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Avnet Reports Second Quarter Fiscal 2022 Financial Results

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Second quarter sales of $5.9 billion, up 25.6% year over year with diluted EPS of $1.50

Second quarter adjusted diluted EPS of $1.51

Electronic Components and Farnell operating margins increased to 3.5% and 13.7%, respectively

PHOENIX, January 26, 2022--(BUSINESS WIRE)--Avnet, Inc. (Nasdaq: AVT) today announced results for its second quarter ended January 1, 2022.

Commenting on the Company’s financial results, Avnet Chief Executive Officer Phil Gallagher stated, "We’re pleased to have delivered another quarter of strong sales and margin expansion in both our Electronic Components and Farnell businesses, contributing to a solid first half to our fiscal year 2022. Our results reflect our team’s continued ability to execute, driving operating strength and organic growth across all regions, with a notable performance in the Americas. As we progress through the second half of fiscal year 2022, we expect to continue to benefit from the favorable demand environment as well as from our investments in e-commerce and in expanding customer relationships."

Fiscal Second Quarter Key Financial Highlights:

  • Sales of $5.9 billion, up from $4.7 billion in the prior year and exceeding guidance.

    • On a constant currency basis, sales grew 27.4% year over year and 6.1% sequentially.

  • GAAP diluted earnings per share of $1.50, compared with $0.19 in the prior year.

    • Non-GAAP adjusted diluted earnings per share of $1.51, compared with $0.48 in the prior year.

  • Farnell operating margins increased 276 basis points sequentially to 13.7%.

  • Electronic Components operating margins increased 31 basis points sequentially to 3.5%, supported by growth across all regions.

  • Returned $23.7 million to shareholders in dividends, with the dividend payout increasing 14% year over year.

Key Financial Metrics

($ in millions, except per share data)

Second Quarter Results (GAAP)

Dec – 21

Dec – 20

Change Y/Y

Sep – 21

Change Q/Q

Sales

$

5,865.2

$

4,668.2

25.6

%

$

5,584.7

5.0

%

Operating Income

211.7

57.2

269.9

%

168.2

25.8

%

Operating Income Margin

3.6

%

1.2

%

238

bps

3.0

%

60

bps

Diluted Earnings Per Share (EPS)

$

1.50

$

0.19

689.5

%

$

1.10

36.4

%

Second Quarter Results (Non-GAAP)(1)

Dec – 21

Dec – 20

Change Y/Y

Sep – 21

Change Q/Q

Sales

$

5,865.2

$

4,668.2

25.6

%

$

5,584.7

5.0

%

Adjusted Operating Income

215.5

79.6

170.7

%

178.8

20.5

%

Adjusted Operating Income Margin

3.7

%

1.7

%

197

bps

3.2

%

47

bps

Adjusted Diluted Earnings Per Share (EPS)

$

1.51

$

0.48

214.6

%

$

1.22

23.8

%

Segment and Geographical Mix

Dec – 21

Dec – 20

Change Y/Y

Sep – 21

Change Q/Q

Electronic Components (EC) Sales

$

5,424.3

$

4,342.4

24.9

%

$

5,129.5

5.8

%

EC Operating Income Margin

3.5

%

2.4

%

109

bps

3.2

%

31

bps

Farnell Sales

$

440.9

$

325.8

35.3

%

$

455.2

(3.2

)

%

Farnell Operating Income Margin

13.7

%

4.5

%

917

bps

10.9

%

276

bps

Americas Sales

$

1,391.5

$

1,101.5

26.3

%

$

1,258.8

10.6

%

EMEA Sales

1,840.8

1,346.3

36.7

%

1,747.6

5.3

%

Asia Sales

2,632.9

2,220.4

18.6

%

2,578.3

2.1

%

________________________

(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 Third Quarter of Fiscal 2022 Ending on April 2, 2022

Guidance Range

Midpoint

Sales

$5.4B – $5.8B

$5.6B

Adjusted Diluted EPS(1)

$1.45 – $1.55

$1.50

________________________

(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 and inventory availability and reflects traditional seasonality from the second fiscal quarter to the third fiscal quarter, primarily in the Asia region where sales traditionally decline due to Asia specific holidays. The above guidance also excludes amortization of intangibles, any potential restructuring, integration, and other expenses and certain income tax adjustments. The above guidance assumes an effective tax rate of between 20% and 24%. 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:

Q3 Fiscal

2022

Q2 Fiscal

Q3 Fiscal

Guidance

2022

2021

Euro

$1.13

$1.14

$1.20

GBP

$1.36

$1.35

$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 April 26, 2022 at 5:00 p.m. ET, and can be accessed by dialing: 877-660-6853 or 201-612-7415 and using Conference ID: 13725008.

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: the scope and duration of the COVID-19 pandemic and its impact on global economic systems, access to financial markets and the Company’s employees, operations, customers, and supply chain; competitive pressures among distributors of electronic components; an industry down-cycle in semiconductors; relationships with key suppliers and allocations of products by suppliers; 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, 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 natural and weather-related disasters, pandemics and health related crisis, warehouse modernization and relocation efforts; risks related to cyber-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; geopolitical events; 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)

Second Quarters Ended

Six Months Ended

January 1,

January 2,

January 1,

January 2,

2022

2021

2022

2021

(Thousands, except per share data)

Sales

$

5,865,217

$

4,668,172

$

11,449,912

$

9,391,232

Cost of sales

5,152,182

4,156,919

10,077,185

8,363,899

Gross profit

713,035

511,253

1,372,727

1,027,333

Selling, general and administrative expenses

501,363

442,084

987,540

913,241

Restructuring, integration and other expenses

11,948

5,272

38,369

Operating income

211,672

57,221

379,915

75,723

Other income (expense), net

1,737

(1,333

)

1,327

(20,831

)

Interest and other financing expenses, net

(21,630

)

(21,485

)

(44,474

)

(43,787

)

Income before taxes

191,779

34,403

336,768

11,105

Income tax expense

40,958

15,240

74,629

10,831

Net income

$

150,821

$

19,163

$

262,139

$

274

Earnings per share:

Basic

$

1.52

$

0.19

$

2.64

$

0.00

Diluted

$

1.50

$

0.19

$

2.60

$

0.00

Shares used to compute earnings per share:

Basic

99,032

98,937

99,340

98,917

Diluted

100,286

99,932

100,701

99,897

Cash dividends paid per common share

$

0.24

$

0.21

$

0.48

$

0.42

AVNET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

January 1,

July 3,

2022

2021

(Thousands)

ASSETS

Current assets:

Cash and cash equivalents

$

167,818

$

199,691

Receivables

4,077,707

3,576,130

Inventories

3,542,723

3,236,837

Prepaid and other current assets

155,963

150,763

Total current assets

7,944,211

7,163,421

Property, plant and equipment, net

338,199

368,452

Goodwill

823,728

838,105

Intangible assets, net

19,271

28,539

Operating lease assets

248,020

265,988

Other assets

207,441

260,917

Total assets

$

9,580,870

$

8,925,422

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Short-term debt

$

350,000

$

23,078

Accounts payable

2,693,696

2,401,357

Accrued expenses and other

588,581

572,457

Short-term operating lease liabilities

56,228

58,346

Total current liabilities

3,688,505

3,055,238

Long-term debt

1,144,592

1,191,329

Long-term operating lease liabilities

221,294

239,838

Other liabilities

354,833

Total liabilities

5,377,644

4,841,238

Shareholders’ equity

4,203,226

4,084,184

Total liabilities and shareholders’ equity

$

9,580,870

$

8,925,422

...