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Avnet Reports Fourth Quarter and Fiscal 2022 Financial Results

Fourth quarter sales of $6.4 billion and operating income margin of 4.5%

Fiscal 2022 sales of $24.3 billion and record diluted EPS of $6.94

Farnell achieves record revenues of $1.8 billion with operating margin over 13%

PHOENIX, August 10, 2022--(BUSINESS WIRE)--Avnet, Inc. (Nasdaq: AVT) today announced results for its fourth quarter and fiscal year ended July 2, 2022.

Commenting on the Company’s financial results, Avnet Chief Executive Officer Phil Gallagher stated, "We are pleased to end the fiscal year on a high note, delivering another strong quarter of year-over-year sales growth and operating margin expansion. Supported by solid execution across our businesses, Avnet continues to gain share and secure new opportunities in the markets in which we compete. Despite an evolving macro environment, we remain well-positioned to continue to grow our business profitably by helping our customers and suppliers navigate an increasingly complex market."

Fiscal Fourth Quarter Key Financial Highlights:

  • Sales of $6.4 billion up 21.9% year over year from $5.2 billion.

    • On a constant currency basis, sales increased 28.2% year over year.

  • GAAP diluted earnings per share increased to $2.51, compared with $0.85 in the prior year quarter.

    • Non-GAAP adjusted diluted earnings per share of $2.07, compared with $1.12 in the prior year quarter.

  • GAAP operating income margin of 4.5%, increased 221 basis points year over year.

    • Adjusted operating income margin of 4.5%, increased 161 basis points year over year.

  • Electronic Components operating income margin of 4.3%, increased 122 basis points year over year.

  • Farnell operating income margin of 14.2% increased 597 basis points year over year.

  • Returned $25 million to shareholders in dividends during the quarter, an 18% per share increase year over year.

  • Returned $102 million to shareholders in the quarter from share repurchases, representing 2.4% of outstanding shares.

Fiscal 2022 Key Financial Highlights:

  • Sales of $24.3 billion up 24.5% year over year from $19.5 billion.

    • On a constant currency basis, sales increased 27.2% year over year.

  • GAAP diluted earnings per share increased to $6.94, compared with $1.93 in the prior year.

    • Non-GAAP adjusted diluted earnings per share of $6.93, compared with $2.71 in the prior year.

  • GAAP operating income margin of 3.9%, increased 242 basis points year over year.

    • Adjusted operating income margin of 4.1%, increased 197 basis points year over year.

  • Electronic Components operating income margin of 3.9%, increased 135 basis points year over year.

  • Farnell operating income margin of 13.4% increased 764 basis points year over year.

  • Returned $98 million to shareholders in dividends during the fiscal year.

  • Returned $193 million to shareholders in the fiscal year from share repurchases, representing 4.7% of outstanding shares.

Key Financial Metrics

($ in millions, except per share data)

Fourth Quarter Results (GAAP)

Jun – 22

Jun – 21

Change Y/Y

Mar – 22

Change Q/Q

Sales

$

6,372.7

$

5,226.7

21.9

%

$

6,488.1

(1.8

)%

Operating Income

284.7

118.0

141.3

%

274.4

3.8

%

Operating Income Margin

4.5

%

2.3

%

221

bps

4.2

%

24

bps

Diluted Earnings Per Share (EPS)

$

2.51

$

0.85

195.3

%

$

1.84

36.4

%

Fourth Quarter Results (Non-GAAP)(1)

Jun – 22

Jun – 21

Change Y/Y

Mar – 22

Change Q/Q

Sales

$

6,372.7

$

5,226.7

21.9

%

$

6,488.1

(1.8

)%

Adjusted Operating Income

287.6

151.8

89.5

%

303.7

(5.3

)%

Adjusted Operating Income Margin

4.5

%

2.9

%

161

bps

4.7

%

(17

)bps

Adjusted Diluted Earnings Per Share (EPS)

$

2.07

$

1.12

84.8

%

$

2.15

(3.7

)%

Segment and Geographical Mix

Jun – 22

Jun – 21

Change Y/Y

Mar – 22

Change Q/Q

Electronic Components (EC) Sales

$

5,930.4

$

4,785.3

23.9

%

$

6,019.1

(1.5

)%

EC Operating Income Margin

4.3

%

3.1

%

122

bps

4.4

%

(9

)bps

Farnell Sales

$

442.3

$

441.4

0.2

%

$

469.0

(5.7

)%

Farnell Operating Income Margin

14.2

%

8.3

%

597

bps

14.9

%

(65

)bps

Americas Sales

$

1,618.4

$

1,194.4

35.5

%

$

1,627.2

(0.5

)%

EMEA Sales

2,064.0

1,737.3

18.8

%

2,185.7

(5.6

)%

Asia Sales

2,690.3

2,295.0

17.2

%

2,675.2

0.6

%

______________________

(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.

Outlook for the First Quarter of Fiscal 2023 Ending on October 1, 2022

Guidance Range

Midpoint

Sales

$6.20B – $6.50B

$6.35B

Adjusted Diluted EPS(1)

$1.85 – $1.95

$1.90

______________________

(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 current market conditions, including a $100 million negative impact on sales at mid-point of guidance from the recent strengthening of the U.S. Dollar as compared to the fourth quarter. This guidance implies a sequential growth rate range of down 1% to up 4% in constant currency, and assumes a typical seasonal shift in sales to Asia from the western regions.

