AVT - NASDAQ

Welcome to the Avnet First Quarter Fiscal Year 2025 Earnings Call. I would now like to turn the floor over to Joe Burke, Vice President of Treasury and Investor Relations for Avnet.

Thanks, operator. I'd like to welcome everyone to the Avnet first quarter fiscal year 2025 earnings conference call. This morning, Avnet released financial results for the first quarter of fiscal year 2025 and the release is available on the Investor Relations section of Avnet'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 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 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, 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 2025 earnings call. In the quarter, we achieved sales of more than $5.6 billion and adjusted EPS of $0.92, both above the high end of our guidance. We also generated over $100 million of cash flow from operations in the quarter. Our results were primarily driven by our strong performance in Asia, offset by continued weakness in the West and at Farnell. Our team continues to compete well in this market by working closely with our customers and suppliers, controlling costs and managing working capital. I want to thank them for their dedication during this challenging cycle, and I know their efforts position us well for when the market recovers. Semiconductor lead-times and pricing continue to be stable for most technologies, with a slight uptick in lead-times and pricing for certain memory and other product families. On the IP&E side, lead-times also continue to be stable. Our global book-to-bill ratio showed little sign of improvement and is still below parity, with our Asia region showing the strongest book-to-bill ratio. Our EMEA business, which has a large portion of its business driven by the industrial and transportation end markets, is seeing softer bookings and billings due to lower demand. Our backlog continues to be lower as a result of shorter lead times and customers being over inventoried and in destocking mode. Cancellations have remained at normal levels. While inventory increased sequentially, it should be noted, almost all of the increase was due to changes in foreign currency exchange rates. We expect to reduce core inventory levels in the coming quarters, but also need to balance the reductions with the near-term opportunities we are seeing in the market. We continue to be open to those opportunities that are good for Avnet, as we have shared previously. You will hear more from that from Ken on our inventory in just a few minutes. Now with that, let me turn to the first quarter results. At the top line, our Electronic Components business was essentially flat on a sequential basis and declined on a year-over-year basis. The bright spot for our EC business is that we have turned the corner by returning to year-on-year growth in our Asia Pac region. Historically, cycle shifts have often started in Asia, with the underlying market recovery also starting in Asia and followed by the West. While it is too early to call with any certainty at this point, we remain optimistic that the return to growth in Asia is a positive sign of things to come in the West. In the Asia region, sales increased 14% sequentially and 6% year-on-year powered by strength in the server and data center and communications end markets. Additionally, it is notable that we saw sequential and year-on-year growth in each major end market we serve. We are cautiously optimistic by the recovery we are seeing in the region, including activity for data center and AI compute projects. In EMEA, demand in the aerospace and defense end market increased sequentially and was flat year-on-year. The industrial and automotive end markets continued to be soft amid a weak economic backdrop. In the Americas, aerospace and defense was our strongest end market, and we saw modest growth year-on-year. We also saw growth in the compute end market, both sequentially and year-on-year. We do continue to see softness in the industrial and transportation end markets. On the demand creation side, our engineering teams continue to engage with our customers and suppliers on design wins and registrations. While demand creation revenues were down, consistent with our overall sales trend, our engineers continue to drive the funnel, converting design wins into revenues, which will pay off in the coming quarters. Now, turning to Farnell. Sales were down sequentially and year-on-year. Farnell has been impacted more than expected from the current EMEA macro environment, given they have a higher percentage of sales from that region. While we are disappointed with Farnell's results, I would underscore that we are in a transition period under its recently appointed President, Rebeca Obregon. In just a few months, Rebecca has identified key areas for improvement and actions to be taken over the next couple of quarters. Although the Farnell business is under pressure due to challenging market conditions. We continue to focus on the things we can control, including executing against our cost reduction initiatives and stabilizing the top line and gross margins. While we have our work cut out for us at Farnell now, I am confident we have the right leadership, strategy and focus to improve results in the coming quarters. To conclude, as we navigate the current market correction, we continue to demonstrate our strength and resiliency, and I want to thank our team for their dedication and competitive spirit, under such challenging conditions. While it is difficult to gauge how long the market correction will continue, there are a number of reasons why I'm optimistic about the future. In the past month, while on the road, I was able to spend some time with the leaders of all of our business units as well as executives of several of our top supplier partners, and we continue to see the benefits and opportunities to grow our IP business globally. We also see opportunities with supplier partners to grow our share by continuing to demonstrate the value of distribution, including tapping our digital automation capabilities to better serve the mass market. Based on the industry sources we follow and the suppliers and customers I speak to regularly, global inventory levels across the supply chain are slowly improving granted with pockets of oversupply in certain areas. That dynamic, coupled with current lead times bodes well for improvement in our book-to-bill and the buildup of our backlog. These same industry sources are still projecting mid-to-high-single-digit growth rates on average, over the next three calendar years, with the highest growth rates in the primary end markets we serve: industrial, aerospace and defense, transportation and servers and data center. Further, we currently see two areas of our business that are positive indicators. First is a return to year-on-year growth for our Asia region with healthy activity in AI-related server and data center projects. Second is the modest increase in our turns business, which is usually a good indicator of future demand. Finally, for more than 103 years, Avnet has proven ability to adapt to changes in the market, whether in corrections and coming out stronger to be able to deliver what's next for our customers. At times like this, we thrive from being at the center of the technology supply chain, helping our supplier partners to reach a long tail of customers and providing end-to-end customer solutions to satisfy their needs wherever they are on their product journey. With that, I'll turn it over to Ken to dive deeper into our first quarter results. Ken?

