Avnet Analyst Day 2010
Performance & Potential
Avnet, Inc.
December 15, 2010
1
Accelerating Your Success™
Opening Remarks and Management
Introductions
Vince Keenan
Vice President, Investor Relations
2
Accelerating Your Success™
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
3
Conclude
Accelerating Your Success™
Safe Harbor Statement
•
•
•
4
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™
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Accelerating Your Success™
6
Accelerating Your Success™
Adaptability
Financial Conservatism
Culture
Profitable Growth
Leadership
7
Accelerating Your Success™
TECHNOLOGY DISTRIBUTION
• Gross Profit $ Volume
• ROCE
• Market Capitalization
8
Accelerating Your Success™
David Birk
Senior Vice President and General Counsel
Avnet, Inc.
30 Years of Service
MaryAnn Miller
Chief Human Resources Officer
Avnet, Inc.
4 Years of Service
9
9
Accelerating Your Success™
Steve Church
Chief Business Development and Process Officer
Avnet, Inc.
20 Years of Service
Steve Phillips
Chief Information Officer
Avnet, Inc.
5 Years of Service
Al Maag
Chief Communications Officer
Avnet, Inc.
13 Years of Service
Jim Smith
President
Avnet Logistics
10 Years of Service
Roy Vallee
Chairman & Chief Executive Officer
Avnet, Inc.
33 Years of Service
10
Ray Sadowski
Chief Financial Officer
Avnet, Inc.
32 Years
of Service
Accelerating
Your
Success™
Rick Hamada
President and Chief Operating Officer
Avnet, Inc.
27 Years of Service
Phil Gallagher
President,
Avnet Technology Solutions
28 Years of Service
Harley Feldberg
President,
Avnet Electronics Marketing
28 Years of Service
AVNET’S LONGEVITY
148 Years of Sr. Leadership
+
90 Years in Business
+
50 Years on NYSE
11
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Macro Environment
What a Difference a Year Two Years Make…
2009
2010
Actual
Dec 09 Forecast
Dec 10 Projection
EM SAM
-15%
9%
22%
TS SAM
-5%
4%
3%
AVT SAM
-7%
5%
7%
• 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
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Accelerating Your Success™
Sources: Bishop, Electronics Outlook, Fleck, Gartner, IDC, iSuppli (Rev: 11/2010)
Recession’s Impact on Semiconductors
First time there has been two consecutive years of decline
First year of recovery more dramatic
32%
V-shape recovery drove new industry record
Growth
20092010
350
300
($ Billions)
250
200
150
100
50
Growth
Decline
Source: SIA/WSTS (total semiconductors)
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Accelerating Your Success™
2010E
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
Semiconductor Y/Y Growth Rates
Global Semi less DRAM, MPU & Flash
50.0%
48.4%
42.6%
41.6%
40.0%
36.7%
35.1%
30.0%
29.2%
28.7%
31.7%
30.7%
25.3%
22.0%
19.4%
17.3%
20.0%
22.0%
10.0%
14.2%
11.8%
11.9%
12.9%
15.7%
12.1%
9.5%
8.7% 9.3%
6.1%
11.6%
9.1%
7.4%
5.4%
3.3%
0.3%
2.6%
0.0%
8.9%
1.8%
-0.4%
-4.9%
-10.0%
-20.0%
Two 100 year floods
in a decade
-24.1%
-30.0%
-12.8%
-15.0%
-18.8%
-29.2%
-31.8%
-42.3%
Jun-10
Sep-10
Mar-10
Dec-09
Sep-09
Jun-09
Mar-09
Dec-08
Sep-08
Jun-08
Mar-08
Dec-07
Jun-07
Sep-07
Mar-07
Dec-06
Jun-06
Sep-06
Mar-06
Dec-05
Jun-05
Sep-05
Mar-05
Dec-04
Jun-04
Sep-04
Mar-04
Dec-03
Jun-03
Sep-03
Mar-03
Dec-02
Jun-02
Sep-02
Recession
Mar-02
Dec-01
Jun-01
Sep-01
Mar-01
Dec-00
Recession
Jun-00
-50.0%
Sep-00
-39.2%
Mar-00
-40.0%
Source: WSTS
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Accelerating Your Success™
Semiconductor Y/Y Growth Rates
Excluding the recessions, the worst quarters in this
period were roughly flat year-over-year
50.0%
40.0%
35.1%
30.0%
28.7%
30.7%
25.3%
20.0%
22.0%
14.2%
12.9%
11.9%
11.8%
10.0%
11.6%
7.4%
8.9%
9.5%
9.1%
6.1%
5.4%
3.3%
1.8%
0.3%
0.0%
-0.4%
S
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Accelerating Your Success™
Dec-07
Sep-07
Jun-07
Mar-07
Dec-06
Sep-06
Jun-06
Mar-06
Dec-05
Sep-05
Jun-05
Mar-05
Dec-04
Sep-04
Jun-04
Mar-04
Dec-03
Sep-03
Jun-03
Mar-03
-10.0%
Semiconductor Y/Y Growth Rates
Resulting in 5 years of uninterrupted growth
50.0%
40.0%
35.1%
30.0%
25.3%
20.0%
30.7%
28.7%
27%
22.0%
18%
14.2%
12.9%
11.9%
11.8%
10.0%
11.6%
7.4%
8.9%
8%
3.3%
6%
0.3%
0.0%
2003
2004
9.5%
9.1%
6.1%
5.4%
1.8%
4% -0.4%
2005
2006
2007
S
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Dec-07
Sep-07
Jun-07
Mar-07
Dec-06
Sep-06
Jun-06
Mar-06
Dec-05
Sep-05
Jun-05
Mar-05
Dec-04
Sep-04
Jun-04
Mar-04
Dec-03
Sep-03
Jun-03
Mar-03
-10.0%
Projected Semiconductor Growth
Current forecasts project at least four years of growth
Total 2011-2013 $ growth is greater than pre-recession
2011 - 2013
+47 Billion
350
2005 - 2007
+43 Billion
300
($ Billions)
250
200
150
100
50
Growth
19
Decline
Accelerating Your Success™
Source: SIA/WSTS (total semiconductors)
2013E
2012E
2011E
2010E
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
Projected Semiconductor Growth Rates
90s growth driven by business spend
Next decade, two 100 year floods impacted semi CAGR
However, recession only interrupted semi market growth
