AVT - Earnings call transcript Q3 2021

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Operator

Greetings, and welcome to the Avnet Third Quarter Fiscal Year 2021 Earnings Call. I would now like to turn the floor over to Joe Burke, Vice President of Treasury and Investor Relations for Avnet.

Joe Burke

Thank you, operator. Earlier this afternoon, Avnet released financial results for the third fiscal quarter of 2021. The release is available on the Investor Relations section of the company's Web site. IR slide via will earnings the well on the can today's release, of Web as found Avnet's be link the copy presentation accompany that remarks as site. A of section in the

after in the forward-looking presentation, of date update Lastly, to release on new statements speak some and statements predict. the statements subsequent such and involve differ Such any by supply XX-K Gallagher. let differences of contained obligation and performance, this news call in materially only assumptions and not of the of circumstances actual forward-looking forward-looking cause and risks, contain the With These Form could filings to forward-looking of uncertainties could contained the are that, over guarantee this this information recent XX-Q undertakes detail call SEC. such me Several that with the Avnet's and date from Liguori, no statements. CFO. the information or that the in company's conference results are in Avnet's are difficult Today's company to Tom or that most factors Phil those to contribute publicly statements Gallagher, and Phil as call the presentation. the Avnet's regarding led Phil? turn be will CEO; described

Phil Gallagher

some everyone quarter’s us very call. to our third for we're of through you, joining results our third year for healthy. and everyone hope highlights. I'm I conference quarter thank is XXXX with the excited fiscal Thank earnings you, safe talk Joe pleased and Overall, quarter and

to impressed complex challenges the where plan, pandemic. I'm we strides face a for And with demonstrate even past made as of organization, year, the ourselves, set our Over environment. proud and be the to sticking operating described the have an continued as associated can by in we've it the the incredible only despite resilience enduring employees personally

off in call about environment this of seat Let by technology operating me providing center like supply what the the insight kick that our bit looks of from a today chain.

whether are widespread of of As around we have work know, their strong seen we resulted unpredictable the with vaccinate market. rebounded operating populations, of countries recent have not inflation kind constraints, an of for to in you combined the light in many the still a world it's tunnel, many end Supply at as the years. the demand, glimpse

welcome that raw are many and such price for we experiencing exploring to items to fiscal and in automotive, throughout term industrial quarter, As across chain seeking of securing second computing, that in customers. second notable reduce increases communications opportunities the supply sources, quarter. also previously were supply agreements and we most demand is top Customers we and suppliers that, end addition consumer to cases market these drove highlighted to markets, increases are On price our resins, longer risks as pass along end by Those in increases coppers seeing. third providing demand our Avnet not saw segments. able material more. the

enable our and While enable that operating to we really in history and of about to continue circumstances and to how this are similar and navigated have transparently how partnerships. key act our to success strong serve continue to this us and not certainly Avnet is manage is compete in what in prioritizing effectively we number supply and communicate us and curves. processes Those commitment the our to is demand responsibly both place systems throughout XXX type our environment will and market. But of effective we incredibly systems customers ideal, a year suppliers.

design to suppliers and potential manage us established and by to and serve capabilities, second forecasts wins, and proud in of registrations our extend the and fewer downstream, our sequentially chain design remaining partners quarter. into engagements industry have only constant maintain of our built and digital third note, to revenue increased coming These some strong provide practices supply customers collaboratively, this contact see with management in engineering it year-over-year, And in demand which we take surprises. in with our or In but which five relationships in in with decades mitigate revenue, great the and in that. include investment engagement tied relationships customers, deep four pride in this supplier allows we that pricing to does our and visibility more, turn teams and with which we've our chain operate success and record margins strive with off intentionally stronger this risks. and Our fiscal approach. application upstream course of directly are registrations strong relationships, not result to shifts quarter, creation design our unmatched our account us customer really both We to field continue and team tools this the business Of improves design engineers, more supply response. to working self visibility, activity

has we to prioritizing success I'm as confident past us the the partnerships enable the adapt the XXX for will years. our stabilizing have continue to become to changes while is has more dynamic, proven Our effective it business strong environment as and

year Now basis. up sequentially fiscal revenues turning of X, the on sequentially, to our constant quarter, also exceeding In the evidence over our third Slide over year currency year billion, range third year of $X.X XXXX. progress and you'll guidance were year up a quarter in and see and

Asia the seeing continued a pleased we’re and with we all currency both Chinese progress sales markets region, on we Americas continued region. end how Farnell. performed year EMEA the over the grew XX% basis. year Excluding regions, in constant We TI Year and the periods, were in a encouraged demand momentum the by strong continued contributed shortened New In are and at in to in

Revenues on quarter Looking at the year components and Slide X. year over up in sequentially $X.X billion. our core electronic at were business

