Avnet, Inc. (AVT) Earnings Call Transcript & Summary

Okay. Next up, folks, on the program, reimagining the business and the future of work, our panelists, please come out on the program. We'll start with Emilia Bostater, Global IT Operations & Architecture for IDEXX Lab. Emilia, welcome.

Thank you. Glad to be here and happy to present IDEXX in this summit.

IDEXX is an amazing company. I've known your boss, Ken Grady for years. A little bit about IDEXX. What's unique about, what you're doing there and the unique architecture that you've crafted over the years and your role?

Sure. So IDEXX is a global leader in companion animal veterinary diagnostics and software solutions, and we also provide diagnostic for livestock, poultry and dairy as well as do water quality testing. So if anyone here on the call has a pet, so imagine you bring your pet to a veterinarian. The veterinarian is our customer. When they check you in, we provide the software that they use to manage their practice, also the in-house diagnostic that the blood test and so forth, IDEXX provides those. And in some veterinarians, they send the samples to one of our reference laboratories and we provide them the results. So it's a pretty exciting business to be on, people love their pets. They are essential service even during this critical time and so is IDEXX. So it's important that we do not miss a beat during this pandemic to be able to serve our veterinarian customers. So we are about 9,000 employees globally in about 100 and so sites. We sell products in 175 service countries, and we are headquartered in Maine.

It's amazing. You never would have figured in Maine, right? And by the way, if you look back, I think, over the past 5 years, pretty safe bet, one of the top performers in the S&P 500 in terms of stock appreciation.

That's correct. And due to our culture, due to our strive, due to our strong principles and due to our principles for innovation and continuously enhance the health of pets and livestock and even people. So my role, I am the Head of Global IT operations, which support all of our infrastructure services as well as our enterprise application support and all of our end-user services. As you can imagine, if you're anywhere near that type of role, it's been a pretty busy and hectic few months to support the companies and the backbone infrastructure to be able to operate and be resilient and make sure that the company is not missing a beat.

It's fascinating. Over the years, the past 3 to 5 years, you really lived the digital acceleration and pivot as you went from a traditional model to really a direct model. A little bit about that and technology playing a key role in being able to go direct to veterinarians.

Sure. So IDEXX is always innovating and looking at different ways of doing business. And a few years back, we did do a leap and went direct and with great results in investing in technology, in our sales and commercial capabilities to be able to serve our customers directly, and that continues. If we look at in April, our incredible sales force did most of the -- 75% of our client base is virtually and really appreciated our customers. In addition, we have -- and this -- we've invested -- this is investments over multiple years. You don't start now, right? You need to be ready now. We have remote technical support, customer support or inside sales. We do remote installation, the in-house equipment that we have in the veterinarian clinics are Internet enabled, so we can monitor, troubleshoot and provide support remotely. And there are a few things that we've added. If we think about the pet-owner and the veterinarian, the interaction in today's world is different. So you're dropping off your dog in a curb side. You're being checked in with an iPad, and IDEXX supports that technology for the veterinarians to be able to do the appropriate social distancing and billing and so forth. So we've added a few of those things in our spectrum as well as we have a really broad spectrum of telehealth capabilities that integrate with the practice management software in the veterinarian practices, so we'll be able to provide even that type of support. So I think well positioned to ensure that those critical services will continue.

Excellent. Thanks, Emilia. Please stay with us on the program. We'll loop back to you here in a minute.

Next up, Max Chan, CIO at Avnet. Max has an amazing background, global executive. One of HMG's top tech leader or recognized as a CIO of the year award recipient. Max, welcome to the program.

Thank you. Thanks, Hunter, for having me. Really appreciate being here on behalf of Avnet.

A little bit about Avnet and the global scale that you've -- the experience you have and how your major transformation over the last few years has gone.

For those of you who are not familiar with Avnet, we are one of the largest technology distributor, focusing on electronic component. Not a household name for sure, however, people would recognize that the little components that you have, either in your chargers or in the cables, et cetera, those are the things that we do. What we have done in the last few years really focusing on transforming away from purely being a box shipper to provide solutions in order to be able to expand through the ecosystem that we have, right? Working with the community of engineers all the way to design, manufacturing, supply chain and go to market, that transformation really has helped Avnet expand our capabilities because we know the upstream and the downstream players in the value chain and really provide that platform to bring supplier and customers together in order to deliver capabilities and technology to the industry. Now that position us so well in these situations where we saw ourselves pivoting together with our customer and supplier to focus on some of the medical needs that we see increasing, right, and being able to quickly bring that to the market and help the globe through this challenging situations.

