We're happy to have Avnet with us today. Avnet is one of the largest semiconductor distributors in the world. Representing the company is Tom Liguori, CFO of the company. Tom, thanks for joining us today. I will start with several of my questions, and then I will open up for Q&A. Before that, I guess Tom has some slides to share.
Just going to make a few opening remarks.
Yeah.
First of all, talk about what is the company today.
What is Avnet? What is our ecosystem? I can see that chart's a little hard to read. Think of this as an electronic distributor. Our customers are the middle market, right? A supplier will go direct to a tier 1, so we're at the middle market. What's going on in the middle market today? They're still designing new products. There's still time to market pressures. Really, they're trying to do connected devices, and anybody that's been walking the floors sees that. Sensors, connectivity, cloud storage, software. We, over the last two or three years, have really been adding to our ecosystem to be able to accommodate that. Two or three years ago, we added Premier Farnell. Premier Farnell is a specialty distributor that really serves the entrepreneur and engineering market. Totally different value proposition.
An engineer wants to be able to buy all of their parts and get them tomorrow to put in a prototype. Less price sensitive. Gross margins in that will be in the 35% range versus 12% range. When you look at Farnell, they have engineering communities. Our engineering community has over 1 million members, and that's where they share design ideas, experiences, and we use that as a way to bring them into our ecosystem. We continue to have the high-volume distribution of our core business, which is once those products get into high-volume production. We've also added things like software and a partnership with Microsoft Azure. Again, those middle-market clients, they don't necessarily have all of the capabilities in-house to do a connected device.
We think what we put together is a little bit unique, and it'll bode us well for the next three to five years. Some of the companies we've acquired to be able to fill out our services to our customers are software companies and people that make apps, and those are the types of things that we're showcasing here. Macro slowdown, and I'm sure Tim will get into that. We're feeling a little bit better than we did four or five months ago. Our book-to-bills are improving. Really, during the downturn, we're using this as an opportunity to manage our costs, reduce our costs, have a better cost structure when we come out of this, focus on cash generation, and I think the people at Avnet have executed well on that. Over the last nine months, we generated $800 million of cash.
During that period, our earnings per share were maybe in the mid $2 range, $2.50. Our cash generation was $7.60 per share. I say that, not to focus on the cash flow itself, but I think it's a good testament to the people at Avnet that run the business day in, day out, that during this slowdown, they've really done, I would say, an excellent job of managing inventories, managing receivables, and helping us to be able to generate cash. Really, the initiatives for the next 12 months are to get our Farnell business back to a double-digit operating margin, to continue to expand the operating margins in our electronic components business, and to continue to focus on cash and generate cash.
TI is transitioning, and that'll be a 12-month process from here on out, and I think we're in pretty good shape as far as having a plan and executing to it.
Great.
So Tim-
Yeah.
What would you like to talk about?
Yeah. I guess, you just mentioned ecosystem and design ideas for new technologies. For CES this year, what are the technologies that make you feel excited and you think could be the potential driver for Avnet in the future?
Yeah. Well, if you go over to the Venetian at some point, we're showcasing our IoTConnect product.
What IoTConnect is a product that you can buy on our website, and it's going to be an IoT store. An example that's over there is a fleet management company that wants to manage, let's say, the forklifts that they have around the country. IoTConnect comes with connectivity, which is recurring revenue to us, comes with cloud storage, recurring revenue to us. Really what they need is a software app, right? That's where our acquisition of Softweb comes in play. Today, what we are selling is an IoTConnect product that one-stop shop where you can get all of your needs. If you wanted to do a fleet management product to track all of your forklifts around the country, you're able to do that from one source.
Got you.
Very important, too, especially the probably middle-market customers.
Yeah. Can you just talk about the overall demand pictures you are seeing by end demand and region by region?
Yeah. We're not seeing much of a change from December, in that, first of all, we do feel better about the outlook today than we did four or five months ago. Our book-to-bills are improving in all of our businesses. The book-to-bills are not one, but they're improving, and that's a change from where we were six months ago. Asia has been stable now for four to five months. You know EMEA, the economy is still soft, so we're not declining, we're not increasing. EMEA business is hanging in there. Americas, we had expected a decline this quarter, similar to what we saw in EMEA and Asia when they went through the macro slowdown. It's gone down less than we expected, so we're feeling much better about Americas.
