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Avnet Reports Fourth Quarter and Fiscal 2020 Financial Results

Quarterly revenues of $4.2 billion

Operating cash flow of $730 million for fiscal year 2020 and $288 million for the quarter

PHOENIX — (BUSINESS WIRE) — August 6, 2020 — Avnet, Inc. (Nasdaq: AVT) today announced results for its fourth quarter and fiscal year ended June 27, 2020.

Fiscal Fourth Quarter Key Financial Highlights:

CEO Commentary

“In the fourth quarter, we delivered quarterly revenues above consensus and generated strong operating cash flow,” said Avnet Interim CEO Phil Gallagher. “Despite the challenges of the COVID-19 operating environment, we are committed to improving our bottom-line results. In fiscal year 2021, we will enhance our core distribution business capabilities, while helping our current and future supplier partners deploy their technologies to over two million customers.”

Gallagher continued, “I want to thank all of our employees for their continued dedication and commitment to Avnet, especially during the uncertainties of the pandemic. Our people’s health and safety remains our top priority. As we enter fiscal year 2021, we will work to manage our costs while still making investments in the business that will ensure we are well-positioned to benefit as the market recovers.”

Key Financial Metrics

($ in millions, except per share data)

 

 

 

 

 

 

 

 

 

 

Fourth Quarter Results (GAAP)

 

Jun – 20

Jun – 19

Change Y/Y

Mar – 20

Change Q/Q

Sales

$

4,159.7

 

$

4,680.9

 

(11.1

)%

$

4,309.8

 

(3.5

)%

Operating Income (Loss)

 

1.9

 

 

(30.0

)

106.4

%

 

(115.8

)

101.7

%

Operating Income (Loss) Margin

 

0.1

%

 

(0.6

)%

69

bps

 

(2.7

)%

274

bps

Diluted Earnings (Loss) Per Share

$

0.53

 

$

(0.33

)

260.6

%

$

(1.29

)

141.1

%

Fourth Quarter Results (Non-GAAP)(1)

 

Jun – 20

Jun – 19

Change Y/Y

Mar – 20

Change Q/Q

Sales

$

4,159.7

 

$

4,680.9

 

(11.1

)%

$

4,309.8

 

(3.5

)%

Adjusted Operating Income

 

42.9

 

 

156.3

 

(72.5

)%

 

70.4

 

(39.0

)%

Adjusted Operating Income Margin

 

1.0

%

 

3.3

%

(231

) bps

 

1.6

%

(60

) bps

Adjusted Diluted Earnings Per Share

$

0.64

 

$

0.95

 

(32.6

)%

$

0.38

 

68.4

%

Segment and Geographical Mix

 

Jun – 20

Jun – 19

Change Y/Y

Mar – 20

Change Q/Q

Electronic Components (EC) Sales

$

3,867.6

 

$

4,337.5

 

(10.8

)%

$

3,974.7

 

(2.7

)%

EC Operating Income Margin

 

1.5

%

 

3.3

%

(173

) bps

 

2.1

%

(61

) bps

Farnell Sales

$

292.1

 

$

343.4

 

(15.0

)%

$

335.1

 

(12.9

)%

Farnell Operating Income Margin

 

3.6

%

 

9.7

%

(610

) bps

 

7.0

%

(340

) bps

Americas Sales

$

1,149.3

 

$

1,266.3

 

(9.2

)%

$

1,203.6

 

(4.5

)%

EMEA Sales

 

1,344.2

 

 

1,638.5

 

(18.0

)%

 

1,512.5

 

(11.1

)%

Asia Sales

 

1,666.2

 

 

1,776.1

 

(6.2

)%

 

1,593.7

 

4.6

%

______________________________

(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 fourth quarter, we delivered sales of $4.2 billion and adjusted diluted EPS of $0.64 despite the uncertain environment,” said Avnet CFO Tom Liguori. “Our business operations and finance teams worked diligently throughout the quarter to optimize our working capital and deliver value to our customers. Our quarterly cash flow from operations totaled $288 million, which marks the 7th consecutive quarter of positive cash flow. For fiscal year 2020, our operating cash flow totaled $730 million.”

Liguori continued, “While taking steps to conserve cash in the quarter, we also reduced adjusted operating expenses by $16 million sequentially and by $7 million year over year. Looking ahead, as we evaluate the economic impact of COVID-19 and the current demand environment, we are establishing a plan to reduce our net operating expenses by $75 million annually. This plan will be in place by the December quarter, and we will implement it while continuing to optimize our working capital levels.

