Welcome to the Avnet Third Quarter Fiscal Year 2026 Earnings Call. I would now like to turn the floor over to Lisa Mueller, Director of Investor Relations for Avnet. Thank you, operator. I'd like to welcome everyone to Avnet's third quarter fiscal year 2026 earnings conference call. This morning, Avnet released financial results for the third quarter of fiscal year 2026, and the release is available on the investor relations section of Avnet's website, along with a slide presentation which you may access 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 a 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. Please note, unless otherwise stated, all results provided will be non-GAAP measures. The full non-GAAP to GAAP reconciliation can be found in the press release issued today, as well as in the appendix slides of today's presentation and posted on the investor relations website. Today's call will be led by Phil Gallagher, Avnet's CEO, and Ken Jacobson, Avnet's CFO. With that, let me turn the call over to Phil Gallagher. Phil? Thank you, Lisa, and thank you everyone for joining us on our third quarter fiscal year 2026 earnings call. This was an outstanding quarter for Avnet, one that reflects both strong execution by our teams around the world and improving market conditions. Over the past several quarters, and really over the past couple years, our team has been operating in a challenging market environment. Throughout that period, we remained focused on the things we can control, supporting our customers, coordinating closely with our supplier partners, managing inventory and working capital with discipline, investing in our people, digital capabilities, and distribution centers with a long-term view. This quarter's results and our June quarter guidance demonstrates that focus positioned us well coming into the beginning of the upcycle. We delivered financial results that came in well above our expectations, including record sales in our Electronic Components business. As data center and AI demand proliferates throughout the market, we also saw broad-based demand across most of our core end markets, which translated into meaningful operating margin and EPS improvement. Before we give more color on the business, I wanted to take a moment to mention we're closely monitoring the current geopolitical environment and remain mindful of the potential broader macroeconomic impact. The conflict in the Middle East had no material impact on our Q3 results outside of some increases in freight expenses due to rising fuel costs. Now, turning to our third quarter. We achieved sales of $7.1 billion, driving a 3.5% operating margin in our Electronic Components business and a 5.2% operating margin in our Farnell business. We also reduced inventory days to 77, below our near-term target of 80 days. Our double-digit year-on-year sales growth was led by another quarter of record revenues in Asia, along with better than typical seasonal growth in the Americas and Europe. From a demand perspective, market conditions continue to improve across the majority of the verticals we serve, which includes data center, industrial, aerospace and defense, transportation, consumer, and networking. The third quarter was led by strong demand in industrial, networking, and our data center end markets. Year-over-year, we also saw broad-based improvement across most verticals, led by the data center. Over the past 90 days, the lead time environment has shifted. Component lead time trends are increasing across many product categories. We have seen lead time extensions in over 50% of the product categories we track, traversing semiconductors and Interconnect, Passive, and Electromechanical, with stability being reflected in the balance. While lead time extensions continue in components supporting data center and AI builds, they are now spreading to a broader set of products supporting diverse end market applications. Customers are increasingly recognizing the challenges of a tightening supply environment and are turning to Avnet's proven expertise to help manage their component supply chains. Our backlog is growing, and our book-to-bill ratios are well above parity in all regions. In the December quarter, we saw early indicators of certain component price increases. During the March quarter, we have seen price increases across a few suppliers and technologies, most predominantly related to memory. We expect to see additional price increases over the next several months, and majority of which are being driven by increases in the underlying input cost of components. Ken will give more color on the impact of pricing during the quarter in his comments. Now with that, let me turn to highlights of our business. Our Electronic Components business delivered a record sales quarter driven by growth across all regions and strong execution. Demand creation activity remained robust. Design wins continued to convert to sales and our Interconnect, Passive, and Electromechanical or IP&E business outperformed, reflecting the benefits of our technical capabilities and our focus on the total solution selling. In Asia, sales reached another record high of $3.5 billion in a quarter that is usually impacted by the Lunar New Year holiday. This marks our seventh consecutive quarter of year-over-year sales growth in the region, which now represents almost 50% of our total sales. Demand increased across all the geographies and verticals we serve, led by the data center, industrial, and networking