Avnet reports first quarter fiscal 2019 financial results
Phoenix--(business wire)--avnet, inc. (nasdaq: avt) today announced results for the first quarter ended september 29, 2018. first quarter key financial highlights sales of $5.09 billion rose 9.2% year over year sales grew 9.9% year over year in constant currency sales grew 9.9% year over year in constant currency gaap diluted eps from continuing operations rose 53.2% to $0.72 year over year adjusted diluted eps from continuing operations increased 35.5% to $1.03 year over year adjusted diluted eps from continuing operations increased 35.5% to $1.03 year over year gaap operating income of $146.8 million rose 127.4% year over year adjusted operating income of $182.5 million rose 33.7% year over year adjusted operating income of $182.5 million rose 33.7% year over year gaap operating income margin of 2.9% adjusted operating income margin of 3.6% expanded 66 basis points year over year adjusted operating income margin of 3.6% expanded 66 basis points year over year net working capital days declined by 1 day to 83 days ceo commentary “we are pleased to report the continued positive trend in profitability and growth entering fiscal year 2019,” said bill amelio, chief executive officer, avnet. “with the introduction of avnet’s new comprehensive ecosystem last year, we have expanded our portfolio of services significantly, which has resulted in first quarter growth among both our existing customers as well as with new and non-traditional customers.” key financial metrics ($ in millions, except per share data) (1) (2) cfo commentary “our focus on cost management resulted in a $26.4 million reduction in selling, general, and administrative expenses year over year on a 9.2% growth in revenue. we also took steps to realize greater efficiencies longer term by opening a new distribution center in hong kong this quarter,” said tom liguori, chief financial officer, avnet. “we reduced net working capital days and remain on schedule for achieving our long term target of 70 days. we continued implementing our capital allocation strategy by repurchasing 3.3 million shares this quarter, and we increased our quarterly dividend by more than 5% to $0.20 per share for a total return to shareholders of $179.8 million.” additional first quarter fiscal 2019 highlights the electronic components business sales rose 9.4% year over year to $4.7 billion with operating margins of 3.4% premier farnell sales rose 7.2% to $379 million, with operating margins rising to 10.8% compared with 9.2% last year asia continued to deliver the strongest growth by region with year-over-year sales rising 18% sales in the americas rose 7.3% year over year and operating margin continued to improve as recovery continues in the americas book-to-bill ratio at the end of the quarter remained positive at greater than 1.0 cash and cash equivalents at the end of the quarter was $365.9 million; net debt (total debt less cash and cash equivalents) was $1.20 billion cash used for operations was $85 million primarily for inventory to support second quarter sales received $120 million of additional proceeds from finalizing the sale price of the technology solutions business, which was used to repurchase shares expanded share repurchase authorization by $500 million, repurchased 3.3 million shares, and increased quarterly dividend by 5.3% to $0.20 per share for a total return to shareholders of $179.8 million during the quarter other highlights won five prestigious awards from the following organizations: nordic semiconductor asa named avnet distributor of the year received the supplier excellence award for outstanding distributor from l3 technologies cs-west division panasonic batteries named avnet distributor of the year in europe magazin elektronik named ebv, a division of avnet, distributor of the year in europe, based on a customer poll harwin named abacus, a division of avnet, distributor of the year in europe nordic semiconductor asa named avnet distributor of the year received the supplier excellence award for outstanding distributor from l3 technologies cs-west division panasonic batteries named avnet distributor of the year in europe magazin elektronik named ebv, a division of avnet, distributor of the year in europe, based on a customer poll harwin named abacus, a division of avnet, distributor of the year in europe named jo ann jenkins, ceo of aarp, to the company's board of directors where she will serve on the audit and corporate governance committees announced a multi-year partnership with not impossible labs and debuted its first product, music: not impossible, at the life is beautiful music festival. music: not impossible uses sophisticated vibration technology to create a more inclusive and enhanced live music experience for the deaf, allowing the deaf and hearing communities to enjoy music together outlook for the second quarter of fiscal 2019 ending on december 29, 2018 (1) 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) avnet, inc. condensed consolidated balance sheets (unaudited) avnet, inc. consolidated statements of cash flows (unaudited) 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 other income (expense), (iii) adjusted income tax expense, (iv) adjusted income from continuing operations, (v) adjusted diluted earnings per share, and (vi) sales adjusted for the impact of 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 adjusted for restructuring, integration and other expenses, goodwill impairment expense 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 without the impact of these items as well as other income (expense) excluding certain amounts 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 many cases, for measuring performance for compensation purposes. management measures operating income for our reportable segments excluding restructuring, integration and other expenses, goodwill impairment expense 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, income from continuing operations and diluted earnings per share from continuing operations adjusted for the impact of the items described above and certain items impacting other expense and income tax expense 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. 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 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. ($ in thousands, except per share amounts) *may not foot due to rounding 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 is measured on a sales from continuing operations basis. 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 first quarter of fiscal 2019 compared to the first quarter of fiscal 2018. sales from suppliers lost as a result of supplier channel changes were $26.5 million, $43.2 million and $37.0 million in the first quarter of fiscal 2018 for the americas, emea and asia regions, respectively. historical segment financial information guidance reconciliation the following table presents the reconciliation of non-gaap adjusted diluted earnings per share guidance to the expected gaap diluted earnings per share guidance for the second quarter of fiscal 2019.
