Avnet Reports Third Quarter Fiscal 2021 Financial Results

Rhea-AI Summary

Avnet, Inc. (Nasdaq: AVT) reported robust fiscal Q3 results for the period ending April 3, 2021, achieving $4.9 billion in sales, up 14.1% year-over-year and exceeding guidance. The company noted a significant increase in GAAP diluted earnings per share (EPS) to $1.07 compared to a loss of $1.29 in the prior year. Non-GAAP adjusted EPS rose 94.7% to $0.74. Operating margins also improved, with GAAP margin up 447 basis points to 1.8%. CEO Phil Gallagher cited strong execution and strategic relationships as key drivers amid supply challenges.

Positive

• Sales increased to $4.9 billion, up 14.1% year-over-year.
• GAAP diluted EPS rose to $1.07 from a loss of $1.29 in the prior year.
• Non-GAAP adjusted diluted EPS increased 94.7% to $0.74.
• GAAP operating margin improved to 1.8%, up 447 basis points.
• Adjusted operating margin grew to 2.3%, a 62 basis point increase.

Negative

• Cash used for operations was $9.9 million due to increased working capital investments.
• Sales from Texas Instruments products fell significantly to under $2 million from $400.6 million year-over-year.

Avnet, Inc. (Nasdaq: AVT) today announced results for its third quarter ended April 3, 2021.

Fiscal Third Quarter Key Financial Highlights:

• Sales of $4.9 billion, up from $4.7 billion sequentially and compared to $4.3 billion in the prior year quarter. Sales exceeded guidance, driven by broad end-market strength.
  • On a constant currency basis, sales grew 10.7% year over year and 4.8% sequentially.
  • Excluding Texas Instruments from both periods, sales grew 22% in constant currency year over year.
• GAAP diluted earnings per share of $1.07, compared with a GAAP diluted loss per share of $1.29 in the prior year quarter.
  • Non-GAAP adjusted diluted earnings per share of $0.74, compared with $0.38 earnings per share in the prior year quarter.
• GAAP operating margin was up 447 basis points to 1.8% compared with negative 2.7% in the prior year quarter.
  • Adjusted operating margin of 2.3% increased 62 basis points from 1.6% in the prior year quarter.
• Farnell operating margins increased sequentially 154 basis points to 6.0%.
• Sales of Texas Instruments’ products were less than $2 million compared with $400.6 million in the prior year quarter.
• As expected, cash used for operations totaled $9.9 million in the quarter as strong demand drives investment in working capital.

CEO Commentary

“In the third quarter, the impact of our back-to-basics strategy resulted in strong execution and performance across all regions,” said Avnet Chief Executive Officer Phil Gallagher. “As we continue to navigate supply constraints, extended lead times and a shifting operating environment, our deep relationships with our partners and tight management of our backlog will continue to be of utmost importance. Our prioritization of these relationships and focus on execution to date have put Avnet on a more linear growth path. Further, our ability to enhance value through demand creation for our partners has continued to contribute to our success at the center of the technology supply chain. We remain confident in our ability to execute and create value for our customers and suppliers.”

Key Financial Metrics ($ in millions, except per share data)
Third Quarter Results (GAAP)
		Mar – 21				Mar – 20				Change Y/Y			Dec – 20				Change Q/Q
Sales		$	4,916.7			$	4,309.8			14.1	%		$	4,668.2			5.3	%
Operating Income (Loss)			87.7				(115.8)			175.7	%			57.2			53.2	%
Operating Income (Loss) Margin			1.8	%			(2.7)	%		447	bps			1.2	%		55	bps
Diluted Earnings (Loss) Per Share (EPS)		$	1.07			$	(1.29)			182.9	%		$	0.19			463.2	%
Third Quarter Results (Non-GAAP)(1)
		Mar – 21				Mar – 20				Change Y/Y			Dec – 20				Change Q/Q
Sales		$	4,916.7			$	4,309.8			14.1	%		$	4,668.2			5.3	%
Adjusted Operating Income			110.5				70.4			57.1	%			79.6			38.9	%
Adjusted Operating Income Margin			2.3	%			1.6	%		62	bps			1.7	%		55	bps
Adjusted Diluted Earnings Per Share (EPS)		$	0.74			$	0.38			94.7	%		$	0.48			54.2	<

FAQ

What were Avnet's Q3 sales for fiscal 2021?

Avnet reported Q3 sales of $4.9 billion.

How much did Avnet's earnings per share increase in Q3 2021?

GAAP diluted EPS increased to $1.07 from a loss of $1.29 in the previous year.

What is Avnet's outlook after the Q3 results?

CEO Phil Gallagher indicated confidence in continued growth and value creation despite supply challenges.

How did Avnet's operating margins change in Q3 2021?

GAAP operating margin improved to 1.8%, up 447 basis points year-over-year.

What impact did Texas Instruments have on Avnet's sales?

Sales from Texas Instruments products significantly decreased to less than $2 million compared to $400.6 million last year.