See, he'll give us live. All right. Good morning, everyone. I am Melissa Fairbanks, analog semiconductor analyst, and I also cover the IT supply chain names. We are thrilled to welcome back Avnet here again this year. We've got Joe Burke, Treasury and IR. And then also in the audience, we've got Lisa Mueller from the IR organization. So hopefully some of you get to meet with them later today. Thank you for coming, Joe. We appreciate you coming back again. Thank you for having us. I think, you know, because this is a generalist conference, it's always useful to do a brief overview, like an introduction. We don't have slides or anything, nothing formal, but just do a brief introduction into the company. Okay. Thanks, Melissa. Thank you for having us. Thanks for the invite. Thanks for everyone attending today, and for those listening on the webcast. We appreciate your time and interest in Avnet. And just to give an overview of Avnet, Avnet's a leading global technology distributor and solution provider, and we serve a very important role in the technology supply chain. Avnet provides the technology of our many manufacturers of technology around the world, and we connect that with the ever-evolving needs and growth of customers around the world, customers such as contract manufacturers, original equipment manufacturers, small, medium-sized businesses, and the mass market. And we do this through two operating groups: our Electronic Components group, which is a broadline distributor, and our high-service value proposition called Farnell. In our business, scale and scope is everything, and we have a great global footprint. We have 250 locations that can reach and ship into 140 countries. We do this with the help of 15,000 employees around the world, of which over 2,000 are hardware and software field application engineers that are able to help our customers solve complex design and supply chain issues, and so, you know, we like where we are in the technology supply chain today. If you take a look at our sales, our sales for FY 2024, which ended in June of last year, were $23.8 billion, and we had earnings per share of $5.43 billion. Then just to round it out, we were founded in 1921 in New York City, Radio Row, selling radio parts to consumers. Over time, we've evolved after wave after wave of technology, and today, where we are with not just components, but services and the like Avnet, by the way, is a family name founded by Charles and Lester Avnet in New York City, and they were immigrants from Eastern Europe. Fun fact. Thanks. Excellent. Thanks for that. So I do want to start in with some of the longer-term dynamics, you know, 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. Yeah. Well, where we've been is, you know, we've weathered wave after wave of economic change as well as, you know, cycles. We're a cyclical business. So we've endured wave after wave of economic cycles. You know, I think we reached a record year in FY 2023. We achieved, you know, $26.5 billion in sales and $8 in earnings per share. And then as, you know, it's no news that we entered a downturn shortly thereafter, and here we are today. So, but I think, you know, as we've gone through the downturn, we've made ourselves a stronger business. We are more resilient. We've been able to focus on the things that we can control, such as our costs and things like that, which we believe will make us stronger as we come out of this downturn. And it will happen. It's just a matter of when, not if. Okay. I know you have set some targets. 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. Yeah. And then also maybe returns. So maybe talk about what that target is, where you are today, you know, 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. Yeah, I think, you know, that's a lot. But I think if you take a look at where, you know, we plan to be, I think 4.5%-5% operating margin at the enterprise level is not unreasonable. I mean, we were back there in FY 2023. And so I think that's reasonable. I think, you know, if you take a look at some of the drivers for that, you know, staying disciplined with our cost control, yet at the same time not being hesitant to invest where we need to, whether that be on the people side, whether it's, you know, field application engineers, sales, digital capabilities, and in continuing to invest in our distribution centers and our IT systems and things like that, as well as the usual things that, you know, we look at from our value perspective. That's demand creation, supply chain services, IP and the like. So there's a number of, you know, value drivers that we have. In fact, you know, we'll probably be talking more about it, but, you know, we're not, as a distributor and solutions provider, we're not just someone who takes, you know, bigger boxes and sends out smaller boxes. There's perhaps, you know, 70% of the revenue that we have has some kind of value attached to it. You've been to our distribution center in Chandler. You've seen the programming center. One of my favorite concepts. There's a lot that happens, you know. You know, customers aren't just looking for a chip, maybe looking for a date coding on it, maybe some barcoding, some programming, taping and reeling and things like that. And that's just one aspect, you know, and there's also demand creation, supply chain and others. So I think what we've done is we've made ourselves a structurally stronger company through this downturn. And when the market turns up across the world, I think that positions us very well to get some very nice drop-through as the economy recovers and the top line recovers. 