Greetings, and welcome to the Avnet First Quarter Fiscal Year 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow a formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joe Burke, Vice President of Investor Relations. Thank you, Joe. You may begin. Thank you, Paul. I'd like to welcome everyone to the Avnet First Quarter Fiscal Year 2024 Earnings Conference Call. This afternoon, Avnet released financial results for the first quarter 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 in advance at your convenience. As a reminder, some of the information contained in the news release and on this conference call contain forward-looking statements that involve risks, uncertainties, and assumptions that are difficult to predict. Such forward-looking statements are not the guarantee of performance, and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in Avnet's most recent Form 10-Q and 10-K and subsequent filings with the SEC. These forward-looking statements speak only as of the date of this presentation, and the company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this presentation. Today's call will be led by Phil Gallagher, Avnet's Chief Executive Officer, and Ken Jacobson, Avnet's Chief Financial Officer. With that, let me turn the call over to Phil Gallagher. Phil? Thank you, Joe, and thank you everyone for joining us on our first quarter fiscal year 2024 earnings conference call. Before we get into the quarter, I want to take a moment and remark on recent events in the Middle East in general, and specifically our operations in Israel. Our thoughts and prayers are with our employees and all those in the region affected by recent events. We hope this devastating conflict will be resolved as soon as possible. As of this date, all of our employees in Israel are safe and accounted for, and we continue to service our customers to the greatest extent possible under these circumstances. Moving on to our results. I'll start with a reminder that in fiscal year 2023, we delivered double-digit sales growth in constant currency, record earnings per share, and ended the year with a strong balance sheet and great momentum. I am pleased to share that we kicked off the new fiscal year with another quarter of solid financial results, continuing that momentum and underscoring our strength and resiliency in the current market environment. In the quarter, we achieved sales of more than $6.3 billion. This was above the midpoint of our guidance, down 3% sequentially, and down 6% year-over-year. Continued efficient management of our operations enabled us to drive solid operating margins of 4.1%, highlighted by a 4.6% operating margin in our electronic components business. Our team continues to compete well in this market by working with our customers to provide the flexibility they need to manage their component supply chains, and by working with our suppliers to provide visibility to end customer demand and the impact our customers' current inventory levels have on near-term demand. In the quarter, demand was mixed across our diverse verticals. Transportation remained strongest, while demand in the industrial and aerospace and defense verticals were a bit more moderate. Overall, semiconductor lead times continue to improve slightly, but still remain higher than pre-pandemic levels. Shortages continue in some areas, particularly MCUs and power products, targeting automotive and industrial applications. While pricing has generally stabilized, we do not expect overall pricing to decline in the near term due to the increased cost for producing components, including higher costs for labor, raw materials, and general inflationary pressures. We continue to coordinate closely with customers and suppliers to effectively manage backlog, which is down from a year ago. As a result, overall book-to-bill ratios continue to be below parity, though modestly above last quarter. We communicated on our August call that we expect inventory levels to be up this quarter as we supported a specific strategic initiative. Our ending inventory levels were in line with those expectations, which Ken will discuss in his comments. I do want to emphasize that as a distributor, inventory is the lifeblood of our business, and having the right inventory is a strategic advantage. We're always working to ensure we have the right mix and right levels. Our suppliers continue to work with us on inventory, and I want to thank them for their partnership and support as we work through the correction together. Before we move on to operating group results, I wanted to provide my thoughts from recent conversations I've had with key stakeholders across the supply chain. I was recently in the Bay Area with a large group of procurement leaders from several of our customers and suppliers. The consensus of the group is that inventory levels for certain parts across the supply chain continue to be elevated, and that additional flexibility to delay inventory replenishment is necessary. Although demand across end markets remain healthy, customers have enough supply of many components, which will take multiple quarters to burn off. The conversations with these procurement leaders also confirmed our belief that Avnet is well-positioned with our supply chain capabilities. Our customers continue to have