Q2 2025 Amphenol Corp Earnings Call

Unknown Executive: 25, earnings conference call for Amphenol Corporation.

Unknown Executive: Following today's presentation, there will be a formal question and answer Until then, all lines will remain in a listen only mode. At the request of the company, today's conference is being recorded.

Unknown Executive: If anyone has any objections, you may disconnect at the I'd now like to introduce today's conference host, Mr. Craig Lampo. Thank you.

Hello and welcome to the second quarter 2025 earnings conference. Call for annanoelle Corporation following today's presentation, there will be a formal question and answer session until then all lines will remain in a listen-only mode. At the request of the company. Today's conference is being recorded if anyone has any objection.

You may disconnect at this time and I like to introduce today's conference host Mr. Craig Lampo, sir. You may begin

Craig Lampo: Good afternoon, everyone. This is Craig Lampo, Amphenol CFO, and I'm here together with Adam Norwitt, our CEO. We would like to welcome you to our second quarter of 2025 conference call. Our second quarter 25 results were released this morning. I will provide some financial commentary and then Adam will give an overview of the business and current market trends and then we'll, of course, take questions.

Speaker Change: Thank you.

Craig Lampo: As a reminder, during the call, we may refer to certain non-GAAP financial measures and make certain forward-looking statements, so please refer to the relevant disclosures in our press release for further information. The company closed the second quarter of 2025 with record sales of $5,650,000,000 and record gap and adjusted diluted EPS of $0.86 and $0.81, respectively. Second quarter sales are up 57% in U.S. dollars, 56% in local currencies, and 41% organically compared to the second quarter of 2024. Sequentially, sales are up 17% U.S. dollars, 16% local currencies, and 14% organic. Adam will comment further on trends by market in a few minutes.

Good afternoon everyone. This is Craig Lampo a CFO and I'm here together with Adam norit our CEO, we would like to welcome you to our second quarter of 2025 conference call. Our second quarter 25 results were released this morning. I will provide some Financial commentary and then Adam will give an overview of the business and current market trends. And then we will, of course, take questions.

As a reminder, during the call, we may refer to certain non-gaap Financial measures and make certain forward-looking statements. So please refer to the relevant disclosures in our press release for further information.

Speaker Change: The company closed. The second quarter of 2025 with record sales, of 5,650 million in record Gap and adjusted, deleted EPS of 86 cents and 81 cents respectively.

Speaker Change: Second quarter of sales were up 57% in US Dollars, 56% in local currencies and 41% organically compared to the second quarter of 2024.

Speaker Change: Sequentially sales were up 17% in US Dollars, 16% in local currencies and 14% organically.

Speaker Change: Adam will comment further on Trends by market in a few minutes.

Craig Lampo: Orders in the quarter were a record $5,523,000,000, up a strong 36% compared to the second quarter of 2024, and up 4% sequentially, resulting in a book-to-bill ratio of .98 to 1. GAAP Operating Income was $1,419,000,000 in the quarter and GAAP Operating Margin was a record 25.1%. GAAP Operating Margin included $29,000,000 of acquisition related costs. Excluding these acquisition related costs, adjusted operating income in the second quarter of 2025 was $1,448,000,000 resulting in a record adjusted operating margin of 25.6%. On an adjusted basis, operating margin increased by a strong 430 basis points from the prior year. Sorry, from the prior quarter and 210 basis points sequentially.

Speaker Change: Orders in the quarter were a record. 5 billion 523 million up a strong, 36% compared to the second quarter of 2024 and up 4% 4% sequentially. Resulting in the book to Bill ratio of 0.98 to 1

Gap. Operating income was 1,419 million in the quarter and gaap operating margin was a record 25.1%.

Cap operating margin included, 29 million of acquisition related costs.

Excluding these acquisition related costs, adjusted operating income in the second quarter of 2025 was 1,448 Million resulting in a record adjusted operating margin of 25.6%.

Speaker Change: On an adjusted basis. Operating margin increased by a strong 430 basis points from the prior year.

Speaker Change: I'm sorry from the prior quarter and 210 basis points. Sequentially.

Craig Lampo: The year-over-year increase in adjusted operating margin was primarily driven by strong operating leverage on the significantly higher sales volumes, which was only modestly offset by the diluted impact of acquisition. On a sequential basis, the increase in adjusted operating margin reflected strong conversion on the higher sales levels, as well as further progress on the profitability improvement initiative.

The year-over-year increase in the adjusted, operating margin was primarily driven by strong operating, leverage on the significantly, higher sales volumes which was by only mildly offset by the dilutive impact of acquisitions.

Craig Lampo: on Acquisition. I am extremely proud of the company's record operating margin performance in the second quarter, which reflects continued strong execution by our team.

Speaker Change: Honest sequential basis the increase in adjusted operating margin reflected strong conversion on the higher sales levels as well as further progress on the profitability Improvement initiatives on acquisitions.

Speaker Change: I'm extremely proud of the company's record. Operating margin performance in the second quarter with reflects continued, strong execution by our team.

Craig Lampo: Breaking down second quarter results by segment compared to the second quarter of 2024. Sales in the communication solutions segment were $2,910,000,000 and increased by 101% in US dollars and 78% organically. Segment operating margin was 30.6%. Sales in the harsh environment solutions segment were $1,445,000,000 and increased by 38% in U.S. dollars and 18% organically. Segment operating margin was 25.2%. Sales and Interconnect Sensors and Systems segment were $1,295,000,000 and increased by 16% in U.S. dollars and 14% organically, and segment operating margin was 19.5%. The company's GAAP effective tax rate for the second quarter was 18.3% and the adjusted effective tax rate was 24.5%, which compared to 20.4% and 24% in the second quarter of 2024 respectively.

Speaker Change: Breaking down second quarter results by segment compared to the second quarter of 2024 sales in the communication solution segment. We're 2 billion, 910 million and increased by 1 and 1 percent in US Dollars. And 78% organically segment, operating margin was 30.6%

Speaker Change: 2%.

Speaker Change: sales is an interconnect sensors and system segments where 1,295 million increased by 50 by 16% in the US Dollars and 14% organically and segment, operating margin was 19.5%

Speaker Change: The company's Gap effective tax rate for the second quarter was 18.3% in the adjusted, effective tax rate was 24.5%.

Speaker Change: which compared to 20.4% and 24% in the second quarter of 2024 respectively,

Craig Lampo: Gapped diluted EPS was a record $0.86 in the second quarter, up 110% compared to the prior year period, and on an adjusted basis, diluted EPS increased 84% to a record $0.81 compared to $0.44 in the second quarter of 2024. This was an outstanding result. Operating cash flow in the second quarter was a record $1,417,000,000 or 130% of net income and free cash flow was a record $1,122,000,000 or 103% of net income. An excellent result, especially considering the growth that we have experienced. In the third quarter, we expect capital spending to again be somewhat elevated versus our typical three to four percent of sales levels as we continue to invest to support the significant growth we are seeing in the IT data com market.

Speaker Change: Gap to looted EPS was a record 86 cents. In the second quarter up 110%, compared to the prior year period and on an adjusted basis. Diluted EPS increased 84% to a record 81 cents compared to 44 cents in the second quarter of 2024. This was an outstanding result.

Speaker Change: Operating cash flow in the second quarter. Was a record 1,417 million or 130% of net income and free cash flow is a record, 1 billion, 122 million or 103% of net income.

Speaker Change: An excellent result especially considering the growth that we have experienced.

Speaker Change: And the third quarter, we expect Capital spending to again be somewhat elevated. Versus our typical 3 to 4% of sales levels, as we continue to invest to support the significant growth, we are seeing in the it data comp Market.

Craig Lampo: From a working capital standpoint, inventory days, day sales outstanding, and payable days are all within our normal range. During the quarter, the company repurchased 2 million shares of common stock at an average price of approximately $78. And when combined with our normal quarterly dividend total capital return to shareholders in the second quarter of 2025 was approximately $360 million. Total debt on June 30th was $8.1 billion and that debt was $4.8 billion. Total liquidity at the end of the quarter was $6.2 billion, which included cash and short-term investments on hand of $3.2 billion, plus availability under our existing credit facility.

Speaker Change: From working capital standpoint, inventory DayZ Day sales outstanding and payable days are all within our normal range.

During the quarter, the company. Repurchased 2 million shares of common stock and an average price of approximately 78 dollars.

Speaker Change: And when combined with our normal quarterly dividend total Capital return to shareholders in the second quarter of 2025 was approximately 360 million.

Total debt on June 30th was 8.1 billion and net debt was 4.8 billion.

Craig Lampo: Excluding acquisition related costs, second quarter 2025 EBITDA was $1.7 billion, and at the end of the second quarter 2025, our net leverage ratio was 0.9 times. During the quarter, the company completed a successful $750 million U.S. bond offering and a €600 million bond offer. As of June 30th, the company had no outstanding borrowings under its revolving credit facility or its commercial paper programs. And we expect quarterly interest expense, net of interest income earned on cash on hand, to be approximately $70 million, which is reflected in our third quarter guidance.

Speaker Change: Total liquidity at the end of the quarter was 6.2 billion which included cash and short-term Investments on hand of 3.2 billion. Plus availability under our existing credit facilities,

excluding acquisition related costs, second quarter, 2025 IA was 1.7 billion dollars, and at the end of the second quarter of 2025, our net, leverage ratio was 0.9 times,

Speaker Change: Turn the quarter. The company completed a successful 750 million us Bond offering and a 600 million euro Bond offering.

Speaker Change: As of June 30th, the company had no outstanding borrowings under its revolving credit facility or its commercial paper programs.

