Hello, and welcome to the First Quarter Earnings Conference Call for Amphenol Corporation. [Operator Instructions]. 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. This is Craig Lampo, Amphenol's CFO. And I'm here together with Adam Norwitt, our CEO. We would like to welcome you to our first quarter 2021 conference call, and our first quarter 2021 results were released this morning. I will provide some financial commentary and then Adam will give an overview of the business as well as current trends. Then we will take questions. As a reminder, during the call, we may refer to certain non-GAAP financial measures and may make certain forward-looking statements. Please refer to the relevant disclosures in our press release for further information. In addition, as a result of our previously announced 2-for-1 stock split effective on March 4, 2021, all share and per share data discussed on this earnings call is on a post-split basis. The company closed the first quarter with sales of $2.377 billion and GAAP and adjusted diluted EPS of $0.53 and $0.52, respectively. Sales were up 28% in U.S. dollars, 25% local currencies and 23% organically compared to the first quarter of 2020. Sequentially, sales were down 2% in U.S. dollars, 3% in local currencies and 4% organically. Orders for the quarter were $2.734 billion, which was up 27% compared to the first quarter of 2020 and up 9% sequentially, resulting in a very strong book-to-bill ratio of 1.15:1. Breaking down sales into our 2 segments. The interconnect business, which comprised 96% of sales, was up 28% in U.S. dollars and 25% in local currencies compared to the first quarter of last year. Our cable business, which comprised 4% of our sales, was up 17% in U.S. dollars and 18% in local currencies compared to the first quarter of last year's. Adam will comment further on trends by market in a few minutes. Operating income was…

Well, thank you very much, Craig, and I'd like to also extend my welcome to everybody on the call here today. And I certainly hope that you, your family, your friends and all of your colleagues are continuing to stay safe and healthy. As Craig mentioned, I'm going to highlight some of our achievements in the first quarter. I'll then discuss our trends and our progress across our diversified served markets. And then finally, I'll make a few comments on our outlook for the second quarter. And of course, we'll have time for Q&A at the end. Our results in the first quarter were substantially better than we had expected coming into the quarter as we exceeded the high end of our guidance in sales as well as adjusted diluted earnings per share. Sales grew a very strong 28% in U.S. dollars and 25% in local currencies. And on an organic basis, sales increased by 23%. And we had organic growth in nearly all of our end markets and driven particularly by growth in the automotive, mobile devices, industrial and IT datacom markets. And I'll talk about each of those markets in a few moments. Craig mentioned, we booked record orders in the quarter of $2.734 billion, and that represented a very strong book-to-bill of 1.15:1. Despite continuing to face a range of operational challenges related to the ongoing pandemic as well as increased costs related to commodities and supply chain pressures, our operating margins were very healthy in the quarter, reaching 19.6%, which was a 260 basis point increase from last year's levels. Craig mentioned our adjusted diluted EPS grew a very robust 49% from prior year, which is again an excellent reflection of the Amphenol organization's strong execution. We generated operating and free cash flow of $321 million…

[Operator Instructions]. Now our first question is from Chris Snyder of UBS.

I guess my question is on supply chain. If you look across the end markets, just given the really -- or the stronger-than-expected growth, did you see any inventory building across any of the end markets? And then kind of staying on that supply chain, as we look into Q2, the top line guidance seems a bit light relative to the Q1 orders and the 1.15 book-to-bill. I mean is there an implication here that deliveries may be pushed out to the right a little bit, just given all the supply chain disruptions we're seeing?

Yes. Well, thanks very much, Chris. I mean first, relative to supply chain and our robust results in the first quarter, I mean I would tell you that across the board, customers want our product because their end customers, by and large, also need the product. Whether that's delivering IT datacom connectors that go into web service providers to satisfy the demand for bandwidth that is happening, whether it's automotive customers scrambling to build as many cars as they can, given the low inventory -- low dealer inventories that are out there, we really saw customers taking product and converting that product into their end systems. And we don't -- obviously don't get full visibility into the warehouses of our customers, but we do get some visibility into the distribution channel. And there, we did not see any material increases in inventory or any noticeable inventory builds. I mean actually, to the contrary, our growth in distribution, our book-to-bill in distribution was not meaningfully higher than what we saw across the total company. Relative to the second quarter, look, we think there's a very strong guidance from several perspectives. First and foremost, there are these supply chain challenges. And I think some of these have been widely reported, in particular, in places like the automotive market, where I talked about that we do see the automotive market having a slight downtick in demand in the second quarter as certain customers have had to take factories offline or otherwise curtail production because of supply chain challenges. So there's no doubt that we see that. As well, when you look at, on a year-over-year basis, our second quarter guidance, as I mentioned just a few moments ago, this is a very strong guidance, 25% growth at the high end of guidance. And…

Now our next question is from Wamsi Mohan of Bank of America.

