Ladies and gentlemen, thank you for standing by, and welcome to the TE Connectivity Q2 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. As a reminder, this conference is being recorded. I'd now like to turn the conference over to our host, Vice President of Investor Relations, Mr. Sujal Shah. Please go ahead, sir.

Good morning, and thank you for joining our conference call to discuss TE Connectivity's second quarter 2018 results. With me today are Chief Executive Officer, Terrence Curtin; and Chief Financial Officer, Heath Mitts. During this call, we will be providing certain forward-looking information, and we ask you to review the forward-looking cautionary statements included in today's press release. In addition, we will use certain non-GAAP measures in our discussion this morning. We ask you to review the sections of our press release and the accompanying slide presentation that address the use of these items. The press release and related tables, along with the slide presentation, can be found on the Investor Relations portion of our website at te.com. Finally, due to the increasing number of participants on the Q&A portion of today's call, we're asking everyone to limit themselves to one question to make sure we can give everyone an opportunity to ask questions during the allotted time. We're happy to take follow-up questions, but ask that you rejoin the queue and ask second question. Now, let me turn the call over to Terrence, for opening comments.

Thank you, Sujal, and thank you, everyone, for joining us today to cover our second quarter results. Before I get into the earnings slides that we posted, I'd like to briefly recap our performance and our guidance against the elements of our business model that we shared at our Investor Day this past December. Our Q1 results in the quarter and our guidance demonstrate both our execution of our business model as well as the trends to drive above-market growth. On the top line, we delivered 7% organic growth in the second quarter and are raising the midpoint of our full-year organic revenue guidance to 6%. And this is at the upper end of our 4% to 6% long-term organic growth target. Our revenue growth continues to be driven by the secular trends, enabling TE to consistently outgrow the markets that we serve. Also in the middle of the P&L, we're executing on the levers to drive operating margin expansion. Our SG&A expenses were down year-over-year as a percentage of sales, and we do expect that trend to continue for the full year. On the bottom-line, we expanded adjusted earnings per share by 19% and we're raising the midpoint of our full-year EPS guidance to reflect 15% growth. This is also in line with the annual double-digit earnings growth target in our business model. We also continue to maintain a balanced capital strategy through share buybacks, dividends; and a disciplined approach on acquisitions. At the same time, we continue to focus on our top priority which is to invest in the organic growth of our businesses, while maintaining ROIC levels in the mid-teens. Now if you can please turn to the slides. I'll start with slide 3, and I'm going to review the highlights from the second quarter. We delivered…

Thank you, Terrence, and good morning everyone. Please turn to slide 8, where I will provide more details on the Q2 financials. Adjusted operating income was $635 million with an adjusted operating margin of 17%, leveraging the strong organic growth of 7%. GAAP operating income was $624 million and included $6 million of restructuring and other charges and $5 million of acquisition charges. For the full year, I continue to expect restructuring charges of approximately $150 million, driven primarily by activity in our Industrial Solutions segment, as we optimize the footprint and make structural improvements in SG&A across the company. Adjusted EPS was $1.42, up a very strong 19% year-over-year, driven by sales growth as well as the benefit from currency translation. GAAP EPS was $1.39 for the quarter and included restructuring and other charges of $0.02 and acquisition-related charges of $0.01. The adjusted effective tax rate in Q2 was 17.7%. We still expect the full year adjusted tax rate at the lower end of the 19% to 20% range, consistent with our expectations last quarter. However, the year-over-year impacts are more pronounced in the second half versus the first half. While the year-over-year impact of tax is only $0.01 in the first half of this fiscal year, we expect a more significant headwind of $0.07 in the second half due to the difference in the adjusted effective tax rates. Page 15 of our slide deck contains a bridge that provides these details. Turning to slide 9. Adjusted gross margin in the quarter was 33.2% with the year-over-year decline driven primarily by the SubCom program delay that we discussed earlier. Despite the gross margin decline, adjusted operating margins expanded 20 basis points to 17% in the quarter. We reduced operating expenses by 130 basis points as a percentage of sales in the quarter, primarily driven by reductions in SG&A. Expense reduction is one of the levers we appoint to expand operating margins. In the quarter, cash from operations was $377 million and free cash flow was $234 million. In the quarter, we returned $309 million to shareholders through dividends and share repurchases. We expect second half cash flow to accelerate significantly in line with typical seasonality, primarily due to working capital requirements. Also, the pipeline organic growth opportunities continues to be very attractive use of our cash. We have modestly increased our capital investments to be approximately 6% of sales this year to support these growth opportunities. As you know, organic growth has the highest return on investment for the company. We have included the balance sheet and cash flow summary in the Appendix for additional details. And with that, I will now turn it back to Terrence.

