Avnet(US:AVT)2022-04-28 00:17Financial Data and Key Metrics Changes - Revenues for the quarter reached $6.5 billion, representing a 32% year-over-year growth and an increase in adjusted operating margin to 4.7% [8][15][17] - Adjusted earnings per share were reported at $2.15, exceeding guidance [15] - Cash flow from operations was $244 million, with $77 million generated from operations and $167 million from a cash income tax refund [20] Business Line Data and Key Metrics Changes - Electronic Components revenue grew 33% year-over-year to $6.0 billion, with an operating margin improvement to 4.4% [16][18] - Farnell sales increased by over 18% year-over-year to $469 million, with an operating margin of 14.9% [15][16] - The Americas business saw revenue growth of over 40% year-over-year, marking the fifth consecutive quarter of operating margin growth [8][16] Market Data and Key Metrics Changes - Strong demand was noted across Automotive, Transportation, and Industrial segments, with expectations for Aerospace and Defense to remain elevated [9][12] - The book-to-bill ratio remained strong, indicating healthy demand conditions [12] Company Strategy and Development Direction - The company is focused on accelerating growth in Farnell and enhancing operational efficiency in its core distribution business [7][14] - Investments in digital and design tools are yielding positive results, contributing to demand creation and gross profit [12][19] - The company aims to maintain a solid supplier base and is committed to increasing shareholder value through dividends and share repurchases [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future opportunities and the resilience of the company in the face of potential economic downturns [34][38] - The impact of geopolitical events, particularly the conflict in Ukraine, was acknowledged, but the overall business impact is expected to be minor [9][10][21] Other Important Information - The company has ceased all business activities in Russia, which represents less than 1% of annual revenues [10] - A non-cash reserve of $26.3 million was taken related to receivables in the region affected by the conflict [21] Q&A Session Summary Question: Near-term expectations for operating margins - Management indicated that near-term operating margins are expected to remain in the 4% to 5% range, with a focus on demand creation contributing positively [26][27] Question: Impact of potential recession on the company - Management believes the company is better positioned to weather a downturn compared to previous economic challenges, with a focus on variable costs and maintaining margins [33][34] Question: Guidance for the next quarter - The company provided guidance for Q4 revenue in the range of $6.0 billion to $6.4 billion, with adjusted diluted EPS between $1.90 and $2.00 [22] Question: Supply chain engagements and margin profiles - Management noted that supply chain orchestration engagements are growing and tend to be higher margin, contributing positively to overall performance [48][51] Question: Pricing impact on revenues - Pricing increases are estimated to have contributed 6% to 7% to revenue growth, with no significant changes in lead times observed [60][70]