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Avnet Inc
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Welcome to the Avnet Fourth Quarter Fiscal Year 2020 Earnings Conference Call.
I would now like to turn the floor over to your host, Joe Burke, Vice President, Treasurer and Investor Relations for Avnet. Thank you. You may begin.
Thank you, operator. Earlier this afternoon, Avnet released financial results for the fourth fiscal quarter of 2020. The release is available on the Investor Relations section of the company's website. A copy of the slide presentation that will accompany today's remarks can be found via the link in the earnings release as well as on the IR section of Avnet's website.
Lastly, 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. In particular, the scope and duration of the COVID-19 outbreak and its impact on global economic systems and our operations, employees, customers and supply chain. 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. Today's call will be led by Phil Gallagher, Avnet's interim CEO; and Tom Liguori, Avnet's CFO.
With that, I'm pleased to turn the call over to Phil Gallagher. Phil?
Thank you, Joe, and thanks to everyone for joining us for our fourth quarter and fiscal year 2020 earnings call. Before we begin discussing earnings, we want to start by thanking Bill Amelio for the many contributions he made while serving as Avnet's CEO for the past 4 years. We are grateful for Bill's hard work during his time at Avnet, and we wish him the best in his future endeavors.
Next, we want to thank our 15,000 employees for their continued dedication and support during the pandemic as well as during this leadership transition. I know I'm not alone when I say that I believe Avnet has a solid foundation from which to grow, with valuable assets and some of the most talented people in our industry. Finally, I want to say that I've been at Avnet long enough to know what we do well and what we need to do better. One of my immediate priorities as interim CEO would be delay the groundwork to truly reinvigorate our business. It's a new fiscal year and a new chapter for Avnet, and you will see we have a renewed focus. We will build on our 100-year history in distribution while continuing to accelerate the profitable growth of Farnell, IoT and our ecosystem. We will show our suppliers and customers that our commitment to them has never been stronger. We will relentlessly pursue superior execution. Put simply, we will work harder than ever before, and I'm truly excited and hope you are, too.
Now turning to our fourth quarter and fiscal year 2020 results. Similar to other companies, we spent the quarter continuing to navigate the COVID-19 operating environment. On our last earnings call in April, we told you that the macroeconomic headwinds resulting from the pandemic as well as other factors will likely impact our fiscal fourth quarter financial results. We also told you we were taking numerous steps to prepare for a significant downturn to ensure financial stability for Avnet during these uncertain times. Although we did not give quantitative guidance for the fourth quarter, the qualitative expectations we provided in April were in line with our fourth quarter results. This included our expectations for performance in Asia, EMEA and the Americas as well as for Farnell. Importantly, our actions during the quarter were consistent with the commitment we made to ensure financial stability for our company.
Looking at our overall performance for the fourth quarter, our revenues were down sequentially and year-over-year. Our adjusted diluted EPS was up sequentially and down year-over-year. Softer demand, particularly in EMEA, impacted our quarterly results as well as softer pricing and some additional costs related to the impact of the COVID-19 on our logistics operations.
Similar to last quarter, we focused on conserving cash and managing our debt. We generated positive operating cash flow for the seventh consecutive quarter.
Looking at our Electronic Components business. Revenues and operating margins were down both sequentially and year-over-year in the June quarter. The region that was most negatively impacted was EMEA, while Asia showed signs of recovery and continues to.
Our book-to-bill ratio at the end of the fourth quarter was slightly below parity but has show signs of improvement in July. Since our book-to-bill is based on lower quarterly revenue base, we are primarily focused on our rate of bookings and backlog to ensure the integrity of our supply chain.
In terms of vertical segments. As you've likely heard from other companies this quarter, weakness was driven primarily by auto and commercial air transportation. However, we saw some strength in the industrial, communications, defense and technology segment. Notably, a bright spot during the quarter was that our global demand creation trends, and design wins are remaining steady.
