APH - Earnings call transcript Q3 2018

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Operator

Hello, and welcome to the Third Quarter Earnings Conference Call for Amphenol Corporation.

Following today's presentation, there will be a formal question-and-answer session. Until then, all lines will remain in a listen-only mode. At the request of the company, today's conference is also being recorded. If anyone has any objections, you may disconnect at this time. to conference like Mr. now would introduce host, today's I Craig Lampo. begin. Sir, may you

Craig A. Lampo

CEO. to you. is quarter together I'm our This afternoon, XXXX with would Lampo, Norwitt, Thank everyone. and conference Craig call. Good our you welcome to Amphenol's CFO Adam We third like here

we Our results as and an give overview this the business were take morning. some trends, will provide will will third commentary then on course Adam as quarter well of current financial the released I quarter, questions. and of

receivable market a in both our XX% Operating of our diluted in excluding the dollars to third which achieved business to to to the year, XXXX. organically. a The of $X.XX quarter which the from income Breaking third was was primarily in quarter in to sales Adjusted compared strategies option stock growth. GAAP of associated quarter last a $X.X from our down of rate operations the quarter XX.X% And adjusted have million, sales the and few hand adjusted translation both on As Interconnect company's XX $XXX of stock this we in up was third in basis, diluted third entrepreneurial stock basis sales of to last the market for and flow $XX certain which XX the for organic periods EPS in option the to third to stock, XX% refer forward-looking with and company's in The approximately in short-term rate quarter. minutes. and under third margins a excellent effective discussed. dynamic the of the cash, were both September. strong quarter cash. of comment comparable this business accounts non-GAAP dividend were along by management in our record XX grew profitability GAAP year on XX.X%, XXXX. continues of a effective XXXX, programs, days which inventory, XX.X% of $XXX of billion such our of was to XX.X% were of individual XXXX. Adjusted in were grew Through to sales $X.X our and paper third net million. is This to Cable company's quarter were operating the of and comprised a last to currency exercises Cable stock companies, industry-leading approximately each maximize and company quarter expenditures outstanding the as adjusted unit for for XX excess to X% to of in with fund resulting segments, team excludes million On points used is XX% $XX our the and market X% enhanced compared a at purchase of diluted to XXXX approximately in billion compared up also increase And of in environment. million, of $XX sales acquired of which both is foster of quarter of million, of local days third strength $X.XX periods the X:X. which up financial and our $X.XX. $X.XX payable committed by net $X.XX quarter payable and million, EPS million the diluted the and trends will third basis deployment end From option existing the of please quarter of $XXX XX% quarter margins for tax investments effective cash the The accounts quarter growth company's rate of Cash associated adjusted the third dividends and compared billion, the net of was XX.X%. days, working $X with of including last result this to year. local the U.S. certain which and respectively information. in in $X.XX further in XX XXXX points within of up approximately an third quarter XXX% in year which an of which and careful able compared XX.X% XX.X% $XXX cash direct adjust XXXX, or local X% and and tax over in From $XX tax capital in to EPS and increased in in be both sales company the XXXX And operating payments second and the quarter excess the year. performance closed third flat approximately XX.X%, certain so net quarter in fund in $XXX a previously record primarily and operating exercises compared $X.XX million days as record of remains billion, The third and a approximately guidance XX.X% commitment The book-to-bill currency, tax in XXXX to standpoint; days, excluded Interest fund the high has the to of the we culture quarter benefit borrowings third make segment currency sales third short-term days from third to to of the $X.XX press sales action-oriented margin third Orders of from margins were respectively, million with appropriately million, from interests conditions amount expenses. team, of million fully management inventory high-performance XX% thereby fostering may GAAP to all $XX $X.XXX capital a currency normal these X% at year. the reminder, a year commercial for end XXXX. quarter in further is excludes culture of by of the $XX in From record a record XX.X%. and as the respectively repay Interconnect of income net excess a option flow in last third non-controlling income. compared U.S. dollars EPS were generator strong the a up continues to of XXXX quarter a acquisitions the benefit with of of million and Adam year a dollars were standpoint was flat expense XX% the And call exceeding from acquisition-related is $XX up Sequentially, of release were segment, quarter relevant driven ratio standpoint the third XX%. dollars last which operations of two exercises disclosures of The driving in performance tax was XX% segment, $XX range. billion benefit compared XX% up third measures and U.S. into quarter company's the future. to our quarter and the sales adjusted tax million acquisitions statements, approximately paid for excellent organic was U.S. refer to by and may quarter Sales of was the of comprised proceeds XXXX. quarter equivalents

a commercial and the debt approximately approximately program outstanding $XXX at the outside the issued three-year its the repurchase of billion. open-market paper billion cash September quarter, balance for U.S. the approximately million programs $X its investments billion. XX, of of shares At million approximately stock credit at end $X.X paper is debt U.S. And repurchased held $XX company of plan. the is under the and net total at approximately billion totaled and under $XXX had the September Total under $XXX commercial company's average program quarter availability billion, facilities under cash $X euro price approximately approximately During $X.X XXX,XXX which under of were commercial company $X.X and our of stock majority The short-term was an paper its XX, million.

just of a company the previously balance X.X%. all-in note rate issued as a commercial the million programs. paper in in note outstanding effective issuance, pro addition, an In proceeds approximately announced, European has XX-year €XXX use to company under under the successful forma October will on debt of outstanding resulting its had which tax aggregate million senior an X, repay $XXX which company The

an The third I turn from and quarter overview this the provide will trends. will excellent And it to business million. now comment XXXX EBITDA a current over an on quarter. who was financial of Adam, perspective approximately was $XXX