350
300
($ Billions)
250
200
10-year CAGR +3.8%
150
100
10-year CAGR +14.9%
50
Growth
20
Decline
Accelerating Your Success™
Source: SIA/WSTS (total semiconductors)
2013E
2012E
2011E
2010E
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
Recession’s Impact on IT Spend
1 year decline versus 2 years
Less volatile than the semiconductor industry
Projections reflect resumption of consistent growth
Total $ growth is greater post-recession
2011 - 2013
+273 Billion
2,000
2006 - 2008
+257 Billion
1,800
1,600
1,400
($ Billions)
1,200
1,000
800
600
400
200
Growth
21
Decline
Accelerating Your Success™ Source: IDC (All Hardware, Software and Services) - 10/2010
2013E
2012E
2011E
2010E
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
0
GDP Growth Versus Total IT Spend
Hardware growth rate higher post recession
Avnet Technology Solutions is ~70% Hardware
IT Spend grew 6.5%
2.1x GDP
IT Spend projected to grow 5.7%
1.6x GDP
2005-2008 CAGR
2010-2013 CAGR
2.5x
8%
8%
1.9x
6%
5.9%
2.0x
1.9x
8.0%
6%
6.4%
6.6%
1.2x
4%
4%
6.2%
4.3%
3.6%
3.2%
2%
1.7x
2%
0%
0%
GDP
Hardware
Services
Software
3 yrs leading into the recession
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Accelerating Your Success™
GDP
Hardware
Services
Software
3 yrs leading out of the recession
Source - IDC - Oct 2010; GDP - IMF Oct 2010
Served Available
Market
EM SAM – Continued Growth Following Record
Total Growth
2011-2013 +$58B
350
$313
300
US$ Billion
250
$274
$331
$291
$225
200
150
100
50
0
2009
2010
Sources: Bishop, Electronics Outlook, Fleck, Gartner, iSuppli (Rev: 11/2010)
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Accelerating Your Success™
2011
2012
2013
TS SAM – Steady Growth Toward One Trillion
Total Growth
2011-2013 +$141B
1,200
$914
$946
$984
$1,034
$1,087
US$Billions
900
600
300
0
2009
Source: IDC, Gartner, iSuppli (rev. 11/2010)
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Accelerating Your Success™
2010
2011
2012
2013
Large Market That is Leading the Recovery
Avnet Total Served Available Market
1,500
1,250
$1,149B
-7%
$1,205B
7%
$1,278B
5%
$1,366B
6%
$1,446B
5%
($ billions)
1,000
5%
5%
3%
4%
-15%
22%
6%
8%
6%
2009
2010
2011
2012
2013
750
-5%
500
250
0
Total Component TAM w/o MPUs, DRAMs, or Flash
Note: Percentages represent sequential growth rates.
26
Accelerating Your Success™
Total Computer TAM w/ Professional Services
Sources: Bishop, Electronics Outlook, Fleck, Gartner, IDC, iSuppli (Rev: 11/2010)
Avnet’s Global Growth Opportunity
Distributor
Distributor
TAM~$319B
~$319B
TAM
Total TAM
$1,275 B
Direct TAM
Avnet
~$956B
~$24.2 Billion*
~$956B
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Accelerating Your Success™
*Avnet’s FY11 revenue is an estimate based upon Q1FY11 annualized excluding Prosys
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
28
Accelerating Your Success™
Business Segment Overview
Electronics Marketing (EM)
•
–
Markets and distributes complex computer
products to VARs, systems builders and
OEMs
–
Products include semiconductors,
interconnect, passive, electromechanical
and subsystems
Value-added services spanning the design
and supply chains globally including
substantial product enhancement
FY 2010 Revenue
–
FY 2010 EBIT1
43%
66%
EM
10/2/10 Working Capital2
28%
34%
57%
Products include enterprise servers,
storage systems, embedded subsystems,
networking software and services
Value-added services including marketing,
tech support, configuration, integration,
training and financial
TS
TS
TS
1
•
Markets and distributes electronic
components and embedded systems to
OEMs, ODMs and EMS providers
–
Technology Solutions (TS)
EM
72%
EM
Excludes corporate expenses, restructuring, integration and other charges 2 Working capital = Trade Receivables + Inventory - Payables
29
Accelerating Your Success™
Emerged from Recession a Much Stronger Company
$25.0
Revenue:
Cash from Ops:
-$1.8B
+$1.1B
$24.2
+$3B
-$30M
Revenue US$Billions
$22.5
$20.0
$19.2
$18.0
$17.5
Acquired 3
companies that
add ~$4B of
revenue and
achieve 12.5%
ROCE with no
add’l debt or
equity capital
$16.2
$15.0
$12.5
$10.0
FY 2008
* Excludes ProSys
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Accelerating Your Success™
FY 2009
FY 2010
Q1FY11
Q1FY11
Annualized*
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
31
Accelerating Your Success™
Q&A
The Path to Premier
Rick Hamada
President and COO
33
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
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Accelerating Your Success™
Vital Link in Global Technology Supply Chain
Semiconductors
IT Original
Equipment
Manufacturers
Interconnect
Passive &
Electromechanical
Devices
Subsystems
EMS / ODM
EM
Non-IT Original
Equipment
Manufacturers
Resellers, ISVs
and
System
Builders
TS
Software &
Services
Vendors
Avnet effectively manages the complexity of the
technology supply chain in a cost-efficient manner,
delivering value to suppliers and customers.
