Avnet Reports Second Quarter Fiscal 2021 Financial Results

• $4.7
  billion in sales, $0.19 EPS and $0.48 adjusted EPS exceeded guidance
• Third consecutive
  quarter of operating margin improvement

PHOENIX, US – Media OutReach – 29 January 2020 – Avnet, Inc. (Nasdaq: AVT) today announced results for its second quarter
ended January 2, 2021.

Fiscal Second Quarter Key
Financial Highlights:

• Sales of $4.7 billion up
  from $4.5 billion in the prior year quarter, supported by record sales in Asia
  of $2.2 billion, up 16% year over year.

o
On constant currency
basis, organic sales increased 4.8% after adjusting for 14 weeks of activity in
the prior quarter.

• GAAP diluted earnings per
  share of $0.19, compared with a GAAP diluted loss per share of $0.19 in the
  prior quarter, a 200% increase.

o
Non-GAAP adjusted diluted earnings per share of $0.48,
compared with $0.36 in the prior quarter, a 33% increase.

• Farnell
  operating margins increased sequentially 97 basis points to 4.5%.
• GAAP
  operating income margin of 1.2%, compared with 0.4% the prior quarter, and an
  adjusted operating income margin of 1.7%, compared with 1.4% in the prior
  quarter.
• Achieved
  net working capital of 75 days, generating $85 million of cash flow from
  operations.
• Sales of Texas Instruments (TI) products were $50 million compared with
  $399 million in the prior year.

o When excluding TI, organic
sales grew 9.3% year over year on a constant currency basis.

CEO
Commentary

“Improvements
in our Farnell, EMEA and Americas businesses, complemented by a record revenue
quarter in Asia, reflect our continued progress in driving operational
efficiencies and enhancing key business lines through strategic investments.
We’ve seen tangible results from this back to the basics strategy over the past
two quarters with increased sales, improving returns on capital and a stronger
balance sheet. As a result, we are better positioned today to manage our
backlog and working capital to navigate uncertainties resulting from COVID-19,”
said Avnet Chief Executive Officer Phil Gallagher. “I am incredibly proud of
our team’s resilience amidst the challenges this past year. They’ve delivered
significant value in providing uninterrupted service at a global scale and in
working collaboratively with our customers and suppliers to manage forecasts,
navigate current market dynamics and mitigate supply chain risk.”

Key Financial Metrics

($ in millions, except per share data)

(1)
A reconciliation of non-GAAP financial
measures to GAAP financial measures is presented in the “Non-GAAP Financial
Information” section of this press release.

CFO
Commentary

“During the second
quarter, we delivered sales of $4.7 billion and adjusted diluted earnings per
share of $0.48, driven by strong execution and a streamlined cost structure
that has allowed us to achieve increased revenue without adding significant
operating expense. Our year over year top line growth and careful working
capital management enabled us to achieve our goal of 75 net working capital
days,” said Avnet CFO Tom Liguori. “Our $75 million operating expense reduction
plan was fully implemented in the quarter, driving our ninth consecutive
quarter of positive operating cash flows. We remain on track to achieve our
$245 million operating expense reduction plan by the end of fiscal year 2022.
We are delivering improved financial and competitive performance, building
Avnet’s core distribution business while still strategically investing in
Farnell, where we see tremendous opportunity to deliver profitable growth.”

Additional Second Quarter Fiscal 2021 Updates

• Returned $21
  million to shareholders with dividends paid during the quarter.
• Achieved highest
  quarterly transportation revenue in 6 quarters in the Americas and Asia.
• Farnell
  selected as the authorized global distributor for National Instruments (NI).
• Avnet
  rejoined the Electronic Components Industry Association (ECIA) as a distributor
  member.
• Named
  Infineon’s Best Performance GC Distribution Partner, Greater China PSS and
  Industrial Power Control Greater China.
• Named
  Micron’s Top EBU Demand Creation and Leading Automotive Tier One.

Outlook for the
Third Quarter of Fiscal 2021 Ending on April 3, 2021

(1)
A
reconciliation of non-GAAP guidance to GAAP guidance is presented in the
“Non-GAAP Financial Information” section of this press release.

