Sean Kerins : Sure, Ruplu. Maybe I’ll take the answers to your questions in a little bit of a different order. But I would first say that, look, we don’t think anything differently now about along these things typically take to play out than we did 90 days ago or so. I would just kind of go back to what I said with the first set of questions and I think this is playing out more or less as we would have seen historically. And again, the macro environment could obviously speed things up or slow things down. It’s a little too tricky to call that. But with respect to inventory, Raj touched on it, but I kind of want to reinforce that, yes, our inventories came up in Q3, but that was very much the result of us leaning into an accretive supply chain services opportunity a decision that was very consistent with our — the value-add piece of our strategy is something for which we enjoy a fee for the value add and the services provided.
It’s not anything that we do in pursuit of fulfillment revenue and we just expect inventories will again decline in Q4. I’m sorry, they would have declined in Q3. They will decline in Q4 and we will again generate cash. So, I think we’re getting our arms around what’s necessary to manage through the working capital and specifically the inventory piece of the question all the while trying to be very mindful of our evolving customer needs and making sure that they get what they need when they get it, given their production pipelines. I think remind me of the third part of your question, sorry, Ruplu. Yes, sure. Yes. So, backlog is still — it’s certainly come down from the all-time highs but it still sits at multiples of where we were pre-pandemic.
Our team is doing a good job working with our customers and our suppliers to reschedule to their production requirements as they change. Again, I would say it’s more about reschedule activity than it is cancellation, and we think we’ve got pretty good line of sight to the backlog we still have to go serve in the next couple of quarters.
Ruplu Bhattacharya: Okay. there, Sean. Maybe I’ll ask Raj, one question. The fourth quarter is typically the strongest quarter for ECS margins. Given the macro environment we’re in, has your expectation for that relative strength of margin in the fourth quarter, has that changed since 90 days ago? And given your expectations for that, has — have your expectations for free cash flow changed? And what are your thoughts on capital allocation?
Raj Agrawal: Yes. On the first part of your question, our expectations have not changed for the ECS business. We still expect a typical fourth quarter for the ECS business, both for the billings and top line as well as the margins. So, no real changes there. And then from a free cash flow standpoint, we sort of walked through all the various pieces, but we expect to generate cash again in the fourth quarter. Our inventory levels will be down again in the fourth quarter. We generated now year-to-date $420 million of cash, Ruplu. So, I think we’ll continue on that. So, we expect a good amount of cash generation in the fourth quarter, and it’s very much in line with our expectations given the point in the cycle that we’re at.
Ruplu Bhattacharya: Got it. And capital allocation, any changes to your thoughts there?
Raj Agrawal: No. I mean our capital priorities stay the same. If I just reiterate those, we will keep investing in the business with to drive organic growth and expansion. So, whether it’s working capital or CapEx, we also have always evaluate M&A opportunities, although we’ve not done anything material in a few years, and we’ve used our excess cash to return back to shareholders through the form of buyback. And then we wrap that all around with managing to an investment-grade credit rating, Ruplu. We’re in that whole perspective hasn’t changed. So, we’re going to make sure we take into account all of those factors as we look at capital return.
Operator: The next question comes from the line of Toshiya Hari with Goldman Sachs. Your line is open.
Toshiya Hari : Thank you. My first question is on the pricing environment. You guys noted that pricing remains relatively stable, which is consistent with what we’re hearing from your partners, your suppliers as well. But curious if you’re seeing any differences across different geos, different end market, different device types. And more importantly, given all the capacity that seems to be going into the ground, whether it be TI, whether it be some of the newer suppliers over in China, are you concerned at all that ’24 pricing could potentially deteriorate? Thank you.
Sean Kerins : Sure thing. So yes, you’re right. We do see the pricing environment as fairly stable. I would say that’s probably a little bit more so true in the West. We did see a little bit of pricing concession activity in Asia in the quarter, which helped us move product, but we’re pretty diligent about that. our expectations are in Q4, less demand were to drop precipitously. Transactional margins will again remain fairly stable as well. I think we talked about in prior quarters that if you think about all the new capital investment as well as the elevated costs for things like raw materials and packaging. I think from a supplier perspective, that’s likely to help keep some upward pressure on pricing for some period of time. So even if overall inflation is slowing, I think input costs are still elevated at this point, we’re not foreseeing big changes to that as we look to the new year, but it’s a little too early for us to call well beyond Q4.
Toshiya Hari : Got it. That’s super helpful. And then as my follow-up, one on the margin-accretive initiatives, you talked about demand creation, IP&E, and Supply Chain services. As a level set can you describe how meaningful those three are collectively as a percentage of your business today and how does that compare with a couple of years ago? And more importantly, how do you see this sort of group of businesses growing into 2024? Thank you, so much.
Sean Kerins : So, if you look back over time, what I can say without breaking out the pieces and parts is that collectively, they are a little more material to our overall mix than they were a couple of years ago when we were in the midst of the shortage market and the pandemic and certainly more material in terms of mix, if you look back, say, three years or four years. We’re not quite ready to break out those pieces and parts, but we do continue to point as much investment at them as possible. We see good potential in all three spaces, be it more demand creation in the mass market. There’s tens of thousands of mass market customers for us to still go after. I think from an IP&E perspective, I think in our 10-K, we talked about that as maybe 13% of our total sales in GC.
