accelerating your success™ 1 avnet analyst day 2010 performance & potential avnet, inc....
TRANSCRIPT
Accelerating Your Success™1 Accelerating Your Success™
Avnet Analyst Day 2010Performance & Potential
Avnet, Inc.December 15, 2010
Accelerating Your Success™2 Accelerating Your Success™
Opening Remarks and Management Introductions
Vince KeenanVice President, Investor Relations
Accelerating Your Success™3 Accelerating Your Success™33
December 2010 Avnet Analyst Day Agenda
9:30 am Check-in
10:00 am Welcome & Introductions Vince Keenan
Performance & Potential Roy Vallee
Operational Update Rick Hamada
Financial Update Ray Sadowski
12:00 pm Buffet Lunch
1:00 pm Technology Solutions Phil Gallagher
Electronics Marketing Harley Feldberg
Wrap up Roy Vallee
2:45 pm Conclude
Accelerating Your Success™4 Accelerating Your Success™44
Safe Harbor Statement
• This presentation 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 based on management’s current expectations and are subject to uncertainty and changes in factual circumstances. The forward-looking statements herein include statements addressing future financial and operating results of Avnet and may include words such as “will,” “anticipate,” “expect,” “believe,” and “should” and other words and terms of similar meaning in connection with any discussions of future operating or financial performance or business prospects. Actual results may vary materially from the expectations contained in the forward-looking statements.
• The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: the Company’s ability to retain and grow market share and to generate additional cash flow, risks associated with any acquisition activities and the successful integration of acquired companies, any significant and unanticipated sales decline, changes in business conditions and the economy in general, changes in market demand and pricing pressures, any material changes in the allocation of product or product rebates by suppliers, allocations of products by suppliers, other competitive and/or regulatory factors affecting the businesses of Avnet generally.
• More detailed information about these and other factors is set forth in Avnet’s filings with the Securities and Exchange Commission, including the Company’s reports on Form 10-K, Form 10-Q and Form 8-K. Avnet is under no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Accelerating Your Success™5 Accelerating Your Success™
Accelerating Your Success™6 Accelerating Your Success™6
Accelerating Your Success™7 Accelerating Your Success™7
Adaptability Financial Conservatism
Culture
Adaptability Financial Conservatism
Culture
Profitable Growth Leadership
Profitable Growth Leadership
Accelerating Your Success™8 Accelerating Your Success™8
• Gross Profit $ Volume
• ROCE
• Market Capitalization
• Gross Profit $ Volume
• ROCE
• Market Capitalization
TECHNOLOGY DISTRIBUTIONTECHNOLOGY DISTRIBUTION
Accelerating Your Success™9 Accelerating Your Success™9
Steve Phillips
Chief Information Officer
Avnet, Inc.
5 Years of Service
Steve Phillips
Chief Information Officer
Avnet, Inc.
5 Years of Service
MaryAnn Miller
Chief Human Resources Officer
Avnet, Inc.
4 Years of Service
MaryAnn Miller
Chief Human Resources Officer
Avnet, Inc.
4 Years of Service
David Birk
Senior Vice President and General Counsel
Avnet, Inc.
30 Years of Service
David Birk
Senior Vice President and General Counsel
Avnet, Inc.
30 Years of Service
Al Maag
Chief Communications Officer
Avnet, Inc.
13 Years of Service
Al Maag
Chief Communications Officer
Avnet, Inc.
13 Years of Service
Jim Smith
President
Avnet Logistics
10 Years of Service
Jim Smith
President
Avnet Logistics
10 Years of Service
Steve Church
Chief Business Development and Process Officer
Avnet, Inc.
20 Years of Service
Steve Church
Chief Business Development and Process Officer
Avnet, Inc.
20 Years of Service
Accelerating Your Success™10 Accelerating Your Success™10
Harley Feldberg
President,
Avnet Electronics Marketing
28 Years of Service
Harley Feldberg
President,
Avnet Electronics Marketing
28 Years of Service
Rick Hamada
President and Chief Operating Officer
Avnet, Inc.
27 Years of Service
Rick Hamada
President and Chief Operating Officer
Avnet, Inc.
27 Years of Service
Ray Sadowski
Chief Financial Officer
Avnet, Inc.
32 Years of Service
Ray Sadowski
Chief Financial Officer
Avnet, Inc.
32 Years of Service
Phil Gallagher
President,
Avnet Technology Solutions
28 Years of Service
Phil Gallagher
President,
Avnet Technology Solutions
28 Years of Service
Roy Vallee
Chairman & Chief Executive Officer
Avnet, Inc.
33 Years of Service
Roy Vallee
Chairman & Chief Executive Officer
Avnet, Inc.
33 Years of Service
Accelerating Your Success™11 Accelerating Your Success™11
90 Years in Business90 Years in Business++
50 Years on NYSE50 Years on NYSE++
148 Years of Sr. Leadership 148 Years of Sr. Leadership
AVNET’S LONGEVITYAVNET’S LONGEVITY
Accelerating Your Success™12 Accelerating Your Success™12
Demonstrated Performance and
Exciting Potential
Macro Environment
Accelerating Your Success™14 Accelerating Your Success™1414
What a Difference a Year Two Years Make…
• Avnet’s served available market (SAM) grew faster than initially forecasted
• Most volatile 2 year period for semiconductor growth
• Concerns of a double-dip have been receding as the global economy continues to grow
• Remain in a gradual cyclical recovery
Sources: Bishop, Electronics Outlook, Fleck, Gartner, IDC, iSuppli (Rev: 11/2010)
2009 2010
Actual Dec 09 Forecast Dec 10 Projection
EM SAM -15% 9% 22%
TS SAM -5% 4% 3%
AVT SAM -7% 5% 7%
Accelerating Your Success™15 Accelerating Your Success™15
Recession’s Impact on Semiconductors19
90
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
E
0
50
100
150
200
250
300
350
($ B
illi
on
s)
Growth Decline
Source: SIA/WSTS (total semiconductors)
32% Growth 2009-2010
First time there has been two consecutive years of declineFirst year of recovery more dramaticV-shape recovery drove new industry record
Accelerating Your Success™16 Accelerating Your Success™16
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
36.7%
42.6%41.6%
29.2%
2.6%
-24.1%
-39.2%-42.3%
-31.8%
-4.9%
17.3%19.4%
22.0%
12.9% 11.9%
25.3%
28.7%
35.1%
30.7%
14.2%11.8%
0.3%3.3%
8.9%
7.4%
11.6%9.1%
5.4%
1.8%-0.4%
6.1%
9.5%8.7%
12.1%
9.3%
-15.0%
-29.2%
-18.8%
-12.8%
15.7%
48.4%
31.7%
22.0%
Global Semi less DRAM, MPU & Flash
Source: WSTS
Source: WSTS
Source: WSTS
Semiconductor Y/Y Growth Rates
Two 100 year floodsin a decade
RecessionRecession
Accelerating Your Success™17 Accelerating Your Success™17
Ma
r-0
3
Ju
n-0
3
Se
p-0
3
De
c-0
3
Ma
r-0
4
Ju
n-0
4
Se
p-0
4
De
c-0
4
Ma
r-0
5
Ju
n-0
5
Se
p-0
5
De
c-0
5
Ma
r-0
6
Ju
n-0
6
Se
p-0
6
De
c-0
6
Ma
r-0
7
Ju
n-0
7
Se
p-0
7
De
c-0
7-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
22.0%
12.9%11.9%
25.3%
28.7%
35.1%
30.7%
14.2%
11.8%
0.3%
3.3%
8.9%7.4%
11.6%9.1%
5.4%
1.8%-0.4%
6.1%
9.5%
Source: WSTS
Source: WSTS
Source: WSTS
Source: WSTS
Semiconductor Y/Y Growth Rates