Turning to Farnell. Both sales and operating income margins in the fourth quarter were down sequentially and year-over-year, which is what we expected, as we indicated on our last earnings call. This, again, was primarily impacted by the slowness in EMEA. In the quarter, Farnell's new customer acquisitions rose around 13% year-over-year largely driven by products supporting COVID-19 safety requirements. We also added multiple new suppliers to Farnell's line card globally.
While we've adapted our near-term priorities to respond to the pandemic, we're still executing against our 5 long-term strategic priorities, as outlined on this slide. In fact, we brought our distribution, traditional demand creation, design services and IoT strategies closer together in a way that will enable us to scale faster and drive better results for Avnet overall. Our customers, suppliers and investors are recognizing how IoT solutions are an extension of our key capabilities, driving more demand creation. Our suppliers are particularly excited about this direction because it's creating significant component demand for them.
As we think about what's ahead, it's important to note that we are reviewing some of the lessons we've learned during the COVID-19 and how we can apply them to improve our business. For example, we have seen that many of our roughly 15,000 employees around the world can work effectively from home. We have also seen how productive our meetings can be over videoconferencing, so we are assessing opportunities for cost rationalization that could benefit our business in the future from decreased travel spend to decrease real estate costs. We are confident that identifying these areas now and reviewing our potential options can allow us to operate more efficiently in the future.
As we mentioned last quarter, we are doing everything we can to ensure the safety and health of all of our employees while keeping our business running as smoothly as possible. And as I mentioned earlier, we are so grateful for our employees' continued dedication through this pandemic, a period that has been challenging and filled with uncertainty. We are truly proud of how Avnet's team members are collaborating across our businesses and around the world to support our customers and supplier partners in the fight against COVID-19.
In closing, we acknowledge that this past year has had obstacles for us and for many other companies. We have adapted our business in response to the operating environment and will continue to do so. We are focused on increasing our profitability by building on our century-long foundation in distribution. We are diversifying and growing our revenue streams with comprehensive solutions that will equip our customers and suppliers to succeed in an evolving world of connected technology.
With that, I'll turn the call over to Tom to report on the financials for the quarter. Tom?
Thank you, Phil. Good afternoon, everyone. I want to start by congratulating Phil on his new role. I know I speak for the global Avnet team in saying we look forward to your leadership and you have 100% of our support. I'm going to keep my commentary brief so as to allow a good amount of time for Q&A.
Turning to the financials on Slide 10. Our revenues for the fourth quarter were $4.2 billion, adjusted EPS was $0.64 and cash flow from operations was $288 million. Both our revenues and adjusted EPS in the quarter were well above the consensus estimates. Although there was softer demand in EMEA, our EMEA revenue came in better than expected. GAAP and non-GAAP diluted EPS were positively impacted by $0.42 from a favorable effective tax rate primarily related to the reduction in value in certain assets and the CARES Act. Also contributing to the bottom line were favorable foreign currency gains and lower interest expense contributing another $0.08 to adjusted EPS. Revenues of $4.2 billion were down slightly from $4.3 billion in the third fiscal quarter. Gross margin of 11.4% was down 62 basis points from last quarter, primarily due to mix. Our Asia revenues came in sequentially stronger, while our higher-margin Americas and EMEA businesses declined. Adjusted operating expenses of $432 million were lower by $16 million sequentially as we implemented actions to control costs in the face of the pandemic uncertainty. Excluding the onetime $42 million tax gain, our adjusted tax rate was 19%.
On Slide 11, we show results by segment and region. Electronic Components revenue of $3.9 billion declined 2.7% versus the previous quarter. Sequentially, Americas and EMEA revenues both declined by 4.5% and 11.1%, respectively. Meanwhile, Asia revenues increased by 4.6%. And at the same time, Asia produced positive cash flow during the quarter, so I have to commend the team there: Prince, Alan, [ CH ] for their continued hard work and results. Electronic Components operating margins were 1.5%, a sequential decline due to the lower sales volume.