markets. In March, I was able to spend some time in China with our Asia leadership team, including visiting with local customers and suppliers. This trip reinforced my belief in the opportunities for growth we see in the region that our Asia team is capitalizing on. In EMEA, we're pleased to see continued rebound in the region, with sales growth both sequentially and year-on-year for the second consecutive quarter. EMEA is experiencing growth across a number of verticals, including industrial, networking, and early signs of the long-term opportunities we see in aerospace and defense. Overall, I would say the market conditions in Europe are improving, although the demand environment is still mixed. We are seeing improvement in our strategic differentiators, including leading indicators in our embedded business, as customers and suppliers are looking for board and display-level solutions. I was able to spend some time in Germany in late March, meeting with several of our IP&E suppliers and customers at our Avnet Abacus Technical Conference. The outlook and momentum I felt coming out of Europe was more encouraging than just even a few quarters ago. In the Americas, sales grew both sequentially and year-over-year, marking our third consecutive quarter of year-on-year growth. Most end markets showed sequential growth led by networking, while aerospace and defense, networking, and industrial were the strongest end markets year-over-year. Our Americas region recently hosted an IP&E summit, bringing together leaders from our top suppliers to reinforce our focus and commitment to accelerating growth in the IP&E space. Our IP&E business had a record quarter, growing 25% year-on-year. We carry a world-class portfolio of IP&E products and solutions and are benefiting from this multiplier effect as every active semiconductor chip requires surrounding IP&E components to function. Think connectors, capacitors, passives, resistors, and sensors, among other technologies. We continue to see success driving conversations with customers about the full solutions we can provide with both our semiconductor and IP&E product offerings. Turning to our other value-added drivers of profitable growth, we continue to benefit from our field application engineers, complemented by our digital design capabilities and tools. Our demand creation revenues increased sequentially by 16%. From a design opportunity standpoint, the leading indicators remain positive, which bodes well for future design wins and downstream revenue. Our supply chain services offerings continue to grow and expand with many OEMs that are household names. We are seeing opportunities and wins across many of the same verticals where we are experiencing strong growth in the core business. These include transportation, data center, and networking, among others. We believe we have the opportunity and capabilities to be the leading supply chain services and solutions provider in the Electronic Components industry. Now, turning to Farnell. We are seeing steady progress in Farnell's performance and recovery. Sales grew double-digits year-over-year for the third consecutive quarter. Gross margins and operating margins expanded in line with expectations, and the business remains on track with its return to double-digit operating margins over the next several quarters. Our Power of One focus is gaining traction as we leverage Avnet's scale and relationships with Farnell's capabilities and offerings. This unique combination differentiates Avnet and strengthens our value proposition to suppliers and customers. Farnell's continued investment in its e-commerce platform, customer experience, and inventory proposition positions us well as demand accelerates. Throughout this cycle, we've remained committed to investing in the future of Avnet with a focus on the long-term opportunities we see for the demand of Electronic Components. Our adaptability has never been more critical. The proliferation of Electronic Components continues at a rapid pace with emerging opportunities in drone technologies, robotics, and edge AI as just a few examples of the future trends. We have made substantial investments in our digital platforms and capabilities, supply chain and distribution center infrastructure, and engineering resources. These investments are not just about near-term efficiency. They're about future-proofing our company and ensuring we can support increasingly complex supplier and customer needs as technology and supply chains evolve. At the same time, we have stayed disciplined in managing expenses, optimizing inventory, and allocating capital. We have consistently said we will balance reinvestment in the business with returning capital to shareholders, all while prioritizing and maintaining a strong balance sheet. We have delivered on those commitments. In closing, I'm extremely proud of what our team has accomplished. I'm excited for the continued recovery in our business. These results reflect not only an improving market environment, also the resilience, experience, and dedication of our team. With the breadth of our supplier partner card, our diversified customer base, the strength of the end markets they serve, we are well-positioned to deliver sustainable growth and improved returns into the future. We are thrilled by the momentum in the business and are confident in Avnet's ability to execute at a high level. With that, I'll turn it over to Ken to dive deeper into our third quarter results. Ken? Thank you, Phil, and