Avnet Reports First Quarter Fiscal 2019 Financial Results

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 113 million average diluted shares outstanding and the average U.S. Dollar to Euro currency exchange rate for the second quarter of fiscal 2019 is $1.16 to €1.00. This compares with an average exchange rate of $1.18 to €1.00 in the second quarter of fiscal 2018.

Today’s Conference Call and Webcast Details:

Avnet will host a quarterly teleconference and webcast today at 1:30 p.m. PDT. To participate in the live call, dial 877-407-8112 or 201-689-8840. The slides can be accessed by following this link: AVNET EARNINGS CALL WEBCAST AND SLIDES or via Avnet’s Investor Relations web page at https://ir.avnet.com/. A replay of the conference call will be available for 30 days, through November 25 at 2:00 p.m. PT, and can be accessed by dialing: 877-660-6853 or 201-612-7415 and using Conference ID: 13683601.

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, 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)

AVNET, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

   
First Quarters Ended
September 29, September 30,
2018   2017  
(Thousands, except per share data)
Sales $ 5,089,879 $ 4,660,943
Cost of sales   4,453,129     4,048,388  
Gross profit 636,750 612,555
Selling, general and administrative expenses 475,146 501,593
Restructuring, integration and other expenses   14,788     46,394  
Operating income 146,816 64,568
Other income (expense), net (1,892 ) 18,921
Interest and other financing expenses, net   (30,093 )   (22,015 )
Income from continuing operations before taxes 114,831 61,474
Income tax expense   31,302     3,292  
Income from continuing operations, net of tax 83,529 58,182
Income from discontinued operations, net of tax   195     121  
Net income $ 83,724   $ 58,303  
 
Earnings per share - basic:
Continuing operations $ 0.73 $ 0.48
Discontinued operations   0.00     0.00  
Net income per share basic $ 0.73   $ 0.48  
 
Earnings per share - diluted:
Continuing operations $ 0.72 $ 0.47
Discontinued operations   0.00     0.00  
Net income per share diluted $ 0.72   $ 0.47  
 
Shares used to compute earnings per share:
Basic   115,260     122,685  
Diluted   116,471     123,984  
Cash dividends paid per common share $ 0.20   $ 0.18  
 

AVNET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

   
September 29, June 30,
2018 2018
(Thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 365,852 $ 621,125
Receivables, net 3,682,512 3,641,139
Inventories 3,395,194 3,141,822
Prepaid and other current assets   114,432   206,513
Total current assets 7,557,990 7,610,599
Property, plant and equipment, net 525,873 522,909
Goodwill 982,306 980,872
Intangible assets, net 199,379 219,913
Other assets   188,226   262,552
Total assets $ 9,453,774 $ 9,596,845
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt $ 10,626 $ 165,380
Accounts payable 2,352,771 2,269,478
Accrued expenses and other   501,435   534,603
Total current liabilities 2,864,832 2,969,461
Long-term debt 1,554,722 1,489,219
Other liabilities   413,147   453,084
Total liabilities 4,832,701 4,911,764
Shareholders’ equity   4,621,073   4,685,081
Total liabilities and shareholders’ equity $ 9,453,774 $ 9,596,845
 

AVNET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

   
Three Months Ended
September 29, 2018 September 30, 2017
(Thousands)
Cash flows from operating activities:
Net income $ 83,724 $ 58,303
Less: Income from discontinued operations, net of tax   195     121  
Income from continuing operations 83,529 58,182
 
Non-cash and other reconciling items:
Depreciation 25,389 38,263
Amortization 20,810 25,506
Deferred income taxes 36,830 (23,436 )
Stock-based compensation 9,044 8,609
Other, net 14,994 4,902
Changes in (net of effects from businesses acquired and divested):
Receivables (19,292 ) (32,409 )
Inventories (269,649 ) (266,998 )
Accounts payable 95,119 37,252
Accrued expenses and other, net   (81,753 )   22,140  
Net cash flows used for operating activities - continuing operations   (84,979 )   (127,989 )
Net cash flows used for operating activities - discontinued operations        
Net cash flows used for operating activities   (84,979 )   (127,989 )
 
Cash flows from financing activities:
Borrowings (repayments) under accounts receivable securitization, net (40,000 ) 28,000
Repayments under senior unsecured credit facility, net (50,330 ) (92,471 )
Repayments under bank credit facilities and other debt, net (1,217 ) (24,888 )
Repurchases of common stock (149,094 ) (68,113 )
Dividends paid on common stock (22,932 ) (22,012 )
Other, net   17,328     (579 )
Net cash flows used for financing activities - continuing operations   (246,245 )   (180,063 )
Net cash flows used for financing activities - discontinued operations        
Net cash flows used for financing activities   (246,245 )   (180,063 )
 
Cash flows from investing activities:
Purchases of property, plant and equipment (41,007 ) (26,659 )
Acquisitions of businesses, net of cash acquired (14,661 )
Other, net   65     1,211  
Net cash flows used for investing activities - continuing operations   (40,942 )   (40,109 )
Net cash flows provided by investing activities - discontinued operations   120,000     45,391  
Net cash flows provided by investing activities   79,058     5,282  
Effect of currency exchange rate changes on cash and cash equivalents (3,107 ) 6,065
Cash and cash equivalents:
— decrease (255,273 ) (296,705 )
— at beginning of period   621,125     836,384  
— at end of period $ 365,852   $ 539,679  
 

Non-GAAP Financial Information

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