Arrow Electronics, Inc.

Good day and welcome to the Arrow Electronics Third Quarter 2025 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Michael Nelson, Arrow's Head of Investor Relations. Please go ahead.

Thank you, Operator. I'd like to welcome everyone to the Arrow Electronics Third Quarter 2025 Earnings Conference Call. Joining me on the call today is our Interim President and Chief Executive Officer, Bill Austin. our Chief Financial Officer, Raj Agrawal, our President of Global Components, Rick Marano, and our President of Global Enterprise Computing Solutions, Eric Nowak. During this call, we'll make forward-looking statements, including statements about our business outlook, strategies, plans, 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 due to the risk factors and other factors described in this quarter's associated earnings release and our most recent annual report on Form 10-K and other 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 our GAAP results. We've reconciled these non-GAAP measures to the most directly comparable GAAP financial measures in this quarter's associated earnings release. You can access our earnings release at investor.arrow.com along with a replay of this call. We've also posted a slide presentation on this website to accompany our prepared remarks and encourage you to reference these slides during this webcast. Following our prepared remarks today, Bill, Raj, Rick, and Eric will be available to take your questions. I'll now hand the call over to our interim president and CEO, Bill Austin.

Thank you, Michael, and good afternoon, everyone. I am humbled, honored, and excited to serve as interim president and CEO of Arrow Electronics. I have been a director at Arrow since 2020, and I deeply believe in the management team and strategic direction that we have been charting. I, along with the full board, are committed to maintaining continuity, driving execution, and delivering results for our customers, partners, and shareholders while we search for a permanent successor. During my first few weeks, I have been meeting with employees, customers, suppliers, and investors. The message is simple. There will be no change in Arrow's commitment to excellence and customer service, which has been foundational within this business for 90 years. I have also taken the opportunity to listen to all parties to get an understanding of what makes us unique, respected, and sets us apart from the competition. Our management team remains committed to our strategic direction. We remain focused on delivering high-quality, innovative technology solutions for our stakeholders. As we review today's results and outlook, you'll see that we are executing well in a market that continues to gradually recover from a prolonged cyclical correction. The fundamentals across both our global components and enterprise computing solutions, or ECS businesses, remain resilient, and we believe we are positioned to emerge with improved momentum. I would like to comment on U.S. Department of Commerce's Bureau of Industry and Security, or BIS, placing three of Arrow's Chinese subsidiaries on its entity list in early October. The Arrow team took decisive action and 10 days later, BIS informed us that it intends to remove these subsidiaries from the entity list and granted a letter of authorization to resume normal business activities. I am pleased with the prompt resolution to this matter which underscores Arrow's robust and continuously evolving trade compliance program, a significant reason why suppliers and customers choose Arrow. Starting on slide three, in the third quarter, we delivered revenue above the midpoint of our guide, as well as earnings per share above the high end of our guidance range, with contributions from both our global components and ECF segments. While we are taking decisive action to navigate the current environment and continue to improve operational and financial performance, I want to remind the investment community of Arrow's strengths and opportunities for growth. Turning to slide four, Arrow is a leader in electronic components and enterprise IT industries, underpinned by a platform-based, data-driven business model. We play a pivotal role in connecting the world's leading technology manufacturers and service providers. Our business operates in a large and growing market. We know that there are ample opportunities to grow our core product distribution business by leveraging our global logistics footprint to deliver the latest technologies to the market. The distribution total addressable market, or DTAM, for our core distribution business is over $250 billion, with demand for value-added services extending Arrow's addressable market even further. Supporting the DTAM is the strength of six primary end markets that we serve. Transportation, industrial, aerospace and defense, medical, consumer electronics, and data center. We are well aligned with all six core markets and believe our strategy is on point for delivering long-term sustainable growth. As our business continues to evolve, we intend to drive profitable growth through a deliberate shift toward an increased mix of higher margin value-added offerings in relation to the product distribution services. Suppliers and customers can rely on Arrow