TD SYNNEX Corporation

Good morning. My name is Rob and I will be your conference operator today. I would like to welcome everyone to the TD Cinex second quarter fiscal 2022 earnings call. Today's call is being recorded and 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. At this time for opening remarks, I would like to pass the call over to Liz Morali, Head of Investor Relations. Liz, you may begin.

Thank you, and good morning to everyone. Thank you for joining us for today's call. With me today are Rich Hume, CEO, and Marshall Witt, CFO. Before we continue, let me remind everyone that today's discussion contains forward-looking statements within the meaning of the federal securities laws, including predictions, estimates, projections, or other statements about future events, including statements about integration progress, synergies, strategy, capital distribution, investments, and our expectations for fiscal year 2022. Actual results may differ materially from those mentioned in these forward-looking statements as a result of risks and uncertainties discussed in today's earnings release, in the Form 8-K we filed today, and in the risk factors section of our Form 10-K and our other reports and filings with the SEC. We do not intend to update any forward-looking statements. Also, during this call, we will reference certain non-GAAP financial information. Reconciliations of GAAP to non-GAAP results are included in our earnings press release and the related Form 8K, available on our Investor Relations website, ir.sinex.com. This conference call is the property of TD Sinex and may not be recorded or rebroadcast without our permission. I will now turn the call over to Rich. Rich?

Thank you, Liz, and good morning, everyone, and thank you for joining our call. Nearly 10 months ago, we closed the merger to form TD Cynics. Through our first three fiscal quarters together, we have successfully generated over $46 billion in revenue and $8.61 in non-GAAP earnings per share, all while making great strides on our merger integration. I'm incredibly proud of our more than 22,000 coworkers and their tremendous efforts to accomplish these very impressive results. In March, at our Investor Day, we were able to share with you our vision of the evolving IT distribution landscape and the opportunities to grow and deliver enhanced financial performance over the coming years. We presented our four pillar strategic framework along with key medium and long-term financial objectives, focused on investing in high-growth technologies like hybrid cloud, security, data analytics, and hyperscale infrastructure, while strengthening our portfolio, expanding our global footprint, and digitally transforming our business. This strategy is underpinned by our role in the center of the technology partner ecosystem as a leading solutions aggregator. From this vantage point and with the strong support of our best-in-class network of over 1,500 vendor partners, we are well positioned to continue delivering unrivaled technology solutions to our more than 150,000 customers. Our performance in fiscal Q2 further demonstrates the success we are having in the market, given our strong value proposition and industry-leading portfolio. In Q2, we grew revenue by 4% year over year, assuming the merger occurred in the prior year, if adjusted for FX and revenue policy alignment. This strong result was driven by robust demand for technology products and solutions, to enable hybrid work, foster collaboration, enhance security, and advance multi-cloud adoption. This is an exciting time to serve the technology ecosystem as the pace of change intensifies and our vendors continue developing products and services that enable companies and individuals to improve their agility, productivity, security, and profitability. We continue to see healthy demand for both endpoint and advanced solutions, with revenue increasing year over year. In PCs, the double-digit growth rate seen during the pandemic continued to moderate, as expected. The supply-constrained environment that we've spoken about the past several quarters continued and was in line with our expectations. From a regional perspective, our America's distribution business experienced strong year-over-year top line growth. On a year-over-year basis, our hyperscale infrastructure business declined given tough prior year compares, but grew on an LTM basis, consistent with our expectations. Our European business also grew year-over-year in constant currency, albeit at a more measured pace given the current economic and geopolitical conditions in the region. Before I pass it over to Marshall to further elaborate on our Q2 results, I wanted to provide an update on our merger integration activities. We continue to make excellent progress on harmonizing processes, benefits, and systems across TD Cynics as well as our optimization programs and synergy attainment. From an ERP systems perspective, I shared with you last quarter that the April-May timeframe would be important as we migrated a large portion of our Canadian business to the new system. I'm happy to report that the migration went extremely well and we are on track with our project plans to transition our U.S. business. As we enter the back half of this fiscal year, we are extremely pleased with the progress we've made and the momentum we are experiencing in the market. I will now pass it over to Marshall, who will provide some further color on our Q2 financial performance. Marshall.