The above guidance is based
upon market conditions existing as of today, seasonally lower revenues in Asia,
gross margin improvement due to the mix shift from Asia to Americas and EMEA,
and ongoing cost reduction programs. It excludes amortization of intangibles,
any potential restructuring, integration, and other expenses and certain income
tax adjustments. The above sales guidance assumes approximately $50 million in
lower sales of Texas Instruments products as compared to the second quarter of
fiscal 2021. The above guidance assumes 100 million average diluted shares
outstanding and average U.S. Dollar to Euro and GBP currency exchange rates are
as shown below:

Today’s
Conference Call and Webcast Details

Avnet will host a quarterly webcast and
teleconference today at 1:30 p.m. PT and 4:30 p.m. ET to discuss its financial
results and provide a corporate update. The webcast can be accessed via Avnet’s
Investor Relations web page at: https://ir.avnet.com/events-presentations.

Those who would still
like to participate in the live call can dial 877-407-8112 or 201-689-8840. A
replay of the conference call will be available for 90 days, through April
27, 2021 at 5:00 p.m. ET, and can be accessed by dialing: 877-660-6853 or
201-612-7415 and using Conference ID: 13713922.

Forward-Looking
Statements

This document contains 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,
with respect to the financial condition, results of operations and business of
the Company. You can find many of these statements by looking for words like
“believes,” “plans,” “expects,” “anticipates,” “should,” “will,” “may,”
“estimates” or similar expressions. These forward-looking statements are
subject to numerous assumptions, risks and uncertainties. You should understand
that the following important factors, in addition to those discussed elsewhere
in the Company’s Annual Report on Form 10-K for the fiscal year ended June 27,
2020 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form
8-K, could affect the Company’s future results of operations, and could cause
those results or other outcomes to differ materially from those expressed or
implied in the forward-looking statements: the scope and duration of the
COVID-19 pandemic and its impact on global economic systems, access to
financial markets and the Company’s employees, operations, customers, and
supply chain; competitive pressures among distributors of electronic
components; an industry down-cycle in semiconductors; relationships with key
suppliers and allocations of products by suppliers; risks relating to the
Company’s international sales and operations, including risks relating to the
ability to repatriate cash, foreign currency fluctuations, duties and taxes,
and compliance with international and U.S. laws; risks relating to
acquisitions, divestitures and investments; adverse effects on the Company’s
supply chain, operations of its distribution centers, shipping costs,
third-party service providers, customers and suppliers, including as a result
of issues caused by natural and weather-related disasters, pandemics and health
related crisis, social unrest or warehouse modernization and relocation
efforts; risks related to cyber-attacks and the Company’s information systems,
including related to current or future implementations; general economic and
business conditions (domestic, foreign and global) affecting the Company’s
operations and financial performance and, indirectly, the Company’s credit
ratings, debt covenant compliance, and liquidity and access to financing;
geopolitical events, including the uncertainty caused by the United Kingdom’s
exit from, and agreement for a new partnership with, the European Union; and
legislative or regulatory changes affecting the Company’s businesses.

Any forward-looking statement speaks only as of
the date on which that statement is made. Except as required by law, the
Company assumes no obligation to update any forward-looking statement to
reflect events or circumstances that occur after the date on which the
statement is made.

About Avnet

Avnet is a global
electronic components distributor with extensive design, product, marketing and
supply chain expertise for customers and suppliers at every stage of the
product lifecycle. For the past 100 years, Avnet has helped its customers and
suppliers around the world realize the transformative possibilities of
technology. Learn more about Avnet at www.avnet.com. (AVT_IR)

/>This document contains 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, with respect to the financial condition, results of operations and business of the Company. You can find many of these statements by looking for words like “believes,” “plans,” “expects,” “anticipates,” “should,” “will,” “may,” “estimates” or similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties. You should understand that the following important factors, in addition to those discussed elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended June 27, 2020 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, could affect the Company’s future results of operations, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements: the scope and duration of the COVID-19 pandemic and its impact on global economic systems, access to financial markets and the Company’s employees, operations, customers, and supply chain; competitive pressures among distributors of electronic components; an industry down-cycle in semiconductors; relationships with key suppliers and allocations of products by suppliers; risks relating to the Company’s international sales and operations, including risks relating to the ability to repatriate cash, foreign currency fluctuations, duties and taxes, and compliance with international and U.S. laws; risks relating to acquisitions, divestitures and investments; adverse effects on the Company’s supply chain, operations of its distribution centers, shipping costs, third-party service providers, customers and suppliers, including as a result of issues caused by natural and weather-related disasters, pandemics and health related crisis, social unrest or warehouse modernization and relocation efforts; risks related to cyber-attacks and the Company’s information systems, including related to current or future implementations; general economic and business conditions (domestic, foreign and global) affecting the Company’s operations and financial performance and, indirectly, the Company’s credit ratings, debt covenant compliance, and liquidity and access to financing; geopolitical events, including the uncertainty caused by the United Kingdom’s exit from, and agreement for a new partnership with, the European Union; and legislative or regulatory changes affecting the Company’s businesses.

