Q2 2020 Amphenol Corp Earnings Call
Hello, and welcome to the second quarter earnings Conference call for Ethanol Corporation.
Following today's presentation there'll be a formal question answer session.
Well done all lines will mean in listen only mode.
At the request that accompany todays conference is being recorded if anyone has any objections you may disconnect at this time I.
Oh, no like change you do see conference host Mr., Craig <unk>, Oh sure you may begin.
Thank you very much.
Good afternoon, everyone. This is Craig Lampo, Amphenols, CFO and I'm here together with Adam Norwitt, our CEO, we would like to welcome you to our second quarter 2020 conference call.
As a reminder, during the call we may refer to certain non-GAAP financial measures and May make certain forward looking statements. So please refer to the relevant disclosures in our press release for further information.
The company called the second quarter with sales of 1.987 billion and with GAAP and adjusted diluted EPS of 85.
And 81 cents respectively.
Sales were down 1% in us dollars and worthwhile currencies compared to the second quarter of 2019.
From an organic standpoint, excluding both acquisitions and currency impacts sales in the second quarter decreased 3%.
Sequentially sales were up 7% in us dollars in local currencies inorganically.
Breaking down sales into our two segments interconnect business, which comprise 96% of our sales were down 1% newest dollars and was flat in local currencies compared to last year.
Our cable business, which comprised 4% of our sales were down 1% in U.S. dollar and up 3% in local currencies compared to the second quarter last year.
Adam will comment further on trends by market in a few minutes.
Operating income was $357 million in second quarter of 2020.
And operating margins were 18%, which was down 230 basis points compared to the second quarter of 2019.
Similar to last quarter the year over year reduction operating margin referred to the higher negative conversion rate than our typical 30% downside conversion due to the can continue negative impact it's called the 19 pandemic on Prem production in productivity.
Particularly due to various government restrictions that have limited our ability to adjust cost in certain geographies.
Compared to the first quarter 2020 operating margin increased 100 basis points in regard to the strong sequential Curt conversion margin on the higher sales levels.
From a segment standpoint, and the interconnect segment margins were 20% in the second quarter of 2020, which was down compared to 22.2% second quarter of 2019, but up from 19.1% first quarter of 2020.
And the cable segment margins were 9.4%, which is down compared to 9.7% in the second quarter of 292019, but up from 7.6%, let's first quarter of 2020.
Given the continued unprecedented challenges created by the code at 19 pandemic. We're proud of this quarter's performance.
Our teams ongoing ability to minimize negative margin impact, resulting from the crisis is a direct result of the strength and commitment of the company's entrepreneurial management team, which continues to foster high performance action oriented culture, and thereby allows us to capitalize on opportunities and maximize profitability in an uncertain market environment.
Interest expense for the quarter was $30 million, which was unchanged compared to the second quarter of two last year.
The company's adjusted effective tax rate was 24.5% for both the second quarter of 2020 in 2019.
The adjusted effective tax rate for the second quarter of 2020 exclusion excess tax benefit of $12 million associated with the stock option exercises during the quarter.
And the adjusted effective tax rate for the second quarter of 2019 excludes the impact of an excess tax benefits associated with stock option exercises during the quarter, partially offset by the tax impact of acquisition related costs.
The company's GAAP effective tax rate for a second quarter of 2020 include items, including guidance. Just mentioned was 20.7 per cent compared to 21.3% in the second quarter of 2019.
Adjusted net income was 12% of sales in the second quarter of 2020, another confirmation of the strength of the Companys financial performance.
On a GAAP basis diluted EPS declined by 9% in second quarter to 85 cents compared to 93 cents in the second quarter of 2019.
Adjusted diluted EPS declined 12% to 81 cents in the second quarter of 2020 from 92 cents in the second quarter of 2019.
Orders for the quarter were 1.971 billion.
Which was down 2% compared to the second quarter of 2019 results in that book to Bill ratio just under one to one.
Despite the unprecedented challenges in the current environment. The company continues to be an excellent generator of cash cash flow from operations was $368 million into second quarter or 160% of adjusted net income.
And that of capital spending of $67 million or free cash flow was 301, nine dollarsfour hundred 23% of adjusted other income.
From working capital standpoint inventory accounts receivable and accounts payable were 1.4 billion 1.7, doing and I and $28 million respectively. At the end of June.
And inventory days days sales outstanding and payable days were 80 974 in 60 days respectively.
While D.S., so and DPL were both when our normal range, yes, I was slightly elevated.
Due to the current crisis, we expect inventory days to remain somewhat elevated but to come back down to more normal levels as business returns to a more typical pattern.
During the second quarter, our cash flow from operations, a $368 million along with proceeds from our recently completed bond offering a 543 million proceeds from the exercise of stock options of 123 million any cash cash equivalents in short term investments on hand at 1.1 billion now the trends.
Relation were used primarily just fund repayments on to our virus credit facilities at 1.35 billion find repayments of senior notes at 400 million.
Fund net repayments under our commercial paper program of 135 million.
On payment of contingent acquisition related obligations of 75 million on dividend payments or 74 million when that capital expenditures of 67 million, it's fun, new debt financing costs of $5 million.
As communicated in our April earnings release, due to the significant economic uncertainty and volatility in the credit in capital markets created by the code at 19 pandemic in March the company had proactively borrowed 1.25 billion under our revolving credit facility and reduced our reliance on commercial paper markets.
As a credit capital market stabilized during the second quarter, we were a pay the amounts borrowed under our revolving credit facility with cash on hand, as well as the proceeds from the 500 million dollar filings you million Euro bond offering completed in May.
As such as of June 32020, there are no balances outstanding under our revolving credit facility or our commercial paper programs.
As a result at June Thirtyth cash and short term investments worth $1.3 billion. The majority of which is held outside of the U.S. and total debt at June Thirtyth was $3.8 billion with no maturities before the third quarter of 2021.
Net debt at June Thirtyth. It was 2.5 billion, which decreased from 2.7 billion as of March 31st 2020 in December 31st was 19.
Total cash on hand, as well as the remaining availability under our credit facilities was $3.8 billion out the ended the quarter, which leaves the company any very strong liquidity position.
The second quarter 2020, EBITDA was forms and $44 million in their pro forma net leverage ratio was 1.3 times.
In summary, although this continues to be a challenging environment. We finished the quarter any position of continued financial strength with a very strong balance sheet liquidity position. We believe this financial strength, coupled with the company's broad market <unk> market Andrea graphic diversity.
Positions us well for the current me volatile environment, which is characterized by continued uncertainty across global markets.
I'll now turn it back over to Adam will provide some commentary on current market trends.