Thanks, Rich, and thanks for joining us today for our call. In fiscal Q2, we delivered another strong performance. with year-over-year revenue growth on a constant currency basis, gross margin expansion, healthy earnings per share, and strong cash flow from operations. This consistency in performance is a testament to the dedicated efforts of our global team and our agile, entrepreneurial, and resilient business model. Total worldwide revenue for fiscal Q2 was $15.3 billion, up 4% when adjusted for constant currency and the revenue policy alignments related to the merger. This is a stronger result than the 3% year-over-year adjusted growth rate at the midpoint of the Q2 outlook we provided last quarter. The growth was driven by strong performance in both core and high growth portions of the business. Euro devaluation accounted for approximately 500 million of headwind versus the per year and an approximate $200 million incremental headwind versus our prior guidance. Our distribution business experienced growth across all regions, excluding the impact of one large government project in APJ in the prior year. Gross profit was $956 million, and gross margin was 6.3%, compared to 5.8% for the prior year, reflecting a favorable product, a strong pricing environment, and solid execution. FX had a 31 million negative impact on growth profit compared to the prior year, primarily due to the devaluation of the Euro relative to the US dollar. Total adjusted SG&A expense was 585 million, representing 3.8% of revenue and in line with our expectations. Non-GAAP operating income was 398 million, up 18% versus the prior year. and non-GAAP operating margin was 2.6%, up from 2.2% in the prior year period. All three regions experienced improved profitability compared to the prior year. FX had a $10 million negative impact on non-GAAP operating income compared to the prior year, primarily due to the yearly devaluation versus the U.S. dollar. Non-GAAP interest expense and finance charges were $46 million. and non-GAAP effective tax rate was approximately 24%. Total non-GAAP net income was $262 million, and non-GAAP diluted EPS was $2.72. Now turning to the balance sheet. We ended the quarter with cash and cash equivalents of $522 million and debt of $4.1 billion. Our growth leverage ratio was 2.4 times, and net leverage was 2.1 times. Accounts receivable totaled $7.9 billion and inventories totaled $8.4 billion. Our net working capital at the end of the second quarter was $3.6 billion, a decrease of $800 million from $4.4 billion in Q1. Our cash conversion cycle for the second quarter was 21 days, down three days from Q1 of 22. Cash from operations was approximately $1.04 billion in the quarter. This is partially due to some unwinding of the Q1 increase in net working capital to support revenue growth and strategic inventory purchases. From a shareholder return perspective for the current quarter, our board of directors has approved a cash dividend of 30 cents per common share. The dividend is expected to be paid on July 29, 2022 to stockholders of record as of the close of business on July 15, 2022. We also continue to repurchase shares. and through the first two quarters of fiscal 22, we have repurchased approximately 53 million of our stock at a weighted average price of approximately $103, in line with our target of 100 million of share repurchases for the year. We have 347 million remaining on our three-year stock repurchase authorization, which expires in July of 2023. Before I discuss our outlook for the third quarter, I wanted to take a moment to provide an update on our merger synergies. As Rich mentioned, our integration efforts are going well, and we continue to make good progress on realizing our merger cost synergies. We are ahead of schedule and remain committed to achieving our targeted $200 million of merger cost synergies. As I've mentioned previously, these opportunities span a variety of areas, including optimization and efficiency improvements via the legacy Tech Data GBO program. as well as traditional deal-related synergies across the spectrum of IT systems, corporate costs, facilities rationalization, taxes, and interest. Now, moving to our outlook for fiscal quarter three. We expect total revenues to be in the range of $14.5 billion to $15.5 billion, which, when adjusted for currency impacts of approximately $500 million, and revenue policy alignments relating to the merger of approximately $300 million, equates to a growth of around 10%. at the midpoint on a year-over-year basis, assuming the merger had occurred in the prior year. Non-GAAP net income is expected to be in the range of $241 million to $279 million, and non-GAAP diluted EPS is expected to be in the range of $2.50 to $2.90 per diluted share. That's based on a weighted average shares outstanding of approximately $95.5 million. Interest expense is expected to be approximately $45 million and we expect the tax rate to be approximately 24%. For the full fiscal year of 22, we continue to expect non-GAAP diluted EPS of $11.15 to $11.65 per diluted share. We are reaffirming this full-year outlook despite an incremental 14-cent headwind from the devaluation of the euro since March. The total FX headwind for fiscal 22 versus the prior year is now approximately 32 cents. We will now Take your question. Operator?

