艾睿電子 (ARW) 2024 Q3 法說會逐字稿

Ladies and gentlemen, good day and welcome to the Arrow Electronics third quarter, 2024 earnings call.

女士們、先生們，美好的一天，歡迎參加艾睿電子 2024 年第三季財報電話會議。

Today's conference is being recorded. At this time, I would like to turn the conference over to Brad Windbigler, Arrows, Treasurer and Vice President of Investor Relations. Please go ahead.

今天的會議正在錄製中。現在，我想將會議交給 Arrows 財務主管兼投資者關係副總裁 Brad Windbigler。請繼續。

Thank you, operator. I'd like to welcome everyone to the Arrow Electronics third quarter, 2024 earnings conference call. Joining me on the call today is our President and Chief Executive Officer, Sean Kerins; our Chief Financial Officer, Raj Agarwal; our President of Global Components, Rick Marano; and our President of Global Enterprise Computing, Eric Nowak.

謝謝你，接線生。歡迎大家參加艾睿電子 2024 年第三季財報電話會議。今天和我一起參加電話會議的是我們的總裁兼執行長 Sean Kerins；我們的財務長 Raj Agarwal；我們的全球零件總裁 Rick Marano；以及我們的全球企業運算總裁 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 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 our most recent filings with the SEC. We undertake no obligation to update publicly or revise any of the forward-looking statements as a result of new information or future events.

在本次電話會議中，我們將做出前瞻性聲明，包括基於截至今天的預測和預期的有關我們的業務前景、策略、計劃和未來財務業績的聲明。由於許多風險和不確定性，包括我們最近向 SEC 提交的文件中描述的風險因素和其他因素，我們的實際結果可能會存在重大差異。我們不承擔因新資訊或未來事件而公開更新或修改任何前瞻性陳述的義務。

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.

提醒一下，我們將在今天的電話會議上討論的一些數據是非公認會計原則衡量標準，無意取代我們的公認會計原則結果。我們已將這些非公認會計準則衡量標準與本季度相關收益發布中最直接可比較的公認會計準則財務衡量標準進行了調整。

You can access our earnings release at investor.arrow.com along with a replay of this call. We've also posted a slide presentation to accompany our prepared remarks and encourage you to reference these slides during the webcast. Following our prepared remarks today, Sean and Raj will be available to take your questions.

您可以在 Investor.arrow.com 上存取我們的收益發布以及本次電話會議的重播。我們也發布了投影片簡報以配合我們準備好的評論，並鼓勵您在網路廣播期間參考這些投影片。在我們今天準備好的發言之後，肖恩和拉吉將回答您的問題。

I'll now hand the call over to our President and CEO, Sean Kerins.

現在我將把電話轉給我們的總裁兼執行長 Sean Kerins。

Thanks Brad and thank you all for joining us. Today, I'd like to discuss our third quarter results provide some commentary on the market environment overall and then close with some thoughts as to how we're lining up for the future. I'll then turn things over to Raj for more detail on our financials as well as our outlook for the fourth quarter.

感謝布拉德，感謝大家加入我們。今天，我想討論我們的第三季業績，對整體市場環境提供一些評論，然後以我們如何為未來做好準備的一些想法作為結束。然後我將把事情轉交給 Raj，以獲取有關我們財務狀況以及第四季度前景的更多詳細資訊。

For the third quarter, we delivered both sales and earnings per share that exceeded the midpoint of our guidance, generating total sales of $6.8 billion and non-GAAP earnings per share of $2.38, contributing to the sales results were sequential growth in our America's components business and solid year over year growth in global ECS.

第三季度，我們的銷售額和每股盈餘都超過了我們指引的中點，總銷售額為 68 億美元，非 GAAP 每股盈餘為 2.38 美元，這得益於我們美國零件業務的連續成長全球ECS 較去年同期穩健成長。

In our global components business, we were pleased to deliver sales in line with our expectations but did so through a different regional and customer mix than originally anticipated. We were also pleased to see better momentum in our ECS business highlighted by steady market dynamics in Europe and an improving trajectory in North America.

在我們的全球零件業務中，我們很高興實現了符合我們預期的銷售額，但透過與最初預期不同的區域和客戶組合實現了這一目標。我們也很高興看到我們的 ECS 業務呈現出更好的勢頭，歐洲穩定的市場動態和北美的改善軌跡凸顯了這一點。

In addition, we continue to make positive strides related to the management of our working capital and the optimization of our cost structure necessary initiatives in light of the current market environment. You'll hear more from Raj on both points shortly.

此外，根據當前的市場環境，我們在營運資金管理和成本結構優化方面繼續取得積極進展。很快您就會聽到 Raj 關於這兩點的更多資訊。

Turning further to our global components business, the market correction appears to be more prolonged than previously estimated, we believe both excess inventory levels and macro headwinds are contributing to its persistence. Having said that our leading indicators remained relatively stable in the quarter.

進一步轉向我們的全球零件業務，市場調整似乎比之前估計的時間更長，我們認為庫存水準過剩和宏觀不利因素都導致了其持續存在。話雖如此，我們的領先指標在本季保持相對穩定。

Our book to bill ratios are still at or even above Q2 levels on a global basis. They just not yet reached full parity overall. Our backlogs have further stabilized and cancellation activity remains within normal range and our forward bookings profile continues to trend positively. From a regional perspective and consistent with what we saw in Q2 market trends varied across regions and verticals. We think largely consistent with the later stages of any cycle.

我們的訂單出貨比在全球範圍內仍處於甚至高於第二季度的水平。他們只是還沒有達到整體上完全平等。我們的積壓訂單進一步穩定，取消活動保持在正常範圍內，我們的遠期預訂情況持續呈現正面趨勢。從區域角度來看，與我們在第二季度看到的情況一致，市場趨勢因地區和垂直領域而異。我們的想法與任何週期的後期階段基本一致。

In Asia, we saw mixed patterns across the region but stability overall, our IP&E business grew sequentially once again in the quarter, we saw modest growth with improving trends in China, especially in the automotive sector, that was alongside some softness in parts of the industrial market and in Asia. In the Americas, we grew sequentially and with better than normal seasonality based on relative strength across a handful of verticals led by aerospace and defense offsetting a decline across our industrial markets.

在亞洲，我們看到整個地區的模式參差不齊，但總體穩定，我們的IP&E 業務在本季度再次實現環比增長，隨著中國趨勢的改善，我們看到了適度的增長，特別是在汽車行業，同時部分地區也出現了一些疲軟。在美洲，我們實現了連續增長，並且季節性好於正常水平，這是基於以航空航天和國防為首的少數垂直行業的相對實力，抵消了整個工業市場的下滑。

And in EMEA, the sequential decline was broad based in nature, reflecting its later entry into correction territory. Our operating margins came under modest pressure in the quarter, this was due mainly to regional mix, specifically, more Asia and less EMEA on a relative basis and customer mix, as our overall sales volume skewed somewhat to the larger end of our customer base.

