Avnet (AVT) 8 Aug 242024 Q4 Earnings call transcript

Welcome to the Avnet Fourth Quarter Fiscal Year 2024 Earnings Call. I would now like to turn the floor over to Joe Burke, Vice President, Treasurer, and Investor Relations for Avnet.

Thank you, operator. I'd like to welcome everyone to the Avnet Fourth Quarter Fiscal Year 2024 Earnings Conference Call. This morning, Avnet released financial results for the fourth quarter and fiscal year 2024, and the release is available on the Investor Relations section of Avnet's website along with a slide presentation, which you may access at your convenience.

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

Joe, you, quarter call. everyone, fourth us our XXXX on year fiscal and thank you, and for joining Thank earnings

For we fiscal billion share. $XX.X revenues $X.XX year of per earnings delivered and diluted in XXXX,

'XX, from year revenues was fiscal the on great per began share. momentum earnings and back Looking record year with fiscal year which 'XX, for year we a both

Their for As correction recovers. will XXXX efforts the team perseverance the want execution market their progressed, emerge market continued our we to faced thank and conditions. a these softening as I demand environment, allow to and stronger from in us challenging

the of X.X% business. highlighted that and Components operating results pleased billion completed sales another the of delivered Electronic in EPS quarter, exceeded operating X.X% financial margins of achieved top to our adjusted quarter. $X.X our a I'm line and we by margin we Turning fourth guidance. In quarter

improvements now than business structural quarters few margin. we X% operating our XX the past delivered over greater have has years, the made consecutive With EC of

the most declined good On basis, we only result generation, another with markets have increased longer the demand most for continue. continued capital serve. quarter, end of in certain And lead aerospace of data executing the for the cash through low decrease lead quarter working primarily defense across management remain as of flow relatively market times year-on-year sound we end mentioned and this as Semiconductor demand and Sequentially, to to times was the technologies. intelligence navigate also center We artificial a cloud would expect surrounding last we driving had is globally. correction. I products, and growth and market build-outs

and seeing On times side, what demand generally the would And products interconnect certain lead are and applications. as capacitors for stable increasing some IP&E we range. normal are I have characterize for returned a to

regions, approaching Asia Americas global Our by the last both modestly improved parity. ratio book-to-bill our quarter, finishing and the quarter led over

Our EMEA a end has and transportation of markets, business demand. is large lower the business, and billings softer this due which to portion industrial driven seeing bookings by

to pleased customers organization hand. and area remained lower with normal is some in levels. improving focus for the position. result as have our shorter on working is do. work and backlog really inventory our through lead key a have made times Our I'm Cancellations our of we has at This team progress their still inventory a

center at want While is are to right there for important a is we areas strategic part of key proposition inventory and chain. supply technology enabler some have other more the the areas, the value Having need in we an inventory our demand still investments. of near-term than growth make we where

In military our In Now sequentially aerospace budgets market on defense last giving Components phase year-on-year in be Europe. Electronic the strongest and a Asia demand were and on the end the market quarter with increased let increased call, on was nearing At that, basis. declined fourth correction year-on-year global sequentially a across for and be the Americas, to turn seeing me and results. to demand as line, EMEA, the in its aerospace we and have business increased may basis. I us our and reasons that mentioned our industrial bottoming Asia. defense, earnings region, in optimistic end aerospace signs defense markets of a final top

a increased our in markets transportation is the industrial, increased it growth with year-on-year sequentially all and transportation, notable So that consumer best Asia demand the end revenues on showing basis. as

return September December to expect Asia in overall year-on-year quarter. growth or to the in We either

design increases of customers On market. and the and proposition our demand revenues creation the in drove suppliers validates registrations. a to on wins with deliver type engage basis value on we and in our side, any This continued can engineering teams sequential