R. Adam Norwitt

appreciate the welcome to and some spending you phone I'd offer of here precious very with thank much my Craig, Well, you much, time and you us. like very to on of today, your we all

served high, I in records As earnings spend the in the could exceeding company, and the our is, across trends also the sales the guidance. quarter. the by delivered a clear increased of which then, performance quarter our eloquently And XX.X%. again, XX% XX% in still time reached to just operating EPS some so of a spend a XXXX. in represented this billion, And a dollars their which strength growing new course, a level U.S. of opportunities I'll global discuss in quarter performance, year I'm of then, of quarter new strong of case, $X.XXX excellent booked world. $X.XX, quarter, prior that fourth the the strong new I respond finally, some the of clearly the team we and electronics With and of in for the markets. the the our I'm full extremely to fourth just robust to a driving very very in I'll X:X. then company's the organically Craig once XX% we from demonstration respect around margins record the achievements many third year. company's to reached exciting the that to mean, operating Amphenol And going detailed. high comment quarter adjusted for pleased in say just quarter, while as very Operating proud both billion. is mentioned, $X.XXX market, I to in finally, reflected the And third can a performance, record our record of only on results. I'm to that's ability Revenues time outlook end quarter third row, orders, with very strong of Craig highlight of book-to-bill progress the say that a all some

this would served here market turning we the third again, comment With for pleased for the that And our markets that of I remain very importantly, also nearly XX% of Now, out markets, than our strong representing benefits company across market third sales, asset cycle. pleased in I diversity, our great economic in to breadth the we once market our creates a no in and would our that was end by here end our more progress great across end the quarter. just balance growth organic very balance point Amphenol we're quarter. of realized position. any all just

another military turning, we XX% market, in increased our the first, put, the quarter. quarter in in market prior from XX% U.S. to X% military a just and military And represented by organically. great So the year sales simply of market. better-than-expected Sales the dollars had

by vehicle, quarter. really X% military in summer broad-based in military typically communications what aircraft, in included helicopters, is sales and seasonally softer sequentially, segments, rose And a our was growth particular. space, and Our

to sales a to successfully excellent into for team the market. position products military an been our array outlook by of working we the to growth year quarter expect expect we the had teens now the in no of has sales military military ahead, coming full applications. high so across robust achieve high quarter. continue XXXX, levels. our technology And for Looking market, for the remain than doubt essentially at the fourth stronger in the broad our in these widest far They year we range XXXX expand driving

market In high customers, addition, further task. I'm continuing future. defense overall look always aerospace to sales new and down an dollars increased represented into very benefited stronger our commercial And amidst U.S. quarter our in environment, volumes, sales leverage to Sequentially, spending pleased quarter. we position level with demand on were not in as our as technology airplane the seasonality. Sales our to in react this easy second The we X% slightly well from this of continued expected to the X% of team's on platforms. growth from content ability XX% to by out-performance grew jetliner forward increased drive the organically from as

the remain continue And going in expect forward by from year and fourth to increase a the aviation the future. to we into so from progress year. this strong XXXX, increase We Looking our we the these levels. modestly commercial performance double-digit into far quarter, year expect low continued look market to sales encouraged for full prior

Our team the transit, a the quarter, the air quite dollars by aircraft, sales next-generation has broad-based. again, was mass growth working organically. XX% The technology industrial XX% and by market thereby and company. represented long-term in battery position entertainment; medical, XX% the company's commercial grew expansion array market great wide in and in comm really of expanded opportunity driven U.S. this And creating equipment, sales for of successfully a heavy in our rail across

sales position looking in further into coming moderate sales ongoing of robust for second market, to we've growth suite the while market. Through quarter very by products the a quarter, sensor the organic a of seasonally these remain to sales interconnect our expected mid-teens industrial very about diversified sequentially. in array from program, X% in strong we we'd fourth confident our year expect industrial performance. acquisition long-term with of We our levels, for continue quarter, And As industrial development from efforts, the we product moderating the strength down were widest full the expect and the into the built and together applications.

industrial we future. market to applications, As look realizing in electronics these our to into of important transform position the benefits forward continues excellent this the

slightly X% were dollars Turning and strong in by just Sales from a XX% automotive in softer in our were second U.S. quarter. of quarter. automotive automotive sales to basis. XX% market the but sales grew touch in They sequential by very represented dollars about the the the than a the still market, expected, Sequentially, and a X% X% moderated on U.S. down about organically organically. just market

levels, the we Looking sales we strong automotive into as from of position manufacturers, we reflects expect by demand expectations. in X degree moderation our do lower while which This the to for encouraged expect slightly remain well the sales these some in fourth mid-teens, certain modestly their than as prior year small now quarter, vehicle customers. is Nevertheless, from global the the while full company's XXXX, Tier increase in strong market. growth

sensors These company's range together strongly expand technologies, to into continues world are developments, acquiring for wide offer a hybrid advanced future vehicles. of that the as strategy carmakers companies and our integrating applications the array high-technology, for of ongoing complementary positioned of around has within us team antennas vehicles. the electric Our and electronics fuel-powered, with interconnect products,

semiautonomous and with systems, emissions And In addition, work few. to on next-generation new just as next-generation and drivetrain aggressively customers interconnect, well a include driving, autonomous we to technologies. data world these high-speed around advanced continue name the as

