Great day, ladies and gentlemen, and thank you for joining the Arrow Electrics (sic) [Arrow Electronics] (00:00:04) Fourth Quarter and Year End 2017 Earnings Conference Call. My name is Latoya and I will be your moderator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. It is with great honor introducing our host for today, Vice President, Investor Relations Arrow Electronics, Steven O'Brien. Please proceed.

Thanks, Latoya. Good day and welcome to Arrow Electronics fourth quarter and year-end earnings conference call. With us on the call today are Mike Long, Chairman, President and Chief Executive Officer; Chris Stansbury, Senior Vice President and Chief Financial Officer; Andy King, President, Global Components; and Sean Kerins, President, Global Enterprise Computing Solutions. As a reminder, some of the figures discussed on today's call are non-GAAP. You can access our earnings release at investor.arrow.com, along with our CFO commentary, the non-GAAP earnings reconciliation and webcast of this call. We will begin with a few minutes of prepared remarks, which will then be followed by a question-and-answer period. I will now hand the call to our Chairman, President and CEO, Mike Long.

Thank you, Steve, and thanks to all of you for taking the time to join us today. I'm pleased to report a strong finish to what was unquestionably the most successful year in Arrow's history. For the fourth quarter, we achieved record sales of $7.6 billion, gross profit of $930 million and operating income of $340 million, and an earnings per share of $2.51. For the full year 2017, sales of $26.8 billion, gross profit of $3.4 billion, operating income of $1.1 billion, and earnings per share of $7.56 also reached record levels. Our view for the next five years out is the most visionary and transformational in our history. We will enable customers to adapt to change. Our customers will rely on us to help them with a multitude of new technologies coming their way. We'll make it even easier for customers to buy from us. That means making it easier for them to buy from us digitally, from a salesperson or through their value-added reseller or managed service provider. With our unparalleled data and the use of intelligent technology, we will increasingly anticipate customers' needs before they do. We're going to continue to expand our services. This will bring us even closer to our customers. We'll provide technical support and unmatched collection of online reference material. We provide engineering help or even have our engineers take over product design. We manage supply change (3:09) and aggregate disparate sources of supply, and we'll control bill of materials and take products all the way from idea to production. We will not leave any market underserved in terms of the products or services we offer. Our digital team is reaching the entry-level market with self-service design. Our field application engineers will continue serving the mid-market. And last month, we announced the…

Thanks, Mike. Fourth quarter sales of $7.63 billion were above the high end of our prior guidance range. Sales increased 18% year-over-year and 15% adjusted for changes in foreign currencies. The actual exchange rate for the quarter was $1.18 to €1, in line with the rates we have previously used for our forecast. Fourth quarter global components sales of $4.94 billion increased 24% year-over-year and increased 21% adjusted for changes in foreign currencies. Global components sales have been at or above the high end of our expectations for six quarters in a row. We had record fourth quarter sales in all three regions. In the Americas, sales increased 25% year-over-year driven by our core, our digital platform, and our sustainable technology solutions. In Europe, sales increased 35% year-over-year and increased 24% adjusted for changes in foreign currencies. Europe sales have grown year-over-year for 19 straight quarters, adjusted for acquisitions and changes in foreign currencies, as we continue to gain share in the marketplace. Despite a challenging year-over-year comparison, Asia again produced strong growth. Asia sales increased 16% year-over-year, marking the sixth straight quarter of double-digit growth. Asia sales increased 14% year-over-year adjusted for changes in foreign currencies. Fourth quarter global components operating income increased 32% year-over-year and increased more than our 24% sales growth. Operating margin increased 30 basis points year-over-year. In short, we started to capture the leverage we've been anticipating for this business. Fourth quarter enterprise computing solutions sales were $2.69 billion, up 10% year-over-year and are above our prior guidance range. Sales grew 6% adjusted for changes in foreign currencies, and billings also grew at a mid-single digit rate year-over-year adjusted for changes in foreign currencies, driven by infrastructure software, cloud demand from new VAR and MSP customers and a return to growth in both regions for…

Thank you, Chris. Latoya, could you please open up the call to questions at this time.