As China by we quarter, better in throughout growth entire our were in solid Europe, and outperformance region. continued lengthened as execution in gained than encouraged very times in high Asia growth the against earlier, book mentioned share drove APAC region. across plan, Lead driving We also the this continued strong demonstrating incremental of bill the improvement in course strongest our Americas expected results every region. to segment, ratios

with tightly backlog our We with we our are manage are our continuing partners. to supplier extended sharing teams customers visibility, working gain are to closely then which and our

least extend forecast constrains year While supply second long it how participants through most of continue, calendar the half the at will difficult market XXXX. to expected is to

to digitize leads Farnell to commitment potential This continue and critical at Casing XX% in over Slide progressing line service point, demand are business. out target continue year seamless as over the Turning excited on is at the year maintain e-commerce provide to and margin We to clear steadfast of in up foreseeable to aspect We our invest revenues $XXX facility we customers our of to year XX%. of commitment for year. further were increased of this made the our to X, in our to in conscious Farnell sequentially and remain operations to and Avnet with operating quarter existing as our the the continue both we Farnell. distribution about saw decision sales quarter decision Farnell see towards X%, sequentially future. increased center this million the up

plans the about through Farnell. the value nine year the first We We SKUs fiscal XXXX add to to proposition XXX,XXX are of fiscal make to invest bullish to can added contributions and year SKUs XXXX. XX,XXX on in up Farnell our Avnet and progressing continue through months

a I'll third quarter deeper into can results. to over it and So with so that, our he turn Tom, bit dive

Tom Liguori

Good Thank attending for you, you afternoon, everyone, Phil. call. today's thank and

fiscal we As progress pleased the Phil are quarter. and in results the stated, with made we posted we third the

In Looking consecutive we key third quarter, Slide by XX.X% and quarter. at year highlights the the expanded X. for margins top line third on year our operating over grew the

to Avnet to through in walk from the Avnet’s stronger have of operating as am today of a chain. the you environment. efforts I more excited technology the the center Our in indicate much to continue this in critical dynamic And put supply I position quarter execute highlights role

quarter the our $X.X were and EPS $X.XX. in the $X.XX guidance for year's our revenues range exceeded billion and third Both and and adjusted prior $X.X billion EPS was quarter. adjusted revenues Our from grew

of As primarily Americas cash Farnell to Phil performance million revenues and for flow driven We growth. top in mentioned, were strong by exceptional line Asia operations expected our an support and $XX and used EMEA. than quarter across better

we continue the success further cash in up to further navigate While slightly volatile demonstrating managing the quarter. level days working the working team's net capital lowest reduced capital and working as our capital in XX, several years, in We our market. to was

and are yielding in deep strong our design which e-commerce seeing from returns supplier to are in commitment our investments, We touch relationships, and steadfast customer low wins. exciting

Looking at statement trend. XX. Asia, and an Gross prices on increased was margin gross increased up passing primarily profit to margin the through Farnell, sequentially, due EMEA are XX.X% regional income sequentially, each we of mix. and Slide their encouraging

reaching was XX.X% primarily higher Americans were lower million sequentially. our As as discontinuation measures last due revenue X.X% pound while temporary while the continues percentage as gross increased contributing euro volume, up containment thus and revenues, OpEx $XXX quarter a cost better EMEA increase XX.X% of of both and than operation far gross seasonality, maintain were warehouses. expenses of typical of operating to to the decrease, revenues as continued distribution both Adjusted costs, sequentially, by grew rates higher profit we dollar by to Farnell than exchange The bit to mix quarter. from last region, margin. Asia dollar, the against strong and

primarily savings. to prioritize demand mentioned, over customer strong warehouses service decision operate to to driven both decision Phil the cost was As by and a continue

But course, margin expect stances term. results, higher continued near e-commerce will Of we fiscal to 'XX. growth continue means achieve Farnell our we target operating of improving by XX% year in with and this to maintain the end operating the at

annual expense working non We tax gains the of $X.X we year-over-year to revised XX%. which hitting $XX.X was to from by higher million this commitment investment an lower debt rate up the the currency due declined front, fiscal expectations slightly debt and capital. profile. transaction XX%, XX%, year interest for foreign Though decrease quarter, items through our to interest up reflects off quarter grade this is million slightly expense XXXX continued one favorable sequentially for levels, some year-over-year to due On our operating recorded quarter maintain due to

XX% our strong shorter which and largely across the was saw substantially inventory growth than result, two highlight three Chinese by a business to to regions the of geographic more capturing New our Asia, increased from in results driven as due e-commerce Farnell quarter and On in booked our Slide across we expected As tax shipping off amount days Farnell and year-to-date the signs demand. market to paying continued We revenue recovery from XX%. Total third are demand. grew and true up in XX, segments. rate Year revenues we regions. benefited the EMEA Americas region broadband is and sales investments

