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Avnet Reports Fourth Quarter and Fiscal Year 2017 Results

PHOENIX--(BUSINESS WIRE)--Avnet, Inc. (NYSE:AVT) today announced results for the fourth quarter and fiscal year ended July 1, 2017.

“In the June quarter, we generated approximately $81 million of cash from continuing operations and $221 million for the fiscal year”

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Fourth Quarter Results

  • Sales of $4.6 billion increased 16.1% year over year
  • Organic sales increased 8.4% in constant currency from the year ago quarter
  • Diluted earnings per share (EPS) from continuing operations of $0.59
  • Adjusted diluted EPS from continuing operations of $0.84
  • Cash generated from operations of $81 million
Fourth Quarters Ended
July 1, 2017 July 2, 2016 Change Growth

$ in millions, except per share data

Sales $ 4,606.4 $ 3,969.0 16.1 % 6.8 %
Constant Currency(2) 17.9 % 8.4 %
Americas 1,332.2 1,105.0 20.6 % 7.2 %
EMEA 1,651.0 1,293.1 27.7 % 13.3 %
Constant Currency(2) 32.1 % 17.2 %
Asia 1,623.2 1,570.9 3.3 % 0.6 %
Constant Currency(2) 4.0 % 1.2 %
Operating Income 93.4 120.2 (22.3 ) %
Adjusted Operating Income(3) 155.2 131.7 17.9 %
Income from continuing operations 73.3 72.1 1.7 %
Adj Income from continuing operations(4) 105.0 75.4 39.3 %
Diluted EPS continuing operations $ 0.59 $ 0.56 5.4 %
Adj Diluted EPS continuing operations(4) $ 0.84 $ 0.59 42.4 %
(1) Financial information is for continuing operations and excludes the Technology Solutions (TS) business as the sale of this business was completed during the March quarter. See “Discontinued Operations” below.
(2) Year-over-year sales growth rate excludes the impact of changes in foreign currency exchange rates. A discussion on the impact of foreign currency on Avnet’s results of operations is included in Exhibit 99.2 to the Form 8-K filed with the Securities Exchange Commission on August 9, 2017 (“Exhibit 99.2”).
(3) Non-GAAP adjustments to operating income in fiscal 2017 include $42.0 million of restructuring, integration and other expenses and $19.8 million of amortization expense. Refer to Exhibit 99.2 for a complete reconciliation of non-GAAP financial information.
(4) Non-GAAP measures. Refer to Exhibit 99.2.

“We closed out the fiscal year with a strong quarter as organic revenue grew 8.4% year over year in constant currency with all three regions contributing to the growth. In our EMEA region, where our electronic components group continues to grow faster than the market, revenue increased 32% in constant currency and organic revenue was up 17%,” said Bill Amelio, CEO of Avnet. “Our digital initiatives continue to gain traction as Premier Farnell’s Element 14 community surpassed 500 thousand members and we continue to add over 30 thousand new digital customers each month. We are seeing meaningful improvement in demand creation metrics as we redeploy field application engineers to new products and suppliers that value the reach and technical breadth we bring to high growth markets. With our digital ecosystem growing steadily and as we realize the positive impacts from our transformation initiatives, we enter fiscal 2018 positioned to drive further organic growth and improve financial performance.”

Segment Reporting

As a result of the sale of the TS Business and the acquisition of Premier Farnell, during the fourth quarter of fiscal 2017, the Company changed its reportable segments to the Electronic Components and Premier Farnell operating groups.

Operating Group Results

Year-over-Year Growth Rates
Q4 FY17 Reported Organic
Sales Sales Sales
(in millions)
Electronic Components $ 4,260.7 7.4 % 7.4 %
Constant Currency(1) 8.8 % 8.8 %

Premier Farnell (acquired Oct 16, 2016)

$ 345.7 0.1 %
Constant Currency(1) 4.0 %
Q4 FY17 Q4 FY16 Change
Operating Income
Electronic Components $ 152.4 154.7 (1.5 ) %
Premier Farnell 35.5 %
Operating Income Margin
Electronic Components 3.6 % 3.9 % (32 ) bps
Premier Farnell 10.3 %
  • Electronic Components sales increased 8.8% from the year ago quarter in constant currency
  • Electronic Components EMEA organic sales increased 18.6% year over year in constant currency, the 16th consecutive quarter of year-over-year growth
  • Excluding the Company’s decision to exit select high volume supply chain engagements, Electronic Components Asia grew 11.6% year over year in constant currency
  • Premier Farnell EMEA organic sales increased 5.8% year over year in constant currency and Premier Farnell Asia organic sales increased 13.0% from the year ago quarter in constant currency
  • Electronic Components operating income margin in the Asia region improved 25 bps sequentially and 45 bps from the year ago quarter
  • Electronic Components inventory declined 4.5% from the year ago quarter, 5.0% in constant currency, and average inventory days declined 10.0% primarily driven by improvement in the Americas region

Cash Flow and Returns to Shareholders

  • Cash generated from continuing operations was $81 million in the June quarter and $221 million in fiscal 2017
  • Cash and cash equivalents at the end of the quarter was $836 million; net debt (total debt less cash and cash equivalents) was $943 million
  • During the June quarter, the Company repurchased 3.3 million shares, representing an aggregate investment of $136 million
  • Entering fiscal 2018, the Company had $399 million remaining under the current share repurchase authorization
  • Avnet paid a dividend of $0.18 per share, or $22 million, during the quarter

“In the June...