good morning, everyone. We appreciate your interest in Avnet. Our sales for the third quarter were approximately $7.1 billion, above the high end of our guidance range and up 34% year-over-year. On a sequential basis, sales were higher by 13%. Regionally, on a year-over-year basis, sales increased 39% in Asia, 31% in Europe, and 27% in the Americas. During the third quarter, sales from Asia were 49% of total sales, compared to approximately 47% of sales in the year ago quarter. From an operating group perspective, Electronic Components had record sales during the quarter as sales increased 35% year-over-year and increased 13% sequentially. In constant currency, Electronic Component sales increased 31% year-over-year. Farnell sales increased 24% year-over-year and 6% sequentially. In constant currency, Farnell sales increased 18% year-over-year. As Phil mentioned, supply dynamics have been driving some price increases, especially in memory. In the third quarter, we saw the impact of these pricing increases in our sales growth. Approximately half of the sequential sales growth and approximately one quarter of the year-over-year sales growth was attributable to higher memory pricing. For the third quarter, gross profit margin at 10.4% was down 68 basis points year-over-year and slightly lower sequentially. Electronic Components gross profit margin was flattish sequentially and down year-over-year, primarily due to a combination of higher percentage of sales coming from our Asia region, as well as some differences in product and customer mix in the Western regions. We reported higher gross profit dollars as a result of the previously mentioned price increases, although the pass-through of these price increases has less of an impact on gross profit margin. As a reminder, when component prices increase, we communicate the changes to our customers and pass through the corresponding increases. From a Farnell perspective, gross profit margins were up 34 basis points year-over-year and were up 49 basis points sequentially, in part due to an expected improvement in product mix of on-the-board components. Turning to operating expenses, SG&A expenses were $519 million in the quarter, up $83 million year-over-year and $27 million sequentially. The sequential increase in SG&A is primarily from a combination of higher sales volumes, including related incentive compensation expense, as well as foreign currency. Foreign currency negatively impacted SG&A expenses by approximately $3 million sequentially and $22 million year-over-year. Excluding the impact of foreign currency, SG&A increased approximately 5% sequentially and 14% year-over-year. As a percentage of gross profit dollars, SG&A expenses were lower sequentially at 70% compared to 74% last quarter. As our business grows, we expect to continue to maintain our discipline, expense management, and drive efficiencies in our business while still making investments in the future. We expect our SG&A expenses as a percentage of gross profit dollars to be in the mid-60s percentage-wise over the next year. For the third quarter, we reported adjusted operating income of $221 million, and the total Avnet adjusted operating margin was 3.1%, an increase of nearly 40 basis points from last quarter. This represents the third consecutive quarter of adjusted operating income margin expansion. Adjusted operating income also grew more than 2x sales compared to last quarter. By operating group, Electronic Components operating income was $235 million, and EC operating margin was 3.5%. The nearly 40 basis points sequential increase in EC operating margin was led by the business recovery in Europe. This is EC's second consecutive quarter of operating margin expansion and is the highest EC operating margin since the first quarter of fiscal 2025. We continue to gain momentum in EC with the recovery of both Europe and the Americas. We currently expect our EC operating margin to reach our 4% near-term goal within the next fiscal year. Farnell operating income was $24 million, and their operating income margin was 5.2%, which was up 55 basis points from last quarter, reaching its highest level in three years. This is Farnell's sixth consecutive quarter of operating margin expansion. Similar to our EC business, we see momentum in Farnell and expect to continue driving operating margin expansion with the near-term goal of getting back to double-digit operating margins by the second half of calendar 2027. Turning to expenses below operating income, third quarter interest expense was $63 million, and our adjusted effective income tax rate was 23%, both consistent with expectations. Adjusted diluted earnings per share of $1.48 exceeded the high end of our guidance for the quarter. Adjusted diluted earnings per share grew more than 3x sales compared to last quarter. Turning to the balance sheet and liquidity. During the quarter, working capital increased by $145 million sequentially, primarily due to an increase in accounts receivable driven by the growth in sales. Working capital days decreased 11 days quarter-over-quarter to 76 days. From an inventory perspective, inventory increased by $168 million or 3% sequentially. The increase in inventories was primarily driven by an increase in certain memory products to support supply chain services engagements and from an overall increase in inventory received at the end of the quarter. Inventory net of accounts payable decreased by $115 million compared to last quarter. We ended the