are happy to have Avnet with us today. Avnet is one of the largest semiconductor distributors in the world. Representing the company is Tom Ligori, CFO of the company. Tom, thanks for joining us today. I will start with several of my questions and then we'll open up for Q and A.
Before that, I guess Tom has some slides to share.
I'm just going to make a few opening remarks. First of all, I'll talk about our what is the company today? What is Avnet? What is our ecosystem? I can see that chart.
It's a little hard to read. Think of this as an electronic distributor. We are our customers are the middle market, right? A supplier will go direct to Tier 1s. We're at the middle market.
So what's going on in the middle market today? Well, they're still designing new products. There's still time to market pressures. But really, they're trying to do connected devices. And anybody that's been walking the floors sees that: sensors, connectivity, cloud storage, software.
So 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 Farnell. Farnell is a specialty distributor that really serves the entrepreneur and engineering market. So 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.
So less price sensitive gross margins in that will be in the 35% range versus 12% range. And when you look at Farnell, they have engineering communities. So our engineering communities has over 1,000,000 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, but we've also added things like software and a partnership with Microsoft Azure. So 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 will 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. But 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 we've the people at Avnet have executed well on that. Over the last nine months, we generated $800,000,000 of cash. During that period, our earnings per share were maybe in the mid-two dollars range, 2.5.
Our cash generation was $7.6 per share. So I say that not that 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 a, I would say, an excellent job of managing inventories, managing receivables and helping us to be able to generate cash. So really, the initiatives for the next twelve 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 will be a twelve month process from here on out. And I think we're in pretty good shape as far as having a plan executing to it.
Tim, what would you like to talk about?
I guess you just mentioned the 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 Avnan in the future?
Yes. Well, if you go over to the Venetian, at some point, we're showcasing our IoT Connect product. And what IoT Connect is a product that you can buy on our website, and it's going to be an IoT store. So 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. IoT Connect comes with connectivity, which is recurring revenue to us, comes with cloud storage, recurring revenue to us.
But really, what they need is a software app, right? That's where our acquisition of SoftWeb comes in play. So today, what we are selling is an IoT Connect product that one stop shop where you can get all of your needs. So 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. Very important to especially the quite middle market customers.
You just talk about the overall demand pictures you are seeing by end demand and region by region?
Yes. 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. And 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 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, and this is what we're hearing from customers, that demand will be improving. I'm not trying to predict it, right? I mean December quarter, clearly slow. I know you had the microchip announcement.
December quarter, clearly slow is 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, World Peace Group, they have seen year over year growth since past two months. Are you seeing similar trend in that region in terms of year over year positive year over year growth? And then do you compete head to head with WPG?
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 has stable.
I wouldn't say that we see a lot of growth in it yet.
Got it. Okay. Thanks. And I guess you just mentioned microchip and many other semi vendors have 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?
Yes. First of all, microchip is a very important supplier to us. So we took that as very good news, right? And 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 over at least the last few months is a supplier who is going right? Their direct customers are the Tier one OEMs, So they may get the first indication of changes in demand. So hopefully, what we're seeing is that the Tier 1s are coming to Microchip with more orders. And as that Tier one flows that down to their supply chain, which is really who we're distributing to, we'll see the same benefits. So 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 in our last earnings call.
In the past, during the cycle, what's the timeframe that you are seeing the lagging compared to the semi vendors in terms seeing the demand become?
It's pretty much varied. If you follow that concept, it's probably three to four months.
Three to four months. Great. Any questions from the audience? Okay. Good
morning. Thanks so much for attending. There's a lot of times a debate when somebody, a chip company like Texas Instruments makes a 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 kind of view on that? And does it simply just happen? Or are we going through something secular?
