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Avnet Reports Third Quarter Fiscal 2018 Results

Strategic Initiatives Continue to Drive Improved Financial Performance

PHOENIX--(BUSINESS WIRE)--Apr. 26, 2018-- Avnet, Inc. (NYSE:AVT) today announced results for the third quarter ended March 31, 2018.

Third Quarter Fiscal 2018 Highlights

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

CEO Commentary

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

 

Key Financial Metrics

($ in millions, except per share data)
       

Third Quarter Results (GAAP)

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

Third Quarter Results (Non-GAAP)(1)

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

Segment and Geographical Mix

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

________________________

(1) A reconciliation of non-GAAP financial measures to GAAP financial measures is presented in the “Non-GAAP Financial Information” section of this press release.

 

CFO Commentary

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

Additional Third Quarter Fiscal 2018 Highlights

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

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

 
     

Guidance Range

   

Midpoint

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

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

 

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

Forward-Looking Statements

This document contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on management’s current expectations and are subject to uncertainty and changes in facts and circumstances. The forward-looking statements herein include statements addressing future financial and operating results of Avnet and may include words such as “will,” “anticipate,” “intend,” “estimate,” “forecast,” “expect,” “feel,” “believe,” “should,” and other words and terms of similar meaning in connection with any discussions of future operating or financial performance, business prospects or market conditions. Actual results may differ materially from the expectations contained in the forward-looking statements.

The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: Avnet’s ability to retain and grow market share and to generate additional cash flow, risks associated with any acquisition activities and the successful integration of acquired companies, implementing and maintaining ERP systems and transitioning to a global ERP system, supplier losses and changes to supplier programs, an industry down-cycle in semiconductors, declines in sales, changes in business conditions and the economy in general, changes in market demand and pricing pressures, any material changes in the allocation of product or price discounts by suppliers, and other competitive and/or regulatory factors affecting the businesses of Avnet generally.

More detailed information about these and other factors is set forth in Avnet’s filings with the Securities and Exchange Commission, including Avnet’s reports on Form 10-K, Form 10-Q and Form 8-K. Except as required by law, Avnet is under no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Teleconference and Upcoming Events

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

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

About Avnet

From idea to design and from prototype to production, Avnet supports customers at each stage of a product’s lifecycle. A comprehensive portfolio of design and supply chain services makes Avnet the go-to guide for innovators who set the pace for technological change. For nearly a century, Avnet has helped its customers and suppliers around the world realize the transformative possibilities of technology. Learn more about Avnet at www.avnet.com.

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

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

AVNET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

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

Non-GAAP Financial Information

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

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

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

Additional non-GAAP metrics management uses is adjusted operating income margin, which is defined as adjusted operating income (as defined above) divided by sales.

Management also believes income tax expense, income from continuing operations and diluted earnings per share from continuing operations adjusted for the impact of the items described above and certain items impacting income tax expense are useful to investors because they provide a measure of the Company’s net profitability on a more comparable basis to historical periods and provide a more meaningful basis for forecasting future performance. Additionally, because of management’s focus on generating shareholder value, of which net profitability is a primary driver, management believes income from continuing operations and diluted earnings per share from continuing operations excluding the impact of these items provides an important measure of the Company’s net profitability for the investing public.

Any analysis of results and outlook on a non-GAAP basis should be used as a complement to, and in conjunction with, results presented in accordance with GAAP.

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

________________________

* May not foot due to rounding

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

________________________

* May not foot due to rounding

 

Organic Sales

Organic sales is defined as sales adjusted for the impact of significant acquisitions, divestitures and other items by adjusting Avnet’s prior and current (if necessary) periods to include the sales of acquired businesses and exclude the sales of divested businesses as if the acquisitions and divestitures had occurred at the beginning of the earliest period presented. Organic sales is measured on a sales from continuing operations basis. Organic sales in constant currency is defined as organic sales (as defined above) excluding the impact of changes in foreign currency exchange rates.

The following table presents reported and organic sales growth rates for the third quarter and first nine months of fiscal 2018 compared to fiscal 2017.

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

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

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

________________________

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

 

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

 

Historical Segment Financial Information

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

________________________

* May not foot due to rounding

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

________________________

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

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

 

Guidance Reconciliation

The following table presents the reconciliation of non-GAAP adjusted diluted earnings per share guidance to the expected GAAP diluted earnings per share guidance for the fourth quarter of fiscal 2018.

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

________________________

(1) Includes accelerated depreciation.

 

 

Source: Avnet, Inc.

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