Avnet, Inc. (Nasdaq: AVT) today announced results for the first quarter ended September 28, 2019.
Fiscal First Quarter Key Financials
- Sales of $4.6 billion were in line with guidance, compared with $5.1 billion a year ago, as industry-wide softness over the past year has impacted historical seasonality, spanning all geographies.
- GAAP diluted earnings per share from continuing operations totaled $0.40; on an adjusted basis, diluted earnings per share was $0.60.
- GAAP operating income margin was 1.4%; adjusted operating income margin was 2.3%.
- Cash flow from operations totaled $196 million.
- Returned $133 million to shareholders including $112 million in stock buybacks and $21 million in dividends.
“In the first quarter we achieved results within our guidance by managing the business effectively as we worked through an ongoing industry-wide slowdown,” said Bill Amelio, Chief Executive Officer of Avnet. “While echoing the short-term caution in our industry, we took steps to position Avnet for long-term growth in our higher margin businesses. We further strengthened our capabilities by broadening our reach and offerings through a strategic IoT acquisition and by forming alliances around the world. We are confident these actions will benefit both our business and our shareholders by laying the groundwork for an accelerated, positive return on investment when the industry rebounds.”
“The $196 million of cash flow from operations Avnet generated this quarter brings our total operating cash flow for the last three quarters to nearly $800 million, enabling us to continue our share repurchase and dividend programs as well as broaden our internal capabilities with acquisitions, including our pending purchase of Witekio,” said Tom Liguori, Chief Financial Officer of Avnet. “We are on track to pull forward $50 million of operating expense reductions that are part of our $245 million cost reduction plan. We expect to have the $50 million fully implemented by the end of the March quarter. These actions, along with others we have put in place, will help us achieve improved operating income margins when industry growth returns to previous levels.”
Additional First Quarter Fiscal 2020 Highlights and Key Developments
- The Board approved a $500 million increase in Avnet’s share repurchase authorization and a 5% increase in Avnet’s quarterly cash dividend to $0.21 per share.
- Working capital days improved 4 days sequentially, contributing to the strong operating cash flow performance.
- Announced the pending acquisition of Witekio, which will strengthen Avnet’s software and IoT capabilities at the device level.
- Avnet announced its distribution relationship with Texas Instruments will be ended by December 2020. As a result, Avnet will implement $35 million in incremental annual cost reductions as the decline in TI product sales occur.
- Formed a strategic alliance with Trusted Objects to secure the industrial IoT through an end-to-end security solution for low-power devices, reinforcing Avnet’s strategy of streamlining and scaling IoT security.
- Formed a strategic partnership with Schneider Electric, the leader in digital transformation of energy management and automation.
- Introduced Avnet’s RFSoC Development Kit using the Xilinx Zynq UltraScale+, which enables wireless system architects to accelerate the path to production in wireless.
- Adopted the new lease accounting standard that has resulted in Avnet’s balance sheet now reflecting a $279 million operating lease asset and a $301 million operating lease liability.
Awards and Notable Recognition Received During the Quarter
- Avnet Asia, Avnet Silica and EBV Elektronik received the Nexperia Gold Billionaires award.
- Avnet India was awarded the Highest Achievement in Business Growth year over year for Enterprise Business by Western Digital India.
- Avnet Silica was named Distributor of the Year by ELEKTRONIK magazine for passive components and Delivery Performance.