Well, TI has been working on this for many years, Jim, as you know. And by the way, thank you for having us at the conference. It's an annual event, we really appreciate it. TI has been working on 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 $1,700,000,000 that's an awful lot of components that are flowing through your distribution centers globally. So that was a stated goal for TI. They've made investments. And so 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. And 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, which is not economical for them to be sending people. But we have hundreds of suppliers, so we get much more revenue from the middle market customer than they would.
Just a quick follow-up on
Any impact from Brexit and the recent tariffs? The tariffs? It seems to be in a better place than it's been in many, many months. It's changing, but 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, right? It takes away uncertainty. Hopefully, will continue. So I think we're a little less sensitive to tariffs and Brexit today, but it's still it could change.
On
the Texas Instruments disengagement, I think the time line for the disengagement is will be completely by the 2020. Can you talk about the cadence of the disengagement and what's the conversation you are having with your customers?
Yes. Well, it goes back to that statement. There's a lot of components that have to get transitioned, right? So it's a very, very big task. So I think if you go back to our last earnings call or when we put out the eight ks, 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.
So would that be more skewed toward the first half? Or it's just barely
I would assume equally through the
year. I
mean I think that would be the preferred and I don't want to speak for TI, but the preferred solution. But we both have the same interest at heart, which is the customers that there's just a lot that has to change and a lot 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 Instrument is doing. Can you comment on your conversation with your vendors after the TI decision?
Yes. I think many right, if you're in the same space and you know that Avnet is not selling TI, then they see that as an opportunity to work with those closer to because we will put more focus on their products.
Got it. So are you having conversations with your vendors right now?
Yes. When we put that's a good question. I see where you're going, Tim. So when we put out the eight ks on the change in the TI, we had several suppliers have CEO to CEO discussions on that very point.
Got it. So what's your plan to absorb the top line deleverage right now given that in the near term that TI is going away it probably takes time to ramp the new vendor relationship?
Yes. So remember that the TI business, because it was no longer demand creation, was predominantly fulfillment, which is lower gross margins. So we gave a range, but figure in the 7% gross margin range for fulfillment versus a corporate average of 12%. So our plan is not necessarily to replace $1,700,000,000 but to replace it with maybe 900,000,000 to $100,000,000 I'm sorry, dollars 900,000,000 to $1,000,000,000 of revenue at margins associated with supply chain engagements, could be some demand creation, things of that nature. And to couple that with we announced about a $35,000,000 cost reduction.
And 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. Please bring up Microchip. Well, we didn't have Microsemi. Microchip buys Microsemi, and now we're doing Microsemi business as well. So there's an ebb and flow here.
It'll just take a little time.
Got it. So on the regional exposure after the TI disengagement, is there a change in terms of doing business in different regions?
Well, it was that business was a little bit more weighted to Asia than Americas and EMEA.
Okay. Got it. So switching gear to margins, you have experienced some margin headwind in 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 Yes.
I think, look, 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. And that's 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. But that's very, very important to get Farnell back. The second thing is, well, we have a program to reduce our OpEx by $245,000,000 And today, we're at about $180,000,000 of savings.
So we still have what would that be, 65,000,000 left to go. And that's going to take four to five quarters, but very, 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. And 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. And so 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 subsectors like industrial automotive to come back to drive your margin growth? Or you can manage the margins at the current level?
Yes. Gave some discussion of that at the last earnings call. We are focused on achieving some level of margin growth through the really, the cost optimization programs that we have. And a return to normal market conditions with macro would definitely be on top of that.
Got it. So your margins, I think the implied margin guidance for the December is slightly below 2% at roughly 2%. I think that's lowest since the financial crisis. Do you think that you have approached the bottom of the margin performance? Why or why not?
Yes. It really depends on where the economy goes. We're believing that it's bottomed out and that March and April will see recovery. So 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. And if we get an uptick in demand in March, that will bode us well for our June quarter, which is typically when you start to see seasonal upticks.
Got it. Okay. So any questions from the audience?
Speaking of book to bill slightly below one and you mentioned earlier that like Microchip recently guided higher. Are you seeing net 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.