Adam, I was wondering if we could just step back perhaps, given your really broad diversified portfolio. How should investors think about the areas in which Amphenol can benefit from this proposed infrastructure plan?

Well, Wamsi, it's a great question. And it's still a proposed infrastructure plan, obviously. So I take everything with a grain of salt, in particular, with the political system that we have now in the U.S. But look, I think we have a lot of our businesses that do stand to play a role in upgrading the infrastructure of the U.S., especially because infrastructure is being defined, as I would think it should be, in a very broad sense. It's not just roads and highways and bridges and tunnels and airports, which would stimulate demand for a wide variety of products that we sell into heavy equipment and otherwise. But infrastructure means the domestic capacity to produce electronic components in certain cases. Infrastructure means bandwidth. Infrastructure means access to data, access to devices. And I think that all of these things ultimately today have a common thread, and that is that the adoption of electronics and, in turn, our ability to enable that adoption of electronics, plays a significant role in the upgrade of those various "elements" of infrastructure. And so whatever the -- ends up coming out of kind of the sausage factory at Washington, if you will, there's no question to me that electronics is going to play a significant role in helping this country to upgrade its infrastructure in the broadest sense. And I think we're very well positioned across our end markets to play some constructive role in that.

Now our next question is from Amit Daryanani of Evercore.

I guess my question is really around, Adam, when I look at your growth rates for the first half of this year, they're about 25% or so. Much of this, I assume, is a cyclical market recovery. But I'm wondering if you could actually talk about if Amphenol is seeing share gains pick up as well in the first half of the year, especially as I imagine that your peers have not been able to ramp up capacity as quickly as demand has come back. And if that's true going forward, could that enable you to grow at a larger premium to the underlying industry growth rate and share gains become bigger for you, hopefully?

Well, thank you very much, Amit, and greetings to you as well. Look, I think the numbers here a little bit speak for themselves. When you look at our overall growth, growing 28% or 23% organically in the quarter, or when you look at some of the individual markets where we had significant growth in a number of our markets, clearly outpacing whatever the industry growth rate will be. And I'm not an expert in exactly what various industry growth rates are. But clearly, growing in industrial by 33% organically and automotive by 44% organically and mobile devices by 51% organically and IT datacom by 25%. Those are clearly ahead of the overall industry growth rates. And you're correct. I think there is a meaningful component of that growth, which is our ability to react quickly, despite a very challenging environment. It should not be understated. There still remains many challenges today in the world, both with COVID and with the supply chain. But our ability to react quickly in an entrepreneurial and agile fashion to satisfy the demand of customers when they need it has been, I think, through this whole cycle, an extraordinary advantage that we brought to bear. And as customers think for the long term about with whom do they want to partner, it's going to be very hard to forget who was there for you when the chips were down at the greatest moment. Who was there for you during the depths of the pandemic when bandwidth was at such a premium and factories were closing all over place because of shutdown orders and the spread of the virus, and who was there to react when you needed to help you support your end customers. And I think that is something that our customers reflect on, integrate into their buying behavior, incorporate into their decisions about who should be their partner going forward. And so does that mean that we have a high potential to continue to outpace the market? And we've outgrown the market for now 2 decades. And I think that this just reinforces for our customers why having Amphenol as your first phone call is a really important principle and a very helpful way to run your supply chain.

Now our next question is from James Suva of Citigroup Investment Research.

And it's nice to see Amphenol continue to make acquisitions. In the past history, sometimes acquisitions have been companies that really needed a global footprint for sales or a global manufacturing footprint or helping to polish their operations. And others have been strategic to help the company grow in the future. But the recently announced acquisitions that you just talked about today, can you help us figure which they are more for the growth or health of operations and you can really improve their profitability or go to market? How do they fit into the Amphenol family?