Sales higher existing incorporated dynamic emphasize I for significantly just in XX% this the related their our able and demonstrating quarter sales were our performance for The mobile Sales sequentially. growth in than again, into mobile sales both quarter, rising great than creates execute devices was from increased and programs. cannot And from stronger able our together XX% the in smartphones, quarter, XX% market much working the to increased strong and the devices wearables. agility customers. to devices strengthened to impressive team long-term on products once outstanding of represented of market All performance expected with from how expected driven ramp a this demand in opportunity mobile face laptops of very by an reactivity. by of as quickly requirements customer year was Amphenol. prior we thereby sales and new by enough rose in here second extraordinarily higher our up

the well significant of the into levels. Looking modest as increase third understanding outperformance these quarter increase now growth, always expect sales quarter. This more as sales full fourth the quarter, of a We our as we the teens to year high approximating expect for fourth came quarter, of light now our and volatility we mid market. second compares prior the from our XX%. favorable mobile high the of out in the view sales course of in And to guidance devices inherent currently somewhere in to in by as XXXX

growing U.S. to represented drove XX% manufacturing important continuing better has third of in than our position our the mobile with The and and market come. market. we We secured the years quarter leading organically. in X% to in realize of mobile market for many the space. mobile and do by position processes this market to to predictable, while in to working team sales benefits dollars sales of products performance networks expected look us next-generation this job not devices this great and all just devices innovative, success. Our Their continues enable customers, in a agility while meeting in in fantastic team our the develop mobile expanding demands reactivity in And exciting the is certainly ever-changing devices working to to the continuing from continues the forward our quarter position XX% drive challenging

were to due quarter equipment stronger mobile quarter in second lower than was the by network had Sequentially, our led the sales to we vendors. Our of sales growth which anticipated. impact normal seasonality slightly this particular

quarter, as in strength to we While, a improved significant for expect sales while our we than the market networks these And in the into We're in position full XX believe is growth sales networks, quarter, favorable we XG is in expect low as full well driven for third yet encouraged networks do by mobile days the continues investments outlook systems ago. from in some levels not fourth reduction more mobile by double-digit next-generation we the our the those performance modest which XXXX our had the now year by strengthen. market. year outlook

focused to service working range the manufacturers for both and of Our of on next products team our broaden remains generation as high-technology into sold prepare equipment construction. network they providers mobile

As we look really our important from than these future, of in of the benefits expected excellent U.S. stronger this market we sales growing the data efforts. from in look to as and and market to datacom team sales Information our organically technology by prior and the in quarter. communications prior forward as in XX% drove working IT the performance realizing dollars and year, represented XX% sequentially X% well XX% with quarter

the to in providers. growth third and servers, broad-based equipment both service storage was the to new supported across sales and well by product generation our of quarter Our web networking as was manufacturers as

sales we of out As anticipated positive we a more nevertheless, than year double we outlook levels. had high fourth moderate sales which these is But in now to look to the low grow last digits expect quarter. quarter, expect from the towards the from XXXX full coming for we

as strong power fiber-optics as Our array a web equipment of service we a of continue our extend and broad around products to range next-generation the in the market for ever, developing and datacom high-speed, as leadership IT in position providers manufacturers in world. wide is

a by flat a clearly strongly quarter. basis, the in to represented data remain coming about finally, center into we of manage softer us offering confident their the operators to had sales of were which is sequential explosive prior we online As was the our performance, high X% accelerate order bit quarter quarter. expected to Sales continued to year market spending. an growth reduced the cable the sales third And slightly broadband prior moderate customers in for as On traffic, our that future. technology continue what positions than from communications X%

expect and that last these to sales For levels. XXXX, of and decrease we will data, the we the customers consumers strength market relatively in position confident as still full broadband for offering sales fourth and the quarter, year muted around our expect Despite year. from benefits our in look of same slight to level video continue we're year, world. at outlook to forward a the in our voice our be the approximately for realizing And of support the in delivering the we businesses expanded the product are who

our leading acquisition worldwide in our of it's put just of the a an execute is on financial with market lean across simply strengthening summary our So basis diverse effective pleased the highly importantly, company's Amphenol's the as competitive third a entrepreneurial management of range And extremely continued our just then respect and in technology; strong and with results and expanding and advantages; flexible superior agile broad I'm markets; customers Amphenol distinct the performance. team. to direct the to cost with organization all most company's a very position extraordinarily structure; presence; really while and quarter, reflection performance program; our increasing entire position well a

the there full uncertainties fourth remains the no for the particular outlook our are marketplace But to demand turning strong. to global and year, quarter doubt geopolitics the in and related and overall in for Now environment nevertheless trade.

based constant exchange the we So economic and assuming quarter expect current the year significant the and for results. on no full following now to and fourth environment geopolitical XXXX rates, changes

This represents to and range respectively. XX% For XX% versus sales billion be $X.XX in diluted to to increase of year $X.XXX adjusted X% sales $X.XXX of EPS fourth a in and EPS the range quarter, adjusted billion and prior the expect we of to diluted $X.XX. the to X%

the $X.XXX we the of For billion the in range diluted $X.XX. of $X.XXX $X.XX with together sales EPS expect to in to year XXXX, now full range billion adjusted

But growth guidance levels full of note significant new a over represents and that, to EPS XX% sales XXXX our XX% diluted full year represents organic also that's outlook and respectively. of now sales prior XX% growth X%. adjusted XX%, guidance of the from organic to approximately X% growth year, this and For this increase

So closing, well outstanding just in confident say strengthened as great results I encouraged we're quarter results financial third our questions the capitalize ability to many company's the third and team maybe. just grow by quarter outlook. our on that, to continuing management build in of I'm market it'd strong upon our that, pleasure there by to as want while the in And superior to beyond. operator, with be our position, delivering And performance opportunities XXXX any that to take these

Operator

Thank now you. will begin. The period question-and-answers

first Our Mohan Wamsi question Bank comes from of America. of

Your now open. line is

Ziv Israel

demand? negative Thank And very it that of Great. about Israel lot Wamsi. helpful. been filling you. prior seen helpful. you in in be China around you you've positive have China there have There can Thanks. be if context or for are seen – Any growth lately. there will put specifically color a What is would Ziv any This weakness of China that is concerns