And 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. And it's pretty broad as far as across the globe. It's in each of our businesses.
Got it. Any more questions?
Describe what you think is kind of driving sort of the recent uptick. I mean, it's maybe it's kind of obvious, but how much of it is just kind of 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? Are you do you think we're seeing kind of end demand improve kind of across various sectors? Just maybe talk through that a little bit.
Yes. I think that more stable trade is definitely helping. 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, and that's those are good signs, right? That means that as demand picks up, we'll see a pickup in demand.
In Americas, 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. And even with the Boeing announcement, we maybe 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. And I believe your inventory days right now is at roughly seventy days in the past two quarters, which is much higher than the forty to forty five days back in twenty eleven, twenty thirteen. I guess two questions here.
Number one is, do you think that you need to work down the inventories to get better margins? And number two is that what's the optimal inventory levels you think that you can see the margin improvement?
That'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. I mean it's approaching like the two hundred day type mark, and that's really just what the industry is. But leaving that aside, yes, we've been on a program for the last one years point 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, one years point ago, we were in the ninety five, ninety six 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. But we've made a lot of good progress.
Got it. So 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 2019. And then you had some 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?
Yes. So well, the main difference is who is the customer, right? Within the same company, the production side is buying from what we 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, right? So just totally different scenario in that.
I'm sorry, what was your question though?
So how do you plan to drive the margin back Yes. To low
say it again.
10% double digit margin.
How do you get the margin back? So different topic, I'm sorry. I thought you were selling inventory. So my apologies, Tim. Last quarter, were at 6.5%.
So why did it drop to 6.5%? 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. So 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 on to the catalog distributors like Farnell, which had the impact of both raising revenue and raising prices. And really the key is raising prices.
So you saw that a lot on the passive side of the business. So 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. And that was really the main reason for the slowdown in the Farnell operating margins.
So you really have to see the lead times comes back or goes longer?
Yes. We need a little of both. So and that's what we tried to lay out in our earnings call last time. To get back to the 10% to 15% range or just to say, to get back to 10%, yes, we definitely need some correction back to normal market on the passive side. And historically, if you go back over the last fifteen years and look at that, it's like a six month process.
So that would also bode well that maybe this pricing demand on those components will be back to normal more in the March. But other than that, it's really just sticking to what we've been doing, which is the OpEx reduction. So 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. And we continue on the other topics we talked about, combining back offices of Farnell and in traditional Avnet.
Even today, if you go to Singapore, you'll have two distribution centers. You go to Chicago, you'll have two offices. And as we speak, both of those those are the types of things that are getting consolidated that's going to help Avnet, but also help Farnell itself.
So can you remind us your passive component exposure as a percentage of your total revenue and what's the trend over there?
Yes. We call it IP and E, which is connectors and passives and other electronic components. It's about 20% of the total globally. For now, it might have a little slightly higher mix, 20%, 25%, and it's been increasing.
It's been increasing because the demand for passive component or it's just your Market share. Market share, got Any questions?
Can you talk about trends in the TI sorry, can you talk about trends in the five business? Yes. Exposure that you have and what you guys are seeing there?
Yes. We're seeing, and this is more on the Asia side, more demand from infrastructure build out on five gs. And we think longer term, five gs is going to help our IoT business because it's like you see today, more and more connected devices. And 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 And 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 software, which is in the 50 gross margin. So you get a blended average in the mid-twenty percent range.
If I can just clarify, the five gs exposure is mostly Asia? What about the North American build outs and Korea and Japan build outs for five gs?
How much exposure do we have by country in Asia?
Yes. Like relative what about the exposure in America? Do you have exposure to five gs build outs in Americas as well?
Or The mostly growth we've seen recently has been more Asia focused. IoT would be global, but that's more long term.
So a 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 gross headwind. How should we think about foreigner 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 milestone for you guys to monitor in terms of the growth back to the normal level.