quarter with 77 days of inventory, achieving our near-term target of below 80 days, earlier than anticipated. Our EC business had 70 days of inventory, and our Farnell business had just over 200 days of inventory. As a value-added distributor in the center of the technology supply chain, inventory is a critical enabler for our business. We remain focused on making the necessary inventory investments to position ourselves appropriately to capture the numerous opportunities we see in the markets we serve. We continue to prioritize servicing our customers' suppliers' inventory needs through an overall pipelining of inventory and through a variety of supply chain programs to meet expected customer demand. Our return on working capital improved over 300 basis points sequentially from both higher operating income and the reduction in working capital days. Continuing to expand our return on working capital is a focus across all of our businesses. We expect to achieve our near-term goal for return on working capital of 16% by the second half of fiscal 2027. In the third quarter, we used $54 million of cash flow for operations to support $800 million of sequential sales growth. We anticipate a use of cash flow from operations in the fourth quarter to continue supporting the sales growth, primarily in the form of accounts receivable. Cash used for capital expenditures was $17 million during the quarter. In line with our stated priorities, we ended the third quarter with a gross leverage of 3.6x, down from 3.9x in the second quarter, with approximately $1.7 billion of available committed borrowing capacity. We believe we are on track to reduce our leverage to our previously stated target of approximately 3x by the end of the calendar year. Returning excess cash to shareholders remains a core priority of our capital allocation program. In the third quarter, we paid our quarterly dividend of $0.35 per share or $29 million, bringing our year-to-date shareholder return to $224 million, including both our dividend and share repurchases. Once our leverage returns to our targeted levels, we expect to use a portion of free cash flow to repurchase shares. We have $226 million remaining on our existing share repurchase authorization. Turning to guidance. For the fourth quarter of fiscal 2026, we're guiding sales on the range of $7.3 billion-$7.6 billion and diluted earnings per share in the range of $1.70-$1.80. Our fourth quarter guidance assumes current market conditions persist and implies a sequential sales increase of approximately 5% at the midpoint. The sales guidance implies sales growth across all Electronic Components regions. This guidance also assumes similar interest expense compared to the third quarter on effective tax rate of between 21% and 25% and 83 million shares outstanding on a diluted basis. This was a strong quarter with solid execution and continued recovery in the West. We are proud of our team for continuing to demonstrate the value we bring to our customers and suppliers. There is always opportunity for improvement, and our goal continues to be to ensure that we remain well-positioned to meet our current customer needs while taking advantage of the positive market conditions we are seeing today and are expecting in the future. With that, I will turn it over to the operator to open it up for questions. Operator? Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. Our first question comes from the line of Melissa Fairbanks with Raymond James. Please proceed with your question. Hey, guys. Thanks so much. I must have hit star one early enough for a change. Congratulations on a great quarter. Glad to see the continued progress and everything. I know you mentioned you've seen some pricing increases from some suppliers. Obviously, memory was a very significant piece of that. Is there any way of contemplating how much of your revenue growth outside of memory has been driven by higher ASPs, even if it's just for some of the higher value components, not just the price hikes or like absolute volume growth? Have you quantified volume growth recently? Yeah. Hi, Melissa. How are you doing? Thanks for the comments. It's Phil. I mean, the memory, you know, we just wanted to be fully transparent on that because it's frankly so public right now. I think, yeah. We knew you'd have a question on that. The balance, a lot of them are I think more of the price increase will start to come into play this quarter, as April 1st. We didn't have a whole lot to calculate as far as the percentage of the growth based on ASPs and the balance of the technologies. If there were ASP increase, they already would have been in the run rate from the prior quarter. Do you know what I mean? Okay. Effectively, the bulk was memory. Okay. Got it. That might change in the quarter, here in the June quarter. Melissa, I would just add, I think as we go forward with other price increases, we don't expect those to be anywhere near the magnitude we saw in memory, and it won't be everything. Okay. Yeah. Hard to replicate that level of price increases. Maybe digging in a little bit further, you mentioned that you've had incredibly strong growth across industrial networking and data center. Are you able to quantify how much those markets contribute to overall components revenue? Yeah. Roughly, you know, you said industrial, but somewhere 50%, 60% probably in that range. Wow. Okay. All right. Great. Well, industrial's our largest, Melissa, right? It does in the +30% right