R. Adam Norwitt

much. Well, thank changes think you to I don't very notable the China. seen in or demand any Look in Asia we have

a basis have broad and We broad business business on a global as China. we well localized very a and in have very

that's positive work is in stable true like haven't prided is places and by customers, and that our one as China, in anything various participants. real truly always fashion can that on playing including on the local customers, market. that Whether in that being markets, China I Chinese China. across And really local in say that only who itself in level a Europe, how the just culture. in team, we're on a local notable local India, rely parcel part being essence global we is those business understands is organized. teams have been anybody participant and the ourselves not else, the in really entrepreneurial would of manifests to And very the seen with wherever, part our a North America, team by we there market run Amphenol managers of in look in field If the but a of way We that to

seen markedly haven't haven't There given is different are than but downs, in other year, always, and slowdowns. any in anything ups we We any years. that notable seen

Ziv Israel

Great. all have. Thanks. I That's

R. Adam Norwitt

Thank you.

Operator

you. Thank

next Our Morgan Craig of Stanley. comes from question Hettenbach

Your now open. line is

Craig M. Hettenbach

more there reacting so Yes. little you in of just slower in or automotive, inventory, be terms on kind out? industrial of to Thank of Anything that weakened a you. growth slowed cyclical you customers industrial did point the some or or markets, autos can just point Adam, things bit. anything out it and

R. Adam Norwitt

Yeah. and group necessarily think category. autos just wouldn't Well, I them, into Craig, industrial, one I

I has year outlook. behind year, we're and market a on really came kind industrial I team the with outlook think a still a certain standing mid-teens think we into that our the still growth space. that just job We done of see and market as a for wonderful in that

is we reduction to little a would and our mean, about, America the at this outlook is point in a we've the basis, customers. just going just volumes a what and all know than think cars really industrial of is not I volumes say of really into electronics for demand variety reasons. head, change and terms And demand of volumes down that outlook and half different the negative is I think of Europe. just Asia, we is head always been But into a from as talked going going perspective, different for we bit about to did also than weaker particular, been this a but into that and and reported. what there market. broadly as wide much bit down you adoption a pace for of in seen I in the out that in reasons. the have think has broad important many fourth critical of little has we're reflection that, adoption in But going I When North second I maybe don't we've performance is a think equipment. in general look again, automotive, automotive, a our slight into lot bit can anything the you change reporting stronger up on the us of say been I quarter. in what regional those I overall up in that a don't from broadly and of trends

it's our on to working opportunities – new trends term it's interconnect array of sensors. to and industrial In position to and and overall enable are of incredible company think interconnect very really with that broad in an those our all trends, long continue see that that's by to not those automotive in basis the we industry with customers market, for the whatsoever. expand changing a such our long in technologies; market irregardless others the We trends the and really benefited just time; and, position have expand I a And our of sensors antennas.

token. electronics, Now, who slowing we about going systems. be prognosis to to beyond not than of changing to of be the But do much try fourth the volumes trend is enhanced or down by new to one am that. give to are quarter. the electronic is what any functionality, adoption the new That continue the not There's see long-term are people trend here to clearly what lots applications, expert certainly in I'm a of going I more

Craig M. Hettenbach

And significance that that of the for give Got seeing in helping that those today one in terms of the as mobile And high-end of the lot that the it. capabilities strength can my particular that broadening I at high-end but context in market, you? any look know phones, a placed just given be kind out? color smartphones, seeing there. of market follow-up you're the of you is something device then, terms particularly might on customer, I China of as the the Appreciate you're all and devices, mobile there's attention

R. Adam Norwitt

hosts of kind phone what and good these will software. have participate I a we've put really the we on topic Yeah. really hardware capabilities mobile eventually embedded in broad think, service It's And mobile of point, a of that where And around for customer. there this fact company, a many world that sort differentiating there's I hardware. decade context for market will the is been this many, I our in I a for just devices of years have where they CEO empty is just such software being that are technology seeing whole think and said cannot in been for mobile we for, our device are those basis capability. really talked value the devices. have that empty the in about the really have hosts sell come is this our always any providers, you choosy the the which will on is And market of all know you we as the the that under And that premium participate manufacturers, technology, that commoditized the that's when

You've phones. to in got have the features

the features to have got You've tablets. in

in both an in wearables features have precision. various complex to have They and and They capability, the mobile got require of very incredible You've the are those laptops degree requirements. and features things that an devices. design all require those And manufacturing. incredible

see we continue to to that have our customers. in and the so, really that is I line have meaning make with long-term hardware it that our success the expectations their to will real operators here, they exactly think when proposition driving manufacturers And phone team

I China there through the every whether devices, around of we're the functionality in lots you at that's to whether and possible. so, world, differentiating attempts And that's places hardware, that think the place the other of do support in in through see or

positive recipe Look, a And to I prepared think the supportive one with when our volatile where the doubt position that's been in they think extraordinarily it's till and can if it I said, market. there's technologies, our do and your to And enabling say all going very long-term you that will being do said will you trend demand about customer. space. trend got requirements my a it's of you you, And recipe, always And be if I in agile the to far, in reactive, I be a and company. that continue you've face, reactive need capabilities consistently, good blue I'm have this so then forward. remarks pretty of and and that be it be so, no can and hardware, underlying still for it, that

Operator

you. Thank

Longbow comes Harrison question from Shawn next Research. of Our

now is line Your open.

