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Avnet Reports Second Quarter Fiscal 2021 Financial Results

Update: January, 29/2021 - 03:43

  • $4.7 billion in sales, $0.19 EPS and $0.48 adjusted EPS exceeded guidance
  • Third consecutive quarter of operating margin improvement


PHOENIX, US - Media OutReach - 29 January 2020 - Avnet, Inc. (Nasdaq: AVT) today announced results for its second quarter ended January 2, 2021.


Fiscal Second Quarter Key Financial Highlights:

  • Sales of $4.7 billion up from $4.5 billion in the prior year quarter, supported by record sales in Asia of $2.2 billion, up 16% year over year.

     o   On constant currency basis, organic sales increased 4.8% after adjusting for 14 weeks of activity in the prior quarter.

  • GAAP diluted earnings per share of $0.19, compared with a GAAP diluted loss per share of $0.19 in the prior quarter, a 200% increase.

     o   Non-GAAP adjusted diluted earnings per share of $0.48, compared with $0.36 in the prior quarter, a 33% increase.

  • Farnell operating margins increased sequentially 97 basis points to 4.5%.
  • GAAP operating income margin of 1.2%, compared with 0.4% the prior quarter, and an adjusted operating income margin of 1.7%, compared with 1.4% in the prior quarter.
  • Achieved net working capital of 75 days, generating $85 million of cash flow from operations.
  • Sales of Texas Instruments (TI) products were $50 million compared with $399 million in the prior year.

     o   When excluding TI, organic sales grew 9.3% year over year on a constant currency basis.

 

CEO Commentary

"Improvements in our Farnell, EMEA and Americas businesses, complemented by a record revenue quarter in Asia, reflect our continued progress in driving operational efficiencies and enhancing key business lines through strategic investments. We've seen tangible results from this back to the basics strategy over the past two quarters with increased sales, improving returns on capital and a stronger balance sheet. As a result, we are better positioned today to manage our backlog and working capital to navigate uncertainties resulting from COVID-19," said Avnet Chief Executive Officer Phil Gallagher. "I am incredibly proud of our team's resilience amidst the challenges this past year. They've delivered significant value in providing uninterrupted service at a global scale and in working collaboratively with our customers and suppliers to manage forecasts, navigate current market dynamics and mitigate supply chain risk."

 

Key Financial Metrics

($ in millions, except per share data)

 

 

Second Quarter Results (GAAP)

 

 

 

Dec -- 20

   

Dec -- 19

   

Change Y/Y

   

Sep -- 20

   

Change Q/Q

 

Sales

 

$

 4,668.2

 

 

$

4,534.8

 

 

 2.9

%

 

$

4,723.1

 

 

 (1.2)

%

 

Operating Income

 

 

 57.2

 

 

 

 46.5

 

 

 23.1

%

 

 

 18.5

 

 

 209.3

%

 

Operating Income Margin

 

 

 1.2

%

 

 

 1.0

%

 

 21

bps

 

 

 0.4

%

 

 84

bps

 

Diluted Earnings (Loss) Per Share (EPS)

 

$

 0.19

 

 

$

 0.05

 

 

 280.0

%

 

$

 (0.19)

 

 

 200.0

%

 

Second Quarter Results (Non-GAAP)(1)

 

 

 

Dec -- 20

   

Dec -- 19

   

Change Y/Y

   

Sep -- 20

   

Change Q/Q

 

Sales

 

$

 4,668.2

 

 

$

4,534.8

 

 

 2.9

%

 

$

4,723.1

 

 

 (1.2)

%

 

Adjusted Operating Income

 

 

 79.6

 

 

 

82.2

 

 

 (3.2)

%

 

 

 65.1

 

 

 22.3

%

 

Adjusted Operating Income Margin

 

 

 1.7

%

 

 

1.8

%

 

 (11)

bps

 

 

 1.4

%

 

 32

bps

 

Adjusted Diluted Earnings Per Share (EPS)

 

$

 0.48

 

 

$

0.40

 

 

 20.0

%

 

$

 0.36

 

 

 33.3

%

 

