Good day and welcome to the Arrow Electronics first quarter 2024 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Raj Agrawal, Senior Vice President and Chief Financial Officer. Please go ahead. Thank you, Operator, and hello everyone. Before we begin, I'd like to introduce our new Vice President of Investor Relations, Brad Windbigler. Brad is our current Treasurer and joined Arrow May of last year. We're excited to have Brad lead Arrow's Investor Relations, and with that, I'll turn it over to him to get us started today. Thank you, Raj. It's a pleasure to be here. I'd like to welcome everyone to the Arrow Electronics first quarter 2024 earnings conference call. In addition to Raj Agrawal, Arrow's Chief Financial Officer joining me today on the call is our President and Chief Executive Officer, Sean Kerins, our President of Global Components, Rick Marano, and our President of Global Enterprise Computing Solutions, Eric Nowak. 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 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 today on today's call are non-GAAP measures, which are not intended to be a substitute for our GAAP results. We've reconciled these non-GAAP measures to the most directly comparable GAAP financial measures in this quarter's associated earnings release, Form 10-Q. You can access our earnings release at investor.arrow.com, along with a replay of this call. We've also posted a slide presentation to accompany our prepared remarks and encourage you to reference these slides during this webcast. Following our prepared remarks today, Sean and Raj will be available to take your questions. I'll now hand the call over to our President and CEO, Sean Kerins. Thanks, Brad, and thank you all for joining us. Today, I'd like to discuss our first quarter performance, provide some color on the overall market environment, and then close with our focal points and priorities as we look to the balance of the year. I'll then turn things over to Raj for more detail on our financials as well as our outlook for the second quarter. In the first quarter, we continued to execute well in a challenging market environment as we worked through the inventory correction that has impacted the global technology supply chain over the past few quarters. We delivered total sales of $6.9 billion, which was in line with our expectations, and generated non-GAAP earnings per share of $2.41, which was above the high end of our guided range. As we take a closer look at Global Components, the cyclical nature of this business is a reality, and we're navigating through a prolonged correction as customers destock surplus inventory levels, which accumulated in response to the severe shortages that marked the industry's supply chain disruptions of the pandemic era. We continued to witness the knock-on impact to the demand environment with softness across many of the markets we serve. While we still see relative strength in pockets, the broader industrial market, a meaningful portion of our overall mix, remains in decline. Having said that, our customer base is stable, our design-related activity is healthy, and the leading indicators that point to the shape and duration of the cycle are definitely improving. Our Book-to-bill ratios have improved steadily since late Q3 of last year across all three operating regions and are now approaching parity. Our backlog, which grew substantially during the shortage market environment, continues to trend downward, consistent with shorter lead times, although it does remain above pre-pandemic levels. Also, cancellation activity has normalized, and our visibility is improving. Broad-based market data suggests customer inventory levels at OEMs and EMS providers are declining both sequentially and year-on-year, a necessary step in the right direction. Lastly, we continue to effectively manage our own inventory in keeping with our improving visibility to changing production schedules, achieving a $390 million reduction during the first quarter. So while it's difficult to precisely predict when the demand environment will accelerate, the industry fundamentals haven't changed, and we're confident in its longstanding cyclical nature for a return to growth in the near term. Now, from a regional perspective, in the West, we were encouraged by design win counts that grew sequentially as customers broadly pivot from efforts to sustain existing products toward new product design and introduction activity. We also enjoyed relative strength in transportation in the Americas and aerospace and defense in India. And in Asia, exiting a late quarter Chinese New Year, we did see an uptick in activity related to consumer verticals and expect better sequential performance in the second quarter. For the Global Components business overall, as we look forward to the second quarter, we expect similar sequential sales trends compared to those we saw in Q1. However, we also expect leading indicators to continue to trend positively. Now, turning to global ECS. In the first quarter, infrastructure software, cloud-related solutions, and AI-enabled compute drove our overall results with softness related to large enterprise storage, networking, and cybersecurity. Globally, our billings were nearly flat year-over-year, and yet our recurring revenue base grew once again as we continue to see customers shift their spending patterns to offerings enabled through IT as a service. This signals an encouraging trend because it will lead to improved visibility, stickier relationships, and higher contribution margins over time. On a regional basis, in India, we again achieved year-over-year billings and gross profit dollar growth in the quarter, driven by healthy cloud adoption and compute refresh activity. In North America, our first quarter results reflect a mixed large enterprise IT spending environment. We continue to position our business in this region for greater mid-market scale and more infrastructure