Well. Thank you very much Craig and allow me to extend my welcome to everybody here on the phone today and first I just want to also offer my hope in wishes that for all of you on the call here. The you your family or friends as well as your colleagues have remained safe and healthy over the course of last quarter.
As Craig mentioned I'm going to highlight some of our achievements in the second quarter I'm also going to discuss the trends and progress across our served markets and then finally I'll make some comments on our outlook for the third quarter.
With respect to the second quarter as Craig just detailed our sales reached $1.987 billion, which was a reduction from prior year of just 1% in US dollars was actually flat in local currencies and down just 3% organically.
And this was driven by reductions in the automotive commercial air mobile networks and military markets, which were essentially offset by growth that we saw in the IP datacom mobile devices and industrial markets.
The declines that we saw in the quarter were largely related to the weakness in demand disruptions on government mandated factory shutdowns that resulted all from the cobot 19 pandemic.
We're in particular very pleased to have realized 7% sequential growth from the first quarter, which is substantially higher than our original expectations.
The company booked 1.971 billion in orders, representing a book to Bill of just under one to one.
And very importantly, despite the significant disruptions to our operations in the quarter related to the pandemic.
Operating margins reached 18% a very strong performance given this environment.
It's Craig just mentioned ample financial position remains extremely strong and that is reflected very well in our operating cash flow 360 million in the quarter.
I just want to say that I'm extremely proud of our team around the world and our performance. This quarter. Once again is a great reflection of the discipline and agility of Amphenols entrepreneurial organization, who has continued to perform well amidst the unprecedented challenges that have arisen throughout the covenant.
Pandemic.
We're very pleased in the quarter to announce that we just last week closed the acquisition of on and on Inc.
On a non is based in California and has annual sales of approximately $20 million and the company designs and manufactures a wide array of high technology connectors and cable assemblies for customers in the industrial market and with a particular focus on medical related applications.
As we welcome this outstanding new team to Amphenol I remain very confident that our acquisition program will continue to create great value for the company.
In fact, it is our ability to identify and execute execute upon acquisitions and successfully bring these new companies into amphenol. The remains a core competitive advantage for the company.
Now turning to our progress across our served markets I just want to comment the first that the value of the company's balanced and broad end market diversification has become even more evident during the covenant in pandemic.
While several of our end markets were negatively impacted by the pandemic in the second quarter that impact was essentially offset by growth that we achieved another markets.
Our diversification continues to mitigate the impact of volatility that can be seen an individual end markets and geographies.
Well at the same time, exposing us to new opportunities as well as important new technology developments wherever they may arise across electronics industry.
In a dynamic and unpredictable environment like we are experiencing today. This diversification is a truly great asset for the company.
Now first the military market represented 10% of our sales in the quarter sales were down by 12% compared to prior year as certain of our facilities face production restrictions from government measures put in place to control the covenant Jane pandemic.
Sequentially, our sales decreased as we had expected but about 20%.
Looking into the third quarter, we expect sales to increase back to our first quarter levels as we look to recover to full production that most of our facilities that work in support of military customers.
Our team focused on the military market has worked hard for many years to strengthen amphenols broad technology position, while increasing our capacity to serve customers across all segments of the import of this important market.
Given the ongoing and continuing favorable military spending environment.
The ethanol team continues to solidify our leadership position by ensuring that we can execute on this increased demand even amidst the disruptions that we experienced during the second quarter.
This enabled us to continue to support the many next generation technologies that are required for modern military hardware.
The commercial air market represented 3% of our sales in the quarter second quarter is second quarter sales declined by 41% from prior year as the commercial aircraft market saw unprecedented declines in demand for new aircraft due to the disruptions to the global travel industry related to the.
David 19 pandemic.
Sequentially, our sales decreased also by 41% from the first quarter.
As we look ahead, we expect the commercial air market to continue to be negatively impacted by the significant reduction in demand for air travel that we're seeing across the world. Accordingly, we expect to further approximately 20% sequential reduction in our sales in this market in third quarter.
Regardless of the difficult environment in the commercial air market.
Our team remains committed to leveraging the company is strong technology position across a wide array of aircraft platforms. A next generation systems that are integrated into those aircraft.
And we remain well positioned when this market ultimately returns to growth.
In fact, it is in challenging times like this that our steadfast in reactive support for customers can create the most long term value and thereby position us for long term success.
The industrial market represented 23% of our sales in the quarter and our performance in the second quarter was stronger than we had expected with sales increasing by 12% in us dollars, an 8% organically.
This growth was driven in particular by strength in the medical instrumentation and heavy equipment segments together with some contributions from our acquisitions that we completed last year.
On a sequential basis sales increased by very strong 17% from the first quarter.
I'd like to emphasize how proud I am of our team in particular working in support of medical applications within the industrial market.
That team continues to work tirelessly to ramp up our production of sensors connectors and interconnect assemblies.
To meet demand from a broad array of customers producing equipment. That's used in support of medical treatment for covered 19 patients. We're just very proud of them.
This month's acquisition of on and on further strengthens our broad high technology offering for the medical equipment market.
As we look into the third quarter, we expect a modest decline from this higher levels of sales. Nevertheless, we remain very pleased with the company's strong position in the worldwide industrial market.
Through both our acquisition program as well as our organic innovations we've developed a broad range of products across a diversified array of exciting industrial segments.
We're proud of the success and look forward to realizing the benefits from our efforts in the industrial market for many years to come.
The automotive market represented 11% of our sales in the quarter sales declined by a very significant 42% in us dollars and 41% in local currency.
Stay at home orders around the world reduced customer demand for new cars and at the same time as government restrictions across many countries resulted in factory shutdowns by automakers and their suppliers.
Sequentially, our automotive sales decreased by 35%.
As we look towards the third quarter, we now expect sales to the automotive market to substantially improved compared to the second quarter as the industry begins to recover and this factor is ramp up their production levels.
However, we do not yet expect sales to reach last years levels as the global automotive industry continues to experience somewhat lower demand in the face of the cope with 19 pandemic.
Regardless of this very challenging time period for the automotive market.
We remain confident and Amphenols long term position.
We've expanded our range of interconnect sensor and antenna products, both organically and through acquisitions to enable a wide array of onboard electronics across a diversified range of vehicles made by auto manufacturers around the world.
This consistent strategy will continue to benefit us as the automotive market recovers.
The mobile devices market represented 14% of our sales in the quarter, our sales to mobile device customers increased by 20% from prior year as demand recovered after the three weeks shutdown in subsequent month long ramp up of production that we saw in China during the first quarter.
Sequentially, our sales and mobile devices increased by a very strong, 47%, which was substantially better than our expectations have been coming into the quarter and which did reflect some catch up of production. After the first quarter shutdowns in China.
