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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 a guarantee of performance, and the company's actual results could differ materially from those contained in such statements. Several factors that could cause or contribute to such differences are described in detail in 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 that 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 about 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, Rebeca 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 centers. 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 its 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, the 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 due to 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.
分析師問答
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Our first question comes from Joe Quatrochi with Wells Fargo. Please go ahead 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, excluding the data center opportunities that you're seeing, I think those are probably fairly nascent a year ago. Are we seeing, excluding data center, a 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. It's really across the board. Even China has 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 along those lines, I think when you guys gave that target, there was probably some assumption around 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% to 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 look at 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 is down, 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 believe we are currently at a low point. We expect to see some modest improvement this quarter. Additionally, regarding margins at Farnell, some challenges are compounding the situation. The onboard components and semiconductor IP&E have declined more significantly than the test and measurement sector, and the onboard components usually operate at a higher margin compared to the rest of the business. I wanted to bring that point up.
Joe, this is Ken. Just to add to that. I would say the 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 three 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 want to highlight our ongoing commitment to Farnell. We have recently expanded further into the Asia Pacific region, including a new presence in Japan and the establishment of a new team there. Ken, Rebecca, and I were just in Japan two 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, that's a great question. We're at a point where it's hard to predict the market's outlook. A few quarters ago, we anticipated a turnaround by now, but that hasn't materialized, especially with the challenges in the West. We believe it may take another quarter or two, possibly leaning towards early 2025. The book-to-bills ratio remains negative, and our backlog has decreased somewhat. Therefore, we expect to move through December as guided, and might see an uptick towards the end of the March quarter into June. At this stage, it's clear that the situation is more unpredictable and has lasted longer than we expected, but we are managing through it and believe we'll emerge stronger. 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 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 two, 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, can I ask you about Farnell and the operating margin? What was the sequential impact from foreign exchange compared to the negative impact from a worse mix of onboard components? How significant was the mix impact? Additionally, what is a reasonable operating margin target for this business? Do you think it can return to a double-digit operating margin? What are the key 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, it's good to hear from you, Matt. You expressed it quite well. We are observing a slight regional increase in December. Typically, in Europe and the Americas, it’s not common, but in Europe, especially with the extended holidays, they usually see a decline in the December quarter compared to September, followed by a recovery in March. However, last year, the expected recovery in March didn't occur in the West. This year feels different. Additionally, we were already at a low point in September, so we're starting from a lower number in Europe. We're performing well despite the current situation in Europe, and I'm proud of our team's efforts. We have seen the lowest figures in several years, which is why we are hopeful we can either maintain our position or see a modest increase in Europe.
Got it. Okay. It appears that the gross margin is at 10.8%, which is the lowest we've seen in several years. I understand that the mix is not in your favor, and you've mentioned Premier Farnell. How should we approach the gross margin as we progress through the fiscal year? Is it solely reliant on the mix, or are there factors like pricing that play a role as well?
Yeah, Matt, I think you nailed the two 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 rescheduling orders? I'm just trying to figure out the timing of this inventory.
Yes, I won't comment on the competition, but I can say that we're still observing similar trends regarding customers' inventory levels. This quarter, the impact of currency fluctuations was minimal, particularly against the euro, but mostly, foreign exchange influenced inventory levels, alongside some developments towards the end of the quarter. Overall, we have maintained the progress seen in previous quarters, with inventory decreasing significantly. When adjusting for certain irregular circumstances, inventory is generally trending downwards, excluding foreign exchange and timing issues. To emphasize, we believe there is a clear path forward. There's still a lot of work to do, but we intend to remain opportunistic. We are identifying opportunities in the market that may lead to some temporary increases or at least stable inventory levels for another quarter or two as we pursue these opportunities.
However, our long-term perspective on necessary inventory levels remains unchanged. While this isn't a universal issue, there are specific products we will continue to focus on, and we have visibility on some of those reductions. The team is highly focused on this; it's a top priority in our discussions. Everyone understands the importance, and we need to drive progress. We still believe that inventory can be beneficial, but there are areas of excess that we need to address, which is impacting not only our overall cash flow but also our 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. The rest of the inventory is fine.
Got it. Okay. Thanks a lot.
Thanks, Matt.
Thank you. Our next question comes from William Stein with Truist Securities. Please go ahead 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, which runs from July to June, we previously anticipated growth but it did not materialize. We find ourselves in a similar situation as last year. We are expecting an increase in the second half of the fiscal year. September was quite low, and we are projecting flat results for December. Therefore, we are modeling some gains in the second half of the fiscal year.
That's helpful. At least one other, if I can. You highlighted the increase in turns 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?
It's challenging to provide a definitive answer to that, but I believe your latter point is more accurate. Currently, book-to-bills are not at parity, which suggests that customers are not adding backlog because they have easy access to what's available. Lead times are stable and certainly lower than they were two years ago. Customers seem to be waiting and delaying their decisions, and occasionally, a need will emerge in their MRP that prompts them to make a purchase. This pattern suggests a more cautious approach from customers, especially in the industrial market and other areas we've noted. Many of our suppliers are eager for customers to share their forecasts so they can plan their production accordingly. Without that insight, the situation reverts to what we saw a couple of years ago. Overall, while there are some increases in order turns, it's still a modest improvement, and we acknowledge that it's not yet where it needs to be.
I appreciate that. If I could ask one more follow-up, please. I'm wondering if you can clarify the end market exposure. I believe we only hear about that from you occasionally. Even if you can't provide it by region, can you remind us of the strong areas like aerospace, defense, and AI? We don't receive that information quarterly from you, so I wonder if you'd be able to discuss it with us for a minute.
I'm going to provide some rough numbers. AI has been mentioned in relation to the hyperscalers in the Asia Pacific, which is starting to impact the regional data centers. We are seeing some growth in that area, although it is not one of our main verticals at this time. We have a few suppliers, particularly in Asia, where we’ve observed a decent increase in business, but it doesn't represent our largest vertical. Currently, AI remains relatively low in our portfolio. Regarding industrial, it varies by region, but it accounts for approximately 30% to 40% of our business from Asia to Europe. Transportation has gained traction in recent years; it may be around 15% to 20% in Europe, but globally it is approximately 10% to 15%. For defense and aerospace, it's about 5% to 10% worldwide, and particularly strong in the Americas at over 20%. Consumer products fall in the 10% to 15% range, while compute and communications combined represent about 30% to 35%. The numbers fluctuate depending on the region, but these are some high-level insights for you. I believe the key message here is the diversification of our customer base. This diversity, particularly across different regions, is something that benefits us significantly.
Thank you.
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.
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.