AVT - Earnings call transcript Q2 2025

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Operator

Our presentation will now begin. Welcome to the Avnet Second Quarter Fiscal Year 2025 Earnings Call. I would now like to turn the floor over to Joe Burke, Vice President Treasury and Investor Relations for Avnet.

Joseph Burke

Thank you, operator. I'd like to welcome everyone to the Avnet Second Quarter Fiscal Year 2025 Earnings Conference Call. along financial the the the at release section Avnet's released year quarter Investor your Avnet presentation, of and slide XXXX, is website, convenience. morning, results may second for fiscal Relations which This you the access with available on

the Several and that difficult As reminder, not materially such that involve only me CEO; release Avnet's as from today's and press appendix by Ken call These the those detail website. Today's results the statements as Form and that Avnet's contained on over turn obligation update otherwise in are The date described stated, subsequent release the after and provided no in the risks, predict. this and can non-GAAP Relations unless the call are Gallagher. Gallagher, slides the conference note, of XX-K Such undertakes Phil? circumstances call as in are Jacobson, reconciliation company be in found non-GAAP cause such the in presentation presentation. Please the With the information today uncertainties to of issued will to be well a SEC. this date this of statements. the contained filings GAAP statements Investor the any contribute posted contain and or statements most to all presentation, new the regarding recent publicly factors to company's forward-looking full led differ XX-Q and forward-looking let or of of that, and speak will information Phil Phil supply CFO. measures. could news forward-looking results some be in performance, on guarantee forward-looking of Avnet's could statements assumptions actual differences and with

Philip Gallagher

Year calendar Joe, Earnings call Quarter the you, us our new in our for year. you, first Call, joining everyone, thank Fiscal on XXXX and Thank earnings Second

to acknowledge Los the ongoing take North a County begin, and in want I moment challenges Angeles in unimaginable we Before to devastation Carolina.

including by we are affected committed Our suppliers, hearts all catastrophes, go employees, Cares out communities and affected customers Avnet the those these support our to to providing through our program. to and

now, to of quarter, operations safe. to locations said, of weakness these with $X.X we billion has EPS let tragedies. With sales and $X.XX, stronger-than-expected been last market our Europe And to of there date, in West, both employees impact are of adjusted were these driven performance no achieved results in As the results. the from the Similar quarter the to our me presenting most by above our the In offset Asia, all of midpoint by challenging primarily our guidance. quarter, that in second turn conditions.

and the team factors manage to Our continues compete control. within well our

providing Their and is time at their today, same when We continue to times space, making over good more the thank for be well semiconductor the along costs in looking who inventory products and in across at optimizing pass to position commoditized the us technologies cycle. operational progress from recovers. Taking are business stable our efforts and the uptick costs. quarter. increases memory are $XXX making These while cash lead certain capabilities. exception our and perseverance of the and want to from the decreases look managing complex I a operations helped technologies. efforts generate us flow higher slight input to during the in a with million market by team of market investments prolonged for Pricing some our in with mixed suppliers challenging on team

stable. and continue pricing be times On the IP&E side, lead to

showing with our weakest the book-to-bill having ratio below the global remains strongest ratio. Europe parity book-to-bill Asia Our region and

environment and being of combination to due current in demand destocking pressure under that shorter times, Our customers be a still to backlog the continues mode. lead

have led and increased sales lower Industrial, and Defense muted the sequentially work cancellations through the inventory. in comms normal Americas levels. Aerospace vertical a with remained we demand, and Asia. perspective, sequential led were progress However, basis. Even by compute levels, continue on by demand a and From the am and to customers at transportation the consumer year-over-year as inventory I made expected on their verticals pleased reducing verticals elevated

to Our and team over composition our will continue coming the optimize the quarters. inventory of their quality efforts

the expect to seeing the We are levels opportunities reduce with reductions inventory balance coming quarters, to will in inventory where but we in continue core needed investment market. the

