Arrow Electronics, Inc.

Good afternoon and welcome to the Arrow Electronics second quarter 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, press star 1 on your telephone keypad. If you'd like to withdraw your question, press star 1 again. Thank you. Rick, you may begin your conference.

Good day and welcome to the Arrow Electronics second quarter 2022 earnings conference call. With us on the call today are Shawn Cairns, President and Chief Executive Officer, and Emeric Seidlitz, Interim Principal Financial Officer. 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 the number of risks and uncertainties, including the risk factors 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 reminder, some of the figures we will discuss on today's call are non-GAAP. We have reconciled those to the most directly comparable GAAP financial measures 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 the CFO commentary, the non-GAAP earnings recommendation, and a replay of this call. Following our prepared remarks today, we will be available to take your questions. I will now hand the call to our President and CEO, Sean Cairns.

Thanks, Rick, and thanks to all of you for joining us today. I'm excited to join all of you in my first earnings call as the CEO of Arrow. I'm also very pleased to report record results for the second quarter as we continue to build upon our record performance over the past several. While market conditions are challenging, they also provide ample opportunities to showcase our commitment to the success of our suppliers and customers. The dedication and focused execution by our team helped us deliver all-time record quarterly sales, gross profit, operating income, and earnings per share while facing an ongoing imbalance between supply and demand. Past investments to enhance our capabilities, especially in the areas of engineering and supply chain, have led to improvements in profitability. We think this is proof positive that we are uniquely positioned to help our customers navigate today's market opportunities and challenges. In our global component segment, demand for electronic components and associated design, engineering, and supply chain services remain strong. In fact, demand continues to outpace supply. Our book-to-bill ratios remain well above parity, backlog is at a record level and continues to grow, lead times are still much longer than historical norms, and supplier and customer delinquencies remain at all-time highs. Given long lead times and production delays, we continue to work closely with our customers to help them satisfy their most urgent backlog priorities. A favorable mix of higher margin products, value-added content, and regional performance led to record quarterly operating income and margins for the business as a whole. The Americas and EMEA regions experienced robust demand across most end markets and industries. Both regions produced year-over-year growth rates in excess of 20%, and despite the adverse effects of COVID-related shutdowns in China, our Asia region still delivered record quarterly sales. In the enterprise computing solutions business, demand for more complex enterprise IT content was healthy in both regions. And while supply constraints represented a headwind to hardware sales, we saw strength in our software and cloud portfolios. The EMEA region delivered record second quarter sales, and the Americas region sales were down slightly year over year due mainly to supply chain constraints related to hardware initiatives. We expect to see upside in those categories when fulfillment improves and project postponements are resolved. Operating profit grew year over year and reported sales came in near the high end of our guidance despite currency headwinds. We believe prospects for this business will continue to improve across the balance of 2022. Before handing over the call, I do want to express how excited and confident I am about the future of Arrow, all underpinned by the talent, hard work, and dedication of all the Arrow colleagues around the world. We believe our strength comes from enabling technology solutions that make a difference in people's lives. Whether it's our work in semi-autonomous technology, intelligence at the edge, or clean energy solutions driven by the electrification of everything, we believe in the power of innovation to make the world a better place. And I'm grateful for the privilege to lead this great company. With that, I will now hand the call over to Rick to provide more details on our results and our expectations.