Avnet, Inc. (NASDAQ:$AVT), the major electronic components distributor, released its earnings for the company’s fiscal year third quarter recently. The earnings report included strong YoY EPS growth and sales growth in line with guidance.
Select Businesses Keep Avnet Buoyant
Avnet’s earnings slide deck called out continued growth in a mixed global environment, with sales slightly down YoY primarily due to declines in Asia.
Income (loss) from continuing operations before taxes showed up on the financials as being significantly better than last year’s FQ3 numbers. This was primarily due to a $181.4 million goodwill impairment expense in 2018. This, along with lower tax expense in 2019 FQ3, kept net figures on the statements of operations looking brighter than they may have otherwise been.
Nevertheless, adjusted diluted EPS was up $1.09, or 4.8%, sequentially and 6.9% from last year. Adjusted operating income margin was up 3.6% from a year ago, at 3.8%.
The company said it had a strong showing from defense and aerospace. Matching industry-wide trends, industrial and automotive performance slowed. Passive and interconnect revenues were up YoY.
Americas’ Region Shows Signs of Recovery
Amid a decline in electronic components, Avnet noted significant recovery in the Americas’ electronic components sector, with healthy revenue growth YoY. In late March, Micron said that the memory chip market should expect a recovery later this year.
Avnet also noted lower operating expenses in its earnings call due in part to improving efficiencies; of course, with sales slightly down YoY, this also played a role in lower OpEx. Gross profits mirrored the company’s overall decline in sales.
The company’s IoT solutions segment grew rapidly to more than $600 million, diversifying Avnet’s revenue streams including IoT industrial equipment and manufacturing.
Avnet CEO Bill Amelio said the Americas and EMEA regions’ “solid performance in the higher margin interconnect and passives segment” demonstrated strong execution.
“Overall, we improved operating income and earnings per share and expanded our operating margins compared to a year ago.”