Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Arrow Electronics first quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press star one again. I would now like to turn the conference over to Raj Agrawal, Senior Vice President and Chief Financial Officer. Please go ahead. Thank you, operator. Hello, everyone. Many of you have gotten to know our Chief Accounting Officer, Rick Seidl, over the last few quarters as he provided interim IR support. I want to thank Rick for his leadership in helping the company navigate the transition. With that, I'm pleased to introduce our new Vice President of Investor Relations, Anthony Bencivenga. Anthony joined Arrow in February, having most recently served as Head of Investor Relations for a semiconductor equipment company. In addition to a background in finance and investor relations, Anthony has an engineering background as well. We're excited to have Anthony on board, and I'll turn it over to him to get us started today. Thank you, Raj. I'm excited to be on board. I'd like to welcome everyone to the Arrow Electronics first quarter 2023 earnings conference call. In addition to Raj, joining us today is our President and Chief Executive Officer, Sean Kerins. 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 Form 10-K and Form 10-Q filings with the SEC. 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 direct 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. Following our prepared remarks today, we'll be available to take your questions. I will now hand the call over to our President and CEO, Sean Kerins. Thanks, Anthony, thanks to all of you for joining us today. First, I'll discuss our Q1 results then turn it over to Raj for more detail on our financials and the outlook for our second quarter. Our global team delivers technology solutions in the form of engineered and critically needed components to a variety of OEM markets, as well as hardware, software, and cloud solutions to the enterprise. In doing so, I'm happy to report we delivered solid results in the first quarter with both sales and earnings per share above the midpoint of our guidance. While the industry backdrop is challenging, we continue to execute well in this environment. In Global Components, strength in industrial and automotive end markets drove revenue for the business above the high end of our guidance. In Europe, we achieved robust year-on-year and sequential growth. Industrial and transportation end markets helped drive record revenue while maintaining healthy levels of backlog. In the Americas, we saw relative strength in industrial, automotive, and aerospace and defense, and we were encouraged by growth in design-related activity. As fully expected, the decline in the Americas revenue is mainly a function of the normalization we see in the shortage market. In both our Western regions, we continue to see strength in interconnect, passives, and electromechanical components, reflecting our ongoing efforts to serve this segment of the electronics market. In Asia, the environment continues to be challenging across most end markets and certainly in China as customers manage through their on-hand inventories. However, by focusing on our suppliers and customers, the team executed well and delivered beyond their original commitments for the quarter. Profitability in our Global Components business was healthy in the first quarter. Our investments in engineering capabilities and the infrastructure to enable supply chain services are providing support to our operating income. While margins may further normalize, I want to reiterate what we said during our fourth-quarter earnings call, which is that our long-term target for Global Components operating margin lies somewhere between 5.5% and 6%. Although demand has softened in certain markets and book-to-bill remains below parity, we still enjoy visibility to demand over a longer time horizon as compared to pre-pandemic levels. Therefore, our backlog continues to remain elevated, and we're comfortable with the quality of our inventory to support our business needs moving forward. Across all three Global Components regions, we're fortunate to serve a diverse set of customers across a variety of markets with technologies from a broad spectrum of component suppliers. We continue to focus on our core business, helping our customers secure products they most need, while at the same time extending our engineering capabilities where they can add further value. Switching gears to our Enterprise Computing Solutions business. Sales were up 3% year-on-year in constant currency, which was within the range of our guidance and consistent with overall market dynamics. Demand was solid in Europe. Both hardware and software sales increased by double digits year-on-year in constant currency across most technology categories, with notable contributions from cybersecurity, compute, and enterprise software. While there are signs the hardware supply chain is improving, we're experiencing a softer IT spending market in North America, which dampened year-on-year sales in the region in the quarter. In both regions, we continue to see the IT market shifting to everything as a service and believe we're well-positioned to help our suppliers and customers navigate this transition. Before I hand the call over to Raj to provide more details on our results, I want to reiterate my confidence in the global Arrow team and our ability to help our suppliers and customers meet their go-to-market and production needs. Make