Your first question comes from Matt Sheerin with Stifel. Please proceed. Matthew John Sheerin - Stifel, Nicolaus & Co., Inc.: Just a question on the guidance. Obviously you've had a strong quarter in both components and computing. If you look at the sequential guide it looks a little bit perhaps below seasonal for the components business and at or slightly below where you were last year on computing, but obviously you're coming off of a strong base, anything to read into that Mike in terms of what you're seeing?

Actually, there's nothing to read into it at all. Our book-to-bill is still strong. Our backlog is still growing. Into the first quarter, we're still seeing the same type of book-to-bills we saw before. We're not seeing cancellation rates. As you know, and I'm not sure what it is with us in the first quarter, but we always sort of struggle to get there in the first quarter. But we really just came off of a quarter where all cylinders are firing on the engine, and we don't really see it as being down. We don't really see that same sort of seasonality issue that we're seeing and we think we're going to have a great year. We think we're going to have a great first quarter. Matthew John Sheerin - Stifel, Nicolaus & Co., Inc.: Okay. And then just related to that, you did talk about the ERP go-live in Q1 in North America and that's on – I know on the component side. Is there – any of that factored into the guidance in terms of potential hiccups or anything on the sell side there?

Yeah, I guess the good news to report, Matt, is that we did it in the fourth quarter. We converted our systems over. The systems are running right now as we expected them to. We're not expecting any down trouble or any problems with inventory or bookings and billings. It looks like things have come up pretty well for us. We had a little bit of a slowdown in terms of salespeople getting to know the system and the speed by which they could operate. That's all getting worked out here early in the first quarter. But other than that, the system is right where we expected to be. I don't want to say non-event because we had an awful lot of people for an awful lot of long time doing a lot of work around getting this system, making sure it was up. The good news I can tell you is we just completed the journey. North America was the last journey. And so, we're really happy to have that behind us, and now we feel like we can just turn things loose. And I think you're going to – you're just going to see the growth continue, Matt. Matthew John Sheerin - Stifel, Nicolaus & Co., Inc.: Okay. And just lastly, if I can just fit in another question, just regarding the pricing environment. As you pointed out, Mike, there are still shortage issues in a bunch of areas, passives and some of the discrete semiconductor areas. And some of the suppliers are seeing some leverage. I would imagine, particularly if you've got the right inventory that you're seeing some better pricing environment, is that helping margins at all?

We're starting to see some firming and there's really some other good news around this. If you remember we talked about registration activity needing to grow. So, we're not just shipping sort of bill of material and commodity parts and it's – I'm happy to report, we've just come off of a very successful design activity quarter in the fourth quarter that brings us back to par for where we were and now we can grow from there. And, as that number continues to grow, we fully expect to get the margin with that, and that is our opportunity. The short-term profits from hard-to-get products, while they're nice, as you know they're not lasting, they sort of cycle with the marketplace, they cycle with production. So frankly, I just sort of discount that as a win (19:25) when we get it, but strategically that's really supply/demand. So, the real trick here for us is more design wins, more designs with customers, more engineering and that's what's going to raise our margin. Matthew John Sheerin - Stifel, Nicolaus & Co., Inc.: Got it. Okay. Thanks very much.

Your next question comes from Param Singh with Merrill Lynch. Please proceed.

Hi. Thank you for taking my question. I guess, firstly on the ECS side, based on the revenue guide, it looks like you are now seeing high single-digit revenue growth with recovery in storage. Do you think that revenue growth will persist? Do you expect to see that kind of trajectory going forward? Also, based on the guide it would imply that you're seeing somewhat flat operating income in the ECS despite the revenue growth, what's your expectation for margin there? I mean you've been running above your historical targets. Do you expect to get back to that range now that hardware is picking up?

Yeah. First off, we do expect growth. We're planning for growth this year in the ECS business. I think, last year, we really thought that the storage piece would cross over in the third quarter. It actually happened in the fourth quarter that we saw the growth, but we're not calling that bad, we just – that was a long term out view when you graph things on a piece of paper. What's exciting or what actually drove us down was there was a pretty, pretty good budget flush on hardware, and that changed our mix a bit. But I still read into that as good news. We believe – we're still seeing growth in software; all forms of software, services, and our cloud, and I guess I'll let Sean sort of answer the profit piece going forward because he's a little closer to this mix change than I am.

