AVT - Earnings call transcript Q1 2022

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Operator

Please standby.

Our presentation will now begin. Welcome to the Avnet First Quarter Fiscal Year 2022 Earnings Conference Call. I would now like to turn the floor over to Joe Burke, Vice President and Treasurer and Investor Relations for Avnet.

Joe Burke

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

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

Phil Gallagher

you conference quarter fiscal earnings of you, everyone call. joining first our year Joe for Thank and us thank for XXXX

also market and our the strengthen the business by regions, critical growth to we've our expansion distribution to margin ongoing and supply progress while relationships. investments in certain on last of efficiencies supporting no high accelerating continued a in shared partner our improve well we As despite for business, of and restrictions disruptions quarter, to core margin growth environment execute strong efforts pandemic

to This total Farnell changes achieving of for at stronger for of are position to much Avnet and execution to us business delivering quarter's we've brings as the and made in reflected operating businesses. market. and in momentum focus X% X.X% any goal Our least sustainable components, kind Avnet margins of durable results electronic our closer this a both

due Of momentum cannot lucky of the individuals dedication course, this a am is company emphasize largely globe. employees. and across with to hardworking to how I such our lead I truly the enough talented

team success. is complex stronger, resulted Our it endured I long-term has market, a has truly poised a in for that of organization resilient the believe challenges but more

we've as been in priority will enhancements they relationships navigate operating difficult that yield digital These critical success efficient. to confident or date, our our to investments and our have a and I'm to Even more to continued strong environment, has our business investing returns. make effective continue and remained people

market We by forecast. And operating sales for grew with that, business, and our made improvements in and of excluding originally In me SlideX. to prior Record the highlights XX.X% X% the we've than deliver environment sequentially, quarter, year-over-year we currency, to let the X.X% to to sales in first reached short-term and supported sooner the efficiencies, sustain were Electronic Farnell, margins targets the quarters. targets the XX%, that year, allowing our on and achieve these operating in the TI coming margins to week and billion, currency. Now improved of achieve up expect respectively. turn for quarter constant Components $X.X given these extra sales us of we constant in sales year-over-year XX.X% the current pleased

drivers. market was communication segments significant the automotive industrial, continued across partially segments results strength. robust are serving with driven strong as Overall demand Our and vertical by

repurposed business had Strong Electronic region at to on geographic sales. better which Looking in Americas the Components our largest primarily than revenues billion year-over-year Asia, Growth sequential the segment in three from the again contributed across X, performance $X.X regions. growth expected record the quarter. quarter all sequentially for with and continued in came results also to quarterly improvement EMEA in Slide and

in design investments all of activity first benefiting and engineers a also revenue, and design our tools gross field be off These prior while have continue pay in in wins Our driver application driving design digital quarters Strong as in and for of for record and organic margins, design sales another new strong engineering the levels business and supplier our continues operating Avnet wins design quarter. we profits design to had resulted win registrations for and across to key quarter registrations growth partners. regions.

chain As great global continue to Avnet We capabilities our increasingly to of technology chains. also supply existing supply parity. they in quarter, to positive the We're chain. center mentioned last new regions the build a to and and navigate with quarter excited out all customers well supply value excited at above services capability complex this this of be book-to-bill as vital demonstrate continue role the

like Now, Analog maximum the move Devices briefly to before on decision. I Farnell, to I would address

on products shared we discontinue X% of impact And XXXX. sales our only be company's our during accounted opponents with few intend ago, year Tronic immediate. business As distribution business. a to weeks the for its maximum won't financial relationship a fiscal Maxim about

proud supplier of needs specific to of strong technology and needs managing look dynamics, We're partners replace margin the We can market impact of we broader the strength supplier customers. these relationships our consolidation. the our we of of have partnerships record expanding current industry and our today existing line the believe the analog through and and dollars. track the forward meet Given card to

Farnell turning to Slide Now X.

and e-commerce to achieve the $XXX continue quarter. up we margins investments XX.X% at performance revenues in operating strategic SKUs as and million Our Farnell benefit of record in

months of investments total capabilities results We've XX% we businesses In quarters. the Avnet and transactions transformation. the quarter embraced the yielded potential digital deliver sales. to returns. notable the positive greater Farnell's from of as the to continue the has team platform Farnell XX we're all to XX% Farnell with platform last e-commerce the excited attributed in Our move revenues coming over for really performance And meaningful success by for seen even over digital as

