Arrow Electronics, Inc.

Good day and welcome to the Arrow Electronics fourth quarter and full year 2025 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Michael Nelson, Arrow's vice president of investor relations. Please go ahead.

Thank you, operator. I'd like to welcome everyone to the Arrow Electronics fourth quarter and full year 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. 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. We appreciate you joining us for a discussion of our fourth quarter and full year 2025 results. I've been serving as Arrow's interim CEO for the past five months, and I've also had the privilege of serving on our board since 2020. In both roles, I continue to be impressed by the depth of talent, operational discipline, and commitment to our suppliers and customers around the globe. I want to thank all of our dedicated colleagues globally who continue to deliver for Arrow. Starting on slide three. we delivered a very strong fourth quarter and with solid execution across global components and ECS. I'm pleased to share that revenue increased 20% year over year and non-GAAP EPS increased 48% year over year, both ahead of expectations. In global components, demand continues to gradually recover from a prolonged cyclical correction. And in ECS, we delivered record gross profit and operating profit in the fourth quarter. The fundamentals of the business are strengthening. Raj will dive deeper into our financial performance, but I'd like to spend a moment touching on a few metrics we are particularly pleased with. First, our leading indicators continue to improve. Book to bill and backlog are increasing. Lead times are incrementally extending. Visibility continues to be cloudy, but we remain disciplined in how we interpret these data points. Our strategic priority to purposefully shift our mix is translating into higher quality results as value-added offerings and ECS continue to perform well, supporting margins, cash generation, and positioning Arrow for profitable growth as the cycle continues to gradually improve. Turning to slide four, while we are pleased with how we finished the year, We remain focused on how we are positioning to grow profitably as the cycle continues to gradually recover. Our investment thesis is unchanged. We are actively executing on our strategy, and our fourth quarter results demonstrate the momentum we are building. We will continue to focus on executing through a gradual recovery while continuing to improve the quality and durability of the business. There are four key pillars of our investment thesis. the reasons why Arrow is unique, respected, and a compelling investment opportunity. First, Arrow holds a leading position in large and expanding markets. Arrow operates at the intersection of electronic components and enterprise IT, serving six large end markets, including industrial, transportation, aerospace and defense, medical, consumer electronics, and data center, all with long-term secular tailwinds. We are well positioned in each of these end markets. As we saw in the fourth quarter, demand trends and ordering behavior improved sequentially, with leading indicators gradually strengthening across regions. Second, Arrow has differentiated capabilities driving profitable growth. A key part of our strategy is growing our higher margin value-added services, which deepen customer engagement and improve returns. These offerings, such as supply chain services, engineering and design, and integration services, extend our role from fulfillment to embedded partnership as we become an extension of customers' and suppliers' product development, supply chain, and go-to-market efforts. Our distribution capabilities around SEMI, IP&E, and demand creation remain a fundamental part of what we do, and our value-added services are a natural extension for Arrow. As we saw in the fourth quarter, value added offerings continue to gain traction and adoption, which is helping to improve our margin profile, reinforcing that this is not a future ambition, but an active driver of profitable growth. The contribution of value added services as a percentage of total operating income has grown over time. Historically, value added services accounted for less than 20% of total company operating income. In 2025, That mix has grown to roughly 30%, reflecting both strong demand and an intentional shift in our portfolio toward margin-accretive offerings. Looking ahead, we are focused on further increasing this mix to drive profitable growth. The secular growth in cloud, AI, and data center demand is creating tailwinds for both our components and ECS businesses, particularly in areas like AI infrastructure build-out, where our supply chain services are increasingly critical. Another lever for margin expansion is our ability to create a productivity flywheel that focuses on driving costs out, which in turn creates leverage in the P&L, expands margins, and provides reinvestment capacity for growth. Our efforts to date have focused on simplifying operations, consolidating resources, and realigning geographically. We have more work to do, but our productivity and cost out efforts are becoming part of everyday life at Arrow as it creates operating leverage and reinvestment capacity in the business. Third, we have a diversified business model which provides financial flexibility. Arrow's combination of global components and ECS creates balance, resilience, and consistent cash generation through cycles. Our diversified model allows us to participate across the full technology lifecycle, from design and planning to deployment, management, and support. This diversification is especially value in this recovery as it provides resilience on both the income statement and the balance sheet, supporting long-term value creation. Our ECS business is a nice compliment to our electronics business as it is a critical growth engine for Arrow. ECS 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-ramp to AI. In ECS, we are also moving beyond transactional distribution toward higher value, more strategic engagements. We are driving channel enablement through our Arrasphere digital platform, which supports cloud and AI scale and acceleration. I'm proud to share that Arrow was recognized as Microsoft's 2025 Distributor Partner of the Year for its Arrasphere AI offerings. including Ourosphere Assistant that helps channel partners drive sustainable growth through agentic selling and insight-driven execution. This demonstrates the differentiated innovation we are bringing to the market. In addition, strategic outsourcing, recurring revenue models, and digital enablement are expanding our role in the ecosystem and improving earnings quality. Many of the solutions we are providing 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. Additionally, three-quarters of ECS billings are software and services. The remaining 25% of billings consists of hardware solutions related to storage, compute, and networking. The fourth quarter confirmed our strategy is progressing with continued momentum in backlog, recurring revenue, and cloud and AI-related demand. Our diversified model provides balance through cycles, which is particularly important in a recovery environment like the one we're in today, ultimately positioning Arrow to deliver sustainable long-term growth, margin improvement, and increasing shareholder returns. And fourth, we have a focused capital allocation strategy designed to maximize shareholder value. We will reinvest in organic growth opportunities that strengthen our differentiated capabilities, expand our value-added offerings, and position the business for profitable growth as markets recover. We will pursue strategic and financially disciplined M&A that enhances our competitive position, deepens supplier and customer relationships, and delivers attractive long-term returns. And we will continue to return excess capital to shareholders. In Q4, we repurchased $50 million in stock, and since 2020, we have returned approximately $3.6 billion to shareholders through share repurchases, reflecting our confidence in the durability of our business model and our commitment to shareholder value creation. As we evaluate all the uses of capital, we remain focused on deploying capital where we see the highest long-term risk-adjusted returns while preserving an investment grade credit profile and the flexibility to continue investing in the business. Turning to slide five, we are very proud of what we accomplished in 2025. We ended the year with strong execution, delivering a solid fourth quarter while continuing to operate in what remains a gradual recovery across our markets. We are improving our execution and we are seeing tangible evidence that our strategy is delivering. The continued growth of higher margin value-added offerings across both global components and ECS is improving the quality and durability of our earnings. Looking ahead, we remain cautiously optimistic as the cycle gradually recovers. We anticipate having the opportunity to drive profitable growth through a measured recovery in 2026 and will continue to manage the business with discipline. We believe Arrow is well positioned for the long term with a diversified business model improving profitability, and a focused capital allocation strategy that allows us to invest through the cycle and create sustainable shareholder value. With that, I'll turn it over to Raj to dive deeper into our financial performance. Thanks, Bill.

