avnet technology solutions q4 fy08 global financial results & highlights august 2008
TRANSCRIPT
Avnet Technology Solutions
Q4 FY08 Global Financial Results & Highlights
August 2008
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TSAvnet Technology SolutionsAvnet Technology Solutions
Our MissionOur Mission
TS Global: Mission
To lead our industry To lead our industry
in growth, innovation, value and effectivenessin growth, innovation, value and effectiveness
in such a way that it ensuresin such a way that it ensures
we are an we are an indispensableindispensable element element
of our suppliers’, customers’ and employees’ of our suppliers’, customers’ and employees’
success and future dreams.success and future dreams.
TS Global: Mission
G I V EG I V EGROWTH INNOVATION VALUE EFFECTIVENESS
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TSAvnet Technology SolutionsAvnet Technology SolutionsQ4 FY08 Global Financial ResultsQ4 FY08 Global Financial Results
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TS Global: Revenue
Q408 Revenue = $1.95B Q4 up 10% year over year on a net revenue basis FY08 up 27% vs. FY07
• IBM year-end close issue resolution, acquisitions contribute to continuing growth trend
$1.16
$1.56$1.46
$1.77$1.61
$2.27
$1.80$1.95
$1.21
$1.00
$1.50
$2.00
$2.50
Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408
BILLIONS FY07 = $6.00B FY08 = $7.63B
$0
$20
$40
$60
$80
$100
$120
Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q4082%
3%
4%
5%
Q408 Op Income = $61.8M Q4 down 10% year over year Up 12% FY08 vs. FY07
• The revenue weakness (in some business units) and supplier rebate issues that negatively affected results in Q3 have been resolved, resulting in increased operating margin performance
TS Global: Operating Income
MILLIONS
Excluding restructuring and other charges
Operating income $$
Operating margin
Operating Income = Gross Profit – Operating Expenses
FY07 = $232.3M / 3.87% FY08 = $261.0M / 3.42%
TS Global: Return on Working Capital
53.2%
83.5%
40.1%
57.8%
34.2%
47.8%
36.5%
21.5%
0%
20%
40%
60%
80%
100%
Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408
Q408 ROWC = 34.2% Increasing revenue in Q4 lifted margins, resulting in higher ROWC vs. Q308
Excluding restructuring and other charges
ROWC represents operating profit in relation to working capital.
FY07 = 51.2% FY08 = 37.1%
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TS Global: Q109 Outlook
Q109 outlook Revenue $1.88B to $1.98B in Q109
• Driven primarily by acquisitions
““If you have 30 minutes, spend five If you have 30 minutes, spend five minutes analyzing past performance and minutes analyzing past performance and
25 strategizing for the future.”25 strategizing for the future.”
““
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TS Global: Q109 Call to Action
We have a marketplace to serve and a future to build. Even as we adjust for the past, we must not lose sight of this future. It will be secured by continuing to push hard on the strategies we have established.
Profitable Growth Remain intently focused on growing profitable revenue and capturing more than our fair
share of the market. In all three regions, our attention to sales must never diminish. We must move forward with the technology solutions the marketplace is buying.
People Development Focus on our and our colleagues’ development. This is a people business. Listen well – the
answers we need to make a quantum leap forward and transform our business already reside in our TS colleagues’ hearts and minds.
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TS Global: Q109 Call to Action (cont’d)
We have a marketplace to serve and a future to build. Even as we adjust for the past, we must not lose sight of this future. It will be secured by continuing to push hard on the strategies we have established.
Operational Excellence We must re-engineer our processes to create a more efficient means to grow the business.
Operational excellence is not program management, nor is it a department – it is a way of life. Focus on eliminating redundant processes and their costs. “Working smarter” is an overused phrase, but it is very appropriate for our situation.
Customer Engagement We need the help of our vendors. We must make certain we are relevant to them and engage
with them to assist us in accelerating their success. Our reseller customers need to feel our touch and strong support. They need to hear we care and we have a better way for them to grow their business.
