign
currency exchange rates. (2) A reconciliation of non-GAAP financial
measures to GAAP financial measures is presented in the Non-GAAP
Financial Information section in this press release.
- Sales for the third quarter ended April
2, 2016, decreased 8.3% year over year and 6.9% in constant
currency to $6.17 billion, organic sales (as defined later in this
release) declined 8.6% year over year and 7.2% in constant
currency
- Adjusted operating income of $205.2
million decreased 10.9% year over year and adjusted operating
income margin of 3.3% decreased 10 basis points year over year
- Adjusted net income of $132.6 million
decreased 7.6% and adjusted diluted earnings per share of $1.01
decreased 2.9% year over year
- Cash generated from operations was
$212.9 million in the March quarter and $596.5 million for the
trailing twelve months
- The Company repurchased approximately
3.7 million shares during the third quarter representing an
investment of $145.7 million, bringing its fiscal year to date
purchases to $331 million, or 8.1 million shares
Rick Hamada, Chief Executive Officer, commented, “Our sequential
revenue decline was slightly below our normal seasonality given an
expected drop in high volume supply chain engagements in our Asia
region of Electronics Marketing (EM) coupled with weaker than
expected demand in certain legacy technologies at Technology
Solutions (TS). These combined impacts led to an overall sequential
revenue decline of approximately 10%. Despite these elements of
softness, we did experience stronger than typical sequential gains
in our western regions at EM and notable growth within areas of our
TS portfolio. Enterprise gross profit margin increased 44 basis
points year over year to 11.9% with contributions from both
operating groups. This improvement in gross profit margin was
offset by the decline in revenue as adjusted operating income
dollars declined 10.9% year over year and adjusted operating income
margin decreased 10 basis points. Given the overall trends through
our March quarter, we have initiated incremental, focused expense
management where we have gaps to our expectations while continuing
to invest in clearly identified areas of current and future growth.
With our strong competitive position at the center of the
technology supply chain, we will continue to leverage our broad
range of resources and financial strength in expanding new markets,
including the Internet of Things, embedded solutions, and third
platform technologies.”
Avnet Electronics Marketing
Results
Year-over-Year Growth Rates Q3 FY16 Reported
Organic Sales Sales Sales (in millions) EM
Total $ 4,041.5 (4.2 ) % (4.2 ) % Constant Currency (1) (3.3 ) %
(3.3 ) % Americas $ 1,192.7 (3.6 ) % (3.6 ) % EMEA $ 1,330.7 6.3 %
6.3 % Constant Currency (1) 9.4 % 9.4 % Asia $ 1,518.1 (12.3 ) %
(12.3 ) % Constant Currency (1) (12.3 ) % (12.3 ) %
Q3 FY16
Q3 FY15 Change Operating Income
$ 183.3 $ 197.3 (7.1 ) % Operating Income Margin 4.5 % 4.7 % (15 )
bps (1) Year-over-year sales growth rate
excluding the impact of changes in foreign currency exchange rates.
- Sales decreased 3.3% in constant
currency and reported sales decreased 4.2% year over year to $4.04
billion
- Operating income decreased 7.1% year
over year to $183.3 million and operating income margin decreased
15 basis points primarily due to declines in the western
regions
- Working capital (defined as receivables
plus inventories less accounts payables) increased 2% sequentially
driven by a planned increase in inventory
Mr. Hamada added, “In our March quarter, seasonal growth in EM’s
core business was offset by the expected decline in our select high
volume supply chain engagements in Asia as EM global revenue
declined 2% from the December quarter. Revenue grew 17% and 6%
sequentially in our EMEA and Americas regions, respectively, while
our Asia region declined 18%. In addition to strong sequential
growth, our EM EMEA team grew revenue 9.4% year over year in
constant currency, which represents their 12th consecutive quarter
of organic growth. As a result of the typical seasonal Q3 growth in
our western regions, EM’s operating income dollars grew 5.3%
sequentially and operating income margin increased 30 basis points.
We were encouraged to see our book to bill ratio return to at or
above parity for the quarter in all three regions. Our sequential
increase in inventory was driven by investments in specific
profitable growth opportunities and preparation for an ERP
implementation in our Americas region. These investments coupled
with the ongoing commitment to enhancing our digital platform,
tools, and design resources will position us to grow faster than
the markets we serve, leading to continued progress toward our
financial targets.”
