Earnings call transcript Q4 2023

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Operator

Welcome to the Avnet Fourth Quarter Fiscal Year 2023 Earnings Conference Call. I would now like to turn the floor over to Joe Burke, Vice President, Treasury and Investor Relations for Avnet.

Joe Burke

Thank you, Paul. I'd like to welcome everyone to the Avnet fourth quarter fiscal year 2023 earnings conference call. This afternoon, Avnet released financial results for the fourth quarter of fiscal year 2023 and the release is available on the Investor Relations section of Avnet's website. IR slide via will earnings the well on the can today's release of website. as found our be link the copy presentation accompany that remarks as A of section in the

company's contribute to As regarding performance a contained this news risks, publicly results only forward-looking contained update and statements the actual undertakes supply release date predict. and most uncertainties, contain XX-K subsequent to not Avnet's such the filings and and and this or guarantee call new no are information of that with are obligation cause after in this presentation. Such Several date as materially in difficult of presentation circumstances conference These differences the speak to or the described differ on detail statements from some such the company reminder, any in Form of the factors statements and information involve of of in assumptions could recent the that could that statements forward-looking the XX-Q SEC. those the forward-looking are forward-looking statements.

be Gallagher, and Jacobson, me Avnet's CFO. by call Ken Gallagher. let led over turn With CEO, that, to call Today's Avnet's the Phil will Phil Phil?

Phil Gallagher

we of navigating share. XXXX a for you, including Thank of while execution to the earnings fourth quarter the growth you, uncertainty. fiscal maintain results to $X our earnings year joining continue of for I'm team drive market financial fiscal per over thank Joe, record with We robust momentum our as through pleased deliver from XXXX, and year conference and our everyone, fiscal call. year throughout XXXX

leverage currency. grew fiscal operating more Farnell Electronic for than year-over-year as delivered and year. in times Operating operating X.X% Components business our sales were greater than units X.X% delivered margin XX% achieved Our operating income up sales. And margin two constant the

customer capitalize the diversified several of strength the our base, over we to next the expected end of our growth supplier serve, As markets line on card, ahead breadth industry with positioned they and we years. look the the well are

in our fourth-quarter $X.XX margin helped to of we coupled businesses grew currency business. of in greater. while with our drive the six stronger-than-expected the in investments Now, X% efficiency which Components consecutive let's X.X% a sales EPS and our In making quarter, year-over-year EPS constant at These quarter. achieve the is Similar delivered we of adjusted $X we quarters turn necessary efficiencies, operations, and to in last the adjusted to continue or quarter, operating Americas in Electronic still EMEA us results.

this overall, Avnet notable at we or at consecutive is It's delivering adjusted margin EC X% operating X.X% last in Day year. Investor our quarter June margin operating that and communicated on greater of margin the second the targets for

quarter, we in year-over-year markets. sales During which growth offset saw Asia, slowdown partially in end the in the Americas was by expected sales declines continuation of the continued a Asian regions, and certain demand EMEA in

From strength experienced automotive, most industrial. verticals, transportation, continued overall key an notably we and perspective, in demand

although aerospace. that come improved, for some microcontrollers, as times are and for and lead defense automotive other modestly in to Average these many of power, demand solid more continued saw than have the many components such Lead into high-end constrained lead for also elevated continue down, categories. categories product We components but segment. the time certain still times go categories

to current last of regions, time quarter. similar book-to-bill demand the in levels a conditions, remains As result our parity below lead ratio all and

consistent and quarter steady relatively as well. remains with backlog last Our

While to cancellations impact elevated, are minimal our on date. backlog the has been

standard pricing. quarter declines with also product some The remained pricing the environment stable during in

few of that of to which come years. the a costs down anytime big some hearing our driver past are supplier was don't soon increases input from they partners We expect over price

believe EC we relationships, business our along our marking this is business gross margins quarter. year-over-year increase up. our including to customers seen As was in We past reason stable our historical without approach customer to them EC our pass approach price this in merely the value we've