Looking to the third quarter, we now expect a modest increase from these elevated second quarter levels.
Well 2020, as thus far soon substantial impacts on the mobile devices market from the pandemic.
Our long term position in this market remains very robust.
Amphenols, leading array of antennas interconnect products and mechanisms continues to enable a broad range of next generation mobile devices and while there is no doubt that this market will always remain one of our most volatile our outstanding and agile team is poised to though is to capture any opportunities for incremental sales.
May arise in 2020 and beyond.
The mobile networks market represented 7% of our sales in the quarter.
Sales in this market decreased by 20% from prior year and 23% organically as we were impacted by reduced demand from wireless Oems.
Particularly related to the U.S. government restrictions on certain Chinese entities that we've discussed extensively in previous quarters.
On a sequential basis, our sales increased by a stronger than expected, 9% from the first quarter, driven essentially by higher sales to equipment manufacturers.
For the third quarter, we expect sales in the mobile networks market to moderate from these levels on lower demand from both Oems and service providers.
Regardless of any near term challenges in the mobile networks market. We're confident in the company's long term position in this important an exciting industry. Our team continues to work aggressively to expand our opportunity with next generation equipment and networks.
As customers ramp up their investments for these advanced systems, we look forward to benefiting from the increase potential that comes from our unique position with both equipment manufacturers and mobile service providers around the world.
The information technology and data communications market represented 27% of our sales in the quarter and sales in the second quarter for this market were much better than expected rising from prior year by a very strong 37% in us dollars and 32% organically as.
Increased data traffic drove both our OEM and service provider customers to significantly increase their demand across virtually all segments of the two datacom market.
Sequentially, our sales increased by a very strong 43% from the first quarter.
I just can't tell you enough how proud I am of our team working in the IP Datacom market grew despite facing production restrictions related to the cobot 19 pandemic in certain geographies was still able to react quickly to satisfy the significant increase in demand from our customers.
As we look towards the third quarter, we now expect of roughly mid teens sequential decline from the second quarter is very high levels.
Our teams continued efforts at developing industry, leading products across a wide array of technologies, including in particular high speed and power products has positioned us to benefit from the continued demand for increased bandwidth that is likely to persist as individuals companies students and governments adjust.
Interacting remotely.
We remain encouraged by the company has strong technology position in the global IP Datacom market and.
Especially given this increased demand for bandwidth our customers around the world are driving their equipment ever higher levels of performance in order to manage these dramatic increases in demand.
In turn our team remains singularly focused on enabling this continuing revolution the 90 datacom.
For their ongoing development of a wide range of next generation products.
The broadband market represented 5% of our sales in the quarter sales increased by 3% in us dollars and 5% organically from prior year, driven by stronger demand for home installation related equipment from broadband operators.
On a sequential basis sales increased by 12% from the first quarter.
We expect sales in the third quarter to remain roughly at these levels as our operator customers continue to upgrade capacity in their networks to supports a significant increase in demand for bandwidth driven by online video and other remotes school and work tools.
We remain encouraged by the company is continually expanding range of products for the broadband market.
Together with our strong positions with customers around the world.
And we continue to position ourselves as the most flexible supplier, thereby ensuring that the company can benefit as operators increased their network investments.
Now turning for a moment to our outlook.
The continued and significant economic and public health uncertainties created by the covered 19 pandemic make it difficult to accurately forecast our performance in the second half of 2020.
Accordingly, we will once again not be providing full year guidance.
However, considering the current demand environment, and assuming no new material disruptions from the pandemic as well as constant exchange rates.
For the third quarter, we now expect sales in the range of 1.960 billion to 2 billion.
And we expect adjusted diluted EPS in the range of 84 cents to 86 cents.
This guidance represents a sales decline versus prior year of 5% to 7% in us dollars and a decrease versus prior year adjusted diluted EPS of 9% to 12%.
Now let me just say I'm extremely pleased by Amphenol performance share in the second quarter, particularly in light of the many challenges our team has faced related to the covered 19 pandemic.
I remain very confident in the ability of our outstanding management team.
To meet these challenges and to navigate these challenges while capitalizing on the many current and future opportunities to grow our market position and expand our profitability.
Now ill team around the world remains committed to fighting hard to secure the Companys financial performance.
All well dedicating ourselves to protecting the safety and health of all of our employees during this pandemic.
And I would just like to finish by taking this opportunity to thank each and every one of the amphenol ends around the world for their dedication and their outstanding efforts here in the second quarter.
And with that operator, we'd be very happy to take any questions that there may be.
Absolutely.
Question and answer appeared will now begin.
First question is from Amit Daryanani from Evercore. Your line is open.
Yes.
Welcome to taking my questions Paul.
Paul well goals, one yet if I think about.
Slide operating margins, you've got the guiding for September quarter, it's around 19% slightly less than that I think.
What about 2 billion of sales.
I would love to understand because if I go back to the flows of 19 when revenues in this 1.95 to 2 billion range you guys were doing well over 20% operating margins up what's this hundred basis points Delta attribute it to.
Is this just the cost of co. It as we go forward at both structural or do you think it's more transient as you go forward.
Sure Thanks, Tom it.
Yes.
First I think we're really happy with the operating margins, we certainly had in 2002nd quarter, reaching 18% with the significant costs that we we had an due to the co. The 19th pandemic that government mandates and the restrictions that impact is certainly our production and productivity.
As we look into the.
Third quarter, we still expect to have some of those costs.
Impacting us I mean, certainly to a lesser extent, we had some improvements we saw some improvements as we came through the second quarter, but we still have some of those headwinds as as we're moving into this into the third quarter, just just to a lesser degree but.
And you can see that by the sequential on from second quarter. The third quarter improvement that we're kind of imply and I think your math is not so far off in terms of our implied.
Margins as we look into that into the third quarter. If you look at the to your question in terms of the impact from from the first quarter of 19 or even if you look at the fourth quarter of 19.
Theres a couple of things that are impacting our margins and the third quarter, one would be certainly the coded Tom.
Costs that were still going to be incurring in the third quarter, albeit to a lesser degree and any other thing if you're comparing to earlier in 2019, we do we still do have a little bit of headwind on margin.
Related to certainly some of the acquisitions, we debuted at nine acquisitions in 2019, all of which were or many of which were below our our average margin and that we're still continuing the journey to to branding off to the company average as you can imagine as you're going to a pandemic and all the things that they have to deal with to ensure that that.
Businesses are maximizing their profitability and given the in many cases that revenue reductions some of these actions aren't necessarily easy to implement.
In the current tied but we certainly have fall.
Spectator runs in the longer term that we still should be able to get them back up to the company average so that really would be the bridge. If you kind of we're comparing earlier 2019 quarters to essentially the third quarter of 2020, but after say saw an extremely proud of the team cheating, 80% in the second quarter and then taking the actions.