We skews. to skews also fiscal the adding continued on XX,XXX add This continue reflects through XXX,XXX quarter inventory XXXX. our past this additional progress in invest plan to an year

Our been inventory at have success. Farnell to investments critical our

We were they've continued new XX% quarter investments, to broad of to deeper the enabled added dive that, Farnell grow to delivering offering first into skews from This years. returns it forward and quarter two on Tom a sales of as last base these to turn over look us results. overall over our around and our customers to bit engineering globe. suppliers With our strengthen I'll the derived

Tom Liguori

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

As pleased very we results Phil with our this stated, past were quarter.

start year While there's the and some share excited the strong still quarter. fiscal work our to highlights I by to am encouraged ahead, from

X, of Slide exceeded higher to our both our growing $X.X margin guidance. of with businesses. Turning billion of revenues objective and Consistent EPS adjusted $X.XX

electronic We operating Our Farnell. year-over-year, electronic in margin Farnell We XX.X% both objectives, X.X% electronic quarter for our delivered short-term record for Farnell grew and consecutive revenues although our components our segments. reached of components components XX.X%. second achieving sales XX.X% and grew

days manage sequentially $XX days days continue net a well our remain working quarter capital capital to year our XX managed, compared grew. decreasing with And which in in working revenues to million declining a expenses XX operating to Our we ago.

contributed these XX% the return on to in invested of of a All quarter. capital

our Slide reducing It our was expense operating on fifth of of profit our demonstrated of percentage also As operating XX. This consecutive consecutive dollars. gross quarter fifth quarter was margin expansion. has

of at for Our X.X% goal total margins is least operating X% sustainable to Avnet. deliver to

margin Moving mix. last primarily slower The income statement down September for points. to to the regional while by improved basis prior quarter XX remains Slide year Compared quarter of XX. was to Gross quarter is first XX.X% from slightly EMEA, due Asia on the XX.X% strong. quarter, margin seasonally gross

our gross businesses were year-over-year. margin Adjusted improved operating $XXX down of or sequentially. million expenses million of X.X% $XX All

expense XX% $X.X of the prior as currency recorded On throughout and the FX $XX.X the primarily quarter. from risk. Electronic which losses our Components a the represent impact British rate in year or to which decreased million also estimated U.S. XXXX. well front, across currency Farnell. quarter, with rate interest is as the quarter, On dollar the and pound, our the million, fluctuations booked segment foreign of fiscal Euro first total hedging We the results costs for associated tax adjusted highlight slightly between Slide We foreign transaction non-operating and we XX,

segment Farnell billion slight improvement record in every with from in a achieved X.X%, were Looking sales operating growing as had business. with of market. revenues revenues margin totaling by a the Operating to a operating achieved while manage million. growing Electronic across region the improved $XXX Components. The at expenses, continues efficiencies the sales team of last revenues first margins quarter quarter $X.X an quarter. XX.X% driven Farnell We strong

While favorable primarily the pricing their the improvements basis made driven in made XXX business, by two points notable XX.X%. The investments last Farnell approximately years. team contributed of over has

been new and investments pleased efforts as contributors e-commerce, in include have make as with noted, sustainable major our strong introductions, these all to initiatives extremely skews to which and inventory Phil expand margins. we're product As Farnell's Overall, operating of enhance and and well Farnell. systems

long-term believe that We effort. to our expansion component of is margin critical a continue Farnell

able XX. sequentially. a Inventory distributor, pleased Turning in tight flat to we on liquidity levels are as we're sheet maintain to these cash, Slide that a the in market. balance remained And relatively

to capital working XX. While we were capital still our were days working improve to dollars up, able

credit. we comfortable position. $XXX $X.X liquidity with the cash Our of and equivalents ended our lines and million, remain position remains quarter We with debt of billion available of strong,

Our was leverage X.X was debt gross and X.X. debt leverage net

as to compared our I allocation reinvestment approximately the share a reiterate capital half value book gone should Slide to grow our add distribution as M&A. net per and primarily be would will allocation systems capital like with half businesses, in expect efficiency to Our We balanced be embedded in to such $XX capital our year-ago shareholder approach $XX value continued Farnell, period. Reinvestments and to On to our higher priorities. to centers XX, business increased improvement, for will expansion, To dedicated systems. for well as portion a and business expenditures IP&E returns.