Components operating sales Turning in for $XX were a strong X% increased our fourth billion group our had consecutive to highlights. year, nearly in EC quarter XXth year-over-year marks Electronic This the Sales of reaching and sequentially. flat business. quarter sales. year-over-year the growth

second I consecutive for very sales and operating the earlier, team gains. the Americas quarter our with market region achieved mentioned margin achieved X.X% quarter, operating strong margin record quarter another EC share As and noting EMEA of sales delivered solid a

demand a all across resulted a of for design quarters wins design prior in in demand yet once had and creation of again quarter sales we gross and regions. High levels activity quarter record another in great and creation profit. From standpoint, engineering registrations

some be Our to our customers activities years new redesign capability component needed past creation Demand to the occurring designs in in that the for as are opposed next-generation overcome supply an engaging today's couple of FAEs continues for shortages. the products in technology essential to were chain.

sequential EC it mentioned couple as call, take levels Our will were quarter's on on And a flat of for out. quarters last to relatively inventory earnings basis. inventory correction a the I play expect we

were are they that calendar sales. This enter would closely our quarter, as XXXX, with characterize we as stabilizing inventory levels we more aligned optimistic and we

inventory, days and to inventory be down the of quarters to the our quality in work ability continue in We to confident the come.

to Farnell. Moving on

year-on-year record currency. up Farnell fiscal solid Following billion 'XX X% products. lower-margin X.X%. $X.X due primarily year 'XX, were Operating sales In sales an of and the year had sales operating year mix margins margins of constant affected quarter, fiscal down a to in in and in of fourth unfavorable margin a sales were with X% sequentially and Farnell

single-board in to have in and for computers operating help strides income will related their Farnell eased, the components quarters. which dollars on constraints making computers, single-board As is now coming backlog filling sales

we We've our near-term at gained Day back operating I'm margin market a ago. record our the pleased reflect goals, and for very attained EPS just I year Investor made the year. share, goals As communicated fiscal we've revenues, progress achieved a grown over the with on 'XX, with year

execute team of in really deliver uncertain accomplish more career. the bright for to still most to is I'm Avnet. of and my seen especially one is and and proud of future the But I've markets there dynamic our in commitment the

into in head XXXX, fiscal continue generating and profit good we we our will sales. operating to As than with year growing commitments levels reducing to greater be make cash, sales, on focus to our on inventory line

to continue of for be market key strengths, helped which lead Our gains our supplier partnerships quarters. share to has one several

customer see increase to in We bring the we are both supplier that confident helping value partners sales our and our accounts.

over positioned well several the years. growth expected the extremely next industry for are We

substantially the features our card is card line key Our line our customers high-performance all of technologies need and unmatched.

and chain really defense service expected The and serve, at of the key the growth and our as to for chains, next include capabilities have excited overall center industrial, resilient technology which markets with about chain. customers rates the high end to our four three opportunities market to a combined the are need over supply transportation, have years. we're we supply When supply

look it the So results over with that, year. and me financial fiscal QX let for to at Ken for Ken? the turn a

Ken Jacobson

performance our and to chain. focus believe year of thank about you, strategy the and partners customer validation on effective Hello, our the your stronger, gain with operations XXXX supply are us technology center over continued our helped Avnet. makes Thank quarter focus a closely working efficient supplier profitable company. the interest share us at of This and a you and while has years for full fourth and positive We past everyone, in Phil. fiscal couple more

and year-over-year Our up XX% EMEA, Americas partially sales a currency. Sales and in and the for quarter $X.X sales sequential in an XX%. for This the growth exceeding end fourth In with basis, year-over-year. quarter guidance XX% X% of EMEA a Asia. led On expected record top the growth constant growth sales was up sales in nearly were the our were grew XX% in approximately range with in year-over-year Americas, growth Asia slightly billion, offset of by constant X% declined by decline X% was currency,

currency. X% and reported constant and Farnell in Electronic X% currency. sales in both lower Component constant constant sales reported year-over-year, operating sales an year-over-year sales X% grew in sequentially group higher perspective, Component currency. both constant Farnell From X% Electronic Quarter-over-quarter, were grew currency. as as in were

points to a due fourth of our margin improved the gross relatively primarily XX.X% from mix Western sales quarter, was and flat year-over-year basis of year-over-year XX For greater margin improved Gross regions. quarter-over-quarter.