Avnet Technology Solutions
Results
Year-over-Year Growth Rates Q3 FY16 Reported
Organic Sales Sales Sales (in millions) TS Total $
2,133.2 (15.3 ) % (16.0 ) % Constant Currency (1) (12.9 ) % (13.6 )
% Americas $ 1,241.2 (13.8 ) % (14.2 ) % EMEA $ 615.8 (14.1 ) %
(15.9 ) % Constant Currency (1) (10.8 ) % (12.6 ) % Asia $ 276.2
(23.2 ) % (23.2 ) % Constant Currency (1) (19.2 ) % (19.2 ) %
Q3
FY16 Q3 FY15 Change
Operating Income $ 55.5 $ 68.1 (18.5 ) % Operating Income Margin
2.6 % 2.7 % (11 ) bps (1) Year-over-year sales
growth rate excluding the impact of changes in foreign currency
exchange rates.
- Reported sales decreased 12.9% in
constant currency and reported sales decreased 15.3% year over year
to $2.13 billion, organic sales declined 16.0% and 13.6% in
constant currency
- Operating income decreased 18.5% to
$55.5 million and operating income margin decreased 11 basis points
year over year to 2.6%
- At a product level, year-over-year
growth in networking and services was offset by a decline in
storage, servers, and software
Mr. Hamada further added, "TS’s revenue came in at the low end
of expectations as all three regions experienced weaker than
expected demand in select areas of legacy data center products. As
a result, organic revenue decreased 14% year over year in constant
currency with all three regions experiencing double digit declines.
Operating income declined 18.5% year over year and operating income
margin was down 11 basis points as an increase in gross profit
margin and a reduction in operating expenses offset some of the
negative impact of the revenue decline. Given the increasing rate
of decline in certain legacy technologies, we will be reducing
annualized operating expenses by approximately $25 million, while
continuing to redirect our investment into higher growth
technologies. We are already seeing the benefits of existing
investments as our All Flash Array storage business grew over 40%
year over year and our converged infrastructure product offerings
increased nearly 20%. Our recently introduced Avnet Cloud
Marketplace, which offers a growing portfolio of solutions from
cloud service providers, flexible payment options, and a powerful
cloud management toolset, is gaining traction with our partners as
they and their customers embrace new consumption models to drive
business results. With our accelerated investments in next
generation technologies, we are confident we can optimize our
portfolio to capitalize on second platform growth segments, as well
as provide seamless support to our expanding community of partners
for the transition to third platform technologies.”
Cash Flow and Return to
Shareholders
- Cash generated from operations was
$212.9 million in the March quarter and for the trailing twelve
months cash generated from operations was $596.5 million
- Cash and cash equivalents at the end of
the quarter was $1.04 billion; net debt (total debt less cash and
cash equivalents) was $1.28 billion
- During the March quarter, the Company
repurchased 3.7 million shares, representing an aggregate
investment of $145.7 million
- Entering the fourth fiscal quarter, the
Company had $221.7 million remaining under the current repurchase
authorization
- The Company paid a dividend of $0.17
per share or $21.9 million during the quarter
Kevin Moriarty, Chief Financial Officer, stated, “We generated
$213 million in cash flow from operations during our March quarter,
bringing our trailing twelve months total to $596 million. During
the quarter, we repurchased $146 million of our shares and still
have approximately $222 million remaining in our share repurchase
program. We have returned approximately $400 million to
shareholders through the first nine months of our fiscal year via
our disciplined share repurchase and dividend programs. In
addition, in the March quarter, we improved our capital structure
with a well-received offering of $550 million of 4.625% ten-year
notes. We ended the quarter with over $1 billion in cash, which
when combined with our strong cash flow generation and credit
facilities, provides us with ample liquidity to invest in
profitable growth going forward.”
