Q1 2022 TD Synnex Corp Earnings Call
Good morning, My name is Brent and I will be your conference operator today I.
I would like to welcome everyone to the <unk> first quarter fiscal 2022 earnings call.
Today's call is being recorded and all lines have been placed on mute to prevent any background noise.
Average speakers remarks, there will be a question and answer session.
At this time for opening remarks, I would like to pass the call over to Liz Murali head of Investor Relations Lynch you may begin.
Thank you and good luck.
Morning, everyone.
Thank you for joining us for today's call.
With me today are <unk> CEO Marshall Witt CFO .
Before we continue let me remind everyone that today's discussion contains forward looking statements within the meaning of the federal securities laws.
<unk> predictions.
This projection or others.
Statements about future events.
These statements and our integration progress strategy demand pre cash flow capital distribution leverage back on that sort of by macro economy and investments.
Actual results may differ materially from those mentioned in these forward looking statements as a result of risks and uncertainties discussed in today's earnings release and the form 8-K, we filed today and in the risk factors section of our form though during this call we will reference certain non-GAAP financial information.
Reconciliations of GAAP to non-GAAP results are included in our earnings press release and the related form 8-K available on our Investor Relations website, IR Dot <unk> Dot com.
This conference call is the property of <unk>.
May not be recorded or rebroadcast without our permission.
I will now turn the call over to rich rich.
Good morning, and thank you for joining our call I want to take a moment upfront to acknowledge the ongoing devastation and human suffering occurring in Ukraine.
We joined government businesses.
And the global community and condemning.
Both invasion of the sovereign Democratic state of Ukraine by Russia.
While we do not have a presence nor direct business in Ukraine or Russia in normal circumstances, we do make very limited shipments on behalf of our customers into Russia, and Belarus and.
And in addition at this time, we have suspended any new transactions with or shipment of products to entities or individuals located in Russia, Belarus, and the DNR or al in our regions of Ukraine.
Importantly, we do have Ukrainian coworkers throughout eastern Europe , and in the U S. And we are committed to supporting them through this difficult time, including making financial contributions to humanitarian aid efforts such as UNICEF protect children and Ukraine campaign.
Corporate giving has and will continue to be an important.
Pillar of our overall environmental social and governance framework.
From a broader ESG perspective, there is a lot of exciting work happening at <unk> and we look forward to sharing more details on our goals and initiatives at our Investor Day next week.
Now I'd like to comment on our quarterly results.
Q1 provided a strong start to our fiscal year with top and bottom line results ahead of our expectations.
The benefits of our enhanced global end to end portfolio are clear and we saw strong and broad based demand across technology types and geographic regions.
Our customers are quickly adapting to the new normal hybrid work environment.
Which is creating the need for additional infrastructure devices and services to support both return to office and work from home setups.
Based on the breadth and depth of our portfolio, we are able to deliver a comprehensive array of technology solutions that customers, both small and large require.
In addition, the need for infrastructure solutions, whether on premises or in the cloud gained momentum throughout the quarter with business is opening back up we saw our customers responding to stronger end user demand from.
From a regional perspective, all three regions performed at or better than our expectations. Despite selective lockdowns in some countries due to the Covid omicron variant.
The ongoing supply chain disruptions continue that we anticipated in Q1, though we began to see some early signs of marginal improvement in our backlog despite.
Despite these indications our total backlog level continues to be elevated and we believe it's comprised of both current customer needs as well as future orders based on extended lead times.
From a strategic perspective, we are executing well on our plans and look forward to sharing more with you at our Investor Day next Tuesday.
That event, you will hear much more about our strategic framework and views on the evolution of the distribution ecosystem with presentations from many members of our executive leadership team.
Our integration efforts are executing as planned and we are on track to achieve our merger related synergy targets.
Our Americas ERP system migration is proceeding according to plan and we have begun to migrate some of our Canadian vendors and some net new U S vendors onto the legacy <unk> platform, which we call Cif.