在歐洲、中東和非洲地區，環比下降本質上是廣泛的，反映出其後來進入調整區域。本季我們的營業利潤率受到適度壓力，這主要是由於區域組合，特別是相對而言，亞洲更多，歐洲、中東和非洲更少以及客戶組合，因為我們的整體銷量在一定程度上偏向於我們客戶群的較大端。

Recall that the mass market where pricing and margins tend to be more attractive has been a significant go to market priority for this business over time. As the market normalizes, we believe that these conditions are transitory in nature and not indicative of any structural changes to our business model.

回想一下，隨著時間的推移，定價和利潤往往更具吸引力的大眾市場一直是該業務進入市場的重要優先事項。隨著市場正常化，我們認為這些情況本質上是暫時的，並不表示我們的業務模式有任何結構性變化。

Our Q4 outlook reflects continuation of ongoing market trends, especially those relevant to the markets in which we choose to compete. As such, we think we're still bouncing along the bottom, given the different trends we're seeing across regions and verticals, we can expect to see some ebb and flow from one quarter to the next.

我們對第四季度的展望反映了當前市場趨勢的延續，特別是與我們選擇競爭的市場相關的趨勢。因此，我們認為我們仍在底部反彈，考慮到我們在不同地區和垂直領域看到的不同趨勢，我們預計從一個季度到下一個季度都會出現一些潮起潮落。

We expect our Asia Pacific business to perform closer to seasonal trends in the fourth quarter with sub-seasonal activity levels in the West driven by softness across the industrial and automotive market segments, based predominantly on lower sales volume, we do expect operating margins will decline.

我們預計我們的亞太業務第四季的表現將更接近季節性趨勢，西方的次季節活動水平受到工業和汽車細分市場疲軟的推動，主要是由於銷量下降，我們預計營業利潤率將會下降。

As has been the case throughout this piece of the cycle., the specific timing and shape of an eventual recovery remains difficult to predict.

正如整個週期的情況一樣，最終復甦的具體時間和形式仍然難以預測。

Turning to global ECS we delivered year over year revenue growth well in excess of our expectations, that was a function of both continued strength in EMEA along with improving execution in North America. Once again on a global basis, we saw healthy demand for infrastructure software related to hybrid cloud and AI related solutions. As a result, we delivered year over year gross profit dollar growth in the quarter and increasingly important proof point implied by our transition to the market for IT as a service.

就全球 ECS 而言，我們的營收年增遠超出了我們的預期，這是歐洲、中東和非洲地區持續強勁以及北美地區執行力不斷提高的結果。在全球範圍內，我們再次看到了與混合雲和人工智慧相關解決方案相關的基礎設施軟體的健康需求。因此，我們在本季度實現了毛利同比增長，並成為我們向 IT 即服務市場轉型所暗示的日益重要的證據。

We believe our steady pivot for the market for hybrid cloud solutions as well as the realignment of our North American business to better reflect the strategy we've successfully deployed in EMEA is leading us to better outcomes overall. These include a growing backlog, more recurring revenue streams, and a creative contribution margins.

我們相信，我們對混合雲解決方案市場的穩定轉向以及對北美業務的重新調整，以更好地反映我們在歐洲、中東和非洲地區成功部署的策略，正在引領我們取得更好的整體成果。其中包括不斷增加的積壓、更多的經常性收入來源以及創造性的貢獻利潤。

Our Q4 outlook reflects consistent performance in EMEA and continued progress in North America. As a result, we expect year over year operating income growth and margin expansion. In closing, while we continue to manage through the cyclical correction in our components business, we also remain focused on our strategic priorities. And global components, our supply chain management and design services offerings continue to grow through customer base expansion.

我們對第四季度的展望反映了歐洲、中東和非洲地區的持續表現以及北美地區的持續進步。因此，我們預計營業收入將年增，利潤率將擴大。最後，在我們繼續應對零件業務的周期性調整的同時，我們也仍然專注於我們的策略重點。在全球組件方面，我們的供應鏈管理和設計服務產品透過客戶群的擴張而不斷成長。

We've now established centers of excellence for automotive, robotics, and high power, all aimed at scaling our go to market model in a solution centric fashion. And we continue to make progress in the IP&E market, deploying a motion in Asia similar to what we've established in the West.

我們現在已經建立了汽車、機器人和高功率卓越中心，所有這些都旨在以解決方案為中心的方式擴展我們的市場模式。我們繼續在 IP&E 市場取得進展，在亞洲部署了一項類似於我們在西方建立的舉措。

In Global ECS, our aerosphere platform is becoming central to our go to market model, enabling the expansion of our customer base and growth in our recurring revenue streams and in both businesses, we're expanding our line card to position us for the future.

在Global ECS 中，我們的大氣層平台正在成為我們進入市場模式的核心，從而能夠擴大我們的客戶群並增加我們的經常性收入流，並且在這兩項業務中，我們正在擴展我們的產品線，為我們的未來做好準備。

Lastly, I'd like to recognize and thank all of our employees around the world for their hard work during the quarter and throughout the year, they represent us proudly in the market each and every day.

最後，我要感謝我們世界各地的所有員工在本季和全年的辛勤工作，他們每天都在市場上自豪地代表我們。

And with that, I'll turn things over to Raj.

這樣，我就把事情交給 Raj。

Thanks Sean. Consolidated sales for the third quarter were $6.8 billion above the midpoint of our guidance range and down 15% versus prior year. Global component sales were $4.9 billion down 2% versus prior quarter ahead of the midpoint of our expectations. Enterprise computing solutions sales were $1.9 billion or 7% higher versus prior year due to favorable product mix and above the high end of our outlook.

謝謝肖恩。第三季的綜合銷售額比我們指引的中點高出 68 億美元，比去年同期下降 15%。全球零件銷售額為 49 億美元，比上一季下降 2%，高於我們預期的中位數。由於有利的產品組合以及高於我們預期的上限，企業運算解決方案的銷售額比上年增長了 19 億美元，即 7%。

Moving to other financial metrics for the quarter. Third quarter, consolidated gross margin of 11.5% was down, approximately 80 basis points. Sequentially driven primarily by regional and customer mix impacts within our global components.

轉向本季的其他財務指標。第三季度，綜合毛利率為 11.5%，下降約 80 個基點。主要由我們全球組件內的區域和客戶組合影響力推動。

Business non-GAAP operating expenses declined $18 million sequentially to $568 million in the third quarter, recall that the second quarter also included a bad debt release of $20 million implying an even greater step down in expenses.

第三季度，非公認會計原則業務營運費用較上季下降 1,800 萬美元，至 5.68 億美元，第二季還包括 2,000 萬美元的壞帳釋放，這意味著費用下降幅度更大。

We have been actively managing our expense base since the market turned with initiatives implemented over the past five quarters, producing savings of approximately $200 million on an annualized basis.