Outlook for Fourth Quarter of Fiscal
2016 Ending on July 2, 2016
- EM sales are expected to be in the
range of $3.90 billion to $4.20 billion and TS sales are expected
to be in the range of $2.05 billion to $2.35 billion
- Avnet sales are expected to be in the
range of $5.95 billion to $6.55 billion
- Adjusted diluted earnings per share is
expected to be in the range of $0.95 to $1.05 per share
- The guidance assumes 131 million
average diluted shares outstanding and a tax rate of 27% to
31%
The above guidance excludes the amortization of intangibles and
any potential restructuring, integration, and other expenses. In
addition, the above guidance assumes that the average U.S. Dollar
to Euro currency exchange rate is $1.13 to €1.00. This compares
with an average exchange rate of $1.11 to €1.00 in the fourth
quarter of fiscal 2015.
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: the Company’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, an industry down-cycle in semiconductors, IT hardware or
software products, 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 product rebates 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 the Company’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.
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 in this document
certain non-GAAP financial information including adjusted operating
income, adjusted operating expenses, adjusted net income and
adjusted diluted earnings per share, as well as 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 for sales, income or expense items,
the Company adjusts the exchange rates used in current periods to
be consistent with the exchange rates in effect during prior
periods.
Management believes that operating income and operating expenses
adjusted for (i) restructuring, integration and other expenses and
(ii) amortization of acquired intangible assets and other are
useful measures to help investors better assess and understand the
Company’s operating performance, especially 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
many cases, for measuring performance for compensation
purposes.
Additional non-GAAP metrics management uses are adjusted
operating income margin, which is defined as adjusted operating
income (as defined above) divided by sales and adjusted operating
expense to gross profit ratio, which is defined as adjusted
operating expenses (as defined above) divided by gross profit.
Management also believes net income and diluted EPS adjusted for
(i) the impact of the items described above, (ii) certain items
impacting other expense and (iii) certain items impacting income
tax expense is useful to investors because it provides a measure of
the Company’s net profitability on a more comparable basis to
historical periods and provides 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 net income
and diluted EPS excluding the impact of these items provides an
important measure of the Company’s net profitability for the
investing public.
Other metrics management monitors in its assessment of business
performance include return on working capital (ROWC), return on
capital employed (ROCE) and working capital velocity (WC
velocity).
- ROWC is defined as annualized adjusted
operating income (as defined above) divided by the sum of the
monthly average balances of receivables and inventories less
accounts payable.
- ROCE is defined as annualized, tax
effected adjusted operating income (as defined above) divided by
the monthly average balances of interest-bearing debt and equity
(including the impact of adjustments to operating income discussed
above) less cash and cash equivalents.
- WC velocity is defined as annualized
sales divided by the sum of the monthly average balances of
receivables and inventories less accounts payable.
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 2016
Fiscal Year 2016
Quarters Ended April 2,
January 2, October 3, Fiscal
2016 YTD 2016* 2016 2015 $ in thousands,
except per share amounts GAAP selling, general and administrative