Thanks, Heath. Let me get into guidance, and I'll start with the third quarter on slide 10. For the third quarter, we expect revenue of $3.65 billion to $3.7 billion and adjusted earnings per share of $1.35 to $1.37. At the mid-point, this represents reported sales growth of 9% and organic sales growth of 5%, with adjusted earnings per share growth of 10%. If you bridge between the 9% total growth and the 5% organic growth, we expect 300 basis points of that growth is driven by currency translation with M&A contributing the rest, which is about 100 basis points. On the dollars basis, year-over-year currency exchange rates are a tailwind of $120 million in the quarter and $0.05, and the tax rate is a headwind in the third quarter of $0.03 that Heath just talked about. By segment, we expect Transportation Solutions to grow mid-teens on a reported basis, which includes the acquisition of Hirschmann, a leading provider of antenna technology and products that we acquired late in 2017. On an organic basis, we expect high-single-digit growth in Transportation. We expect auto to be up high-single digits organically with outperformance, once again, versus market due to content growth. We also expect continued strong growth in commercial transportation and sensors. In Industrial Solutions, we expect to grow mid-single digits organically with growth driven by continued strength in industrial equipment as well as growth in commercial air and defense. And in Communications, we expect Communications to be down mid-single digits with continued above-market growth in both D&D and appliances, being more than offset by declines in SubCom. I do want to highlight, SubCom had a very strong quarter over last quarter three so some of it is due to the comp. Now turn to slide 11, so I can cover the…

All right. Thanks, Brad. Could you give the instructions for Q&A session?

Thank you. And we'll go to the first line, and question will come from Craig Hettenbach with Morgan Stanley. Craig M. Hettenbach - Morgan Stanley & Co. LLC: Yes. Thanks. Just wanted to start with SubCom and you guys had talked about expected weakness there. But just from a visibility standpoint and accounting standpoint, when do you expect to see some improvement both in revenue and in margins in the SubCom piece?

Hey, Craig. Thanks for the question. When you think of SubCom, we highlighted last quarter about the program ramp delay we have. We still feel we're an elongated cycle and I think we'll show that. At the company level – and I think you've seen in the Communications segment margins, if we didn't have the program ramp delay, the segment margin would probably be about 200 basis points higher and overall operating margin of the company would probably be about 50 basis points higher. So, that sort of firepower is what we're working through. As we all know in SubCom, SubCom has anywhere from four to six projects going on and this is one of them. So, we do expect that this will be the program just due to how a project accounting will work through as the project completes, so we do expect that for the rest of the year. But the backlog makes us feel very good about the cycle and we just have to work through this one program issue. So, market feels good. Programs we're winning feels good. We just have on the margin side this pressure from this ramp delay and we're dealing with it. Craig M. Hettenbach - Morgan Stanley & Co. LLC: Great. Thanks for the color on the margins, in particular. And then just on the automotive sensor side, in terms of some of those design wins, can you talk about when you've seen inflection in the revenue, like from a timing perspective when these wins will start to ramp?

As we all know, in automotive what's great about automotive is, as you win these they layer in, and we're starting to see that. As we said, later this year, we expect it to be growing double-digits and our automotive sensor piece, a part of our sensors business. We are still committed to that. You're going to continue to see strong growth as these design wins come into revenue. So, I think it's really creating a good backbone. I think you're seeing broad growth in the sensors business. And I feel very good that our automotive sensors business, actually in the quarter, grew higher than our automotive connector business, which is a real for us. So, I think those indicators that we've put out there for you, starting second half, growing double-digit we feel very good about and then we'll continue to layer in over time, and get some return on the investments we will make.

All right. Thank you, Craig. Can we have the next question, please?

It will come from Wamsi Mohan with Bank of America.