We are taking a measured approach to this project to ensure a seamless experience for our customers and vendors.
Additionally, we have made very good progress on aligning our global policies across the variety of areas.
And as I frequently said aligning our one global <unk> corporate culture is critical and we have made very good progress there too.
We have introduced a servant leadership model across the organization and are looking forward to bringing over 100 of our top leaders together or an in person leadership seminar next month.
We see this as an important journey and are very pleased with the progress we've made so far.
As we look forward through the fiscal Q2 and beyond there are a variety of inputs informing our views. We continue to believe in the technology adoption trends fueling it spending in 2022 and beyond.
At the same time, we are cognizant that it spending has historically been correlated to GDP, we recognize that more vendor partners understand the value of distribution and we believe they are choosing <unk> because of our extensive global footprint and broad portfolio, which creates unique.
Capabilities and market opportunities.
Some offsetting headwinds to this maybe potential impact to the macro economy and supply chain from the war in Ukraine, and recent Covid related Lockdowns in Asia, we're closely.
<unk> monitoring developments in both areas.
One thing is for certain our teams have proven their capabilities in navigating a challenging and unpredictable environment over the last two years and we will continue to remain singularly focused on enabling success for our customers and vendors.
I will now pass it over to Marshall, who will provide additional details on our financial performance.
Marshall.
Thanks, Rich and thank you to everyone today for joining us on our call.
We had a strong start to the fiscal year with results ahead of our expectations.
We continue to see a challenging supply environment.
As expected and given excellent focus and execution, our teams were able to deliver performance at or better than we anticipated across all three geographic regions.
Total worldwide revenue came in at $15 5 billion.
Up one 5% from the prior year when normalizing for the merger.
When adjusted for constant currency and the ASC 606 revenue policy alignment related to the merger revenue grew approximately 6%.
Gross profit was $969 million and gross margin was six 3%, reflecting a favorable mix of products and good execution by our team.
Total adjusted SG&A expense was $562 million, representing three 6% of revenue and in line with our expectations.
non-GAAP operating income was 432 million and non-GAAP operating margin was two 8%.
non-GAAP interest expense and finance charges were $41 million.
And the non-GAAP effective tax rate was approximately 24% and in line with our expectations.
Total non-GAAP net income was $292 million and non-GAAP diluted EPS was $3 <unk>.
Now turning to the balance sheet.
We ended the quarter with cash and cash equivalents of $510 million and debt of $5 billion.
Our gross leverage ratio was three one times and net leverage was two eight times.
Accounts receivable totaled $8 7 billion and inventories totaled $7 7 billion.
Our net working capital at the end of the first quarter was $4 3 billion.
Our cash conversion cycle for the first quarter was 24 days and higher than Q4 of fiscal 'twenty, one which was <unk> 14 days.
Cash used in operations was approximately $1 3 million in the quarter.
This use of cash was primarily due to a temporary increase in net working capital to support revenue growth and strategic inventory purchases that are expected to sell through in the next three to four months.
From a shareholder return perspective for the quarter. Our board of directors has approved a cash dividend of <unk> 30 per common share.
The dividend is expected to be paid on April 22022 <unk>.
<unk> to stockholders of record as of the close of business on April eight 2022.
As we mentioned in our last earnings call, we are employing a capital allocation framework that targets, both dividends and share repurchases as shareholder return vehicle.
We intend to do share repurchases of about $100 million in fiscal 'twenty, two and have already bought back $25 million in Q1 and expect to repurchase another $25 million in Q2.
As rich mentioned, our integration efforts are going well and we continue to make good progress on realizing merger cost synergies that are in line with our plan.
As I've mentioned previously these opportunities span a variety of areas, including optimization and efficiency improvements via the legacy Tech data GPO program as well as traditional deal related synergies across the spectrum of it systems corporate costs facilities rationalization.
And taxes and interest.