35
Accelerating Your Success™
End Users
Strategic Framework
Premier Technology, Marketing,
Distribution and Services Company, Globally
Deliver Industry-Leading Economic Profit
Profitable
Growth
Operational
Excellence
People
Development
Be the preferred partner
to our customers
and suppliers
Consistently strive for
flawless execution and
process innovation
Attract, develop
and engage the
best employees
Performance and Values Based Culture of Excellence
1. Integrity
36
2. Customer Service
Accelerating Your Success™
3. Accountability
4. Teamwork
5. Innovation
Enterprise Performance: Balanced Scorecard
Metric Type
Global Objectives
Avnet KPMs
Economic Profit $ Growth
Shareholder
Deliver industry-leading
economic profit.
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
37
Accelerating Your Success™
Attract, develop and engage the
best employees.
On Time Performance Appraisals
with Development Plans
Employee Engagement Index
Enterprise Initiatives – Enhancing Avnet’s Culture
Value-Based Management / Profitable Growth
Operational Excellence
Employee Engagement
Customer Engagement
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Accelerating Your Success™
Business Portfolio Composition
Avnet
Electronics
Marketing
Avnet
Technology
Solutions
$11.0B
$8.2B
FY ‘10 Revenue
39
FY ‘10 Revenue
Americas
$3.4B
Americas
$4.9B
EMEA
$3.7B
EMEA
$2.3B
Asia / Japan
$3.9B
Asia
$1.0B
Accelerating Your Success™
Portfolio Performance
30%
27.0%
70%
25.7%
25.1%
60%
25%
64.0%
50%
21.3%
49.9%
50.5%
17.8%
40%
30%
20%
20%
15.8%
29.6%
26.4%
24.2%
15%
10%
0%
10%
FY05
40
FY06
Accelerating Your Success™
FY07
FY08
FY09
FY10
Avnet ROWC
% of Avnet portfolio (by revenue) at
or above long-term ROWC goal
80%
Avnet’s Value-Based Management Journey
ROCE
Driving Value
16%
FY10
14%
12.5%
12.5%
WACC
FY08
FY07
10%
FY06
FY05
FY09
FY04
5%
$5
41
$10
$15
Driving Growth
Accelerating Your Success™
$20
Revenue
($B)
Measuring Operational Excellence
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%
Operating Expense as a % GP$
100%
Q4 FY10
66.4%
80%
78.0%
75.7%
72.8%
60%
66.5%
67.6%
FY07
FY08
71.0%
40%
20%
FY05
42
FY06
Accelerating Your Success™
FY09
FY10
The Power and Impact of Engagement
Thoughtful organizational development strategies lead
to a more productive and engaged workforce, a more
loyal customer base, and higher shareholder returns.
Employee
Retention
People
Practices
Employee
Engagement
and
Organizational
Climate
External
Service
Value
Accelerating Your Success™
Customer
Satisfaction
Customer
Loyalty
Employee
Productivity
Employee Engagement
43
Profitability
Revenue
Customer Engagement
“Putting the Service-Profit Chain to Work,” Heskett, et al.,
- Harvard Business Review
$3.50
73%
Avnet EPS
$3.00
68%
65%
$1.39
$1.04
64%
$0.50
62%
$0.00
Total
Employees
44
72%
US companies reported70%
employee
engagement 68%
$1.92
on average declined ~9%
2008 vs. 2009*
66%
$1.87
$1.00
$2.77
70%
$2.00
76%
74%
$3.18
$2.76
$2.50
$1.50
75%
75%
60%
FY04
FY05
FY06
FY07
FY08
FY09
FY10
9,900
9,800
10,900
11,700
12,800
12,900
14,200
*Towers Watson and WorldatWork 2009/2010 U.S. Strategic Rewards survey
Accelerating
Success™
(1)Your
Excluding
restructuring, integration and other items.
Avnet Employee Engagement
Employee Engagement / Enterprise Performance
Avnet’s Customer Engagement Evolution
Satisfaction
Loyalty
Engagement
(early 2000’s)
(2006)
(2010)
45
Accelerating Your Success™
Accessible
Truly Loyal
High Risk
Trapped
ATTITUDE
• 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
BEHAVIOR
Walker Loyalty Matrix
Avnet Global Logistics Scale & Scope
Total Lines Shipped (in millions)
9.5
9.1
9.0
8.5
•
•
•
•
•
8.6
~ 2,500 employees
Global footprint
~ 3 million sq. ft.