Excluding the recessions, the worst quarters in this period were roughly flat year-over-year
Accelerating Your Success™18 Accelerating Your Success™18
Ma
r-0
3
Ju
n-0
3
Se
p-0
3
De
c-0
3
Ma
r-0
4
Ju
n-0
4
Se
p-0
4
De
c-0
4
Ma
r-0
5
Ju
n-0
5
Se
p-0
5
De
c-0
5
Ma
r-0
6
Ju
n-0
6
Se
p-0
6
De
c-0
6
Ma
r-0
7
Ju
n-0
7
Se
p-0
7
De
c-0
7-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
22.0%
12.9%11.9%
25.3%
28.7%
35.1%
30.7%
14.2%
11.8%
0.3%
3.3%
8.9%7.4%
11.6%9.1%
5.4%
1.8%-0.4%
6.1%
9.5%
Source: WSTS
Source: WSTS
Source: WSTS
Source: WSTS
2003 2004 2005 2006 2007
18%
27%
6%8%
4%
Chart Title
Semiconductor Y/Y Growth Rates
Resulting in 5 years of uninterrupted growth
Accelerating Your Success™19 Accelerating Your Success™19
Projected Semiconductor Growth19
90
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
E
2011
E
2012
E
2013
E
0
50
100
150
200
250
300
350
($ B
illi
on
s)
Growth Decline Source: SIA/WSTS (total semiconductors)
Current forecasts project at least four years of growthTotal 2011-2013 $ growth is greater than pre-recession
2005 - 2007+43 Billion
2011 - 2013+47 Billion
Accelerating Your Success™20 Accelerating Your Success™20
Projected Semiconductor Growth Rates
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
E
2011
E
2012
E
2013
E
0
50
100
150
200
250
300
350
($ B
illi
on
s)
Growth Decline
10-year CAGR +14.9%
10-year CAGR +3.8%
Source: SIA/WSTS (total semiconductors)
Next decade, two 100 year floods impacted semi CAGRHowever, recession only interrupted semi market growth
90s growth driven by business spend
10-year CAGR +7.5%
Accelerating Your Success™21 Accelerating Your Success™21
Recession’s Impact on IT Spend
Less volatile than the semiconductor industryProjections reflect resumption of consistent growth
1 year decline versus 2 years
Source: IDC (All Hardware, Software and Services) - 10/2010
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
E
2011
E
2012
E
2013
E
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
($ B
illi
on
s)
Growth Decline
2011 - 2013+273 Billion
2006 - 2008+257 Billion
Total $ growth is greater post-recession
Accelerating Your Success™22 Accelerating Your Success™22
GDP Growth Versus Total IT Spend
IT Spend grew 6.5% 2.1x GDP
IT Spend projected to grow 5.7% 1.6x GDP
3 yrs leading into the recession 3 yrs leading out of the recession
Hardware growth rate higher post recessionAvnet Technology Solutions is ~70% Hardware
Source - IDC - Oct 2010; GDP - IMF Oct 2010
GDP Hardware Services Software0%
2%
4%
6%
8%
3.2%
5.9% 6.4%
8.0%
2005-2008 CAGR
1.9x 2.0x
2.5x
GDP Hardware Services Software0%
2%
4%
6%
8%
3.6%
6.6%
4.3%
6.2%
2010-2013 CAGR
1.9x
1.2x
1.7x
Served Available Market
Accelerating Your Success™24 Accelerating Your Success™24
2009 2010 2011 2012 20130
50000
100000
150000
200000
250000
300000
350000
$224,532
$273,755$290,530
$313,423$331,258
US
$ B
illio
n
Sources: Bishop, Electronics Outlook, Fleck, Gartner, iSuppli (Rev: 11/2010)
Total Growth 2011-2013 +$58B
EM SAM – Continued Growth Following Record
Accelerating Your Success™25 Accelerating Your Success™25
2009 2010 2011 2012 20130
300
600
900
1,200
$914 $946 $984$1,034
$1,087
US
$B
illio
ns
Source: IDC, Gartner, iSuppli (rev. 11/2010)
Total Growth 2011-2013 +$141B
TS SAM – Steady Growth Toward One Trillion
Accelerating Your Success™26 Accelerating Your Success™26
Large Market That is Leading the Recovery
2009 2010 2011 2012 20130
250,000
500,000
750,000
1,000,000
1,250,000
1,500,000
-15% 22% 6% 8% 6%
-5%3% 4%
5%5%
Total Component TAM w/o MPUs, DRAMs, or Flash Total Computer TAM w/ Professional Services
($ b
illi
on
s)
$1,446B5%
$1,149B-7%
Note: Percentages represent sequential growth rates. Sources: Bishop, Electronics Outlook, Fleck, Gartner, IDC, iSuppli (Rev: 11/2010)
$1,366B6%$1,278B
5%$1,205B7%
Avnet Total Served Available Market
Accelerating Your Success™27 Accelerating Your Success™27
Avnet’s Global Growth Opportunity
27*Avnet’s FY11 revenue is an estimate based upon Q1FY11 annualized excluding Prosys
Total TAM $1,275 B
Direct TAM ~$956B
Distributor TAM ~$319B
Direct TAM ~$956B
Distributor TAM ~$319B
Avnet ~$24.2 Billion*
Accelerating Your Success™28 Accelerating Your Success™2828
Avnet’s Vision Statement
Avnet will deliver
the highest value to our customers, suppliers,
employees and shareholders as the premier technology marketing,
distribution and services company, globally
Accelerating Your Success™29 Accelerating Your Success™29
Business Segment Overview
• Markets and distributes electronic components and embedded systems to OEMs, ODMs and EMS providers
– Products include semiconductors, interconnect, passive, electromechanical and subsystems
– Value-added services spanning the design and supply chains globally including substantial product enhancement
• Markets and distributes complex computer products to VARs, systems builders and OEMs
– Products include enterprise servers, storage systems, embedded subsystems, networking software and services
– Value-added services including marketing, tech support, configuration, integration, training and financial
1 Excludes corporate expenses, restructuring, integration and other charges 2 Working capital = Trade Receivables + Inventory - Payables
28%
72%
43%57%
34%66%
TS
EM
TS
EM
TS
EM
FY 2010 Revenue FY 2010 EBIT1 10/2/10 Working Capital2
Technology Solutions (TS)Electronics Marketing (EM)
Accelerating Your Success™30 Accelerating Your Success™30
FY 2008 FY 2009 FY 2010 Q1FY11 Q1FY11 Annualized*$10.0
$12.5
$15.0
$17.5
$20.0
$22.5
$25.0
$18.0
$16.2
$19.2
$24.2
Rev
enue
US
$Bill
ions
30
Emerged from Recession a Much Stronger Company
* Excludes ProSys
-$1.8B+$1.1B
Acquired 3 companies that
add ~$4B of revenue and
achieve 12.5% ROCE with no add’l debt or equity capital
+$3B-$30M
Revenue:Cash from Ops:
Accelerating Your Success™31 Accelerating Your Success™3131
Avnet – Global Leader in Technology Distribution
Gross Profit Dollar Volume
Return on Capital Employed (ROCE)
Market Capitalization
• VBM culture improving performance through the cycles
• Exited this downturn a much stronger company– Setting quarterly records for revenue, EPS and ROCE
– More diversified revenue stream with significant growth opportunities
– Experienced management team with proven, consistent performance
• Served market >$1.2 trillion and growing much faster than GDP
• Avnet is growing much faster than the market– Organic and value creating M&A
Q&A
Accelerating Your Success™33 Accelerating Your Success™
The Path to Premier
Rick HamadaPresident and COO
Accelerating Your Success™34 Accelerating Your Success™
Executing to Avnet’s Vision
• Avnet’s Strategic Framework
• Our Enterprise Priorities & Initiatives– Value Based Management (VBM)
• Portfolio Management & Performance– Operational Excellence– Employee Engagement– Customer Engagement
• Global Infrastructure Scale & Scope
Accelerating Your Success™35 Accelerating Your Success™
Avnet effectively manages the complexity of the technology supply chain in a cost-efficient manner,
delivering value to suppliers and customers.
