Day one of our Global Technology Conference. Great to see everybody here. We're honored to have the team from Avnet, and from Avnet we have Chief Executive Officer Phil Gallagher, and those of you who've known Phil for over 43 years. He's been with Avnet, and he's a real institution when it comes to distribution in t his industry. We also have Ken Jacobson, he's been with the company since 2013, and prior to that he was with First Solar. A lot of experience on that side as well. We hope to have a great discussion. Phil, I'm going to start with a very overall general question. Where do you think we are in this cycle? Is this cycle any different from prior cycles which have been primarily driven by inventory? What do you think is driving this cycle, and where do you see this year trending? Yeah. Tough to call exactly where we are in the cycle. First of all, thanks, Ruplu, for having us, and thanks for all those in the room and those listening. Where do I want to start? I think the difference, at least my view, being, yeah, 43 years and seeing a handful of cycles, I always go back to 1999, 2000, where it was heavy comms, it's heavy, the Ciscos, the Lucents, et cetera, Alcatels, and the whole thing. You had Y2K, the perfect storm came together and boom, dropped, and it was a pretty significant drop. Flattened out, obviously it came back. This one, you had the most recent, post-COVID, if you will. This just feels a lot different. Everybody knows the data center, what's happened to data center, and the hyperscalers, which, that started several quarters before we actually saw the impact, the positive impact, I should say. Now the expansion to the balance of the verticals being impacted. The data center, the hyperscale, and compute, driving up. Industrial's moving up and to the right. We even saw some growth in automotive transportation. We lump it in with transportation, anything with wheels, with golf carts, e-bikes, frames, tractors, that's stronger. Aerospace defense with what's going on in the world, not only strong in the Americas, that's going to continue to expand in Europe and even parts of Asia-Pac. Consumers, steady as she goes. It's really a diverse recovery across multiple verticals, or you could arguably say all the verticals, and geographic as well. Asia is now in our eigth quarter of year-over-year growth in Asia-Pac with record numbers. That's through June, by the way. We're not giving any guidance, I mean, through March, that's not guidance into June. Europe is showing oxygen, which is great news for our European friends. Saw some life here in the last several quarters in Europe. Still not where it needs to be, but definitely some rebound there in the industrial space as well, which is good news. The Americas now has been on its third, probably fourth quarter of accelerated growth, in the +30% range. Overall, it's not only diverse vertically, but it's diverse geographically. We have our Farnell business, which is now three quarters in a row of over +20% growth, and that's not just onboard components, semiconductors, interconnect, passive, electromechanical. They also have that Emerson Test & Measurement, which is another indicator in the market. What's happening in Tektronix, to National Instruments, and Keysight, and they're all doing extremely well. That's another front end, if you will, on the cycle on testing and whatnot, what's happening in semiconductor. Just feels better. The data says it is better, and our job as Chief Executive Officer s, Chief Financial Officers is to keep our eyes wide open and stay vigilant. As I like to say to the team, sip the champagne, enjoy it, and we get back to work because there's still a lot to get done. Yeah, no, that makes sense. Let's put some numbers on this and talking about the electronic components business. Can you talk about backlog? Can you talk about lead times and pricing and book-to-bill? What are some of the numbers that are giving you confidence that this is a sustainable recovery that you're seeing? You start with the backlog, the book-to-bill you might have to come back to me with a couple of the other four or five tied in there, Ruplu. The backlog is 50%-80% higher than it was this time last year, we look at the backlog daily. We not just look at the backlog, we look at the adjustment of the backlog and cancellation rates and whatnot, that's still in manageable range. There's nothing crazy happening there. The backlogs look solid. Of course, we continue to audit the backlog. I think that's important for all of our customers and suppliers to know. The book-to-bills are still very positive, even when you net it out for memory inflation, still positive. The numbers, again, it supports, we look at the backlog. I go about as far as 180 days because after that it gets pretty gray, but it looks really solid for the next at least six months, and I think it's going to continue to increase. What was the other two you added on that? Lead times and book-to-bill. Yeah. The book-to-bill I hit on. That's positive in all regions across the verticals. Lead time. That's kind of a mixed bag. We know what's happening in memory. I don't think that's going to get better. We don't talk about suppliers specific, by the way, ever, but you can guess who the memory guys are. That's going to continue to be tight. I challenge it all the time. I challenge, you've been around long enough, you live in a paranoid state, right? I'm like, "Are you serious, really?" When you go across the verticals and you go across the technologies, yeah, I think memory's going to be super tight and I'd just lump it after that. Any tied to power is going to continue to be tight. Anything tied to power, Hi-Rel products, any tied to the high-end capacitors in mil-aero, are going to be tight. Certain parts of the discretes are going out, controllers going out, and pricing going up. The pricing, many of you have the letters out that have