Good day, and thank you for standing by. Welcome to the Arrow Electronics First Quarter 2022 Earnings C onference C all. all. 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 the session, you'll need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, you may press the pound star zero. I would now like to hand the conference over to your first speaker today, Rick Seidlitz, Principal Financial Officer. Please go ahead. Thank you, Patricia. Good day, and welcome to the Arrow Electronics First Quarter 2022 Earnings C onference C all. all. With us on the call today are Mike Long, Chairman, President, and Chief Executive Officer, Sean Kerins, Chief Operating Officer, and Rick Seidlitz, Interim Principal Financial Officer. 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 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, Rick, and thanks to all of you for joining us today. For the first quarter, we built on the record performance we delivered in 2021. We saw a continuation of the strong demand conditions from last year. As a result, demand for electronic components and associated design, engineering, and supply chain services remained high. This led to record sales in the first quarter, exceeding the top end of our expectations. In addition, our record gross profit and earnings per share for the quarter were driven by strong execution in the face of severe supply chain demand imbalance. I'm pleased to report that our past investments to enhance our capabilities, especially in the area of supply chain as a service, are leading to growth in our profit performance. While some bottlenecks persist, demand for electronic components across key industries and all three regions, particularly the Americas and the EMEA region, remained strong. A favorable mix of higher-margin products and solutions, along with regional mix, resulted in record quarterly operating income and margins. This points to Arrow helping customers navigate shortages and supply chain challenges. In this environment, they can maintain production, bring new products to market, and securely manage their applications and data. By helping to mitigate production risks and help assure a steady stream of products to the market, Arrow solidifies its position as a trusted advisor working alongside customers and suppliers. Thanks to the focused execution, our components business produced record results this quarter. Our Global Components business delivered the highest-ever operating income, along with sales above our high end of expectation. The Americas experienced robust demand across most end markets and industries. EMEA performance was strong across all industries due to improved supply, while Asia's performance was impacted by product mix and supply. Design activity improved in all three regions and backlog continues to grow, indicating that all customers are still concerned with securing supply. Our enterprise computing solutions business delivered solid operating performance. We saw demand continue to grow for more complex solutions, including hybrid, with backlog at record levels in all regions. With operating performance growing year-over-year, our business is well-performed and positioned for the remainder of the year as customers are anticipating longer fulfillment and placing orders further out, resulting in a strong pipeline. While the IT demand environment was healthy, business mix was skewed towards software and services due to customer preferences. Hardware-related sales continue to face challenges from supply chain bottlenecks, resulting in slightly lower net sales than we anticipated compared to prior year. I'd like to congratulate all of our teams for their strong execution in delivering a record quarter. Arrow's well-positioned to continue to deliver results given our investments that are driving our growth. Arrow's strength also comes from consistently emerging stronger from downturns and disruptions. Our performance is indicative of just that, and we look forward to expanding our business to the benefit of our customers, suppliers, and team. We also believe our strength comes from working on technology solutions that make a difference in people's lives. That is engineering the power of innovation to make life better. Before I hand the call back over to Rick to provide more details on our results and our expectations for the next quarter, I'd like to add a personal note. On Monday, we announced that Sean Kerins will assume the role of President and Chief Executive Officer effective June first, and that I will become Executive Chairman. Over the years, I have enjoyed our conversations about the business and the dynamics affecting our industry at large. I'm grateful for those relationships we've built, and I wish you all much success in your careers. Sean has been a leader with Arrow for 15 years, most of that working closely with me, so you already know that you're in great hands with him. With that, Rick, I'll hand it over to you. Thanks, Mike. First quarter sales increased 10% year-over-year on a non-GAAP basis. The average euro dollar exchange rate for the quarter was $1.12 to €1. Changes in foreign currencies negatively impacted sales growth by $152 million year-over-year, slightly below the prior expectation of a $160 million negative impact to growth. First quarter gross profit margin of 13.3% was up 220 basis points year-over-year due to higher margins in both Global Components and enterprise computing solutions. Operating expenses increased slightly as a percentage of sales year-over-year, but decreased significantly as a percentage of gross profit. As a reminder, many of our value-added services and solutions can be independent of the sale of electronic components and therefore