Vital Link in Global Technology Supply Chain
IT Original Equipment
Manufacturers
Non-IT Original Equipment
Manufacturers
End UsersEMS / ODM
Resellers, ISVs and
System Builders
Semiconductors
InterconnectPassive &Electro-
mechanical Devices
Subsystems
Software & Services Vendors
EM TS
Accelerating Your Success™36 Accelerating Your Success™
1. Integrity 2. Customer Service 3. Accountability 4. Teamwork 5. Innovation
Performance and Values Based Culture of Excellence
Strategic Framework
Be the preferred partner to our
customers and suppliers
Profitable Growth
Attract, develop and engage the best employees
People Development
Consistently strive for flawless
execution and process innovation
Operational Excellence
Deliver Industry-Leading Economic Profit
Premier Technology, Marketing, Distribution and Services Company, Globally
Accelerating Your Success™37 Accelerating Your Success™
Enterprise Performance: Balanced Scorecard
Metric Type Global Objectives Avnet KPMs
Shareholder Deliver industry-leading economic profit.
Economic Profit $ Growth
ROCE ≥14.0% / ROWC ≥ 30.0%
Customer & Supplier Be the preferred partner to our customers and suppliers.
Customer Loyalty/Customer Retention
Gross Profit $ Growth
Operational Excellence Consistently strive for flawless execution and process innovation.
Operating Expense to NGP/GP $ Per Employee
Working Capital Velocity
Employee Attract, develop and engage the best employees.
On Time Performance Appraisalswith Development Plans
Employee Engagement Index
Accelerating Your Success™38 Accelerating Your Success™
Enterprise Initiatives – Enhancing Avnet’s Culture
Value-Based Management / Profitable Growth
Operational Excellence
Employee Engagement
Customer Engagement
Accelerating Your Success™39 Accelerating Your Success™
Business Portfolio Composition
FY ‘10 Revenue
Americas $3.4B
EMEA $3.7B
Asia / Japan $3.9B
AvnetElectronicsMarketing
$11.0B
Avnet TechnologySolutions
$8.2B
FY ‘10 Revenue
Americas $4.9B
EMEA $2.3B
Asia $1.0B
Accelerating Your Success™40 Accelerating Your Success™
Portfolio Performance
FY05 FY06 FY07 FY08 FY09 FY100%
10%
20%
30%
40%
50%
60%
70%
80%
10%
15%
20%
25%
30%
29.6%24.2%
49.9% 50.5%
26.4%
64.0%
15.8%
21.3%
25.7%25.1%
17.8%
27.0%
% o
f Avn
et p
ortf
olio
(by
rev
enue
) at
or
abo
ve lo
ng-t
erm
RO
WC
goa
l
Avn
et
RO
WC
Accelerating Your Success™41 Accelerating Your Success™
12.5%
Avnet’s Value-Based Management Journey
ROCE
Revenue($B)
5%
10%
$5 $10 $15 $20
FY07
FY06
FY08
FY04
FY05
WACC
Dri
vin
g Valu
e
Driving Growth
FY10 14%
16%
FY09
12.5%
Accelerating Your Success™42 Accelerating Your Success™
Measuring Operational Excellence
FY05 FY06 FY07 FY08 FY09 FY1020%
40%
60%
80%
100%
78.0%
72.8%
66.5% 67.6%
75.7%
71.0%
Avnet 5-year Gross Profit Dollar CAGR = +9.3%
Avnet 5-year Operating Expense CAGR = +7.3%
Avnet 5-year Operating Profit CAGR = +15.5%
Q4 FY1066.4%
Ope
ratin
g E
xpen
se a
s a
% G
P$
Accelerating Your Success™43 Accelerating Your Success™
Customer EngagementEmployee Engagement
“Putting the Service-Profit Chain to Work,” Heskett, et al., - Harvard Business Review
Thoughtful organizational development strategies lead to a more productive and engaged workforce, a more loyal customer base, and higher shareholder returns.
The Power and Impact of Engagement
People PracticesPeople
PracticesEmployee
Engagement and
Organizational Climate
EmployeeEngagement
and Organizational
Climate
External Service Value
External Service Value
Customer Satisfaction
Customer Satisfaction
Customer Loyalty
Customer Loyalty
ProfitabilityProfitability
RevenueRevenue
Employee Retention
Employee Retention
Employee Productivity
Employee Productivity
Accelerating Your Success™44 Accelerating Your Success™44
Employee Engagement / Enterprise Performance
(1) Excluding restructuring, integration and other items.
