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Avnet Inc. (AVT - Free Report) reported first-quarter fiscal 2019 results, wherein both the top line and bottom line surpassed the Zacks Consensus Estimate.
The company reported non-GAAP earnings of $1.03 per share, beating the consensus estimate of $1.01 and increasing 35.5% from the year-ago quarter.
Avnet’s quarterly revenues of $5.09 billion increased 9.2% year over year on a reported basis and 9.9% on constant currency basis. The figure topped the Zacks Consensus Estimate of $4.98 billion. Revenues came within the company’s guided range of $4.8-$5.2 billion.
The company’s solid results can be attributed to strength in vertical markets such as industrial, transportation, defense, aerospace and healthcare. Continued transformation efforts and commitment to accelerate the Electronic Components business including the replacement of revenues from supplier program changes was also a key driver.
Revenues from the sale of IP&E (interconnect, passives and electromechanical) devices also remained strong.
Healthy quarterly results were driven by continued strong worldwide demand for the Electronic Components segment, which grew 9.4% year over year to $4.71 billion.
Within this segment, the supplier line card continued to increase. Five new franchises were added in the quarter across connectivity, power control, programmable logic devices, enhancing Avnet’s solutions capabilities across various vertical markets.
Premier Farnell segment’s revenues totaled $379.1 million, up 7.2% year over year.
Its IoT solutions witnessed 15% customer additions and 30% revenue pipeline expansion as a result of its initiatives in the space through acquisitions and partnerships.
Avnet also added five new supplier lines at Premier Farnell.
Avnet continued to benefit from its partnership with Microsoft (MSFT - Free Report) , which referred Avnet’s solutions to its IoT partners, giving the former attractive customer expansion opportunities.
Avnet has also focused on leveraging its expertise in technology to come up with new innovations to drive growth. It partnered with Not Impossible Labs recently to demonstrate its new technology, which will make it possible for deaf people to experience music. This technology will be released in the market later.
Avnet recently opened a new design center in Guadalajara, Mexico. The company also added new customers in blockchain, pharmaceuticals, healthcare, consumer goods etc., helping it expand its customer base.
Talking about Avnet’s digital capabilities, during the quarter, the company witnessed impressive growth in user engagement for its online communities — Hackster and element14. Strong momentum was also displayed in the company’s e-commerce revenues, making management optimistic about its aim to hit $1 billion of e-commerce revenue in fiscal 2019.
Additionally, the company continued to focus on transformation, additional integration with Premier Farnell and low-cost regions to expand the business.
Geographically, Americas sales improved 7.3% year over year to $1.27 billion. EMEA and Asia sales increased 1.3% and 18% to $1.71 billion and $2.1 billion, respectively.
However, the recent lull in demand from the China market was an overhang on book-to-bill ratio, which was slightly lower this quarter but still greater than 1.0.
Margins
The company reported gross profit of $636.8 million, up 3.9% year over year. However, gross margin contracted 60 basis points (bps) to 12.5% as a result of higher revenue mix from Asia, which is a low-margin region.
Adjusted operating income increased 33.7% from the year-earlier quarter to $182.5 million. Adjusted operating margin came in at 3.6%, up 66 bps.
Balance Sheet and Cash Flow
Avnet exited the fiscal first quarter with cash and cash equivalents of $365.9 million compared with $621.1 million recorded in the previous quarter.
Long-term debt was $1.6 billion. The company returned $180 million to shareholders in the form of $157 million worth repurchased shares and 20 cents per share increased dividend.
Guidance
For second-quarter fiscal 2019, the company estimates sales in the range of $4.9-$5.3 billion, representing year-over-year growth of 13% at mid-point of $5.1 billion.
Non-GAAP earnings per share are estimated in the range of 98 cents to $1.08, representing growth of 32% at mid-point of $1.03.
Long-term earnings growth for CyberArk and Vishay is projected to be 19.83% and 9.16%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Avnet (AVT) Q1 Earnings & Sales Beat Estimates, Increase Y/Y
Avnet Inc. (AVT - Free Report) reported first-quarter fiscal 2019 results, wherein both the top line and bottom line surpassed the Zacks Consensus Estimate.
