Avnet Reports Fourth Quarter and Fiscal 2019 Financial Results

Quarterly sales of
$4.7 billion within guidance despite macroeconomic headwinds and tariffs

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Fiscal year sales
rose 3%, SG&A expenses were reduced by $117 million, or 6%, and cash flow
from continuing operations totaled $591 million

PHOENIX - Media OutReach - 9 August 2019 - Avnet, Inc. (Nasdaq: AVT) today announced results for the fourth quarter
and fiscal year ended June 29, 2019..

 

Fiscal Fourth Quarter Key Financial Metrics

• Sales of $4.7 billion, which were in line with
  guidance, declined 7.5% from a year ago and 0.4% from the prior quarter.
  Sales guidance for the fiscal fourth quarter anticipated
  lower-than-historical seasonality and emerging macroeconomic headwinds
  across all geographies.
• GAAP diluted loss per share from continuing
  operations, which includes $137 million of goodwill impairment expense,
  totaled $0.33; on an adjusted basis, diluted earnings per share was $0.95.
  
• GAAP operating margin of (0.6)%, adjusted
  operating margin of 3.3%.
• Selling, general and administrative (SG&A)
  expenses declined $40.6 million, or 8.1%, over the prior year quarter and
  benefited from the acceleration of planned cost optimization actions and a
  disciplined approach to spending while prioritizing investments to drive
  growth.
• Cash flow from operations totaled $335
  million, up sequentially from $269 million in the fiscal third quarter.
• Returned $138 million to shareholders with
  $117 million in stock buybacks and dividends totaling $21 million.
• Reduced revolving debt by $354 million with
  net debt of $1.2 billion at the end of the quarter.
• Recorded a goodwill impairment totaling $137
  million related to the Electronic Components operating group as a result
  of the declining macroeconomic environment and business outlook.
• For the fiscal year ended June 29, 2019, Avnet
  generated cash flow from continuing operations totaling $591 million,
  repurchased nearly 13 million shares (more than 10%) of Avnet stock and
  reduced SG&A expenses by $117 million, or 6%, compared to a year ago.

 

CEO
Commentary

“Avnet continued to execute well in
our fiscal fourth quarter despite rapidly changing market conditions,” said
Avnet CEO Bill Amelio. “We are pleased to have delivered revenues within our
target range. We did see margin pressure that was greater than anticipated due
to mix and the softening of customer demand, which were exacerbated by global
trade tensions and associated tariffs. We remain committed to the multi-pronged
strategy we laid out at our 2018 Investor Day, which regardless of market
fluctuations, promises to deliver superior service, innovation and support to
our customers, suppliers and partners, as well as enhance value for our
shareholders long term.”

 

CFO Commentary

“During the
fourth fiscal quarter, we generated strong operating cash flow of $335 million
and put the cash to work repurchasing stock and paying a dividend, in
accordance with our capital allocation strategy,” stated Tom Liguori, Avnet
Chief Financial Officer. “As we continue to monitor the prevailing market
conditions, including current inventory corrections, we have pulled forward our
three year $245 million cost reduction plan by accelerating $50 million of
annual savings and efficiency improvements to be completed by the end of the
first quarter of fiscal 2020, while still making investments in key growth
areas including IoT and Farnell.”

 

Additional Fourth Quarter Fiscal 2019 Highlights and Key
Developments

• IoT pipeline rose 5% quarter over quarter to
  $630 million, and continues to expand to new markets including retail and
  healthcare.
• Avnet’s distribution center and warehouse in
  Chandler, Arizona became an authorized Foreign Trade Zone (FTZ) increasing
  global logistics efficiency, improving cash flow, reducing customs related
  fees, and mitigating potential exposure from punitive tariffs that may be
  imposed on imports.
• Farnell announced the launch of the new
  Raspberry Pi 4 Model B Computer, the most powerful Raspberry Pi model ever
  made.
• Avnet’s community, Hackster.io reached
  1 million members, bringing Avnet’s total community members, when combined
  with element14, to 1.6 million.
• At Mobile World Congress Shanghai, Avnet
  showcased key parts of its end-to-end IoT solution including the highly
  scalable IoTConnect cloud-based software platform. We also highlighted our
  IoT connectivity solutions, all of which provide greater security while
  affording flexible cellular connectivity.
• Farnell added more than 159,000 SKUs to its
  e-commerce site, providing customers access to a wider breadth of
  technology and products.

 

Awards and Notable Recognition
Received During the Quarter

• Avnet Silica received the Global Partner of
  the Year award from Xilinx, and was named 2018 EMEA Distributor of the
  Year from ON Semi.
• Avnet Integrated was recognized as Supplier of
  the Year by GIRA and received the Supplier Appreciation and Dedicated
  Support award from Avaya.
• Avnet Japan was named Microsoft’s FY19
  Distributor MVP.
• Avnet Abacus was named EMEA Distributor of the
  Year by both TE Connectivity and Molex.
• NXP recognized Avnet Asia for delivering the
  Best Performance in Demand Creation.
• Recognizing Avnet’s supply chain expertise and
  pioneering implementation of advanced digital technologies and processes,
  Supply & Demand Chain Executive magazine selected Avnet as a 2019 SDCE
  100 Award recipient.
• Farnell received the Gold award for Best Global
  Performance from TDK Epcos, and the Outstanding Performance award from
  Neutrik.

 

For the full
press release, please visit: https://news.avnet.com/press-release/avnet/avnet-reports-fourth-quarter-and-fiscal-2019-financial-results.

All brands and trade
names are trademarks or registered trademarks, and are the properties of their
respective owners. Avnet disclaims any proprietary interest in marks other than
its own.

 

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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.