cost we the ability to get develop Farnell. and would President her expect course Rebeca been reductions I of the to the mostly planned, suppliers to and strategy Obregon named with that down that were similar globally. to have I'm Farnell's demonstrated Avnet, Farnell's drive approach Gross with not lower margins were like confident highlight recently our synergies and the in sequentially year and collaborative trends In stabilized are to quarter is margins previously not at immune Before Sales results, year-on-year, EMEA and overall we market relationships, at due has business. her which over fourth into growth. Farnell improve drive important softness, proceeding execute as to Rebeca semiconductors. to but accelerate time for sequentially, announced of fiscal demand the cultural has alignment experience, profitable with customers will EC our and and our Farnell XXXX. only sales sales lower employees

between Farnell's global and a introduction Avnet expect allows product from X synergistic to Farnell that to The business. production enhance combination the mass us one new also is collaboration of offerings only global as our high-service serve as the customers service broadline high Avnet. distributors to positioned has to continue distribution Avnet. We

computing. IP&E our our demand demand value to in I've in which areas, particularly proposition a the capabilities. As Asia, in saw team, continue centers. engineering nice and related as data such a leverage embedded of to global focus mentioned key key a and IP&E, we technology in for we to supply already and this build-out creation player in much continues area, the be our increase other chain, creation, of QX, is

needs announced manufacture on using Because business IP&E the with brand look our we to creation, example also through offerings. from years. addition our embedded the other launch to we're target demand The market business. we in opportunity systems. our and Tria improve trend, solutions distinct of chip brands will over increasingly XXX Tria compute driving our The is how of offering move of brand and technology modules the just and we the In compute suppliers the are to for to value new focused through embedded their solutions unit to stand-alone designed to adapted of embedded of into down solutions manufacturing customers ability OEMs compete past that's this have our changing recently the products. modular another

electronics and, edge adoption for on its This today continue applications feel as space. To of for the in and trends tuned conclude, center pervasiveness optimistic demand and embedded updates to stay ultimately, about progress to I applications. future. capabilities includes computing the many our leverage data explore technology the companies so by So ways AI future driven those both long-term in and the innovative in the in

supply as as data trends sales supply surrounding services participation the participating through customers the We position to and technology components well partners. of next the data AI that our to the into excited should chain will to growth across continue providing supplier in is value to and Avnet's chain several grow sales center. This several quarters center at deliver positively are impact of expected verticals. allow over us I'm centers the increasing

correction to year that be in the 'XX, belief market As enter seems stages. its prevailing we fiscal is the last

appears to environment and similar or bottomed, signs brighter to continue and control come. of we're region Until Europe. the Asia control in demand market will we we for in Americas awaiting to and quarters manifest navigate Our then, a this point in can anticipation have inflection through bottoming what to a the

our fourth quarter over results. dive Now that, to to Ken I'll turn deeper with it into

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

down quarter in XX% $X.X X% currency, Farnell X% XX% sales XX% guidance down Components sequentially quarter-over-quarter an than in in year-over-year and constant in XX% sales Asia, constant XX% sales to in XX% declined constant basis, sales a the constant growth in Our currency. declined declines year-over-year seasonal On X% in currency. and and basis, operating in in sequential year-over-year perspective, due in declined currency. less XX% Americas. From currency. were Asia. and sales were constant Farnell down sales group declined EC sales X% and constant in declined or in year-over-year Electronic currency On the EMEA, fourth currency. sales for approximately below the a regions XX% constant above billion, Western sales

year-over-year points points margin For quarter, fourth the lower and basis of XX was gross basis lower XX.X% sequentially. XX

gross fourth due sequentially last was sales benefited sequential year-over-year, Farnell The largely market mix Our for strategic was some on-the-board margin due we impact from EC quarter from the Western to a of mentioned of and margin quarter. year-over-year. demand continued the opportunities down the to lower was decline and inventory sequentially gross down margin gross regions. primarily of weak components.