That are needed to really sequentially get up to these higher levels that we do expect in the third quarter.
We're really we're really happy with those results.
Thank you speak curious and just a reminder for the parties acute.
You may to limit asking to only one question.
Q will proceed to Mark Delaney from Goldman Sachs. Your line is open.
Yes. Good afternoon, thanks, very much for taking the question and solutions on the good results I'm going to better understand what the company as seen in the mobile devices and markets and to what extent are there opportunities for the company to.
Participating more sophisticated design, especially around Fiveg in second half of this year and in some of the past years went when a company that can participation on on a new program launches using a pretty big sequential increase in the third quarter.
I realize there's a there's a base effective of where you're coming in off of the successes twoq levels, but trying to understand and so what I'm, saying able to participate and in some of those opportunities in Threeq you.
Is there anything around just the timing and maybe just more fourq you this year orders.
What's the opportunity set thats.
Maybe playing into the guidance there. Thank you.
Well, thanks, Thanks, very much mark.
Talked already my prepared remarks about the fact that.
In the second quarter. There was some degree of catch up from the first quarter and I just want to credit our team for what a fabulous job. They did in recovering from the shutdown as you know well our mobile devices business virtually all of that is manufactured in China and so when that was really having the.
Comprehensive shutdown in the first quarter that had a disproportionate impact on our mobile devices.
Team and also on the manufacturing of our customers in fact at the same time. So our team did a fabulous job of recovering getting all the workforce back in place, but really the beginning of March and then was able to really catch up.
With that demand here in the second quarter and normally we would not see a 47% increase in the second quarter in fact, the second quarter sequentially.
Second quarter tends to be a little bit more of a lull in the mobile devices market as you know having followed the company for for quite some time.
So I think if you take that out.
Thats sort of anomaly here in the first half we still have in the second half you know great participation in many new programs and whether those are fiveg related or otherwise.
Just the devices continued to get more complex. Our team continues to do a great job in helping to enable those devices from a wide array of customers.
And ultimately puts us at a very strong position.
I would say with the pandemic. The there does appear to be a little bit of slippage in some programs that maybe would have normally launched a little bit earlier.
That may be combined with the disproportionate second quarter that we saw I think if you factor all that out you probably get through a little bit nor a little bit more normal looking.
Sequential outlook for mobile devices, but we continue to have a very strong position. We're excited about these general these next generation.
Programs that are coming the new functionalities that are being put into the phones and while we're never going to win everything you know every new program is kind of a new jump ball for us our team has done a fabulous job of supporting customers in good times and bad and.
Where normally we have come to bat for our customers when they have a new launch and when others may be can't support as well.
The the ramp up here, we came to bat for our customers during a pandemic when everything was very chaotic and in the first half and our team just kept their head down kept focused get made sure that we had the right resources in place the right capabilities to meet what our customers needed and I think that puts us in a strong position to the extent that there are.
Opportunities for incremental.
Volumes are incremental programs in the near in the long term I think we'll be well positioned to take advantage of those.
Thank you. Our next question comes from Craig Hettenbach from Morgan Stanley. Your line is open.
Yes. Thank you Adam I guess, good to see kind of a flaw in the M&A environment. After that the first half of the year. So just curious to get your take on that small tuck in and just how you see things set up in terms of opportunity set and ability to execute on M&A as those opportunities arise.
Well. Thanks, so much Craig we're really excited it's not a big company on a non but it's a great company and I think it is a wonderful reflection of our approach to acquisitions, we have taken for a long long time that very patient approach of.
Incubating relationships with a wide array of companies around the industry and around the world developing relationships developing real mutual trust between the us and the owners of these entrepreneurial companies such that when it is appropriate and when they have that they have sort of cross the.
Across the kind of Canyon, if you will have deciding that they want to want to sell their company.
We don't have to build that trust from scratch, we've already established as one of our relationships because the fact is independent Nick when we're all socially distancing, creating new relationships from scratch is harder it's much harder to do and so this was not in the case of on and on a book that showed up from a banker and we said well.
Who are these people while you can't meet them none of that happen, we had long standing interactions with the the entrepreneurs who founded this company who by the way stay on as now the general manager of that company going forward.
And so we're very excited about that the the second thing is this is a company that has just a real unique technology proposition unique products that go into exciting areas of the industrial market in particular into medical technology, and we talked earlier about the strength of our medical business in the quarter.
It's not that we saw that strengthened thereby said Oh, let's go buy on a non because it's a medical company thats more coincidental, but I think the fact is they are a company that is present in next generation electronics used in a wide array of applications that are exciting in that are important and we're very proud to bring them into the amphenol.
Family.
The overall M&A environment in a pandemic, it's different as you can imagine you youre going to be more careful youre going to make sure you know the people you're going to make sure that the business as resilience to it.
In a time like this but all that being said we continue to have a strong pipeline and Craig Craig mentioned before we acquired nine companies last year I don't know that we're going to do that this year with a pandemic so far in the first half, but but we're very pleased that we're able to make this one and bring them into the amphenol family and we're very hopeful that there'll be more.
To come in the future.
Thank you. Our next question comes from Matt Sheerin from Stifel. Your line is open.
Yes. Thank you good afternoon.
One question Adam regarding the industrial sector.
Very strong results there you talked about.
Some of the end markets, particularly.
Medical.
Did you see any signs of maybe some pull in inventory building a customers. We're hearing that from some semiconductor company and other component companies I'm wondering if if you're seeing any of that and then within the medical markets are you beginning yet to see a shift from coal we had related demand and.
And products versus elective surgeries. Thanks.
Thanks, So much Matt great question.
Look I don't know that I would call the demand pull and but I would call. The demand that we saw for coated related medical equipment in particular things like ventilator respiratory therapy devices.
Patient monitoring for new hospital constructions things like that that was very very significant demand. There's no doubt about it is that a pull in.
It didn't exist before this demand. So it was all new demand, though the world never built as many ventilators as the world is now building.
And I don't know that pull in would be necessarily the right term for that but there was definitely a rush to build and from our perspective, what our team just at such a great job of is massively increasing their capacity to support that demand.
Oftentimes our competitors could not do so and I can't tell you. The number of calls I've had with customers letters of gratitude from customers dozens if not hundreds of programs to in support of covet, where our team just pulled out all the stops and made it happen and we've worked with companies who never.
Built medical equipment before we've worked with long term medical companies, we work directly with governments around the world who are building strategically their medical their medical infrastructure and these are all things that we're not just sort of a one time situation, but rather is an ongoing recognition.
The World just didnt have enough of the certain type of medical equipment to deal with the respiratory borne pathogens.
