Ladies and gentlemen, thank you for standing by, and welcome to the Arrow Electronics fourth quarter and full year 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to turn the call over to your speaker today, Steve O’Brien, Vice President in Investor Relations. Please go ahead. Thanks, Denise. Good day, and welcome to Arrow Electronics' fourth quarter and year-end 2020 earnings conference call. With us on the call today are Mike Long, Chairman, President, and Chief Executive Officer, 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 in our most recent 10-K and 10-Q filings with the SEC. We undertake no obligation to update publicly or revise any of the forward-looking statements. As a reminder, some of the figures we will discuss on today's call are non-GAAP. We have reconciled those to the most directly comparable GAAP financial measures in our earnings release. These non-GAAP measures are not intended to be a substitute for our GAAP results. 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. We will begin with a few minutes of prepared remarks, which will then be followed by a question-and-answer period. I will now hand the call to our Chairman, President, and CEO, Mike Long. Thanks, Steve, and thanks to all of you for joining us today. When I spoke to you in late April of 2020, right after our first quarter, there was much we didn't know about how the coming months would unfold, which is why it's incredible to be here today talking about record quarterly sales and earnings in the fourth quarter of the year. Not to mention, in 2020, we generated record operating cash flow, reduced debt by a record amount, and returned a record cash to the shareholder for the year. It's a true testament of our strength. But not only did we do that, but in a very short period of time, we had almost 15,000 people that had to go from office work to work from home. And this is a true testament of the hard work and the dedication of our team. Every day, our customers have a choice. We're proud they continue to choose Arrow. Customers place their trust in Arrow's engineering, design, and supply chain services. They rely on us to ensure their products are designed to be efficiently manufactured and well-received in the marketplace. Our suppliers are critical to our success. They continue to choose Arrow to sell, market, and design their components into some of the most innovative and important products coming to market. While our reputation speaks for itself, our consistency comes from putting our people first. Once again, I'd like to thank our team for continuing to deliver for customers and to move technology forward in a year of extreme challenges. While some of these same obstacles we've had in the past, we've seen major device upgrades and major upgrade cycles, followed by strong sales. The foundation of our business has never been stronger. While business conditions in our industry are dynamic, we're cautiously optimistic that the demand environments for Americas and Europe can return to growth. Customers are ramping up prior production levels across many industries, and the inventory correction that occurred prior to the pandemic means that some components are in short supply. Orders and backlog are up in all regions. In line with this, our Americas Customer Sentiment Survey showed an increase in the percentage of customers that have an inventory shortage and a decrease in customers with an excess of inventory. Turning to our Enterprise Computing Solutions business, we're pleased to deliver operating income growth on a year-over-year basis. Operating income growth continues to be the truest measurement of performance for this business, and in addition, operating margin reached its highest level since the fourth quarter of 2017. While we were pleased with our Enterprise Computing Solutions results, we see strong potential for further improvements in 2021. First, the markets we serve remain challenged by lockdowns and continued restrictions to related on-site work. In the meantime, widespread work-from-home policies continue to drive security and cloud solutions. In the past, we've seen major upgrades, followed by strong infrastructure spending to support them. We see further benefits to enterprise computing from a recovery by specialty VARs and MSP customers who serve some of the industries that have both mostly been impacted by the pandemic. Our customers who service the hospitality, retail, restaurants, and even the medical industries have been hampered by an inability to work on-site at their end customers. We derive value from complexity, so helping these customers design and sell secure, multi-site, hybrid cloud data solutions should benefit our volumes and profits compared to our business in 2021. Before closing, I thought I'd share a few words of our company's long-standing commitment to developing business leaders and proactive succession planning. We recently announced the appointment of Sean Kerins as Arrow's new Chief Operating Officer. Sean has been a valued member of our team since 2007. His leadership and proven track record at