Thank you, Phil, and good morning, everyone. We appreciate your interest in Avnet and for joining our first quarter earnings call. Our sales for the first quarter were approximately $5.6 billion, above our guidance range and down 12% year-over-year. On a sequential basis, sales were up 1%. Regionally, on a year-over-year basis, sales increased 6% in Asia but declined 28% in EMEA and 16% in the Americas. From an operating group perspective, Electronic Component sales declined 11% year-on-year, but increased 1% sequentially. Farnell sales declined 18% year-over-year and declined 8% sequentially. For the first quarter, gross margin of 10.8% was 97 basis points lower year-over-year and 72 basis points lower sequentially. The year-over-year and sequential decline is primarily driven by the sales mix shift to Asia. PC gross margin was down both sequentially and year-over-year. The declines were primarily due to a higher mix of sales from Asia. Farnell gross margin was down year-over-year primarily due to a lower mix of on-the-board components and was down sequentially primarily due to the impact of foreign currency. Turning to operating expenses. SG&A expenses were $439 million in the quarter, down $48 million, or 10% year-over-year and down $11 million, or 3% sequentially. As a percentage of gross profit dollars, SG&A expenses were higher sequentially at 72%. In the first quarter, we incurred additional restructuring integration and other expenses, primarily for the continuation of expense actions taken at Farnell, which are permanent in nature. Farnell operating expenses were down $17 million year-over-year and $2 million sequentially. And the Farnell expense reduction actions are being realized as previously expected. Overall, first quarter operating expenses were lower than anticipated. As we move through fiscal 2025, we expect expenses will increase modestly when sales improve and the underlying business recovers. For the first quarter, we reported adjusted operating income of $169 million and our adjusted operating margin was 3%. By operating group, Electronic Components operating income was $197 million, and EC operating margin was 3.8%. The sequential decline in EC operating margin was primarily due to the seasonal sales mix shift to Asia. Farnell operating income was $2 million and Farnell operating income margin decreased to approximately 1%. Farnell's operating margin was negatively impacted sequentially, primarily due to the declines in sales and from unfavorable impacts on gross margin due to changes in foreign currency exchange rates. Turning to expenses below operating income. First quarter interest expense of $64 million decreased by $6 million year-over-year and was flat sequentially. Our adjusted effective income tax rate was 23% in the quarter as expected. Adjusted diluted earnings per share of $0.92 exceeded our expectations for the quarter. Turning to the balance sheet and liquidity. During the quarter, working capital increased $88 million sequentially, all driven by changes in foreign currency exchange rates. In constant currency, working capital decreased by $76 million sequentially. Working capital days decreased three days quarter-over-quarter to 107 days. Our return on working capital decreased quarterly the lower operating income. The reported increase in inventories of $145 million was largely driven by changes in foreign currency exchange rates. Additionally, a portion of the inventory increase was related to inventory received during the last couple of days of the quarter, which drove a corresponding increase in accounts payable. Inventory days improved three days sequentially to 101 days. Our near-term goal is to get inventory days in the 80s by the end of this fiscal year. We remain focused on reducing inventory levels where elevated, noting that we also want to make investments where needed. We continue to have ongoing conversations with our supplier partners on specific opportunities for inventory increases that we will only consider if there is a benefit to Avnet. Such benefits may include incremental margin, improved terms, additional stock rotation rights or additional market share. Our approach on these opportunities is focused on achieving win-win outcomes that are mutually beneficial to Avnet and our supplier partners. Our increase in working capital led to an increase in debt of $55 million. We generated $106 million of cash from operations in the quarter. Cash flow from operations was negatively impacted by over $90 million of income tax payments in the quarter, including $44 million for a transition tax payment from the 2017 TCJA. We ended the quarter with a gross leverage of 3x, and we had approximately $825 million of available committed borrowing capacity. With regards to our capital allocation, we continue to prioritize our existing business needs. During the quarter, cash used for CapEx was $32 million within our expected quarterly levels of approximately $25 million to $35 million per quarter. We increased our quarterly dividend by approximately 6% to $0.33 per share. Our Board expanded our buyback authorization to $600 million as part of our commitment to continue to use positive free cash flow to reduce our share count. In the quarter, we repurchased approximately $100 million worth of shares, which represented more than 2% of shares outstanding. We are on track for our goal to reduce share count by at least 5% this fiscal year, in line with our capital allocation priorities and our commitment to provide consistent and dependable returns to shareholders. Book value per share improved to approximately $56 a share or a sequential increase of $2 per share. Turning to guidance. For the second quarter of fiscal 2025, we are guiding sales in the range of $5.4 billion to $5.7 billion and diluted earnings per share in the range of $0.80 to $0.90. Our second quarter guidance assumes current market conditions persist and implies a sequential sales growth of approximately 2% to a sales decline of approximately 4%. This guidance assumes flattish sales in each EC region and assumes Farnell's performance is generally consistent with the first quarter of fiscal 2025. This guidance also assumes similar interest expense compared to the first quarter, an effective tax rate of between 21% and 25% and 89 million shares outstanding on a diluted basis. In closing, our team continues to execute well against the areas we can control, but we still have plenty of work to do. Given today's rapidly changing market conditions, our team continues to demonstrate our value proposition to our customers and suppliers. We remain confident our approach through this market downturn will benefit Avnet in the long term. With that, I will turn it over to the operator to open it up for questions. Operator?

Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Joe Quatrochi with Wells Fargo. Please proceed with your question.

Yeah. Thanks for taking the question. I wanted to kind of understand your comment in terms of just Asia returning to year-over-year growth. I guess, I wonder, ex the data center opportunities that you're seeing, I think those are probably fairly nascent a year ago. Are we seeing ex--data center return to year-over-year growth in Asia as a kind of leading indicator as well?

Yeah, hey Joe, this is Phil. Yeah, we mentioned on the script a little bit about AI in Asia, but that's not a huge number for us, to be honest with you. We're seeing some upside there. But that's not really what's carrying today for us over in Asia. We have seen an increase in some consumer, believe it or not, communication, compute, even some aerospace, and the industrials in Asia is not down as much as it is in Europe and the Americas. It's more pronounced particularly in Europe than the Americas than Asia. So I'd say, it's a little bit more broad than just data center or to hyperscalers. We don't pay a ton there. We do get some power benefits there and some large connector lines and some analog lines, its really across the board. Even China is kind of flattened out for us.

Okay. That's helpful. Maybe on the Farnell side, I mean, I guess as we take a step back and try to think about the go-forward path here, I mean, structurally, do you think that this business can still return to that double-digit EBIT target? And I guess what does that require? And then maybe just long those lines, I think when you guys gave that target, there was probably some assumption around like pricing and the impact of pricing on a go-forward basis? And how has that played out relative to your planning?

Yeah. Thanks, Joe. Yeah, I just reemphasize, we're disappointed in where we are with Farnell from where we were to where we are today. I don't think we're alone in some of the high service. We might have accelerated down a little bit more than some others. A couple of things, I want to highlight here. First off, to answer your question is, yes, we absolutely believe in the Farnell model. It wasn't that long ago, 6% of our revenues and close to 20%, 25% of our operating income, and we believe it can get back to those ranges again. We've announced a new leader in July, as I mentioned in the script, Rebecca Obregon. She's actually over there now with her team. We're looking at some restructuring. As Ken pointed out, we started that about a year or so ago. We have hit the numbers we targeted for restructuring costs. Unfortunately, the market has accelerated down more than we anticipated. And keep in mind, they're even heavier in Europe than they are in the balance of the world, and Europe is having a tougher time in the rest of the market. So they're not immune to that. The activity, what's interesting to our Farnell, the activity, if you -- line item activity, that's down, let's call it, 8% to 10%, yet the business is down 18%. So the line item activity is not down near as much as the revenue, which says the line item, but the value per line item is down a little bit more or almost 2x with the line items are down. So we have a combination of things working at Farnell. We are restructuring, another round of restructuring there. We've changed out a bunch of the staff, by the way, as well, going to a regional sales model. All the positions that we needed to fill through the quarter are filled. Now we've got to focus on execution.