Additional Fourth Quarter Fiscal 2020 Updates

Outlook for the First Quarter of Fiscal 2021 Ending on October 3, 2020

 

 

 

 

 

 

 

Guidance Range

 

Midpoint

Sales

 

$3.8B – $4.2B

 

$4.0B

Non-GAAP Diluted EPS(1)

 

$0.00 – $0.16

 

$0.08

Estimated Annual Tax Rate

 

17% – 21%

 

19%

______________________________

(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, and excludes amortization of intangibles, any potential restructuring, integration, and other expenses and certain income tax adjustments. 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:

 

 

 

 

 

 

 

 

 

Q1 Fiscal

 

 

 

 

 

 

2021

 

Q4 Fiscal

 

Q1 Fiscal

 

 

Guidance

 

2020

 

2020

US to Euro

 

$1.16

 

$1.10

 

$1.11

US to GBP

 

$1.30

 

$1.24

 

$1.23

Today’s Conference Call and Webcast Details

Avnet will host a quarterly webcast and teleconference today at 1:30 p.m. PDT and 4:30 p.m. EDT to discuss its financial results and provide a corporate update. The webcast can be accessed via Avnet’s Investor Relations web page at: www.ir.avnet.com, or from the following link Avnet Earnings Call Webcast and Slides.

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 30 days, through September 5 at 5:00 p.m. EDT, and can be accessed by dialing: 877-660-6853 or 201-612-7415 and using Conference ID: 13705277. The webcast 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: the scope and duration of the COVID-19 outbreak and its impact on global economic systems, financial markets and Avnet’s operations, employees, customers and supply chain; 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 electronic components including semiconductors; declines in sales; changes in business conditions and the economy in general; disruptions to the business resulting from pandemics, epidemics or other health related crisis (such as COVID-19 outbreak); 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 electronic components distributor with extensive design, product, marketing and supply chain expertise for customers and suppliers at every stage of the product lifecycle. 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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarters Ended

 

Years Ended

 

 

 

June 27,

 

June 29,

 

June 27,

 

June 29,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

(Thousands, except per share data)

 

Sales

 

$

4,159,700

 

 

$

4,680,909

 

 

$

17,634,333

 

 

$

19,518,592

 

 

Cost of sales

 

 

3,684,629

 

 

 

4,085,784

 

 

 

15,570,877

 

 

 

17,032,490

 

 

Gross profit

 

 

475,071

 

 

 

595,125

 

 

 

2,063,456

 

 

 

2,486,102

 

 

Selling, general and administrative expenses

 

 

451,099

 

 

 

459,611

 

 

 

1,842,122

 

 

 

1,874,651

 

 

Restructuring, integration, impairment and other expenses

 

 

22,052

 

 

 

165,554

 

 

 

225,962

 

 

 

245,540

 

 

Operating income (loss)

 

 

1,920

 

 

 

(30,040

)

 

 

(4,628

)

 

 

365,911

 

 

Other income (expense), net

 

 

7,425

 

 

 

1,807

 

 

 

(737

)

 

 

11,231

 

 

Interest and other financing expenses, net

 

 

(25,489

)

 

 

(34,810

)

 

 

(122,742

)

 

 

(134,874

)

 

Income (loss) from continuing operations before taxes

 

 

(16,144

)

 

 

(63,043

)

 

 

(128,107

)

 

 

242,268

 

 

Income tax (benefit) expense

 

 

(68,304

)

 

 

(27,915

)

 

 

(98,574

)

 

 

62,157

 

 

Income (loss) from continuing operations, net of tax

 

 

52,160

 

 

 

(35,128

)

 

 

(29,533

)

 

 

180,111

 

 

Income (loss) from discontinued operations, net of tax

 

 

 

 

 

3,292

 

 

 

(1,548

)

 

 

(3,774

)

 

Net income (loss)

 

$

52,160

 

 

$

(31,836

)

 

$

(31,081

)

 

$

176,337

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share - basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.53

 

 

$

(0.33

)

 

$

(0.29

)

 

$

1.64

 

 

Discontinued operations

 

 

 

 

 

0.03

 

 

 

(0.02

)

 

 

(0.03

)

 

Net income (loss) per share basic

 

$

0.53

 

 

