avt_Current Folio_8K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

__________________

Date of Report (Date of earliest event reported)    January 24, 2019

AVNET, INC.
(Exact name of registrant as specified in its charter)

 

 

 

 

 

New York 

 

1-4224

 

11-1890605

(State or other jurisdiction

 

(Commission

 

(IRS Employer

Of incorporation)

 

File Number)

 

Identification No.)

 

 

 

 

2211 South 47th Street, Phoenix,  Arizona

 

85034

(Address of principal executive offices)

 

(Zip Code)

 

(480) 643-2000

(Registrant’s telephone number, including area code.)

 

N/A

(Former name and former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 


 

Item 2.02     Results of Operations and Financial Condition.

 

On January 24, 2019, Avnet, Inc. (the “Company”) issued a press release announcing its second quarter results of operations for fiscal 2019.  A copy of the press release is attached hereto as Exhibit 99.1.

 

The information in this Current Report on Form 8-K and the exhibit attached hereto are being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933 except as shall be expressly set forth in such filing.

Item 9.01    Financial Statements and Exhibits.

(d) Exhibits.

The following materials are attached as exhibits to this Current Report on Form 8-K:

 

 

 

 

Exhibit
Number

   

Description

 

 

 

99.1

 

Press Release, dated January 24, 2019.

 

 

 

 

 

2


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

 

Date: January 24, 2019

 

AVNET, INC.

 

 

 

 

 

 

 

 

By:

 

/s/ Thomas Liguori

 

 

 

 

Name: Thomas Liguori

 

 

 

 

Title: Chief Financial Officer

 

 

 

 

 

 

3


avt_Ex_ 99-1

Picture 2

Exhibit 99.1

 

Picture 3

 

Avnet Reports Second Quarter Fiscal 2019 Financial Results

 

Quarterly sales grew 12% year over year to $5.05 billion;

GAAP diluted EPS of $0.33 decreased 30%; Adjusted diluted EPS of $1.04 rose 33%

 

 

 

PHOENIX - January 24, 2019 - Avnet, Inc. (Nasdaq:AVT) today announced results for the second quarter ended December 29, 2018.

 

Second Quarter Key Financial Highlights

·

Sales rose 11.7% year over year (13.1% in constant currency) to $5.05 billion

·

GAAP diluted EPS from continuing operations decreased 30% year over year to $0.33

o

Non-GAAP adjusted diluted EPS rose 33% year over year to $1.04

o

Foreign exchange rates negatively impacted adjusted diluted EPS by $0.02

·

GAAP operating income rose 18% year over year to $96.1 million

o

Adjusted operating income rose 28% year over year to $178.8 million

·

GAAP operating income margin was 1.9%, up from 1.8% a year ago

o

Adjusted operating income margin was 3.5%, up from 3.1% a year ago

·

Returned $197 million to shareholders with $175 million of share repurchases and dividends of $22 million

 

CEO Commentary

“Our second quarter results demonstrate the tremendous progress we are making in transforming Avnet into a global technology solutions company,” said Avnet CEO Bill Amelio. “Even with the current uncertainties in Asia, Avnet posted strong gains in revenue and profitability compared to a year ago. Our unique ecosystem approach is really starting to pay off with our suppliers and customers. With the addition of Softweb Solutions, we now have the software and hardware to deliver an end-to-end IoT capability that can lower costs, speed time to market, and reduce complexity for our customers.”  

 


 

Key Financial Metrics

($ in millions, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter Results (GAAP)(2)

 

 

 

Dec – 18

   

Dec – 17

   

Change Y/Y

   

Sep – 18

   

Change Q/Q

 

Sales

 

$

5,049.0

 

 

$

4,521.6

 

 

11.7

%

 

$

5,089.9

 

 

(0.8)

%

 

Operating Income

 

 

96.1

 

 

 

81.6

 

 

17.7

%

 

 

146.8

 

 

(34.6)

%

 

Operating Income Margin

 

 

1.9

%

 

 

1.8

%

 

 9

bps

 

 

2.9

%

 

(98)

bps

 

Diluted Earnings Per Share

 

$

0.33

 

 

$

0.47

 

 

(29.8)

%

 

$

0.72

 

 

(54.2)

%

 

Second Quarter Results (Non-GAAP)(1)(2)

 

 

 

Dec – 18

   

Dec – 17

   

Change Y/Y

   

Sep – 18

   

Change Q/Q

 

Sales

 

$

5,049.0

 

 

$

4,521.6

 