Sure thing, Mike. And Param, just to kind of round out part of Mike's comments as to our growth outlook, bookings are up nicely so far this year in Q1. And we did exit Q4 with backlog up nicely year-on-year as well. Clearly, we saw a mix shift to hardware in Q4 that was even better than we anticipated which does create some gross margin pressure. But we think as the year played out, we think both top line and profit dollars will continue to grow.

Got it. All right. Thank you, guys. And then, as my follow-up, the component side, as you mentioned you've been seeing consistent growth, your book-to-bill has been pretty strong, you're being at the high end or above your component guidance in the past few quarters. It just feel that the guide has always been conservative, why would you guide something which is down 3% sequentially when you're seeing a strong book-to-bill like that? Or is there some missing piece? Everything that you've mentioned so far with the lead times, with the activities, with the end markets has been very positive. And it's hard to believe that you would see that kind of sequential decline.

Hi, Param, it's Andy. I'll take that one. Yeah, over and above what Mike said in his comments, really, we don't see a significant change in the sort of macroeconomic conditions or the demand patterns we're seeing. What you're seeing is fundamentally a sort of shift in mix. The products that we sell and the regions in which we sell them continue to change over time. Asia, as you know, has grown dramatically for us over the last couple of years and is now the largest region for us in components, and of course Q1 for them with the Chinese New Year is always sequentially lower than Q4. So, there is nothing, nothing behind this, Param. It's really just a mix issue and we continue to see positive momentum as we go through into the first quarter of 2018.

Param, this is Mike. What I could add to this is that we – our customer survey that we put out, it's interesting because with all of the talk in the marketplace, for some reason, we're just not seeing the same thing that others are about this slowdown. Our North America customer survey showed that we had a record low number of customers saying they had too much inventory. And conversely, the percentage of customer is saying they did not have enough inventory, was also at record high levels. So, our customers are thinking that they're producing product and they're still worried about product shortages. And frankly, as you can tell from our inventories, we're staying ahead of that and keeping our inventory levels where we are to support them.

Right.

And I think that will carry through. But I wouldn't read anything into the guidance. I don't necessarily see the demands the same as they were given the growth, especially when you're coming off of the huge growth we had in Europe, and the huge growth we came off of in China. They were the two big drivers, and they're both planning on being up significantly year-over-year.

Right.

So that's where I think we are.

Okay. Got it. And just really quickly, did you have any cash payments for U.S. tax in this quarter or is it starting 1Q 2018?

Sorry, the cash payments for...

Tax.

...tax?

Yeah. The U.S. tax payment that you had – was it even cash or was it all non-cash for the most recent quarter (00:25:04).

No. That was all non-cash and that won't start until this year.

Got it. Thank you so much guys.

Your next question comes from Adam Tindle with Raymond James. Please proceed. Adam Tindle - Raymond James & Associates, Inc.: Okay. Thanks and good afternoon. Just wanted to start with Chris. In Q4, we saw a much higher delta between gross profit dollar growth and operating expense growth on a year-over-year basis than we've seen in quarters past, resulting in nice leverage, as you mentioned. I know you still want to invest in the business, so I'm trying to understand as we enter 2018, how we can think about gross profit dollar growth versus expense growth or leverage in general? Was there something extraordinary about Q4? You talked about firing on all cylinders. Or do you think the kind of leverage we saw in Q4 is kind of the way to think about 2018?

Yeah. Adam, if you think about some of the conversations we've had over the course of the last year, we felt it was really important to get back to leverage and that even with not having all the design activity on the new business in that we had the ability to drive that kind of leverage in Q4. And we're glad that we did. I think as we go into 2018, the focus is definitely – and you can see it in the guide on continuing to drive GP faster than we're growing OpEx. And to Mike's point a few minutes ago, as we get more design win activity coming through GP, that will help as well. But that is definitely a focus for us. Adam Tindle - Raymond James & Associates, Inc.: Makes sense. And just as a follow-up on cash flow. Working capital has been elevated, and I know you're growing at a significant rate. Just wanted to see how you're thinking about working capital metrics entering 2018, whether it's on a cash cycle or as a percent of sales. Is there a goal you're driving towards to where we might see a meaningful cash flow uptick? Or is there still enough growth opportunities to where we might not see the $600 million, $700 million or so of operating cash from years past?

