Arrow Electronics, Inc (ARW) Q2 2023 Earnings Call Transcript

Arrow Electronics, Inc (NYSE:ARW) Q2 2023 Earnings Conference Call August 3, 2023 1:00 PM ET

Company Participants

Anthony Bencivenga – Vice President, Investor Relations

Sean Kerins – President and Chief Executive Officer

Raj Agrawal – Chief Financial Officer

Conference Call Participants

Matt Sheerin – Stifel

Melissa Fairbanks – Raymond James

Joe Quatrochi – Wells Fargo

Ruplu Bhattacharya – Bank of America

William Stein – Truist Securities

Operator

Hello. My name is Chris and I’ll be your conference operator today. At this time, I’d like to welcome everyone to the Arrow Electronics Second Quarter 2023 Earnings Conference Call. [Operator Instructions] Thank you. Anthony Bencivenga, Vice President of Investor Relations, you may begin.

Anthony Bencivenga

Thank you, Chris. I’d like to welcome everyone to the Arrow Electronics second quarter 2023 earnings conference call. Joining me on the call today is our President and Chief Executive Officer, Sean Kerins; and our Chief Financial Officer, Raj Agrawal.

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 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, some of the figures we will discuss on today’s call are non-GAAP measures which are not intended to be a substitute for GAAP results. We’ve reconciled these non-GAAP measures to the most directly comparable GAAP financial measures in this quarter’s associated earnings release or Form 10-Q. You can access our earnings release at investor.arrow.com, along with the CFO commentary, the non-GAAP earnings reconciliation and a replay of this call. 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, we’ll be available to take your questions.

And now I will turn the call over to our President and CEO, Sean Kerins.

Sean Kerins

Thanks, Anthony, and thank you all for joining us. Today, I’d like to discuss our Q2 performance, provide some color regarding the market overall and then close with a couple of key thoughts as we think about the future. I’ll then turn things over to Raj for more detail on our financials as well as our outlook for Q3.

In the second quarter, Arrow delivered sales and earnings per share within our expected ranges, consistent with the softer semiconductor market and a mixed information technology spending environment. Our global team continues to deepen relationships with our suppliers and increase engagements with customers, always with an emphasis on our value-added offerings and capabilities. As a result, we believe we’re well positioned to help our suppliers and customers navigate the current environment, while positioning them for the many growth prospects that lie ahead.

Having said that, we recognize we operate in a cyclical industry, and we’re currently managing through an inventory correction. While I can’t say for certain how long this will last, I can tell you that we’ve experienced these cycles before, and fully understand what it takes to navigate them. We’ve always been a resilient business and see times like these as opportunities to strengthen the company for the future. To that end, we remain focused on our strategic priorities for accretive growth and exercising prudent cost management and working capital discipline.

In our global components business, there are a few dynamics currently at play. Component lead times are coming down. We’ve seen consistent improvement in average lead times for the past few quarters. While they’re not quite back to pre-pandemic rates across the board, there has been substantial progress. At the same time, inventory levels throughout much of our customer base remain elevated. Consequently, while longer-term electronics markets are expected to grow, the total addressable market for semiconductors according to multiple sources will clearly decline in 2023. While it may take time to work through existing inventories, we are encouraged that in general and particularly in the West, end of market demand appears to be fairly steady. And in addition to improving lead times, we do see other indicators that speak to the underlying health of the business. In Q2, the pricing environment was largely stable. Our book-to-bill rates, though below parity, continued to hold steady. Our design-related activity grew substantially, and we’re seeing continued adoption of our supply chain services offering.

Now to take a look at each of our operating regions in a little more detail. In Europe, we saw a slight sequential decline in revenue, but that was better than normal seasonality, and we achieved robust year-over-year growth from a resilient industrial market along with strength in automotive as well as aerospace and defense. In the Americas, we experienced a sequential and year-over-year decline in revenue. However, performance was stronger when adjusted for the further decline we experienced in the shortage market, which we now believe to have largely normalized. In addition, our focus on the market for interconnect, passive and electromechanical devices, is helping to offset a more challenging semiconductor operating environment.