of products margin were Electronic lead of on-the-board regions. and as greater premiums Components' year-over-year unfavorable improved purchased sequentially both rate primarily our sold. impacts unwinding have combination a when exchange to and of times pricing were from from Farnell gross down when products was year-over-year Western the was foreign both primarily versus margin component and a up gross sales to due due from mix sequentially,

on continue operations. efficient We and effective focused to maintaining remain

controlled grow significant well able Our we operating our be expenses overall increase in as expenses. have continue been sales any to without to

the were year-over-year During adjusted up $XXX quarter, operating million, up expenses X% sequentially. and X%

by negatively currency operating Foreign sequentially. million $X impacted expenses

quarter, As than XX% lower a than quarter. points operating basis basis gross last fourth XX percentage profit XXX and adjusted the year of expenses in points dollars, a were ago higher

faster year-over-year For which two grew times income the consecutive by is times. of the increased sales than three growth income sales operating constant operating more growth adjusted million, X% our in XXth exceeding fourth quarter, This and quarter currency. of we $XXX reported than

quarter-over-quarter. improved XX fourth basis margin operating the adjusted flat points year-over-year Our was X.X% was which and in quarter,

EC Electronic operating was income than quarter-over-quarter. year-over-year EC XX% our and operating expanded X.X%, points flat million, operating led was essentially group, Components' by Americas year-over-year. margin and year-over-year, up $XXX which operating margin basis improvement basis XX By both up by was XX EC more points businesses, EMEA The

Farnell mix continued was impacted X.X% lower-margin XX% quarter, pricing be points year-over-year. impacts, unwinding down Farnell was the income sales of quarter-over-quarter. products. million, of operating the basis premiums, $XX foreign XX operating rate exchange margin and margin an down unfavorable Farnell from by in to operating

operating our corporate margin goals fiscal for by of X.X% delivered expenses, Our X.X%. income with exit operating when margin targeted fourth-quarter a achieving income XXXX margin a combined our on operating groups, excluding

million expense increased below increase due interest to $X.XX and was in expenses $XX negatively interest quarter expense operating $XX to primarily Fourth The earnings market rates. impacted share of year-over-year. sequential income. adjusted Turning by increases by year-over-year million Increased per million interest diluted $X quarter-over-quarter.

was and quarter effective XX.X% the in income year. the tax adjusted rate full XX.X% was Our for

was but decreased year-over-year $X.XX for effective quarter. adjusted $X.XX $X.XX the diluted Adjusted income rate better-than-expected per higher share A in share earnings tax by which per diluted quarter-over-quarter. earnings quarter, the approximately $X.XX benefited were

Turning to liquidity. sheet and balance the

in $XX of working million, by increase the increase During quarter, payables in decreased offset million by inventories. including million capital $XXX a an $XXX

our days. one day XX result, a working capital increased quarter-over-quarter to As days by

our four Our decreased receivables by quarter-over-quarter. days days one-day approximately inventory days approximately increased and by

to capital our of two be on continues working times cost return Our capital.

investment continued Our inventories the inventory due to during primarily breadth. quarter at and Farnell, X% largely replenishment in increases increased for

we As increases of believe initiatives stabilized. be which levels mentioned, Phil the strategic create will expect the temporary consistent term, have levels in inventory when levels to adjusting fourth-quarter we generally Near effects our inventory with levels. inventory for any

We customers continue our quarters. inventory remain inventories and ordered with inventory their confident related few the to and on in to purchase the We quality days turnover are our next of inventory focused work behalf. the improving collaboratively on over

in to quarter, operations first for the and due operations inventories the in to we towards of generate the for come to will expected to flow we In quarter, Looking expect expect see strategic fourth generated business out from our the second of increase flow quarter. temporary $XXX end during to first cash the cash and which ship quarter. opportunity from the quarter million inventories a EC first are we in a

approximately to to Our of during of opportunities the capital needs working sequential improvement. dividends, a allocation, available our term, quarter which the decreased regard committed X.X times, But capacity. of continue end, shareholder million the with At we leverage had near gross $XXX and capital returns evaluate our With remains $XX share buybacks, in support quarter expenditures. we was to drive million by and debt capital the to M&A. business, including including all priority approximately borrowing a

share market, were capital expenditures we During used for million. cash and share are [Technical warehouse or share in a In fiscal million XXXX $XX reminder, paid value as fourth we per elevated a in $X sequential approximately was per to approximately in during new fourth fourth the improved Book our continued increase shares due our expenditures a shareholder when quarter. dividend of case which by our to increase investments quarterly share. our repurchases be Difficulty] the per to the capital $XX Europe. the a value to quarter, $X.XX $XX share the quarter, believe undervalued and of or

guidance. to Turning

are guiding in billion we per $X.XX For share diluted the fiscal in billion of adjusted of the range sales $X.XX $X.XX the quarter to first to XXXX, $X.XX. earnings range of and

