Arrow Electronics Inc. Q1 2023 Earnings Call

May 4, 2023

Quarter 2023 earnings conference call all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If he 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.

Yes.

[music].

Okay.

[music].

And again I would now like to turn the conference over to Raj Agra Wall Senior Vice President and Chief Financial Officer. Please go ahead.

Thank you operator, and Hello, everyone.

Many of you have gotten to know our chief accounting officer, Rick sideways over the last few quarters as he provided interim IR support.

I want to thank Rick for his leadership in helping the company navigate.

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With that I am pleased to introduce our new Vice President of Investor Relations Anthony Pennsylvania.

Yeah, Anthony joined Arrow in February having most recently served as head of Investor Relations for semiconductor equipment company.

In addition to background in finance and Investor Relations Anthony has an engineering background as well.

We're excited to have Anthony onboard and I'll turn it over to him to get us started today.

During this call we will 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 10-K and 10-Q <unk>.

Flings 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 <unk>.

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 speakers' remarks, there will be a question and answer.

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 Dot Arrow Dot com, along with the CFO commentary the non-GAAP earnings reconciliation and a replay of this call.

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 Agra Walsh Senior Vice President and Chief Financial Officer. Please go ahead.

Following our prepared remarks today will be available to take your questions and I will now hand, the call over to our president and CEO Sean Kerins.

Thank you operator, and Hello, everyone.

Many of you have gotten to know our chief accounting officer, Rick sideways over the last few quarters as he provided interim by our support.

Thanks, Anthony and thanks to all of you for joining us today.

I wanted to thank Rick for his leadership in helping the company navigate that transition.

First I'll discuss our Q1 results and then turn it over to Raj for more detail on our financials and the outlook for our second quarter.

With that I'm pleased to introduce our new Vice President of Investor Relations Anthony Pennsylvania.

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.

Yeah, Anthony joined Arrow in February having most recently served as head of Investor Relations for semiconductor equipment company.

In addition to background in finance and Investor Relations Anthony has an engineering background as well.

In doing so I am happy to report we delivered solid results for 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.

We're excited to have Anthony on board and I will turn it over to him to get us started today.

Thank you Raj I'm excited to be on board I would 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 will make forward looking statements, including statements about our business outlook strategy.

Global components, the 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.

<unk> and future financial results, which are based on our predictions and expectations as of today.

Actual results could differ materially due to a number of risks and uncertainties, including the risk factors described 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 result of new information or future events as a reminder.

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.

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 reconcile these non-GAAP measures to the most direct comparable GAAP financial measures in this quarter's associated earnings release Form 10-Q, you can access our earnings release at Investor Day.

And both our western regions, we continue to see strength in interconnect.

Passives and electro mechanical 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.

<unk> dot com, along with the CFO commentary the non-GAAP earnings reconciliation and a replay of this call.

Following our prepared remarks today will be available to take your questions and I will now hand, the call over to our president and CEO Sean Kerins.

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.

Thanks, Anthony and thanks to all of you for joining us today.

First I'll discuss our Q1 results and then turn it over to Raj for more detail on our financials and the outlook for our second quarter.

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 five five 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.

Global components, the 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.

Across all three global component regions, we're fortunate to serve a dessert excuse me 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.

Industrial and transportation end markets helped drive record revenue, while maintaining healthy levels of backlog in.

In the Americas, we saw relative strength in industrial and.

Our customer secure products they most need.

Automotive and aerospace and defense and we were encouraged by growth in design related activity.

At the same time, extending our engineering capabilities, where they can add further value.

Now switching gears to our enterprise computing solutions business sales.

As fully expected the decline in the Americas revenue is mainly a function of the normalization, we see in the shortage market.

Sales were up 3% year on year in constant currency.

It was within the range of our guidance and consistent with overall market dynamics.

And both our western regions, we continue to see strength in interconnect.

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 cyber security compute and enterprise software. While there are signs the hardware supply chain is improving we're experiencing a softer it spending mark.

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.

Currently in China as customers managed through their on hand inventories.

In North America, which dampened year on year sales in the region in the quarter in both regions. We continue to see the market shifting to everything as a service and believe we are well positioned to help our suppliers and customers navigate this transition.

By focusing on our suppliers and customers the team executed well and delivered beyond their original commitments for the quarter.

<unk> ability 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.

Before I hand, the call over to Raj to provide more details on our results I want to reiterate my confidence in the global Aero team and our ability to help our suppliers and customers meet their go to market and production needs make no mistake, our employee's collective understanding of our markets and their commitment to our suppliers and customers.