And in Asia, while we experienced continued softness in the Chinese market across both verticals, we did grow sequentially in the region with relative strength in sales from networking and communications infrastructure, along with modest improvement in parts of both the industrial and consumer segments. Profitability in our global components business remained above historic levels in the second quarter. Given a fairly stable pricing environment, the sequential operating margin decline was mainly a function of regional mix and a decline in volume along with the associated impact to operating leverage. We continue to believe our value-added offerings, including demand creation, design services and supply chain management are contributing to our structural margin health and remain committed to our long-term profitability outlook for this business.

Now switching gears to our enterprise computing solutions business. Sales for the second quarter were down year-on-year, largely a function of mix as we saw relative strength in cloud, software and services as customers migrate to IT solutions delivered on an as-a-service basis. Operating income grew modestly year-on-year and was in line with our expectations. The favorable mix contributed to year-over-year operating margin improvement.

In Europe, demand for cybersecurity solutions and other infrastructure software remain healthy. We were also pleased by the continued adoption of our hybrid cloud portfolio, which is enabled through our ArrowSphere digital platform. And in the Americas, we saw relative strength in the public sector. We continue to focus on expanding our customer base in the mid-market and are seeing steady progress even against the backdrop of softer enterprise IT demand.

Now before I hand things over to Raj, I’d like to offer just a couple of thoughts as we look to the future. First, I want to be clear. I’m very excited about the key markets in which we operate and believe the long-term growth prospects are promising. You consider just a few key trends: the electrification and connectivity of everything; the accelerated adoption of new technologies such as electric vehicles, renewable energy and artificial intelligence, just to name a few; and in the IT space, the growing relevance of hybrid and multi-cloud solutions all delivered on an as-a-service basis. And second, while the current market trajectories are challenging and a little bit uncertain, we’re confident in our ability to generate cash in the near term, providing us the flexibility we need to serve our capital allocation priorities very effectively.

And with that, I’ll hand things over to Raj.

Raj Agrawal

Thanks, Sean. Consolidated revenue for the second quarter was $8.5 billion, down 10% year-over-year. Changes in foreign currencies had a negligible effect on revenue during the quarter. By business, global components sales were $6.7 billion, within our expected range down 10% year-over-year. Notably, we had significant year-on-year growth in EMEA with strong performance in the industrial and automotive markets. In enterprise computing solutions, sales were $1.8 billion, also within our expected range and down 8% year-over-year.

Moving to other financial metrics for the quarter. Consolidated gross margin of 12.5% was down 60 basis points year-on-year, principally due to reduced volumes in the component shortage market, partially offset by improved product and region mix in the enterprise computing solutions business as customers continue to shift from hardware solutions to software and cloud solutions.

Non-GAAP operating expenses were $656 million a reduction from both last quarter and last year. We continue to look for further cost reduction opportunities in this environment. Non-GAAP operating income was $410 million or 4.8% of sales with global components operating margin coming in at 5.8% and enterprise computing solutions coming in at 4.8%. Interest and other expense was $85 million, which was better than expected due to lower average daily borrowings during the quarter. Our non-GAAP effective tax rate of 23.1% was in line with our expectations. Diluted EPS on a non-GAAP basis for the second quarter was $4.37, in line with our expectations and based on a 57.4 million share count.

Now moving on to working capital. Net working capital was up slightly from Q1 at $7.5 billion. Accounts receivable increasingly – increased slightly from Q1 to $11 billion, driving days of sales outstanding to 118 from 111 at the end of the first quarter. Accounts payable were flat sequentially at $9 billion, bringing days of payables to 111 from 104 last quarter. Inventory decreased by about $75 million to $5.5 billion with inventory turns remaining at 5.5 turns. With inventory down slightly and the changes in days payable offsetting days of sales, our resulting cash conversion cycle was roughly flat from last quarter at 74 days.

Cash flow used for operating activities in the second quarter was $127 million. In conjunction with the cash generated in the first quarter, on a year-to-date basis, cash flow from operations was $97 million. We do continue to have confidence in our ability to generate positive cash flow. Net debt for the second quarter was up slightly from Q1 at $3.9 billion and total liquidity stands at approximately $2.1 billion, including our cash balance of $240 million. Our balance sheet remains strong and provides us with ample financial flexibility.