expenses
$ 1,628,425
$ 539,038
$ 530,831
$ 558,556 Amortization of intangible assets and other
22,845 7,433 7,921 7,491
Adjusted operating expenses
$ 1,605,580
$
531,605
$ 522,910
$ 551,065 GAAP
operating income
$ 614,695
$ 181,618
$ 226,115
$ 206,962 Restructuring, integration and other expenses
63,352 16,172 21,222 25,958 Amortization of intangible assets and
other 22,845 7,433 7,921
7,491 Total adjustments 86,197 23,605
29,143 33,449 Adjusted operating income
$ 700,892
$ 205,223
$ 255,258
$ 240,411 GAAP net income
$ 409,725
$ 123,459
$ 156,012
$ 130,254 Restructuring,
integration and other expenses (net of tax) 42,029 10,804 14,100
17,125 Amortization of intangible assets and other (net of tax)
16,073 5,376 5,513 5,184 Income tax adjustments (17,972 )
(7,056 ) (11,295 ) 379 Total adjustments to
net income (net of tax) 40,130 9,124
8,318 22,688 Adjusted net income
$
449,855
$ 132,582
$ 164,330
$ 152,942 GAAP diluted EPS
$ 3.05
$
0.94
$ 1.16
$ 0.96 Restructuring, integration and
other expenses (net of tax) 0.31 0.08 0.10 0.12 Amortization of
intangible assets and other (net of tax) 0.12 0.04 0.04 0.04 Income
tax adjustments (0.13 ) (0.05 ) (0.08 )
- Total adjustments to diluted EPS (net of tax) 0.30
0.07 0.06 0.16 Adjusted EPS
$ 3.35
$ 1.01
$ 1.22
$ 1.12
* Does not foot due to rounding
Fiscal 2015
Fiscal 2015
Quarters Ended June 27, March 28, December
27, September 27, Fiscal 2015* 2015
2015 2014 2014 $ in thousands, except per
share amounts GAAP selling, general and administrative expenses
$ 2,274,642
$ 561,585
$ 555,148
$
573,962
$ 583,946 Amortization of intangible assets and
other 54,049 19,603 11,187
11,052 12,208 Adjusted operating
expenses
$ 2,220,593
$ 541,982
$
543,961
$ 562,910
$ 571,738
GAAP operating income
$ 827,673
$ 180,477
$ 203,712
$ 250,287
$ 193,197 Restructuring,
integration and other expenses 90,805 43,734 15,494 13,257 18,320
Amortization of intangible assets and other 54,049
19,603 11,187 11,052
12,208 Total adjustments 144,854
63,337 26,681 24,309
30,528 Adjusted operating income
$ 972,527
$ 243,814
$ 230,393
$ 274,596
$ 223,725 GAAP other (expense) income,
net
$ (19,043 )
$ (3,080 )
$ (8,945 )
$
(5,524 )
$ (1,493 ) Venezuela foreign currency loss
3,737 3,737 - -
- Adjusted other (expense) income, net
$
(15,306 )
$ 657
$ (8,945 )
$ (5,524 )
$ (1,493 ) Total adjustments to income before income
taxes
$ 148,591
$ 67,074
$
26,681
$ 24,309
$ 30,528
GAAP net income
$ 571,913
$ 158,733
$ 121,529
$ 163,706
$ 127,946 Restructuring, integration and
other expenses (net of tax) 65,897 30,514 12,035 10,188 13,160
Amortization of intangible assets and other (net of tax) 36,643
12,287 7,708 7,675 8,973 Venezuela foreign currency loss (net of
tax) 3,737 3,737 - - - Income tax adjustments (55,101 )
(45,770 ) 2,192 (5,597 ) (5,926
) Total adjustments to net income (net of tax) 51,176
768 21,935 12,266
16,207 Adjusted net income
$ 623,089
$
159,501
$ 143,464
$ 175,972
$ 144,153 GAAP diluted EPS
$ 4.12
$ 1.15
$ 0.88
$ 1.18
$ 0.91
Restructuring, integration and other expenses (net of tax) 0.47
0.22 0.09 0.07 0.09 Amortization of intangible assets and other
(net of tax) 0.26 0.09 0.06 0.06 0.07 Venezuela foreign currency
loss (net of tax) 0.03 0.03 - - - Income tax adjustments
(0.39 ) (0.33 ) 0.02 (0.04 )
(0.04 ) Total adjustments to diluted EPS (net of tax) 0.37
0.01 0.16 0.09
0.12 Adjusted EPS*
$ 4.49
$ 1.16
$ 1.04
$ 1.27
$ 1.02
* Does not foot due to rounding
Organic Sales
Organic sales is defined as reported sales adjusted for the
impact of more than insignificant acquisitions and divestitures by
adjusting Avnet’s prior 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. In addition, fiscal 2016 sales are
adjusted for the estimated impact of the extra week of sales in the
first quarter of fiscal 2016 due to it being a 14-week quarter and
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 discussed above.
The following tables present the reconciliation of reported
sales to organic sales for the third quarter and first nine months
of fiscal 2016 and fiscal 2015.
