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, Mr. Craig Lampo. Sir, you may begin.

Thank you. Good afternoon, everyone. My name is Craig Lampo, and I'm Amphenol's CFO. I'm here together with Adam Norwitt, our CEO. We'd like to welcome everyone to our first quarter conference call. Q1 results were released this morning. And I will provide some financial commentary on the quarter; and Adam will give an overview of the business and current trends and then Q&A. The company closed the first quarter with sales and EPS of $1.451 billion and $0.59, excluding one-time items. Sales were up 9% in U.S. dollars and up 11% in local currencies compared to the first quarter of 2015. From an organic standpoint, excluding both acquisitions and currencies, sales in the first quarter decreased 1%. Sequentially, sales were up 1% in U.S. dollars and down 8% organically after a seasonally stronger fourth quarter. Breaking down sales into our two segments. Our Cable business, which comprises 6% of our sales, was down 1% from last year primarily due to the effective currency translation. The Interconnect business, which comprises 94% of our sales, was up 10% from last year, primarily due to the impact of acquisition. Adam will comment further on trends by market in a few minutes. Operating income, excluding one-time items, increased to $270 million in the first quarter. Operating margin, excluding one-time items, was 18.6%, compared to 19.6% in the first quarter of 2015. The decline in operating margin is due primarily to the lower profitability level of the FCI business acquired in early January. As discussed on our last earnings call, the FCI acquisition is accretive on an earnings per share basis, but reduces the company's overall operating income percentage as the business currently operates at a lower level of profitability than the average of the company. We continue to be very excited about the…

Well, thank you very much, Craig. And I'd like to add my welcome to all of you on the phone here today from sunny Wallingford, Connecticut. As Craig mentioned, I'm going to highlight a few of our first quarter achievements here. I'll then discuss the trends and progress across our served markets. And then finally, I'll make a few comments on our outlook for the second quarter, as well as for the full year; and then of course there'll be time for questions at the end. With respect to the first quarter, we're very pleased that our results in the first quarter were stronger than expected as we exceeded the high-end of our guidance in sales and earnings; and that's despite continued market uncertainty. Our revenues increased by 9% in U.S. dollars and 11% in local currencies, reaching $1.451 billion. And very importantly, the company booked a new record of $1.479 billion in orders, which represented a book-to-bill of 1.02 to 1. As Craig went through and as we had anticipated, our margins, after acquisition-related expenses, were lower than prior year due to the impact of FCI, but reached to higher than expected 18.6% operating margins. And operating cash flow in the quarter was again a very strong $194 million. And I just have to say once again, how proud I am of this entrepreneurial Amphenol team who once again has reconfirmed the value of both their discipline, as well as their very important agility; and that has driven strong performance despite what are still very significant uncertainties in the worldwide economy. Now turning to our trends across our served markets. I would just point out that once again in the quarter, we continue to have a real tremendous balance across our end market diversification, as no one of our…

Thank you. The question-and-answer period will now begin. And our first question comes from the line of Wamsi Mohan from the Bank of America Merrill Lynch. Your line is now open.

Yes. Thank you. Adam, on the DLA issue, can you perhaps help us think to what percentage of the bill of material is subject to these procurement restrictions? And logistically, does this sort of, in the long run, affect the way you're going to have to source and where you're going to manufacture? Does it affect your cost structure at all, or do you view this just as a transitory thing within a couple of quarters where you overcome these supply chain issues? And I have a follow-up.

Yeah. Well, thank you very much, Wamsi. I think with respect to, the first part of your question, as it relates to the bill of materials, I don't know whether you mean the bill of materials in terms of our product range or what do we represent on the bill of materials of our customers. So, maybe I'll answer both. On one, I would just tell you that connectors represent a small percentage of the overall bill of materials, but we're the largest connector manufacturer in the defense industry. So, we have a very, very broad presence across essentially every equipment that there is. As it relates to our products, I think I mentioned that the products that issued here; number one, they come from one facility; and number two, they represent less than 10% of our overall military sales. So, from that perspective, it is a relatively minor impact to the overall military business that we have even if one or two of those products can end up on lots of different systems around the world. We do believe this will be a transitory issue. Let me just say that very clearly. We're working very rapidly to address the demands of the DLA. And our team is well, well along in that process. And as I mentioned, we expect this at most to be a two-quarter disruption at the extent that it is. Will it mean that we will have to source certain things in certain different places? Absolutely, because ultimately part of the issue arose from sourcing of components in a place that they now have decided is not appropriate to source from. So, we have already resourced those products. And I can tell you today that the vast majority of what we need to resource has already been resourced. And ultimately, I can tell you that our company is very good at managing through any cost impact that would come from that. We don't expect any material changes to our profitability in that business long-term.