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

saw actions quarter, expenses were incurred flat the our cost profit during actions at and regions. gross restructuring, we We other reductions included these In a for and integration, of some percentage across quarter, fourth including business. additional permanent of These impact at costs communicated a from our at SG&A all Farnell Farnell. temporary sequentially actions As and both the fourth dollars, reduction EC combination cost previously XX%.

actions. from realize to XXXX, those we expect further cost Moving fiscal reduction to benefits

some by will of the headwinds start expense However, driven new offset impact be year. fiscal of by the the operating

operating and margin by was fourth we group, expenses $XX this income decline the operating business X.X%. and overall margin was driven correction quarter by operating in the most our was remained By is at but Farnell million margin by X%. operating sequential Americas. For as of EMEA adjusted were sales operating million, and million and was lower operating million, market income Electronic Components X.X%. benefit this Farnell's $XX approximately EC adjusted Farnell's $XXX quarter, $XXX the income of operating was Farnell reported offset the

$XX by $XX decreased Fourth quarter $X to million Turning to million primarily down expenses year-over-year operating was throughout below sequentially, the of levels lower and debt expense interest quarter. million due income.

XX% was various the rate effective by diluted rate adjusted Our of during fourth was adjusted effective tax in tax exceeded lower tax XX% the approximately a the $X.XX. the of quarter, combination expected adjusted per due up lower of rate lower-than-expected earnings the $X.XX driven factors, expectations benefit truing expense year of including quarter than interest higher and income rate. our to expense, from quarter. Adjusted full lower a and share The for interest sales, tax EPS

the Turning to balance sheet liquidity. and

receivables, During million, million inventories capital working decrease reported $XXX capital days million XXX days including a payables. $XX in $XXX decreased to million $XX a sequentially, increase Working X quarter-over-quarter increase the and in decreased quarter, a days. in of

was flat working essentially quarter-over-quarter. Our capital on return

down Our X net of of EMEA due to X% in days in increases inventories Farnell. inventories the strategic days extent, and lesser and, EC a across Americas quarter, were EC we reflecting quarter. Inventory decreased to were during Declines saw regions this in days. to XXX opportunities sequentially the decreases inventories

get inventories to billion. below is goal near-term $X Our

business. are mentioned, our invest other in will looking our areas inventories elevated where As to areas, Phil be although in it sense makes certain we for previously

well continues market to goal to the be take we are Our ensure advantage to recovery. positioned of

XXXX make adjusting where We progress to they the elevated. our inventories fiscal lower areas heading in by into expect continued remain

cash quarter, $XX the operations We working of debt to Our past from for decrease $XXX decrease X a $XXX and capital of generated million of $XXX existing million. million We million the approximately the full quarter fiscal capital regards and over gross in the With capacity. continue in prioritize in led to X.Xx, our a allocation, had million leverage available business committed we needs. year. we of to borrowing our ended with $XXX quarters,

was CapEx expected. as quarter, the for $XX cash used During million

the to $XX expect share at XXXX CapEx million of per fiscal quarter. In approximately to fourth quarterly million. $X.XX levels our million dividend remain quarter, of $XX we paid in We historical or $XX per

repurchased We which of $XX million X% approximately also represented worth shares, outstanding. shares nearly of

new the so have repurchased an enter $XX we million. As we far additional year, fiscal

Our the share value, price book quarter. $XX to fourth trade a was share below which in continues

$X include cash Our to in start year share nearly Since capital returned continued million returning the nearly we priorities allocation fiscal shareholders, $X.X to dividends with of have and XXXX, billion to nearly shareholders. of $XXX have billion repurchases.

repurchases by repurchased XX time of have XXXX per allocation share shares and We will important reduced of part our has beyond. year. Share in count fiscal X% diluted million priorities that to capital continue our an an frame, over average which be

are by thereby least our as provide dependable X% consistent to a dividend fiscal at our returns. We well and reduction of as shares commitment outstanding XXXX, increasing continuing targeting during shareholder

Turning to guidance.

