Net Income $ $ $ (65.4) Adjusted Net Income (1) $ $ $ (61.0)

Transcription

1 $ in millins - except per share data CFO Review f Fiscal 2016 Furth Quarter Results Fiscal 2016 Results Fiscal Years Ended July 2, 2016 June 27, 2015 Net Chg Sales $ 26,219.3 $ 27,924.7 $ (1,705.4) Grss Prfit $ 3,037.5 $ 3,193.1 $ (155.6) GP Margin 11.6 % 11.4 % 16 bps Selling General and Administrative Expenses $ 2,170.5 $ 2,274.6 $ (104.1) Adjusted Operating Expenses $ 2,141.9 $ 2,220.6 $ (78.7) Adjusted Operating Expenses as % f Sales 8.2 % 8.0 % 22 bps Adjusted Operating Expenses as % f Grss Prfit 70.5 % 69.5 % 98 bps Operating Incme $ $ $ (40.0) Adjusted Operating Incme $ $ $ (76.9) Operating Incme Margin 3.0 % 3.0 % 4 bps Adjusted Operating Incme Margin 3.4 % 3.5 % (6) bps Net Incme $ $ $ (65.4) Adjusted Net Incme $ $ $ (61.0) Diluted EPS $ 3.80 $ 4.12 (7.8)% Adjusted Diluted EPS $ 4.22 $ 4.49 (6.0)% Return n Wrking Capital (ROWC) 20.1 % 21.6 % (153) bps Return n Capital Emplyed (ROCE) 10.7 % 11.6 % (88) bps Wrking Capital Velcity (0.3) A discussin n the impact f freign currency n the Cmpany s results f peratins, the definitin f rganic sales and a recnciliatin f nn-gaap financial infrmatin is attached as exhibit 99.2 ( Exhibit 99.2 ) t the Frm 8-K filed with the Securities Exchange Cmmissin n. Sales fr fiscal 2016 decreased 6.1%, r $1.7 billin, t $26.2 billin. Excluding the translatin impact f changes in freign currency exchange rates (als referred t as cnstant currency and referenced t as CC in the graphs that fllw), rganic sales (refer t Exhibit 99.2) decreased 5.3% with bth perating grups cntributing t the decline. Electrnics Marketing (EM) rganic sales decreased 3.7% in cnstant currency primarily due t the expected decline in the Asia regin s select high vlume supply chain engagements and verall lwer demand in the industrial markets EM Americas serves. These declines were ffset by rganic grwth in EMEA f 7.8% in cnstant currency. Technlgy Slutins (TS) rganic sales decreased 7.9% in cnstant currency primarily due t lwer verall demand fr certain legacy datacenter prducts and frm the impact f changes in prduct mix. In fiscal 2016, the Cmpany imprved its enterprise grss prfit margin by 16 basis pints ver fiscal 2015 driven predminately by imprvements at TS. Adjusted selling, general and administrative expenses ( SG&A expenses ) declined 3.5%, r $78.7 millin, t $2.1 billin and declined 1.9% in cnstant currency frm fiscal Adjusted perating incme at the enterprise level decreased 7.9% t $895.6 millin and adjusted perating incme margin declined 6 basis pints primarily due t higher csts incurred as a result f the ERP implementatin in EM Americas ffset by imprvements in perating incme margin in TS Americas and EMEA regins. EM perating incme declined 9.0% and perating incme margin decreased 22 basis pints t 4.4%. TS perating incme declined 2.4% and perating incme margin increased 21 basis pints t 3.3%. Adjusted diluted earnings per share declined 6.0% year ver year due t the decline in perating incme at bth perating grups. Cash flw frm peratins decreased 62% year ver year t $224.3 millin, primarily driven by decreases in prfitability and an increase in inventry at EM t supprt the ERP implementatin in EM Americas. The Cmpany returned $466.1 millin, t sharehlders via its dividend and share repurchase prgram.