Consistent with our priority of enhancing shareholder value, we repurchased shares in the amount of approximately $200 million during the second quarter. At the end of the second quarter, our remaining stock repurchase authorization stands at approximately $824 million. Please keep in mind that the information I’ve shared during this call is a high-level summary of our financial results. For more details regarding the business segment results, please refer to the CFO commentary and the earnings presentation published on our website.

Now turning to Q3 guidance. We expect sales for the third quarter to be between $7.78 billion and $8.38 billion. We expect global component sales to be between $6 billion and $6.4 billion, which at the midpoint is down 7% from prior quarter and reflects the currently elevated inventory levels across our customer base and continued softness in Asia. We expect enterprise computing solutions sales to be between $1.78 billion and $1.98 billion, which at the midpoint, represents a 4% decline year-on-year. We are assuming a tax rate in the range of approximately 23% to 25% and interest expense in the range of $85 million to $90 million.

Our non-GAAP diluted earnings per share is expected to be between $3.40 and $3.60 on average diluted share count of 56 million shares. We expect sequential decline in revenue and reduced operating leverage to be the primary drivers of the sequential decline in EPS. We estimate changes in foreign currencies will benefit sales in Q3 by approximately $212 million and EPS by approximately $0.11 compared to the prior year. Compared to the prior quarter, we estimate changes in foreign currencies will benefit sales by $42 million and benefit EPS by $0.04.

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

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question is from Matt Sheerin with Stifel. Your line is open.

Matt Sheerin

Yes. Thank you. Good afternoon, everyone. Sean, I’d like to just get a little bit more color on your guidance for the component business in the September quarter. It looks like you’re guiding down roughly 15% year-on-year, 7% sequentially. You did see – you did – you do normally see sequential growth in Asia in September. And as we look at the numbers now, is that expectations for that growth, which would imply North America and Europe down kind of mid-teens sequentially? Does that make sense?

Sean Kerins

Good morning, Matt, I think those numbers would be a little bit extreme. We are guiding sub-seasonal in Asia for the region. I think we continue to see softness in China. That’s probably not new news to anybody. We just haven’t quite seen the rebound yet that the market expects. But our sequential decline in Europe and the Americas, though sub-seasonal, are not as significant as you suggest. Those are mainly a function of just the elevated inventory levels that we see in the business. Whereas the Asia, specifically Chinese, challenges are more a function of market. But the operating margin decline that you see in the guide is largely just a function of the shortfall in sales volume versus seasonality versus much anything else as we do kind of assume continued pricing stability in Q3 as much as we saw in Q2.

Matt Sheerin

Got it. And as we think about Q4, I know you’re not giving guidance for that. But would you expect this correction to play out through Q4, which would mean that the components would be down sequentially in Q4?

Sean Kerins

Well, you’re right, Matt. We’re only providing guidance for Q3. So I don’t really want to speculate too much beyond that. But what I can say is that given our history with the cyclical nature of this business, our experience has been historically that these kind of corrections take roughly two to three quarters to play out. That would certainly seem consistent with the inventory levels we see in our business and our assessment of our firm backlog. Obviously, a better demand environment could move things along more quickly. A declining demand environment could slow things down, but that’s been our typical experience historically. And that’s kind of the best we can tell you about anything beyond the third quarter at this point.

Matt Sheerin

Okay. Fair enough. And just lastly, on OpEx, you’ve done a good job of taking costs down. And it looks like it was down roughly $30 million or so sequentially on OpEx. Raj, how should we think about OpEx on a dollars basis relative to where it was in the June quarter?

Raj Agrawal

You mean for the third quarter, Matt?

Matt Sheerin

That’s right. Yes.

Raj Agrawal

Yes. Look, I think we’ll get the benefit of variable costs that will come down as the volume comes down. So that part of it, you should continue to see. And then as I mentioned in my comments, we’re always looking for further cost-reducing opportunities and optimizing the business wherever we can, rebalancing our workforce around the world, and we’ve been looking at closing underutilized facilities. So that stuff doesn’t show up right away, but it certainly does help over the longer term. And so we’re looking at that on an ongoing basis.

Matt Sheerin

Okay, very good. Thank you.

Operator

The next question is from Melissa Fairbanks with Raymond James. Your line is open.