Arrow makes him the ideal executive to now lead both businesses and advance innovation across our global sales, marketing, and operations. We're confident in his ability to help Arrow capture value and growth from the increasing convergence of semiconductor electronic component industries with the information and operational technology industries. With that, I'll now hand the call over to Chris to provide more details on our fourth quarter results and our expectations for the first quarter. Thanks, Mike. Fourth quarter sales were $8.45 billion. Sales increased 13% year-over-year on a Non-GAAP basis. The average euro- dollar exchange rate for the quarter was $1.19 to €1, compared to the rate of $1.16 we've used for forecasting. Strengthening of the euro relative to the dollar boosted sales by approximately $50 million compared to what we had anticipated in our prior guidance. Global Components sales were $5.92 billion. Sales were above the high end of our prior guidance, and we saw improving demand across regions and most industries. Global Components Non-GAAP operating margin was 4%, up 40 basis points year-over-year. This improvement was mainly due to greater operating expense efficiency in all regions as we leveraged higher sales volumes. We continue to see substantial opportunity for further operating income leverage, as all regions can capture an improving mix of higher value component sales and as the Americas and Europe regions continue to recover. Enterprise Computing Solution sales of $2.53 billion were above the midpoint of our prior expected range. Fourth quarter billings increased year-over-year, adjusted for changes in foreign currencies, and we experienced growth in infrastructure software across the portfolio, security, storage, and industry standard servers. Global Enterprise Computing Solutions non-GAAP operating income margin increased by 30 basis points year-over-year to 6.3%, the highest level since 2017. Returning to consolidated results for the quarter, the effective tax rate was below our expectations due to timing of certain discrete items. For the full year 2020, our effective tax rate was near the low end of our long-term range of 23%-25%. We continue to see 23%-25% as our appropriate target range going forward. Non-GAAP diluted earnings per share were $3.17, 44 cents above the high end of our prior expectation. Approximately $0.04 of the upside to prior guidance was attributable to more favorable exchange rates. Turning to the balance sheet and cash flow, operating cash flow was $200 million, despite substantially stronger demand than we anticipated. Our cash cycle improved by 2 days compared to the third quarter and 11 days compared to last year. This improvement significantly aided cash flow generation in the face of working capital demands. Inventory days were the lowest level since the fourth quarter of 2015. Ending 2020, debt decreased by $715 million compared to 2019. Leverage, as measured by debt to EBITDA, was at the lowest level in over 5 years. We returned approximately $100 million to shareholders during the fourth quarter through our share repurchase plan. The remaining authorization under our existing plan is approximately $463 million. Please keep in mind that the information I've shared during this call is a high-level summary of our financial results. For more detail regarding the business segment results, please refer to the CFO commentary published on our website this morning. Now, turning to guidance. Midpoint sales and EPS guidance will be all-time first quarter records. The diversity of the products we sell and the customers and industries we serve helps provide stability for our business as a whole. Our guidance reflects continued improvement in both Global Components and Enterprise Computing Solutions operating margins on a year-over-year basis. Finally, as we discussed last quarter, please note the CFO commentary includes information on our fiscal calendar closing dates for 2021. In 2021, the first, second, and third quarters close on April 3rd, July 3rd, and October 2nd, respectively, unlike in 2020, where they closed on March 28th, June 27th, and September 26th. These closing dates have a much greater impact on Enterprise Computing Solutions than on Global Components, and full year comparisons are not affected as fiscal 2021 ends on December 31st, as always. With that, I'll turn the call over to the operator for Q&A. Ladies and gentlemen, to ask a question, please press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Toshiya Hari with Goldman Sachs and Company. Your line is open. Hi, good afternoon, and thank you so much for taking the question. Congrats on the very strong results. My first one, I wanted to ask about the shortage situation. Can you sort of just describe how broad and how intense, if you will, the shortage is today, the delta between demand and supply? And based on what you're hearing from, I guess, both your suppliers on the supply side, as well as demand from your customers, at what point in the year do you--would you expect supply to catch up to demand? Thank