2 $ in millins - except per share data Fiscal 2016 Furth Quarter Results Q4' FY15 Q3' FY16 Q4' FY16 Y/Y Chg Seq. Chg Sales $ 6,796.3 $ 6,174.7 $ 6,226.8 $ (569.5) $ 52.1 Grss Prfit $ $ $ $ (54.8) $ (5.8) GP Margin 11.6 % 11.9 % 11.7 % 18 bps (19) bps Selling General and Administrative Expenses $ $ $ $ (19.5) $ 3.1 Adjusted Operating Expenses $ $ $ $ (5.7) $ 4.7 Adjusted Operating Expenses as % f Sales 8.0 % 8.6 % 8.6 % 64 bps bps Adjusted Operating Expenses as % f Grss Prfit 69.0 % 72.2 % 73.4 % 440 bps 122 bps Operating Incme $ $ $ $ (7.5) $ (8.6) Adjusted Operating Incme $ $ $ $ (49.1) $ (10.5) Operating Incme Margin 2.7 % 2.9 % 2.8 % 12 bps (16) bps Adjusted Operating Incme Margin 3.6 % 3.3 % 3.1 % (46) bps (19) bps Net Incme $ $ $ 96.8 $ (61.9) $ (26.7) Adjusted Net Incme $ $ $ $ (47.3) $ (20.3) Diluted EPS $ 1.15 $ 0.94 $ 0.75 (34.8)% (20.2)% Adjusted Diluted EPS $ 1.16 $ 1.01 $ 0.86 (25.9)% (14.9)% Return n Wrking Capital (ROWC) 22.5 % 18.5 % 17.1 % (536) bps (142) bps Return n Capital Emplyed (ROCE) 12.0 % 9.8 % 9.1 % (286) bps (73) bps Wrking Capital Velcity (0.8) (0.1) Refer t Exhibit Sales fr the furth quarter f fiscal 2016 decreased 8.3% in cnstant currency and declined 8.4% year ver year n a reprted basis t $6.23 billin due t high single digit declines in bth the EM and TS perating grups. Sequentially, sales decreased 0.2% in cnstant currency, which was belw the nrmal seasnal range f +2% t +5%. The belw seasnal decline f 3.5% at EM was primarily ffset by 6.3% grwth at TS. Adjusted perating incme decreased 20.1% year ver year t $194.7 millin and adjusted perating incme margin declined 46 basis pints primarily as a result f lwer sales and additinal csts and inefficiencies incurred by EM Americas as a result f implementing a new ERP system. Sequentially, adjusted perating incme decreased 5.1% and adjusted perating incme margin declined 19 basis pints as a 50 basis pint imprvement in perating incme margin at TS was ffset by a decline in EM Americas due t the afrementined ERP system implementatin. Adjusted diluted earnings per share f $0.86 decreased 25.9% year ver year, with the shrtfall due primarily t the impact f EM America s ERP implementatin. Avnet s ROWC decreased 536 basis pints year ver year and ROCE was dwn 286 basis pints primarily due t a decrease at EM. Cash flw used in peratins was $72.8 millin in the furth quarter f fiscal 2016 as prfitability decreased sequentially and wrking capital increased. Wrking capital increased $399.1 millin year ver year, r 10.7% in cnstant currency, and increased 5.4% sequentially in cnstant currency. During the furth quarter f fiscal 2016, the Cmpany paid a dividend f $0.17 per share, r $21.6 millin, and repurchased $46.8 millin wrth f stck, r 1.2 millin shares, at an average price f $39.69.