FY04 FY05 FY06 FY07 FY08 FY09 FY10$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
60%
62%
64%
66%
68%
70%
72%
74%
76%
$1.04
$1.39
$1.87
$2.76
$3.18
$1.92
$2.77
65%
68%
70%
73%
75% 75%
US companies reported employee engagement on average declined ~9%
2008 vs. 2009*
*Towers Watson and WorldatWork 2009/2010 U.S. Strategic Rewards survey
Avn
et E
mpl
oyee
E
ngag
emen
t
Avn
et E
PS
Total Employees 9,900 9,800 10,900 11,700 12,800 12,900 14,200
Accelerating Your Success™45 Accelerating Your Success™
Avnet’s Customer Engagement Evolution
High Risk Trapped
Accessible Truly Loyal
AT
TIT
UD
E
BEHAVIOR
• Key metrics: Loyalty and Retention• Formal survey process
– 89,000 customer contacts surveyed• Regional analysis & action plans• Understanding drivers of engagement• Ongoing “Voice of the Customer”
activities– Day-to-day relationship
management, focus groups, advisory councils and online communities
Walker Loyalty Matrix
Satisfaction(early 2000’s)
Loyalty(2006)
Engagement(2010)
Accelerating Your Success™46 Accelerating Your Success™
Avnet Global Logistics Scale & Scope
• ~ 2,500 employees• Global footprint
~ 3 million sq. ft.• Manage ~ 500,000
SKUs globally• 99+% same day ship• ~ 70% include value-add
– Program 200+ million devices
– Integrate 760,000+ systems– 19.4+ million
cable assemblies
• Quality performance currently exceeds 5 σ standards*
FY05 FY06 FY07 FY08 FY09 FY106.5
7.0
7.5
8.0
8.5
9.0
9.5
7.1
8.07.9
8.6
7.7
9.1
Total Lines Shipped (in millions)
5-year CAGR = +5%
* Five Sigma = 233 defects per million opportunities
Accelerating Your Success™47 Accelerating Your Success™47
Avnet Global IT Scale & Scope
776 terabytes of storage
405 software applications
~ 3,600 virtual servers
~ 29,270 visitors to website daily
~ 700 IT professionals
As of Q1 FY’11
95% spam filtered from 6 million e-mails daily
68 integrations executed since 1991
Accelerating Your Success™48 Accelerating Your Success™
Executing to Avnet’s Vision
• Strategic framework, planning and review process supporting world-class execution
• Enterprise initiatives drive performance-based culture of excellence
• Our global scale and scope positions us for continued profitable growth
• Avnet team is committed to shareholder value creation
Accelerating Your Success™49 Accelerating Your Success™
Thank You
Accelerating Your Success™50 Accelerating Your Success™
Financial Report
Ray Sadowski
Chief Financial Officer
Accelerating Your Success™51 Accelerating Your Success™
Agenda
• Historical Results
– Performance through the recession
• Strong Financial Position
• Long-term Business Model
• Acquisition Integration Update
Historical Results
Accelerating Your Success™53 Accelerating Your Success™
$12.7
$10.6
$8.9$9.5
$10.8
$12.6
$14.8
$17.0$17.9
$16.7
$22.8
$5
$7
$9
$11
$13
$15
$17
$19
$21
$23
$25
CY00 CY01 CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10*
Avnet, Inc. Revenue
Avnet’s Journey – The Last Decade
($ in billions)
6 years of growth with revenue peaking in CY ‘08
Tech Bubbledownturn
Less severe
downturn
Two 100 Year Floods in one decade; yet steady progress
Record revenue in 2010
* CY10 is an estimate based upon three completed quarters and guidance for Q4CY10
Accelerating Your Success™54 Accelerating Your Success™
$1.90
$1.54
$1.23 $1.24
$1.45
$1.63
$1.92
$2.21$2.31
$1.96
$2.7215.0%
14.6%13.8%
13.1%13.5%
12.9% 13.0% 13.0% 12.9%
11.8% 11.9%
0%
2%
4%
6%
8%
10%
12%
14%
16%
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
CY00 CY01 CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10*
GP $ GP % of Sales
Avnet, Inc. – Gross Profit $ and %
* CY10 is an estimate based upon three completed quarters and guidance for Q4CY10
Margins impacted by geographic and business mix($ in billions)
Accelerating Your Success™55 Accelerating Your Success™
$650
$238
$101
$166
$317
$377
$599
$750
$694
$443
$865
5.1%
2.3%
1.1%
1.8%
2.9%3.0%
4.1%
4.4%
3.9%
2.7%
3.8%
0%
1%
2%
3%
4%
5%
6%
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
CY00 CY01 CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10*
Op Income $ Op Income %
Significant operating leverage during periods of growth:Demonstrated during CY 03-07 growth periodStarting a new trend in CY 10
Avnet, Inc. – Operating Income $ and %
* CY10 is an estimate based upon three completed quarters and guidance for Q4CY10Note: Excludes restructuring, integration and other charges
($ in millions)
Accelerating Your Success™56 Accelerating Your Success™
Avnet, Inc. – EPS
$2.49
$0.43
$0.06
$0.48
$1.40 $1.50
$2.32
$3.12
$2.90
$1.72
$3.64
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
CY00 CY01 CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10*
Steep decline in profits tied to significant
revenue loss
Y/Y more than doubled to record level
Excludes restructuring, integration and other charges
* CY10 is an estimate based upon three completed quarters and guidance for Q4CY10
Dramatic trough to trough performance
Accelerating Your Success™57 Accelerating Your Success™
23.2%
30.0%
24.1%
18.6% 19.0%17.0% 17.0% 16.8% 17.1%
14.6%13.4%
4.3 3.34.2
5.4 5.3
5.9 5.9 6.0 5.9
6.97.5
5.2
4.3
5.3
7.2 6.97.6
7.98.2 8.1
9.19.7
0
2
4
6
8
10
12
0%
5%
10%
15%
20%
25%
30%
35%
CY00 CY01 CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10*
WC
Ve
loc
ity
& In
ve
nto
ry T
urn
s
WC
% o
f S
ale
s
Average WC % of Sales WC Velocity Inventory Turns
* CY10 is an estimate based upon three completed quarters and guidance for Q4CY10
Avnet, Inc. - Working Capital Velocity & Inventory Turns
Significantly higher velocity due to VBM and geographic and business mix
Accelerating Your Success™58 Accelerating Your Success™
VBM Improved ROWC
22.1%
7.5%
4.7%
9.4%
15.5%
17.5%
23.9%
26.4%
22.8%
18.2%
28.4%
0%
5%
10%
15%
20%
25%
30%
CY00 CY01 CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10*
Note: Excludes restructuring, integration and other charges
ROWC declined due to the dramatic
cycle downturn
ROWC moves to record level
following recession
VBM launched early 2001 ROWC improved as
VBM combined with organic growth + M&A
ROWC reached higher peak
* CY10 is an estimate based upon three completed quarters and guidance for Q4CY10
Accelerating Your Success™59 Accelerating Your Success™
8.5%
2.8%1.8%
4.0%
7.5% 7.8%
10.3%
11.9%
10.0% 10.0%
15.6%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
CY00 CY01 CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10*
VBM Improved ROCE
Note: Excludes restructuring, integration and other charges
ROCE declined due to the dramatic cycle downturn
VBM launched early 2001
New ROCE target established in 2009
14% - 16%
ROCE improved as VBM combined with
organic growth + M&A
* CY10 is an estimate based upon three completed quarters and guidance for Q4CY10
New ROCE target range Previous ROCE target
Strong Financial Position
Accelerating Your Success™61 Accelerating Your Success™
VBM Cash Flow from Operations
$168 $204$393
$499$289
$410$173 $200
$206$166
$20
$142$121
-$423
$126
-$211
$809
-$582
-$600
-$400
-$200
$0
$200
$400
$600
$800
$1,000
$1,200
FY05 FY06 FY07 FY08 FY09 FY10
Net Income Non Cash Items Working Capital
$462m $725m $454m $1,118m$-19mAnnual Totals
$-30m($ in millions)
Accelerating Your Success™62 Accelerating Your Success™
$2.9 Billion of cumulative cash from net income + non-cash Items over the past 6 years
VBM Cash Flow from Operations
$168 $204$393
$499$289
$410$173 $200
$206$166
$20
$142$121
-$423
$126
-$211
$809
-$582
-$600
-$400
-$200
$0
$200
$400
$600
$800
$1,000
$1,200
FY05 FY06 FY07 FY08 FY09 FY10
Net Income Non Cash Items Working Capital
($ in millions)
Accelerating Your Success™63 Accelerating Your Success™
Strengthened Balance Sheet
Key Credit Statistics
$1,244 $1,235 $1,209 $1,225
$970
$1,280
$85.1
$96.5
$77.2 $72.3 $66.5 $61.7
$0
$50
$100
$150
$200
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
FY05 FY06 FY07 FY08 FY09 FY10
Total Debt Interest Expense
(5.8%)(7.1%)
(6.5%)
(Effective interest rate noted above line)
(5.6%)(5.0%)
2005 2006 2007 2008 2009 2010Debt to EBITDA 3.2 2.1 1.6 1.5 1.7 1.7EBITDA Coverage 4.5 6.1 9.9 11.5 8.6 12.1Debt to Capital 37.2% 30.4% 26.2% 22.9% 26.0% 29.8%
(5.4%)
($ in millions)
Accelerating Your Success™64 Accelerating Your Success™
Financing Strategic Objectives
• Maintain Avnet’s Investment Grade credit ratings– Cost of Debt Capital– Access to Capital– Trading Partner Relationships– Competitive Position
• Optimize Avnet’s cost of capital• Ensure adequate availability of capital / liquidity to
meet the needs of the business– Fund organic growth– Fund M&A growth
Accelerating Your Success™65 Accelerating Your Success™
Capital Allocation Strategy
• Disciplined internal resource allocation• Reinvest cash generation for growth - primarily
through value creating M&A = ROCE ≥ 12.5%– Continue to believe the best use of cash is to fund
future growth
• Return “Excess” cash to shareholders when appropriate– Dividends (perpetual)– Stock buyback
Accelerating Your Success™66 Accelerating Your Success™
Liquidity Framework
• Normal Float $200M $300M• Working Capital Expansion $200M $500M• Debt Due Within 3 Years -- --• Committed M&A $100M $100M• Potential M&A $200M
$500M• Total $700M $1.4B
Low High
Long-Term Business Model
Accelerating Your Success™68 Accelerating Your Success™
Long-term Model Philosophy
• Remain committed to achieving ROCE of 14% – 16%– Adjusted for impairment of goodwill on legacy businesses = ~16%
– Incremental investments including acquisitions will be held to a minimum 12.5% ROCE threshold
• Top operational goal is generating 30% ROWC at the enterprise level– Varies by group and region due to different tax rates
• Shift of business mix towards Asia and TS, including growth in Latin America, could negatively impact operating margins
• These margin declines should be positively offset by higher asset velocity
Accelerating Your Success™69 Accelerating Your Success™
Long-Term Business Model
*Note: ROCE goal of 12.5% = ~16.0% after impairment of goodwill; items above do not include restructuring, integration or other charges.