The company reported non-GAAP earnings of $1.03 per share, beating the consensus estimate of $1.01 and increasing 35.5% from the year-ago quarter.
Avnet’s quarterly revenues of $5.09 billion increased 9.2% year over year on a reported basis and 9.9% on constant currency basis. The figure topped the Zacks Consensus Estimate of $4.98 billion. Revenues came within the company’s guided range of $4.8-$5.2 billion.
The company’s solid results can be attributed to strength in vertical markets such as industrial, transportation, defense, aerospace and healthcare. Continued transformation efforts and commitment to accelerate the Electronic Components business including the replacement of revenues from supplier program changes was also a key driver.
Revenues from the sale of IP&E (interconnect, passives and electromechanical) devices also remained strong.
Avnet, Inc. Price, Consensus and EPS Surprise
Avnet, Inc. Price, Consensus and EPS Surprise | Avnet, Inc. Quote
Quarter Details
Healthy quarterly results were driven by continued strong worldwide demand for the Electronic Components segment, which grew 9.4% year over year to $4.71 billion.
Within this segment, the supplier line card continued to increase. Five new franchises were added in the quarter across connectivity, power control, programmable logic devices, enhancing Avnet’s solutions capabilities across various vertical markets.
Premier Farnell segment’s revenues totaled $379.1 million, up 7.2% year over year.
Its IoT solutions witnessed 15% customer additions and 30% revenue pipeline expansion as a result of its initiatives in the space through acquisitions and partnerships.
Avnet also added five new supplier lines at Premier Farnell.
Avnet continued to benefit from its partnership with Microsoft (MSFT - Free Report) , which referred Avnet’s solutions to its IoT partners, giving the former attractive customer expansion opportunities.
Avnet has also focused on leveraging its expertise in technology to come up with new innovations to drive growth. It partnered with Not Impossible Labs recently to demonstrate its new technology, which will make it possible for deaf people to experience music. This technology will be released in the market later.
Avnet recently opened a new design center in Guadalajara, Mexico. The company also added new customers in blockchain, pharmaceuticals, healthcare, consumer goods etc., helping it expand its customer base.
Talking about Avnet’s digital capabilities, during the quarter, the company witnessed impressive growth in user engagement for its online communities — Hackster and element14. Strong momentum was also displayed in the company’s e-commerce revenues, making management optimistic about its aim to hit $1 billion of e-commerce revenue in fiscal 2019.
Additionally, the company continued to focus on transformation, additional integration with Premier Farnell and low-cost regions to expand the business.
Geographically, Americas sales improved 7.3% year over year to $1.27 billion. EMEA and Asia sales increased 1.3% and 18% to $1.71 billion and $2.1 billion, respectively.
However, the recent lull in demand from the China market was an overhang on book-to-bill ratio, which was slightly lower this quarter but still greater than 1.0.
Margins
The company reported gross profit of $636.8 million, up 3.9% year over year. However, gross margin contracted 60 basis points (bps) to 12.5% as a result of higher revenue mix from Asia, which is a low-margin region.
Adjusted operating income increased 33.7% from the year-earlier quarter to $182.5 million. Adjusted operating margin came in at 3.6%, up 66 bps.
Balance Sheet and Cash Flow
Avnet exited the fiscal first quarter with cash and cash equivalents of $365.9 million compared with $621.1 million recorded in the previous quarter.
Long-term debt was $1.6 billion. The company returned $180 million to shareholders in the form of $157 million worth repurchased shares and 20 cents per share increased dividend.
Guidance
For second-quarter fiscal 2019, the company estimates sales in the range of $4.9-$5.3 billion, representing year-over-year growth of 13% at mid-point of $5.1 billion.
Non-GAAP earnings per share are estimated in the range of 98 cents to $1.08, representing growth of 32% at mid-point of $1.03.
Zacks Rank and Stocks to Consider
Avnet currently carries a Zacks Rank #4 (Sell).
A few stocks worth considering in the broader Computer and Technology sector are CyberArk Software Ltd. (CYBR - Free Report) and Vishay Intertechnology, Inc. (VSH - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for CyberArk and Vishay is projected to be 19.83% and 9.16%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>