 

11.7

%

 

$

5,089.9

 

 

(0.8)

%

 

Adjusted Operating Income

 

 

178.8

 

 

 

140.3

 

 

27.5

%

 

 

182.5

 

 

(2.0)

%

 

Adjusted Operating Income Margin

 

 

3.5

%

 

 

3.1

%

 

44

bps

 

 

3.6

%

 

(5)

bps

 

Adjusted Diluted Earnings Per Share

 

$

1.04

 

 

$

0.78

 

 

33.3

%

 

$

1.03

 

 

1.0

%

 

Segment and Geographical Mix(2)

 

 

 

Dec – 18

   

Dec – 17

   

Change Y/Y

 

Sep – 18

   

Change Q/Q

 

Electronic Components (EC) Sales

 

$

4,680.7

 

 

$

4,163.5

 

 

12.4

%

 

$

4,710.8

 

 

(0.6)

%

 

EC Operating Income Margin

 

 

3.4

%

 

 

3.1

%

 

27

bps

 

 

3.4

%

 

(5)

bps

 

Premier Farnell  (PF) Sales

 

$

368.3

 

 

$

358.1

 

 

2.8

%

 

$

379.1

 

 

(2.9)

%

 

PF Operating Income Margin

 

 

10.8

%

 

 

9.3

%

 

142

bps

 

 

10.8

%

 

0

bps

 

Americas Sales

 

$

1,300.4

 

 

$

1,210.2

 

 

7.5

%

 

$

1,271.8

 

 

2.3

%

 

EMEA Sales

 

 

1,668.6

 

 

 

1,506.0

 

 

10.8

%

 

 

1,714.9

 

 

(2.7)

%

 

Asia Sales

 

 

2,080.0

 

 

 

1,805.4

 

 

15.2

%

 

 

2,103.2

 

 

(1.1)

%

 


(1)

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

(2)

Certain prior year amounts in the Company’s measurement of operating income have been recasted to reflect the adoption of new accounting standards during the first quarter of fiscal 2019.

 

CFO Commentary

“This quarter, we continued to execute broadly across our stated goals including accelerating the Americas, optimizing our cost structure and reducing share count,” stated Tom Liguori, Avnet Chief Financial Officer. “We delivered year-over-year, double-digit sales growth while reducing selling, general and administrative expenses by $12 million. Our diluted share count decreased by 10 million shares year over year or 8%. Our remaining buyback authorization stands at $440 million at the end of the quarter which we will utilize appropriately to signal our continued confidence in Avnet’s long-term outlook.”

 

Additional Second Quarter Fiscal 2019 Highlights and Key Developments

·

Expanded Avnet’s Internet of Things (IoT) capabilities with the acquisition of Softweb Solutions. The integration of Softweb’s best-of-breed artificial intelligence (AI) software for IoT applications, along with its data services and digital process capabilities, provides Avnet with rapid design, development, and deployment capabilities that can help customers increase efficiency, speed time to market and help their businesses transform.

·

Capitalized on the significance of electronica, a leading trade show for electronics, by building Avnet City. This was the first time Avnet used an industry event to bring together under one exhibit the expanse of Avnet’s end-to-end ecosystem. The well-received Avnet exhibit included community-oriented events hosted by Hackster.io and element14, and demonstrations highlighting the Company’s innovation capabilities, including robotics, AI and virtual reality. 

·

Demonstrated at CES the depth and breadth of Avnet’s IoT R&D resources including its role as a lead partner for Microsoft Azure Sphere; the unveiling of Avnet’s SmartEdge Agile, which is ideal for developing machine learning applications such as predictive maintenance and remote monitoring; and Avnet’s SmartEdge Industrial IoT Gateway, which is designed for automation applications that require strong end-to-end security.

·

Generated $72 million of cash flow from continuing operations during the quarter.

 


 

·

Recorded restructuring, integration and other expenses of $62 million during the second quarter primarily for non-cash impairment and severance costs. These charges were incurred in connection with the continued transformation of our IT, distribution center and business operations including the re-prioritization of our IT initiatives and resources. Second quarter transformation projects are expected to deliver approximately $10 million in savings per quarter once fully implemented.