Yeah. Great question. It's really going to depend on how the overall environment grows. As we said before, if we're growing over 10%, then we will have to make investments in working capital. But that aside, I would say that the balance sheet exiting Q4 is pretty much run rate balance sheet, and we don't have all the sales in yet, that we've won over the last year to support that. So that will help returns. The way we're looking at it, we're really focused on the cash conversion cycle, not just one – any one element of working capital. And I would expect that we could improve that as we go forward. Adam Tindle - Raymond James & Associates, Inc.: Got it. Thank you.

Your next question comes from Shawn Harrison with the Longbow Research. Please proceed.

Hi there, everybody. Wanted to just, I guess dovetail on Adam's question, specifically on the leverage used on the components business for the fourth quarter. I think you grew EBIT at 1.3 times the rate of sales growth. Can you maintain that type of leverage on the component sales growth throughout 2018? Can you do better than that? I know the target typically is more, 1.5 times. But anything on that aspect of the business would be helpful?

Yeah. I wouldn't commit to a specific number at this point because I think from quarter-to-quarter, the timing of how we make investments in our strategy could change. I would say broadly speaking now, that, that focus remains in terms of growing the OI at rates faster than we're growing sales and the guidance that we've given in the past on that, I would stick to.

Okay. And then two quick follow-ups if I may. You had another line card win here, it looks like, coming on board, but when does that begin to ramp for you in 2018 on the components business? And second, anything you could give on eInfochips in terms of the new profile, price pay, any accretion for 2018, would be helpful.

Oh, you're talking about eInfochips?

Well, yeah. It looks like you guys won Silicon Lab as well. So maybe when did that business ramp on for you, too? But eInfochips, the cost of the business, revenue profile, any accretion. And, also the Silicon Lab when does that ramp in for you?

It starts ramping in after February. And the eInfochips will start ramping now. The idea between that one, as you know, the purchase and you can see the earnings. While it's a very profitable company and very nice earnings to the overall Arrow, it's not quite as material. And our focus there is going to be growing that over the next several quarters. And it actually is filling a need that we had a hole. So, the nice part of that is we do expect some early wins for that. They could make it pretty viable for us going into the second half of the year. I would say, honestly, with that one is, it's coming in, we're getting, going, we're going through the sales cycle. We're introducing our engineers to their engineers. I would look for more out of that in the second half of the year versus the first half.

Perfect. Thanks, Mike, and congratulations again on the quarter.

Thank you.

Your next question comes from Mark Delaney with Goldman Sachs. Please proceed. Mark Delaney - Goldman Sachs & Co. LLC: Yes. Good afternoon. Thanks for taking the questions. First question is on the ECS segment, which I realized grew nicely on a year-over-year basis, and appreciate the comments in the prepared remarks on which areas where growing fastest. But hoping you could help us understand maybe what was the upside surprise relative to guidance, was there any one or two product categories in particular that had driven that upside versus guidance? And related to that, yeah, and just related to that, would you describe any of the upside in ECS to maybe some pull forward of Americas purchases given the tax law and the opportunity to maybe expense CapEx in the fourth quarter, while the U.S. statutory rate was still higher?

Yeah. Go, ahead, Sean.

