Hello and welcome to the First 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 being recorded. If anyone has any objections, you may disconnect at this time. I would now like to introduce today’s conference host, Ms. Diana Reardon. Ma’am, you may begin.

Thank you. Good afternoon. My name is Diana Reardon, and I’m Amphenol’s CFO. I’m here together with Adam Norwitt, our CEO, and we’d like to welcome everyone to our first quarter call. Q1 results were released this morning. I’ll provide some financial commentary on the quarter and Adam will give an overview of the business and current trends. We’ll then have a question-and-answer session. The company closed the first quarter with sales of $1.327 billion and $0.057 of earnings, meeting the high-end of the Company’s guidance. Sales were up 7% in U.S. dollars and 11% in local currencies compared to Q1 of 2014. From an organic standpoint, excluding both acquisitions and currency impacts, sales in Q1 2015 were up 5%. Sequentially, sales were down 7% in U.S. dollars and 6% organically from Q4 of 2014. Breaking down sales into our two major components, our cable business, which comprise 6% of our sales in the quarter was down 3% from last year. Our interconnect business, which comprises 94% of our sales, was up 17% from last year, reflecting the benefits of both good organic growth and the company’s acquisition program. Adam will comment further on trends by market in a few minutes. Turning to operating income, operating income increased to $260 million in the quarter. Operating margin increased to 19.6% compared to 18.8% last year excluding one-time items, a strong year-over-year conversion margin on incremental sales of 32%. The increase of 80 basis points in operating margins over the prior year resulted from an increase in profitability in our interconnect business. From a segment standpoint, in the cable segment, margins were 12.1% compared to 12.2% last quarter. In the interconnect business, margins were 21.8%, up 90 basis points from 20.9% last year. The improvement in ROS reflects excellent operating execution both…

Well, thank you very much, Diana. And let me also add my welcome to those of you on the call today. As Diana mentioned I’m going to highlight some of our first quarter achievements and then I’ll spend some time to discuss their trends and progress across our diverse served markets. Then finally, I’ll make a couple of comments on our outlook for the second quarter, as well as for the full year. With respect to the first quarter, I’m just very pleased to report that our sales and EPS were both at the high end of guidance and that’s despite a challenging economic environment, as well as the impact of the strengthening U.S. dollar. Our sales increased 7% from prior year in U.S. dollars and 11% in local currencies, reaching that $1.327 billion. And orders at $1.340 billion were a book-to-bill of 1.01 to 1 which is an encouraging sign. Our profitability in the quarter continues to be very strong as we generated operating margins of 19.6% which as Diana mentioned is an 80-basis-point increase from prior year. And our EPS grew 14% from prior year essentially despite the rate of our sales growth. I just want to say that I’m extremely proud of our global team who was once again able to react quickly to the many opportunities that are being created by the electronics revolution, all the while exercising the discipline and drive necessary to achieve outstanding operating performance. And I think our strong results in this first quarter once again demonstrate the benefits of the company’s outstanding entrepreneurial culture. I’m very pleased in the quarter that we completed the acquisition of Invotec during the first quarter. And Invotec is the leading UK based manufacturer of highly engineered, harsh environment, printed circuit boards, flex circuits and related…

Thank you. Participants we’ll now begin the question-and-answer session. And our first question comes from the line of Jim Suva of Citi. Your line is open.

Thank you and congratulations to your team at Amphenol. Really great result, especially considering the currency and the changes.

Thank you.

Diana and Adam, can you help us understand a little bit more granularity on your comments around the mobility? You mentioned some softness. Is this broad based global, is it geographic, is it more like smartphone handset, or tablet, or notebook, or how should we think about that commentary?

Yes. Jim, thank you very much. I think we talked about mobility and mobile from two standpoints. One is the mobile networks markets where we do have a more moderate view of that market, as well as the mobile devices market where, I think, we have somewhat stronger view than we previously had. So, I assume what you’re asking is relative to our comments on mobile networks. And in mobile networks, I think, what we have seen is last year, there was just tremendous performance in that market. You know that we grew last year by 24% over prior year, which is really far in excess of many of the statistics that one saw coming out of equipment manufacturers or the various capital spending results of the operators around the world, and I think that was just a great confirmation of the efforts that we’ve made over many years to broaden our product offering in support of these new technologies in these next generation systems. But no doubt about it, that was a lot of build out that happened last year and I think what we’re seeing on a global basis really is that the operators are really working to digest those investments, in particular here in the first half, but even throughout the year, more maybe than we would have thought previously. From a regional standpoint, last year we saw good growth in all of the regions, probably saw a little bit better in Asia but we had strong double-digit growth in every region. I think in this quarter, we probably saw a bit more magnified reductions in Europe, and some reductions in North America. We actually still saw some element of continued strength on a year-over-year basis in Asia. I think for the full year, we would probably anticipate that all the regions would still be in that kind of digestion phase of their investments. But perhaps, maybe Europe would be a little bit weaker than Asia, for example. Relative to mobile devices, again, we are seeing more strength in that space and that just comes down to our organization’s fantastic ability to continue to win programs at the leading device manufacturers. I think we did talked about last year, that we saw a little bit, worst performance last year in tablets, a little bit better performance maybe in things like ultrabooks and we’ve seen good performance with some of the new smartphone manufacturers, as well as some of the accessories around those products. And I think that those trends are largely continuing coming into 2015 and we probably wouldn’t expect a much different performance across that market this year.