Yes. Thank you. Good morning. So Terrence, when you net everything out there is an implied $0.05 – is a $0.10 increase in your guide for the full year, but a $0.05 lower operational performance relative to prior expectations. Can you clarify how much of this is the SubCom shortfall? And is your view on SubCom doesn't sound like it's really changed longer-term, given the strong backlog, but just wanted to get some color on that. And Heath, could you comment on the weaker gross margins and free cash flow, if you could bridge those on a year-on-year basis? Should we expect a substantial jump-up in the second half, both half-over-half and year-over-year? Thank you.

Hey, Wamsi. I'm going to take – I'll add on to what I said to Craig about SubCom. I'm going to ask Heath to talk about the EPS comment as well as conversion of free cash flow. So when you look at the order momentum, it's the trends we talk about and the $1 billion of backlog that we had and the $600 million we book. So long-term trends, I do not see. It's really around the backbone really that supports the video demand that continues to get pulled. And certainly, our customers are – the hyper-scalers feel good about the momentum there. And then, Heath, why don't you take the second piece?

Yes. Wamsi, the year-over-year decline in gross margin is primarily due to SubCom, and some of the pressures that we're working through relative to that project. As you know, in the project accounting world, it's not a one period impact, it spreads through the entire timeframe of the overall project which will take us into the early part of 2019. Having said that, we would expect to start to see some improvement in the overall margins both at that segment level as well as at SubCom itself, as we work our way through that into the early parts of next year. On the cash flow side, cash flows in the year were – year-to-date about $400 million in – a little over $300 million in cash. I would tell you that we have built up some inventory to support the growth in the second half of the year, and we would expect that working capital would move from a use of cash to a source of cash, as we move our way through the second half of the year. We've got a pretty good line of sight to that.

And we'll go to next question which comes from David Leiker with Baird. Please go ahead. David Leiker - Robert W. Baird & Co., Inc.: Hi. Good morning, everyone.

Hi, David. David Leiker - Robert W. Baird & Co., Inc.: On the Transportation business, you clearly have a lot of secular trends there that – you have these tailwinds for your business there in terms of driving bookings. I mean, if we look at the business that you're seeing coming in right now for new contract awards, are there any particular things there you call out that show either higher take rates or increased technology, different technologies that are coming to market? Anything in particular that seems to be gaining more strength relative to – over the last year or two?

David, great question. And what I would say is, you really see every OEM really focused on anything connected as well as the powertrain on the electric side. So I would say, those trends are not new. I would say, there continues to be an acceleration on the powertrain side. I would say, that side is one that we continue to see increased demand. Now, as you know, what we win today doesn't turn into revenue for four years. But I would tell you, our TERP or our revenue pipeline that we had that I quoted in sensors, we continue to see increased TERP momentum built around connected and electric powertrains, whatever piece it is, whether it's plug-in, whether it's hybrid. So, those are things we continue to see in all regions of the world. And when you think about where we're positioned, we feel very good that we get the benefit of both of those. So I wouldn't say, it's not something significantly different; we'll just continue to see that strong acceleration across both of them.

Okay. Thank you, David. Can we have the next question, please?

Sure. That will come from Shawn Harrison with Longbow Research. Please go ahead.

Hi. I'm going to beat the SubCom issue to death if I can. If we look into 2019, is there an expectation that you would see kind of a rebound into the $800 million to $900 million of annual revenue range? Or is it more trending toward kind of this lower level for the next 18 months?

Shawn, I think we're – well, first of all, for 2019 it's too early to tell as the project stack result is up. The backlog is good and our visibility out is good. I don't want to quantify that. I think staying in that range that we talked about at our Analyst Day in December which was $600 million to $1 billion, we're comfortably inside that range. Certainly, this year we'll be somewhere between $700 million to $750 million. I think as important that we're going to see margin momentum as we go into next year, as we win ourselves off of this particular project – the single project delay. So, I'm going to cite that part of your question in terms of quantifying it, but I would say that the backlog is setting up nicely.

Okay.

Our next question will come from Amit Daryanani with RBC Capital Markets. Please go ahead.