Any forward-looking statement speaks only as of the date on which that statement is made. Except as required by law, the Company assumes no obligation to update any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made.

AVNET, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

AVNET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

AVNET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Non-GAAP
Financial Information

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
operating expenses, (iii) adjusted other income (expense), (iv) adjusted income
tax expense, (v) adjusted income from continuing operations, (vi) adjusted
diluted earnings per share from continuing operations, and (vii) sales adjusted
for the impact of significant acquisitions and other items (as defined in the
Organic Sales section of this document).

There are also references to the impact of
foreign currency in the discussion of the Company’s results of operations. When
the U.S. Dollar strengthens and the stronger exchange rates of the current year
are used to translate the results of operations of Avnet’s subsidiaries
denominated in foreign currencies, the resulting impact is a decrease in U.S.
Dollars of reported results. Conversely, when the U.S. Dollar weakens and the
weaker exchange rates of the current year are used to translate the results of
operations of Avnet’s subsidiaries denominated in foreign currencies, the
resulting impact is an increase in U.S. Dollars of reported results. In the
discussion of the Company’s results of operations, results excluding this
impact are referred to as “constant currency.” Management believes organic
sales and sales in constant currency are useful measures for evaluating current
period performance as compared with prior periods and for understanding
underlying trends. In order to determine the translation impact of changes in
foreign currency exchange rates on sales, income or expense items for
subsidiaries reporting in currencies other than the U.S. Dollar, the Company
adjusts the average exchange rates used in current periods to be consistent
with the average exchange rates in effect during the comparative period.

Management believes that
operating income and operating expenses adjusted for restructuring, integration
and other expenses, goodwill and intangible asset impairment expenses and
amortization of acquired intangible assets and other, are useful measures to help
investors better assess and understand the Company’s operating performance.
This is especially the case when comparing results with previous periods or
forecasting performance for future periods, primarily because management views
the excluded items to be outside of Avnet’s normal operating results or
non-cash in nature. Management analyzes operating income and operating expenses
without the impact of these items as an indicator of ongoing margin performance
and underlying trends in the business. Management also uses these non-GAAP
measures to establish operational goals and, in most cases, for measuring
performance for compensation purposes. Management measures operating income for
its reportable segments excluding restructuring, integration and other expenses,
goodwill and intangible asset impairment expenses and amortization of acquired
intangible assets and other.

Additional non-GAAP metrics management uses is
adjusted operating income margin, which is defined as adjusted operating income
(as defined above) divided by sales.

Management also believes
income tax expense (benefit), net income and diluted earnings (loss) per share
adjusted for the impact of the items described above and certain items
impacting other income (expense) and income tax expense (benefit) are useful to
investors because they provide a measure of the Company’s net profitability on
a more comparable basis to historical periods and provide a more meaningful
basis for forecasting future performance. Adjustment to income tax expense
(benefit) and the effective income tax rate include the effect of changes in
tax laws including recent tax law changes in the U.S., certain changes in
valuation allowances and unrecognized tax benefits, income tax audit
settlements and adjustments to the adjusted interim effective tax rate based
upon the expected annual adjusted effective tax rate. Additionally, because of
management’s focus on generating shareholder value, of which net profitability
is a primary driver, management believes income from continuing operations and
diluted earnings (loss) per share from continuing operations excluding the
impact of these items provides an important measure of the Company’s net
profitability for the investing public.

Any analysis of results and outlook on a non-GAAP
basis should be used as a complement to, and in conjunction with, results
presented in accordance with GAAP. All amounts below relate to Avnet’s
continuing operations.

^* May not foot/cross foot due to rounding and differences in average
diluted shares between quarterly periods compared to the fiscal year to date.