Chronicle Journal: Finance

Avnet Reports Fourth Quarter and Fiscal 2020 Financial Results

Avnet, Inc. (Nasdaq: AVT) today announced results for its fourth quarter and fiscal year ended June 27, 2020.

Fiscal Fourth Quarter Key Financial Highlights:

  • Sales of $4.2 billion, compared with $4.3 billion in the previous quarter and $4.7 billion in the prior year quarter.
  • GAAP diluted earnings per share from continuing operations of $0.53, compared with loss per share of $0.33 a year ago.
    • Non-GAAP adjusted diluted EPS of $0.64 compared with $0.95 a year ago.
    • GAAP and Non-GAAP diluted EPS was positively impacted by $0.42 from lower tax expense and $0.08 from lower interest expense and favorable foreign currency gains as compared to the prior quarter.
  • GAAP operating income totaled $1.9 million, compared with GAAP operating loss of $30 million a year ago.
    • Adjusted operating income of $42.9 million, compared with $156.3 million a year ago.
  • GAAP operating margin of 0.1%, compared with GAAP operating loss margin of (0.6)% a year ago.
    • Adjusted operating income margin was 1.0%, compared with 3.3% a year ago.
  • Cash flow from operations totaled $288 million in the quarter, up sequentially from $98 million in the previous quarter.
  • Adjusted operating expenses improved by $16 million compared to the previous quarter and by $7 million compared to the prior year quarter.
  • For fiscal year 2020, cash flow from continuing operations totaled $730 million, up $139 million from fiscal year 2019.
  • For fiscal year 2020, reduced debt by $296 million with net debt of $948 million at the end of the current fiscal year.

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

  • Awarded the Cypress Semiconductor product line by Infineon, further expanding the breadth of our line card.
  • Redeemed $300 million of outstanding 5.875% notes in April 2020.
  • Returned $21 million to shareholders with dividends paid during the quarter.
  • Recorded an income tax refund receivable of over $100 million related to the reduction in value in certain assets and from the impact of the CARES Act, most of which is expected to be realized in fiscal 2021.

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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