On slide six, consolidated revenue for full year 2025 was $30.9 billion, which was up 10% versus the prior year, or up 9% versus the prior year on a constant currency basis. The growth was driven by an 8% increase in global components revenue and an 18% increase in ECS revenue, or 7% and 15% versus the prior year on a constant currency basis, respectively. Non-GAAP diluted EPS for the full year increased 4% to $11.02. I would like to provide color to some of the key drivers to our 2025 performance. During the year, margins experienced headwinds from our regional mix and customer mix and global components, offset by growth in our creative value added services and continued productivity initiatives. We are seeing gradual improvements in both western regions and mass market customers. Additionally, we continue to execute our strategy of increasing the mix of our value added services while driving operating leverage in the business. Now turning to our fourth quarter results. On slide seven, Sales for the fourth quarter increased $1.5 billion year-over-year to $8.7 billion, exceeding our guidance range and up 20% versus the prior year, or up 16% versus the prior year on a constant currency basis. Fourth quarter consolidated non-GAAP gross margin as a percent of sales of 11.5% was down 20 basis points versus the prior year, again driven primarily by regional and customer mix and global components. Our fourth quarter non-GAAP operating expenses increased $53 million sequentially to $669 million. The increase was driven by higher variable costs to support top line sales growth, as well as normal seasonality within the ECS business. Importantly, our ongoing cost savings initiatives have supported a lower op-backs as a percent of gross profit, which declined 700 basis points sequentially and 100 basis points year over year to 67%. We believe there is ample opportunity to drive efficiencies in how we operate and increase operating leverage in the business model. In the fourth quarter, we generated non-GAAP operating income of $336 million, which was 3.8% of sales. Margins improved sequentially due to normal seasonality within our ECS segment. Interest and other expense was $44 million in the fourth quarter as we benefited from lower average debt levels throughout the quarter. And our non-GAAP effective tax rate was 23%. And finally, non-GAAP diluted EPS for the fourth quarter increased 48% to $4.39, which was above our guidance range, driven by a number of factors, including favorable sales results, a higher mix of our value-added services, and lower interest expense. Turning to slide eight, let's take a closer look at our global components business. Global component sales increased $1.1 billion year over year and $326 million sequentially to $5.9 billion in the fourth quarter. Above our guidance range and up 6% versus the prior quarter. Our results in the fourth quarter illustrate our belief that the cyclical recovery remains on track for gradual upswing as our business continues to build momentum. Several of the key data points that we've previously highlighted improved again in the fourth quarter. Our book-to-bill ratios improved further in all three regions and are above parity. Our backlog continues to see healthy sequential growth and has increased for the last four consecutive quarters. All three of our operating regions performed better than seasonal trends. Our sales growth was underpinned by strength for both semiconductor and IPD components. Demand trends across many of our core markets such as transportation, industrial, and aerospace and defense remain healthy and are showing activity levels higher than one year ago. Our inventory is turning at a more normal pace compared to historical trends. Stated lead times in the fourth quarter began to modestly expand, indicating improving demand levels. Taking all of this together, the market environment has incrementally improved over the last 90 days, reiterating our view that the business is in the early stages of a gradual cyclical upturn. Importantly, our focus remains on driving profitable growth. Within these efforts, a few dynamics are at play that I'd like to touch on. First, we are closely monitoring the mix of our business, both from a regional and customer standpoint. We are seeing incremental improvements in both western regions and mass market customers, but continue to expect a gradual recovery. Second, we are making a measured shift toward an increased mix of higher margin value-added offerings, namely supply chain services, engineering and design services, and integration services. These offerings are our natural extension for Arrow, building upon our core SEMI, IP&E, and demand creation capabilities, which remain an important piece of our business. Our lens is focused on how we can best help the customers and suppliers position for growth, remove complexity, and get to market quickly. Lastly, operationally, we are focused on efficiency. We are continuing our efforts to right-size our cost structure, freeing up capacity to reinvest in accretive areas of the business. Taking a closer look at each of the three