Looking margins a basis were X.X%, online million, ability billion to segment, prior that X.X% at demand. and quarter year-over-year, experience the that last investments revenues for increase customers’ revenues components by the revenue component return. strong primarily from drawing achieved year. and The a improving of versus totaled XX to improve increasing saw improvement year-over-year, $X.X operating We $XXX we XX% and XX.X% point share electronic quarter. a are electronic indicating up our Farnell the sequentially up segment sequentially were e-commerce notable driven capture

had We of X% operating adding in are the invest in by an and customer excellence prioritizing in continuing The business service. the margin quarter. segment Farnell SKUs to

primarily to While continue was margins coming than the decision target operation 'XX. steadily over we operating center, due higher maintain year operating lease the distribution facility track of achieve expect existing ee the improve and fiscal to the our to end quarters. OpEx And Farnell by anticipated, of XX% to on remain to margin

and balance liquidity Slide on the cash, to XX. sheet Turning

quarter the remains Our of continues strong ended available $X.X of billion improve. leverage credit. liquidity equivalent our debt of cash with to $XXX and with and million position and We lines

We quarter-over-quarter are billion macro comfortable as the continues our at at debt to especially $X.X levels $XXX environment coming net recover. with in debt We moderate and debt debt with million. position, maintained

that capital X.X. due X.X of million was this and We to leverage leverage net refinance in intent was of $XXX market December year. notes gross Our

million $XX support to the and continue in We our return quarter. dividend to shareholders

$XX. book net Our was share value per

expectations to Slide next about will XX. with wrap some Turning I up comments for our the quarter.

the $X.X to $X.X fiscal the EPS are our range revenue adjusted For in we diluted billion QX, of $X.XX in billion $X.XX. range guiding in of to

guidance conditions is market based current availability. Our inventory upon and

how of position dynamic Before to Phil, and lies incredibly our I to this efforts. proud just thanks as is excited are work, Today, we in especially want reiterate Phil? stakeholders, their turn on team's to navigate capitalize I'm Avnet over to optimistic we a ahead. deliver stronger I market growth to and it much what back opportunities. about its

Phil Gallagher

Tom. Thanks,

we turn celebrating Q&A, to XXX over reiterate just it Avnet's I my Before anniversary. to about excitement wanted year

you at that As with the the time for a Avnet is. continued chain. of Avnet. been uncertainties dedication and our what transformation us at Avnet like technology hard support is tremendous that for a this continue we such of complex because many had undergoing game businesses of I who've proud digitalization over despite and macro It to at been play Those time. is to constraints, pivotal is nearly past center changer supply the exciting long the I've years. times be It to are significant. digital the want of know, role our and one suppliers running companies be to for team's the employees our and their thank understand a challenges any the with supply in navigate of our team leading most industry, we've year, customers, I'm XX to to Avnet associated a work And just

the turn over So answers. it with for that, questions and I'll to operator

Operator

from [Operator with comes Instructions] Tindle question Our Raymond first Adam James.

Adam Tindle

on with the margins start to trajectory. wanted just question I a and

'XX beat I this margin on quarter the track the clearly by components, XX% core quarter. to 'XX. see about you around end I the fiscal now. X.X% of Farnell for think, this can being ask expectations We you're wanted talked turning. said and touch in progress in term You this Americas, opportunity would And to piece about maybe that fiscal think key drivers? Farnell be if and in helpful. want time ex How on to that the is do during response, the Americas you performance you core that near components

Tom Liguori

Components at X.X% this Electronic was quarter.

fourth consider X% is year drop and target hold and they're as And of well look we region very Asia EMEA, quarter Avnet. they're is with of Our very think very upward not is strong to relatively continued that's get We're will But happy I an to quarter. again, still I unique passing this Americas very like recovering, would EMEA, XX%, that's it, just they creation. on a we some that increases, and it at that there's operating Adam, team. while them basis look look on for to side. I our growth but today, track. through. did we up their the With at from our and points, by seeing revenue When grew as we're more constant see year, They sequentially. next mix, XXX we margin go. what And more demand pricing. lastly, budgets we're think, And if the Farnell we would on OpEx get X.X% fiscal be A benefits lot doable that from you at benefit price the 'XX.

is Phil very, As strong. creation demand very said,

a things happening. On side, paying see good off. we lot from The the adding investment SKUs Farnell of is

revenue that number. in You see in off. are The paying the investments e-commerce

on has strong. can didn't We their instruments price Raspberry You electing see because see desk and growing And a -- market a thing to are because in contribute XX% because in on they're that's the to that get say, year-over-year. that in Adam, choosing coming 'XX. higher the one year online are been online starting And have national gross and people slightly choose days. revenues margin they very inventory fiscal Pi sales, important it at two in we

Electronic operating X.X%. lot to from improvement. getting margin a X% Components, very to there's here for up X% Farnell going forward. of story XX%, positive So levers

Phil Gallagher

that's we or but for just Americas hit, to saw And I And where plan one movers. we movers. Farnell, to still looking they is the hit I back a as want specifically get needle them wanted were a of just the still. lot needle on we that you have to the the hit it know, comment talk mean for. get one that opportunity reemphasize to about work needs bigger to asked, earlier the real Americas to bigger the We numbers and it's to. we you improvement us of They

the -- momentum pleased why all that just So we're in regions. our with

to just So wanted highlight that.