All right. Great. Thanks, Adam. I appreciate the detail. And as a follow-up, on the mobile devices, you noted, if I heard you right, 20% quarter-on-quarter increase. I know obviously like 1Q was a fairly tough quarter across the entire mobile supply chain. It seems as though your 2Q quarter-on-quarter increase is actually somewhat better than what a lot in the industry are witnessing. And I was wondering if you could share any color on what is driving that sequential growth here from somewhat low levels arguably in 1Q? Thanks.

Yeah. Well, no, I appreciate that. Look, I think the first quarter, we view that as a normal quarter. I mean the reality is, if you look at our results over many years, the first quarter is usually down somewhere between, I don't know, 20%, 35%. So, was this slightly the high end of that? Maybe, but it was not out of the ordinary as far as we're concerned. That is what it is usually in the first quarter. I can't comment on what others are seeing in the second quarter. I can only comment on the fact that our team continues to do a wonderful job to take advantage of every opportunities that is present in the market, whether that is on new programs, taking share on other programs, developing new products, expanding the range of products that we sell, expanding the range of customers to whom we sell those products, and the different types of platforms that are there, because you're dealing with platforms everything within mobile computing devices that can be tablet, computers, that can be laptops, that can be phones, that can be accessories, wearables, all those kind of things. And I think our team does a fabulous job of continuing to diversify their business, expand and deepen their presence with customers and ultimately that's what we see going to the second quarter with the robust sequential outlook that we have.

Thank you. And our next question comes from the line of Jim Suva from Citi. Your line is now open.

Thank you. And congratulations to you and your team there at Amphenol. I think most are aware of your very good acquisition strategy and how strong it's been. And with interest rates so low, can you talk a little bit about your comfort level for continuing to do acquisitions or maybe are there debt to capital or debt to EBITDA levels or something you're mindful of, or it seems like the cash flow generated nature of this industry really supports a meaningful still room for M&A. So, can you talk about sometimes we get pushback about, oh, the company can't lever up any more or things like that, but can you just kind of talk about where your comfort level is from a financing perspective? Thank you.

Yeah. I'll let Craig talk first about the capital structure in the company, and then I'll maybe make a few more comments.

Sure. So, Jim, at the end of the quarter, we had about $1.8 billion of capacity under our revolver and cash from availability perspective after we did the new revolving credit facility that we entered in the first quarter that I mentioned in my comments, which certainly we believe is very strong capacity and certainly does even take into account the strong operating cash flow that the company continues to generate. From a pro forma leverage perspective, we're approximately 1.5 times at the end of the quarter, which is certainly well within our comfort level, certainly giving full on the appropriate consideration to the importance of our investment grade rating. So, I would say that we're very comfortable and certainly have sufficient flexibility from a leverage standpoint, and believe that we have plenty of capacity for future acquisitions as well as any stock repurchases that may be warranted.

And I think that's a very important backdrop, which is, we continued to be a very aggressive acquirer in the industry. We have a lot of capacity. We made just, at the beginning of the year, closed the largest acquisition in our history. Last year, we completed three other acquisitions and we continue to have a strong pipeline. At the same time, we will always be a disciplined acquirer. So, we look for companies that have great people that have great technology, that have a strongly complementary market position. And then we look to pay fair prices for those companies. And the fact that interest rates are low or not low, doesn't necessarily enter into our calculus so much in terms of the price we're willing to pay on things and how much of our capital we're willing to put to work. We view acquisitions as a very, very long-term initiative. This is not a short-term approach to say, well, that can be accretive in the year and thus we will do the acquisition. We're very, very thoughtful about that. And thus, we spend a lot of time. We date many, many, many companies over time. And then eventually, the select few of those that we date ultimately become strong acquisitions for the company. And we will continue to follow that same approach regardless of what short-term interest rates do or what the overall market multiples will do.

Thank you. And our next question comes from the line of Sherri Scribner. Your line is now open.