you. Yeah, so the first thing is I will disconnect sort of automotive from my comments, because a lot of the shortages you're hearing about are automotive, and they're specialty-type parts, things that people in our business typically are in the middle of. So when you take that out, yes, we still do automotive business, but it typically runs in the, you know, sort of tier three accounts, tier one accounts, those types of things. What I would tell you is overall, yes, we're seeing some shortages. The I believe at this point, it's a little overblown. It's probably a good time to talk about the book- to- bill, too, because we have seen an increase in book- to- bill. And what I mean by that is customers are placing their orders out longer than they have in the past. So we're getting more visibility past 90 days. Our percentage of backlog within the quarter sales has not increased. So it would suggest that it's really not double ordering, but customers are giving us a longer-term view, so we can in turn share that with suppliers and help them forecast their manufacturing as things go out. We're also seeing suppliers asking us to give them greater visibility, and I believe the market is reacting well to that, and that can minimize a lot of the problems that are being talked about out there. Short term, we don't see too many restrictions right now on our shipments for the first quarter. You know, there's always gonna be a couple of parts that are hard to get, but we don't expect that there's gonna be widespread shutdowns or anything like that. Hopefully that helps your question and gives you a little perspective on it. Yeah, it does. Thanks very much for the context. And then as my follow-up, just on the profitability of the business, you guys did a great job improving margins in the December quarter. As you look out into the middle part of 2021 and the back half of 2021, you know, outside of reasonable regional mix normalizing, i.e., I guess, the US and Europe recovering, what are some of the levers that you can pull to improve margins in your business? Thank you. Well, I think you're already seeing some of the margin improvements that have come through. We certainly are getting more efficient as a business in terms of our cost of sales or our cost to margin even with investments that we've put into handling components, our manufacturing facilities. Most of that work has been done or close to completed, so we're seeing benefits there. But really, you want to get down to the big lever, it's those two. So North America is hugely anemic. It's been, you know, by all terms, cracked for the last couple of years, and really, until we can get out of our way and focus on growing this economy, that'll be a little bit of a rope around our neck. Europe looks like it's progressing probably a little better than North America in terms of growth again. But the real hammer is the North American economy, and that will make a difference because you'll see volumes there, so you can see our infrastructure in North America get more efficient with those volumes, and that's a piece of the pie. Your next question comes from Steven Fox with Fox Advisors. Your line is open. Hi, good, good afternoon. For the first question, Chris, I was just wondering, last quarter, you talked about continuing to generate cash flows while you're growing over 10%. You obviously just did that. But then you guys mentioned that, inventories are now at levels you haven't seen since 2015, and customers are placing longer extended orders. So can you just sort of talk to the level of your confidence to continue to do that as the supply chain dynamics seem to have changed a lot in the last 90 days? And then I had a follow-up. Yeah, you know, really, we're super pleased with the cash generation of the business over the last 12 and 24 months. You know, record cash flow in 2020 and $2.2 billion over the last two years. So that's clearly a focus of ours, Steve, and that'll remain. In the near term, you know, I think that's a little more challenging in the very short run as we obviously look to build working capital to support the growth, but we'll do that diligently. As I look forward, though, I don't think, you know, anything really changes. We'll be very focused on generating cash flow over the course of 2021. I think, you know, the cash conversion cycle that we've got now is the right target for us, you know, over time. It'll move around from quarter to quarter, but we like where we are, and we're gonna do our best to maintain that. Thanks for that. That's helpful. And then, Mike, just as a follow-up, in your prepared remarks, you mentioned that you're cautiously optimistic about demand returning to growth in the Americas and Europe. Can you give us some examples of maybe what's behind that, either customer conversations or, different industries that you're hopeful about, and whether that is gonna result in a meaningful shift in some of your sales mix on the component side from Asia over the next couple quarters? That'd be helpful. Thank you. Sure. I think the first thing that gives me, you know, sort