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

Our region. to the implies in guidance conditions down are a sales growth as that current and growth the Asia flat close sequential Western we sales lower-than-seasonal quarter of to assumes in regions greater-than-seasonal persist this sales returning a On Asia. declines change first market in basis, year-over-year and to X%, with in guidance year-over-year flat sales implies

the interest between basis. Despite outlook, have EC assumes and on some offset our we the outstanding variable effective at XX our tax XX% the of Assumptions resets operating This near-term for have compensation, the implemented expense first specific Farnell also and reduction to quarter cost quarter, similar still guidance XX% compensation compared increases level. million rate fiscal include year. a stock-based initiatives fourth momentum and in an will entering some seasonal new on we which shares to of headwinds diluted expenses

expect well on quarters. capitalizing improves, coming market remain opportunities we growth the the once on positioned focused happen are We in which and to

open turn the over Our that, Avnet to things as questions. to partners chain. for can we and to center of over operator demonstrate on our continue the execution technology that the the value Operator? focus up customer the at provides remains supply control supplier to I'll With it we

[Operator Instructions] William question Securities. comes Stein Our with first from Truist

results. couple of good inventory. about wanted Congrats Perhaps I things. on to quarterly the ask a first,

I by by still to supplier provide and end situation? as that spiky or sort you improved not Can condition your well call in a but whether of bit if update recent became or would think I also or quarters, region sure I'm maybe we're used you dispersed not by it spiky supplier word dispersed this inventory an market. that and more in

Yes. Thanks, Ken jump Phil. This and is Will, comment. then and I the appreciate start I'll in.

to to you're about we got higher and what with it's referring inventory still down. own want it we've team, it's think across Even to goals board. I get and not when to talk our being than it be continue we bring our up up is the --

say, every or product a little had, single It's every tends like top you. it's to let's lines I It where quarters the it's for will, of that think more a in more we customers. you noted that that's kind at that's up X not what a come in we've bit X if we're good single buy in, well commodity line. imbalanced, maybe or be down. And heavy, for was had little us to as bit X starting ago, course, which good we working of as special and

Will. we it again, the inventory. That's at still inventory, We're spiky, I -- the all know, just inventory, certain yes, why I'll in leave in jump we imbalanced commodities you got in put want to that So have or the a so suppliers little right? still our distribution, a word. that. still we guess, know to not right We're lines. you little is hey, Ken, -- so investing script deliberately certain

cross through just similarities there of making it. I'd each has it though its are progress is even Well, that -- say each kind situation, is own some but region region

better make, calendar So we'll than progress end to again, it regions And continue the have to through of everyone's year. got progress but had some certain the drive others.

other. One

geo for and less take may, market, maybe there so demand see meaningful I to that much my anymore, that trend? takeaways semi end X snapback X begun the to geographically, a big market, well if orders China. of semi of quite have they as much that end similar in by in been you a recovery, it in a particular told your companies difference even clarify. what the been end didn't are if maybe talking -- conditions bookings And aerospace/defense, that broader maybe sound that you dispersed as were been out or not, story It both some from hoping One I'm companies some large them you interesting for was the were the between might your that suppliers ex of understand we of has story. It's market prepared suppliers strong. But can a an that like maybe perspective. As Have the that And and listened have what you're picture. more been your remarks suppliers saw identify help seeing can about, us hasn't story.

on is than There's slower And Yes. be. demand -- to is statement still Thanks, correct. Will. overall still like bookings we'd your

suppliers false as most said and times have visibility, well. the They say, lead it, think there's anytime I down happens them starts to everything just, would to right, would wants track available is know that that turn. we when and more assumption going because I market we what are want be anybody

has down most actually far So right big market us -- most been The generally it's fine, really, is affecting good. as as industrial. slower. Defense/aero now, and

in probably hyperscalers, in you're AI, shape. center, good you're pretty data If

As far in or a a may or that sequentially as yes. Asia, in holding in now. that might in, suppliers the more transportation. modest, increase end of not China. consumer not well have. -- at see I'm We we in consumer-based. those markets and seen Pac although we our own as markets saw robust, some did in don't We're industrial. the looking We sure. But lines increase wouldn't Asia seeing, was we as but we're I be in recovery We've say to, really vertical space some They may about, I see talked did We some modest you're in playing referring be modest, China. specific, China particularly

number talk script Asia, December. did that's we in total. see including Japan, now, or in Asia growth as going sequential about Pac So in in But see begin recovery how Depending we're either September our Hope total the in strong we'll growth was that in and which then a September way year-on-year works good Pac Asia typically it helps. to West. comes, starts the Asia sign overall to Pac, as its

you. Thank Yes. Great.