I am guessing that that is not.
Situation the the people around the world one to face again.
Now are we seeing a shift from more covance focused medical equipment to the more elective surgical I mean, there's no question that early in the quarter, we did see a little bit softer demand for products that are used in purely elective fashion.
I wouldn't say that that was material and obviously despite that our medical business within industrial did really really well I mean this is outstanding performance.
Is that balancing a little bit more here coming into into the third quarter. I guess that was that would probably be a fair would have put it I mean, we expect as I said earlier in the third quarter, we expect our sales to be at or a little bit below the levels that they were in the second call.
These are very very high levels of consumption.
And our team continues to work hard to make sure that we can satisfy that demand and if there was a little bit of a more broad demand for some of those things that were earlier pushback that maybe the case.
Look we're just really proud of what the team has done here and medical.
Thank you. Our next question comes from Samik Chatterjee from Jpmorgan. Your line is open.
Hi, Thanks for taking my question.
See given the Florida.
Which looks like photo fill assuming the wise.
If you can give us a bit.
Visibility into what the cadence was.
Yeah.
Kind of exiting the quarter.
You can curious if you're seeing any big differences in terms of order activity between the regions given that the different regions seem to be in different places data containment.
Okay.
Yeah. Thanks, so much cemig.
Look I think that we came into the quarter as you will call recall on the heels a very very significant orders that we had in Q1, we had the highest book to bill in the history of the company in the third highest orders absolute order volume in the history of the company I think it was 2.150 billion.
And so it's not surprising to me it was not surprising to us that our orders would more level.
At or around our sales levels here here in the second quarter. In fact, I would have told you that after such a big order number it wouldn't surprise me if the orders were actually a little bit lower.
And then the sales levels and that was probably our expectation coming into the quarter that that orders would have been a little bit lower so I'd say that the fact that we outperformed.
On sales and met nearly met those sales levels with orders is a good reflection of of the demand from our customers in terms of the cadence throughout the quarter.
I Wouldnt say that Theres anything so notable the middle of the middle of the quarter's probably little lighter than the beginning in the ended the quarter Thats, maybe the only thing I would say and regional I don't think there was anything abnormal or anomalous from a regional perspective relative to orders.
Thank you. Your next question comes from Wamsi Mohan from Bank of America. Your line is open.
Yes. Thank you.
Q3 guide is clearly above consensus and quite strong, but but when you adjust for all 5 million on M&A and the incremental FX benefit. The guide is also somewhat subsea well.
Can you talk about what sort of dynamics are causing that did you see I know you addressed this on industrial but more broadly do you see any any pull forward if so and in any of the end markets and how large that might have been.
Yeah. Thanks, so much wamsi, well I'll point to a couple of of markets to describe this maybe with a little bit more specificity I talked already about mobile devices, where I would say the demand that we saw in the second quarter did reflect some catch up from from the disruptions that we.
Experienced in China in the first quarter. So thats, maybe one piece of the puzzle I think the second is I would talk about IC Datacom and I mentioned that we expect IC datacom expect that market to be down in the kind of mid teens.
Quarter to quarter and that is just a reflection of the extraordinary level of demand that we had here in the second quarter. I mean, these are still very very high levels of IC datacom demand in the third quarter. Traditionally you would see IP datacom strengthening into the second half and the fact that there was this very significant and I would say.
Incremental demand not not pull ahead per se again. This is that nuance of of a pull in the bandwidth requirements that emerged in the second quarter and even late in the first quarter.
Was not customers around the world setting all we had originally planned to put this bandwidth in the second half, let's put it in the first up this is a new demand for bandwidth because all of us around video calls all the time because all of US are working from home schools are teaching remotely.
Governments are working remotely hospitals are communicating remotely.
Just an intense demand for bandwidth that that nobody knew was going to exist as of January 22nd which was the day before we won was locked down for for the pandemic and so thats I wouldn't call that a pull in I would call that incremental demand that was very significant in the second quarter that we unique.
We were able to satisfy from our customers and that moderates somewhat in the third quarter, but moderate still to a very high level of demand and I think those those are probably the biggest areas where which impact.
The sequential guidance into the third quarter.
Without that otherwise you would probably be looking at a much more typical and even a little bit of recovery coming into the second quarter. Because I also talked about the fact that we see a strong recovery and military in the second quarter received very strong recovery in automotive, though those two markets, which were more dramatically impacted where we don't see that recovery is incomes.
Celaire Luckily for us that's a much smaller percent of our sales and has much less impact, but if you think about the markets that we're deeply impacted by the pandemic in the quarter.
We see very strong recoveries from both military and from automotive, but but not from from Comair. So I think you take all that together kind of put it into the calculator and you end up with a with a guide that we have which I think is a very strong guide, but does reflect essentially at similar levels roughly similar levels to what we achieved during this.
Second quarter.
Thank you. Our next question comes from Nikolai Todorov from Longbow. Your line is open.
Hi, guys. Thanks for taking the questions Bob.
Understood just can you guys speak a bit about about your assessment.
Some our inventories and I know, we're going back to this question, so or not so but.
Particularly interested in Datacom mobile devices and industrial end markets.
If I look at the mobile devices and combining.
Kind of the guide through the third quarter essentially implies that your sales are roughly flattish where production is down about 15% and I understand part of this it is content growth, but similar you want to industrial side, if we assume that some of that medical demand is going to subside or at least flattened.
For the second half what are you seeing in your non medical industrial customers in terms of.
Inventory situation ER docs.
Well. Thanks, so much cycle I mean, as I've said before we don't have perfect visibility into our customers warehouses and how much inventory.
We got a little bit of visibility from our distributors, but distributors represent just a bit over 15% of our sales and I would tell you visit VR distributors' inventory levels are very healthy theres nothing abnormal about them I wouldnt say that the ticked up or ticked down in any meaningful way here in the second quarter I mean as it relates to IP.
Datacom.
Again, I don't know the numbers, but I can tell you I would be pretty surprised if our customers and 90 Datacom put anything that we shipped to them on the shelf of a warehouse.
I mean, this was a dramatic need for product to be put in the field. So that people like you and I would not see us spending circle and return Netflix on in the evening and if it's sitting in if our product to sit in a warehouse, it's not helping someone get bandwidth and so I would be very surprised if any of that stuff ended up building inventory.
Sorry.
Mobile devices is really the theres very little inventory in the whole channel. So I don't think that Thats, one that I would note.
Relative to industrial I think industrial is the one market for us, especially when you take our medical where we have a little bit of a higher proportion of distribution and so there I guess I could be have a little bit more visibility than normal and I would tell you that the inventory levels seems healthy and reasonable and no abnormal changes as we came into or out of Dick.