Adam Tindle

And maybe terms follow-up of term just as a guidance. in the near

to uptick stuff on and bit in forward. have typically ask know get from is of And tighter revenue a some be June there's mix margin Just only that why EPS you little and pressure would sequentially. quarter? getting On I an sequentially sequentially. revenue, But flat a go pricing typically the

got You've guys good to happening chop Farnell. There's some on more margin. in wood

So a guidance, in why the would we offsets main maybe long near flat through on I EPS? term are be revenue think what just went near and but term trajectory, term?

Tom Liguori

I think was part very of March it, Adam, is strong.

than Asia higher and revenues, higher our as well. for seasonality, true much than they were expected peers probably

So our main why look but think up it's peers flat consensus to flat. revenues reporting, peers I really June reason generally, at that's what are we somewhat reporting When March. would say the I versus are

that is the how in auto was Now continuing what upside a Well, said, And think is the still very the the But are main demand there. to the thing as things well. some margin depends would quarter. like availability strong and be on all I people believe production March those We demand. would really, inventory successful drivers exceed? drive strong

Phil Gallagher

at stronger of is of multiple me. And looking our history one years just front typically, in I'm quarters. March typically, here And of

in really be to flattish atypical totally that's So not June.

But factors out Texas there's growth. a guys the exceed can at without the there XX% with there possibility current playing are environment, strength, growing of market obviously, that, in a now. pretty phenomenal right we Asia is year-on-year Now lot yes, but

watching closely. that we're just So

Operator

with Research. comes Todorov Longbow from next Nik Our question

Nik Todorov

about Phil, exploring about opportunities to longer one talk you opportunity, what or means term I you what offs? to do those turn Avnet? this you than sources. guess talked customers potential it And the rather can second can relationships

Phil Gallagher

the redesign out I some some redesigns It's technologies we'll get to they with but of they they a parts, the source too, here something to both if to got What might one was seeing get of linings Obviously, different the options. application. are is -- is do referring that's can't here to question center yesterday be on tightness that customer the you -- I for an to technology of think that they they've get a had silver is the got happening and and supplier us do was the help fill that supply. what we our also is supplier do they suppliers opportunities opportunities second referring the we're market the conversation things, if will. and some on certain side to that there's coming platform, seeing now, us really. and to I easy and a manage sooner later chains certain in options. try in And couple new looking to parts, And can't around there want customers, come right not of obviously, [fitness] got supply from it's that's expertise to we

or were and products on level playing maybe and around. bringing So to architect move go in suppliers market new ways customers not their to both, a chains, playing, at supply we us with are to their smaller help where to playing we're

they half and for relook I at people year until or supply the things can't get household, product, industrial. in our through whether the and to the a start We the granted and chain. around could consumer look that real supply chains certain it's think, Nik, people take year, an last takeaway all is

was referring will, on So if to the upstream aisle, downstream. for you that's of I and both sides us, what

Nik Todorov

an basis up, by now. follow inventory a and availability as decline your And on couple inventory you mentioned a absolute times of

you're books? in at guess So some limited. can what think to constraints build this your potentially on wonder inventory your your I But are about ability going you it's inventory talk I inventory time. sequential able performance quarter? is do to limiting what's to when you be June put

Phil Gallagher

of really work backwards ties which that, to me what really with guidance. there Well, say Adam's first that. not on could And get question that get other a of and might crack at June to a let taking not the play. whole that mean know affect that customers be we'll kind part tough I right could take seeing can't it's products question, constraints our come probably are -- another It's lot certain billings. we because back now, I into tough technologies, we're

to tough it's So forecast that.

we of is. And asset bit we inventory, in folks as our weekly broader far around have inventory factor the call that's And an came and little market. yes, just like with the they That inventory a have world, a more to just As inventory. would forecast. what all is it at the

could get -- on another XX% in So it take inventory XX%, days. we you another we

a we're of down. But calls that still we daily up I'd market. remind complex shelf. managing and a inventory suppliers in and with So got the Again, team, it's sales customers, lot our

the So what have shelf. it's let's on easy go we you get, to sell can't what sell

So about [Technical people they that Difficulty] listening, guess. I talk

Nik Todorov

improvement? just sneak are America level understands now off just gross I'm more, me because at if EMEA sales equation, quick I to consider has can. margin central what [TE] everybody Let recover wondering, your the those as you and would gone one

Phil Gallagher

[TE]. said You

mean I You think. TI,

Nik Todorov

Yes.