自從市場轉向以來，我們一直在積極管理我們的費用基礎，並在過去五個季度實施了舉措，按年計算節省了約 2 億美元。

In line with our continuing focus on reducing costs, we are simplifying our operations and beginning in the fourth quarter are executing a plan to further reduce our annual operating expenses by approximately $90 million to $100 million by 2026. While achieving approximately one third of these savings next year. These efforts will focus on geographic realignment and consolidation of resources. We estimate total restructuring expenses related to these initiatives to be approximately $135 million.

根據我們對降低成本的持續關注，我們正在簡化運營，並從第四季度開始執行一項計劃，到 2026 年將我們的年度運營費用進一步減少約 9,000 萬至 1 億美元。明年將實現其中約三分之一的節省。這些努力將集中在地理調整和資源整合。我們估計與這些措施相關的重組費用總額約為 1.35 億美元。

The company also intends to exit certain underperforming, non-core business lines which we estimate will generate approximately $50 million in additional costs. Based on current market conditions and given expectations for a future recovery, we believe these initiatives are appropriate and comprehensive.

該公司還打算退出某些表現不佳的非核心業務線，我們估計這些業務線將產生約 5,000 萬美元的額外成本。基於當前的市場狀況以及對未來復甦的預期，我們認為這些措施是適當且全面的。

In the third quarter, we generated non-GAAP operating income of $215 million which represented 3.2% of sales. With global components operating margin at 3.9% and enterprise computing solutions at 4.1% both on a non-GAAP basis. Interest and other expense was $63 million in the third quarter as we benefited from lower average debt levels linked to our efforts to drive working capital efficiencies.

第三季度，我們的非 GAAP 營業收入為 2.15 億美元，佔銷售額的 3.2%。以非 GAAP 計算，全球組件營運利潤率為 3.9%，企業運算解決方案營運利潤率為 4.1%。第三季的利息和其他費用為 6,300 萬美元，因為我們受益於與我們努力提高營運資本效率相關的較低平均債務水準。

Our non-GAAP effective tax rate was 15.9% which benefited from successful resolution of recent audits. And finally, non-GAAP diluted EPS for the third quarter was $2.38 exceeding the high end of our guided range benefiting from favorable interest and tax expense.

我們的非 GAAP 有效稅率為 15.9%，這得益於最近審計的成功解決方案。最後，受益於有利的利息和稅收支出，第三季非 GAAP 攤薄後每股收益為 2.38 美元，超出了我們指引範圍的上限。

Moving over to working capital, networking capital grew modestly at the end of the third quarter by approximately $94 million compared to second quarter ending the quarter at $6.9 billion. Inventory at the end of the third quarter was $4.5 billion decreasing $125 million from Q2. Our cash conversion cycle finished the quarter at 80 days.

轉向營運資本，第三季末網路資本小幅成長約 9,400 萬美元，而第二季末的網路資本為 69 億美元。第三季末庫存為 45 億美元，比第二季減少 1.25 億美元。本季結束時，我們的現金轉換週期為 80 天。

Our cash flow from operations was $81 million in the third quarter or $804 million a year-to-date. This is the fifth consecutive quarter of positive cash flow generation. Net debt at the end of the third quarter was lower compared to Q2 at $3 billion. We repurchase $50 million of shares in the third quarter and our remaining repurchase authorization stands at approximately $375 million.

第三季我們的營運現金流為 8,100 萬美元，今年迄今為 8.04 億美元。這是連續第五個季度產生正現金流。第三季末的淨債務為 30 億美元，低於第二季。我們在第三季回購了 5,000 萬美元的股票，剩餘的回購授權約為 3.75 億美元。

Year-to-date, we have repurchased $200 million of our stock. In the short term, we are continuing to balance our capital priorities with managing our debt ratios.

今年迄今為止，我們已經回購了價值 2 億美元的股票。短期內，我們將繼續平衡我們的資本優先事項與管理債務比率。

Now, turning to Q4 guidance. We expect sales for the fourth quarter to be between $6.67 billion and $7.27 billion. We expect global component sales to be between $4.5 billion and $4.9 billion which at the midpoint is down approximately 5% from prior quarter.

現在，轉向第四季的指引。我們預計第四季銷售額將在 66.7 億美元至 72.7 億美元之間。我們預計全球零件銷售額將在 45 億美元至 49 億美元之間，中位數較上一季下降約 5%。

Enterprise computing solutions should benefit from typical fourth quarter seasonality. We expect sales to be between $2.17 billion and $2.37 billion which is up 3% at the midpoint year on year.

企業運算解決方案應受益於典型的第四季季節性。我們預計銷售額將在 21.7 億美元至 23.7 億美元之間，年比中位數成長 3%。

Consolidated non-GAAP operating margins are expected to benefit quarter on quarter from fourth quarter seasonality and ECS, more than offsetting an anticipated decline in global components operating margins resulting primarily from negative operating leverage due to lower sales volume.

預計綜合非公認會計準則營業利潤率將因第四季度季節性因素和 ECS 而逐季度受益，這足以抵消主要由於銷售下降導致的負營業槓桿導致的全球零部件營業利潤率的預期下降。

We're assuming a tax rate in the range of approximately 23% to 25% and interest expense of approximately $60 million to $65 million. And our non-GAPP router earnings per share is expected to be between $2.48 and $2.68.

我們假設稅率約為 23% 至 25%，利息支出約為 6,000 萬至 6,500 萬美元。我們的非 GAPP 路由器每股收益預計在 2.48 美元至 2.68 美元之間。

And finally, we estimate changes in foreign currencies to have an immaterial effect on our Q4 guide. The details of foreign currency impact can be found in our press release.

最後，我們估計外幣的變化對我們的第四季指南影響不大。外匯影響的詳細資訊可以在我們的新聞稿中找到。

With that Sean and I are now ready to take your questions. Operator, please open the line.

肖恩和我現在準備好回答你們的問題了。接線員，請開通線路。

(Operator Instructions)

（操作員說明）

Matt Sheerin, Stifel.

馬特謝林，史蒂菲爾。

Yes, thank you and good afternoon everyone. Just first question relative to your guidance on for components guiding down around 5% -- 4% sequentially, I think Sean, you said that you expect Asia to be seasonal in the Western markets to be down. Could you just clarify what that means? Should it mean that Asia should be sort of flat and Europe and North America down on high single digits. And I have a follow up question.

是的，謝謝大家，大家下午好。第一個問題是關於您對零件的指導，我想肖恩，您說您預計亞洲將在西方市場中出現季節性下降，預計將季減 5% - 4% 左右。您能澄清一下這代表什麼嗎？這是否意味著亞洲應該持平，而歐洲和北美則出現高個位數下降？我還有一個後續問題。

Sure, Matt. So I think the question is about the seasonality, right? So if you're looking for how that compares to Q3, we see modest step downs in the West and we see something that looks flattish in Asia. If that helps you out.

