Shares of Avnet Inc. AVT were down 3.8% on Apr 23, following lower-than-expected fiscal third-quarter 2015 results.
The companyreported third-quarter 2015 adjusted earnings of $1.04 per share, which missed the Zacks Consensus Estimate of $1.09 per share. Earnings however managed to touch the lower end of management’s guidance of $1.04 per share to $1.14 and were up 1% on a year over year basis.
Avnet Inc. - Earnings Surprise | FindTheCompany
Quarter Details
Revenues of $6.74 billion were up a marginal 0.8% from the year-ago quarter. Reported revenues were toward the lower end of management’s guidance range of $6.6 billion to $7.2 billion and missed the Zacks Consensus Estimate of $6.86 billion. The year-over-year increase was primarily due to a strong Electronics Marketing (EM) business.
On a segmental basis, revenues from EM increased 2.1% from the year-ago quarter to $4.22 billion. The year-over-year increase was driven by a sales increase in Asian regions (up 11.4% year over year). Also, growth in Americas (up 3.7% year over year) contributed to the segmental increase.
Revenues from Technology Solutions (TS) decreased 1.3% from the year-ago quarter to $2.52 billion, primarily due to a 10.7% decline in the Asian region. The company also witnessed a decline in the computing components business.
Gross profit decreased 3.8% year over year to $774.4 million due to higher cost of sales. Gross margin contracted 50 basis points (bps) and came in at 11.5%, primarily due to margin contraction in the western regions.
Adjusted operating income increased 2.9% from the year-ago quarter to $230.4 million. Operating margin came in at 3.4% compared with 3.3% reported in the year-ago quarter. The increase was primarily led by the Americas region and a higher revenue base.
Adjusted net income came in at $143.5 million or $1.04 per share compared with $144.1 million or $1.03 per share in the year-ago quarter. Adjusted net income excluded restructuring, integration and other charges, and amortization of intangible assets.
Avnet exited the quarter with cash and cash equivalents of $803.5 million compared with $903.3 million in the previous quarter. Avnet’s long-term debt came to $1.73 billion. The company generated $60 million cash in operating activities during the quarter. Avnet paid a dividend of $21.7 million (16 cents per share) in the quarter.
During the quarter, Avnet repurchased shares worth $38.8 million and had $318.3 million remaining under its stock repurchase program at quarter-end
Guidance
For fourth-quarter fiscal 2015, the company projects consolidated sales in the range of $6.6 billion to $7.2 billion (mid-point $6.9 billion). The mid-point of the range is in line with the Zacks Consensus Estimate. Avnet projects EM and TS sales in the range of $4.15 billion–$4.45 billion and $2.45 billion–$2.75 billion, respectively.