Hi, thanks. Adam, it sounded from your commentary that the macro continued to be challenging and looking at the guidance for the full year for many of your segments, the growth seems to be somewhat challenged. I guess I'm trying to think about the outlook with the FCI business obviously in there. How should we think about organic growth for you guys this year? It seems like it maybe low single-digits. And how should we think about the connector industry market growth at this point?

Yeah. Well, thank you very much, Sherri. I think we don't have a different view about our organic growth this year than we did when we came into the year. And I think at the time we talked about the organic growth being kind of at the midpoint just a hair above flat. And I think at the high point it was somewhere between flat, I think, down to the up 1% or something in that range. And we don't have a different view about the – or down 1% to up 2% I guess it was. We don't have a different view about the organic growth of the company this year. Now, when you look at the different markets, it's not that every market has that somber outlook. And I think this really speaks to the value of the diversification in the company. We have one market, mobile devices, which is not a small market for us. Last year in particular, it was a significant 18%, 19% of sales market and we do expect that that market will be down in the coming year, and that's all organic. On the other side, we have a positive organic outlook for markets like automotive, industrial. We have a positive outlook for aeros for commercial aviation and others are more flat. So, I think the value of the diversification in a time like this where there is no question that the overall growth environment is more muted is really coming through in 2016. What does that mean in terms of the overall growth of the Interconnect industry? There are many studies about that. I think when you compare us to others, you see still a more favorable outlook and a more favorable ultimately results in terms of the organic growth compared to the overall industry. And our goal, as a company, continues to be to outgrow the industry in every environment and through every cycle. And if you look over the course of the last 10 years, 15 years, we have outgrown the industry by a significant margin and we still have a long-term conviction to continue to do that going forward.

That's helpful. Thanks, Adam. And then just thinking about the margin profile as we move forward with FCI. Is there a point when you think that FCI's business can get to your corporate average levels and how long does that take? Thanks.

Yeah. I think, Sherri, what I would say on that is that we've taken some great actions I think in the first quarter that provide a real solid foundation for future performance for FCI. I mean, as a management team, we continue to be committed to improving that overall profitability of FCI. And I'm confident over time that we will be successful on bringing up to that pre-acquisition average for the company. I would say in regards to our full year guidance, it's only been three months since we acquired the company. And certainly it takes some time to see the impact of these actions. So, I would say that our current guidance really isn't so different than what we guided to in January of the top line and bottom line perspective. But I think, over time, we are committed to getting them. I wouldn't necessarily give you a specific timeframe for doing that, but I think if you look at our history and our success at prior acquisitions, I think you can feel confident as we do that we will be successful in doing that over some period of time.

Thank you. And our next question comes from the line of Shawn Harrison from Longbow Research. Your line is now open.

Hi. Afternoon, everybody.

Good afternoon.

Adam, I guess the mobile infrastructure market, you cited a better start to the year than maybe previously anticipated, but then echoing some caution about the year getting better. And so, maybe if you could just characterize what you're seeing out there? Is there something regionally that's giving you pause or is it just, let's wait and see how the June quarter plays out before getting a little bit more bullish on that market?

Well, Shawn, as you know, one swallow does not make a summer. And I think this is a market which had a very challenging year last year. There is still volatility in the market, there's still a lot going on from a corporate perspective in that space. We had a great quarter in the first quarter, and it was better than we had expected. There's no question about that. But I think it's a little too early to say that that is going to be then a trend of growth in the year. Should the opportunity present itself to have that growth in the year, our organization is so well positioned. And the one thing that we felt very good about in the first quarter is that the growth, that did not just come out of one place. We saw strength in North America. We saw strength in some places even like in India. We saw some strength in Europe. We didn't see so much strength in Asia in the quarter. And I would say that we probably saw more strength coming out of our sales of our product direct to service providers as opposed to the equipment manufacturers. And you know that there have been many widely reported corporate combinations among the OEMs in that space. So, there's still a lot going on in the industry that makes one take maybe a more prudent outlook for such a market, but to the extent that there is spending that is going to be there, there's no question in my mind that we will capture more than our fair share of it.

That's helpful. And as a follow up just on mobile devices, it's tough to actually say what seasonality is in the back half given its varied significantly for you over the past couple of years. But, at least with a strong second quarter, it implies a muted ramp into the back half versus maybe what you saw last year even a few years before. Are you seeing a shift in terms of how that market is ramping or are you just taking a more cautious view on what those devices will grow overall for the year?