contribute more meaningfully to profits than to sales. Interest and other expense was $34 million, which was slightly below our prior expectation. This was mainly attributable to higher interest income offset partially by higher rates on floating rate debt. Our effective tax rate of 23.5% was in line with prior expectation and the target long-term range of 23%-25%. Turning to the balance sheet and cash flow, first quarter operating cash flow was -$200 million. The first quarter is typically our most challenging quarter for cash flow generation. Compared to the fourth quarter, our inventory days have increased, but this is largely due to us stocking higher value inventory with a greater design and engineering component. Our cash cycle of approximately 60 days was six days longer than the fourth quarter. However, our return on invested capital and return on working capital reached new highs for any first quarter and are near our all-time highs achieved in the fourth quarter. We are making responsible working capital investments to capitalize on strong demand environment. Net debt totaled $2.9 billion, and total liquidity was $2.6 billion when including cash of $243 million. Our liquidity position is one of the best in the history of our company. Our strong profitability and the effective management of our balance sheet enabled us to deliver on our commitment to return cash to shareholders through the repurchase of approximately $250 million of shares for the fourth consecutive quarter. This brings total cash returned to shareholders over the last 12 months to approximately $1 billion, reducing our diluted shares by approximately 9%. We remain committed to returning cash to shareholders as we are confident that we are repurchasing shares below their intrinsic value. At the end of the first quarter, our remaining repurchase authorization stands at approximately $513 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 business segment results, please refer to the CFO commentary published on our website this morning. Turning to guidance, midpoint sales and EPS guidance imply all-time quarterly records. Midpoint Global Components sales guidance would be an all-time record for any quarter. Our guidance reflects continued strong operating leverage for Global Components on a year-over-year basis, with profit growing several times faster than sales. Our forecast suggests enterprise computing solutions profits grow year-over-year, and it would achieve its strongest second quarter in several years. We estimate an approximately $300 million headwind to sales and $0.20 headwind to EPS growth due to the strengthening of the US dollar compared principally to the euro. Finally, please note that the CFO commentary includes information on our fiscal calendar closing days. With that, I'll turn the call over to the operator for Q&A. Thank you. At this time, I would like to remind everyone in order to ask a question, please press star then the number one on your telephone keypad. Again, that is star one on your telephone. Please stand by while we compile the Q&A roster. Your first question comes from the line of Toshiya Hari from Goldman Sachs and Company. Your line is open. Hi, thank you so much for taking the question, and congrats on the strong results and congrats to Mike for a very successful career. I had two questions. First, I guess on the pricing environment, we're obviously hearing from your partners, your suppliers about inflation and how they're passing that through to partners and customers like yourselves. What are you seeing from a cost perspective? How are you translating that into your pricing, and how should we expect that to impact margins going forward? Then I've got a quick follow-up. Sure. Well, as you know, we've been talking about this for a few quarters, and the increases do get passed along all the way through to the customer base. What we started seeing was that they were coming more often at the end of last year going into this year. What I would say is I believe most of it will stick because raw materials are up, trucking is up, moving products around costs more, and just general manufacturing for the suppliers is up. I expect for that to go through. Having said that too, as you know, that does have an effect on your inventory ratios, your turns, and those types of things, especially if you're stocking more value-added product, but the prices have gone up significantly. I would say that, pricing will abate towards the second half of the year, but we're still expecting some price increases through there, and by then I would say everybody will be caught up, which would be good. It would be good to get some normalcy in the product. That's very helpful. Then, as a follow-up, I just wanted to ask about your views on the overall cycle. You know, you guys sound really good. Your suppliers, your partners also sound very good about the demand profile going forward and the visibility you have. At the same time, you know, we hear about some of the consumer-facing applications from a demand perspective, you know, there being signs of moderation. You've got a war going on in Europe. You've got the lockdowns in Asia. I guess the fear is things kind of slow down from here onward. What are you seeing and what are you hearing from your customers and how are you planning your business for the next six to 12 months? Thank you. Yes. I can address most of that by things we've said and some of the new things we've said. First off, you know, the size of this war is not as big as some of the others. However, you know, during war conditions, obviously the military starts spending more money and creates more demand. While, you know, the war is a negative, as you guys know, you know, a war economy