Avnet, Inc. · NASDAQ:AVT
Avnet — Conference Presentation (February 2003)
31 slides from Avnet's conference presentation, Feb 24, 2003
Slide 1: Avnet, Inc. - Creating Value for the Technology Supply Chain
Global Reach Superior Capabilities Avnet, Inc. Deeper Relationships Creating Value for the Technology Supply Chain Management Strength Roy Vallee Distinctive Value Chairman and Chief Executive Officer Investment Opportunity
Slide 2: Non-GAAP Results and Regulation G
Non-GAAP Results and Regulation G ¾ Use of Pro-Forma or Non-GAAP Results In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles (GAAP), the Company also discloses pro forma or non-GAAP results of operations that exclude certain c
Slide 3: Safe Harbor Statement
Safe Harbor Statement This presentation, which can be downloaded and printed at www.ir.avnet.com/presentations, contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are b
Slide 4: Enterprise Highlights
Enterprise Highlights Market Improving Industry Operational Conservative Asset Rich Leader Fundamentals Momentum Financial Policy • #1 in net sales with • Widespread evidence • Stabilization of • Reduced debt $1.91 • High quality assets global reach of tech supply chain revenue billion since Dec 200
Slide 5: Differentiators
Differentiators Market Leader Global Reach Brand Strength Superior Capabilities / Knowledge Capital Superior Product Knowledge Unique Service Models Longstanding Customer & Supplier Relationships Experienced Management / Depth Value Based Management Culture Value / Differentiatio
Slide 6: Leading Market Position
Leading Market Position ($ in billions) 1997 Current [4 Quarters ended March 2003] ($ in billions) Avnet $9.0 Arrow $7.8 Arrow (**) $7.5 Avnet* $5.4 VEBA $3.7 Future Electronics (*) $2.6 Marshall $2.2 Pioneer-Standard $1.5 Bell Micro $2.1 Future Electronics $2.1 Memec (*) $1.6 Premier Farnell $1.0 P
Slide 7: Technology Supply Chain Market Leader
Technology Supply Chain Market Leader ¾ Incorporated in 1955 with a history of managing thru technology cycles ¾ Largest technology distributor in net sales ($8,920 million FYE 2002) ¾ Provides value-add services throughout technology supply chain Product Supplier Base OEMs & End Users Technology Su
Slide 8: Vital Link in Supply Chain
Vital Link in Supply Chain AVNET Product Suppliers Products Customers >250 >100,000 • Semiconductors • IBM • Interconnect, Passive, • Electronic & computer & Electromechanical Original Equipment • HP / Compaq (“IP&E”) Manufacturers • Enterprise network & (“OEMs”) • Xilinx computer equipment • Intel
Slide 9: Extensive Authorized Relationships & Breadth of Product Line
Extensive Authorized Relationships & Breadth of Product Line >250 Suppliers Avnet’s Line Card • Authorized worldwide distribution relationships • Extensive breadth and depth Reduce of product offerings costs Benefits to Suppliers Benefits to Customers • Broader customer base for • Purchasing efficie
Slide 10: Broad Array of Value-Added Services
Broad Array of Value-Added Services Traditional Distributor Services ¾ Sales & marketing ¾ Required for entry ¾ Inventory management ¾ Logistics ¾ Differentiated by scale and scope ¾ Financing Value-Added Services ¾ Supply chain management ¾ Deepen business ¾ Design relationship with ¾ Technical ser
Slide 11: FY03 Revenue Snapshot
