1 June 27, 2015
Avnet, Inc. Corporate OverviewAs of June 27, 2015
2 June 27, 2015
From components to cloud and design to disposal, Avnet brings products, services and solutions to customers that build, sell and use technology, globally.
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Who We Are and What We Do
Who We Are
WhatWe Do
Financial Scope
We are one of the world’s largest global distributors of electronic components, computer products and embedded technology serving customers in more than 115 countries.
We connect the world's leading technology companies with more than 100,000 customers by providing cost-effective, value-added services and solutions.
For the fiscal year ending June 27, 2015, we generated revenue of $27.9 billion.
4 June 27, 2015
Company Snapshot
Americas$11.14B
(40%)
Asia$8.91B (32%)
EMEA$7.87B (28%)
• Named to the FORTUNE Most Admired list for technology distribution, 2007-2015
• No. 4 on the 2015 InformationWeek Elite 100 as a Top Business Technology Innovator
• No. 108 on the 2015 FORTUNE 500 (U.S.)
• No. 430 on the 2015FORTUNE Global 500
• Named a World's Most Ethical Company by EthisphereInstitute 2014 and 2015
An Industry Leader
FY15 Annual Revenue
$27.9BAvnet, Inc.
$10.6B
AvnetTechnologySolutions
$17.3B
AvnetElectronicsMarketing
• Headquartered in Phoenix, AZ
• Founded in 1921
• AVT listed on the NYSE in 1960
• 800+ suppliers
• 100,000 customers
• 96 acquisitions announced or closed since FY91
• 18,000+ employees worldwide
Fast Facts
38%
62%
5 June 27, 2015
Organizational Structure
Avnet, Inc. Board of Directors
Avnet Executive Leadership Team
Rick HamadaChief Executive Officer
MaryAnn MillerChief Human Resources Officer and Corporate Marketing & Communications
Kevin MoriartyChief Financial Officer
Gerry FayGlobal President, Electronics Marketing
Patrick ZammitGlobal President, Technology Solutions
Mike BusemanChief Global Logistics and Operations Officer
Steve PhillipsChief Information Officer
Erin LewinGeneral Counsel
6 June 27, 2015
Operating Groups
Avnet Electronics MarketingServing electronics original equipment manufacturers and electronic manufacturing services providers globally, distributing electronic components and embedded systems from leading manufacturers and providing associated design-chain and supply-chain services.
Avnet Technology SolutionsCollaborating with customers and suppliers to create and deliver services, software and hardware solutions that address the business needs of end-user customers locally and around the world.
7 June 27, 2015
Purpose and Vision
Our PurposeWe help technology make the world a better place to live, work and play.
Our VisionWe aspire to be the premier partner of choice for our customers, suppliers, employees and shareholders by accelerating their success throughour global technology marketing and distribution resources, services and culture.
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Top Priorities
Profitable Growth
Globalization
Great People
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Avnet’s financial strength, solid balance sheet and market leadership give its customers and suppliers complete confidence in its stability and in its ability to invest in long-term, shared growth opportunities.
10 June 27, 2015
Avnet, Inc. FY15 Results
$27.9B1.5%2
Y/Y
$972.5M4.4%3
Y/Y
$4.495.9%
Y/Y
21.6% $584M
Revenue Adjusted Operating Income1
Adjusted EPS1
ROWC4 Cash Flow from Operations
1 Excluding restructuring, integration and other items.2 Revenue increased 1.5% Y/Y on a reported basis and increased 5.4% Y/Y in constant currency (excluding the translation impact of changes in foreign currency exchange rates).
3 Adjusted Operating Income increased 4.4% Y/Y on a reported basis and 11% in constant currency.4 ROWC = Return on Working Capital is defined on slide 28.