in returns, you dividend. the and X.X% top increased desire by our steady increase by on in reliable on steadily the delivering increasing June voice responded We a a we of your quarter. for And shareholder focusing For returns. X.X% quarter dividend have

an shareholder, you increasing through cycle. the dividend expect a should As

We repurchase the repurchase continue as allocation an plan. expect the also quarter. And toward of capital our our part our forward going integral program end of to we share activity reinitiated

Let me wrap guidance. up on Slide XX with

Our strong associated where And constraints. and constraints as today's guidance electronic The of today components and it above remain remains second COVID-XX potential assumes globe demand, guidance across supply price shutdowns today. impact continuing uncertain, the inflation. assumes to quarter ongoing relates they're conditions

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

we and at XX. our to to margins Turning businesses execution a Slide In objective such least by higher value core our sustainable of is X.X%. better summary, grow Farnell. our to the building distribution, Through as add in business cycle, X% remain excellent operating supported committed

growing businesses, that, on this higher opportunistic roadmap operator both the increasing and growth. to organic committed buybacks over for questions-and-answers. focus value. add With and it remain Our for value in investments and I'll reliable turn We to dividend, inorganic shareholder increasing

Operator

Thank you.

be will Thank Instructions] session. now conducting [Operator you. a We question-and-answer

Our proceed with Longbow Todorov Please first Nick question question. from Research. is with your

Nick Todorov

achieving good timeline. congrats on the thanks. ahead And afternoon, margin goals of Yes,

in benefits and continue of you margins? you the the that, that investors how So you're but mentioned for you're should think the whole given improvement going the anticipate on can the near-term pull now like those, see you that about in that reached next milestone that levers can question it Phil, those I backdrop seeing to sustain you've that current so seems are margins? what goal you think the to environment,

Phil Gallagher

Yes, them early. Nick. Sure, achieved we've

in the expect do the beyond. are - to in and and is the are think got about more, be off. off, able for see next we've XX you inventory to investments they and Farnell, quarters The We what e-commerce paying really revenue, levers to they their can the got they paying that that always to investments talked do skews We several XX%.

But all Americas, the and margins that in has see Americas. where of should as over more getting halfway job want with continuing you total. of they the come. team the know out a what stellar over that talked on the main of You'll what growth course a And with and But are creation. them to e-commerce revenue percentage throughout are Farnell, are demand done still there's we is then we've yes, benefiting about we called Those be. from are to pricing. on those levers,

to we So be benefit. want regardless pricing sustainable, of that

like thing all of there businesses I some fuel expediting think should in though, headwinds our you the other costs, know costs. are

and hard when, subside come. but time. to a those job expect did good our to It's to team we over So, more margins of say

Nick Todorov

you is? think return great. should where through about obviously dividend of cycle the and the Okay, increasing how to the dividend it's it's do how buy with obvious attractive investors And the a question the increases buybacks, But back that to do the stock think here. balance - fairly you're just that pretty the the stock dividend I given that, raised planning you again, throughout balance cycle? to

Phil Gallagher

lower that, of with the internally, year flow modeling starting our much that from right? sheet. committee So finance do companies believe time a forward. past? through a from every message cycle lot what most the we're is a many spent we through different just sessions our better as dividend at position increasing we cycles, cash an balance we're deliver the our and where that a is going We're Yes, point Why deposition, with can in we different

may Buybacks going it the level a net is to not but we're trying percent there, annual I'm to go You the continue appropriate. increase think it to What see that basis. an it get is will we at more of specifics, on level trying are it look as the get we're to and to the opportunistic. into on do income. dividend. to And we we from

vary game where based we're time you price, this it allocation market and the So in it'll expect the buybacks. of back really capital share should a that on lot in plan, took on And landed. our happy we're but

Nick Todorov

And me. Phil. from thanks. Okay, one last

quarters, from you give Can sold end? Maxim commitment some into on little Maxim. transition there. on few Just the timing bit for replace that strategy you on the understand dive I'm dollars gross to us guessing a us next the Can growth out Thanks. timeline? the help of you're

Phil Gallagher

that plans total the sure, and the a the Yes, year. roughly next our we at over supplier technology, of few be frankly, balance X% on Yes, re-budgeting, did our don't any Nick. And we the of beyond, just it script over. partners have place, we Internally, not we're ago. of got mapping great we're that's weeks And in we've fiscal affecting earnings know, few Maxim, see Thanks. actually you the team. parts the going have to it for anticipated putting we that revenues goal doing

great it one So issue. to as won't is great again got And Nick, go We technologies for got relatively We but an opportunity the replace us see this small. card. it to a gaps. it, an be line not we fill

Nick Todorov

Got Thanks. Good luck. it.