Third Quarter Ended
Nine Months Ended
Acquisitions/ As Reported and
As Divestitures (1)/ Organic Sales
- Reported - Estimated Organic Sales -
Fiscal 2016 Fiscal 2016 Extra Week (2)
Fiscal 2016 (in thousands) Avnet, Inc. $
6,174,716 $ 19,992,467 $ (464,098 ) $ 19,528,369 EM 4,041,527
12,627,543 (300,000 ) 12,327,543 TS 2,133,189 7,364,924 (164,098 )
7,200,826
EM Americas $ 1,192,695 $ 3,583,065 $ (82,000 ) $
3,501,065 EMEA 1,330,751 3,798,262 (92,000 ) 3,706,262 Asia
1,518,081 5,246,216 (126,000 ) 5,120,216
TS Americas $
1,241,209 $ 4,375,343 $ (123,112 ) $ 4,252,231 EMEA 615,824
2,098,981 (17,986 ) 2,080,995 Asia 276,156 890,600 (23,000 )
867,600
Third Quarter Ended
Nine Months Ended As Reported -
Acquisitions/
Organic Sales - As Reported -
Acquisitions/ Organic Sales -
Fiscal 2015 Divestitures (1) Fiscal
2015 Fiscal 2015 Divestitures (1)
Fiscal 2015 (in thousands) Avnet, Inc. $
6,736,860 $ 21,246 $ 6,758,106 $ 21,128,326 $ 94,110 $ 21,222,436
EM 4,219,528 — 4,219,528 13,028,812 — 13,028,812 TS 2,517,332
21,246 2,538,578 8,099,514 94,110 8,193,624
EM Americas $
1,237,213 $ — $ 1,237,213 $ 3,652,114 $ — $ 3,652,114 EMEA
1,251,873 — 1,251,873 3,759,678 — 3,759,678 Asia 1,730,442 —
1,730,442 5,617,020 — 5,617,020
TS Americas $ 1,440,532 $
6,630 $ 1,447,162 $ 4,724,640 $ 17,425 $ 4,742,065 EMEA 717,196
14,616 731,812 2,246,822 76,685 2,323,507 Asia 359,604 — 359,604
1,128,052 — 1,128,052 (1) Includes the
following acquisitions:
•
Orchestra Service Gmbh acquired in November 2015 in
the TS EMEA Region
•
ExitCertified Corporation acquired in January 2016 in the TS
America Region (2) The impact of the additional week of
sales in the first quarter of fiscal 2016 is estimated
Sales
Organic As Reported Sales
Sales Sales Year-Year % Organic
Organic Year-Year % As Reported As
Reported Change in Sales Sales Change
in Q3-Fiscal Year-Year Constant
Q3-Fiscal Year-Year Constant 2016 %
Change Currency 2016 % Change
Currency (Dollars in thousands) Avnet, Inc. $
6,174,716 (8.3 ) % (6.9 ) % $ 6,174,716 (8.6 ) % (7.2 ) % EM
4,041,527 (4.2 ) (3.3 ) 4,041,527 (4.2 ) (3.3 ) TS 2,133,189 (15.3
) (12.9 ) 2,133,189 (16.0 ) (13.6 )
EM Americas $ 1,192,695
(3.6 ) % — $ 1,192,695 (3.6 ) % — EMEA 1,330,751 6.3 9.4 %
1,330,751 6.3 9.4 % Asia/Pacific 1,518,081 (12.3 ) (12.3 )
1,518,081 (12.3 ) (12.3 )
TS Americas $ 1,241,209 (13.8 ) %
— $ 1,241,209 (14.2 ) % — EMEA 615,824 (14.1 ) (10.8 ) % 615,824
(15.9 ) (12.6 ) % Asia/Pacific 276,156 (23.2 ) (19.2 ) 276,156
(23.2 ) (19.2 )
ROWC, ROCE and WC
Velocity
The following tables (in thousands) presents the calculation for
ROWC, ROCE and WC velocity.