Shawn M. Harrison

the Two morning congrats Congratulations guess, Hi, – results. questions. on and afternoon, sorry. or I

trends continuing were third there First, of you just on relative networks there topic stronger days XXXX, any my there, here strength activity and that's to dynamics de XXXX ago? the regional year pure year-to-date. to the timing? XX mobile just spend free jure as business, the the pressuring it's Is terms of late, to was in the some where now your you're just quarter than flow. see cash for other lagging second, lack then in of lagged of M&A anything relative activity It in And

R. Adam Norwitt

with the and as wireless. Yeah. much, Shawn. we quarter North mobile would strong mobile strong Well, strength had say I thanks not very in mean saw so America and that in Europe you networks. that more related a very was to heard, respect we I Asia was networks,

But balanced we maybe that North it So, coming came across trends that so We not quarter. the necessarily expected but America, across Asia balanced. given into not in just regionally but is the and space, how out. were that wasn't was Europe. overall with It hadn't really balanced surprising happy necessarily

generation particular, otherwise. and on I while done to we making market. that of in capitalizing really think of such mobile well-positioned opportunities this view XG fact, the has outstanding a future, think work our started I year, the for networks of future year, have we that hard into out coming we're team sure whatever themselves the us, favorable presented next doing have an of is when job also that the for or just the And didn't in

really job team done global really a think, – that's just so basis. here And a I outstanding has the on

times. it I of control Now, many relative M&A, mean the we to timing cannot said M&A. I've

to year, we hard acquisition in quite appetite the argue M&A. company. we change I all in a approach, change that lower cash the number really year, the continue prior that should change had pipeline a would of a opportunity. any have fact maybe flow of a made pretty didn't of good was we year in But the or understanding prior outstanding any but of deals be an of indication good an largest change not very as strategy, close history M&A. the of We little work or bought we companies, in in in of at the quarter and that it free percent the than bit We XXXX,

join It's of principle. and in said part we've want company we environment a perspective. to extraordinarily along. long-term from very been were company we're win a extraordinary to going going low. that just entrepreneurs, say they strong And our I going about So, a companies proposition have has very, whom very, a on said consistent a who stock were they're we've I that's M&A. as wouldn't going something and not extraordinarily buy We'll valuations breadth geographical regardless sell great, And interest it's read when rates high, for be we to people, We're And be to very, companies great anything them organization through end continue were deal compelling say We've go will long-term a that that product customer and proposition and compelling a as buy on stock when into very in and very of great going their know we to remain processes. – ours where We're want that up. when really successful the a disciplined be program. consistently just pipeline we want great very of take part We're a technology to I think, a reach do low. and continue to when principle And position. We've to interest to patient where that very, been say we approach to of be to acquisition rates be basis very those for all those that said for very to of up. part price We're get going they're them, have that they a valuations is companies and to a when to to way and to them an do hospitable to well. deciding that that to life. very acquisitions that important every

Operator

you. Thank

Mark of Our Sachs. Delaney Goldman next question comes from

Mark Delaney

Good questions. Yes. for I taking afternoon. Thanks have the two.

Adam is tariffs question those quarter First steps some or of and the you about to taking avoid was last issues. mitigate Amphenol tariffs spoke and on

or on tariffs an are that seen at whether update order financial think Amphenol from own I topic was both to impact demand? its an tariffs having wondering So if what you on provide extent on all impact can direct has you patterns any customer and

R. Adam Norwitt

be and a control. let appreciate what methodology to terms just that something that. tariffs everybody that a not thing. not have no we about thing last to changed. Well, that. me just I dealing with and tariffs remind it in is first of just are I question, And has would it mean, over quarter what discussed Yeah. foremost, which continue It's approach Tariffs say Unfortunately, our Mark, our is. I happened.

about are. they While what whether very be we try our or are to debate passionately not they lend the to voice tariffs, there should

what approach to not we we've our is, is, our so have tariffs? company a to how organization to react do taken not one-size-fits-all those tariffs. this question choose And then in And operate we you how company given the surprisingly with the done dealing and

in initiatives I has of or specific those created, of who we countries, really level pushed And the that the the those of price, margins in that which tariffs you take I sometimes. supply location not products to Where those of that measures combination when those think, very the a mean, are what one meaningful decision-making resulted course, And to fact with thereby changing processes, at manufacturing, the We And changing damage make lot take reflection competitors? when ultimately managers company how in into who company the general any they're deal with whether that equipped position. any chain. XX.X%, is changing flowing the down one to the Who also to adjusting logistics, part-number-by-part-number this are must there then to we – to are of heart operate operation but with have And And around are can customers, that the our did is these those quite the operating third have implicated, the countless are impact things about meaningful who a world real-time do of to those not had can from made? measures quarter the who value mitigate. And wise and financial having ultimately, that heavy the which we that to the best really is really deal a tariffs had think have tariffs. do ultimately know that that the see you to? shipped decisions How customers? I our manufacturing are are where tariffs. the event,

it year. the is new now, and there's day. right one next Now here thing quarter fourth tariffs with There's it every But sure will tariffs what be we're more this whole And I'm in it day hopefully is. will deal more because to get managing there resolved.

make are a same relatively that is as if by harmed policies. that corporation if sure forward, move what work consider And levels hard so, team to new confident as we extremely methodology, ultimately are I tariffs, Amphenol misguided our not of in is going that new there I'm there tariffs, to

Mark Delaney

I'm piece this could what that at to curious, deconstruct had a anticipated That's reporting company the tied for more understand piece more business to at us and the follow-up you helpful. is the traditional hyperscale a And a IT datacom big of stronger question the between portion IT which of that if on the Can now datacom you OEMs? And help than the market hyperscale is help year. has hyperscale bit start better percentage point. tied been results enough