Phil Gallagher

Nick. Thanks,

Tom Liguori

Thanks, Nick.

Operator

you. Thank

comes Our proceed Matt Please question Sheerin your with with from next Stifel. question.

Matt Sheerin

customers slightly, of probably could can't has but want to wanted missing you everyone afternoon. Could up was EMS it. more about thanks. noticed ask constraints, just de-commits you to I inventory give seeing Good imagine big your been get Phil, from supply us about I talking if semi-suppliers. and parts. Yes, have about I color They're environment, a lot and the they talking what your because are you're supply guidance, a all get you'd

you are well? parts So you getting color as there? just give issues having us Could

Phil Gallagher

Yes, broad of Matt. a spectrum such commodities.

know, As more you available others. some parts readily particularly than are

were pretty As We're far But ages that really much across fine the still last is out or expediting more, they're with up the a fine Pretty have different out course, out, the of inventory where quarter, that. with at No not million we're across as And like our We'd blew whole out were standard, inventories. in about as expanded a point last now going commodities. we're - you quarter, out The of days the like times we we you up. but play really lead commodities inventory being I'm the the it. saw And lot right? there. really question they to board. since roughly $XX looking have numbers everyday number.

customer-by-customer. is but we're It's lot doubt Matt. how call is that, say to inventory with we tough the good it. much, overall, a chain. a if saw for there still always about got do no we more pain There supply exactly in can sure. it's of yes, Tough So pleased But growth, more

Matt Sheerin

gross to Okay, also But sequentially. was in pricing Farnell, margin, down mix. a little which your but terms on think thank benefiting you. I I would And premiere on business the a that you're imagine was mostly on the that addition side in margin. core bit of

it looks like it should into that up So backing what expect looks for the be like sequentially we number, gross should December, margin? the

Phil Gallagher

But - margin electronic right? But slower. a great time. slower. at Yes, is margin is components. The They the current a not gross job gross did look really our year-over-year, is one generally quarter, Matt. is This flattop the were building businesses makes this if they their for big and up. of news Europe - was is this you Asia quarter every good in

Matt Sheerin

Right.

Okay. All much. right. very Thanks

Phil Gallagher

Thanks, Matt.

Operator

Thank you.

question is of Ruplu Our Bank question. with from Bhattacharya your Please proceed America. with next

Ruplu Bhattacharya

for on to on margins. thank guide. and the has my with taking quarter you first Congrats strong questions. question the Farnell Hi, My do

on I it so you as this the have points the should this also The I good sustain constrained Farnell And And forward? there things this pricing. question something fiscal ecommerce that can forward were that about prepared XXX Is quarter? that remarks pricing 'XX? quarter the achieve made target? XXX is room And when from basis do Do and But mean, it's XX% the you basis is those next to and that transactions ecommerce. just think points is sustainable you a see of had strong going I environment, Tom, XX% in going said on - transaction strong. of a pricing on just sequential takes given, think can I was you of think demand you side? is improvement, if increase puts then further that think we

Tom Liguori

Ruplu thank the Yes, you question. for

in stellar gross operating take which and and So keep new. that that, X.X%, benefit, would so benefit pricing before margin strong quarter, there points and been the the and in out words, quarter have other isn't still anything basis they this a now, before So is mind, for you is margin if right? quarter, a was quarter had growth, a XXX pricing the

in people or new is we to higher they're one So invest that and to higher. seeing to going And us, sensitive. peers in skews, puts they in can operate continue bringing not much pricing, that revenue their think less e-com, in they very at in performing is number you're well, cheaper to are XX% We're our with levels, but systems the without the to take will the give targets, web order continue is get to and generally and price ecommerce. process, investment website, two, number

with So did subside, and them fuel with I with some does mention we're it they even Nick, business very we on was costs. think helps happy freight have I and that. it think headwinds more. as those will time over to every And

happening good really just So with Farnell. things

Ruplu Bhattacharya

the Thanks appreciate Then for ask to you - I wanted details. I on Tom, that, OpEx. about

out? done opportunity update have there think you SG&A forward? operational more You've is your take controlling cost How any Can efficiencies, about to more an restructuring us efforts? job on a expenses. good should going we more give And

