Arrow Electronics Q2 2023 Earnings Call Transcript

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Provided by Quartr
August 3, 2023

There are 9 speakers on the call.

Operator

My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Arrow Electronics Second Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you.

Operator

Anthony Bencivenga, Vice President of Investor Relations, you may begin.

Speaker 1

Thank you, Chris. I'd like to welcome everyone to the Arrow Electronics Second Quarter 2023 Earnings Conference Call. Joining me on the call today is our President and Chief Executive Officer, Sean Kerins and our Chief Financial Officer, Raj Agrawal. During this call, we'll make forward looking statements, including statements about our business outlook, strategies and future financial results, which are based on our predictions and expectations as of today. Our actual results could differ materially due to a number of risks and uncertainties, including the risk factors described in our most recent 10 ks and 10 Q filings with the SEC.

Speaker 1

We undertake no obligation to update publicly or revise any of the forward looking statements as a result of new information or future events. As a reminder, some of the figures we will discuss on today's call are non GAAP measures, which are not intended to be a substitute for GAAP results. We've reconciled these non GAAP measures to the most directly comparable GAAP financial measures in this quarter's associated earnings release or Form 10 Q. You can access our earnings release at investor. Arrow.com along with the CFO commentary, the non GAAP earnings reconciliation and a replay of this call.

Speaker 1

We've also posted a slide presentation to accompany our prepared remarks and encourage you to reference these slides during this webcast. Following our prepared remarks today, we'll be available to take your questions. And now I will turn the call over to our President and CEO, Sean Kerins.

Speaker 2

Thanks, Anthony, and thank you all for joining us. Today, I'd like to discuss our Q2 performance, provide some color regarding the market overall And then close with a couple of key thoughts as we think about the future. I'll then turn things over to Raj for more detail on our financials as well as our outlook for

Speaker 3

Q3. In the

Speaker 2

Q2, Arrow delivered sales and earnings per share within our expected ranges, consistent with the softer semiconductor market and a mixed information technology spending environment. Our global team continues to deepen relationships with our suppliers and increase engagements with customers, always with an emphasis on our value added offerings and capabilities. As a result, we believe we're well positioned to help our suppliers and customers navigate the current environment, while positioning them for the many growth prospects that lie ahead. Having said that, we recognize we operate in a cyclical industry And we're currently managing through an inventory correction. While I can't say for certain how long this will last, I can tell you that we've experienced these cycles before and fully understand what it takes to navigate them.

Speaker 2

We've always been a resilient business and see times like these as opportunities to strengthen the company for the future. To that end, we remain focused on our strategic priorities for accretive growth and Exercising prudent cost management and working capital discipline. In our Global Components business, there are a few dynamics currently at play. Component lead times are coming down. We've seen consistent improvement in average lead times for the past few quarters.

Speaker 2

While they're not quite back to Pre pandemic rates across the board, there has been substantial progress. At the same time, inventory levels throughout much of our customer base remain elevated. Consequently, while longer term electronics markets are expected to grow, the total addressable market for semiconductors according to multiple sources will clearly decline in 2023. While it may take time to work through existing inventories, we are encouraged that in general And particularly in the West, end of market demand appears to be fairly steady. And in addition to improving lead times, We do see other indicators that speak to the underlying health of the business.

Speaker 2

In Q2, the pricing environment was largely stable. Our book to bill rates, though below parity, continued to hold steady. Our design related activity grew substantially, And we're seeing continued adoption of our supply chain services offering. Now to take a look at each of our operating regions In a little more detail, in Europe, we saw a slight sequential decline in revenue, but that was better than normal seasonality and we achieved robust Year over year growth from a resilient industrial market along with strength in automotive as well as aerospace and defense. In the Americas, we experienced a sequential and year over year decline in revenue.

Speaker 2

However, performance was stronger when adjusted For the further decline we experienced in the shortage market, which we now believe to have largely normalized. In addition, our focus on the market for interconnect, Passive and electromechanical devices is helping to offset a more challenging semiconductor operating environment. And in Asia, while we experienced continued softness in the Chinese market across both verticals, we did grow sequentially in the region With relative strength in sales from networking and communications infrastructure, along with modest improvement in parts of both the industrial and consumer segments. Profitability in our Global Components business remained above historic levels in the 2nd quarter. Given a fairly stable pricing environment, The sequential operating margin decline was mainly a function of regional mix and a decline in volume along with the associated impact to Operating leverage.

