Avnet Inc at Raymond James Institutional Investors Conference Transcript

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

Question: Melissa Fairbanks - Raymond James - Analyst : Excellent. Thanks for that. So I do want to start in with some of the longer-term dynamics, the view the overview of the company over the long term. Maybe start with where you've been and where you're going, and then we'll get into some of the more current trends.

Question: Melissa Fairbanks - Raymond James - Analyst : Okay. I know you have set some targets, and it's been -- it's hard to believe it's been several years since your analyst meeting, but you have set some long-term targets for operating margin. And then also maybe return. So maybe talk about what that target is, where you are today versus where you are today, but then also how much of that is going to just be cyclical -- in terms of returning to volumes versus structural, and then we'll get into some of these structural drivers.

Question: Melissa Fairbanks - Raymond James - Analyst : One of my favorite topics, yes.

Question: Melissa Fairbanks - Raymond James - Analyst : Is it safe to assume that having the FAE footprint and doing some of this demand creation, doing some of the programming, it gives you maybe a little bit better visibility into revenue. It's a little bit of a leading factor? Or is that --

Question: Melissa Fairbanks - Raymond James - Analyst : Okay. I think now (inaudible) a good time to maybe dig into the Farnell business. I think Farnell is a little bit of a differentiator for you. It's -- it came through an acquisition several years ago. And been a little bit challenged more recently, but discuss maybe the dynamics of Farnell versus traditional (inaudible).

Question: Melissa Fairbanks - Raymond James - Analyst : Okay. That's exciting. That's exciting. So the restructuring is going on within Farnell. Maybe talk about some opportunities for beyond the value-added services, but are there any other opportunities internally that you can take, whether it's from automation or like talk about common systems across the footprint.

Question: Melissa Fairbanks - Raymond James - Analyst : Okay. Great. That's exciting. I think maybe now we should move into talking about some of the current business dynamics. It might be helpful to maybe review what you saw in the December quarter, what your March quarter outlook is kind of applying from end market demand, geographic dynamics?

Question: Melissa Fairbanks - Raymond James - Analyst : We will.

Question: Melissa Fairbanks - Raymond James - Analyst : Sure. Okay. Well, you brought it up. You know I was going to bring it up at some point. The tariff question. It is one of the biggest topics probably this week, and I'd like to say, even taking a 90-day outlook is a little bit challenging. I think at this point, we've got like a seven-day outlook to. And so I'm curious about how your customers won, are you able to pass through rising costs if we do? And how does that impact your P&L? Is there any impact? Two, how easy is it for you to shift inventory around your global footprint to address maybe customer concerns about trying to mitigate tariff impact.

Question: Melissa Fairbanks - Raymond James - Analyst : And it is a common system that you run across all global locations, correct? So it internally in terms of way that you fulfill orders or account for orders doesn't change regardless of the geography. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 03, 2025 / 4:35PM, AVT.OQ - Avnet Inc at Raymond James Institutional Investors Conference

Question: Melissa Fairbanks - Raymond James - Analyst : I think the important thing is this is nothing new for you.

Question: Melissa Fairbanks - Raymond James - Analyst : You've dealt with it in the past.

Question: Melissa Fairbanks - Raymond James - Analyst : Yes. Yes. So getting into pricing, this might be a little bit more general question. So far, even as revenue has declined, and we've seen this ongoing correction among your supplier base, even among your customer base. Pricing pressure has actually been fairly benign. Lead times are normalized. We're hearing some of your suppliers start to say expect this year is going to be the first year of more normalized pricing adjustments. Maybe discuss are we returning to? Are you also seeing more normalized pricing environment, low to mid-single-digit annual declines on pricing. And then maybe as a follow-up to that, how do you absorb those pricing concessions?

Question: Melissa Fairbanks - Raymond James - Analyst : Okay. I think that leads into a question about inventories because obviously, pricing, demand is the number one determination -- determinating factor, but the pricing probably also factors into the way that you manage your inventories. So we have seen inventories begin to normalize. I think we heard from one of your suppliers earlier today that they were actually seeing instead of under shipping end market demand actually beginning to ship to end market demand. From an inventory perspective, we have seen -- you've taken some opportunity for some opportunistic purchases, whether that was to support supply chain services or end-of-life support. Maybe talk about the dynamics and how you decide how to manage that. And if there's any risk of obsolescence.

Question: Melissa Fairbanks - Raymond James - Analyst : We're quickly coming up on time. I just want to see if there are any questions in the audience. before I move on, I do want to talk about capital allocation. You mentioned the buyback, you mentioned the dividend. You also mentioned some of the areas that you've been making investments more recently to kind of fund the longer-term opportunities in the business. Talk about your priorities for cash generation, capital returns and then shareholder returns.

Question: Melissa Fairbanks - Raymond James - Analyst : Okay. All right. We actually only have one minute left. So I know it's (inaudible) how quickly it goes. I think Farnell was the last big acquisition that you did. It was pretty transformative in terms of M&A, we have seen you make some investments into areas like you mentioned, either technology gaps, engineering gaps or something. Is -- are there any large-scale acquisitions that are out there potentially? Do you evaluate those? Or does Ken just say like absolutely not?

Question: Melissa Fairbanks - Raymond James - Analyst : Excellent. Thanks so much, Joe. I appreciate having you here again.