Okay. And maybe just as a quick follow-up to that. I mean, did things get worse from here before they get better? Or do you think we're kind of bouncing on the bottom here?

We think, we're bouncing along the bottom. We're hoping to see modest improvement this quarter, and the other thing because you did it -- and you asked about margin too at Farnell. Some of it's double whammy. They got the onboard components, semi IP&E that's down more than the test and measurement and the onboard components tend to run at a higher margin than the balance of the business. So we kind of kind of double whammy there, the onboard components down. Test & Measurement is holding up okay, but just runs at a lower margin. So I just wanted to throw that in.

Joe, this is Ken. Just to add to that. I would say gross margin profile has been stable now for the past couple of quarters from Farnell, we had a little bit of impact from foreign currency movements and things like that. But I think on a like-for-like product, pricing and overall margins have been pretty stable now for probably 3 quarters in a row for Farnell. It's really a top line, plus that currency, but the cost actions are taking traction as intended. It's just unfortunately, the top line is dropping faster than the cost actions are benefiting.

I guess last time is that our commitment to Farnell, we just expanded further in Asia Pac, actually expanded into Japan, the e-commerce site and a new team in Japan expanded. We're just there last -- Ken and I were just there with Rebecca 2 weeks ago.

Thanks for all the color. Appreciate it.

Thank you. Our next question comes from the line of Ruplu Bhattacharya with Bank of America. Please proceed with your question.

Hi. Thank you for taking my questions. I have one for Phil and one for Ken. Phil, just in terms of where we are in terms of the market correction, I mean, what innings do you think we are in. Are we at the bottom? Or do you think, there's another couple of quarters of this correction? And also, have you seen any impact from the WT Micro future acquisition, either any positive trends or negative trends? If you could give us your view on that.

Yes, great question. I think we're getting into that crystal ball time [indiscernible] Ruplu on the outlook on the market. We said a few quarters ago, we thought it would start turning by now, and that obviously hasn't happened across the board, particularly with some of the challenges we're seeing in the West. We think it's another quarter or 2. I think it's -- I'm not going to call which quarter because it's really tough to call. But I think it's probably more into early 2025. The book-to-bills are still negative. Backlog has been eaten up a little bit. So I think we're going to grind through December to what we guided. And then I think, we'll start to see an uptick maybe latter part of the March quarter into the June quarter. It's kind of -- at this point, the best I can see at this point in time, I think we've all realized this is just a little bit choppier than we thought, and it's lasted a little bit longer than we thought, but we're managing through it and going to come out better on the other side. The second part of your question was...

WT Micro...

Yes. No, we don't comment, as you know, publicly or privately really on our competition. WT is a great competitor and the Future is a great competitor, and we're still competing with them as one, although they're still pretty much operating separately, but they definitely got some synergies between the 2, and we'll just go compete with them like we have in the past. But nothing earth shattering on that end.

Okay. As a follow-up, Ken, can I ask you about Farnell, another question on operating margin? How much was the impact sequentially from FX versus you talked about a worse mix of onboard components being lower? How much was the mix impact? And then, when we look at this business, what is a reasonable operating margin target for this business? Do you think that it can ever get back to double-digit operating margin? And what drives -- what are the drivers for margins over the next couple of quarters?

I think answering your last part of the question first, I think Phil answered that way we do believe, we get back to double digits, I think it's going to take a little longer than we thought. We think we have the cost aspects of the business. Generally dialed in, there's still some more work to do, but all over that. And I think in the commentary, you see that we are seeing the traction there in terms of OpEx. The reality is, we want to drive sales growth there, return to kind of historical $400 million-plus levels. And when that sales growth returns, it's going to be a higher mix of on-the-board components. So that helps gross margin as well. So I think really just recovery in the overall market, Phil mentioned some of the competition in that space and the high service aren't immune to this as well. And the overall transactional margin is holding up really well there on the board components. It's just a matter of the mix is down. So we think both of those comes back with some market recovery. From the FX, it was probably somewhere in the 150 to 200 basis points, kind of impact this quarter. We don't necessarily anticipate that to return, but you never know with some of those things. So we're continuing to look at hedging and other things too to try to minimize our impact.