No change from previous model
FY09 Actual FY10 Actual 3 Year GoalROCE Avnet 8.7% 14.7% 14 - 16%*ROWC Avnet 17.8% 27.0% 30.0%Working Capital Velocity Avnet 5.9 7.8 6.7 - 7.5Operating Income Margin Electronics Marketing 3.9% 4.5% 5.0 - 5.5% Technology Solutions 2.9% 3.1% 3.4 - 3.9% Avnet 3.0% 3.5% 4.0 - 4.5%
Accelerating Your Success™70 Accelerating Your Success™
55% Drop Through
60% Drop Through
65% Drop Through
5%
10%
15%
20%
25%
5% 6% 7% 8% 9% 10%
Op
era
tin
g In
co
me
Gro
wth
Gross Profit Growth
Operating Leverage
Value Creating M&A
Accelerating Your Success™71 Accelerating Your Success™
Revenue Seasonality
Numbers provided are estimates for a typical quarter and can vary based upon several factors including but not limited to:– Economic/Market conditions– M&A activity– End of fiscal calendar– Foreign currency exchange rates
Sequential Revenue Growth
Sept Dec Mar JunEM +1% to -3% 0% to -3% +4% to +7% 0% to +4%TS -1% to -5% +22% to +28% -16% to -20% +3% to +7%Avnet 0% to -4% +8% to +12% -4% to -7% +1% to +5%
Sept Dec Mar Jun20%
22%
24%
26%
28%
30%
EM TS AVT
Percent of Annual Revenue
Acquisition Integration Update
Accelerating Your Success™73 Accelerating Your Success™
Bell Integration Update
Note: Full synergies goal of $60 million annualized ($15 million per quarter) is expected to be achieved as we enter fiscal year 2012.
• Retained all key personnel, suppliers and customers
• Converted Bell’s Americas business to Avnet’s IT system
• Comfortable with synergy target of at least $60M
Q1 Q2 Q3 Q4% Complete 51% 72% 86% 100%Cumulative annualized synergies @ end of quarter $30.4 $43.1 $51.6 $60.0Incremental annualized synergies @ end of quarter $30.4 $12.7 $8.5 $8.4
Q1 Q2 Q3 Q4Synergies impacting current quarter $6.3 $9.2 $11.8 $13.9Year to date synergies realized $6.3 $15.5 $27.3 $41.2
($ in millions)
($ in millions)
Accelerating Your Success™74 Accelerating Your Success™
Summary
• Took advantage of the V-shaped recovery to deliver record results
• Long term priorities continue to focus on driving profitable growth and increasing Economic Profit $– ROWC > 30%– ROCE = 14 – 16%; incremental > 12.5%
• Demonstrating strong operating leverage• Strong balance sheet and liquidity
– Investment grade credit statistics– Higher EPS and growth potential
• Proven mgm’t team; growing long-term shareholder value
Q & A
Accelerating Your Success™76 Accelerating Your Success™
Technology Solutions
Phil GallagherDecember 15, 2010
Accelerating Your Success™Accelerating Your Success™
Agenda
• Avnet Technology Solutions (TS) – A Global
Snapshot
• TS’ Strategic Imperatives
– Customer Focused Go-to-Market Strategy
– Global Scale and Scope
– Portfolio Management
77
Accelerating Your Success™Accelerating Your Success™
Demonstrating Sustainable Growth
We will create a sustainable competitive
advantage and profitability for TS
globally by developing technology solutions that generate value for the IT
supply chain.
Our Mission
Accelerating Your Success™
4-Year CAGR 13.2%
78
Accelerating Your Success™Accelerating Your Success™
Regional Revenue Mix Shift
4-Year CAGR:Asia = 41.4%
EMEA = 17.9%Americas = 7.3%
Q1FY11 includes Bell/Tallard79
Accelerating Your Success™Accelerating Your Success™
World-Class Supplier Partnerships
In Q1FY11, Avnet’s Top 10 suppliers* accounted for 73% of total revenue.
* Includes Bell Micro
We celebrate our supplier partnerships every day and are particularly proud of those that achieve significant milestones.
80
Accelerating Your Success™Accelerating Your Success™
Outperforming the Market
Source: Avnet Data based on rolling 4 qtrs YoY growth- 1FQ11; IDC, Gartner, iSuppli – Oct 2010
Services Software Hardware0%
5%
10%
15%
20%
0.8%
5.2%
14.6%
6.2%
12.0%
19.0%
Market Growth TS Revenue Growth
Proprietary Servers
ISS Networking Storage Processors-20%
-10%
0%
10%
20%
30%
40%
-16%
16% 18%
11%
2%
23% 21%25%
Key Hardware Technologies vs. Market
Market Growth TS Revenue Growth
We are outgrowing the market in all categories -- software and services at an accelerated rate, with hardware growth led by storage, ISS and networking.