Hey, Mark. So, we will start where you finished, which is by no means that we see any pull forward business that impacted our Q4. In general, if I look at Q4, the drivers for growth were pretty balanced. As Mike mentioned, we saw a more typical year end budget flush in Q4 2017 than we did in Q4 2016. But as we also mentioned, our software based solution strategy continue to serve us well. And for us, it's all about exercising our installed base and getting our selling partners into the next big demand trend and we think we've got a pretty good handle on what they are and those are the places in which we're investing; things like security, things like analytics, and certainly things like hybrid cloud. But we also benefited from net new customer relationships as we saw our competitive wins start to roll into the business, add more scale in the quarter. So, that was very helpful also. And then lastly, as we pointed out, we did see renewed momentum with storage and that was largely driven by the adoption of kind of the next generation architectures, which we think now well more than 50% of our total storage mix really bodes well for the future. Mark Delaney - Goldman Sachs & Co. LLC: Thanks for that, Sean. And for a follow-up question on the new U.S. tax law, I'm just curious if that changes Arrow's capital allocation strategy at all maybe because of increased flexibility of where your cash is domiciled?

We certainly like the increased flexibility around where we can use the cash. But if you look at capital structure or just capital location priorities, it really doesn't change things. The overall change in tax rate was not material enough for us to consider doing that. So, we believe in the way that we've structured the company the right way and we're going to stick to that as we go forward. Mark Delaney - Goldman Sachs & Co. LLC: Thank you.

Your next question comes from Steven Fox with Cross Research. Please proceed.

Thanks. Good afternoon. I was wondering if you could decompose the organic growth in the components business a little bit more, the 21%. It's very healthy number. It seems like there's a bunch of factors. So, if you sort of start with the baseline of market growth and just sort of add it on some of these competitive wins plus IoT demand, et cetera. If you can give us a better feel for how you're growing, that'd be helpful. And then I have a follow-up.

Andy, can you take it?

Yeah. If you kind of think about it this way, Steven, if you look at the overall semiconductor market through the channel, that's probably going to come in in 2017 at the high single-digits, low double-digits kind of number. And then if you add into that, the balance of it was fundamentally us outperforming the market, a chunk of that and we've kind of already told you, a sort of run rate number that's going to come in at around a couple of hundred million a quarter from the competitive wins. And the rest is the investments that we've made in growing our business in the areas like IoT, like digital, like our engineering services capability. So, that's kind of how it all breaks down into those three major buckets. If that answer your question, Steven?

Yeah, it does. And then, maybe just to build on that answer a little bit. If you just look at then the IoT and the engineering services portion going forward, do you guys have a sense for how much that could help above and beyond market growth maybe in 2018? And would that be a discernible number to operating margin mix where we'd see a benefit to margins year-over-year just from that?

Well, let me take the second one first, Steven. If we think about the engineering services, as Mike said, as we look at exporting out the eInfochips capability, we'd certainly expect to see some of that as we go into the second half, but we're sort of really in early connection mode there, but we like the opportunity. As far as IoT is concerned then we've seen IoT hardware be above the average growth rates for our business for some quarters now. And we're starting to see the kind of associated services both upstream and downstream from that hardware kind of ramp through our opportunity funnel. So I think, yes, our expectation is that would be accretive.

Great. That's helpful. And then a real quick one if I could. On the cloud services business, can you just give us a sense of where you came out versus your $1 billion run rate target for this quarter?

Yeah. If we basically take out December, we exceeded the $1 billion run rate. So we're on track. It's still growing at a strong rate. It's going to be exciting. And since you asked about that, we might as well tell you that digital is well over the $1 billion mark at this point in time, too, (36:18) $1.1 billion, $1.2 billion right in there. So, both of those activities are ramping and going very strong.

Great. Thank you so much.

Your next question comes from Adrienne Colby with Deutsche Bank. Please proceed.

Hi. Thanks for taking my question. I was hoping you could provide some additional color on your expectations for the enterprise computing business in Europe. How sustainable is the double-digit growth rate into 2018?

I'm sorry. Say that again?

Just wondering in terms of the enterprise computing business in Europe, how sustainable a double-digit growth rate is?

Well, we've got a healthy outlook in Europe, both in Q1, and then from a planning perspective for the full year. It's hard to call it precisely, but I think so far this year, out of the gate, we're seeing some good momentum. And as I said earlier for the business overall, also good backlog exiting Q4 2017.

As a follow-up, could you talk about how you're thinking about the upcoming implementation of, I think it's GDPR, the General Data Protection Regulation, in the UK. I think it goes into effect later this year. Wondering if you're starting to see an uptick in demand on the security side of the business?