As we contemplate the full fiscal year, we expect revenue growth approaching mid single digit which include an approximate $1 1 billion of headwind due to the alignment of accounting policies.
And a headwind of approximately $1 2 billion due to FX impacts from the weakening of the Europe .
We now expect non-GAAP EPS to be $11 15 to $11 65 per share, which is an increase from $10 80 to $11 20.
Provided in our last quarterly update.
Our updated forecast also reflects an expected 18 headwind from FX.
Given our upcoming Investor day, we wanted to provide you with an updated view of the full year.
Historically, we provide quarterly guidance and will return to our historical precedent next quarter.
Looking more specifically at fiscal Q2.
Bit more difficult to forecast with precision given the increased level of macroeconomic uncertainty due to the war in Ukraine.
Potential COVID-19 impact rising inflation and the continuing supply chain constraint.
Against that backdrop, our view encompasses our current estimates given the information. We currently have for Q2 and the full year.
For fiscal Q2, we expect total revenue to be in the range of $14 8 billion to $15 8 billion, which when adjusted for currency impact of approximately $300 million.
And ASC 606 revenue policy alignment related to the merger of approximately 300 million.
This equates to growth of around 3% on a year on year basis.
Although we began to see some stabilization in our backlog in Q1, the level continues to be elevated compared to historical levels and.
And we estimate the impact to fiscal Q2 revenue will be approximately 4% to 5%.
non-GAAP net income is expected to be in the range of $231 million to $270 million and non-GAAP diluted EPS is expected to be in the range of $2 40.
The $2 80 per diluted share based on weighted average shares outstanding of approximately $96 million.
non-GAAP interest expense is expected to be approximately $37 million and we expect the non-GAAP tax rate to be approximately 24%. Please.
Please note that these statements regarding our expectations for our fiscal second quarter of 2022 and full year of 2022 are forward looking and that our actual results may differ materially.
We now will take your questions operator.
At this time I would like to remind everyone in order to ask a question press star followed by the number one on your telephone keypad. If you would like to withdraw your question again press star one in the interest of time, we request you limit yourself to one question and one follow up question.
Your first question comes from the line of Russo Chair.
Sure Yes.
Bank of America. Your line is open.
Hi, Thank you for taking my questions.
Rich I was wondering if you can comment on the margin differential between the <unk> side of the business and the text data side of the business and how quickly do you expect that gap to close and specifically you've talked about $100 million. This year of deal synergies and some of that is from the GPO initiative.
I was just wondering like how much of these is helping to harmonize the margins between the two sides of the business. So any any comments you can provide on that would be helpful.
Sure.
As a generalization and when you take a look at the margin differentials between the legacy businesses.
Youll find that the.
The Americas margins are not very different but rather it's.
Regional mix of the margins that.
No.
Drive some of the difference that you've seen between the two companies.
Many companies within the industry.
Europe .
Margin profiles are a bit lower when compared to the Americas profiles.
Generally is due to cost driven by complexity of regional sorry country structures within that region. So that's kind of the way we think about the margin differentials.
From a European perspective, just to close it out.
So we.
Are.
Really happy with our European financial model the return on invested capital.
Attributes of that model are quite good.
No.
That's the way, we think about and in addition to that.
One last thought around Europe as there is more intensity around the.
What I would call the endpoint and part of the business we.
We do business in Europe and actually.
Carry some mobility lines that are.
Fairly significant and those mobility lines again, although they're lower margin attributes the return on invested.
Capital attributes of those segments are really really good.
So that's sort of the summary.
In addition to that from a synergy perspective again, just to recap what we had committed to at the time of deal $100 million in year, one to 100 incremental in year two for 200 in total.
We feel good about where we're at from the execution of that overall plan.
Call it on track actually.
Tactically running running a bit ahead relative to our expectations are <unk>. This is mark so just add little color to the $100 million synergies for year. One just as a reminder, an element of that is below.