$

(0.30

)

 

$

(0.31

)

 

$

1.61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share - diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.53

 

 

$

(0.33

)

 

$

(0.29

)

 

$

1.63

 

 

Discontinued operations

 

 

 

 

 

0.03

 

 

 

(0.02

)

 

 

(0.04

)

 

Net income (loss) per share diluted

 

$

0.53

 

 

$

(0.30

)

 

$

(0.31

)

 

$

1.59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used to compute earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

98,855

 

 

 

105,615

 

 

 

100,474

 

 

 

109,820

 

 

Diluted

 

 

99,025

 

 

 

105,615

 

 

 

100,474

 

 

 

110,798

 

 

Cash dividends paid per common share

 

$

0.21

 

 

$

0.20

 

 

$

0.84

 

 

$

0.80

 

 

AVNET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

June 27,

 

June 29,

 

 

 

2020

 

2019

 

 

 

(Thousands)

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

477,038

 

$

546,105

 

Receivables, net

 

 

2,928,386

 

 

3,168,369

 

Inventories

 

 

2,731,988

 

 

3,008,424

 

Prepaid and other current assets

 

 

191,394

 

 

153,438

 

Total current assets

 

 

6,328,806

 

 

6,876,336

 

Property, plant and equipment, net

 

 

404,607

 

 

452,171

 

Goodwill

 

 

773,734

 

 

876,728

 

Intangible assets, net

 

 

65,437

 

 

143,520

 

Operating lease assets

 

 

275,917

 

 

 

Other assets

 

 

256,696

 

 

215,801

 

Total assets

 

$

8,105,197

 

$

8,564,556

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Short-term debt

 

$

51

 

$

300,538

 

Accounts payable

 

 

1,754,078

 

 

1,864,342

 

Accrued expenses and other

 

 

472,924

 

 

413,696

 

Short-term operating lease liabilities

 

 

53,313

 

 

 

Total current liabilities

 

 

2,280,366

 

 

2,578,576

 

Long-term debt

 

 

1,424,791

 

 

1,419,922

 

Long-term operating lease liabilities

 

 

253,719

 

 

 

Other liabilities

 

 

419,923

 

 

425,585

 

Total liabilities

 

 

4,378,799

 

 

4,424,083

 

Shareholders’ equity

 

 

3,726,398

 

 

4,140,473

 

Total liabilities and shareholders’ equity

 

$

8,105,197

 

$

8,564,556

 

 

 

 

 

 

 

 

 

 

AVNET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Years Ended

 

 

 

June 27, 2020

 

June 29, 2019

 

 

 

(Thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net (loss) income

 

$

(31,081

)

 

$

176,337

 

 

Less: Loss from discontinued operations, net of tax

 

 

(1,548

)

 

 

(3,774

)

 

Income (loss) from continuing operations

 

 

(29,533

)

 

 

180,111

 

 

 

 

 

 

 

 

 

 

Non-cash and other reconciling items:

 

 

 

 

 

 

 

Depreciation

 

 

101,100

 

 

 

97,160

 

 

Amortization

 

 

81,139

 

 

 

83,682

 

 

Amortization of operating lease assets

 

 

60,656

 

 

 

 

 

Deferred income taxes

 

 

(34,264

)

 

 

33,801

 

 

Stock-based compensation

 

 

26,832

 

 

 

30,098

 

 

Goodwill, long-lived, intangible asset and other impairments

 

 

144,092

 

 

 

192,083

 

 

Other, net

 

 

45,049

 

 

 

(21,265

)

 

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

 

 

 

 

 

 

 

Receivables

 

 

221,486

 

 

 

464,981

 

 

Inventories

 

 

266,791

 

 

 

81,929

 

 

Accounts payable

 

 

(106,990

)

 

 

(377,855

)

 

Accrued expenses and other, net

 

 

(46,176

)

 

 

(173,671

)

 

Net cash flows provided by operating activities - continuing operations

 

 

730,182

 

 

 

591,054

 

 

Net cash flows used for operating activities - discontinued operations

 

 

 

 

 

(56,284

)

 

Net cash flows provided by operating activities

 

 

730,182

 

 

 

534,770

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Borrowings (repayments) under accounts receivable securitization, net

 

 

(227,300

)

 

 

122,300

 

 

Borrowings (repayments) under bank credit facilities and other debt, net

 

 

(2,123

)

 

 

(61,738

)