a need for our services as they transition from a JIT to a more resilient supply chain. With that, let me turn to the highlights for our businesses. At the top line, electronic components business saw mixed results across the regions. In constant currency, electronic component sales were down nearly 3% sequentially and 8% year-over-year. Sales in the Americas were down 9% sequentially and 6% year-over-year, with transportation and industrial as the strongest end markets. Sales in Asia were up 4% sequentially and down nearly 17% year-over-year, coming off a record sales quarter last year. In Asia, transportation continues to be our strongest end market, and China continues to have the softest demand. Coming off a record sales quarter in Q4, EMEA sales were down 5% sequentially and up 2% year-over-year in constant currency. In the quarter, EMEA continued to see strength in transportation, industrial, and the aerospace and defense end markets. Despite some of the broader market challenges we've been facing, we're encouraged by how demand is holding up in some of our key markets. We believe that our diversification and focus on high-growth verticals is helping to keep sales above the $6 billion per quarter level, as previously communicated. We continue to benefit from our unique engineering capabilities, with our field application engineers and digital design tools resulting in another strong quarter for demand creation. As component lead times stabilize, our field application engineers are now busy spending more time on product innovation and developing new design starts, rather than chasing down parts to maintain existing designs. Customers are also evaluating more redesigns as they look to optimize costs or to mitigate future risk related to older technologies. Turning to our Farnell business. As expected, Farnell sales and profitability were impacted by product mix and competitive pricing pressures. Farnell sales were down 5% sequentially and down 4% year-over-year in constant currency. In the quarter, we made progress working through the backlog for single-board computers, but the shipments have yet to fully ramp. We also had a good quarter for test and measurement component sales. Sales of the on-board product lines, comprised of semiconductors and IP&E products, saw the greatest decline in sales, driving the unfavorable sales mix. Operating margins for Farnell were above 4% during the quarter, and we expect them to be at or above similar levels in the December quarter, which is traditionally the lowest sales quarter from a seasonality standpoint. We remain excited about Farnell, despite the disappointing near-term outlook, and see additional opportunity to leverage Farnell's and electronic components' unique and synergistic collaboration to better serve Avnet customers. Farnell also has growth opportunities with recent line card additions and from investments in new products that should materialize over the next few quarters. Given the recent results, however, we are taking certain cost actions to reduce the operating expense base at Farnell, which Ken will touch on in his remarks. To conclude, as we navigate the current market environment, we continue to demonstrate our strength and resiliency. I believe our recent results reflect that. I want to thank our teams for delivering under such challenging conditions. Given the macro and industry-specific backdrop, it is difficult to gauge when the correction will finish, but our best estimate is it will last through mid-2024. This time frame is also consistent with some of the recent conversations I've had with top executives of several of our major suppliers, who share the view that the correction will subside sometime in the middle of 2024. We continue to believe our diversified end markets and our broad customer base positions us well for profitable growth for all of our stakeholders. As I've said before, while we cannot control the overall market, I am confident in our team's ability to execute in a challenging and uncertain environment, and to continue to deliver value to our suppliers and customer partners. With that, I'll turn it over to Ken to dive deeper into our first quarter results. Ken? Thank you, Phil, and good afternoon, everyone. Thanks for joining our earnings call. As Phil mentioned, we had a solid start to 2024. Our sales for the first quarter were approximately $6.3 billion, down 6% year-over-year and in line with guidance. On a sequential basis, sales were down 3% in constant currency. From a regional perspective, sales from the Western regions were 61% of sales in the first quarter, compared to 64% last quarter and 56% in the year-ago quarter. The sequential decline was expected due to seasonal mix shifts from the Western regions to Asia in the first half of each fiscal year. From an operating group perspective, electronic component sales declined 7% year-over-year and 8% in constant currency. Sales declined 3% quarter-over-quarter in constant currency. Farnell sales declined 1% year-over-year and 4% in constant currency. Farnell sales were 5% lower sequentially in constant currency. Excluding sales of single-board computers, Farnell sales declined 8% year-over-year and 7% quarter-over-quarter in constant currency. For the first quarter, gross margin of 11.8% improved 43 basis