been sent from suppliers, it's pretty public knowledge what's going on in memory, and we'll see how that continues. Even one of your participants here, Steve, came out with something yesterday, or they'll be putting out some price increases, and we've seen that from other suppliers. It's in the higher tech stuff, if you will, the more higher-end controllers or whatnot. I think the good news, I think it's being managed better this time. We'll see as we get through it. I'm not seeing price increases four and five times in the same month like we were seeing the last, it was kind of constant. Trying to give customers as much notification as we possibly can, and just manage through it one supplier at a time. Everybody handles it differently, and that's the good news, bad news of the job we do for the supply chain, right? We manage the complex, and we try to make that simple. Phil, I want to ask you a couple of higher-level questions that we keep getting time and again from clients. One is, how do you see Avnet's strategic relevance over the next five years? There's always talk of vendors consolidating, them trying to go in-house, or they're trying to go direct to customers. How do you see your relevance over the next five years? What value add are you providing? Yeah, I think it's actually going up, Ruplu. I talk to the board or our team or people like you. We can't control what supplier's going to buy what supplier and who's going to merge with who. I mean, we're not sitting in the boardrooms. We don't have control over that. What we can control is the value we bring to the market. From really inception through design, through manufacturing, end of life, and our job is just to add value on all those different journeys within the supply chain, within the ecosystem. Demand creation, leaning in on that. Supply Chain as a Service, leaning in on that. What's happening with manufacturing moving around the world, constantly lifting and shifting supply chains is really complex. I actually think the relevance of what we do is going to keep going up. It's not going down because the world is getting more complex. Tariffs, we don't even talk about tariffs hardly anymore, right? It's back to life. We help manage that, right? We take the complex and make it simple. The world's getting more and more complex with different regulations and compliance, I think the supplier's going to continue to lean in on the channel. Most of them know that we're the most profitable means to go to market, okay, still, because they ship with us, and we handle the receivables. We pay them on time. We manage the inventory for them. I think it's going to go the other way. I think it's more positive than not. Okay. Actually, I'm really excited about the spot we're in right now and the center of technology supply chain. Just think about where we are. The amount of suppliers, we have the technology. Not going to list them all. Taking that downstream to this mass customer base from the highest end on defense aero to data centers and hyperscalers and everything in between. It's a pretty cool place to be. Another higher-level question we keep getting is in terms of inventory management, right? Are suppliers less willing to hold inventory now? Are they pushing more inventory into the channel? On the other side, I'll also talk about customers. After COVID and what happened in automotive, are customers more willing to hold inventory, or is it just in time? How are you seeing inventory on both sides? Oh, probably a mixed bag. I'd say on the supplier side, I don't think a whole lot has changed. It's pretty fair and balanced. Sometimes you have to carry a little bit more inventory for a given supplier based on maybe their lead times or whatever might be happening in the market. There's no extremism here where we're being asked to go carry X amount of inventory more than what we should have. By the way, where there is, we have a conversation, and we go back and forth. You negotiate what's fair and balanced and what is it we really need. We don't ever take inventory that don't have any demand or visibility to, right? We're not just, "Oh, yeah, put that inventory in and we'll ship it back in 90 days." No, that is not happening. It's a give and take based on the suppliers. Certain commodities, you got to carry more inventory. Where sometimes in the past, in connection you might have to carry more inventory to serve that market. It turns a different level in the IPD space than it does in a semi space. When I talk about inventory in general, it's not as much how much inventory you have as are you getting returns on the inventory you do have? That's why, guy on my left, return on working capital, return on capital employed, and we're getting good returns that we want to put more inventory in. Sometimes inventory is seen as a bad thing. It's not. It's good inventory. That's a good thing. Distribution, we're supposed to have inventory on the shelf. Just the right amount with the right returns. Farnell, though, on the other hand, runs a different inventory model. We've been breaking that out separately in the last several quarters for you guys to help better understand the days of inventory. They have to carry more because on the core side, we carry a more, it's not narrow, it's wide, but it's deeper in inventory. Where Farnell is really broad because their service and the engineer, the one-stop shop, yeah, they have broader inventory, but not as deep. The inventory's, the modeling is just a little different for the business units, and it's different within commodities, and it might be a little different within the technology within the commodity, or the supplier within the commodity. On the customer side, I think we're finally getting a little bit more visibility, which is good news. They were understandably so with what happened in the last go-around. They, just like a lot of us, end up with too much