Toshiya Hari: The first one is on long-term margins. And Ken, I think this predates you as a CFO. But back in June ’22 at the Analyst or Investor Day, you guys threw out a medium-term operating margin target of above 5%. And I realize we’re at the close to the trough of the cycle. But Farnell, I think at the time, operating margins were in the mid-teens. You’re currently at 4% or 5%. I think EC has held in really well. But do you think the above 5% cross cycle or medium-term target is still intact and you’re comfortable with that? Or have there been sort of fundamental permanent changes that would kind of swing that view?
Ken Jacobson: Yes. Thanks, Toshiya. I mean I’m generally familiar with, obviously, those targets to put out. And I would say we are not coming off of those targets. We see opportunity. Now clearly, we’re a little bit backwards, right? So we’ve got to get back to where we were. But again, the EC business holding up in the third quarter. You mentioned the trough. I’ve just knocked on wood there. But let’s — we see opportunity, and we see that some of the markets we’re in have growth, we do see right now, Phil made some commentary that pricing in general is holding up pretty well. We are still focused on gross margin. So even if there is pressures on some level of pricing, what we’re focused on those higher margin opportunities.
We use supply chain as a service as higher margin. Phil talked about demand creation, IP&E, some of our embedded solutions products. So those are all higher-margin type opportunities relative to kind of the baseline margin we have. And then Farnell, obviously, getting that back is key, and that’s going to take longer than we would have liked or expected because of where — how far down has come, but we still see those opportunities medium term. And we think the overall health of our business and the overall opportunities we’re seeing when we talk to our supplier partners, I mean I think we’re definitely excited for the future, even though it’s going to be some choppy waters here for the next couple of quarters.
Toshiya Hari: Okay. That’s helpful. And then as my follow-up on free cash flow generation going forward. You guys spoke to a declining inventory or managing that better going forward. You also noted that CapEx should normalize lower, I forget at what point, but you talked about that. So it feels like you’ve got pretty good tailwinds from a free cash flow perspective, middle part of the year, back half of the year. A, is that the right way to think about sort of the trajectory of free cash flow; and b, if there’s any quantitative guidance you can provide on that, that would be super helpful for perhaps calendar ’24.
Ken Jacobson: Yes, I think that’s right. I mean I wouldn’t get into calendar ’24, but what we did say for this next quarter for the March quarter was cash flow in excess of what we used in the first half of the fiscal year and that the CapEx levels are normalized, so we would expect positive free cash flow in the third quarter. And to answer your question, as the inventory goes down, right, then the cash flow accelerates. So we see line of sight to that in Q3 and Q4. We’re not going to give quantitative numbers, but we see lots of opportunity and we want to drive large cash flow numbers.
Operator: Ladies and gentlemen, there are no further questions at this time. I’d like to hand the floor back over to Phil Gallagher for closing remarks.
Phil Gallagher: Great. Thanks a lot. And I want to thank everyone for attending today’s earnings call, and I look forward to speaking to you again at our third fiscal quarter earnings report in May. Thank you very much. Have a great rest of the week.
Operator: Ladies and gentlemen, this does conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation.