Segment and Geographical Mix

 

 

 

Dec -- 20

   

Dec -- 19

   

Change Y/Y

 

Sep -- 20

   

Change Q/Q

 

Electronic Components (EC) Sales

 

$

 4,342.4

 

 

$

4,203.6

 

 

 3.3

%

 

$

4,382.2

 

 

 (0.9)

%

 

EC Operating Income Margin

 

 

 2.4

%

 

 

2.2

%

 

 17

bps

 

 

1.9

%

 

 46

bps

 

Farnell Sales

 

$

 325.8

 

 

$

331.2

 

 

 (1.6)

%

 

$

340.9

 

 

 (4.4)

%

 

Farnell Operating Income Margin

 

 

 4.5

%

 

 

6.0

%

 

 (155)

bps

 

 

3.5

%

 

 97

bps

 

Americas Sales

 

$

 1,101.5

 

 

$

1,186.6

 

 

 (7.2)

%

 

$

1,205.7

 

 

 (8.7)

%

 

EMEA Sales

 

 

 1,346.3

 

 

 

1,425.8

 

 

 (5.6)

%

 

 

1,480.7

 

 

 (9.1)

%

 

Asia Sales

 

 

 2,220.4

 

 

 

1,922.4

 

 

 15.5

%

 

 

2,036.7

 

 

 9.0

%

 

TI Sales

 

 

 

Dec -- 20

   

Dec -- 19

   

Change Y/Y

 

Sep -- 20

   

Change Q/Q

 

Sales of TI Products

 

$

 49.6

 

 

$

399.2

 

 

 (87.6)

%

 

$

241.0

 

 

 (79.4)

%

 


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

 

CFO Commentary

"During the second quarter, we delivered sales of $4.7 billion and adjusted diluted earnings per share of $0.48, driven by strong execution and a streamlined cost structure that has allowed us to achieve increased revenue without adding significant operating expense. Our year over year top line growth and careful working capital management enabled us to achieve our goal of 75 net working capital days," said Avnet CFO Tom Liguori. "Our $75 million operating expense reduction plan was fully implemented in the quarter, driving our ninth consecutive quarter of positive operating cash flows. We remain on track to achieve our $245 million operating expense reduction plan by the end of fiscal year 2022. We are delivering improved financial and competitive performance, building Avnet's core distribution business while still strategically investing in Farnell, where we see tremendous opportunity to deliver profitable growth."

 

Additional Second Quarter Fiscal 2021 Updates

  • Returned $21 million to shareholders with dividends paid during the quarter.
  • Achieved highest quarterly transportation revenue in 6 quarters in the Americas and Asia.
  • Farnell selected as the authorized global distributor for National Instruments (NI).
  • Avnet rejoined the Electronic Components Industry Association (ECIA) as a distributor member. 
  • Named Infineon's Best Performance GC Distribution Partner, Greater China PSS and Industrial Power Control Greater China.
  • Named Micron's Top EBU Demand Creation and Leading Automotive Tier One.


Outlook for the Third Quarter of Fiscal 2021 Ending on April 3, 2021


 

 

 

 

 

 

    

Guidance Range

    

Midpoint

Sales

 

$4.3B -- $4.7B

 

$4.5B

Non-GAAP Diluted EPS(1)

 

$0.52 -- $0.58

 

$0.55


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


The above guidance is based upon market conditions existing as of today, seasonally lower revenues in Asia, gross margin improvement due to the mix shift from Asia to Americas and EMEA, and ongoing cost reduction programs. It excludes amortization of intangibles, any potential restructuring, integration, and other expenses and certain income tax adjustments. The above sales guidance assumes approximately $50 million in lower sales of Texas Instruments products as compared to the second quarter of fiscal 2021. The above guidance assumes 100 million average diluted shares outstanding and average U.S. Dollar to Euro and GBP currency exchange rates are as shown below:


 

 

 

 

 

 

 

 

 

Q3 Fiscal

 

 

 

 

 

 

2021

 

Q2 Fiscal

 

Q3 Fiscal

 

 

Guidance

    

2021

    

2020

Euro

 

$1.21

 

$1.19

 

$1.10

GBP

 

$1.36

 

$1.32

 

$1.28


Today's Conference Call and Webcast Details

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

 

Those who would still like to participate in the live call can dial 877-407-8112 or 201-689-8840. A replay of the conference call will be available for 90 days, through April 27, 2021 at 5:00 p.m. ET, and can be accessed by dialing: 877-660-6853 or 201-612-7415 and using Conference ID: 13713922.