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 five five and 6%.

Is what drives our success.

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.

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 $182 million impact.

Across all three global component regions, we're fortunate to serve at dessert excuse me 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.

And on a quarter over quarter basis currency 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.

While at the same time, extending our engineering capabilities, where they can add further value.

Now 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.

Consolidated non-GAAP gross margin of 12, 7% was down 60 basis points year on year, principally due to reduced volumes and the component shortage market, partially offset by improved product and region mix in the enterprise computing solutions Eric.

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 cyber security compute and enterprise software. While there are signs the hardware supply chain is improving we're experiencing a softer it spending mark.

non-GAAP operating expenses were $681 million flat to Q1 of last year and up 30 basis points as a percentage of sales.

In North America, which dampened year on year sales in the region in the quarter in both regions. We continue to see the market shifting to everything as a service and believe we're well positioned to help our suppliers and customers navigate this transition.

non-GAAP operating income was $433 million or 5% of sales with global components operating margin coming in at six 2% and enterprise computing solutions coming in at four 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.

At the high end of our guidance range and based on a $59 5 million share count.

Is what drives our success and I appreciate their determination and hard work with that.

Now turning to the balance sheet and cash flow net working capital was roughly flat sequentially from Q4 of last year to $7 2 billion.

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.

Accounts receivable came down by 14% sequentially to $10 7 billion.

Ladies of sales outstanding declined from $1 20 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 $1 14 last quarter the.

And on a quarter over quarter basis currency positively impacted sales by $150 million.

The sequential decline in both receivables and payables is largely due to seasonality in our ECS business.

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 with within our guidance.

Inventory increased 4% to $5 $5 billion with inventory turns declining largely due to seasonality from $6, one last quarter to $5 five 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 contributed 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.

Now turning to the second quarter non-GAAP guidance.

We expect sales for the second quarter to be between $8 42 and $9.02 billion.

We expect global components sales to be between $6, six 4% and 7.04 billion.

Which at the midpoint is flat from prior quarter.

We expect enterprise computing solutions sales to be between $1 78, 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 in EPS growth by <unk>.

I will now turn the call over to the operator for Q&A.

Okay.

At this time I would like to remind everyone 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.

It relates to your component business and the inventory build.

It looks like inventories were still up significantly year over year in your interest expense, obviously up significantly as well.

With lead times coming in what you would think that.

You'd be looking at unwinding some of that inventory.

What's the plan 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.

A little bit more about what that means for interest expense, but look I think if you look at our inventory build over the past three quarters.

Is progressively gotten smaller each time, if you look at it year over year.

That's largely a function of the price increases that came into the business because unit volumes are only now.

Starting to catch up to something close to flat year on year, there was a sequential increase.

We don't think of it as significant.

Remember and you probably have seen this past.

Past cycles when lead times start.

Moving around as they are including coming in time, it gets to be a little bit less predictable and receipts sometimes occur later in the quarter than you might think.

So the sequential increase is not something.

We're at all concerned with we feel good about the quality of the inventory we have got on hand.

I'm very confident in our ability to sell through it and I think the most important point is if you look at our our turns in the core.

Global component business at Q1 exit.

We were right on or slightly above our historical targets.

And expectations, both for semiconductor and IP.

And Matt Let me just add a little bit about interest expense is up year over year and sequentially as well.

Not unexpected given the interest rate environment that we're in and the larger working capital balances. We have that's just the way the business is set up.

To the extent that the business tax 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 continue to manage the business within an investment grade credit ratings framework.

And so our interest expense was a bit higher in the quarter than we had expected just given the higher balances, but very manageable overall.

Okay. Thanks, very much for that and my second question.

<unk> two.

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%. So it looks like but that supplier is taking more product on a direct basis. So could you.

To the extent that you can talk about that relationship the puts and takes there and how you see that longer term.

So probably no surprise to you, but we really don't ever speak about any.

Suppliers, specifically, we're focused on the <unk>.

<unk> market and our complete semiconductor line card and we feel good about.

What's in front of us and our ability to navigate.

This cycle is it is it steadily corrects, but.

I can't speak to what's happening with any one supplier in particular.

Okay fair enough. Thank you very much.

Thanks Mac.

Your next question comes from the line of Joe Quadro G with Wells Fargo. Please go ahead.

Yes, thanks for taking the questions I was wondering.

Your nearest competitor talked about customers pushing orders out.

I'm wondering if you could kind of just give us some comments around that if you are seeing as well and then any color on cancellation rates.

