Hello and welcome to the Second Quarter Earnings Conference Call for Amphenol Corporation. Following today’s presentation, there will be a formal question-and-answer session. Until then, all lines will remain in a listen-only mode. At the request of the company, today’s conference is being recorded. If anyone has any objections, you may disconnect at this time. Now, I would like to introduce today’s conference host, Mr. Craig Lampo. Sir, you may begin.

Thank you very much. Good afternoon, everyone. This is Craig Lampo, Amphenol’s CFO. And I’m here together with Adam Norwitt, our CEO. We would like to welcome you to our second quarter 2021 conference call. Our second quarter 2021 results were released this morning. I will provide some financial commentary, and then Adam will give an overview of the business as well as current trends. And then we’ll take some questions. As a reminder, during the call, we may refer to certain non-GAAP financial measures and may make certain forward-looking statements. So please refer to the relevant disclosures in our press release for further information. In addition, all data discussed during this call will be on a continuing-operations basis unless otherwise noted. The company closed the second quarter with record sales of $2.654 billion, and GAAP and adjusted diluted EPS of $0.59 and $0.61 respectively. Sales were up 34% in U.S. dollars, 30% in local currencies and 22% organically compared to the second quarter of 2020. Sequentially, sales were up 12% in U.S. dollars and in local currencies, and 7% organically. Orders for the quarter were a record $3.120 billion, which was up 50% compared to the second quarter of 2020, and up 14% sequentially, resulting in a very strong book-to-bill ratio of 1.18 to 1. Breaking down sales into our two segments, the interconnect segment, which comprises 96% of our sales, was up 34% in U.S. dollars, and 30% in local currencies compared to the second quarter of last year. Our cable segment, which comprises 4% of our sales, was up 27% in U.S. dollars and 24% local currencies compared to the second quarter of last year. Adam will comment further on trends by market in a few minutes. GAAP and adjusted operating income were $476 million and $532 million respectively in the second quarter of 2021. GAAP operating income includes $55 million of transactions, severance, restructuring and certain other non-cash costs related to the MTS acquisition. And the company also incurred $34 million related to the extinguishment of outstanding MTS senior notes. That in accordance with GAAP was recorded as an increase to goodwill in the second quarter, and therefore, had no impact on the second quarter earnings. Excluding these acquisition-related costs, adjusted operating margin was 20%, which increased by a strong 200 basis points compared to the second quarter of last year and increased by 40 basis points sequentially. The year-over-year improvement in adjusted operating margin was primarily driven by normal operating leverage on the higher sales volumes and a lower cost impact from the COVID-19 pandemic, partially offset by the impact of the challenging commodity and supply chain environment that we experienced in this year’s quarter. The sequential increase in adjusted operating margin was driven by the normal conversion on the increased sales levels, partially offset by the impact of the MTS Sensors business, which is currently operating below the company’s average operating margin. From a segment standpoint, in the interconnect segment, margins were 22% in the second quarter of 2021, which increased from 20% in the second quarter of 2020 and increased 50 basis points sequentially. In the cable segment, margins were 6.1%, which decreased from 9.4% in the second quarter of 2020 and 8.8% in the first quarter. These lower margins in the cable segment are directly related to the rapid increases in the prices of certain commodities and logistics costs, which we have not yet been able to offset with pricing actions. Given the dynamic market environment, we are very proud of the company’s performance. Our team’s ability to effectively manage through the current market challenges is a direct result of the strength and commitment of the company’s entrepreneurial management team, which continues to foster a high-performance action-oriented culture. The company’s GAAP effective tax rate for the second quarter was 17.5%, which compared to 20.7% in the second quarter of 2020. On an adjusted basis, this effective tax rate was 24.5% in the second quarter of both 2021 and 2020. GAAP diluted EPS was $0.59, an increase of 40% compared to the $0.42 in the prior year period. And adjusted diluted EPS was a record $0.61, an increase of 53% compared to $0.40 in the second quarter of 2020. The company continues to be an excellent generator of cash. Operating cash flow was $411 million in the second quarter, or 109% of adjusted net income. And net of capital spending, our free cash flow was $307 million or 81% of adjusted net income. From a working capital standpoint, inventory days, days sales outstanding, and payable days were 85, 71 and 60 days respectively, all excluding the impact of acquisitions in the quarter and