Our next from Sheerin with Matt comes Stifel. question

question the or like North -- know appreciate call to but up just following sounds and September guidance, quarter on I it demand. giving Just Europe. you in I Phil, ready you're yet, not Will's bottom you're regarding America

suppliers, what little meaning other be and may that flat bit markets should overall a sequentially, right that offset Is down below at point? think business this to expect X hearing be Asia it from given so to that And by we're those sequentially? the seasonal, we to so down about your way

when impact think see the it mix shift, there. primarily heavy last be an the EMEA. so you would I you think Asia from obviously, Matt, Yes, guidance, a there's decline from about sales quarter, But

So we're seasonal seeing definitely lower EMEA. than in

typically slow for Now seasonally is EMEA. the September quarter

I here in is periods getting that You anything this or August have we necessarily so says healthy. expecting. But either, bottom we call industrial, a is right? don't definitely worse, lower business been see right? august I pretty there's very it's Again, think the our speaking, a vacation of so softness, weak it's But than month. hoped little usually had to generally transportation, mean, I still but they're ready bit think is But don't we're that having region strongest

I call thanks, if out think Ken... you --

based below be your kind my just question of those backlog. looking December was, that Yes. September about seasonal, to Actually, regions? the past And X was expect should on quarter, Phil, talking you I actually

December Well, can, quarter? hear right? okay, that Matt? You you out give Matt. we Okay. me Can guidance don't far,

yes. Yes,

we into to and in the -- going bottom that The pretty I into last now Asia, believe, hold March And is see thing called Well, that the we think calendar right. that's, all Asia. sequentially. December called bottom. foggy same Americas still stable is quarter Okay, we we mean, Asia, actually March. we say I would Europe. through true view year the right for was

much to tough believe really would the moving just so September it's bottom. many is nearing -- pretty So pieces. I like to

and You got of June that Europe, ago quarters coming record September to a all-time remember, we're quarters. were off in year

in safe the space year-on-year that's in down, to some for So particular, compares suppliers and play I well. say industrial we're in and compare in get of in going But that big consistent tough Europe. the market, our industrial us on as think pretty many is Europe to that's it's a

would regarding gross seeing margin sequentially. then looks X% also pricing it well? incremental Got you backing it, okay. that margin that component this you have. that guidance, XX And margin below are mix-driven least And or like really point pressure be down looks by target or points into all your as your at like at will margins be Is basis it

mostly it's Matt, mix. Yes,

of a and being it lot the I dip, it. We may kind below feel of change it right, little dip Asia from that's our expenses think good of again, last does year be mention from OpEx shift but that really driving primarily overall couple a We're did only difference but to X%. some about that's But fiscal too, it's of bit, in timing quarters. we you're quarter. kind will up the from it hoping a mix what's be quarter and Europe big But a up headwinds.

looking just on OpEx, September And past the quarter. Okay. Ken,

should out You work some restructuring from incremental to OpEx not? talked we or about there expect so

significantly, Yes, modestly not but I think right.

comes Raymond from Our Melissa James. with question next Fairbanks

some your of I've inventories. X to related a on the commentary little got

expect had unique know investment of kind end-of-life some in we forward strategic there what you've chain your wondering services can Just business. or terms moving products. either of of opportunities expansion in maybe supply some I

Melissa, this Ken. is

Specifically to end-of-life?