Manage ~ 500,000
SKUs globally
99+% same day ship
~ 70% include value-add
–
8.0
8.0
–
–
7.9
7.7
7.5
•
7.0
7.1
6.5
FY05
46
FY06
FY07
Accelerating Your Success™
FY08
FY09
FY10
Program 200+ million
devices
Integrate 760,000+ systems
19.4+ million
cable assemblies
Quality performance
currently exceeds
5 σ standards*
* Five Sigma = 233 defects per
million opportunities
Avnet Global IT Scale & Scope
~ 700 IT professionals
~ 3,600 virtual servers
405 software applications
776 terabytes of storage
~ 29,270 visitors to website daily
68 integrations executed since 1991
95% spam filtered from 6 million e-mails daily
47
Accelerating Your Success™
As of Q1 FY’11
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
48
Accelerating Your Success™
Thank You
49
Accelerating Your Success™
Financial Report
Ray Sadowski
Chief Financial Officer
50
Accelerating Your Success™
Agenda
• Historical Results
– Performance through the recession
• Strong Financial Position
• Long-term Business Model
• Acquisition Integration Update
51
Accelerating Your Success™
Historical Results
Avnet’s Journey – The Last Decade
Two 100 Year Floods in one decade; yet steady progress
Avnet, Inc. Revenue
($ in billions)
Less
severe
downturn
$25
$23
Record
revenue
in 2010
$22.8
$21
6 years of growth with
revenue peaking in CY ‘08
$19
$17
$17.0
Tech Bubble
downturn
$12.7
$12.6
$10.8
$10.6
$11
$16.7
$14.8
$15
$13
$17.9
$8.9
$9
$9.5
$7
$5
CY00
53
CY01
CY02
CY03
CY04
CY05
CY06
CY07
CY08
Accelerating Your Success™
* CY10 is an estimate based upon three completed quarters and guidance for Q4CY10
CY09
CY10*
Avnet, Inc. – Gross Profit $ and %
Margins impacted by geographic and business mix
($ in billions)
$3.00
15.0%
16%
14.6%
$2.72
13.8%
13.1%
$2.50
13.5%
12.9%
13.0%
13.0%
12.9%
$2.31
$2.21
$2.00
11.8%
11.9%
12%
$1.96
$1.92
$1.90
14%
10%
$1.63
$1.54
$1.45
$1.50
$1.23
8%
$1.24
6%
$1.00
4%
$0.50
2%
$0.00
0%
CY00
CY01
CY02
CY03
CY04
GP $
54
CY05
CY06
CY07
CY08
CY09
GP % of Sales
Accelerating Your Success™
* CY10 is an estimate based upon three completed quarters and guidance for Q4CY10
CY10*
Avnet, Inc. – Operating Income $ and %
Significant operating leverage during periods of growth:
Demonstrated during CY 03-07 growth period
Starting a new trend in CY 10
($ in millions)
$900
$800
$700
5.1%
$865
$750
5%
$694
$650
$599
3.8%
4.4%
$600
6%
4%
4.1%
3.9%
3.0%
$500
2.9%
$400
3%
$377
2.3%
1.8%
$300
$238
$443
2.7%
$317
2%
1.1%
$200
$166
1%
$101
$100
$0
0%
CY00
CY01
CY02
CY03
CY04
CY05
Op Income $
55
Accelerating Your Success™
CY06
CY07
CY08
Op Income %
Note: Excludes restructuring, integration and other charges
* CY10 is an estimate based upon three completed quarters and guidance for Q4CY10
CY09
CY10*
Avnet, Inc. – EPS
Y/Y more than doubled
to record level
$4.00
Dramatic trough to
trough performance
Steep decline in profits
tied to significant
revenue loss
$3.50
$3.64
$3.12
$2.90
$3.00
$2.50
$2.49
$2.32
$2.00
$1.72
$1.40
$1.50
$1.50
$1.00
$0.48
$0.43
$0.50
$0.06
$0.00
CY00
56
CY01
CY02
Accelerating Your Success™
CY03
CY04
CY05
CY06
CY07
CY08
Excludes restructuring, integration and other charges
* CY10 is an estimate based upon three completed quarters and guidance for Q4CY10
CY09
CY10*
Avnet, Inc. - Working Capital Velocity & Inventory Turns
30%
30.0%
WC % of Sales
24.1%
7.2
7.6
15%
10%
5.3
3.3
8.2
7.5
8
8.1
18.6% 19.0%
6.9
5.9
5.9
6.0
5.9
6
17.0% 17.0% 16.8% 17.1%
4.3
4.3
7.9
6.9
20%
5.2
10
9.1
25%
23.2%
9.7
5.4
5.3
14.6%
13.4%
4.2
2
5%
0%
0
CY00
CY01
CY02
CY03
Average WC % of Sales
57
4
CY04
CY05
CY06
WC Velocity
CY07
CY08
CY09 CY10*
Inventory Turns
Accelerating Your Success™
* CY10 is an estimate based upon three completed quarters and guidance for Q4CY10
WC Velocity & Inventory Turns
Significantly
higher velocity due to VBM and geographic and business
mix
35%
12
VBM
Improved ROWC
ROWC moves to
record level
following recession
ROWC reached
higher peak
30%
28.4%
VBM launched
early 2001
ROWC improved as
VBM combined with
organic growth + M&A
25%
26.4%
23.9%
22.8%
22.1%
20%
ROWC declined
due to the dramatic
cycle downturn
18.2%
17.5%
15.5%
15%
9.4%
10%
7.5%
4.7%
5%
0%
CY00
58
CY01
CY02
Accelerating Your Success™
CY03
CY04
CY05
CY06
CY07
CY08
Note: Excludes restructuring, integration and other charges