Thank you very much, Jim. I mean, look, our criteria for acquisitions has always started with two things, and that's people and the products, in other words, the technology that those companies have. And so the very first test for us is, are we acquiring a company that has people who have passion, drive, integrity and entrepreneurial spirit that we think will fit into the Amphenol organization. And then second, do they have unique enabling technologies that ultimately solve real problems for their customers. And then when we found those companies, we don't focus on either growth or on improvement in operating performance. We try to do both of those things. And our acquisition program, which has been so successful over so many years, has really been successful because we were able to find ways to accelerate the growth of those companies and find ways to improve their operating performance. And so I would say that the 3 acquisitions that we're talking about today, of course, MTS being far and away bigger than Euromicron or Cabelcon, they all share that great potential, both from a top line growth perspective, taking advantage of being part of Amphenol, taking advantage of being part of a global company with strong partnership, preferred supplier relationships with customers across all of our end markets, but also being part of a company that has access to low-cost manufacturing when appropriate, who has access to collaborative initiatives across the company from a technology or sourcing perspective that ultimately can help to drive better operating performance. And so I would say, with these 3 companies, we think that they all have great growth and profitability improvement potential, despite their very different scales.

Now our next question is from Matt Sheerin from Stifel.

A question, Craig, regarding your commentary about some cost headwinds weighing somewhat on your margins. Could you quantify that in terms of maybe what in terms of basis points you've seen? And is that just an issue that you see persisting over the next couple of quarters that we're hearing from other suppliers as well?

Yes. Thanks, Matt. Yes, I mean, I just want to start by saying we are actually extremely proud of the ability to achieve these strong operating margins in the first quarter, I mean, 19.6% in this challenging environment while we still have COVID costs. And then on top of that, we've seen certainly increasingly challenging commodity and supply chain environment. I think it's really just a great achievement, and I really am happy with the performance of the general managers to be able to offset some of these costs that they're seeing. The reality is, is that we have seen increasing challenging environment as we come into the first quarter. To quantify that is a little bit difficult. But I think the way I would think about it is that if you -- as we kind of came into the first quarter from the fourth quarter, sequentially, we would expect a typical close to 30% kind of sequential downside conversion. So really, the gap between that is -- the vast majority of that, I think, is really the pressures from the commodity and supply chain environment. I mean there is some small component related to some of the acquisitions of Positronic as well as Euromicron that we closed earlier in the quarter. But the vast majority really would be that kind of cost environment that we're seeing some headwinds from. In terms of how long that will last, I mean there's certainly -- we're doing -- I think the team is again doing a good job of trying to offset some of that, I think, through taking some cost actions and over time, maybe also through passing on some of those increases to customers to the extent you can't do it within the factories. But I don't think this is necessarily something that we're going to be able to necessarily get through in the quarter. So that certainly is still included in kind of our second quarter guidance that we gave is expect to still have some of those headwinds we haven't guided to the rest of the year. So I guess I won't comment on that. But certainly, I think that this environment that we find ourselves in now, I'm very happy with kind of what we've been able to achieve in terms of offsetting a certain level of those costs. But I think that the reality is that the -- we're probably sitting here at least for another quarter here with some of those cost headwinds that we see today.

And Matt, I would just add to that a little color. There are certain parts of this, which are pretty significant cost differences in commodities, for example. I mean, they're all very well reported. And the way that Amphenol operates is we have close to 125 general managers around the world, and each of them is really tuning their operation in light of the costs that are hitting them, in particular. So you take an example, a general manager in our cable business, which has a very high component of material cost, very significant in our cable segment, there's not a choice, but to go and work with customers and to make sure you take a leadership position in adjusting price to account for those commodity prices. And we would certainly expect that others in the industry would have that same dynamic. And that's just one example of how it goes. But the beauty is that these general managers have every tool available to them to adjust, whether it's from the price you sell to the customer, to every element of cost are all in the power of the general managers. And when you see a sudden increase in some of these things, it can take a short while to work through it. But Craig and I are confident that over time, our team is going to manage this, as they always have.

Now our next question is from Mark Delaney of Goldman Sachs.

This quarter was certainly a good illustration of Amphenol's leadership and operational flexibility, but I'd still be interested in understanding if you're thinking of any -- making any changes in how the company operates going forward in terms of things like how you're sourcing material, where you locate manufacturing or inventory management once you have some time to fully reflect on how COVID and some of the trade issues have stressed global supply chains or even just because Amphenol is becoming a bigger company with the M&A that you've done, including most recently with MTS?