Yes.

that there's we suppliers last several end-of-life doing think programs. are I mean, time it, some, call buyer I

alternative years. love don't for we necessarily X we those do engagements start X, for methods. when about you think We something to multiple look for can right? beyond for talk product years, But I that, to hold

And those a we are, got more the fair term. But that. a versus just right? being but see to that for it, our we opportunity customer see of supply needs for of do lot cheaper again, longer it's open current whatever take and of meaningful. A anything customers to temporary it pockets chain. But bit that things couple of it with within for stuff, But say type get gets we back-to-back becomes ago. a we'll is on the some to more holds but do pipeline return expensive historical So the where it are of as we're we wouldn't end-of-life than a stuff holds a So seeing the serving little capital, I lot years it of the hold cost buy opportunity. to it shipped. was of of last-time kind we're seeing to

okay. Okay,

On chain December or I think maybe the back quarter even going quarter. to maybe the this December supply services business, a the conference in

had some You opportunities.

inventory. some term space. customer. update onboarded auto us then was you saw industrial an You opportunities And some that the business? for I believe it you potentially in an on longer Can give

Yes.

with So there's optimistic to just the overall is new that quarter. right? consistent But down, to financial specific that a metrics not be supply top to And recover. And in will I again, necessarily ready even transportation, of of would progress the but things give will opportunity, which we particular, say of of some percentage puts this takes. I service start of inventory, being some still broadly. these wins. as on but but market see components little we're made I outside then guess take chain of quarter, roughly with What more last was while X% in more that being there and is for think lots the that's a broader some been other legacy that years, buying I'd type the have down technology engagements is of let's commentary companies say, give more supply the chain for, ramp,

there X. anything. the see in in for Asia. we've performing if dynamics heard Asia has but Love you're to if could in been good competitive on inventories okay. lot increase on comment talked I about competitive the or I'm Obviously, quick about can wondering the squeeze one But Maybe better the if impacting pricing progress seeing way. We've regions more by there. pressures that's just today, some what of X Asia you. you the Yes, a

couple Yes. in you the markets, more maybe a certain overall, Phil. I competitive Asia the This in questions. China, have some appreciate -- whatnot. hear all may I Melissa, suppliers from thanks indigenous is even is time. suppliers you Nothing it. and market of a mean, for But

our commodities minimal. norm we're this hear pressures do we So of -- net effect that's pricing from certain us has the the the out not at about business to certain some affecting of been seeing suppliers. point. Again, in anything But

with next comes Our from Joe question Quatrochi Fargo. Wells

on target just do of your the holding how to as of supply is that kind then being inventory for including take? billion inventory, think or chain agent And sub-$X you suppliers? customers long you're could that service curious -- clarify, that an Just the

Yes, goal. Joe, net that's a that goal, say think would I I

the see be and takes fiscal so think new I there'll towards our be puts as throughout fiscal the year achieved. year, I'd should say of end get we you that

to change the a be but report There's I there would out drastic and kind that number, of percentage supply be mentioned think think we'll reduce term takes clearly, progress reducing that pockets we'll update we'll -- in we're will there and focused inventory thinking on accordingly. Again, what overall updates of kind materially the of how that are it. continue kind invest capacity still what to about that's would within chain. puts but But there's That's on nothing where is we're give number at. near Phil I elevated. that to continue and increase of see we're we

talked data on then And center the about side. the Okay. the opportunity on -- you

how big average? a relative that curious, how today? to should revenue margin the of And for corporate kind is you from about we profile think the Just perspective

profile tied our relatively Asia okay? average business basis margin don't to some has a the margin that We see from number. relative of On or the total Phil. particularly is But the this to Joe, it's enterprise, typical we're quantify those small, of we out and our hyperscalers, customers. increased Joe, Yes, to been suppliers opportunities our about getting And there.

doing bit the directly call, the other lot hyperscalers little industrial lot a believe in their with makes of we're business selling last that particular got think more we've you I difficult AI, a to supporting are and right? we're space, So which hyperscalers OEM talked we're, measure of is if the hyperscalers, I a will. the in customers customers opportunity, the about in our we we're the end into sell it to or that customers