Great. And as a very quick follow-up, your acquisition. A lot of times when we hear printed circuit board companies, we think they’re a very low margin business. Am I correct by assuming that this company is a lot more than just printed circuit boards and lot higher value add, and maybe give us a little bit of a flavor or color into, if that’s a [ph] correct statement, more than just printed circuit boards.

Now, this is an outstanding question, Jim. And it’s very true that there is a whole industry of printed circuit boards and that’s not an industry that we have in large part participated in. But we do have a business in very high reliability, harsh environment, printed circuits, be it flex or rigid flex or rigid boards, and the related assemblies that is really active in the military area space and industrial space. And that’s what this company is. And so it’s by no means a big entry into printed circuits, rather it’s a continuation of our approach to present a total interconnect solutions for those very high-reliability application that we see in particular in aerospace, military and industrial. One trend that we have seen and we have been really one of the drivers of that trend from a very high technology standpoint is there are applications, in particular in those harsh environments, where traditionally those have been managed through big cable bundles. And that those cable bundles are over timed in certain of those applications being migrated towards a more of a printed circuit technology that integrates connectors and integrate that whole assembly and allows the customers to have a better vibration proof and a more kind of certainty of the application than they would have had in the past. That’s a very, very long term trend that we see and it’s one that we’re really at the forefront of working with leading customers around the world on enabling. Previously, we had that capability predominantly in North America and the Invotec acquisition gives us that high value-add, high technology opportunity to support customers also in Europe. And so it’s very, very much consistent with that strategy. You could call it a little bit of a niche strategy in that broader printed circuit area, but it’s very complementary to our overall value-add interconnect offering to those customers.

Okay. Our next question comes from the line of Sherri Scribner of Deutsche Bank. Your line is open.

Hi. Diana, I just wanted to bridge the full-year revenue guidance versus what you’ve said a couple of months ago to what you’re saying now. It looks like you add the acquisition back. You add the modestly [ph], you had this quarter and then you take out the FX impact, it’s mostly the same guidance. I just want to make sure that I’m understanding that correctly, it seems like mostly that changes the acquisition and FX impact.

Sure. I think that’s the right way to look at it. I think at the high end, that’s exactly right. It’s the same guidance adjusted for FX impact and adding in the Invotec acquisition. And from a low end of guidance, we’ve increased the range from 2% to 5% organic growth to 3% to 5%. So I think the way you’ve described is correct.

Okay. Thanks. And then I guess just for the second quarter guidance, it seems a little – it seems like the seasonality is a bit less than you would typically see. Usually you see sales increased sort of in the mid-single-digit. On a sequential basis, what’s really driving that? And then I guess, what’s the strengths that drives growth in the second half of the year? Obviously, mobile devices to some extent, I just want to get a little more color. Thanks.

Sure. I think as I said in my prepared remarks, we expect in the second quarter to look sequentially. We expect not to see the normal sequential increase in the wireless market. The wireless network market, due to the fact that we now see a year-over-year decline in that market and I think Adam just described pretty well what is going on there. In terms of the mobile device market, we actually do have a more positive view of that market and expect now that that market will be up in the mid-single-digit – range for the year. But in the second quarter, due to program timing, again we expect that market to be flat. And then as we move into Q3 and Q4, the second half of the year, we expect to see a significant strengthening in that market. And that’s why you see a little bit less than what our normal sequential seasonality would be in Q2 and we’ll have a little bit higher than normal seasonality if you will when we move into Q3 in the second half of the year.

Our next question comes from the line of Shawn Harrison of Longbow Research. Your line is open.

Hi. Good afternoon. I guess, kind of going back to the first question is on mobile, twofold on devices, am I correct, is it solely content gains which give you the bullish view on the second half of the year versus a better volume outlook for the device market? And then, second on networks, is it – is there an inventory issue of Amphenol products or is it that there’s an inventory issue of end products being put into the market? I just wanted to be clear on that versus just lack of deployment of base stations and associated equipment for the year.

Shawn, thank you very much. Just relative to mobile devices, it’s hard for us to always say is it content gains? Is it new wins on new programs? Is it more content on programs that we already had content? I think the best is to say that we’re doing an excellent job of maximizing our content on as many devices as we can, and we have a lot of devices in the space. So to sort of parse it out and say which is content and which is totally new things and which are volume expectations. But I think that the team is just doing a fabulous job to gain position on coming programs in which we have a lot of confidence as well on programs that we really start to see and start to really see in the pipeline. Relative to mobile networks, I mean, I don’t know necessarily that I would call it an inventory although there certainly may be end inventory in the channel, of base stations and things like that. I mean, that’s very common when you have a big capital spending year followed by some reductions and that some of the equipment manufacturers may very well have some inventory. But I think if you just look at the capital spending plan that are widely reported, there are many of those that do reflect some significant downturns. I think there are some of those operators as well who are also involved in some of these broadly reported corporate mergers and whether that is keeping some governor on their spending plans. That’s something they know that I don’t know. But there are certainly some moving pieces going on strategically in the industry. I think all that being said, we feel that our position in that space, that our position with customers is really stronger than it was before and one thing I’ll say is when you look at our performance last year, we did such a fabulous job in a time of high growth than demand to satisfy customers. They don’t forget that. They really don’t forget it. And so when that spending comes, and it will come, they will always remember who was there for them and who reacted quickly, who didn’t caused their crews to not have the parts when they needed them in the field. And that will reflect positively on our ability to continue to gain position in the mobile networks market long-term.