81
Accelerating Your Success™Accelerating Your Success™
Demonstrating Market Leadership
Avnet is the largest value-added IT distributor in the world, with $8.2B in sales
Avnet has the only global footprint among its peer group
The industry recognizes Avnet’s thought leadership with our SolutionsPath® methodology
Avnet’s Global Solutions Centers provide integration capabilities that deliver a differentiated end-to-end supply chain for data center solutions around the world
The world’s leading suppliers of data center technology partner with Avnet to attract and grow the most successful enterprise resellers around the globe
82
Accelerating Your Success™Accelerating Your Success™83
Executing Our Strategic Imperatives
1. Achieve targeted ROWC in all regions
2. Continue to build and leverage TS’ global scale and scope
3. Focus on high-growth technologies and verticals
4. Strengthen TS’ value-added solutions enablement model
5. Support customer, reseller and supplier migration to cloud-
based services
Market Focus
Accelerating Your Success™Accelerating Your Success™
Becoming a “Trusted Advisor”
85
Empowered consumers are driving businesses to become more agile, without compromise
Available, scalable, flexible, capacious and secure
Legacy infrastructure is complex and burdensome
Simplification, virtualization
New infrastructure can be quickly deployed with virtual data center assets (public or private cloud)
Line executives are challenging IT to support new, differentiated applications and service levels
The channel partner of the future is a trusted advisor to their
customer – understanding not only technology, but also its application
and its business value.
Accelerating Your Success™Accelerating Your Success™
Serving a Very Large and Growing Market
Source: Gartner, IDC & iSuppli – Nov 2010
2009 2010 2011 2012 20130
300
600
900
1,200
$914 $946$984
$1,034$1,087
TS Served Available Market
US
$B
illio
ns
Accelerating Your Success™Accelerating Your Success™
Vertical Growth
Technology Growth
Segmenting for Optimal Growth
TAM CAGR, 4.7%
$0 $50,000 $100,000 $150,000 $200,000 $250,0000%
5%
10%
15%
20%
25%
30%
2010 IT Spend
3 Yr
CA
GR
2010
-201
3
Gov
t & E
du (5
)
Bank
ing
(4)
Reta
il (3
)He
alth
care
(2)
Utili
ties
(1)
Security (d)
Networking (f)
Mobility (b)
Storage (g)
Collaboration (e)
Virtualization (c)
Cloud (a)a
b
c
e
d
fg
12
3 4 5
Source: Gartner & IDC Oct 2010
87
Accelerating Your Success™Accelerating Your Success™
Line
of
Bus
ines
s E
xecu
tives
an
d C
-Sui
te D
ecis
ion
Mak
ers
Avnet interprets market needs, creates differentiated enablement programs and aggregates products & services to help our partners become trusted advisors.
Extending the Value Chain with SolutionsPath®
• NetworkPath™
• VirtualPath®
• MobilityPath™
• SecurePath™
• StoragePath™
Fin
anci
alP
ath
™
Hea
lth
Pat
h®
Ret
ailP
ath
™
En
erg
yPat
h™
Go
vPat
h™
Market Focused
Customer Intimate
…with a repeatable, scalable enablement framework.
Industry, technology, application and customer expertise…
Avn
et S
ervi
ces
Clo
ud
Rea
dy™
88
Accelerating Your Success™Accelerating Your Success™
Increasing Supplier, Reseller and End-User Value
Envision – Enable – Execute with our proven SolutionsPath® methodology
“We continue to invest in helping our channel partners deepen skills, deliver value to clients, and pursue new opportunities for growth. We see that commitment to
growth reflected in Avnet's resources and programs that they have developed to help IBM Business Partners sell
complete solutions that meet the business needs of IBM's customers worldwide. Many of these programs
are among the industry best practices for our channel."
Rich Hume, general manager, global business partner and midmarket organization, IBM
“Thanks to Avnet’s HealthPath® University and Internship and the skills that we have been able to further develop with their
collaboration, we have the in-depth healthcare industry knowledge that stands out to hospitals and medical facilities
and that quickly establishes us as trusted advisors.”
Jeff Teeter, vice president, vertical solutions, Logicalis
Analytics & market opportunity
identification
Strategic engagement & go-to-market strategy
Training and enablement
Demand creation
Service delivery
89
Accelerating Your Success™Accelerating Your Success™
cloud /klaʊd/ –noun 1. a set of services and
technologies that enables the delivery of computing services over the internet in real time.
2. the delivery of IT resources via a shared network in the form of applications (SaaS), infrastructure (IaaS) and platform (PaaS).
Assessing “The Cloud” Opportunity
“The Cloud” is growing quickly and could become a much more significant portion of overall IT spend by 2014, with private cloud services outpacing public.
Traditional IT Products -- 5% CAGRPublic IT Cloud Services -- 27% CAGRPrivate IT Cloud Services (prelim) – 36% CAGR
Source: IDC 2010 (note: Private IT Cloud Services are IDC's preliminary estimates)90
Accelerating Your Success™Accelerating Your Success™
Private Cloud – Avnet is Here, Now
Public, Private or Hybrid? Legacy infrastructure predicates a slow,
deliberate migration to public cloud offerings Private cloud solutions still dominate the
landscape in Avnet’s served market Avnet is CloudReady™
Portfolio of cloud offerings from the world’s leading technology suppliers
SolutionsPath® practices in all key cloud technologies
Hosted/managed service infrastructure Partner enablement services, including end-
user assessment services PayNow™ financial program
Avnet occupies a unique and differentiated place in the value chain for customers evaluation and migrating to cloud solutions.
91
Accelerating Your Success™Accelerating Your Success™
Public Cloud – Avnet is CloudReady™
Avnet is poised, in all regions of the world, to support our suppliers’, partners’, and customers’ respective pace of public cloud adoption.
Infrastructure still reigns Even in most emerging markets, IT/voice
infrastructure is still core Cloud adoption is likely in back-office
functions, not mission-critical ones “Voice of the Customer” still rules
Councils, conferences, polls, surveys Avnet has its finger on the pulse of the
speed with which customers will move The future is still unclear
The channel will always find its role and a way to add value
We consider team, time and tempo in all endeavors
Predicting the impact of the internet 10 years ago is
analogous to predicting the impact of the cloud today. Avnet is positioned to succeed, along
with our trading partners.
92
Global Expansion
Accelerating Your Success™Accelerating Your Success™
Going Where the Growth Is
94
We continue to invest in markets that will provide the greatest growth opportunity, organically and through value-creating acquisitions.
2010 2011 2012 2013
$946B
$984B
$1,034B
$1,087B
IT Spend Forecast
North Amer-
ica44%
Asia/Pac18%
Western Eu-
rope17%
Latin Amer-
ica8%
Japan4%
Eastern Eu-
rope4%
Middle East/Africa
4%
New Growth Spend by Region
$141B
*Note: Data represents breakdown of net new IT Spend Growth between 2010 to 2013
Source: Gartner, IDC & iSuppli – Oct 2010
Accelerating Your Success™Accelerating Your Success™
Extending our Global Footprint
Americas$5.1B Revenue
17% YoY Growth
EMEA$2.5B Revenue
16% YoY Growth
Asia$1.1B Revenue
79% YoY Growth
Recent Acquisitions
Avnet Revenue & Growth based on Rolling 4 Qtrs Q1FY11
Bell Micro (NA, LAC, EMEA) ~~~ Tallard (LAC) ~~~Datamation (Indonesia) ~~~ itX (Australia) ~~~ Sunshine (Vietnam)
Recent Acquisitions
Avnet TS-Served Countries
95
Accelerating Your Success™Accelerating Your Success™
NetApp Services SyncSort CommVault Quantum Apple (Latin America) IBM (Latin America) Riverbed Oracle (Brazil, Mexico)
Oracle (Australia) Dell (Vietnam) HP (Vietnam and Indonesia) NetApp (India) VMware (Indonesia) IBM (Indonesia, Vietnam)
Oracle (UK, Belgium, Luxembourg, Switzerland, Ireland, Hungary, Slovakia, Czech Republic, 16 countries in MENA)
HP (Hungary, UK) Juniper (Poland, Czech Republic) NetApp (Ireland, Netherlands, Germany,
UK) EMC/Data Domain (Mostly Eastern
Europe) VMware (Eastern Europe) Avaya (Belgium, Ireland, Netherlands,
Poland) ShoreTel (pan European) Symantec (Ireland, UK, Netherlands,
Czech Republic, Slovakia) Brocade IP (Eastern Europe) HDS (France, Germany, Austria, Hungary) Microsoft (UK) IBM (Belgium, Netherlands, Turkey)
Asia
Americas
EMEA
We expand our line card to support our solutions distribution vision and provide our suppliers global market reach and operational scale.