* CY10 is an estimate based upon three completed quarters and guidance for Q4CY10
CY09
CY10*
VBM
Improved ROCE
New ROCE target
established in 2009
14% - 16%
18%
ROCE improved as
VBM combined with
organic growth + M&A
16%
15.6%
14%
12%
11.9%
VBM launched
early 2001
10.3%
10.0%
10.0%
CY08
CY09
10%
8.5%
8%
ROCE declined due
to the dramatic
cycle downturn
7.5%
7.8%
CY04
CY05
6%
4.0%
4%
2.8%
1.8%
2%
0%
CY00
CY01
CY02
CY03
Previous ROCE target
59
Accelerating Your Success™
CY06
CY07
New ROCE target range
Note: Excludes restructuring, integration and other charges
* CY10 is an estimate based upon three completed quarters and guidance for Q4CY10
CY10*
Strong Financial
Position
VBM
Cash Flow from Operations
($ in millions)
$462m
$-19m
Annual Totals
$725m
$454m
$1,118m
$-30m
$1,200
$1,000
$800
$126
$600
$809
$166
$206
$400
$200
$0
$142
$121
$200
$173
$393
$499
$289
$204
$168
$20
$410
-$211
-$200
-$423
-$582
-$400
-$600
FY05
FY06
Net Income
61
Accelerating Your Success™
FY07
FY08
Non Cash Items
FY09
FY10
Working Capital
VBM
Cash Flow from Operations
$2.9 Billion of cumulative cash from net income +
non-cash Items over the past 6 years
($ in millions)
$1,200
$1,000
$800
$126
$600
$809
$166
$206
$400
$200
$0
$142
$121
$200
$173
$393
$499
$289
$204
$168
$20
$410
-$211
-$200
-$423
-$582
-$400
-$600
FY05
FY06
Net Income
62
Accelerating Your Success™
FY07
FY08
Non Cash Items
FY09
FY10
Working Capital
Strengthened Balance Sheet
($ in millions)
$1,400
$1,244
$1,235
$1,209
$1,280
$1,225
$200
$1,200
$970
$1,000
$800
(6.5%)
$600
$400
$150
(7.1%)
(5.8%)
(5.6%)
$96.5
$77.2
$85.1
$72.3
(5.0%)
(5.4%)
$66.5
$61.7
$100
$50
$200
$0
$0
FY05
FY06
FY07
Total Debt
FY08
FY09
Interest Expense
FY10
(Effective interest rate noted above line)
Key Credit Statistics
Debt to EBITDA
EBITDA Coverage
Debt to Capital
63
2005
3.2
4.5
37.2%
Accelerating Your Success™
2006
2.1
6.1
30.4%
2007
1.6
9.9
26.2%
2008
1.5
11.5
22.9%
2009
1.7
8.6
26.0%
2010
1.7
12.1
29.8%
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
64
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
65
Accelerating Your Success™
Liquidity Framework
Low
•
•
•
•
•
•
66
Normal Float
$200M
Working Capital Expansion $200M
Debt Due Within 3 Years
-Committed M&A
$100M
Potential M&A
$200M
Total
$700M
Accelerating Your Success™
High
$300M
$500M
-$100M
$500M
$1.4B
Long-Term Business
Model
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
68
Accelerating Your Success™
Long-Term Business Model
No change from previous model
FY09 Actual FY10 Actual 3 Year Goal
ROCE
Avnet
ROWC
Avnet
Working Capital Velocity
Avnet
Operating Income Margin
Electronics Marketing
Technology Solutions
Avnet
8.7%
14.7%
14 - 16%*
17.8%
27.0%
30.0%
5.9
7.8
6.7 - 7.5
3.9%
2.9%
3.0%
4.5%
3.1%
3.5%
5.0 - 5.5%
3.4 - 3.9%
4.0 - 4.5%
*Note: ROCE goal of 12.5% = ~16.0% after impairment of goodwill; items above
do not include restructuring, integration or other charges.
69
Accelerating Your Success™
Operating Leverage
25%
Operating Income Growth
Value Creating M&A
20%
65% Drop Through
60% Drop Through
55% Drop Through
15%
10%
5%
5%
6%
7%
8%
Gross Profit Growth
70
Accelerating Your Success™
9%
10%
Revenue Seasonality
Sequential Revenue Growth
Sept
+1% to -3%
-1% to -5%
0% to -4%
EM
TS
Avnet
Dec
0% to -3%
+22% to +28%
+8% to +12%
Mar
+4% to +7%
-16% to -20%
-4% to -7%
Jun
0% to +4%
+3% to +7%
+1% to +5%
Percent of Annual Revenue
30%
Numbers provided are estimates for a
typical quarter and can vary based
upon several factors including but not
limited to:
28%
26%
–
–
–
–
24%
22%
20%
Sept
71
Dec
EM
TS
Accelerating Your Success™
Mar
AVT
Jun
Economic/Market conditions
M&A activity
End of fiscal calendar
Foreign currency exchange rates
Acquisition
Integration Update
Bell Integration Update
• 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
% Complete
Cumulative annualized synergies @ end of quarter
Incremental annualized synergies @ end of quarter
Synergies impacting current quarter
Year to date synergies realized
Q1
51%
$30.4
$30.4
($ in millions)
Q2
Q3
72%
86%
$43.1
$51.6
$12.7
$8.5
Q4
100%
$60.0
$8.4
Q1
$6.3
$6.3
($ in millions)
Q2
Q3
$9.2
$11.8
$15.5
$27.3
Q4
$13.9
$41.2
Note: Full synergies goal of $60 million annualized ($15 million per quarter) is expected to be achieved
as we enter fiscal year 2012.