Tom Liguori

market, gross for the And really the in more out commissions. for expense operating we've a company cost we've need on for of focused on going their we're to percentage profit everybody and logistics, a reason focused Yes, as dollars. really growing sales for freight got in that

things costs? percent Are low in reduce with for think there that we view available work five the to certain of we're down was one is, to of business it we into continue Yeah, XX% a on to as are OpEx economy. there's for the set think a has deal the in like mid-XXs. more very gross doable. reinvestments things I that get But news inflationary XXs - an can and reinvestments, those that's - specific slides to dollars those to high We outsourcing. we that good the come quarters So dollars profit the was row

Phil Gallagher

with right. Yes, energy it their to white brought and right. XX% cost to the Tom. There's the core And the me. same the a Farnell even transactions, Ruplu generated you their close side we black is Well, of thing jumping And of about equation. being out XX% the This as Phil, just lot hard of let dollars out taken talk online. up over well, just efficiencies, digital

adjunct So not community. e-commerce, about digital online an FAE just customer a technical self-serve, support to but an automation our as to

So areas in a lot those of where can efficiency. get we is,

lot we So we of a as that. grow, automate more can

Ruplu Bhattacharya

your can please one thanks much stand? Can make then the target? more to many And Where And the you can more in that of make it for us - I to that. trying take similar that you that there - target for of do up on you up for mean, have I does Okay, Phil. up? how with you're revenue Maxim just based just how if do Thanks. TI a remind need How make you is revenue? long to

Phil Gallagher

- of in mean, time. have kind are of this TI in had without there our we in to The sure. market example, record with those Asia point Then without Europe not all. guys. Ruplu. the you rearview if recovered, quarters, help Parts the at all-time mirror regions divisions most, record we it's kind I quarter at a got look Texas. in Yes, most But for Asia record had quarters for of if

we're kind on moving that. of So of and off

budget. it's not to believe have going Maxim, we next We said 'XX, just effect. to As plan earnings. we it'll a for the as just for we quarters be don't. And any several fiscal net far and that don't into baked Again, our planned we number the as in

on for no Maxim. this - we're re-budgeting So end

Ruplu Bhattacharya

for Okay. all the Congrats again. details. you Thank

Phil Gallagher

it. You got

Tom Liguori

I should look.

Operator

Instructions]. [Operator

question Jim proceed Citigroup. question. Please Suva with comes from next your Our with

Jim Suva

two have much. very And you questions. Thank I

with than handful works any the going Or end and we're any ask the think Maxim then shifts mic. a I'll of over here? what want. do could the if order and of there's over is, more share think an relationships. And to the is more shortages? are that, you And maybe Do earning are finished The off or question? come other to not? enter can And there just past But doing handful can elephant years, You be why still like you of my everybody get asked, question been that's a because given more you shifts, we you room answer question some question share is semiconductor second that it and or seems integration? that the on more in why Thank you. components one you and fill

Phil Gallagher

Yes, Jim, I'll take the subpar there. first one. Supplier, you consolidation, really talking right about And right? out share put - a with subpar consolidation

win. you Sometimes

Sometimes you lose.

in I've they're Motorola, sometimes right? decades. this Fairchild and okay, electric And But Cypress new. acquired look around that's the got dialogue back went that when at the the But acquired so been decision Microchip if right? they're national neutral, other recent Infineon. four lines. not and started And merged. gone, acquired and Avnet Renesas by They've and were house. way. one, Microsemi, most it's been We've IDT I inner but all And, you acquired for and and in top that general

So they proposition chain the of marketplace that. bringing supply and to execute jobs we're technology. design, to okay, what our We center do is we to predict, drive adjust the go from being value can't the forth back kind to go and through can

we can. possibly the in frankly, on we'll we side, tough many boardrooms. feel be as execute we we to sit for don't But if again, predict, the as well, So, winning

be know, got doing be out on. offense, going to issue. is you this again, Jim, else around no continue. it's on And move no and to And there. got to question, happening don't what one. just It's, something there's adapt XXX So mindset with the to we're that's There's years,

can know he earnings. you're jumped - what And I assumes assuming earnings Tom bringing ASPs the you're about I'm the off mic. over in. On talking the jump up?