Okay.

Sure Joanne.

For.

I'm not sure I understand the first part of your question, but what I can say is.

Couple of things one.

We talked about book to Bill upfront they are below parity, but we're pleased that in fact over the past couple of quarters.

They have not eroded further in fact, if not eroded even in the past.

30 days of this quarter.

We feel good about that we are engaged in reschedule activity.

And that.

Is a good way for us to collaborate with our suppliers.

To help our customers meet their production needs.

It's a great way for us to stay close to both our suppliers and customers and we're doing that throughout the world.

As importantly, or more importantly, we consider any cancellation activity as modest.

At best.

Has not accelerated either.

So we think we have a good handle on where we sit relative to our backlog.

What's happening with our customers' production needs.

And of course, the way, which we're collaborating with our suppliers too.

And I get the right inventory in.

For the right demand at the right time.

Our backlog is still significant.

The delinquent piece of it is still significant.

But if you consider all the work we do to constantly scrub it that I just described.

We also feel good saying that.

The majority of it is firm versus forecasted so again I think we've got a good handle on what's happening with inventory.

And our backlog.

Thanks for that and then as a follow up.

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 that impact starting to be mitigated.

Yes sure thing so I'm glad you asked because I want to be clear the the operating margin.

The impact you saw in components, both annually and sequentially was strictly a function of the decline we see.

In the shortage market and Thats.

That's evidence of the fact that the <unk>.

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.

So.

Going forward.

Relative to the impact we see from the shortage market as it continues to decline.

We see some additional impact this quarter its all built into our guidance and we expect it to fully abate across the second half.

Perfect. Thank you.

Your next question comes from the line of <unk> <unk> with Bank of America. Please go ahead.

Hi, Thanks for taking my questions.

Sean.

Yes.

Europe was strong in and you pointed out that Americas. There is some softness in enterprise. It spending so two parts of the question first I think Europe remains strong or do you think there is some contagion that Ken.

Slow spending there and then.

Within ECS the second part is.

Your software as Hilde has typically been strong every quarter. So when you sell vendor software does that set up a recurring.

And to you as well and and if so is that really the size how much of the ECS revenue is recurring.

So let me let me start with your first question is just talk a little bit about the market.

Because we do see a little bit of a tale of two cities.

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.

We saw that in Q1 hard to predict.

How much longer that persists, we're reasonably confident in our our Q2 guidance and I think were showing me.

Margin expansion, both sequentially and year on year, but the.

The market is still soft here Europe appears to be more resilient.

Don't yet see any contagion.

So certainly linked the two.

You can note that R.

Our business in components in Europe was also strong with a healthy outlook for Q2 as well. So I think the markets are just a little bit different in that regard.

As for the mix inside of our ECS business Youre right, we intentionally continue to drive that business too.

More software more cloud obviously.

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 is still at record levels.

And as the hardware business.

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 versus perpetual basis. So you are right we have a growing <unk>.

Backlog of what I would call recurring like revenue in the ECS business is becoming more significant and I think at the right time down the road either will be prepared to give you more.

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 and if so how long do you think that been last and how do you size any excess inventory in the channel and where is this.

Inventory.

Elevated in the debt.

Or do you have a view into where in the channel there is more inventory.

Sure.

So I'll bring you back to what I said, a few minutes ago about inventory in general.

We do know that our turns have come down.

We're comfortable there is still left.

Levels.

While starting to look more normal.

Don't give us great concern.

We're managing this very carefully.

The inventory build in the ecosystem.

Fairly broad based I wouldn't say that we.

We pointed to any one piece of the market versus others.

Hard to say how long it takes.

For the customer base to work through the existing inventory levels, but again.

I'll point, you to the fact that our book to bills have not eroded further.

In the past one to two quarters, nor in the first part of this new quarter. So we feel like we're in a market that probably is moving more sideways.

That falling sharply.

In.

Funny enough.

Sometimes those markets are a little bit more difficult to call.

Then when something is falling more sharply but.

I prefer this scenario because I think it starts to suggest were may be experiencing a softer landing.

Okay. Thanks.

Thanks for all the details appreciate it.

You bet.

Okay.

Your next question comes from the line of Toshi Hari with Goldman Sachs. Please go ahead.

Hi, Thank you so much for taking the question.

Had a follow up on the demand outlook in <unk>.

Your components business as well.

Your Q2 guide as you guys noted.

Oppose implies sort of a flattish outlook for the June quarter, which is a couple of percentage points below typical seasonality.

Can you provide a little bit more context or color by geography or end market does anything stand out.

