Avnet announced results for its second quarter ended December 31, 2022.
Commenting on the Company’s financial results, Avnet Chief Executive Officer Phil Gallagher stated, “We delivered another strong quarter of sales and earnings to close out 2022. This past year we were able to accelerate our sales growth, expand operating margins and gain market share thanks in large part to our customers’ partnership and our employees’ dedication and commitment. As we head into 2023, we are closely monitoring near-term market dynamics and remain encouraged about the medium-term growth opportunities across our diverse end markets.”
Fiscal Second Quarter Key Financial Highlights:
- Sales of $6.7 billion up 14.5% year over year from $5.9 billion.
- On a constant currency basis, sales increased 21.1% year over year.
- Diluted earnings per share increased to $2.63, compared with $1.50 in the prior year quarter.
- Adjusted diluted earnings per share of $2.00, compared with $1.51 in the prior year quarter.
- Higher interest expense negatively impacted second quarter adjusted diluted earnings per share by $0.31 year over year.
- Operating income margin of 4.5%, increased 84 basis points year over year.
- Adjusted operating income margin of 4.5%, increased 80 basis points year over year.
- Electronic Components operating income margin of 4.7%, increased 122 basis points year over year.
- Farnell operating income margin of 9.0% decreased 461 basis points year over year.
- Returned $64 million to shareholders in the quarter from share repurchases, representing 1.8% of outstanding shares.
- Returned $26 million to shareholders in dividends during the quarter.
Key Financial Metrics
($ in millions, except per share data)
| Second Quarter Results (GAAP) | ||||||||||||||||||
| Dec – 22 | Dec – 21 | Change Y/Y | Sep – 22 | Change Q/Q | ||||||||||||||
| Sales | $ | 6,717.5 | $ | 5,865.2 | 14.5 | % | $ | 6,750.1 | (0.5 | )% | ||||||||
| Operating Income | 299.0 | 211.7 | 41.2 | % | 290.5 | 2.9 | % | |||||||||||
| Operating Income Margin | 4.5 | % | 3.6 | % | 84 | bps | 4.3 | % | 15 | bps | ||||||||
| Diluted Earnings Per Share (EPS) | $ | 2.63 | $ | 1.50 | 75.3 | % | $ | 1.93 | 36.3 | % | ||||||||
| Second Quarter Results (Non-GAAP)(1) | ||||||||||||||||||
| Dec – 22 | Dec – 21 | Change Y/Y | Sep – 22 | Change Q/Q | ||||||||||||||
| Adjusted Operating Income | 300.5 | 215.5 | 39.5 | % | 293.3 | 2.5 | % | |||||||||||
| Adjusted Operating Income Margin | 4.5 | % | 3.7 | % | 80 | bps | 4.4 | % | 12 | bps | ||||||||
| Adjusted Diluted Earnings Per Share (EPS) | $ | 2.00 | $ | 1.51 | 32.5 | % | $ | 2.00 | – | % | ||||||||
| Segment and Geographical Mix | ||||||||||||||||||
| Dec – 22 | Dec – 21 | Change Y/Y | Sep – 22 | Change Q/Q | ||||||||||||||
| Electronic Components (EC) Sales | $ | 6,309.5 | $ | 5,424.3 | 16.3 | % | $ | 6,324.2 | (0.2 | )% | ||||||||
| EC Operating Income Margin | 4.7 | % | 3.5 | % | 122 | bps | 4.2 | % | 47 | bps | ||||||||
| Farnell Sales | $ | 408.0 | $ | 440.9 | (7.5) | % | $ | 425.9 | (4.2 | )% | ||||||||
| Farnell Operating Income Margin | 9.0 | % | 13.7 | % | (461 | ) bps | 12.1 | % | (308 | ) bps | ||||||||
| Americas Sales | $ | 1,681.2 | $ | 1,391.5 | 20.8 | % | $ | 1,678.9 | 0.1 | % | ||||||||
| EMEA Sales | 2,255.9 | 1,840.8 | 22.6 | % | 2,129.5 | 5.9 | % | |||||||||||
| Asia Sales | 2,780.4 | 2,632.9 | 5.6 | % | 2,941.7 | (5.5 | )% |
| _______________ | ||
| (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 2023 Ending on April 1, 2023
| Guidance Range | Midpoint | |||
| Sales | $6.15B – $6.45B | $6.30B | ||
| Adjusted Diluted EPS(1) | $1.75 – $1.85 | $1.80 |
| _______________ | ||
| (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 implies a sequential growth rate range of down 4% to down 8%. This guidance assumes a seasonal decline in sales from Asia primarily due to the Lunar New Year and below seasonal growth for the western regions.
The above guidance also excludes amortization of intangibles and certain income tax adjustments. The above guidance assumes similar interest expense to the second quarter and an effective tax rate of between 22% and 26%. The above guidance assumes 92.5 million average diluted shares outstanding and average currency exchange rates as shown in the table below:
| Q3 Fiscal | ||||||
| 2023 | Q2 Fiscal | Q3 Fiscal | ||||
| Guidance | 2023 | 2022 | ||||
| Euro to U.S. Dollar | $1.09 | $1.02 | $1.12 | |||
| GBP to U.S. Dollar | $1.24 | $1.17 | $1.34 |
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 May 2, 2023, at 5:00 p.m. ET, and can be accessed by dialing: 877-660-6853 or 201-612-7415 and using Conference ID: 13734794.
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 2, 2022 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 crises, 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.