software and cloud adoption. During the quarter, we were pleased to announce significant enhancements to our digital go-to-market platform, ArrowSphere. It plays a key role in helping our suppliers and channel partners manage their journey to the markets for IT as a service and solution selling and is key to the acceleration of our line card customer base expansion initiatives. Given the annual nature of our global ECS business, you might recall Q1 is typically the slowest of the year. Our second quarter outlook does call for modest improvement and operating income dollar growth year-on-year. In closing, as we continue to navigate a challenging market environment, we remain focused on the factors and variables within our control. These would include prudent management of our cost structure to keep our expense ratios in line. This will protect our selling, engineering, and customer experience capacity for future growth. Effective working capital management while still striving to meet the needs of our customers and suppliers. This discipline, again, contributed to strong cash flow during the quarter, providing us the flexibility to pursue our capital allocation priorities. In the meantime, we remain invested in the growth priorities I highlighted last quarter while staying close to our suppliers and customers around the world. Those relationships, fostered through the dedication of our global team, give me great confidence in our ability to successfully navigate this environment and capitalize on a promising future. With that, I'll hand things over to Raj. Thanks, Sean. Consolidated sales for the first quarter were $6.9 billion within our guidance range and down 21% versus prior year. Global Components sales were $5.2 billion, down 8% versus prior quarter or 24% versus prior year due to the ongoing semiconductor inventory correction. Enterprise Computing Solutions sales were $1.7 billion, down 8% versus prior year. This was partly a function of product mix and partly a function of lower discretionary IT spending in North America. Moving to other financial metrics for the quarter. First quarter consolidated gross margin of 12.5% was down approximately 20 basis points versus prior year, driven primarily by the overall mix and the components business. Sequentially, our gross margin was lower by approximately 10 basis points due to the seasonality within the ECS business, partially offset by favorable regional mix within the global components business. Our Q1 GAAP expenses included $57 million related to operating expense reduction initiatives and the winding down of a business. These actions will produce operating expense savings as we progress through 2024. Non-GAAP operating expenses declined sequentially to $618 million, resulting from a decline in variable expenses and our continued efforts to control spending. We generated non-GAAP operating income of $251 million in Q1, which was 3.6% sales, with Global Components operating margin coming in at 4.7% and Enterprise Computing Solutions coming in at 4.2%, both on a non-GAAP basis. Interest and other expense was $80 million in the first quarter. Our non-GAAP effective tax rate was 22.6%, which benefited from favorable geographic income mix. And finally, non-GAAP diluted EPS for the first quarter was $2.41, which was above the high end of our guidance range. Bringing our attention to working capital. We reduced net working capital in the first quarter by over $400 million from Q4, ending the quarter at $6.9 billion. In fact, Q1 represents the third consecutive quarter of lower net working capital. Accounts receivable and accounts payable both decreased in the first quarter with nearly offsetting impact. Inventory at the end of the first quarter was $4.8 billion, decreasing $390 million from Q4. Over the past two quarters, we've reduced inventory levels more than $1 billion. Our cash conversion cycle grew in the first quarter due to seasonality in our ECS business. Our cash flow from operations was $403 million in the first quarter. Net debt at the end of the first quarter was lower compared to Q4 at $3.3 billion. We repurchased $100 million of shares in the first quarter, and our remaining stock repurchase authorization stands at approximately $475 million. Now turning to Q2 guidance. We expect sales for the second quarter to be between $6.2 billion-$6.8 billion. We expect global component sales to be between $4.6 billion-$5 billion, which at the midpoint is down approximately 8% from prior quarter. We expect enterprise computing solutions sales to be between $1.6 billion-$1.8 billion, which at the midpoint represents a 7% decrease year-on-year. We're assuming a tax rate in the range of approximately 23%-25% and interest expense of approximately $75 million. Our non-GAAP diluted earnings per share is expected to be between $2.05-$2.25. Finally, we estimate changes in foreign currencies to have an immaterial effect on our Q2 guidance. The details of the foreign currency impact will be found in our press release. With that, Sean and I are now ready to take your questions. Operator, please open the line. Ladies and gentlemen, we will now begin the question and answer session. In order to ask a question, press star, then the number one on your telephone keypad. Your first question comes from the line of William Stein with Truist Securities. Please go ahead. Great. Thanks for taking my questions. Hey, guys. I'm hoping you could linger for a second on the business exit and inventory write-down. That's sort of unusual for you guys, or maybe it's less so, but it's I don't recall having seen anything like this in the past. Maybe you could just dig into that for a minute. What are you exiting? Any explanation? Yeah. It was a small business for us, Will, and it was unprofitable in nature. It did have some inventory on the balance sheet that we wrote down as a result. It's not a material impact from a P&L standpoint, but it did have some inventory