isn't always a bad thing. The second thing in general, where you're coming across, especially on consumer products and some of the others, I think the point that was just made really plays into that. We have seen pricing go up, but unit shipments have gone down, you know, over the last year. We're not filling the full demand that is going to market, and the question would be if some end-use markets pulled their demand out, what would happen? Right now the answer to that is largely not much of anything. Ukraine demand came completely out, Russia demand came completely out, and here we are in the exact same place. I think, you know, we're in a position of higher priced product but lower units to get to a market that has a higher than normal expectation of getting product. I do not see manufacturing picking up to a point that is going to offset that all the way through the first half of next year and possibly going further from what we can see today, even though I wouldn't commit to it. I would love to commit to it, but Sean's gonna be sitting here, so I don't want him to have to live with what I say. I will tell you, I think the demand, forecast, separate from the economy is still good for a good period of time. Very helpful. Thank you so much. Yep. We have your next question coming from the line of Joe Quatrochi from Wells Fargo. Your line is open. Yeah. Thanks for taking the question, and I'd echo congrats to Mike and Sean's new roles. I want to try to understand, you know, the incremental EBIT margin that you're seeing in the components business on a year-over-year basis is pretty phenomenal. How do we think about that looking into the second half of this year as we start to maybe comp some more significant price increases that we saw in the back half of last year? I think what we would say from our point of view is firm, if that's a good enough answer for you. We don't see things going the opposite way in our ratios right now because as I said, we believe demand is gonna stay in, you know, where it is. The supply factor is what really gives you pause. But now we're sitting here with, you know, roughly four quarters of demand from our suppliers, so it gets a little bit easier to forecast, albeit still tough because we can get some upside. But we expect it to probably continue to improve given some of the efficiencies we're working on at the same time that the volume is going out the door. I don't see things declining for quite a while yet. Okay. That's helpful. Just kind of curious, you know, you talked about, you know, the higher value inventory additions this quarter. Are we to take that as, I guess, assuming that your inventory on a units basis is continuing to still kind of decline or remain flat? Yeah. I think that's exactly what we see. You know, I wouldn't say it's declining. I wouldn't say it's totally flat. I would definitely say it's not up. Mm-hmm. When we start to get more supply, and I think it'll be an irregular supply in the beginning as suppliers can increase their volumes, but that's a long way off. I think it's still more of the same. I think there's still some more price increases and hopefully we start getting upside of product towards the second half of this year a little bit. Got it. That's helpful. Thank you. Mm-hmm. Your next question is from Matt Sheerin from Stifel. Your line is open. Yes. Thank you, and good afternoon. A question, Mike, just regarding the components business and the revenue decline in Asia year-over-year. You talked about constraints and some other issues, you know, yet your competitor, your biggest competitor, Avnet, had pretty strong, you know, double-digit growth year-over-year. So I'm wondering, you know, what the difference might be in terms of customer mix and also the supplier relationship with TI, where we saw a lot of movement. You took a lot of market share, but I know there's some of that business going direct. So does that play into it at all as well? Yeah, of course. There's several things. Number one, you know, you also saw WPG and WT had, I think you even wrote the article about it, you know, some growth, but that was primarily Taiwan. As you know, we're not a large- Yeah Top player in Taiwan, number one. Number two, the consumer end of the business has not been a strength for us. Number three, it is the supply. If you remember when this first started to take off, we were shipping a lot of product, and China was overwhelmingly the biggest in the mix. Most of those manufacturers got out of trouble. I'm not gonna say they're out of trouble, but we went to a more hand-to-mouth situation there now than what we felt was an oversupply. It's balance. It's how much product you get. You know, it just varies by how your backlog sits. I think we're in a good place there. I wouldn't really ring the bell on any place. Like, for example, if we really did great in North America, Matt, and the other guys didn't do great, or they did great in Asia, and we didn't do great, or vice versa in Europe, it's about supply for each of us. They have their supply issues, we have ours, and that's what we're dealing with. It is clearly not a demand problem anywhere for anybody. Got it. Fair enough. That's quite helpful. On the computing side, you talked about increased profits year-over-year, but for Q2, you're guiding, you know, revenue down. Again, is that a function of mix? In terms of the pipeline that you're seeing, are you expecting the second half to be up versus the second half of last year? Yeah. Well, right now what we are seeing are constraints on product and hardware, and we're trying to get that piece of it caught up. That's largely what's missing. Virtually everything else we have in-house is growing. The hardware piece is the