Yeah. No, look, I think, we still have an outlook for second half to be much stronger than the first half, but you're correct in your calculation that it would be a lower ramp. Last year, our second half sales in mobile devices were, I think, 40%, 45% compared to the first half. And I think our guidance here would imply something more into the mid to high 20%s. So, no doubt about it. Now, in a given year, is there some years where it's more like this year and some years more like last year, I think we've seen all those different scenarios over time. I think that the growth that we're seeing in the second quarter, maybe that's a little more than we would normally see in the second quarter and maybe the second half is a hair less than we would see in other years. And so maybe that's a little bit more in balance from that perspective. But I can tell you that we do always take a prudent approach to our outlook in this market. These are products that sometimes have lifecycles of less than a quarter. And so, we want to be very careful in terms of representing what our customers tell us while also taking some of our past experience in terms of how those ramp ups ultimately go and that's how we craft the guidance. I think what everybody knows, who's followed the company for a long time, is to the extent that opportunities do arise either a competitor falls down on the job or a customer sells more of their products, our team has always been impeccably able to capitalize on those opportunities. And we'll, no doubt, be in that same position this year should those opportunities arise.

Thank you. And our next question comes from the line of Amit Daryanani from RBC Capital Markets. Your line is now open.

Perfect. Thanks. Good afternoon, guys. I have a question and a follow-up as well. I guess, Adam, when you think about the stop shipment impact from the DLA, do we think about this 1% revenue, $10 million, $11 million a quarter call it, essentially seizing in June and September, and then you're having a potentially snap up effect in the December quarter. Is that the way to think about it? Is that sort of what you baked into your model, and do you run a risk of share loss in this market given the fact that it's going to take two quarters to resolve it?

Well, thank you very much, Amit. I think that I would not anticipate any material snap back in the fourth quarter. I think the thing is still playing out. We are just over 30 days or so into this wonderful experience with the DLA. But no doubt about it, our team will be poised as soon as we are off that stop ship to satisfy every one of our customers as much as they need to be, but I wouldn't necessarily assume some massive snap back. Look, relative to share, in the next two quarters are some people going to take some orders that otherwise we would have taken, I guess by definition that's the case. But I can tell you, as a company who has been through two floods and this is the same facility, which was having a flood in the past, and by the way, I could tell you that these issues relate back even to the time of the flood, but that's not for regulators to sympathize with. I can tell you that this is an organization who does not accept to lose a position, period. And with our breadth of technologies, with our program presence, a two quarter stop shipment is not going to hurt Amphenol in the medium-term or long-term in our market position. In fact, I can tell you, we're going to come back so much stronger after this, that I would expect over the long-term, we will further build our leadership position in the military market.

Perfect. That's very helpful. And I guess, Adam, I heard you guys talk about the M&A discussion with Jim. I'm curious, you guys have plenty of liquidity as you sit today, what drove the decision to expand the commercial paper program, increase your revolver further at this point, given the fact you have enough liquidity and it doesn't seem like M&A is any more eminent today than it's ever been in the history of the company?

Sure. I think I'll take that one, Amit. I think the reasoning for that is really just more based on the size of the company today. We thought it was very prudent to increase the capacity of the company. We're a much bigger company than we were when we initially entered into the credit facility at the $1.5 billion size. We want to – we use most of our cash from a domestic perspective. We use for our share repurchase and dividend programs so domestically, we generally use our facilities for that in addition to any M&A that may come along. So there wasn't any other reason other than just to increase our capacity, and given the size of the company, so to put us in a better position long-term, but I wouldn't read so much into that. In regards to our overall capacity, again, this $1.8 billion that I mentioned before, which includes the $1.1 billion of availability at the end of the quarter under our credit facility and then the additional $700 million of cash that we had on our balance sheet at the end of the quarter.

Thank you. And our next question comes from the line of Matt Sheerin from Stifel. Your line is now open.

Yes. Thanks. Just a couple of quick ones for me, Adam. Just regarding the auto business, it sounds like the momentum is continuing there, you talked about good growth rates for the year. Within that business, the heavy truck and off-road vehicle area, I know has been mixed too weak for other suppliers and I know that tends to be a good margin business relative to the rest of your auto. How are things tracking there and what's the outlook versus geographies for that business?