Operating income in the form of better taxes and interests. So your question to how do margins benefit. They certainly do from an SG&A perspective, and from a GPO to initiatives, but there is also below the line benefits as well.
Okay. Thanks, Thanks for all the details on that I appreciate it.
Can I ask you, which you've also had time now to look at the line cards for the two companies.
The parts of the line cards that you want to enhance our similarly are there parts that you would like to prune.
So let.
Let me move on to the enhanced piece for just one moment.
There are always parts of the line card that you would like to enhance.
And it usually has to do with the emergence.
The new entrants if you will into the market. So we're always focused in carrying out the business development to make sure that we capture our fair share of those new entrants.
Overall, we're very satisfied as a generalization with our line card, but always looking to improve it is the best way to net as it relates to pruning.
I know that.
In the past when tech data was a public company, we talked about some portfolio activities.
We're taking place as a generalization most of those portfolio activities.
Okay.
I would say that were material had been completed in the past. So right now we're kind of full speed ahead relative to <unk>.
Executing executing our business and there are no anticipated significant.
Pruning if you will that we foresee.
At the current time.
Okay. Thanks for that and if I could just squeak.
Squeeze one more in Marshall you talked about strategic inventory purchases.
Looks like inventory was up 17% sequentially, but it is an environment, where you need to plan for future revenues. So maybe can you just talk about how you see the cash convergent cycle going forward and how should we think about free cash flow this year.
Sure.
It was elevated you did call out that it was temporary.
Cash conversion landed around 24 days for the quarter, we thought coming out of Q4, we'd see it two to four day deterioration to about 16.
Think about this group through everyday is around.
175 in terms of just cash generation or cash usage.
So thats about 6% to seven days.
Increase that we saw.
We still believe as we think through the rest of <unk> 22, and our thoughts on 'twenty three being our second year of being together that the $1 billion of free cash flow is still our target and we expect to be able to achieve and hit that the other aspects to that as we referenced earlier in our prepared remarks is our capital allocation strategy and how we plan to deploy that.
We think that there is still significant opportunity to opportunities for us from the overall program management on various customer and vendor.
Supply financing those synergies and benefits to us we think are significant and will continue to be brought into the overall management of our of our programs going forward.
Thank you for taking my questions and congrats on the strong execution in the quarter.
Thank you.
Your next question is from the line of Ananda Baruah with loop capital. Your line is open.
Hey, good morning, guys and congrats on the strong results and thanks for taking the question.
I guess, yes, just a couple for me if I could.
You guys mentioned a couple of times that results were above your expectations or ahead of your expectations.
The top line can you talk about what you saw.
As being the drivers there.
And including anything that is <unk> specific and then I have a follow up thanks.
Yes, so ananda good morning to you hope you're doing well.
Couple of thoughts.
<unk> had provided a point of view early on.
That we as we move through this year that we would see an acceleration within the data center.
We call that segment advanced solutions, and then maybe a little bit of a moderation as it relates to the PC ecosystem, which we call <unk> and.
And in fact.
It's playing out that way obviously, there is a lot of backlog still to be worked off within the <unk> segment, but.
As we had stated in the prepared comments.
Moving through the last quarter and into this quarter and throughout the quarter, we had seen more strength within the advanced solutions segment, then the theory behind that is obviously.
With Covid and people being remote the project based business was a bit delayed.
People weren't coming into deploy those projects.
Now I think they're beginning to take root.
So that's what I would state relative to.
How we had seen so to be specific the bit of the over achievement.
That we're talking about with.
Primarily due to that advanced solutions segment.
That's super helpful.
I guess the follow up.
Yes.
Just going over to the PC business could you two things can you just give us what your view is.
Sure.
Throughout the year from your current baseline difference like what Youre seeing so I guess, it's more of like.
Sequential.
Through the year do you think things are stable here from a shipment go forward base ended the year over year might look a little bit different.
Th current baseline book and then just any color on high it would be great too and that's it for me thanks guys.