3 $ in millins - except per share data Sales Year-ver- Year Grwth Rates Q4' FY15 Q1' FY16 Q2' FY16 Q3' FY16 Q4' FY16 Reprted Avnet, Inc. $ 6,796.3 $ 6,969.7 $ 6,848.1 $ 6,174.7 $ 6,226.8 (8.4)% Cnstant Currency (8.3) Electrnics Marketing (EM) $ 4,315.9 $ 4,471.4 $ 4,114.6 $ 4,041.5 $ 3,939.2 (8.7)% Cnstant Currency (9.4)% Americas $ 1,269.9 $ 1,265.2 $ 1,125.1 $ 1,192.7 $ 1,082.2 (14.8)% EMEA $ 1,245.0 $ 1,326.4 $ 1,141.1 $ 1,330.7 $ 1, % Cnstant Currency 2.2 % Asia $ 1,801.0 $ 1,879.8 $ 1,848.4 $ 1,518.1 $ 1,564.0 (13.2)% Cnstant Currency (13.8)% Technlgy Slutins (TS) $ 2,480.5 $ 2,498.3 $ 2,733.4 $ 2,133.2 $ 2,287.6 (7.8)% Cnstant Currency (6.4)% Americas $ 1,497.3 $ 1,508.7 $ 1,625.4 $ 1,241.2 $ 1,382.9 (7.6)% EMEA $ $ $ $ $ (0.7)% Cnstant Currency 0.8 % Asia $ $ $ $ $ (20.8)% Cnstant Currency (17.8)% Year-ver-year sales grwth rate excludes the impact f changes in freign currency exchange rates. Refer t Exhibit 99.2 Avnet s furth quarter fiscal 2016 sales decreased 8.3% year ver year in cnstant currency t $6.2 billin with bth perating grups cntributing tward this decline. On a sequential basis, Avnet sales decreased 0.2% in cnstant currency, and increased 0.8% n a reprted basis, which was belw the nrmal seasnal range f +2% t +5% primarily due t disruptin in EM America s custmer delivery and service capabilities as a result f an ERP implementatin.

4 $ in millins - except per share data EM's furth quarter fiscal 2016 sales f $3.9 billin decreased 9.4% year ver year in cnstant currency due t duble digit declines in the Americas and Asia regins partially ffset by grwth in EMEA. Americas' sales decreased 14.8% year ver year reflecting declines in sales primarily frm disruptins frm the regin s ERP implementatin. EMEA s sales increased 2.2% year ver year in cnstant currency, and reprted sales increased 3.9% marking the thirteenth cnsecutive quarter f rganic grwth. Asia s sales decreased 13.2% year ver year primarily due t expected declines in the regin s select high vlume supply chain engagements. EM's sales decreased 3.5% sequentially in cnstant currency r 2.5% n a reprted basis, which is belw the nrmal seasnal range f flat t +4% as a result f the sales disruptin resulting frm the ERP implementatin in the Americas and expected declines in select high vlume supply chain engagements in Asia. TS' sales decreased 6.4% year ver year in cnstant currency, r 7.8% n a reprted basis, t $2.3 billin, primarily due t declines in legacy data center prducts. Organic sales decreased 7.6% in cnstant currency (8.9% in reprted dllars). America s sales decreased 7.6% year ver year, rganic sales declined 8.0%. EMEA s sales in cnstant currency increased 0.8% year ver year, rganic sales declined 3.0% in cnstant currency. Asia s sales declined 17.8% in cnstant currency (20.8% in reprted dllars) year ver year due t sfter demand fr certain legacy datacenter prducts and frm the impact f changes in prduct mix. TS' sales increased 6.3% sequentially in cnstant currency, which is at the high end f the nrmal seasnal range f +4% t +7%. At a prduct level, year-ver-year grwth in netwrking, sftware and services were ffset by declines in servers and legacy strage.

5 $ in millins - except per share data Grss Prfit Grss Prfit $ $ $ $ $ $ (54.8) Grss Prfit Margin 11.6 % 11.4 % 11.4 % 11.9 % 11.7 % 18 bps Grss prfit f $731.0 millin, decreased 7.0% year ver year (decreased 7.8% in cnstant currency) and decreased 0.8% sequentially. The year-ver-year decline was driven by lwer sales at bth perating grups, while the sequential decline was primarily due t the decline in sales related t the ERP implementatin in EM Americas. Grss prfit margin f 11.7% imprved 18 basis pints frm the year ag quarter as a result f TS prtfli management actins and a mre favrable prduct mix. Grss prfit margin declined 19 basis pints sequentially primarily due t the Americas regin at bth perating grups. EM grss prfit margin declined sequentially and was essentially flat with the year ag quarter. The sequential decrease was primarily due t a decline in the Americas regin. TS grss prfit margin was essentially flat sequentially and imprved year ver year. The year-ver-year imprvement was primarily due t an increase in the Asia regin.