How's the pandemic shaped your transformation -- reshaped it?

You know what, it actually becomes a silver lining for us. It helps to accelerate the transformations. It actually helps us to [ signal in ] And Gary's point earlier, jumping into things and solving problem quickly. The collaborations is so much stronger with our various partners, more so than what it used to be, right? We brought down the barrier that we used to think we have to get people together in a room in a particular space to come out with the solutions. Now we can do it by coming on platform like Zoom to be able to do that more collaboratively and more quickly.

It's amazing, right, the amount of innovation as the culture shifts, the organization shifts using platforms like Zoom, how you can impact shift so quickly.

And it's a dream for technology leader like myself, right? Historically, Avnet, we have seen ourselves very much focusing on the different regions. We do very well in the regions, but we continue to have road blocks where we try to move capabilities and best practice from one region to another region. Today, it's all seamless because everyone work remotely. Regardless of where you are, in China or in Germany or in the States, you'll be able to jump on to a platform, albeit time zone is a challenge. And Gary, if you can solve the time zone problem, I think that will be great. But then, again, people are comfortable with that, right? People know that they are saving time in commute, but they are willing to be more flexible with the time to be able to work as a global company. And that has shaped Avnet in a big way in the last 2 months as compared to what we have been trying to drive in the last many years.

Thanks, Max. Stay with us. We'll circle back to you here in a minute.

Next up, Quintin McGrath, Senior Managing Director, Technology Management, Enablement for Deloitte. Quintin's got an amazing role at Deloitte. Quintin, welcome to the program.

Thank you. Thanks, Hunter.

So let's talk about multi-generational leadership, right? How many generations do we have? What really matters in this digital world? What really matters in the Zoom world as it relates to getting people to think differently, to innovate and to help drive that cultural shift that we've all been touching on and let's just call it out. This is your -- right in your wheelhouse, right?

Yes, absolutely. And it's very interesting. This whole focus and a lot of our focus historically has been on the generations and saying there's a difference in the generations. And for sure, the way that the generations have been experiencing in the last, what, 2 months to 2.5 months has been fairly different as well as how introverts and extroverts experience -- have experienced the past while. And we've seen that within the thinking and the organization, that there's different ways that we have to interact and integrate. And so the focus on how do we make sure that we are meeting the needs and meeting the various employees of the different generations in different ways. And so many of the Zoom calls we have -- and yes, we also use Zoom in the organization, is how do we connect people together. And so often with the younger -- young generation, [ within ] young generations, we have a number of watercooler type discussions where we're interacting and bringing very much focus on how do we reach them. Now recognize, of course, that purpose is very, very important in terms of the many generations but, of course, now expanding to the rest of the organization. And so how do we then link up not only just meeting them as individuals and considering their well-being, but how do we then take it further and help them to be able to impact the community around them and give them purpose even in a lockdown time? And so we've seen a lot of encouragement from our leaders right from the global CEO down in terms of how do we focus on impacting our people with the community and our clients as we serve them. So the various generations, very different needs, but then at the same time, recognizing different people and individuals have a very different focus on what they need right now and how do we respond to that. And that's all driven by things like values and attitudes in terms of how we actually think about delivering our services and delivering them to our clients.

When you think of the social enterprises and we get back to work, what's important?

Yes. The social enterprise, from my perspective, is really key. And think about a social enterprise as one that focuses on, clearly, the profits of the organization. We're business people. We clearly have to make profits and make sure our stakeholders are -- get their appropriate dues. But then we recognize as well, as an enterprise, we have an impact on the community around us, impact on the world around us. And it's been really interesting watching the focus as we drive back into the new normal. Just how people have sat back during the lockdown and said, well, look at the positive impact potentially that's happened in the environment, less planes have been flying, we're driving less cars around, how's that had a positive impact in the world? And so Punit Renjen, our global CEO in last year's global impact report talked about the people, about profits and planet and really focusing on, as we come back into this new normal, let's bring along with it the bigger picture of the social enterprise. So we're not just here to focus on profits. We do need to focus on that. What about the community? What about the planet? What about what we're doing more broadly? And as we bring that context into what we've learned over the last 2.5 months, we can certainly add that to the community around us and impact on world around us.