Very helpful, and if I may just may one brief follow-up, it seems as if private party multiples – private market multiples on sensor companies has gone a bit sky-high over the past six to 12 months, is that anyway change your thinking about the opportunities in that market near-term knowing that you guys are typically a very stood acquirer?

Pretty safe to compliment look we’re not a bottom feeder, we are still an acquirer, we pay fair multiple for a good companies and we have bought many companies in many different valuation cycles. So whether there are a few data points over the last twelve months that reflect may be higher multiples than we would necessarily have paid, does that change the landscape for Amphenol? Absolutely not, we continue to have a fabulous reputation among sellers, both financial sponsor sellers, as well as real owner, managers of companies. As a company that does what it says, keeps it word, executes quickly, pays a fair price and is a fabulous home ultimately for those companies. And I think that that’s the one who pays only the highest price doesn’t win in every instance. There are some instances where they do win and if someone wants to pay a much higher price than us, in certain occasions, we’ll be happily not buying those companies. But I think that there still remain a lot opportunities for us to acquire great companies using our consistent methodology which hasn’t changed over the years. And we have not chased kind of market multiples as you know very well, regardless of what cycle that we’re in. We view this as a real long-term game. When you’re buying a company you’re buying it in our world that leads for life. And you don’t sort of buy opportunistically when things are cheap and not buy when things are expensive and you don’t only buy because of short-term dynamics that are at play. We feel very confident that long-term we are going to continue to be successful across the broad range of companies that we want to acquire that includes interconnect as well as sensor companies.

Okay. Our next question comes from the line of Sherri Scribner of Deutsche Bank. Your line is open.

Hi. Diana, I just wanted to bridge the full-year revenue guidance versus what you’ve said a couple of months ago to what you’re saying now. It looks like you add the acquisition back. You add the modest beat that you had this quarter and then you take out the FX impact. It’s mostly the same guidance. I just want to make sure that I’m understanding that correctly. It seems like mostly the change is the acquisition and FX impact.

Sure. I think that’s the right way to look at it. I think at the high end, that’s exactly right. It’s the same guidance adjusted for FX impact and adding in the Invotec acquisition. And from a low end of guidance, we’ve increased the range from 2% to 5% organic growth to 3% to 5%. So I think the way you’ve described is correct.

Okay. Thanks. And then I guess just for the second quarter guidance, it seems a little – it seems like the seasonality is a bit less than you would typically see. Usually you see sales increased sort of in the mid-single-digit. On a sequential basis, what’s really driving that? And then I guess, what’s the strengths that drives growth in the second half of the year? Obviously, mobile devices to some extent, I just want to get a little more color. Thanks.

Sure. I think as I said in my prepared remarks, we expect in the second quarter to look sequentially. We expect not to see the normal sequential increase in the wireless market. The wireless network market, due to the fact that we now see a year-over-year decline in that market and I think Adam just described pretty well what is going on there. In terms of the mobile device market, we actually do have a more positive view of that market and expect now that that market will be up in the mid-single-digit – range for the year. But in the second quarter, due to program timing, again we expect that market to be flat. And then as we move into Q3 and Q4, the second half of the year, we expect to see a significant strengthening in that market. And that’s why you see a little bit less than what our normal sequential seasonality would be in Q2 and we’ll have a little bit higher than normal seasonality if you will when we move into Q3 in the second half of the year.

Our next question comes from the line of Shawn Harrison of Longbow Research. Your line is open.

Hi. Good afternoon. I guess, kind of going back to the first question on mobile twofold on devices, am I correct, is it solely content gains which give you the bullish view on the second half of the year versus a better volume outlook for the device market? And then, second on networks, is it – is there an inventory issue of Amphenol products or is it that there’s an inventory issue of end products being put into the market? I just wanted to be clear on that versus just lack of deployment of base stations and associated equipment for the year.

Shawn, thank you very much. Just relative to mobile devices, it’s hard for us to always say is it content gains? Is it new wins on new programs? Is it more content on programs that we already had content? I think the best is to say that we’re doing an excellent job of maximizing our content on as many devices as we can, and we have a lot of devices in the space. So to sort of parse it out and say which is content and which is totally new things and which are volume expectations. But I think that the team is just doing a fabulous job to gain position on coming programs in which we have a lot of confidence as well on programs that we really start to see and start to really see in the pipeline. Relative to mobile networks, I mean, I don’t know necessarily that I would call it an inventory although there certainly may be end inventory in the channel, of base stations and things like that. I mean, that’s very common when you have a big capital spending year followed by some reductions and that some of the equipment manufacturers may very well have some inventory. But I think if you just look at the capital spending plan that are widely reported, there are many of those that do reflect some significant downturns. I think there are some of those operators as well who are also involved in some of these broadly reported corporate mergers and whether that is keeping some governor on their spending plans. That’s something they know that I don’t know. But there are certainly some moving pieces going on strategically in the industry. I think all that being said, we feel that our position in that space, that our position with customers is really stronger than it was before and one thing I’ll say is when you look at our performance last year, we did such a fabulous job in a time of high growth than demand to satisfy customers. They don’t forget that. They really don’t forget it. And so when that spending comes, and it will come, they will always remember who was there for them and who reacted quickly, who didn’t caused their crews to not have the parts when they needed them in the field. And that will reflect positively on our ability to continue to gain position in the mobile networks market long-term.