within our normal range. During the quarter, the company repurchased 2.5 million shares of common stock for approximately $167 million, at an average price of approximately $67. At the end of the quarter, total debt was $5.2 billion and net debt was $4 billion. Total liquidity at the end of the quarter was $2.3 billion, which included cash and short-term investments on hand of $1.2 billion, plus availability under our existing credit facilities. Second quarter 2021 GAAP EBITDA was $597 million, and our net leverage ratio was 1.6 times. On a pro forma basis, after giving effect to the sale of MTS Test & Simulation business, net leverage at June 30, 2021 would have been 1.3 times. As previously discussed, due to the pending sale of the MTS Test & Simulation business, that business is being reported as a discontinued operation, and therefore, its expected results are excluded from our Q3 guidance. In addition, in conjunction with the divestiture of the Test & Simulation business, the company will incur certain additional cash tax-related acquisition-related costs in the third quarter, which will not be included in income from continuing operations and therefore are not included in our guidance. 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 here on the call today. And I hope that you, your family, friends, and colleagues continue to stay safe and healthy and indeed are able to enjoy the summer so far. As Craig mentioned, I’m going to highlight some of our achievements in the second quarter. I’ll then get into a discussion of the trends, and our trends and progress across our served markets. I’ll make some commentary on our outlook for the third quarter. And then, of course, we’ll have time for questions at the end. Our results in the second quarter were substantially better than expected, as we exceeded the high end of our guidance for sales and adjusted diluted earnings per share. Craig already mentioned our sales grew very strongly at 34% in U.S. dollars and 30% in local currency, reaching a new record of $2.654 billion. On an organic basis, our sales increased by 22%, with growth driven particularly by the automotive, military, industrial, and broadband markets, as well as contributions from the company’s acquisition program. We’re very pleased to book record orders in the quarter of $3.120 billion, which represented a very strong book-to-bill of 1.18 to 1. Despite facing operational challenges in certain geographies related to the ongoing pandemic as well as continued increases in costs related to commodities and supply chain pressures, we were very pleased to deliver very strong adjusted operating margins of 20.0% in the quarter. This was a 200 basis point increase from last year’s levels and a 40 basis point improvement sequentially. Adjusted diluted EPS grew a significant 53% from the prior year to another new record of $0.61 and is an outstanding reflection of our continued strong execution. And then, finally, the company generated operating and free cash flow of $411 million and $307 million respectively in the second quarter. I just can’t emphasize enough how proud I am of our organization around the world. These results once again reflect the discipline and agility of our entrepreneurial organization. As we have continued to perform well amidst, what is a very dynamic and challenging environment? Very pleased that in the quarter we closed on the acquisition of Unlimited Services. Unlimited, based in Oconto, Wisconsin, but also with operations in Mexico, has annual sales of approximately $50 million. This is a great manufacturer of cable assemblies for the industrial market primarily, with a particular focus on heavy vehicles. The addition of Unlimited broadens our already strong position in value-add interconnect products that are integrated into a wide array of industrial applications. As we welcome this outstanding new team to Amphenol, I remain very confident that our acquisition program will continue to create great value for the company. In fact, our ability to identify and execute upon acquisitions, and then to successfully bring these new companies into Amphenol remains a core competitive advantage for the company. Now turning to our served markets, I just would comment once again, how pleased we are that the company’s broad and balanced market diversification continues to create real value for us. We believe that ultimately, this diversification mitigates the impact of the volatility of individual end markets, while also giving us broad exposure to leading technologies and the innovations of those technologies, wherever they may arise across the broad scope of the electronics industry. Turning to the military market, the military market represented 11% of our sales in the quarter. As expected, sales grew a strong 45% from the COVID impacted prior year second quarter and were up 30% organically, driven by broad strength across virtually all segments of the military market. On a sequential basis, sales increased by 12%, also very strong. As we look into the third quarter, we expect sales to remain at these current elevated levels, and we continue to be very excited by the strength of our position in the military market. This