This and first sequential quarter. on a sales market increasing with assumes down regions guidance Western to typical sales is of seasonal X% and shift growth Asia implies conditions more based rate sales Our in declining current first-quarter less a guidance X%. down a than mix

million acceleration tax For in components to related shares decline basis. to assumes similar factors, due Farnell continuing be to Farnell, pressured expenses. rate previously and reduced of similar operating on between a impacted opportunities we and interest levels fourth on-the-board outstanding the expect combination Farnell expense that factors This margin includes compared of XX% to sales due near-term declines margins, guidance XX the including diluted gross a we are In margins. identified XX% operating evaluating quarter effective seasonal on the in and reduced to operating margin also to demand which gross fourth-quarter expected response of

would In for closing I to in fourth to opportunity thank a Avnet the record like quarter out for hard the the this the outstanding year their their around closing, team efforts take work in company. and entire for world

over it for will to to Operator? I turn that, open back operator up With questions. the

Operator

we and you. question-and-answer now gentlemen, conducting a Thank Thank session. Instructions] you. be will Ladies [Operator

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

Ruplu Bhattacharya

Phil, can the the the of talk about revenue led surprised high of Hi. questions. And you the end You to Thanks beat taking in guidance. you talk can quarter outperformance? you that, talked correction for quarter, inventory last about the and part you in last do that's my what that? still industry what in the an had supply? excess linearity experiencing is long the and going you are think quarter, parts to How and about

Phil Gallagher

the me execution out inventory the markets think really it we're Yeah, by the work terrific let your say we've defense. a with just quarter transportation, customers teams. strong I to say in just back in the been Yeah. just get The continued saw it with a of and course did surprise. We in job. saying, we the team and it Thanks, would first very and automotive, question. Ruplu. was start part would was I came nice industrial, in, of strength the as I

as So it just to on, quarter the continued strong. stay went

Ruplu, for are okay, when the So maybe able the by been But execution not a right? long think inventory bad [indiscernible] really is inventory, team. and I we've quite the to a have saying right it's And we inventory get thing, get time, as out. So, you in it back

inventory last said, the itself inventory right, we as it's touched think the On in had I I call, quarter, industry on correction.

I still modestly. frame, were quarter what that's time three basically as sequentially out that's inventory in two saw we think playing to a really think up I

that's still think I playing So out.

be not mean, And weighted, have growing again, the like heavier not There's the It's okay? me, everything, to And inventory. inventory. to handful healthy. is of inventory. it's is mean trust areas, inventory we're tend suppliers more thing. we'd want so bad note, There a I to just I I other that talked also a about we where

kind of generalize it's one lump sum. are we -- inventories the But is not So often all same. inventory

answered that Ruplu? your hopefully question So there,

Ruplu Bhattacharya

Yeah, thanks also you that computers, there. mix Ken can talked reduce about operating XQ, that think to margins, help for dollars, for some of more persist. I they're about a sales you issues mentioned if fiscal the And I maybe the costs. single-board about income available, operating but should said that couple ask Phil, details opportunities and so some talked you you the things Farnell

you term Do of net remain they and about segment -- a quarters this cost little in the term? below or over should have in think medium how of it, think reduce should next couple margins? Farnell about if near talk we opportunities to operating the we XX% can bit how So, you and medium in what about the

Phil Gallagher

get few let -- we or non-traditional back let's turn quarters talked to talked FX some Yeah, as last shipments some, product on a we on in over and issue pressure mix the of previous backwards Farnell some to coming to XX%, some and we're of were in Again, in XX me Yeah, standpoint it had about is upside the flattening coming take where from down I'll Ruplu, going had we we to and years, the some that customers getting we've Farnell. out -- pricing in call work over the which product products we're months some about, expense. Ken more had Farnell. buying it from the

heavily say were good we've down about starting which tent us. that's like up let's shipments on-the-board and and headwind the we long up parts components and So looking talking that's those a margin there. with pole business things computer, that were to backlogged going are bit been catch and the coming little single-board Yeah, for that with for with some