Tom Liguori

Yes, exactly. the ASP exactly. Yeah,

Phil Gallagher

Okay, good.

way right? You're some get suppliers. hopefully, inflation, because at first And question. I increases iterations the your plus the still there's then of poor a of an XX been it's I mean, answered looking suppliers, cost We're we increases. some the by there? lift from as which So over that, price multiple ASP

the it's can. prices part still which portfolio, to of supplier or those are keep So we we're you our But marketplace. proud right? to work you on XX% need on teams, Every as effort of the can flat, the in XX% we little and competitiveness imagine And bit on mind, of. the is really as might quickly the a bounce to of different. exactly. pass it handles XXX% are our whatever that It's not Then or in others on be it number a customers

down much to And by would in X% So much to go trying yes. something way, X% not the that ahead, as might not that looking year-on-year, by inflationary nail SKU at it's quarter-on-quarter Tom range. you versus we're But as be that how think. is ASPs not. as

Tom Liguori

what basis. saying margins to that's Jim, we're X% operating X.X% on a sustainable

we price right. got X% increase. really, freight But that As points, that much headwinds have transparent, do say profiting the XXX opinion we out. are, Phil Again, we're near-term, again, And are to going but with X.X% said, in where but X% not on say, you're the it's trying they to to Farnell basis, on core, there's a to was to little to hard from be passing benefit, different their but basis that, Everybody's right? not as benefits here some that's realized just I that X.X% sustainable there pricing. but sustainable basis. on a you're

Jim. Okay

Jim Suva

details and appreciated. for That's the Thank Thank you clarification. much greatly so you.

Phil Gallagher

Thanks, Jim.

Tom Liguori

Jim. Thanks,

Operator

you. Thank

Fairbanks next Raymond with question question. is your from James. Please Our with proceed Melissa

Melissa Fairbanks

you've priorities on my of excuse mentioned a you while the targets it what now Farnell A Hi of the this And that in of couple as to or that, buyback capital capital question with the things And for slide. margins? that's as noticed, been since first I provide since this a highlighted is Thanks. couple quick for that this benefiting sharing there? a just - of M&A. kind looking for capital the color Is one we done any priorities you're to, you business thanks strategy And noticed, you time one allocation a the your kind then that's the taking of of for are capital share now allocation, your in done leverage, is in things while have M&A. while. the one usual? structure, the of a A potential things me we guys, with business highlighted the follow-up know things I that as optimal that It's been like as a that related allocation had that a time capital growing shift you accretive as you normalized of and first question. returns, one can while. It's to is a you've at? just reintroduced, target slide. do

Phil Gallagher

thanks We're call. glad on Sure, the have you and to Melissa welcome to Avnet.

Melissa Fairbanks

Thanks very much.

Phil Gallagher

a smaller The M&A refinement, add maybe capital said businesses. value slight allocation, year more it's to strategic our higher we've growing refinement,

So embedded which that's margin. Farnell. we yes, a to that we've And we Yes, chips, why which can but not do. that that Avnet that we don't IP&E slightly have interconnects, we software, added, company targets is passives going them. share systems, few. and to by bringing That's But make I we we talked think out we about benefit mentioned better is too are we're going things to mentioned do what is think a much higher board these internally,

leverage is That our more mid be cycle two, the net because where On on could at our important cycle, the three, leverage. that's be but Depending in question? mid-twos is leverage target look less. we times it answer below two capital the it is gross could structure, more your as through And the desirable. you're

Melissa Fairbanks

does. sure much. Thanks very It

Phil Gallagher

Thanks, Melissa.

Operator

Thank you.

question from proceed Fargo. next with Please Our Wells with your Joe Quatrochi question. is

Joseph Quatrochi

quarter that sales Curious benefit business for points talked percentage also, what targeted question. goal and the the there of about, last then Farnell basis terms on was just taking is pricing time? e-commerce in for of XXX a thanks Yes, over you that the

Phil Gallagher

think I points. about we quarter, it last was said XXX basis

So this is new, within that They recall range. not Joe. it

So this quarter. continued into benefit going

to Farnell that. We more efficient then to And publicized web They're for the orders goal better they're there's haven't a Yes, for to grow. pricing. only handle. typically say room

Tom Liguori

off the lifts team. transaction really in Yes, Joe and XX% to we're pleased. of load side, closer yes that over to absolutely on We get XX% really broke revenue the the e-commerce a

well. we increased more it's that. drive XXX what's that, skews e-commerce, put So helping new with with the we've the which over the published, touch to the to do we an do with got does, we're behind to what will one, when well, enterprise, continue of service plus take the And automation, goal obviously not in you initiatives to some XXXX scenes right? across will Farnell if which business going best exact as our that that, of as leveraging over is high to it, the obviously go many model, to if and we put beginning to but increase the and committed that's then So we're core low