Very helpful, and if I may just one brief follow-up. It seems as if private market multiples on sensor companies has gone a bit sky high over the past six to 12 months, is that anyway change your thinking about the opportunities in that market near-term knowing that you guys are typically a very stood acquirer?

Well, I appreciate the complement. Look, we are not a bottom feeder. We are a stood acquirer. We paid fair multiples for good companies and we have bought many companies and many different valuation cycles. So, whether there are a few data points over the last 12 months that reflect maybe higher multiples than we would necessarily have paid because that changed the landscape for Amphenol, absolutely not. We continue to have a fabulous reputation amongst sellers, both financial sponsor sellers as well as real owner, owner, managers of companies, as a company that does what it says, keeps its word, executes quickly, pays a fair price, and is a fabulous home ultimately for those companies. And I think that thus the one who pays only the highest price doesn’t win in every instance. There are some instances where they do win. And if someone wants to pay a much higher price than us in certain occasions, we will be happily not buying those companies. But I think that there still remain a lot of opportunities for us to acquire great companies using our consistent methodology which hasn’t changed over the years. And we have not chase kind of market multiples as you know very well regardless of what cycle that we’re in. We view this as a real long-term gain. When you’re buying a company, you’re buying it in our world at least for life. And you don’t just sort of buy opportunistically when things are cheap and not buy when things are expensive. And you don’t – you only buy because of short-term dynamics that are at play. We feel very confident that long term we’re going to continue to be successful across the broad range of companies that we want to acquire that includes interconnect as well as center companies.

Okay. Our next question comes from the line of Amit Daryanani of RBC Capital Markets. Your line is open.

Good afternoon, guys. Thank you. Two questions from me, one, Adam, I was wondering if you can just touch on this mobile devices trend that you expect in the back half of, is there a lot of breadth to the strength that you guys are expecting or is it really driven by one or two customers because this is historically at least being a fairly volatile part and for you guys in the past. I’m just trying to get a sense of how good the breadth is from a customer basis on the back half.

Well, look, I think we’ve always said and I wouldn’t say anything different this year that our breadth in that market is relatively reflective of the overall breadth of who is successful and who’s not successful in the space. And so, I think, I wouldn’t say anything different about our outlook for this year. It is a market where there are always winners and losers of the day. And sometimes those are different winners and different losers of yesterday and different winners and different losers of tomorrow. But it is a relatively concentrated market as it relates to who’s winning at a given moment. And I think from that standpoint, our guidance is consistent with how we have always approached that market. I think we have a strong position across a lot of different products, product types as well. I mean, it’s not just phones, it’s not just tablets, it’s not just ultrabooks, I mean, there’s accessories and other things that go along with those. And I think our team has just done a fabulous job on their continued mission to diversify our presence in that space, as best one can in the space where there are always winners and losers.

Got it. And then just on the automotive side, your revenue growth, the organic trends have been well ahead of what I think order production in content number would suggest. So, if we could just talk a little bit of what’s driving that? And then, are you starting to get benefits from cross-selling opportunities with the GE sensor assets you guys acquired? Is that something tangible difference in your revenue line over there?

Yes it’s a very great point. I mean, we’re just so proud of this market and how that’s performed. I mean, just to think over the last, half a decade here. I mean six years ago, Q1 of 2009, this market was 5%, 6% of sales and here it is this quarter, 18% of sales. Really, a historical high for us across that balanced diversification that we have. And I think if I look at why we continue to outperform, I mentioned in my remarks earlier, that we really see two main pillars of that. One is we’ve made a lot of great acquisitions. And over the course of the last five years, we’ve acquired just a great range of really interesting, really high technology, high performance companies ranging from companies that are involved in field connectors to companies involved in automotive lighting to companies involved in data com and power connectivity in the car to sensor companies. And I think that those acquisitions have really rounded out our high value product offering, at the same time as the other pillar has been a real focus on organic growth and driving products into new applications in the car, not trying to take share from the traditional players but really capitalizing on new applications, new electronics, new functionalities that comes into the car. And so ultimately, as it gets to that sort of cross-selling, automotive is not a market where things slip on a dime. At the same time, if I think over the last five years, have we benefited from cross-selling of some of those acquisitions that we have brought on and have those become drivers of really renewed organic growth for the company? No question about it. But that does take time. And so, now to your question of does the sensor company which we acquired 16 months ago in the case of Advanced Sensors or Casco, roughly less than half a year ago, have those started to create meaningful material impacts to sales? I wouldn’t say that they’re material impacts to sales, when I say that we have seen meaningful progress in finding those opportunities, absolutely. When do those ultimately translate into kind of moving the needle on a revenue standpoint? There is a certain time horizon to that in the automotive industry, whatever that may be, once in three years. And I fully expect given the great progress that our team has managed to achieve, that we will see that impact long-term. But I wouldn’t necessarily say that our results this quarter have any meaningful impact from cross-selling of sensors, but they clearly have meaningful impact from cross-selling of other things that we’ve acquired over the last six years.