14Basis Points
Y/Y
11 June 27, 2015
Avnet, Inc. Revenue and Adjusted EPS1
$11.1 $14.3 $15.7 $18.0 $16.2 $19.2 $26.5 $25.7 $25.5 $27.5 $27.9 $0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
$0
$5
$10
$15
$20
$25
$30
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
($ in
Billi
ons)
1 A reconciliation of non-GAAP financial measures to GAAP financial measures is included in the Non-GAAP Financial Reconciliation and Information section of this presentation
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Cash Flow from Operations
$462
$(19)
$725
$454
$1,118
$(30)
$278
$529
$696
$237
$584
$(800)
$(600)
$(400)
$(200)
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015
Cash flow generated from working capital and other Cash from operations
($ in Millions)
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The Power and Impact of Engagement
Technology suppliers and customers benefit from Avnet’s global scale and scope to effectively reach a wide range of markets across the globe.
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Regional Snapshot
AmericasFY15 sales:
$11.14BEmployees:
6,800+Locations/Offices:
97Started in region:
1921Acquisitions announced or
closed since FY91:
28
EMEAFY15 sales:
$7.87BEmployees:
6,400+Locations/Offices:
185Started in region:
1991Acquisitions announced or
closed since FY91:
43
Asia PacificFY15 sales:
$8.91BEmployees:
5,400+Locations/Offices:
109Started in region:
1995Acquisitions announced or
closed since FY91:
25
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Vital Link in Global Technology Supply Chain
Avnet effectively manages the complexity of the technology supply chain in a cost-efficient manner, delivering value to suppliers and customers.
IT Original Equipment
Manufacturers
Non-IT Original Equipment
Manufacturers
End Users
EMS / ODMResellers, ISVs
andSystem Builders
Semiconductors
Interconnect,Passive and
Electro-mechanical Devices
Embedded Systems
Software
Software and Services Vendors
Forward and Reverse Logistics – Integrated Supply Chain Expertise
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Avnet Services
Avnet offers a breadth and depth of services capabilities, such as:• Supply-chain and design-chain
services• Logistics solutions• Product assembly• Device programming• Computer system configuration
and integration• Asset disposition• Financing• Marketing services• Technical seminars • Core distribution services
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Global Logistics
Global Footprint:
2.5 Million Square Feet
Global Facility Network• Distribution Centers• System Integration Centers• IC Programming Centers
Global Services• Trade Compliance Regulation• Transportation Management• Regulatory Quality Compliance
FY15 Performance89 Billion Units Shipped
2.5 MillionPart Numbers Stocked
5 MillionOrders Processed
440,000Systems Integrated
259 Million Devices Programmed
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Poing, GermanyStutensee, GermanyTiel, NetherlandsTongeren, Belgium
Avnet Global Facilities Infrastructure
Global Footprint
3.6 MILLIONSQ. FT.
Total Operations Employees
3,500+
DistributionCentersBeijing, ChinaChandler, ArizonaGuadalajara, MexicoMiami, FloridaSan Jose, CaliforniaToronto, Canada
Newcastle, UKPoing, GermanyTongeren, BelgiumStutensee, Germany
Value AddCenters
Acton, MassachusettsAtlanta, GeorgiaChandler, ArizonaGuadalajara, MexicoGroveport, OhioHollis, New HampshireNogales, MexicoSan Jose, California
Third-PartyLogisticsBratislava, SlovakiaHerrenberg-Gültstein, GermanyJazlovice, Czech RepublicJundiai, BrazilOtopeni-Ilfov, RomaniaPiaseczno/Warszawa, PolandVecses, HungaryZug, Switzerland
China (4 Locations)Ho Chi Minh City, VietnamIndia (10 Locations)Jebel Ali Free Zone, DubaiJapan (2 Locations)
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Integration
Lifecycle Solutions
Cables/ConnectorsP
Beijing, ChinaHong Kong, ChinaSydney, AustraliaSingaporeTianjin, China
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Hachioji, JapanHong Kong, ChinaJakarta, IndonesiaSingaporeSydney, AustraliaTaipei, Taiwan
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Global IT
Scale and Scope• 1,282 physical servers• 3,554 logical servers• 2,451 terabytes storage• 64% of all supplier orders (by volume) are
placed electronically• 58% of all customer orders received (by
volume) are received electronically• 82% of inbound email messages filtered as
spam• 29,033 unique average daily visitors to Avnet
websites• 923 average monthly external break-in
attempts this quarter
Award Winning Excellence in IT
• Avnet’s Steve Phillips Inducted into CIO Magazine’s CIO Hall of Fame
• Avnet Ranks Fourth on the 2015 InformationWeek Elite 100 as a Top Business Technology Innovator
• Avnet’s Brian Chan Recognized as a 2015 Computerworld Premier 100 IT Leader
• Avnet Selected as a 2015 CIO 100 Award Winner by CIOMagazine
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Avnet’s people initiatives help drive profitable growth by inspiring and engaging employees, which ultimately enhances the customer experience and increases shareholder value.