At this time, I would like to remind everyone, in order to ask a question, press star, then the number one in your telephone keypad. We request you limit yourself to one question and one follow-up. Your first question comes from a line of Matt Sheeran from Stiefel. Your line is open.

Yes, thank you very much. Good morning, everyone. My first question, Rich, just regarding your commentary on the overall demand environment, you still sound fairly bullish, but could you give us a little bit more color on the PC quote-unquote moderation that you're seeing? Are you continuing to see that weaken? And it also sounds like supply is starting to open up there. And then relative to the comments you've made in previous quarters about expectation for on-prem infrastructure projects coming back and accelerating in the second half. Are you still seeing that and hearing that from your customers?

Yeah, Matt, thank you for your question. So first, when we look back at 2Q, on a constant currency basis, we talk about the advanced solutions and endpoint segment, and we talked about growth in both of those segments. In addition to that, I think we had a separate schedule for everybody to have a look at PCs and how they fit within our portfolio and profile. And to kind of move on to your second point, what I would say is the story remains consistent in the PC realm as what we had articulated previously, at least from our crystal ball, and that is that the commercial PCs have some Pretty good demand associated with them. The weakness, I think, in the overall scheme of the PC category would be in the Chromebook as well as the consumer piece, at least for the foreseeable future. And as you would have noted from that schedule that we had incorporated in there, you know, we're heavier weight to the commercial piece. And, you know, when you get down to the consumer piece, segment and think about it in the grand scheme of our entire portfolio, it's a single digit number, a mid-single digit number estimated. So, you know, I think that the sentiment of the market, you know, the PC providers have sort of articulated that point of view and we would reaffirm that that's the way we see it. As it relates to advanced solutions, Certainly the growth rates there have been higher than the endpoint segment. And, you know, we do continue to see good demand in that segment. And I do believe, as we had talked for a while since the beginning of the year, that through the pandemic, you know, you had PCs launching with high demand, the advanced solutions sort of deferring. And now you're coming around to the moderation of PC. And, you know, pretty good demand strength, if you will, within the advanced solution segment. So that's how we see it.

Okay. Thanks so much for that. And then as my follow-up, just regarding the inventory bill that you had again in the quarter, up about $700 million sequentially, but you're guiding essentially, well, down slightly sequentially for the August quarter. Could you just explain that, and is any of that related to your hyposcale business where you typically stage inventory or products ahead of any ramps?

Hi, Matt. This is Marshall, and thanks for the question. It's an equal balance between distribution and hives, but yes, it's the same demand forecast that we build up. You saw and we experienced in Q2 some of the higher margins in solid returns of some of that buildup at the end of Q1 for Hive. We expect that same thing for the second half.

Okay, great. Thanks a lot.

You know, the one comment that I would make is as we look at quarter, quarter, quarter, the supply chains continue to be volatile. We usually accomplish what we need to in the quarter. So we'll see ebbs and flows in working capital, I think, you know, for the tactical frame. And then we're pretty comfortable with what we articulated in our investor day financial model for working capital once we move to sort of stabler grounds, if you will. But we do see these bumps in the road here and there that, you know, are typically a bit unusual if we were to be in a stable environment.

Got it. Okay. Thanks a lot.

Thank you, Matt. Have a good day.

Your next question comes from a line of Rube Kloop. Bhattacharya from Bank of America. Your line is open.

Hi, good morning. Thank you for taking my questions. It looks like FX has an incremental 850 to 900 million negative impact on the top line and about 14 cents on the EPS. So can you give us your thoughts on that and what is giving you confidence to keep the EPS guide for fiscal 22 unchanged? And what drives the operating margin improvement in fiscal 4Q?