inventory, right? They had too much either finished goods, WIP, or raw inventory on the shelf, and they had to burn it off. I think actually the demand is probably back a little bit earlier than we saw because they're eating up their own inventory. I think they're eating through that. We feel pretty good about the customer end inventory. We don't have visibility of every single inventory out there, but just based on the demands and the bookings we're seeing and the billings, it feels pretty good. The customer's been pretty reasonable on that end. We'll see. I think the key is going to be as this gets tighter and broader, how the suppliers behave this time versus last time, maybe behave bad or good. Just how do we enforce NCNRs and things along those lines as they build up capacity. Got it. No, that makes sense. Let me ask Ken a couple of questions. one thing that's been- Good. One thing that's been impacting the industry is supplier price increases. Can you help us just walk through how that impacts your revenues and margins? As prices have gone up for components, is there any danger of demand falling off in the second half of the calendar year or next year? Do you see any signs of demand destruction in any end market? Maybe I'll start. Phil mentioned memory a little bit, and maybe just to kind of level set, when we talk about Avnet's exposure or memory business, it's primarily focused on our key focus vertical, so industrial, aerospace defense, transportation some, but not necessarily data center type memory. What we saw is in calendar 2025, that was roughly 5%-7% of our business, and in the March quarter, it was roughly 10%-15% of our business. That's mostly because prices doubled. Not that we got more units, it was the pricing and memory doubled. Now, I think that's an extreme amount of price increase. What we're seeing more broadly across our portfolio is selective price increases maybe between 10% and 20%, and usually there's some time to roll it out. Our approach to price increases is we need to pass those through. As a distributor, we can't absorb price increases, especially of that magnitude, and so we pass those along, and we do a good job trying to message our customers, give them time to adjust if they want to pull some stuff in. Usually, that happens depending on the size of the price increase. We'll move forward at the new price. I think we're seeing now as lead times go out a little bit more, more pervasiveness of price increases. Again, not as significant as what we saw in memory, but starting to see more and more signs of at least selective price increases across certain parts of the customer's portfolio, or sorry, supplier's portfolio. Now, from our perspective, that these are built into the BOMs, and they have to usually pass those through. Whether it's an EMS customer, whether it's a transportation customer, they would typically take that piece of the BOM and pass it along to the end customer. I think there are some anecdotes about certain consumer technologies where the price of memory is now making it non-competitive. Consumers are only going to pay a certain amount. I think more broadly, we're not seeing pricing affect just underlying demand. Again, we haven't seen pricing increases anywhere near what we saw post-COVID and those shortages, but lead times aren't extended the same. A lot of that price increase was because of input costs. You think about the cost of energy, you think about the cost of substrates, all those things that require to make a semiconductor, those are real, and they're still real today. We'll continue to monitor it, but I think the impact we saw this last quarter, we wouldn't expect to see similar levels of impact, although there'll be some impact of pricing as we move forward, most likely. Got it. I want to ask you a question on value-added services. I want you to talk about what type of value-added services Avnet provides. I have a tendency to put three questions into one question, and I'm going to do that again. Here we go. Which is, are you seeing any components, if I look out six months, are there any components that could be in short supply? We've heard of things like MLCCs that might become short. Does that enable you to do some other type of service, such as shortage market? Is there some value add that you can provide customers by trying to get parts? Talk to us about what you're seeing in the market in terms of which components are going into shortage or that already have a shortage, and just overall, can you talk about your value-added services, supply chain services, demand creation? Good. Yeah. I think maybe I'll start off by, we've been talking probably for the past year, if not 18 months, about customers needing to give us visibility. One of the challenges we saw is if we don't get the visibility from our customers and we're only looking out three months, then we can't provide the proper visibility to suppliers to figure out what to build. We've been harping over the past amount of time to start to get that visibility, and Phil mentioned the backlog. Now the good news is we have more visibility, and that's where I think supply chain capabilities overall help mitigate the impacts of parts getting tight. If we're pipelining appropriately, if we've given suppliers the right forecast, we can minimize those disruptions, not only in our core business where supply chain is our core competencies, but also on supply chain services. Think about large OEMs that have complex supply chains that we can help manage those supply chains. Things like buffer stock, vendor-managed inventory, all the different supply chain solutions we have, we can bring to bear as long as we have the visibility and know what the customers need. Things are getting tighter. We've talked about lead times extending, but parts are generally still available. Memory is probably the most tight right now, but other categories are starting