How We Measure Success KPM = Key Performance Metric
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TSAvnet Technology SolutionsAvnet Technology Solutions
Q4 FY08 Global & Regional HighlightsQ4 FY08 Global & Regional Highlights
TS Q408 Highlights: Global
New leadership Rusty Murdaugh, TS group finance officer (GFO)
TS Global: Employee Engagement Survey scores On well over half the questions, we rated our performance
and/or satisfaction higher than we did in 2007 Key areas for improvement, measured by gap to high-performing norm:
• Improved employee engagement• Stronger alignment of goals
– Please see John Paget’s comments within the presentation notes pages
Rusty Murdaugh
Index TS TS Americas
TS Asia-Pac TS EMEA
Engagement Index 72%+ 74%+ 75%+ 66%-
Commitment Index 66%+ 70%+ 70%+ 59%-
Values Index 77% 78% 80% 75%
Inclusiveness Index 66% 67% 73% 62%
Line of Sight Index 80%+ 82%+ 82%+ 77%-
Improvement from 2007
Slight Decline from 2007
(+) = Above Global norm
(-) = Below Global norm
TS Q408 Highlights: Americas
New leadership Jeff Bawol promoted to president, TS Americas
Phoenix Global Solutions Center open for business (“Pecos”) Logistics team completed one of the most complex and largest inventory
transitions in the history of TS • Emptied $97,839,948M in inventory (consisting of 4,446 pallets / 5,890 SKUs / 521,391 parts) from
3 locations: Livermore (CO), Harbour (AZ), McKemy (AZ)• Loaded that inventory onto 171 tractor trailers, which traveled 27,312 miles• Processed 147,011 transactions• Brought Red Planet warehouse management system (WMS) online
Recognition 2008 Microsoft Channel Partner Summit Operational Excellence Award
Jeff Bawol
TS Q408 Highlights: Americas
New offerings Channel Optimization™
• Gives VAR CEOs and C-level executives customized analysis, tools, frameworks and methodologies to improve their business profitability
Avnet ProSeries Symposium• Helps VARs' sales reps hone ability to deliver NetApp solutions
– Interactive whiteboard technique helps sales reps retain, convey more information HP Electronic Vaulting Services
• Provides VARs mid-market customers with secure, off-site data back-up and recovery support for a monthly fee; Avnet and HP co-manage the sales channel
Power Premiers road show • Designed to help VARs and their customers better understand how IBM's Power Systems
server platform can solve IT challenges around system performance
TS Q408 Highlights: Americas
New & enhanced vertical practices HealthPath University Internship Program launched
• A one week program for HealthPath University graduates conducted on site at a regional healthcare facility enables partners to view healthcare technology through the eyes of hospital personnel and patients
VirtualPath University launched• VirtualPath University provides partners with virtualization market understanding,
knowledge, technology drivers and tools.
G I V E: In the community Although Avnet has many traditions, few are as long standing as its participation in the
annual Make A Difference Serve-a-Thon for Schools. For 14 years, Avnet employees have donated time, sweat and elbow grease to help make Phoenix-area schools better places for local children. This year was no different – 165 volunteers spent the day planting, cleaning, organizing, building and painting.
TS Q408 Highlights: Asia Pacific
Acquisition: Ontrack Solutions (Mumbai, India) Software, storage, server, security, networking and virtualization systems integrator Ontrack Solutions portfolio
• HP & IBM (all STG products and Lotus and Tivoli software)• Software solutions: VMware, Citrix, DoubleTake, CheckPoint, Nokia, Websense, RSA
US $13M annual revenue Closing July 2008 Ontrack Solutions will continue as a systems integration business Avnet will also launch a solutions distribution business enabling business partners to procure
cutting-edge IT solutions for distribution to their customers
TS Q408 Highlights: Asia Pacific
New and expanded relationships CA (Singapore agreement)
• Avnet Partner Solutions becomes the primary sales interface in Singapore for CA's enterprise IT management software, serving as the value-added distributor for CA's enterprise solutions while streamlining operations and marketing and building solid relationships with the Avnet and CA channel partner community
G I V E: In the community Avnet employees worldwide send aid to Chinese earthquake victims
• After southwestern China’s Sichuan province was struck by a terrible earthquake in May, Avnet employees around the world rushed to help by donating $93,169 to the American Red Cross and other rebuilding projects. As it has done following other disasters, Avnet matched every dollar donated by employees, bringing the total contribution to $186,338.
Furniture purchased using Avnet Rebuilding Fund is loaded onto a truck for delivery.
TS Q408 Highlights: EMEA
Acquisition Horizon acquisition finalized
• Technical integrator and distributor of IT products in the UK and Ireland
New and expanded relationships Colubris Networks (global distribution agreement)
• Colubris MultiService Controllers (MSCs), MultiService Access Points (MAPs), Wireless Client Bridge and Network Management System offer secure WLAN connections and support mobility functions essential to modern networks
• Expands distribution agreement from UK to Germany Datamax / O’Neil (European agreement)
• Adds to linecard the complete line of Datamax desktop printers and O'Neil mobile printers• Expands TS’ wireless and mobility solutions offering
This presentation is updated quarterly and distributed via the TS Global newsletter in conjunction with the release of Avnet’s financial performance
(approximately three weeks after quarter end and five weeks after fiscal year end). It is intended to give TS employees around the world a quick overview of TS’ financial performance and highlights, and may be used (in whole or in part)
alone or with other TS presentations to talk about TS at the global level.
For more information, please contact Michelle Taylor, Director, TS Global Marcom: [email protected]
You may also contact the following people for more information on any of the items within the regional highlights:
Americas: [email protected]
Asia Pacific: [email protected]
EMEA: [email protected]