Sure. Well, first, I would just make one clarification which is, we don't classify heavy truck as part of our automotive business, that's part of our industrial business.

Got it. Okay.

I certainly wouldn't assume that our margins are different on a heavy truck than it would be on overall automotive. So automotive is for us really automotive, as it is called. No, we're so happy with the automotive business. And you've followed us long enough to have seen the trajectory of that business over the last six years, seven years going from I think at its low 0.56% of sales to today 19% of sales, and we've done that both through some wonderful acquisitions together with some just outstanding technology program wins that we've had over those many years. And where we used to be a safety device company with a little bit of telematics, today, we have a very broad high-technology automotive offering, ranging everything from engine control to antilock braking, to electronic transmission, to high-voltage products, into sensors, starting even to make penetration and things like antennas along with the RF products that we've sold for so many years, and together with hybrid and electric vehicles. And so that breadth that we have into the high-growth content opportunities in the car that has really been for us what has differentiated in terms of our performance. And geographically, our automotive business has also really transformed from a predominant kind of two-thirds European business to today, a less than half of the business in Europe and really equally spread on the rest between North America and Asia. And when we look at our results in the last quarter, actually, we had really strong performance. For example, in the first quarter coming out of in Asia where there was some talk last year at least in terms of some warning signs in that space. But our team in Asia has just done a fantastic job and we've made a nice acquisition as well last year that positioned us with some of the local manufacturers in Asia. So I'd just tell you, we continue to grow in our satisfaction with the breadth and the depth of our automotive business. We're still small on any relative and comparable basis, but we certainly are getting more and more than our fair share as things go on.

Got it. And just another question on FCI, it looks like the results there came in to plan, but there was a disproportionately higher percentage of distribution sales for FCI than there is I know for Amphenol. And there has been talk among other suppliers, particularly the semi-suppliers that inventory correction has largely played out in distribution, there is some refresh going on. Are there signs from FCI's perspective that that's happening?

Yeah. I would just tell you that FCI didn't necessarily see a meaningful inventory – maybe at the time that everybody else was talking about it. And not surprisingly, they don't see necessarily a correction or a refresh that comes sometimes on the tail of that. So we don't see anything meaningful plus or minus relative to changes in the distribution channel. What we do see and that's for sure is now having owned FCI for just over three months, the relationships, the presence, the discussions that we're having with the distributors have really gone to a next level. And I think that that is just the testament to the strength that FCI had. You correctly point out, roughly 40% of their sales was on distribution, but what's more important is not that 40%, but rather where that 40% resides with the distributors. We have traditionally been more in the industrial, the aerospace, the harsh environment products with those distributors and FCI takes us much more into the more commercial products, a lot of which end up in embedded computing applications in the industrial space. And I think that's an area really of excitement among all of our distributors. And so we go from maybe a more traditional position with them to a position that is really right in the wheelhouse of many of their strategies. And I think we really see already the benefits of that in terms of the dialogs that we have had with our distributors and that we continue to have with them. So we thought all along that FCI would be a great asset as it relates to our distribution channel and I can just tell you three months in that that has been clearly confirmed for me.

Thank you. And our next question comes from the line of Mark Delaney from Goldman Sachs. Your line is now open.

Yes, good afternoon, and thanks very much for taking the question. Questions on the industrial segment. Adam in your prepared remarks you talked about some varied transmission, different portions of industrial. I was hoping you could elaborate a bit more on some of those subsector trends within industrial that you're seeing. And if you could help us reconcile at all some of the differences in indicators we see, there has been some improvement in some of the indices like the ISM index has started to pick up, but there is still quite a bit of volatility at a micro level on the industrial – from the industrial companies. So any sort of granularity or color you could give us on industrial would be helpful?