of that optimism, not only for the Americas, but for EMEA, too, would be the growth and design wins. So we've seen some pretty good growth in design wins in North America, you know, up around the 15, 16% range, and we've seen just under 10% in Europe. So as we're seeing the design wins grow, that's usually a good indicator about business coming down the pipe within the next six months or so. There should be an increase of what we've seen in the past. I think the, you know, my opinion of tariffs, I think that's been holding us back quite a bit. I think it's, I think the whole plan backfired and put the burden on American companies to pay the tariffs, so, I haven't seen anything lifting those, but, you know, the demand is there, and there's still, business out there, and I think people are figuring out how to maneuver around that. We've seen some uptick in sort of aerospace and, and defense. We've seen some uptick in, in consumer. You guys have, you know, seen that. And surprisingly, we're seeing a little life in industrial manufacturing at this point. So when you put those together, I would say the conditions are in pretty good shape, for things to come back, but that's where the sort of cautious optimism comes in for me is, you know, will our politicians work together on the economy to make it better? If they do, I don't see any reason it couldn't be better, but, you know, I sort of duck early and say, "What's the next curveball coming?" So that's where I am on that one, Steve. I appreciate that. That's all very helpful. Congrats on the great results. Thanks. Your next question comes from Nikolay Todorov with Longbow Research. Your line is open. Yeah, thanks, and congrats, guys, on a great execution. Mike, can you remind us the operating profit margin delta to your Asia component business? Seems like you guys have done a great progress there and driven by scale. But as you look forward, can you talk where do you see that delta between the Asia component business in North America and Europe eventually getting in the medium-term future? Thanks. Yeah, I mean, I think, you know, while I won't give you the numbers specifically, I think, you know, there's a couple of things that you can just deduce by how things are operating. North America and Europe have had, you know, a little bit of negative operating margin reduction just in size and scale. That's what happens when the economy shrink, and Asia has improved. Asia has improved more than they have reduced, which is good, which is why you see the leverage you do, and we're really confident that that's a good thing because we're really sitting here doing the math, and if those two take off and end up with their rightful sort of mix inside the company, we're gonna be right back where we think we need to be. So we do have a view. We do have a line of sight. The real question that we have for ourselves is: How fast can we get North America and Europe back up, either through share gains or, or through general economy gains? And that's really the, that's really the conditions that need to exist. Okay, great. And then as a follow-up on the component side, can you talk about the pricing environment that you see? I think maybe you can do the same and exclude the auto side and talk about what are you seeing and what is your ability to pass through those. And as you think about that, I think last quarter you mentioned that you expect to see the component business start approaching that, the prior levels of, you know, high 4% or low 5% operating profit. Do you still believe you can do that in 2021? Yeah, we believe we can get there in 2021. Obviously, the economy is gonna be dependent on can we consistently be there, but we actually believe we can be there. That's not an issue in terms of the company. In terms of the pricing environment, more and more suppliers are raising prices. We won't hesitate to raise those prices. We have to. We don't have enough margin to absorb price increases like that. And the suppliers are doing two things: They're requiring that they see a better visibility of your product, they're demanding a firmer schedule, and the ones that are really fabulous are doing price increases first. So we are seeing it. I expect it to continue through the first half of the year. It's a nature of the business. There hasn't been a price increase in a long time, so this is really something new, but nobody's gonna be immune from it. It's coming. Okay. And just, lastly, on ECS, on, on the enterprise computing segment, it seems like the mix of business has shifted quite favorably towards software and security. You know, maybe can you give us an update on the, the, the percentage mix, and, and then, any color on what are you expecting for the hardware side of that business in, in 2021? ... Sean, why don't you go ahead and take that one? Yeah, sure thing. And you kind of read it right. You know, we have been intentionally driving a mix shift to things like cloud, software, and services, the kind of things that we typically treat through agency accounting. And so while sometimes that creates a little