6 $ in millins - except per share data Operating Expenses Selling, General and Administrative Expenses $ $ $ $ $ $ (19.5) Amrtizatin f Intangible Assets and Other (19.6) (7.5) (7.9) (7.4) (5.8) 13.8 Adjusted Operating Expenses $ $ $ $ $ $ (5.7) Adjusted Operating Expenses as a % f Grss Prfit 69.0 % 69.6 % 67.2 % 72.2 % 73.4 % 440 bps Refer t Exhibit Adjusted selling, general and administrative expenses ( adjusted SG&A expenses ) were $536.3 millin in the furth quarter f fiscal 2016, a decrease f $5.7 millin, r 1.0%, frm the furth quarter f fiscal The year-ver-year decrease in adjusted SG&A expenses was primarily due t the impact f prir restructuring actins and expense efficiencies including frm the Avnet Advantage initiative partially ffset by an increase in expenses related t acquisitins, the ERP implementatin in EM Americas and ther csts, including emplyee merit cmpensatin increases that tk effect in January Sequentially, adjusted SG&A expenses increased $4.7 millin, r 0.9% primarily due t the increase in EM Americas related t the ERP implementatin. Adjusted SG&A expenses as a percentage f grss prfit increased 440 basis pints frm the year ag quarter. EM SG&A expenses as a percentage f grss prfit increased 660 basis pints frm the year ag quarter and 393 basis pints sequentially, primarily due t lwer sales and increases in csts incurred related t the ERP implementatin in the Americas regin. TS SG&A expenses as a percentage f grss prfit increased 176 basis pints frm the year ag quarter and decreased 470 basis pints sequentially. The sequential decrease was primarily due t higher grss prfit related t the grwth in sales.

7 $ in millins - except per share data Operating Incme Operating Incme $ $ $ $ $ $ (7.5) Adjusted Operating Incme $ $ $ $ $ $ (49.1) Operating Incme Margin 2.7 % 3.0 % 3.3 % 2.9 % 2.8 % 12 bps Adjusted Operating Incme Margin 3.6 % 3.5 % 3.7 % 3.3 % 3.1 % (46) bps Electrnics Marketing (EM) Ttal Operating Incme $ $ $ $ $ $ (50.3) Operating Incme Margin 4.8 % 4.8 % 4.2 % 4.5 % 4.0 % (82) bps Technlgy Slutins (TS) Ttal Operating Incme $ 77.6 $ 74.5 $ $ 55.5 $ 70.8 $ (6.8) Operating Incme Margin 3.1 % 3.0 % 4.3 % 2.6 % 3.1 % (3) bps Refer t Exhibit Avnet adjusted perating incme f $194.7 millin decreased $49.1 millin r 20.1% year ver year primarily due t lwer prfitability at bth perating grups. Avnet adjusted perating incme margin f 3.1% decreased 46 basis pints year ver year and 19 basis pints sequentially. EM perating incme margin f 4.0% decreased 82 basis pints frm the year ag quarter primarily due t the year-ver-year decline in sales and t higher perating csts incurred as a result f the ERP implementatin in the Americas regin. Sequentially, perating incme margin decreased 58 basis pints primarily due t the lwer sales and increased csts related t the ERP implementatin in the Americas regin. TS perating incme margin f 3.1% remained flat frm the year ag quarter as the decline in sales was partially ffset by imprvements in grss prfit margin. Operating incme margin increased 50 basis pints sequentially primarily due t imprvements in the EMEA and Asia regins.