on hand that we wrote down. It's sort of part of our OpEx savings initiatives that Will is looking for. That should help us as we move through the course of the rest of this year as well. Okay. Maybe as my follow-up, I could ask about inventory trends. Inventory days are still running about, I don't know, 20+ days above sort of the historical norm, but payables are also pretty inflated. They sort of offset each other, so it's not a big deal from the cash conversion perspective. But what should we anticipate for the next few quarters and maybe long-term targets in terms of sort of working capital targets that'd be helpful for truing up my model? Thanks so much. You bet, Will. Thanks for joining us. So maybe just a few remarks about what we're doing to manage inventory in this environment in general, and then I'll let Raj speak to how we're thinking about working capital in total. As you saw, we were able to manage a step down in inventory once again this quarter. I think it's been pretty substantial over the past couple. We're obviously very focused on backlog conversion. We do still see better sell-through in the mass market, and given our mass market focus, that's been helpful. We obviously still carry some excess. We think that's largely a function of some of the longer-term supply agreements that came to prominence during the peak of the shortage market, many of which are now obsolete or winding down, but there's still some remnants of that both in our shop as well as throughout the ecosystem. But in general, we're pretty confident in the quality of our inventory as it relates to customer demand, given the visibility we do have. We tend to look at our inventory through the lens of turns. We are seeing our turns normalize both for semiconductor and IP&E. We think that's a good sign. It's another of the positive leading indicators that we want to see as we manage through the cycle. Ultimately, we do want to maintain inventories that best serve customer needs, especially in areas related to demand creation and solution selling, both of which are pretty important to our suppliers because it is all about getting back to growth. So we may not see the same step down in Q2 as we saw in Q1 and Q4, but we are managing this effectively, and we are getting to turns that we think are in line with historical patterns. Ultimately, once we get to the right level, that'll be a good sign in terms of the correction overall. Yeah. Will, let me just pause for a second to see if that answers your question, if you have something more there. Well, I understand. I think you just said that the sequential burn from a dollar's perspective may not be as big, but I wonder if we have longer-term targets that we can sort of anchor our model towards over time for either of these two metrics? On the inventory, what I would say, just add to Sean's comments, it's the lowest level it's been in a couple of years. So we really want to position ourselves to support our customers. A billion-dollar reduction in the last two quarters was quite significant, as I mentioned. So we certainly want to be positioned for the upturn when that comes. And that's really important to us. Overall, we've generated let me answer it this way. We've generated about $900 million of cash flow in the last 12 months. So we're doing a really good job of managing the overall working capital. We're going to continue to generate cash flow in the second quarter, a healthy amount of cash flow, but we also want to manage working capital to the needs of the business. Your next question comes from the line of Joe Quatrochi with Wells Fargo. Please go ahead. Yeah. Thanks for taking the question. I wanted to follow up on the OpEx savings that you mentioned in the prepared remarks in the last question. Can you just kind of help us quantify maybe how to think about the OpEx savings on a net basis as we move through to 2024 and modeling that? Sure, Joe. Let me just kind of frame up the way we're thinking about cost in this environment, and then Raj can give you some color to maybe help you think about the magnitude. As you'd expect, we're taking appropriate actions in this environment to navigate the correction. I think we said last quarter, and it's still true that you can expect to see our absolute operating expense dollars trend downward throughout the course of the year. However, we do see this as ultimately short-term in nature, even though this cycle's taken longer than those in the past to play out. So ultimately, we do want to protect our growth priorities and all the associated selling and engineering and customer experience capacity for the long haul. We've always taken a posture that leads us to concentrate on structural costs so that we can repurpose it over time in favor of what we're trying to do to grow, and that's exactly what we're up to now. And we think the expense ratios that we're managing too are really consistent with the last time we had to navigate a correction. Yeah. And Joe, just to add to that, we did take some expenses in the first quarter, as I'd mentioned in my comments. I would, first of all, just say this is part of our ongoing OpEx reduction initiatives, but specifically, we would expect these charges to pay back within the next 12-15 months. So that's the way I would look at it in the P&L. Okay. So I guess maybe ask it a different way. I mean, what's the right kind of OpEx trajectory that we think about for 2024? Just giving those comments. I mean, obviously, it depends on the overall revenue trajectory, but putting that aside for a moment, we would see OpEx trending downward for the various things that we've talked about. Okay. Maybe shifting gears a little bit. I just kind of want to think about the component side. I think if you look at the guidance for the June quarter, this would be potentially where things shake out, the fourth quarter in a row that your largest U.S. competitor would actually be larger from a