The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Joe Quatrochi - Wells Fargo - Analyst
: Hey, thanks for taking the questions and congrats to Joe Burke. Thanks for all the help over the last several years. Maybe just to start,
it feels like the commentary on EMEA is definitely maybe a bit more positive than 90 days ago. So can you talk about just kind of
what's changed there? And like what end markets maybe are driving?
Question: Joe Quatrochi - Wells Fargo - Analyst
: Got it. That's helpful. And then I guess as a follow-up, I appreciate that FX is kind of making the inventory dynamic a bit more difficult
to kind of track quarter-to-quarter for at least just looking at it on the balance sheet at that point in time. But I guess, how should
we think about just inventory trends in the September quarter that you're thinking about relative to trying to still work down maybe
in some pockets?
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AUGUST 06, 2025 / 4:00PM, AVT.OQ - Q4 2025 Avnet Inc Earnings Call
Question: Joe Quatrochi - Wells Fargo - Analyst
: Thank you.
Question: Ruplu Bhattacharya - Bank of America. - Analyst
: My questions, Joe. We're going to miss you. Stay in touch. You're retiring too soon. I mean, so really appreciate all the help.
Question: Ruplu Bhattacharya - Bank of America. - Analyst
: All right. Phil, I wanted to start by asking on the core business. So Asia remains strong. How do you see that trend continuing over
the next couple of quarters? How do see the mix of regions? And how does that impact the core business margins as we go forward?
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AUGUST 06, 2025 / 4:00PM, AVT.OQ - Q4 2025 Avnet Inc Earnings Call
Question: Ruplu Bhattacharya - Bank of America. - Analyst
: Okay. Well, that's a great segue into my next question, which is on Farnell. What are some of the things that you guys are doing to
improve margins there? One aspect was you've hired a digital office -- Chief Digital Officer and your -- can you give us like how much
of sales for Farnell are now -- has now come through the online portal. And how do you see margins trending? It was at 4.3% this
quarter. How should we think about -- how about that going forward?
Question: Ruplu Bhattacharya - Bank of America. - Analyst
: And thanks for all the details there. If I can just sneak one quick one, and it's a very top level, high-level question. The industry has
been going through an inventory correction over the last year, 1.5 years. Phil, do you think that we're at the bottom of this is excess
inventory now out of the channel? And how do you see that -- are we now at an inflection point, do you think?
Question: Ruplu Bhattacharya - Bank of America. - Analyst
: Okay, thanks for all the details. Appreciate it.
Question: Melissa Fairbanks - Raymond James - Analyst
: Hey guys, thanks so much. I have a few questions. To start with though, Joe, I'm hopeful we can still play golf together in the spring.
That would be great. You might have more time. Just to follow up on some of Ruplu's questions on Farnell margins in particular.
Phil, I think you kind of hinted at it, get back to a double-digit margin percentage.
I'm wondering what we should of as being a normalized margin for Farnell? Obviously, we had some pretty extraordinary situations,
conditions going on during the supply chain crisis. Just wondering what kind of the -- if you could let us see that spreadsheet, let us
know what the internal targets are for margins?
Question: Melissa Fairbanks - Raymond James - Analyst
: I would love to see whatever spreadsheet you're looking at right now with all the lead times and inventory levels. I would love to
see that.
Question: Melissa Fairbanks - Raymond James - Analyst
: Okay, great.
Question: Melissa Fairbanks - Raymond James - Analyst
: I had a couple of questions for Ken. You mentioned that you would restart the merit increases that we didn't see in fiscal '25. Just
wondering we should model OpEx going forward? If it's the September quarter outlook that kind of contemplates that entire uplift?
Or it's going to be kind of like a rolling, I don't know if it's on a calendar year or fiscal year for those merit increases.
Question: Melissa Fairbanks - Raymond James - Analyst
: Okay. And maybe as a last question, asking you guys to pull out your crystal ball forecasting. It was nice to see interest expense come
down a little bit in the June quarter, that you're guiding for flattish during the September quarter, assuming that we are starting to
see some stabilization, maybe even an inflection point in some of the broader demand. What should we be assuming in terms of
inventory investment and then potentially what that means for the interest expense going forward?
Question: Melissa Fairbanks - Raymond James - Analyst
: Great. Thanks very much, guys. I appreciate all the detail.
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AUGUST 06, 2025 / 4:00PM, AVT.OQ - Q4 2025 Avnet Inc Earnings Call
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