To the downside and how are you thinking about the second half vis vis the typical seasonality in your components business.

Yes, sure thing I wouldn't want to speculate too much about the second half of this environment. We're trying to focus primarily on just 90 days out but.

Happy to give you some color around what we see.

<unk> for the.

For the second quarter, and I would say it breaks down a little bit differently in each region, we do see Europe again.

Expecting better than seasonal sales results I.

I would say in the Americas when you normalize for.

Just the the shortage declines we see in that piece of the market.

Roughly in line with what would be normal seasonality and in Asia.

Got a forecast for sequential sales growth.

And it's starting to approach more.

Typical seasonality.

So we don't feel overly bullish.

But we're not we're not overly pessimistic either.

Got it. Thank you and then as my quick follow up.

Just thoughts on one for Raj, maybe thoughts on working capital.

Over the next couple of quarters.

And implications for free cash flow generation and buybacks and so on and so forth. Thank you.

Okay.

Yes, sure, yes, I think from a working capital standpoint, we're going to obviously try to manage that as tightly as we can.

You saw that affect working capital was flat to the previous quarter and it really is going to be a function of whether 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.

And I would just say that our capital priorities have not really changed.

Overall from a stock buyback standpoint, we continue to act in our invest in the business and Thats really under working capital.

And 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 and then lastly, we want to put our excess capacity and cash flow towards.

Stock buyback to the extent that we sit here as a good value, which we continue to see.

So that's really the priority order.

<unk> investment in <unk>.

We sort of manage all of this with an investment grade credit ratings framework to manage the entire business. So that's sort of how we look at it for sure.

Would it be fair to expect inventory to trend kind of flat to down going forward or.

The trajectory is still going to be a little bit more positive.

I think it just depends from a pricing standpoint, that's not going to really have an impact on inventory itself.

But again.

We think that we have a great and strong backlog.

Now that the inventory there is there to support that backlog in blue.

We believe we will be able to sell through all of that inventory and so we feel good about our position as we have it today to share.

Thank you very much.

Again for any questions Press Star One. Your next question comes from the line of William Stein with Cure with Securities. Please go ahead.

Great. Thank you for taking my questions.

To what degree are extended lead times.

I am sure you are still experiencing some of those.

And component shortages influencing your ability to cure on the system side, if the business and thats affecting revenue is that it.

Is that really the is it still a prevailing trend at all if so to what degree or is that really reverted you mentioned.

Spend in Americas. This week, so I'm wondering how that's netting out thank you.

Yes, no sure thing well, so youre right. There is a indirect connection between what happens upstream in the semiconductor market versus what eventually materialize as downstream in the systems World I would say for the most part.

As it pertains to.

Compute and storage we've seen.

The bigger parts of our backlog.

Flush.

The worst of that situation has certainly improved.

There is still some normalization to occur in the systems space, but by and large is certainly better than it was a couple of three quarters ago and we're through.

Most of the aged backlog if you will.

More generally in semiconductor Youre right lead times have improved but there is still not yet back to.

Pre pandemic levels.

And the improvement has been fairly broad based but theres still a few categories out there that I would.

They are highly constrained and that does create.

Challenges for making sure we we serve that the delinquent demand first.

As best as possible, obviously things that fully normalized we wouldn't still have.

Such a sizable delinquent backlog, but as it pertains to our systems business.

You can assume that the worst of that.

Headwind is behind us.

Great. Thank you and as a follow up I'm, hoping you can talk about linearity in the quarter I know historically, we've tended to ask you and.

Even component companies in semi as well about order linearity.

But given the way the buyers I think are behaving. These days it feels like the backlogs are still robust, it's maybe more relevant to talk about linearity of cancels and push outs can you talk about how that.

Is trending with that stable or accelerating.

Yes.

That is doing thank you.

<unk>.

Yes, sure thing so youre right.

In more normal times linearity is maybe a more relevant question, but given the size of our backlog and again, we've been given visibility to demand multiple quarters out right well beyond the normal horizon that we typically get visibility to so.

Book to Bills, then become a little tougher to.

Manages predictably as you might in the past so again remember what I said the book to bills are not eroding.

As we manage that backlog.

Even including the rescheduling work, we do and.

And I would just reiterate.

While there is rescheduling activity.

The cancellation.

Levels are very modest and they have not accelerated.

Since we saw signs of them in the latter part of last year.

Thank you.

You bet will.

And we have no further questions at this time I will 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.

Arrow Electronics Inc. Q1 2023 Earnings Call

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