to extend. I won't get into any specific categories, but I think the criticality here just becomes, if we don't know what the customers need and they don't give us that visibility, it's hard for us to bring solutions to bear. Now, many times, some of those solutions come with a cost. They're going to have to pay for the value we provide, but we have kept customers up and running longer, the customers that use our services versus others. I think the suppliers are seeing that value provide as well, and we're being referred to from the suppliers as well for that. I do think we're going to continue to see things get tighter, especially as demand gets pulled through. Now, some of that demand is being pulled through by the data center, but it's broad-based. We're seeing it pretty broad-based, that's just many more categories that need the components. Again, that leads into pricing, that leads into shortages and things like that. Again, we want to make sure Farnell, who's seeding the market for new designs and revs, continue to have the right product as well. That's where inventory comes in. If you get into these shortage times, those who have the inventory end up benefiting, and then you have more premium pricing power. Yeah, I would jump in for that one as well. The whole umbrella of value-added services, that was kind of 1980s, 1990s, have value-added services. I don't think we do. When you think about it, value equals benefit minus cost. Are we adding value to the marketplace or not? The customers, as far as ultimately, we'll define that value equal benefit minus cost. We're making a profit. You got the most complex value-added, or the simplest, let's say. Say, cable connector assembly, a PROM programming. We program chips for some of the largest OEMs in the world around the globe, and that's a services capability. +70% of what we ship out of every warehouse around the world, we're doing something to the product. Special handling, date code, special packaging, whatever it might be, including the services I just mentioned, we're touching that product for sure more than once. I think sometimes there's this image that we have these large warehouses, we get big boxes in, and we just take it, ship small boxes. It's a lot more complex. Invite anybody to any of our distribution centers around the world. I think you'd walk away saying, "Hmm, holy cow, these guys do a lot more than we thought." You get to the more complex, with, of course, demand creation is value-added. Design services. We do total board solutions. Supply chain solutions. We started with consignments and in-plant stores in the 1980s and 1990s. It's as complex as you can get with all the way up to Supply Chain as a Service for customers that couldn't spell distribution five, 10 years ago, that are coming in now saying, "Hey, we need help managing our supply chain around the world." By the way, suppliers are coming in and saying, "Hey, why would we build this supply chain if we already have an Avnet as a partner to go do this for us?" We're continuing to drive that. Of course, we've got integrated solutions where we do more data center work. We've got the Farnell, which Ken just talked about, helps seed the market. It all, in this whole Power of One, comes together under the value-added services umbrella. As far as products and things getting tight, I think we talked about memory probably enough. Yeah, that market is super tight. I think the next one's going to be, well, I'm not saying in order, but I think Hi-Rel's going to get tight. Anything around power is going to get tight. Anything around the data center, lead times are going to be going out. It's going to be more and more difficult. We need customers to continue to give us that visibility as much as possible. As far as services to help them find it, yeah, we have third parties can help them go find that. We're not in that business directly. We're not in the gray market or the broker business. We're authorized, but we will help them try to find products if we can, but we won't sell it to them. Okay. We'll let them. We'll find it and help them go negotiate it. That's helpful. We talked about Farnell a little bit. Strategically, do you see Farnell as a core part of Avnet? Is there value to be created if you spun that off? Maybe not now, but as margins improve. Tell us, is a catalog business something that Avnet really needs to have? Yeah. If our Farnell team's listening, they'll probably panic now. Yeah, no, we're not. That's not on the radar screen at this point in time by any stretch of the imagination. We love Farnell. As I've shared before, in the prior peak to trough, in the peak, Farnell was 6% of our business. You'd say, kind of yawn. It was 20% of our operating income. Okay? That's a public number. It means a lot to us. Yes, I like the people. Yes, I like the model, but I'm also a capitalist. We need to get the returns. It's on the right track right now, but it was only about a year ago we started that with Rebeca taking that over, just the Power of One. How do we better, where I think we've made some mistakes in the past we've isolated it in two separate. It's kind of a moat around it, and sitting over here, we're like no, no, how do we bring it closer to the core? Still keep it separate, I call it on the front end, but build out their digital capabilities, build e-commerce capabilities. You know, +70% of all their line items go through e-commerce, 55% of their revenues. Yeah, we're actually doing joint calls together now with the power of one joint account calls. Because again, they're not just selling onboard components, I said this earlier. Yeah, they got, line card almost matches, 85%, 90% of what Avnet Core has. But they got, you know, test and measurement, MRO, lines like NI, Keysight, Tektronix, the things that we don't have that every customer, every supplier is using. But it's a fragmented market as well, which is