Forward-Looking Statements

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the financial condition, results of operations and business of the Company. You can find many of these statements by looking for words like "believes," "plans," "expects," "anticipates," "should," "will," "may," "estimates" or similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties. You should understand that the following important factors, in addition to those discussed elsewhere in the Company's Annual Report on Form 10-K for the fiscal year ended June 27, 2020 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, could affect the Company's future results of operations, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements: the scope and duration of the COVID-19 pandemic and its impact on global economic systems, access to financial markets and the Company's employees, operations, customers, and supply chain; competitive pressures among distributors of electronic components; an industry down-cycle in semiconductors; relationships with key suppliers and allocations of products by suppliers; risks relating to the Company's international sales and operations, including risks relating to the ability to repatriate cash, foreign currency fluctuations, duties and taxes, and compliance with international and U.S. laws; risks relating to acquisitions, divestitures and investments; adverse effects on the Company's supply chain, operations of its distribution centers, shipping costs, third-party service providers, customers and suppliers, including as a result of issues caused by natural and weather-related disasters, pandemics and health related crisis, social unrest or warehouse modernization and relocation efforts; risks related to cyber-attacks and the Company's information systems, including related to current or future implementations; general economic and business conditions (domestic, foreign and global) affecting the Company's operations and financial performance and, indirectly, the Company's credit ratings, debt covenant compliance, and liquidity and access to financing; geopolitical events, including the uncertainty caused by the United Kingdom's exit from, and agreement for a new partnership with, the European Union; and legislative or regulatory changes affecting the Company's businesses.

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


About Avnet

Avnet is a global electronic components distributor with extensive design, product, marketing and supply chain expertise for customers and suppliers at every stage of the product lifecycle. For the past 100 years, 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)



This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the financial condition, results of operations and business of the Company. You can find many of these statements by looking for words like “believes,” “plans,” “expects,” “anticipates,” “should,” “will,” “may,” “estimates” or similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties. You should understand that the following important factors, in addition to those discussed elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended June 27, 2020 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, could affect the Company’s future results of operations, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements: the scope and duration of the COVID-19 pandemic and its impact on global economic systems, access to financial markets and the Company’s employees, operations, customers, and supply chain; competitive pressures among distributors of electronic components; an industry down-cycle in semiconductors; relationships with key suppliers and allocations of products by suppliers; risks relating to the Company’s international sales and operations, including risks relating to the ability to repatriate cash, foreign currency fluctuations, duties and taxes, and compliance with international and U.S. laws; risks relating to acquisitions, divestitures and investments; adverse effects on the Company’s supply chain, operations of its distribution centers, shipping costs, third-party service providers, customers and suppliers, including as a result of issues caused by natural and weather-related disasters, pandemics and health related crisis, social unrest or warehouse modernization and relocation efforts; risks related to cyber-attacks and the Company’s information systems, including related to current or future implementations; general economic and business conditions (domestic, foreign and global) affecting the Company’s operations and financial performance and, indirectly, the Company’s credit ratings, debt covenant compliance, and liquidity and access to financing; geopolitical events, including the uncertainty caused by the United Kingdom’s exit from, and agreement for a new partnership with, the European Union; and legislative or regulatory changes affecting the Company’s businesses. Any forward-looking statement speaks only as of the date on which that statement is made. Except as required by law, the Company assumes no obligation to update any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made.