So make still Just not drives it just lower It be mistake. okay? no dollars, to percent. tends just calorie margin,

assured, take or double-digit, back yeah, OpEx? going So Ken, three get into us to or long so two it's quarters. couple of maybe that quarters to on

Ken Jacobson

Yeah.

in closer But due things. we've Ruplu, think some I after. things freight on to Farnell you about kind think being all I should can you little think people, think, to we overall. Avnet it's but need that had But and of the the meaningful savings, I the Farnell's experiencing. that at go opportunities, it margin not the necessarily clear to the demand not lot of and to a a to of business we radar. just meaningful OpEx overall pull those environment that operations about And have looking of want to It's as be

Ruplu Bhattacharya

Okay.

a X% Avnet think on And think your about sequentially. sneak up for inventory I can Ken? going maybe I was we if a I something in said inventory? Are Inventory quarter. little EC in, for bit for at the first you now inventory up Okay. peak more -- one

working and in cash couple just terms quarters cycle flow? requirements So the thoughts your of free conversion cash on next capital and of over

Ken Jacobson

Yeah.

EC comment quarter. think on late in was ship is, it term inventory out word inventory And getting levels. up stabilized, next did the opportunity there I So we quarter But flattish we inventory where there to so the quarter. quarter last we're modestly we'd are an have like compared this to -- is what and

flow term. to So the generate into be inventory believe temporary likely first to the this million a From there cash increase $XXX but quarter, right are we stabilizing we going quarter. is happy still over in is a perspective,

the will flow cash think I continue.

see guidance but at it probably still is inventory sales stable with the sequentially, levels. get flow cash few going how look little we a You to quarters being down out bit the take it's inventory to of the a generated

Phil Gallagher

I'll good Yeah, Ruplu, with flow add that, the Ken. just modeling Difficulty] thanks, and impact to and and cash evolve [Technical return. what's pickup finance

-- just returns a working and flat little capital just the positive it's not it's should strategic, they're inventory for that, up something that probably will the the drive to bit. be to company. should for be a of So Outside neutral company. not happening, the is It it's stable, very down inventory bit good

Ruplu Bhattacharya

details. it. Okay, all thanks Appreciate for the

Phil Gallagher

you, Ruplu. Thank

Operator

you. Thank

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

Joe Quatrochi

also the business taking Components on some comments The in thanks that the as Electronics the in you that seeing Farnell that is pressure you Yeah, or saw, solely business questions. well? are for pricing

Phil Gallagher

to pressures it's on up caught they natural have then they months So some it, Yeah, way where XX turns, per we they they -- little the as but pretty complex. FX again, spoke prior Joe. one upside on inventory procure to on with way trying inflation a in got a good a in or some, pricing. it, so lower they It's that just additional the explain sit bit products just I'm had pricing before, -- Predominantly, and it's the year the two just and down Farnell. question,

script, On didn't got [hash] to made suppliers, again the the from we the We component right? it pricing side, these to as just on. mark (ph) pricing we when we arrangements. increased passed long-term up the So said in end customer, we that on the

how multi It's we're you but you stabilization is actually that's always do. compression what pricing about there, source, So how seeing sell. buy in and

mean, to going or that's micros -- are a we pricing really past. in as down as in palladium where go to whatnot, know, little up, but unusual, gold, silver, be and So are the they're don't -- played up, costs not high continuing Silver, the not the end that's them maybe we've stay believe erosions costs input products, the copper, they that input the Joe, pressures ASP elevated. there's and labor bit. long you higher as okay, seen the I remain still or

long we We'll elevated input the suppliers bringing are as we for remain don't see, they costs the down. up, as so. most and don't part, but think see So prices the

Joe Quatrochi

of price as Asia. to it. a And mean, that do just overall some I you to in time I supply think the you kind chain? flow-through from mean, the how foundries some maybe assume takes that, some starting about I Got where of follow-up of of the guess, to are cuts that? we’re in see probably I out to kind get of to play distribution reports

Phil Gallagher

yeah, term, question any see a same suppliers, some seeing the we're the term, same effect don't short short things the [indiscernible] of and for we talk Probably Yes, on of suppliers. but better us. have major that the reading