points year-over-year and was 67 basis points lower quarter-over-quarter. EC gross margin improved year-over-year, primarily due to greater mix of sales from our Western regions. EC gross margin declined sequentially, primarily due to a seasonal mix shift to Asia. Farnell gross margin was down year-over-year, largely due to the unwinding of pricing premiums, an unfavorable sales mix, and from competitive pricing pressures. Farnell gross margin was down sequentially, primarily due to an unfavorable sales mix and from competitive pricing pressures for on-board components. Turning to operating expenses, we continue to focus on controlling and reducing costs in specific areas, but we aren't currently planning any broad-based cost reduction actions while we navigate through this market correction. We want to build on the momentum we created over the past couple of years, and to be fully resourced to take advantage of the opportunities we see coming out of the correction. During the quarter, adjusted operating expenses were $486 million, down 4% sequentially, but 2% higher year-over-year. Operating expenses were down slightly in constant currency year-over-year. As a percentage of gross profit dollars, adjusted operating expenses were 65% in the first quarter, 320 basis points higher than a year ago, and 323 basis points higher than last quarter. For the first quarter, we reported adjusted operating income of $262 million, which decreased 11% year-over-year. Our adjusted operating margin was 4.1%, which decreased 22 basis points year-over-year and decreased 64 basis points quarter-over-quarter. By operating group, electronic components operating income was $273 million, up 2% year-over-year. EC operating margin was 4.6%, up 38 basis points year-over-year, but 47 basis points lower sequentially. The year-over-year improvement was led by our EC EMEA and EC Americas businesses, each of which expanded operating margin year-over-year by more than 20 basis points. The sequential decline was primarily due to a combination of lower sales and a seasonal mix shift of sales to Asia. Farnell operating income was $18 million, down 66% year-over-year. Farnell operating margin was 4.2% in the quarter, down 389 basis points quarter-over-quarter. Farnell operating margin continued to be impacted by sales mix and competitive pricing pressures related to on-board components. In order to improve margins, Farnell has implemented a series of expense management activities to reduce operating expenses. While we anticipate Q2 to be another challenging quarter for Farnell, we expect these actions will support its path back to high single-digit operating margins in the near term and a return to double-digit operating margins in the medium term. Turning to expenses below operating income, first quarter interest expense of $71 million increased by $26 million year-over-year, but decreased $40 million quarter-over-quarter. Increased interest expense negatively impacted adjusted diluted earnings per share by $0.21 year-over-year. Adjusted effective income tax rate was 24% in the quarter as expected. Adjusted diluted earnings per share were better than expected at $1.61 for the quarter. Turning to the balance sheet and liquidity. During the quarter, working capital increased by $134 million, including an expected increase in inventories of $290 million, partially offset by an $84 million decrease in receivables and a $72 million increase in payables. As a result of this working capital increase, working capital days was 101 days for the quarter, which increased four days quarter-over-quarter. Our return on working capital decreased quarterly, but remains well above our cost of capital. Inventories grew during the quarter due to two factors. The largest was the expected increase in inventories for EC business due to the strategic opportunity we had communicated last quarter. The second was an increase in inventory investments made at Farnell. Note, we don't expect any further investments in Farnell as they have sufficient inventory to support current business conditions. As we move into our second quarter, we are seeing a ramp in our supply chain services, which will result in an increase in inventories. For Q2, we expect inventory levels to remain flat to up slightly as a result of the inventory growth for those engagements, which are expected to be cash flow and working capital neutral. We continue to characterize our inventories as stable, and as Phil mentioned, we believe it'll take multiple quarters for customers to burn off their elevated inventory levels. While we continue to focus on improving inventory turns and generating cash flow, our top priority is to ensure we continue to support our customers' and suppliers' needs as we work through these challenges together. The increase in working capital led to an increase in debt of $112 million. During the quarter, we used $41 million of cash for operations. We used $110 million of cash for operations over the past 12 months. We ended the quarter with a gross leverage of 2.3 times, and we had approximately $732 million of available committed borrowing capacity. Our teams continue to work on selling inventory on hand and collecting receivables to provide additional liquidity in the coming quarters. From a capital allocation perspective, we