Components year-on-year results. basis. declined Electronic sales turning line, the increased At Components a top attention Now basis on to slightly our sequential and our Electronic a on

the Americas, in not end applications. and and this increases on defense of to continues aerospace our creation be consumer into continue We the region design market meaningful uncertainty the year-on-year. experience for confidence. moderate and showed the as in sales certain we region, and funnel any on saw application backdrop wins industrial end Defense markets. In In the growth in field a transportation with industrial, X% potential in regulatory growth effect spot United which converting orders and growth year-on-year all we sequential and market business demand year-on-year increasing markets saw weak the both increases. Demand across communications our quarter are to for bright saw tariff advance We sequentially ordering and of Aerospace a the the sequentially and to geopolitical the drive to increased due due end benefit engineers having the the dampening Asia in customers basis. EC the States. In to revenues. end Asia continue did factors, select the and changes by a We sequential economic see in revenues in EMEA, slight from recent sequential business

positive and increased also creation future wins for Our which sequentially a design demand revenues. registrations is indicator

cost Farnell environment reduction improvements Farnell the at and some facing Europe execute pressures they conclude, growth initiatives our will competitive team to of have and were year-on-year. their leveraging and sales. most highest control relationships. To Farnell confident sequentially in recent current components. been customer in steady macro dedication is we I want prolonged spirit. am have Now challenged where for we to against over. as also the sales weak on Including market Sales focus pricing And Farnell. one opportunities those thank we that be the the to see turning flat down on-the-board correction existing and Avnet and percentage of uncertain our slow has continue memory. I given for competitive

there correction future While it is difficult continue, will are reasons why I'm Avnet. to long the about market the many how of gauge optimistic

line diverse base. customer a a great supplier card have and We

emerge and giving We stronger. we seasoned us leadership and capacity these market solid stable to a have team, have conditions a and balance challenging the even sheet, weather

We partners grow our and supply share chain also capabilities. into to services to see with supplier continuing the demonstrate our tapping including by digital value distribution, opportunities of

focus it gross continued quarter products to offerings margin embedded on I'll to over dive our benefit. With and creation that, Additionally, higher-margin deeper solutions, IP&E future growth turn demand results. into as second such Ken and will yield our

Ken Jacobson

earnings our and good interest joining Thank in you, Avnet for and morning, We appreciate call. quarter everyone. second your Phil,

sequential guidance approximately Our of the higher the range sales increased a by basis, billion, end Regionally, $X.X year-over-year. sales were sales On a second near and declined were an year-over-year X%. our sales group on operating for in down X% quarter basis, less year-over-year in the X% but perspective, Asia sales but XX% Americas. From and sequentially. sequentially. year-over-year XX% than declined XX% EMEA X% Component and in X% declined Electronic X% increased Farnell high

were to basis and of margins XX each For the The on to XX down EC basis a gross points points result region lower the and components. lower sales margin EC sequentially. the from Asia. competitive and down an second unfavorable sequential year-over-year mix pricing basis. impacted for product a sequentially shift was margin to Gross and gross was also significant margin, sequential remained declines consistent mix for of same portion year-over-year and largely pressures which mix of XX.X% quarter, year-over-year also on-the-board Farnell Asia sequentially. A gross was both shift relatively due year-over-year

$XX or expenses in year-over-year Turning expenses. down $XXX quarter, million million X% and $X down million to SG&A sequentially. operating the were

XX%. a gross dollars, of were sequentially SG&A As percentage at higher slightly profit expenses

sequentially year-over-year. impact operating Foreign $X currency million relatively positively had impacted expenses no and approximately by

For the reflecting can $X as million focused to XX points planned, improved on sequentially. expense and to year-over-year was X% Electronic shift areas reductions and continue primarily the $XXX was operating basis $XX down income million Farnell of were was operating X.X%. margin X.X%. quarter-over-quarter, operating million operating control. control. The operating all group, Farnell down in expense reported expenses progress year-over-year the and we due we operating and Components margin By sales adjusted and operating margin sequential income our adjusted was decline second was operating EC mix remain operating quarter, Farnell Asia. $XXX million, EC we margin to up

and low income. operating expenses to Turning

million Second lower $XX quarter $X adjusted by million decreased This of sequentially share decreased impacted interest $X.XX expense per by due expense diluted and million $X.XX positively interest to average lower and year-over-year earnings sequentially. $XX borrowings. year-over-year