Speaker Change: And we expect quarterly interest expense, net of interest income earned on cash on hand to be approximately 70 million which is reflected in our third quarter guidance.

Adam Norwitt: I will now turn the call over to Adam, who will provide some commentary on current market trends. Well, thank you very much, Craig.

Adam Norwitt: And I'd like to extend my welcome to all of you from sunny Wallingford, Connecticut. And I hope that all of you on the call here today, together with your family and friends and colleagues are enjoying a wonderful summer so far. As Craig alluded to, I'm going to highlight our achievements in the second quarter. I'll talk about our trends and progress across our serve markets. We'll make some comments on our outlook for the third quarter. And then of course, we'll have time for questions at the end. Let me just say that we drove outstanding performance in the second quarter of 2025.

I will now turn the call over to Adam who will provide some commentary on current market trends. Well, thank you very much Craig and I'd like to extend my welcome to all of you from Sunny uh Wellingford Connecticut. And I hope that all of you on the call here today, together with your family and friends and colleagues are enjoying a wonderful summer so far. It's Craig alluded to, I'm going to highlight our achievements in the second quarter. I'll I'll talk about our Trends and progress across our serve markets. Uh, we'll make some comments on our outlook for the third quarter and then of course, we'll have time for questions at the end.

Adam Norwitt: In fact, our results were much stronger than expected, exceeding the high end of guidance in sales and adjusted diluted earnings per share. Our sales grew from prior year by a very strong 57% in U.S. dollars and 56% in local currencies, reaching a new record $5,650,000,000. And then on an organic basis, our sales increased by 41%, with all of our end markets experiencing robust organic growth. And I'll talk about those markets specifically here in a few moments. The company booked a record $5,523,000,000 in orders in the second quarter, and that represented a book-to-bill of 0.9821, and these orders grew by 36%, very strong compared to prior year, and were also up sequentially from our previous record orders in the first I want to say that we're particularly pleased to have delivered record adjusted operating margins of 25.6% in the quarter.

And let me just say that we drove about standing performance in the second quarter of 2025. Um, in fact our results were much stronger than expected exceeding. The high end of guidance in sales and adjusted diluted earnings per share our sales Grew From prior year by a very strong 57% in US Dollars and 56% in local currencies, reaching a new record, 5,650 million dollars and in on our

Speaker Change: Organic basis, our sales increased by 41% with all of our end markets, experiencing robust, organic growth. And I'll talk about those markets specifically here in a few moments.

The company booked a record 5,523 million in orders in the second quarter. And that represented a book to Bill of 0.98 to 1 and these orders grew by 36% very strong compared to Prior year. And we're also up sequentially from our previous record orders in the first quarter.

Adam Norwitt: This is an increase of 430 basis points from prior year and 210 basis points sequentially. This strong profitability is a direct result of the outstanding execution of the Amphenol team around the world, who continue to manage well in what continues to be a challenging cost environment. Adjusted diluted EPS grew 84% from prior year and reached a new record of $0.81. And finally, the company generated record operating and free cash flow in the second quarter of $1.4 billion and $1.1 billion, respectively, both clear reflections of the quality of the company's earnings. I cannot express enough my pride in our team.

Secondary please to delivered record adjusted operating margins of 25.6% in the quarter. Um, this is an increase of 430 basis points from prior year, uh, and 210 basis points sequentially. The strong profitability is a direct result of the outstanding execution of the ampol team, around the world who continue to manage well in what continues to be a challenging cost environment.

Speaker Change: 4% from prior year and reached a new record of 81 cents.

Speaker Change: And finally, The company generated record operating and free cash flow in the second quarter of 1.4 billion and 1.1 billion respectively, both Clear Reflections of the quality of the company's earnings.

Adam Norwitt: Amphenol's results this quarter once again reaffirm the value of the drive, discipline, and agility of our entrepreneurial organization as we continue to perform well amidst a very dynamic environment. We're very pleased in May to have closed on the acquisition of Narda MiTech and based in Hopag, New York, with annual sales of approximately $120 million. Narda MiTech is a leading provider of active RF and microwave components primarily for the defense Together with our previously announced acquisitions of XMA and Q Microwave, and now with NARDA, we're building a strengthened presence in RF interconnect and active RF components, which is a great complement to our leading position across RF connector, cable, cable assembly, and antenna products for this important market.

Speaker Change: I cannot express enough, my pride in our team uh ael's results this quarter once again, reaffirm the value of the drive discipline and Agility of our entrepreneurial organization as we continue to perform well amidst the very Dynamic environment.

Speaker Change: We're very pleased in May to have closed on the acquisition of Narda, Mitch and based in Haag New York with annual sales of approximately 120 million dollars. Nard Mitch is a leading provider of active RF and microwave components primarily for the defense Market.

Adam Norwitt: We remain confident that our acquisition program will continue to create great value for the company. Our ability to identify and execute upon acquisitions, and then to successfully bring these companies into the Amphenol family, remains a core competitive advantage for the company. Now, turning to our CERB markets, we're very pleased that the company's end-market exposure remains highly diversified, balanced, and broad. This diversification continues to create great value for the company, enabling us to participate across all areas of the global electronics industry, while not being overly exposed to the volatility of any given market or application. The defense market represented 9% of our sales in the quarter.

Speaker Change: Together with our previously announced Acquisitions of xma and Q microwave. And now with Narda, we're building a strengthened presence in RF, interconnect and active RF components, which is a great complement to our leading position across RF connector, cable, cable, assembly, and antenna products for this important Market.

We remain confident that our acquisition program will continue to create great value for the company.

Speaker Change: Our ability to identify and execute upon Acquisitions. And then to successfully bring these companies, into the AOL family remains a core competitive Advantage for the company.

Now turning to our serve markets, we're very pleased that the company's End Market exposure remains highly Diversified balanced and Broad this diversification. Continues to create great value for the company and enabling us to participate across all areas of the global electronics Industry while not being overly exposed to the volatility of Any Given Market or application.

Adam Norwitt: Sales grew from prior year by a very strong 25% in US dollars and 18% organically. And this was driven by broad based growth across most segments within the defense market. Sequentially, our sales increased by 13%, which was better than our expectations coming into the quarter for a high single-digit increase. Looking into the third quarter, we expect sales to increase modestly from the second quarter levels, including the benefit of our acquisition. We remain encouraged by the company's leading position in the defense interconnect market, where we continue to offer the industry's widest range of high technology products.

Speaker Change: The defense Market represented 9% of our sales in the quarter sales, Grew, From prior year by a very strong 25%, in US Dollars and 18% organically. And this was driven by broad-based growth across most segments within the defense Market

Sequentially, our sales increased by 13%, which was better than our expectations coming into the quarter for a high single digit increase.

Speaker Change: Looking into the third quarter. We expect sales to increase modestly from these second quarter levels including the benefit of our acquisition.

Adam Norwitt: With the addition of Narda MyTech, we continue to diversify our already broad product offering to capitalize on the increasing adoption of electronics in defense equipment. Amidst the current dynamic geopolitical environment, countries around the world are expanding their spending on both current and next-generation defense technologies, and we're positioned better than ever to catalyze on this long-term demand trend. The commercial aerospace market represented 5% of our sales in the quarter, and sales increased by 50% in U.S. dollars and 8% organically from prior year, as we benefited from the addition of CIT last year, as well as our continued progress in expanding content on next generation commercial aircraft.

We remain encouraged by the companies leading position. In the defense interconnect Market where we continue to offer the industry's widest range of high technology products.

With the addition of Narda mitech, we continue to diversify. Our already broad product offering to capitalize on the increasing adoption of electronics in defense equipment.

Speaker Change: Amidst, the current Dynamic geopolitical, environment countries, around the world are expanding their spending on both current. And Next Generation defense Technologies, and we're positioned better than ever to catalyze on this long-term demand trend.

Adam Norwitt: Sequentially, our sales grew by 6% in U.S. dollars from the first quarter, which was better than our expectations coming into Looking to the third quarter, we expect our sales to be up in the low single digits from the second quarter level. I'm truly proud of our team working in the commercial air market. With the ongoing growth and demand for jetliners, our efforts to expand our product offering both organically and through our acquisition program are paying real dividends. In particular, we continue to be very encouraged by the progress of the CIT team as part of Amphenol, and we look forward to further capitalizing on our expanded range of product solutions for the commercial air market long into the future.

Speaker Change: The commercial Aerospace Market represented 5% of our sales in the quarter and sales increased by 50% in US Dollars and 8% organically from prior year as we benefited from the addition of CIT last year, as well as our continued progress in expanding content on next generation, commercial aircraft.

Sequentially. Our sales Group by 6% in US dollars from the first quarter, which was better than our expectations coming into the quarter.

Speaker Change: Looking to the third quarter, we expect our sales to be up in the low single digits from these second quarter levels.

I'm truly proud of our team working in the commercial air market with the ongoing growth and demand for jet liners, our efforts to expand our product offering both organically and through our acquisition program are paying real dividends in particular. We continue to be very encouraged by the progress of the CIT team as part of AOL. And we look forward to further capitalizing on our expanded range of product solutions for the commercial Air Market long into the future.