Melissa Fairbanks

Hi, guys. Thanks very much. Raj, I had a question for you. I just wanted to ask about the revolver and the interest expense. I know you’ve been prioritizing the buybacks, and that’s driving a lot of accretion. But I was wondering how you’re balancing that buyback against bringing down some of the debt in the near-term?

Raj Agrawal

Yes. Melissa, we really think about it in the order of priorities of our capital priorities. So we’re always very much going to invest in the business to drive organic growth and expansion. That’s the first priority. We also – as I mentioned before, we’re always looking at the right kind of inorganic opportunities that will fit within our strategy, and then we’ll use our excess cash or capacity to buy back stock if we feel that it’s a good value. And we have felt that it’s a great value, obviously. The interest expense has been ticking up. That’s largely a function of rates. But the environment that we’re in and that we’re going to go through the next few quarters, we would likely see more cash generation and sort of gives us the opportunity to do all of those things as well as maybe even address the debt level a little bit. But we’re very much within our targeted credit rating ratios. And so no concern from that standpoint.

Melissa Fairbanks

Okay. Great. And then maybe I always have to ask about inventories, of course. It’s great to see inventory dollars coming down. I think you had said previously on a call that June quarter was probably going to – we’re going to start to see some normalization in the near-term. With under-shipping demand and kind of excess inventories at the customer level, do you have kind of an updated view on when we could get some of that working capital release?

Sean Kerins

So Melissa, I can give you kind of the big picture on our inventory profile. You’re right. We did see inventories come down in the quarter for the first time in several quarters. That’s a good sign in this environment. We do expect them to come down even further in the third quarter. It’s interesting. Units were definitely down in the quarter on a global basis. And ASPs largely held up, which does suggest inventory levels still reflect price increases where they would have fallen even further. Part of that is the fact that many of our suppliers are pretty collaborative when it comes to working with our customers as they look to reschedule per their production needs. But we think we’re managing inventory well. We like the quality of almost all of it. The only question is when it sells through, given the environment we’re in. But we do expect inventories to rotate down yet again in Q3, and hence, our confidence in cash generation in the near-term as we look forward. Turns are not too far out of line from what we would call historical norms in any of our three big operating regions, Melissa. I would say, they’re each within one turn or less of what you’d expect when things finally reach a steady state again.

Melissa Fairbanks

Okay, great. That’s very helpful. Thanks very much.

Sean Kerins

Thank you, Melissa.

Operator

The next question is from Joe Quatrochi with Wells Fargo. Your line is open.

Joe Quatrochi

Yes. Thanks for taking the question. I wanted to kind of stick on the inventory dynamic. Some of your suppliers have talked about their distributor inventory still remains well below the kind of historical levels that they have maintained previously. So I guess like how should we think about that dynamic and then the ability to maybe maintain pricing as being somewhat stable in that environment just given that inventories continue to be lean or also moving downward now?

Sean Kerins

Yes. So Joe, maybe just to step back and think about how these corrections typically play out, right? As supply has improved and lead times have come down, our suppliers have made decent progress addressing the enormous amount of delinquent demand that was in the market. That typically gets solved for first with their larger OEM customers. And in many cases, they’re the ones that they tend to serve directly. And then anywhere from two quarters or more later, it starts to show up in the mass market customer base. They were basically further back in the queue, if you will, which we tend to serve on their behalf. So the suppliers tend to see this whole phenomenon a little bit better than a little bit sooner than we do. But the pattern typically plays out the same in each case. And we think that, therefore, we’ve got a little bit in front of us to work through the inventory build that we’ve experienced in the mid-market, but it’s headed in the right direction. If you think about your pricing question, there’s a big difference between what plays out in the largest end of the market, the large OEM customers versus the mass market, which is our primary focus. The mass market is the place where pricing and margins tend to hold up in a better over time than you might see in the largest sub accounts. But like I said, so far, we’ve seen pretty good pricing stability in where we’ve been so far this year.

Joe Quatrochi

Got it. That’s helpful. And then just you referenced kind of typically, these things kind of take two to three quarters to play out. In the context of your components, EBIT margin has obviously been very strong over the last several quarters. And you talked about the structural benefits there that you’ve put in place. I mean how do we think about those structural benefits coming into play now as demand starts to slow? Do you think you can maintain component EBIT margin above 5%?