當然，馬特。所以我認為問題在於季節性，對嗎？因此，如果您想了解與第三季相比如何，我們會看到西方的經濟略有下降，而亞洲的情況則顯得持平。如果這對你有幫助的話。

Got it. And in terms of your book to bill, you said it's a little bit better, but below one, is it below one in all regions and basically Asia the best followed by the two other markets?

知道了。就您的帳單而言，您說它稍微好一點，但低於一，是否在所有地區都低於一，基本上亞洲是最好的，其次是其他兩個市場？

Yeah, you got. It's below one overall. It's still advancing just more slowly than we'd like. And Asia is leading the way.

是的，你得到了。總體低於一。它的進展仍然比我們希望的要慢。亞洲正處於領先地位。

Okay, great. And then on the gross margin, which is just, you said has been weak and I think that's the lowest number in a few years. You talked about mix and I talked about a large deals. With Europe expected to be down as you said, lagging the other markets by at least two to three quarters. When would you expect gross margin to be back to kind of 12%-plus because it sounds like you're guiding gross margin to be flattish give or take for next quarter.

好的，太好了。然後是毛利率，你說毛利率一直很弱，我認為這是幾年來的最低數字。你談到了混合，我談到了大宗交易。正如您所說，歐洲預計將出現下滑，落後於其他市場至少兩到三個季度。您預計毛利率什麼時候會恢復到 12% 以上，因為聽起來您正在指導下個季度的毛利率持平。

, Matt, I'd love to be able to say when that occurs. Obviously, when the market improves again, I think you'll see the mass market return. Remember that the mass market typically follows the larger OEMs into recovery. And right now it's a little bit more about the larger OEMs in our customer base than it is about the mass market when that happens, you won't see the impact from that piece of our gross margin hit, that we experienced in Q3. Tough to call.

，馬特，我很樂意在這種情況發生時說出來。顯然，當市場再次改善時，我認為你會看到大眾市場的回報。請記住，大眾市場通常會跟隨較大的原始設備製造商復甦。現在，我們的客戶群中較大的原始設備製造商的影響比大眾市場的影響更大，當這種情況發生時，你不會看到我們在第三季度經歷的毛利率下降的影響。很難打電話。

I think part of the challenge related to the recovery is that look, there's still excess margins or I should say excess inventories, throughout the industry. Not just that, distribution levels but at customer levels as well. And, if you look at excess inventory a long time, shorter lead times, that means we're not quite getting the visibility that we would need to, to lead us to be more certain about the timing of a broader recovery. We do believe it's coming but really tough to call it, beyond more than say 90 days at a time.

我認為與復甦相關的部分挑戰是，整個行業仍然存在超額利潤，或者我應該說庫存過剩。不僅如此，經銷層面也是如此，客戶層面也是如此。而且，如果你長期關注過剩的庫存和較短的交貨時間，這意味著我們還沒有完全獲得我們需要的可見性，從而使我們更加確定更廣泛的復甦的時間。我們確實相信它會到來，但很難說它會到來，一次超過 90 天。

Yeah. Fair enough. Okay. Thanks a lot, Sean.

是的。很公平。好的。非常感謝，肖恩。

William Stein, Truist Securities.

威廉斯坦，Truist 證券公司。

Great. Thank you for taking my questions. When you're discussing the results, I think perhaps even more so in the guidance. That was a bit below expectations. You cited customer mix and geo mix, I think the geo mix, we get that. But on the customer side, I'm hoping you can linger on that for a minute maybe. I'm not sure exactly how to ask it, but maybe you can tell us more, be a little bit more specific about and markets or what's driving that and sort of in particular can you tell us if there was any change of either policy or a change generally among any of your larger suppliers that could be influencing your performance and the outlook. Thank you.

偉大的。感謝您回答我的問題。當你討論結果時，我認為在指南中可能更是如此。這有點低於預期。你提到了客戶組合和地理組合，我認為地理組合，我們明白了。但在客戶方面，我希望您能在這個問題上停留片刻。我不確定具體如何提問，但也許您可以告訴我們更多信息，更具體地介紹市場或推動這一趨勢的因素，特別是您能告訴我們政策或政策是否有任何變化嗎？商中普遍存在的變化可能會影響您的績效和前景。謝謝。

Yeah, sure thing. Well, let's start there because there certainly wasn't any programmatic changes, that impacted us in Q3 or that we see, impacting us in a material way in Q4. So I wouldn't cite, any big policy shifts if you will.

是的，當然可以。好吧，讓我們從這裡開始，因為肯定沒有任何程序性變化在第三季度影響我們，或者我們看到，在第四季度對我們產生了實質影響。所以如果你願意的話，我不會引用任何重大的政策變化。

If you go back to what I tried to answer, with Matt's question, I think, remember the way the market typically exits a recovery, it tends to be Asia first and then the West follows, typically North America and then eventually Europe. And I think that's what we're seeing play out now.

如果你回到我試圖回答的問題，我想，請記住市場通常退出復甦的方式，它往往首先是亞洲，然後是西方，通常是北美，然後是歐洲。我認為這就是我們現在看到的情況。

And then by customer type and you're right, it does vary a little bit across verticals. But by customer type, we typically see recovery before we see it. We see it in the large end of the market before we see it in the mass market and that's playing out now. And so it's a little bit tough to predict exactly what our mix will look like, at the start of each quarter, we do a pretty good job of it.

然後，根據客戶類型，你是對的，不同垂直領域的情況確實略有不同。但根據客戶類型，我們通常會在看到復甦之前就看到復甦。在我們在大眾市場中看到它之前，我們先在高端市場中看到它，現在這種情況正在發生。因此，準確預測我們的組合會是什麼樣子有點困難，在每個季度初，我們都做得很好。

Last quarter, we think we saw a little more rotation to the larger end of our demand profile which impacted us on the gross margin line, we think we've got it read fairly accurately for Q4, which is why we talk about, the main headwind to operating margin being strictly about the downturn in volume versus other factors.

上個季度，我們認為我們看到需求概況的較大端發生了更多的輪換，這對我們的毛利率線產生了影響，我們認為我們已經相當準確地解讀了第四季度的情況，這就是我們談論主要因素的原因營業利潤率的不利因素嚴格來說是銷量下降與其他因素相比。

I'd say if you look at our traditional mix, we're very strong in the automotive sector, especially across a whole variety of industrial markets. And the industrial markets themselves tend to involve not just the big names that we'd all understand but lots of smaller companies too. And so we're not seeing all the small companies come back at the same rate we are the large ones, aerospace and defense, in the West has been more steady for us. But that tends to at times involve larger programmatic deals as well. So a little bit more color, we think we've got it read well for at least the fourth quarter.

