Avnet, Inc. reports 24.5% EBITDA decline in 2018 while 9.2% Revenue growth
08/08/2018 • About Avnet, Inc. (
$AVT) • By InTwits
Avnet, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 2.4% in FY2018 vs. 3.5% in FY2017 vs. 3.4% in FY2014
- Avnet, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.7%.
- The company has potentially unprofitable business model: ROIC is 3.4%
- It operates with high leverage: Net Debt/EBITDA is 2.2x while industry average is 0.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Avnet, Inc.'s Revenue increased on 9.2%. Revenue growth showed acceleration in FY18Q4 - it increased 9.8% YoY. During the last 5 years Revenue growth bottomed in FY2016 at -40.1% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.6 pp from 20.0% to 21.7% in 2018. During the last 5 years EBITDA Margin topped in FY2016 at 3.9% and was declining since that time.
Gross Margin showed almost no change in FY2018. Gross Margin followed a growing trend at 0.52 pp per annum in FY2014-FY2018. SG&A as a % of Revenue showed almost no change in FY2018. SG&A as a % of Revenue stuck to a growing trend at 0.57 pp per annum in the last 5 years. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018. During FY2014-FY2018 SBC as a % of Revenue topped in FY2016 at 0.34% and was declining since that time.
Net Income margin decreased on 3.8 pp from 3.0% to -0.82% in FY2018. During the last 5 years Net Income margin topped in FY2016 at 3.0% and was declining since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.82% in FY2018. Avnet, Inc. showed almost no change in CAPEX/Revenue from FY2015 to FY2018. Average CAPEX/Revenue for the last three years was 0.78%.
Accounts receivable as a % of Revenue showed almost no change in FY2018. Inventories as a % of Revenue showed almost no change at 16.5% in FY2018. Accounts payable as a % of Revenue increased slightly on 1.4 pp from 12.4% to 13.7% in FY2018.
Avnet, Inc. has spent
$15m on M&A in FY2018 which accounts for 0.080% of revenue.
Return on investment
The company operates at low but positive ROIC (3.4%) and negative ROE (-3.2%). ROIC decreased on 3.0 pp from 6.4% to 3.4% in FY2018. ROE dropped on 13.8 pp from 10.6% to -3.2% in FY2018. ROIC declined at -2.2 pp per annum in the last 5 years. During the last 5 years ROE topped in FY2015 at 11.9% and was declining since that time.
Leverage (Debt)
Debt level is 2.2x Net Debt / EBITDA and 3.6x Debt / EBITDA. Net Debt / EBITDA surged on 0.7x from 1.5x to 2.2x in FY2018. Debt decreased on 7.0% while cash dropped on 25.7%.
Avnet, Inc. has no short term refinancing risk: cash is higher than short term debt (375.6%).
The company paid
$88 despite negative Net Income of $-156 in FY2018. Dividends grew on average at 1.2% per annum in the last 5 years).
Management team
The company's CEO William J Amelio "Bill" is a founder and has spent 2 years with the company. CEO total compensation was
$7,164,491 in FY2018 which included
$1,000,000 salary. Thomas Liguori "Tom" is a Avnet, Inc.'s CFO. Thomas Liguori "Tom" has spent 1 year at the company.
The company has 1.0% shares owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 15,400 employees. The number of employees decreased slightly on 1.9%. Average revenue per employee in FY2018 was
$1,236,162 and it jumped on 11.3%.