73
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
74
Accelerating Your Success™
Q&A
Technology Solutions
Phil Gallagher
December 15, 2010
76
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™
Demonstrating Sustainable Growth
Our Mission
We will create a
sustainable competitive
advantage and
profitability for TS
globally by developing
technology solutions that
generate value for the IT
supply chain.
Accelerating Your Success™
78
Accelerating Your Success™
4-Year CAGR 13.2%
Regional Revenue Mix Shift
4-Year CAGR:
Asia = 41.4%
EMEA = 17.9%
Americas = 7.3%
79
Accelerating Your Success™
Q1FY11 includes Bell/Tallard
World-Class Supplier Partnerships
In Q1FY11, Avnet’s Top 10 suppliers* accounted for 73% of total revenue.
We celebrate our supplier
partnerships every day and are
particularly proud of those that
achieve significant milestones.
* Includes Bell Micro
80
Accelerating Your Success™
Outperforming the Market
We are outgrowing the market in all categories -- software and services at an
accelerated rate, with hardware growth led by storage, ISS and networking.
20%
19.0%
14.6%
15%
40%
Key Hardware Technologies vs.
Market
30%
12.0%
25%
23%
16%
20%
18%
21%
11%
10%
10%
2%
0%
6.2%
-10%
5.2%
5%
-20%
-16%
Proprietary
Servers
0.8%
ISS
Market Growth
0%
Services
Software
Market Growth
81
Hardware
TS Revenue Growth
Accelerating Your Success™
Source: Avnet Data based on rolling 4 qtrs YoY growth- 1FQ11; IDC, Gartner, iSuppli – Oct 2010
Networking
Storage
TS Revenue Growth
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™
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 cloudbased services
83
Accelerating Your Success™
Market Focus
Becoming a “Trusted Advisor”
 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
85
Accelerating Your Success™
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.
Serving a Very Large and Growing Market
TS Served Available Market
1,200
$914
$946
$984
$1,034
$1,087
US$Billions
900
600
300
0
2009
Accelerating Your Success™
2010
2011
2012
Source: Gartner, IDC & iSuppli – Nov 2010
2013
Govt & Edu (5)
Banking (4)
30%
Retail (3)
Utilities (1)
Healthcare (2)
Segmenting for Optimal Growth
Cloud (a)
a
25%
Vertical Growth
3 Yr CAGR 2010-2013
20%
Technology Growth
Mobility (b)
b
15%
Virtualization (c)
c
10%
Security (d)
d
e
5%
Collaboration (e)
2
1
f
3
g
5
4
Networking (f)
Storage (g)
TAM CAGR,
4.7%
0%
$0
$50
$100
$150
$200
$250
2010 IT Spend
Source: Gartner & IDC Oct 2010
87
Accelerating Your Success™
Extending the Value Chain with SolutionsPath®
Avnet interprets market needs, creates differentiated enablement programs and
aggregates products & services to help our partners become trusted advisors.
Industry, technology, application and customer expertise…
• StoragePath™
Customer Intimate
…with a repeatable, scalable enablement framework.
88
Accelerating Your Success™
GovPath™
EnergyPath™
RetailPath™
• SecurePath™
FinancialPath™
• MobilityPath™
HealthPath®
• VirtualPath®
CloudReady™
Avnet Services
• NetworkPath™
Line of Business Executives
and C-Suite Decision Makers
Market Focused
Increasing Supplier, Reseller and End-User
Value
Envision – Enable – Execute with our proven SolutionsPath® methodology
“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
Service delivery
Demand creation
Strategic engagement & go-to-market strategy
Training and enablement
Analytics & market
opportunity identification
“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
89
Accelerating Your Success™
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.
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).
90
Accelerating Your Success™
Traditional IT Products -- 5% CAGR
Public IT Cloud Services -- 27% CAGR
Private IT Cloud Services (prelim) – 36%
CAGR
Source: IDC 2010 (note: Private IT Cloud
Services are IDC's preliminary estimates)
Private Cloud – Avnet is Here, Now
Avnet occupies a unique and differentiated place in the value chain for
customers evaluation and migrating to cloud solutions.

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 enduser assessment services
 PayNow™ financial program
91
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
92
Accelerating Your Success™
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.
Global Expansion
Going Where the Growth Is
We continue to invest in markets that will provide the greatest growth
opportunity, organically and through value-creating acquisitions.
New Growth Spend by Region
Middle
East/Africa
4%
Eastern
Europe
4%
IT Spend Forecast
$1,087B
$1,034B
$141B
$984B
2011
2012
Source: Gartner, IDC & iSuppli – Oct 2010
94
Japan
4%
Latin
America
8%
$946B
2010
North
America
44%
Accelerating Your Success™
2013
Western
Europe
17%
Asia/Pac
19%
*Note: Data represents breakdown of net new IT Spend
Growth between 2010 to 2013
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 TS-Served Countries
Recent Acquisitions
Bell Micro (NA, LAC, EMEA) ~~~ Tallard (LAC) ~~~
Datamation (Indonesia) ~~~ itX (Australia) ~~~ Sunshine (Vietnam)
95
Accelerating Your Success™
Avnet Revenue & Growth based on Rolling 4 Qtrs Q1FY11
Expanding Partnerships* for Global Reach
We expand our line card to support our solutions distribution vision
and provide our suppliers global market reach and operational scale.
