Arrow Electronics, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Aerial Electronics first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 in your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to turn the call over to Steve O'Brien, Vice President of Investor Relations. Please go ahead.

Thanks, Denise. good day welcome to arrow electronics first quarter 2021 earnings conference call on the call today are mike long chairman president and chief executive officer sean karens chief operating officer and chris stansbury senior vice president and chief financial officer 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 in our most recent 10K and 10Q filings with the SEC. We undertake no obligation to update publicly or revise any of the forward-looking statements. As a reminder, some of the figures we will discuss today on the call are non-GAAP. We have reconciled those to the most directly comparable GAAP financial metrics in our earnings release. These non-GAAP measures are not intended to be a substitute for our GAAP results. You can access our earnings release at investor.arrow.com, along with a CFO commentary, the non-GAAP earnings reconciliation, and a replay of this call. with a few minutes of prepared remarks, which will then be followed by a question and answer period. I'll now hand the call to our Chairman, President, and CEO, Mike Long.

Thanks, Steve. Thanks to all of you for joining us today. Let me begin by saying strength and stability are and have been the hallmarks of our business. We've had the opportunity to prove this under both strong and weak demand conditions over the last 12 months. During the first quarter, our dedicated team did their utmost to help customers manage their supply chain and get the components they need. I'm pleased to report that our flexible business model can respond as well to the current challenge of demand outstripping supply as it did to the pandemic. And before that, the electronic components market correction. This flexibility is what's enabled us to deliver first quarter results across the P&L statements. Last quarter, I said that we were seeing customers ramping production levels across many industries. I also said we were optimistic that the post-pandemic rebound we had seen in Asia could extend to the Americas and Europe, so that both of those regions could return to growth. Clearly, our global components business capitalized on strong demand in all regions this quarter, with sales up 42% year over year. We saw strong demand from key industries such as transportation, communication, consumer, electronics, and industrial. As a result, global component sales reached $6.4 billion, which is an all-time record in the company's history. Turning to enterprise computing solutions, sales were in line with our expectations. And importantly, we delivered the operational leverage that we expect our investors to have. Operating income from global components increased by more than 70% year over year. This significant improvement was due to greater operating expense leverage from higher sales volume and from favorable pricing in all regions. We expect to further grow our operating income as the Americas and Europe regions continue to recover and as our revenue mix across all regions shifts towards the greater proportion of our higher value component sales we've been saying for years that the semiconductor industry remains vibrant the increasing amount of electronic content and everything for us is a tailwind for our business and has also led us to have healthy platform diversification We experienced strong demand from nearly all key track verticals. Stepping back, when I look at the reasons why past semi-cycles have ended badly, I'm optimistic that a smoother landing could happen this time. Our visibility is better than ever. Capacity additions at fabs are currently limited, so there's no supply surge coming. There is no longer just one product that's driving all demand like phones and PCs in the past, and we don't see shortages causing complementary products to stockpile. And lastly, we, in cooperation with our suppliers, have been proactively managing orders and customers' expectations. Turning to enterprise computing solutions, sales were in line with our expectations and billings increased at a solid rate year over year. We experienced growth in infrastructure software across the portfolio and the demand for computing drove server sales. Operating income, which is the truest measure of our performance for Enterprise Computing Solutions, we're pleased to once again deliver operating income growth year over year in the first quarter. And we expect that growth again in the second quarter. While we are pleased with our Enterprise Computing Solutions performance, we see strong potential for further improvements in the second half of 2021. Rules and restrictions related to on-site work continue to change and are variable across regions, especially in Europe. The good news is that even in Europe, we're seeing signs that IT spending priorities are shifting towards the more complex, transformational projects that tend to be better aligned with our value-added focus. In closing, I'm pleased to report that Arrow Electronics has overcome many challenges, both recently and over the company's decades of being in business. We're currently experiencing tremendous demand, which is a first-class problem. Our team continues to innovate so we can deliver the best possible solutions for our customers and drive enhanced value for our shareholders. We're optimistic about the future and look forward to capitalizing on the positive tailwinds to build our strong momentum and improve our performance even further. With that, I'll hand the call over to Chris to provide more details of our first quarter results and our expectations for the second quarter.