Farnell revenues for the quarter totaled $292 million, down 12.9% sequentially. As we mentioned last quarter, we anticipated a challenging quarter for Farnell. The segment had an operating margin of 3.6% in the quarter. Regarding the Texas Instruments transition, our revenues from TI in the fourth quarter were $324 million, with a gross profit of approximately 8%. We expect to see a continued steady decline in TI revenue in the second half of the calendar year as the transition is completed by December 31.
Turning to cash flows and balance sheet on Slide 12. We ended the quarter with a cash balance of $477 million and debt of $1.4 billion. Our gross debt leverage was 3.1 and our net debt leverage was 2.1. Our net book value per share was $38, up slightly over the prior quarter. Tangible book value per share remained relatively constant at $29.
Turning to liquidity on Slide 13. Our liquidity position remains strong. Recall that during calendar year 2019, we put in place improved processes and tools to enhance our focus on cash generation. These actions did benefit in FY '20, with $730 million in cash flow from operations. In the fourth quarter, we generated $288 million of cash flow from operations. This is the seventh straight quarter of positive cash flow from operations. We used the cash to pay down $300 million of debt to satisfy a June maturity date. And the banks are supporting us. We amended the terms of our revolving credit facility to prepare for any potential headwinds over the next few quarters. With these changes to our financing, we are well positioned to maintain ample liquidity.
Turning to Slide 14. Looking ahead, we will focus our financial efforts in managing our inventories and receivables, generating cash and paying down debt during the pandemic. Today, we also announced plans to reduce our operating expenses by $75 million annually and our working capital levels by another $100 million. Both are expected to be fully realized by the December quarter.
Turning to business outlook on Slide 15. We are guiding revenue in the range of $3.8 billion to $4.2 billion, and adjusted EPS in the range of $0 to $0.16. This guidance reflects a wider range than in the past quarters given the continued uncertainty from factors related to COVID-19.
Turning to Slide 16. We currently are seeing a demand environment similar to the just-completed June quarter. Seasonally, the September quarter has lower EMEA revenues, with Asia and the Americas being somewhat flat. For September, we are seeing a slight uptick in Farnell revenues. We expect TI revenues to decline sequentially to the range of $100 million to $150 million. Overall, with the lower TI revenues and seasonally lower EMEA, we expect a slight decline in operating margins.
In summary, our ability to generate cash flow remains intact, and our balance sheet is healthy. We are taking steps to reduce both our cost and working capital, which are expected to improve our financial results starting in the December quarter.
With that, let's open the line for Q&A. Operator?
[Operator Instructions] Our first question comes from Adam Tindle with Raymond James.
Congrats to Phil. Phil, I just wanted to start out. Just thinking about the portfolio holistically and strategic options. Last time we had a CEO change, you acquired Farnell and divested TS in fairly short order. So just wanted some color on your thoughts on the portfolio, how you're thinking about strategic options? And if you want to tie in some of the color on enhancing your core distribution capability, that would be helpful.
Yes. Thanks, Adam. I appreciate that. I haven't thought through all of it yet in the last 4 days, but we're certainly working for it. I'll tell you what we're going to be doing is certainly reinvigorating the foundation, okay, of the core business and Avnet Integrated as well. Getting extremely close with our supplier partners and customers and then driving the demand creation, design services and supply chain. We'll continue to be doubling down on Farnell. We're -- we know we're not where we need to be in Farnell -- with Farnell right now, but we are tracking and making progress appropriately. So we need to -- we're proud of where we are in the center of technology. We're right smack in the middle of it. Think we weren't even more out of about the value we're bringing to the customer suppliers through the last 3, 4 months of the pandemic with the global logistics capabilities we have. So we're going to double down on that. Reinvigorate that while building out the new businesses, okay? And the things like the IoT that we've talked about and the ecosystem. So some of this -- button down the execution, button down the fundamentals while then looking look ahead to the future diversification of the portfolio.
Understood. And then maybe just as a follow-up, I thought it was notable to see Cypress returning. If you could maybe just walk us through that? It seems to have come full circle. It was one of a string of losses years ago and is now returning. So just some color on why and fill your relationship guide. Do you foresee this sort of thing becoming more of a trend?