regions, in the Americas, sales saw healthy sequential growth underpinned by strength in aerospace and defense, industrial, transportation, and networking and communications. In EMEA, we are seeing a healthy backlog build across verticals, which is a sign of the market improving. And finally, in Asia, we once again saw broad-based sales growth highlighted by strength in compute, consumer, and continued EV momentum in the transportation sector. Global components non-GAAP operating income increased approximately $20 million sequentially to $219 million, up 10% from the prior quarter. Non-GAAP operating margins increased sequentially by 10 basis points. Turning to slide nine in our global ECS business. In the fourth quarter, global ECS sales increased approximately $400 million year over year to $2.9 billion, above the midpoint of our guidance range and up 16% versus the prior year, or up 11% versus the prior year on a constant currency basis. Total ECS billings were $7.1 billion, up 16% year over year. Our global ECS business continues to differentiate on the more complex end of the IT spectrum. where we are experiencing strong secular demand trends behind hybrid cloud, infrastructure, hardware, and software, cybersecurity, data protection, and data intelligence for AI-driven workloads. Our global ECS technology mix, regionally diversified presence, and critical role in the middle of technology providers and channel partners have driven over 75% backlog growth year-over-year, finishing 2025 at another all-time high. Looking ahead and building off our foundation of enabling technology providers and supporting channel partners, we're expanding our global ECS addressable market opportunity by going beyond the role of a traditional distributor. Through this new motion, Arrow becomes the exclusive go-to-market partner for a supplier, taking on all or part of their commercial activities and gaining the ability to sell software licenses and software subscriptions on behalf of the supplier's brand. These agreements are a key strategic pillar for our ECS business and position us well as more suppliers look for partners who can simplify and scale their go-to-market motions. Over time, they are expected to be meaningfully margin accretive once at scale. Turning to the balance sheet on slide 10, networking capital grew sequentially in the fourth quarter by approximately $180 million, ending the quarter at $7.4 billion to support the business for growth. Importantly, the financial metrics we monitor improved with return on working capital up 170 basis points year-over-year to 18%. Likewise, return on invested capital increased 190 basis points year-over-year to 11.1%. Working capital as a percent of sales declined in the fourth quarter to approximately 21%, and our cash conversion cycle decreased year-over-year by seven days. Relatedly, inventory at the end of the fourth quarter was $5.1 billion. and our inventory turns improved, reflecting disciplined working capital management. Cash flow from operating activities was $200 million. Full year cash flow from operating activities was $64 million. Gross balance sheet debt at the end of the fourth quarter declined sequentially by $44 million, finishing the year at $3.1 billion. We repurchased $50 million in shares in the fourth quarter and $150 million in 2025. Now turning to Q1 guidance on Flight 11. We expect sales for the first quarter to be between $7.95 and $8.55 billion, representing an increase of 21% year-over-year at the midpoint of the range. We expect global component sales to be between $5.75 and $6.15 billion, representing sequential growth of 1% at the midpoint. In enterprise computing solutions, we expect sales to be between $2.2 and $2.4 billion, which is up approximately 13% at the midpoint year-over-year. We're assuming a tax rate in the range of 23% to 25% and an interest expense of approximately $60 million. Our non-GAAP diluted earnings per share is expected to be between $2.70 and $2.90. Details of the foreign currency impact can be found in our earnings release. As we look ahead to 2026, our view of the market is relatively consistent. We believe demand levels are incrementally improving in many markets, highlighted by the leading indicators that we mentioned. We are pleased with the momentum that we are building. However, a few factors are leading to a more gradual recovery. Inventory normalization throughout the supply chain is still in progress. Macro and geopolitical instability is creating uncertainty and overall market complexion can vary by region, and market, and customer type. As you build your 2026 models, I would highlight a few items that will impact the linearity of our financial results. In Q1, we are expecting global components to perform above seasonal trends in all our regions, while Q2 is expected to be seasonally strong for Asia. Q1 will have four additional shipping days that will result in four fewer shipping days in Q4, which primarily impacts the ECS business. We will provide you with updates in the quarters to come. With that, I'll now turn things back over to Bill for some closing thoughts.