Thanks a lot, guys. I guess, maybe to start with Industrial segment. Could you just maybe help me understand how much cost are you taking out of the model right now from all these cost containment initiatives? And should revenues remain stable to where they are today? What could fiscal 2019 margins look like on the Industrial? So I just want to get a sense of what the cost containment benefits would be? And then secondly, just on the Subsea thing, I understand all the issues you guys are outlining right now, but these are all the same issues. It sounds like you knew about 90 days ago when you initially talked about this push out. So, what really changed in the last 90 days for margins to take a hiccup and for you to lower your full year revenue expectation from Subsea?

Go ahead.

Yeah. So let me take the second part now and I'll let Heath do the Industrial. Number one is, it's just slightly less than where we were on SubCom. And it really relates to the program delay we knew about, but it is creating some ripple effect because realize we have one factory, one engineering team and that's creating a bump effect on other projects and we're working through that. So when you look at it, revenues down slightly and margins down slightly due to that revenue. So, that's really all that's changed. And then on the Industrial segment, Health, go ahead.

We're still – we've talked pretty openly about the footprint consolidation activity that is taking place in our Industrial business. We are still the programmatic element of that, some of the bigger moves. We are still in fairly early days of that. As we talked about last couple of quarters, that's something that's going to transpire over the next several quarters, over the next couple of years. So, I would tell you that the margin improvement that you're seeing is both good operational execution by the team, some moderate restructuring as well as good leverage on the organic revenue growth. If you think about 2019 – we're getting a lot of 2019 questions today already with two quarters left in our 2018 fiscal year. But I would tell you that whatever organic revenue growth that you want to model for Industrial using a normalized flow through of 25% to 30%, I think is probably a good modeling. And we'll have more clarity as we progress through the end of the year, how much of the impact of the restructuring the larger projects that will layer into next year, both on the cost side as well as the savings side.

All right. Thank you, Amit. Can we have the next question, please?

Sure. That will come from Mark Delaney with Goldman Sachs. Please go ahead. Mark Delaney - Goldman Sachs & Co. LLC: Yes. Good morning and thanks very much for taking the question. I was hoping if you could help better contextualize the revenue guidance for the June quarter on a sequential basis. Certainly, we appreciate the much higher base in March, and you mentioned some Subsea issues. But even putting Subsea aside, it seems like the low seasonal sequential guidance for June. So, is it just conservatism or are there any markets we're expecting deceleration in June on a quarter-to-quarter basis?

Yeah. This is Heath. We're expecting the second half of the year to be about 3% organically higher than the first half of the year. How it calendarizes between our third and our fourth quarter is, there's always puts and takes in terms of what activity is going on. But in terms of where our orders stacked up towards the end of our second quarter, as we lean into the third quarter – our 5% organic growth guidance, we feel pretty good about that number. And we'll update you in 90 days in terms of where we ended up.

Okay. Thank you, Mark. Can we have the next question, please?

Sure. It will come from Christopher Glynn with Oppenheimer. Please go ahead. Christopher Glynn - Oppenheimer & Co., Inc.: Thanks. Good morning. So for the current year, Transportation group got a great test case to really see the content growth and the outperformance versus the cycle. At Industrial, it's a less clear test case because it's a good industrial cycle there. But just wondering if you could speak to the kind of long-term qualitative visibility of that segment for outgrowth with the factory automation, et cetera. In relation to the much established understanding of how Transportation should perform long term.

Thanks, Chris, for the question and let me take that. So first off, when I think through Transportation before I get to Industrial, I think it's more than just this year is proved outperformance. Last year at a 3% production environment, we grew 10%; and this year with the 2%, we're growing high-single digits. So I think we continue to show that in a production cycle that is decelerating in automotive, and I think you see that. In Industrial, I think it will always be a little bit mark here because you don't have one index. You really have industrial production. And I think you're seeing at that 6%, good performance. And I think the drivers of it, as we talked at our Investor Day, are really three elements. Number one is the commercial air platforms that we've talked to you about, where we have significant content increases with both major airframe suppliers. And while we had a bump in our bookings for the past six months or so, you're starting to see that reacceleration on those take rates. Secondly is, where we've positioned ourselves in factory automation, you mentioned robotics. There is increased content. And when you're looking at the connectedness and the factory, the digitization of the factory, that clearly plays where we are. And then the third area that I would say long term will drive it is also our medical business. Our medical business is in there. That's long-term high-single-digit with where we don't figure out therapies that are our (35:10) structural part. So, those are the three major drivers long term. The other thing that we're benefiting from near-term is defense. Defense, we have seen a tick up over the past six months. We've highlighted it this year. But that is something we sort of view is – as we ramp budget cycles. But that's the way we think about Industrial, and that's why we feel in an industrial production environment that typically is below GDP, we can grow that mid-single-digit like we're showing this year.