8 $ in millins - except per share data Interest Expense, Other Incme (Expense) and Incme Taxes Interest Expense $ 23.7 $ 23.6 $ 22.4 $ 23.3 $ 29.8 $ 6.0 Other Incme (Expense) $ (3.1) $ (5.9) $ (6.5) $ 2.2 $ (8.0) $ (4.9) Incme Tax Expense (Benefit) $ (5.1) $ 47.3 $ 41.2 $ 37.1 $ 38.5 $ 43.5 Adjusted Incme Tax Expense $ 61.2 $ 58.0 $ 62.0 $ 51.6 $ 44.7 $ (16.5) Effective Tax Rate (3.3)% 26.6 % 20.9 % 23.1 % 28.4 % 3,173 bps Adjusted Effective Tax Rate 27.7 % 27.5 % 27.4 % 28.0 % 28.5 % 76 bps Refer t Exhibit Interest expense f $29.8 millin increased $6.0 millin frm the year ag quarter primarily due t interest expense incurred n the Cmpany s $550.0 millin 4.625% Ntes issued in March The Cmpany incurred $8.0 millin f ther expense in the furth quarter f fiscal 2016 cmpared with $3.1 millin f ther expense in the furth quarter f fiscal The year-ver-year increase in ther expense was primarily due t higher csts incurred t hedge freign currency expsures. The effective tax rate f 28.4% in the furth quarter f fiscal 2016 was higher than the effective tax rate in the furth quarter f fiscal 2015 primarily due t a lwer effective tax rate in the furth quarter f fiscal 2015 due t the release f a valuatin allwance.

9 $ in millins - except per share data Net Incme and EPS Net Incme $ $ $ $ $ 96.8 $ (61.9) Adjusted Net Incme $ $ $ $ $ $ (47.3) Diluted EPS $ 1.15 $ 0.96 $ 1.16 $ 0.94 $ 0.75 (34.8)% Adjusted Diluted EPS $ 1.16 $ 1.12 $ 1.22 $ 1.01 $ 0.86 (25.9)% Refer t Exhibit Net incme decreased by $61.9 millin year ver year t $96.8 millin, resulting in EPS f $0.75 per share n a diluted basis. The year ver year and sequential decrease was primarily due t the declines in prfitability at bth perating grups discussed abve and the increase in the effective tax rate. Adjusted net incme fr the furth quarter f fiscal 2016 was $112.3 millin, r $0.86 per share n a diluted basis. Adjusted net incme was dwn 29.6% frm the year ag quarter and adjusted diluted earnings per share decreased 25.9%, primarily due t the lwer perating incme at bth perating grups partially ffset by a psitive impact due t the Cmpany s share repurchases. Adjusted diluted earnings per share f $0.86 decreased $0.15, r 14.9% sequentially.

10 $ in millins - except per share data Wrking Capital Accunts Receivable $ 5,054.3 $ 4,903.2 $ 5,395.0 $ 4,874.2 $ 4,975.1 $ (79.2) Inventries $ 2,482.2 $ 2,805.0 $ 2,650.2 $ 2,826.9 $ 2,856.2 $ Accunts Payable $ (3,338.1) $ (3,339.8) $ (3,628.1) $ (3,298.0) $ (3,233.8) $ Wrking Capital $ 4,198.4 $ 4,368.4 $ 4,417.1 $ 4,403.1 $ 4,597.5 $ Wrking Capital Velcity (0.80) Refer t Exhibit Wrking capital (accunts receivable plus inventries less accunts payable) increased $399.1 millin, r 9.5%, year ver year and increased 10.7% in cnstant currency. The increase was primarily due t increases in inventries at EM t supprt the ERP implementatin and frm a decrease in accunts payable. On a sequential basis, wrking capital increased 5.4% in cnstant currency as a decrease at TS was ffset by an increase at EM. Wrking capital velcity decreased 0.8 turns year ver year and decreased 0.1 turns sequentially, primarily due t a decrease in sales. Inventries increased $374.0 millin, r 15.1%, year ver year primarily at EM Americas t supprt the cnversin f its ERP system and new supplier arangements. On a sequential basis, inventries increased 1.7% in cnstant currency.