R. Adam Norwitt

smaller number to our grow to tell it I than to a terms sales continued the Yeah. significance rest, is. pace a it's would by has faster for But you percentage what equipment Well, at it I of some in you have still but manufacturers. don't

products. market different seen types across we've here all in think particular the really the the I IT datacom We broad-based very of growth third quarter. growth in saw in

the own price-performance our all The offering that be us included that or very of curve depth say product both in have or products to that the we organic product that's that across offering, breadth acquisitions mean, really we And customer, and was were development. made, of double-digit all of server, we another wouldn't and type years really why the growth over allows mean, is And enables of number as our that very, blade we storage, us developed of partner everything see, router those that, very really of there strong, or a leading have remarks was I I a in I server one whether So a server, prepared they in into and another strong the whether that on advantage and the on the and a I customers concentration a one networking. It side, of degree quarter. my are to regardless one alluded with making region. certainly that a carrier class that? between. technology other side broad-based. rack

strength strength And ultimately balanced broad-based to we're what IT breadth allowed that with have that datacom those together the that of customers so, market. of and the to us has in able the product more offer technology, it's

time at demands really a feel on IT on comes I that about global because a continue the put we very when think, hardware it good position basis to accelerate.

some is pick you a lately that can't Just generating new seeing up imagine. of without new amounts can't development paper even innovation, some you that data

that, things and in growth of deep with data unique and about week think exponential video. as the these that this things driving, a going about like story ultimately the I is of Internet much of this today space And whole to things Internet, the on that you technologies proprietary I data autonomous is the and story that in data telescope like think, of occupies. generate like saw created high-definition which our sort results as together video accelerated is traffic being results. And matching apparently a year I this sort think

Operator

Thank you.

of next comes Stifel. Matt Sheerin Our from question

Your line is now open.

Matthew John Sheerin

giving about job talk you. network One of in strength mobile seeing by ramping positioned in comments color. next a and the lot of there's on of are XXXX good good follow-up, just play done with terms talked the terms in telecom Adam, out How half and you're and of back in your ramps. Yes, non-XG here into specifically you and thank how year answering customers? really about areas that regarding questions you've technology a the area, you

R. Adam Norwitt

those that the really networks frequency really speed get are operating than targeted embedded technology I these And designed possible. about Well, mean much and step systems an just I our from used function a that's back into in is certain Yeah. sure interconnect and position that sets real XG, mean, don't I you I products is are in Matt. in next-generation levels systems do gets have very make that number are to into is ramp working tell systems a that I you a XG very for can't a lot designed XG the sense on broadest those density, years are to being the performance in products is about requires thanks which And give thereby all much of you reductions if and much, in latency. the latency team and but at – performance of our And what more of has from been higher current and requirements. equipment Look, products. are that perspective. speed to timing all of what a being cases strong. are of that our XG think that can

IT with are leading it's to have to so sure to product Mark's engineers that our you with around considerations. going you of products customers in we're a similar levels and I have When involved can of help a products suite hoping that these tell to and extremely talking systems is front have compatible products with question, what's upon the the center as were And those and lot and mean that our XG datacom timing build-outs is just rely really "XG" organization, networks, go in a XG. our you high forwards ready, I is everybody your design are their lot that achieve the be at really may give perform to does that to products such And probably through customers in and we and that see credit things performing systems who've that about called they not. leading that But don't make there a while worked that. equipment very we XG producing for world XG be like where of already dynamic that they customers can look space

that starts in you'll overall the in some us of these to little lead But mobile the then to as and then to to there's work. I up. have usual spending for go a environment. generational changes system, So a networks hard out building be that's bit is have meaning and a – when eventually slowly going long of There's think, predict. test validation, And lot design

Matthew John Sheerin

Fair enough, Yeah. okay. a lot. Thanks

R. Adam Norwitt

Thanks so much, Matt.

Operator

you. Thank

comes question Daryanani of Amit Markets. next from Capital Our RBC

open. Your line is now

Amit Daryanani

devices. guys you on mobile have two upside questions guys. first guess, I nice you. Thank one, I to well, have the see as Adam,

involved I guys was it's happened up were think you think you components just that think XX% were in? upside that the the involved the products end demand you was what others by to, When sequentially supposed you said fact about it in that same days which way couldn't it think would more it they XX execute better plus do past? the driven in versus September. the you're thought I has what drove was be in in the ago, Or

R. Adam Norwitt

Yeah.

bit ability the demand better was we execute case, this the demand in our had think and I better to a than on was anticipated.

of but this team, confident, makes them as it And their make that is you either, absolute know, and people and it the lot it, any out mean, a of when I on our so in there's little people a in meaning mean, answer little XX-day And used I increases, well, is bit production in If cannot I of to broad being all factories us do whether basis. mechanics your you question, are the period that sales can comes right credit a not more when the that a very volumes set-up, that this people who involved. is a a in significant not we've we're Amit. which Amphenol getting ability inside getting XX% is And a an real where things probably we here. more lines bit just better it and easier. in market, the you just having past around. doesn't they think, bit organization. again, this having on made organization, happen made you hindsight, first to in small just work say It increase like think required. place, rodeo, enough hard in happen. to on being to place, those logistics bail little about – volumes basis. was a our the Amphenol But these the I I really less the make the getting the this maybe I mean, done to happen has having it And simple better in again, really that an mean, the a execute

Amit Daryanani

today and tone it's could think like XX% think at tariff do for XX%, why just of you lot cost bit a your more and not any for X a a might on of a If I'm you September; to tariffs. continue Is connectors in I buying tariffs I going XXXX? And to do waiting to double are right, That's to half tariff? different or risk be if customers heard XX% in the at trends I versus X, off (XX:XX) it. goes creates Got going you are be for point? this response better seeing ordering broad-based of January I that up know are vacuum first helpful. by December. products. your January obviously then, sounds around importantly, supposed in guys of XX% follow-up, wondering, go And comments