continue to prioritize our existing business needs, including working capital and capital expenditures. During the first quarter, cash use for capital expenditures was $76 million, primarily to support a new distribution center being constructed in EMEA. We increased our quarterly dividend by approximately 7% to $0.31 per share, and we repurchased approximately $27 million worth of shares. We have $291 million left on our current share repurchase authorization. For the long term, we remain committed to our roadmap of delivering a reliable and increasing dividend and share repurchases to increase our shareholder value when we believe our shares are undervalued by the market. Book value per share improved to approximately $52 a share, or a sequential increase of approximately $1 per share. Turning to guidance, for the second quarter of fiscal 2024, we're guiding sales in the range of $6.0 billion-$6.3 billion and diluted earnings per share in the range of $1.35-$1.45. Our second quarter guidance is based on current market conditions and implies a sequential sales decline of 1%-5%. This guidance assumes a seasonal decline in sales from the Western regions, primarily due to holidays. This guidance assumes similar interest expense compared to the first quarter on effective tax rate of between 22% and 26%, and 92 million shares outstanding on a diluted basis. In summary, we're pleased with our performance and execution during the quarter within this current market environment. We will continue to focus on execution, managing through the correction, and achieving our stated financial goals. With that, I will turn it back over to the operator to open it up for questions. Operator? Thank you. We'll now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Thank you. Our first question is from Melissa Fairbanks with Raymond James. Please proceed with your question. Hi, guys. Thanks so much. Great quarter. Congratulations on another great quarter in a little bit of a challenging time. I was wondering if we could dig in on the strategic investment in inventory that you made. Are you able to give us a little more color on maybe is that targeting a specific end market or specific customer sets, or just kind of understand what's going on there? Yeah, Melissa, it's Phil. And by the way, thanks for the comments. Appreciate that. It's really for specific—it's a specific supplier with a handful of customers, okay? And so it's very, it's very limited. And I think it's important. That's why we noted it on the last call to let everybody know, "Hey, we planned this. We know about this." And we don't do that without all the ROIC measures in place and be sure it's good for Avnet, good for the customer, good for the supplier. So it's very specific in nature. Okay, great. Is it safe to assume that that's already in the backlog, whatever that level of fulfillment is going to be? Excuse me. Yes. Yeah. Okay. That's, that's actually a great question, because it wasn't a broad-based, "Hey, go, bring in inventory and go, go try to find homes." It's, it- Okay. brought it in, it has specific homes. Great. Great. Thanks. And then maybe just one kind of quick, I don't know if this is a quick answer, but maybe discuss some of the actions that you're taking at Farnell. You mentioned return to high single-digit operating margin within the near term. Just wondering if you could give a little bit more detail on, you know, is near term by fiscal year end, or what should we be thinking there? Yeah, I mean, I think specific to some of the, you know, cost actions, it's a combination of factors. I think it's things like, you know, optimized freight, you know, looking at warehouse footprint, as well as some people actions, right? But it's trying to look at where we have, you know, some areas for improvement that we've been planning, you know, for a couple quarters, but hadn't really pulled the trigger and now need to accelerate some of those things. There's also opportunities in terms of, you know, new supplier lines and, and, you know, shared, shared strategic customers between Avnet and Farnell. And, and I do think that timeline is, you know, exiting the fiscal year in that, you know, mid to high single digits is the expectation. Okay, great. Thanks so much. That's all for me now. Thanks, Melissa. Thank you. Our next question is from Ruplu Bhattacharya with Bank of America. Please proceed with your question. Hi, thank you for taking my questions. Phil, I want to start with a higher level question. I think I heard you say that, you know, the industry inventory correction, you think it'll take till the middle of next year. So I guess my question would be, why is that the right time frame? Why not earlier or later? What are some of the things that are, you know, leading you to think that it'll be till the middle of next year? And what can drive that? What can help in that process? Like, what are some of the factors that go into that? Yeah, thanks, Ruplu. Well, you know, it's our best estimate on how, you know, by what we're seeing in lead times, combined with our backlog and the book to bills. So there's a lot that goes into that, not to mention some of our own analytics that we put to the, you know, historical versus future. So that's just what we're seeing today, Ruplu. Hey, it could be