Al Miralles: And good morning, Ruplu. On the — on your question on seasonality, so first, just look, our outlook is based on the premise, we continue to see strength in software and services and lower growth in terms of hardware overall. With respect to the timing of that, first half, our typical seasonality would be first half 48, 49, we’d expect to maybe be slightly below that in the first half, and that’s reflective of that continued slope towards more netted-down revenues and cloud, security, et cetera with the expectation that in the second half, you may see a pickup there, more on the client device. And so second half a bit stronger in terms of top-line impact, if you will.
Chris Leahy: Ruplu, it’s Chris again. I would just add — let me just add that as we think about the customer behavior more recently, and a lot of folks have been talking about extra signatures, a little more scrutiny, et cetera. Yes, we have been seeing that. We haven’t been seeing is a pullback — wholesale pullback in projects. In fact, those infrastructure projects that we had talked about being delayed a little bit are actually coming to the forefront. Again, back to the technology being essential to all of our customer base. So we are seeing that resiliency as well.
Ruplu Bhattacharya: Got it. Thanks for the details there. Can I ask a follow-up? Al, I may have missed this, but on the call, did you mention what was netted-down items as a percent of gross profit in the fiscal 4Q? And sounded like that, that percent was unusually high in the quarter, and you expect that to moderate but your guide for next year for operating margin, I mean you’re guiding it to be higher at mid to high-8% versus your original guide for this year was below 8%. So I guess my question to you would be what are you assuming for netted-down items as a percent of gross profit in 2023? And in general, can you help us parse out that year-on-year operating margin improvement? What are some of the factors that are driving the increase? And what are some of the headwinds year-on-year?
Al Miralles: Sure. So let me just start with the operating margin. So operating margin, I would most notably point to expectation that we would continue to be somewhat higher on gross margin in 2023 versus 2022. I certainly would not expect that those gross margins would match what we saw in Q4, which was really extraordinary. But I would just start from that square that somewhat higher gross margins in 2023 will certainly drive our NGOI margin, coupled with expectation we’d have some operating leverage there. To your original question on netted-down revenues for the quarter, you’re right. Our prepared remarks noted that netted-down revenues grew 26% year-over-year. On a percentage of GP basis, Ruplu, that was 31% in the fourth quarter, so continue to be really strong.
Operator: Our next question comes from Samik Chatterjee from J.P. Morgan. Please go ahead.
Samik Chatterjee: Yes. Hi, and thanks for taking my questions. I guess for the first one, in sort of the capital allocation priorities that you referenced in your prepared remarks, maybe we can sort of get a bit more color about how you’re thinking about the M&A pipeline here? And sort of what are the focus areas, particularly as you look at sort of the changing mix of where customers are looking to spend? How are you thinking about the M&A pipeline and what are the focus areas for the company? And I have a follow-up, please.
Al Miralles: Let me just start, and then Chris can add on from an M&A perspective. So as you know, our capital priorities reopened both M&A and share repurchase. And the way that I would think about that, as I spoke to that range of our free cash flow of 50% to 75%, we would expect return to shareholders. So if you take the dividend, you can get a sense for what that range would look like. There is a range there because we view that as really optionality for us to tackle between what’s going to drive the longest strategic value, including M&A as well as what’s going to maximize shareholder return in the more near-term. And so look, both of those options and array of options are available to us. We’re certainly back on the path of share repurchases, but M&A is also on horizon as well.
Chris Leahy: Yes. And I would just add, we’re never out of the market. We did have a pretty heavy year integrating Sirius, which is an incredibly successful and having an impact in the market. But we’re always looking for organizations that can add capabilities in — broadened capabilities, I should say, in high-growth, high relevance areas and also add scale to those practice areas that we’ve built if we can add scale at a faster pace, and we think about geography and our global presence. So we’re always looking, and it’s good to have a solid year of the Sirius integration behind us.
Samik Chatterjee: Got it. Got it. And for my follow-up, I know you’re all talking about sort of client devices being softer than expected. But I think you also mentioned on the flip side, solutions tracked much better than expected which, again, sort of is counter to the mixed impressions we get about enterprise spending. So maybe if you can sort of give us a bit more color on — is that really solutions doing better than expected more of a supply dynamic where supply is easing up faster? Or are you seeing sort of upsized deals from your customers? Or is it really a strong run rate of orders that you continue to see on that front continued interest from customers? Just trying to sort of parse that out in terms of the backdrop of — the macro backdrop that we have.