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? Yeah, it does. It is a leading factor because, you know, our broadline business is working with our customers to get their product to market, to extend that, and eventually to end of life. But again, at that point in the middle somewhere, our design teams are working to the next generation of technology for our customers. And, you know, it's a long process to go from a design win to a registration to actually realizing that revenue. So it is good indicators, and we're always out there, you know, working to design the next generation of product for our company's customers. So yeah. Okay. I think now would be a good time to maybe dig into the Farnell business. I think Farnell is a little bit of a differentiator for you. You know, 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 fulfillment. Sure. Yeah, the traditional business on the electronic components broadline side is we serve maybe 300,000 plus customers around the world for high volumes based on forecasts that they'll give to us. And we're trying to, again, help them scale up quickly and meet their needs over the course of years for certain production. On the Farnell side, that's what we call our high-service business. High-service business basically focuses on engineers, purchasing managers, hobbyists, makers, and the like who are trying to get product quickly. So limited order size and a rapid turnaround. It's all about speed and convenience versus the broadline side of electronic components where we're meeting needs over the course of a production run. And yes, most of Farnell's business is done through their e-commerce website in as many as 35 languages, I believe. And it's a great property, and we're very happy with it. But we were disappointed in the results over the past year. And as a result, you know, Phil Gallagher, CEO, has made some changes. He brought in Rebeca Obregon, who's been with Avnet a while. She has an engineering background by education and by experience. She's an electrical engineer, and she's, you know, welcomed the opportunity to take hold at Farnell. And she got right to work. She's been on board in Farnell as president of Farnell for about eight months now. And she got right to work by recalibrating the strategy and realigning her organization to meet the needs of that strategy. She's taken a look at the sales force. We have a local regional sales team. So she's brought on and bolstered the sales leadership in each region. And that's a good differentiating factor for them because they have local sales folks that are helping as opposed to just meeting the needs out of e-commerce site in one location. Other areas where we see some opportunities are the rationalization of the supplier line card to conform more with Avnet overall. We have a lot of suppliers that aren't contributing a lot to our margin. And then another area which we're really interested in is in what we're calling the power of one. We really haven't brought Farnell close to core Avnet. So bringing it in, maybe bringing Farnell along on sales calls to some of our top customers to say, "Hey, what are your needs on the maintenance and repair side, test and measurement," and things like that. So there's been a number of areas where, you know, Rebeca's quickly at work getting results, and I think you'll see those results shortly. And then one other area is we know as an e-commerce-oriented company, we need to do better for Farnell with their parametric search, their e-commerce response time, and things like that. We know we get a lot of visitors to the Farnell website. It's all about improving the cart conversion for Farnell. And that's some of the things that, you know, we'll be seeing in the future as a result of working on the e-commerce site. 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, you know, like talk about common systems across the footprint? Yeah. No, we're very, we have great ERP systems, and that provides us with a lot of information. We have good CRM systems, and that helps us too. And that will actually help in tracking leads from the Farnell to the core and back and forth. I think one of the things that's really critical is, as I mentioned before, we're not hesitant in this downturn. And maybe that's a differentiator for us. We're not hesitant to invest in people and new capabilities. And one of the things that we've done recently is we press released back in October a new addition to Phil's staff, a Chief Digital Officer. We know we can do better with our digital capabilities. That's where we can not only do better internally, but upstream with our suppliers and downstream with our customers. We've brought on Dave Youngblood back in the October timeframe. Dave has prior experience as a head of digital experience at ADI. He's had experience at Murata as well as Texas Instruments, and Dave's primary responsibility right now is to focus on getting the e-commerce experience over at Farnell to world-class status, but further than that, once as he works on that, to marshal the digital resources around Avnet and to improve them across the organization. If you just think of all the data that we have within our systems, how valuable can that be for not only us to understand what our customer needs next, but also to create greater tie-in with our suppliers to help them get better visibility and to make it easier to do business with us, as well as to improve things like quotation on large bills of materials around the