Speaker 2

We continue to believe our value added offerings, including demand creation, design services and supply chain management are contributing to our structural margin health and remain committed to our long term profitability outlook for this business. Now switching gears to our Enterprise Computing Solutions business. Sales for the 2nd quarter were down year on year, Largely a function of mix as we saw relative strength in cloud, software and services as customers migrate to IT solutions delivered on an as a service basis. Operating income grew modestly year on year and was in line with our expectations. The favorable mix contributed to year over year operating margin improvement.

Speaker 2

In Europe, demand for cybersecurity solutions And other infrastructure software remained healthy. We were also pleased by the continued adoption of our hybrid cloud portfolio, which is enabled through our AeroSphere digital platform. And in the Americas, we saw relative strength in the public sector. We continue to focus on expanding our customer base in the mid market and are seeing steady progress even against the backdrop of Software Enterprise IT Demand. Now before I hand things over to Raj, I'd like to offer just a couple of thoughts as we look to the future.

Speaker 2

First, I want to be clear. I'm very excited about the key markets in which we operate and believe the long term growth prospects are promising. You consider just a few key trends. The electrification and connectivity of everything. The accelerated adoption of new Technologies such as electric vehicles, renewable energy and artificial intelligence, just to name a few.

Speaker 2

And in the IT space, the growing relevance of hybrid and multi cloud solutions all delivered on an as a service basis. And second, While the current market trajectories are challenging and a little bit uncertain, we're confident in our ability to generate cash in the near term, providing us the flexibility we need to serve our capital allocation priorities very effectively. And with that, I'll hand things over to Raj.

Speaker 4

Thanks, Sean. Consolidated revenue for the 2nd quarter was $8,500,000,000 down 10% year over year. Changes in foreign currencies had a negligible effect on revenue during the quarter. By business, global components sales were 6,700,000 within our expected range down 10% year over year. Notably, we had significant year on year growth in EMEA with strong performance In the Industrial and Automotive markets, in Enterprise Computing Solutions, sales were $1,800,000,000 also within our expected range and down 8% year over year.

Speaker 4

Moving to other financial metrics for the quarter. Consolidated gross margin of 12.5% was down 60 basis points year on year, principally due to reduced volumes in the component shortage market, partially offset by improved product and region mix In the Enterprise Computing Solutions business, as customers continue to shift from hardware solutions to software and cloud solutions. Non GAAP operating expenses were $656,000,000 a reduction from both last quarter and last year. We continue to look for further cost reduction opportunities in this environment. Non GAAP operating income was $410,000,000 or 4.8 percent of sales with Interest and other expense was $85,000,000 which was better than expected due to lower average daily borrowings during the quarter.

Speaker 4

Our non GAAP effective tax rate of 23.1% was in line with our expectations. Diluted EPS on a non GAAP basis For the Q2 was $4.37 in line with our expectations and based on a 57,400,000 share count. Now moving on to working capital. Net working capital was up slightly from Q1 at $7,500,000,000 Accounts receivable increased slightly from Q1 to $11,000,000,000 driving days of sales outstanding to $118,000,000 from $111,000,000 at the end of the Q1. Accounts payable were flat sequentially at $9,000,000,000 bringing days of payables to 111 from 104 last quarter.

Speaker 4

Inventory decreased by about $75,000,000 to $5,500,000,000 with inventory turns remaining at 5.5 turns. With inventory down slightly and the changes in days payable offsetting days of sales, Our resulting cash conversion cycle was roughly flat from last quarter at 74 days. Cash Flow used for operating activities in the Q2 was $127,000,000 In conjunction with the cash generated in the Q1, on a year to date basis, Cash flow from operations was $97,000,000 We do continue to have confidence in our ability to generate positive cash flow. Net debt for the Q2 was up slightly from Q1 at $3,900,000,000 and total liquidity stands at approximately $2,100,000,000 including our cash balance of $240,000,000 Our balance sheet remains strong and provides us with ample financial flexibility. Consistent with our priority of enhancing shareholder value, we repurchased shares in the amount of approximately $200,000,000 during the Q2.