Order at least relative to the distribution side of our industrial business.
Thank you. Your next question comes from Deepa Raghavan from Wells Fargo Securities. Your line is open.
Hi, good afternoon, everyone.
Validated.
Hey.
Are you able to speak specifically to Chinese to try and this trend worsens overall all in my questions mode, yet too.
Gauging how much of the fall with momentum in China is predicated on us in Europe.
Fabry supporting that up.
And I guess the second part of the question is are there any verticals are there somewhere to close that up more at risk. If these developed nations.
The main Craig.
Doesn't feel like China is in a fair to decouple from Europe or us. Thank you.
Okay.
Thank you very much deeper.
Well look it should not surprise anybody that after the first quarter, where because of the pandemic. Our China operations were shut down for three weeks and then ramping up over the course of the following month that there was significant sequential increase in our sales in Asia and in general and specifically in China.
I mean, the is normal and mobile devices is the best example of that which is essentially all fulfilled in China in that grew 47% sequentially.
You talked about is that momentum tied to the us in Europe or just broadly around the world.
All most of the mobile devices in the World are made in China. The vast majority and so to the extent that people in us or Europe by more or less phones, that's going to impact demand. There. So I guess in that market I would say that's the case the IP datacom market is another one where there is more there's a certain degree of production in China that.
That shift around the world and so again I think that that would be one where it's it's not just the Chinese domestic market.
I know you alluded to in a kind of decoupling.
And which is a little bit of a different topic, then just the kind of recovery in the second quarter.
And I'll, just say one thing about that.
We read the papers like everybody, we're very close to all of the geopolitics of the moment.
And I've said before and I was just said again here today the way that we organize our company has always been we're a global company, but we rely on local management around the world to execute that is we give authority to our more than 120 general managers around the world to make all the decisions that.
They need to make to in order to adapt to their local markets and we don't have expense we have local people in every geography, we have Indians in India Germans in Germany, French people in France in Chinese people in China Americans in the U.S. and that approach has always been a very.
Very successful approach and a globalizing world, but it is equally successful and equally powerful in a world, which is decoupling so to speak or fragmenting are becoming more nationalistic or whatever however, you would like to term that.
And our people in every country that they operate are viewed very much as a local supporter of those customers, even if behind them. The customers know that they have the strength the breadth the financial stability the resources of a global company and that puts us and really a best of both worlds position.
And so to the extent that the relations between one country and another start to deteriorate.
Whatever that is we had amphenol remained very agnostic to that I mean, yes, do I want to I think the world personally is better if everybody gets along sure that that I'd be lying if I said, so the opposite but can amphenol succeed regardless theres no doubt about that's how we've turned this company. That's how we've built the culture of this company.
Thats, how our organization is equipped and I think in the current world. It really creates actually an opportunity for our company long term, we're not going to shy away from the fact that were and American headquartered company that were traded on the New York stock exchange, but we're always going to make sure that our customers in every geography.
We get from US the superior presence of a local team and all what that entails and so I think.
To the extent that this this decoupling happens it is what it is it's well above my pay grade I can tell you.
But we're going to make sure that our team can manage either way to find great success.
Thank you. All are next question comes from Steven Fox from Fox Advisors. Your line is open.
Thanks, Good afternoon.
Hi.
Just wondering you touched on some of that dense dynamics going on with some ITD Datacom I was wondering if you can do the same thing for the outdoor markets with wireless infrastructure in broadband how would you sort of compare and contrast, the need for bandwidth there and your content gains going forward for the rest of year. Thank you.
Thanks, so much Steve.
I would I would say that if you compare broadband and mobile networks and kind of the acute situation of the last let's call. It four months five four and a half or so months, where everybody has been working from home.
I think the pressure has been more on the core internet. The pressure has been more on the broadband service providers than it has been necessarily on the mobile service providers and I'd say that because the fact is the real bandwidth constraints have come from people at.
Home, where the vast majority of people still today at home are not using wireless broadband as a means to deliver high speed internet to their house now that can change and I think maybe this whole.
Situation has is going to be a catalyst for that long term to change because I can tell you myself and I won't name my cable operator, they're all wonderful, but it was not always easy over the last four months innovating.
Two or three kids in the house all on Zoom calls when I was on zoom call. My wife was on zoom call I mean.
Or teams or Google or whatever I mean, we're all on video calls and and that was not always perfect and then my son decides to play a video game and all of a sudden the whole thing just freezes up and so the fact is is there is a real rush to help that at home capacity.
Over the last quarter and I think that was reflected more in what we saw with broadband growing 12% quarter to quarter.
As opposed to mobile networks, because in mobile networks. What we saw was really a growth from our OEM customers and we grew 9% sequentially, which was very strong given that some of that a little bit coming out of China, where the some of the equipment providers in China were of course shutdown.
But but in terms of our work directly with service providers. The strength really came in broadband and Nic data come in in the second quarter.
Now what does that mean long term I do believe that long term.
The fact of this pandemic coming at the same time as Fiveg is really beginning to be constructed is probably a good thing it's going to mean ultimately that we're going to have a variety of means to get broadband data to our homes and that that is not.
Just confined to cable systems to telco operators to mobile operators, but Theres also satellite internet being put up in a relatively big way by certain pretty famous operators I mean, there's a lot going on here to make sure that are that homes can have much better bandwidth capacity than they may have had in the.
Yes.
Regardless of where it is you know this well you've covered us for a long long time, Steve I mean are our approach has never been to bet on one of those ways of getting high speed. It's been that our approach has always been let's make sure were present everywhere, let's make sure were present with the broadband operators, let's make sure were present with the mobile network operators, let's make sure we're press.
Isn't with the web service providers, let's make sure were present with satellite.
Based internet whatever it may be and I think as long as we maintained that high technology partnership with customers across each of those areas, we're going to be well positioned as the world continues to build the infrastructure for bandwidth to homes to offices to governments to hospitals and everywhere around the world.
Thank you. Your next question comes from William Stein from Suntrust. Your line is open.
Hi, good afternoon. Thanks for taking my question I'm wondering if you can.
Elaborate Adam on capacity I think you mentioned that this was still somewhat of a constraint in the quarter did I.
This year I thought that as of the ended last quarter that these issues had been resolved at least internally, maybe it's more a matter of your customers capacity any.
Sort of clarification would be great. Thank you.
Well. Thanks, we'll know I mean, I would tell you. The as we came out of last quarter. I mean, you will recall the first quarter was really a story of China and the various significant kind of on off of the factories. There. It was it was a without equal.
There was no essential business. There was nothing it was just they were shut down for three weeks and then you had to reopen through a very complex and cumbersome process actually to prove that you were protecting your people and we did just a great job of that and thereby we're able to open maybe a little bit faster than than some others, but but as the as the virus spread.