the of adjusted exceeded expected. Adjusted per rate earnings quarter. in was Our $X.XX for our XX% of quarter as tax income midpoint effective share diluted the guidance the

balance the to sheet liquidity. Turning and

the reported million inventories in $XXX currency million reduction decrease million rates million $XXX increase a a to inventory working changes million, and million decrease During in the capital $XXX in in receivables decreased foreign reduction. the capital of of including payables. sequentially and $XXX exchange Sequential quarter, contributed by $XX of working $XXX

a days. of capital working quarter-over-quarter result capital As XXX this decrease, days days decreased working to X

from to lower the reduction capital. working partially working offset return in quarter last decreased capital average Our by due income, on operating

reduction demonstrates additional have we the our work more of goals. optimize is there reduction quarter us progress this inventories, to Although to ahead near-term

Our days sequentially inventory days XX days. X to improved

priority for customer have our needs our we to right the and support position opportunities. inventory outlined, Phil Avnet As ensuring to growth remains

to cash aged $XXX inventories or generated excess by need of We invest We approximately generated capacity. X.Xx, quarter. us $X.X the billion million we the $XXX from quarter cash achieve working areas our inventories quarter. of in management the borrowing leverage growth flow had while continue of capital we gross we allowed a in from ended to work million available operations We The objectives. down this debt to and with decrease our committed of

Over for within was which liquidity $XX to to capacity billion X million of of support we maturities and quarter. years used our over of coming future extended million, primary the levels past quarterly several $XX per our the million approximately borrowing road $XX Cash paid to facilities, quarter, per we the our share for expenditures capital We delivering expected value. In needs. provide increasing weeks, credit repurchases trading quarterly be or second a the committed undervalued the and reliable shares continue of dividend to by and market making map book $XX as remain $X.XX and we below million. of share increase value our shareholder to our dividend are still $X believe

shares and on our $XXX the for We million repurchased have million also repurchase authorization. approximately $XX current share left

our of share approximately at on a shares currency changes to are this outstanding value Book track $XX We goal fiscal decreased $X or for foreign sequential per decrease a reduce year. by to least share in per rates. due to exchange share X%

Turning to guidance.

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

flows guidance and rate conditions second Our third Western approximately seasonal the XX%. a of disciplined driving shares of performing similar decline to in sales Asia compared with regions working for team within our market seasonal XX assumes decline control, sales to a guidance current also the conclusion, sales in growth. expenses. areas compared the assumes sales quarter X% between capital sales This and diluted our persist expectations tax basis. In XX% Lunar to The and on and reductions Year on guidance sequential due typical million well quarter and consistently New is of expense to a in outstanding effective being cash XX% implies modest implies decline operating our and a interest

when supplier Chain value to continue back look investing our while it questions. the well where reduce Phil and can that, will conditions areas to the market last Technology we and for in capabilities. positioned Avnet partners, to will one turn customer growth We to By word to I before improve. With our Supply business still return be at expense providing for of Center

Philip Gallagher

want again, one he Sheerin he be Matt friend Thanks, noticeably Ken. coverage a him on and longtime He's his this that. it appropriate. not announced go him industry, I'm before congratulate I missing we to the sure Appreciate for Well, thank listening to a knowing Supply today, Yes, wish him going he's to will take his and personally on And probably of and and dedicated been just Stifel the the thought decades moment is. to that's be we quarter. retirement. Avnet Technology well Chain. of of recently missed. questions, I analyst questions there's

next up of turn I'll Matt, in to luck, your operator, best it So the for it we'll that, questions. chapter. With open and over

Operator

conducting be Instructions]. now We'll [Operator a question-and-answer session.

first Hari Sachs. Our Toshiya from question Goldman with is

Toshiya Hari

cycle know beyond market/kind a the this curious Phil. a question about is you're thinking Maybe tough how but overall of for industry March I quarter. one, the

I sort follow-up. think QX, helpful. environment of then your be of improve you And and half. expectation QX changed, changed late second that quarter, definitely that if to hinted has was last of on sort what if so, sort the expand for XX a into over the I really past And internally, you can days? quick in anything Has the have would