Well, I'm not sure about the latter part yet. I absolutely believe and as I call the upstream and the value of the supply relationships, key and critical to our success in servicing our customers globally. With regards to Cypress specifically, we're the #1 distributor today with Infineon globally. We have a great relationship with Infineon. So with this acquisition of Cypress, we're proud to be bringing Cypress back under the line card. We hope that's going to happen in the next few months. And it's similar to what happened with Microsemi. We were able to get Microsemi back with the Microchip acquisition. So we're feeling confident, okay? We feel good about where we are. We still have some work to do. But this is a big win for the team.
Got it. And Tom, congrats on cash flow again.
Our next question is from Matt Sheerin with Stifel.
Phil, your comments regarding the demand environment. If you take out the loss of TI, you're looking sort of flattish sequentially. It sort of sounds in line with some of your peers and suppliers. Could you talk about, particularly what you're seeing in Europe as you look maybe to the December quarter, particularly auto? Because I know you have a decent amount of auto exposure there. Are there any signs of life there in terms of backlog or bookings that give you any hope that, that's going to recover?
Yes. Thanks, Matt. Appreciate that. And yes when we net out the loss of that one supplier, we feel pretty confident with the guidance. And it's pretty good with the guidance given what's going on in the marketplace.
Specific to Europe, Europe is the toughest region for us right now, probably consistent with others as well. The book-to-bill in Europe is starting to come back a bit, still below parity. But I can just tell you that the internal guidance we had for Europe for the June quarter, the team in Europe exceeded that. And it's looking -- December is a tough call, Matt, even with all the shutdowns through the past 4 or 5 months, then you get the holidays and the summer quarter in Europe. So it's really a tough one to call, but we feel it's going to start to bounce back in December but more into the March quarter, but it's alive. I mean, we're proud of our Europe team. We're proud of our performance over there given the share data we've gathered, we've increased share in the past quarter.
Okay. And Tom, on the OpEx reduction efforts that $75 million that you talked about, will any of that be coming out of the September quarter? And can you give us a feel for what you should expect -- we should expect OpEx to be?
OpEx, Matt, for the September quarter should be about the same, and you'll see most of the reduction -- or you'll see all of the reduction in the December quarter.
Why don't I add a couple of points around it. It's about 5% of the total. Part of it -- half of it is temporary measures because this is all related to matching expenses to the lower volume. So projects on hold, travel, things of that nature. I want to be very clear to everybody, we're not touching our market-facing activities. The engineering is staying intact. In fact, this is net of some investments because, as Phil said, this is all about growing our share, growing the business, executing. And so we'll have selective investments in geographic -- specific geographic location, specific industries to grow our business, but this is more aligning cost to revenue.
Our next question is from Ruplu Bhattacharya with Bank of America.
Phil, congrats on the new assignment. It's well deserved. I'm sure you're going to do a great job. I just wanted to ask you a high-level question first. When you look at the quarter, did the end markets pretty much play out as you had expected? I'm looking at Farnell margins at 3.6%. They came in better than we had thought. So has it changed your thinking on the cadence of how Farnell margins can improve back to the double-digit range? So any thoughts on how the quarter progressed? And how should we think about the margins, especially in Farnell progressing from here?
Yes. Thank you. And it did progress as we expected. And as we noted, just to our internal goals, a little bit better and not where we need to be, but certainly better than we had originally forecasted. The end markets, yes, figured out exactly what we put in the script. And for sure, we're seeing the automotive transportation market soft. And of course, aerospace, very, very soft. And in some of the challenged compounds of Farnell is -- their strength is Europe, okay? So it's kind of a double dip for them because that's their strength market and with Europe being a little softer, it impacted them. On the margin side, we're very pleased with Chris Breslin and the team. I think a good, good processes, good management, and we are encouraged and confident that the road map we have for Farnell for the next 3, 4 quarters, we can continue to increase the operating margin to the goals that we've set.
