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Tickers in this Article: AVT
Avnet, Inc. (AVT) reported an adjusted net income of $145.3 million or 99 cents per share in the fourth quarter of fiscal 2012 (ending June 30, 2012) compared to $189.4 million or $1.22 per share in the fourth quarter of fiscal 2011 and an adjusted net income of $151.6 million or $1.03 per share in the third quarter of fiscal 2012. The earnings were not only below the Zacks Consensus Estimate of $1.08 per share but also management's guidance range of $1.05 - $1.13 per share for the quarter.

For the full year of fiscal 2012, adjusted net income was $607.9 million or $4.06 per share compared to $666.6 million or $4.32 per share in fiscal 2011. The results lagged the Zacks Consensus Estimate of $4.16 per share.

Revenues

Sales came in at $6.31 billion, down 8.8% y/y but up 0.4% sequentially. The year-over-year decline was caused by a negative currency translation impact. Although, the revenues in the quarter were within management's guidance range of $6.30 billion to $6.90 billion, it failed to meet Zacks Consensus Estimate of $6.54 billion.

On a segmental basis, revenues from Electronics Marketing (EM) declined 5.0% from the year-ago quarter to $3.76 billion, within management's guidance range of $3.75 billion - $4.05 billion.

Revenues from Technology Solutions (TS) fell 13.8% from the year-ago quarter to $2.54 billion. The segmental revenues were slightly below management's guidance range of $2.55 billion - $2.85 billion.

In fiscal 2012, net sales came to $25.7 billion, falling 3.1% annually. Segment-wise, Electronics Marketing (EM) sales amounted to $14.9 billion, decreasing 0.8% annually and Technology Solutions (TS) sales came in at $10.8 billion, declining 6.04% annually.

Margins

Gross margin in the quarter was 12.0% which remained nearly flat year over year and sequentially. Excluding restructuring, integration and other charges, adjusted operating margin was 3.7% which remained consistent with the previous quarter but declined from 3.9% in the year-ago quarter.

EM operating margin came in at 5.1% compared to 5.9% in the year-ago quarter and 5.2% in the previous quarter. TS operating margins increased to 2.7% from 2.3% in the year-ago quarter but it remained flat compared to the third quarter of fiscal 2012.

For the fiscal year 0f 2012, gross margin amounted to 11.8% compared to 11.7% in the fiscal 2011, whereas adjusted operating margin came in at 3.7% in fiscal 2012 versus 3.8% in fiscal 2011.

Balance Sheet and Cash flow

Avnet ended the year with cash and cash equivalents of $1.0 billion, up from $940.1 million at the end of the previous quarter. As of June 30, 2012, long-term debt was $1.3 billion compared to $1.2 billion at the end of the previous quarter.

During the quarter, the company generated $259 million of cash from operating activities compared to $281 million in the previous year quarter. In fiscal 2012, Avnet generated net cash of $529 million from operating activities compared to $278 million in fiscal 2011.

Guidance

For the first quarter of fiscal 2013, the company projects consolidated sales in the range of $5.80 billion to $6.40 billion. Avnet projects that EM sales and TS sales will be in the range of $3.55 billion - $3.85 billion and $2.25 billion - $2.55 billion, respectively. Adjusted EPS (excluding restructuring charges, acquisitions charges and post-closing integration activities) is likely to be within 78 cents to 88 cents per share along with a tax rate of 29% - 31%.

The company anticipates that annual sales and EPS will be adversely affected by the foreign currency translation and it will reduce EPS by 6 cents during the quarter.

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