96
EMEA
Asia
 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)






Accelerating Your Success™
Oracle (Australia)
Dell (Vietnam)
HP (Vietnam and Indonesia)
NetApp (India)
VMware (Indonesia)
IBM (Indonesia, Vietnam)
Americas








NetApp Services
SyncSort
CommVault
Quantum
Apple (Latin America)
IBM (Latin America)
Riverbed
Oracle (Brazil, Mexico)
*Significant 2010 line card additions by region
TS Global Line Card
Portfolio
Management
Managing Regional Priorities
TS remains committed to value-based, portfolio management to
drive our committed financial returns in each region.
Americas
EMEA
Asia
▪ Continue to drive
profitable growth
▪ Continue driving toward
targeted financial returns
▪ Accelerate drop-through
with operational focus
▪ Expand in LAC, with a
focus on improving
profitability
▪ Leverage and scale
regional expertise for panEuropean support
▪ Continue to balance
expansion opportunity with
profitability
▪ Maintain strong regional
ROWC performance
▪ Expand appropriately in
high-growth geographies
▪ Strengthen the line card to
support our solutions and
global growth strategies
▪ Strengthen the line card to
support our solutions and
global growth strategies
98
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 $8B and presence in more than 70 countries.
 Avnet intends to continue to outgrow the markets we serve by investing
in high-growth technologies, vertical markets and geographies.
 Avnet leads the industry with our SolutionsPath® methodology,
redefining the role of distribution.
 Avnet maintains world-class supplier and reseller partnerships that
provide data center hardware, software and services solutions.
 Avnet will continue to exercise value-based management across the TS
portfolio to achieve our stated financial targets in all regions.
99
Accelerating Your Success™
Q&A
Electronics Marketing
Harley Feldberg
President, Electronics Marketing
101
Accelerating Your Success™
Agenda
• Our Mission
• Market Opportunity
• Who We Are
• Growth Opportunities
102
Accelerating Your Success™
Our Mission
Avnet Electronics Marketing will be the most
successful electronic components distributor in
the world by providing our customers & suppliers
best-in-class design chain and supply chain
solutions.
103
Accelerating Your Success™
Market Opportunity
2011 Sizable Revenue and GP Opportunity
TAM
Large
Medium
Small
~ DTAM
~ Channel GP$
$204 B
$9 B
$900 M
$73 B
$49 B
$6 B
$14 B
$14 B
$4 B
$291 B
$72 B
$ 10.9 B
Our global footprint positions us for strong share gain
Source: Avnet EM
TAM Sources: Electronics Outlook, Bishop, Fleck, Gartner, iSupply, Paumanok, SIA (Rev 11/5/10)
DTAM/GP: Avnet EM estimates for independent franchise distribution
105
Accelerating Your Success™
Design To Consumption – All Regions Matter
Semiconductor Design TAM by Region
2009
Semiconductor Consumption by Region
2009
The winning formula for components
distribution requires strength in both
Source: Avnet EM BIO, Gartner, iSuppli
106
Accelerating Your Success™
Projected Components Growth through 2013
Semiconductors w/o MPUs, DRAMs or Flash
107
Accelerating Your Success™
Interconnect, Passive and Electromechanical
Growth Forecasted in All Regions
2010 – 2013 Component TAM Growth Forecast
Equates to
approximately
$27B of DTAM
Growth
Sources: Bishop, Electronics Outlook, Fleck, Gartner, iSuppli, Paumanok, SIA (Rev: 11/2010)
108
Accelerating Your Success™
Who We Are
Experienced EM Global Leadership Team
Patrick Zammit
EMEA
Ed Smith
Americas
Harley Feldberg
President, EM Global
Stephen Wong
Asia
Tom McCartney
Japan / IP&E
Gerry Fay
Ravi Kichloo
Tim Barber
Beth Ely
Sean Fanning
Bill Crowell
Dayna Badhorn
Supply Chain
Global & Strategic
Accounts
Semiconductor
Business Dev.
Design Chain
Business Dev.
Avnet Express
Marketing &
Communications
Finance
Strategic Planning
Average 20+ years of industry experience
110
Accelerating Your Success™
Unique Market Position
A balanced approach…
EM FY01
EM FY05
EM FY10
Americas
67%
Americas
40%
Americas
31%
EMEA
28%
EMEA
38%
EMEA
35%
Asia
5%
Asia
22%
Asia
36%
$8.3B
$6.3B
$14.4B
With all regions achieving financial metrics
111
Accelerating Your Success™
Specialized Customer Support
AVNET SERVICE
Supply Chain
Solutions
& Logistics
Design Chain
& Supply Chain
Solutions
AMERICAS
EMEA
ASIA
Japan
Avnet United
Avnet Velocity
Tier 1
Tier 2
Avnet EM
EBV
Avnet EM
Avnet Memec
Silica
Avnet Memec
Avnet Embedded Avnet Abacus
Avnet Memec
Avnet Embedded
Avnet EM
Avnet Unidux
Tier 3
Core
Distribution
Tier 4
Avnet Express
Optimizing our value prop for our customers and suppliers
112
Accelerating Your Success™
Focused on Profitable Growth
Our strong fundamentals maximize profitable growth…
- Leadership
- Scale & Scope
- Growth Strategies
113
Accelerating Your Success™
Growth Strategies
The Winning Formula
Global Strategies
Design Chain Solutions
Supply Chain Solutions
Asia
Japan
E-Commerce
IP&E
Embedded
Execute these strategies using:
Our strengths as an industry leader
Our global scale and scope
Our ability to invest
115
Accelerating Your Success™
Avnet Electronics Marketing: Global Strategies
Design Chain, Migration to Solutions
Tim Barber
Global Strategic Imperative
Why It Matters…