Philip Gallagher

the of we're several bit more inventories I collective maybe the over overall for with seeing is the Obviously, here cycle, little as as anticipated. My excess that we're market an Yes, a just burning We're some has okay? we there's some kind there and it burn out not missing there the an think mean our than just mean it the I a the complex mark out we're more of, POS. here industry bit a on I'm yet our I question. view question this industry. to off very as challenges bullish there's quarters a little year and dealing thanks in had question no gotten still inventory and on improving industry, off, last semiconductor bit

all calling June a current row, a in which and issues we We March we're lot quarter, the the know start summer happening need we'll the below it quarter. the that long second taking other and gray real of things into our beyond to still geopolitical time. our that see what at we're into we're I've recovery will bit. And we some think the I So extra know whether but a see of shift, and And to the is eaten year parity it's which the backlog, that for still end how indicators this think kind do what manage still seeing having outlook. I in That's bookings, we getting than and are is point we're is seeing given is West atypical. greater just that not a more be in some been its -- about a time did having in at come back but this it's industry, toll just of okay? a East so just

we'll we this doing, little a and I ready be cycle, is back. a doing want healthy, on But and it bullish to for choppier Again, The technology need what think we're it's well okay, we're I managing I be on when out the happening what's happening We positive to want bit long semiconductors. do through of haul. maintain a what's -- it just longer, for than but little to there. super I'm bounces applications we're wanted,

Toshiya Hari

And follow-up maybe my for margins. gross then on Ken, Great.

about demand driver I improve leading the in and indicators good. over focus should And talked profitability on quarter things the in was as gross March implied long I on well. to March primary creation medium going know the got your again guidance the we your about term margins December mix and the know there. Farnell look you've think that should how beyond you for mentioned How You guys quarter?

the the should around both long and So term, near the thinking how margins? be gross we and term puts takes about

Ken Jacobson

Yes. of comments. A couple

about and on business from mix, decline takes And for trying on We're kind of Asia that then it. you if I there's of would each coming gross be, rest we think at margin the quarter, think the puts to of margin attribute the the focus the right? XX% unit. first about

pressure So as think about We soft, doing. general, generally up margin. and on each margins are good there's some pretty about gets pressures. And holding each they're pretty Farnell they're think, well of environment in There's well. I how the gross as the regions obviously region demand speaking, feel as up well. And pretty holding competitive in

a sign. that's good So

then of would expect seasonality, to still Even shift the a Asia normal forward, but you our shift think in I a quarter, we cases, that that although West kind the over flattish think And the about. lines think here. we're you'll we see region, mix again, next hopefully several think kind to mix right? the and guidance to the we product margins isn't of a it this look I as and positive opportunities in So higher to right, mix those the margin normalize. of we the drive down But base of because bit margin bit each about West, opportunities thinking more hold normal little is got gross accretion. we've midterm seasonal margin enough gross some, being increase able than normalizes over quarters continue keep little talked getting margin

Philip Gallagher

me I stuff lot jump Asia we've highlighted, a quarter just Let too. if market. just back in in there's Asia on, year-on-year just on seen you highlight, the review good if the would look which going I mean I of that growth second -- row Pac, a at of Pacific. we've can

balance imagination. well. to typically there not And So sign gloom a to for stretch good by that as want that's it's doom any of of I out highlight the come just in all regions. the what's

Operator

next question Securities. is William Our Truist from Stein with

William Stein

right, you quick in case. was please me of I'm Can and the if foreign maybe I tell it from ones. benefit the couple quantify there suspect quarter that a A if exchange. that's

Ken Jacobson

from didn't would different. say Yes. currency. get much was If it a bit little anything, really benefit we I

million $XX on So was, I'm is, here sales how I the it, guess, looking line. it call at

We the capital end lot at on did the that's did translated. the of Currency gist of is the which the quarter, versus the quarter help how move side kind mentioned gets during it of quarter. balance beginning a there. the the So sheet working

William Stein

question. different a to maybe And way Okay. at the inventory go

have stuff You about some that but mean, of that idea it typical. I've can it burn to for characterize XX sludge, this rights they talk normal days about above moving or sort maybe get see call about path if line, there in to inventory off? see on made some things can in heard normal, Maybe you a aren't there's something say don't way might what it's talk on. still reduction is wonder when will things basis. time, so Like we I inventory? industry of better quarter, really when I there. protection I Maybe folks a good just sort you when matter of and us or Or progress And you a normalize that the straight rotation days a maybe price as up to clear we else