Thanks so much, Mark. I mean, look, the answer I'll give you is really 2 sides. The answer is no, we think that our approach, our culture, the unique entrepreneurial organizational structure that we have had in Amphenol for many decades is uniquely tailored to an environment like we've been in and to an environment like we're headed into. But the other answer is yes, every day, meaning we're making changes every day. We're not making those changes from here at headquarters. We're not deciding on a blanket approach like we're going to go out of one country and go into this country, or we're going to increase our inventory this much or we're going to change how we're sourcing things. But those general managers around the world are every day making course corrections. And some of them pretty significant course corrections in the moment to react to the environment that is around them. So when tariffs came in, you'll remember this already, it seems like so long ago that there was the thing called tariffs several years ago. But our team immediately reacted to that in every way possible from moving production to changing logistical flows, to doing lots of other things to passing on the price to customers when there was no other option. And that was a real-time, in the moment kind of transformation, but not at a corporate level, rather it was at the individual operating unit levels. And I think as we've gone through the pandemic, as we see the very robust demand coming out of this part of the cycle, we're making lots of changes every day to make sure that we remain the most competitive, that we are able to outperform the market at the highest degree possible and that we're able to deliver to the bottom line superior operating profitability and ultimately convert that to cash. And those are just day-to-day decisions that are made by our general managers, obviously, in some consultation with us. But ultimately, the proof, I think, is really in the pudding of that approach.

Now our next question is from Craig Hettenbach with Morgan Stanley.

Just questions on MTS. I think their operating margins are roughly in the mid-teens. And I know other acquisitions you've done in the past where they've been lower. There's a path to kind of get them to corporate average. So just curious if there's any similarities or differences in terms of that approach for this deal? And then, Adam, you mentioned a number of the key markets for MTS where they play. Any of those stand out in particular from a growth perspective that you're most excited about?

Thanks very much, Craig. I think you're roughly accurate about the operating margins with MTS. Obviously, there will be some amortization, and we include amortization in our numbers, so that they can have a little bit of downward impact on the operating margins. But you're right, I mean every company who comes into Amphenol thinks about how are they going to achieve, ultimately, that growth in margins to get up to the Amphenol corporate average or above. Obviously, an average is just an average, and there are some above and some below. And I would tell you that the management team in the MTS Sensors business is an extraordinarily capable team of individuals. The gentleman who leads that business, who led the business inside of MTS, who, by the way, led the predecessor family-owned company that was acquired by MTS, I mean this is a just truly outstanding individual who also likes to see that his company is doing as well as his sister companies. And there's no doubt about it that there's a little bit of peer pressure inside of Amphenol when you come in and see the margins of your peers. And something tells me that that's an organization that does not want to be below the average. And how long is that going to take? That's always a question. But when there's is a will, there's a way. And I think this is a team that has an extraordinary will to make that happen. In terms of the markets with the MTS Sensors business, I talked already that they have strong position in industrial and military and then in commercial air and automotive, roughly in that order, I would say, in terms of magnitude. And they participate in just some of the most exciting applications within those.…

Our next question is from William Stein of Truist Securities.

Congrats on the very good results today. I would like to ask you about the commercial aerospace end market. That end market was already in a pretty significant downturn because of the 737 MAX grounding and then we had COVID obviously stopped travel and demand for planes. But I think you guided this segment up sequentially. And I wonder if that's an indication that you think we're past the bottom here. And I wonder what you're seeing in terms of recovery, what you're seeing in the order book and maybe what you're hearing more anecdotally from your customers?

Thanks, Will. Yes, I mean, it's a tough time in the commercial air market. There's no doubt about it. I mean it's hard to think of a market that was not -- that was more heavily impacted over the last 1.5 years than the commercial air market. It represents now just 2% of our sales. And we did guide it up sequentially in the quarter ahead. Although I would say that that's really the impact of the MTS Sensors acquisition. I don't know that I would necessarily say that I'm kind of calling a bottom, so to speak. But clearly, the rate is declining. The rate of decline on a sequential basis is getting smaller. It's down by just 3% sequentially in the quarter, which is, I guess, a green shoot of encouragement, if you will. But the commercial air market has a tough road ahead of it. And our team working in that market is doing everything they can to continue to diversify their business to make sure that the products that they sell, which have other applications, are being proliferated and we're re-devoting resources to designing in those products into other applications, where they can be very enabling technologies such that when the commercial air market does eventually come back, which it will, we're not going back to horses and buggies, we will be flying again one day. And I hope to be doing so very soon after I get my second shot tomorrow morning together with Craig. That market will come back. And when it comes back, our operations working in that market will be stronger than ever because they will have taken this opportunity to diversify themselves, diversify their product sets, leverage their resources in a broader fashion. And I think that's the way to deal with a crisis like this, and that's always been the Amphenol way.