 

Borrowings (repayments) under senior unsecured credit facility, net

 

 

223,058

 

 

 

505

 

 

Repayments of public notes

 

 

(302,038

)

 

 

 

 

Repurchases of common stock

 

 

(237,842

)

 

 

(568,712

)

 

Dividends paid on common stock

 

 

(83,975

)

 

 

(87,158

)

 

Other, net

 

 

(14,330

)

 

 

12,127

 

 

Net cash flows used for financing activities - continuing operations

 

 

(644,550

)

 

 

(582,676

)

 

Net cash flows used for financing activities

 

 

(644,550

)

 

 

(582,676

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(73,516

)

 

 

(122,690

)

 

Acquisitions of businesses, net of cash acquired

 

 

(51,509

)

 

 

(56,417

)

 

Other, net

 

 

(9,992

)

 

 

30,422

 

 

Net cash flows used for investing activities - continuing operations

 

 

(135,017

)

 

 

(148,685

)

 

Net cash flows provided by investing activities - discontinued operations

 

 

 

 

 

123,473

 

 

Net cash flows used for investing activities

 

 

(135,017

)

 

 

(25,212

)

 

Effect of currency exchange rate changes on cash and cash equivalents

 

 

(19,682

)

 

 

(1,902

)

 

Cash and cash equivalents:

 

 

 

 

 

 

 

— decrease

 

 

(69,067

)

 

 

(75,020

)

 

— at beginning of period

 

 

546,105

 

 

 

621,125

 

 

— at end of period

 

$

477,038

 

 

$

546,105

 

 

 

 

 

 

 

 

 

 

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), income from continuing operations and diluted earnings (loss) per share from continuing operations 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

 

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 - continuing operations

$

1,842,122

 

 

$

451,099

 

 

$

469,646

 

 

$

464,873

 

 

$

456,503

 

Amortization of intangible assets and other - continuing operations

 

(81,555

)

 

 

(18,952

)

 

 

(21,071

)

 

 

(21,454

)

 

 

(20,078

)

Adjusted operating expenses - continuing operations

 

1,760,567

 

 

 

432,147

 

 

 

448,576

 

 

 

443,419

 

 

 

436,426

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating (loss) income - continuing operations

$

(4,628

)

 

$

1,920

 

 

$

(115,760

)

 

$

46,475

 

 

$

62,738

 

Restructuring, integration and other expenses - continuing operations

 

81,870

 

 

 

23,796

 

 

 

19,211

 

 

 

14,265

 

 

 

24,598

 

Goodwill and intangible asset impairment expenses (benefits) - continuing operations

 

144,092

 

 

 

(1,744

)

 

 

145,836

 

 

 

-

 

 

 

-

 

Amortization of intangible assets and other - continuing operations

 

81,555

 

 

 

18,952

 

 

 

21,071

 

 

 

21,454

 

 

 

20,078

 

Adjusted operating income - continuing operations

 

302,889

 

 

 

42,924

 

 

 

70,358

 

 

 

82,194

 

 

 

107,414

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP (loss) income before income taxes- continuing operations

$

(128,107

)

 

$

(16,144

)

 

$

(158,086

)

 

$

12,086

 

 

$

34,038

 

Restructuring, integration and other expenses - continuing operations

 

81,870

 

 

 

23,796

 

 

 

19,211

 

 

 

14,265

 

 

 

24,598

 

Goodwill and intangible asset impairment expenses (benefits) - continuing operations

 

144,092

 

 

 

(1,744

)

 

 

145,836

 

 

 

-

 

 

 

-

 

Amortization of intangible assets and other - continuing operations

 

81,555

 

 

 

18,952

 

 

 

21,071

 

 

 

21,454

 

 

 

20,078

 

Other expenses and early debt redemption - continuing operations

 

21,582

 

 

 

2,054

 

 

 

15,526

 

 

 

4,002

 

 

 

-

 

Adjusted income before income taxes - continuing operations

 

200,992

 

 

 

26,914

 

 

 

43,558

 

 

 

51,807

 

 

 

78,713

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income tax expense (benefit) - continuing operations

$

(98,574

)

 

$

(68,304

)

 

$

(29,425

)

 

$

6,870

 

 

$

(7,714

)

Restructuring, integration and other expenses - continuing operations

 

18,648

 

 

 

4,659

 

 

 

4,372

 

 

 

3,377

 