Ken Jacobson

Will. give Thanks, and in. Yes. you can some I'll jump Phil here comments then

Do complicated. to of I just inventory pockets think is in kind and to really to bullet. that get pockets there's how is the bought just -- work them that with but becoming The customers to through general, committed have we through We've inventory we demand that are no still have down. on aged we those. got working take, silver inventory. And them then to, absorb of answer of wrong need stuff, need that's we're they

just of good not So taking targets, some and think through this challenges. kind a of to We time. them. working aged broader And right? elevated been It's more get It's lit everywhere, know the made up. of it's matter not it's they've those progress time we we through everywhere, inventory

the well. picks as quarters take it's few that going clearly, demand there. help think right, to continue if I more So up, progress to And a will

write-offs to it's don't So than view think huge inventory, risk high what of expected well as It's demand. as underlying. customers we're this can. charges meaningful and There's related we still just inventory. good doing as more. It's a having we still I lower And

problems some that our have stock If rid ago. we're continue has of wouldn't with actually more that that just anything, our maybe stuff to we of opportunities those So been have fundamentally changed. suppliers anything it, to the I same. use but work seeing done couldn't we'll to it's get rotations year of more say work a and through

So in we're seeing more to overall help flexibility get system the this. everyone through

Philip Gallagher

the And obviously It's Yes. It's Will, great Phil. we're closely internally. question. is right? of a looking very one questions, at this this

is, question or down. inventory going determine to answer to right? yes, market had the growth, the continue work definitely continue to But to will we're based previous is of somewhat we're on going So down want short pace. the The what going at just continue acceleration to move we the inventory on that to

whatever that want we're of tracking side to call call tracking coin, we're other sludge, all yes, NMI. you it, slab, but The it

the shape. with we're to that So now, the nonmoving point then There's in our customers right moved we're tracking addition it's inventory. pretty to key sales that's working try is aging, obviously. that some I or And rotation. The on in teams inventory. good suppliers the And want we're to with get all and make not

call. have after customers think So the and call work all we We're a I in need we think handful bit. supply And our working up it's the have script, investments business, not them we're and I driving inventory mean the a put chain that run we aging don't returns of I need to them. X. down joined business still business, need right and That's that's call lot of the to that right? because the in, game it's have I some the we're we we to suppliers still that a that's taking our deliberately with feedback and inventory let's get a inventory we're making inventory. to in the bit. in and We mentioned while we just suppliers off stuff want it when to

to I as clear that do well. So make want

Operator

Quatrochi is Wells Fargo. question Joe next from with Our

Joseph Quatrochi

about the guess how the turns do see dynamic? just to fast to strategic at mean, been inventory it key kind relative how verticals that overall Maybe or to down? depends follow-up level that. the mean that your cycle Or do think I inventory we a I here of you investment of mix on optimization? just of I the in guess, I think continued

Philip Gallagher

It's a Joe. good question,

get to the com, nats might a Because we work used in We that's of in be have there lot why used now. I'm to down to used et in inventory vertical [ to to also don't do what's at cetera. because transportation, buy the industrial that -- some -- tail on looking you buy is verticals ]

your So about chain it's you excess vertical. inventory. inventoried than vertical at not those the that there's necessarily even know, along with are And slowed. as by very not world as concerned look heavy and by heavier it probably one a in We next industrial. the or and segment having question, things Europe we're balance in -- that even in supply do overly in the has we any lines. But vertical It's just we're with of industrial,

picked one mentioned then -- transportation other you overly there and quality tell our is XX% transcript customers transportation, there are it some That business. And are is transportation at of like obviously we inventory have and some issues inventory. all, transportation, across will is in okay? XX% not the up, but select not products. between I the it's we have where that's okay, big And inventory and in Now at that that technologies not concerning in that in it's select because unique the board, slows call

we unfortunately, guess, side, back But I defense there increasing defense particularly aerospace many, on and there right? continuing as for grow issue really and nicely, no that is start business, to we the in it's called and the inventory side. on aerospace is So to see bounce a that's out, really