Yeah. No. Thank you very much, Mark. Look, I mean, we are not too wedded to all of these micro indicators in the industrial market. I mean, I read the same papers and see some of these things. I think there is no question. I mentioned in my prepared remarks that that is a relative somber overall industrial market. That being said, I can tell you our industrial team is far from somber. And I think the reason is, is we continue to plum for those opportunities that are there. We are not just stuck to things that aren't growing. But as soon as we see that the opportunity is not there, our team is quickly pivoting towards those areas where there are opportunities. And so we talked about last quarter, one example where we've seen a really great growth out of something like a hybrid bus and truck. We've seen also great growth coming out of alternative energy in areas like new lighting applications. We saw strength in instrumentation in the quarter. Conversely, a market like an oil and gas continues to not be a great place to be and that is what it is. And our team who is involved in oil and gas is doing all the things that you would expect and Amphenol management team to do at a time when sales are down very significantly. It is just a kind of a microcosm of how we view our business overall within industrial that we drive every day to make sure that we are properly diversified and agile such that we can pivot towards the opportunities that are there in the industrial market. And I think, our team has shown consistently the ability to really fair it out those growth opportunities, wherever they may be.

That's helpful. A follow-up question on commodities, there's been some rebound in commodity prices, especially in gold. And can you just talk about to what extent you are starting to see that in your cost structure and if there is something we need to be keeping in mind, as we think about modeling costs going forward?

Yeah, I mean, I'll take that. Thanks. Yeah, a good question. I think that as we've said before, there is certainly many contributors to margin. And in terms of the rebound of gold or copper or the other commodities, we've always said that you kind of have to look at the top-line growth opportunities in terms of the marketplace versus the bottom-line from the commodities and other things. And we haven't seen really a significant – although certainly a positive commodity environment is helpful, but we haven't seen that significant improvement other than in the cable segment, which I talked about a little bit. I wouldn't say that we would – I would say that there is a – we would also see a negative trend right now, based on where the prices are. Certainly if the markets then overall, become more robust in the future and like in 2011 when the commodities had some significant increase, there could be some impact at that point, but we don't see that at this point in time.

Thank you. And our next question comes from the line of Mike Wood from Macquarie Capital. Your line is now open.

Hi. Good afternoon. Auto remains one of your strong growth markets, curious if you can give us some more color just in terms of what's actually been driving the content and based on your platform visibility, where you see some of the content, if there is maybe one or two areas that you could point to of strong growth there?

Well, good afternoon, Mike. I think I mentioned earlier that we have really broadened our automotive business and we broadened it both from an application, we've broadened it geographically, we've broadened it by customer. I wouldn't point to just one or another application. I mentioned earlier that we've seen solid growth coming out of hybrid electric vehicles. Look, hybrid electric vehicles has been something that people have been talking about for pretty close to a decade now and I would tell you that today that seems to be a bit more of a reality than it was earlier just the prognosis for hybrid electric vehicles. So we're happy to see that, we're happy to see that we continue to win and gain new content. We've seen a lot of great content in other areas like electronic transmissions for example, that's something I've talked about in the past. It's an area where customers have one of the harshest environment electronic systems in the car, and where there is a unique interconnect requirement, in a very inhospitable part of the car, which is ultimately transmission. And it's part of a category of applications that I would almost refer to as halfway to hybrid because that's one area, whether that's electronic transmissions, whether that's start-stop motors, whether that's engine management control. These are all areas which allow automakers to improve the fuel efficiency of the car without having to stick a heavy battery and add all of the cost of a hybrid drive into the car. And so I think in general that is one area that's sort of hybrid-ish or half-hybrid area that we have seen good growth and we continue to see good progress with our customers.

Great. And also can you talk about how you view the diversity target to the company with the acquisition strategy? In terms of having now multiple segments that are approaching 20%, is there a sort of number cut-off where you'd exclude large acquisitions from your pipeline just to maintain the diversity?

Look, we believe that the diversity of the company is a great asset for Amphenol and I think we see it here in the first quarter. We've seen it over recent years, and I think this is really a strategy that is from my perspective really without reproach. Today, we have an outstanding balance across our – across the various markets with two markets representing 19% of sales, one representing 18%, and a few others in the double-digits. And I think that balance is really a great asset for the company. But we have had in the past in a given quarter, even in given year, markets be higher than 20% even up in to the mid-20%s, even flirting maybe close to 30%. Is there a bright line that we would have? I wouldn't tell you that there is a bright line, but I would tell you that there are areas – there are levels where we would not be comfortable and I think that would really mean that one market would have a disproportionate impact on the company. Is that 35%, is that 40%, is that 30%? I mean I think it's hard to pin a number on to it. But I would definitely know it when I saw it.

Thank you. And your next question comes from the line of Steven Fox from Cross Research. Your line is now open.