I think we need to go around the world with the inventory correction, meaning inventory in the supply chain at customers, predominantly over in Asia, EMEA toward the end of that inventory correction cycle, and Americas, it will really depend on where Americas goes with demand. Overall, we're hoping that by March or April, this is what we're hearing from customers, that demand will be improving. I'm not trying to predict it. December quarter, clearly slow. I know you had the Microchip announcement. December quarter, clearly slow, was what the guidance was. March, with the book-to-bill below one, March will be very similar to December.
Got it. Asia demand, you mentioned that it's improving. One of your competitors, WPG Holdings, they have seen year-over-year growth in the past two months. Are you seeing similar trend in that region in terms of positive year-over-year growth? Do you compete head-to-head with WPG?
Well, I think the latter is really the key. In many products, yes, we compete head-to-head. They do more memory and processing units than we do, so that comparison may be a little skewed. I would say our Asia business we see as stable. I wouldn't say that we see a lot of growth in it yet.
Got it. Okay. Thanks. I guess you just mentioned Microchip and many other semi vendors have called out demand recovery in the first half of this year. Do you agree or disagree in terms of timing and what are we seeing in the semi cycle?
First of all, Microchip's a very important supplier to us, so we took that as very good news. We hope that that's a sign of things to come. There's always a question of, are we a leading indicator or a lagging indicator? I think what we've come to the conclusion of, though, at least the last few months is, a supplier who is going, their direct customers are the tier 1 OEMs, so they may get the first indication of changes in demand. Hopefully what we're seeing is that, the tier 1s are coming to Microchip with more orders, and as that tier 1 flows that down to their supply chain, which is really who we're distributing to, we'll see the same benefits. I think it's a thing in the right direction. Did we see in December an improvement in demand?
No, we're pretty much what we talked about at our last earnings call.
In the past, during the cycle, what's the timeframe that you're seeing the lagging compared to the semi vendors in terms of seeing the demand pick up?
It's pretty much varied.
Right.
If you follow that concept, it's probably three to four months.
Three to four months. Great. Any questions from the audience? Okay. Jim.
Good morning. Thanks so much for attending. There's a lot of times a debate when somebody, a chip company like Texas Instruments, makes the decision to use distribution less or go internal, and then there's sometimes when I've seen over the years and decades, companies embrace distribution more and less direct. Where are we in the cycle, and what you saw happen with TI, is it percolating to others, or what's your view on that? Does it simply just happen, or are we going through something secular?
Well, TI's been working on this for many years, Jim, as you know. By the way, thank you for having us at the conference. It's an annual event, and we really appreciate it. TI's been working at this for several years. A few years ago, they decided to do their own demand creation, and that was well known. They've also been investing, and if you think about if you want to go direct, that is a lot of floor space, people, distribution capability you need because when we talk about our TI business with $1.7 billion, that's an awful lot of components that are flowing through your distribution centers globally. That was a stated goal for TI. They've made investments, the decision itself was not a surprise.
I think the timing was a bit of a surprise coming, but I can honestly say we don't have any other supplier talking to us about that. I think it's just more what our semi suppliers focus on. They focus on new product development and getting their product to market, and they kind of like the demand creation that we do, sending out engineers to get them to, again, that middle market where it's just not economical for them to be sending people. We have hundreds of suppliers, so we get much more revenue from the middle market customer than they would.
Yeah. Just quick follow-up.
Oh.
Okay.
Any impact from Brexit and the recent tariffs?
It seems to be in a better place than it's been in many, many months. It's changing, it seems like Brexit is better thought out and less of an impact than maybe we were afraid of six to eight months ago. Any movement on the China-U.S. trade is positive for us. It takes away uncertainty. Hopefully, that'll continue. I think we're a little less sensitive to tariffs and Brexit today, but it still could change.
On the Texas Instruments disengagement, I think that the timeline for the disengagement will be completely by the end of 2020. Can you talk about the cadence of the disengagement and what's the conversation you are having with your customers?
It all goes back to that statement, there's a lot of components that have to get transitioned, right?
It's a very big task. I think if you go back to our last earnings call or when we put out the 8-K, we expected it to move rather quickly and maybe be substantially done by the summer. The agreement is by the end of this year. It's a big task, so it may go through the year.
Would that be more skewed toward the first half?
I would assume equally through.
Equally. Okay.
through the year. I think that would be the preferred, and I don't want to speak for TI, but the preferred solution. We both have the same interests at heart, which is the customers, that there's just a lot that has to change and a lot of repositioning of inventory, so we'll see how the timing goes.