toughest piece. When we get into the second half, because Sean's gonna have to live with you, I'm gonna let him answer that piece. Okay. Thanks, Mike. By the way, you know, I may come down and go fishing with you in the sound after this is all over. Thanks, Mike. That'd be great. Yeah. Yeah. Matt, in addition to what Mike said, I would just point out that, you know, we love hardware, and we'll continue to drive it. We've also intentionally been driving a mix shift to, you know, more software, more hybrid cloud, more services. By definition, that's gonna create, you know, a different dynamic for reported sales. We are actually gonna grow on the billings line in Q2, by the way. At the end of the day, you wanna kind of evaluate things on the basis of GP and operating income dollar growth, you know, year-over-year. We did that in Q1, and we're calling for that again in Q2. As we look to the second half, it's hard to say exactly when the, you know, the hardware supply chains improve. Your guess might be not much different than mine. You know, the good news is that hardware pipeline and backlog continues to grow. That gives us a little confidence that we're seeing some renewed activity in the traditional, you know, on-premise piece of the data center, especially as it pertains to hybrid cloud activity. We'll keep building that backlog and be able to benefit from it, you know, when things loosen up. We are expecting continued progress across the course of the year, and we are looking for, you know, better performance in the second half. Okay. Sean, have you seen the supply constraints actually worsen in the quarter, which we've heard from some others, or is it, you know, kind of the same? No, we have, Matt. You know, since we started to see lead times extend in our systems and storage and network business, I would say mid last year, you know, kind of late Q3, in some cases, lead times have doubled, tripled, or even quadrupled. The news hasn't gotten better. And, you know, we're working it case by case and supplier by supplier and deal by deal. It will get better. It's just tough to call exactly when. Okay. Great. Thanks, and congrats to you and Mike. Thanks, Matt. Thanks, Matt. The next question is from Ruplu Bhattacharya from Bank of America. Your line is open. Hi. Thanks for taking my questions. I'd like to convey my congrats as well to Sean and Mike. Again, this quarter, you had a very strong quarter in ECS for software and services. Mike, you also talked about supply chain as a service. Do you think at this point, you know, there's a recurring revenue component to your ECS sales that probably is meaningful? Can you comment on, you know, is that something that you would disclose at some point? How should we think about this mix of software and services trending over the next couple of quarters? Yeah, I think that you know, you're absolutely right. It's an astute pickup, and that would be something that we would look at disclosing, you know, at a later date as we saw the consistency start to build on those products. You know, it's really not in a position where you would call it a line of business. It's really a product sale in our normal conditions of business. But as we start to see that diverge, you are correct, it will move into that. You'll start to see that being reported like others. I wouldn't expect that for another year or so, though. What I can tell you is we're very pleased with the increases we're seeing, you know, in the services and in the cloud business. That's what we've been pushing for over the last couple of years as we know that model is changing. We just wanna be on the front end of it this time. Got it. That makes sense. Maybe for my follow-up. Mike, can you talk about your capital allocation priorities for the next 12 months? As you look out into, you know, the next three to four quarters, what gives you the most concern? I mean, it looks like the backlog is strong and market demand is strong. Doesn't look like we're going into a recession or at least, you know, orders aren't being cut. I mean, is there anything that gives you concern as you look out over the next 12 months, and how would you spend your cash and capital allocation? Thanks. Yeah, I think there's you got a few questions in there, but that's okay. I think as far as our cash and allocation of cash, it's the same. You know, invest in the business where we can get the growth and the profit. You know, M&A, if that's a possibility, which is rather remote during this period of time right now. Then the third is to do buybacks, you know, return cash to shareholders, which as you know, we've been doing, and we've been doing it with great consistency to, you know, give that comfort level. As far as that goes, I don't see a big change right now going out. Things that would concern me are, you know, if inflation continues to go in higher value inventory, obviously that takes more cash to buy the inventory until you can get settled through the system and get your receivable prices matching your inventory level. So, you know, you might sell a part for $1 today, but then that part, I'm gonna use an extreme example, might go to $1.50, you know, next month, and you're still pulling your receivables in at a lower price. That's, that plays a little bit of havoc with your cash short term. But certainly on your sales and profit, you get it there. So for us, it's really about, I think cash and continuing, you know, buybacks on a certain level balanced with our cash. Okay. Thanks for all the details, and congrats on the strong execution. Thanks. We have your next question from William Stein of Truist Securities. Your line is now open. Great. Thanks for taking my question, and I wanna add my congratulations on