 

 

6,240

 

Goodwill and intangible asset impairment expenses - continuing operations

 

6,433

 

 

 

207

 

 

 

6,226

 

 

 

-

 

 

 

-

 

Amortization of intangible assets and other - continuing operations

 

16,119

 

 

 

3,613

 

 

 

4,307

 

 

 

3,964

 

 

 

4,235

 

Other expenses and early debt redemption - continuing operations

 

6,238

 

 

 

506

 

 

 

4,992

 

 

 

740

 

 

 

-

 

Income tax benefit (expense) items, net - continuing operations

 

47,655

 

 

 

22,996

 

 

 

15,119

 

 

 

(4,071

)

 

 

13,611

 

Adjusted income tax (benefit) expense - continuing operations

 

(3,481

)

 

 

(36,323

)

 

 

5,591

 

 

 

10,880

 

 

 

16,372

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP (loss) income - continuing operations

$

(29,533

)

 

$

52,160

 

 

$

(128,661

)

 

$

5,216

 

 

$

41,752

 

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

 

63,222

 

 

 

19,137

 

 

 

14,839

 

 

 

10,888

 

 

 

18,358

 

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

 

137,659

 

 

 

(1,951

)

 

 

139,610

 

 

 

-

 

 

 

-

 

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

 

65,436

 

 

 

15,339

 

 

 

16,764

 

 

 

17,490

 

 

 

15,843

 

Other expenses and early debt redemption (net of tax) - continuing operations

 

15,344

 

 

 

1,548

 

 

 

10,534

 

 

 

3,262

 

 

 

-

 

Income tax (benefit) expense items, net - continuing operations

 

(47,655

)

 

 

(22,996

)

 

 

(15,119

)

 

 

4,071

 

 

 

(13,611

)

Adjusted income - continuing operations

 

204,473

 

 

 

63,237

 

 

 

37,967

 

 

 

40,927

 

 

 

62,341

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted (loss) earnings per share - continuing operations

$

(0.29

)

 

$

0.53

 

 

$

(1.29

)

 

$

0.05

 

 

$

0.40

 

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

 

0.63

 

 

 

0.19

 

 

 

0.15

 

 

 

0.11

 

 

 

0.18

 

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

 

1.37

 

 

 

(0.02

)

 

 

1.39

 

 

 

-

 

 

 

-

 

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

 

0.65

 

 

 

0.15

 

 

 

0.17

 

 

 

0.17

 

 

 

0.15

 

Other expenses and early debt redemption (net of tax) - continuing operations

 

0.15

 

 

 

0.02

 

 

 

0.11

 

 

 

0.03

 

 

 

-

 

Income tax (benefit) expense items, net - continuing operations

 

(0.47

)

 

 

(0.23

)

 

 

(0.15

)

 

 

0.04

 

 

 

(0.13

)

Adjusted diluted EPS - continuing operations

 

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal

 

Quarters Ended

 

Year to Date

 

June 29,

 

March 30,

 

December 29,

 

September 29,

 

2019*

 

2019*

 

2019*

 

2018*

 

2018

 

 

($ in thousands, except per share amounts)

GAAP selling, general and administrative expenses - continuing operations

$

1,874,651

 

 

$

459,611

 

 

$

468,171

 

 

$

471,723

 

 

$

475,146

 

Amortization of intangible assets and other - continuing operations

 

(84,257

)

 

 

(20,737

)

 

 

(22,080

)

 

 

(20,513

)

 

 

(20,927

)

Adjusted operating expenses - continuing operations

 

1,790,393

 

 

 

438,872

 

 

 

446,092

 

 

 

451,210

 

 

 

454,219

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income (loss) - continuing operations

$

365,911

 

 

$

(30,040

)

 

$

153,085

 

 

$

96,050

 

 

$

146,816

 

Restructuring, integration and other expenses - continuing operations

 

108,144

 

 

 

28,158

 

 

 

2,939

 

 

 

62,260

 

 

 

14,788

 

Goodwill impairment expense - continuing operations

 

137,396

 

 

 

137,396

 

 

 

-

 

 

 

-

 

 

 

-

 

Amortization of intangible assets and other - continuing operations

 

84,257

 

 

 

20,737

 

 

 

22,080

 

 

 

20,513

 

 

 

20,927

 

Adjusted operating income - continuing operations

 

695,708

 

 

 

156,252

 

 

 