FY03 Revenue Snapshot FY03 YTD Revenues $6.86 B FY03 Mar Qtr Revenue Analysis Q3 FY03 Revenue By Group $1.28B AC AC 18% 19% $.42 B $1.29 $1.29 B B EM $.63B CM 54% $1.84B 27% EM CM $3.74B 55% 27% Q3 FY03 Revenue by Region $0.74B Asia Asia $.27 B 11% 11% $.82 $.82 B B $1.25 $1.25 B B EMEA Amer $2.29B
Slide 12: Quarterly Revenue
Quarterly Revenue FY 2001 FY 2002 FY 2003 4,000 3,630 3,457 3,500 3,000 2,538 2,360 2,347 2,340 2,500 $ Billions 2,201 2,214 2,145 2,174 2,000 Stabilization 1,500 1,000 500 - Dec-00 Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 AVT Creating Value for the Technology Supply Chain 12
Slide 13: Quarterly Earnings (Loss) Per Share
Quarterly Earnings (Loss) Per Share Diluted EPS from Continuing Operations FY 2001 FY 2002 FY 2003 • Stabilization • Continued P&L and Bal Sheet • Managing Mgmt Balance Sheet • Financial • Rebuilding P&L Leverage $1.00 $0.68 $0.69 $0.56 • Return to Profitability $0.50 $0.05 $0.01 $0.06 $0.08 $(0.01)
Slide 14: Management Strength
Management Strength Roy Vallee Chairman & CEO, Avnet, Inc. 30 Yrs Andy Bryant Ed Kamins Rick Hamada Electronics Marketing Applied Computing Computer Marketing 23 Yrs 31 Yrs 20 Yrs CORPORATE OFFICES David Birk Steve Church Ray Sadowski Chief Legal Officer Strategic Business Chief Financial Officer Sh
Slide 15: Avnet's Value Propositions - EM
Avnet’s Value Propositions - EM Electronic Electronic Manufacturing Manufacturing Services Services Flextronics, Flextronics, Solectron, Avnet Solectron,etc. etc. Electronics Marketing Electronic Electronic Component Electronic End Component Electronic&& End Manufacturers Computer User Manufacturers
Slide 16: Electronics Marketing
Electronics Marketing ¾ Overview March 03 Contribution Global marketing and ($ in Millions) Amount % Avnet distribution of electronic Revenue (1) $4,952.8 55% components and value-added Operating Margin 2.37% 84% (2) Operating Assets (3) 2,452.8 68% services (1) Revenue is trailing four quarter re
Slide 17: Avnet's Value Propositions - AC
Avnet’s Value Propositions - AC Electronic Electronic Manufacturing Manufacturing Services Services Flextronics, Flextronics, Solectron, Solectron,etc. etc. Electronic Electronic Component Electronic End Component Electronic&& End Manufacturers Computer User Manufacturers Semiconductors ComputerOEMs
Slide 18: Applied Computing
Applied Computing ¾ Overview March 03 Contribution ($ in Millions) Amount % Avnet Provides microprocessors Revenue (1) $1,639.0 18% and embedded subsystems Operating Margin 1.42% 17% (2) to OEMs and system Operating Assets (3) 513.8 14% integrators (1) Revenue is trailing four quarter revenues (2)
Slide 19: Avnet's Value Propositions - CM
Avnet’s Value Propositions - CM Electronic Electronic Manufacturing Manufacturing Services Services Flextronics, Flextronics, Solectron, Solectron,etc. etc. Electronic Electronic Component Electronic End Component Electronic&& End Manufacturers Computer User Manufacturers Semiconductors ComputerOEMs
Slide 20: Computer Marketing
Computer Marketing ¾ Overview March 03 Contribution Distributor / reseller of ($ in Millions) Amount % Avnet enterprise networking, storage, Revenue (1) $2,414.0 27% and computer hardware to Operating Margin 2.09% 36% (2) VARs and end users Operating Assets (3) 637.1 18% Focus on mid- to high-en
Slide 21: Avnet's Value Propositions