Thanks. Good afternoon. Just one question from me, please. Just getting back to the FCI acquisition, you mentioned how you're getting a handle on the distribution strength of the business. My understanding is – are there sort of product synergies whether its backplane connectors with some of the stuff you do in datacom et cetera. So I was wondering Adam, if you could just talk a little bit about – I'm sure you're not including sales synergies in your guidance, but the potential for that to ramp and what kind of rough timeline before you could pull some of those synergies together and we could see that in the top-line numbers? Thanks.

Well, thank you very much, Steve. Look, we are just owning the company now for one quarter. We're very, very pleased with the results here in the first quarter, and I can tell you that there is a lot of activities ongoing across the company. Some of those activities and Craig alluded to them are to get the cost structure in order, and we had significant actions here in the first quarter to do so. But there is other activities, which is to really identify collaborative opportunities for growth. And those collaborative opportunities fall into a few different categories. One is from a market standpoint, working with customers where we may have a strength with a certain customer in a certain geography and FCI may not or vice-versa. Another may be just into a new market. For example, taking FCI's embedded computing products and seeking to proliferate those into an area like an aerospace, for example, where they didn't have so much presence in the past. And a third and equally important area is that technology collaboration. And what I can just tell you is here in the first 90-100 days, we have really attacked all of those areas in a very thoughtful way, because at the same time, as you want to be impatient, as you want to get all that stuff done, you have an organization of 7,000 people who have a new family and they need to adjust to that new family. And we're very thoughtful about how we do that, how we bring the people in, what we ask of them, what we drive them. I mean this is not an easy process for someone coming into a company. But the initiatives that we have already, we start to already see the prospect of value creating between us on those incremental initiatives. When are they going to result in extra sales per se, I think it's too early to pin that on to a day, to a quarter or an outlook. But there is no doubt in my mind that long-term, we will have significant opportunities to realize incremental growth because of those very strong initiatives that are really being embraced across the company.

Great. I appreciate the color. Good luck.

Thanks, Steve.

Thank you. And our next question comes from the line of Brian White from Drexel. Your line is now open.

Yeah. I'm wondering if you could talk a little bit about IT and data and how you're thinking about the second half of the year. I wasn't clear, are we expecting organic growth in that area? And second part would be China communications infrastructure, what are you seeing in the comm infrastructure market in China? Thank you.

Thank you very much, Brian. Relative to IT-datacom, I think when I talked about our guidance both at the beginning of the year, as well as just now, we did talk about the fact that while we expect a very strong growth because of FCI, we do expect the market overall on an organic basis to be roughly at the same levels of last year. Now, that does incorporate in the second half some growth compared to the first half. And that's not abnormal in the IT-datacom market and that is really organically growing from the first half to the second half of the year. And we look forward to that and we feel that that is not only normal, but it is something that should happen, given our real strength with customers. I think the overall IT datacom market is a market that is going through a lot of transition right now; and you see that in some of the public releases that already come out. But you see that really in terms of the shift of power in the industry and, something that I've talked about in the past, that shift of power towards the operators, the service providers and a little bit away from some of the traditional OEMs. I can tell you that our team and, in particular, our team as it relates to the acquisition of FCI and the breadth of products that we have from FCI has done an outstanding job of ensuring that we take advantage of that shift, as opposed to get injured by that shift; and we're doing a great job to pivot towards some of those new customers. And so, while our overall outlook for the year for IT datacom is a more muted outlook organically, the strength that we…

Okay. Great. Thank you.

Thanks, Brian.

Thank you. And our next question comes from the line of Craig Hettenbach from Morgan Stanley. Your line is now open.

Great, thanks. Just a follow-up question on automotive, given the increased breadth by geography and following up on your comments of robust growth for 2016. Any differences that you're seeing by geography in terms of the automotive growth?

Yes. I think – I mentioned that in the first quarter actually we saw our strongest growth coming out of Asia in the automotive space; and we were really pleased to see that. We saw some growth coming out of North America and some maybe a more muted performance coming out of Europe at least in that quarter. I think one quarter is not always perfectly reflective. I think for the year we continue to see opportunities in all of the geographies in automotive. And it's really great for us, given that we are now a much broader geographical presence in the automotive market; and that is a big change from where we were six years, seven years ago, and we're very pleased to have that position.