Sean Kerins

We do. And I’ll give you some perspective on this. I mean if you think about the up cycle that we all just experienced, that preceded the environment we’re now in, probably the most significant disconnect between supply and demand than we’ve seen in recent history in the industry, certainly in all of my time at Arrow. So a correction of some sort was probably inevitable. But if I go back to the last time that we would have seen some kind of a cyclical correction, that was 2019 pre-pandemic. And I can safely say that even with this guide, our margins are structurally better than they were at that time and to a much more significant degree. And such that even if we were to see further margin pressure down the road as inventory levels fully correct, we know that some of that will cycle back just through sheer volume alone, which will help restore operating leverage. And to your point, we have not lost sight of our value-add priorities and growth opportunities around things like engineering and demand creation, around things like supply chain, and they can continue to contribute to our structural margin strength. So, we still – for all those reasons, we still feel really good about our longer term steady-state outlook. We are basically not losing sight of where we are headed, even though the current environment is a little bit tough.

Joe Quatrochi

Got it. Thanks for that.

Operator

The next question is from Ruplu Bhattacharya with Bank of America. Your line is open.

Ruplu Bhattacharya

Hi. Thank you for taking my questions. Sean, you talked about an inventory correction happening in the channel. Could you give us a little bit more color on that? Are there specific types of semiconductors that have higher inventory in the channel? And a higher-level question, how do you measure excess inventory? Like how do you know that there is something that has excess inventory in the channel? And related to this is, if the demand environment is weaker, you think free cash flow generation in such an environment can be more – can be higher than normal? And would you use that higher cash flow for things like higher buyback than you would have normally done? So, if you can just give us your thoughts on inventory, a little bit more color on inventory in the channel, and your thoughts on free cash flow and uses of that.

Sean Kerins

Sure. A couple of different questions in there, Ruplu. So, maybe we can break it down. First, I want to tell you that although our backlog has come down of late, it’s still multiples bigger than it was pre-pandemic, multiples. And we still think roughly two-thirds of it is firm and maybe 25% or more of it is delinquent. So, that alone tells us we still have fulfillment to execute upon within our inventory profile, and we will. But it also gives us confidence that our guide is probably right where it needs to be. The inventory build throughout our customer base may be less specific about certain technology sets and more about just the electronics market overall. It’s elevated, and we know that because of our turns. We know that because of the feedback we get from our customers. And we certainly know that based on all of the close collaboration that we undertake with our suppliers all the time to kind of navigate this market. So again, we are probably a turn or so off in each of our operating regions relative to what we would expect to see when things reach steady state. But by and large, when inventories are elevated to the extent they are across our customer base, it slows down our ability to execute on fulfillment, and it will occur. It’s just a matter of the work our customers are doing to kind of realign their production schedules to solve for their end market demand. With regard to what it all means in terms of free cash flow, like I said, in a correcting environment, we feel more confident about our ability to generate cash. And maybe I will let Raj talk a little bit about how we are thinking about what we do with that cash as we look forward in the near-term.

Raj Agrawal

Yes. Ruplu, nice to speak with you again. I think we are going to just continue to manage it through our key priorities for capital. And so investing in the business, as I have said, and then looking at inorganic opportunities. But certainly, if we have more flexibility with cash, we will – I expect that we will continue to buy back some stock. And that’s been a key use of cash the last few years, as you know. And in a more flush cash environment, we will certainly keep that as one of our key priorities. So, that won’t be off the table, but we will continue to evaluate against all those priorities.

Ruplu Bhattacharya

Okay. Thanks for all the details there. As my follow-up, if I can ask a question on ECS margins. So, the segment margins grew 40 bps sequentially on lower revenue. How should we think about margins in that segment for fiscal 3Q? Is there any inventory correction happening on that side of the business? And is it reasonable to think that even if the macro is weak, the fiscal fourth quarter is typically the strongest quarter for that segment, both from a revenue and margin standpoint. Do you think that relative outperformance in the fourth quarter maintains even in this environment? Thanks.