TS Global Line Card
Expanding Partnerships* for Global Reach
*Significant 2010 line card additions by region96
Portfolio Management
Accelerating Your Success™Accelerating Your Success™
TS remains committed to value-based, portfolio management to drive our committed financial returns in each region.
▪ Continue to drive profitable growth
▪ Expand in LAC, with a focus on improving profitability
▪ Maintain strong regional ROWC performance
Americas▪ Continue driving toward
targeted financial returns
▪ Leverage and scale regional expertise for pan-European support
▪ Expand appropriately in high-growth geographies
▪ Strengthen the line card to support our solutions and global growth strategies
EMEA▪ Accelerate drop-through
with operational focus
▪ Continue to balance expansion opportunity with profitability
▪ Strengthen the line card to support our solutions and global growth strategies
Asia
Managing Regional Priorities
98
Accelerating Your Success™Accelerating Your Success™
Accelerating Your Success™
Avnet TS had a strong recovery in FY10 and is delivering financial returns within our targeted range.
Avnet is the leading IT solutions distributor in the world in scale and scope with revenues over $8B and presence in more than 70 countries.
Avnet intends to continue to outgrow the markets we serve by investing in high-growth technologies, vertical markets and geographies.
Avnet leads the industry with our SolutionsPath® methodology, redefining the role of distribution.
Avnet maintains world-class supplier and reseller partnerships that provide data center hardware, software and services solutions.
Avnet will continue to exercise value-based management across the TS portfolio to achieve our stated financial targets in all regions.
99
Q&A
Accelerating Your Success™101 Accelerating Your Success™
Electronics Marketing
Harley FeldbergPresident, Electronics Marketing
Accelerating Your Success™Accelerating Your Success™
Agenda
• Our Mission
• Market Opportunity
• Who We Are
• Growth Opportunities
102
Accelerating Your Success™Accelerating Your Success™
Our Mission
Avnet Electronics Marketing will be the most successful electronic components distributor in
the world by providing our customers & suppliers best-in-class design chain and supply chain
solutions.
103
Market Opportunity
Accelerating Your Success™Accelerating Your Success™
2011 Sizable Revenue and GP Opportunity
$204 B
~ DTAM
$14 B
$9 B
$49 B
~ Channel GP$
$900 M
$6 B
$4 B
$73 B
$14 B
$72 B $ 10.9 B
Source: Avnet EMTAM Sources: Electronics Outlook, Bishop, Fleck, Gartner, iSupply, Paumanok, SIA (Rev 11/5/10) DTAM/GP: Avnet EM estimates for independent franchise distribution
TAM
Medium
Large
Small
$291 B
Our global footprint positions us for strong share gain
105
Accelerating Your Success™Accelerating Your Success™
Design To Consumption – All Regions Matter
Semiconductor Design TAM by Region2009
Semiconductor Consumption by Region2009
Source: Avnet EM BIO, Gartner, iSuppli
The winning formula for components distribution requires strength in both
106
Accelerating Your Success™Accelerating Your Success™
Projected Components Growth through 2013
Semiconductors w/o MPUs, DRAMs or Flash Interconnect, Passive and Electromechanical
107
Accelerating Your Success™Accelerating Your Success™
Growth Forecasted in All Regions
Sources: Bishop, Electronics Outlook, Fleck, Gartner, iSuppli, Paumanok, SIA (Rev: 11/2010)
Equates to approximately $27B of DTAM
Growth
2010 – 2013 Component TAM Growth Forecast
108
Who We Are
Accelerating Your Success™Accelerating Your Success™
Experienced EM Global Leadership Team
Stephen WongAsia
Harley FeldbergPresident, EM Global
Ravi KichlooSemiconductor
Business Dev.
Tim BarberDesign ChainBusiness Dev.
Bill CrowellFinance
Sean FanningMarketing &
Communications
Ed SmithAmericas
Beth ElyAvnet Express
Dayna BadhornStrategic Planning
Gerry FaySupply Chain
Global & Strategic Accounts
Patrick ZammitEMEA
Tom McCartneyJapan / IP&E
Average 20+ years of industry experience
110
Accelerating Your Success™Accelerating Your Success™
Unique Market Position
Americas 40%
EMEA
38%
Asia
22%
EM FY05
Americas 31%
EMEA
35%
Asia
36%
EM FY10
Americas 67%
EMEA 28%
Asia 5%
EM FY01
With all regions achieving financial metrics
A balanced approach…
$8.3B $6.3B $14.4B
111
Accelerating Your Success™Accelerating Your Success™
Specialized Customer Support
Optimizing our value prop for our customers and suppliers
Avnet Express
Avne
t Exp
ress
Tier 1
AVNET SERVICE AMERICAS EMEA ASIA Japan
Avnet UnitedAvnet Velocity
Core Distribution
Supply Chain Solutions& Logistics
Design Chain & Supply Chain Solutions
Avnet EMAvnet MemecAvnet Embedded
EBVSilicaAvnet AbacusAvnet MemecAvnet Embedded
Avnet EMAvnet Memec
Avnet EM
Avnet Unidux Tier 2
Tier 3
Tier 4
112
Accelerating Your Success™Accelerating Your Success™
Focused on Profitable Growth
Our strong fundamentals maximize profitable growth…- Leadership- Scale & Scope- Growth Strategies
113
Growth Strategies
Accelerating Your Success™Accelerating Your Success™
The Winning Formula
Global Strategies
Design Chain SolutionsSupply Chain Solutions
AsiaJapan
E-CommerceIP&E
Embedded
Execute these strategies using:Our strengths as an industry leader
Our global scale and scopeOur ability to invest
115
Accelerating Your Success™Accelerating Your Success™
Avnet Electronics Marketing: Global Strategies
Design Chain, Migration to Solutions
Global Strategic Imperative • We will offer the most compelling Demand Creation value proposition for both customers and suppliers –EM Design Chain Opportunity:
–Design Chain: approximately 35% of our business
–Over 800 Engineers Worldwide–Greater than 45K Design Wins
Annually
Tim Barber
Why It Matters…• Design TAM is dispersed Worldwide• Suppliers are narrowing their focus both with customers and technology offering
• Customers want solutions, not just parts
• Affords us higher margins• Customer entanglement
116
Accelerating Your Success™Accelerating Your Success™
Avnet Electronics Marketing: Global Strategies
Supply Chain Solutions, Complex and GlobalGerry Fay
Global Strategic Imperative • We will continue to develop leading-
edge supply chain strategies to meet more complex customer demands– Avnet United: Global Business Mgmt – Business Migration: Linking inter-
regional design and fulfillment– Avnet Velocity: Tier I Fulfillment-only
Services
– Complex Supply Chain Solutions influences approximately 15% of our business
Why It Matters…• Innovative Solutions Developed to
Leverage the Core Business• Extends ROI of Demand Creation
Investments in the West• Leverages our Scale and Scope• Customer Entanglement
117
Accelerating Your Success™Accelerating Your Success™
Avnet Electronics Marketing: Global Strategies