Okay. Our next question comes from the line of Mark Delaney of Goldman Sachs. Sir, your line is open.

Great. Good afternoon and thanks so much for taking my questions.

Thank you.

For the first question, Adam, I was hoping you could help provide some perspective on some of the trends you’re seeing in the industrial end market and I know you commented on weakness in the oil and gas area specifically as you had anticipated, but I wanted to see if you’ve seen slowdown in any of your other industrial end markets given some of the weaker data points we’ve seen this earnings season from some of the big industrial companies.

Sure. Well thank you very much. Obviously, we did talk about oil and gas and I think that’s the real sort of the industrial market, the one that’s no doubt in the headlines with the broadly reported price of oil and the resulting slowdown in some of the drilling, and extraction and the exploration activities there. And like anybody else, we’re not immune to that slowdown and that had certainly had some impact. I mean fortunately for us, we’re not leveraged on to one or another part of the industrial market. We have a very diversified industrial market across things like heavy equipment, alternative energy, lighting, machine tool, factory automation, rail mass transit. And I think I mentioned where we saw really the strength in the quarter. We saw that great strength in heavy equipment and that heavy equipment strength was not just because of some acquisition that we made with Goldstar, but also we saw outstanding performance in heavy equipment organically where we’ve just made great progress really in taking stronger position with customers in the off-road and heavy equipment market. We’ve seen fantastic performance in alternative energy where our team there has just done such a fabulous job in what is not an easy market. I mean, solar and wind energy and the other sort of ancillary alternative energies. Some of those can be very tough markets, but we have an organization that just focuses on that space, drives costs down, and takes share with important customers around the world. And they’ve done a great job. We’ve done a great job in things like lighting and machine tool, as well. I think the only space where we maybe saw a little bit of downturn besides oil and gas, wasn’t quite as robust in factory automation although in local currencies, it was relatively flat. But otherwise, I think we’ve seen pretty broad-based growth in our industrial market.

Yes. Thanks. I appreciate the perspective there. And for a follow-up question on gross margins, I know gross margins have gone back to 32% which is a good number and I think that’s been a level that are high after several years. I think the last time you guys were there were at 2010, 2011. As you look out into the second half of the year, if we think about mobile device revenue mix maybe increasing, is that something that’s going to put some downward pressure on gross margin or are there other things that can maybe offset what I would expect would maybe be some mix headwinds for 2H?

I think that we would more talk about operating income margin. I think as we’ve said before on prior calls, we really don’t manage the gross margin or the SG&A line. We look at operating income margin and I think that they are within the market we participate in they are certainly to your point, a different mix of gross margin and SG&A, but it’s the operating income, I think, that we all care about at the end of the day. From an operating income standpoint, we had certainly very good performance here in the first quarter in line with what our expectations are. We had a very strong year-over-year conversion margin on incremental sales. I think the guidance as we’ve laid that out has again good conversion margins in the remainder of the year. It implies an increase in ROS levels as we go through the year, and so, we feel very good about what the trajectory of that profitability will be during 2015 and that fully incorporates that mix that you refer to with a stronger mobile device market in the second half. So again, we feel very good about the profitability profile that we expect to see in 2015 and expansion in ROS levels.

Okay. Our next question comes from the line of Amitabh Passi of UBS. Your line is open.

Hi, guys. Adam, I have a couple of questions on the IT data com segment. Looks like sales are sort of stabilizing over the last three quarters or so, just wondering, are you starting to see somewhat stability with your OEM customers or do you continue to see your business skew more towards the web-scale companies?

Yes, thank you very much, Amitabh. I think stabilized, we’re happy to see actually pretty strong growth in that space this quarter. We grew 7% for the year. I think I guided that we expect to have that IT data com grow mid-single digits for the year and I think we’re doing that at a time when you continue to not see such robust growth at least coming out of the publicly traded hardware OEMs around the world. So I think from that standpoint, we are – really continue to gain position in the IT data com space. There is no question that we have really expanded our activities around working with, as you call it, the web-scale providers or we call it kind of the data center web service provider customer base. And I think that’s a real pivot that we have had to make and in typical Amphenol fashion, that’s a pivot that we make very quickly because that’s kind of one of the great advantages of our entrepreneurial organization is that agility that we’re able to exercise. We don’t have to kind of completely restructure ourselves to pivot towards a new trend in that market. And I think as I mentioned earlier, we do see in the IT datacom market, quite a significant transformation happening and I think I call it kind of a re-architecting almost of how you work in that IT datacom space, and I just think our team has done a fantastic job in capitalizing upon that, not just reacting to it, but really capitalizing upon that change. I think where we have seen real progress is in our real leading offering of high speed products, as well as with our outstanding power solutions that go into that market, and the high speed, no…

That was helpful, Adam. And just a quick follow-up, there’s some excitement in the market around standardizing 25-gig. Is that a meaningful needle mover for you guys, or in the grand scheme of things, would have been noise [ph] I’m just trying to get a sense of how big 25-gig could be potentially for your business.

