) reported adjusted earnings (excluding restructuring,
integration and other charges, gain on bargain purchase and
other, amortization of intangibles, and tax gains) of 90 cents
per share in the first-quarter of fiscal 2014, beating the Zacks
Consensus Estimate of 88 cents. Earnings were toward the higher
end of management's guidance range of 83 cents to 93 cents.
Revenues came in at $6.35 billion, up 8.1% from the year-ago
quarter. Revenues in the quarter were within management's
guidance range of $6.05 billion to $6.65 billion but missed the
Zacks Consensus Estimate of $6.36 billion. The year-over-year
increase was primarily due to strength in the Asia region
On a segmental basis, revenues from Electronics Marketing (EM)
grew 7.8% from the year-ago quarter to $3.94 billion; within
management's guidance range of $3.70 billion - $4.0 billion. The
year-over-year improvement was led by double-digit growth in Asia
and EMEA, which offset weak performances in America.
Revenues from Technology Solutions (TS) grew 8.6% from the
year-ago quarter to $2.41 billion. Segmental revenues were within
management's guidance range of $2.35 billion - $2.65 billion. The
year-over-year growth was mainly due to a 9.3% increase in
Europe, Middle East & Africa (EMEA), 10.7% increase in
Americas and 1.8% in Asia revenues.
Gross margin in the quarter was 11.6%, down 7 basis points
year over year, primarily due to a decline in Electronics
Marketing segment margin.
Adjusted operating margin was 3.1% versus 2.5% in the year-ago
quarter. Electronics Marketing operating margin came in at 4.5%,
up 38 basis points from the year-ago quarter, primarily due to
improvement in the Americas region. Technology Solutions
operating margin was 2.6%, up 86 basis points from the year-ago
quarter, primarily due to strength in the America and Asia
Adjusted net income was $125.9 million or 90 cents compared
with $88.9 million or 62 cents in the year-ago quarter. Adjusted
net income excluded restructuring, integration and other charges,
gain on bargain purchase and other, amortization of intangibles,
and tax gains.
Balance Sheet and Cash Flow
Avnet ended the quarter with cash and cash equivalents of
$865.6 million, down from $1.0 billion in the previous quarter.
Long-term debt was $1.20 billion, down from $2.05 billion in the
The company generated $489.0 million of cash from operating
activities, significantly up from $267.0 million in the prior
Avnet paid a dividend of $21 million (15 cents per share) in
the quarter. Avnet did not buy back any shares during the
quarter. At quarter end, Avnet had approximately $225.0 million
outstanding under the stock repurchase program.
For the second-quarter of fiscal 2014, the company projects
consolidated sales in the range of $6.65 billion and $7.25
billion. Avnet projects EM sales and TS sales to be in the range
of $3.80-$4.10 billion and $2.85-$3.15 billion, respectively.
Adjusted EPS (excludes restructuring and integration charges
related to costs reductions and acquisitions and amortization of
intangibles) is likely to be within $1.05 to $1.15 per share
while tax rate is likely to be in a range of 27% - 31%.
Avnet posted mixed first quarter results, with earnings per
share beating the Zacks Consensus Estimate but revenues missing
the same. Both the top and bottom line were within managements
guided range. The company provided decent fiscal second-quarter
2014 guidance. The restructuring and share buyback plans could
boost share prices in the near term.
Avnet's leading position in electronics distribution,
continuous cost cutting initiatives and acquisition synergies are
encouraging. It does however see significant competition for both
its domestic and foreign operations, especially from archrival
Arrow Electronics Inc. (
But we look forward to management's decision to optimize costs
and investments to tap the changing demand.
Currently, Avnet has a Zacks Rank #3 (Hold). Investors can
also consider other technology stocks such as
Western Digital Corporation
), both carrying a Zacks Rank #1 (Strong Buy).
ARROW ELECTRONI (ARW): Free Stock Analysis
AVNET (AVT): Free Stock Analysis Report
PLEXUS CORP (PLXS): Free Stock Analysis
WESTERN DIGITAL (WDC): Free Stock Analysis
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