Good question, Rupu. Thank you. This is Marshall. So, yeah, we feel really confident. Clearly, the 14 cents is a headwind. As we think about our investor day profile and looking at what we thought overall adjusted net revenues would be, we gave a guidance of 6% to 8%. We still feel good about that. And then we also gave an operating margin profile range of 2.5% to 2.7%. Same thing there, we feel really good about that. So the execution of the business, our belief that the second half of the year we'll still have, we'll call it decent to good IT spend growth that we're gonna benefit from. The synergies that we spoke to that are also in the investor presentation give us that confidence that we can offset those FX headwinds.

Okay, thanks for that. Could you talk about the pricing environment? Are you seeing vendors continue to raise prices And can you also talk about wage inflation and impact to your margins from that?

Sure. So first in the pricing environment, you know, certainly, you know, over the last year to year and a half, there has been consistent price changes basically across the board, you know, based on all of the factors that we're familiar with, right? And I would speculate that we're going to continue to see those price changes as we move forward until sort of the inflationary impacts sort of calm down. And, you know, I think that they'll ultimately start to abate. But, you know, for the tactical frame, I would suggest that they'll continue. Now, as it relates to labor and how it impacts, you know, our business. So first of all, labor inflation is part of the overall inflation that gets sort of translated into price across the entire supply chain. We carefully manage our compensation to make sure that we maintain competitiveness within the market. At the same time, we will pass through those increments. I would consider them sort of marginal if you will, incremental impacts to our overall pricing to end users, but they are there and we move, you know, reasonably quickly to make sure we get them passed through.

And Ruplu, just to remind you, our merit cycle falls into Q2, so you'll probably see a little bit higher SG&A relative to revenue, but the range for us is still in that three and a half to four percent range on SG&A. And back to what Rick said, over time, we do find ways of offsetting that

Okay, thanks for all the details, Sarah. I appreciate it. Maybe for the last one, Rich, if I can ask you a higher-level question. So investors are concerned about the possibility of a recession in the U.S. or a slowdown in Europe. Have you seen any slowdown anywhere in any region? And can you talk about your visibility? Has it improved any since 90 days ago? And if you can also talk about the backlog, how that is trending and your expectations for that for the rest of the year. Thank you.

Yeah. Here's what we see. We take it from the Global Channel Guide, which is the most up-to-date information we see, the IDCs and context information of the world. If you go and you take a look at those publications, what you'll find out is that the America's market is more robust, if you will, than the European market. Read the America's market to have been over the recent past call it the higher single digit mid to high single digit and in Europe actually has been bumping or bumping around flat overall so I think you you know you could speculate to see you're seeing the impacts of some of the geopolitical issues in Europe potentially Then Asia Pacific, which we don't have up-to-date information on, but our speculation would be sort of a mid-single-digit best-guess market right now. So, you know, that's sort of the backdrop of sort of the growth rates that we see in sort of that segment that we operate in. When we think about, you know, your next question looking forward, we do feel as if they're is good, robust demand. We feel pretty good about our backlog. The backlog is marginally down sequentially in total. But that was sort of our view as to how things would play out. And as we move forward, my crystal ball would say that as we move through time, hopefully we'll see it move marginally down each quarter moving forward. And then, you know, we basically create our commitments here from a bottoms-up perspective where we hear from each region with a particular emphasis on the coming quarter and then a view for the remainder of the year. And that really informs, you know, our guidance, if you will. So that's the process that we go through, Rupalu.

Thank you. Your next question comes from the line of Jim Suva from Citigroup. Your line is open.

Thank you, and good morning. I had a question. You mentioned hyperscaler was down due to difficult comps, and I think you said as expected. Can you remind us, since we're now approaching the time period of kind of starting to lap the integration that you had with TD and Cinex, as we look ahead for the next quarter or two, Are those difficult year-over-year comps for Hyperscale or behind us? And what are you kind of seeing for the demand in your Hive business?