FY16 YTD
Q3 FY16 Q2 FY16
Q1 FY16 Sales $ 19,992,467 $ 6,174,716 $
6,848,057 $ 6,969,694 Sales, annualized (1) (a) 26,490,019
24,698,864 27,392,228 26,385,270 Adjusted operating income (2)
700,892 205,223 255,258 240,411 Adjusted annualized operating
income (1) (b) 928,682 820,892 1,021,032 910,127 Adjusted effective
tax rate (3) 27.6 % 27.6 % 27.6 % 27.6 % Adjusted annualized
operating income, after tax (c) 672,273 594,244 739,125 658,841
Average monthly working capital Accounts receivable 4,840,229
4,905,736 4,982,198 4,787,201 Inventories 2,766,662 2,787,825
2,747,160 2,745,479 Accounts payable (3,184,831 )
(3,265,178 ) (3,256,725 )
(3,182,154 ) Average working capital (d) $ 4,422,060
$ 4,428,383 $ 4,472,633 $
4,350,526 Average monthly capital employed (e) $
5,997,305 $ 6,028,867 $ 6,026,327
$ 5,909,334 ROWC = (b) / (d) 21.0 %
18.5 % 22.8 % 20.9 % WC Velocity = (a) / (d) 6.0 5.6 6.1 6.1 ROCE =
(c) / (e) 11.2 % 9.9 % 12.3 % 11.2 %
FY15 Q4
FY15 Q3 FY15
Q2 FY15 Q1 FY15 Sales $
27,924,657 $ 6,796,331 $ 6,736,860 $ 7,551,880 $ 6,839,587 Sales,
annualized (a) 27,924,657 27,185,324 26,947,440 30,207,520
27,358,348 Adjusted operating income (2) 972,527 243,814 230,393
274,596 223,725 Adjusted annualized operating income (b) 972,527
975,256 921,572 1,098,384 894,900 Adjusted effective tax rate (3)
27.7 % 27.7 % 27.7 % 27.7 % 27.7 % Adjusted annualized operating
income, after tax (c) 703,332 705,305 666,481 794,351 647,192
Average monthly working capital Accounts receivable 5,109,326
4,979,668 5,251,882 5,318,083 4,993,653 Inventories 2,667,351
2,593,545 2,564,071 2,700,424 2,729,194 Accounts payable
(3,274,382 ) (3,234,283 ) (3,344,479 )
(3,437,897 ) (3,231,037 )
Average working capital (d) $ 4,502,295 $ 4,338,930
$ 4,471,474 $ 4,580,610 $
4,491,810 Average monthly capital employed (e) $
6,077,926 $ 5,898,475 $ 6,028,015
$ 6,161,858 $ 6,101,274
ROWC = (b) / (d) 21.6 % 22.5 % 20.6 % 24.0 % 19.9 % WC Velocity =
(a) / (d) 6.2 6.3 6.0 6.6 6.1 ROCE = (c) / (e) 11.6 % 12.0 % 11.1 %
12.9 % 10.6 % (1) Annualized amounts are based
on a 53-week fiscal year. (2) See reconciliation to GAAP amounts in
the preceding tables in this Non-GAAP Financial Information
section. (3) Adjusted effective tax rate for each quarterly period
in a fiscal year is based upon the currently anticipated annual
effective tax rate, excluding the tax effect of the income tax
adjustments quantified above in the reconciliation to GAAP amounts
in this Non-GAAP Financial Information section.
Teleconference and Upcoming
Events
Avnet will host a quarterly teleconference today at 2:00 p.m.
Eastern Time. Financial information, including financial statement
reconciliations of GAAP to non-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 components to cloud and design to disposal, Avnet, Inc.
(NYSE:AVT) accelerates the success of customers who build, sell and
use technology globally by providing them with a comprehensive
portfolio of innovative products, services and solutions. Avnet is
a Fortune 500 company with revenues of $27.9 billion in fiscal year
2015. For more information, visit www.avnet.com. (AVT_IR)
AVNET, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(UNAUDITED)
Third Quarters Ended Nine Months Ended
April 2, March 28, April 2, March 28,
2016 2015 2016 2015 (Thousands,
except per share data) Sales $ 6,174,716 $ 6,736,860 $
19,992,467 $ 21,128,326 Cost of sales 5,437,888
5,962,506 17,685,995 18,721,003
Gross profit 736,828 774,354 2,306,472 2,407,323 Selling,
general and administrative expenses 539,038 555,148 1,628,425
1,713,056 Restructuring, integration and other expenses
16,172 15,494 63,352
47,071 Operating income 181,618 203,712 614,695 647,196
Other income (expense), net 2,200 (8,945 ) (10,138 ) (15,963 )
Interest expense (23,281 ) (23,871 ) (69,306 )
(71,936 ) Income before income taxes 160,537 170,896 535,251
559,297 Income tax expense 37,078 49,367
125,526 146,117 Net income $