sooner. I mean, no question. I just didn't think we need to be overly bullish there. I think as we're seeing the market softening a bit, the book to bills have been below parity for a while. Which again, I think is fine at this point, because we want to get that backlog right. So we're making the adjustments in the backlog, but that's just what we see, you know, and based on those factors I shared and the different verticals that we study. I think the good news is we're so diversified that we're not any too over or top heavy on any one vertical, which I think helps us give a pretty good view to the market. And as I said before, this is a, you know, in my forty-something years, that it's a different market. I mean, there's so many mixed signals. There's still some lead times that are out there tied to certain products. There are some verticals and customers still doing really well, others not so well. So it's just, it's definitely a bit of a mixed bag, but that's just how we see it. We don't press it with our regions. We get the roll-up and the forecast and do a rolling fourth quarter, and that's about what we see. Okay. Thanks for the details there. If I can ask you a question on margins. You know, I think overall, you've said that as long as revenues can stay above $6 billion, then the operating margin for the company can stay above 4%. When you look at the operating environment today, I think you said that you saw unwinding of pricing premiums at Farnell, and you saw some competitive pricing there. Are you also seeing competitive pricing in the core business? And does that range still hold valid, that you know, as long as revenues are above $6 billion, can you every quarter keep the margins above 4%? Can you just give us your thoughts on that? Yeah, let me touch on the first part, with Farnell, and I'll let Ken touch on the $6 billion to 4% EC. The difference there in Farnell versus what we're seeing in the core, and we've talked about this over the last several years, the catalog guys in general get a, you know, unnatural lift in tight times or when extended lead times, where they'll get, you know, premium pricing, as well as non-traditional customers kind of swooping in, you know, large volumes, and they get the lift in both margin and in revenue. When we say the unwinding and the pricing pressure there, some of those customers have gone away, and the margins are kind of just normalizing, particularly in semiconductor and IP&E, okay? Well, right now, as we look at it, and we talked about it in the script, we're not seeing as much of that ASP pricing pressure on the component side, on EC. And we've said that before. We don't believe we're gonna see the pressures or deflationary pricing. It's always competitive, Ruplu, you know, in commodity standard products, it's always up and down. I'm just talking as an overall view. That's our take. I'll let Ken comment on the $6 billion and $4 billion. Yeah, I think the guidance, you know, obviously is, is above $6 billion. I think the 4% really, you know, if you, if you dial it back to a couple quarters ago, is really an EC-focused kind of commentary. Clearly, with Farnell being down, let's say, from 8%-4%, you know, causes some pressure on the overall corporation margin. But I think the EC is, is, very healthy, implied in the guidance. And remember, you know, when we get into the March and June quarters, we go into our seasonal mix shift, where we get a little bit more out of the West and less from Asia. The only other comment I would give is, you know, I think we are seeing, like in Asia, for example, you know, we, we'd expect in the, in the first half of FY 2024 or, first half calendar 2024 to kind of start to think about year-over-year growth because of how, you know, early Asia started to seeing some of the softness. Okay. Okay, I appreciate the details there. If I can sneak one more in. Once the warehouse in Europe is done, and I think this quarter you said that inventories, you had expected it to be up because of certain because of a specific program. So then how should we think about, you know, the cash conversion cycle and free cash flow over the next couple of quarters? Any thoughts on that? And will your CapEx be coming down year-on-year next year? Because, you know, you already have, you'll have the warehouse already factored in. Thank you. Yeah, I think you'll see another quarter, next quarter should be another elevated quarter of cash, of CapEx, similar to this past quarter, as that warehouse gets constructed, and then you start to see it taper off in the first half of 2024, I guess, similar to what I would say is historical levels. You know, from a free cash flow standpoint, as Phil said, you know, gonna be challenging on the inventory side to really work it down over the next couple quarters. So you'd expect cash flow from, you know, our earnings, and some, you know, collection of receivables from the sales decline. So we'd expect cash flow over the next couple quarters. You know, trailing twelve-month cash flow, I think I mentioned, was about $110 million usage. So I think there's another bad quarter falling off of cash flow usage from a year ago. So that's how I think we should think about it. Okay. Thank you for all the details. Appreciate it. Thanks, Ruplu. Thank you. Our next question