your relative ascensions to these new positions and also especially on, you know, the great results that you're posting today and the guidance. And you deserve quite a bit of credit for that. I do wanna ask about the cyclicality of each of the businesses for a moment. In components, in the past we've seen periods like this, for example, post-financial crisis in calendar 2010 to 2011. In fact, if you go further back to the tech bubble in 2000, margins were dramatically higher. Now we're seeing this expansion again in the last few quarters. Those are great results, but I wonder if there's enough that's changed in this business that might keep those margins at this elevated level through, you know, the cyclical times that we're almost certainly going to face. Yeah. You know, we've kinda laid out how we saw the pricing go, but there's several things that have changed, and there's obviously several things that have changed within Arrow. You know, one happens to be engineering. As you know, we've put more focus on that over the years than our services and software business, which, you know, are less susceptible to those market changes. Thirdly, if you take the components business, which as you guys know is one of the big drivers of just looking at the numbers, the price increases appear to be more structural now. You know, with the raw material prices up, I don't think anybody is thinking that raw material prices are gonna go down. You have manufacturing costs, you have new fabs coming on, and you guys know in a $10 billion fab, somebody's gonna pay for it, and in the end, it's gonna be in the price of the product. As these structural changes start to take place in the business, I think you're going to see that. The other thing is the amount of inventory on hand is likely to move closer to a just-in-time inventory, thereby there'll be less inventory being held for two reasons. One is going to be more visibility in the system, so customers are gonna have to place their orders out further, and customers are gonna be more concerned with supply than trying to get that extra penny off the part like they've been conditioned to. All of that will come into play. The question is, will we give back any of it? I think any time you're dealing with an inflationary market and hard to get parts at one time, of course, some will go back. I don't believe it'll be dramatic, as dramatic as last time, because that was really an economic situation more than the semiconductor business this time with a pure supply problem. Now coupled even with a little pullback in the market, that's not gonna fix the problem. We're still gonna have these shortages for the next year or two. Hopefully, that helps you. Yeah, that helps a lot, Mike. I was focused on the component side. I think you slipped some commentary in systems, but I wanna focus on that business separately just for a moment. You know, I was talking with an investor earlier today who said, you know, "Look at the multi-year growth in revenue in this business." You know, I know that you've in the past had this target of one and half to two times IT industry spend, and I don't necessarily track that so carefully. You know, this business has declined in each of the last four years on a revenue basis anyway. It's the revenue's down to where it was about nine years ago. Yep As you call out, I appreciate that the profitability here. Maybe if we look at the operating profit, that's the right way to measure it 'cause it's not, it looks better in that regard. Is that the way we should think about this business in terms of how you manage it internally? You're managing it to the operating profit level, and that's what we should target from a growth perspective. If so, maybe what's the growth rate that we can expect in the future? Thanks so much. Yeah. I think you hit the nail on the head. We have been pushing this business to a services and software business. The operating income, you know, has been getting better. That business has been growing with the market. If you go nine or ten years ago, our hardware business was basically all we had. We just had hardware that we were selling. Over that period of time, you know, you may or may not remember based on your age, but I'll show mine a little. We used to buy storage systems from EMC at $1 million, you know, and they used to get put in. Now that product is $50,000. The price of hardware has come way down over the years, and we thought then it wouldn't be sustainable as we started building the rest of the business. Given, you know, how we account for things and how we have to legally account for things, you don't get to see the growth on the top line in sales. The best place to either see it is really on the bottom line and where we've applied money over the years to improve the bottom line. We're also seeing the point now of what I would say is that crossover point where we should be seeing a little more consistent growth because we're getting to those levels now. Great. Thank you. Yep. Thanks, Will. The next question is from Nikolay Todorov from Longbow Research. Your line is open. Yeah. Hello, everyone, and my congrats as well to both of you. A question, I think, Mike, you mentioned when you talked about the components business in each geography, loosening supply. Maybe you can touch upon that and expand a little bit. Where exactly which areas of maybe products you're seeing signs of supply starting to loosen up? I guess related to that, the outlook for the components business into the second quarter is stronger than most of your suppliers and peers. Is that also because of expectation of supply loosening up? Yeah. We believe we've got a handle on the supply we're gonna get for the second quarter. You know, we