Sean Kerins

Sure thing, Ruplu. Well, again, probably not going to talk a lot about Q4 at this point because we are only guiding Q3. You are right, Q4 is very predictably the largest quarter of the year when you think about seasonality. But to your first question, there really aren’t any inventory challenges in that business for us. In fact, this is working capital friendly for us because even in most places where we participate in hardware, the model is more drop ship in nature. We have always liked that piece of the model for us, because again, it’s working capital friendly. I would say our backlog has continued to build, and that business is a function of all the kind of the multi-period cloud and software subscriptions that we are helping the channel navigate, and those things tend to get built out over time. And that piece of our business is growing, which we think is good for the model longer term. But there is no barriers to revenue or fulfillment as it relates to elevated backlog or inventory. Most of the supply chain challenges related to systems in that business have all been normalized.

Ruplu Bhattacharya

Okay and thanks for all the details. Appreciate it.

Operator

[Operator Instructions] The next question is from William Stein with Truist Securities. Your line is open.

William Stein

Great. Thanks for taking my questions. I joined a little late, so I apologize if you might have addressed this already. But I think in the CFO commentary, you talked about shortage market revenue. And I am hoping you could just elaborate on your exposure to that part of the components market, the impact it’s having on your business today and in terms of margins especially and how you expect that to progress in the next few quarters?

Sean Kerins

Certainly. So, if you think about the operating margin decline we saw in the second quarter, Will, it was really a function of three things. One part was regional mix, and that was just due to the fact that we saw some sequential growth in Asia. One part of it was just the normalization of our shortage market activity, which typically has been most prominent in the Americas. And as lead times have come in and supply and demand are moving towards getting better aligned, the activity levels in that piece of the market have declined pretty significantly. We saw some further erosion of that activity in Q2, and that had some pressure on margins. And then thirdly and most substantially though, it’s strictly a function of the shortfall in volume overall, which put some pressure on operating leverage. But we think, Will, that the upside and now the downside by way of period-over-period compares, as it relates to our shortage market activity, have largely normalized. And that piece of the margin stress should get a lot simpler and less pronounced from here.

William Stein

That’s helpful. Appreciate it. One other – I know – pardon me, inventory has been discussed a couple of times already, but I just want to go at this a little bit different way. Among the semi companies I cover, most of them sort of beat their chest about how they starved the channel of inventory through this whole last cycle. And so while your inventories have increased, they are very well protected. And it’s always a little bit difficult to reconcile these two data points. But I think the issue is that smaller companies, even some public ones we have spoken to, haven’t been able to do a great job of sort of managing this issue. And so some I have spoken to have told me about six months of inventory at distribution. I don’t know if you are experiencing that with any of your suppliers. But what the real question gets to is I am hoping you can talk through the consistency or, on the other hand, disparity of your inventory across technologies and suppliers. My guess is that it’s very uneven relative to what it usually is. I am hoping you can sort of help us clarify this. Thank you.

Sean Kerins

Yes. Sure, Will. And maybe just I will repeat a little bit of what I said earlier. Part of this is based on the pattern of how these corrections play out. Remember that suppliers tend to solve for the larger customer demand, especially when it’s as delinquent as we saw it during the last cycle, before they solve for the mass market, right. So, we will typically see the inventory build later than they will just because mass market customers were further back in the queue. So, that accounts for a little bit of the delta in timing and therefore, our experience now versus their experience then. You are right in assuming that the inventory mix is not uniformly problematic for all suppliers and all technologies equally in all regions. We are talking about this in the aggregate. But I would say, look, most of our suppliers are pretty collaborative when it comes to meeting the evolving production schedules of our customer base as they work through their inventories. That’s evident in the fact that our units came down pretty substantially in Q2, and we expect to see that again in Q3. And the wildcard here is the fact that the ASPs are holding up so that’s inflating inventories beyond what they would look like otherwise. But if you are looking for one or two long poles in the tent to define this problem, we would see it more generally across the portfolio. There are some cases where suppliers have different programs in place, some are more favorable than others. But by and large, we feel good about the handle we have on this and our ability to work both customers and suppliers to work through this as expeditiously as possible, given the broader market demand question.

William Stein

Okay. Thank you.

Sean Kerins

Thank you.

Operator

We have no further questions at this time. We will turn it over to Anthony Bencivenga for any closing remarks.

Anthony Bencivenga

Okay. Thanks again, Chris and thank you all for joining today’s call. We look forward to meeting you at upcoming investor events. Have a great day.

Operator

This concludes today’s conference call. You may now disconnect. Thank you.