Got you. ON Semiconductor was here yesterday. I think they are one of your vendors. They mentioned they will expand their relationship with distributors, which is, I think, opposite to what Texas Instruments is doing. Can you comment on your conversation with your vendors after the TI decision?
Yeah. If you're in the same space and you know that Avnet's not selling TI, then they see that as an opportunity to work with us closer to because we will put more focus on their products.
Got it. Are you having conversations with your vendors right now?
Yeah. That's a good question. I see where you're going, Tim. When we put out the 8-K on the change in the TI, several suppliers have CEO to CEO discussions on that very point.
Got it. What's your plan to absorb the top line de-leverage right now, given that in the near term, the TI is going away, and it probably?
Yeah
takes time to ramp the new vendor relationship.
Yeah. Remember that the TI business, because it was no longer demand creation, was predominantly fulfillment, which is lower gross margins.
We gave a range, but figure in the 7% gross margin range for fulfillment versus a corporate average of 12%. Our plan is not necessarily to replace $1.7 billion, but to replace it with maybe $900 million to $1 billion of revenue, at quote unquote, "margins associated with supply chain engagements," could be some demand creation, things of that nature. To couple that with, we announced about a $35 million cost reduction. Those two together would replace the gross profit or the lost profits from the TI transition. I would say that these things happen over the years in distribution. Something similar happened to us, unfortunately, three or four years ago because of some ERP issues where we lost suppliers. Hey, we worked through it. We got it back. We've added suppliers. You bring up Microchip.
Well, we didn't have Microsemi. Microchip buys Microsemi, and now we're doing Microsemi business as well. There's an ebb and flow here.
Got it.
It'll just take a little time.
On the regional exposure after the TI disengagement, is there a change in terms of doing business in different region?
Well, that business was a little bit more weighted to Asia.
than Americas and EMEA.
Okay. Got it. Switching gear to margins, you have experienced some margin headwind last year, and you mentioned product mix and top-line headwinds as key reasons for the margin pressure. Can you maybe just talk about the factors which are getting better, which are getting worse, which are just, you know?
I think when you look at our margins, there's really three overriding things we're focused on. One is the higher margin business of Farnell, and we need to get Farnell back to a double-digit operating margin. Part of that is a recovery in the market with passive pricing and volumes, and to continue on the plan that we've been going through with some of the combining back offices. That's very important, to get Farnell back. The second thing is, well, we have a program to reduce our OpEx by $245 million. Today, we're at about $180 million of savings, so we still have, what would that be? $65 million left to go.
That's going to take four to five quarters, but very focused. The last would be Americas. We talked about over the last year or two, that Americas, when we had the ERP issue last year, their operating margins went down. I'm really pleased to report that Americas, they've been growing revenues just about every quarter for the last five or six quarters. I think four out of five quarters, we've had sequential growth in Americas, and that compares very favorable to our peers. Continuing taking share in Americas, and with that comes the benefit of operating leverage.
For the near-term margin expansion, do you have to see the sub-sectors, like industrial automotive, to come back to drive your margin growth? Or you can manage the margins at the current level?
Yeah. We gave some discussion of that at the last earnings call.
Right.
We are focused on achieving some level of margin growth through the cost optimization programs that we have. A return to normal market conditions with macro would definitely be on top of that.
Got it. Your margins, I think the implied margin guidance for the December quarter is slightly below 2%, at roughly 2%. I think that's the lowest since the financial crisis. Do you think you have approached the bottom of the margin performance? Why or why not?
Yeah. It really depends on where the economy goes. We're believing that it's bottomed out and that March and April we'll see recovery. Our expectation is that with a book-to-bill slightly below one, that would indicate to us that March will probably be very similar to December quarter. If we get an uptick in demand in March, that'll bode us well for our June quarter, which is typically when you start to see seasonal upticks.
Got it. Okay. Is there any questions from the audience? Yes.
Speaking of book-to-bill slightly below one, and you mentioned earlier that Microchip recently guided higher, are you seeing net more positive indications, or is that just an outlier? What I'm trying to get at is it seems like through this show, companies have been talking a little more positively than maybe a couple of months ago.
Yes. Thank you, Jim. We are feeling more positive than we were a couple of months ago. In fact, our one-on-one before this, we were talking about what was book-to-bill through the cycle. Well, five or six quarters ago, our book-to-bill was close to 1.1. As a company, I think we bottomed out in the summer more as a 0.9, and now we seem to be approaching one, so we do have a good trend developing. It's pretty broad as far as across the globe. It's in each of our businesses.
Got it. Any more questions? There's questions over there.