for a broad range of services, deepening our legacy relationships and opening the door to new opportunities. This has been a natural extension for Arrow, building upon our core distribution platform with accretive value-added offerings like supply chain services, engineering and design services, and integration services. Drilling down into a few examples. First, within our global component segment, our supply chain services offering is well established and positioned to support growth in AI infrastructure build out. For example, many of the hyperscalers and even some of the other players that are making massive infrastructure investments in large language models need help with sourcing, managing, staging, and provisioning of electronic components globally. Arrow Supply Chain Services provides this support so hyperscalers get the right source in the right region of the world at the right time so they can build out their points of presence. In short, our customers stick to their competency, and we leverage ours, staging and moving materials throughout a very complex global supply chain, and we do it with confidence and ease. We are effectively enabling customers to outsource a piece of their entire supply chain or a piece of their bill of material to Arrow. They can then focus on what they do best, like research and development, or go to market. We focus on what we do best, and the result is a win-win. Supply chain services are accretive to our core business, and we expect that the global trend toward investment in AI will create a significant tailwind. Second, let's focus on our engineering and design services. Engineering and design services is another area where we become an extension of OEMs and suppliers product development and design team. Not for days or weeks, but for quarters and potentially years to help them design the next generation of their product portfolio. Gives us a completely different way to not only serve our OEM customers, but in some cases, even our traditional suppliers. Like supply chain services, Engineering and design services carry a higher margin profile than the core business. And lastly, in our intelligent solutions business, we are involved in designing, building, and testing discrete compute hardware and associated software that enables our suppliers to quickly bring unique appliances to the market. This is a growing unit and margin accretive to the core business. Another lever for margin expansion is our ability to create a productivity flywheel that focuses on driving costs out, which in turn creates reinvestment capacity for growth and margin expansion. Our efforts to date have focused on simplifying operations, consolidating resources, and geographic realignment. Our productivity and cost out efforts are becoming part of everyday life at Arrow as it creates reinvestment capacity and leverage in the business. One of Arrow's key differentiators is our diversified business model, which enables Arrow to become more relevant to suppliers and customers, and it provides us the right to play more completely throughout the technology lifecycle. In other words, we participate from design and planning to deployment and further to management and support of technology solutions. Our ECS business is a nice complement to our electronics business and is comprised of hybrid cloud, and infrastructure software, hardware, and services to deliver solutions such as cybersecurity, data protection, virtualization, and data intelligence, much of which is on the ramp to AI. This reflects our ongoing alignment to the higher growth demand trends across enterprise IT, many of which are now served on an as-a-service basis. This continues to contribute to the growth of our recurring revenue volumes now roughly one-third of our total ECS billings. Within our ECS business, we are capitalizing on an opportunity to expand our addressable market and accelerate growth through evolving strategic outsourcing arrangements, which we have implemented with multiple large suppliers. Under the strategic outsourcing model, Arrow becomes the brand and the exclusive partner of the supplier in the region, taking control of the go-to-market activities. Our diversified business model that includes electronic components and enterprise IT solutions contributes to our capital allocation strategy because it creates more resilience on the balance sheet and helps us to continue to generate strong, free cash flow over time. Our capital allocation strategy is focused in three areas. Reinvesting in organic growth opportunities, M&A opportunities, and returning excess capital to shareholders. As a reminder, we have returned approximately 3.5 billion to shareholders via share repurchase since 2020. As always, we are committed to carefully and rigorously evaluating all uses of capital with the ultimate goal of generating the highest risk-adjusted return on investment over the long term and maintaining an investment-grade credit rating. Before I turn the call over to Raj, I want to emphasize that Arrow remains committed to disciplined execution strengthening our supplier and customer partnerships, and delivering sustainable value for our shareholders. With that, I'll now hand things over to Raj, who will walk you through the financial results in more detail. Raj?