Okay. And just for my follow-up. Tom, I just wanted to clarify, you had a cost reduction plan in place. Was that completed, or was there anything remaining in that? And for the new $75 million OpEx reduction that you announced, is there a cost associated with that as well? And how much is cash and how much is noncash?
Now good question, Ruplu. Okay. So the original OpEx reduction program was $245 million. And to date, we're through $190 million of that, so there's more to come there. Then on the 6 -- $75 million, about half of it is permanent measures, we should be on top of that. In the $75 million, roughly a little over half of it would be a cash cost implement. And I think most of the implementation costs would be cash related.
Our next question comes from Tim Yang with Citi.
Congrats to Phil on the new role. On your book-to-bill, which is below parity, I believe you mentioned your book-to-bill was slightly above 1 in early June. So can you maybe just talk about book-to-bill trend in the quarter? And how should we think about the book-to-bill for September quarter?
Sure. I'll take that, Tom. Yes. So closing up the June quarter, globally, our book-to-bill is slightly down or slightly less, I should say, 1:1. It was positive in Asia Pacific, okay, and very close to 1:1 in the Americas, okay? So again, to the earlier question, Europe being a little bit of the lagger. Early, as we see it through the quarter, we are today sitting above 1:1, closing out July and all regions showing positive trending there. But I do want to remind you that the base is a little bit lower. So we're still not -- we don't think where we need to be, but at least the book-to-bill is improving.
Got it. And then next question is on margins. If I look at your guidance, I think it implies your components segment margin would remain at roughly 1.5% or maybe even a little bit below order. My question is, is my math right? And if so, why with less TI for the component?
Tim, you were breaking up, but basically, the guidance would infer a slightly lower operating margins in core distribution. And most of the revenue decline in the guidance is associated with the transition of TI. We have taken steps. As you can see in this quarter, our OpEx is down $16 million sequentially. And the presidents, the teams around the world have made progress in replacing some of the TI revenue through share shift and other measures. So I think we're pretty well on track with what our original plan was, which was about 24 months, to make up the gross profit dollars. I hope that answers your question.
Tom -- I'll add on to that, Tim. The other thing in addition to TI mix is the Asia mix. It's a little seasonality in here. Asia coming back a little bit stronger and Europe is still not where it needs to be. That's going to drive a bit of a margin mix.
Our next question is from Shawn Harrison with Loop Capital.
My congrats as well, Phil. I guess wanted to dig into your comments on Farnell, maybe not needing or being where you'd like it to be. What still has to happen to get this business in the exact same competitive lane as the peers in that business? Is it solely inventory, or are the best practices? Are there other factors that we can watch over the next 6 to 12 months to see that business more -- in a more competitive dynamic with the peers?
Yes, that's a good question, Shawn. And I'm sure Chris Breslin is listening, too. So we've got -- first of all, I'd give credit to the couple of leaders out there. They're very good at what they do, okay? So we're definitely coming in from a different position. I would say, as I said earlier, in Europe, we hold our own in Europe in catalog, e-commerce space. We're expanding in Asia, doing well there, but the one that we're really working on from a regional standpoint is the Americas. Americas is really good at what they do and more traditionally MRO, but expanding that line card and getting more accessibility and a global inventory view on the expanding SKUs. So that's the one and [ whoever is running the call ] as well runs the Americas that's where we're really driving hard.
As far as the other big thing we've done is expanded the SKUs. That's not all on the shelf. Yes, we've expanded our SKUs well over 150,000 in the plan and that will help. You've got to have first call effectiveness, particularly in digital side of the world in e-commerce. So there are the two big things we're doing. And then we're also expanding the marketing campaigns with Farnell and expanding the line card, for example, I think last quarter, we announced we picked up Micron, a large memory globally and they did not have that before. It's not just a matter of fact to bring in Micron, but we bring in Micron plus the associated depth around the Micron. So continue to expand the line card. We've got the [ new ] logistics center, going to be ramping up closer to the end of calendar year. That's slightly delayed due to the COVID virus, the COVID situation and getting some work done there. So that's been a little bit of a delay, but we don't think it's impacting us too much at this point in time. I think you'll see to the earlier question that quarter on quarter on quarter, we continue to see that come back.