Around the world to the nearly 40 countries in which we operate there was a whole range of restrictions that ultimately did impact our capacity our productivity in a whole variety of countries and not not just the nearly 40 countries, but even here in the U.S., we operate in dozens of states in.
The U.S. and every state had a slightly different approach I remember very well the day that the very first restrictions were taken and that was not even a state level restriction that was a county, where contra Costa and I think it was Alameda counties in California adopted the very first real significant business restrictions.
To to enable better social distancing and to stop the spread of the virus and so our teams around the world in our more than 200 facilities, it's hard to find one where we didnt at one point face something during the quarter, where the team had to somehow navigate a government.
Distraction or actually just to us taking measures to protect the people that were important and appropriate measures to protect our people and so no doubt about it in the quarter. There were significant expenses that that we incurred Craig talked about those and there was also impact on our capacity.
In a variety of ways and talked about that in a few of our markets, but the one in particular that that I mentioned was was in military where our sales were down 20% and that had nothing to do with demand that was all to do with navigating the variety of restrictions that were put in place in a variety of countries and our team just did a fabulous.
[noise] job.
Of doing so now as we came out of the corridor I would say that it's it's a much better situation, it's not totally done.
The we still have a number or let's say several places around the world that that are still facing some restrictions.
And who knows.
To the extent that.
The later part of the year, the latter part of the year.
Brings a further acceleration of the virus.
Ultimately, we all know that the only way to control. This virus is for people to wear masks into of social distancing.
And that ultimately may require governments to implement again restrictive measures that can have an impact on our customers and can have an impact on us and thats one of the levels of uncertainty that that to be honest makes it difficult for us to give a full year guidance.
So who knows what will come I Cross my fingers and my toes that that it doesn't get worse, but I'm realistic enough to know that this is a virus that doesn't just kind of stop magically it stops through social distancing it stops through mass squaring, that's what our people are doing and to the extent that go.
Governments around the world have problems that they face where the virus gets out of control. They want surprise me. If ultimately there is an impact on on the production of products on businesses being able to operate and we're not necessarily immune to that but regardless.
There is no doubt about it that in this kind of.
Very unique world a world, where we've never had to deal with governments, telling you can or cannot.
Open your factories.
Our team just did an amazing job of navigating those very tricky shoals here in the quarter and if something else were to come I'm sure they'll do the same great job.
Thank you. Your next question comes from Joseph Spak from RBC capital markets. Your line is open.
Thank you good afternoon, everyone.
Good afternoon.
I wanted to maybe just zoom out a little bits per second because over the past couple of months, we've seen the market really.
Dive in and pay a lot of attention increasing intention I'd say to alternative power trains for transportation.
The it for the lighter commercial vehicle markets, but also things like hydrogen.
For industrial uses particular news out of Europe. So yes. These are clearly long term trends, but maybe sometimes market enthusiasm.
That over over it skews on the opportunity. So can you speak to what you're seeing from your customer on these sort of things and weather.
Something like hydrogen is even an opportunity for amphenol.
Well look these are all exciting things and I remember years ago. When we were working on the first electric cars that we worked on air vis a boy I wonder if there's ever going to be an electric car that people actually owned and drive and now I look out in our parking lot.
Here, because I have a beautiful view of our parking lot out in my office window and I see a few of these electric cars more than I ever more than I ever did before so you talked about something like hydrogen fuel cells, you talk about alternative energy sources of whatever for cars.
I think long term there will be new drive trends I think there will be new technologies.
And I think regardless of what it is the great thing about these revolutionary New technologies is that they always require a new type of interconnect they require a more ruggedized they require a higher technology solutions and so they create opportunities for our company they create opportunities for our whole industry and I think that's that's a really good.
Thing now I thought you were going to ask Joe that given the pandemic in social distancing.
Is that going to have an impact on these things I think there's a chance.
Look I am I'm not the one to tell you, which way the auto market is going to go in which way drive trends are going to go.
But these last six months here and it is really a six months.
Six months ago from from Tomorrow that we will on was shutdown. These have been really unbelievable unbelievable time period of change, it's causing people to reassess everything.
I compare it at home to its like someone throw the bag a flower in the air and you just don't know where the flowers is going to land, but it will eventually land somewhere and I do believe that people are totally reassessing aspects of their life and some of those may ultimately result in driving these trends to act.
Celebrate a bit more what I mean by that will take public transport.
A huge amount of public transport anybody should be.
But the fact is once you know that an invisible thing like a virus can be spread through a dense public transport on the margin, it's going to probably caused people to use public transport, a little bit less and thats not great for the environment.
But at the same time people are waking up to these kind of existential threats.
Having a pandemic really makes it very quickly get clarity on things that can affect your life.
And the environment is clearly one of those things and I believe that it will be a missed opportunity for people not to sort of wake up a little bit about the environment. So you take that combination of maybe people wanting to be a little bit more in the privacy and the sanctity of their own vehicles together with a little bit of a wakeup call about existential threat.
Humanity.
Would make one think a little bit more about a hydrogen fuel cell for example, or electric vehicle or something like that now you'd I don't want to go totally off the reservation on this discussion, but the fact is.
This this time period can be a catalyst for change and a lot of that change can be very exciting change.
And regardless of what it's going to be our company I believe is very well positioned to take part in that to capitalize upon it and help to table it.
Yeah.
Thank you. Our next question comes from Shawn Harrison from Loop capital. Your line is open.
Hi, everybody Adam.
Again, just on your comments on kind of the wireless networks business when we said.
It would weaken both at the OEM as well as the service provider level in the back half how much of the weaknesses.
Just a tough sequential comparison versus maybe some pauses you're seeing and deployments in if you are seeing any causes is that just.
Through the end of the calendar year, and then 21 looks better for that business any kind of commentary would be appreciated.
Yes, I mean look I guess, there's a little bit of each Sean.
I would say that if you're a big company, who is dealing with massive increases of bandwidth demand.
And you're facing kind of constrained capital.
You may be allocating some of that capital towards that bandwidth as opposed to expansion of next generation mobile network and I think theres, a little bit of that on the margin.
There has been a lot of corporate goings Incomings I think a lot of those things have been settled now.
But I think it's a little a little bit of each.
As we come here into the third quarter.
Look I think long term our outlook for this market remains to be a very positive one we have a strong position.
Both with Oems and operators and in particular strong position.
And next generation systems.
We've had that difficult comparison for a couple of quarters now because of the restrictions that were put in place in China.
And that will continue here for really through this this year.
But but by and large I would tell you that we still have a very positive outlook for the for the market long term and.