Adam Norwitt: The industrial market represented 19% of our sales in the quarter, and our sales in this market grew 25% in U.S. dollars and 12% organically, as we continue to see improvements across our diversified industrial market. In particular, our organic growth was driven by expansions in alternative energy, instrumentation, medical, industrial EV, and factory automation. And I'm especially pleased that we grew organically in all of our Serb geographic regions during the quarter, including in Europe. On a sequential basis, our sales grew by much better than expected 11% from the first quarter. Looking in the third quarter, we do expect sales to moderate slightly from the second quarter levels on typical seasonality.

the industrial Market represented 19% of our sales in the quarter and our sales in this market grew 25%, in US Dollars and 12% organically, as we continue to see improvements across our Diversified industrial markets,

In particular, our organic growth was driven by expansions in Alternative Energy instrumentation, medical industrial, EV, and Factory Automation. And I'm, especially pleased that we grew organically in all of our serve geographic regions, during the quarter, including in Europe,

Honest. Sequential basis. Our sales grew by a much better than expected 11% from the first quarter.

On typical seasonality.

Adam Norwitt: But we remain encouraged by the company's strength across the many diversified segments of this important market. As demand has continued to recover, I'm confident that our long-term strategy to expand our high-technology interconnect, antenna, and sensor offering, both organically and through complementary acquisitions, has positioned us to capitalize on the many electronic revolutions that continue to occur across the industrial market. This creates exciting opportunities for our outstanding team working in this important area. The automotive market represented 14% of our sales in the second quarter, and sales in this market grew 10% in U.S. dollars and 8% organically, as we experienced growth really in all regions.

Speaker Change: But we remain encouraged by the company's strengths across, the many Diversified segments of this important Market. As demand has continued to recover. I'm confident that our long-term strategy to expand our high technology, interconnect, and tana, and sensor offering both organically and through complimentary Acquisitions has positioned us to capitalize on. The many electronic revolutions that continue to occur across the industrial Market.

Speaker Change: this creates exciting opportunities for our, our standing team working, in this important area,

The automotive Market represented 14% of our sales in the second quarter and sales in this market grew 10% in US Dollars and 8% organically, as we experience growth really in all regions.

Adam Norwitt: Sequentially, our sales and automotive grew by 7% from the first quarter, which was also much better than our expectations coming into the quarter and really reflected strong execution by our team. For the third quarter, we expect sales to be slightly lower than the second quarter levels, as customers plan for their traditional summer shutdown. I remain proud of our team working in the automotive While there are still areas of uncertainty in this market, our team continues to be focused on driving new design wins with customers who are implementing a wide array of new technologies into their vehicles.

Speaker Change: Sequentially. Our sales and Automotive Group, by 7% from the first quarter, which was also much better than our expectations coming into the quarter and really reflected strong execution by our team.

Speaker Change: For the third quarter, we expect sales to be slightly lower than these second quarter levels as customers plan for their traditional summer shutdowns.

Speaker Change: I remain proud of our team working in the automotive Market.

Adam Norwitt: We look forward to benefiting from our strong position in the automotive market for many years. The communications networks represented 11% of our sales in the second quarter. Sales grew from prior year by 143% in U.S. dollars, which was driven primarily by the addition of Andrew. On an organic basis, our sales increased by a robust 16% from prior year as we benefited from increased spending by communications networks operators, as well as wireless equipment manufacturers. Sequentially, sales in the second quarter grew by 30% from the first quarter, driven in part by the Andrew acquisition, which was completed in the first Organically, our sales grew by a better than expected 7%.

Speaker Change: Well, there are still areas of uncertainty in this. In this market, our team continues to be focused on driving, new design, wins with customers who are implementing a wide array of new technologies into their vehicles.

Speaker Change: We look forward to benefiting from our strong position in the automotive market for many years to come.

Speaker Change: The communications networks represented 11% of our sales in the second quarter sales group from prior year by 143%. In US Dollars, which was driven primarily by the addition of Andrew on an organic basis, our sales increased by a robust 16% from prior year, as we've benefited from increased spending by Communications networks operators, as well as wireless equipment manufacturers,

Speaker Change: Sequentially sales in the second quarter grew by 30%, from the first quarter driven in part by the Andrew acquisition, which was completed at Mid the, it was completed in the first quarter.

Organically, our sales Group by a better than expected 7%.

Adam Norwitt: Looking into the third quarter, we expect sales to remain at these very strong Q2 levels. With our expanded range of technology offering, especially following the acquisition of Andrew, we're well-positioned with both service provider and OEM customers across the global communications networks market. Our deep and broad range of products, coupled with an expansive manufacturing footprint, have positioned us to support customers around the world. As those customers continue to drive their systems to higher levels of performance, we look forward to supporting them for many years to come. The mobile devices market represented 6% of our sales in the quarter, and our sales grew by 14% in U.S.

Speaker Change: Looking into the third quarter. We expect sales to remain at these very strong Q2 levels.

With our expanded range of Technology offering, especially following the acquisition of Andrew. We are well, positioned with both service provider and OEM customers across the Global Communications networks Market. Our deep and broad range of products coupled with an expansive, manufacturing footprint have positioned us to support customers around the world.

Speaker Change: As those customers continue to drive their systems to higher levels of performance, we look forward to supporting them for many years to come.

Speaker Change: The mobile devices now.

Speaker Change: number of sales in the

Adam Norwitt: dollars and organically in the second quarter, as strength in smartphones and laptops was only partially offset by declines in products sold into tablets. Sequentially, our sales increased by 4%, which was actually much better than our expectations coming into the quarter for a high teens decline. As we look into the third quarter, we anticipate sales to increase in the high single digits compared to the strong second quarter level. I'm very proud of our team working in the always-dynamic mobile devices market, as their agility and reactivity have once again enabled us to capture incremental sales in the quarter.

Speaker Change: and our sales, grew by 14% in US Dollars and organically in the second quarter as strength and smartphones and laptops was only partially offset by declines, in products, sold in to tablets.

Speaker Change: Sequentially, our sales increased by 4% which was actually much better than our expectations coming into the quarter for a high teens decline.

Speaker Change: As we look into the third quarter, we anticipate sales to increase in the high single digits compared to these strong second quarter levels.

Adam Norwitt: I'm confident that with our leading array of antennas, interconnect products, and mechanisms designed in across a broad range of next-generation mobile devices, We're well positioned for the long And finally, the IT Datacom market represented 36% of our sales in the quarter. Sales in the second quarter grew by a very strong 133% in U.S. dollars and organic. And this was driven by continued acceleration in demand for our products used in artificial intelligence applications, together with continued robust growth in our base IT data combination. I'm very proud of our team's outstanding execution in the second quarter, as we were actually able to outperform even our customers' very high expectations for deliveries of AI-related products.

Speaker Change: I'm very proud of our team working in the always Dynamic mobile devices Market as their agility and reactivity have once enabled us to capture. Once again enabled us to capture incremental sales in the quarter.

I'm confident that with our leading array of antennas interconnect products and mechanisms designed in across a broad range of next of Next Generation mobile devices.

Speaker Change: We're well positioned for the long term.

Speaker Change: And finally, the it data comp Market represented 36% of our sales in the quarter.

Sales in the second quarter grew by a very strong 133% in US Dollars and organic. And this was driven by continued acceleration in demand for our products used in artificial intelligence applications together with continued robust growth in our base, it data Comm business.

Adam Norwitt: As a result, we shipped substantially more than expected, including some modest portion of third quarter demand. In fact, without this additional output, our IT Datacom sales would have represented roughly a similar percentage of overall company sales as we saw in the first quarter, or approximately 33%. On a sequential basis, our sales increased by a very strong 29% from the first quarter, substantially better than our expectation for a high single digit increase, again, reflecting that outperformance of our team executing beyond what anybody expected. And this growth was driven by sales of AI-related products, as well as growth in our base IT datacom, in our base IT datacom.

Speaker Change: I'm very proud of our teams as standing execution in the second quarter, as we were actually able to outperform even our customers very high expectations for deliveries of AI related products.

Speaker Change: Percentage of overall company sales as we saw in the first quarter or approximately 33%.

Speaker Change: On a sequential basis, our sales increased by a very strong 29% from the first quarter, um, substantially better than our expectation. For a high, seal digit increase again, reflecting that outperformance of our team, executing beyond what, what anybody expected. And this growth was driven by sales of AI related products as well as growth in our base. It data Comm uh, in our base, it data come business.

Adam Norwitt: As we look into the third quarter and due to the stronger than expected execution of our team in the second quarter, we expect ourselves to moderate in the mid to high single digits from these very strong second quarter levels. So I got to tell you, we're more encouraged than ever by the company's position in the global IT data market. Our team has done an outstanding job securing future business on next generation IT systems with a broad array of customers. And the revolution in AI continues to create unique opportunity for Amphenol, giving our leading high-speed and power interconnect products.

Speaker Change: As we look into the third quarter and due to the stronger than expected execution of our team in the second quarter, we expect our sales to moderate in the high in the mid to high single digits from these very strong second quarter levels.

Speaker Change: so I got to tell you we're more encouraged than ever by the company's position, in the global it data Comm Market

Adam Norwitt: In fact, whether high-speed, power, or fiber-optic interconnect, our products are critical components in these next-generation networks, and this creates a continued long-term growth opportunity for Amplify. Turning to our outlook and assuming current market conditions as well as constant currency exchange rates, for the third quarter, we expect sales in the range of $5.4 to $5.5 billion and adjusted diluted EPS in the range of $0.77 to $0.79. This would represent sales growth from prior year of 34 to 36%. and adjusted diluted EPS growth of 54% to 58% compared to the third quarter of last year. I remain confident in the ability of our outstanding management team to adapt to the many opportunities and challenges in the current environment and to continue to grow our market position while driving sustainable and strong profitability over the long term.