no mistake, our employees' collective understanding of our markets and their commitment to our suppliers and customers is what drives our success, and I appreciate their determination and hard work. With that, I'll hand it over to Raj. Thanks, Sean. On a consolidated basis, first quarter sales were above the midpoint of our guidance range at $8.7 billion, down 4% year-over-year or 2% on a constant currency basis. Changes in foreign currencies negatively impacted sales by $203 million year-over-year, slightly more than our expectation of a $182 million impact. On a quarter-over-quarter basis, currencies positively impacted sales by $150 million. Global Components sales were $6.9 billion, slightly exceeding the high end of our guidance range and down 5% year-on-year. Enterprise Computing Solutions sales were $1.9 billion within our guidance range and flat year-on-year. Consolidated non-GAAP gross margin of 12.7% was down 60 basis points year-over-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. Non-GAAP operating expenses were $681 million, flat to Q1 of last year and up 30 basis points as a% of sales. Non-GAAP operating income was $433 million or 5% of sales, with Global Components operating margin coming in at 6.2% and Enterprise Computing Solutions coming in at 4.4%. Interest and other expense was $80 million, which was higher than expected due to the higher interest rates and higher average daily borrowings. Our effective tax rate of 21.8% was lower than expected, primarily due to the release of certain international reserves. Diluted EPS on a non-GAAP basis for the first quarter was $4.60 at the high end of our guidance range and based on a 59.5 million share count. Turning to the balance sheet and cash flow. Net working capital was roughly flat sequentially from Q4 of last year to $7.2 billion. Accounts receivable came down by 14% sequentially to $10.7 billion. Days of sales outstanding declined from 120 last quarter to 111 at the end of the first quarter. Accounts payable reduced by 14% sequentially to $9 billion, bringing days of payables down to 104 from 114 last quarter. The sequential decline in both receivables and payables is largely due to seasonality in our ECS business. Inventory increased 4% to $5.5 billion, with inventory turns declining largely due to seasonality from 6.1 last quarter to 5.5 this quarter. Our cash cycle was 73 days, which was a seven-day increase from the fourth quarter, primarily driven by the seasonality of the business and a 13-day increase year-over-year, primarily due to inventory increases, which are largely related to pricing. As a reminder, our inventory investments allow us to support customer demand, and we have continued to generate strong returns in the process. Operating cash flow was $224 million. Net debt for the first quarter was sequentially up slightly from Q4 at $3.7 billion. Total liquidity stands at $2.3 billion, including our cash balance of $206 million. We believe we have adequate liquidity to fund our future operations and investments in working capital. Our strong profitability and effective management of our balance sheet enabled us to deliver on our priority of returning cash to shareholders by repurchasing shares in the amount of $300 million during the quarter. At the end of the first quarter, our remaining stock repurchase authorization stands at approximately $1 billion. 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 published on our website this morning. Turning to second quarter non-GAAP guidance. We expect sales for the second quarter to be between $8.42 billion and $9.02 billion. We expect Global Components sales to be between $6.64 billion and $7.04 billion, which at the midpoint is flat from prior quarter. We expect Enterprise Computing Solutions sales to be between $1.78 billion and $1.98 billion, which at the midpoint is also flat to prior quarter and represents a 6% decline year-on-year, consistent with the state of the IT spending market. We are assuming a tax rate of 23.5% and interest expense of approximately $90 million. Our non-GAAP diluted earnings per share is expected to be between $4.25 and $4.45 on an average diluted share count of 58 million shares. Both a higher tax rate and higher interest expense are the primary drivers for the sequential change in EPS. We estimate changes in foreign currencies will increase sales growth for Q2 by $12 million and have a negligible effect on EPS compared to the prior year. Compared to the prior quarter, we estimate changes in foreign currencies will increase sales growth for Q2 by $54 million and EPS growth by $0.04. I'll now turn the call over to the operator for Q&A. At this time, I'd like to remind everyone that to ask a question, press star one on your telephone keypad. Our first question comes from the line of Matt Sheerin with Stifel. Please go ahead. Yes, thank you and good afternoon. My first question relates to your Component business and the inventory build. Looks like inventories were still up significantly year-over-year, and your interest expense obviously up significantly as well. With lead times coming in, you would think that you'd be looking at unwinding some of that inventory. What's the plans there, and how should we think about interest expense as we get through the year? Thanks, Matt. Let me talk a little bit about some of the dynamics impacting our inventory picture, and I'll let Raj talk a little bit more about, you know, what that means for interest expense. Look, I think if you look at