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Global Headcount
EMEA6,445
Asia5,453 Americas
6,899Total
18,797
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The Power and Impact of Engagement
Employee Engagement Customer Engagement
Thoughtful organizational development strategies lead to a more productive and engaged workforce, a more engaged customer base and higher shareholder returns.
People Practices Employee
Engagement and Organizational
Climate
External Service Value
Customer Satisfaction
Customer Loyalty
Profitability
Revenue
Employee Retention
Employee Productivity
“Putting the Service-Profit Chain to Work,” Heskett, et al. - Harvard Business Review
Since 2004, Avnet has maintained a focus on employee engagement, and it shows in our results.
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$1.39 $1.87 $2.76 $3.18 $1.92 $2.77 $4.42 $4.19 $3.63 $4.24 $4.49
68%
70%
73%
75% 75% 75%
77% 77% 77% 77%
74%
60%
62%
64%
66%
68%
70%
72%
74%
76%
78%
$-
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Avnet EPS (1) Avnet Employee Engagement
(1) Excluding restructuring, integration and other items.
9,800 10, 900 11,700 12,800 12,900 14,200 17,000+ 17,000+ 19,000+ 18,000+TotalEmployees
Avnet’s engagement scores continue to rank among the top performing companies
benchmarked by Towers Watson.
18,000+
The Power and Impact of Engagement
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Avnet delivers value to its customers and suppliers through technical knowledge and industry-centric expertise so they can make the most of opportunities, solve business problems and accelerate their success.
25 June 27, 2015
FY15 Strategic Growth Investments
• Avnet opens CenterPoint value-added IT lifecycle services center in Ohio
• Avnet opens Global Development Center in Shenzhen, China
• Avnet releases first Corporate Social Responsibility (CSR) report
• Avnet opens data center in Nettetal, Germany
• Avnet enhances Board of Directors expertise with addition of two new directors: Avid Modjtabai, senior executive vice president of Wells Fargo & Company and Rodney C. Adkins, president of 3RAM Group LLC
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Addendum
27 June 27, 2015
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 in this document certain non-GAAP financial information including adjusted operating income, adjusted operating expenses, adjusted net income and adjusted diluted earnings per share, as well as sales adjusted for the impact of acquisitions and other items (as defined in the Organic Sales section of this document). There are also references to the impact of foreign currency translation 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 “excluding the impact of changes in foreign currency exchange rates” or “constant currency.” Management believes organic sales and sales in constant currency are useful measures for evaluating currentperiod performance as compared with prior periods and for understanding underlying trends. In order to determine the translationimpact of changes in foreign currency exchange rates for sales, income or expense items, the Company adjusts the exchange rates used in current periods to be consistent with the exchange rates in effect during prior periods.
Management believes that operating income and operating expenses adjusted for (i) restructuring, integration and other expenses and (ii) amortization of acquired intangible assets and other, is a useful measure to help investors better assess and understand the Company’s operating performance, especially 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 ongoingmargin performance and underlying trends in the business. Management also uses these non-GAAP measures to establish operational goals and, in many cases, for measuring performance for compensation purposes.
Additional non-GAAP metrics management uses are adjusted operating income margin, which is defined as adjusted operating income (as defined above) divided by sales and adjusted operating expense to gross profit ratio, which is defined as adjusted operatingexpenses (as defined above) divided by gross profit.