Speaker Change: Our team has done an outstanding job. Securing future business on Next Generation, it systems with a broad array of customers. And the revolution in AI continues to create unique opportunity for anole, giving our leading high speed and power, interconnect products,

Speaker Change: In fact, whether high-speed power or Fiber Optic. Interconnect, our products are critical components in these next Generation networks, and this creates a continued long-term growth opportunity for ampol

Speaker Change: Turning to our Outlook uh and assuming current market conditions as well as constant currency exchange rates for the third quarter. We expect sales in the range of 5.4 to 5.5 billion and adjusted diluted EPS in the range of 77 to 79 cents.

Speaker Change: This would represent sales growth from prior year of 34 to 36% and adjusted diluted EPS growth of 54 to 58% compared to the third quarter of last year.

Adam Norwitt: Finally, I'd like to take this opportunity to thank our entire global team for their truly outstanding performance here in the second quarter.

Speaker Change: I remain confident in the ability of our outstanding management team to adapt to the many opportunities and challenges in the current environment and to continue to grow our Market position. While driving sustainable and strong profitability over the long term.

Unknown Executive: And with that, operator, we'd be very happy to take any questions. Thank you.

Finally, I'd like to take this opportunity to thank our entire Global team for their truly outstanding performance here in the second quarter.

Speaker Change: And with that operator, we'd be very happy to take any questions.

Unknown Executive: The question and answer period will now Please limit to one question per caller. To ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by.

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William Stein: The first question is from the line of William Stein with Truist, your line is now open. Great. Thank you for taking my question.

Speaker Change: The first question is from the line of William Stein with truist. Your line is now open.

Adam Norwitt: Congrats, alumni. I believe it's above even your drop. Target. And so I wonder if this might be a time to revisit that, that bogey. I think historically, you've talked about 25% fall through, you're now up What should we think about going forward? Yeah, thanks. Well, I really appreciate the question. Yeah, listen, I would agree. I mean, the team really has just done an exceptional job really driving operating margin. I mean, 25.6% in the quarter is really an amazing achievement that the team should be really proud of. And we certainly are. I mean, Q3 also reflects their guidance.

Great. Thank you for taking my question. Uh, congrats on the

Fantastic quarter. And what really sticks out to me, is the operating margin, which is now um I I believe it's above even your drop through.

Speaker Change: Target. And so, I wonder if this might be a time to revisit that, uh, that bogey, I think, historically, you've talked about 25% fall through, you're now above that on an aggregate basis. Uh, what should we think about going forward?

Adam Norwitt: It really reflects another strong quarter profitability kind of, you know, essentially at the same levels on slightly lower, you know, revenue guidance. So we certainly expect this operating margin to continue. You know, as you know, and as you just mentioned, you know, we've long targeted the 25% conversion margin in the last couple of years. So we've really meaningfully exceeded, you know, that benchmark. So, you know, it's partially due to just the exceptional organic growth, but also, you know, the bottom line is we're really just selling higher technology products. And we continue to do a really good job of controlling our costs and, you know, our traditional kind of Amphenolian fashion.

Speaker Change: Yeah, thank thanks. Well, I really appreciate the question. Yeah, unless and I I I would agree. I mean, the team really has just done an exceptional job, really driving operating margin. I mean, 25.6% in the quarter has really a amazing achievement that that the team is should be really proud of. And, and we certainly are, I mean, the Q3 also reflects their guidance. You really reflects another strong quarter of profitability, kind of, you know, essentially at the same levels on, on slightly lower, um, you know, Revenue guidance,

Adam Norwitt: Now, listen, we do expect some normalization of conversion margins as we continue to kind of scale our cost structure in line with these higher sales volumes as we move into kind of maybe 2026, you know, but, you know, but we really believe that the overall impact of that will be modest and our conversion margins will continue to remain, you know, higher and, you know, you know, meaningfully higher than kind of that 25% conversion target that we've historically had. So, you know, as you say, it's not lost on us that we just did close a quarter here, you know, well above 25%, you know, and going forward, you know, as we continue to grow, we do believe there's still room for, you know, really further, you know, margin expansion.

Speaker Change: So we certainly expect this this, uh, operating margin to to continue. Um, you know, as you know, and as you just mentioned, you know, our we've long targeted, the 25% conversion margin in the last couple years, so we've really meaningful exceeded, you know, that Benchmark. So, you know, it's partially due to just the exceptional organic growth, but also the the, you know, the bottom line is we're really just selling higher technology products and we continue to do a really good job of controlling our costs and, you know, our traditional kind of amphenol and fashion. Um, now listen, we do expect some normalization of conversion margins, as we continue to kind of scale our cost structure in line with these higher sales volumes as we move into kind of maybe 2026, you know. But you know, but we really believe that the overall impact of that will be modest and our conversion of margins will continue to remain, you know, higher. And, you know, you know, meaningfully higher than kind of that 25% conversion Target that we've historically had. Uh so you know as you say it's not lost on us that we just did close a quarter here, you know. Well above 25%

Adam Norwitt: You know, this reflects the, you know, increased level of technology we've had that's embedded in our products, our differentiated value that we consistently deliver and certainly, you know, the innovation and execution that we've had. So I think looking ahead, we do expect to convert incremental sales on operating income, maybe, you know, I would say approaching 30%. I think, you know, close to 30% would be our target kind of moving forward and I think it's appropriate given where we're at and kind of where we're heading. You know, of course, there are going to be periods, you know, due to M&A and other factors, we'll be above or below that, but I think 30% is kind of, I think, the targeted conversion that you should think about kind of as we continue to move forward and we continue to grow and I think we should certainly be able to continue to increase those margins as the company continues to increase our revenue, you know, in the future.

We do believe there's still room for, you know, really further, you know, margin expansion, you know, just reflects the, you know, increased level of Technology, we've had that's embedded in our products. Our differentiated value that we consistently deliver in in certainly, you know, the Innovation and execution, uh, that that we've had. So I think looking ahead, we do expect to convert incremental sales and operating income. Maybe, you know, I would say approaching 30%, I think, you know, close to 30% would be our Target kind of moving forward and I think it's appropriate given where we're at and and kind of where we're heading. Um, you know, of course they're going to be periods, you know, do the m&a and other factors will be above or below that, but I think 30% is kind of, I think the the targeted conversion that you should think about kind of, as we continue to move forward and we continue to grow. And I think we should certainly be able to continue to increase those margins as uh, as the company continues to, uh, to increase our Revenue, you know, in the future.

Unknown Executive: Thank you.

Steven Fox: The next question is from the line of Steven Fox with Fox Advisors. Your line is now open. Hi, good afternoon. Just to follow up on that margin question, Adam, can you talk a little bit about how that sales mix is sort of becoming richer? I would imagine.

Steven Fox: Thank you. The next question is from the line of Steven Fox with Fox advisors your line is now open.

Adam Norwitt: A good portion is due to the mix of sales from Gen AI data centers, but can you sort of describe to us what's changing in sort of the tech roadmap for Amphenol that's driving the margin? Yeah, thanks very much, Steve. I mean, look, we, I think Craig just alluded to the fact that, for sure, when you grow really fast, and we did grow by 133% in IT Datacom, you really would expect conversion margins to be a little bit higher in that high growth area. And that's true in whichever market where we would grow at that speed.

Steven Fox: Hi good. Good afternoon, just to um, follow up on that. Margin question. Adam, can you talk a little bit about how that sales mix has sort of becoming richer? I I I would imagine

A good portion is due to um the mix of sales from gen AI data centers. But can you sort of describe to us what's changing in sort of the tech roadmap for amps and all? That's driving the margins thanks.

Adam Norwitt: But relative to Craig's comment about technology, I would tell you, this is really a cross When we think about the importance of our products to our customers and ultimately the value that we create for our customers with these next-generation, high-technology products, whether that is in the defense market, the industrial market, the automotive market, the communications networks, and, of course, in IT Datacom, by creating more value for our customers and by continuing to instill that Amphenolian cost mindset into everything we do, we are not, because we're selling higher-technology products, all of a sudden moving out of our kind of shabby-chic headquarters here in Wallingford.

Steven Fox: Yeah, thanks very much Steve. I mean, look, we I I think Craig just alluded to the fact that um, for sure when you grow really fast and we did grow by 133% in it data Comm, you know, you you you really would expect conversion, margins to be a little bit higher in that high growth area and that's true in whichever Market where we would grow at that speed. Um, but relative to Christ's comment about technology. I would tell you this is really a cross, the company. When we think about the, the importance of our products to our customers and ultimately the value that we create for our customers, with these next Generation, high technology products, whether that is in the defense Market, the industrial Market, the automotive Market, the, the communications networks. And and of course in it data Comm, you know, by creating more value for our customers. And by continuing to instill that aeolian cost mindset into everything we do. We, we are not because we're selling higher.

Adam Norwitt: Quite the contrary. We continue to watch every penny of the company's money as if it were coming out of our own pockets. And by selling that high-technology product across the board, that allows us to have the confidence that Craig just talked about, where we can think about a conversion margin target of closer to 30% instead of our traditional 25%. So, yeah, for sure, we're enabling more in IT Datacom and growing very significantly, and that's contributive, but that's not, by definition, the only area where we're selling high-technology products. Thank you.

Technology products, all of a sudden, you know, moving out of our kind of shabby chic headquarters here. In Wallingford, quite the contrary, we continue to watch every penny of the company's money, as if it were coming out of our own pockets. And, and by selling that high technology product across the, the board that allows us to have the confidence, that that Craig just talked about to where we can think about a conversion margin Target of closer to 30% of our traditional 25%. Um, so so yeah, for sure, you know, we're, we're enabling more in IQ Data common growing, very significantly and that's contributing um, but that's not by definition, uh the the only area where we're selling high technology products.