bit of a headwind for reported sales, it's very favorable for growth and operating margins, and we're gonna stay that course. We think there's a good future in it. In terms of, you know, the outlook going forward, you know, by no means is, you know, hardware disappearing. You know, it sort of ebbs and flows a little bit, but if you look at our overall mix, just on a volume basis, you know, hardware is still roughly a third of the total. In fact, we saw our storage business grow a little bit year-on-year for the full year in 2020, and that tells me that, you know, there's still a big on-premise business that, you know, we'll benefit from in the future. You know, I believe you can't sweat IT assets forever. We do need the broader market to come back and data centers to reopen, but that will be, you know, ultimately a good thing, you know, when it does happen. Okay. Your next question comes from Adam Tindle with Raymond James. Your line is open. Okay, thanks. Good afternoon. Mike, I just wanted to start on the component trends and how global demand is above supply right now. You talked about seeing some supplier price increases, and inflation is potentially becoming a theme. Just wanted you to revisit that idea and cover how inflation impacts component distributors historically, and what could be different this time during this cycle. I'd imagine that there's a benefit to gross margin, and that's been in decline for a number of years, but could eventually turn around here with some inflation help in Western regions coming back, so maybe you can double-click on that point. Yeah, I think first off, you know, the pricing declines have largely been across the board with efficiency. You know, efficiency has largely outrun the pricing declines, and that's just sort of a basic in the law of economics, right? The efficiency eventually does get to the market, and that's what you've certainly seen in our business over the years. I would expect that to slow, and clearly, in times of inflation, you're gonna see that slow, but it's gonna depend on how the inflation hits the raw materials for the industry. But then you have one more thing, right? You used to have most semiconductor companies used to have their own fabs, and they didn't have a third party running the fabs. Now there's third parties running the fabs. The fabs are needing to make more money, too, so that's just another sort of curveball in the equation. I think largely manufacturers have looked at that. They've sort of priced that in right now to what they're looking for, and you're starting to see it go to the market. You know, the inflation is gonna hit the end-use products first before it hits the manufacturing products. So I think, you know, that'll be a delayed reaction if it happens. You know, I still think there's some question as to whether or not that will happen, but the price increases are coming now, and I largely think we'll have that priced in by midyear in 2021. Got it. That's helpful. And, just one follow-up for Sean. First of all, congrats on the new role, and just wanted to ask you a strategic question on ECS. You've had, you know, some changes at the competitor level, one, you know, splitting their business, another changing from Chinese ownership to now a new PE firm ownership. And, you know, each of those competitors seems determined to continue to consolidate and get bigger in that industry. I'd just be curious, your kind of long-term strategic view and the moves that you can make in ECS to perhaps consolidate as well, or does it make sense to kind of stay where you're at? You know, what does the chessboard look like in three to five years, let's call it? Sure thing. Well, first of all, thank you for the congrats, I appreciate that. I, you know, very aware of the fact that at least the capital structure or the finance structure for some of our competitors has changed. You know, in terms of what that means for their go-to-market strategies, be it, you know, public or private, you know, probably better for them to answer. But you can imagine we've got a healthy respect for all of our competitors, but, you know, intentionally, we are gonna continue to focus on, you know, what we think is a promising market for, you know, hybrid and multi-cloud solutions. We're gonna stay in the more complex end of the, you know, the IT spectrum, and we think that that, you know, will continue to stand us apart. You know, with regard to consolidation in the industry overall, you know, we're always sort of keeping our eyes open for, you know, markets and players that we think offer us a, a value-based return. And so, you know, I'll make sure that we continue to, to look at those. By no means, you know, would we not do something if it made sense, but we like our space, you know, in the more complex end of the enterprise, you know, IT environment, as I said. And, you know, I think in the near term, you know, our intention is to, to largely stay there, although obviously, we'll compete differently over time if you look at, you know, the investments we'll make in, you know, our cloud go-to-market