Yes. I mean, 25-gig is something we’ve actually been developing, inhibiting for I don’t know, feels like almost eight years now, that we’ve been talking about creating and have created interconnect solutions to support 25-gig. The reality is, we’re working on interconnect solutions just well beyond 25-gig. And one of the reasons for that is, that the interconnect sometimes outlast the silicon in these devices. I mean you can imagine an environment where boxes are being built and they want to change our cards in that box with the latest speed upgrade. But you got to still put it through the connectors that are residing, for example, in the backplane or the midplane of such a system. And so, we have always pride ourselves on creating high speed solutions that gives headroom beyond where the customers want to go in today. And so, it’s true that there’s maybe a lot of more publicized talk about 25-gig. For us, we’re talking about things like 56-gig and 100-gig and beyond right now because we need to think far in advance such that when our customers design our product into their core architecture, they’ve got room to expand in the future.

Okay. Our next question comes from the line of Mike Wood of Macquarie Group. Your line is open.

Hi. Good afternoon. First question on order growth, can you just remind us – you were looking for that end market for the full year. I think you may have mentioned low double-digit previously. And with the growth rates in auto be primarily determined by product launches or is it really customer decisions with upgrading to a specific add-ons when they make the car purchase?

Thank you very much, Mike. Yes. I think we have guided for that market to be growing in the low-double-digit. I don’t know if I’ve given specific number, but it’s somewhere in the low-teens I would estimate organically…

Organic. Yes.

Yes, from organic. Obviously, we have much higher expectations because of the acquisitions that we made last year. I think we would see in a local currency basis growth sort of more in the kind of 25%, 30% range for the year. Relative to timing, you have a couple of dynamics in play. Certainly, we have good content on new platforms and many times you work for many years on a new system that’s integrated into a new platform and that has a certain ramp cycle to it. But in addition to that, what we have started to see more of over the recent years is what I would call mid-cycle upgrades. And those mid-cycle upgrades would be things like lighting and onboard electronics where the electronics industry is just moving in a much faster pace than the automotive industry has traditionally moved. And I think the auto companies have recognized that there are certain feature sets in the car that they can’t wait five years for a platform upgrade to implement. I mean, you’d see it even in any car you drive, you buy it with a GPS system and within six months, that GPS already feels kind of old and clergy [ph]. And I think that that is the dynamic that the car companies they’re really facing up too quickly. And so we have seen a few more of what I would call mid-platform upgrades which don’t coincide with that traditional kind of second half of the year product launch that you would normally see in car companies. And so I think that it’s maybe not quite as magnified to those platform launches as it has been traditionally.

Great, and then more than 30% conversion in March on the interconnect business, was that upside relative to your long-term goals from the improvement on the acquired companies notably Advanced Sensors. So does that have a similar impact embedded in our 2Q guidance?

Sure. I think from a year-over-year standpoint, that’s 32% conversion margin had contributions from both of those things. So I think to your point the acquisition program did come along very well during 2014 as we talked about last year and coming into this year, so there is a positive impact there. But the base business or the core business also performed very well from an operational and execution standpoint on that incremental volume. And so I think we’re getting a contribution from both of those things that you’re seeing in the Q1 profitability level. And I would say as we work our way through 2015, I think, that would also be true where we expect both our base business and the acquired companies to continue to execute well and to continue to move up that scale from a profitability perspective.

Okay. Our next question comes from the line of Steven Fox of Cross Research. Your line is open.

Thanks. Good afternoon. Two questions from me, one, just a quick check on your DSOs being up four days for the quarter. I wasn’t quite clear on whether you were saying that there’s a slightly higher level or whether you think that number comes down in the next couple of quarters. And then secondly, Adam, can you just talk a little bit more about the broadband business given it’s never been a huge growth area for you organically and some of the things you just talked about seem to suggest that it could be headed for some more muted growth for a while and you have fixed costs that are, my understanding is very well associated just with that business. What is it that that keeps you in it today versus maybe looking out a year or two?

Maybe I’ll just start with the DSO question.

Yes. Thank you.

To your point and as I said, the DSO was at the high end of our normal range at the end of Q1 and DSO and payable days are a little bit harder because you can get the end of the quarter sometimes and if you do have a day or two either way. But I think that over time, we would expect, I think, that to come back down more to the midpoint of our range and it can range anywhere from 70 days to 77 days probably at the end of a quarter. But we would expect that that would work its way back down towards that midpoint.