Amit Daryanani: The next question is from the line of Amit Daryanani with Evercore. Your line is now open. Thanks a lot. Good afternoon, everyone. You know, Adam, I guess there's always this worry around, you know, peak revenues, peak margins, when we have strong prints like this one. And so perhaps you can touch on it. You know, I realized there was about 150 million of shipment in June versus September that you talked about. But really, away from that, can you spend some time talking about how do you think about the durability of growth on the AI infrastructure side as you go out over the next few quarters?

Thank you. The next question is from the line of Amit dyani with evercore. Your line is now open.

Adam Norwitt: And then anyway, the size of favor, how much of the growth in IT Datacom that you folks had came from AI versus the traditional kind of IT Datacom markets? Thank you. Yeah, thanks very much. And certainly, I can understand the question. I mean, look, we talked about the fact that we overperformed. I mean, this is a very, very strong outperformance. If you think about our second quarter, we originally guided the quarter to be at the high end $5 billion in sales. And we ultimately achieved $650 million more than that. And on the IT Datacom side, we outperformed very, very significantly.

Good. Uh, thanks a lot. Good afternoon, everyone. Um, you know, Adam, I guess there's always this worry around, you know, Peak Revenue Peak margins, when we have strong prints like this, 1 and so perhaps you can touch on it. You know, I realize those about 150 million off shipment in June versus September that you talked about, but really away from that. Can you spend some time talking about? How do you think about the durability of growth on the AI infrastructure side as you go out over the next few quarters and then anyway, the size of a favor, how much of the growth in it data come that you folks had came from AI, versus the traditional kind of it data call markets. Thank you.

Adam Norwitt: And, you know, you gave a side to that. And that's I think, a good rough estimate of how much we kind of shift of what would be Q3 demand. And if you factor that in, you certainly don't see a peakiness to the performance. I mean, there is continued momentum in that space. And when we think about the durability, you know, are we always going to grow IT Datacom by 133%? No, of course, we're not going to. I think that wouldn't be reasonable to expect it. But do we see future growth opportunities in this revolution of AI?

Adam Norwitt: No doubt about it. I mean, when I look at what we have already secured, what we are already shipping to support across, up and down the stack of the folks who are investing from the web scale providers, all the way down to the chip makers, and everything in between, including the OEMs, including the data center configures, all of that, there's no doubt that there remains great opportunities for us. And I can tell you that our team continues to win. I mean, when you're not only the best product portfolio, the broadest, the deepest set of technologies that help to enable these next generation systems, but also the proven capability to ramp up and to build those around the world in multiple locations, as our customers navigate the same geopolitics that everybody else is with tariffs and trade and the like, and to satisfy their demand, and actually in the second quarter, to more than satisfy their demand, I can tell you that our reputation persists.

Adam Norwitt: And as we look at new customers, looking at new configurations, new architectures, we are really the first phone call on all of these. And our team continues to do an excellent job of prosecuting these next generation opportunities. So I think that that is a very durable continuation.

Steven Fox: Solution of AI, no doubt about it. No doubt about it. I mean, when I look at what we have already secured, um, what we are already shipping to support across up and down the stack of the folks who are who are investing from the web scale providers, all the way down to the ship makers and everything in between including the oems, including the data center configures. All of that, there's no doubt that there remains great opportunities for us. And I can tell you that our team continues to win. I mean, when you have not only the best product portfolio, the broadest, the deepest set of technologies that help to enable these next Generation systems. But also the proven capability to ramp up, and to build those around the world in multiple locations, as our customers navigate the same geopolitics that everybody else is with tariffs and trade, and the like, and to satisfy their demand and actually in the second quarter to more than satisfy their demand. I can tell you that our, uh, our our

Adam Norwitt: And, you know, I would consider that we're kind of in the early innings of the adoption of AI on a broad basis across the economy. And so we're very excited about that.

Adam Norwitt: In terms of AI and its contribution to our growth, you know, I would say roughly two-thirds of our growth on a year-over-year basis, and actually roughly two-thirds of our growth sequentially in the quarter were coming from AI. So, you know, it's a significant contributor to the overall performance of our IT datacom business, and we look forward to it continuing to be so going forward many years in the future. Thank you.

Reputation. Precedes us. And as we look at new customers looking at new configurations, new architectures, we are really the first phone call on all of these. And our team continues to do an excellent job of Prosecuting these next Generation opportunities. Um so I think that that is a very durable continuation and then, you know, I I would consider that we're kind of in the early Innings of the adoption of AI on a broad basis across the economy. And and so we're very excited about that in terms of AI and its contribution.

To our growth. Yeah, I would say roughly 2/3 of our growth on a year-over-year basis and actually roughly 2/3 of our growth sequentially in the quarter. Um, we're we're coming from AI so it's you know, it's a significant contributor to the overall performance of our it data Comm business and we look forward to to to to it. Continuing to be. So going forward. Many years in the future,

Joe Giordano: The next question is from Joe Giordano with TD Cowen. Your line is now open. Piggott. Thanks for taking my questions.

Joe Giordano: Thank you. The next question is from Joe Giordano with TD, Cowen, your lines now open.

Joe Giordano: hey guys, uh

Adam Norwitt: Sticking with AI, just curious if you're If your business there is getting more concentrated or less concentrated from a customer standpoint as you've moved along here and if you were to just like average out your 2q and your 3q there. Asyia Merchant, Samik Chatterjee, William Stein, Andrew Buscaglia, Joseph Giordano, Yeah, so first, thanks very much, Joe. I mean, number one, I'll tell you, we have a very broad business here. So, you know, there are some big folks who are spending on this, and we have a broad representation across all of those big folks. And again, I mentioned that includes at the ultimate consumer, the people who are spending the money putting in place these massive capabilities down through the builders of those data centers, the OEMs, and then all the way to the chip companies.

Joe Giordano: speaking with AI, just curious, if you're um,

Joe Giordano: If your business there is getting more concentrated or less concentrated from a customer standpoint as you've moved along here. And if, if you were to just like

average out your 2 q and your 3, Q there and

Joe Giordano: Just smooth for the, for the pull forward here. I know you're not going to give guidance further than next quarter but like is is what you've secured. Set you up to have further kind of sequential increases into the future off of that, like Smooth base.

Speaker Change: Yeah, so first, thanks very much Joe. I mean, number 1, I'll tell you, we have a very broad business here, so, you know, there are some big folks who are spending on this and we have a broad representation across all of those big folks. And again, I've, I've mentioned that includes at the at the ultimate consumer, the people who are spending the money putting in place.

Adam Norwitt: And I wouldn't say that that is overly concentrated, you know, quite the contrary.

Adam Norwitt: And as you ask about, for sure, if you look at Q2 and Q3, and if you sort of factor out the kind of shift ahead that we had because of our execution, you know, that's a relatively stable performance, do we see future growth opportunities? We do. You know, is every quarter going to be sequentially more than the quarter before it in a space like this? I wouldn't necessarily say that. We'll see. I'm sure there will be quarters that will be up and there will be quarters that will be down. But over the long term and over the medium term, we see continued progress and ability to continue to grow this business.

Speaker Change: Is, uh, these massive capabilities down through the the Builders of those data centers, the oems and then all the way to the chip companies. And I wouldn't say that that is, uh, that, that is, uh, overly concentrated, you know, quite quite the contrary. Um, and, and as you as you asked about, for sure, if you look at Q2 and Q3 and if you sort of factored out the the the the kind of ship ahead that we had because of our execution. Um you know that that's you know, relatively stable performance, do we see future growth opportunities? We do, you know is every quarter going to be sequentially more than the quarter before it in a space like this? I I wouldn't necessarily say that um we'll see I'm sure there will be quarters that will be up and there will be quarters, that will be down but over the long term and over the medium term, we see continued progress and ability to continue to grow this business for

Mark Delaney: Thank you.

Adam Norwitt: The next question is from Mark Delaney with Goldman Sachs. Your line is now open. Good afternoon. Thanks for attending. I also had a question on AI and some of the dynamics there. some degree of pull in from 3Q and 2Q, maybe you can elaborate on contributed to that and why. As you think about your expectation for. Sales to be down somewhat next quarter, granted off of a high base, what's giving you the confidence to still invest at a higher level? CapEx. Thank you. to your longer-term view tied to AI that you spoke to, but are there commitments or visibility you're getting from customers that supports the higher-level...

Mark Delaney: Thank you. The next question is from, Mark Delaney with Goldman Sachs your lines now open.

Uh yes uh good afternoon. Thanks for taking my question and let me have my congratulations uh for the strong results. Um I I also had a question on AI and some of the Dynamics there. You spoke to seen some degree of pull in from 3 q and 2q. Maybe you can elaborate on what you think, uh, contributed to that and and and why you shipped early and you know, as as you think about your expectation for

Adam Norwitt: Yeah, thanks very much, Mark. And again, I mean, this, I wouldn't necessarily call it a pull in, but rather that we were able to out-execute our customers' original demand plans, and they'll take whatever we can ship them. And so it was just us outperforming what really anybody expected, either us internally or with our customers with their already lofty expectations. As it relates to CapEx, I did mention that capital is a little bit elevated. I mean, I talked just a few moments ago about the fact that we do have an expectation and a confidence that we are continuing to gain momentum in this space, winning programs, getting visibility from customers for their future plans, which create incremental opportunities for us.

Mark Delaney: Sales to be down somewhat next quarter, you know, granted off of a high base, what's giving you the confidence to still invest at higher levels of of, of capex? Uh, I think maybe you know, perhaps speaks to your your your longer term view tied to AI that that I you spoke to but other commitments or visibility or getting from customers that supports the higher levels of capex that you spoke to thanks.