我想說，如果你看看我們的傳統組合，我們在汽車領域非常強大，尤其是在各種工業市場。工業市場本身往往不僅涉及我們都了解的大公司，也涉及許多小公司。因此，我們並沒有看到所有小公司都以與大公司相同的速度回歸，航空航天和國防，在西方對我們來說更加穩定。但這有時也往往涉及更大的程序化交易。所以多一點色彩，我們認為至少在第四季我們的閱讀效果很好。

I appreciate that clarification. Maybe if I can just ask one more, it's just, I want to make sure I understand it. I think you answered it but let me just go at it a different way. Several years, maybe quite a number of years ago, one of the very big analog companies, sort of changed the way they deal with distribution and that has sort of continued to play out over the years, but there's another one, a competitor to them in that space. Where I think there's this idea circulating that, that company is sort of following suit and for example, not paying for design wins and just going for fulfillment only. Is that a dynamic that you're seeing or is that not happening in either the -- has that not happened recently or in the outlook?

我很欣賞這項澄清。也許我可以再問一個，只是，我想確保我理解它。我想你已經回答了，但讓我換個方式來回答。幾年前，也許是很多年前，一家非常大的模擬公司，在某種程度上改變了他們處理分銷的方式，並且這種方式多年來一直在持續發揮作用，但還有另一家公司，他們的競爭對手在那個空間。我認為有這樣一種想法流傳，該公司有點效仿，例如，不為設計勝利付費，而只是為了實現。這是您所看到的動態，還是在最近或展望中沒有發生這種情況？

Well, as you probably might guess, we never talk about our suppliers other than in very general terms. But I'm actually glad you asked the question because it does allow me to talk a little bit about how we see our role in the broader industry as we look to the future.

嗯，正如您可能猜到的那樣，我們從不談論我們的供應商，除非是非常籠統的術語。但我實際上很高興你問了這個問題，因為它確實讓我可以談談我們在展望未來時如何看待我們在更廣泛的行業中的角色。

But maybe first, just for a little bit of context, our supplier portfolio is fairly diverse. There's no -- not any one supplier accounts for more than 10% of our total revenue. And the fact is that over time suppliers do make program changes. It's been true in this business as long as I can remember, but we feel like by and large we're kind of too big at this point for any single change to alter our thinking as to the potential for growth and margin, that we see in this market, especially as we look longer term.

但也許首先，我們的供應商組合相當多樣化。沒有任何一家供應商的收入占我們總收入的 10% 以上。事實上，隨著時間的推移，供應商確實會改變計劃。從我記事起，這在這個行業就是如此，但我們覺得總的來說，我們目前的規模太大了，任何單一的變化都無法改變我們對成長和利潤潛力的看法，我們看到在這個市場上，尤其是當我們放眼長遠時。

And then I would also say look, we're not running away from opportunities related to things like channel consolidation. We've got proven supply chain assets and processes across the globe. They're far reaching, they're scalable, they're resilient, they're compliant. And frankly, we're delighted to exercise them even further on behalf of our suppliers and large customers around the world.

然後我還要說，看，我們並沒有逃避與通路整合等相關的機會。我們在全球擁有經過驗證的供應鏈資產和流程。它們影響深遠、可擴展、有彈性、合規性。坦白說，我們很高興代表我們的供應商和世界各地的大客戶進一步運用它們。

And I think over time we're certainly well positioned to benefit from the economies of scale that would come with doing that. So I took the high road to your question because again, we don't talk about specific suppliers, but we don't see anything altering our view of the potential, in the landscape and in the market over time.

我認為隨著時間的推移，我們肯定能夠從這樣做所帶來的規模經濟中受益。所以我對你的問題採取了積極的態度，因為我們不會談論特定的供應商，但隨著時間的推移，我們認為沒有任何事情會改變我們對潛力、前景和市場的看法。

Appreciate that. Thank you.

很欣賞這一點。謝謝。

Thanks Will.

謝謝威爾。

Joe Quatrochi, Wells Fargo.

喬·夸特羅奇，富國銀行。

Yeah. Thanks for taking the questions. I kind of wanted to ask about the Asia demand that you're seeing. I think, your competitor that reported yesterday saw quite a bit stronger kind of recovery in Asia. So I just kind of wanted to understand, what you're seeing from an end market there and then maybe what's kind of different.

是的。感謝您提出問題。我想問一下您所看到的亞洲需求。我認為，昨天報道的你們的競爭對手在亞洲看到了相當強勁的復甦。所以我只是想了解，你從那裡的終端市場看到了什麼，然後也許有什麼不同。

Yeah, sure. Fair enough. If you look at Q3 or as we look at it, we think our Asian business approached typical seasonality. And that included some modest growth in China. We saw that as an improving sign and a good part of that came from really healthy growth in automotive, specifically the EV market in China.

是的，當然。很公平。如果你看看第三季或我們的看法，我們認為我們的亞洲業務接近典型的季節性。其中包括中國的一些溫和成長。我們認為這是一個改善的跡象，其中很大一部分來自汽車行業的真正健康成長，特別是中國的電動車市場。

And our Q4 outlook suggest something in line with normal seasonality, as I said earlier. So I think in general things are moving in a better direction than they were in that market this time last year. I guess I would say without speaking to any of our competition, we play in a number of verticals in this region. But our go to market priorities have always largely centered on the broader industrial mass market, especially in Mainland China, where frankly things have been slower to recover. And so we've got our eye on the ball relative, to our strategy and where we play -- and that's what I try to keep the team focused on.

正如我之前所說，我們第四季度的前景表明與正常季節性相符。因此，我認為總體而言，市場正朝著比去年這個時候更好的方向發展。我想我會說，在不與我們的任何競爭對手交談的情況下，我們在這個地區的多個垂直領域開展業務。但我們進入市場的重點始終主要集中在更廣泛的工業大眾市場，尤其是在中國大陸，坦白說，那裡的情況恢復較慢。因此，我們的注意力集中在與球相關的、我們的策略和比賽地點上——這就是我努力讓球隊專注的事情。

That's really helpful. And then maybe as a follow up for Raj. Any help on just how to think about modeling the OpEx given the cost reduction plans that you outlined today and then just to be clear, the $90 million to 100 million, is that a net savings or should we think about some of that being reinvested and then is it mostly in components or is it spread across the entire organization?

這真的很有幫助。然後也許作為拉吉的後續行動。考慮到您今天概述的成本削減計劃，關於如何考慮對營運支出進行建模的任何幫助，然後需要明確的是，9000 萬到 1 億美元是淨節省，還是我們應該考慮其中的一些進行再投資和那麼它主要是在元件中還是分佈在整個組織中？

Yeah. Joe, let me just give you some background. I mean, as I mentioned in my comments we've done a pretty good job of taking OpEx out the last few quarters. You can see that the run rate of our OpEx is down materially from where it was just a year ago. And with the new actions today, we do expect to get an incremental $90 million to $100 million and I would say that's net.

是的。喬，讓我給你一些背景。我的意思是，正如我在評論中提到的，過去幾季我們在減少營運支出方面做得非常好。您可以看到，我們的營運支出的運行率比一年前大幅下降。透過今天的新行動，我們確實預計將獲得 9,000 萬至 1 億美元的增量，我想說這是淨收益。

We're always looking for investment opportunities that may come along. But we do see that as a real savings to us. It is going to be across the organization. So we are really consolidating certain functions and operations and focusing on more of the cost efficient regions around the world and really going to more of a shared services, delivery model. And so I think you'll see that across the board and I think it's real structural savings in the business because we are consolidating and putting certain functions and other things in other locations around the world.