Okay. Great. And then, Tom, if I may have two clarifications. One, is the buyback restarted? It looks like there was a little bit in the quarter? And then second, if I do my math correct, it looks like $200 million of TI supplier sales will have to come out in the calendar fourth quarter.
Okay. So the first question, the buyback remains on path. And the second question, just for clarity, June quarter was $325 million. That will go down to $100 million to $150 million in the current quarter. So December would go down by the remaining $100 million to $150 million.
Our next question comes from Joe Quatrochi with Wells Fargo.
Yes. Tom, I apologize if I missed it, but what was the estimated COVID-19 cost? I think last quarter, it was $10 million. And I think you had assumed that freight costs kind of returned more to a normalized level. And just curious if there's an update on that?
Good question. So freight did come back to a normalized level. So in this quarter, it remained at about $10 million. And the way to think about this, this is a full 3 months of PPE and different work rules in our distribution center.
Okay. That's helpful. And then maybe on the demand side, can you talk about the growth that you've seen in design activity this quarter? Or maybe how do I think about that kind of going forward for -- in terms of how we think about revenue growth?
Phil, do you want to take that?
Yes. No, I got that, Tom. Yes. Actually, the demand creation continues to move at a really good pace and holding steady, both on design registrations and actual design-in and design win production. So we're actually very pleased. I have to say probably somewhat surprised with not going to go kind of hand to hand, if you will, with the FAEs and to the customers. But with the remote capabilities now, we've actually had really good success in work. The trend is steady as she goes and demand creation and design wins, which is terrific. It's actually holding up better than the core. If you look at our design revenue, it was half. If we're down x percent, it was down half. So it's actually stickier than the balance of the core business.
Our next question comes from William Stein with Truist Securities.
Phil, I want to add my congrats to the new role, well deserved. I wonder if you can talk a little bit about your vision for capital allocation. In the past -- I guess, maybe it's a little bit way past now, but the company used to be very acquisitive. I wonder if you see any opportunities in that regard. You also have a dividend right now, which sort of stretches beyond what the company's current earnings power is, has the risk of diminishing your tangible book value over time. I wonder if you have any thoughts in those two and other uses of capital. And then I have a follow-up, if I can.
If I could defer a little to, Tom, in the short term, we're going to be focused on organic and reinvigorating the core. As I said early and the value-add distribution bringing to the marketplace around organic growth, organic investments and SAEs, account managers, demand creation, Farnell as we talked out as far as M&A and IoT, of course. And as far as M&A and dividend, I'll turn that over to Tom.
Thanks, Phil. And I would just reiterate, this reinvigorate the core, put money into that. But we'll -- basically, the priorities today during the pandemic, our balance sheet and liquidity and maintain that. So the buyback is paused. The dividend, hey, we agree with you 100%. It's greater than the net income. That cannot continue forever, but we are fully aware of that, finance committee is fully aware of that. We keep an eye on that, and we do expect that we'll get a recovery. We think that our actions being taken this quarter will help us all. So right now, we plan to continue with the dividend. As far as M&A, it's not a priority today. Sure, if there was something small that makes sense, we would look at it. But today, it's all about balance sheet and liquidity. Does that answer your question, Will?
Yes. One follow-up, if I can. I know it was under different CEO's leadership, and it was at least a couple of years ago at this point. But I think the last Analyst Day, the company highlighted its expectation to 4.5% to 5% operating margin. And we're well below that now, and I think we understand that a good part of that is a cyclical effect. But it -- all of the supplier consolidation and not only consolidation among the suppliers, but consolidation of their sort of distribution partnership. Might call into question whether a reviewed or renewed take on operating margin goals would result in something much lower. I wonder what your take is, Phil or Tom, if you have a view you could share as to what might be a realistic goal for when demand returns to a more normalized level.