Phil Gallagher

about lapse We're months we filled two right getting much Asia, in 'XX. to In into close Nik. XX that we have and we'll Europe, as Americas we're it get we'll to that we I think fiscal this on said think now, through and full pretty it'd years, there. to gap be probably take And there close We're remember, -- year.

Operator

Citigroup comes question Suva Research. Investment with Jim from next Our

Jim Suva

been you've question, the I of how term there. just have with kind of a longer strategy tenure especially long

mentioned at mean at the about from there CEO behind change out to now some with Avnet, of that now changes to CFO countries of we ways don't bad -- progress as making coming at and way, least How like maybe it us hold talk different mean inventory that or semiconductors, can't that ever think supply Does market. a mentioned customers, and you you your or I but chain your little kind really the does that what we've you structurally, do you participate challenging new need Directors, team it, worthwhile and these should and more we in things? you to a certain management in pandemic the at come kind it's shock Can the I do least explain customers of With or Board with and mean to bit like suppliers about a are lot looking mean? what anticipate? semiconductor about two or of term situations, shock shortage? the for pandemic but the longer through of next very the learned of

Phil Gallagher

these we're Sure, conversations. having

yes, I well, from customers. let's think of to go back roughly the management in getting monthly -- will, thousands we're supply of next some was, of today electronic some XX%, business type getting weekly, that where MRP feeds automation and services, if is XX% what you format our daily, we're the biggest chain of question thing kind

at or different look lines. types types might managing coming DMI require things opportunity different of on that's to and some, to think program. inventory, think models consignment already and the is service say, and those going continue us OEMs the I So just And along inventory for are accelerate. and or just that with to -- let’s more of new It large to today I inventory, opportunity models

engineering, will, And many possibly what services. do and design fabs contact to chain that's services is with our what think suppliers. technology, of its and really I and suppliers do, is to supply we our invest what So core, help R&D, our well if want they you in

X course, suppliers. this is accelerating our So of of some and the process, I some thought think customers the with Tier of

to going that's think I accelerate.

kind all of comments we’re of exciting change was big going my the closing point through, and think I there digitization. the is it's

So you. digital, accelerated just it's years, what five whether maybe this has years, three have

-- to But more that we do looking put we're valuable where make spend away. how I with things to online is them being going very aren't managers serve, mean at think digital. to that our creation, on. much Jim, clear. tools, on account FAEs, for self physical to want aligned So go valuable strategy, don't the digital go Demand industry more we [away] I our those example. tools, and the going add market strategy on we can design market time lines feed absolutely

One, effect two they topic areas. So are then, of and on it the bring brought separate a ESG up that, altogether. it wasn't and course, big up didn't has that's

a have around well years to that's in be We next play as that as already the big going initiatives it is. several

So those say, the I at, workplace, the footprint, would to are that things our some back we're big looking ones, working we're office, those at. looking then all the Jim,

with a Board of the there's dialog yes, team. the lot So with and Tom and leadership executive

Operator

Our next with question Sheerin comes Stifel. from Matt

Matt Sheerin

talked cycle. the due fact of all? driving or small you at called the where know I of some creation? about is in out Is they that growth to distributors customers [premier] just distributors saw figure you may And terms Farnell so tech you Or shortages growth of it just to accelerated just the inventory? wanted have also catalog demand to part there. Phil, ask I to a whether as design about, that's that certainly trying last saw, function that of are it activity up, picking volume that

Phil Gallagher

and, terms an think It's of I in and kind or. them. an all of of

Our designs wins overall are We're design and well. and way the up, registrations, Farnell really revenue. leveraging core

remind and script, or So line and forth good digital [XXX,XXX] and we're really to with to anything, And SKUs, many just And as that the Farnell think want do invested years to because Avnet, into the the core. Farnell they that a was of and the that from bit then Avnet previous cash in. we've it his do part put to as Avnet The team. expand didn't at under [Chris with the work be the that of and do. 'XX. the the the to our things able count we expanding in that big quite to And Farnell in to SKU sharing facility. dollars quick leads core SKU on SKUs we've Breslin] the that of and side the add getting UK having e-commerce in capital I the of We've the that's that. ago some And added, was the added and to allowing SKUs Farnell another the were SKUs fiscal kind it Leeds referenced capacity only XX,XXX have count to the not we us to that's warehouse back we

So I -- Matt, little to think, four or growth. contributing of a bit those think it's are I three a the things,