 

Awards and Notable Recognition Received During the Quarter

·

Received ROHM Semiconductor’s Global Distributor Award

·

Named Supplier of the Year by L3 Technologies for the second year in a row

·

Received Infineon’s Top Distributor Award in Asia and Greater China

·

Recognized by Micron with the Most Valuable Demand Creation Distributor Award in Asia

·

Received several TE Connectivity awards in China/Asia for Excellent Solution Design and Growth

 

 

Outlook for the Third Quarter of Fiscal 2019 Ending on March 30, 2019

 

 

 

 

 

 

 

    

Guidance Range

    

Midpoint

Sales

 

$4.5B - $4.9B

 

$4.7B

Non-GAAP Diluted EPS(1)

 

$1.03 - $1.13

 

$1.08

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.

 

The above guidance excludes any additional acquisitions, any 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 110 million average diluted shares outstanding and average U.S. Dollar to Euro and GBP currency exchange rates are as shown below:

 

 

 

 

 

 

 

 

 

 

Q3 Fiscal

 

 

 

 

 

 

2019

 

Q2 Fiscal

 

Q3 Fiscal

 

 

Guidance

    

2019

    

2018

US to Euro

 

$1.14

 

$1.14

 

$1.23

US to GBP

 

$1.29

 

$1.29

 

$1.39

 

 

 


 

Today’s Conference Call and Webcast Details

 

Avnet will host a quarterly teleconference and webcast today at 2:30 p.m. MST/4:30 p.m. EST to discuss the financial results and provide a corporate update. 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 also can 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 February 23 at 5:00 p.m. EST, and can be accessed by dialing: 877-660-6853 or 201-612-7415 and using Conference ID: 13685891. 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 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)

 

Investor Relations Contacts

 

Tom Liguori, CFO

Avnet

480-643-7550

or

Ina McGuinness

480-643-7053

investorrelations@avnet.com 

 

Media Relations Contact

 

Maureen O’Leary

Media Relations

480-643-7499

maureen.oleary@avnet.com 

 

 


 

AVNET, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarters Ended

 

Six Months Ended

 

 

    

December 29,

    

December 30,

    

December 29,

    

December 30,

 

 

 

2018

 

2017

 

2018

 

2017

 

 

 

(Thousands, except per share data)

 

Sales

 

$

5,048,980

 

$

4,521,636

 

$

10,138,859

 

$

9,182,578

 

Cost of sales

 

 

4,418,947

 

 

3,919,175

 

 

8,872,077

 

 

7,967,563

 

Gross profit

 

 

630,033

 

 

602,461

 

 

1,266,782

 

 

1,215,015

 

Selling, general and administrative expenses

 

 

471,723

 

 

484,082

 

 

946,868

 

 

985,674

 

Restructuring, integration and other expenses

 

 

62,260

 

 

36,762

 

 

77,048

 

 

83,156

 

Operating income

 

 

96,050

 

 

81,617

 

 

242,866

 

 

146,185

 

Other income, net

 

 

2,584

 

 

3,349

 

 

692

 

 

22,270

 

Interest and other financing expenses, net

 

 

(33,718)

 

 

(22,826)

 

 

(63,811)

 

 

(44,841)

 

Income from continuing operations before taxes

 

 

64,916

 

 

62,140

 

 

179,747

 

 

123,614

 

Income tax expense

 

 

28,141

 

 

5,346

 

 

59,443

 

 

8,638

 

Income from continuing operations, net of tax

 

 

36,775

 

 

56,794

 

 

120,304

 

 

114,976

 

Loss from discontinued operations, net of tax

 

 

(374)

 

 

(10,070)

 

 

(179)

 

 

(9,949)

 

Net income

 

$

36,401

 

$

46,724

 

$

120,125

 

$

105,027

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share - basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.33

 

$

0.47

 

$

1.07

 

$

0.94

 

Discontinued operations

 

 

0.00

 

 

(0.08)

 

 

(0.01)

 

 

(0.08)

 

Net income per share basic

 

$

0.33

 

$

0.39

 

$

1.06

 

$

0.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share - diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.33

 

$

0.47

 

$

1.06

 

$

0.93

 

Discontinued operations

 

 

0.00

 

 

(0.08)

 

 

(0.01)

 

 

(0.08)

 

Net income per share diluted

 

$

0.33

 

$

0.39

 

$

1.05

 

$

0.85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used to compute earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

110,332

 

 

120,400

 

 

112,796

 

 

121,543

 

Diluted

 

 

111,462

 

 

121,749

 

 

113,967

 

 

122,867

 

Cash dividends paid per common share

 

$

0.20

 

$

0.18

 

$

0.40

 

$

0.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

AVNET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

    

December 29,

    

June 30,

 

 

 

2018

 

2018

 

 

 

(Thousands)