Yes, so I'll handle the PCP and then maybe hand it off the Marshall to give his comments around the highest piece, but on the PCP again, I apologize for being a little bit repetitive.
But the expectation was first half of the year.
Sure.
Moderate I'm sorry.
<unk> robust moving to moderate and then sort of maintaining that moderate.
Through the rest of the year.
I think that that still is the way I would.
Couch it as you know there are still are.
Things, which are sort of driving.
Demand within that space as we come through the.
Operating system transitions.
Every company has.
Very conscientious of more than ever about security in some of the attributes and the new.
Operating systems applications et cetera tend to help drive continuous refresh so but allow me to kind of put it in the startup.
Moderate category as opposed to the robust category sort of moving forward to the back half of the year and then expectation would be that the advanced piece as I said earlier would have some pretty good growth attribute the moving through the next couple of quarters Marshall on the hype vis Ananda Hi has had a great quarter.
Broadly speaking.
For scale infrastructure continues to grow in the double digit category. That's the industry comment and hive is currently benefiting from that.
In the quarter, we saw similar distribution like strength and what that represents is.
Our capability to put in Q1.
And as we spoke to previously I haven't done a tremendous job of enabling their overall end to end solution portfolio too.
Further increased current customer business and also expand to new customers.
So that's super helpful. Any anything that we should be aware of.
As July if hyperscale build that continue this year to be robust that it wouldn't.
Wouldn't be a beneficiary of that.
Certainly they're correlated as you know, it's a lumpy business.
Okay.
So it's a tougher compare.
But if you think about the first half.
<unk> revenue and operating income grew and we would expect as you look out on an annual basis that there will be a correlation between hyper scale infrastructure growth and high opportunities yes.
Yes, I think it's a good reminder, that.
Our feeling relative to that segment is that.
Marshall has just stated I'm reiterating that we expect to have really good growth out of tributes within that business annually, but.
Depending on the ebb and flow of.
Requirements in.
And.
Sometimes you run into compares that are.
We are a bit stronger so, but we like we like the fundamental that guidance that's super helpful.
Thank you Amanda.
Question is from the line of Keith how some with Northcoast Research. Your line is open.
Good morning, guys good to talk to you again.
If I look at your second quarter guidance. It seems like there's a perhaps a setback in terms of the operating margins.
From the first quarter it may perhaps or answer the question in part by the high response, but anything or at least we think about in terms of the second quarter operating margin step back.
Good morning, Keith I hope Youre doing well.
Hey, Keith This is Marshall I'll take it first and then.
Then rich can provide any other commentary.
Keith what we're seeing just in terms of the seasonal behaviors that the collective.
Organizations come together is that Q4 and Q1.
Are behaving very similarly.
And the revenue profile of margin profiles are fairly consistent you can see that in the numbers, we just posted for quarter one.
We're also seeing some seasonal relationships between quarter, two and quarter three.
In Q1.
And that has typically been a stronger legacy tech data quarter, where aaas demand and business is higher that has a higher margin profile.
In Q2, what we're seeing is a more balanced profile between Aaas and Aas.
Such that margins historically, what we're seeing traditionally come down 30 basis points plus or minus.
Most of that is just the seasonal relationships, we're starting to see as a combined organization coming together nothing in terms of structural changes in gross profit or gross margin and nothing in terms of structural changes and what we're seeing in terms of operating margin.
Alright Thats helpful. I appreciate it and then in terms of the inflationary environment right. I mean, we've had a lot of price increases from the vendors over the past year and you guys are yes.
Yes.
Let me start and then I can handle it.
That's up to Marshal Keith so.
Let's take it a piece at a time first as it relates to.
Vendors and pricing there are continuous price changes all.
Moving.
In upward direction as.
As we move through time, so that has not abated.
And obviously the things that you talk about all the way from more expensive more expensive freight I believe are all contributing to that.
We as you know.
Vince can benefit from.
