) reported fourth-quarter 2014 adjusted earnings of $1.14 per
share, which beat the Zacks Consensus Estimate of $1.10. Earnings
were at the higher end of management's guidance range of $1.04 to
$1.14 and were also up 11.8% on a year-over-year basis.
Avnet, Inc - Earnings Surprise |
Revenues of $7.05 billion were up 6.9% from the year-ago
quarter. Reported revenues were at the higher end of management's
guidance range of $6.6 to $7.2 billion and beat the Zacks Consensus
Estimate of $6.9 billion. The year-over-year increase was primarily
due to strong Electronics Marketing (EM) business and Technology
Solutions (TS) business.
On a segmental basis, revenues from EM grew 8.8% from the
year-ago quarter to $4.32 billion. The year-over-year increase was
driven by sales increase in Americas and EMEA regions. Organic
sales reported 8.1% year-over-year growth.
Revenues from TS grew 4.2% from the year-ago quarter to $2.73
billion. The company witnessed growth in the Americas region, which
more than offset the decline in EMEA region. The company witnessed
growth in software, services and storage solutions which was
partially offset by a decline in the computing components business.
Organic sales were up 0.3% year over year.
Gross profit for the quarter increased 8.6% year over year to
$837 million, while gross margins came in at 11.9% compared with
11.7% reported in the year-ago quarter as margin expansion in the
EM business was offset by decline in TS business margins.
Adjusted operating income increased 5.9% from the year-ago
quarter to $244.9 million, while operating margin remained flat at
3.5% year over year. The increase was primarily due to improvement
Adjusted net income came in at $160.1 million or $1.14 per share
compared with $141.8 million or $1.02 in the year-ago quarter.
Adjusted net income excluded restructuring, integration and other
charges, foreign currency loss and amortization of intangible
Avnet exited the quarter with cash and cash equivalents of
$928.9 million compared with $960.1 million in the previous
quarter. The company generated $34 million cash in operating
activities during the quarter. Avnet paid a dividend of $20.7
million (15 cents per share) in the quarter.
During the quarter, Avnet repurchased shares worth $7.4 million
and had $216 million remaining under its $750 million stock
repurchase program at quarter-end.
For first-quarter fiscal 2015, the company projects consolidated
sales in the range of $6.4 to $7.0 billion (mid-point $6.7
billion), while the Zacks Consensus Estimate is pegged at $7.08
billion. Avnet projects EM and TS sales in the range of $4.1-$4.4
billion and $2.3-$2.6 billion, respectively.
Adjusted earnings per share (excludes restructuring and
integration charges related to costs reductions and acquisitions
and amortization of intangibles) is expected within 93 cents to
$1.03, lower than the Zacks Consensus Estimate of $1.18. The tax
rate is likely to be in the range of 26-30%.
Avnet posted better-than-expected fourth-quarter results. The
guidance, however, was less-than-encouraging due to tepid IT
Moreover, a significant portion of the company's revenues comes
from the sale of semiconductors, which is a cyclical industry
characterized by changes in technology and manufacturing capacity
and is subject to significant market upturns and downturns.
Avnet's leading position in electronics distribution, continuous
cost cutting initiatives and acquisition synergies are encouraging.
It does, however, face stiff competition in both its domestic and
foreign operations, especially from archrival Arrow Electronics
). However, we look forward to management's decision to optimize
costs and investments to tap the changing demand.
Currently, Avnet has a Zacks Rank #2 (Buy).
Investors can also consider other technology stocks such as DST
) and Micron Technology (
) that have the same Zacks Rank as Avnet.
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