Ken Jacobson

just have I'd invest. is continue that think overall go should inventory our capacity expectation to Joe, And but to add we I down,

as so bring may pockets investments some we of the and attacking like -- getting for but down. really sure make moving. down. And think go That's I inventory. stop right, to the we inventory the those we're not or it where ahead opportunity of those could on inventory attacking not good as not we'll down inventory it's spigot inventory good come just that because customers, business. excess have down for still right So that's But item and We would getting focused but stop and it not get coming total in investments. make there's our slow It's areas want and to in are just line challenges our the meaningful we're in,

between and recovery. we'll down, continue a plenty may of differences investments be bring those still the still opportunity X to bringing from while of making items and that. And right do to of inventory so for And capacity in the the inventory there but there inventory us down -- position well the kind quarter-to-quarter, may timing be to investments

Joseph Quatrochi

about we about a follow-up, turns you just as And March quarter? saw December level in the of demand talk can type And inter-quarter of that you just-in-time just that's of or embedded demand should the that level how think the in guidance? quarter

Philip Gallagher

think said nothing we last that we're Joe. in but quarter Yes. see slight. words use continue turns. the careful I we overly quarter, that a September I slight again, quarter, December, in on last And saw in We to that We touched started exciting. increase here,

building outside in March the a not So of we're norm quarter. for the lot turns

some happening out But things we're I typically our and that are there a is big as conservative that's big has been of in still a March January. looking looking of If lot backlog, I now, month. Right at change. forecasting. changes now, not we're could that we being and have be good kind that right say, a number. the in turns news. there. We what backlog we're in what at that mean on mean we're there turns chain would it, month at "Hey, we're we're Now looking put did supply

Operator

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

Ruplu Bhattacharya

And margins. you question you operating on Phil, to is do your what a control question that Ken, and I margins. help want to ask to just my can under

you hired do margins -- sales side, improve of most that But I I that core can how the the Digital I'm margin the And under say the what on And website, X% a you I on over of margins, that your quarters? trending just know not what's you a things your not? Chief there through you see side. grow as and are the thoughts the that margins core control So to see you is same are are driver give on couple that cost recently well? improving things side business. next for the on and question you're I something Officer, big doing is the can know how some thinking Farnell side? help what us your under And on of on control? the but can the think, So mix operating EC and what's is

Ken Jacobson

Thanks, focus it's do mix. is to goal region. Asia growth. We all to hard focus in to mix. take that margin I on Ruplu. if And Yes, think of the our want on gross a we regional Yes. regional control necessarily each not growing, advantage is And

share we think Farnell start organization we the So addition with few that and market a things is can facilitate terms our I'll the going things on leverage expense in base will different in broader help which where with maybe kind control. to of A those growth part got Avnet of in customer sales customers. margin, do actions, of the how to we Farnell operating overall we've

do we proposition. think Officer, can Digital the of Chief approach And our e-commerce the the Youngblood, conversion there's connected just Farnell. and we in with with I terms Dave mentioned he's and You really Farnell take more

would demand So call, a Avnet. was the we where control, can you the we to as get overall that up independent of and tell websites Farnell Dave lot traffic do our And and think of as he related that that's is. we on well move within

help things we that, so that. to And into visits there's turn sales, got some make to we're and those just do driving unlock

examples. So there a are few

better creation this or mix quarter. quarter. demand mix listen, the On our EC was actually higher IP&E than this semis core a side, was side

talked we've do things the that including that than, Embedded supply to growth Tria our services, margin market. the chain are those brand, going have about, all those believe higher let's broader are a So business, things say, higher we have

things into business channel, growth our and the help get the help. share if model. as So our can get some those help shift scale pattern their again, some to those distribution the back opportunities, will helps the scale direct leverage operating And channel the of additional well more perhaps market return suppliers from kind from all more to on

things long little investments tougher is So not just are is term. we focused the again, there work our continue to our medium than to It And on on. and thought. term, we a focus short

to going today, continue things operating overall we control. pencils on market months thought from to considering to sharpen are those margin. yield our benefits now, on But benefits might. as do the XX we but hasn't not may X probably we expenses, think things we're there recovered So the yield quickly They will as it