我們一直在尋找可能出現的投資機會。但我們確實認為這對我們來說是真正的節省。它將遍及整個組織。因此，我們確實正在整合某些功能和運營，並專注於全球更多具有成本效益的地區，並真正轉向更多的共享服務和交付模式。因此，我認為您會全面看到這一點，我認為這是業務中真正的結構性節省，因為我們正在整合某些功能和其他東西並將其放置在世界各地的其他地方。

So we do expect to see that obviously, you going to take into account the trajectory of the business and how that moves along next year. But in isolation, we'll certainly see that.

因此，我們確實希望看到，顯然，您將考慮業務的發展軌跡以及明年的發展。但孤立地看，我們肯定會看到這一點。

And Joe, I would just add that, these are no regrets actions that we already chosen to undertake. We think they make a lot of sense for the company over the long haul regardless of our near term outlook. And in fact, this kind of structural stuff actually creates reinvestment capacity and reinvestment potential for us. And we're looking to put some of that to work right away.

喬，我想補充一點，這些都是我們已經選擇採取的無悔行動。我們認為，無論我們的近期前景如何，從長遠來看，它們對公司來說都很有意義。事實上，這種結構性的東西實際上為我們創造了再投資能力和再投資潛力。我們希望立即將其中一些投入使用。

Perfect. Thank you.

完美的。謝謝。

Thanks, Joe.

謝謝，喬。

Ruplu Bhattacharya, Bank of America.

魯普盧‧巴塔查亞 (Ruplu Bhattacharya)，美國銀行。

Hi, thanks for taking my questions. Sean on the ECS side, can you talk about what product lines were strong and which ones were weak? And as we look into the next quarter, are you expecting the same seasonal uptick in operating margin that you get in a typical year going from 3Q to 4Q?

您好，感謝您回答我的問題。ECS方面的Sean，您能談談哪些產品線是強的，哪些是弱的？當我們展望下一個季度時，您是否預計從第三季到第四季營業利潤率會出現與典型年份相同的季節性上升？

Sure, Ruplu and welcome. Well, I'll start with your second question first. The answer is yes, for sure. We'll see the normal seasonal uptick that we see in that business. And we're grateful for it given the consolidated portfolio. We'll also see, margin uplift, year on year.

當然，魯普魯，歡迎。好吧，我先從你的第二個問題開始。答案是肯定的。我們將看到該業務的正常季節性成長。考慮到合併後的產品組合，我們對此表示感謝。我們也將看到利潤率逐年上升。

And part of that is coming to your first question because if you look at the, the mix shift that we've been driving over time, consistent with our strategy, we're getting, I think better aligned to the pieces of the market where we're seeing really good growth. And specifically we talk in terms of hybrid cloud and infrastructure software. And when we talk about infrastructure software, you can think virtualization, you can think about data protection and cyber security, you can think about business and data intelligence. Certainly that also leads to the role we're playing with AI in the indirect channel.

其中一部分是你的第一個問題，因為如果你看看我們隨著時間的推移一直在推動的混合轉變，與我們的策略相一致，我認為我們正在更好地適應市場的各個部分我們看到了非常好的成長。具體來說，我們談論的是混合雲端和基礎設施軟體。當我們談論基礎設施軟體時，您可以考慮虛擬化，您可以考慮資料保護和網路安全，您可以考慮業務和資料智慧。當然，這也導致了我們在間接通路中發揮人工智慧的作用。

Many of those offerings have the added feature of being potentially recurring in nature. Therefore a creative force on the contribution line, but more importantly, they're growing. And while it may not be about billings as they do, which is why we talk a little bit about GP dollar growth, we think it bodes well for our future.

其中許多產品具有本質上可能重複出現的附加功能。因此，貢獻線上的創造力，但更重要的是，他們正在成長。雖然這可能不像他們那樣與賬單有關，這就是為什麼我們稍微談論一下 GP 美元增長，但我們認為這對我們的未來來說是個好兆頭。

Okay. Thank thanks for the details there. Sean, can I ask a question on the component side? I thought earlier this year, the thought was that the inventory correction would be done by the end of December and now it sounds like it's still extending out. So any sense for like which product lines or which components are still in excess? And where does that inventory sit? Is it sitting at distribution or is it at end customers.

好的。謝謝你那裡的詳細資料。Sean，我可以問一個關於組件方面的問題嗎？我今年稍早認為，庫存調整將在 12 月底完成，現在聽起來似乎仍在延長。那麼，哪些產品線或哪些零件仍然過剩，有什麼意義嗎？這些庫存在哪裡？是在分銷處還是在最終客戶處。

And just related to this, I think if I heard correctly that, , as part of the restructuring, you're also exiting some product lines or line cards. Do you think that the recovery is going to be less strong than what you had anticipated? Why, exit these lines is there? Are you sure that they won't come back in terms of demand? So just the rationale for doing this right now?

與此相關的是，我想如果我沒聽錯的話，作為重組的一部分，你們也會退出一些產品線或產品線卡。您認為復甦的力道是否會低於您的預期？為什麼，退出這些行是有的？你確定他們不會在需求方面回來嗎？那麼現在這樣做的理由是什麼呢？

Yeah, sure. Well, I'll start there because what we're exiting is, we would call it non-core and very immaterial from a revenue perspective. It would really have no bearing on our outlook for Q4 or much less next year. So don't read too much into that. As for the broader recovery, look, as I said earlier, I wish I knew exactly how to call it. You're right. The excess inventory challenge ultimately doesn't go away until the demand environment improves enough for it to fully resolve itself.

是的，當然。好吧，我將從這裡開始，因為我們正在退出的是，我們稱之為非核心，從收入的角度來看非常無關緊要。這實際上對我們第四季的前景沒有影響，更不用說明年了。所以不要對此過度解讀。至於更廣泛的復甦，正如我之前所說，我希望我確切地知道如何稱呼它。你說得對。庫存過剩的挑戰最終不會消失，除非需求環境改善到足以完全解決這個問題。

We are still sitting on inventory that, we still like, is still relevant based on all the verticals and use cases we serve, it's just taking longer to sell. But until the demand upticks more sharply, the excess inventory tends to be a little bit of a headwind. And as part of your question, it's - I think it's broad based, right? It's at the supplier level in some cases is certainly in the channel at the distribution level. And it's also at the customer level as well, both large OEM and certainly in the mass market.