there. Okay? Sure. Historically been that way. Historically, it's coming back, pretty strong actually, year- on- year. So that's, yes, that's roughly the numbers. Okay. Perfect. Thanks very much. Can I squeak in one more? Yeah. Of course. You mentioned longer lead times are spreading across more of the portfolio. I know IP&E has had some tightness for quite some time and then some of the memory or storage stuff. Just wondering if there are any areas where you're seeing stock outs yet, or maybe even double ordering, the taboo phrase? Well, let me work backwards on that. On the double ordering, you know, Our suppliers will see more of that, Melissa, 'cause though they could see. You know, similar orders from the same customers to multiple channels, tougher for us to see that. We'll see inflated demand or inflated forecasts from the customers, right? We are pretty disciplined around that. If somebody's using 100 pieces a month for years and all of a sudden they want 500 pieces per month, we're like, "Okay, what happened," right? That's just an example. We are doing our damnedest to track that and call that out as much as we can from an analytics standpoint. As far as lead times go and stockouts, no, it's mostly memory right now. However, we are for sure seeing lead times, you already mentioned the IP&E. They've gone out a bit, not to stockout levels by any stretch, but they've been leaking out a bit. Now discrete's a tad. Analog's about, you know, flat to up a tad, but it's been up. Storage has gone up, and that's gonna be tied to memory more than likely. Okay. Right? Yeah. For sure. As lead times go out in memory, it's gonna push out the storage. Yeah, that's about the picture right now. Okay, perfect. Thanks very much. I appreciate all the detail. I knew you had the data. I just had to write that or ask the right questions. Thanks, guys. Thank you, Melissa. Catch you later. Take care. Thank you. Our next question comes from the line of William Stein with Truist Securities. Please proceed with your question. Great. Thanks for taking my questions. Great to see another strong quarter, and I hope you're right that we're sort of in the beginning of this upturn. Phil, you mentioned strength in AI data centers driving demand. Can you remind us what your exposure is to that end market? Is that simply traditional component distribution where the ODMs are using the channel, or is there some sort of supply chain service associated with that? Any characterization of that exposure or sizing, for example, would be helpful. Thanks, thanks, Will. Thanks for the comments. I think we estimated couple of quarters ago somewhere in the 5%-7% range, probably increased a little bit closer to 10%-15% that we have exposure. To be clear to your questions, it goes directly into the data center, and that would be, I don't know what you'd call traditional anymore, but it's definitely tied to supply chain, but it's more in the core and traditional product lines, you know. We don't, as you know, we don't carry NVIDIA, it's not that. The bulk of that selling into directly the hyperscalers and data centers is more in Asia and within Asia, Taiwan. What we try to track is, and working to track is what other verticals are being impacted with the expansion of data center, right? Industrial and others are also seeing a lift, and that's our sweet spot, right? It's directly to the data center. We're tracking is the number I gave you. Then you got the, I call it the N -1 factor, right? What is the amount, the industrial segment is, you know, I don't like to mention customers' names, but you can manage anybody in power management, heating, cooling, HVAC, et cetera. They're also increasing. We're trying to determine how much is tied to the data center. Hope that answers your. Yes, we are expanding our supply chain as a service opportunities as well, but that's not as much in that number that I gave you. That'd be more a services revenue. Thanks. I have one other, if I can. I was a little surprised to see components grow faster than Farnell in the quarter. I think based on your comments, it sounds like that's more memory-driven. Maybe there's less of that in Farnell. I would just expect that at this point in the cycle when things are, you know, you're just starting to hear about lead times stretch, prices increasing, shortages starting to show themselves, that perhaps Farnell starts to be a more prominent part of the business. Is that on the come in your opinion or, you know, anything you can talk about the sort of performance differential between these two? Because Farnell has, you know, quite a bit of gearing on the margin side. Thank you. No, thanks, Will. I think part of it is, you know, they've had now three quarters of double-digit year-on-year growth, so they've kind of gotten a lift ahead of some of the core, the balance of the core outside of Asia. The other thing is they have a lesser percentage of their business is onboard components, right? Their percentages are lower because of the MRO test and measurements, you know, a big part of their business. It's not all apples to apples like everything we have. They're not 90% onboard components. They're not 90%, you know, semiconductor and IP&E, like we are in the core. I think that's the biggest delta difference. Then the other one is their strongest region, typically the largest region, is in Europe. As we said in the script, although we're encouraged with what we're seeing in Europe, and there's for sure oxygen in Europe. Great news