Avnet Q4, FY 2020 Sales Slip From Prior Year

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Avnet, Inc. (Nasdaq: AVT) today announced results for its fourth quarter and fiscal year ended June 27, 2020.

Fiscal Fourth Quarter Key Financial Highlights:

• Sales of $4.2 billion, compared with $4.3 billion in the previous quarter and $4.7 billion in the prior year quarter.
• GAAP diluted earnings per share from continuing operations of $0.53, compared with loss per share of $0.33 a year ago.
  • Non-GAAP adjusted diluted EPS of $0.64 compared with $0.95 a year ago.
  • GAAP and Non-GAAP diluted EPS was positively impacted by $0.42 from lower tax expense and $0.08 from lower interest expense and favorable foreign currency gains as compared to the prior quarter.
• GAAP operating income totaled $1.9 million, compared with GAAP operating loss of $30 million a year ago.
  • Adjusted operating income of $42.9 million, compared with $156.3 million a year ago.
• GAAP operating margin of 0.1%, compared with GAAP operating loss margin of (0.6)% a year ago.
  • Adjusted operating income margin was 1.0%, compared with 3.3% a year ago.
• Cash flow from operations totaled $288 million in the quarter, up sequentially from $98 million in the previous quarter.
• Adjusted operating expenses improved by $16 million compared to the previous quarter and by $7 million compared to the prior year quarter.
• For fiscal year 2020, cash flow from continuing operations totaled $730 million, up $139 million from fiscal year 2019.
• For fiscal year 2020, reduced debt by $296 million with net debt of $948 million at the end of the current fiscal year.

CEO Commentary

“In the fourth quarter, we delivered quarterly revenues above consensus and generated strong operating cash flow,” said Avnet Interim CEO Phil Gallagher. “Despite the challenges of the COVID-19 operating environment, we are committed to improving our bottom-line results. In fiscal year 2021, we will enhance our core distribution business capabilities, while helping our current and future supplier partners deploy their technologies to over two million customers.”

Gallagher continued, “I want to thank all of our employees for their continued dedication and commitment to Avnet, especially during the uncertainties of the pandemic. Our people’s health and safety remains our top priority. As we enter fiscal year 2021, we will work to manage our costs while still making investments in the business that will ensure we are well-positioned to benefit as the market recovers.”

CFO Commentary

“During the fourth quarter, we delivered sales of $4.2 billion and adjusted diluted EPS of $0.64 despite the uncertain environment,” said Avnet CFO Tom Liguori. “Our business operations and finance teams worked diligently throughout the quarter to optimize our working capital and deliver value to our customers. Our quarterly cash flow from operations totaled $288 million, which marks the 7th consecutive quarter of positive cash flow. For fiscal year 2020, our operating cash flow totaled $730 million.”

Liguori continued, “While taking steps to conserve cash in the quarter, we also reduced adjusted operating expenses by $16 million sequentially and by $7 million year over year. Looking ahead, as we evaluate the economic impact of COVID-19 and the current demand environment, we are establishing a plan to reduce our net operating expenses by $75 million annually. This plan will be in place by the December quarter, and we will implement it while continuing to optimize our working capital levels.”

Additional Fourth Quarter Fiscal 2020 Updates

• Awarded the Cypress Semiconductor product line by Infineon, further expanding the breadth of our line card.
• Redeemed $300 million of outstanding 5.875% notes in April 2020.
• Returned $21 million to shareholders with dividends paid during the quarter.
• Recorded an income tax refund receivable of over $100 million related to the reduction in value in certain assets and from the impact of the CARES Act, most of which is expected to be realized in fiscal 2021.

The full release can be found here.