our inventory builds over the past three quarters, it's progressively gotten smaller each time. If you look at it year-over-year, you know, that's largely a function of the price increases that came into the business because unit volumes are only now, you know, starting to catch up to something close to flat, year-on-year. There was a sequential increase. You know, we don't think of it as significant. You know, remember, you probably have seen this in past cycles when lead times are moving around as they are, including coming in, you know, timing gets to be a little bit less predictable, receipts sometimes occur later in the quarter than you might think. The sequential increase is not something, you know, we're at all concerned with. We feel good about the quality of the inventory we've got on hand. I'm very confident in our ability to sell through it. I think the most important point is if you look at our turns in the core Global Components business at Q1 exit, you know, we were right on or slightly above our historical targets and expectations both for semiconductor and IP&E. Matt, let me just add a little bit about interest expense. It is up year-over-year and sequentially as well. It's not unexpected given the interest rate environment that we're in and the larger working capital balances we have. You know, that's just the way the business is set up. You know, to the extent that the business starts to generate cash in a more protracted slowdown, then we would certainly be able to pay down debt. We're comfortable with where we are in terms of overall debt levels and, you know, continue to manage the business within an investment grade credit rating framework. You know, interest expense was a bit higher in the core than we'd expected, just given the higher balances, but very manageable overall. Okay. Thanks very much for that. My second question relates to your largest semiconductor supplier. In your recent 10-K, you reported that that supplier revenue was down 18% year-over-year in 2022, while its own revenue was down just 9%. It looks like that supplier is taking more product on a direct basis. Could you, to the extent that you can, talk about that relationship, the puts and takes there and how you see that longer term? Matt, probably no surprise to you, but we really don't ever speak about any supplier specifically. You know, we're focused on the, you know, the broader market and our complete semiconductor line card, and we feel good about, you know, what's in front of us and our ability to, you know, navigate, you know, this cycle as it steadily corrects. I can't speak to what's happening with any one supplier in particular. Okay, fair enough. Thank you very much. Thanks, Matt. Your next question comes from the line of Joe Quatrochi with Wells Fargo. Please go ahead. Yeah, thanks for taking the questions. I was wondering if your, you know, nearest competitor last night talked about customers pushing orders. I was wondering if you could kind of just give us some comments around that, if you're seeing that as well, and then any color on cancellation rates. Sure. Joe, as for, you know, not sure I understand the first part of your question, but what I can say is, you know, a couple of things. One, you know, we talked about book-to-bill upfront. They are below parity, but, you know, we're pleased that, in fact, over the past couple of quarters, they have not eroded further and in fact had not eroded even in the past 30 days of this quarter. We feel good about that. We are engaged in reschedule activity, and that, you know, is a good way for us to collaborate with our suppliers and, you know, help our customers meet their production needs. That's a great way for us to stay close to both our suppliers and customers, and we are doing that throughout the world. You know, as importantly or more importantly, you know, we consider any cancellation activity as modest at best, and it has not accelerated either. We think we have a good handle on, you know, where we sit relative to our backlog, what's happening with our customers' production needs, and of course, you know, the way in which we're collaborating with our suppliers to, you know, get the right inventory in, you know, for the right demand at the right time. Our backlog is still significant. The delinquent piece of it is still significant. If you consider all the work we do to, you know, constantly scrub it that I just described, we also feel good in saying that, you know, the majority of it is firm versus forecasted. Again, I think we've got a good handle on what's happening with inventory, and our backlog. Thanks for that. As a follow-up, you know, the shortage market services continues to be kind of a headwind on margins in the Component business. What inning are we in in terms of starting that impact starting to be mitigated? Yeah, sure thing. I'm glad you asked because I wanna be clear. The operating margin, you know, impact you saw in components both annually and sequentially was strictly a function of the decline we see in the shortage market. That's, you know, that's evidence of the fact that the, you know, the underlying pricing and margins in the core business are holding up nicely, and they held up nicely in all three regions in the quarter. You know, going forward, you know, relative to the impact we see from, you know, the shortage market as it continues to decline, you know, we see some additional impact this quarter. It's all built into our guidance and, you know, we expect it to fully