Acquisition Boosts Avnet's 4Q Profit, Sales

Phoenix-based Avnet posted a profit of $58.8 million, or 40 cents per share, for the quarter ended July 1, a 24 percent gain from $47.3 million, or 39 cents per share, a year earlier. Fourth-quarter sales came in at $3.61 billion, up nearly 28 percent from $2.83 billion a year ago.

"We are very pleased with our performance in the fourth quarter. These results represent new post-bubble highs for operating income, operating income margin, earnings per share, return on working capital and return on capital employed excluding certain items," said Avnet Chairman and CEO Roy Vallee in a statement.

For the 2006 fiscal year, Avnet reported $14.25 billion in sales, up 28.8 percent from $11.07 billion in fiscal 2005.

"We completed the Memec integration on schedule, exceeded our original synergy target by approximately $30 million and have substantially retained all of the revenue of the combined businesses," Vallee said. "As a result, in fiscal year 2006, we established many new records, including revenue, net income (excluding certain items) and asset velocity. In addition, we took actions to reduce and refinance some high-interest rate debt, which allowed us to exit the year with our balance sheet in the best condition in years."

Sales for Avnet Technology Solutions, which includes the Avnet Partner Solutions distribution arm, were $1.16 billion, down 3.4 percent year over year. Avnet Technology Solutions' revenue was negatively impacted by slow sales of microprocessors and the exiting of the single tier end-user business, according to Avnet.

"However, we were very pleased with our Partner Solutions Group, as they grew revenue [by] double digits sequentially in all three regions," Vallee said in the statement. "With the recent addition of the Sun product line and our continued focus on solutions selling, we are well-positioned to continue to grow market share and accelerate shareholder value creation."

Excluding divested businesses, Avnet's total sales rose 1.9 percent, the company said. In the Americas, sales declined 4.5 percent but, excluding divestitures, were up 2.9 percent.

In the current fiscal quarter ending Sept. 30, Avnet expects sales of $3.50 billion to $3.65 billion and earnings of 50 cents to 54 cents per share.

Avnet shares were trading at $17.52 Wednesday morning, up 17 cents, or 1 percent.