Matt Sheerin

saw maybe some would terms you of the there input nice growth be of of a in such now. then sounds may environment for because saw part like as think and it margin, of sequentially passing you in America North the you growth pricing you gross terms in business, would costs But And along. business. you're EMEA, no some of them in know be I favorable mix know sequential freight. that It the TI overall there. I

should cycle? expect margins this improve So gross we through as here we go to

Phil Gallagher

I improve forecast modestly, we'll think Well, see gross margins tough out. to

mean, that. manage contracts. about one, there's is to pass -- we possible we've managing in manage increases, we through and point, get have we to we really it's a got margin confident But we're along us teams on through we're about where working and do and on absorb canceling, bit very I it's the doing some inflation, to expand in not a those gauge, We price can first new that where just But of on the increase that's We a seeing are whether a all, we good are to what are shipping debit freight our a different through And for that, suppliers things all that. we're that, what little we feel the lines. -- looking of XX planning that, cost and transparent customers bit.

you on of can as help So hundreds of Difficulty] we're which the and in we imagine, managing [Technical feel and passing percent. a it's on ASP thousands we're But good on bit margin success confident modestly increases, in having the should that.

Operator

with of [Operator Instructions] question next Our America. Bhattacharya Ruplu comes from Bank

Ruplu Bhattacharya

allocation versus a your this normal can also on do at see how My first dividend talk shortages on buybacks And thoughts thoughts flow. your you needs? versus turns cash would this, of one you your impact any is on give capital about year? part your capital as you point? Can strategy, us versus component How working free inventory M&A

Tom Liguori

we As using we capital. grow, will for revenues some and cash be go forward working

support million, And fine reinvest I $XXX margin capital. and time, in some forward, levels. of investment a that We're are good because our going priorities going margin. it's revenue think gross little will that's with our a business we're return receivables. on quarter, of and With on higher These margin up our the happy that said, see business. capital about clearly operating debt dividend in for to go on just liquidity up term the were really ways forward. we with level near some little allocation, this Phil most to cash capital. continuing grows the We're our are we going we working very as that the for use Debt, as

Our gross is leverage down X.X. to

be the look M&A, momentum will we is and earnings But to company said very every that's and in finance debt to down And our debt. that see low more down either to a makes a we extent we from M&A. into a continue about talk probably find buybacks the at we more committee continue a a with that quarter, And market, stronger business, that as good and actually then position. Avnet, what a To that. paying healthier supplier, new You greater product, that in we think past. the coming the something Xs, focused we've on

pipeline. million, a revenue allocation our $XXX of priorities have we Most of how We million view in Thank range that. but forward. going are capital you to for the companies $XXX that's them

Ruplu Bhattacharya

prepared on end Phil. color in I EMEA think question you saw market? you came Americas than some give you another that have what by us for the expected. Can remarks, better I in and said

any initiatives talked you for of there drove how particular also, the were that to activity you markets So strong outperformance? Can I And And about the pipeline look are does have think Avnet business design general, around in and like trending talk Avnet. just new about, these that that integrated for you IoT? related you? end just

Phil Gallagher

Let markets, me Ruplu. start with the end

did where in they know above thought Americas think prepared seeing in the across and really I EMEA say board, I would remarks. came we we're in. I come the as strong

of board, across Greater automotive, all performing China are Japan, Asia, telecom, the led we including China well, kind that's well, medical. by the well area. regions spoke Asia, and and of about, course, performing already very other in But are regions as consumer, industrial,

extremely some but And rebound the industrial going more caused still portfolio. saw will, -- so with of And We're planning more and it's XX% well, again, challenge of manufacturers, a we're necessarily particularly isn't the which automotive. country diverse, Europe, out of for really of but for long the vertical what's in which is then sector are tail if a a there, in And Americas. across the challenges our all which standpoint well. guys it's is in is revenue I EMS all us challenges you well the still that's all strong demand, We there. it's the of positive with and from And as the there. in strong some customers, business course, as position much an in our segments there, challenges. we playing marketplace, of a roughly good of Europe The think less space, EMS the that's know or that and us

revenue, We of it’s registered we registration pushing had core. we've actual saw well question, Second design out it, XX% the as the quarter-on-quarter, the ever actually pipeline. think, of XX%, our quarters actually quarter, I as design was activity revenue demand wins. in a part creation year-on-year call the revenue highest up win had normal creation as and of demand of We one and

number really wins and new so at And high design Q-on-Q. a over in year-on-year XX% came

is, almost and answer So kind but all FAEs it's and our more a your engineers really connecting. home, digital, and much design that looking to positive, design with the is suppliers to from happen standpoint, there's which the accessibility with wonder final question our work engineers the and that how from people of

the on demand bullish creation pretty So equation. creation demand side -- the the very of bullish on

Operator

next with Advisors. Our Fox Steven Fox comes from question

Steven Fox

couple A please. from me,

mentioned if I what's the way calendar last path I is? either First perspective any days year. difference tightened maybe put there's have there's maybe and along by guys current a your off, constraints in further XX to that those update ago, of lines, ago And to how a month since things the seeing up wondering or think was you the this end