I'm just curious, can you just describe what you think is kind of driving sort of the recent uptick? Maybe it's kind of obvious, but how much of it is just caution going into the end of the year, last year, given the concerns about sort of trade and all that, and now is there just kind of a little bit of a relief? Do you think we're seeing end demand improve across various sectors? Just maybe talk through that a little bit.
Yeah. I think that more stable trade is definitely helping. I think the inventory correction that's associated with any cycle is well along. Meaning, in Asia, we think the inventory correction is complete. In EMEA, we think it's near complete. Those are good signs, right? That means that as demand picks up, we'll see a pickup in demand. In America, it's a little harder to say because it's unclear where America's demand is going. Right now, we're seeing a more positive outlook, to Jim's question, than we did three months ago. As far as industry, aerospace and military continues to remain strong. Even with the Boeing announcement, we may see a little softening on aerospace, but being picked up on the military side. Automotive and industrial, not really much change.
Questions? Quick follow-up questions on inventory. I think many component suppliers have mentioned the channel inventories as an issue for pricing. I believe your inventory days right now is at roughly 70 days in the past two quarters, and which is much higher than the 40-45 days back in 2011, 2013. I guess two questions here. Number one is, do you think that you need to work down the inventories to get better margins? Number two is, what's the optimal inventory levels you think that-
Yeah
you can see the margin improvement?
It's a good question. What might be skewing that is the addition of Farnell a bit. Because Farnell, serving the engineers and having to have a breadth of SKUs for the engineers, has much higher inventory days. It's approaching the 200-day type mark, and that's really just what the industry is. Leaving that aside, yeah, we've been on a program for the last year and a half to better manage our working capital. We know that there's still room in the inventory to come down. I would say it's maybe a little bit macro related, but more just part of the continual working capital reduction plan, Tim, that we have going on. Working capital in total, a year and a half ago, we were in the 95, 96-day range of working capital.
Today, we're at 84, and our goal is to get it down to 70, but that's going to take five or six more quarters. We've made a lot of good progress.
Got it. On Farnell, I think you mentioned this is a catalog business. You had good progress in terms of margin expansion, I think in 2018, but in the first half of 2019. Then you had something like margin headwind in the past two quarters. What's the main difference between the catalog versus broad line distributors, and then can you provide some color on how do you plan to drive the margin back to your low teens?
Yeah. Well, the main difference is who is the customer, right? Within the same company, the production side is buying from what you would call mainline core distribution. The engineering side is buying from Farnell because it's an online sale, it's got far higher SKU count, and much lower order size, and you can get it delivered in a day or two. Just a totally different scenario in that. I'm sorry, what was your question, though?
How do you plan to drive the margin back to low teens? Yeah.
Yeah. Say it again.
10% double-digit margin.
Oh, yeah. How do you get the margin back? Different topic. I'm sorry. I thought you were still on inventory, my apologies, Tim.
Yeah.
Last quarter, we were at 6.5%. Why did it drop to 6.5%?
Yeah.
Well, one of the things that happens is, because the margins in a catalog distributor are higher, they tend to get maybe a little bit better supply picture. Last year, when certain components were short, what you found was that people that would typically have been buying from mainline Avnet were concerned about being short parts and having their production going down. They would be coming onto the catalog distributors like Farnell, which had the impact of both raising revenue and raising prices. Really the key is raising prices. You saw that a lot on the passive side of the business. Once the macro slowdown happened and components were greater availability, those customers that are typically mainline distribution customers went back to their historical buying patterns, and we saw prices of things like components drop pretty precipitously.
That was really the main reason for the slowdown in the Farnell operating margins.
You really have to see the lead times comes back or it goes longer.
Yeah. We need a little of both. That's what we tried to lay out in our earnings call last time. To get back to the 10-15% range, or just, let's say, to get back to 10%.
We definitely need some correction back to normal market on the passive side. Historically, if you go back over the last 15 years and look at that, it's like a six-month process. That would also bode well that maybe this pricing demand on those components will be back to normal more in the March quarter. Other than that, it's really just sticking to what we've been doing, which is the OpEx reduction. We just opened a new distribution center in Europe for Farnell that has higher capacity, much lower cost in total. There's an example of cost reduction helping drive margins. We continue on the other topics we talked about, combining back offices of Farnell and traditional Avnet. Even today, if you go to Singapore, you'll have two distribution centers. You go to Chicago, you'll have two offices.
As we speak, both of those are the types of things that are getting consolidated that's going to help Avnet, but also help Farnell itself.