world and things like that. So again, we think this is an important hire for us, for our team, and that should position us well for the future. Okay. That's 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. Yeah. So in the December quarter, we delivered $5.7 billion worth of revenue. Margin was a little under pressure because there was a, the good news was Asia had year-on-year growth, and it was strong as a percentage of our total revenue for the quarter. Asia's our lowest margin business. Europe is our highest, and America is right behind Europe. So in terms of the geo mix shift, Asia kind of weighed on margins. And then if you take a look at the other regions, our America's business actually had sequential growth, marginal sequential growth, even though year-on-year declines in Europe. Okay. No surprise there. Europe is still challenged. I think 25% or so year-on-year declines, but things will turn around there. But again, I think the message for investors is we're just controlling the best we can within the environment that we have. We're trying to pull all the right levers that we have to manage our business well. We generated $338 million worth of cash for the quarter. Our inventories were down about 6%. We bought back $51 million worth of our shares during the quarter, and we paid our dividends. So again, just controlling what we can control in a tough environment and trying to optimize our inventory and get it down even further as we progress through the rest of the year. So for the quarter, we guided some subseasonal declines. For the March quarter, there was a couple of, I would call them slight pull-ins in the Asia region due to uncertainty and maybe in advance of the Lunar New Year. But we saw nothing unusual in the December quarter for the Americas in terms of pulling in advance of the tariff war, which we'll probably be talking about. Oh, we will. The March guide is probably subseasonal. It is subseasonal. I think we're guiding down 8% to the midpoint. Had it not been for a couple of one-offs in the December quarter, it probably would have been more like 3%-6% down. Again, we're just doing the best we can in this environment. When the West recovers, primarily Europe, I think a lot of the headwinds that we've faced over the past year will turn into tailwinds as it relates to the top line as well as margin. Sure. Okay. Well, you brought it up. You knew I was going to bring it up at some point, the tariff question. It is one of the biggest topics. Probably this week, you know, and I 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 too. And so I'm curious about how your customers, one, 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? Yeah. Well, I think thanks for that question. We do get that question a lot lately. And there was a lot of uncertainty. What are the tariffs going to look like? How much is it going to be? Are you going to be able to help yourself and make sure you're not passed and pass that along and that you're not absorbing it? And for sure, tariffs are not a new topic for us. At the first round of tariffs going in place back in 2017, I guess we were able to handle that and make sure that we did what we could do to mitigate the impact of tariffs on our customers. And so really no impact from the P&L perspective. We're not in it to make money. We're not in it to lose money either. We were able to pass the tariffs along. Tariffs are really something that we'll be able to work with. Look, with the data and the systems that we have and the relationships that we have with our suppliers, we'll do everything we can to understand, "Hey, can we shift the sourcing of this product from this country tariffed to an untariffed country?" That will be the first question that we're looking. What can we do to mitigate the impact? Depending upon what countries are on the tariff list and what aren't, we'll do everything we can to figure out how to mitigate it legally as possible. The short answer is we do have the processes and systems in place to track this all internally and to make sure that we'll pay the government and make sure that we're getting reimbursed for that expenditure. And it is a common system that you run across all global locations, correct? So it internally, in terms of the way that you fulfill orders or account for orders, doesn't change regardless of the geography? Right. We don't have to change what we do. We just have to make sure we're capturing everything correctly. It just might mean that we have to keep more eyes on it. The data is all there in the systems and the country of origin and things like that. We've got that to the extent that there may be a supplier that is the importer of record and we've got to go chase down records there, then we'll do that too. Generally, we've been working well with our customers and suppliers from the first round to make sure that everything works well. Yeah, to be determined. We'll keep an eye on the news and see how it goes. A little bit of certainty would go a long way, though. That would help us. I think the important thing is this is nothing new for you. You've dealt with it in the past. Yes. We've been there. Yeah. Yeah. 