is from Joe Quatrochi with Wells Fargo. Please proceed with your question. Yeah, thanks for taking the questions. I just wanted to kind of understand, you know, talking about maybe a cycle correction kind of lasting till mid-2024, and in the context of kind of, you know, maintaining revenue above $6 billion and, you know, that's kind of the, the low end of your, your guide for the December quarter. Are we to take that as you're kind of viewing things bouncing along the bottom here? Or should we think about, you know, the potential of further correction as we get into the first half of next year? Yeah, thanks, Joe. Good question. I think it's gonna be more bouncing along the bottom. I mean, again, I think it's just because what I just shared, I think, with Melissa, or maybe it was Ruplu, the mixed signals in the market. Again, there's, you know, we are still seeing, as of today, we're still seeing transportation overall, pretty positive. The industrial segment, you know, they have had a few bumps in it. But again, parts of the industrial is so broad, parts of that customer base is still really good, and other parts are a little bit softer. And, you know, defense aero, unfortunately, what's going on in the world is gonna continue to be a pretty strong market for us, and that's sizable for us in the Americas. Sooner or later, I guess the wild card is China and Asia Pac, right? I mean, you know, what happens there, if that pops back sooner than people think, that could have a greater lift. Right now we're just rolling up what we see. We do a rolling forecast with our teams, and what we're sharing is what we're getting from them and looking at the backlog in a 0-30, 31-90, 91-180 day. I look at it daily and see what is our backlog today versus a year ago, and it's telling us that's about where we're gonna be. Again, you're gonna have the mix shifts too, Joe. You know, as Ken pointed out, Asia is gonna be stronger this quarter. If it comes back down in the March quarter, so we'll have a stronger mix in the West, so. Got it. Hope that helps. It's complex. Yeah, sure. I appreciate that. Maybe just a question on the Farnell side, in terms of the cost actions you're taking. I think in the past, you had chose to leave the Leeds facility open or online, just given the demand you were seeing. Is that part of the cost actions of closing that? And then, if it is, can you remind us of the cost savings related to that? Yeah, no, the what we're talking about is separate from that. What you're referring to, Joe, would have been, you know, bringing up a new warehouse in Leeds and shutting down the old warehouse, and a lot of that's behind us. Although I'd say some of the-- now with that warehouse online, there's more optimization on the broader warehouse footprint, so it's maybe more adjacent warehouses, you know, not primary warehouses, that provide some of the cost savings. So I think it was a subcomponent of some of those numbers we talked about before. Okay, thank you. Thanks, Joe. Thank you. Our next question is from Matt Sheerin with Stifel. Please proceed with your question. Yes, thank you, and hello, everyone. Phil, just another question regarding the inventory that you're building and the supply chain engagements that you're talking about for the December quarter. Is that mostly Asia business? I think, Matt, it depends. This is Ken. It depends on the engagement. Some of it's global. You know, a lot of it's physically in Asia, but I wouldn't characterize it as something predominantly Asia. You know, I'd say it's more global engagements in nature, although a lot of the global production does happen in Asia. But some of it's Americas-based, you know, a little bit of maybe based, but it's, I think it's across the board rather than something Asia-specific. Fair to say it's more Americas and Asia than Europe, okay, but it's not primary. Not, it's not all Asia, Matt. Okay, that's helpful. So this is more of a fulfillment, so lower margin, but good returns? Is that how we think about that? Yeah, and some of it's, you know, may be buffer stock, and some of it may be fast turning. It's kind of a mixed bag. But the returns are there, though, Matt. That's your point. There are- Sure models there. Yep. Yep. And then, I think you said that inventories will remain elevated in the December quarter. Is that because you expect some of those supply engagements to carry over into March, or are there other reasons why you wouldn't start cutting inventory or your portfolio? I would imagine that some of your products with lead times in, you know, where you can prune, where others, you said there's elevated lead time. So I'm trying to figure out why you're not—you're talking about, you know, more significant cuts to your inventory when a lot of the suppliers are basically blaming all the distributors for cutting orders, yet you don't seem to be doing that. Yeah, it, Matt, it's net new inventory coming in specific for these supply chain engagements as they begin to ramp, and that would be offsetting, you know, anything we're doing organically to get inventories down. So that's the kind - that's kind of how we're trying to signal it, is there's net new coming in. Not, let's say, normal course of business, but specific to some supply chain engagements that's then having a flattening