我們仍然持有庫存，我們仍然喜歡這些庫存，根據我們服務的所有垂直行業和用例，這些庫存仍然具有相關性，只是需要更長的時間來銷售。但在需求大幅上升之前，庫存過剩往往會帶來一些阻力。作為你問題的一部分，我認為這是基礎廣泛的，對吧？在某些情況下，它是在供應商級別，當然也是在分銷級別的管道中。客戶層面也是如此，包括大型 OEM，當然還有大眾市場。

So it's gotten better. You're right about that. We thought the pace of recovery would be a little bit healthier from where we sat earlier in the year. Things are taking longer to play out. It will resolve itself, but we're going to need a better demand environment before we see that.

所以情況變得更好了。你是對的。我們認為復甦的步伐會比今年早些時候的情況更加健康一些。事情需要更長的時間才能結束。它會自行解決，但在我們看到這一點之前，我們需要一個更好的需求環境。

Got it. If I can just sneak one more in. As part of a previous question, you said that even though you're exiting some lines, you have areas of investment and you're going to quickly get into that. So can you talk about like what areas of investment you're going to focus on to that? Arrow is stronger as the recovery happens coming out of this downturn, you're going to be better positioned. So any -- if you can, you give us any details on what areas of focus you have in terms of investment?

知道了。如果我能再偷偷溜進去就好了。作為上一個問題的一部分，您說過，即使您要退出某些產品線，但您仍然有投資領域，並且您很快就會進入其中。那麼您能談談您將重點投資哪些領域嗎？隨著經濟從低迷中復甦，Arrow 會變得更強，您將處於更好的位置。那麼，如果可以的話，您可以向我們詳細介紹您在投資方面的重點領域嗎？

Well, I can talk broadly in terms of our strategic growth priorities. In our components business, we're pretty clear eyed about the long term potential we see in the mass market. That's always served us well, we think that's a great spot for demand creation. So we're going to continue to look at how we increase capacity for that piece of our strategy. We will continue to look to invest in our value added offerings related to supply chain management and design service.

嗯，我可以廣泛地談論我們的策略性成長重點。在我們的零件業務中，我們非常清楚大眾市場的長期潛力。這一直對我們很有幫助，我們認為這是創造需求的好地方。因此，我們將繼續研究如何提高該策略的容量。我們將繼續尋求投資與供應鏈管理和設計服務相關的加值產品。

And we're making slow but steady progress as it pertains to the market for IP&E which is where specialization is so important. So that we distinguish our motion in that segment of the market versus our motion for semiconductor.

我們正在緩慢但穩定地取得進展，因為它涉及 IP&E 市場，而專業化在該市場中非常重要。這樣我們就可以區分出我們在該市場領域的動向與我們在半導體領域的動向。

So those priorities are really clear for us and we've had to navigate a challenging market environment. But as we continue to make progress with structural cost, we know we can create investment capacity for those priorities at greater rates. I would say in the world of global ECS, it's all about the market for hybrid cloud infrastructure software. We like to talk about all things IT as a service, we like the outcomes that, that piece of the market leads us to.

因此，這些優先事項對我們來說非常明確，我們必須應對充滿挑戰的市場環境。但隨著我們在結構性成本方面繼續取得進展，我們知道我們可以以更高的速度為這些優先事項創造投資能力。我想說，在全球 ECS 領域，一切都與混合雲基礎設施軟體市場有關。我們喜歡談論 IT 即服務的所有事物，我們喜歡這塊市場引導我們所取得的成果。

That doesn't involve just selling capacity. It also involves investment in our digital experience aerosphere. And we continue to invest in that at a steady rate as well. And I think we're starting to see better outcomes as a result.

這不僅涉及銷售能力。它還涉及對我們的數位體驗航空圈的投資。我們也繼續以穩定的速度對此進行投資。我認為我們開始看到更好的結果。

Okay. Thank you for all the details. Appreciate it.

好的。感謝您提供所有詳細資訊。欣賞它。

Melissa Fairbanks, Raymond James.

梅麗莎·費爾班克斯，雷蒙德·詹姆斯。

Hi guys. Thanks so much for taking my question. I had just a quick follow up probably beating a dead horse at this point, but trying to get some more visibility into some of the non-core business that you plan to exit. I assume that that is something that happens kind of on a continual basis.

嗨，大家好。非常感謝您提出我的問題。我只是進行了快速跟進，可能在這一點上已經死馬了，但試圖對你計劃退出的一些非核心業務有更多的了解。我認為這種情況會持續發生。

Wondering if you can give us some visibility into why this big chunk all at once. Is it limited to either certain geographies or certain products or what was kind of the catalyst behind a large scale exit? Well, not large scale, I know it's not immaterial to revenue but just a little bit more color.

想知道您是否可以讓我們了解為什麼會同時出現這麼大的一塊。它是否僅限於某些地區或某些產品，或大規模退出背後的催化劑是什麼？好吧，規模不大，我知道這對收入來說並不重要，只是多了一點色彩。

Yeah, sure, maybe just a couple more words, Melissa and then I'll let Raj talk a little bit about the financial aspects of it. But we're talking about a very isolated line of business and a remote geography, that again is core to our global components business overall not material from a revenue perspective. And the time is right in this environment to just -- as you say, we're always looking at, being smart about the portfolio. And this just happened to be the right time for that decision.

是的，當然，也許再多說幾句話，梅麗莎，然後我會讓拉傑談談它的財務方面。但我們談論的是一個非常孤立的業務線和偏遠的地理位置，這又是我們全球零件業務的核心，整體而言從收入角度來看並不重要。在這種環境下，現在正是——正如你所說，我們一直在關注、明智地對待投資組合。而這恰好就是做出這個決定的正確時機。

Yeah, Melissa and just to add about the charge that we said today for $50 million we expect most of that will be in the fourth quarter as of right now. And it is mostly a non-cash charge because the business that we're closing down has assets associated with it and it'll be an asset impairment and some inventory reserves as well. So that's why you see the bigger number, but it's mostly non cash at this stage.

是的，梅麗莎，補充我們今天所說的 5000 萬美元費用，我們預計其中大部分將在第四季度支付。這主要是非現金費用，因為我們要關閉的業務有與之相關的資產，這將是資產減損和一些庫存儲備。這就是為什麼你會看到更大的數字，但現階段主要是非現金。

Okay, perfect. That's really helpful. Then as my follow up, I was wondering about an ECS, how should we think about seasonality in the business over the long term? So moving more toward cloud based sales, IT as a service, does that change the complexion of seasonality or does it get smoothed out over time with more of the recurring revenue?

好的，完美。這真的很有幫助。然後，作為我的後續行動，我想知道關於 ECS，從長遠來看，我們應該如何考慮業務的季節性？那麼，更多地轉向基於雲端的銷售、IT 即服務，這是否會改變季節性的複雜性，或者隨著時間的推移，它會隨著更多的經常性收入而得到平滑嗎？

I think we're learning more about this as the recurring revenue piece of our mix continues to grow. It's now approaching something, on the order of a third of our volume. So we'll see if that changes seasonality as this plays out further because it's still growing at really nice rates. I think in general, Melissa, the IT spending cycle for most CIOs across the course of a year, tends to be fairly similar, over all these years and it may not ultimately change much.