Yes. And, Steve, relative to the broadband business, it’s true that right now we would certainly prefer to have them more robust growth outlook for the business, and last year that business was slightly down on a year-over-year basis. Why are we in that business? And I’ve said it before and I’ll just reiterate it today, we believe that it’s very important for the company to participate in all aspects of the electronics industry and that includes in all aspects of how people get Internet and high speed data. And the broadband remains one of the top ways that high speed data is delivered to homes and businesses around this country and many others. And we have just an outstanding position in that space, and I think our team has done an excellent job to diversify our products such that we’re no longer simply just a cable on a real company that we were many years ago. It’s very true that right now that industry is going through a lot of change. I mean, you have the very widely reported mergers that are still lingering and delayed. Then who knows ultimately whether they get approved. You can imagine that that causes a pause in the purchasing activities of customers. But we saw a very similar dynamic for close to three years in our wireless networks business, and I talked all along about the fact that there was building, a pent-up demand in the wireless networks market, and ultimately, that pent-up demand which we continue to focus on gaining position, we continue to position on gaining technology breadth in that space, ultimately, last year, we were able to realize fantastic growth in that space as the operators ultimately realized that they had to satisfy some of that pent-up demand. What kind of pent-up demand is being created in the broadband space? I mean I can only speak out of personal anecdotes of how terrible that service is in certain areas and you can imagine that as that business shakes out, in particularly in the United States, that one could imagine a scenario where the build-out activity strengthens again. And we’re not a company that is just living by the short-term of what’s happening in that market in a given year. We have long-term conviction that it’s great to be in a space where we have a high technology, leadership position in an area that is delivering one of the best delivery systems for high speed data that anyone knows today. So what will it be this year? We have a more muted expectation. We anticipate a little bit of growth this year. What will it end up being next year? Time will tell. But one day, will there be a necessity for investment in that space, an investment where Amphenol will be a participant in that? We certainly have that long-term conviction.

Fair enough. That’s very helpful. Thanks.

Thank you, Steve. I appreciate it.

Your next question comes from the line of Craig Hettenbach of Morgan Stanley. Your line is open.

Yes. Thank you. Adam, question on the sensors business. If you think through the strategy there, can you give a little context in terms of how much is push versus pull in terms of some of your customers perhaps pulling you into discussions in terms of what you can offer at this point and what the implications are for the growth there?

Sure. I mean, look, I ‘m not going to tell you that in any of our businesses, customers just come screaming and knock down the door. I mean, we got people out there knocking lots of doors. And so, in every one of our business, we’re going to push hard and that’s true certainly in the sensor business, as well. I think to the extent that there is a pull, it’s a pull that happened internally in Amphenol, where we have fabulous relationships with certain customers in certain segments of either the industrial or the automotive market in particular where we don’t have a sensor relationship. And through that wonderful dialogue that we have with our ongoing relationship from an interconnect standpoint, we pull in the sensor team to talk about a collaborative drive whether that is a new integrated product, or whether that is just a totally new product that the customers says, hey, now that you have that sensor, let’s talk. What’s the genesis of that conversation? Is that the customer taking up to notice there is it our sales person promoting it or our engineering team promoting it, I have a hard time to say which is push and which is pull. But no question there’s a lot of dialogue happening at customers across those spaces. And the customers that I have had the good fortune to visit, they just are really happy that a company in whom they have so much confidence like Amphenol, now can offer them a broader solution of interconnect, of sensors and of antennas, which are all products that are real growth areas for customers in most of those spaces. You talked about something like the Internet of Things which is a very often bantered about, almost cliché these days. Ultimately, this Internet of Things as it’s reflected in places like industrial and automotive and otherwise, is a network of sensors with antennas and interconnect on them. And there’s very few companies very, very few who can say they’re really a leader in all three spaces and that’s something that we can say very strongly to our customers around the world. And I think ultimately that will create long-term value for the company and for those customers. And does it start with a push or a pull, it doesn’t really matters as much as in the end that we win it.

Got it. Maybe just a follow-up there since you mentioned kind of integrated product. Can you talk about just the design engineer teams working together now and how you envision that as you look out over a couple of years in terms of where the technology might go?

Sure. I mean, you know very well, Craig, having covered the company for awhile that we have still a very simple organization which general managers who run their organizations and they have full accountability and authority to run their businesses and all the functions report up into those businesses. And so, we don’t have an integrated engineering organization across Amphenol. What we do have is a very successful approach towards collaborating across those companies. And so, to the extent that these integrated products happen, it’s through that collaboration that will come, for example, between an engineer working in our sensor organization and an engineer working in one of the other operations, be that in industrial or automotive or otherwise. And the real question comes is how do you stimulate those dialogues and identify them. And that’s where our group executives and our management team comes into play so much, which is making sure that we are incubating those dialogues on a frequent basis, facilitating them and identifying them as appropriate such that we can put those engineers in a room together and get the job done. And I think we’ve done that really from day one. So one of the very first things we did when we acquired Advanced Sensors and then later when we acquired Casco, was to get a bunch of engineers in a room together to meet each other, number one, and to exchange kind of, hey, this is what I do, tell me what you do, kind of you show me yours, I show you mine. And that initiation of the relationship was something that we took the opportunity very early to do and that has already started to pay great dividends through some of the collaborative activities that we’ve seen. So I think that long term, to the extent that customers have a desire and a need for those integrated products and we think they will and we see them already having that, I think our engineering teams will work very well collaboratively still within the basic Amphenol operating structure but in a way that can be very effective to solve those problems for customers.

Okay. Next question comes from the line of Will Stein of SunTrust. Your line is open.

Thank you for taking my question. Two quick ones, first in the wireless infrastructure end market, I’m wondering if you’re seeing anything meaningful from the small cells this year?

