Avnet, Inc. (NYSE:AVT) Q2 2015 Earnings Conference Call - Final Transcript
Jan 22, 2015 • 02:00 pm ET
I would like to now turn the floor over to Vince Keenan, Avnet's Vice President of Investor Relations. Thank you.
Good afternoon, and welcome to Avnet's Second Quarter Fiscal Year 2015 Business and Financial update. As we provide the highlights for our second quarter fiscal year 2015, please note that in the accompanying remarks we have excluded certain items including intangible assets, amortization expense, restructuring integration, and other items, and certain discrete income tax adjustments for all periods covered in our non-GAAP results. When we refer to the impact of foreign currency we mean the impact change in foreign currency exchange rate when translating Avnet's non-U.S. dollar based financial statement in the U.S. dollars.
In addition, when addressing working capital, return on capital employed and return on working capital the definitions are included in the non-GAAP section of our press release. (Forward-Looking Cautionary Statements)
In just a few moments, Rick Hamada, Avnet's CEO, will provide Avnet's second quarter fiscal year 2015 highlights. Following Rick, our Chief Financial Officer, Kevin Moriarty will review some additional financial highlights and provide third quarter fiscal year 2015 guidance. At the conclusion of Kevin's remarks, a Q&A will follow. Also here today to take any questions you may have related to Avnet's business operations are Gerry Fay, President of Electronics Marketing and Patrick Zammit President of Technology Solution. With that, let me introduce you Mr. Rick Hamada to discuss Avnet's second quarter fiscal 2015 business highlights.
Thank you, Vince, and hello, everyone. Thank you all for taking the time to be with us today and for your interest in Avnet. Our team delivered another quarter of steady progress in our financial performance as they leveraged strong seasonal growth into record adjusted earnings per share and strong cash flow from operations. Despite some currency headwinds beyond our expectations, our typically strong December quarter at TS core enterprise revenue up 10.4% sequentially and 12.8% in constant currency as compared with our normal seasonal plus 8% to 12%. TS increased 29% sequentially and to point 2% year-over-over in constant currency.
At a product level, networking of security
services and storage were all up year-over-year while our sequential growth was led by software services and storage. EM also delivered above-seasonal sequential growth driven by select high volume supply chain engagements in our Asia region. As a result, enterprise revenue up $7.55 billion grew 1.8% year-over-year or 4.6% in constant currency with both operating groups exceeding our expectations for the quarter.
The year-over-year growth in constant currency was driven by a 9.7% increase in EM where strong growth in Asia and EMEA lad to a seventh consecutive quarter of year-over-year growth. Our strong sequential growth and leverage at TS drove adjusted operating income up 23% $274.6 million and adjusted EPS increased 25% from the September quarter to a record $1.27. Adjusted operating income margin increased 37 basis points sequentially to 3.6% and was up 9 basis points year-over-year with both operating groups contributing to this improvement.
Another highlight of the quarter