Avnet, Inc.

Please stand by. Our presentation will now begin. Welcome to the Avnet first quarter fiscal year 2023 earnings conference call. I would now like to turn the floor over to Joe Burke, Vice President of Treasury and Investor Relations for Avnet.

Thank you, Paul. Earlier this afternoon, Avnet released financial results for the first quarter fiscal year 2023. 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 ABNET'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 statement or supply new information regarding the circumstances after the date of this presentation. 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, Joe, and thank you, everyone, for joining us on our first quarter fiscal year 2023 earnings conference call. In the prior fiscal year, we delivered record results and continue to take strategic steps to position Avnet as a more durable company with an increasingly critical role in the global technology supply chain. We are well positioned to continue to deliver value to our customers, suppliers, and shareholders, even in the face of a more challenging and uncertain operating environment. I am pleased to share that we kicked off the fiscal year with another quarter of solid financial results, including meaningful sales growth across all regions and improved profitability year over year. We achieved these results despite the macro headwinds affecting certain areas of our business, which I'll touch on in a minute. In a quarter, we achieved sales of $6.8 billion. This exceeded the higher end of our guidance, up 6% sequentially and over 20% year over year. On a constant currency basis, sales increased nearly 29% year over year. Efficient management of our operations also enabled us to drive solid operating margins of 4.3%, which is the third consecutive quarter of a greater than 4% operating margin. Further, the combination of a solid sales and effective management of operations allowed us to increase operating income three times greater than revenues on a year-over-year basis. A significant driver of our results in the quarter was, of course, the continued execution by our incredible global team. Our team has effectively managed market complexities and has served as great partners to our customers and suppliers as they face fast-changing supply chain conditions and uncertainties. We are more deeply engaged with our customers and suppliers than ever before, which enables us to maintain the necessary expertise and capabilities to help them navigate today's supply chain complexities. And with the structural and organizational changes we made to our business over the last two years, we are well positioned to continue serving as a control tower for our customers and suppliers. In a quarter, Demand remains strong globally and in key vertical segments like transportation, industrial, and aerospace and defense, and we have continued to invest in inventory to meet this demand. You will see that inventory levels were higher at the end of the first quarter as compared to the prior quarter, which Ken will speak to further in his commentary. This reflects our need to support sustained sales levels in Asia and quarter A increases for specific supply chain engagements. overall we continue to be very comfortable with our days of inventory heading into our second quarter with that let me turn to the highlights for our business at the top line our electronic components business saw sequential and year-over-year growth across all three regions In constant currency, electronic component sales were up nearly 9 percent sequentially and up over 31 percent year-over-year, reaching $6.3 billion in the quarter. These results were primarily driven by another record quarter of sales in Asia and consistent, strong sales growth in both the Americas and EMEA regions. Increased sales in Asia were driven primarily by growth in the transportation and industrial markets. The team in Asia is also successfully gaining share in the region, leading to record quarter billings. The Americas and EMEA regions both benefited from strength in key verticals, notably industrial, transportation, and aerospace and defense. We are very pleased with the growth in these markets, as highlighted at our Investor Day in June. This is proof that we are well diversified across the end markets we serve and reinforces our expectation that these end markets will continue to have positive long-term growth prospects. Further, our enhanced focus on growing key supplier relationships and addressing their supply chain needs continues to bring benefits across all of our regions. We continue to coordinate closely with customers and suppliers to effectively manage our backlogs. As a result of those actions, our overall book-to-bill ratio continued to moderate as was near parity leading into our second quarter. We continue to benefit from our unique engineering capabilities with our field application engineers and digital design tools resulting in another record revenue quarter for demand creation. We believe this continued strength is indicative of the increasing value of the capabilities we provide to customers and suppliers and is important to supporting our margins in a more uncertain operating environment. Turning to our Fresnel business, Fresnel sales and profitability were impacted by currency fluctuations, particularly weakness in the British pound, and ongoing component shortages that are affecting Fresnel's ability to fully meet demand for single-board computers. Even with that, the backlog for single-board computers remains robust, and we expect to realize such sales when the product becomes available. Additionally, Farnell recently became the exclusive licensed distributor of the Raspberry Pi single-board computer. We are really excited about this development, which will increase our market share and favorably impact Farnell's revenue in the midterm. Operating margins for Farnell were above 12% during the quarter, impacted by a weakening of the British pound. We expect currency fluctuation to have a continued impact on Farnell into the second quarter. We remain excited about Farnell and continue to see opportunities to leverage Farnell's and electronic components' unique and synergistic collaboration to better serve our Avnet customers. To conclude, I want to reiterate that we are a stronger and much more durable company today through the changes we've made to our business. And I believe our recent trends and results reflect that. While we cannot control the overall market, I am confident in our team's ability to execute in a challenging and uncertain environment and continue to deliver value to our supplier and customer partners. There's never been a greater need for the capabilities that Adden has, and we look forward to continuing to play a critical role at the center of the technology supply chain. With that, I'll turn it over to Ken to dive deeper into our first quarter results.