revenue perspective. I know there's a lot of inventory dynamics that are going on right now, but just how do we think about your market share and just the sustainability of that as we look forward to a market recovery? So Joe, we don't really think that there's any reason to believe market share dynamics have changed in a meaningful way throughout this cycle. If we look at our competition more broadly, we all carry a different mix of line card, some commons, some different, and that tends to vary region by region. So it's not surprising that quarter to quarter, you're going to see some variability in our growth rates and others. But again, we're pretty confident that we're holding, if not gaining ground, in most of our key supplier relationships. Perfect. Thank you. Thanks, Joe. As a reminder, if you would like to ask a question, press star followed by the one on your telephone keypad. Your next question comes from the line of Ruplu Bhattacharya with Bank of America. Please go ahead. Hi. Thanks for taking my questions. Maybe I'll start with Raj. In the ECS segment, Raj, was there a meaningful contribution from netted-down items to gross margins? And can you talk about the gross margins in that segment in Americas versus Europe? Because I think you were trying to focus on the middle market in Americas. Did that have a meaningful impact in this quarter? Ruplu, are you talking about the first quarter or our second quarter guidance? No, I'm just talking about the quarter you reported, the first quarter. Oh, yeah. First of all, there's some seasonality from the fourth quarter to the first quarter. So that's playing a part in a lot of the numbers that you're seeing because the ECS business has its largest quarter as the fourth quarter of the year. And so the gross margin step-down that you've seen there is mostly related to seasonality. Year-over-year, that business did grow gross margins, but that's really what you're seeing there in the gross margin profile of the business. As has always been the case, Ruplu, the margin dynamics are different between the two regions. In Europe, they're structurally higher based on the substantial size of our mid-market customer base and the mix of the products we offer. In North America, as is the case for the industry, margins tend to be a little bit lower. Right. And just to follow up on the second part of that question, I think, Sean, you had said that you're focusing on customer mix and the mid-market in the Americas region. What innings are we in in that, and how is that progressing? So I think, look, we really like the model that we've established in Europe, Ruplu. We think it really reflects our strategy overall, right? You got a substantial mid-market customer base. We have a rich line card of infrastructure software and cloud solutions, good efforts through digital adoption. And frankly, we're on the same path in North America. It is taking longer than maybe we first thought. We're fortunate now to have the gentleman that really helped build and establish our model at scale in Europe now leading our global business. And I know Eric will be spending quite a bit of time in North America, but it will take some more time as we look forward. Okay. Got it. If I can ask a quick follow-up, Sean, from your prepared remarks for the component segment, it sounded like you were seeing some green shoots. I mean, it's still going through inventory correction, but you saw the book-to-bill was improving, and things sounded a little bit better. But when we look at the guide, right, at the midpoint, at least $4.8 billion, I think it's going to be down 8% sequentially. So just can you give us your thoughts on what you think what you're seeing for the June quarter in terms of regional mix, and is anything weaker or stronger? I mean, if you can just give us your thoughts on the June quarter for the component segment. Thank you. Yeah, sure. I'll try to frame it up a little bit and then maybe ask Rick Marano, our global president, to talk about some of the differences from region to region. He's a little bit closer to our regional market activity. But as you know, in Q1, we saw softness across a number of key verticals for us. There was a better market related to transportation in the West, aerospace and defense in Europe, consumer-related verticals in Asia. We saw those as, as you say, green shoots. We think we're approaching the bottom based on all the leading indicators that we pay close attention to. We're probably not quite there yet, but we're sure getting a lot closer. And as you know, the cycle plays out differently from one region to the next, and it plays out differently over time. I'll let Rick give you some additional color about that. Yeah. Thanks, Sean. I think when you look at the markets overall from a regional standpoint, I think they're playing out as we expected them to play out to a certain degree. Some green shoots in the East, in Asia, around certain verticals that we're starting to see some sense of recovery from. To Sean's point, in the West, in the Americas, some green shoots around transportation, destocking continuing to happen, and inventory levels getting to some levels where we're starting to see some build and backlog overall as we talk about North America. And in EMEA, and we look at basically the mil-aero segment of our business, we see some green shoots there. But as we work through the balance of the cycle, as destocking continues to happen, we're confident that we're starting to see the market shape up the way we thought we would based off of the regions and the timing within the cycle in those regions as well. Okay. Thanks for all the details. Appreciate it. Sure. I will now turn the call back over to Brad Windbigler for closing remarks. Please go ahead. Great. Thank you all again for joining today's call. We look forward to meeting you at upcoming investor events. Have a good day. Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.