Yes. So far we're monitoring that closely. And we see spots in our pipeline that would indicate we might see some demand from that. But I think it's a little bit too early for us to tell.

Thank you.

Your next question comes from James Suva with Citi. Please proceed.

Thank you very much and especially all the good answers so far in detailed questions. When we talk with investors, there are some investors who focus on margin percent and others who focus on margin dollars. And so, when we think about as CEO and CFO as you run your company, can you help us and investors better understand about how you kind of layout the strategy of Arrow Electronics for growing one versus not growing the other? Because if my math is right, and maybe it's wrong, I think the gross margin percent year-over-year is down pretty big. But the dollars are up and operating margin percent's are kind of flattish, but the dollars are up. Can you help us understand how you strategize and lead your teams when you evaluate those different metrics and what's most important to you?

Yeah. So, let's go back to the initial comments I made in the beginning is that we're going to make it easier for customers to purchase any service from us that they want. And so, by saying that, Jim, what happened this year is the supply chain activity, which would be a lower gross margin activity grew at a much faster rate than the engineering design activities, which are now starting to catch up. So if you look at it, the supply chain type activities are going to bring in the high GP or the high dollars, if you will, and the engineering activity is what will help raise the gross profit. The biggest change in the business over the year that caused that to go down was that our mix of design wins and design win activity shipments versus supply chain got out of sku (00:39:56) because we had a bunch of wins, as you know, early on in the year that we're starting to pick up and gathered steam all year. So, it's not an either or here, it's actually both by business. You'll also notice or you'll see that we built up and purchased eInfochips to even do more design activities. 1,500 more engineers than what we had before in that one business. So, that will push our gross profit up over the course of the year, as we've said, probably you'll see some of it more in the second half than in the first. And the additional services that we will continue to launch will be GP percent based more than dollar based. So, that's really the difference in the business. It's all good. Our job is to get it all. Our job is basically to bring technology to our customer base in the easiest form and allow them to get their products to market. And if we do that, we're going to satisfy the suppliers, we're going to satisfy the customers, and we're going to grow faster in the market and that's what the goal is.

Well, thank you so much for the detailed answer. That actually fully explains it, and I appreciate the additional insights. Thank you.

You bet.

Your next question comes from William Stein with SunTrust. Please proceed.

Great. Thanks for taking my questions. First, Mike, you mentioned that your surveys among customers, I think there was a very varied answer to the status of their inventory. I think it's fair to say the extended lead times in some categories that you highlighted certainly influence that. I'm wondering how you expect that issue resolves itself over the years – over the rest of this year, I should say? Do you see more capacity coming online? Do you see potentially customers adjusting designs to specify in shorter lead time products, in other words redesign parts or some other resolution?

Well, it's interesting because while parts are hard to get, I would say that overall, we've had a pretty successful supply chain this year of giving customers what they need. And there has0 been very few line down situations at the customer base where the product hasn't found its way there. So, if I start with that, I expect this to persist through the first half of the year easily. The current book-to-bill indications are that it's going to stay the same. I do not expect a lot of online capacity to come on because, frankly, I don't know where it's going to come from. That's the big thing. You don't just flip a switch and you don't just flip a switch in a year to get capacity because everybody is buying their capacity from the foundries. So, if they don't have it, then there's none to be had. And, if there is anything to come online, I certainly haven't really heard about it. So, I'm going to probably go out on a limb here and say this market is going to continue through the first half of the year easily and we'll see what comes out of it in the second half. But right now, the manufacturers are bullish. They're bullish everywhere in the world. We're seeing pretty unprecedented growth in Europe. North America returned to growth and that was a North America survey, which even makes it more buoyant that it was a fourth quarter survey going into the year. So, those manufacturers are feeling good. And overall, it's going to be us continuing to manage our supply chains and our inventory. And frankly, we've had orders on factories for 12, 15, 18, 20 weeks on all of these products to make sure our customers are covered. So, hopefully we got it right.

