Avnet, Inc. (AVT) has reported 47.15 percent plunge in profit for the quarter ended Oct. 01, 2016. The company has earned $68.84 million, or $0.53 a share in the quarter, compared with $130.25 million, or $0.96 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $118.40 million, or $0.91 a share compared with $152.90 million or $1.12 a share, a year ago.

Revenue during the quarter dropped 9.29 percent to $4,173.40 million from $4,600.80 million in the previous year period. Gross margin for the quarter expanded 35 basis points over the previous year period to 12.59 percent. Total expenses were 96.86 percent of quarterly revenues, up from 96.31 percent for the same period last year. That has resulted in a contraction of 56 basis points in operating margin to 3.14 percent.

Operating income for the quarter was $130.99 million, compared with $169.99 million in the previous year period.

However, the adjusted operating income for the quarter stood at $193.10 million compared to $240.40 million in the prior year period. At the same time, adjusted operating margin contracted 60 basis points in the quarter to 4.63 percent from 5.23 percent in the last year period.

"We took a significant step in our strategic transition as we completed the acquisition of Premier Farnell on October 17th and announced the sale of our Technology Solutions operating group to Tech Data Corporation on September 19th. With the sale of TS, we will be singularly focused on leveraging EM's design and supply chain services with Premier Farnell's digital platform to offer the broadest suite of products and services to support customers at every stage of the product lifecycle," said Bill Amelio, chief executive officer of Avnet.

For the second-quarter, Avnet forecasts revenue to be in the range of $4,200 million to $4,500 million. On an adjusted basis, the company expects diluted earnings per share to be in the range of $0.69 to $0.79.

The company has spent $34.39 million cash to meet investing activities during the quarter as against cash outgo of $32.03 million in the last year period.

Cash flow from financing activities was $193.79 million for the quarter as against cash outgo of $33.29 million in the last year period.

Cash and cash equivalents stood at $1,196.54 million as on Oct. 01, 2016, up 45.09 percent or $371.85 million from $824.70 million on Oct. 03, 2015.
 

Working capital increases sharply
Avnet, Inc. has recorded an increase in the working capital over the last year. It stood at $6,265.88 million as at Oct. 01, 2016, up 66.90 percent or $2,511.62 million from $3,754.27 million on Oct. 03, 2015. Current ratio was at 2.82 as on Oct. 01, 2016, up from 1.76 on Oct. 03, 2015.

Cash conversion cycle (CCC) has decreased to 57 days for the quarter from 89 days for the last year period. Days sales outstanding went down to 86 days for the quarter compared with 106 days for the same period last year.

Days inventory outstanding has decreased to 30 days for the quarter compared with 64 days for the previous year period. At the same time, days payable outstanding went down to 60 days for the quarter from 81 for the same period last year.