Philip Gallagher

for Thanks in. jump me question. the let Yes,

reemphasize now, digital a just made maybe XX investment of Yes, days sales a we been tends side, Inc., online at touch on on He's lower run few. sales couple that our the margin. Ken just in yes, it's add online it's Just maybe points board so big to a barely can and Farnell, a higher impact alone at cost. Avnet, let low Dave. It's

So that's a good thing.

and -- and strategy are the creation the is I'm driving to is continue on we then which in that been suppliers increased website. Fundamentally, we've in of do term all embedded again, percentage but be running bps to Farnell bought doing That than over better in we're revenues made higher good to with have talks creation right? And continue to the actions story industrial only to it. we with been more rebuilt reemphasize sticky the the had design on more clear some again, the more similar, exciting. going as not want Farnell, about working creation rebuilt and have he the that sticky, go core. sales we and runs last the now we've good but staff the we're and as cost, will biggest in, the that in we've something quarter are Demand in turnkey to expense once is where only some of We of is middle Rebecca, right on trickling transcript, chartered of not last it. roughly IP&E than year and in markets quarter, experience on. at creation, customer is be we're it with That demand we're seen in about the that. we runs benefit focused margins business still improvements decline, it boards, of the is could of base, at doing Ken the there the they demand demand very mix. And Ken even can is about Farnell. not some increase customer XXX our it the after talked and action or So absolutely has a in taken our through then we're I thing semis. the the on President actually that so online that's in short benefit, touched the margin just and some Xx

add. a anyway, that I few just to wanted So

Ruplu Bhattacharya

Are can ask. investments opportunities you So M&A, for any the do taking how that this mean, position better you For environment? talked environment, of are are you In you and or And flow I uses how chance my competitors for cash? and cash do you Ken, rollouts there see think to organically in making thinking company. capital inorganic versus follow-up, returns? Is about growth? buybacks share any any about I about this you if any any free

Philip Gallagher

back to upside we're inventory of the strategy don't inventory. to on the We or So being our customers to pay I Ken. value want think bit question, marketplace, go don't one the but might that we little a on to want we chain they think -- want even and than share on to cost, just for. customers. I'll with those our and Yes, working drive center gaining -- suppliers. to gain more like We suppliers with we're continuing Yes, and supply areas right? as to can't customers long-term just that we the share, by force sacrificing the want. But we're questions value that I'd we're to customers at technology, with and build have trying some in Will's first, work say, stuff upstream,

of constant not and think part to responsibility other with more value a of we question? act. it's the overuse there, was accountability more But long-term term and of that balancing What customers, those So extracting customers with we relationships have okay? out these and share the the having driving right balance

Ken Jacobson

obviously, We reduced just and X% had quarter -- past continue say the maintain billion to fiscal But And investments we that cash and continue to I have business. view pretty we to think share buying need $X.X leverage the dividend under as goal attractive again, of our past as going count to continue I back increased we'll as of beyond support and this prioritize buy going achieve flow in to to the good control the well back September doing, being the been just a quarters. that, the want we're we shares. business least we shares X we're and over at keep time, at year. of same but the the to this going we're

of consistency would I say just same to So just the there. we're and want more drive some

Philip Gallagher

Yes. of And your M&A. Ruplu, the other was question part

along type of that some debt on those We're place, the business we going okay? transcripts, okay, and in about to have Ken there's priorities. always nature, brings about yes, profitably organic still if But just Q&A talked calling their the of will down nature, talk have, maybe and fastest right dialogue we're acquisition having very expertise of with think is to us. we're just We way Yes, the higher that we are one of that that in margin don't in these us areas are fit in in we talked differentiate come market strategic that open the dialogues. we allocation to us in we backs, driving growth, M&A, grow the bankers be capital selective, Yes, touched So But people. the first. to dividends, the share okay?