Can you remind us your passive component exposure as a % of your total revenue, and what's the trend over there?
Yeah. We call it IP&E, which is connectors and passives and other electronic components. It is about 20% of the total globally. Farnell might have a little slightly higher mix, 20%-25%, and it has been increasing.
It's been increasing because the demand for passive component, or it's just your operations?
Market share.
Market share. Got you.
Yeah.
Okay. Any questions?
Can you talk about trends in the 5G business?
Yeah.
The exposure that you have and what you guys are seeing there.
Yeah, we're seeing, this is more on the Asia side, more demand from infrastructure build-out on 5G. We think longer term, 5G is going to help our IoT business because it's, like you see today, more and more connected devices. To us, that's very important because the connected devices that we sell have a much higher gross profit than our normal business. IoT products will have a gross profit in the 25% range compared to our corporate average of about 12%. The reason is, it goes back to what we talked about earlier. When you sell an IoT product, yes, you're still selling electronic components and you're still selling sensors, which may have a 10%, 12% margin, but you're also selling engineering services, which is more in the 20%. You're selling software apps, which is why we bought Softweb, which is in the 50% gross margin.
You get a blended average in the mid-20% range.
Got you.
If I can just clarify, the 5G exposure is mostly Asia? What about the North American build-outs and Korea and Japan build-outs for 5G?
How much exposure do we have by country in Asia?
Yeah, like relative, what about the exposure in America? Do you have exposure to 5G build-outs in Americas as well, or is it mostly Asia?
The growth we've seen recently has been more Asia focused. IoT would be global, but that's more long-term.
Yeah. Follow-up question on Farnell. You put that as one of your priorities, and then probably like in the past two quarters, you have some growth headwind. How should we think about Farnell growth, like in the near term as you continue to integrate the business? And I think during last earnings call, you mentioned Brexit is one of the key milestones for you guys to monitor in terms of the growth back to the normal level. Is any progress over there?
Yeah. Think of Farnell as being in the 6% operating margin range today, and getting it to the 8%-10% by the summer. As we get more and more of a recovery, that should benefit Farnell as well.
Okay. That 8% to 10%, what's the top line growth that you embedded for that?
I think it was a 6% top line growth.
On year basis.
which is really what the historical cycles have shown.
Got it. You are expecting the cycle or the demand for Farnell to back to the normal level in the summer of this year?
Getting toward the normal level.
Got you. Okay. In the past, you mentioned the demand weakness in industrial and automotive, which are the two segments. There's higher margins for you guys. Can you talk about how do you track the end demand in those two markets? Is that a PMI, auto sales, or other metrics that you're tracking in terms of for the demand? If the end demand recovers, how fast would you see the demand coming back?
The latter is probably a matter of months, like three to four months. We track most of our businesses on a variety of metrics. PMI is clearly a key metric. Really by region, we look at book-to-bill. It gives us a pretty good indication of what is the trend in demand for that market or that region.
Got it. If we see the auto sales remains at flattish on year-over-year basis, what's the implication to you guys? Would you see that some demand or still flattish consistent with the auto sales, or it's just not quite relevant the metric for you guys?
To the-
For auto exposure, I think it's probably low to mid teens for total revenue.
No. Well, okay. Like auto's a really good example of we should grow with the overall auto market, because, right, we're mainline in many, many customers. Auto has higher content. That's why auto's been really a focus on us, as there's more and more electric vehicles. Really, the electronic content in the vehicle, that helps us quite a bit.
Got you. Your IoT effort, you mentioned you have partnership with Microsoft Azure. Can you maybe just help investors understand what exactly the partnership is about and how much your revenue would benefit from this partnership in general?
Yeah. We've had the partnership for about a year. Let's say that really most of the opportunities and leads in our IoT business comes from Microsoft, because they're interested in the cloud business. They don't necessarily have hardware people inside their business. We help one another on that. What's the partnership itself? It's just a document where we make certain investments, they make certain investments, and it's worked out well for us.
Who do you compete in that space?
That's a really good question, because sometimes we're asked, "Well, do you compete with Accenture or other big IoT?" Let's go back to who are our customers? Our customers are the middle market OEMs and manufacturers, right? I can honestly say we don't really have any one single major competitor. In fact, most of these opportunities come about that the customer is trying to develop a connected device, right? They need capability. That may come direct from our core salespeople, or it may come from Microsoft or somebody else. We will work with them on the design, selling recurring revenue for the connectivity, the cloud storage. Our software business will develop a mobile app for them or a desktop app to manage the device in the field. That's important because they then have one-stop shop, and they're not really competing it, right?