Okay. Thanks for all the details.

Our next question comes from the line of Matt Sheerin with Stifel. Please proceed with your question.

Yes. Thanks. Hello, everyone. Phil, a question on the commentary about your guidance for the December quarter, and I think you're looking at sort of flattish, sequential growth across the regions. Is that right? Because it seems like EMEA, typically, Europe is down sequentially just on selling days. And it sounds like Europe is the weakest market in terms of demand right now. So could you just clarify that?

Yes. No, thanks, Matt. Good to hear from you. You kind of articulated it about right. So we're seeing modest, very modest regional uptick in December. And you're right. Typically, Europe, Americas, it's not very -- it's not as typical, but in Europe with the holidays extended, they typically net down in the December quarter over September with a bounce back in March, which recall last year, the bounce back in March did not happen in the West. So I think it is a little bit of a different year. And also, Matt, frankly, I mean, we're down pretty low in September. So we're coming in off a low number in September for us in Europe. competing well -- I think we all know what's going on in Europe right now. So we're competing well and proud of the team, but we came in with a -- we came in pretty well, the lowest it's been in the multiple years. So that's why we're optimistic we might be able to be flat to up modestly in Europe.

Got it. Okay. And then on the gross margin, it looks like that 10.8%. That was the lowest number that I see going back a few years. And I know that mix is working against you, and then you talked a little bit about Premier Farnell. But how should we think about -- it looks like gross margins should be flat again on that mix in December. So how should we think about gross margin as we get through the fiscal year? Is it just dependent on mix? Or is there pricing or other things in the mix there?

Yeah, Matt, I think you nailed the 2 biggest drivers on that gross margin. The Asia shift in mix. And obviously, the upside we saw in the quarter came from Asia and then Farnell is probably the second biggest driver. I'd say within each regional business, there's puts and takes. We're seeing a little bit weaker mix in terms of some of the bigger customers that might have a little bit better pricing doing more business than, let's say, the mass market customers just in the overall demand environment. We're seeing the larger customers demand hold up a little bit better. So there's a little puts and takes there. But I think, in general, going to next quarter, flat to up slightly on gross margin is kind of how we're thinking about it. And then OpEx would be kind of similar as probably up a little bit there in OpEx from some timing differences and other things like that, but within the kind of normal range.

Got it. Okay. And then just lastly, on the inventory, I know you're targeting a fairly big reduction back to the 80s in inventory days. But you haven't really seen any significant progress where some of your competitors, a lot of the EMS companies have been cutting inventory. So I guess the question is, why have you been lagging? Is that partly because your customers are still kind of pushing back on our rescheduling orders? I'm just trying to figure out the timing of this inventory.

Yes. I think I won't comment on the competition, but what I would say is we're still seeing some of the same dynamics in terms of customers' inventory levels. Our comment was this quarter is really absent currency, the dollar weakened a little bit here against the euro in particular, but there was mostly FX was driving the inventory and then we had some things happen towards the end of the quarter. And I think in general, we're going to keep doing -- we have done past couple of quarters prior to this one, inventory came down nicely. I think when you normalize for some of the one-offs here, inventory is still directionally going down absent FX and some of the timing differences. But I guess, just to emphasize, Matt, hey, we think we've got a path. There's plenty of work to do still, but we are going to try to continue to be opportunistic. We're seeing some things out there in the market where we can take advantage of them and that may require some temporary increases or at least inventory being flattish for another quarter or two, right, while we execute against some of these opportunities, right? But we think long term, nothing's changed in terms of our view of where inventory needs to get. It's not everywhere. It's certain specific products that we'll continue to work on and we've got line of sight to some of those reductions. And I guess what I'll just say is the team is very focused on it. It's the number one or number two topic we bring up whenever we're with the team. And so everyone kind of gets it and we need to drive it -- we want to emphasize that we still believe inventory is a good thing, but there is pockets of excess that we need to go execute against, and it's hurting not only our broader cash flow, but it's also hurting the returns...

Yes. And we signaled that, Matt, in the last couple of quarters on some special opportunities we had that we thought were good win-wins for both Avnet and the supplier. So it didn't totally surprise us, but we know we need to get it back down into the 80s. And it's going to take some work. And it's really, by the way, about a half a dozen suppliers that we really need to work down. Rest of the inventory is fine.

Got it. Okay. Thanks a lot.

Thanks, Matt.