Financial and operational results
FY ended 06/30/2018
Avnet, Inc. ($AVT) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 27,500 | 27,925 | 16,741 | 17,440 | 19,037 | 9.2% |
| Gross Profit | 3,226 | 3,193 | 2,078 | 2,369 | 2,527 | 6.7% |
| SG&A | 2,341 | 2,275 | 1,460 | 1,771 | 1,970 | 11.3% |
| EBITDA | 927 | 975 | 653 | 617 | 465 | -24.5% |
| EBIT | 790 | 828 | 573 | 461 | 231 | -50.0% |
| Interest expence | 105 | | | | | |
| Tax | 156 | 141 | 87 | 47 | 288 | 512.0% |
| Net Income | 546 | 572 | 507 | 525 | -156 | -129.8% |
| Stock Based Compensation | 46 | 62 | 57 | 48 | 24 | -49.7% |
Balance Sheet
|
|---|
| Cash | 929 | 933 | 1,031 | 836 | 621 | -25.7% |
| Accounts Receivable | 5,221 | 5,054 | 2,770 | 3,338 | 3,641 | 9.1% |
| Inventory | 2,613 | 2,482 | 2,560 | 2,825 | 3,142 | 11.2% |
| Accounts Payable | 3,402 | 3,338 | 1,591 | 1,862 | 2,269 | 21.9% |
| Short Term Debt | 865 | 331 | 1,153 | 50 | 165 | 230.0% |
| Long Term Debt | 1,209 | 1,647 | 1,339 | 1,729 | 1,489 | -13.9% |
Cash flow
|
|---|
| Capex | 123 | 174 | 137 | 120 | 156 | 29.5% |
| Dividends | 83 | 87 | 89 | 89 | 88 | -1.1% |
| Acquisitions | 117 | | | 803 | 15 | -98.1% |
Ratios
|
|---|
| Revenue growth | 8.0% | 1.5% | -40.1% | 4.2% | 9.2% | |
| EBITDA growth | 24.2% | 5.2% | -33.1% | -5.5% | -24.5% | |
|
|---|
| Gross Margin | 11.7% | 11.4% | 12.4% | 13.6% | 13.3% | -0.3% |
| EBITDA Margin | 3.4% | 3.5% | 3.9% | 3.5% | 2.4% | -1.1% |
| EBIT Margin | 2.9% | 3.0% | 3.4% | 2.6% | 1.2% | -1.4% |
| SG&A, % of revenue | 8.5% | 8.1% | 8.7% | 10.2% | 10.3% | 0.2% |
| SBC, % of revenue | 0.2% | 0.2% | 0.3% | 0.3% | 0.1% | -0.1% |
| Net Income Margin | 2.0% | 2.0% | 3.0% | 3.0% | -0.8% | -3.8% |
| CAPEX, % of revenue | 0.4% | 0.6% | 0.8% | 0.7% | 0.8% | 0.1% |
|
|---|
| ROIC | 11.6% | 11.9% | 8.2% | 6.4% | 3.4% | -3.0% |
| ROE | 11.9% | 11.9% | 10.8% | 10.6% | -3.2% | -13.8% |
| Net Debt/EBITDA | 1.2x | 1.1x | 2.2x | 1.5x | 2.2x | 0.7x |
| Interest coverage ratio (ICR) | 7.5x | | | | |
| Interest expence / Average debt | 5.1% | | | | | |
People
|
|---|
| Insider ownership | 1.0% | 1.0% | 1.0% | 1.0% | 1.0% | 0.0% |
| Employees | 19,000 | 18,800 | 17,700 | 15,700 | 15,400 | -1.9% |
| Revenue/Employee, th. $ | 1,447 | 1,485 | 946 | 1,111 | 1,236 | 11.3% |
Avnet, Inc. ($AVT) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 4,661 | 4,522 | 4,795 | 5,059 | | 11.7% | 5.8% | | 9.8% |
| EBITDA | 134 | 143 | 5 | 179 | | -12.4% | -10.9% | | 18.6% |
| Net Income | 58 | 47 | -320 | 59 | | -15.3% | -54.7% | | -28.0% |
Balance Sheet
|
|---|
| Cash | 540 | 590 | 430 | 621 | | -54.9% | -53.6% | | -25.7% |
| Short Term Debt | 195 | 243 | 102 | 165 | | 99.5% | -1.4% | | 230.0% |
| Long Term Debt | 1,495 | 1,488 | 1,489 | 1,489 | | -42.7% | -56.0% | | -13.9% |
Ratios
|
|---|
| Gross Margin | 13.1% | 13.3% | 13.6% | 13.0% | | 0.6% | -0.4% | | -0.7% |
| EBITDA Margin | 2.9% | 3.2% | 0.1% | 3.5% | | -0.8% | -0.6% | | 0.3% |
| Net Income Margin | 1.3% | 1.0% | -6.7% | 1.2% | | -0.4% | -1.4% | | -0.6% |
Peers in Technology Distributors
Below you can find Avnet, Inc. benchmarking vs. other companies in Technology Distributors industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Tech Data Corporation ($TECD) | | 3.2% | -4.7% | -8.3% | 38.9% |