opportunity. Back on the core side, Farnell, they got hundreds of thousands of customers, upwards of a million, because they define a customer as an engineer on the p- card. They get an order for a reference design kit, a high-end chip. We filter that and then get that lead over to the core team. If it's assigned, boom, goes to that account manager. If it's not, it goes to a central, if you will, telesales screening process to help further develop that lead. Yeah, I think they're integral to each other, and we're leaning in on both and leveraging back office where we can. It is a different model. The way they pick and ship is different. That's why some people say, "Well, why don't we just merge the warehouse?" It's different. It's a very different business model. We're pleased with the progress on the rebound here with Farnell, and we're looking to have them around for a long time. Got it. By the way, if they are listening, they still have work to do. They're not back where they need to get to. All right. I'm sure she's laughing at that. This is a question maybe for both Ken and yourself. Ken, maybe talk about operating margin targets for both the core as well as for Farnell. How quickly you can achieve those. How variable is the cost structure now versus maybe pre-COVID? Are there opportunities to drive more automation and more productivity? Phil, for you, I guess AI has been on the radar for many companies. How are you implementing AI within Avnet? What are you doing on the portal side? Is there some advancements there? You go first. Yeah, from an operating margin perspective, our electronic components business, we're targeting a return to +4% here over the next few quarters. Farnell is 10% or above operating margin in the next, let's say, several quarters. We think we're well on track and hopefully can beat those timeline targets we gave this last quarter. We look at our overall, let's say, operations, our cost structure is much more efficient and structurally sound than prior to COVID, right? We've been through some restructurings, and I think we really are a stronger company operationally than we were prior to COVID. What that means is, as we grow, we can continue to create more operating leverage from the model, right? Our models want to scale, but also efficiency and expense and we feel well-positioned. As we get into this next up cycle, if you will, we feel pretty good about where our expense base is at, and that we can continue to drive operating leverage across all our regions, right? One of the challenges we've had with our operating margin has been we've seen a lot of growth from Asia relative to the West, and Asia is roughly 50% of our business. Asia is still expanding their operating margin, still generating a lot of operating income dollars, and their expense efficiency has been pretty strong. All of our businesses continue to make improvements and strides in recovering their operating margin, and so feel pretty good about that trajectory. I'll let Phil talk about the internal efficiencies AI. Just to build on Ken's point, we're driving efficiency and productivity across the board. We need to increase drop through. We've got to improve our expense and net GP ratios. As far as the operating margins themselves go and then drive, of course, EPS, the message to our Asia team isn't to shrink, okay? We want them to continue to grow. It's good growth. They're doing a great job. We just need the West to pick it back up because it's just a math issue. Asia's so big, and we don't want that to stop. We're getting good returns in Asia, but it does affect the percent, if you will, on the operating margin. As Farnell in the West picks up, that should kind of balance that. Well, AI, yeah, we're right smack in the middle of that. Obviously, I look at it in multiple ways. We sell into AI, right, directly into data centers, into hyperscalers. Our customers are the OEM customers, if you will, in the industrial sector. We're selling into them, and they're selling into the application data center, and you have DMS providers who are big pieces. To me, it's almost an N -1, even trying to figure out exactly how much of that business is going into the data center, but it's obviously in the mid to high billions from a vertical standpoint, if you could verticalize it. As far as AI as an application, using AI internally, driving productivity and efficiencies, we've got multiple applications already running in that space, customer services, at sales, et cetera, quoting. Leveraging it in the supply chain, how we better manage supply chains moving forward and demand creation, how do we better automate design cycles or design services with agents in e-commerce? We've got multifaceted angles that we're attacking AI and leveraging AI internally as well as selling and leveraging it externally. I think everyone needs to remember that as this infrastructure gets built in data centers, it's just going to increase our opportunity on the edge, right? More and more is going to end up on the edge, okay, with IoT, if you will. That line card we have is phenomenal, and that's just going to further increase smart buildings, smart elevators, smart everything, robotics, drones, et cetera. Got it. Yeah, we're excited about it. I always ask you this as the last question. I'm going to ask this again. What are people missing about the Avnet story, and what message do you want to leave investors with? We're excited we're in the center of the technology supply chain. I think people wouldn't know the name, obviously, Avnet. We're selling the highest technology suppliers to the highest technology customers and are right smack in the middle of it. It's a complex world, and I always say complexity is our friend, okay? Our job is to help simplify and drive value to the marketplace. Got it. All right, great. Thank you so much for coming. Thanks, Ruplu. Thanks for all the details. Appreciate it.