Avnet, Inc.

Please stand by. Our presentation will now begin. Welcome to the Avnet first quarter fiscal year 2022 earnings call. I would now like to turn the floor over to Joe Burke, Vice President of Treasury and Investor Relations for Avnet. Joe Burke, Vice President of Treasury and Investor Relations for Avnet Thank you, operator.

Earlier this afternoon, Avnet released financial results for the first fiscal quarter of 2022. The release is available on the investor relations section of the company's website. A copy of the slide presentation that will accompany today's remarks can be found via the link in the earnings release as well as on the IR section of Avnet's website. Lastly, some of the information contained in the news release and on this conference call contain forward-looking statements that involve risk, uncertainties, and assumptions that are difficult to predict. Such forward-looking statements are not the guarantee of performance, and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in evidence most recent form 10Q and 10K and subsequent filings with the SEC. These forward-looking statements speak only as of the date of this presentation and the company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this presentation. Today's call would be led by Phil Gallagher, Avnet's CEO, and Tom Liguori, Avnet's CFO. With that, let me turn the call over to Phil Gallagher.

Phil? Thank you, Joe, and thank you, everyone, for joining our first quarter fiscal year 2022 earnings conference call. As we shared last quarter, despite supply disruptions and ongoing pandemic restrictions in certain regions, we have continued to execute well in a strong market environment and progress on our margin expansion efforts. by accelerating the growth of our high margin Fresnel business while also supporting the growth of our core distribution business through investments to improve efficiencies and strengthen critical partner relationships. Our focus and execution and the durable changes we have made to position Adnet as a stronger business are reflected in this quarter's results for both electronic components and Fresnel businesses. This momentum brings us much closer to achieving our goal of delivering sustainable operating margins of at least 3% to 3.5% for total ad net in any kind of market. Of course, this momentum is largely due to the dedication of our employees. I cannot emphasize enough how truly lucky I am to lead a company with such hardworking and talented individuals across the globe. Our team has endured the challenges of a complex market, but I truly believe it has resulted in a stronger, and more resilient organization that is poised for long-term success. Even as we've continued to navigate a difficult operating environment, our priority has remained investing in our people, our relationships and digital enhancements that make our business more effective and efficient. These investments have been critical to our success to date, and I'm confident they will continue to yield strong returns. Now, with that, let me turn to the highlights of the first quarter on slide five. In the quarter, we achieved sales of $5.6 billion, up 7.6% sequentially, and 17.5% year-over-year in constant currency. Excluding TI sales and the extra week in the prior year, sales grew 32.9% year-over-year in constant currency. Record sales for electronic components and for Fresnel, supported by improved operating efficiencies allowing us to deliver operating margins that reached our short-term targets of 3% and 10% respectively. We were pleased to achieve these targets sooner than originally forecast, and given the current market environment and the improvements we have made to our business, we expect to sustain these margins in the coming quarters. Our strong results are partially driven by continued market strength. Overall, demand was robust across vertical segments with the industrial, automotive, and communications segments serving as significant drivers. Looking at electronic component segment on slide six, revenues for the business were up both sequentially and year-over-year in the quarter to $5.1 billion, with sequential growth across all three geographic regions. Growth primarily came from our largest region, Asia, which again had record quarterly sales. Strong performance in EMEA and continued improvement in the Americas also contributed to better than expected results in the quarter. Our investments in digital and design tools and field application engineers continues to pay off as we had another strong quarter of design and engineering activity across all regions. Strong levels of design registrations and design wins in prior quarters have resulted in record sales in design win revenue and gross profits for the first quarter. These design wins and registrations continue to be a key organic growth driver for Avnet, benefiting our operating margins while also driving new business for our supplier partners. As mentioned last quarter, our supply chain services capabilities also continue to be of great value to new and existing customers as they navigate the increasingly complex supply chains. We are excited to continue to build out this capability and demonstrate Aetna's vital role at the center of the global technology supply chain. We exited this quarter with a positive book to fill in all regions well above parity. Now, before I move on to Farnell, I would like to briefly address the Interlog Devices Maxim decision. As we shared a few weeks ago, Maxim intends to discontinue its distribution relationship with our electronic components business. Maxim products only account for about 3% of the company's sales during fiscal year 2021, and the financial impact on our business won't be immediate. Given current market dynamics, the strength of our existing line card and supplier partners and our track record of managing through the impact of industry consolidation, we believe we can replace the margin dollars. We are proud of the strong supplier partnerships we have today and look forward to expanding these relationships to meet the specific analog needs and the broader technology needs of our customers. Now, turning to Fresnel in slide seven, our strategic investments in SKUs, and E-commerce continue to benefit performance at Fresnel as we achieve record revenues of $455 million and operating margins of 10.9% in the quarter. Our investments in Fresnel continue to deliver meaningful returns. In the quarter, Fresnel's digital capabilities yielded notable performance with 53% of revenues and 69% of total transactions attributed to E-commerce sales. We have seen positive results from the Fresnel platform over the last 18 months as the team has embraced digital transformation and we're really excited by the potential for even greater success as we move all AvNet businesses to the platform over the coming quarters. We also continue to invest in inventory this past quarter, adding 18,800 SKUs. This reflects continued progress on our plan to add an additional 250,000 SKUs through the fiscal year 2022. Our inventory investments at Fresnel have been critical to our success. This quarter, 15% of Fresnel's sales were derived from new SKUs added over the last two years. We look forward to delivering continued returns on these investments as they've enabled us to grow and strengthen our overall offering to our broad base of engineering customers and suppliers around the globe. With that, I'll turn it over to Tom to dive a bit deeper into our first quarter results.