So, Jim, first of all, good morning. Thanks for the question. You might recall in previous broadcasts, we always talk about Hive being a lumpy business. We stage, we then release, and stage and release, we find ourselves into cycles like that. And we are bullish and confident with the hyperscale sort of segment over time. You know, the market data would state that that category, you know, has double digit growth rates. And, you know, we firmly believe that, you know, that's the case in sort of the sustaining time. I would tell you that, you know, when you think about Q2 and then going into Q3, and then potentially Q4. The business in total, you know, has the benefit of some easier compares. And then I would say that that segment as well sort of falls into that category. So, you know, we have a 1H for the entire business in that category that was pretty robust in FY21. And then it sort of slowed in the back half of the second half of the FY21. And so, yeah, the compares get easier for both the total and that segment.

And then my follow-up question is on the inventory. Of course, you had to build this quarter. Then you mentioned that you're going to be working it down some for the August quarter. How do we bridge that versus the comments of supply chain challenges still existing today? Because if the supply chain challenges still exist today, you'd think inventory would be flattish or maybe it's seasonal because otherwise people will say there's some weakening of demand or your backlog there.

Yeah, I'm going to start and then I'm going to turn it over to Marshall. But by starting, I want to make sure everybody's focused on the working capital improvements that we had seen in the quarter. They have been or are substantial from my point of view. Jim, if I harken back to an earlier comment that I had, I said as we sort of continue to march through these supply-constrained environments, we're comfortable with our working capital model that we had taken everybody through at Investor Day. But until we get stability in the supply chain, we're going to have some shorts and longs, if you will. It's the proverbial golden screw discussion in the core of distribution that has you hanging on, especially within the advanced solution segment to inventory longer than you normally would. And then I think when we think about the hyperscale business, the ebb and flow of getting a bit behind on scheduled deployments and then getting back on schedule based on many factors associated with the pandemic sort of cause a bit of a continuity issue. But as I said, in the long term, once we sort of get through all these supply things, they'll work themselves out and we'll have we believe we'll have really good stability as it relates to sort of our working capital profile. Marshall, I don't know if you have anything to add to that.

Well said. Great. Thanks so much for the details. It's appreciated. Yeah, thank you, Jim.

Your next question comes from a line of Adam Tindall from Raymond James. Your line is open.

Okay, thanks. Good morning. Rich, you knew I would ask about working capital if you got to me, but Maybe I'll save that for my second question. On synergies, you talked about tracking ahead. Would you characterize that as moving faster on your existing roadmap, or are you finding new areas of synergy where the total synergy number may end up being higher? And I'm asking because you have that track record of overachieving on your slide. I'm just wondering if the total synergy number is maybe even tracking higher, and if you could talk about the composition of the remaining synergy, that'd be helpful.

Adam, thanks for the question. This is Marshall. So we're still committed to the $200 million as we enter into fiscal 23. And as in our prepared remarks, we're at 130 forecasted for the first year. No new elements to that, just moving quicker than we had expected throughout it. And I would just say, if you think about the way that that synergy of 130 breaks down, it's roughly 60% SG&A, and the rest is both aligned in taxes and interest.

And then as it relates to additional synergies, typically you put a project plan together, you go and you get myopically focused on executing that project plan. We're kind of keeping our head down to make sure we get that accomplished. And then subsequent to that, I'm sure other opportunities will present themselves. We just don't have a quantitative point of view as to what that might be.

Okay. Makes sense. Maybe just as a follow-up, Marshall, I'll take the working capital question all the way up to ROIC instead. I realize you've reported a trailing four-quarter metric, but it's just under 13%, and the year-ago period was just over 21%. Maybe if you could talk about your view of where pro forma ROIC should ultimately go. Do you think you can get back into the 20s? The key drivers to that and timing to get there would be helpful. Thanks.

Thanks for the question, Adam. In our pro forma pre-merger expectation, we thought that ROIC and adjusted basis would land somewhere around 11%. As we continue to march through and integrate the companies and get the full digestion of debt and equity, you'll see that 12 and a half land somewhere around that 11%. Adam, again, that's a forecast for the full year. And then from there, we believe given all the things we do in terms of capital allocation and reinvesting back in the business and acquisitions and other opportunities, we should see that step back up. And Adam, you've heard us say this in the past. We always achieve to have a 300 to 400 basis point ROIC above our weighted average cost of capital. That continues to be the goal that we have in front of us.

Got it. Thank you.

Thank you.