abate across the second half. Perfect. Thank you. Your next question comes from the line of Ruplu Bhattacharya with Bank of America. Please go ahead. Hi, thanks for taking my questions. Sean, in ECS, you know, Europe was strong and you pointed out that Americas there's some softness in enterprise IT spending. Two parts of the question. First, do you think Europe remains strong, or do you think there's some contagion that can slow spending there? Within ECS, the second part is, you know, your software sales have typically been strong every quarter. When you sell vendor software, does that set up a recurring payment to you as well? If so, is there a way to size how much of the ECS revenue is recurring? Ruplu, let me start with your first question and just talk a little bit about the market, because we do see a little bit of a tale of two cities. You know, I think it's widely known given some of the more recent reports there is a bit of a tougher environment here for IT spending in North America. You know, we saw that in Q1. Hard to predict, you know, how much longer that persists. We're reasonably confident in our Q2 guidance, and I think we're showing the, you know, margin expansion both sequentially and year-over-year. The market is still soft here. Europe appears to be more resilient. We don't yet see any contagion that necessarily links the two. You can note that our business and components in Europe was also strong, you know, with a healthy outlook for Q2 as well. I think the markets are just a little bit different in that regard. As for the mix inside of our ECS business, you're right. You know, we intentionally continue to drive that business to, you know, more software, more cloud. Obviously, you know, we account for that differently. It tends to have a downward impact on the sales line, should have an upward impact on the, on the margin line. If you look at our backlog in ECS, it's still at record levels. As the hardware business and the hardware backlog has started to flush, you realize that a good chunk of the remaining backlog is all tied to what I would call unbilled revenue, related to cloud and software as customers look to deploy that on a subscription, you know, versus perpetual basis. You're right. We have a growing backlog of what I would call recurring like revenue in the ECS business. It's becoming more significant, and I think at the right time down the road, you know, we'll be prepared to give you more visibility into what that looks like going forward. Okay. Okay, thanks for that. I appreciate the details. Maybe if I can ask a follow-up on the components business. Are you seeing a market inventory correction in components? If so, how long do you think that will last, and how do you size any excess inventory in the channel? Where is this inventory most elevated? Is it at EMS or do you have a view into where in the channel there is more inventory? Thank you. I'll bring you back to what I said a few minutes ago about inventory in general. You know, we do know that our turns have come down. You know, we are comfortable. They're still at, you know, levels that are, you know, while starting to look more normal, you know, don't give us great concern. We're managing this very carefully. You know, I'd say the inventory build in the ecosystem is, you know, fairly broad-based. I wouldn't say that we, you know, we pointed to any one piece of the market versus others. Hard to say how long it takes, you know, for the customer base to work through the existing inventory levels. Again, I'll point you to the fact that our book-to-bills have now eroded further, in the past, you know, one to two quarters nor in the first part of this new quarter. We feel like we're in a market that probably is moving more sideways, then falling sharply. You know, funny enough, you know, sometimes those markets are a little bit more difficult to call, you know, than when something is falling more sharply. You know, I prefer this scenario because I think it starts to suggest we're maybe experiencing a softer landing. Okay. Thanks for all the details. Appreciate it. You bet. Thanks, Ruplu. Your next question comes from the line of Toshiya Hari with Goldman Sachs. Please go ahead. Hi. Thank you so much for taking the question. I had a follow-up on the demand outlook in your components business as well. Your Q2 guide, as you guys noted, I suppose implies sort of a flattish outlook for the June quarter, which is a couple of percentage points below, you know, typical seasonality. Can you provide a little bit more context or color by geography or end market? Does anything stand out to the downside? How are you thinking about the second half vis-a-vis typical seasonality in your components business? Yeah, sure thing. You know, I wouldn't want to speculate too much about the second half in this environment. We're trying to focus primarily on just 90 days out. Happy to give you some color around what we see, you know, in Global Components for the second quarter. You know, I'd say it breaks down a little bit differently in each region. We do see Europe again, expecting better than seasonal sales results. I would say in the Americas, when you normalize for, you know, just the shortage declines we see in that piece of the market, you know, we're roughly in line with what would be, you know, normal seasonality. In Asia, you know, we've got a forecast for sequential sales growth, and it's starting to approach more typical seasonality. We don't feel overly bullish, but, you