Increased vendor prices.
Basically.
Is.
In those situations, where we have inventory within our system and.
As they take their prices up we take our prices up so we would anticipate that that's like a five to 10 bps sort of.
Margin advantage for us when.
When that type of activity occurs.
Then kind of get closer to home obviously the in place.
For increasing a bit more than.
It has historically.
In addition to that cost of freight.
Has been going up as well.
We are pretty determined to make sure that we stay on top on top of that.
And we try to make sure that.
Bind with those changes and Thats the way, we sort of execute the business.
Keith.
The only thing I'd add to that is from quarter to quarter. We may see ebbs and flows where we may have a little bit higher cost associated with any of those inflationary pressures that typically over the period of a year.
Or more rehab.
<unk> been able to cover whether thats through pass throughs or productivity enhancements such that it doesn't.
Sheerin with Stifel Your line.
And as open.
Yes, thanks, and good morning, everyone.
And with that we'll ask John .
Just one concerning.
The rich.
Okay.
Kate that between.
Fine.
Decline in device side versus the infrastructure side, because times for things like networking.
Storage product so.
Could you parse that into those two segments great.
Great question.
And that is the tale of two cities so.
The marginal improvements that were the <unk> segment.
Calling in.
And elevating.
Thanks, Steve.
Just just about across the board.
We see issues there, but in particular with the newest technologies.
The lead times are the longest so it is the tale of two cities within.
Okay.
Helpful. And then just regarding the question.
Previous question on margins, if we sort of backing into gross margin. It looks like it's going to be down is that also a function of mix and it looks like you had.
Really nice mix that that helped drive that margin upside in.
Yes.
Matt just as a reminder, and I should have said this earlier, we have a great Q1, investor deck and the TV Phoenix Investor website. It helps show pre merger.
Sure.
Consolidated results assuming that we were.
Together as at December 1st I, just want to let you know that that helps.
Having an apples to apples comparison.
We do expect gross margin and gross profit to improve and that's a year over year comment as we see it and also as I spoke to earlier with Keith or about Keith's question the margin for error for op margin desk.
Come down sequentially, but year over year, we also expect it to improve.
My question was sequential I get the year over year, but it looks like on a sequential basis gross margin will be down and so my question is you got it.
This year between Q4 or Q.
Thanks.
Okay alright, thank you.
Welcome.
Your next question is from line of Jim Suva with Citigroup.
Thank you and good morning.
I had one question that is on your full year outlook and it looks like you are taking it up very materially if my Memory's right.
You're talking about a 11, 50% to 65.
Not materially.
Hey, let me know if my math is right. The B what are the main drivers behind that.
Better margins better mix, because it seems like even three months ago the backlog was.
Really elevated in Lincoln and give you good visibility. So it seems like something materially has really improved here and so I'm just kind of curious about that improvement which is a positive. Thank you.
Hi, Jim This is Rick finished within our commentary.
Yes, we're very pleased to be able to raise the overall guidance for the year I'll start with the backdrop of a confidence around mid single digit growth rate for the full year and that's adjusted for ASC 606 and.
And FX I think the goodness that we're experiencing is in two categories. One is just the affirmation and ability to.
To realize our synergies that we spoke to earlier the second is the better than performance in.
In regards to the combined entity. So our teams working together and I touched on this little bit earlier.
We are discovering and finding even more ways to be efficient that arent being tracked through our synergies.
Roy to go after everything that we see that is beneficial but we're seeing.
Continued goodness at a better than expected rate in regards to our two enterprises coming together.
Yes, Keith I.
Just wanted to provide some comments on that as well if I could.
Okay.
I believe the midpoint of the the margin that we had that range that we've given before was like 11 Bucks and if they go to the midpoint currently.
It's 11 40 right.
We've delivered up.
If you just go back to that baseline we.
Liver to material portion of that in Q1.
Relative to the 303 so.
I just want to make sure you have that perspective.
That's great and as a follow up.