believe that we've been looking at it for a while, and it looks pretty good. I think, you know, since we started looking at it and thought of our own guidance, we also saw other suppliers come out with a little stronger market than we thought was gonna happen. It's very good. It's purely a supply-demand and when the orders are in the system. Virtually every vertical market in North America, in Europe, and in Asia, you know, with the exception of one or two, are up in their demand count. The ability to really forecast to you immediately by region where that's gonna fall is a difficult thing. We know the prices, we know the inventory levels, and we kinda know where the inventory is coming in, and that's how we build it up. Pure supply right now, nothing else to it. Okay. Thanks. That's helpful. Second question, just double-clicking on a comment you made that pricing will abate towards the second half. Can you expand maybe a little bit on what do you mean by that? Simply because we've seen obviously the raw components, raw materials continue to increase throughout the first couple of months of the year. Maybe can you talk broadly about the sustainability of pricing power for the suppliers? Are you starting to see any increase in pushback from customers on the price increases on the semis side, which we've heard are quite substantial? Yeah, I think the customers have a choice. You know, I'll start there. They can pay it or not get parts. That's the draconian answer, and that's basically the answer from the suppliers too. The reason that I say abate, I didn't say go away, so you know, we might as well put that out there right now. You know, a lot of suppliers came out with 20% immediate price increases, 25% immediate price increases to get caught up to where they thought they needed to be. I don't believe we're gonna see that kind of increase again in the second half of the year. I think those numbers will go down, and I think largely it is a big exercise for suppliers to raise the price and go through everything on their side. I don't see a lot of them coming back and revisiting that to the following year. The pricing power is there. As I said before, the difference is either a supplier builds a $10 billion fab or they farm it out to somebody else who has, and whoever builds the fab is gonna have the ability to charge to have those products built. Customers have frankly been getting a deal for a good many years. They've been getting better, faster, cheaper, right? In their products, and they haven't had to pay for that. Now they're gonna have to pay for it, and I think that's here for good. Got it. Appreciate the answers. Thank you. Yep. Again, if you would like to ask a question, please press star one on your telephone. We have a question from the line of Jim Suva from Citigroup. Your line is open. Thank you so much. Congratulations, Sean and Mike. You know, having known you for decades, it's gonna be a pleasure for me to say congratulations, but you'll be missed. Thank you. My question is on the inventory build. You know, I'm not saying inventory is a bad thing. It's not. When I look at the percent increase year-over-year, up over 40% and quarter-over-quarter up, say 10, 11%, and I look at your outlook for sales. Yes, prices are going higher, but your sales outlook isn't, you know, even close to those type of builds. Can you help me understand, and maybe some of it is it's already completely shipped out of your building and gone, or I just don't understand the magnitude. It seems like a big difference. Again, not that it's a bad thing, but I'm just trying to get my arms around why there's such a big difference between the two numbers. I think what you have, Jim, is the age-old answer that, you know, when you take it over time, the inventory changes here daily. It, you know, one week can make a huge difference. One day of shipments can make a huge difference. You are seeing an end of the period number, but there is a lot of activity and a lot of churn in the period itself. The vast difference, though, remember I said before, we may be carrying a part today at $1.50 that we sold 30 days ago at $1 because the supplier just came in and rose the price, raised the price on it. We have to pass that through on all future shipments. You get the dollar value of the inventory today, and you get the future sale of that higher level inventory tomorrow. Does that make sense? Just the difference, again, of your sales outlook isn't, you know, close to, you know, let's say. Let's call it close to 9%-10% for your sales outlook. The inventory build, you know, was up year-over-year 40%. What came in. Right. come out, there's still a disconnect. Well, you have that, but you also have, as I said before this time for us, we had a bit of a fraying up of the higher, more expensive type parts that were more of what were the golden screw parts. If you remember, that was the biggest scream that most of the customers had. They didn't have the parts to fulfill their build. Those parts are coming in now, and that's one of the other reasons that you see the inventory is actually more askew with the higher dollar value parts than it was before. Okay, that makes complete sense. Okay. We do go fishing here. We do go fishing here in San Francisco, also in Silicon Valley. Thank you. I know you do, and I know you like it. It's a great career. I was waiting for you to get on. Maybe your July Fourth party. Congratulations. Thanks, Jim. There are no further questions. I would like to turn the call back to the speakers for further remarks. Speakers, please go ahead. Thank you for your interest in Arrow Electronics, and have a nice day. This concludes today's call. Thank you for participating. You may now disconnect.