Operator

is next Our Securities. with William Truist Stein from question

William Stein

to impact ask seen just quarter that tariffs and closed. potential might I the impact and we the even about have the wanted in

I remarks, from Asia when I you were be, hoping of your there's know about you a of going Americas, of how to think benefit maybe anticipation be orders, know discussing whether received think try as like effect in or in helpful. upside get this. having But That to anticipation in no not any you I you Phil, to you would in it's or do the give on. idea action. said some would how this you customer just pull-in guess, And when I'm slight anticipation ahead prepared if tariffs a talked some can there's us downside, that

Philip Gallagher

Yes. Thanks, Will.

general, wasn't is and more because revenue transcript in and we my would offer customers. or we Will, number me got we that's do it and his, didn't is I to to the of And customers measure it in you, a want it was bring it the an if we me know think have pull-ins start. for part more. now the there in it, the see we take would like to don't to like, we see over impact And was thought waiting. And went that's didn't let So I we we I'll March. And turn we I Ken see to on estimate backwards, large. the because a or how the yes, -- customer, it we and hey, from that but quarter this just work don't to to we December want tariffs. backlog March see quarter, inventory would much uncertainty of would how know chance I well glad, we to around it. Surprisingly, thought or don't on do

backlog to need sense we're there, driving Peter going So the to unnecessarily pay too, No Paul. that Rob, right? to March

So on. Asia. that in we just a move Ken little touch didn't backlog let bit see I'll

of we're will it is come a is we in bit it. conversation. we'll hey, with tariffs my we over and York everyday yes, shareholder and I far it But losing our high-level with the meetings analyst is, know As -- quite team, an December response trade New and had meetings, deal belief this City everyone though, My but personal tons got place. when And tariffs. asked it where processes it's actual asked in general down in in not rhetoric We've about And as zones today got handled free what is. have it in place. sleep We've we from before.

X% yesterday we is ship about a China. Americas Americas they our know of think product different there's okay, of ops a something some lot memory, of I'm we out I have, within talked more, out the And we the think can a lines that the those that I in lot going in this by instead business like of suppliers those along actually China. coming similar of of region, review.

Now need it's whatnot. and their chains because the complex to move supply suppliers

having really our suppliers, So the maybe and be tariffs. line assure what but we're got up. on and not the processes with all important, It's these pass we're the internally, I'll it obvious, will our dialogues we set That but paying will are this, We tariffs, on can customers we've customers that, it restate I don't make make sure know we money pass-through. they a Few it's the of. through.

can't afford distributing receiving we the products customers. that we're and that obviously, So to absorb to in the

for it. So an because It issue. not I the we're one again, at is night keeping it's well prepared up of issues me think

rodeo to make Ken, the... it, on first customers I through either, we'll want to comment just our have not well a prepared. think are but I manage you It's their okay. do we'll be think

Ken Jacobson

line see benefit mentioned the in in, And top Asia changes, advance potential that. regulatory right? some of slight of pulling customers in December from quarter, the terms Phil In did we

on some We in high-end January also a saw There of that price couple technology. increase things. effect was a took

the on customers in in well quarter. So able were uptick the as of benefit out product of to increase December side in we well price that didn't an high-end a buying January from some we we benefit effect of bit global Americas front in benefit from get price some see as saw there end-of-life took from was a as in advance that the but we tariffs, of in much increases, for getting in demand little tariffs, independent saw those

for was when when to X% things, from those for it to X% goes those kind midpoint, things, So guidance down midpoint of normalize X% we X% kind somewhere normalize at think the when our midpoint you to you normalize down We items. in of XX%.

was added those X% combined underlying X% quarter. all the it huge but a things something, wasn't amount, it of to X So

anticipated, Some problem. some of were Yes, were no those not.

Operator

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

Philip Gallagher

good off birds, last fiscal for for reported Bowl is will thanks I It's think earnings comment, from everybody. to Super now, to okay? April. One to XXXX attending of call and at to go I year speaking you which in the X.X event in week. call, most the forward be you. Thank today's And third quarter week you again look a Okay. hope I XXXX earnings start our we from say guess, of want Philly. know Hey, just

do are can Kansas upset to Thanks. We're rest So the if best you from you. All to going apologize. day. we the I great right. of City, Have a

Operator

concludes today's this gentlemen, and Ladies conference.

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

Avnet (AVT) 29 Jan 252025 Q2 Earnings call transcript