Now our next question is from Joe Giordano from Cowen.

So we've heard kind of like different strategies and different responses from many companies this season about how they're dealing with sourcing of components that are in scarcity. And we've heard some say that the ability to like leverage all their individual businesses as one big customer kind of gives them leverage at suppliers. I think you guys are probably going the other way. Can you kind of talk about how the structure of Amphenol as kind of small independent companies essentially gives them an advantage when sourcing? Is it because some of these businesses are small enough that they're -- it's not a big quantity that they need? Can you maybe just talk us through that relative to some other maybe ways to accomplish that?

Yes. Look, Joe, we try to have the best of both worlds in sourcing. And so at the end of the day, sourcing happens under the purview of those 125 general managers around the world. And sometimes it's good to be small and sometimes it's good to be big. And what we try to do is we present ourselves as whichever is most beneficial in the moment. So we oftentimes are a few general managers who buy a common material will work together and they may go together to a vendor. That's what gets us the results that we need. But in other cases, it's a very local decision where maybe a purchasing person says to a local sales rep, hey, just sneak me what I need here, no one's going to notice. And in between both of those, there's a whole spectrum of techniques, strategies, tactics that our supply chain team around the world will be taking. The most important principle, though, is this, if you have supply chain disconnected from the business, it's actually really hard to decide, ultimately, am I doing the right thing? How do I -- what if I need to redesign something? Well, if there's this monolithic engineering team and a monolithic sourcing team and the sourcing team says, we can't get this part, we need to redesign it, and it has to go sort of up and down the corporate chain to get that redesign resources to be allocated or to convince the engineer to do so, that can be a very laborious process. Whereas in our organization, the purchasing person is sitting in the door right next to the engineering person reporting to the general manager who's 2 doors down from her. And they can just get in the room together and say, look, we can't find this thing, let's redesign it right now, let's reallocate the resources, let's make it happen. And it's that kind of real-time, connected to the business approach. Whether it is dealing with shortages, whether it's dealing with logistical challenges, whether it's dealing with quality issues, whether it's dealing with new design, whatever, we've always found that, that approach can be very effective. But we try to be what will make us be the most successful, let's say that.

Our next question is from David Kelley from Jefferies.

Just hoping to follow up on automotive. Really robust growth versus underlying production in the quarter. You referenced electrification wins as a contributor. And then you mentioned broadly, you aren't seeing channel inventory build, but I would assume you delivered to market share gains and then probably benefited from favorable mix as well. Just hoping you can walk us through some of the drivers of you're really showing automotive performance in the quarter.

Sure. Well, thanks very much, David. I mean, you know the underlying market much better than I do. You could teach a master class on it, for sure. But what I would tell you is our team in all regions really performed very strongly here. And we saw great growth really across the board, across the regions. And we saw disproportionate growth from new programs that we're -- that we've long worked to design ourselves in on relative to EVs. But it wasn't exclusively EVs. We saw growth in lots of other new platforms as well. And I think our long-term share gains in the automotive market, and I referenced this earlier, is really a function of us focusing our efforts on next-generation technologies in car, next-generation systems, next-generation applications, everything from passenger comfort and connectivity, to safety, to engine management, emissions control and obviously, high voltage related to EVs and hybrid EVs. And I think all of those things are helping us to outperform the broader market in a quarter like we just had here in the first quarter, but also over a very long time period. We're really talking about the better part of the decade, where we have had a relatively consistent performance that is a decent amount, if not far in excess of the underlying unit production volumes that are out there. So there's not like 1 silver bullet to this. I think it's been a collective approach. It's been our acquisition program, where we've added new companies, both interconnect, antenna and sensor companies. And it's a lot of work on engineering of next-generation systems that go into these cars across all of the regions. And I think when we put all that together, ultimately, we've seen strong performance.

Now our next question is from Samik Chatterjee of JPMorgan.

I wanted to get your views on mobile networks. You mentioned you had better revenue than you expected in the quarter. You're guiding to sequential improvement in revenues. And how should I think about visibility or sustainability of this improvement through the rest of the year? And how correlated is that going to be to some of the like 5G CapEx plans that the North American telcos recently outlined? How much of that is going to probably help sustain some of this growth through the rest of the year?