motion, among others. Got it. Thank you very much. Yeah, this is Mike. I'll add one thing to that. We now have overlap between our computer business and our core components business in the range of, you know, $1 billion-$1.5 billion of customers. So that we've seen that consolidation, or not the consolidation, but that sort of movement together over the last couple of years. We knew it was coming, and we knew there was a gap there, but we're starting to see that now with, you know, a really, a big trend in the OEM computing business to start doing these specialized appliances that we had talked about, and from the design to the supply, to the chip, to the build of those. And we're now seeing that through not only our contract manufacturer customers, but ourselves, and also in the designs that are coming in. So, you know, that does give us a synergy that, these two businesses working together, are playing better in our sandbox, and you can see that from the efficiency numbers in here. So yeah, we don't, we don't have any intentions of splitting anything, selling anything off, or changing our strategy. We believe we have a good strategy. We believe it's served us well so far, and, there's no desire to change that. Thanks for the clarity. Okay. Your next question comes from Tim Yang with Citi. Your line is open. Hi, thanks for taking the questions. Back in 2017 and 2018, there were component shortages, and you benefited from that. But in 2019, you experienced some headwinds due to destocking. What have you learned from that experience, and what are you doing differently in this cycle to protect the potential destocking risk, you know, after these shortages? Yeah, I think, you know, in the past, you would see this book-to-bill, you know, panic everybody, that there was double ordering, and they would talk themselves into it. We've spent a lot of time, this go around, with our customers, you know, asking for better visibility in their product and product flow as being the best way to help them. And that keeps them from sort of doubling up on their current orders, asking for all of it at once, because the truth is they're not gonna get it. They never were in a shortage before, but this certainly helps us have orders that now coincide with the lead times that are out there from the suppliers. That will help with a better flow and hopefully keep inventories at a level that we don't have a big crash at the end of this, which is something that, you know, you guys have seen before. Not recently, 'cause we haven't had a shortage level like this for some time, almost 10 years or something. But I think, you know, the way it's being handled, we're planning on it being a smoother ending than the rough ending that we've typically expected in a downturn. So we'll see how much we've learned if the visibility helps us all, but I believe it's going to. Got it. This is very helpful. As a follow-up on ECS, I think Americas ECS revenue was down 10% year-over-year, and I think that's consistent with the previous two quarters. Can you maybe just talk about what you are seeing in the end market? And we have heard some server and PC demand recovery, but it seems like that's not quite reflected in your ECS segment. Yeah, sure. So just in terms of, you know, some of the market and technology trends that we saw in Q4, and this is generally true for, you know, all of our regions, but, you know, I think we're still seeing some benefit from the, you know, the, the remote work initiative, if you will, still has some legs. And that benefits, you know, multiple pieces of our technology portfolio. I think right now, all things cloud and cybersecurity remain, you know, in good demand. And, you know, the good news is we've got good exposure to both of those technology sets. And then I think you heard, you know, Mike talk a little bit in his opening remarks, you know, there is a reality where, you know, you can't get inside all the data centers yet, and so that tends to slow work that needs to be done, you know, on premise with existing application environments. I think we saw a little bit of improvement in that regard in Q4. And again, depending on when the broader market comes back, you know, we should see more of that, over time. Got it. Thank you. Your next question comes from Matthew Sheerin with Stifel. Your line is open. Yes, thank you, and hello, everyone. The question, Mike, regarding your Asia component business, which, as you said, was up a very strong 50%+ year-on-year. How much of that was from underlying business versus semiconductors and other components into that customer base that you may not have been serving previously? Well, anytime you get a new customer, there's a new opportunity, right, Matt? So, you know, the nice thing that we have seen overall, and I don't know that the transition business has much play in this, but we did see an increase in sales of other components, also in Asia-Pac. You know, it was expected, even with some of the transfer business you guys have alluded to before. We said, you know, they were really the first to come out of COVID, so