That helps. It suggests of course extended lead times without additional capacity and growth expected. It's sort of hard for all that to play out collectively. But I'll go on to maybe my follow-up. Can you remind us what the long-term margin targets are in the components segment, and sort of what the path is to get into that range? Thank you.

Yeah, they still haven't changed. It's interesting. They still haven't changed from the 5% we had out there. We haven't gone back on that. What's been interesting with that, as you know we were starting to gain on that and bring that home and then the – of course, there were some significant changes in the market about how business came to market and we capitalized on a lot of supply chain business, which is great business, but brings us in just sort of under those levels. And now, with the engineering business we have to build a back-up. The funny thing is we see exactly the same path we did before. So that's not a difference. I guess the good news is the company is a whole heck of a lot bigger than it was and stronger and earning more, which is a plus. But you're just going to have to wait a little while for that to happen.

Thanks Mike. Good luck.

And by the way, if I do do that, I haven't had one of you come to tell me what I get for it.

We'll think about that. Thanks.

Yeah.

Your next question comes from Louis Miscioscia with Pivotal Research Group. Please proceed.

Okay. The questions and requests from us never end. So, sorry about that, Mike.

That's okay.

Here, maybe some easier ones. Obviously, on the ECS side, you talked about strong server growth. Can you pin that to anything? Or is it really just tied to the global economy just doing well? And then, I guess tied to that, what about Intel's problems with their chips? I mean are customers saying anything? I mean there was some concepts and thought that maybe that customers would hold off for a period of time until they understood what a better fix was possibly out there.

Yeah. First off, I'd say I don't think anybody is holding off of anything right now.

Sure.

And as we said before, there was a good budget flush that sort of returned to what we would call historical days. Sean, you guys had a lot of product growth. Why don't you go ahead and go through with them and show them. Because it was really across the board, there was a lot of growth.

Yeah. Lou, you nailed it right. It wasn't just storage, it was also servers. But if look across all the categories in which we participate, billings were up year-on-year. And I think, the drivers include not just the year-end budget flush and some of our customer wins, but also some of our initiatives to stimulate demand in our installed base. And, I think one of the takeaways from the uptick with hardware is that it validates at least in part that the on-premise deployment model is certainly not dead.

Okay. And then, shifting over to the semi side a little bit. Could you maybe separate out the extraordinary growth into again what might be just more the normal economic positive situation, and then the areas that are Internet of Things and digital and other things that are more new growth areas? Just trying to understand how we're getting the different levels of growth coming in.

Yes. Sure. There's been a, obviously a mix change in-house of how we do business with everything. And, Andy, you want to go ahead and go through that with them so he can.

Yes. As I mentioned earlier on, Lou, I think that we're kind of going to end up with a – at a market growth globally it's somewhere in the high single digits, low double digits. And the rest of that – of the growth that we experienced is clearly market growth above that or market share gains above that. A chunk of that has come from the supply chain wins that we've talked about in previous calls and the rest of it, you can really much point to those things you just mentioned, the investments we made in digital and IoT to capture the kind of value and growth that those markets can provide for us. So, we sort of see it in those three buckets and the second two are (00:48:53) still momentum behind us.

Okay. Thank you. Good luck on the New Year.

Thank you.

Yeah. Lou, basically, I can maybe help you a little bit. If you think of IoT's passing the $1 billion rate, digital's passing the $1 billion rate, so that can tell you a little bit how the new business have started to come in here and sort of the rate and pace. It's a pretty good clip.

Thanks.

I would now turn the call over to Mr. O'Brien for closing remarks.

Thanks, Latoya. And in closing, I will review Arrow's Safe Harbor statement. Some of the comments made on today's call, may include forward-looking statements including statements addressing the future financial results. These statements are subject to a number of risks and uncertainties that could cause actual results or facts to differ materially from such statements for a variety of reasons. And the company undertakes no obligation to update publicly or revise any of the forward-looking statements. Detailed information about these risks is included in Arrow's SEC filings. If you have any questions about the information presented today, please feel free to contact me. Thank you for your interest in Arrow Electronics and have a nice day.

Ladies and gentlemen, thank you for your participation. This concludes today's conference. You may now all disconnect and enjoy the rest of your day.