effect of overall, you know, work we're doing on inventory- Yeah in the base business, in the core business. Yeah, it's complex, Matt, so your questions are right on. And, you know, I guess the net-net is, we're confident with the inventory levels. We'll start to bring them down. But right now the inventory is fresh, it's good inventory, it's not aging. To Ken's point, the newer stuff is what we're talking about that's stopping it from coming down. Okay, okay. Thank you for that. And I appreciate that the visibility behind Q2 is difficult, but you did talk about this inventory correction taking at least a couple more quarters. And traditionally, in your March quarter, you're sequentially up in the Western markets, in North America, in Europe. In past cycles, that hasn't happened because of some of the issues that you're facing now. So the question is: How should we think about how the rest of the year plays out to the best that you can tell us? Yeah. Matt, I guess what I'd say is that I think we'll, we'll still get a mix shift to the West. Now, whether it'll be, you know, normal seasonality or, or, let's say, normal pops, I still think that's to be determined. You know, we still feel confident above $6 billion, and we'll get a little bit of gross margin lift from, from mix shifts. That's how I'm seeing. I think a lot of what Phil's commentary on the mid-2024 is really about inventory levels, right? The inventory is stable. We're not gonna see the inventories really come down meaningfully, you know, through that timeframe, 'cause there's still plenty of work to do there. Yeah, Matt, when we're talking about the inventory levels, we're talking about the market. You know, we say, you know, we track, like you do, all the inventory levels by, you know, EMS, us, end markets, et cetera. And that's our estimate based on current pull and demand, that the inventory as the inventories burn off out there and customer inventory, and to sum it up, you know, we estimate that's mid 2024. Could be sooner, like, you know, it could come quicker. Okay, thank you. And just lastly, relative to the interest expense, which was down sequentially but still up significantly from where it was a few quarters ago, and I would think that would be, you know, one area where you can drive a profitability growth as you continue to generate more cash, inventory comes down, you bring down your short-term borrowings. So how should we think about that as a potential driver of profitability over the next few quarters? Yeah, I think, Matt, definitely as we get back to cash flow generation, paying down debt will be a part of that, especially as sales are down, trying to keep leverage in the same ballpark we've had it. But then, you know, we'll try to be more opportunistic on buybacks as well. We think there'll be enough cash to do both, but, you know, got to get back to that generation before we can start to work down the debt and/or, you know, increase the buybacks. Okay, well, sounds good. Thank you very much, and best of luck to your baseball team tonight. Thanks, Matt. Thank you. Our next question is from Joseph Cardoso with J.P. Morgan. Please proceed with your question. Hey, thanks for the question, guys. So the first one here is just, can you provide a bit more color on what you're seeing out of Asia? You know, obviously, it was another quarter of softness, but just curious, it sounds like you're expecting some improvement there and just wanted to touch on, is that just more of a function of typical seasonality and the easier comps, or if you're actually seeing any green shoots in the region around improvement, and if so, where that is materializing, if you have any color on that? Yeah, sure, Joe, I'll go first, and so thanks for that. Overall, we're competing well in Asia. We think we're picking up some share as well. But the. If you look at it in QoQ, you know, just looking at the numbers for, you know, the industrial in Asia held up pretty well. It was down year-over-year, as we talked about in the script in general, because we had such a record-breaking, you know, numbers a year ago. Transportation was up both QoQ and year-over-year. So there are some signs of positiveness in Asia, and Japan's been good. Japan's been positive for us. So it's really, there's no one thing. We just feel that, and Ken and I were just over there and talking to the team and our leader there that, you know, feeling that it's gonna start to turn a bit. Now, you know, we're not. It's very important, we're not overly exposed to any one vertical, right? And I think that's really, really important, and we're not overly exposed to China, right? We do our business in China, but we're not overexposed. So gives us maybe a bit more of a balanced portfolio in the Asia Pac region. My only other comment would be our team over there is really competing well in the markets they serve. And so we're seeing, you know, very good progress there in terms of trying to take share. No, got it. That sounds great. That sounds great. And then, and maybe this one is a little bit more random, but, you know, just within the automotive transportation business, you know, some folks across the supply chain have just been highlighting headwinds, either in the form of UAW strikes or, you know, increased competition in China around some