Joe Quatrochi

are maybe a from Asia, what lasting for think next changed, shipping inventory follow-up, quarter rather last that at you slightly quarter? closer maybe And I from enough. things getting reduction? quarters. is seeing Has two just as finding maybe anything or from least maybe then you guess, weakness continuing, China in-demand about just better last view Or bottom a I that the to Fair than talked

Phil Gallagher

energy the China, about from signs regions, no bit. the But applications vice a spend over because yeah, And a optimism about you're all Asia it. versa. lot [Technical but down call some said, lot be Difficulty] a versus did the lot as and and But is question the there’s team, optimism Taiwan of in consumer basically -- wind, the solar, you backing there's positioned good quarters, regional call is reading demand we're about we in also some charging tough Japan. to across the industrial to around might Southeast definitely storage there. hear several and in Taiwan let's and that time China the leaders with next, a or more say, well

but we not I’m ourselves, position So either. we're as negative bullish I'm stretch, not -- any by

signs there's bounce stable. also some certainly positioned will we're add China overall, no positive I think that [indiscernible]. China There's there. back. Asia us. and weighted, I Joe. within has for Japan weighted doubt not well we're been to or again, across overly Pac, But should But positive We're not overly Asia

Joe Quatrochi

Helpful. Thank you.

Operator

Our question question. with next Matt Please with from Stifel. Instructions] [Operator proceed is your Sheerin

Matt Sheerin

And, thank hello, Yes, you. everyone. Phil, and

most downcycle, following expected, next be you and continue competitor, up be that visibility this to bigger quarter, should things correction be you should compared first seasonality the you that expect to this Just EMEA, the to your on America, in at would into March seem Obviously, up below than similar So seasonal and just about as would regarding with or below North tough in this too to holding whole the back seasonal think expect guide for that to point? better the be and where or particularly is December question, cycle. people particularly

Phil Gallagher

doing March, Ken I continues in just to as to appreciate Yeah, reiterate, strong. the team well. home leadership the Ruplu's play. then under it’s jump remained has December, mean, thanks, Dana's industrial nice it's question, terrific and with Yeah, Matt. pretty I company the back -- transportation positioned We're first been the just let I'll compliment. June, a industry, Europe And there phenomenal. just been and well Americas we're job. as

there. we term, no lot because that mixed a signals, to don't tough many intended, so There's pun as far know, signals. typically guide seasonality, As mixed it into is as or of beyond, March using out call. there's Matt, you Been but December

the happening As complexity time in things I a long this I our of in industry of the a much there's because in markets. in transportation, some offsetting said lot in industrial charging, still script, really that's in still even battery, in seen other haven't good

to to last want again, I But what I said stick quarter.

quarter get think start can because I October, quarter you of an And we to an with East, happen as in seeing know, two that will in inventory growth. call as -- the an a -- think starting into uptick, think we're September, say. quarter to but start December it's a I one in to tough we to three additional Pac an to see we'll we uptick correction. I going the what's modest Asia December. do going XXXX, in We some in more uptick, there. see do happen, remember, as uptick Asia And this that think well is

Matt Sheerin

ahead. In next go yeah, December -- to

Ken Jacobson

billion, in it's about add, the talked news And We I'll we Asia. seasonal just feel pretty here period good holiday $X.X in down big a X%. about And in growth the there's the still good is really that. Europe, summertime.

there normal But on ourselves time, healthy of outlook an We So see what good, $X quarter. maybe going last about are of levels. quarter still the having when been. have to still sales pretty you per and holiday don't more Christmas they the be of than get we kind kind into December quarter, below is there's those billion commented also pretty dipping

Phil Gallagher

let right? think seeing last of the as in a I seasonality seen quarter Asia out Europe, to well. to think I I several -- And Matt, think that typical in me whatnot. where to we are of going in seeing and more we of years Matt, some start we're more coming seasonality. a jump But start we'll see to last more going start the normal, due summer hadn't but think Define Yes. I just typical three COVID normal do years,

Matt Sheerin

it. Got

and will backing America on X%, your be margin guide, North down the -- headwinds Okay. and operating will it into be some to the read in on That's operating based gross margin then just Farnell looks like margin Is that looks EMEA helpful. that? it you about margins, And down else like And of into talked like year-over-year with down. and anything X.X%. the there and low sequentially,

