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Strong Americas demand fuels Avnet’s bottom line

Avnet

Strong demand from the Americas fueled year-over-year organic growth for distributor Avnet Inc., which released its second quarter fiscal results Thursday.

Avnet, the parent company which includes the Electronics Marketing and Technology Solutions business, reported sales of $7.42 billion for Q2 of its fiscal 2014, up 10.8 per cent over the same quarter one year ago. GAAP operating income was $221 million, up 13.3 per cent over the year ago, while GAAP net income dropped by 9.2 per cent, to $124 million. Adjusted net income was up 12.6 per cent, to $163 million.

“We are encouraged by the overall progress in our financial performance this quarter as we exceeded our original expectations for both revenue and earnings while also experiencing continued momentum in our year-over-year organic growth,” said Avnet CEO Rick Hamada, in a statement. “In the December quarter, strong demand for IT infrastructure in our TS Americas region and continued growth in our Asia components business drove revenue above our expectations at both operating groups.”

Breaking out the numbers for Avnet Technology Solutions (ATS), through which Avnet works with channel partners, total sales reached $3.26 billion, up eight per cent. The Americas led the way with a 16.3 per cent increase in reported sales, while sales were up by 1.7 per cent in Asia and down 2.9 per cent in EMEA. Overall, ATS operating income of $120.2 million, up 603 per cent, with an operating income margin of 3.7 per cent.

“We remain confident that our continuing investments in higher growth markets, including converged solutions, software and professional services, will allow us to develop and deliver incremental value to our partners. With end users remaining highly focused on optimizing their data centre investments, including the growing interest in hybrid cloud solutions, the breadth of tools and services that TS has developed will help navigate this dynamic landscape to accelerate progress to results,” said Hamada. “While we are pleased to see year-over-year growth return to TS at the global level, it is not consistent at this time across all regions. However, we believe our competitive position including our strong supplier and customer relationships, position us well for continued progress in improving margins and returns.”