11 $ in millins - except per share data Returns Return n Wrking Capital (ROWC) 22.5 % 20.9 % 22.8 % 18.5 % 17.1 % (536) bps Return n Capital Emplyed (ROCE) 12.0 % 11.1 % 12.2 % 9.8 % 9.1 % (286) bps Refer t Exhibit ROWC f 17.1% and ROCE f 9.1% decreased 536 basis pints and 286 basis pints year ver year, respectively, primarily due t declines at EM ffset by imprvements at TS. Sequentially, ROWC and ROCE decreased 142 and 73 basis pints, respectively, primarily due t increased wrking capital at EM partially ffset by imprvements in bth ROWC and ROCE at TS.

12 $ in millins - except per share data Cash Flw Net Incme $ $ $ $ $ 96.8 $ (61.9) Nn-Cash Items $ 75.7 $ 74.8 $ 53.4 $ 59.4 $ $ 91.1 Wrking Capital and Other $ 64.9 $ (238.8) $ (91.4) $ 30.0 $ (336.4) $ (401.3) Cash Flw frm Operatins $ $ (33.7) $ $ $ (72.8) $ (372.1) TTM CF frm Operatins $ $ $ $ $ $ (359.6) The Cmpany used $72.8 millin f cash fr peratins during the furth quarter f fiscal 2016, driven by decreases in prfitability and wrking capital changes in EM Americas. During the furth quarter f fiscal 2016, the Cmpany repurchased 1.2 millin shares at an average cst f $39.69 per share. Entering the first quarter f fiscal year 2017, the Cmpany had apprximately $174.9 millin remaining under the current repurchase authrizatin. During the furth quarter f fiscal 2016, the Cmpany paid a dividend f $0.17 per share, r $21.6 millin in ttal, and $88.6 millin fr fiscal Cash and cash equivalents at the end f the furth quarter f fiscal 2016 was $1.03 billin, f which $972.7 millin was held utside the United States; net debt (ttal debt less cash and cash equivalents) was apprximately $1.46 billin.

13 $ in millins - except per share data Frward-Lking Statements This dcument cntains certain frward-lking statements within the meaning f Sectin 27A f the Securities Act f 1933, as amended, and Sectin 21E f the Securities Exchange Act f 1934, as amended. These statements are based n management s current expectatins and are subject t uncertainty and changes in facts and circumstances. The frward-lking statements herein include statements addressing future financial and perating results f Avnet and may include wrds such as will, anticipate, estimate, frecast, expect, believe, and shuld, and ther wrds and terms f similar meaning in cnnectin with any discussins f future perating r financial perfrmance, business prspects r market cnditins. Actual results may differ materially frm the expectatins cntained in the frwardlking statements. The fllwing factrs, amng thers, culd cause actual results t differ materially frm thse described in the frward-lking statements: the Cmpany s ability t retain and grw market share and t generate additinal cash flw, risks assciated with any acquisitin activities and the successful integratin f acquired cmpanies, an industry dwn-cycle in semicnductrs, IT hardware r sftware prducts, declines in sales, changes in business cnditins and the ecnmy in general, changes in market demand and pricing pressures, any material changes in the allcatin f prduct r prduct rebates by suppliers, and ther cmpetitive and/r regulatry factrs affecting the businesses f Avnet generally. Mre detailed infrmatin abut these and ther factrs is set frth in Avnet s filings with the Securities and Exchange Cmmissin, including the Cmpany s reprts n Frm 10-K, Frm 10-Q and Frm 8-K. Except as required by law, Avnet is under n bligatin t update any frward-lking statements, whether as a result f new infrmatin, future events r therwise. Nn-GAAP Definitins and Recnciliatins A discussin n the impact f freign currency n the Cmpany s results f peratins, the definitin f rganic sales and a recnciliatin f nn-gaap financial infrmatin is attached as Exhibit 99.2 t the Current Reprt n Frm 8-K filed with the Securities and Exchange Cmmissin n.