Your next question comes from a line of Vincent Colicchio from Barrington Research. Your line is open.

Nice quarter, guys. Rich, I'm curious, are you seeing a general increase in turnover or stabilization? And what does turnover look like for your top 100 leadership executives?

Yeah, so if I talk about turnover, it clearly is elevated. To be candid with you, I'm really surprised relative to how successful we've been in our recruiting efforts as well. So, you know, I would say that we're, you know, we're a little bit higher than normal, but very, very manageable. As it relates to our top 100, we've been very stable. There have been no surprises that I'm aware of. And, you know, we have, you know, managed team closely and stayed close to them, especially through the Sort of the merger phase, I mean, there's incremental workload that is quite substantial. So we're asking people to do a lot more than the norm. But, you know, I feel as if we've got really good stability in our top 100.

And three-quarters into the integration, client loss is tied to diversification. Is that... sort of in line with your expectations? Is it a meaningful number?

Good question, Vince. This is Marshall. It's better than expected. As you know, we have a highly complimentary vendor line card and same with the customer base. If we think about the integrations we've done so far and the commentary Rich has had about the Canadian CIS migration, it's gone very smoothly. There's very little disruption. We expect the same thing to be the case for the U.S. migration. Very pleased with the overall result and significant upside, as we've mentioned in previous conversations, around Crossbell once we get onto one platform.

Okay, that's it for me. Nice quarter. Thank you.

Thank you very much.

Your next question comes from a line of Keith Husam from North Coast Research. Your line is open.

Good morning, guys. Hey, Rich, when you were in the investor day, you talked quite a bit about TD Cinex migrating toward more solutions for your customers and netting down revenue. Perhaps talk about progress made over the quarter and, you know, the demand for that that you saw this quarter.

Yeah, so if I could, during the Investor Day, we talk about high-growth technologies, and just to give everybody sort of an insight there, we're talking about hybrid clouds and security, analytics and IoT, hyperscale infrastructure. Even within... You know, the endpoint space, ARBR, is within there as well. We have an expectation of sort of an elevated growth rate, if you will, for that category. The core distribution piece of that clearly has been on track to deliver, if you will, that elevated growth rate. We talked about Hive being a little bit lumpy, so we think about Hive having that elevated growth rate annualized. So we're feeling really good, Keith, about those high growth technologies and kind of where we're at with more investment, if you will, to come to make sure that we're bringing, continue to bring incremental value to that customer set. As it relates to the netting, you get into those high growth technologies using cloud as an example, you know, there is that category in particular is one which gets netted. And, you know, as that becomes a bigger piece of the pie, there's a larger netting that maybe, Marshall, you want to comment.

Yeah, you're right. So we always try to reference gross billings when we think about the high growth technology sections, and we'll do that going forward. But early on, two quarters in, relative to our investor day profiles and what we thought were very much in line with that.

All right, appreciate it. In terms of your guidance, can you give us some puts and takes on what would it take for, I guess, to come at the lower end of your guidance in terms of revenue and what would it take to come to the higher end of your guidance? So what's the big swing items in your mind and what would it take to actually be top end of your guidance?

So I think I'll start and then maybe Marshall can uh, discuss today and maybe, maybe statement of the obvious, but if in fact we see a sudden downturn of demand based on the recessionary pressures that, that would have us find ourselves probably at the low end of our guidance, um, to get to the high end of the guidance, what would it take it? Uh, just one, one thing comes to mind, right? Is that is, uh, you know, uh, a significant release of supply to, to, um, be able to sell through a bigger portion of the backlog. And obviously, you think about demand, but if incremental demand is constrained by adding to the backlog, then that would be a tougher putt. But I think a bigger release of supply would be helpful to get us to the higher end.

And we don't see that as being likely this quarter, do we?

You know, it's hard to predict. I think I was talking earlier about the evolution of, you know, the PC stuff being at the front end of the pandemic demand wise and then the advanced solution stuff being higher demand. You know, I think Matt had commented earlier, I think, in his insight that, you know, or asked, is the PC stuff becoming a bit more stable? It kind of feels like it is. So, you know, never say never, but we have a pretty tight relationship with most of our suppliers, and we really, once we hear from the regions, you know, they actually, if you will, cross-track with regard to our vendors to make sure that We're supply-supported. And, in fact, you know, that would be our range currently would be our best call. But, you know, if they're pleasant surprises that would come, they would be just that, pleasant surprises.