Thanks, Raj. Turning to slide 12, looking forward, our key priorities are clear. We remain focused on executing with discipline in an environment that continues to improve gradually, while recognizing that the recovery remains different by region and market and customer type. Our priority is to accelerate profitable growth as we continue to manage mix costs and working capital carefully and align investment levels with the pace of demand. We recently made several internal organization changes to better align our go-to-market teams in a way that creates greater focus on our growth initiatives. The changes will enable Arrow to continue to excel in traditional distribution while sharpening our focus on higher margin opportunities with deep technical engagement, value-added services, and differentiated solutions. In our global components business, we appointed chief growth officers across global classic distribution, global services, and global IP&E distribution. In our ECS business, we appointed a chief revenue officer integrating sales, marketing, as well as vendor and customer success to deliver optimal results across all regions. The direction is clear. We will continue to expand our higher margin value-added offerings across both global components and ECS, deepening customer relationships and improving the quality and durability of our earnings over time. We remain confident in Arrow's strategy, differentiated capabilities, and diversified business models while planning thoughtfully for a measured recovery as we move more through the year. We will continue to allocate capital to the highest return on investment opportunities with the goal of increasing returns for our shareholders. Finally, on leadership, the board's search for a permanent CEO remains ongoing. We continue to evaluate candidates, all of whom bring varied experience across complex environments. We will update the market when the process is complete and the Board is ready to make an announcement. With that, Raj, Rick, Eric, and I will now take your questions. Operator, please open the call to questions.