Speaker 4

At the end of the Q2, our remaining stock repurchase authorization stands at approximately $824,000,000 Please keep in mind that the information I've shared during this call is a high level summary of our financial results. For more details Regarding the business segment results, please refer to the CFO commentary and the earnings presentation published on our website. Now turning to Q3 guidance. We expect sales for the Q3 to be between $7,780,000,000 $8,380,000,000 We expect global components sales to be between $6,000,000,000 $6,400,000,000 which at the midpoint is down 7% from prior quarter And reflects the currently elevated inventory levels across our customer base and continued softness in Asia. We expect Enterprise Computing Solutions Sales to be between $1,780,000,000 $1,980,000,000 which at the midpoint represents a 4% decline year on year.

Speaker 4

We are assuming a tax rate in the range of approximately 23% to 25% and interest expense in the range of $85,000,000 to $90,000,000 Our non GAAP diluted earnings per share is expected to be between $3.40 $3.60 on average diluted share count of 56 Marine shares. We expect sequential decline in revenue and reduced operating leverage to be the primary drivers of the sequential decline in EPS. We estimate changes in foreign currencies will benefit sales in Q3 by approximately $212,000,000 and EPS by approximately $0.11 compared to the prior year. Compared to the prior quarter, we estimate changes in foreign currencies will benefit sales by $42,000,000 and benefit EPS by $0.04 I will now turn the call over to the operator for Q and A.

Operator

Thank you. Our first question is from Matt Sheerin with Stifel. Your line is open.

Speaker 5

Yes. Thank you and good afternoon everyone. Sean, I'd like to just get a little bit more color on your guidance for the Component business in the September quarter, it looks like you're guiding down roughly 15% year on year, 7% sequentially. You did see you do normally see sequential growth in Asia in September. And as we look at the numbers now, is that expectations for that growth, which would imply North American Europe down kind of mid teens sequentially.

Speaker 5

Does that make sense?

Speaker 2

Good morning, Matt. I think those numbers would be a little bit extreme. We are guiding sub seasonal in Asia for the region. I think we continue to see softness in China. That's probably not new news to anybody.

Speaker 2

We just haven't quite seen the rebound yet that The market expects, but our sequential decline in Europe and the Americas though sub seasonal Are not as significant as you suggest. Those are mainly a function of just the elevated inventory levels that we see in the business, Whereas the Asia, specifically Chinese challenges are more a function of market. But The operating margin decline that you see in the guide is largely just a function of the shortfall in sales volume Versus seasonality versus much anything else as we do kind of assume continued pricing stability In Q3, much as we saw in Q2.

Speaker 5

Got it. And as we think about Q4, I know you're not giving guidance for that, but would you expect this correction to play out through Q4, which would mean that the components would be down Sequentially in Q4?

Speaker 2

Well, you're right, Matt. We're only providing guidance for Q3, so I don't really want to speculate Too much beyond that. But what I can say is that given our history with the cyclical nature of this business, Our experience has been historically that these kind of corrections take roughly 2 to 3 quarters to play out. That would certainly seem consistent with the inventory levels we see in our business and our assessment of our firm backlog. Obviously, a better demand environment could move things along more quickly.

Speaker 2

A declining demand environment could slow things down, but that's been Our typical experience historically, and that's kind of the best we can tell you about anything beyond the Q3 at this point.

Speaker 5

Okay, fair enough. And just lastly on OpEx, you've done a good job of taking cost down and It looks like it was down roughly $30,000,000 or so of sequentially on OpEx. Raj, how should we think about OpEx on a dollars basis relative to where it was The June quarter?

Speaker 4

You mean for the Q3, Matt?

Speaker 5

That's right. Yes.

Speaker 4

Yes. Look, I think we'll get the benefit of variable costs that will come down as the volume comes down. So that part of it, you should continue to see. And then as I mentioned in my comments, we're always looking for further cost reduction opportunities and optimizing the business Wherever we can, rebalancing our workforce around the world and even looking at closing underutilized facilities. So That stuff doesn't show up right away, but it certainly does help over the longer term.

Speaker 4

And so we're looking at that on an ongoing basis.

Speaker 5

Okay, very good. Thank you.

Speaker 6

The

Operator

next question is from Melissa Fairbanks with Raymond James. Your line is open.

Speaker 6

Hi, guys. Thanks very much. Raj, I had a question for you. I just wanted to ask about the revolver and interest expense. I know you've been prioritizing the buybacks and that's driving a lot of accretion.