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

482,166

 

$

621,125

 

Receivables, net

 

 

3,445,807

 

 

3,641,139

 

Inventories

 

 

3,306,299

 

 

3,141,822

 

Prepaid and other current assets

 

 

156,451

 

 

206,513

 

Total current assets

 

 

7,390,723

 

 

7,610,599

 

Property, plant and equipment, net

 

 

462,914

 

 

522,909

 

Goodwill

 

 

1,010,568

 

 

980,872

 

Intangible assets, net

 

 

184,979

 

 

219,913

 

Other assets

 

 

185,515

 

 

262,552

 

Total assets

 

$

9,234,699

 

$

9,596,845

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Short-term debt

 

$

1,845

 

$

165,380

 

Accounts payable

 

 

2,046,571

 

 

2,269,478

 

Accrued expenses and other

 

 

424,350

 

 

534,603

 

Total current liabilities

 

 

2,472,766

 

 

2,969,461

 

Long-term debt

 

 

1,961,467

 

 

1,489,219

 

Other liabilities

 

 

391,729

 

 

453,084

 

Total liabilities

 

 

4,825,962

 

 

4,911,764

 

Shareholders’ equity

 

 

4,408,737

 

 

4,685,081

 

Total liabilities and shareholders’ equity

 

$

9,234,699

 

$

9,596,845

 

 

 

 

 

 

 

 

 

 

 


 

AVNET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

    

December 29, 2018

    

December 30, 2017

 

 

 

(Thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

 

$

120,125

 

$

105,027

 

Less: Loss from discontinued operations, net of tax

 

 

(179)

 

 

(9,949)

 

Income from continuing operations

 

 

120,304

 

 

114,976

 

 

 

 

 

 

 

 

 

Non-cash and other reconciling items:

 

 

 

 

 

 

 

Depreciation

 

 

48,124

 

 

77,510

 

Amortization

 

 

41,220

 

 

47,256

 

Deferred income taxes

 

 

44,857

 

 

(55,921)

 

Stock-based compensation

 

 

17,077

 

 

17,090

 

Other, net

 

 

77,437

 

 

22,386

 

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

 

 

 

 

 

 

 

Receivables

 

 

193,520

 

 

108,459

 

Inventories

 

 

(209,582)

 

 

(410,361)

 

Accounts payable

 

 

(205,254)

 

 

75,342

 

Accrued expenses and other, net

 

 

(140,495)

 

 

(55,955)

 

Net cash flows used for operating activities - continuing operations

 

 

(12,792)

 

 

(59,218)

 

Net cash flows used for operating activities - discontinued operations

 

 

(56,284)

 

 

 —

 

Net cash flows used for operating activities

 

 

(69,076)

 

 

(59,218)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Borrowings under accounts receivable securitization, net

 

 

366,000

 

 

78,000

 

Repayments under senior unsecured credit facility, net

 

 

(59,420)

 

 

(99,971)

 

Repayments under bank credit facilities and other debt, net

 

 

(595)

 

 

(27,381)

 

Repurchases of common stock

 

 

(335,404)

 

 

(135,458)

 

Dividends paid on common stock

 

 

(44,701)

 

 

(43,572)

 

Other, net

 

 

15,200

 

 

(1,214)

 

Net cash flows used for financing activities - continuing operations

 

 

(58,920)

 

 

(229,596)

 

Net cash flows used for financing activities

 

 

(58,920)

 

 

(229,596)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(70,186)

 

 

(67,397)

 

Acquisitions of businesses, net of cash acquired

 

 

(62,514)

 

 

(14,661)

 

Other, net

 

 

963

 

 

2,402

 

Net cash flows used for investing activities - continuing operations

 

 

(131,737)

 

 

(79,656)

 

Net cash flows provided by investing activities - discontinued operations

 

 

123,473

 

 

112,664

 

Net cash flows (used) provided by investing activities

 

 

(8,264)

 

 

33,008

 

Effect of currency exchange rate changes on cash and cash equivalents

 

 

(2,699)

 

 

8,940

 

Cash and cash equivalents:

 

 

 

 

 

 

 

— decrease

 

 

(138,959)

 

 

(246,866)

 

— at beginning of period

 

 

621,125

 

 

836,384

 

— at end of period

 

$

482,166

 

$

589,518

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

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 “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. Management measures operating income for our 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 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year to Date

 

Quarters Ended

 

 

 

    

2019*

    

December 29, 2018*

 

September 29, 2018

   

 

 

 