We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Will Stein with Truist Securities.

Hey, Will. Great. Thanks for taking me. Hey, thanks for taking my question. Congrats on the good results and outlook. I was hoping you can comment on billing linearity through the quarter. Was there anything unusual in terms of timing relative to what you would typically deliver on sort of a month-to-month basis? As a follow-up, I'd like to ask the same question about billing, pardon me, booking patterns through the quarter, whether that sort of followed any different than typical pattern. Thank you.

Will, you're referring to the fourth quarter, I assume, right? Yeah.

During the fourth quarter, month-to-month trend in both what you billed and what you booked.

I don't think we saw anything unusual. I think it was largely aligned with our expectations. Obviously ECS has its largest quarter in the fourth quarter and that played out as we had thought it would play out and we continue to see building momentum within our components business, but nothing unusual. All three regions performed ahead of normal seasonality and components, so that's one call out I would say, and that's going to continue on into the first quarter as well as we said in our prepared remarks. So I would say nothing unusual from either a billings or booking standpoint.

Yeah, nothing was pulled forward.

So above seasonal, above the normal pace, but it didn't improve or slow down through the quarter?

No, no. In fact, I would just say that based on our guide that we gave for the first quarter, momentum has continued into the first quarter. So we're seeing a lot, we're seeing more of what we saw in the fourth quarter as we now entered into the first quarter.

Great, guys. Thanks so much.

Sure.

Your next question comes from the line of Rupu Bhattacharya from Bank of America. Please go ahead.

Hi. Hi. Thanks for taking my questions. Hey, Raj. In global components, you saw strong sales in the Americas region and looks like in the ECS segment, you saw strong revenue growth in EMEA. Can you give us some more details on what drove that? And do you think the strong growth sustains into the second half of 26? I just wanted to clarify, you know, I think you said there was no pull in of demand. Was that in both the components and in the ECS segment? And should we expect this level of demand to sustain in the second half? And I have a follow-up.

Yeah, you want to take it, Bill? No, go ahead. Yeah, I think in terms of demand, I would say there wasn't anything in particular to call out within the different regions. We continue to have a pretty healthy backdrop in our key vertical segments within components, transportation, aerospace, and defense. you know, industrial as well. And I think that demand trend we've continued to see into the first quarter. As we said, the western regions are starting to come back, so it's a better mix overall. And, you know, we're also seeing the mass market come back. Rick, do you want to add anything to the component side?

Yeah, I would just add, Raj, to what you said. Again, very gradual, consistent build and backlog. And again, very, very tied to what we're seeing around

industrial mill arrow um in particular those markets are coming back in a nice fashion yeah the only thing i would add to that is what the guys have already said root blue is that if you remember from our last call and what we've talked about in third quarter we didn't see the industrial markets in the west coming back strong not that they're coming back strong but we're seeing more industrial um more industrial activity in the West as we went through the fourth quarter.

Okay. Okay. Thanks, Bill, for all the details there. Can I, for my follow-up, I'm going to try and sneak two parts of the question in. In the ECS segment, 25% of billings are hardware. Can you talk about, like, what you saw strengthened, what particular categories? And then you talked about these value-added services. I was wondering if you can talk a little bit more about that. What type of customers are using your value-added services? I think, Bill, you mentioned AI infrastructure. And so if you can just talk a little bit more about what you guys do in there, what type of customers are using it, and how high is the percent of operating income, do you think, over time? this these type of services can get to. Thanks so much for taking my questions. I appreciate it.

Eric, why don't you take the ECS hardware piece?

Yeah, so yes, hardware is 25% of our revenue. The other 75% are mostly software, cloud and services. Of course, this second part is growing faster due to the extra growth that we have in AI and cloud. In the hardware side, it's mostly storage, compute, of course, networking, and security, because security is a mix of software and hardware. So that's where the 25% comes. The highest growth in these segments comes, of course, from the networking and security part.