Joseph Quatrochi

services you maybe your chain disruptions Thanks, just for supply I And there, about relatively margins? given if seeing talk higher then seeing the sticky that's as wondering was a that's could that follow-up, helpful. we're demand in out the all you're I that assume

Tom Liguori

worry to about Yes, that up say I'll get supply people are I until don't can't chain they take they down certainly what chains need. supply as on like picking services

we're supply Tier-Xs So many we're because chain suppliers for and from capacity, velocity. assistance. they're increasing actually calls our getting And of near many they architects for [indiscernible] our

typically bit goal over be well might Margin they XX%, exciting. margin have, have sticky they they which but different, well some little as model. own we higher also a a above more the model returns on yes, unique opportunities net We're So XX%, are those it The margin returns, returns corporate of seeing those lot of depends the are, are that is Joe, the a for sure. so XX%.

your So had is great. quite sticky. which a good But it's but the very calls. we've few global okay, is Typically point business to

Joseph Quatrochi

you. Thank

Tom Liguori

Thanks, Joe.

Operator

Thank you.

Longbow question your with question. proceed Todorov Please with next Research. Nick from Our is

Nick Todorov

follow-up driving change or one you expedite were There volume the if suppliers think it guys in and just you of so do you why requested but see a that? do breadth us, that do, Yes, talked about by customers? some is

Phil Gallagher

any call as this the expedites as past quarter go. Yes, and jump this far in same back Nick, was interesting as again. would is say earnings you as I

to I'm next. So lot in a People in to not they're talk quite by and have a Tier-Xs frankly, declining many few of calling years, stretch, any involved myself. us

the sensors analog, really certain than available, so So products and power, a discreet, in space, causing a back what to are I and products certain just lot this it's just fine are broad. tight. but time Matt's and issues are others certain think question, what's it's Again, really, just of certain sign tighter controller

was So the that disruption it's But in tighter I it's call. for of think some causing this little asked earlier get a going to short-term. here

Nick Todorov

a of Got people trends Some call are quarter. any, strong hear there? very perspective do seeing softening What particularly specifically in in coming or do China. it order from What you see, of Asia, it. And China in the moderation last too? there on from Asia, power Thanks. impact you and question see just terms performance you your any you shortages about out do the think in

Phil Gallagher

we've of in Yes, had really Yes, it's Asia-Pac. quarters across And Asia. amazing the number great an question.

really, stream. just more So because diversified, it's a which it's or China Greater will not really if you China, is from revenue good news,

still pretty the moderation think yes, much mean, probably I word. I the are on positive right is numbers. so book-to-bill doubling record

actually So a probably there's thing. bad not moderation a

Okay.

moderation just to starting this year, year, normalizing and Chinese we'll won't next goes, Year right year. maybe But you how quarter be then it into canceled, effectively see is So the was get term. last this New again,

three, five four lot a strong over there. the variables our still or but into in there's with to So Asia-Pac map pretty months more overall, team next

Nick Todorov

thanks. Got it,

Operator

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

Phil Gallagher

to here, questions. be a the to certainly accomplishment year attending achieve. Appreciate company up persevere century I not what's thank for this that the my outstanding companies the years. in much. pretty call. incredible you for thank very want we'll excited In celebration, XXXth it's It's next today's that Great, and come earnings anniversary time seen all adapt, many year everybody wrapping in businesses, future XXX I've in evolve, pretty our our

look As to expect operating as the to we we persist. next current quarter, ahead environment said we

to positions demonstrate for believe X% returns. market Avnet safe. impact execute and results supply year capitalize us the supplier the our past shareholder year ability of continue center capture margins internally all our the role reflect our in year the deliver of these global to driving at Our opportunities. staying the to significant Thanks. total customers again invest forward operating our second earnings a over in We've upside X.X% technology than to growth, look changes current to to quarter you steadily With least market, at healthy hope Avnet's changes, the ever. continue January and additional Have our and type that priority remains We to increasing day. partners past sustain everyone and made fiscal close for and any speaking in that, results. business XXXX and capture will that stays I to chain of to on we a is durable continue vital to I great more

Operator

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

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

Avnet (AVT) 29 Oct 212022 Q1 Earnings call transcript