Okay. Thank you, Chris. Can we have the next question, please?

Sure. And our next question will come from the line of Joe Giordano with Cowen. Please go ahead. Joseph Giordano - Cowen & Co. LLC: Hey, guys. Thanks for taking my question.

Hey, Joe. Joseph Giordano - Cowen & Co. LLC: So kind of related questions here. You mentioned robotics. I don't remember you mentioning that recently. Can you kind of talk about where you're seeing strength there? Is it a particular application or particular market within that? And then kind of related, curious for some – an update on how you're seeing the integrated solutions between connectors and sensors together? Are you making that combined sale like on an engineer kind of level?

Yeah. So let me take both of them. They're very different questions. On robotics, we did talk about it at Investor Day. And what we see there, number one is, it leverages not only what we do, but also our whole position. So we benefit from both the robotics manufacturers in Japan as well as increasingly in China, as well as the traditional robotics manufacturers that you have in Germany and Europe. So we're very well-positioned at all of those, and it's really across broad application. We see it in automotive, as you still get a program ramp up. We're also seeing increasingly everywhere globally, as people deal with labor and how do they get better quality and productivity. So we continue to see that and that is we're benefiting from. On the solutions side, your second part of your question, on the solutions side, we continue to see it. The strongest we see it is more around our automotive, where we have a very strong position. Elsewhere I would say it's more spotty, but we continue to have momentum in the TERP and the revenue pipeline we have. But, clearly, we do get those benefits similar to the examples we've shown everybody. But those not only give us sensor opportunity and interconnect opportunity, it also takes content upper role because there is other things that we do when we provide more of that solution. So, that is part of the content story when you look at automotive and you see that separation. And we also have that in our industrial transportation business. You see it. In our commercial transportation business, you see tremendous growth. That is not only rebound in the market. That is also on those solutions that we're doing. Everywhere in the world, not just in one region – yeah, it's benefiting in China, it's benefiting here, and you really see it in the outperformance that we had that's now been well over a year and a half in that business.

Okay. Thanks for the question, Joe. Can we have the next question, please?

Sure. That will come from Deepa Raghavan with Wells Fargo Securities. Please go ahead.

Good morning. A couple for me. Could you please talk about China momentum across your product lines, especially where you see some strength and some weakness? It looks like auto story is accelerating there. You mentioned robotics, what else? And secondarily, Heath, could you comment on the inventory in the channel? Mixed REITs there, but sales have increased. Thank you.

Thank you, Deepa. So let me take the China piece. Heath will take the inventory piece. So in China, our performance was very strong in the quarter and our sales growth overall was basically 10%. And when you see that, in Transportation, not just auto across, we were up 12%; in our Industrial business unit where we have robotics, we had 10% growth; as well as in our Communications Solutions which is both data, devices and appliances, on excluding SubCom, we were up 8%. So very strong growth across the China verticals, not just in one application. So, we feel very good about the momentum we had in China. And certainly, that's higher than company organic growth. So, I'll hand it over to Heath here, and he'll talk about inventory channel.

Yeah. The channel inventory actually is – as you can imagine, you've seen the numbers in our Industrial Solutions segment, that is benefiting greatly from that. If you look at it there is – we feel very good that there's not a buildup in that channel inventory. Our channel partners have confirmed that. We've got pretty good line of sight to our major channel partners in terms of what they're stocking right now. And that continues to be pretty strong and a good indicator for us in terms of the broader industrial economy. So in general, in good shape.

All right. Thank you, Deepa. Can we have the next question, please?

And that will come from Jim Suva with Citi. Please go ahead.

Thanks very much. On the SubCom, it sounds like has the push-outs been elongated even further than what you'd have thought say 90 days ago? And are you losing any business to customers or competitors who maybe want solutions or contracts completed sooner? Thank you.