The success in our IoT business today is really a function of how fast will those products come to the market.
Can you share your % of revenue in IoT, and then what's the recurring % of the total revenue?
Yeah. Okay. Let's just talk in dollar term. Today, IoT is very, very small. It's a $100 million business, right?
Just going to update this first one.
The reason it's important, though, because it's high growth, so let's say we get it to $500 million. Well, if we have $500 million and you have a 25% gross profit, there's $125 million, right? We don't need billions of dollars of IoT revenue. I hope nobody at Avnet is hearing this, because their goal is to get billions of dollars of IoT revenue. It has a very strong drop through to the bottom line.
That's not near-term driver, but it's a long-term margin driver for you guys.
Two to three years.
Two to three years. Got it.
till you have a material bottom line impact.
Yep. Tom, you mentioned cost saving. Can you maybe just give us an update, like cost savings, you have $65 million left probably in the next one year for the margins and what's the update, what's progress you are making in the cost saving?
Cost savings are right on track. I think maybe we're doing it a little faster than we expected. We feel good about the progress we've made. This last $65 million is fully identified by project. It tends to be things that we've been working on for the last 12 months that are now coming to fruition, like building the new distribution center in Europe. We feel very confident we'll hit the $245 million and probably more.
Got you. One of the investment thesis for Avnet is that your cash generation is strong when the demand is slowing down. How should we think about cash generation when you see the demand picking up in the second half or in the summer of this year?
Yeah. We've generated $800 million over the last three quarters.
Right? As demand picks up, we all look forward, at Avnet, to the day where we're buying inventory and growing inventory. It'll be a sign of recovery in the markets. Can we continue at an $800 million pace over three quarters? No, that's not a long-term pace. I think we've always talked about, at our current size, cash flows in the $500 million range. That's probably more to what you should expect. In the near term, while the markets are slow, we're taking advantage to really focus on our working capital management and generate the cash. What we're using the cash for has been, at least the last four or five quarters, is buybacks. I would expect to see maybe a little bit changing shift.
I mean, not huge, but smaller tuck-in acquisitions to the extent that we can add a distributor that has $100 million to $200 million of revenue, but they bring a different either market or supplier we don't have. That's clearly of interest to us, especially with the TI, right? That would be a good replacement. With the slowdown, we're very focused on making sure we retain our investment-grade rating. We look at maintaining a gross leverage of about 2.5 times or so. When we look at capital allocation, those are really the main points. We continue to have our dividend program and our expectation that we'd like to say is continue doing what we're doing, which is grow at 5% or so every year.
Regarding the acquisition, is there any regional focus for you to do that, like in the future?
No, it's not a regional focus. I think what we're seeing is more Americas and EMEA. The intent there is to build our business out, but they have to have good returns. I don't want anybody to worry about paying high prices or things of that nature. On top of that, in the last 12 months we bought Softweb, we bought Witekio. Those are smaller software companies. They really help to fill out our IoT capabilities. They could be part of the mix as well.
Got you. With the TI disengagement, it seems like your Asia exposure will be smaller compared to probably like in the past. Can you maybe just talk about your Asia exposure? Is that more focused on the certain group of big customers, or is more like just fulfillment to a broader base customers?
It's fulfillment to a broader base, and much of it is associated with our mainline suppliers. We also do some business in Asia. That would be Asia suppliers that need somebody to have a broad reach into all the different countries throughout Asia.
Got you. We have time for some questions, any questions from the audience? Okay. My last question to you, Tom, is that, can you maybe just share with investors, like what you feel is, you mentioned this is for Avnet, why you feel that excited about Avnet?
Oh. Well, a couple things. First is just the opportunity with Farnell and IoT and the higher margin businesses. We think we've put a lot of the basic building blocks in place for both of those to do well in the market. I think one thing that people probably don't discuss or look at as much as they should have, is the performance of our Americas business. There's a lot of talk about, "Hey, are you growing in Asia?" That's lower margin. A lot of focus on TI. If you look at where are we competing as a distributor and doing well or gaining share because of our distribution capabilities, our performance, our pricing, our on-time delivery, look at Americas. Americas, we've had revenue growth in four of the last five quarters.
I think if you look at the broader distribution market, that's a little unique, and it's a good indication of really the capabilities we have in-house and the talent of the people at Avnet.
Got you. All right. This concludes the meeting. Thanks for coming.
Thanks, Tim. Thank you, everybody.