AVNET, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarters Ended

 

Six Months Ended

 

 

    

January 2,

    

December 28,

    

January 2,

    

December 28,

 

 

 

2021

 

2019

 

2021

 

2019

 

 

 

(Thousands, except per share data)

 

Sales

 

$

 4,668,172

 

$

 4,534,806

 

$

 9,391,232

 

$

 9,164,814

 

Cost of sales

 

 

 4,156,919

 

 

 4,009,193

 

 

 8,363,899

 

 

 8,095,362

 

Gross profit

 

 

 511,253

 

 

 525,613

 

 

 1,027,333

 

 

 1,069,452

 

Selling, general and administrative expenses

 

 

 442,084

 

 

 464,873

 

 

 913,241

 

 

 921,377

 

Restructuring, integration and other expenses

 

 

 11,948

 

 

 14,265

 

 

 38,369

 

 

 38,863

 

Operating income

 

 

 57,221

 

 

 46,475

 

 

 75,723

 

 

 109,212

 

Other (expense) income, net

 

 

 (1,333)

 

 

 (1,963)

 

 

 (20,831)

 

 

 2,969

 

Interest and other financing expenses, net

 

 

 (21,485)

 

 

 (33,904)

 

 

 (43,787)

 

 

 (67,535)

 

Income before taxes

 

 

 34,403

 

 

 10,608

 

 

 11,105

 

 

 44,646

 

Income tax expense (benefit)

 

 

 15,240

 

 

 6,940

 

 

 10,831

 

 

 (774)

 

Net income

 

$

 19,163

 

$

 3,668

 

$

 274

 

$

 45,420

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 0.19

 

$

 0.04

 

$

0.00

 

$

 0.45

 

Diluted

 

$

 0.19

 

$

 0.04

 

$

0.00

 

$

 0.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used to compute earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 98,937

 

 

 100,431

 

 

 98,917

 

 

 101,781

 

Diluted

 

 

 99,932

 

 

 101,302

 

 

 99,897

 

 

 102,839

 

Cash dividends paid per common share

 

$

 0.21

 

$

 0.21

 

$

 0.42

 

$

 0.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


AVNET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

    

January 2,

    

June 27,

 

 

 

2021

 

2020

 

 

 

(Thousands)

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 376,333

 

$

 477,038

 

Receivables, net

 

 

 3,105,317

 

 

 2,928,386

 

Inventories

 

 

 2,816,421

 

 

 2,731,988

 

Prepaid and other current assets

 

 

 156,375

 

 

 191,394

 

Total current assets

 

 

 6,454,446

 

 

 6,328,806

 

Property, plant and equipment, net

 

 

 403,270

 

 

 404,607

 

Goodwill

 

 

 834,795

 

 

 773,734

 

Intangible assets, net

 

 

 38,812

 

 

 65,437

 

Operating lease assets

 

 

 284,886

 

 

 275,917

 

Other assets

 

 

 248,104

 

 

 256,696

 

Total assets

 

$

 8,264,313

 

$

 8,105,197

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Short-term debt

 

$

 311,800

 

$

 51

 

Accounts payable

 

 

 1,935,661

 

 

 1,754,078

 

Accrued expenses and other

 

 

 520,463

 

 

 472,924

 

Short-term operating lease liabilities

 

 

 58,400

 

 

 53,313

 

Total current liabilities

 

 

 2,826,324

 

 

 2,280,366

 

Long-term debt

 

 

 895,639

 

 

 1,424,791

 

Long-term operating lease liabilities

 

 

 259,599

 

 

 253,719

 

Other liabilities

 

 

 372,018

 

 

 419,923

 

Total liabilities

 

 

 4,353,580

 

 

 4,378,799

 

Shareholders' equity

 

 

 3,910,733

 

 

 3,726,398

 

Total liabilities and shareholders' equity

 

$

 8,264,313

 

$

 8,105,197

 

 

 

 

 

 

 

 

 


AVNET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

    

January 2, 2021

    

December 28, 2019

 

 

 

(Thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

 

$

 274

 

$

 45,420

 

 

 

 

 

 

 

 

 

Non-cash and other reconciling items:

 

 

 

 

 

 

 

Depreciation

 

 

 44,002

 

 

 49,822

 

Amortization

 

 

 30,474

 

 

 41,257

 

Amortization of operating lease assets

 

