Avnet, Inc.

Please stand by. Our presentation will now begin. Welcome to Avnet's second quarter fiscal year 2026 earnings call. I would now like to turn the floor over to Lisa Muller, Director of Investor Relations for Avnet. Please go ahead.

Thank you, Operator. I'd like to welcome everyone to Avnet's second quarter fiscal year 2026 earnings conference call. This morning, Avnet released financial results for the second quarter of fiscal year 2026 and the release is available on the Investor Relations section of ADMED'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 ABNIT's 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. 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, ABNET CEO, and Ken Jacobson, ABNET 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 second quarter fiscal year 2026 earnings call. I am pleased to share that we delivered another quarter of financial results that exceeded the high end of our sales and EPS guidance. In the second quarter, we achieved sales of $6.3 billion, driving a 3.2% operating margin in our electronic components business and a 4.7% operating margin in our farmhouse business. We also generated over $200 million of cash flow from operations in the quarter and reduced inventory dollars and days as projected. Our double-digit year-on-year sales growth was led by record revenues in Asia, along with better than typical seasonal growth in the Americas, Europe, and far now. I want to thank our team for delivering this performance while remaining focused on the areas we can control. In the quarter, we made solid strides in expanding operating margins, optimizing inventory, and generating cash flow, while continuing to make necessary investments to best support future growth. From a demand perspective, sales increased sequentially in most of the verticals we served, and not surprisingly, were led by strong demand in compute and aerospace and defense. Year over year, we also saw broad-based improvement across most verticals. Now, Turning to today's market, demand signals continue to reset globally, resulting in lead times trending higher across most product categories. This trend is still largely driven by the data center, artificial intelligence, but is also broadening as projected growth rates of all segments we track continue to improve. We're also seeing an increasing number of customers' orders being placed within lead times, along with higher instances of deliveries beyond lead times. These factors are driving a mismatch, if you will, between customer request dates and supplier delivery dates. This creates opportunity for us to deliver our supply chain value to our customers by addressing those misalignments. The pricing environment remains stable during the quarter, but we have seen spot price increases with a few suppliers and commodities. The supply dynamics suggest there may be upward pricing pressure across many technologies going forward. We exited the quarter with robust book-to-bills in every region, led by Asia and EMEA. As momentum builds, we are coordinating closely with customers to effectively validate and manage our backlog, while continuing to encourage customers to provide us extended visibility that we can share with our supplier partners. The more visibility we can give to our supplier partners, the more supply chain expertise we can bring to bear to solve for the complexities in the market. With that, let me turn to highlights for our businesses. At the top line, our electronic components business drove year-over-year growth and sequential sales growth across all regions. In Asia, sales reached a record high of over $3 billion. This marks our sixth consecutive quarter of year-on-year sales growth in the region. Demand increased across most of the verticals and geographies we serve for both the year-on-year and sequential compares. In EMEA, we're seeing clear signs of recovery, with sales growing both sequentially and year-on-year. Most end markets showed year-on-year growth, including industrial, while compute, consumer, and transportation were the strongest end markets quarter-over-quarter. We are encouraged with the improving outlook in the region, especially given the continued market uncertainty. I'm confident that EMEA's new leader, Gilles Petron, will continue to drive profitable growth in the region. In the Americas, sales grew both sequentially and year-over-year, marking our second consecutive quarter of year-on-year growth. Most end markets showed sequential growth led by aerospace and defense, while industrial, communication, and compute were the strongest end markets year-over-year. Our EC team is focused on several growth and margin expansion opportunities, including demand creation, supply chain services, embedded solution, and our interconnect passive and electromechanical business, or IP&E. Demand creation revenues increased sequentially by 7% as our field application engineers continue to drive the funnel for converting design wins into revenues. Our design registrations and wins also increased sequentially, which is a positive indicator for future revenues. We continue to develop and invest in both digital tools and hardware solutions that will allow our design engineers to better support our customers' design requirements. We are also pleased with the growth in our IP&E business, which had double-digit growth year-on-year. As a reminder, IP&E products carry higher gross margins, and there are many cross-selling opportunities with IP&E components that are complementary to our semiconductor business, including for our domain creation efforts. Now, turning to Fresnel. Sales grew sequentially and year-on-year. Fresnel's continued improvement reflects recovery across all three regions. We believe this is a sign engineers are working on developing new products, which we view as another indicator of the upturn in demand for electronic components. Operating margins improved sequentially in line with our expectations. We also continue to gain traction growing Fresnel's sales of on the board components through our power of one initiatives which leverages the best of adnet core and farnell digital platforms although we are seeing improvement in sales of higher margin on board components farnell continues to have a higher relative sales mix of test and measurement maintenance and repair and single board computers as a recovery of demand for the onboard components continues especially in europe We expect Farnell's gross and operating margins to continue to improve. So here at the center of technology supply chain, as we look forward, there are many reasons why I'm optimistic about AdNet's future and our position in the marketplace. We have a diverse and high-quality supplier line card and customer base. We have a seasoned and stable leadership team and employee base. We're the only global distributor that also has a high-service distribution business. We have the right resources and, more importantly, capacity in place with our sales teams, our engineers, and our technical capabilities. And from an operating expense standpoint, we believe we're a well-positioned for future growth. So our model will create operating leverage over the next couple of years as we return to growth across the world. We're also well-positioned with inventory. but continue to drive down areas of excess while we invest in areas of need. To conclude, we are pleased with the momentum we're seeing moving into the new calendar year. For those of you who attended CES this year, there was a lot of excitement at the show. We had the opportunity to meet with leadership of many of our supplier partners and customers, and we continue to be encouraged that 2026 will be a year of growth and margin expansion and approved returns for Avnet. With that, I'll turn it over to Ken to dive deeper into our second quarter results. Ken?