123,459 $ 121,529 $ 409,725 $ 413,180
Earnings per share: Basic $ 0.95 $ 0.89 $ 3.11
$ 3.02 Diluted $ 0.94 $ 0.88 $ 3.05 $
2.97 Shares used to compute earnings per share: Basic
129,811 136,046 131,834
136,965 Diluted 131,650 137,721
134,298 139,181 Cash dividends paid per
common share $ 0.17 $ 0.16 $ 0.51 $ 0.48
AVNET, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
April 2, June 27, 2016 2015
(Thousands) ASSETS Current assets: Cash and cash
equivalents $ 1,036,485 $ 932,553 Receivables, net 4,874,179
5,054,307 Inventories 2,826,858 2,482,183 Prepaid and other current
assets 200,579 173,030 Total current assets 8,938,101
8,642,073 Property, plant and equipment, net 610,747 568,779
Goodwill 1,295,406 1,278,756 Intangible assets, net 86,989 99,731
Other assets 194,217 210,614 Total assets $
11,125,460 $ 10,799,953
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities: Short-term debt $ 706,742 $ 331,115 Accounts
payable 3,297,981 3,338,052 Accrued expenses and other
559,697 603,129 Total current liabilities 4,564,420
4,272,296 Long-term debt 1,610,539 1,646,501 Other liabilities
190,300 196,135 Total liabilities 6,365,259 6,114,932
Shareholders’ equity 4,760,201 4,685,021 Total
liabilities and shareholders’ equity $ 11,125,460 $ 10,799,953
AVNET, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(UNAUDITED)
Nine Months Ended April 2, March 28,
2016 2015 (Thousands) Cash flows from
operating activities: Net income $ 409,725 $ 413,180 Non-cash and
other reconciling items: Depreciation 71,112 70,919 Amortization
21,183 32,630 Deferred income taxes 3,963 29,500 Stock-based
compensation 47,724 48,890 Other, net 43,665 57,766 Changes in (net
of effects from businesses acquired): Receivables 181,723 (186,037
) Inventories (319,865 ) (89,994 ) Accounts payable (74,510 )
118,449 Accrued expenses and other, net (87,593 )
(210,751 ) Net cash flows provided by operating activities
297,127 284,552 Cash flows from
financing activities: Issuance of notes, net of issuance costs
542,043 — Repayment of notes (250,000 ) — Borrowings (repayments)
under accounts receivable securitization program, net (400,000 )
110,000 Borrowings (repayments) of bank and revolving debt, net
448,468 (96,372 ) Repurchases of common stock (334,177 ) (147,606 )
Dividends paid on common stock (66,944 ) (65,602 ) Other, net
(12,028 ) (13,993 ) Net cash flows used for financing
activities (72,638 ) (213,573 ) Cash flows
from investing activities: Purchases of property, plant and
equipment (111,070 ) (133,422 ) Acquisitions of businesses, net of
cash acquired (19,675 ) — Other, net 8,436
(8,765 ) Net cash flows used for investing activities
(122,309 ) (142,187 ) Effect of currency exchange
rate changes on cash and cash equivalents 1,752
(54,295 ) Cash and cash equivalents: — increase
(decrease) 103,932 (125,503 ) — at beginning of period
932,553 928,971 — at end of period $ 1,036,485
$ 803,468
AVNET, INC.
SEGMENT INFORMATION
(UNAUDITED)
Third Quarters Ended Nine Months Ended
April 2, March 28, April 2, March 28,
2016 2015 2016* 2015 (Millions)
Sales: Electronics Marketing $ 4,041.5 $ 4,219.5 $ 12,627.5 $
13,028.8 Technology Solutions 2,133.2 2,517.3
7,364.9 8,099.5 Avnet Sales $
6,174.7 $ 6,736.8 $ 19,992.5 $ 21,128.3
Operating Income (Expense): Electronics Marketing $ 183.3 $ 197.3 $
570.3 $ 591.4 Technology Solutions 55.5 68.1 247.1 248.1 Corporate
(33.5 ) (35.0 ) (116.5 ) (110.8 ) 205.2
230.4 700.9 728.7 Restructuring, integration and other expenses
(16.2 ) (15.5 ) (63.4 ) (47.1 ) Amortization of intangible assets
and other (7.4 ) (11.2 ) (22.8 ) (34.4
) Operating Income $ 181.6 $ 203.7 $ 614.7 $
647.2
* Sub-totals and totals may not foot due to rounding
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160428005539/en/
Investor Relations
ContactAvnet, Inc.Vincent KeenanInvestor Relations(480)
643-7053investorrelations@avnet.com
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