Rick, do you want to take the value-added services on components?

Yeah, sure. Thanks. Thanks, Bill. The only thing I would say on that is, you know, Rich D' Value added services and extension of what we do in our existing business today we're very confident in our capabilities and the product offering that we serve. Rich D' From an overall standpoint there and we're just extending that offering further and farther it's across multiple vertical markets it's not tied to a specific vertical marker what we do our service offering.

James Meeker & yeah ruby the last part of your question was what percent can it become I don't think we have a projection for you here but. It's going to depend, obviously, on the rest of the business. So even though it's a faster growing, higher margin part of the business, you know, as we get growth in the rest of our business, it does have an impact on the overall percentage of operating income.

I think what we've said in the past, Raj, is it's usually 2x gross margin, gross profit of our normal business would be. It could be up to 2x.

It's at least 2x. I'd say some are higher, some are lower, but it's a very profitable side of the business. But You know, if we have the rest of the business growing much faster, the mix percentage is going to vary based on that, but it's going to be a strong contributor regardless.

Okay. Thank you for all the details. Really appreciate all the color.

Your next question comes from Melissa Fairbanks from Raymond James. Please go ahead.

Hi, guys. Thanks so much for taking my question. Kind of a quick one. Normally, at this point in the cycle, we would normally see a really big step up in investment in working capital. We did see inventories increase during the December quarter, I'm assuming to support future growth. But actually, we've had two quarters in a row now where your interest expense, or three quarters in a row now, where the interest expenses come in meaningfully lower than what your expectations were. I think last quarter that was due to some of the timing of that working capital investment. I see that you've guided the $60 million interest expense in the March quarter. Just wondering how we should think about working capital investment, how that flows through to the interest expense line, and what to think about that in the near term.

Yeah, Melissa, that's a really good observation. You know, the interest expense level was say, much lower than we were expecting. Sometimes the cash flows and the timing of the cash flows have an impact that is not as predictable. And and but we also we like the fact that we were sitting on a little bit more cash. We were able to pay down some debt in the short term. It is ultimately the same reason why, which is the timing of working capital and how that ramps up. You know, because we have another growth quarter here in the first quarter, We do believe that we're going to use more working capital as we always do when we're growing. And so the interest expense forecast is based on our best view at this stage. But obviously, if that changes, we'll have to let you know. But right now, that's where we are. Generally, as rates have come down, we have a fair amount of debt that's short term in nature. And so that's also helped interest expense. And that was also a factor in the in the fourth quarter. you know, short-term rates are at least 100 basis points lower than they were in the prior year. And so that's also having a mitigating impact on overall interest expense.

Okay, great. Thanks so much. That's very helpful. I just had one quick follow-up about seasonality in some of the end markets. You did give us some insight into Asia seasonality in the June quarter. At this point in a quote-unquote recovery cycle, Would we expect to see above seasonal results in some of the western markets because they have been so challenged recently, or is the visibility still just not there yet?

Well, let me start the backside of that question first, visibility. You know, visibility, Melissa, is not as clear as we would like it to be. It's getting better. Our backlogs are extending. We feel good about that, but visibility beyond 90 days is still a little bit cloudy. And then, you know, your question about seasonality, Q1, we're above, you know, we think we said in Raj's notes in his script that we're above seasonal in Q1 in all three regions. So we're seeing that, and, you know, we'll see that as we go forward.

Okay, great. Thanks so much. I appreciate it.

Thanks, Melissa.

There are no further questions at this time. I will now turn the call back to Interim President and CEO Bill Austin for closing remarks.

Thank you, Operator. Let me close with this. Industry fundamentals are improving across all regions and in many verticals. We're pleased with how our strategy execution is playing out because it's centered on growth and margin expansion, but we're not yet satisfied as there's more work to do. So we'll see you in another 90 days and we'll talk to a lot of you in the next day or two. Thank you for joining.

This concludes today's call. Thank you for attending. You may now disconnect.