Mark Delaney: Yes, good afternoon. Thanks very much for taking the question. In the CEC segment, the company, if I heard correctly, was guiding for growth there. I think a number of companies have been reporting pretty broad-based weakness in the comms infrastructure market. So, maybe elaborate a little bit more on what Flex has seen in the comms infrastructure markets? And perhaps is there share gain or something else that’s a tailwind for Flex that other companies perhaps are not benefiting from?
Revathi Advaithi: Yes. No, I’d say first, there’s two things that are happening, right? If you think about the three segments in CEC, cloud, communications and enterprise, we’re still seeing growth in all three segments of it, while you are seeing a lot of noise about enterprise segment and how that is performing. But for us, a couple of things happening. In cloud, we’ve clearly, while people have talked about the rate of growth changing, it is still pretty significant growth. And that’s important. And along with that and market share gains, it has helped us show continued growth for cloud, and we see that playing forward. I would say in the communications space, similarly, we have seen share gain that has happened with specific customers and we’re supporting that growth.
But we’re also seeing there’s enough backlog being cleared in that business that is also supporting underlying growth. So, overall, I’d say CEC, the story of share gain is a big story there, particularly in communications and cloud. So — and we feel like if the rate of change of growth switches a little bit, overall, it’s still a very positive growth story for us. Paul, you’d add anything?
Paul Lundstrom: No, I think that was clear.
Mark Delaney: Thanks, Revathi. And my second question was on the China market. I was hoping you could elaborate a bit more on what Flex has been seeing operationally in China, given the unfortunate COVID dynamics in recent months. And also, when you talk to your customers, are they expecting demand to pick up this coming year, given the potential reopening that’s occurring in China? Thanks.
Paul Lundstrom: No problem, Mark. So, the way we thought about this a couple of months ago was we — as things started to open up, we expected there to be sort of a big COVID spike in the November-December timeframe. And then, post Chinese New Year, our thought was we’d see another one. I’ll just kind of tell you how that played out. COVID cases were very high as we move through December, particularly the back half of December. That probably had a little bit of effect on us, but I think we were able to manage it. But absenteeism was quite high in December. Too early to call on what’s going to happen here post Chinese New Year, but we track this stuff every day. And I’m pleased to say that people returning to work has been very, very high, higher than what we had originally anticipated coming back from Chinese New Year. And I think by the end of this week, we’re going to be at 100%. So that’s good news. Hopefully, that has some color that helps, Mark.
Mark Delaney: Yes, thank you.
Operator: Your next question comes from the line of Matt Sheerin from Stifel. You may ask your question.
Matt Sheerin: Yes, thanks. Good afternoon. I wanted to ask another question on the Reliability segment where you’ve got good growth, and it sounds like you’re confident in most of those subsegments in terms of growth and program ramps. We are hearing about some incremental weakness in some of those broader industrial markets, particularly semi cap. I know you have some exposure, but not as much as of some of your peers. So, could you talk about those end markets demand versus program ramps and any pockets of concern there?
Revathi Advaithi: Yes. So, Matt, across Reliability, we have really good strong demand, driven by the underlying fundamentals of the end markets we’re in, but also kind of continued market share gains. We have very little in semi caps, so that’s a good thing. And so, we don’t see the fluctuations of the up and down in that, and that doesn’t affect our overall portfolio. In industrial, we’re seeing very strong growth in renewables and we have a lot of opportunities to continue to grow in renewables. We’re seeing really good growth in areas like automation. So, industrial between renewables, the basic power business there and automation, the fundamentals are very strong, and we don’t have much exposure to semi cap equipment. And then, in auto, EV and ADAS is — EV particularly is very, very strong, because we have a lot of new program ramps going on there.
And even while dealer lot inventory maybe getting filled up a little bit more, we see a very strong path forward in terms of year-over-year growth for automation. And health is going along as we predicted, right? So, pretty steady growth rate and is going well. So, we really are on the other side of this equation, we have a lot of growth in Reliability. We just have to execute to that.
Matt Sheerin: Okay. Thanks for that. And then, on the margins within that business, which I know have been under pressure for the reasons that you explained. How do we get to that? You’re talking about a 5%-plus margin for the whole company, which would imply nice margin expansion within Reliability, because I assume that the Agility business is going to be sort of in that range. So, what’s the timing there? And in terms of these investments playing off or these other issues like logistics and supply issues, when do we start to see those margins move up?
Paul Lundstrom: Yes, it’s a good question, Matt. I look back to the February-March timeframe when we’re putting together the framework that we ultimately shared with you with our Investor Day. In a spreadsheet, we always plan for a nice gradual acceleration of margins, nice even smooth line, but I don’t think any of us anticipated going into this year that inflation would be as sticky and persistent — as large and sticky as it has been, nor did we anticipate the semiconductor shortages persisting as long as it has. And so, both of those have put pressure on the business, including Reliability, of course. And I would say more so with Reliability, because what we’ve talked about before, the stops and starts on that larger node technology where you have resources idled, waiting for components definitely puts pressure on margins.
And so, I look at both the inflation effect and the component shortage effect and ultimately how that impacts factories as sort of being one-time items. All else equal, I think you would have seen better margin performance out of the core Flex business. And I think as we look ahead, we’ll slowly start to see those things abate and we’ll see the margins accelerate.
Revathi Advaithi: And Matt, I think all the more reason to feel bullish about our long-term target, right? Because if we are at core Flex target where we are today performing with Reliability margins under pressure, the upside is clear from that. So, long-term targets remain intact. If anything, we feel really good about it.
Matt Sheerin: Okay. Thanks very much.
Operator: Your next question comes from the line of Ruplu Bhattacharya from Bank of America. You may ask your question.