178,103

 

 

 

178,823

 

 

 

182,531

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income (loss) before income taxes- continuing operations

$

242,268

 

 

$

(63,043

)

 

$

125,563

 

 

$

64,916

 

 

$

114,831

 

Restructuring, integration and other expenses - continuing operations

 

108,144

 

 

 

28,158

 

 

 

2,939

 

 

 

62,260

 

 

 

14,788

 

Goodwill impairment expense - continuing operations

 

137,396

 

 

 

137,396

 

 

 

-

 

 

 

-

 

 

 

-

 

Amortization of intangible assets and other - continuing operations

 

84,257

 

 

 

20,737

 

 

 

22,080

 

 

 

20,513

 

 

 

20,927

 

Other expenses - continuing operations

 

509

 

 

 

509

 

 

 

-

 

 

 

-

 

 

 

-

 

Adjusted income before income taxes - continuing operations

 

572,574

 

 

 

123,758

 

 

 

150,581

 

 

 

147,689

 

 

 

150,546

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income tax expense (benefit) - continuing operations

$

62,157

 

 

$

(27,915

)

 

$

30,628

 

 

$

28,141

 

 

$

31,302

 

Restructuring, integration and other expenses - continuing operations

 

26,746

 

 

 

7,455

 

 

 

306

 

 

 

15,665

 

 

 

3,320

 

Goodwill impairment expense - continuing operations

 

18,566

 

 

 

18,566

 

 

 

-

 

 

 

-

 

 

 

-

 

Amortization of intangible assets and other - continuing operations

 

17,986

 

 

 

4,382

 

 

 

4,747

 

 

 

4,379

 

 

 

4,478

 

Other expenses - continuing operations

 

57

 

 

 

57

 

 

 

-

 

 

 

-

 

 

 

-

 

Income tax (expense) benefit items, net - continuing operations

 

(8,143

)

 

 

20,896

 

 

 

(4,059

)

 

 

(16,742

)

 

 

(8,238

)

Adjusted income tax expense - continuing operations

 

117,369

 

 

 

23,441

 

 

 

31,622

 

 

 

31,443

 

 

 

30,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP income (loss) - continuing operations

$

180,111

 

 

$

(35,128

)

 

$

94,935

 

 

$

36,775

 

 

$

83,529

 

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

 

81,398

 

 

 

20,703

 

 

 

2,633

 

 

 

46,595

 

 

 

11,468

 

Goodwill impairment expense (net of tax) - continuing operations

 

118,830

 

 

 

118,830

 

 

 

-

 

 

 

-

 

 

 

-

 

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

 

66,271

 

 

 

16,355

 

 

 

17,333

 

 

 

16,134

 

 

 

16,449

 

Other expenses (net of tax) - continuing operations

 

452

 

 

 

452

 

 

 

-

 

 

 

-

 

 

 

-

 

Income tax expense (benefit) items, net - continuing operations

 

8,143

 

 

 

(20,896

)

 

 

4,059

 

 

 

16,742

 

 

 

8,238

 

Adjusted income - continuing operations

 

455,205

 

 

 

100,316

 

 

 

118,960

 

 

 

116,246

 

 

 

119,684

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted earnings (loss) per share - continuing operations

$

1.63

 

 

$

(0.33

)

 

$

0.87

 

 

$

0.33

 

 

$

0.72

 

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

 

0.74

 

 

 

0.20

 

 

 

0.02

 

 

 

0.42

 

 

 

0.10

 

Goodwill impairment expense (net of tax) - continuing operations

 

1.07

 

 

 

1.13

 

 

 

-

 

 

 

-

 

 

 

-

 

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

 

0.60

 

 

 

0.15

 

 

 

0.16

 

 

 

0.14

 

 

 

0.14

 

Other expenses (net of tax) - continuing operations

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Income tax expense (benefit) items, net - continuing operations

 

0.07

 

 

 

(0.20

)

 

 

0.04

 

 

 

0.15

 

 

 

0.07

 

Adjusted diluted EPS - continuing operations

 

4.11

 

 

 

0.95

 

 

 

1.09

 

 

 

1.04

 

 

 

1.03

 

______________________________

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

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 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 fourth quarter and full year of fiscal 2020 compared to fiscal 2019.