Mark Delaney: Pull in. But rather that we were able to out execute our customers, uh, original demand plans and they'll take whatever we can ship them.

Adam Norwitt: And so when we talk about CapEx, sometimes that's not only CapEx for just one quarter ahead, but rather a little bit to come. And that is really where we would make those investments with that confidence for the future. I already said it, but I'll just reiterate it. Our team continues to win very broadly in this market in current and next-generation systems and architectures. And that kind of winning, the visibility that you get from the customers, the commitments you get from those customers, those all collect to give you the confidence to invest in these very high-technology products, which do sometimes require a little bit more capital.

Mark Delaney: Um, and so it was just us. Outperforming what really anybody expected either us internally or what our customers with there are already lofty, expectations? Um, as it relates to capex, I mean Craig, uh, did mention that Capital was a little bit elevated. I mean, I talked just a few moments ago about the fact that we do have an expectation and a confidence that we're continuing to gain momentum in this space winning programs getting visibility from customers for their future plans, which create incremental opportunities for us. And so when we talk about capex, sometimes that's not only a capex for just 1, quarter ahead but rather a little bit to come and and that's that's that is really where you know we would make those Investments with that confidence for the future. Um I I I already said it but I'll just reiterate it. Our team continues to win. Very broadly in this market in current and Next Generation.

Mark Delaney: Systems and architectures. And, and, you know, that that kind of winning the the visibility that you get from the customers, the commitments, you get from those customers, uh, those all collect to, to give you the confidence to invest in these very high technology products, which do sometimes require a little bit more capital,

Samik Chatterjee: Thank you.

Mark Delaney: Thank you.

Samik Chatterjee: The next question is from Samik Chatterjee with J.P. Morgan. Your line is now open. Hi, thanks for taking my question. Adam, I know last quarter you had mentioned some of the pull ahead that you thought was happening in mobile devices, which is why you had guided a bit for a sequential moderation, which didn't seem to have played out this quarter as much. I'm just curious, like obviously with the book bill at 0.9821, if I take AI aside, is there anything to call out in terms of areas that you might be seeing some level of pull ahead from customers where maybe that's driving some of the book to bill to be closer to one than what we had been generally seeing as above one book to bill in the past few quarters?

Speaker Change: The next question is from semic strategy with JP Morgan your lines now open.

Samik Chatterjee: Just curious more outside of AI, if you're seeing anything that would be from order trend, more sort of indicating a sequential moderation as such.

Speaker Change: Hi. Um, thanks for taking my question. Um, Adam. Um, I know last quarter. You had mentioned. Um, some of the pull ahead that you thought was happening in mobile devices, which is why you had guided a bit for a sequential moderation, which didn't seem to have played out this quarter as much. I'm just curious like, uh, obviously with the book to bill at 0.98 to 1, um, if I take AI, um, SI. Um, is there anything to call out in terms of areas that you might be seeing some level of pull ahead from customers where, maybe that's driving some of the book to build to be closer to 1 than what we had been generally seeing, as of 1 book to build in the past few quarters, just curious more outside of AI if you're seeing anything. Um, that would be from an order Trend more, uh, sort of uh, indicating a sequential moderation as such thank you.

Adam Norwitt: Well, thanks very much, Samik. I mean, first, you mentioned mobile devices, and in mobile devices, our bookings always equal our shipments because they're pretty quick call-offs. And yeah, in the first quarter, we did talk about, there was a pretty well publicized pull-ahead of some volumes in the first quarter, which we certainly helped to enable for our customer, and that was at the time related to the anticipation of some tariffs. I wouldn't say that that happened here in the quarter. In fact, I would say that our team in mobile devices just did a really outstanding job of capitalizing on opportunities to support our customers better, whether that's taking a little bit of market share, shipping a little bit more than maybe customers expected, or customers needing a little bit more because of the volatility of that market.

Speaker Change: Well, thanks very much. So, I mean, first you mentioned mobile devices and and mobile devices are booking is always equal our shipments, because they're pretty quick. Call offs. And yeah, in in the first quarter we did talk about there was a pretty well. Um, publicized pull ahead of of some volumes in the first quarter, which we certainly helped, uh, to enable for our customer and that was at the time related to the anticipation of, of some tariffs. I, I wouldn't say that that happened here in

Adam Norwitt: In terms of the rest of the company, I wouldn't say that there's anything really notable around the book-to-bill. I'd say that the book-to-bills were fairly clustered, pretty close to that level, maybe a little bit stronger in the defense market. And, you know, we've talked about the ongoing strength in defense previously, and, you know, we continue to see that here. And you can imagine with ITDataCom, with us shift ahead as we did, that, you know, there was a modestly a little bit lower book-to-bill, but nothing that gives us any concern about the visibility that we have.

Adam Norwitt: We continue to have still a very positive outlook for that market.

In in the quarter. In fact, I would say that our team in mobile devices, just did a really outstanding job of capitalizing on on, on opportunities to to, to, to support our customers better. Whether that's taking a little bit of market share, shipping a little bit more um, than than maybe customers expected or or customers needing a little bit more because of the volatility of that market, in terms of the rest of the company. I, I wouldn't say that there's anything really notable around the book to Bill. I'd say that the book to bills were fairly clustered, uh, pretty close to, to that level. Maybe a little bit stronger in the defense market. And, you know, we've talked about the ongoing strength in defense, uh, previously. And, you know, we continue to see that here, um, and you can imagine with IQ Data Comm with us having shipped ahead as we did that, you know, there was a modestly, a little bit lower but to go but nothing that gives us any concern about the visibility that we have. We continue to have still a very positive outlook uh for for that market.

Luke Junk: Thank you. The next question is from Luke Junk with Baird. Your line's now Good afternoon. Thanks for taking the question. I want to circle back to operating margin dynamics. You know, of course, we've talked a lot about the higher technology underpinning that margin dynamic.

Speaker Change: Thank you. The next question is from Luke junk with beard your Line's now, open

Adam Norwitt: Adam, hoping maybe you could talk about some of the pure operating pieces here in terms of blocking and tackling. I'm just trying to wrap my head around 41 points of organic growth. I mean, we're talking billions and billions of incremental sales. Maybe just give some life to some of the practical considerations in terms of bringing that amount of incremental volume online, plus to the extent that it might be supporting what you're saying about the incremental margin moving up over time as well. Well, look, Luke, I'm glad you asked that question, because growing 41% organically is certainly not a trivial task, let alone, you know, 14% organic on a sequential basis, which is just 90 days of time.

Luke: Uh, good afternoon, thanks for taking question. Um, I want to Circle back to um operating margin Dynamics. Uh you know, of course, we've talked a lot about the higher technology underpinning that margin Dynamic. Um, Adam. Hey, hoping maybe you could talk about some of the pure operating pieces here in terms of blocking and tackling uh you know, I'm just trying to wrap my head around 41 points of organic.

Luke: Growth. I mean, we're talking billions of billions of incremental sales, maybe just give some life to some of the more practical, considerations in terms of bringing that amount of incremental volume online. Plus to the extent that it might be supporting what you're saying about. The incremental margin moving up over time as well. Thank you.

Adam Norwitt: And, and, you know, I mentioned it in my prepared remarks, how grateful I am, and how proud I am of our team around the world for really moving mountains here. I mean, they have truly moved mountains. And, you know, when you think about what does that mean? I mean, it's hiring the people, it's putting in place the automation machines, the testing, the validation, it's setting up new facilities. I mean, we have set up, you know, a lot of new facilities over this time period, including diversifying our geographic footprint to insulate us and our customers from from the dynamics that are going around, you know, related to trade and other areas.

Adam Norwitt: I mean, it's really every step of the way, every function in the company, which has to focus on exercising themselves, the as you say, blocking and tackling across the company was really impressive. And, you know, look, in maybe other enterprises, one would think about just throwing money at the problem. You know, how much money can I throw to get the growth? But that's not the Amphenol style. That's not our entrepreneurial culture, that Amphenolian culture that we talk about, you know, for so many years. It's rather, how do you get the most out of your resources, your facilities, your capabilities, and thereby ultimately convert that to the bottom line, as Craig talked about already.

Luke: It's just 90 days of time and and, you know, I mentioned it in my prepared remarks, how grateful I am and how proud I am of our team around the world for really moving mountains here. I mean, they have truly moved mountains and you know, when you think about, what does that mean? I mean it's hiring the people it's putting in place the automation machines, the testing the validation, it's setting up new facilities. I mean, we have set up, you know, a lot of new facilities over this time period, including diversifying, our Geographic, footprint to to insulate us and our customers from, from the Dynamics that are going around, you know, related to trade, and, and other areas. Um, I mean, it's really, every step of the way, every function in the company, which has to focus on exercising themselves. The organization reacting in real time to to grow the company by a 41% organic basis. Um, and yes, there's a strong growth that happened in 19 data Comm, but even if

Luke: You took out it data Comm, you know, this was double digit, organic growth across the board in the company and all of our end markets with the exception of 2 grew and double digits. And those 2 that didn't grew by 8% organically, which is also very very strong and so no doubt about it. That that kind of as you say, blocking and tackling the company was was was really impressive and you know, look in in in maybe other Enterprises 1 would think about just throwing money at the problem, you know.

Adam Norwitt: And it's just a very, very impressive performance by the organization. And it is those little movements by, you know, the thousands of people around the world, nearly 150,000 Amphenolians globally today, that ultimately allowed us to satisfy our customers, to take advantage of the growth opportunity that was there, and then to convert that opportunity into the margins and ultimately the cash that creates the virtual virtuous cycle that the company has been on for a long time. Thank you.