You've talked a lot about your milestones per year cost synergies being on track and then you gave a little.
<unk>.
Slightly a little bit better which is could be here on the revenue side <unk> not talked a whole lot of about revenue synergies is that still a discovery process is theres something there I'm just thinking about some approved vendors or some synergies or better rebates or better by.
<unk> purchasing power again that focus was a lot on the cost synergies I'm just wondering about the revenue side of things or is that something more of that.
Potentially we will be hearing about next week at your Investor Day.
So we believe that the revenues there are revenue synergy opportunities and just a quick recap is.
<unk>.
Legacy TD had a broader base of.
I guess you said it does just to pick one category had a stronger security practice. So we go in both directions with that right now.
No.
But you have to remember is our ERP.
We're not yet consolidated.
So there is a bit of a manual.
Engagement, if you will.
One of the legacy reps, having to engage the other side to get it loaded into the system et cetera. So our speculation that the unlock for that revenue synergy really comes to life when we get aligned in the ERP.
And then a salesperson will naturally be able to engage and then.
Work with it within the system that they.
And the common system that.
They have all their visibility too so.
Long story short, we see them, we hear about we take.
<unk>, we can but the unlock will be once we get to a consolidated platform.
And that consolidated platform ERP I know you mentioned youre going to do it very slow so theres no hiccups.
American North America person, so it's what's the timeline on that again.
So we are already underway we.
Have began to migrate customers and vendors in Canada.
Yeah.
We will get through Canada or.
Segment of course, Canada, if you will sort of April may done then we've already also started to board some of.
Bob.
<unk>.
The.
Mismatches in the line card to the Cif system.
In the U S. And then we will get underway in the U S.
We would expect it to.
As I said in the last call via Rolling Thunder.
So by the time, we get to the end of this year. If everything goes as planned we will have a pretty significant portion of the business moved over.
The entirety of getting the business moved over consistent what we said during the integration will be within that total two year horizon, but.
Expect that to be material needs by year end and then we'll close out the rest.
And the first nine months of 2003.
Thank you and congratulations to you and your team in such a challenging time good job.
Hey, Thank you thanks very much.
Hope, you're having a great morning.
Your final question comes from the line of Vincent Colicchio with Barrington Research. Your line is open.
Yeah Rich I was wondering if you could talk about what areas of the business. What are you seeing the most wallet share gains.
So from an overall market perspective.
Obviously.
All of those insights.
Following the close of the quarter, if you will but I would say that.
We had had questions in the past relative to larger wallet shares with some vendors and whether we had concerns that they would be taking action.
Perhaps too.
Move away there has been none of those indications we have had enthusiastic engagement with our our vendors in.
Feel as if.
We are.
Have a lot of headroom with all of them.
Cause of if you will the transitions to the new technologies cloud analytics security Iot.
So we are building <unk> is another example, and a lot of edge solutions. So we're building out plans too.
Yes.
Engage with them in those high growth areas.
<unk>.
I would expect that.
Well, we will grow consistent.
Not ahead of the market as we move forward, that's kind of how we think about it.
And.
It sounds like the integration is going well, but need to ask.
Given the tight labor market.
Disruption from a big integration has there been any pickup in turnover.
Data.
I think like the rest of the world.
The turnover is a bit elevated relative to what the historical norms have been however.
Is.
Unprecedented or like seriously concerning.
Our focus is to make sure that we're providing.
Great career opportunities are fair and competitive set of financial.
Opportunities and benefits and we stay keep a close.
Close pulse with our teams to sort of understand where we're at but to be direct and answer your question.
Within the current environment.
Theres nothing thats really out of the norm for us currently.
Okay.
Thanks for answering my questions nice quarter guys. Thank.
Thank you very much we appreciate you joining us.
At this time there are no more questions. This concludes today's call.
Have a nice thanks, everyone.
Good day.
Okay.
Sure.
Yes.
Yes.
Okay.