Chris Leahy: Yes. No, it’s a very fair question. And I would characterize it this way. We are seeing strong demand in the solutions space. And while we’ve had some supply feather out, I mean, where it’s really moderated is on the client device space, some pockets in solutions but we’re still carrying heavy backlog, particularly in NetComm. So the demand that you’re seeing reflected in our performance is just that, it’s demand, it’s not a flow through of backlog.
Operator: Our next question today comes from Amit Daryanani from Evercore. Your line is now open.
Amit Daryanani: Thanks for taking my question. I have two as well. I guess, Chris, maybe to start with, you folks are talking about IT spend being flat in 2023. When I listen to IDC, Gartner, even some of your peers, they’re all talking about IT spend being up about 3%, 4%. So from your perspective, where is the biggest delta here versus what you’re talking about versus what maybe IDC Gartner and your peers are saying? And then how much of the delta do you think is perhaps conservatism and you can color where you’re seeing that versus the netted-down revenue impact that you have?
Chris Leahy: Good morning, Amit. Well, look, I wish I could say that it felt stronger out there. I really do, but that’s not what the temperature is that we’re feeling. So we build our expectations by listening to our customers. We’ve got thousands of sellers and technical advisers out there. And it’s just the pulse that’s coming back to us and looking at industry and partner data, we’re feeling that it’s going to be flattish. And then the 200 basis points to 300 basis points of premium that we always commit to would be on top of that. In terms of mix, I guess what I would say is we don’t calculate in our customer spend versus net sales as an example. But of course, in this kind of environment, as we’ve explained, when you’ve got hardware that’s more muted and you’ve got, in our case, netted-down solutions more heavily in the mix, you can expect more meaningful customer spend than the net sales line reflects.
But that said, we are right now feeling flattish. Of course, we’ll update you as we move through the year, but that’s kind of where we feel right now.
Amit Daryanani: Got it. It always seems that you folks start to guide gross profit dollars growing at a premium to IT spend versus revenues given the way the mix is going up. That may be a discussion for a different day. But I do want to ask you a follow-up on the NetComm market. You talked about December quarter; I think it was up in that business. I’d love to get a sense, as you see supply starting to improve, especially on the NetComm side, are you seeing cancellations or deferrals happening over there? And then how do you think about NetComm into 2023 in this flat IT spend environment?
Al Miralles: Good morning, Amit. We are not seeing any level of cancellation or postponements there. The demand on NetComm, and you can see from our reported results, really, really strong. We’re not getting a lot of help from a supply perspective, honestly. Extended lead times is still there. Our backlog has not moved substantially really — our backlog has moved more in client, as Chris suggested, supply is still — there’s still friction there on the NetComm side, but that’s notwithstanding really strong written demand.
Operator: Our next question today comes from Erik Woodring from Morgan Stanley. Your line is now open.
Erik Woodring: Great. Thank you. Good morning, guys. Yes, Chris, maybe a high-level question for you. And that’s now that you have a year of Sirius under your belt, and that being one of the larger acquisitions CDW has done in the last handful of years. How do you think about doing more transformational deals going forward rather than tuck-in deals? And then does kind of the lower leverage targets that you guys communicated today — is that because you want greater flexibility to do larger deals? I just want to kind of get a sense of how you’re thinking about transformational deals because it does seem like Sirius has been a pretty significant success for you and what your appetite would be for those types of deals going forward? And then I have a follow-up.
Chris Leahy: Yes. No, look, it’s a great question, Erik, and it’s all a matter of supply and demand, right? We’re pretty particular in looking at organizations that really complement our suite of capabilities and/or scale them, along with the — obviously, the financial return, but the fit in terms of culture. And I’ll tell you, we’ve done eight over quarters and check, check, check. They’ve all been really outstanding. Now that said, there are companies out there that we think of and always reflecting on and some other larger transformational deal would certainly be something we’d consider. But it’s a matter of finding them and making sure they’re going to fit and provide the financial return. And you asked a question on the debt ratio, though, Al, did you want to tackle that?