This couple of dynamics that you described are probably a pretty good way too too.
Capture what's happening here in the third quarter.
Thank you next question comes from Jim Suva from Citigroup investment Research. Your line is open.
Thank you Adam in the past, sometimes there has been times, where like in mobility there have been like.
Integration.
Connectors and integration of and Tan as an integration of sockets and there's times when they're sick locally like expansion.
Those sockets, whether it be technologies like Fourg, LTE or Threeg year integration of say why and all these different things as you look for say the mobility segment.
Yes, Good times, where are you mentioned, there's been some integration that is kind of bank pressured I wonder with Fiveg can you give us any color about does that give you a chance were like Morse socket wins and more content per item versus in the past or how can we think think about that thank you.
Thanks, so much.
Well look Fiveg I think I've talked about this in the past the good news about Fiveg is fiveg is not a replacement to prior modes of devices communicating with networks, it's a supplement.
Because you cannot just have a device, which only communicates using fiveg it would be useless outside of just a couple of areas and you have this kind of chicken and egg that you can't the network is not useful without the devices, but the devices are also not useful without the network and thus the devices have to be back.
Backwards compatible all the way through all degeneration, you drive from Manhattan to San Francisco and in between there you're going to go through a lot of areas that may not even have fourg LTE may not even have threeg, maybe it will still be to GE kind of a communication and so but your phone still have to work.
Are you still have to be able to call 911 and stuff to build the look on Google maps, and this kind of things and so so the fact is adding a fiveg functionality increases the complexity of the device now that's a generality obviously each device itself each customer each program is going to.
I have a different architecture, a different approach to designing that and whether that's going to cause more connectors or cable assemblies or less more antennas or less more mechanisms are less you cannot draw out just a very perfect generalization about that you can say that.
In its totality you would expect fiveg to add to the complexity and you would expect that that would that would create further opportunities, but but you can assure yourself that on each program that's going to be the case. So I think fiveg net net is is a great positive and it's a great positive for us not just in the devices, but it's also a positive.
Because we work in the networks and it's also a positive because we work in the core the core Internet, where we have such a strong position as well and so we think fiveg has the potential to impact virtually all of the segments of our business can you talk about internet in factories and you talked about.
Yes, adopting high speed data into a new medical devices.
You talked about how it works even in the military what the military is going to do when when you have fiveg functionality. All of these things are creating new applications, new functionalities, which ultimately going to need new interconnect solutions that amphenol can provide so the long term.
Prospects I think from Fiveg are very pervasive and very positive.
Ultimately is a given phone or given tablet going to have more or less of the things that we sell it's impossible to say in the short term.
Thank you Sir our next question comes from David Kelley from Jefferies. Your line is open.
Hi, good afternoon.
A question on automotive and Adam you talked about visibility to a substantial sales improvement in Q3.
Do you foresee any supply chain risks to meeting that ramp and then realizing that is unlikely to impact the near term, but given the magnitude and timing of this rebound.
This is an opportunity for amphenol to take market share from competitors that might still be feeling let's call. It deeper effects from the Q2 disruption. Thank you.
Thanks, so much David.
I think from our perspective, I don't see a risk to our team ramping up our teams just so nimble their flexing their capabilities, we saw that even during the course of the of the second quarter. You know if you think about the trajectory of the auto market just within the second quarter I can tell you.
April was not the most fund month to be an automotive.
Interconnect supplier that's for sure but by the time, we came into June we were already starting to see some recovery.
Of momentum and in our teams able to flip a switch and really be running to satisfy that demand now your question about market share.
I will tell you and I'm going to broaden this to be beyond automotive.
It is an existential crisis for many.
I talked during my prepared remarks, and we've talked so many times about the strength of the diversity of Amphenol and you couple that with the financial afforded to that Craig has just done such an amazing job of ensuring inside this company and that has created ultimately of resilience to amphenol that is I believe second to none.
There are many in our industry and in other industries, but in our industry, who are more focused and those focused companies to the extent that they're in the wrong side of the market volatility that can create more existential threat and it can create in the eyes of customers a perception of the next.
Substantial threat.
And that ultimately may over time.
Create a kind of a draw to those customers to work with a company that demonstrates resilience in the time of true crisis.
And I think in that respect Amphenol comes out really passing that test with flying colors, and so I wouldn't just can find that to automotive I would say across all of our markets.
Our customers have seen in amphenol accompany that can deal with the crisis like no other and they want to have that there has been so much talked about supply chain resiliency and as opposed to sort of efficiency versus versus longevity kind of that debate that people have had.
I think we've always strive to give our customers both tried to give them great a great offering of the best products at competitive prices, but also from a company that's going to be around regardless of what crisis hits us.
And I think that can be a positive long term and in particular in a crisis that was where the catalyst for that crisis as a public health emergency.
It is almost brings more focus to two that dynamic than than ever before and so I think long term that can create an opportunity for our company across all the markets, including automotive.
Thank you enter your last question for today comes from Joe Giordano from Cowen Your line is open.
Hey, guys just wanted to dig in on the industrial.
On a little bit can you maybe put a finer point on.
On what the non medical Estadio, what the or what that would have looked like without the benefit from our medical or maybe want to size and scale the size medical for us.
In some fashion.
Yes. Thanks, so much so I mean look we don't breakout every detail of all of our industrial market. It would be would make this phone call to go for hours.
But I will tell you that we had strong performance in a number of are important industrial segments beyond medical I mentioned, specifically instrumentation heavy equipment. We had great performance also in our sort of battery related applications for heavy vehicles.
And Conversely, we had other parts of the industrial market that we're more impacted things like oil and gas as as I referred to before but medical was not the only store in industrial and I think we would have still had a good performance in industrial even without that medical, especially if you think about on a sequential basis growing 17% sequentially.
In that market I mean that could not have come from just one one piece of the that industrial puzzle, which was medical so I think we still have strong positions across industrial what what has really been the basis of our industrial market is the diversification within that very very broad market and what ties ended.
Aerial all together remains these are these are just harsh environment applications, where you're taking high technology interconnect and sensor products in China products, and you're putting them into very in hospital in hospitable environments everything from down in oil well to a very a very clean.
I see you in a hospital and everything in between and we have great performance in many segments of that market and the diversity within that market I think helps us to have that strong performance.
Thank you speakers at this time, we don't have any further questions on Q nickel over team for closing remarks.
Well, thank you very much and thanks to everybody for for your attention to Amphenol today, and just like to take this opportunity to wish you all a good summer I hope you'll get some.
Some well deserved vacation time this summer, you'll you'll need to come back fully recharged for the second half and Craig and I look forward to speaking to all 90 days from now thanks again. Thank you.
Thank you for attending today's conference have a nice Dan.