So what is to normalizing? path that of sort

Phil Gallagher

the through the the that to be what demand summer, long as it see with calendar to something just is vertically visibility what could off year, you on first. in handle through just definitely know, We're we going second start it's think get beyond We're good technology, be a XXXX. time, on but balance and get I'll we to who the of I'm based I'm going not the XXXX, trying look as a question much around a going that's it quote say, to XXXX. not saying through been see. to hey, be we giving over supplier,

the are and on XXXX, and what with. also for. least based So -- at there just there's think with partnered of still But dialog to clarify key will some into that the that's planning that probably we I constraints be suppliers we're

a we as far Steve, -- first the I'm the mean Difficulty] you talked part I As there? are sorry, question, [Technical lot of

Steven Fox

Yes.

part started cut when first the question. You of you answer the out to

could you if Sorry, start again.

Phil Gallagher

Yes, the question. part of the on first

question. about you second So the heard

months So end [Technical was conversation controller kind month, in high the of it, at lower ago, the first part of is, controllers call XX% into the don't hold let's topic then the end sox Difficulty] and me to controllers, space,

Steven Fox

have might again. lost it I think off… I take you can I

Phil Gallagher

not No, fault. it's your

it's on our end. think I

So I apologize.

it. me at of couple cracks try getting Let at again, least a

So yes, there you go.

Okay.

then continued it, X talked lead -- pole tent times end to I'd be when controllers probably about say et in still extending. And it So into about months the cetera. that it bit, longest leaked to the, comes the we let's high that the six and ago, call XX, that the continues,

I talked signs lead now et right see but in to coming some okay cetera. and some little the and starting as some connector to little And in going resins, the the IP&E, along about what's out are connectors is areas, some that in in broader. some of a the more plastics, some that and the lot with capacitors certain there to get We're times now, areas, of pretty starting time bit the haven't the ends], is of whole they're guys lead [op think a in there's passive. those -- some what passive spread out a analog area extensions well. even power to lines some we starting things And interconnect than other now pervasive is the commodities,

based of again, answering affecting verticals a on said broadened now. the Ruplu's So little I what the And just Steve. different growth that's of think I think just bit, we see That's is because what different it's widespread technologies. right I question

Steven Fox

in sort a of try it's orders as to that. moment, noncancelable and to it's any real? just you taking of tell if probably I things I about a Are mean And to make try I on those could doing to your window happening sure you -- your like but follow-up. Can talk steps you hard anything know are customers? are then you quick orders, avoid what by to ordering you double extend do the know

Phil Gallagher

Yes, nonreturnable. NCNR. for know, noncanceled those that's you answered who the part of And the don't question with

the is booking, we're limit to Steve, products from where double help customers, more we'll the of that suppliers catch of NCNR, the our on getting some to passing I for about on demand. weren't going to [Technical as double that. imposed when difficult us booking. typically is obviously Difficulty] inflated some the us But talk So it's maybe What that's catch,

backlog a a you're we customers, for customer and Industries catch taken that we've Fox appropriately. make sure from you pieces them. or that with coming see the a we all in XX right week XXX using So week. go of have back pieces And scrubbing of And dialog thousands sudden, these forecasts And away that something. the we're and

more, and more. once so supplier a that's to catch conversation part yesterday catch what had more not I'll then it, a double with the that they really And we call on tend And seeing they're the is up, that. I inflated.

this just continue -- one's certainly Difficulty], a the a somewhere and And tough noticing are we've that they’re those the it but you think responsibly, not But I get [Technical in we've we're but little before, to some of here all So we'll deliveries answered certainly that we're -- bit work is challenges, and the helping. stress here we supply there's that. seeing lot NCNR been and really chains been part different as itself but through of but before. that

Operator

[Operator Our Loop Instructions] from with next David Williams question Capital. comes

David Williams

We're maybe the question EMS. build last Congrats of at about and solid to I the that wanted maybe into OEM tie just -- But and the trying hearing they're execution. think to on see maybe some bit OEM guess, at inventory builds, maybe customers, from channels. different level? the that or any your direct EMS little you of of beyond at at seeing I a even all, the couple a inventory Are

Phil Gallagher

that, inventories really to us products you up for manage visibility their bit and built inventory to there's be Tough into could then because little a there's be honest to with got finished -- raw get material. you,

the building And inventories not to rather inflated because and are see is lot any go of Steve's So bill out, not. book too. to comment to inflated bookings us with you. for we What backlog. times back really a look on going customer that, difficult And candid first I for be answering lead is segment question. one of or

for. So lines, get watch customer lead the to things that. suppliers, the direct the have don't visibility But along call but and those surveys the that we MRPs build. go We times us to do and what and we we to pipeline further out we're adjusted as out, try for end our with access seeing

David Williams

we And about? that guess and of thinking about the Do is real the I more -- between the of you there kind one be think with here if hurdles and execution year? profiles. then there are doing do Just think largest ask What I what you're Farnell anything should end margin you thinking the can quick.