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarters Ended

 

 

 

 

 

 

 

 

As Reported

 

 

Sales

 

Sales

 

As Reported

 

and Organic

 

 

as Reported

 

as Reported

 

and

 

Year-Year %

 

 

and Organic

 

and Organic

 

Organic

 

Change in

 

 

Fiscal

 

Fiscal

 

Year-Year

 

Constant

 

 

2020

 

2019

 

% Change

 

Currency

 

 

(Dollars in millions)

Avnet

 

$

4,159.7

 

$

4,680.9

 

(11.1

)%

 

(10.4

)%

Avnet by region

 

 

 

 

 

 

 

 

 

 

Americas

 

$

1,149.3

 

$

1,266.3

 

(9.2

)%

 

(9.2

)%

EMEA

 

 

1,344.2

 

 

1,638.5

 

(18.0

)

 

(16.2

)

Asia

 

 

1,666.2

 

 

1,776.1

 

(6.2

)

 

(6.0

)

Avnet by operating group

 

 

 

 

 

 

 

 

 

 

EC

 

$

3,867.6

 

$

4,337.5

 

(10.8

)%

 

(10.2

)%

Farnell

 

 

292.1

 

 

343.4

 

(15.0

)

 

(13.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Years Ended

 

 

 

 

 

 

 

 

As Reported

 

 

Sales

 

Sales

 

As Reported

 

and Organic

 

 

as Reported

 

as Reported

 

and

 

Year-Year %

 

 

and Organic

 

and Organic

 

Organic

 

Change in

 

 

Fiscal

 

Fiscal

 

Year-Year

 

Constant

 

 

2020

 

2019

 

% Change

 

Currency

 

 

(Dollars in millions)

Avnet

 

$

17,634.3

 

$

19,518.6

 

(9.7

)%

 

(8.7

)%

Avnet by region

 

 

 

 

 

 

 

 

 

 

Americas

 

$

4,755.3

 

$

5,135.8

 

(7.4

)%

 

(7.4

)%

EMEA

 

 

5,753.4

 

 

6,762.9

 

(14.9

)

 

(12.4

)

Asia

 

 

7,125.6

 

 

7,619.9

 

(6.5

)

 

(6.5

)

Avnet by operating group

 

 

 

 

 

 

 

 

 

 

EC

 

$

16,340.1

 

$

18,060.3

 

(9.5

)%

 

(8.7

)%

Farnell

 

 

1,294.2

 

 

1,458.3

 

(11.3

)

 

(9.5

)

Historical Segment Financial Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year 2020

 

 

 

 

 

 

Quarters Ended

 

 

 

 

 

Fourth Quarter

 

Third Quarter

 

Second Quarter

 

First Quarter

 

 

Fiscal Year

 

June 27,

 

March 28,

 

December 28,

 

September 28,

 

 

2020*

 

2020*

 

2020*

 

2019

 

 

2019

 

 

 

(in millions)

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronic Components

 

$

16,340.1

 

 

$

3,867.6

 

 

$

3,974.7

 

 

$

4,203.6

 

 

$

4,294.2

 

Farnell

 

 

1,294.2

 

 

 

292.1

 

 

 

335.1

 

 

 

331.2

 

 

 

335.8

 

Avnet

 

$

17,634.3

 

 

$

4,159.7

 

 

$

4,309.8

 

 

$

4,534.8

 

 

$

4,630.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronic Components

 

$

349.1

 

 

$

58.9

 

 

$

84.8

 

 

$

93.1

 

 

$

112.3

 

Farnell

 

 

75.5

 

 

 

10.4

 

 

 

23.4

 

 

 

20.0

 

 

 

21.8

 

 

 

 

424.6

 

 

 

69.3

 

 

 

108.2

 

 

 

113.1

 

 

 

134.1

 

Corporate expenses

 

 

(121.6

)

 

 

(26.3

)

 

 

(37.8

)

 

 

(30.9

)

 

 

(26.7

)

Restructuring, integration and other expenses

 

 

(81.9

)

 

 

(23.8

)

 

 

(19.2

)

 

 

(14.3

)

 

 

(24.6

)

Goodwill and intangible asset impairment expenses

 

 

(144.1

)

 

 

1.7

 

 

 

(145.8

)

 

 

-

 

 

 

-

 

Amortization of acquired intangible assets and other

 

 

(81.6

)

 

 

(19.0

)

 

 

(21.1

)

 

 

(21.4

)

 

 

(20.1

)

Avnet operating (loss) income

 

$

(4.6

)