Growing in Asia, Profitably
Global Strategic Imperative • Drive a leading distribution model in
Asia that effectively balances a focus on EP generation with an aggressive investment in regional growth–Develop effective connections with
other regions to create a globally differentiated value for EM
–Invest in, and develop, infrastructure that gives us scale and productivity
Stephen Wong
Why It Matters…• Continue organic investments in growth
segments• Broad Coverage• Achieving financial metrics• Strong leadership with acquisition and
integration experience• Significant M&A opportunities• Peer Group ~ $26B DTAM
118
Accelerating Your Success™Accelerating Your Success™
Avnet Electronics Marketing: Global Strategies
Japan, Significant Market Opportunity
Global Strategic Imperative • We will continue to develop our
business in Japan financially and operationally–Pursue additional acquisitions or
alliances to create scope and scale
Tom McCartney
Why It Matters…• Japan Design influences 20% of
global spend• Large fragmented market,
Independent DTAM is approximately $12B
• Significant M&A opportunities• Customer Supply Chain Complexity
Increasing• Enables further supplier
collaboration on global engagements
Top 32 Distributors
119
Accelerating Your Success™Accelerating Your Success™
Avnet Electronics Marketing: Global Strategies
e-Commerce, Broadening Reach and Services
Global Strategic Imperative
• Expand our e-commerce offering to enable “speed and convenience” procurement of high-profit, low-volume orders
–Common global e-commerce engine (IT)–Online engineering for NPI–Regional customer interface models
– Local Language– Local Currency– Local Inventory
Beth Ely
Why It Matters…• Margin Enhancement• Customer Expansion• On-line Engineering Support• Expanded Service Offering for Speed and
Convenience
$14 Billionsmall customer DTAM
opportunity
120
Accelerating Your Success™Accelerating Your Success™
Avnet Electronics Marketing: Global Strategies
IP&E Expansion, Selling Across the Board
Global Strategic Imperative • We will expand our “share of wallet”
by further leveraging and extending our industry leading IP&E Portfolio– Specialized Resources in all
regions– Critical element of Solution Selling
Strategy
Tom McCartney
Why It Matters…• Margin Enhancement• Fragmented Distribution Channel
provides Acquisition Opportunity• Supplier Channel Consolidation• Estimated $12B DTAM
121
Accelerating Your Success™Accelerating Your Success™
EM Global Strategy:
Embedded, The Design Evolution
Global Strategic Imperative • Define and launch Avnet EM’s
Embedded strategy regionally and globally– Implement a globally aligned
strategy, incubated regionally, to extend EM’s value proposition in Embedded products
– Ensure the successful integration of Bell business
Why It Matters…• Solution Selling Strategy• New Integration Service Models
• Displays• Embedded Boards• HDD
Sources: Gartner, IDC, iSuppli, (*Without TVs and Monitors), Avnet BIO Estimates
Estimated $50BTAM
122
Accelerating Your Success™Accelerating Your Success™
Development Kits
Supplier Created
Avnet Created
3rd Party Partners
Operating Systems
Microsoft
Linux
Production Modules
Processing
Communications
Power
Wireless
Avnet’s Customer Touch Points…Expanding
• MPU /MCU• DSP• Programmable
Logic• ASIC• Connectivity
– Wired– Wireless
• Analog• Power• IP&E• Displays• Memory
• Embedded Boards– Extension of processor architecture
• Displays– Panels– Systems
• Integrated Systems– Supplier systems– Value added services
Chip Level System Level Embedded Solution Level
Customer Benefits…Time to Market
Development Costs
123
Accelerating Your Success™Accelerating Your Success™
Summary
• CY10, an exciting year, yielding outstanding results– All regions participated in the performance
• Technology continues to proliferate the globe• Experienced and committed leadership team• Global scale and scope matter more than ever• Ability to invest organically and through acquisition• Our strategic imperatives will accelerate profitable growth• Looking forward, growth should continue at a steady pace• Strong operating discipline regardless of market conditions
124
Q&A
Accelerating Your Success™126 Accelerating Your Success™
Summary and Wrap-Up
Roy ValleeChairman & CEO
Accelerating Your Success™Accelerating Your Success™
Recognized Industry Leadership
#142 on 2010 Fortune 500
Information Week recognizes Avnet among Top 250 Technology Innovators
Launched 4 new vertical practices in high growth markets
CIO Magazine Names Avnet CIO 100 Award Honoree
Certified Cisco Unified Computing
System
Relocated assembly warehouse to Nogales, Mexico
2010 Fortune’s Most Admired
EBV celebrates 40
years of success
Accelerating Your Success™Accelerating Your Success™
Avnet Portfolio: Performance & Potential
128Sources: Bishop, Electronics Outlook, Fleck, Gartner, IDC, iSuppli (Rev: 11/2010)
2% 3% 4% 5% 6% 7% 8% 9% 10% 11%
TS LAC
TS EMEA
TS Asia Pac
EM Americas
EM EMEA
TS N. AmericaEM Asia Pac
EM Japan
ROWC LRPT
Low
Retu
rn o
n W
orki
ng C
apit
al
H
igh
Note: Bubble size represents Q1FY11 sales annualized
Low 3 Year Market Growth CAGR 2010-2013 High
Accelerating Your Success™Accelerating Your Success™
Avnet Portfolio: Performance & Potential
129
TS LACTS EMEA
TS Asia Pac
EM Americas
EM EMEA
EM Asia Pac
TS N. America
EM Japan
ROWC LRPT
Low
Ret
urn
on W
orki
ng C
apit
al
H
igh
Note: Bubble size represents Q1FY11 sales annualized
Fragmented Avnet Estimated Market Share Consoli -dated
Accelerating Your Success™Accelerating Your Success™
Avnet’s Value-Based Management Journey
ROCE
Revenue
5%
10%
$5 $10 $15 $20 $25
FY07
FY06
FY08
FY04
FY05
WACC
Driving Growth
FY1016%
14%
FY09
Accelerate EP$ Growth
Post
Bubble
Rec
overy 12.5%
Shareholder Value
Great Recession
V-Shaped Recovery
Accelerating Your Success™Accelerating Your Success™131
• Leveraged post-tech bubble growth to new records– Doubled revenue to $18B with ROWC 2,199 basis points to 25.1%
• Performed well through the Great Recession– Trough to trough performance significantly improved
– Quarterly records for revenue, EPS & ROCE in 1st year of recovery
• $24B revenue run rate with expanded global footprint – More diversified and substantial growth opportunities
• ROCE is within target range at the enterprise level – Opportunity for expansion and/or higher growth
• Avnet is the global leader in technology distribution– Substantial opportunities to grow economic profits/shareholder value
Demonstrated Performance & Exciting PotentialDemonstrated Performance & Exciting PotentialDemonstrated Performance & Exciting Potential
Accelerating Your Success™Accelerating Your Success™
Demonstrated Performance and
Exciting Potential
Demonstrated Performance and
Exciting Potential
THANK YOUTHANK YOU