Avnet Inc at Bank of America Global Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : Maybe, Ken, I wanted to start with a high-level question, just talk about the macro environment. If you can talk about what you're seeing from a regional basis, North America, Asia, Europe, what are the demand trends like the same question on a vertical basis end market basis, what are you seeing?

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : Got it. In this environment, how long a forecast do you get from your customers and overall visibility based on those forecasts, do you think that visibility is better than what you had 90 days ago?

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : So say, since you talked about book-to-bill. Can you talk about how book-to-bill is trending across different regions?

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : Can you talk about China? What is the game plan for China? Do you see your revenues, your investments in China increasing and overall it at a higher level? Can you talk about where your investments and where your focus is on a regional basis, where do you think there's maximum growth for the company?

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : Got it. And I want to come back to Europe when we talk about Farnell, maybe that's a better time to talk about that. Let's, you also mentioned backlog. What is a normal level of how many months of backlog you typically have? And how is that running? And do you think there's any double ordering happening?

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : Just on cancellation rates, is there no, what is the normal level of cancellation is there's a certain percent that is normal and that you're typically trying to keep that under.

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : Got it. Can what investors be looking for in this space is to time the upturn. There's an inventory correction that has impacted this market. How do you see that trending? I mean, how many more quarters of inventory correction, do you see happening?

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : Got it. Maybe you want to talk about pricing, what are you seeing from suppliers in terms of pricing on both the passive side as well as on the semiconductor side. And our people are suppliers still raising prices in this environment.

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : Okay. And if suppliers were to take down pricing, I've been an investor concern has always been like what impact that's going to have on the P&L. So what are your thoughts on that? Like what happens when suppliers taking on phases?

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : Got it. But you also mentioned that you've gained share couple of years ago, you had some supplier consolidation that impacted revenues. But I think for the most part, you guys have done a good job of coming out of that. So where are you gaining share and which regions and how is the line card spending? I mean have you added more suppliers? Are you happy with the progress you've made?

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : Got it. But it so maybe this is a good segue to talk about the segments of I remember the Analyst Day, which was I think the 2022, you gave an overall revenue target of 5% to 8%. Obviously, the world has kind of changed over the ensuing years. But how should we think about revenue growth in the medium term and in the long term, how are you thinking about growth now?

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : Yes, that makes sense. Just touching on margins, the core business margins last quarter, I think we're 4.1%. So I think I asked you this on the earnings call but I'm going to ask it again like what needs to happen to keep core operating margins above 4%. And when you think about the drivers of margins, like what can you have us think about the impact of pricing, versus revenue growth, versus FX versus other? Are there cost measures you can take you just talk about how you're thinking about core set of core operating margin.

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : Got it. Just staying on the core EC business for a for a bit of talk to us about demand creation I mean, is this a higher margin business for you? I mean, what's the differential in margins between demand creation opportunity versus a regular opportunity? And then I mean, what exactly like what type of customers take or what type of suppliers and to take benefit of your demand creation? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 06, 2024 / 3:40PM, AVT.OQ - Avnet Inc at Bank of America Global Technology Conference

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : Got it. Maybe let's see into Farnell. So talk to us about what's happening in the catalog business. You talked about high margins at Farnell. I remember like it used to be double digit margins there. So how do we get from the 4% back to double digits? Are we going to get there? So to talk to us or what are the issues facing for now in Farnell margins?

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : Now has benefited from e-commerce sales from whatever investments do you still need to make? And for now like do you need to hire more engineers? Or do you need more CapEx into that business. So how do you see spending on Farnell trending?

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : Talk to us about your inventory expectations for cash conversion cycle, free cash flow?

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : How can you handle that supply chain services, ODC revenues from that?

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : Right? We have the expertise there to help them in their supply chain. So we're very excited about the future prospects, although it's scaling slower than we'd like, we're still seeing the opportunities there gone. And so we have about a minute left. I want to talk about your thoughts on an issue, which is with shares of for the longest time traded at tangible book value. And now over the last month, I think they were up 17% and you're still at book value. So what are your thoughts on that? I mean, how do you see receivables or are there any asset write-downs that you're expecting? So what is the market missing? And what would you say about to tell investors why this is a good time to invest? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 06, 2024 / 3:40PM, AVT.OQ - Avnet Inc at Bank of America Global Technology Conference

Question: Ruplu Bhattacharya - BofA Securities, Inc. - Analyst : Great. So we've touched on a lot of different things. I've got a lot of questions, but we're out of time. So Ken, Joe, thank you for coming. Really appreciate all the details.