for us. It's still a little bit more spotty than what we see in other regions. What we need is for Farnell to accelerate its growth in Europe as well. That you're absolutely right, that will help the margin mix too. They don't have as much memory. The volumes of memory in the Core is much higher, that would also impact it. Hope that answers it. It mostly does. Maybe just let me tack on a maybe half question. Is this perhaps related to inventory work down that's still, perhaps we're done with that for the most part, but is there still more of that that's gonna really make the difference in the Farnell business customers truly depleting so that they have to come reorder? Yeah, I think that, I think. Well, I sure hope so. I think most of that's behind us. There's still probably some, we don't have visibility to everybody's inventory and the end customers. I think, I think for the most part, that is behind us. We did see, I mean, inside of Farnell, we have seen revenue per line items increasing. The line items themselves are increasing. Those signs, I mean, we're actually pretty pleased with where the progress we're making in Farnell. There's still work to do, and I know that team's on this call right now, so they know that, you know, and we have our long-term marching orders there, and we're just gonna continue to work towards those goals. Great. Thank you. Thanks, Will. Thank you. Our next question comes from the line of Joe Quatrochi with Wells Fargo. Please proceed with your question. Yeah, thanks for taking the questions. Maybe a few if I could. You know, I think you said 50% of the sequential increase in revenue, this quarter was related to pricing. Any help on how that contributed to this, the increase in EBIT on a sequential basis? Yeah, Joe, I think how I'd characterize it is we kinda try to get it in the script as we pass on prices, right? It does, you know, we maintain the same gross margin, but get incremental gross profit dollars. I think it contributed to the overall drop through in operating leverage. Now, again, I think a lot of what we saw outside of, you know, the guidance and where a lot of the beat was in Asia. You know, continue to see that trend in Asia being strong, which now is, you know, close to 50% of our EC business. But it helped the operating margin leverage, like the other sales, but didn't have a meaningful impact on the gross margin. Right. I guess, like, on the EBIT dollar increase sequentially, fair to say that it was more than 50%? I would say it was probably around the same as the sales growth. In terms of the percentage of that coming from there. Yeah. Okay. I guess, you know, as we think about just, like, what's embedded in the guidance, you know, I think you said earlier, right, we've seen, you know, a round of price increases across maybe more of the broad analog mixed signal space that kinda started taking place in April. How do we think about that contemplated, I guess, in the 5% sequential growth for the June quarter? Yeah, I would say I think it's in there at least what we know. Again, it's less pronounced than what we saw last quarter, right? I think it's already kind of in the Q3 run rate for the memory pricing, and then some of the other things are just, you know, a much smaller percentage. Again, it's not everything. The timing is kind of throughout the quarter versus everything's at the beginning of the quarter. Think about, yes, it might be double-digit increases in price, but it's, you know, 10%-20%, let's say, on average, right? Yeah. [crosstalk] Like $100? Yep. Okay. Maybe just last loose thing. On the inventory, you know, can you just kinda update us how you feel about your inventory positioning across just kind of the broader, you know, line card and where, you know, you see that going over the coming quarters? I think we feel generally good. Again, I think Phil commented on the book-to-bill and the backlog, right? Which is one of our challenges we've had over the past several quarters is trying to get that visibility so we can, you know, make sure our suppliers are building the right parts that are needed. I think we feel good. There's still opportunity we have to, you know, some things that are in excess and some things that are aged, right? Continue to turn that and move that and convert it into good inventory. Again, we're gonna keep investing in inventory. You know, we wanna make sure we're prepared, and we've got enough to support the needs of the customers and the overall demand. You know, we're happy with the progress on the inventory days, and we'll continue to work that where we have opportunities and continue to reinvest, especially in the IP&E side of things. You know, Farnell, you know, still have some continued investment to make as well, so they're improving their inventory days as well. You know, there's still some things we wanna make sure they're prepared as well. Again, I think you see it here continuing to kinda work down as we continue to grow, you know, still opportunities for some investment and some, you know, overall efficiency there. Yeah, Joe, I'll just add to that. I mean, it's our lifeblood, right? Inventory sometimes gets a bad word, you know? It's, you know, we don't want it aging, and we don't want too much of anything, you know, that we don't need. We're constantly balancing that, and it's critical to, obviously, our suppliers, that we've got the appropriate inventory. As importantly, as lead times go out, that we're pipelining, and part of that message