 

 28,111

 

 

 31,354

 

Deferred income taxes

 

 

 (311)

 

 

 (15,518)

 

Stock-based compensation

 

 

 15,331

 

 

 14,503

 

Asset impairment expense

 

 

 15,166

 

 

 --

 

Other, net

 

 

 17,004

 

 

 22,157

 

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

 

 

 

 

 

 

 

Receivables

 

 

 (94,831)

 

 

 185,598

 

Inventories

 

 

 51,185

 

 

 94,182

 

Accounts payable

 

 

 130,768

 

 

 (52,711)

 

Accrued expenses and other, net

 

 

 (29,779)

 

 

 (71,858)

 

Net cash flows provided by operating activities

 

 

 207,394

 

 

 344,206

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Borrowings (repayments) under accounts receivable securitization, net

 

 

 11,800

 

 

 (35,400)

 

Repayments under senior unsecured credit facility, net

 

 

 (239,430)

 

 

 (1,376)

 

Repayments under bank credit facilities and other debt, net

 

 

 (1,480)

 

 

 (1,301)

 

Repurchases of common stock

 

 

 --

 

 

 (198,630)

 

Dividends paid on common stock

 

 

 (41,512)

 

 

 (42,426)

 

Other, net

 

 

 (2,301)

 

 

 (4,887)

 

Net cash flows used for financing activities

 

 

 (272,923)

 

 

 (284,020)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

 (30,022)

 

 

 (44,252)

 

Acquisitions of assets

 

 

 (18,371)

 

 

 (51,509)

 

Other, net

 

 

 725

 

 

 (13,098)

 

Net cash flows used for investing activities

 

 

 (47,668)

 

 

 (108,859)

 

Effect of currency exchange rate changes on cash and cash equivalents

 

 

 12,492

 

 

 (8,622)

 

Cash and cash equivalents:

 

 

 

 

 

 

 

-- decrease

 

 

 (100,705)

 

 

 (57,295)

 

-- at beginning of period

 

 

 477,038

 

 

 546,105

 

-- at end of period

 

$

 376,333

 

$

 488,810

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Information

 

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

 

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

 

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

 

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

 

Management also believes income tax expense (benefit), net income and diluted earnings (loss) per share adjusted for the impact of the items described above and certain items impacting other income (expense) and income tax expense (benefit) are useful to investors because they provide a measure of the Company's net profitability on a more comparable basis to historical periods and provide a more meaningful basis for forecasting future performance. Adjustment to income tax expense (benefit) and the effective income tax rate include the effect of changes in tax laws including recent tax law changes in the U.S., certain changes in valuation allowances and unrecognized tax benefits, income tax audit settlements and adjustments to the adjusted interim effective tax rate based upon the expected annual adjusted effective tax rate. Additionally, because of management's focus on generating shareholder value, of which net profitability is a primary driver, management believes income from continuing operations and diluted earnings (loss) 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

 

Quarters Ended

 

 

 

Year to Date

 

January 2,

 

October 3,

 

 

 

2021*

  

2021

 

2020

 

 

 

($ in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

GAAP selling, general and administrative expenses

 

 

$

 913,241

 

$

 442,084

 

$

 471,158

Amortization of intangible assets and other

 

 

 

 (30,592)

 

 

 (10,417)

 

 

 (20,175)

Adjusted operating expenses 

 

 

 

 882,649

 

 

 431,667

 

 

 450,983

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income

 

 

$

 75,723

 

$

 57,221

 

$

 18,502

Restructuring, integration and other expenses

 

 

 

 38,369

 

 

 11,948

 

 

 26,420

Amortization of intangible assets and other

 

 

 

 30,592

 

 

 10,417

 

 

 20,175

Adjusted operating income

 

 

 

 144,683

 

 

 79,586

 

 

 65,097

 

 

 

 

 

 

 

 

 

 

 

GAAP income (loss) before income taxes

 

 

$

 11,105

 

$

 34,403

 

$

 (23,297)

Restructuring, integration and other expenses

 

 

 

 38,369

 

 

 11,948

 

 

