Avnet, Inc. (AVT) reported an adjusted net income of $151.6 million or $1.03 per share in the third quarter of fiscal 2012 compared to $172.0 million or $1.15 per share in the second quarter of fiscal 2012 and a net income of $169.7 million or $1.10 per share in the year-ago quarter.
The earnings surpassed not only the Zacks Consensus Estimate of 98 cents per share but also management’s guidance range of $0.94 – $1.02 for the quarter.
Sales came in at $6.28 billion, down 5.9% y/y and 6.1% sequentially, reflecting weakness from the EMEA region sales and deteriorated performances across both its major segments. Revenues were within management’s guidance range of $5.95 billion to $6.55 billion and marginally beat the Zacks Consensus Estimate of $6.27 billion.
On a segmental basis, revenues from Electronics Marketing (EM) declined 4.3% from the year-ago quarter to $3.76 billion, within management’s guidance range of $3.55 billion – $3.85 billion.
Revenues from Technology Solutions (TS) fell 8.1% from the year-ago quarter to $2.52 billion, falling within management’s guidance of $2.40 billion – $2.70 billion.
Margins
Gross margin increased to 12.0% from 11.8% in the previous year quarter and 11.7% from the previous quarter. Excluding restructuring, integration and other charges, adjusted operating margin was 3.5%, versus 3.6% in the year-ago quarter and 3.4% in the last quarter.
EM operating margin came in at 5.17% compared to 5.73% in the year-ago quarter and 4.86% in the previous quarter. TS operating margins increased to 2.69% from 2.09% in the year-ago quarter but fell from 3.83% in the last quarter.
Cash flow/Balance Sheet
Avnet ended the quarter with cash and cash equivalents of $940.1 million, down from $968.5 million at the end of the previous quarter. Long-term debt amounted to $1.2 billion at the end of the quarter, somewhat consistent with the last quarter.
During the first nine months of fiscal 2012, Avnet generated net cash of $269.4 million from operating activities compared to net cash spent of $3.4 million in the previous comparable period and used $95.4 million in capital expenditures.
During the quarter, Avnet repurchased 710,000 shares for an aggregate cost of $22.9 million under its existing $500 million share repurchase program, started in August 2011.
Guidance
For the fourth quarter of fiscal 2012, the company projects consolidated sales in the range of $6.30 billion to $6.90 billion. Avnet expects EM sales and TS sales to be in the range of $3.75 billion – $4.05 billion and $2.55 billion – $2.85 billion, respectively. Adjusted EPS is expected in the range of $1.05 – $1.13 along with a tax rate of 29% – 31%.
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