Avnet, Inc.

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

Joe Burke Thank you, Paul. Earlier this afternoon, Avnet released financial results for the fourth quarter and fiscal year 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 AFNET's website. 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 Avnet's most recent form, 10-Q and 10-K, and subsequent filings with the SEC. These forward-looking statements speak only as of the date of this presentation, and the company undertakes no obligation to publicly update any forward-looking statements or supply new information regarding the circumstances after the date of this presentation. Today's call would be led by Phil Gallagher, Avnet's CEO, Tom Liguori, Avnet's CFO, and Ken Jacobson, Avnet's Corporate Controller, an incoming CFO this September. With that, let me turn the call over to Phil Gallagher. Phil?

Thank you, Joe, and thank you, everyone, for joining our fourth quarter and fiscal year 2022 earnings conference call. What a year it has been for Avnet. On the heels of our centennial anniversary, we've built on the prior year's momentum to deliver robust financial results including a record EPS year, nearly reaching $7 for the fiscal year. Our sales for the fiscal year were up nearly 25% year-over-year. This was supported by a strong year for electronic components and, notably, a record revenue year for Farnell. We had a great performance from both operating groups, and we're really excited about the revenue synergies we're seeing between the two as well. As announced earlier in the year, we also achieved and surpassed our near-term operating margin targets and we're pleased to cap off the fiscal year with operating income margins of 4.5%, this recently ended quarter, and 3.9% for the fiscal year. Beyond the numbers, we were excited to host our investor day in June, where we had the opportunity to see many of our stakeholders in person in New York. We also announced a couple of key executive successions this fiscal year, including the appointment of Dana Badhorn, a 24-year veteran of Adnet, as the new America's leader for electronic components. And more recently, the appointment of Ken Jacobson, who has been a key contributor in our finance organization for nine years, to CFO effective in September. These moves are part of our succession planning process, which ensures continuity in executing our strategic plan. We've continued to make investments in inventory, including SKU additions at Farnell, and in field application engineers and online design tools that have delivered meaningful value and growth. Additionally, we continue to make investments in our employees and are kicking off fiscal 2023 with a compensation increase across our employee base and merit-based rewards to acknowledge strong performers and remain competitive in a challenging labor market. As I've mentioned throughout the year, we've been immensely proud of our team's commitment to executing on our strategy amid an increasingly complex macro environment. Their contributions have enabled us to grow, share, and secure exciting new business opportunities. Enhance the value proposition of our supply chain engagements and high-service R&L offerings. Provide uninterrupted support to our customers and suppliers looking to decrease risk in their supply chains. And lastly, to surpass our near-term operating margin targets sooner than anticipated. Our teams are unmatched in terms of experience, expertise, and diligence, and their efforts are instrumental to Aetna's success and role at the center of the global technology supply chain. We have a strong foundation to build upon in the coming fiscal year and are well positioned to deliver value and adapt even if market conditions change in the future. From a demand perspective, this past quarter we saw continued strength in the industrial, automotive, transportation, and aerospace and defense segments. Additionally, we expect some applications like EV charging and other alternative energy applications to pick up based on current energy supply concerns. Lingering COVID-19 impacts from inflation and impacts from the conflict in Ukraine continue to have some ripple effects on supply chains. While supply of some of the parts has modestly improved, we expect supply chain challenges to persist throughout the remainder of this calendar year. It's in these types of environments that our role as a distributor is particularly critical. As we've proven over the years, the value of ADNET in a complex operating environment is our ability to serve as a control tower for our customers, helping them proactively manage their supply chains. We expect customers and suppliers to leverage these solutions more fully in the coming years. Now, turning to our electronic components and Fresnel highlights. Electronic components had a strong year, reaching nearly $23 billion in sales. We were pleased to maintain robust sales this quarter following a very strong third quarter. These results were primarily driven by another record quarter of demand creation engagements, expanded sales in Asia, and solid sales in the Americas and EMEA regions. Notably, this was our fifth consecutive quarter of growth in Asia, which enabled us to reach a near-term milestone of $10 billion in sales for the region for the fiscal year. And we saw year-over-year growth this quarter of over 34% in both the Americas and EMEA on a constant currency basis. Our book-to-bill ratios at the end of the quarter remained above parity. Lead times are mixed. Some remain extended, particularly for controllers, while some lead times of other products have been moderating. We continue to effectively manage our backlog. We brought our inventory levels up this quarter to support the ramp-up of sales in Asia into the seasonally strong first fiscal quarter. As a distributor, we pride ourselves on our ability to meet and support strong customer demand, and I am proud of the success we've had in managing key relationships with customers and supplier partners to get the right parts in the right place at the right time. From a demand creation standpoint, we again had a solid quarter of design and engineering activity across all regions. High levels of design registrations and wins in prior quarters resulted in yet another quarter of record demand creation sales and gross profit. Demand creation revenue as a percentage of total electronic components increased to 31.2% for the year. Now, moving on to Fresnel. As I mentioned earlier, it was a record revenue year for Fresnel, with full-year revenues increasing 20.2% year over year. With demand indicators remaining fairly consistent, we continue to make investments in Fresnel, adding over 18,000 new inventory SKUs in the quarter. Our investment in Fresnel's e-commerce platform and improving the user experience continues to yield meaningful results. Nearly 56% of Farnell's total sales and 72% of total orders transacted were placed through Farnell's e-commerce platform this quarter. We expect to continue to see increased traffic and new customer acquisitions in quarters to come. As we continue to improve our digital capabilities, we expect Farnell's value proposition to increase and enhance the synergistic collaboration between Farnell and Electronic Components. This collaboration allows us to serve our customers from new product introduction to mass production and is a key differentiator for Avnet. As we head into fiscal year 2023, we see opportunity for Avnet to leverage and build upon the value of its demand creation capabilities, supply chain services, embedded products, and front-end offerings. We're a different and much more resilient company today due to the durable changes we've made to our business. There's never been a greater need for global distributors, and we remain confident in our ability to meet those opportunities. Before I turn it over to Tom to dig deeper into the financials, I'd like to take a moment to thank Tom for his immense contributions to Avnet. Over the past four and a half years, Tom has been a big part of our transition into a stronger, more profitable, and resilient company. Our balance sheet hasn't been this strong in decades. Tom and his team have built a high-quality finance organization And importantly, he has served as an invaluable partner to me since my transition into the CEO role. I'm going to miss working alongside Tom and having him join me on these calls, but I'm absolutely confident we're in excellent hands with our incoming CFO, Ken Jacobson. Ken is a seasoned AdNet executive who many of you have already met. He has served as our corporate controller and has been a critical leader in our financial organization for the past nine years. So with that, let me pass it over to Tom.