Speaker 6

But I was wondering how you're balancing that buyback against bringing down some of the debt in the near term?

Speaker 4

Yes. Melissa, we really think about it in the order of priorities of our capital priorities. So we're always Very much going to invest in the business to drive organic growth and expansion. That's the first priority. We also, As I mentioned before, we're always looking at the right kind of inorganic opportunities that will fit within our strategy and then we'll use our excess cash or capacity to buy back stock If we feel that it's a good value and we have felt that it's a great value obviously.

Speaker 4

The interest expense has been ticking up. That's largely a function of rates. But the environment that we're in and that we're going to go through the next few quarters, we would likely see more cash generation and so it gives us the opportunity to do All of those things as well as maybe even address the debt level a little bit. But we're very much within our targeted credit rating ratios. And so No concern from that standpoint.

Speaker 6

Okay, great. And then maybe I always have to ask about inventories, of course. It's great to see inventory dollars coming down. I think you had said previously on a call that June quarter We're going to start to see some normalization in the near term. With under shipping demand and kind of excess inventories at the customer level, Do you have kind of an updated view on when we could get some of that working capital release?

Speaker 2

So Melissa, I can give you kind of the big picture on our inventory profile. You're right. We did see inventories come down in the quarter for The first time in several quarters, that's a good sign in this environment. We do expect them to come down even further in the Q3. It's interesting.

Speaker 2

Units were definitely down in the quarter on a global basis and ASPs largely held up, Which does suggest inventory levels still reflect price increases where they would have fallen even further. Part of that is the fact that Many of our suppliers are pretty collaborative when it comes to working with our customers as they look to reschedule For their production needs, but we think we're managing inventory well. We like the quality of Almost all of it. The only question is when it sells through, given the environment we're in, but we do expect inventories to rotate down yet again in Q3 and Hence our confidence in cash generation in the near term as we look forward. Turns are not too far Out of line from what we would call historical norms in any of our 3 big operating Regents, Melissa, I would say they're each within one turn or less of what you'd expect when things finally reach steady state again.

Speaker 6

Okay, great. That's very helpful. Thanks very much.

Speaker 2

Thank you, Melissa.

Operator

The next question is from Joe Quatrochi with Wells Fargo. Your line is open.

Speaker 7

Yes. Thanks for taking the questions. I wanted to kind of stick on the inventory dynamic. Some of your suppliers have talked about that their distributor inventory still remains well below the kind of So, Oracle levels that they have maintained previously. So, I guess, like, how should we think about that dynamic and then The ability to maybe maintain pricing as being somewhat stable in that environment, just given that inventories continue to be leaner Also moving downward now.

Speaker 2

Yes. So Joe, maybe just to step back and think about how Yes, these corrections typically play out, right? As supply has improved and lead times have come down or suppliers have made Decent progress addressing the enormous amount of delinquent demand that was in the market. That typically gets solved for 1st with their larger OEM customers. And in many cases, they're the ones that they tend to serve directly.

Speaker 2

And then anywhere from 2 quarters or more later, it starts to show up in the mass market customer base. They were basically further back in the queue, if you will, which we tend to serve on their behalf. So The suppliers tend to see this whole phenomenon a little bit better than a little bit sooner than we do, but the pattern typically plays out the same in each case. And we think that therefore we've got a little bit in front of us to work through the inventory build that we've experienced in the mid market, but it's headed in the right direction. If you think about your pricing question, there's a big difference between what plays out in the largest end of the market, The larger OEM customers versus the mass market, which is our primary focus.

Speaker 2

The mass market is the place Where pricing and margins tend to hold up in a better over time than you might see in the largest sub accounts. But like I said, so far, we've seen pretty good pricing stability in where we've been so far this year.

Speaker 7

Got it. That's helpful. And then just you referenced kind of typically these things kind of take 2 to 3 quarters to play out. In the context of your components, EBIT margin has obviously been very strong over the last several quarters. You talked about the structural benefits there that you put in place.

Speaker 7

I mean, how do we think about those structural benefits coming into play Now as demand starts to slow, do you think you can maintain component EBIT margin above 5%?

