Slide 1: Avnet Fiscal Second Quarter 2020 Financial Results
Avnet Fiscal Second Quarter 2020 Financial Results Bill Amelio Chief Executive Officer January 23, 2020
Slide 2: Safe harbor statement
Safe harbor statement This document contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on management’s current expectations and are s
Slide 3: Executive Overview
Executive Overview Bill Amelio Chief Executive Officer
Slide 4: Q2 2020 financial results
Q2 2020 financial results • Delivered quarterly sales of $4.5B, in line with guidance • Adjusted diluted EPS of $0.40(1), in line with guidance • Positive indicators signal a likely bottoming of downturn • Expecting a return to growth in second half of 2020 4 (1) Non-GAAP measure. See Non-GAAP Defin
Slide 5: Q2 2020 highlights
Q2 2020 highlights • Net Promoter Scores improved 97% since May 2017 • Won significant accounts in aerospace and defense • Acquired focused line card distributor Phoenics • Completed construction of new Farnell DC in Europe • Completed Witekio acquisition 5 (1) Non-GAAP measure. See Non-GAAP Definit
Slide 6: Q2 2020 highlights, cont.
Q2 2020 highlights, cont. • Achieved targeted operating expense reductions • Launched MaaXBoard • Announced Avnet Guardian 100 • Powered by Microsoft Azure Sphere • Launched new IoT Partner Program 6
Slide 7: Accelerating electronic components business
Accelerating electronic components business • Quarterly sales of $4.2B as we continue to navigate demand correction • Operating margins of 2.2% • Phoenics: • Strong track record of best-in-class experience for customers and suppliers • Focused line card with complementary solutions • Plan for replac
Slide 8: Farnell: scaling higher profit margin business
Farnell: scaling higher profit margin business • Pricing, sales and margin pressures showing signs of receding • Gaining traction on five-pronged plan for long-term success: 8
Slide 9: Farnell: scaling higher profit margin business, cont.
Farnell: scaling higher profit margin business, cont. • European distribution center completed in December 2019 • Added more than 47,000 SKUs to inventory in first half of fiscal 2020 • Rolled out new ways for customers to pay in Europe and China • eCommerce global order penetration continues to ben
Slide 10: Digital Transformation and Avnet Integrated
Digital Transformation and Avnet Integrated Digital Transformation Making it easier for customers to do business with us Avnet Integrated Exited quarter with strong order trends 10
Slide 11: IoT update
IoT update • Diversifying business to maximize higher-margin opportunities • Reduces exposure to fulfillment-type revenue fluctuations • Remain committed to our core component value proposition • Focused on leveraging new technologies of supplier partners • Established team of IoT experts around the
Slide 12: IoT partner program overview
IoT partner program overview 12
Slide 13: Secure and scalable platform for smart cities
Secure and scalable platform for smart cities The Solution: Smart water metering solution • All-in-one metering solution for U.S. cities with: • Valve control • Rechargeable power • Remote on/off capabilities Avnet’s Role • Developed PoC on Avnet IoTConnect platform • Enabled switch from AWS for bet
Slide 14: FY20 corporate strategy
FY20 corporate strategy Scale Leverage higher profit ecosystem businesses for growth Amplify Extend Drive distribution digital continuous opportunities capabilities improvement Successful execution will add value for our customers, 14 suppliers, investors and employees
Slide 15: Financial Overview
Financial Overview Tom Liguori Chief Financial Officer
Slide 16: Q2 2020 Financial highlights
Q2 2020 Financial highlights $4.5B Revenues slightly above midpoint of guidance 11.6% Gross margin held steady sequentially $443M Adjusted operating expenses(1), up $7M sequentially due to one-time costs $50M Annual cost reduction 83 Net working capital days down one day sequentially $149M Cash flow
Slide 17: Key metrics by business segment and region
Key metrics by business segment and region Electronic • Revenues of $4.2B, down 2.1% sequentially and 10.2% YoY Components • Operating margins of 2.2% compared to 3.4% last year • Revenues of $1.2B, down 2.4% sequentially and 8.8% YoY Americas • Revenues appear to be stabilizing, signaling near-bott
Slide 18: Q2 2020 Balance sheet and cash flow performance
Q2 2020 Balance sheet and cash flow performance $149M Cash flow generated from operations; $948M total over four quarters $109M Cash returned to shareholders through stock buybacks and dividends $51M Invested in acquisitions of Witekio and Phoenics $144M Revolving debt reduction 2.6 Gross debt lever
Slide 19: Strategic Focus
Strategic Focus • Returning Farnell to double digit operating margins • Expanding Electronic Components revenues and margin while transitioning TI • Growing higher margin businesses including Farnell and IoT • Managing costs and generating cash 19
Slide 20: Outlook for Q3 FY20
Outlook for Q3 FY20 (ending on March 28, 2020) Metric Guidance Range Midpoint Sales $4.1B - $4.5B $4.3B Non-GAAP Adjusted Diluted EPS(1) $0.38 – $0.48 $0.43 Estimated Annual Tax Rate 19% - 23% 21% Reflects similar market conditions to Q2 and estimated impact of the Texas Instruments transition 20 (1
Slide 21: Q&A Session
Q&A Session
Slide 22: Thank you
Thank you IAVNET
Slide 23: Non-GAAP Definitions
Non-GAAP Definitions In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company also discloses certain non-GAAP financial information including (i) adjusted operating income, (ii) adjusted ope