Sure. Phil, you want me to take that?
Yes. Go ahead, Tom. Thanks.
This is Phil's -- this is your seventh -- sixth day. So obviously, Phil has a vision, is very focused on core and continuing to grow higher-margin business as well. So I think it'd be presumptuous for me to put any target out there right now. We'll be working through that. I think what is important to know is this is probably like an evolution of strategy. That's what Phil was saying earlier. It's not a revolution of strategy. And so I think we always look historically. Historically, distribution operating margins are in the 3% to 4% range. So regardless of what we come out with has goals after working through this with Phil. I think those are good benchmarks in the meantime for you to look at. Does that help, Will? Or any follow-up on that?
Helpful. Good luck, guys.
[Operator Instructions] Our next question comes from Nik Todorov with Longbow Research.
Phil, congrats from me as well. I guess if you guys can touch on your assessment of the inventory situation at customers. I think there's been a lot of mixed data points. Some of the connector suppliers have seen some excess inventory in auto. But generally, what is your view? How do you assess the inventory situation at that end customers?
Phil, do you want to start? Or do you want me to start?
Yes. Let me take that. Thanks, Nik. I appreciate that. Well, it's always difficult, frankly, to get exactly the end customer inventory. It's account by account. I can tell you what we're doing with our backlog, with our suppliers, we're managing that extremely tight. We have a Regional President and I set a call every single week. We use the analytics to understand what customers are frankly living up to their forecast and expectations, which ones are. And we're one at a time kind of discussing what's going on. So as a whole, it's difficult. But I will say the one thing that does override, which we looked at very closely, is our book-to-bill and the cancellations of push out, which is an aggregate, okay? And right now, the cancellations and pushouts are not excessive, okay? They're in the norm, which is 20%, 25%, which is typical. And that's what we do. It's kind of a shock absorber, if you will, for the industry. So right now, not -- yes, I think it's relatively healthy, okay? And there's nothing to show that there will be that much excess inventory out there, frankly.
Tom, you can comment on?
No. I would agree with Phil 100% on that. And our inventories are healthy as well.
Okay. And as a follow-up, Phil, just love to hear your thoughts on the overall trend of supplier consolidation in the industry. How do you see that potentially impacting -- not so much interested in the potential impacts from the deals, but how does that impact customers and your ability to maybe acquire additional customers that you're not currently working with?
Yes. And Nik, you meant acquiring additional suppliers, I think. But the -- so look, we don't sit in our supplier boardroom, so we're not sure exactly who they're looking to buy or divest or what have you. I can tell you that it's not new. Yes, the acquisitions and mergers have certainly accelerated over the last several years, and we all know who's been acquiring who. The last couple have -- actually, the last couple have actually benefited us with -- as we announced this week, Cypress coming in with Infineon, Microsemi with Microchip. And we're always looking at the line card for the gaps and overlaps and adding lines where they're key and critical from a technology standpoint. So all we can do is continue to execute with those suppliers that we have and be a good supplier partner for them, and driving demand creation, customer expansion, revenue growth and do what's right, work hard and then no pun intended, let the chips fall where they may.
Okay. Great. And just a quick follow-up. Tom, what was the TI contribution in the March quarter? I don't know, I remember if you guys shared that.
March was $400 million.
Gentlemen, there are no further questions at this time. I'll now turn it back to Phil Gallagher for closing remarks.
Thank you, operator. Appreciate that. Well, as I mentioned earlier, it's only my first week, fourth day on the job. But I guess I am really energized by my role as the interim CEO, and I look forward to sharing my vision and the team's vision for renewed Avnet in the months ahead. So thank you for your time. We hope everyone stays healthy and safe during this time. As we enter new fiscal 2021, we're motivated to succeed no matter the economic environment, drive execution as we know we can, and we look forward to updating you on our first quarter results in October. Thanks, and have a great day.
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. We thank you for your participation.