Brilliant insights. Quintin, please stay with us.

Next up, Craig Peasley, Head of Product Marketing from Adobe. Craig, welcome to the program.

Thank you for having me.

Really appreciate Adobe's support over the years. Yes. I think we've been working together for 3 years, very friendly and close with Cynthia Stoddard, your global CIO.

Absolutely.

So Craig, what are the digital innovation areas of focus that you're seeing companies really pivot moving on during this crisis?

Well, I mean we're -- we've seen -- it's really remarkable what we've seen from companies. I mean just with the COVID pandemic, how companies are able to respond to -- some of these companies had processes in place that were just in person. They weren't really -- they looked at their digital transformation projects as kind of a multiyear initiative. What we've seen in a matter of weeks and months is that companies are kind of moving away from those multiyear plans to implementing things in days and weeks. And we've seen across industries, governments, for example, and banks and insurance companies, you name it, they've had to -- they're reacting in hours. I mean what was a nice to have prior is now becoming an imperative. When you look at things like the business processes, how the business gets done, so many of these companies just simply weren't prepared for this transition to a kind of fully digital remote work environment. And so we've been working closely with so many of these companies, the CIOs as well as the chief experience officers to help them think about how to quickly approach and transform to digital really, really quickly. And it's been -- I think it's been a learning process for them. For Adobe, this is something that we've been doing for many, many years. In fact, I was talking with some CIOs last week, and we were talking paperless -- Adobe was talking paperless office 25 years ago. It's one of the reasons PDF became a standard format. So we've kind of been leading that effort for many, many years. And I think now with the environment we're in, companies realize that this is just -- it's an imperative, and they've got to make that transition in investments. But we know it's challenging, right, because we've read and seen a lot of the research that says the companies are pulling back on their spend to offset maybe loss in revenues. But what we're saying is that the companies are continuing to accelerate their digitization primarily through IT, but what they're doing is they're never into focus. So instead of having these broad projects across multiple functions, they're segueing them into those that are more critical to their core business processes. And they're setting very -- based on an agile process, they're focused very much on what can we do here quickly to improve experiences, first, for their employees to make sure that they're productive and they're able to continue to collaborate day to day similar to what a lot of the other guests had shared but more importantly, going forward, will be the customers, is how do they drive that engagement and deliver experiences that their customers expect.

Craig, we've been following this lead, reimagine, reinvent the customer journey, and you all have been living it for the 25 years. I've tracked you for 15 with Gerri Martin-Flickinger when we used to get something in the box. And now you guys are a complete digital company. I think the stock's up probably over -- close to 1,000% over that time. You guys know scale, right?

Yes. We do. And it's been -- we've gone through the -- Adobe has gone through that journey over the last 8 to 10 years. And so you mentioned, Cynthia Stoddard, what better advocate to have than somebody who's actually taken a multibillion-dollar company through that process. We're taking what we've learned there, and we're bringing that to customers and others in the industry that are looking for that kind of partnership and that kind of advisory to help them get over -- make those same transitions. It's all about scale. So we are completely digital. And I would say one of the things, in talking with a lot of our customers, is many of their organizations are still utilizing software on-premise. They're not fully engaged on cloud services. And I think if ever there was a time for companies to reconsider and make that transition to fully cloud so that they can scale whether they're doing business globally or whether now supporting an entirely digital workforce to be able to provide those services, it's really, really important.

Hey, never let a good crisis go to waste or a bad crisis. What -- how can people get in touch with you and your team to learn more about the customer map and the customer journey?

Yes. Reach out to me, [email protected] or also go to our website and look at both our Adobe Document Cloud as well as our digital experience services.

Awesome. I'd love to follow-up with you later. Stay with us, Craig, okay? Great to have you on the program.

Next up, Brian Shield, VP of IT of Boston Red Sox. Brian has been a great fan and a friend of HMG for a long time, no pun intended. Brian, welcome to the program.

Thanks, Hunter. Great to be here.

Good to see you. Boy, wow, things have changed in your world dramatically. And I got to tell you, I am losing it because I want baseball back. When are we going to see baseball this year?