Ken Jacobson

half of right? different from I on the and XX% you've it Matt, another is from I'll necessarily but and less you doing it the just you've the decline, is a bit pressure coming Asia, EMEA the then about coming captured not we're coming approximately for just kind profit XX% of create anything the guess, of let's I’d that then that going to sales normal from the little side. lower got, gross And shift Yeah, dollars, It's cost Farnell. Think say frame things, other probably in say, on mix, higher more. seasonal

overall make of the and There's I the the right comment the puts margin guidance. kind with size always is, to EC will that's operating on we gross year-over-year way still see So takes margin in it. EC. But expansion on

Matt Sheerin

In though. not Okay. it. company, Got but okay, for the EC,

Okay. lastly, on you EPS interest mix free of particularly the operating you said that? cash expense, in to borrowings, margin correction terms here to been presentation, that's pressure to big that and continued used down in priority headwind. your bring obviously, your And a just those Is see a as headwind a offset what on if the margin

Ken Jacobson

just to Yeah, cash sure down I'd sales to especially some want see down. allocation start will So then balance strong, the as priorities sheet other in. we'll well, cash right? some mean, make go pay our of make deploy We starting debt, to we come we to sure we're say, Matt, but flow I look look capital to to do keeping the definitely, at

is we've put some it's value. it right down feel best to as now trade But of we way now, but in because So to possible. as got continuing we see top value clearly, also getting expensive, as well book in the sure make the below good interest shares so great mind work that. And just the paying about to

Matt Sheerin

Right.

Okay, thank you very much.

Phil Gallagher

Matt. Thanks,

Operator

Thank you.

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

Melissa Fairbanks

have of Most very hear for guys. It's just But asked great much. were nicely to both the year-on-year. Europe questions so margins and you. I been Hi, my had answered. one up Thanks and really Americas

I think still market. Europe is highest-margin your

opportunities Just you to closing gap highlight Western Asia market? markets. if that wondering in give any then the us to margin drive on you those between an could if update any opportunities have closer maybe And

Phil Gallagher

there, XX% we working issues which probably three, the Yeah. where is the years still four back behind we're we pleased Hi, with Americas were what we're we're really from ago us. well thanks. or doing, to Yeah, ERP, Melissa, at and five had with the

Closing think always to message. we really years, to XX the We where margins Europe business XX, XX% Europe's well. Europe, last it about higher But for it's operating we a well, as get in -- gross us. need been to we're So be. tend higher-margin strong

close to so really Europe that. I I'm I don't not that. Europe But catch -- team that's I challenging catch want on do the the But we'll Europe, Americas know -- to to Americas. And -- want Americas that gap Americas to with it certainly

Melissa, second And the So with your the of we're question? overall. part progress what was pleased

Melissa Fairbanks

Just if any opportunities, yeah. there's

Phil Gallagher

Yeah.

volume. a of I mix, that in Asia, returns just lot we're mean it's the pleased with Asia.

capital. we operating as Asia, working on both margin return on So as well measure

a higher returns So model. they'll have

that. Asia which terrific, well West. as in So the particular in strategic nicely. and the in in do. and had us volume returns has that grow have the most getting right success But the some Japan, thing with drives Asia, that in always the But up been the margins, I come operating and for closer to that overall, We based think shrink really to Asia, the could Asia We've the spot right? about we isn't that's drop-through models of get on we're

Ken Jacobson

move some is in example, so too, markets. Japan, other there the are as a Melissa, plenty hard we service Farnell of base comment, the supply some opportunities there's margin And do about, engagement I'll grow than a But better healthy as margin that mentioned. of markets margin opportunities really chain the for think big and to overnight, that a needle in has of to definitely opportunity see but Asia, as good type there. Farnell. it's some well to that just Phil makes

-- move opportunity, just but base big it's some needle. a it's such to hard that it’s the there's So

Melissa Fairbanks

Okay. Great. Thanks very much guys.

Phil Gallagher

Melissa. Thanks,

Operator

are you. time. back at remarks. any over Thank closing There floor to to the Gallagher Phil no further for questions hand I'd this like

Phil Gallagher

to a everyone for you I wish today's fiscal to earnings speaking lot. our at want in Well, all attending to rest call, I next and and the earnings quarter summer, again report Thanks a look thank November. great you forward of

Operator

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

disconnect for your Thank time. You lines this at your may you participation.

Avnet (AVT) 16 Aug 232023 Q4 Earnings call transcript