Luke: How do how much money can I throw to get the growth? But that's not the ampol style. That's not our entrepreneurial culture that amphenol and culture that we talked about, you know, for so many years it it's rather. How do you get the most out of your resources, your your facilities, your capabilities and, and thereby ultimately convert that to the bottom line as, as, as Craig talked about already and and it's just a very, very impressive, uh, performance by the organization. And it is those those little movements by, you know, the, the thousands of people around the world nearly 150,000 aeolians globally. Today that ultimately allowed us to satisfy our customers to take advantage of the growth opportunity that was there and then to convert that opportunity into the margins and and ultimately as a cache that creates The Virtuous cycle that the company has been on for a long time.

Joseph Spak: The next question is from Joseph Spak with UBS. Your line is now open. Thanks so much.

Speaker Change: Thank you. The next question is from Joe back with UBS your lines now open.

Adam Norwitt: Adam, I guess I just want to, not to beat the horse on this, but, you know, You mentioned it as sort of, I guess, not pull forward, but over performance in the AI side. And you're saying that's because your customers will take their hands on whatever they can get. But then you did sort of it did seem like part of the reason you're sort of talking about a little bit of maybe sequential. So, can you just sort of help us square that circle? Like, I know you said this was always going to be a little bit lumpy, even if there's, you know, great long-term growth.

Um, thanks so much um, Adam. I guess I just want to not to beat the horse on this but, you know, you, you you mentioned it as sort of. I guess not pull forward, but over performance in the AI side and you're saying, that's because your customers will, you know, get their take their hands on whatever they can get. Um, but then you did sort of it did seem like part of the reason you're sort of talking about a little bit of maybe sequential softeners was sort of account for that. So, can you just sort of help us square that circle? Like, I know you said this was

Adam Norwitt: So, is that what you're sort of seeing, maybe a little bit of just digestion before we see, you know, some further… Yeah, I mean, look, I've always said, Joe, that it's going to be, there can be lumpiness. And look, I would not call Q3, you know, kind of like an air pocket, the demand from our customers remains very strong. There's no doubt about it. It's just that when they think of their demand plans, and what ultimately they're delivering out into the field, and they want to match all the various parts up to do that, you know, we've gotten a little bit ahead in certain areas.

Always going to be a little bit. Lumpy, um, even if there's you know, great long-term growth, so is is, is that what you're sort of seeing maybe a little bit of just digestion before we see um, you know, some some further gains.

Adam Norwitt: And that was just this outperformance that we had in the second quarter. But the overall demand, the investments that are being made by our customers and their customers remain very, very robust.

Speaker Change: Yeah, I mean, look, I've always said Joe that it's going to be, there can be lumpiness and I look I would not call Q3, you know, kind of like an air pocket. The, the demand from our customers remains very strong, there's no doubt about it. It's just that when they think of their demand plans and what, ultimately, they're delivering out into the field and they want to match all the various parts up to do that. You know, we've gotten a little bit ahead in, in certain areas and that that was just this this outperformance that we had in the second quarter. Um, but the the overall demand the Investments that are being made by our customers and their customers remains very, very robust.

Asiya Merchant: The next question is from Asiya Merchant, Citigroup. Your line is now open. Great.

Speaker Change: Thank you. The next question is from a CM Merchant City Group, your Line's not open.

Asiya Merchant: If I can just double click a little bit on the industrial market as well, that did really well for you guys. So I think you mentioned Europe's growing. talk about. And my impression is that that market should also help to improve incremental margins. Yeah, thanks very much Asiya.

Great. Thank you for taking my question. If I can just double click a little bit on the industrial Market as well, that did really well for you guys better than expected. I think even on an organic and sequential basis definitely. So, uh, I think you mentioned Europe's growing to organically, just if you could talk about the Improvement that you're seeing there. And my impression is that that market should also help to improve incremental margins at this momentum. So

Speaker Change: Stains. If you could just talk about that as well, thank you.

Adam Norwitt: Well, let me just address the margin. I mean, I certainly wouldn't assume that there'd be any disproportionate contributions from industrial. We make good money across all of our markets. I think we've addressed that already. But relative to industrial, I mean, we are very encouraged by the performance. It's now been, you know, our third quarter in a quarter, strong sequential growth on an organic basis, growing 7% sequentially. You'll recall, we had something like seven quarters in a row of industrial moderation. We finally, in the third quarter of last year, saw a flat industrial market organically, and then 6% up and 6% up in Q4 and Q1.

Adam Norwitt: And now we've doubled that rate with a 12% growth. And so I think for sure, you know, I think last quarter, I talked about, you know, not just green shoots, but maybe even a daffodil or two in the industrial market. And I think we've now seen that certainly. And that includes not just in North American Asia, which the last two quarters were drivers of, but also in Europe, where we actually saw double digit organic growth in Europe in industrial in the second quarter.

Adam Norwitt: The other thing that I'm encouraged by in industrial is that if I look at all the sub-segments of our industrial market, and there's a lot of them, you know, from medical to alternative energy, instrumentation, rail mass transit, factor automation, and we saw good growth in most of our end markets. You know, strong growth in medical, strong growth in alternative energy, strong growth in instrumentation, you know, strong growth in areas like factor automation, with only a couple of the markets, you know, being a little more modest. And so the breadth of that together with the regional growth that we've seen in industrial, I think was very encouraging.

Speaker Change: Been, you know, our third quarter in a row of year-over-year organic growth, which we've now seen in industrial. Uh and that included, you know, this quarter strong sequential growth on an organic basis growing 7% sequentially. Um you'll you'll recall we we had something like 7 quarters, uh, in a row of industrial moderation. We finally, in the third quarter of last year saw a flat industrial Market organically and then 6% up and 6% up in Q4 and q1. And now we've doubled that rate with a 12% growth. And so I think for sure, you know, I think the last quarter I talked about, you know, not just green shoots, but maybe even a daffodil or 2 in the industrial market. And I think we've now seen that that that certainly and that includes not just in North America and Asia, which the last 2 quarters were drivers of. But but also in Europe, where we actually saw, you know, double digit organic growth in Europe, in industrial in the second quarter, the other thing.

That I'm encouraged by an industrial. Is that if I look at all the sub-segments of our industrial market, and there's a lot of them, you know, from from medical to Alternative Energy, instrumentation, rail, mass transit Factor Automation. And we saw a good growth, you know, in most of our end markets, you know, strong growth in medical, strong growth in Alternative Energy, strong growth in instrumentation. Um, you know, strong growth in in, in areas like Factory automation with, with only a couple of the markets, you know?

Speaker Change: Being a little more modest. And so the breadth of that together with the regional growth that we've seen in industrial I think was was very encouraging for us.

Andrew Buscaglia: The next question is from Andrew Buscaglia with BNP Paribas, your line. Hey, good morning, everyone. Good morning or good afternoon. Good afternoon.

Speaker Change: Thank you. The next question is from Andrew Busca with BNP Perabo, your line is now open.

Hey, good morning, everyone.

Speaker Change: Good morning.

Speaker Change: Or good afternoon.

Adam Norwitt: Yeah, I wanted to ask, on the acquisition of Nardo, can you comment on what you pay for at either valuation or dollar amount wise, and then you're generating a ton of cash. Double what I was expecting just in the quarter. What do you plan to do with it in the second half? Are more deals on the horizon? Are they more NARDA-like deals? Or are we going to see kind of a Comscope deal in size? How do you comment on that?

Speaker Change: Good afternoon. Um yeah, I wanted to ask um, on the acquisition of Nardo. Can you comment on what you paid for it? Either valuation or dollar amount wise and then you're generating a ton of cash, uh, double what I was expecting just in the quarter. Uh, what do you find to do with it in the second half? Is it is, um, are more deals on the horizon, are they more Narda like deals or are we going to see kind of a comp scope deal in size? Have you comment on that? Thanks.

Adam Norwitt: Yeah, thanks, Andrew, very much. I mean, look, NARDA is a great company. And as I said, it's a very exciting new growth area for us in these RF components, which are really a very close complement with our with our RF interconnect, which is an industry leading offering that we have. And if you think about RF across the company from antennas, all the way to connectors and active components, now NARDA really complements that very well. You know, we paid roughly 300 million for this, which is a reasonable multiple as we always do look to pay. In terms of our acquisition pipeline, we have a great pipeline today.

Speaker Change: Yeah. Thanks Andrew. Very much. I mean, look, nard is a great company. And as I said, it's a very exciting New Growth area for us in these RF components which are really a very close complement with our, with our RF interconnect, which is an industry-leading offering that we have. And if you think about RF across the company from antennas all the way to connectors and Active Components. Now, not not a really complements that very well. Um, you know, we paid roughly 300 million for this, which is a reasonable multiple as we always as we always, uh, do, uh, look look to pay.

Adam Norwitt: We continue to have companies large, medium and small across all of our end markets. And we continue to hunt for companies that have great people with great products and a great market position. And I would tell you that, you know, today looking at our pipeline, we're very encouraged by the potential going forward.

Adam Norwitt: And, you know, ultimately, we remain not very skilled at predicting when we'll sign and announce those acquisitions. But the beauty of our acquisition program, if you look over the last two and a half, three years, you know, we brought into Amphenol, into our family, I think, roughly 15, 16 companies. They were across almost all of our end markets, geographically diverse, and also companies large, medium and small, which included our two largest ever acquisitions of CIT and NARDA. And the Andrew business from Comscope. We're very encouraged by the performance of CIT and Andrew, which are certainly helping those great conversion margins that Craig talked about earlier, as well as the other acquisitions that we've made.