 

$

1.9

 

 

$

(115.8

)

 

$

46.5

 

 

$

62.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales by geographic area:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

4,755.3

 

 

$

1,149.3

 

 

$

1,203.6

 

 

$

1,186.6

 

 

$

1,215.8

 

EMEA

 

 

5,753.4

 

 

 

1,344.2

 

 

 

1,512.5

 

 

 

1,425.8

 

 

 

1,470.9

 

Asia

 

 

7,125.6

 

 

 

1,666.2

 

 

 

1,593.7

 

 

 

1,922.4

 

 

 

1,943.3

 

Avnet

 

$

17,634.3

 

 

$

4,159.7

 

 

$

4,309.8

 

 

$

4,534.8

 

 

$

4,630.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year 2019

 

 

 

 

Quarters Ended

 

 

 

 

Fourth Quarter

 

Third Quarter

 

Second Quarter

 

First Quarter

 

 

Fiscal Year

 

June 29,

 

March 30,

 

December 29,

 

September 29,

 

 

2019*

 

2019

 

 

2019

 

 

2018

 

 

2018

 

 

 

(in millions)

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronic Components

 

$

18,060.3

 

 

$

4,337.5

 

 

$

4,331.3

 

 

$

4,680.7

 

 

$

4,710.8

 

Farnell

 

 

1,458.3

 

 

 

343.4

 

 

 

367.5

 

 

 

368.3

 

 

 

379.1

 

Avnet

 

$

19,518.6

 

 

$

4,680.9

 

 

$

4,698.8

 

 

$

5,049.0

 

 

$

5,089.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electronic Components

 

$

614.9

 

 

$

141.1

 

 

$

153.3

 

 

$

158.6

 

 

$

161.9

 

Farnell

 

 

159.3

 

 

 

33.2

 

 

 

45.7

 

 

 

39.6

 

 

 

40.8

 

 

 

 

774.2

 

 

 

174.3

 

 

 

199.0

 

 

 

198.2

 

 

 

202.7

 

Corporate expenses

 

 

(78.5

)

 

 

(18.0

)

 

 

(20.9

)

 

 

(19.4

)

 

 

(20.2

)

Restructuring, integration and other expenses

 

 

(108.1

)

 

 

(28.2

)

 

 

(2.9

)

 

 

(62.3

)

 

 

(14.8

)

Goodwill and impairment expenses

 

 

(137.4

)

 

 

(137.4

)

 

 

-

 

 

 

-

 

 

 

-

 

Amortization of acquired intangible assets and other

 

 

(84.3

)

 

 

(20.7

)

 

 

(22.1

)

 

 

(20.5

)

 

 

(20.9

)

Avnet operating income (loss)

 

$

365.9

 

 

$

(30.0

)

 

$

153.1

 

 

$

96.0

 

 

$

146.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales by geographic area:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

5,135.8

 

 

$

1,266.3

 

 

$

1,297.2

 

 

$

1,300.4

 

 

$

1,271.8

 

EMEA

 

 

6,762.9

 

 

 

1,638.5

 

 

 

1,740.9

 

 

 

1,668.6

 

 

 

1,714.9

 

Asia

 

 

7,619.9

 

 

 

1,776.1

 

 

 

1,660.7

 

 

 

2,080.0

 

 

 

2,103.2

 

Avnet

 

$

19,518.6

 

 

$

4,680.9

 

 

$

4,698.8

 

 

$

5,049.0

 

 

$

5,089.9

 

______________________________

* May not foot/cross foot due to rounding

Guidance Reconciliation

The following table presents the reconciliation of non-GAAP adjusted diluted earnings per share guidance to the expected GAAP diluted earnings (loss) per share guidance for the first quarter of fiscal 2021.

 

 

 

 

 

 

 

 

 

Low End of

 

High End of

 

 

Guidance Range

 

Guidance Range

 

 

 

 

 

 

 

Adjusted diluted earnings per share guidance

 

$

-

 

 

$

0.16

 

Restructuring, integration and other expense (net of tax)

 

 

(0.24

)

 

 

(0.11

)

Amortization of intangibles and other (net of tax)

 

 

(0.10

)

 

 

(0.07

)

Income tax expense adjustments

 

 

(0.05

)

 

 

0.05

 

GAAP diluted (loss) earnings per share guidance

 

$

(0.39

)

 

$

0.03

 

 



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