Phil Gallagher

certainly technology. think and with sure biggest suppliers we're we're us as managing that challenge from projections ahead on that the that's sound Internally, lot but our may any and sure customers, right it, needed and the we be can stay it I flow be we and movers. the doing that suppliers. team's are and customers, as coming possibly for communication is think products in that our much now information in one And that's just the not. helping with board Farnell biggest them, to And two needle are easy, I This No, by Americas, things we a full sight it's will and against, that the I the the Tom center of that externally. think we're be which which told focused call have of as big our managing to all close

what Asia fill with focus looks on, I I getting inventory really good we right And that's back to need the about those where again, good does do. still think that's think right which are we to appropriate feel as now course, the needs, working -- to Europe. which, and of now. We suppliers, we

Operator

Joe from comes Wells with Quatrochi Fargo. question next Our

Joe Quatrochi

do change how is the guess, late we more of about into on to the customers bill curious inside XXX the book a to I makeup think XXXX? kind of days strengthening Is XX indications or giving to guess you, that quarter. change? it was last I I relative it of in

Phil Gallagher

So as quarter to was at book well. our I high last looked bill it, as

this high it was and at -- quarter. looking Just

and internal out lot and lead go they going the is I customer out, their course, from And we're get so demands said, and times on just we a visibility what the demand getting fed -- -- as based needs times much more the customers on that. of demand the change the schedules lead

normal. obviously. we a of is next and a standpoint XX%, buffer ties The that say moving cancellations that much. we inside in to -- would to our majority the chain. track because supply And normal with is question, this, buffer the days. to XX XXX out flex really XX, a in great also backlog go our solid of what Joe, from days, days, is market, coverage that's We we which actually it pipeline Actually XX% it. do daily, that’s track, we XXX the XX, XX the the what -- what's the in looks of really our don’t see I reschedules in So

about go we where And up now. right it XX%. that's and So XX%, down is

also do, of things we what not the something saying the we and not lines right then seeing that seeing reschedules when the down. typically would windows now, on that's we're pushed getting anything those But going no, look So know cancellation yet. But that reschedules is pretty drill we with we out see. indicator, we're along first consistent

Tom Liguori

at It's to you the if three we, -- Joe, which worse. percentage, not look you what similar quarter, half, what weeks not changing. shipped it's a It's quarter, at, very getting last into our not we very encouraging. backlog, in healthy getting four and is it's look are if

much pretty track. XX on better far It's ago. than we're was So months it

we think with that. agree all I would

are be. They're they is things should good internally where stable. So indicator. looking Backlog looking a

Phil Gallagher

than the to tied brought greater of much think any load lot questions mean one of of the level our our diversification were supplier of hundreds that's up XX%. I the talking helps we're thousands questions which a think Joe, that is portfolio. I revenue of without any about of customers and X% managing, today. -- And no customers than that more I we're

but that this you from some other what So asked well. standpoint, will, smooth helps if of questions and out vulnerability you as helps a the some de-risk of

Joe Quatrochi

us it look those about Just would volume contract understand terms you be commitment? Is of customers kind like detail that looking talked longer on contracts. helpful. just you to any based type in term pricing? the fixed And maybe help what sign then Can length, like supply of just of do

Phil Gallagher

imagine we're kind -- these, that been some get years ingrained just managing, hub. those. had customers, XX, of years. we've mean bit we've XX all talking And household the the little with suppliers. for supply those A I'm more They for that a and of at complex of complex, again, them look been we've as Joe, supply names some chains I but their

they everything standpoint. So integral supply to we're almost chain a that do from

So are some traditional. of them

implant fine, that's that's a typical problem, have no store, a You consignment contract.

the that XX engaging of we've of shelf forecast, on at site, for XX customer head the to we've Some orders, demand, got we taking been have years. the my engagements the XX, people managing where receiving, top the right intake and that's the

it's And really become so integral.

investments. person when typically these into the get customer longer wouldn't You know person, was versus really complex, for of got who customers, Avnet which is they're almost make to you've part, you great. the you most go because some But the

we and investments on you’re on that So need transparent upfront to making and return get that investment. a we're

so to longer And typically much term much be nature. tend more in they more strategic,

Operator

I no are Gallagher at to any call There for this closing back the you. further would comments. like Thank time. over to Phil turn questions

Phil Gallagher

our operator, fiscal it. everyone fourth stay have Thank really a week. August and you In you, earnings today's you. earnings speaking Thank quarter thank all attending great the and report. again for of safe, look interim, call. We I forward in appreciate to rest the to for

Operator

this conference. gentlemen, conclude today's and Ladies does

disconnect a lines at your for time. this may You evening. your have and participation you wonderful Thank

Avnet (AVT) 29 Apr 212021 Q3 Earnings call transcript