Yes. It's a great question. It's funny to think about sports. Like everyone tunes into watch Tom Brady rip his pants or something golfing over the weekend. It's like I think we all sort of have a pent-up frustration as it pertains to sports. So I mean that's a great question. I think everyone probably reads about what's going on right now with Major League Baseball and kind of working with the players in trying to find a model that works for both them as well as organization and things. So I think everyone is optimistic that we'll kind of get this squared away and be back to -- at least the business in baseball, obviously, I think the fans will be sort of a secondary, at least, within the ballpark. Obviously, you're going to lag a little bit. So it creates challenges obviously for all sports organizations in terms of how you kind of adjust to this kind of new normal if you will.

It would be interesting in terms of production, what gets -- how it's treated in terms of more attention to production as it relates to home viewing, right? So what's changed in your world? What's changed in your world over the past 10 weeks?

Yes. Like everyone, I think we've gone through these phases. I remember Gartner had this slide, which I kind of somewhat memorized about like, you think about this first sort of reaction phase. Sort of we all kind of respond to kind of our employees working from home. And I think any IT organization I think, hopefully, came away from that first initial phase as heroes, right? I mean they got this -- their organizations in a place where they can all work digitally. A lot of these things, we've been testing and advocating for, for the last X number of years that have actually worked and things like that. So my hope is that. And then as you kind of transition from that to a bit of a recovery phase to ultimately kind of like a rebuild model, I think it's critically important that CIOs and IT leaders to understand sort of this transition and sort of carry this renewed energy and enthusiasm and hopefully, some success to basically capitalize on that to -- within their organization to kind of affect culture to drive the top line, to kind of make a difference, to revisit their technology imperatives and things like that so that they can sort of both support the business and hopefully drive new forms of business.

Are you working on new ways to engage fans more broadly with the business as it relates to a digital platform maybe for this season?

Yes. So I mean for those who may not know, I mean the Boston Red Sox ownership group, Fenway Sports Group is -- owns the Red Sox and Liverpool Football and Roush Fenway Racing and a majority ownership stake in NESN or New England Cable Sports Network, a local regional sports net -- New England, and some other ancillary businesses as well. And so obviously, there's a big focus on sports in general. But I think there's been a transition, if you will, over the last years to really, in all sports, I think, to really kind of start working with a fan on a 365-day year. It used to be -- for many sports, it was kind of like you're actively engaged during the season, and then teams throughout go into some form of off-season, and then you'd sort of reemerge when they're in even spring training or pre-season type of thing. And I think you're now starting to see, like everything with social media and other sort of aspects, that there's touch points along the way. And so like many of those organizations, we're starting to leverage those touch points. Obviously, our partners on the television side are looking at new ways touching fans. We're looking at ways and having a lot of conversations with a lot of other sports franchises about like what should that stadium look like when you don't have fans. Do you leverage some elements about materiality? Do you do -- how do you most effectively sort of create sort of a compelling opportunity? But one of the big challenges for those that tune in and listen to these different challenges about sports in an environment we don't have fans is the home field advantage, right? Like what's a home field advantage without fans necessarily. So there's a lot of underlying changes taking place or in discussion. And so I think the common theme here is innovation. And I think like many of your guests this morning, I think, it's also about learnings. And I think there's never been a better time ever to both to have relationships with your peers and to have relationships with various organizations like this one where you can learn from one another. One of your prior guests said it well, I thought, which is there is this -- kind of this like silver lining here. We're all sort of, I think, behind sort of finding solutions to the COVID-19 challenges. I think we're all sort of realizing, too, that this -- these boundaries that sort of used to exist between organizations really are very impractical and impediments really to our own sort of evolution and innovation. And my hope is that we kind of learn from all this. And if you're in sort of kind of technology organization with where if it's kind of the invent a year type of thing, I think, it's a new world. You're really kind of not just buying eightball. You're really in serious danger of being sort of moved out in some respects because I think the I in CIO had never before -- should be about innovation.

Well stated. Really, really great segment there. Thank you, Brian. Stay with us. Maybe we'll bring all the panelists back to an open mic. Is this the best time ever -- start with you, Brian -- to be in tech? And why?