Speaker Change: Um, in terms of our acquisition pipeline, we have a, we have a great pipeline today. Uh we continue to have companies, large medium, and small across all of our end markets and we continue to hunt for companies that have great people with great products and and a great Market position. And I would tell you that, you know, today looking at our pipeline, uh, we're we're very encouraged by the potential going forward and, you know, ultimately, uh, we, we remain, uh, not very skilled at predicting when we'll sign and announced uh, those Acquisitions. Um, but the beauty of our acquisition program, if you look over the last 2 and a half 3 years, you know, we brought into AOL into our family, I think roughly 15, 16 companies, they were across almost all of our end markets, geographically diverse and also companies large medium and small, which included our 2 largest ever Acquisitions of CIT and and the Andrew business from commscope. We're very encouraged by the performance of CIT and a

Adam Norwitt: And so there's no doubt that we believe that, you know, acquisitions still represent one of the best returns on the capital that we're generating. And we're generating a lot of cash, and we have a lot of capital to go put to work, both in our own organic investments, but also through our M&A program.

Andrew which are certainly helping those great conversion. Margins, that Craig talked about earlier as well as the other Acquisitions that we've made and and so there's no doubt that we believe that you know it's Acquisitions still represent 1 of the best Returns on the capitol that we're generating and we're generating a lot of cash and we have a lot of capital to to go put to work both in our own organic Investments. But also through our m&a program

Saree Boroditsky: The next question is from Saree Boroditsky with Jeffreys. Your line is now Hi, thanks for taking the question. Just maybe something high level, you know, there were a number of end markets in the quarter that came in better than your expectations. I know you kind of talked about the pull forward in AI, but maybe just talk about what surprised you in the quarter, or was it just conservative given some of the high level uncertainty we're seeing? And then how does that, uh, how does that apply to how you're thinking about the guidance for?

Thank you. The next question is from cere, bids with Jeffrey's your line is now open.

How does that, uh, how does that apply to how you're thinking about the guidance for 3Q? And is there some conservative in there as well? Thank you.

Adam Norwitt: Well, thanks so much, Saree. Look, we always try to guide as best as we can. We have a bottoms-up approach to this. Have we outperformed that in many quarters? We have, but I'm not going to label our guidance conservative or aggressive or otherwise. I think we take a similar approach as we always have. You know, what surprised us to the upside here, I will say that just broadly, we saw strong performance across nearly all of our end markets or stronger than expected performance across nearly all of our end markets. And they each had their own dynamic.

Adam Norwitt: But I think the one common thread is the ability of our organization to execute when there is demand available for us. And we showed that in IT Datacom. We demonstrated that in mobile devices. We're consistently demonstrating that in our defense market and in fact, across the board. And that ability to pivot quickly when the opportunities are there in this very exciting electronics industry, I think that's something that Amphenolians the world over never miss a chance to take advantage of. And so that real sort of execution across our team, I think if anything, it's not surprising to me, but I'd say that's the common theme across all of these end markets.

Well, thanks so much sir. Look, we we always try to guide as best as we can. Um, we have a Bottoms Up approach to this. Um, have we outperformed that in many quarters? Uh, we have but I'm not going to label our our guidance, you know, conservative or aggressive or otherwise. I think we, we take a similar approach as, as we always have. Um, you know, what surprised us to the upside here? I I will say that just broadly, we saw strong performance across nearly all of our end markets, uh, or stronger than expected performance across, nearly all of our end markets and they each had their own Dynamic. Um, but I think the 1 Common Thread is the ability of our organization to execute when there is demand available for us. And we showed that in it data Comm, we demonstrated that in mobile devices, we're consistently demonstrating that in in our defense market, and, and in fact across the board and that ability to Pivot quickly when the opportunities are there in this very excitingly

Adam Norwitt: I will say it's encouraging, you know, on another side, which is that the demand that we see across our markets appears to be strengthening. You know, a few markets which were maybe in the last few quarters, more questionable, industrial, automotive, for example, you know, it's nice to see those markets growing organically. It's really nice to see that in communications networks where we had strong growth, 16% organic growth. And, you know, Comair again, growing 8% organically. So there is robust demand, I would say almost across the board in all the areas that we serve. And then it's just up to our team to out-execute even that level of demand.

Speaker Change: Electronics Industry. I think that's something that aeolians the world over. Uh, never miss a chance to take advantage of and and so that that real sort of execution across our team. I think if anything it's not surprising to me but I'd say that's the common theme across all of these end markets. I will say it's encouraging, you know on on another side which is that the

Adam Norwitt: And I think we've demonstrated the ability to do that pretty consistently.

Speaker Change: Demand that we see across our markets is appears to be strengthening you know, a few markets which were maybe in the last few quarters more questionable industrial Automotive for example you know it's nice to see those markets growing organically. It's really nice to see that in Communications networks uh where where we had strong growth 16% organic growth. Um, and and you know, calm are again, growing 8% organically. So there is robust demand. I would say almost across the board in all the areas that we serve, and then it's just up to our team to out execute, even that level of demand. And, and I think we've demonstrated the ability to do that pretty consistently.

Speaker Change: Thank you.

The next question is from Mom. Momsy Mohammed of America, your blacks now open.

Unknown Executive: Yes, thank you so much.

Wamsi Mohan: Adam, I just want to go back to AI and ask about... What you said about shipping ahead because of superior execution, would you say that that was something that happened just in 2Q or was there some of that in 1Q as well and then orders came back inter-quarter? I guess the question is really, how far out do you have visibility in the order book? And over the past few quarters, how much volatility have you seen the order patterns and IT data come, especially relative to AI, which might uptake mid-quarter?

Uh yes, thank you so much. Um, how do I just want to go back to AI um, and and ask about

Speaker Change: What you said about shipping ahead, um, because of the superior execution, would you say that? That was something that happened just in 2q, or was there some of that in in 1 Q as well? And then orders came back into a quarter. I guess, I guess the question is really how far out do you have visibility in the order book and order the past few quarters? How much volatility have you seen the order patterns and ID data columns especially relative to AI which might uptake mid quarter? Thank you.

Adam Norwitt: Thanks, Wamsi. I mean, look, I would say that our out-execution to our customers' demands was really more clear here in the second quarter. But relative to orders, I mean, we've talked about, we've had very, very strong orders over the last, you know, almost full year in AI. And some of those orders were really, you know, maybe a little bit longer visibility because of the capital that we're spending on behalf of our customers to do these very significant ramp-ups for them around the world. And so, you know, there can be always a little bit of lumpiness in those orders.

Adam Norwitt: But given that, you know, how well we're executing, I would say, you know, it's kind of a net of this kind of shipping ahead that we had in the quarter. I would say it's, you know, pretty close to one-to-one in the quarter. But we've had much stronger orders as we've worked on investments and been awarded new programs. And we will continue to be awarded new programs based on everything that we see with our customers. And there will be some quarters where the orders are a little lumpier. But overall, we see a positive trend, you know, for, you know, quite some time into the future.

Scott Graham: The last question is from Scott Graham with Seaport Research, your line is now open. Hey, thanks for taking the question. Congratulations on the quarter. I'm hoping you could answer this on either of you. You know, the another question on the incremental margin, which, you know, for rounding purposes, let's just say it's up 500 plus basis points over the last couple of years. which also coincides with two years of your three most acquisitive years in the company's history.

Adam Norwitt: So I'm wondering if, you know, of that 500 base points, how much of that would you say is organic versus how much is, you know, from the acquisitions with good assimilation integration, that's Yeah, thanks, Scott. Yeah, listen, I would I would say that certainly, you know, there are pieces of this. And, you know, one, you know, a big piece, the meaningful piece of is certainly the things that we talked about earlier, which is just, you know, increased technology of our products, the more, you know, meaningful, you know, the more meaningful way that we have serving our customers in terms of execution in terms of our ability to, to really, you know, service them with great quality products, the things they need into their architectures, those those types of things are really, I think, you know, have a big part of, of our of our margin expansion, and really, you know, just creating value for your for our customers and sharing in that value.

Adam Norwitt: But there's no doubt about it. I mean, our acquisition program, and our ability to improve the profitability of the acquisitions that we've been doing over time, has has certainly added to the profitability of the business, especially when you look, you know, sequentially over kind of a number of quarters, you know, we have seen meaningful profitability improvements, and, you know, some of the larger acquisitions that we've, you know, more recently done, as well as some of the smaller ones. And that certainly has had some impact on our profitability improvement over time. So it's not just one thing, it's, it's a, you know, it's a lot of things that go into improving profitability, you know, both organically and through and through the acquisitions and working with even some of the businesses that within the company that are at lower profitability levels that may not be acquisitions.

Adam Norwitt: You know, and certainly working with them on profitability improvement initiatives that that we've seen, you know, kind of, you know, come along over over the coming, you know, past year. So I think there's a variety of things, but there's no doubt that, you know, that our success and our, you know, the team's ability, you know, at the acquisitions that have come into the family, to be able to improve on their margins has certainly been one of the things that have been, you know, helpful and improving our profitability. Appreciate it. Thank you.

Unknown Executive: There are no further questions.

Unknown Executive: I'll hand the call back to Mr. Noria for closing remarks. Well, thank you very much. And I'd like to once again, thank everybody for joining our call this quarter. And I wish everybody a great continuation of your summer. And we look forward to talking to you all again, just in a short 90 days. Thanks very much and have a great summer. Thank you.

This concludes today's call. Thank you for joining. You may now disconnect your