Got it. And then as my follow-up on the sensor market and granted you're a relatively new entrant to the space, but just from what you've seen so far after the first couple of acquisitions. Anything you could distinguish in terms of some of the growth drivers in that for those technologies relative to connectors or – and even go so far as growth rate opportunities?

Sure. Look, we've now been in the sensor market for just over two years. I think it’s two years and a quarter now since we made our first acquisition of GE's Advanced Sensor business. I think originally when we made that acquisition, there was always the question, is sensors naturally a higher growth area than interconnect; and we always said, we certainly don't think it's a lower growth than interconnect. And I haven't changed my opinion. Is it necessarily higher growth than interconnect? I don't think by definition it is. But is it at least as good of an opportunity as the interconnect market? We think, no doubt about it, which makes some sense when you get down to it. Because every time you have a new application for a sensor, and that's whether it's in automotive, or industrial, or in aerospace, ultimately that sensor has got to connect into the system. And so, you may have so many new applications in a plane, or a car, or a train, or a bus. Each time you have that new application, that's going to require then some way to get that signal back into the overall system; and that usually is happening through an interconnect product. And so, the reality is the two are not necessarily disconnected in terms of their trends; and we feel very good about that market. I think as we've now gotten a little bit more mature in our experience in the sensor market, and as we've gotten out with more customers, and as we've learned more about the space, we are really excited to be a part of the sensor industry and to have our presence in the sensor industry. Now, we're still small. There is no question about that. Bigger than we used to be, but smaller than we will be in the future. And I think that we see so many potential growth opportunities in the long-term, either organically or through acquisitions over time. And it is just a really exciting technology space. And it's one that really gets to a lot of the underlying technology trends in the various markets that we serve, whether that's emissions control, or whether that's performance, or autonomous driving, or whether that's more control and more analytics that goes on in industrial equipment. You name it, there is no question about it, sensors have a great future there.

Got it. Thanks for all that color.

Thank you very much, Craig.

Thank you. And our last question comes from the line of William Stein from SunTrust. Your line is now open.

Great. Thank you for squeezing me in. Adam, I was hoping you could spend a minute talking about military end market, ex this DLA issue, and maybe looking towards the back half of this year and into next. There is an expectation among some investors that the sequestration is off, we had the first up DoD budget in maybe seven years. Would Amphenol expect to see an acceleration of growth in this end market? And maybe you can characterize the trends and the projects that are going out in that end market, please?

Sure. Well, thank you very much, Will. Look, if we takeaway this issue that we already talked extensively about and you look at our outlook for the market, which is still to have a positive growth in the military market despite that DLA issue, I think you'll get the answer right there to the question, which is that we do have a positive outlook. And I think that positive outlook speaks to the breadth of presence that we have across the military market, whereby we are really participating on essentially every program in those geographies where we're allowed as a U.S. company to participate. And I think whether that is new airplane platforms, whether that's upgrade communication systems, whether that is new avionics and radars, there is definitely growth opportunity that we see starting in this year and long-term. Now, is this a snap back or kind of a spike in growth, I would not advocate taking that view of it. But is there really a kind of maybe a more solid footing under the trends of the military market today than there was a couple of years ago? I feel like there is. And you look at our performance even last year in the military market, where we had relatively flat performance in a market where I think you would have thought was overall down, there's no doubt about it that we continue to grow our position in the military market; and that's despite any of the sort of mild regulatory hiccups that may come our way. So long-term, I think that's a great market to be in. It's a market where we have tremendous presence; and it's a market where there's a lot of innovation around the technologies and around the electronics that are there. We see also in the military market that there is a subtle shift that appears to be happening just more geopolitically; and that subtle shift is that subtle shift away from a more tactical focus, getting a little bit back towards a more strategic focus. And that's a geopolitical topic that you could spend hours to review. But the net-net of that is that when you get to a more strategic priority in military, the answer very often comes down to new technologies and new systems, and what can be done with radars, with surveillance, with new fighter jets, with new avionic systems, with new communication systems. And so, long-term I think that that will be a great place to be. And our position remains very, very strong there, and we look forward to capitalizing on those trends going forward.

Thanks, Adam.

Thank you very much, Will. Well, I think if I understand correctly this was our last question. And I'd like to take the opportunity to wish all of you a very warm and pleasant spring here; and we look forward to speaking to all of you again here in just around 90 days. Thank you very much. Thank you.