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 they 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 environments, 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? Yeah. Pricing has been pretty benign. Of course, there's always, depending upon the market, I think we've passed the point where we're getting 10 letters a month on price increases. That was the news of a year or two ago, and we're seeing some pricing's mixed, I would say. We're seeing some increases on some of the higher-end technologies where suppliers are looking to recapture the cost of production of input for what they did to go out and build the capacity that they needed, as well as some of the more commoditized products. It's always pricing up and down depending, and there's some commodities that are going down, but the thing that I'd like to continue to remind our investors is we're a very diverse company as it relates to the types of products that we hold and things like that. And as it relates to your question about, we do have certain pricing protection within the EC business as it relates to if market prices go down. We'll evaluate whether we have the certain pricing protections. And a lot of it comes back to this concept of ship and debit and things like that, where we work with our suppliers to make sure that we're getting some type of relief on product should the pricing go down below what we think is reasonable for us to capture a decent margin. So this is really based on strong relationships and the agreements that we have with our suppliers. And I think we've been able to work through cycle after cycle, depending upon where you are in the cycle. There's different conversations that occur, and I think this is no different. Okay. I think that leads into a question about inventories because obviously pricing, demand is the number one determination or determining factor, but 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, really? Yeah, a lot of good questions in there. We get a lot of those questions today and recently, but yeah, no, we've got strong relationships with our supplier partners, and we're very proud of the relationships that we have there. And there's times when offers come to us and say, "Hey, we'd like to see if there's opportunities for this, and we'll review that," and if there's opportunities regarding additional margin or payment terms or some rotation ability where, "Hey, maybe we have parts at this end of the aging spectrum, and can we rotate them back?" And it's all part of maintaining good relationships, but at the end of the day, what we're really focused on is return on capital. If things don't work out from a return on capital, we're going to have to take a pass, so that's one of the things. In terms of obsolescence, we do have certain abilities to return and rotate out stock. Always a risk that's out there that we're mindful of. But we've been able to manage things pretty well. I don't think we reserve very conservatively regarding inventory and receivables. So there may be some things that we do from time to time, but it might not even rise to anything that you'll see in our earnings because we're applying these things against our reserves. So yeah. 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. Sure. Well, it's always let's support the business, make sure our systems and our distribution centers are world-class because if they're not operating, it may impact the ability to service our customers adequately. So we've got to make sure that that's there. We've got to make sure that we're keeping the product moving along. After that, yeah, we do take a look at our valuation of our shares. And when they're trading at a discount to book value at attractive prices, let's say that, that's as good an acquisition as we can find. And there's not much risk there as far as we're concerned. So we believe we've been good allocators of our cash in that regard. We do pay a dividend. I think that dividend's probably yielding about 2.5% right now at current prices. And M&A. We're always taking a look at M&A to fill in to see if there's any gaps that we have in our portfolio, things like IP&E, Interconnect, Passives, and Electromechanical. But as of right now, I think we're really focused on just making sure that we're generating cash and keeping our systems up and running and returning excess cash and maybe keeping a balance with paying down some debt to make sure that we're being good stewards on that side too. Okay. All right. We actually only have one minute left. So I know it's kind of shocking 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. Are there any large-scale acquisitions that are out there potentially? Do you evaluate those, or does Ken just say, "Absolutely not"? There are some. Look, we've spent the last 30-plus years consolidating the industry. There's a few players left, and it's kind of like a barbell at this point. So things are always being brought to management. Management talks to the board. But as of right now, I think there's not a lot of transformative that we would be able to talk about. But as we wrap up, if I may, I just wanted to thank everyone for attending and listening today. We believe we have a highly diversified position in the market today. We stand out by being the only broadline distributor that has a Farnell. Not many Farnell competitors have a broadline. We like the fact that we have a strong culture of our people, tenured, experienced management, great leadership around the world in Asia and in Europe and in the Americas. We're very happy with our supplier line card. We think our global line card is second to none. Very proud. Our global footprint also is second to none. I want to thank everyone today. Excellent. Thanks so much, Joe. Appreciate you having me here. Thank you, Melissa. Thank you, everyone. We do have a breakout session downstairs in case anyone has any follow-up questions. But thanks very much, everyone.