No. Hey, Jim. With the orders we see, we don't believe we're losing contracts. And in fact, the $600 million we feel very good about where we are year-to-date from a backlog perspective. It's just the one project, a program delay. It's a little bit. So it's about $50 million, as we highlighted in our guide. But from that viewpoint, something we'll work through. We have to remember this is a construction business, so it does create some ripple effect. And these are typically long-term projects to begin with. Typically, these projects get worked on, get won. They don't start construction right away. So, I don't feel we're hurting any customer on other projects. It's just how we're planning through it and how we have to run the cable through the factory and integrate it through the deployment, because this is a complete system realized. We do the design work of the system. We do the manufacturing of the equipment that goes into the system and we deploy it. So it's a turnkey solution. And guess what? When we give a turnkey solution, we're going to give a solution that works to the expectations our customers have at it. And really in this case, we're making sure we're going to keep our customers happy.

Okay. Thank you, Jim. Can we have the next question, please?

And that will come from Steve Fox with Cross Research. Please go ahead.

Hi, good morning. Just one on capital spending. So Heath, you explained the cash flow dynamics for the second half. But with the increase in capital spending through the year, can you just give us a sense for what the spending is directed at, and whether this is a change in your long-term expectations for CapEx ratios? Thanks.

Sure. And Steve, I appreciate the question. Regarding CapEx, we are running higher this year than we had in the past. And I will tell you that as we evaluate our opportunity set there, it's really very strong and it's all tied to growth. It's in the areas that you would expect us, in the areas we've highlighted around auto wins, things in the sensors world, things in the medical world, selectively across the industrial, where we have won projects and we're in the process of tooling up for those. And in this business, sometimes you're spending money to get tooled up and so forth; sometimes one to two years in advance of when you'll actually see the revenue. And we talk a lot about something called the TERP, which is the TE Revenue Pipeline. And in these businesses that I mentioned today, the opportunity set is very strong. These are largely things that have been committed by customers that will fuel organic revenue growth, outsized organic revenue growth for time to come. So, we look at it – and the use of our cash flows, this is a really good opportunity to step that up because the return on invested capital from these investments is quite good. Now, we'll always be good shepherds of the cash and disciplined with where we do it; no different than our M&A activity, but we feel like this is a pretty good step up. If you are modeling it, we're going to run about 6% this year. I'd say, it's harder to know because as the markets correct or move around, we might adjust our thinking there. But we probably pivoted – if you're modeling between 5% and 6%, we probably pivoted a little bit closer to the higher end of that range. And we'll continue to update everyone as things come around, but this is really exciting opportunity to invest. And I would say our cash flow, your first part of your question, the cash flow in our second half of fiscal year will be significantly higher than what you saw in the first half. Most of that is not tied to a reduction in CapEx. Most of that is, you'll see a reduction in working capital as it turns into a source of cash. I would expect our second half free cash flow to be at or higher than what our second half free cash flow was a year ago.

Okay. Thank you, Steve. Can we have the next question, please?

Sure. That will come from William Stein with SunTrust. Please go ahead.

Hey. Thanks. One clarification and then one question. Clarification is again on SubCom. I understand there is a lot of leverage in that business, but there is also this unusual project accounting. If revenue were to not rebound from these levels, would margins increase regardless because of the accounting treatment? And then I had a question about supply chain. You had some issues here that hurt profitability, I think, last year. I don't think those are happening now, but there are broader issues in the supply chain with regard to passives and discrete semis. And I wonder if you're seeing any impact of that on the business? Thank you.

I'll take the first part of the question, and Terrence will chime in for the second half. Relative to the percentage of completion accounting that is handled by the SubCom team for this project, it is very specific project-by-project. So, not all projects are created equal in terms of size of project or implied margin of those projects. So when you have hiccups, whether it's in the factory or when you have any kind of a ramp up otherwise because of technology or requirements, those tend to believe through a particular project through the end of that contract as it gets revalued. I would say, if you are looking at it versus raw total topline number for the business, there can't be a mix in projects can swing that profitability pretty dramatically. So, I wouldn't assume that the business stays at low levels if the revenue does not rebound, because there are things coming in. And obviously, we're very conscious of the billion plus dollars of backlog that we have in the business, what the makeup of the implied margin is in that business. And we would tell you that runs higher than where we are today, but largely because we've had some inefficiencies with this particular project delay ramp up that we're waiting our way through now. Terrence?