• 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
• 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™
Avnet Electronics Marketing: Global Strategies
Supply Chain Solutions, Complex and Global
Gerry Fay
Global Strategic Imperative
Why It Matters…
• We will continue to develop leadingedge supply chain strategies to meet
more complex customer demands
– Avnet United: Global Business Mgmt
– Business Migration: Linking interregional design and fulfillment
– Avnet Velocity: Tier I Fulfillment-only
Services
• Innovative Solutions Developed to
Leverage the Core Business
• Extends ROI of Demand Creation
Investments in the West
• Leverages our Scale and Scope
• Customer Entanglement
– Complex Supply Chain Solutions
influences approximately 15% of
our business
117
Accelerating Your Success™
Avnet Electronics Marketing: Global Strategies
Growing in Asia, Profitably
Stephen Wong
Global Strategic Imperative
Why It Matters…
• 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
• 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™
Avnet Electronics Marketing: Global Strategies
Japan, Significant Market Opportunity
Tom McCartney
Global Strategic Imperative
Why It Matters…
• We will continue to develop our
business in Japan financially and
operationally
–Pursue additional acquisitions or
alliances to create scope and
scale
• 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™
Avnet Electronics Marketing: Global Strategies
e-Commerce, Broadening Reach and Services
Beth Ely
Global Strategic Imperative
Why It Matters…
• Expand our e-commerce offering to
enable “speed and convenience”
procurement of high-profit, lowvolume orders
–Common global e-commerce
engine (IT)
–Online engineering for NPI
–Regional customer interface
models
– Local Language
– Local Currency
– Local Inventory
• Margin Enhancement
• Customer Expansion
• On-line Engineering Support
• Expanded Service Offering for Speed and
Convenience
120
Accelerating Your Success™
$14 Billion
small customer DTAM
opportunity
Avnet Electronics Marketing: Global Strategies
IP&E Expansion, Selling Across the Board
Tom McCartney
Global Strategic Imperative
Why It Matters…
• 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
• Margin Enhancement
• Fragmented Distribution Channel
provides Acquisition Opportunity
• Supplier Channel Consolidation
• Estimated $12B DTAM
121
Accelerating Your Success™
EM Global Strategy:
Embedded, The Design Evolution
Global Strategic Imperative
Why It Matters…
• 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
• Solution Selling Strategy
• New Integration Service Models
• Displays
• Embedded Boards
• HDD
Estimated $50B
TAM
Sources: Gartner, IDC, iSuppli, (*Without TVs and Monitors), Avnet BIO Estimates
122
Accelerating Your Success™
Avnet’s Customer Touch Points…Expanding
Chip Level
• MPU /MCU
• DSP
• Programmable
Logic
• ASIC
• Connectivity
– Wired
– Wireless
• Analog
• Power
• IP&E
• Displays
• Memory
System Level
Development Kits
Supplier Created
Avnet Created
3rd Party Partners
Operating Systems
Microsoft
Linux
Production Modules
Processing
Communications
Power
Wireless
123
Accelerating Your Success™
Embedded Solution Level
• Embedded Boards
– Extension of processor architecture
• Displays
Customer Benefits…
– Panels
Time to Market
– Systems
Development Costs
• Integrated Systems
– Supplier systems
– Value added services
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
Accelerating Your Success™
Q&A
Summary and Wrap-Up
Roy Vallee
Chairman & CEO
126
Accelerating Your Success™
Recognized Industry Leadership
Launched 4 new vertical
practices in high growth markets
Relocated assembly
warehouse to Nogales, Mexico
#142 on 2010
Fortune 500
2010 Fortune’s
Most Admired
Information Week recognizes
Avnet among Top 250
Technology Innovators
Certified Cisco
Unified Computing
System
EBV
celebrates 40
Accelerating
Your Success™
years
of
success
CIO Magazine Names Avnet
CIO 100 Award Honoree
High
Avnet Portfolio: Performance & Potential
EM EMEA
TS N. America
Return on Working Capital
EM Asia Pac
EM Americas
ROWC
LRPT
TS EMEA
TS LAC
EM Japan
Low
TS Asia Pac
2%
3%
Low
4%
5%
6%
7%
8%
3 Year Market Growth CAGR 2010-2013
9%
10%
11%
High
Note: Bubble size represents Q1FY11 sales annualized
128
Accelerating Your Success™
Sources: Bishop, Electronics Outlook, Fleck, Gartner, IDC, iSuppli (Rev: 11/2010)
High
Avnet Portfolio: Performance & Potential
Return on Working Capital
EM EMEA
TS N. America
EM Asia Pac
ROWC
LRPT
TS LAC
TS EMEA
EM Americas
EM Japan
Low
TS Asia Pac
Fragmented
Avnet Estimated Market Share
Note: Bubble size represents Q1FY11 sales annualized
129
Accelerating Your Success™
Consolidated
Avnet’s Value-Based Management Journey
Shareholder
Value
ROCE
16%
FY10
14%
12.5%
Accelerate EP$ Growth
FY08
FY07
V-Shaped Recovery
WACC
10%
FY06
FY05
FY09
Great Recession
FY04
5%
$5
$10
$15
$20
$25
Revenue
Driving Growth
Accelerating Your Success™
Demonstrated
Exciting
Potential
Demonstrated
DemonstratedPerformance
Performance
Performance
& &Exciting
& Exciting
Potential
Potential
• 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
131
Accelerating Your Success™
THANK YOU
Demonstrated Performance
and
Exciting Potential
Accelerating Your Success™