It So that. We're working from moves way, ecosystem as to out will we're as the time either there, also built we difficult gets overall that. on, can gets more probably certainly benefit. that quantify benefiting imagine. you But

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

X First Farnell. is on

you the Farnell. next you the to the turn to talked do throughout of get at around? margins business or the of end different think do Farnell cadence fiscal about How Ken, to do margin you year? can the So I should year mean, by what that? where Rebeca Farnell about fiscal the And think in plan we improvement

Ruplu. do you Thanks, can walk. have I'll touch imagine we first. the We and Ken Yes. a a on go plan there let I'll have margin.

just yes, complete the becomes are certainly That with Farnell. us as disappointed because recovers. about excited tailwind a said, So for we're we also where overall, opportunity the market it

effect in due particularly the transcripts we as of the I the the are the of and up in resetting announced in there. about show Farnell. in of we OI the that, Europe the been effect -- largest As a positive the that with role. market, structure think starting you team jumped on Avnet adjustments Rebeca further well net the the the not as the region. XX-year Farnell's XX to with know, OpEx couple just did for which to are a strategy months talked industry, see talked at about quarters It's where Farnell, already softening ago yes, in and we She's has OpEx veteran of that We

continue look So Farnell. to Avnet, leverage in total, at with best we're going to to continue structure, of okay, strategy the the

we've script, in about talked there. a we unique the opportunity As

We at all invest front slowing for end, not down the end. and its e-commerce Farnell we in see shareholders. bring We're value it's the that the continue critical on long-term that front to digital can because we think Avnet prop

So with I'm in on get stay and tuned the... anything we'll you. more, Ken, the for one-on-ones more sure

of sales and the to think the impact just I operating on improvement, the were a pushed broader bit. it, we say going The kind into quarter, I'd out Ruplu, it's you're the anticipated see going of margin little think obviously softer than that's I market. EMEA when

of right? of not good the being at going taking saw lot overall. on-the-board for components we're pretty well sequential decline there. see and good news effect, We margin, gross OpEx actions a level is the it as So good And that's feel a to we pretty are stable, improvement. The about as current sales,

we things is for we expect that recovery. for and next shape So that everything X. feel But we quarter to top good about at those softer least control, the the continue anticipated else in can line than or good the

capital I the mean, allocation I Okay. of Maybe you seems it channel. prepared can we're the the follow-up, inventory for remarks, my nearing like from ask priorities. your correction end Phil, on if the in

And expect? quarters investments this may of correction And you So I efforts we how terms that you think this And kind of in trade-off you any allocation? other capital can where you more how environment, you do So your investments? expect and buybacks have? any quarters about how your of doing the should type focus like correction? mean, if weave or many focus would M&A in in many of investments between or you where do just more of

been about Ruplu, I'll dropped market think -- start with We've of below $XX. off $XX. by the here, we book I value below of saying our turmoil steadily just trading some

is feel use we buying So capital appropriate now. our back shares of the right

with have tuck-in it. listen would transformational. And nothing although inventory it's M&A the when the few to things some it's we've in through should get to going dividend. to of the combination subsided aggressively. open So We're We're board, quarters and then into so with to right? think wouldn't side inventory getting but pursuing ourselves. investment talked really comes we things we to team a of of take our projects, every across to not the of We at, are that's about type customers, they inventory where a be kind continuing still capabilities lot levels Europe. in it better we own see opportunity to think say the there's and our But but opportunities support again, That's I capital invest of still be things. anticipate also or largely we

depending piece and levels debt I going and where down, the to in mostly the drive be business. are continue buybacks dividends, debt again, on of it's pay So to at think improvements some

Gallagher further no questions are at closing there now Phil remarks. I'll Gentlemen, time. this for back turn to it

today's I at great very look call. first a Thank rest forward you day. everyone you I Thank again year to report you. and attending much, want our to of earnings thank Great. October. for to the XXXX And speaking earnings quarter Have fiscal in

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

for time, your lines we disconnect participation. your this you and at thank may You