($ in thousands, except per share amounts)

 

GAAP selling, general and administrative expenses - continuing operations

 

 

$

946,868

 

$

471,723

 

$

475,146

 

Amortization of intangible assets and other - continuing operations

 

 

 

(41,440)

 

 

(20,513)

 

 

(20,927)

 

Adjusted operating expenses - continuing operations

 

 

 

905,429

 

 

451,210

 

 

454,219

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income - continuing operations

 

 

$

242,866

 

$

96,050

 

$

146,816

 

Restructuring, integration and other expenses - continuing operations

 

 

 

77,048

 

 

62,260

 

 

14,788

 

Amortization of intangible assets and other - continuing operations

 

 

 

41,440

 

 

20,513

 

 

20,927

 

Adjusted operating income - continuing operations

 

 

 

361,354

 

 

178,823

 

 

182,531

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income before income taxes- continuing operations

 

 

$

179,747

 

$

64,916

 

$

114,831

 

Restructuring, integration and other expenses - continuing operations

 

 

 

77,048

 

 

62,260

 

 

14,788

 

Amortization of intangible assets and other - continuing operations

 

 

 

41,440

 

 

20,513

 

 

20,927

 

Adjusted income before income taxes - continuing operations

 

 

 

298,235

 

 

147,689

 

 

150,546

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income tax expense - continuing operations

 

 

$

59,443

 

$

28,141

 

$

31,302

 

Restructuring, integration and other expenses  - continuing operations

 

 

 

18,985

 

 

15,665

 

 

3,320

 

Amortization of intangible assets and other - continuing operations

 

 

 

8,857

 

 

4,379

 

 

4,478

 

Income tax expense items, net - continuing operations

 

 

 

(24,980)

 

 

(16,742)

 

 

(8,238)

 

Adjusted income tax expense - continuing operations

 

 

 

62,305

 

 

31,443

 

 

30,862

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income - continuing operations

 

 

$

120,304

 

$

36,775

 

$

83,529

 

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

 

 

 

58,063

 

 

46,595

 

 

11,468

 

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

 

 

 

32,583

 

 

16,134

 

 

16,449

 

Income tax expense items, net - continuing operations

 

 

 

24,980

 

 

16,742

 

 

8,238

 

Adjusted income - continuing operations

 

 

 

235,930

 

 

116,246

 

 

119,684

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted earnings per share - continuing operations

 

 

$

1.06

 

$

0.33

 

$

0.72

 

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

 

 

 

0.51

 

 

0.42

 

 

0.10

 

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

 

 

 

0.29

 

 

0.14

 

 

0.14

 

Income tax expense items, net - continuing operations

 

 

 

0.21

 

 

0.15

 

 

0.07

 

Adjusted diluted EPS - continuing operations

 

 

 

2.07

 

 

1.04

 

 

1.03

 


* May not foot/crossfoot due to rounding

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal 

 

Quarters Ended

 

 

 

    

Year to Date

 

June 30,

 

March 31,

    

December 30,

    

September 30,

    

 

 

  

2018*

  

2018*

  

2018*

  

2017*

  

2017*

 

 

 

 

($ in thousands, except per share amounts)

 

GAAP selling, general and administrative expenses - continuing operations(1)

 

 

$

1,991,401

 

$

500,257

 

$

505,471

 

$

484,082

 

$

501,593

 

Amortization of intangible assets and other - continuing operations

 

 

 

(91,923)

 

 

(21,736)

 

 

(22,725)

 

 

(21,877)

 

 

(25,585)

 

Adjusted operating expenses - continuing operations(1)

 

 

 

1,899,478

 

 

478,521

 

 

482,746

 

 

462,204

 

 

476,007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income (loss) - continuing operations(1)

 

 

$

209,218

 

$

121,527

 

$

(58,494)

 

$

81,617

 

$

64,568

 

Restructuring, integration and other expenses - continuing operations

 

 

 

145,125

 

 

36,848

 

 

25,120

 

 

36,762

 

 

46,394

 

Goodwill impairment expense - continuing operations

 

 

 

181,440

 

 

 -

 

 

181,440

 

 

 -

 

 

 -

 

Amortization of intangible assets and other - continuing operations

 

 

 

91,923

 

 

21,736

 

 

22,725

 

 

21,877

 

 

25,585

 

Adjusted operating income - continuing operations(1)

 

 

 

627,706

 

 

180,111

 

 

170,791

 

 

140,256

 

 

136,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP other income (expense), net - continuing operations