Thank you, Samik. Well, look, we're really pleased with the sequential growth that we saw in this market. Obviously, that's a market that, over the last year or 2, has not always had the most robust growth as the operators have somehow struggled. There's been a lot of corporate things going on, delays in investment last year. We also saw some redeployment of the investment towards really the core of the networks to support the massive growth in bandwidth. But we've always talked about the fact that our team has been working diligently over many years to design in our products into next-generation systems and networks, be they 5G or otherwise. And I think we start to see kind of some early progress with that here in the first quarter. And to the extent that operators are expanding their investment, we would hope to benefit from that. It may not always be in a perfect quarter-to-quarter correlation. We don't have a position with absolutely every operator with the exact same degree of success. But we have a very strong position on the equipment, that is really going to enable 5G for the long term. And so to the extent that 5G creates incremental capital spending, which, again, has yet to be perfectly articulated, then, for sure, we would feel like we would be in a good position to be able to benefit from that in the medium and long term.

Our next question is from Luke Junk from Baird.

Adam, you mentioned hybrids and electric vehicles especially as a growth driver in your end market discussion of both auto and industrial trends this afternoon. Could you help us better understand the span of EV-related products, especially across those two segments? And in particular, I'm wondering how might differentiate the company's opportunity set versus some of your connector peers that have a more auto-based focus.

Thanks very much, Luke. Yes. No, you picked up on that very astutely. We participate in the electrification of vehicles, whether those are passenger vehicles or commercial vehicles, and both have been really great drivers for us in recent quarters and years. And in the industrial, we talk about that industrial battery and the heavy vehicles. There's a wide range of vehicles that are undergoing electrification right now from big trucks, and there's plenty of news media around that, to postal vehicles and trash trucks and buses and goods vehicles, delivery vans, you name it. And so all of that is what we classify really in our industrial business or industrial market as that battery heavy vehicle. And then when we talk about automotive, the hybrid EV, that's really passenger cars and the related products. In addition, we think about the charging infrastructure for electrification as really an infrastructure piece and that we think about in our industrial business as well. And that's all -- those are all components of areas where we've seen strong performance in -- certainly in the first quarter and over a number of years and look forward to that. Because I think if you confine your view of electrification just to passenger vehicles, you're missing a really exciting area of the electronics revolution, which is that electrification more broadly. By the way, I mean, we're working as well with the Department of Defense in certain countries on the electrification of military vehicles, which, I think, is going to be a long process. But over the long term, we see that as an area that can also be another benefit and another growth lever along this just real kind of, call it, a megatrend, if you will, of electrification across kind of all things that move.

Now our next question is from Steven Fox from Fox Advisors.

Craig, I just wanted to talk a little bit more about your extra costs in the coming quarter. If I applied your analysis for Q1 to Q2, it looks like the pressure is about $20 million or so, similar to Q1. I imagine there's some M&A impacting your incrementals. But can you talk about whether that's in the ballpark and what you guys are doing to sort of reduce that $20 million nut going forward?

Yes. Thanks, Steve. Yes. No, actually, your math probably isn't so far off. It's certainly in the range of what we'd probably quantify that as. And if you look sequentially going from Q1 to Q2, essentially, a lot of that growth is our acquisitions that we just announced. So as you can imagine, the sequential conversion is going to be a little bit lower than your typical conversion just because those are -- acquisitions are at a lower profitability level as an average of the company. And clearly, as we talked about with MTS specifically, but also related to the other 2, over time, we would expect to be able to work those up to the company average. But as we -- talking about Q2 specifically, that sequential conversion really mostly is impacted related to the acquisitions. But essentially, the cost impact that you just quantified is kind of is in that ballpark that we had in Q1 essentially we're expecting to still see in Q2 as the team continues to work through all those actions to ultimately, over time, neutralize those impacts.

As of this time, we don't have any further questions on queue. Now I'll turn the call back to Mr. Lampo for closing remarks.

Well, this is Mr. Norwitt. But anyway, thank you very much, and we truly appreciate everybody's time today on the call. And I did want to take a moment just to wish everybody good health here. And I hope everybody is getting the chance to be vaccinated soon, wherever you may be. And I wanted to make just a special comment and note about any of you who may have friends or family in India. We obviously have an organization in India, and we're very carefully attentive to the ongoing situation with the pandemic there and doing our part to help the communities in India. And I just wanted to send our best wishes to any of you on the phone here today with family and friends in India. It's a fabulous country, and I'm sure they're going to work their way through this difficult stage in the pandemic. Thank you all to everybody and wish you all good health, and we'll talk to you all in the next 90 days.

Thank you, everybody. Bye, bye.

Thank you. And thank you, everyone, for attending today's conference. Have a nice day.