The above guidance also excludes amortization of intangibles and certain income tax adjustments. The above guidance assumes an effective tax rate of between 21% and 25%. The above guidance assumes 96 million average diluted shares outstanding and average currency exchange rates as shown in the table below:

Q1 Fiscal

2023

Q4 Fiscal

Q1 Fiscal

Guidance

2022

2022

Euro to U.S. Dollar

$1.02

$1.06

$1.18

GBP to U.S. Dollar

$1.20

$1.26

$1.38

Today’s Conference Call and Webcast Details

Avnet will host a quarterly webcast and teleconference today at 1:30 p.m. PT and 4:30 p.m. ET to discuss its financial results and provide a corporate update. The webcast can be accessed via Avnet’s Investor Relations web page at: https://ir.avnet.com.

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 90 days, through November 8, 2022 at 5:00 p.m. ET, and can be accessed by dialing: 877-660-6853 or 201-612-7415 and using Conference ID: 13730217.

Forward-Looking Statements

This document contains 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, with respect to the financial condition, results of operations and business of the Company. You can find many of these statements by looking for words like "believes," "projected", "plans," "expects," "anticipates," "should," "will," "may," "estimates" or similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties. The following important factors, in addition to those discussed elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended July 3, 2021 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, could affect the Company’s future results of operations, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements: geopolitical events and military conflicts; pandemics and other health-related crises, including COVID-19; competitive pressures among distributors of electronic components; an industry down-cycle in semiconductors, including supply shortages; relationships with key suppliers and allocations of products by suppliers, including increased non-cancellable/non-returnable orders; accounts receivable defaults; risks relating to the Company’s international sales and operations, including risks relating to the ability to repatriate cash, foreign currency fluctuations, inflation, duties and taxes, sanctions and trade restrictions, and compliance with international and U.S. laws; risks relating to acquisitions, divestitures and investments; adverse effects on the Company’s supply chain, operations of its distribution centers, shipping costs, third-party service providers, customers and suppliers, including as a result of issues caused by military conflicts, terrorist attacks, natural and weather-related disasters, pandemics and health related crisis, warehouse modernization and relocation efforts; risks related to cyber security attacks, other privacy and security incidents and information systems failures, including related to current or future implementations, integrations or upgrades; general economic and business conditions (domestic, foreign and global) affecting the Company’s operations and financial performance and, indirectly, the Company’s credit ratings, debt covenant compliance, liquidity and access to financing; constraints on employee retention and hiring; and legislative or regulatory changes affecting the Company’s businesses.

Any forward-looking statement speaks only as of the date on which that statement is made. Except as required by law, the Company assumes no obligation to update any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made.

About Avnet

As a leading global technology distributor and solutions provider, Avnet has served customers’ evolving needs for an entire century. We support customers at each stage of a product’s lifecycle, from idea to design and from prototype to production. Our unique position at the center of the technology value chain enables us to accelerate the design and supply stages of product development so customers can realize revenue faster. Decade after decade, Avnet helps 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

July 2,

July 3,

July 2,

July 3,

2022

2021

2022

2021

(Thousands, except per share data)

Sales

$

6,372,653

$

5,226,734

$

24,310,708

$

19,534,679

Cost of sales

5,593,022

4,581,787

21,345,317

17,294,049

Gross profit

779,631

644,947

2,965,391

2,240,630

Selling, general and administrative expenses

494,943

498,497

1,994,847

1,874,831

Russian-Ukraine conflict related expenses

26,261

Restructuring, integration and other expenses

28,449

5,272

84,391

Operating income

284,688

118,001

939,011

281,408

Other expense, net

(6,160

)

(2,955

)

(5,302

)

(19,006

)

Interest and other financing expenses, net

(29,987

)

(23,345

)

(100,375

)

(89,473

)

Income before taxes

248,541

91,701

833,334

172,929

Income tax expense (benefit)

1,718

6,346

140,955

(20,185

)

Net income

$

246,823

$

85,355

$

692,379

$

193,114

Earnings per share:

Basic

$

2.54

$

0.86

$

7.02

$

1.95

Diluted

$

2.51

$

0.85

$

6.94

$

1.93

Shares used to compute earnings per share:

Basic

97,309

99,655

98,662

99,258

Diluted

98,387

100,630

99,819

100,168

Cash dividends paid per common share

$

0.26

$

0.22

$

1.00

$

0.85

AVNET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

July 2,

July 3,

2022

2021

(Thousands)

ASSETS

Current assets:

Cash and cash equivalents

$

153,693

$

199,691

Receivables

4,301,002

3,576,130

Inventories

4,244,148

3,236,837

Prepaid and other current assets

177,783

150,763

Total current assets

8,876,626

7,163,421

Property, plant and equipment, net

315,204

368,452

Goodwill

758,833

838,105

Intangible assets, net

12,651

28,539

Operating lease assets

227,138

265,988

Other assets

198,080

260,917

Total assets

$

10,388,532

$

8,925,422

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Short-term debt

$

174,422

$

23,078

Accounts payable

3,431,683

2,401,357

Accrued expenses and other

591,020

572,457

Short-term operating lease liabilities

54,529

58,346

Total current liabilities

4,251,654

3,055,238

Long-term debt

1,437,400

1,191,329

Long-term operating lease liabilities

199,418

239,838

Other liabilities

307,300

354,833

Total liabilities

6,195,772

4,841,238

Shareholders’ equity

4,192,760

4,084,184

Total liabilities and shareholders’ equity

$

10,388,532

$

8,925,422

AVNET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Years Ended

July 2, 2022

July 3, 2021

(Thousands)

...