 26,420

Amortization of intangible assets and other

 

 

 

 30,592

 

 

 10,417

 

 

 20,175

Other expenses - equity investment impairments

 

 

 

 15,274

 

 

 51

 

 

 15,223

Adjusted income before income taxes

 

 

 

 95,340

 

 

 56,819

 

 

 38,521

 

 

 

 

 

 

 

 

 

 

 

GAAP income tax expense (benefit)

 

 

$

 10,831

 

$

 15,240

 

$

 (4,408)

Restructuring, integration and other expenses 

 

 

 

 7,178

 

 

 2,577

 

 

 4,601

Amortization of intangible assets and other

 

 

 

 7,066

 

 

 2,037

 

 

 5,029

Other expenses - equity investment impairments

 

 

 

 52

 

 

 26

 

 

 26

Income tax expense items, net

 

 

 

 (13,498)

 

 

 (10,788)

 

 

 (2,710)

Adjusted income tax expense

 

 

 

 11,629

 

 

 9,092

 

 

 2,538

 

 

 

 

 

 

 

 

 

 

 

GAAP net income (loss)

 

 

$

 274

 

$

 19,163

 

$

 (18,889)

Restructuring, integration and other expenses (net of tax)

 

 

 

 31,191

 

 

 9,371

 

 

 21,819

Amortization of intangible assets and other (net of tax)

 

 

 

 23,526

 

 

 8,380

 

 

 15,146

Other expenses - equity investment impairments (net of tax)

 

 

 

 15,222

 

 

 25

 

 

 15,197

Income tax expense items, net

 

 

 

 13,498

 

 

 10,788

 

 

 2,710

Adjusted net income

 

 

 

 83,711

 

 

 47,727

 

 

 35,983

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted earnings (loss) per share

 

 

$

$ 0.00

 

$

 0.19

 

$

 (0.19)

Restructuring, integration and other expenses (net of tax)

 

 

 

 0.31

 

 

 0.09

 

 

 0.22

Amortization of intangible assets and other (net of tax)

 

 

 

 0.24

 

 

 0.09

 

 

 0.15

Other expenses - equity investment impairments (net of tax)

 

 

 

 0.15

 

 

 -

 

 

 0.15

Income tax expense items, net

 

 

 

 0.14

 

 

 0.11

 

 

 0.03

Adjusted diluted EPS

 

 

 

 0.84

 

 

 0.48

 

 

 0.36


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


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarters Ended

 

Fiscal Year

 

June 27,

 

March 28,

 

December 29,

 

September 29,

 

2020*

  

2020*

 

2020*

 

2019*

 

2019*

 

($ in thousands, except per share amounts)

GAAP selling, general and administrative expenses

$

 1,842,122

 

$

 451,099

 

$

 469,646

 

$

 464,873

 

$

 456,503

Amortization of intangible assets and other

 

 (81,555)

 

 

 (18,952)

 

 

 (21,071)

 

 

 (21,454)

 

 

 (20,078)

Adjusted operating expenses 

 

 1,760,567

 

 

 432,147

 

 

 448,576

 

 

 443,419

 

 

 436,426

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating (loss) income

$

 (4,628)

 

$

 1,920

 

$

 (115,760)

 

$

 46,475

 

$

 62,738

Restructuring, integration and other expenses

 

 81,870

 

 

 23,796

 

 

 19,211

 

 

 14,265

 

 

 24,598

Goodwill and intangible asset impairment expenses (benefits)

 

 144,092

 

 

 (1,744)

 

 

 145,836

 

 

 -

 

 

 -

Amortization of intangible assets and other

 

 81,555

 

 

 18,952

 

 

 21,071

 

 

 21,454

 

 

 20,078

Adjusted operating income

 

 302,889

 

 

 42,924

 

 

 70,358

 

 

 82,194

 

 

 107,414

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP (loss) income before income taxes

$

 (128,107)

 

$

 (16,144)

 

$

 (158,086)

 

$

 12,086

 

$

 34,038

Restructuring, integration and other expenses

 

 81,870

 

 

 23,796

 

 

 19,211

 