| EACO Corp ($EACO) | | 4.1% | 5.9% | 5.7% | 23.1% |
| Richardson Electronics, Ltd. ($RELL) | | -0.7% | 3.7% | -3.6% | 19.2% |
| Synnex Corporation ($SNX) | | -3.6% | 5.4% | 21.2% | 17.6% |
| Wayside Technology Group, Inc. ($WSTG) | | 12.1% | 9.4% | -61.6% | 13.0% |
| |
|---|
| Median (16 companies) | | 4.5% | 5.3% | 5.7% | 8.3% |
|---|
| Avnet, Inc. ($AVT) | | 1.5% | -40.1% | 4.2% | 9.2% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Taitron Components Incorporated ($TAIT) | 25.4% | 31.1% | -10.8% | 39.4% | 44.0% |
| Richardson Electronics, Ltd. ($RELL) | 29.7% | 30.0% | 31.6% | 32.1% | 33.7% |
| EACO Corp ($EACO) | 27.5% | 29.3% | 29.3% | 28.5% | 28.5% |
| Surge Components Inc ($SPRS) | 24.5% | 25.0% | 25.2% | 25.2% | 25.6% |
| ADDvantage Technologies Group, Inc. ($AEY) | 32.3% | 35.0% | 32.2% | 30.4% | 23.7% |
| |
|---|
| Median (16 companies) | 15.9% | 16.3% | 14.2% | 16.9% | 16.3% |
|---|
| Avnet, Inc. ($AVT) | 11.7% | 11.4% | 12.4% | 13.6% | 13.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Taitron Components Incorporated ($TAIT) | -8.6% | -3.2% | -39.0% | 13.0% | 19.2% |
| CDW Corporation ($CDW) | 7.3% | 7.5% | 7.7% | 7.6% | 7.7% |
| ePlus inc. ($PLUS) | 7.3% | 7.5% | 7.6% | 7.3% | 7.1% |
| EACO Corp ($EACO) | 4.0% | 4.5% | 4.7% | 4.5% | 5.9% |
| Surge Components Inc ($SPRS) | 2.8% | 3.8% | -1.5% | 1.2% | 4.8% |
| |
|---|
| Median (16 companies) | 3.2% | 3.5% | 3.4% | 3.8% | 4.1% |
|---|
| Avnet, Inc. ($AVT) | 3.4% | 3.5% | 3.9% | 3.5% | 2.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Richardson Electronics, Ltd. ($RELL) | 2.0% | 3.5% | 3.4% | 3.8% | 3.2% |
| ePlus inc. ($PLUS) | 0.9% | 1.0% | 2.1% | 1.5% | 1.0% |
| EACO Corp ($EACO) | 0.6% | 0.4% | 0.3% | 5.5% | 0.8% |
| PC Connection, Inc. ($CNXN) | 0.3% | 0.5% | 0.4% | 0.4% | 0.8% |
| Synnex Corporation ($SNX) | 0.4% | 0.8% | 0.9% | 0.6% | 0.6% |
| |
|---|
| Median (16 companies) | 0.5% | 0.5% | 0.4% | 0.5% | 0.5% |
|---|
| Avnet, Inc. ($AVT) | 0.4% | 0.6% | 0.8% | 0.7% | 0.8% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Surge Components Inc ($SPRS) | 6.7% | 9.5% | -4.0% | 3.9% | 24.6% |
| CDW Corporation ($CDW) | 16.5% | 17.3% | 18.8% | 20.1% | 23.1% |
| EACO Corp ($EACO) | 19.6% | 21.8% | 22.2% | 16.1% | 21.2% |
| ePlus inc. ($PLUS) | 20.1% | 21.0% | 21.5% | 22.8% | 20.8% |
| Insight Enterprises, Inc. ($NSIT) | 17.0% | 17.4% | 20.7% | 19.3% | 20.0% |
| |
|---|
| Median (17 companies) | 13.6% | 12.1% | 12.5% | 11.5% | 11.8% |
|---|
| Avnet, Inc. ($AVT) | 11.6% | 11.9% | 8.2% | 6.4% | 3.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Synnex Corporation ($SNX) | 2.0x | 0.9x | 1.2x | 2.1x | 3.9x |
| Anixter International Inc. ($AXE) | 3.2x | 4.7x | 3.6x | 3.0x | 3.1x |
| ScanSource, Inc. ($SCSC) | -1.4x | -0.9x | 0.2x | 0.6x | 2.5x |
| CDW Corporation ($CDW) | 3.2x | 3.3x | 2.8x | 2.7x | 2.4x |
| Arrow Electronics, Inc. ($ARW) | 1.8x | 2.2x | 2.2x | 2.3x | 2.2x |
| |
|---|
| Median (15 companies) | -0.2x | -0.4x | 0.1x | 0.9x | 0.5x |
|---|
| Avnet, Inc. ($AVT) | 1.2x | 1.1x | 2.2x | 1.5x | 2.2x |