Yes. Like a lot of the people who had come on before, absolutely. And I know that we probably have been saying that for 10 years, but there really is a unique opportunity here. And that's around sort of, I think, there is this unique moment where it's not just about sort of -- we've all talked about sort of driving revenue. But like most CIOs kind of looked at that in sort of with a passing eye of like how am I going to really do that. I think more than ever, if you're not driving revenue, then you need a major challenge. But driving revenue, driving employee productivity, reducing expenses, thinking about sort of your strategy, rebuilding your strategy, like your -- you mean where all of our budgets are going to be under renewed stress, and so therefore, what you put forth is going to be never more impactful. And there's an opportunity to kind of inform employees and make them more aware and touch your customers. I should have led with that. Like it's -- there's never been a better opportunity to do those things, and I think the CIO is the best-positioned leader in an organization, I think, to kind of enact those changes.

Brian, thank you so much for sharing your thought leadership today and your ongoing commitment in support of the HMG platform. It's brilliant. Emilia, same idea, best time ever, right, to be in our industry and to be a tech leader. You're having fun at IDEXX. I know that.

Yes. No, it is actually a great time. And I think one of the things that's been nice to see that the year's worth of investment and trust in the company to invest in collaboration tools, invest in cloud-based product, to invest in security network, all of those things. So now the fruits are paying off, and the importance of that background work is acknowledged. That said, I think what's exciting here is this is now time to show that technology doesn't exist just for technology's sake. It exists to solve business problems and accelerate the company objectives that ultimately result in customer benefits. And I think IT in any company now has a seat at the table. As in -- an any leader, I think this is an opportunity to reinforce culture and the company purpose as well as global inclusion.

Excellent. Really well said. Thank you, Emilia. Quintin, do you want to jump in on being a tech leader in this environment?

Absolutely. And at this time, it's really interesting. If you take a look at what's happening in technology over the last decade, it's been absolutely crazy. We've got to the point now where every business is a technology business. And we've just released in Deloitte, we've got a human capital trends report and it's interesting to see the focus now is the fusion of human and technology and how do we have organizations that are technology organizations but are human, are distinctly human. And I think that to me is a richness of the time that we have now as IT leaders, CIOs, is we're in a position where the organization has become technology-driven. All businesses are technology businesses. And so the ability for us as custodians of technology and everything it brings along with it, to be part of that and keep the organization distinctly human and there was an overwhelming annual focus around being human and doing things in an ethical and an appropriate way as to how should we do stuff. So the combination of the great -- the fantastic acceleration of any technology, the fact that technologies are way embedded in the organization now, and now we, as IT leaders, can bring the richness of that along with the human element of well-being and change to our people and impact on society around us as well. So an amazing place for us, I believe, as technology leaders and something we need to take up the mantle of being those custodians and actually making a difference and bringing in the appropriate technologies in the appropriate way to our organizations and society.

Quintin, brilliant, thank you for coming on the program today. Craig, over to you. Best time ever to be a technology professional.

Easily best time ever. IT has never been more strategic to a business success than -- I mean it's never been more strategic. So I think it's an opportunity for IT to really lead and show what it's capable of delivering, both to employees where we know it's all about workforce -- it's all about productivity in a remote environment so that if you want to retain your best people, you need to make sure that they feel productive and that they feel engaged with the company. And then two is with customers, right? So you can imagine how companies are going through this transition. What about their customers? So ensuring that they're having experiences where we're bringing them along is of utmost importance to drive satisfaction and long-term loyalty. So IT is right in the center where it needs to be.

Excellent. Thanks, Craig. Brian, final comment on the panel today?

Oh, yes. I loved it. I've learned so much from everyone here. And there's a comment -- you'll love this, Hunter. It's like I was on a Peloton this morning and the instructor said -- she said change is inevitable, but growth is optional. And I couldn't -- I think there's this unique opportunity, both for ourselves as well as our associates, to really use as an opportunity to kind of address some of those opportunities to become a better leader, become a better person if you will. And so my -- I have a very kind of optimistic sort of hope that we'll be in much better place as a result of all this in the future.

Brian, brilliant final thought. Thank you so much for being here today. A big thanks to Emilia, Max, Quintin, Brian again, Craig, and really appreciate all your engagement. Please stay with us, if you can, until the end of the summit because we'll bring -- hopefully, bring everyone back together for a final comment.