 

 14,265

 

 

 24,598

Goodwill and intangible asset impairment expenses (benefits)

 

 144,092

 

 

 (1,744)

 

 

 145,836

 

 

 -

 

 

 -

Amortization of intangible assets and other

 

 81,555

 

 

 18,952

 

 

 21,071

 

 

 21,454

 

 

 20,078

Other expenses and early debt redemption

 

 21,582

 

 

 2,054

 

 

 15,526

 

 

 4,002

 

 

 -

Adjusted income before income taxes

 

 200,992

 

 

 26,914

 

 

 43,558

 

 

 51,807

 

 

 78,713

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income tax expense (benefit)

$

 (98,574)

 

$

 (68,304)

 

$

 (29,425)

 

$

 6,870

 

$

 (7,714)

Restructuring, integration and other expenses 

 

 18,648

 

 

 4,659

 

 

 4,372

 

 

 3,377

 

 

 6,240

Goodwill and intangible asset impairment expenses

 

 6,433

 

 

 207

 

 

 6,226

 

 

 -

 

 

 -

Amortization of intangible assets and other

 

 16,119

 

 

 3,613

 

 

 4,307

 

 

 3,964

 

 

 4,235

Other expenses and early debt redemption

 

 6,238

 

 

 506

 

 

 4,992

 

 

 740

 

 

 -

Income tax benefit (expense) items, net

 

 47,655

 

 

 22,996

 

 

 15,119

 

 

 (4,071)

 

 

 13,611

Adjusted income tax (benefit) expense

 

 (3,481)

 

 

 (36,323)

 

 

 5,591

 

 

 10,880

 

 

 16,372

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net (loss) income

$

 (29,533)

 

$

 52,160

 

$

 (128,661)

 

$

 5,216

 

$

 41,752

Restructuring, integration and other expenses (net of tax)

 

 63,222

 

 

 19,137

 

 

 14,839

 

 

 10,888

 

 

 18,358

Goodwill and intangible asset impairment expenses (benefits) (net of tax)

 

 137,659

 

 

 (1,951)

 

 

 139,610

 

 

 -

 

 

 -

Amortization of intangible assets and other (net of tax)

 

 65,436

 

 

 15,339

 

 

 16,764

 

 

 17,490

 

 

 15,843

Other expenses and early debt redemption (net of tax)

 

 15,344

 

 

 1,548

 

 

 10,534

 

 

 3,262

 

 

 -

Income tax (benefit) expense items, net

 

 (47,655)

 

 

 (22,996)

 

 

 (15,119)

 

 

 4,071

 

 

 (13,611)

Adjusted net income

 

 204,473

 

 

 63,237

 

 

 37,967

 

 

 40,927

 

 

 62,341

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted (loss) earnings per share

$

 (0.29)

 

$

 0.53

 

$

 (1.29)

 

$

 0.05

 

$

 0.40

Restructuring, integration and other expenses (net of tax)

 

 0.63

 

 

 0.19

 

 

 0.15

 

 

 0.11

 

 

 0.18

Goodwill and intangible asset impairment expenses (benefits) (net of tax)

 

 1.37

 

 

 (0.02)

 

 

 1.39

 

 

 -

 

 

 -

Amortization of intangible assets and other (net of tax)

 

 0.65

 

 

 0.15

 

 

 0.17

 

 

 0.17

 

 

 0.15

Other expenses and early debt redemption (net of tax)

 

 0.15

 

 

 0.02

 

 

 0.11

 

 

 0.03

 

 

 -

Income tax (benefit) expense items, net

 

 (0.47)

 

 

 (0.23)

 

 

 (0.15)

 

 

 0.04

 

 

 (0.13)

Adjusted diluted EPS

 

 2.04

 

 

 0.64

 

 

 0.38

 

 

 0.40

 

 

 0.60

 


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


Sales of TI Products

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter

 

First Quarter

 

Fourth Quarter

 

Third Quarter

 

Second Quarter

 

 

January 2,

 

October 3,

 

June 27,

 

March 28,

 

December 28,

 

 

2021

 

2020

 