they're starting to turn back on. You know, Europe was sort of the second one to come out of this COVID thing. We're starting to see that turn on ahead of North America, and hopefully, as North America turns back on from COVID, we'll see the increase we're all finally hoping for here. You know, and I think that's really what you're seeing, is that these economies are turning on at a different time, but I believe that has a play in it, and fully expect that Asia will continue to grow. We have added a lot of salespeople in the Asia region, and that goes part and parcel with the growth. You do that naturally. There's no change in strategy for us in Asia. We still believe we're operating the way we should there, just like we believe we're operating the way we should in Europe and North America. At this time, I think the, you know, the biggest hindrance we have, Matt, has nothing to do with Asia and really has everything to do with North America, and that's where we're focusing now to figure out, you know, is there anything we can do to make North America grow faster? We're gonna do it if we can. Okay, thanks for that. And just related to that, given the outsized exposure to Asia now, your gross margins have been trending down year on year. And Chris, what should we be thinking about gross margin, particularly as you got some improvements in North America and Europe, but the Asia business is still growing pretty fast here. So how should we be modeling down gross margin? Yeah, I mean, I think as we look forward, we'll, we'll continue to see improvement as, EMEA and, Americas come out of COVID, as Mike said. I think the other thing you'll see, obviously, is operating leverage. And we have talked in the past about continued growth in our value-added services and offerings that we can bring customers that ultimately help GT. And I think you'll see them, you know, in that order. So in terms of kind of predicting that over the course of a year, tough to do, but I fully expect that, you know, as we exit, you know, 2021, you're gonna see stronger margins than we exited 2020 with, as a result of all of those things. So that's, you know, high level, how I think about it, and in the near term, we're focused on driving the operating leverage as mix improves. Your next question comes from Ruplu Bhattacharya with Bank of America. Your line is open. Hey, thanks for taking my questions. I have two for Chris. The first one on ECS margins. The fourth quarter is typically strong, and this quarter, we're certainly at 6.3%. Can you help us understand the 190 basis points sequential improvement? How much of that was higher volumes, how much of that was FX, how much of that was mix? And then the next part of that is, looking into the first quarter, if I look at the year ago quarter, it was, you had a steep decline from Q4 to Q1. But now that the business mix in ECS is improving to higher software and services, can you give us your sense of, you know, what type of a decline we should expect sequentially in ECS margins? So, Ruplu, really, if you look at Q4, the key driver was mix, as Sean mentioned earlier. So as we see more shift to our software and services portfolio, those are higher margin. As we said, that obviously impacts sales growth, right? We've talked about that a lot in the past because of the gross to net accounting that takes place, but, it is margin accretive. And as we look to Q1, we've got, margin expansion as well, year-over-year, as we expect that trend to continue. So the mix trends, product mix trends in that business are very positive. And as Sean mentioned earlier, our focus on hybrid and multi-cloud environments, are a big reason behind that, and that's gonna continue. Okay, got it. And then maybe for my second question, just wanted to delve a little bit deeper into the quarter closing dates, comments that you had. So, are we? Is the net takeaway that the first quarter is gonna be stronger and the fourth quarter should be a little bit weaker because there's one less week in the fourth quarter and one more in the first quarter? And if so, how, what, what kind of dollar impact are we talking about? Yeah, I think... So when you look at the impacts of the change in the calendar year over year, it's beneficial to the way we look at ECS because so much of that business is calendar quarter independent. So in Q1, we pick up a calendar quarter end. And what happened last year is Q4 was really the big quarter. So I think you're gonna see a Q1, Q4 shift year on year, where Q1 will be relatively stronger and the offset will take place in Q4. Got it. That makes sense. All right, thanks, and congrats on the quarter. Thank you. Your next question comes from Joe Quattrocchi with Wells Fargo. Your line is open. Yeah, thanks for taking the question. On the component shortages, you know, it seems more like that this time around, it's on the ASIC side, versus last time it was more about passives and MLCCs. Mike, I'm just curious, how do you think about the supply side's ability to catch up this time? And how do you think about that from your approach? Do you