R. Adam Norwitt

in what tariffs little lot just but a about Well, let's and Yeah. when. that, there's be a specific

then X, lists called there've List in was in what – you was three and been As the line And there look that called was X. connectors. product List a know, X, at There List tariffs. of those X, List are you products if

already So and was – XX%. that at

constrained it's infinite XX%, in but which pull and List ability We seen always in XX%. the demand. XX%. And and tariffs I the also customers. haven't then necessarily is has at were suppose this the hoarding X X could Are customers support that mind our is not the sell one And sort support you margins? whatever or just at when be overbuying, demands. that's to second that, step of into product was It that you in there necessarily. the List So capacity can Obviously, by customer. the instance? we'll kind the some, be of some there to that moves due X step on bear are with have when not also to those it we of U.S., that do that Could

And we that indications dynamic pulling real And so, that you haven't forward. that seen just clear clear. described is of as any not

equipped I'm and same pay the of effects? that grade X, with resolve? ultimately these what question And how List we have with does significant bigger that to with it's way had be we Does that's the to come dealt think here; make sell region. same far. part will other that taken think to is so about Those I by of regardless think tariff are my and our what of to we've the susceptible vast make been deal it XX%, have and not that really about. that, and effect strategy talking Again, is in an have like all or levels any we XX% business large, And to about, not that forgetting and tariffs, customers, tariffs so our we're dealt things have one to so well of to and ultimately with the the probably least tariffs. answer, above forecast of of going at enormous that that heck we economical to a make the that's deal we've it But about fight do some our we've are fact macro effects? deal majority what being to Where how we've Does the from the far the we come. it with the that. so have I But products far, continue proportion team of those there around localized think well that always not I is tariffs?

Operator

you. Thank

next Raghavan of Fargo comes Securities. Our question Deepa from Wells

Your now is open. line

Deepa B. N. Raghavan

below One quick risk. Adam and a expectations. from like afternoon, organic in looks Two point the Craig. questions me. Good automotive is came growth two or It your

what's that single-digit with coming comfort if your softer curious Just expectations? of performance, well weakness content And was high in year? continues the next how continuing your into versus much market strong versus growth content

R. Adam Norwitt

for mean, content. Yeah. from it's see is or me of signs as two that to Well, I we one kind market guess, to of But any don't said mean, far I points say content it. hard I I earlier, organic, slowing down.

adopted electronic new to continue cars. systems being We into see

long-term, I to towards what or – I of the one I I view, see organic probably And continued earlier favorable the of the in content I we or think of expansion to it's be, total say market. predict. that the exactly much to still value that's that to – without total around two knowing have points would to comfortable drivers And grow. is of market electronic us be, So what units change, cars going for harder continue feel what the very that going world. think the continued the a cars content we said guess, will is But

Deepa B. N. Raghavan

seems curious. semiconductor it's My quarter? Are I Has that this mean, that this generally, And hit just you that mean, is well-broadcasted it. directly Thank from you. seeing I follow-up shortages, a supply something companies has headwind abated? chain. either Got on to have indirectly? lot passive accelerated? or any impacts of

R. Adam Norwitt

and, and as you talked very discussion you. that I point well Yeah. a Well, it's couple thank a well-reported semiconductors. a correctly No, I quarters of think out, in about, – we've about particular, it's passives guess, some for reported

these impact so reported. of not demand have due shortages are our We to any seen on meaningful customers widely that the

say over that these Have products? more Sure, an a think course bit of hasn't assorted around more has still probably team there I while we're impact. sort in we are is But our overtime supply it our sure for don't to on that's basis, a any of ancillary components any a I the bit anecdote once our the little general, sign in to the performance. of, be that meaningful to I any time our there of they are odd buy get sourcing world impact real absolute an buying of very impact spent passives people component, growth performing year, matching our while the other question that a the that maybe of from On us, that the accelerated customers and may working because make some about had can't some meaningful customers. that's little that, strongly. think can't because we and have less been advanced

Deepa B. N. Raghavan

one can I sneak in, Got If more sorry. it. just

what thoughts weak I that what have no days that are I base deviation you. performance buying Thank Your your curious pass products? is we're ago? on. the your it markets seeing. is there? at end big lost moderated momentum way the versus that's XX indicates mean are just sentiment question your my And I'll customer broadly. But obviously sentiment a market Has that from mean,

R. Adam Norwitt

Look sentiment our reflected a say I you. here anything quarter, think think strong for thank the in Well, I fourth about is I different would than be don't the guidance. continues guidance very which to

at customers I frequent the lots a our have and very very continue that basis. think ones interfaced least, to on customers visit I positive, I of be with

the so. do automotive there's to helps level are demand that is that in demand we've as that about us a to all to them our while really look which but products, industry to advanced about that slight them, deliver overall I probably to markets, that that for reflect cases, done IT, where networks, seen with think been both where technologies time. about we've enabling demand the are future. satisfy some is for and has produce I well could systems for of some quite the the fact operate in new customers mobile positive We've many thing that We go in their very design but to And moderation them that fantastic customers customers in to I a to not through military same on continuing done all also of same technologies think true at and our technology changed, the with higher talked the talked levels. job get hasn't

technologies. demand it are Our is swings next-generation there short-term for them. think for in If very customers of that thirsty what are is I some

Operator

you. Thank

Suva Our comes Jim of from next question Citigroup.