Yes. I think we are very much participating in small cells, and I couldn’t break down how much of our sales are resulting from small cells, but is there something meaningful? Yes. I would say that there is something meaningful in small cells as the capital spending of some of our operator customers, in particular, shifts a bit from macro towards a bit – towards small and microcells. But we certainly would benefit from that because we have a great product offering that covers that both from an interconnect, as well as an antenna perspective.

Great. And then, in the industrial, that broad based industrial end market, I want to follow up on a question that’s asked earlier. Often I think we as analysts try to look at results of some of the biggest industrial companies and try to draw conclusions from their results to those of Amphenol and others. And I’m wondering if that – if you think that’s a reasonable way for us to anticipate demand shifts in this end market or, perhaps, is much of your demand really coming from either private companies or companies that we might not have a good view of because of their size? Any characterization trying to line up those two, let’s say, the results of the big companies and your results would be really helpful. Thank you.

Sure. Will, I would love to be able to help you make a model for the industrial market, but I think I would fail miserably. You’d do a much better job than I would. Our industrial business is so diversified. And so to look at maybe, for example, a diversified industrial company, I mean, there’s a pretty big one down the road here in Connecticut and say, is that a proper proxy for the industrial outlook for Amphenol. I wouldn’t necessarily say that that would be the most highly effective approach to that. And we work across so many segments of industrial. Ultimately, what ties these industrial markets together is that their applications that tend to go into areas which are a little bit dirtier, a little bit more tricky to deal with, they tend to have to last a long time. But I mean, you’re talking about applications as diverse as solar cells and high-speed rail, factory automation, oil and gas, things that may – companies that make earthmovers and tractors, lighting and next-generation lighting, medical. I mean, do those have necessarily the same cadence to them, those spaces, or is there one or two sort of proxy big companies where one can say, well, that’s going to drive it, not necessarily. And I think there’s another element, too, which is the same dynamic that we talked about in automotive which is the expansion of new electronic feature set in that space. Means that you can’t just say how many more cars are built this year and that’s what are the revenues of Amphenol or Amphenol’s peers going to be in that space. You have the very same dynamic that happens in industrial. There is this what I – so, not is a very easy to say word but kind of an electronification that’s happening across the industrial market and all those spaces that I referred to, where something, for example, that used to be a hydraulic or a mechanically driven feature on a tractor now becomes electronic, or where a train that used to only need power to connect between the cars now need the whole suite of fiber optics, and digital, and power, and RF and other aspects, or where a train network now has to be tracked through the whole wireless system, something like a positive train control. I mean I can go on and on about that migration that’s happening in the industrial market away from hydraulics and mechanics and towards electronics, which is the same thing we’ve seen in commercial areas, the same thing we’ve seen in military, it’s the same thing we’ve seen in automotive whereby it’s very hard to just take the overall equipment sales and then put that as a template for what one should expect for Amphenol. I think clearly, our performance over these years has reflected a very different trajectory than one would have seen in overall GDP year overall industrial performance.

Great. Thank you.

Thank you very much Will.

Our next question comes from the line of Wamsi Mohan of Bank of America. Your line is open.

Yes. Thank you. Diana, you noted that inventory was a little higher than normal to support future builds. So in light of the fact that guidance is roughly flat sequentially, what end market is this targeting, why is it typically higher this quarter? And I have a follow-up.

Sure. I think we wouldn’t – we’re not going to get into inventory by end market, but I think our guidance is, from an organic standpoint, about 3% growth sequentially so it’s not exactly flat but I think that some of this build is not necessarily just for Q2, but also to some extent, goes into the second half of next year. That being said, I mean, inventory is a little bit higher but it’s still at the high end of the normal range that the company has had if you go back over the last few years. So, it’s not an astronomical build in inventory that we’re talking about here. And I think as I’ve said in the prepared remarks, we would expect as we go through the year, that inventory would come back down at least to the midpoint of the range from a day’s perspective historically.

Okay. Thanks for that Diana. And then, if I’m looking at this right, your guidance implies some organic deceleration in the second quarter, reacceleration again on the second half, despite some slightly tougher compares in the back half. So, is it fair to think that the puts and takes are largely the mobile network comments you alluded to in 2Q and then the mobile device ramp in 3Q that’s creating this dynamic, or are there additional drivers of acceleration that you have confidence in 3Q and further

Sure. I think if you look at the guidance and think about why it’s different than perhaps what you’d expect from a normal seasonality standpoint, I think it’s exactly those two markets that you just mentioned. It’s the fact that the wireless markets, which would ordinarily be up sequentially in Q2 for the reasons I already explained. We don’t expect that and then we do expect a pretty significant sequential uptick in the mobile device market in the second half of the year. And that does happen from time to time. If you go back historically, you can find other years where that’s happened. Then I think as Adam has described on many of these calls before, it just tends to be a lumpy type of business depending on timing of program introductions and that kind of things. But it is – those two markets that are giving the 2015 sequential seasonality a bit different look than perhaps what it has been in the past.

Okay. At this time, there are no further questions on queue. Speakers, you may proceed.

Well, thank you very much. And again I thank you all for your attention today and I hope that spring has come as it has here at Wallingford, Connecticut, to all of you and we look forward to speaking to you again in a short three months. Thank you very much.

Thank you.

Bye-bye.

Thank you for attending today’s conference. And have a nice day.