is to our customers to continue to give us, as we talked in the script, more visibility longer term. That's starting to happen. Still not across the board, but that's starting to happen as well. Right now we feel Inventory position, we'll continue to improve it. That means both the, hopefully turning it, but adding the appropriate inventory from a SKU standpoint. To that point, for now, we've actually added, and this is key back to Will's question even from a NPIs, for new product introduction, but we've added over 50,000, almost 60,000 SKUs last year, another 70,000 additional SKUs, just this year. A lot of that is in the IP&E space, but it is well across the board in semiconductors. I think we have a good handle on it right now, and we feel pretty good about the position with inventory overall. Thank you. Thanks, Joe. Thank you. Our next question comes from the line of Ruplu Bhattacharya with Bank of America. Please proceed with your question. Hi, thanks for taking my questions. Phil, you beat guidance for fiscal 3Q. You're guiding above seasonal for fiscal 4Q. Based on the visibility that you have, do you think that you can maintain above-seasonal growth for the second half of calendar 2026? As you know, we don't typically guide out that far, right? You know, I really remain, you know, vigilant on this, Ruplu. We're just managing the bookings, managing the backlog, it looks positive at this point in time that we'll continue to see some growth as we get through the year. Summer's always tough to judge, right, with the holidays and whatnot. We're not seeing anything that would really negate that at this point. At this point in time, I think is the important point. Okay. Maybe I can ask a follow-up to Ken. On margins, and specifically on incremental margins, revenues beat quite a bit. You came above the high end of guidance. Was this the incremental margin that you were expecting in the core business? How should we think about that as we move forward? Has your expectation for Farnell margins changed? Like, initially, you had guided on the Farnell side, 50 to 100 basis points of improvement every quarter. I think on the call, you said that you're targeting double-digit operating margin now by sometime in the second half, I think you said, of calendar 2027. How should we think about that incremental margin on that side of the business? Thanks. Yeah, I'll start with the last 1 first about Farnell, Ruplu. I would say, you know, I think we're tracking pretty well. We saw a nice uptick in gross margin because the on-the-board component mix as expected. You know, I think Phil mentioned here is that, you know, if Europe really comes back, we've had couple of quarters of growth there now, it's not, you know, it's not the same as what we're seeing in Asia for sure or even in the Americas in terms of the growth in Europe, both at Farnell and for the core business. I think as that continues to recover, which we're monitoring, you know, you'll get some more uplift there. We feel good about the progress, the guidance implies, you know, improvement in that range we were expecting, in terms of the fourth quarter. I think for the quarter itself, going back to the last comment, you know, a lot of that beat came from Asia, right? We expected to be down a little bit because of the Lunar New Year, it was up, you know. That's impacting the overall operating margins. I think in general, you know, we had good progress on operating margin expansion in EC, you know, and let's say the guidance implies, you know, further improvement there. We're tracking pretty well and have a few quarters in a row now, and then the combination of the two helps the net income operating margin expand. It's still, you know, a few quarters away from kind of where our near-term milestones are, I think we're making good progress and feel good about that. Obviously the broader leverage in operating income dollars is growing much faster than the sales, which is what we'd expect. Okay. Let me just ask a clarification on that. On Farnell margins, where do you think that can get to by the end of this calendar year? Just so that we set our expectations. On, maybe my last question would be, you talked a lot about memory. How much is memory as a percent of revenue or as part of the product line? Like how much, how big is that in terms of your product line or in terms of revenues? Thanks for taking my questions. Yeah, a few different questions there. You know, we said 50 to 100 basis points a quarter, you know, for the Farnell improvement. If you take that by three quarters left in the calendar year, you get 150 to 300, right? That's not changing. You know, from a memory perspective, obviously, with where pricing's gone, it's become a bigger percentage. You know, think about, you know, roughly in the low double-digit range. That's primarily a core business kind of comment. EC, you know, Farnell would have a much smaller concentration. Okay. Thank you for all the details. Thanks, Ruplu. Yeah, thanks, Ruplu. Thank you. There are no further questions at this time. I will now turn it back to Phil Gallagher for closing remarks. Okay. Thank you. Thanks for everyone attending the call, and I appreciate all the callbacks and the questions. You know, again, thanks for attending today's call. We look forward to speaking to everybody at our upcoming conferences and at our fourth quarter and fiscal year 2026 earnings report in August. Okay. Thanks a lot. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.