Speaker 2

We do. And I'll give you some perspective on this. I mean, if you think about the upcycle that we all just experienced That preceded the environment we're out now in. Probably the most significant disconnect between supply and demand Yes, than we've seen in recent history in the industry, certainly in all of my time at Arrow. So a correction of some sort was probably inevitable.

Speaker 2

But if I go back to the last time that we would have seen some kind of a cyclical correction, That was 2019, pre pandemic. And I can safely say that even with this guide, our margins are structurally better Than they were at that time to a much more significant degree. And such that even if Yes. We were to see further margin pressure down the road as inventory levels fully correct. We know that some of that will cycle back just through sheer volume alone, Which will help restore operating leverage.

Speaker 2

And to your point, we have not lost sight of our value add priorities and growth opportunities around things like Engineering and demand creation around things like supply chain and they can continue to contribute to our structural margin strength. So we still For all those reasons, we still feel really good about our longer term steady state outlook. We're basically not losing sight of where we're headed Even though the current environment is a little bit tough.

Speaker 7

Got it. Thanks for that.

Operator

The next question is from Ruplu Bhattacharya with Bank of America. Your line is open.

Speaker 8

Hi, thank you for taking my questions. Sean, you talked about an inventory correction happening in the channel. Could you give us a little bit more color on that? Are there specific types of semiconductors that have higher inventory in the channel? And a higher level question, how do you measure excess inventory?

Speaker 8

Like how do you know that there's something that has excess inventory in the channel? And related to this is, if the demand environment is weaker, you think free cash flow generation in such an environment can be more Any higher than normal? And would you use that higher cash flow for things like higher buybacks than you would have normally done? So if you can just give us your thoughts on inventory, a little bit more color on inventory in the channel and your thoughts on free cash flow and uses of that?

Speaker 2

Sure. A couple of different questions in there, Ruplu. So maybe we can break it down. First, I want to tell you that Although our backlog has come down a plate, it's still multiples bigger than it was pre pandemic, multiples. And We still think roughly 2 thirds of it is firm and maybe 25% or more of it is delinquent.

Speaker 2

That alone tells us we still have fulfillment to execute upon Within our inventory profile and we will. But it also gives us confidence that Our guide is probably right where it needs to be. The inventory build throughout our customer base Maybe less specific about certain technology sets and more about just the electronics market overall. It's elevated and we know that because of our turns. We know that because of the feedback we get from our customers, and we certainly know that Based on all of the close collaboration that we undertake with our suppliers all the time to kind of navigate this market.

Speaker 2

So again, we're probably a turn Or so off in each of our operating regions relative to what we'd expect to see when things reach steady state. But by and large, when inventories are elevated to the extent they are across our customer base, it slows down Our ability to execute on fulfillment and it will occur. It's just a matter of the work our customers are doing to kind of realign Their production schedules to solve for their end market demand. With regard to what it all means in terms of free cash flow, Like I said, in a correcting environment, we feel more confident about our ability to generate cash. And maybe I'll let Raj talk a little bit about how we're thinking about What we do with that cash as we look forward in the near term?

Speaker 4

Yes, Ruplu, nice to speak with you again. I think we're going to just continue to Manage it through our key priorities for capital and so investing in the business as I said and then Looking at inorganic opportunities, but certainly if we have more flexibility with cash, we'll I expect that we'll continue to buy back some stock And that's been a key use of cash the last few years as you know. And in a more flush cash environment, we'll certainly Keep that as one of our key priorities. So that won't be off the table, but we'll continue to evaluate against all those priorities.

Speaker 8

Okay. Thanks for all the details there. As my follow-up, if I can ask a question on ECS margins. The segment margins grew 40 bps sequentially on lower revenue. How should we think about margins in that Segment for fiscal 3Q, is there any inventory correction happening on that side of the business?

Speaker 8

And is it reasonable to think that even if the macro is weak, the The fiscal 4th quarter is typically the strongest quarter for that segment, both from a revenue and margin standpoint. Do you think that relative outperformance in the 4th quarter maintains even in this environment? Thanks.

Speaker 2

Sure thing, Ruplu. Well, again, probably not going to talk a lot about Q4 at this point because we're only guiding Q3, you are right. Q4 is very predictably the largest quarter of the year when you think about seasonality. But To your first question, there really aren't any inventory challenges in that business for us. In fact, This is working capital friendly for us because even in most places where we participate in hardware, the model is more drop ship in nature.