我認為，隨著我們組合中經常性收入的不斷增長，我們對此有了更多的了解。現在已經接近我們體積的三分之一了。因此，我們將看看隨著這種情況的進一步發展，這是否會改變季節性，因為它仍在以非常好的速度增長。Melissa，我認為總的來說，大多數 CIO 一年內的 IT 支出週期往往相當相似，而且這些年來最終可能不會發生太大變化。

But I do think we're going to benefit from the recurring piece of our progress because that is generating larger and larger backlogs as that piece of our business continues to grow. So we might see a little more smoothing over time, but I think that's going to be slower to play out.

但我確實認為我們將從我們不斷取得的進展中受益，因為隨著我們業務的不斷增長，這會產生越來越大的積壓訂單。因此，隨著時間的推移，我們可能會看到更多的平滑，但我認為這會更慢。

Okay, perfect. Thanks very much. That's very helpful. That's all for me. Thanks.

好的，完美。非常感謝。這非常有幫助。這就是我的全部。謝謝。

Thanks, Melissa.

謝謝，梅麗莎。

Toshiya Hari, Goldman Sachs. .

Toshiya Hari，高盛。。

Hi. Thank you so much for taking the question. I had one for Sean and then one for Raj as well. Sean, a question on the pricing environment. I think most of your suppliers so far this quarter have said pricing remains pretty stable in the marketplace. There is a concern on the part of investors that because pricing was so inflationary during the pandemic that could reverse as this oversupply situation kind of persists. What are you seeing in the market today and any concerns going into 2025?

你好。非常感謝您提出這個問題。我為肖恩（Sean）準備了一份，然後也為拉吉（Raj）準備了一份。肖恩，關於定價環境的問題。我認為本季到目前為止，大多數供應商都表示市場價格仍然相當穩定。投資人擔心，由於疫情期間價格通膨過高，隨著供應過剩的情況持續存在，價格可能會出現逆轉。您對當今市場有何看法以及 2025 年有哪些擔憂？

So I think I can make this pretty straightforward for you. Well, first we haven't seen many if any of our suppliers actually reduce prices formally. So that that hasn't -- that certainly hasn't leaked into the channel yet. We happen to believe there's a lot of reason that it won't. The second thing I would say is look I would agree that if you look at our traditional mass market customer base, the pricing environment and therefore transactional margins were relatively stable in Q3, we accept the same where we expect them to be relatively stable in Q4. Not necessarily assuming that that would change much in 2025.

所以我想我可以讓你變得非常簡單。嗯，首先，我們還沒有看到很多供應商真正正式降價。所以這還沒有——當然還沒有洩漏到渠道中。我們碰巧相信有很多理由證明它不會。我要說的第二件事是，我同意，如果你看看我們傳統的大眾市場客戶群、定價環境以及因此交易利潤在第三季度相對穩定，我們也接受同樣的觀點，我們預計它們在第第四季相對穩定。不一定假設到 2025 年這種情況會發生很大變化。

At the same time, I would say, and as we mentioned is our overall mix did skew somewhat towards the larger end of our customer base. That is where pricing tends to be more heavily negotiated. That could be a factor in the near term. But as the mass market returns, you'll see that piece of the gross margin dynamic normalized for us, at least that's how we're thinking about next year and beyond.

同時，我想說，正如我們所提到的，我們的整體組合確實有些偏向我們的客戶群的較大端。這就是定價往往需要更多協商的地方。這可能是近期的因素。但隨著大眾市場的回歸，你會看到我們的毛利率動態已經正常化，至少這是我們對明年及以後的看法。

Yeah, that's really helpful. Thank you. And then my follow up for Raj. Curious how you're thinking about free cash flow going forward. You guys have done a really good job in bringing down inventory over the past year or so. How are you thinking about working capital needs as you hopefully go into an upturn in '25 and more importantly, if you can speak to your capital allocation priorities, especially given where your stock sits today. That would be really helpful. Thank you.

是的，這真的很有幫助。謝謝。然後是我對 Raj 的跟進。很好奇您如何看待未來的自由現金流。在過去一年左右的時間裡，你們在降低庫存方面做得非常好。當你希望在 25 年進入經濟好轉時，你如何看待營運資本需求，更重要的是，如果你能談談你的資本配置優先事項，特別是考慮到你的股票今天的位置。這真的很有幫助。謝謝。

Yeah. Hey Toshiya, I would say the business model hasn't changed. So typically in times of decline in the business, we're going to generate cash. And over the last 12 months, we've generated about $1.1 billion of operating cash flow. And in times of growth, we're going to want to make sure that we're well positioned to have the working capital that's needed to grow the business. And so we'll use up more cash generally, we generate cash on an ongoing basis and it really is the working capital aspect of the business that varies from period to period if you will.

是的。嘿，Toshiya，我想說的是商業模式沒有改變。因此，通常在業務下滑的時期，我們會產生現金。在過去 12 個月中，我們產生了約 11 億美元的營運現金流。在成長時期，我們需要確保我們處於有利位置，並擁有發展業務所需的營運資金。因此，我們通常會消耗更多的現金，我們會持續產生現金，如果你願意的話，這實際上是企業的營運資金方面隨時期的變化。

I'd say that from a capital allocation standpoint, nothing has changed from our perspective. We've historically, always focused on investing organically in the business and whether it's capital, CapEx or working capital. We've done some small M&A. We announced a small one also earlier this week in the engineering space. And so that's been a small use of cash. And then we certainly have been very focused on buying back stock over the years.

我想說，從資本配置的角度來看，我們的觀點沒有改變。從歷史上看，我們始終專注於對業務的有機投資，無論是資本、資本支出或營運資本。我們進行了一些小型併購。本週早些時候，我們還在工程領域宣布了一個小型專案。所以這只是現金的一小部分使用。多年來我們當然非常注重回購股票。

Last year in 2023 we bought back about $750 million of cash. And this year, we've been more focused on debt pay down just given the trajectory of the business. But at the right time, we'll get back into that in the same way that we've done historically. So capital location priorities have not changed.

去年 2023 年，我們回購了約 7.5 億美元現金。今年，鑑於業務發展軌跡，我們更加關注債務償還。但在適當的時候，我們會像歷史上所做的那樣回到這個問題。因此，首都選址的優先事項並沒有改變。

Got it. Thank you.

知道了。謝謝。

And that concludes our question and answer session. I will now turn the conference back over to Mr. Brad Windbigler for closing remarks.

我們的問答環節到此結束。現在我將把會議轉回布拉德·溫比格勒先生致閉幕詞。

Thanks Abby. And thank you all for joining today's call. We look forward to meeting you at upcoming investor events. Have a good day.

謝謝艾比。感謝大家參加今天的電話會議。我們期待在即將舉行的投資者活動中與您見面。祝你有美好的一天。

This concludes today's call. We thank you for your participation. You may now disconnect.

今天的電話會議到此結束。我們感謝您的參與。您現在可以斷開連線。