of the new applications being deployed there. You know, just curious, and it, and it doesn't sound like it, but are you guys seeing any of those headwinds at all materialize in your business, or is that largely noise for you guys? Thanks for the question. Yeah, well, it's not, it's not noise. There's certainly some reality to the competitive nature of what's going on in automotive. Again, this past quarter, we just did not see that, and we still see it pretty positive. The auto strike, we really didn't see any real effect on that, at least to date, and it sounds like they're working to resolve some of those. But again, when you look at automotive, you know, in total, it's, it's just, you know, we're not overexposed. It's, it's maybe 15%-16% of our business is, you know, approximately or something along those lines. So it's not like 50% or 60%. So even if there is a slight tick down, it, it's not gonna have a huge effect on us. We also look at transportation beyond just automotive. You know, we put in that bucket transportation, it's, you know, it's golf carts, dump trucks, trains, e-bikes, you know, so, you know, which is battery and a lot of that's semiconductor. So we kind of broaden that vertical as well. Got it. Appreciate the colors, guys. Thanks, Joe. Thank you. Our last question is from William Stein with Truist Securities. Please proceed with your question. Great. Thanks for taking my questions. I want to offer my congratulations and, also add on to Matt's comment. I was surprised to see the, Avnet logo on the Diamondbacks, but, all good stuff. I have, a couple questions. First, and I apologize if you touched on this already, but, I think you cited automotive or transportation as a strong end market, and I even think you cited industrial, at least in Asia, as a relatively stronger end market. These have been sort of the standout weakening end markets among the semi suppliers, as we progress through earnings season or, you know, or at least so far. But enough to have said it, that it's, you know, been pretty significant misses, actually. I wonder if you're not seeing the same trends, is this a matter of, you think, inventory in the channel, that you guys maybe you're not ordering as much from the suppliers, or is it inventory at end customers? Or any clarification on this would be really helpful. Yeah, let me give a shot at that. Yeah, transportation, if you look at globally, was up modestly QoQ and up year-on-year as well for us. And industrial, you know, first of all, it's really a broad. You know, so it maybe depend, you know, how people define industrial. It's our largest segment, you know, by a long shot, so it's really a long tail. And if you look at, you know, some regions, it's stronger than others. I think what we said in the script, we called out that it's moderating, though. We definitely see some moderation in industrial, so we did call that out, William, I know you saw. So we saw stronger strength in transportation than we did in industrial. And then we called out defense. Defense aero was a little softer in September, but we don't expect that, that's going to continue to be a growth market as well. We separate that out from industrial. But it depends, just depends on the market, the submarkets within industrial, because it's so broad. And that's why I keep talking about the mixed signals, because there's still some nice pull on demand, and there's others that are just a little over inventory. But I think they'll be burning that off, and like I said, through the first half calendar 2024. Great. And the follow-up, you know, recently, WT Microelectronics acquired Future Electronics, and, you know, that's a pretty unusual, rather large combination of competitors. And I wonder if, the company has any view as to whether that would, increase or decrease competitive pressures, and any description of the sort of change in competitive dynamics that you anticipate from that or, or ones that you've already seen. Thank you. Yeah, thanks. Thanks, Will, and thanks for the comments. Well, we don't, we don't make comments on, on the competition, nor certainly that, that merger. We want to focus on our execution and our operation, operational focus and, just continue to do with our suppliers, who, who we value greatly, and, and our customers. I think, we do that, we'll be fine. You know, so we already compete with WT in Asia, and we keep competing with Future, you know, in the West. So they're gonna combine together, and we'll see how that, that works out. But in the interim, we're, we're stable and, balance sheet's solid, and we want to continue to drive growth with our current suppliers and customers. I wish them luck. Thank you. Thank you. Thank you. There are no further questions at this time. I would like to hand the floor back over to Phil Gallagher, Chief Executive Officer, for closing comments. Thank you. Hey, I want to thank you for attending today's earnings call, and I look forward to speaking to all of you again at our fiscal second quarter earnings report in January. And as since it was noted, today does mark game five of the World Series in Major League Baseball. On behalf of Avnet, Team Avnet, want to say, "Go Diamondbacks!" Okay, have a great, have a great rest of the week. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.