Is there any progress over there?
Yes. Think of Farnell has been in the 6% operating margin range today and getting it to the 8% to 10% by the summer. And then as we get more and more of a recovery, should benefit Farnell as well.
Okay. So that eight to 10%, what's the top line growth that you embedded for that?
I think it was a 6% top line growth, which is really what the historical cycles have shown.
Got it. So 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.
Getting toward level. Got you. Okay. In the past you mentioned the demand weakness in industrial and automotive, which are the two segments of higher margins for you guys. Can you talk about how do you track the end of demand in those two markets?
Is that PMI, auto sales or other metrics that you're tracking in terms of the further demand? And 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. So if we see the auto sales remains flattish on year over year basis, what's the implication to you guys? Would you see that some demand or is still flattish consistent with the auto sales or it's just not quite a relevant metric for you guys? For auto exposure, think it's probably low to mid teens No, for total okay.
Like auto is a really good example of we should grow with the overall auto market because right, we're mainline and many, many customers, but auto has higher content. So that's why auto has been really a focus on us, as there's more and more electric vehicles, but really the electronic content in the vehicle that helps us quite a bit.
Got you. Your IoT effort, you mentioned you are partnered with 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?
Yes, we've had the partnership for about a year. Would 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. So it's a really good 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? And let's go back to who are our customers. Our customers are the middle market OEMs and manufacturers, right? So 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?
And they need capability. So that may come direct from our core salespeople or it may come from Microsoft or somebody else. But 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 desktop app to manage the device in the field. And that's important because that's 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 percentage of revenue in IoT and then what's the recurring percentage of the total revenue?
Yes, okay. Let's just talk in dollars. Today, IoT is very, very small. So it's a $100,000,000 business, right? So the reason it's important though, because it's high growth so let's say we get it to $500,000,000 Well, if you have $500,000,000 and you have a 25% gross profit, there's $125,000,000 right?
So 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. But it has a very strong drop through to the bottom line.
So that's not near term driver, it's a longer term margin driver for Two you to three years. Two to three years. So you
have a material bottom line impact.
Yes. Tom, you mentioned the cost saving. Can you maybe just give us an update like cost savings? You have $65,000,000,000 left probably in the next one year for the margins. And what's the update?
What's the progress you are making in the cost
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 $65,000,000 is fully identified by project. It tends to be things that we've been working on for the last twelve months that are now coming to fruition, like building the new distribution center in Europe.
So we feel very confident we'll hit the $245,000,000 and probably more.
Got you. One of the investment thesis for Aptiv is that your cash generation is strong when the demand is slowing down. So 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?
Yes. So we've generated $800,000,000 over the last three quarters, right? So as demand picks up, we all look forward at Avnet to the day where we're buying inventory and growing inventory. It will be a sign of recovery in the markets. So can we continue at an $800,000,000 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 $500,000,000 range, and that's probably more to what you should expect. But 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. And what we're using the cash for has been at least the last four or five quarters is buybacks. And 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 100,000,000 to $200,000,000 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 this slowdown, we're very concerned not very concerned. We're very focused on making sure we retain our investment grade rating. So we look at maintaining a gross leverage of about 2.5x or so. And 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. And the intent there is that these are we either build our business out, but they have to have good returns. So I don't want anybody to worry about paying high prices or things of that nature. On top of that, we in the last twelve months, we bought Softweb, we bought Wittechio, those are smaller software companies, but they really helped to fill out our IoT capabilities.
So they could be part of the mix as well.
Got you. So 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 small 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. Are there any questions from the audience? Okay. My last question to you, Tom, is that can you maybe just share with investors like what do you feel that's investment thesis for Avnet?
Why you feel that excited about Avnet and so?
Well, a couple of things. First is just the opportunity with Farnell and IoT in the higher margin businesses. And 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, but that's lower margin, a lot of focus on TI.
But 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.