Non-GAAP Financial Information and Reconciliation
28 June 27, 2015
Management believes net income and diluted EPS adjusted for (i) the impact of the items described above, (ii) certain items impacting income tax expense and (iii) the gain on legal settlement and foreign currency loss is useful to investors because it provides ameasure of the Company’s net profitability on a more comparable basis to historical periods and provides a more meaningful basis for forecasting future performance. Additionally, because of management’s focus on generating shareholder value, of which net profitability is a primary driver, management believes net income and diluted EPS excluding the impact of these items provides an important measure of the Company’s net results for the investing public.
Other metrics management monitors in its assessment of business performance include return on working capital (ROWC), return on capital employed (ROCE) and working capital velocity (WC velocity).
• ROWC is defined as annualized adjusted operating income (as defined above) divided by the sum of the monthly average balances of receivables and inventories less accounts payable.
• ROCE is defined as annualized, tax effected adjusted operating income (as defined above) divided by the monthly average balances of interest-bearing debt and equity (including the impact of adjustments to operating income discussed above) less cashand cash equivalents.
• WC velocity is defined as annualized sales divided by the sum of the monthly average balances of receivables and inventories less accounts payable.
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.
Non-GAAP Financial Information and Reconciliation
29 June 27, 2015
Fiscal Year 2015
OperatingIncome
Income Before Income Taxes Net Income
DilutedEPS
$ in thousands, except per share dataGAAP results $ 827,673 $ 712,965 $ 571,913 $ 4.12
Restructuring, integration and otherexpenses 90,805 90,805 65,897 0.47
Foreign currency loss — 3,737 3,737 0.03
Amortization of intangible assets and other 54,049 54,049 36,643 0.26
Income tax adjustments — — (55,101) (0.39)
Total adjustments 144,854 148,591 51,176 0.37
Adjusted results $ 972,527 $ 861,556 $ 623,089 $ 4.49
Non-GAAP Financial Information and Reconciliation
30 June 27, 2015
ROWC, ROCE and WC VelocityThe following table (in thousands) presents the calculation for ROWC:
(1) See reconciliation to GAAP amounts in the preceding tables in this Non-GAAP Financial Information and Reconciliation section.(2) Adjusted effective tax rate for each quarterly period in a fiscal year is based upon the currently anticipated annual effective
tax rate, excluding the tax effect of the items in the above reconciliation to GAAP amounts in this Non-GAAP Financial Information and Reconciliation section.
Q4 FY15 Q4 FY14Sales $ 6,796,331 $ 7,048,708Sales, annualized (a) $ 27,185,324 $ 28,194,832Adjusted operating income (1) $ 243,814 $ 244,865Adjusted annualized operating income (b) $ 975,256 $ 979,460Adjusted effective tax rate (2) 27.7 % 27.9 %Adjusted annualized operating income, after tax (c) $ 705,305 $ 706,387Average monthly working capital
Accounts receivable $ 4,979,668 $ 5,020,472Inventories $ 2,593,545 $ 2,632,177Accounts payable $ (3,234,283) $ (3,208,300)
Average working capital (d) $ 4,338,930 $ 4,444,349Average monthly total capital (e) $ 5,898,475 $ 6,009,390ROWC = (b) / (d) 22.5 % 22.0 %WC Velocity = (a) / (d) 6.3 6.3ROCE = (c) / (e) 12.0 % 11.8 %
Non-GAAP Financial Information and Reconciliation
31 June 27, 2015
ROWCThe following table (in thousands) presents the calculation for ROWC:
(1) See reconciliation to GAAP amounts in the preceding tables in this Non-GAAP Financial Information section.
Fiscal Year 2015Adjusted operating income (1) (a) $ 972,527Average monthly working capital
Accounts receivable $ 5,109,326Inventories $ 2,667,351Accounts payable $ (3,274,382)
Average working capital (b) $ 4,502,295ROWC = (a) / (b) 21.6 %
Non-GAAP Financial Information and Reconciliation