approach that any differently? Well, you know, basically, look at the sales for the fourth quarter of everybody that was out there. You know, it was largely a good quarter, right? So, not a surprise that you're seeing some shortages given the uptick. You know, it's typically been kind of a 10%er, you know, if you wanna put a number on it, when the business goes up, before you start seeing some shortfalls out there. And that's, you know, just a given of the supply chain, but the supply chain has increased. It still looks as though there's more increasing coming on. If I can say that after COVID, things are looking up, as we said, in Europe already, so we're hoping North America does the same. And the trick here is visibility. How much visibility can we give the manufacturers of what we really need during a quarter? So, you know, in the past, as I said, our book-to-bill went into the manufacturer, and they would see this big glob of stuff, and we'd be asking for everything right now. This time it's measured. We need X amount in January, we need a certain amount in February, we need a certain amount in March. We're getting the next quarter. We know April, May and June, and then we can talk to you about after that. So the industry has responded well, where we've asked for them to place their orders out further. That's one of the reasons, actually, that we didn't publish our Book-to-Bill without an explanation this quarter, because you'd see, you know, a big Book-to-Bill, but there's a big portion of that goes into Q2 and starts to go into Q3. So my view is, yeah, it could be hand-to-mouth for a little while, but I think things are going to largely make it through the year. I believe everybody is digging to make that happen, and they will. That's helpful. And then on the ECS side, you know, you recently announced an expansion of your partnership with AWS. I was just curious if you could talk about that opportunity, and then maybe can you remind us how big is your, your cloud business or maybe what was that from a revenue perspective last year? Sure thing. So, you know, what I can tell you is, you know, we are still growing our overall cloud business and then the, the recurring revenue piece of it substantially. You know, I think I'll, I'll work with Steve and Chris, and at the right time, we'll be able to get, you know, more specific about, you know, actual numbers. But, you know, we continue to invest in that market trend, and I think we're lining up to it nicely. As for the, the cloud portfolio, you know, we continue to add, you know, supplier solutions to it. You know, you called out, you know, the partnership with AWS. While we wouldn't talk specifically about, you know, the size of any supplier relationship, we are, we are pleased to now be working with the five largest cloud hyperscalers in the world, in the way that we go to market and the value they see in our channel. That particular relationship, to Mike's earlier point, is really gonna help us, you know, in sort of the IoT or the IT meets OT space, we think, over time, given the, the potential associated with our, our full portfolio. Okay, and your last question comes from William Stein with Truist Securities. Your line is open. Great, thanks for taking my question. I'd just like to ask about the decrease in inventory. That was something that, you know, was certainly expected, given the, comments from many of your suppliers about, about the shortages and such. What does Arrow see from the perspective of the potential to refill that, to improve, you know, delivery stats for customers? Is that something you think could, get back to more normal levels in a couple of quarters, or do you see that as being sort of at this protracted lower level through the whole year and maybe even longer? Well, I'm not sure it's at a protracted lower level. You know, I think we're talking about, what, $50 million or $40 million? It's not a- Relatively flat. It's basically flat. We're seeing flat inventories, and you just saw a big number come out of the inventory level that we finished with. As I said, I think you're gonna be seeing more hand to mouth. We're probably going to be getting more shipments in per month now than sort of just a few a quarter from manufacturers. That's sort of the diligence that has to be on this at that point, and I don't expect that to, as I said, be a problem. We gave you forecast for the first quarter that, you know, is largely my guess, it's better than the fourth quarter for components, and we believe we can do that. We don't believe that inventory level that you just brought up is an obstacle for us to be able to deliver that number. So hopefully, that answers your question. Yep, very good. That does it for me. Thanks. Okay, and I'd now like to turn the call back over to Steve O’Brien for closing remarks. Thanks, everybody, for joining us today. If you have any questions about the call or our earnings materials, feel free to reach out to me. Thanks for your interest in Arrow Electronics, and have a nice day. This concludes today's conference call. You may now disconnect.