know, we're not overly pessimistic either. Got it. Thank you. Then as my quick follow-up, just thoughts on one for Raj, maybe thoughts on, you know, working capital, over the next, you know, couple of quarters, and implications for free cash flow generation and, you know, buybacks and so on and so forth. Thank you. Hey, Toshiya. I think from a working capital standpoint, we're gonna obviously try to manage as tightly as we can. You saw that working capital was flat to the previous quarter. It really is gonna be a function of the trajectory of the business overall that will determine where working capital goes. From a cash flow standpoint, that's also connected to the same thing. I would just say that our capital priorities have not really changed overall from a stock buyback standpoint. We continue to, you know, invest in the business, and that's really in the working capital. You know, we're always looking at M&A opportunities. Even though we haven't done anything significant in the last few years, we continue to look and evaluate. Lastly, you know, we wanna put our excess capacity and cash flow towards stock buyback, to the extent that we see it as a good value, which we continue to see. That's really the priority of order of investment. You know, we sort of manage all of this with an investment-grade credit rating framework, to manage the entire business. That's sort of how we look at it, Toshiya. Would it be fair to expect inventory to trend kind of flat to down going forward? You know, is the trajectory still gonna be a little bit more positive? I think it just depends from a pricing standpoint. That's not gonna really have an impact on inventory itself. Again, you know, we think that we have a great and strong backlog. We, we know that the inventory there is there to support that backlog, we believe we'll be able to sell through all of that inventory. We feel good about our position as we have it today, Toshiya. Thank you very much. For any questions, press star one. Your next question comes from the line of William Stein with Truist Securities. Please go ahead. Great. Thank you for taking my questions. To what degree are extended lead times that I'm sure you're still experiencing some of those, and component shortages influencing your ability to procure on the system side of the business and that's affecting revenue? Is it still a prevailing trend at all? If so, to what degree, or is that really reverted? You mentioned IT spend in Americas is weak, I'm wondering how that's netting out. Thank you. Yeah. No, sure thing, Will. You're right. There is a, you know, indirect connection between, you know, what happens upstream in the semiconductor market versus, you know, what eventually materializes downstream in the systems world. I would say for the most part, you know, as it pertains to compute and storage, we've seen, you know, the bigger parts of our backlog, you know, flush. You know, the worst of that situation has certainly improved. There's still some normalization to occur in the system space, but by and large, it's certainly better than it was a two, three quarters ago. You know, we're through, you know, most of the aged backlog, if you will. You know, more generally in semiconductor, you're right, lead times have improved, but they're still not yet back to pre-pandemic levels. The improvement has been fairly broad-based, but there's still a few categories out there that, you know, I would say, you know, are highly constrained, and that does create, you know, challenges for making sure we serve the delinquent demand first, as best as possible. Obviously, if things had fully normalized, we wouldn't still have You know, such a sizable delinquent backlog. As it pertains to our systems business, you can assume that, you know, the worst of that headwind is behind us. Great. Thank you. As a follow-up, I'm hoping you can talk about linearity in the quarter. I know historically, you know, we've tended to ask you and, you know, even component companies and semis as well about order linearity. Given the way the buyers, I think, are behaving these days, it feels like the backlogs are so robust, it's maybe more relevant to talk about linearity of cancels and pushouts. Can you talk about how that is trending, whether that's stable or accelerating and/or, you know, whatever that is doing? Thank you. Yeah, sure thing, Will. You're right that in more normal times, you know, linearity is, you know, maybe a more relevant question. Given the size of our backlog, and again, we've been given visibility to demand, you know, multiple quarters out, right? Well beyond the normal horizon that we typically get visibility to. You know, book-to-bills then become a little tougher to, you know, manage as predictably as you might in the past. Again, remember what I said, the book-to-bills are not eroding, as we manage that backlog, you know, even including the rescheduling work we do. I would just reiterate, while there is rescheduling activity, the cancellation, you know, levels are very modest, and they have not accelerated, you know, since we saw signs of them in the latter part of last year. Thank you. You bet, Will. We have no further questions at this time. I'll turn the call back to Anthony for any closing remarks. Thank you, Regina, and thank you all for joining today's call. We look forward to meeting you at upcoming conferences and roadshows. Have a good day. Ladies and gentlemen, that will conclude today's call. Thank you all for joining. You may now disconnect.