Avnet’s Value Propositions Electronic Electronic Manufacturing Manufacturing Services Services Flextronics, Flextronics, Solectron, Avnet Solectron,etc. etc. Electronics Marketing Electronic Electronic Component Electronic End Component Electronic&& End Manufacturers Computer User Manufacturers Semi
Slide 22: Customer Segmentation
Customer Segmentation Direct Distribution “AVT’s Sweet Top Spot” >90% <10% Tier 50-200 OEMs 2nd Tier 30-40% 60-70% 10,000 OEMs (approx) <10% 90-100% 3rd Tier 100,000+ OEM Companies Total Electronic Component Sales in CY2001: $190 Billion Source: Avnet estimates. AVT Creating Value for the Technology
Slide 23: Growing Components Market
Growing Components Market 1996 2001 2006 Total Available Market: $183B Total Available Market: $190B Total Available Market: $318B Direct $110B Direct $102B 35% Direct 54% $105B 57% 45% 27% 24% 20% Contract 22% 24% Contract Manufacturing Manufacturing Distribution $44B $51B Contract $36B 1% Overlap
Slide 24: Forecasted Semiconductor Growth
Forecasted Semiconductor Growth ($ in billions) Worldwide Semiconductor Revenue $250 $200 $150 $100 $50 $0 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003E 2004E 2005E Source: SIA / WSTS / Electronic Outlook. Grow
Slide 25: Avnet: Managing What We Can Control
Avnet: Managing What We Can Control Since December 2000 Quarter(1) Reduced SGA • Significant • Delivered $ $350+ M Annualized(2) Reactive Operating • Constant $ $448+ M Annualized(2) Leverage Reduced WC(3) $2.10 B • Strong Balance Reduced Debt(4) $1.85 B Sheet Liquidity (5) $827 M Capacity • Sha
Slide 26: Improving Asset Velocity
Improving Asset Velocity (1) 75 7.0 Inventory Turns 6.8 Days Sales Outstanding (2) 6.5 69.7 6.5 70 6.0 5.4 5.5 65 5.0 61.3 61.9 4.9 61.2 5.0 4.7 59.4 60 4.5 55.9 56.6 4.0 4.0 55 3.5 3.0 50 (Sep-01) (Dec-01) (Mar-02) (Jun-02) (Sep-02) (Dec-02) (Mar-03) (Sep-01) (Dec-01) (Mar-02) (Jun-02) (Sep-02) (De
Slide 27: Improving Asset Velocity - Cash Conversion Cycle
Improving Asset Velocity Avnet Cash Conversion Cycle (Days) 120 118 118 110 FY99 - FY02 100 Average = 96 Days 98 Ð 52 Cycle Trough 96 days 90 95 94 93 Ð 30 Cycle Peak 80 83 days 70 75 66 60 Dec-00 Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Cash Conversion Cycle equal to Inventory
Slide 28: Changing Business Model
Changing Business Model Avnet's Value-Based Management Initiative 6.0 6.0% 5.5 5.61% 5.0 5.0% 4.4 4.0 4.0% 3.0 3.0% 2.4 2.0 2.0 2.0% 1.55% 1.0 1.0% 1.01% 0.16% - 0.0% Sep-00 Dec-00 Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Working Capital Velocity Operating Margin (BSC) Working
Slide 29: Outlook
Outlook ¾Continue to see stability in technology end markets See slight components markets improvement worldwide ¾ Significant P&L leverage ¾ Balance Sheet strong ¾ We continue to manage the things we can control NYSE: AVT AVT Creating Value for the Technology Supply Chain 29
Slide 30: Most Recent Guidance
Most Recent Guidance ¾ June Quarter (Q4-FY03) Enterprise Revenue: • Expected range $2.25B – $2.3B Group Revenues • EM: Slight revenue growth sequentially • CM: Revenues down sequentially in range of 5 – 10% from unusually strong March 2003 quarter • AC: Revenues down sequentially in the range of
Slide 31: Question and Answer Session
Question and Answer Session Thank you for your interest in Avnet. Please contact us at: 480-643-7053 [email protected] www.ir.avnet.com GAAP Information can be found on the Avnet Investor Relations Web site at: www.ir.avnet.com/gaap www.ir.avnet.com/presentations www.ir.avnet.com/financial