open. now is line Your

Jim Suva

have Craig, see as supply chain, levels, comments the the as normal on across it customers and uncertainty for what tariffs itself smaller we maybe very Thank lead-times, you and Or manner simply lead-times will Adam semiconductor to strong be up your that much. a one think your any say well double giving has positive wonder very to that inventory about companies or a excess longer and than inventory longer and got or you. that bookings whether lead-time? now distribution, Thanks in us? because show than to are catch

R. Adam Norwitt

as is, our all industry the visibility levels and and is do the into a a degree Deepa those out, our these different perfect to Look, warehouses more think I good distributors. have distribution very a It's in are much before, bit we we Jim. the and of run semiconductors things inventory mean, to. things lot tariffs industry inventories astutely alluded of said we customers. think a notable run of the lead-times the of and see company our Amphenol I the capital-intensive our a you I way things little I've once a in and and industry that Thanks very nothing fashion. really Remember passives bookings healthy, channel of that, different. their not seem and We don't pointed various with is all certainly related not our double that that like again, that way capital-intensive much

the but will the the where upside are and Our think with increase I the out very lead-time manufacturing the ability different a see healthier of a which from And (XX:XX). think that in thus, and the is relatively the also interconnect be seen that respect to double to that you anecdotes stable. And semiconductor have able is is we're of we bit bit and and operates supply behavior go large, a a those react the But and operate reflection that more way owing there. you military things to that perspective. There that we've in once lead-times chain to in passives other the while lead-times to and market from items really our little with downside, to keep on we extraordinary on booking I agility, industry. some like by maybe that mentioned, demand, those changes agility industry stretch a demand in way fun, adjust

Jim Suva

the details. Thanks for so much

R. Adam Norwitt

Thanks, Jim.

Operator

Thank you.

of from Our last question in queue Cowen. Joe Giordano comes

Your is line now open.

Tristan Margot

at going Hey, anything the for guys. of terms Good rates. lean highlight have would wondering Joe. this afternoon. terms your in point capacity cycle you forward? and And of CapEx in if in is for was spending taking like are in operations I the you Thanks This how question. to utilization Tristan

R. Adam Norwitt

a Yeah. Well, always we that fashion. very in say I operate would just efficient

just not fashion. flexible a The levels, we is factories fast capital with about when – capital-intensive operate just we that inventory a business. way a talked that I think Jim mentioned and I I our from it's spending

And huge burst that's perspective, at seams when and the It's build operating that not good, our and and and part nor the to do lean. come ahead are from culture. times get things can't support always we customers. then So parcel we're that to we for Amphenol to of orders capacities try wait and the

infrastructure numbers. time a customers over economic exactly regardless try reflects demands to that scale the cycle the principle at the period think see And especially that you ultimately times, we're of company, operational always look that in in. the you'll what the our we of I during So of to when volatile long performance

Craig A. Lampo

would be range perspective. I in spending and higher organically as is growth we certainly quarters have I from we levels on year first guess, mean, the the this I had high bit over X% thing, certainly more year have higher on only of of the do see while again, our that we add significant that right a bit for that's we pretty level year you range. have a little typically a we'll years those end of capital capital. three guidance And up more kind a here. had And a growth of little now. spend again, into do But and bit driving growth, we just within little it's this to X% high have that those that But

Tristan Margot

the based China, China and in your I do M&A still Adam then tariffs, with likely Thanks. you're And to Okay. current comments about on there guess, I situation? think,

R. Adam Norwitt

Yeah.

We market, the think maybe towards electronics We do answer I Amphenol I would we from is broadly, long-term view that the don't way it favor more in even which in the a new very, away take M&A. is, or run market very to members don't in a for trying a hunt chase hot potential family lost has acquisitions. industry. that market

acquisitions remains we for position. look for We great fantastic to alluded criteria words look and I products look earlier. market Our very people. in other for or great it for We technology consistent.

We permanent the these it's make for be for getting Amphenol companies believe we're a companies and in these those we acquisitions which buying is part we're to to that when married says when the strategy right basis. really to those for organizations. not long-term, we'll a life time to it's time. sometimes acquisitions, perceived right sometimes all make the of be that when parcel and And perceived And and we'll make acquisitions that's

place one quarter that's whether so another it's of you quarter be us that not to And buy when much be the less for in as important. or that in the right to is where place right

in hottest not company along, I think you, market fabulous necessarily always that And to of we're very and approach along right which is the with that valuation in space happens So our regardless, and to And comes we're short-term happens or in the is to great will really the moment, served to disciplined great market entrepreneurs, the tell variations the approach, space I products, a going has if agnostic well reasonable of terms term. position one be an acquisition. to from that. over is the long that us that be of China terms going away trends that environments is that be and in not market of in process shy that

today blind there are sensitive impediments we that there place, want not any in that we are would we're success. place, impediments are very in because that think sure see geography And very that of in buy, significant But to if make put don't significance. impediments any to company put to structural we governmental that. that not obviously any governmental Now, we to are I be that

Operator

further And you. at speakers this queue no Thank time. we show in questions

R. Adam Norwitt

and beginning Well, And we look that's all company. a that all you fall very nice. And and you enjoyable thank just much. you very all very very the at we of much XXXX. in seeing Thank will your your to today forward again, time interest appreciate and the truly you season I wish

Craig A. Lampo

you. Thank

Operator

for have you attending Thank a day. conference today's and nice

call As as today's recorded. a well, was reminder

toll-free and XXX-XXX-XXXX, provide dialing the a access the day. XXXX. passcode toll number of again you with can well You the and nice replay a XXX-XXX-XXXX in number by as have Thank

Amphenol (APH) 24 Oct 182018 Q3 Earnings call transcript