Yeah. And, Will, on the supply chain, first off, I would say, when we look at the supply chain in our world we're not a semiconductor, we aren't passive. There are some extended lead times, very much in those product categories. When we look in our world, there are some pockets where lead times extended. What I'd like, and Heath talked about a little bit is, our sell-in the distribution and their sell out is imparity. So, we do not see distributors getting ahead of themselves, so the sell-in and sell-through is an alignment. Certainly, there are some areas you can see in our growth rates. In some areas, you're growing 20%. When you have that type of growth, we have extended lead times as we catch up but I would not say it's broad-based like some other product categories that you may follow.

Okay. Thank you, Will. Can we have the next question, please?

That will come from Shawn Harrison with Longbow Research. Please go ahead.

Hi. Just follow up a little bit on Will's question. The margin impacts from SubCom, I think it was 50 basis points corporate overall. Once we get into the middle of the next year, you would expect that to not be a 50 basis point drive from kind of the SubCom, is that the best way to think about modeling it in the 2019?

I think that's fair way of thinking about it, Shawn.

Okay. And then as a brief follow up just on the data and devices business, the hyper-scale strength. Are you seeing any change in the composition of the hyper-scale guys that are driving your business, maybe more customers or less customers kind of a slowing growth rate in terms of underlying spend or an accelerated growth rate?

So, Shawn, on that this is the same customers, I would say. I don't see more players and I would say it's been pretty constant. So what's really great is, as you're aware, when you take our data and devices business, there is hyper-scale customers, there is legacy telecom customers, and then there are sort of the lower-tier below that. Hyper-scale continues a very accelerated growth rate and they have the growth rates that we've talked about; really proud of the team of what the solutions are bringing on a high-speed area. We do expect, outside SubCom, high-single-digit organic growth really shows a traction we have in those customers and stay in front because they do have high expectations; and I think we're doing a good job.

Thank you, Shawn. Can we have the next question, please?

It will come from Sherri Scribner with Deutsche Bank. Please go ahead.

Hi. Thank you. Terrence, I'd be curious to get your thoughts on the trade war discussions that are going on about the U.S. and China. I know you guys aren't incorporated in the U.S. and so maybe this has less of an impact on you. But I'm curious, given your exposure to China and the Chinese auto market, how do you see potential trade war potentially affecting your business? I assume it might have some negative impact and what have your customers said about this? Thanks.

So Sherri, one of the things is, I think you have to take it back to what our business model is and it's really staying close to our customers and we try to localize both engineering as well as manufacturing close to our customers, so we can co-create. So we are firmly a believer in global free trade and we're staying close to our customers, because we have to stay to them to what decisions they make; where they want to design and also where they want their supply chains to be. So, that's the way we focus on it, to really make sure how do we win with our customers and also how do we support them. So we have not had a lot of feedback from our customers yet. I think there is a lot of – clearly, a lot of words being said and our customers are trying to digest it and we're staying close to them. So, that's really always our strategies in these situations to really stay close to our customers and we'll continue to update for our owners and everybody else as we do more. But right now, there's really no update.

Okay. Thank you, Sherri. Can we have the next question, please?

Sure. That will come from Joe Giordano with Cowen. Please go ahead. Joseph Giordano - Cowen & Co. LLC: Heath, just given all the questions on SubCom, how much thought have you guys given to just reporting that as a separate segment so that it doesn't kind of obscure the positive trends we're seeing in the rest of the Communications business?

Well, candidly, not a lot of thought. I mean, we obviously – our organizational structure is set up in such a way that it adheres to segment accounting rules and so forth, and the SubCom team is managed by the same team that manages the rest of the organization, so – rest of CS business. So, no, it's not frontend center for us. We try to provide as much visibility as we can to explain due to the lumpiness of the business both from an order as well a revenue perspective. That certainly is something we try to highlight there. But pulling it out as a separate segment, I don't see in the near future.

Okay. Thank you, Joe. It looks like we don't have any further questions. So anyone does have questions, please contact Investor Relations at TE. Thank you for joining us this morning and have a nice day.