Thank you. [Operator Instructions] Our next question comes from the line of William Stein with Truist Securities. Please proceed with your question.

Thanks. I have a couple. First, Phil, you talked about strength over the next three years. I'm wondering, if you expect revenue to turn to year-over-year growth during fiscal 2025 towards the end of the year and maybe even if you have a full year view at this point, do you think we'll wind up seeing sales grow in the current fiscal year?

In our current fiscal year, we're going to -- our current fiscal year is July to June, just to reemphasize and last year, we anticipated that, and it didn't happen. We're in the same -- it's kind of the Vuja De instead of Déjà Vu here, Will. We're kind of in the same boat we were last year. We are anticipating a second half fiscal increase. I'll leave it at that. I mean September was pretty low, and we're guiding flat in December. So we are anticipating and modeling some second half fiscal year gains of that.

That's helpful. At least one other, if I can. You highlighted the increase in turns [ph] business. And I guess what I've discussed with some of your suppliers and the semi companies, I cover is this potential to sort of misinterpret signals when customers come in with what we call turns business, right? There are a lot of potential reasons for that. I think it's easy to interpret that in an optimistic way and say, well, the demand is improving and they're wanting product really quickly. The other way to view that is simply that they've grown accustomed to your having quite a bit of excess inventory and able to deliver in very quick turns. So why should they give you tons of visibility. I wonder where you think we are in that dynamic? Do you think the shorter lead times in the turns business is more optimistic demand? Or is it more of a view that they're relying on you to have the inventory and that, in fact, we're not really seeing a pickup in end demand?

Yes. It's tough to give an absolute answer on that, but I think your latter point is more a closer, Will. As we see book-to-bills still not the parity, the underlying message there you could conclude is that customers aren't putting backlog on -- right in pipeline because things are readily available. Lead times are stable, I'll say, okay, and lower than they were two years ago, for sure. So they're just kind of waiting and delaying and then all of a sudden something will pop into their MRP and boom they need to go buy it. So we see this turns. I think it's more of that, Will, than anything because it seems -- some customers are -- don't find defense, aero, we already pointed out. But the greater market like in industrial and whatnot, they're just not pipelining, and a lot of our suppliers who are on this call, we're trying to get customers to give us that outlook because suppliers want the outlook, so they know what to build for the future, it will be right back where we were a couple of years ago. So short of that, we get turns. And that's why we put it in the script, it's modest, Will, but it was -- they were up. So it turns up a little bit, so we put it in the script, but it's not where it needs to be.

I appreciate that, if I could one more follow-up, please. I'm wondering, if you can level set us on the end market exposure. I think we get that from you all once in a blue moon you disclose end market exposure. Even if you can't give it on a regional basis, can you just remind us what -- because when you start throwing out things like aerospace, defense and AI that we know is strong, sort of remind us that we don't get that on a quarterly basis from you all. So I wonder if you'd be able to discuss that with us for a minute.

I'm going to give you some rough numbers. We do give you this. So first of all, let's work backwards. AI, we mentioned it in the script in Asia Pac a little bit with some of the hyperscalers, and that will start get into the regional data centers. So we're seeing some lift there. It's not one of our key verticals right now. I mean, we have some suppliers and it's kind of particularly in Asia that we've seen some nice increase in business. But again, it wouldn't be our largest vertical by any stretch. So AI is still relatively low. Industrial, if you look at Industrial, it depends again, it differs by region. But let's call it between 30% and 40%, something in that range of our business. I just give you a range from Asia to Europe. Transportation is the one that's probably come up in the last several years, where many years ago, one of the channels to participate there would do today. Again, it might be in the 15% to 20% in Europe, but globally, it's somewhere around in the 10% to 15% globally, okay? Defense, Aero, globally, 5% to 10% probably in the Americas is very strong, right? 20-plus defense and aerospace. Consumer in the 10% to 15% range, kind of gives you some -- compute and communications tied them together probably about 30% to 35%. So, it's -- it really depends on the region, but that's some high-level numbers for you.

Thank you.

Well, I think the key message there too, Will, is the diversification of our customer base, okay? I think that's -- what does help us a bit, one time we're really diverse and of course, diverse by regions, so I want to throw that in as well.

Thank you.

Thank you. And there are no further questions at this time. I will now turn it back over to Philip Gallagher for closing remarks.

Great. Thank you. And I want to thank everyone for attending today's earnings call, and I look forward to speaking to you again at our first quarter fiscal year 2025 earnings report. Thanks a lot. Appreciate it, and have a nice holiday.