Speaker 2

We've always liked that piece of the model for us because again it's working capital friendly. I would say our backlog has continued to build And that business is a function of all the kind of the multi period cloud and software subscriptions that we're helping the channel navigate Those things tend to get build out over time and that piece of our business is growing, which we think is good for the model longer term. But There's no barriers to revenue or fulfillment as it relates to elevated backlog or inventory. Most of the Supply chain challenges related to systems in that business have all but normalized.

Speaker 8

Okay. Thanks for all the details. Appreciate it.

Operator

The next question is from William Stein with Truist Securities. Your line is open.

Speaker 3

Great. Thanks for taking my questions. I've joined a little late, so I apologize if you might have addressed this already. But I think In the CFO commentary, you talked about shortage market revenue. And I'm hoping you could just elaborate on your Exposure to that part of the components market, the impact it's having on your business today and in terms of margins especially And how you expect that to progress in the next few quarters?

Speaker 2

Certainly. So if you think about the operating margin decline we saw In the Q2, Will, it was really a function of 3 things. One part was regional mix and that was Just due to the fact that we saw some sequential growth in Asia. One part of it was just the normalization of our shortage market activity, which Typically, it's been most prominent in the Americas. And as lead times have come in and supply and demand are Yes, moving towards getting better aligned, the activity levels in that piece of the market have declined pretty significantly.

Speaker 2

We saw some further erosion of that Activity in Q2 and that had some pressure on margins. And then thirdly and most substantially though, strictly a function of the shortfall in volume overall, Yes, which put some pressure on operating leverage. But we think, Will, that the upside and now the downside by way of Period over period compares as it relates to our shortage market activity have largely normalized And that piece of the margin stress should get a lot simpler and less pronounced from here.

Speaker 3

That's helpful. Appreciate it. One other inventory has been discussed a couple of times already, but I just want to go at this a little bit different way. Among the semi companies I cover, most of them Sort of beat their chest about how they starve the channel of inventory through this whole last cycle. And so, while your inventories have increased, they're Very well protected and so it's a little bit difficult to reconcile these two data points.

Speaker 3

But I think the issue is that smaller companies, even some public ones who have spoken to haven't been able to do a great job of Sort of managing this issue and so some I've spoken to have told me about 6 months of inventory At distribution, I don't know if you're experiencing that with any of your suppliers, but what the real question gets to is I'm hoping you can Talk through the consistency or on the other hand disparity of Your inventory across technologies and suppliers, my guess is that it's very unevent relative to what it usually is. I'm hoping you can Sort of help us clarify this. Thank you.

Speaker 2

Yes, sure, Will. And maybe just I'll repeat a little bit of what I said earlier. Part of this is based The pattern of how these corrections play out, remember that suppliers tend to solve for the larger customer Demand, especially when it's as delinquent as we saw it during the last cycle before they solve for the mass market, right? So we'll Typically see the inventory build later than they will, just because mass market customers were further back in the queue. So that accounts for A little bit of the delta in timing and therefore our experience now versus their experience then.

Speaker 2

You're right in assuming that the inventory mix is not uniformly problematic for all suppliers and all technologies equally in all regions. We are talking about this in the aggregate, but I would say, look, most of our suppliers are pretty collaborative when it comes to meeting Yes, the evolving production schedules of our customer base as they work through their inventories. That's evident in the fact that our units came down pretty substantially in Q2, we expect to see that again in Q3. And the wild card here is the fact that the ASPs are holding up, so that's inflating inventories beyond what they would look like otherwise. But if you're looking for 1 or 2 long poles in the 10 to define this problem.

Speaker 2

We would see it more generally across the portfolio. There are some cases where suppliers have different programs in place. Some are more favorable than others. But by and large, Yes, we feel good about the handle we have on this and our ability to work both customers and suppliers to work through this is as expeditiously as possible Given the broader market demand question.

Speaker 3

Okay. Thank you. Thank you.

Operator

We have no further questions at this time. I'll turn it over to Anthony Benjivanga for any closing remarks.

Speaker 1

Okay. Thanks again, Chris, and thank you all for joining today's call. We look forward to meeting you at upcoming investor events. Have a great day.

Operator

This concludes today's conference call. You may now disconnect. Thank you.

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Arrow Electronics Q2 2023
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