Great. Thanks. Appreciate it.

Your next question comes from the line of Ananda Barua from Loop Capital. Your line is open.

Hey, good morning, guys. Thanks for taking my question. I guess I have two if I could. Rich, I don't think I heard you in any of your answers give what your consumer exposure is. So I'd love that. And if you did, I apologize for the repeat question.

Yeah, so if you take a look at the charts that we had included in the pack, we had a special emphasis or special insight, if you will. So, you know, if you think about the consumer piece sort of standalone, you could think about it as being a sort of mid-single digit percentage of our total overall portfolio.

So, it's really small at this point.

Well, yeah. I mean, it's mid-single digit. So, you know, I think that the whole PC category, if it calibrates a pie, it's pretty well calibrated to the reality. So, You know, you can think of the whole PC category being 20%-ish and then, you know, the consumer piece being, you know, a percent of that, which gets us to 5% of the open.

Got it. And so what about some of the legacy stuff for each company? You know, legacy tech data has, you know, had sort of handset exposure primarily in Europe and legacy Cinex. you know, had some meaningful consumer exposure, retail exposure in North America. Is that, are those both de minimis at this point? And so, you know, really the PC, the retail, sorry, so really the consumer exposure is on the PC side at this point.

Amanda, this is Marshall. Yeah, we still have legacy Cinex, new age electronics, great business performing well. And on the legacy tech data side, we've got, uh, um, we call it consumer related mobility in Europe.

Right. And that's, that's, that's performing, uh, you know, consistent with expectation as well.

And that's helpful guys. And in any sense, Rich, if we, Sarah Marshall, if we stack those two up, you know, to the PC consumer, like where that would sort of land for the company, uh, kind of what consumer exposure would be overall as a percentage of revenue.

So again, uh, So you're asking if you were to have included mobility within the PC category, what would that be? I don't have the number right in front of me, but I wouldn't even comment. But, you know, I wouldn't think it would be super material.

Cool. Cool. That's helpful. And then I guess sort of Rich, your comments about second half, second half 22, good IT spending environment. What, like, what do you guys see? I guess what I'd love is to get some context, kind of see things like, you know, what are you guys seeing, maybe your interpretation, kind of the overall theme, you know, of customer behavior, you know, right now, given, you know, kind of macro, macro indicators you know everybody's you know sort of watching the same macro indicators it seems like commercial spending and has been really well intact at the same time and marshall you're you're actually one of the people who's watching these macro indicators you know so um you know as the cfo of cynics and so you know what do you guys think what's the what are you experiencing i guess is the overarching theme from your from your customers you have this one situation where commercial demand is clearly very well intact. At the same time, kind of the macro indicators are what they are. And your conclusion is solid IT spending through the second half of the year. So I just would love any context there. you know, to try to get a sense of what it is you think your customers are experiencing as you guys interpret it.

Yeah, so maybe I'll go first. I hate to be a little bit repetitive here, but we see a really strong infrastructure, you know, the advanced solutions category. You know, that area continues to, I think, be most challenged as it relates to supply and backlog, and the PCs are moderating with a particular emphasis of the consumer segment being sort of weaker. We see that. We sort of articulated that theme when we started the year. We said in the first half, we thought that there would be good demand around PCs, and the AS segment would begin to, if you will, accelerate a bit. And then in the back half, we'd see more moderation in PCs and that we'd have solid demands around the AS category. And I think that's what we see playing out. And the only other thing that I would offer is the high growth technologies of cloud analytics and IoT security and hyperscale as a basket. You know, those growth rates are strong, and they're becoming more and more meaningful part of our business as we move through time. So, you know, from an end-user demand perspective, certainly the high-growth technologies, the advanced solution, project-based business, and then PC moderation.

Great. That's super helpful. All right. Thank you, guys. Appreciate it.

Thank you, Ananda.

at this time there are no more questions this concludes today's call have a nice day