2020

 

2020

 

2019

 

 

(in millions)

Sales of TI Products

 

$

 49.6

 

$

 241.0

 

$

 322.5

 

$

 400.6

 

$

399.2


Organic Sales

 

Organic sales is defined as sales adjusted for the impact of significant acquisitions, divestitures and other items by adjusting Avnet's prior and current periods (if necessary) to include the sales of acquired businesses and exclude the sales of divested businesses as if the acquisitions and divestitures had occurred at the beginning of the earliest period presented. Additionally, fiscal 2021 sales are adjusted for the estimated impact of the extra week of sales in the first quarter of fiscal 2021 due to the 14-week fiscal first quarter and the 53-week fiscal year. Organic sales in constant currency is defined as organic sales (as defined above) excluding the impact of changes in foreign currency exchange rates.

 

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

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six Months Ended

 

 

Sales

 

 

 

 

Organic

 

 

 

 

 

 

 

 

 

 

 

 

Organic

 

 

As Reported

 

 

 

Sales

 

Sales

 

 

 

Organic

 

 

 

Sales

 

 

and Organic

 

TI Sales

 

Adj for TI

 

As Reported

 

Estimated

 

Sales

 

TI Sales

 

Adj for TI

 

 

Q2-Fiscal

 

Q2-Fiscal

 

Q2-Fiscal

 

Q2-Fiscal

 

Extra

 

Q2-Fiscal

 

Q2-Fiscal

 

Q2-Fiscal

 

    

2021

    

2021(1)

    

2021(1)

    

2021

    

Week(2)

    

2021

    

2021(1)

    

2021(1)

 

 

(in millions)

Avnet

 

$

 4,668.2

 

$

 49.6

 

$

 4,618.6

 

$

 9,391.2

 

$

 306.0

 

$

 9,085.2

 

$

 290.6

 

$

 8,794.6

Avnet by region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

 1,101.5

 

$

 14.0

 

$

 1,087.5

 

$

 2,307.1

 

$

 77.0

 

$

 2,230.1

 

$

 82.5

 

$

 2,147.6

EMEA

 

 

 1,346.3

 

 

 20.8

 

 

 1,325.5

 

 

 2,827.0

 

 

 97.0

 

 

 2,730.0

 

 

 123.7

 

 

 2,606.3

Asia

 

 

 2,220.4

 

 

 14.8

 

 

 2,205.6

 

 

 4,257.1

 

 

 132.0

 

 

 4,125.1

 

 

 84.4

 

 

 4,040.7

Avnet by segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EC

 

$

 4,342.4

 

$

 49.6

 

$

 4,292.8

 

$

 8,724.5

 

$

 284.0

 

$

 8,440.5

 

$

 290.6

 

$

 8,149.9

Farnell

 

 

 325.8

 

 

 --

 

 

 325.8

 

 

 666.7

 

 

 22.0

 

 

 644.7

 

 

 --

 

 

 644.7


(1)         Sales adjusted for the impact of the termination of the TI distribution contract.

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

 

The following table presents reported and organic sales growth rates for the second quarter and first six months of fiscal 2021 compared to fiscal 2020.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six Months Ended

 

 

 

 

 

 

Sales

 

Organic

 

 

 

 

 

 

 

 

 

 

 

Organic

 

 

 

 

 

As Reported

 

Sales

 

 

 

 

Sales

 

 

 

 

Organic

 

Sales

 

 

Sales

 

 

and Organic

 

Adj for TI

 

 

 

 

As Reported

 

 

 

 

Sales

 

Adj for TI

 

 

As Reported

 

Year-Year %

 

Year-Year %

 

Sales

 

Year-Year %

 

Organic

 

Year-Year %

 

Year-Year %

 

 

and Organic

 

Change in

 

Change in

 

As Reported

 

Change in

 

Sales

 

Change in

 

Change in

 

 

Year-Year

 

Constant 

 

Constant

 

Year-Year

 

Constant 

 

Year-Year

 

Constant

 

Constant

 

    

% Change

    

Currency

    

Currency(1)

    

% Change

    

Currency