position is really based upon our industry-leading breadth of high-technology interconnect and now sensor products, together with our support of essentially all major military programs. This gives us great confidence for our long-term performance in this important area. The commercial air market represented 2% of our sales in the quarter. Sales grew by 7% versus the prior year, really with the benefit of the contributions of our recent acquisitions. On an organic basis, sales were down by about 14%, as the commercial aircraft market continued to experience declines in demand for new aircraft production. Sequentially, our sales did increase by better than expected 19%. That’s really from the benefit of the MTS acquisition as well as some organic progress. As we look ahead, we expect a slight seasonal moderation in sales in the third quarter, which we would typically see in commercial air. Regardless of the ongoing difficult environment, our team working in this commercial aerospace market remains committed to leveraging the company’s strong interconnect and sensor technology position across a wide array of aircraft platforms and next-generation systems that are integrated into those planes. As personal and business travel continues to recover from the pandemic, we look forward to jet manufacturers beginning to expand their production levels. The industrial market represented 27% of our sales in the quarter, and our performance in the second quarter for industrial was much stronger than expected, with sales increasing by 54% in U.S. dollars and 28% organically. This growth was broad-based across most areas of the worldwide industrial market and was driven in particular by organic strength in the transportation, battery, heavy electric vehicle, marine, and energy generation segments, together with the contributions from our acquisitions that we have completed over the past year. On a sequential basis, sales increased by a very strong 26% from the first quarter, really with the benefit of acquisitions as well as strong organic performance. Looking into the third quarter, we expect sales to remain at these elevated levels, despite what would typically be a seasonally lower quarter. I can’t say enough how proud I am of our team working in the industrial market. We’ve had a long-term strategy to expand our high-technology interconnect, antenna, and sensor offering both organically as well as through complementary acquisitions. That strategy has positioned us strongly with industrial customers around the world, who are accelerating their adoption of electronics. The acquisition of Unlimited Services further bolsters our leading value-add capabilities in this important market, and we look forward to realizing the benefits of this strategy for many years to come. The automotive market represented 20% of our sales in the quarter. I just say that sales were higher than our expectations, at a very strong 134% in U.S. dollars and 117% organically, as our team was able to execute strongly in the face of a robust and broad recovery in the automotive market. In particular, we once again drove very strong growth of our products used in electric and hybrid electric vehicles this quarter, which confirms again for us our global team’s long-term efforts at designing in high voltage and other interconnect and sensor products into these important next-generation platforms. Despite an increase in production disruptions among our automotive customers due to the widely reported global supply chain issues, we were able to achieve a small sequential increase in our sales, which was a bit better than we had expected coming into the quarter. No doubt about it, there continued to be a range of widely reported supply chain challenges that are rising within the automotive industry, and this is impacting overall demand from vehicle manufacturers around the world. Accordingly, as we look towards the third quarter, we do expect a modest sequential decline in our sales. I remain extremely proud of our team working in the automotive market. They continue to demonstrate a high degree of agility and resiliency in both driving a significant recovery from last year as reduced production levels, while expertly navigating the myriad of supply chain challenges that the entire automotive industry is still facing. We look forward to benefiting from their efforts long into the future. Turning to the mobile devices market, that market represented 10% of our sales in the quarter. Our sales to customers in the mobile devices market declined from the prior year by 4% in U.S. dollars and 6% organically, as declines in handsets and laptops more than offset growth in wearables. I would just remind you that our last year’s second quarter did include a significant sequential recovery and really a catch up from the COVID impacted first quarter of 2020, which made the comparison versus prior year a little more challenging. Sequentially, our sales fell by 6% from the first quarter, which was modestly better than our expectations. Looking to the third quarter, we now expect an approximately 25% increase in sales from these second quarter levels as we benefit from the seasonally typical higher demand in the mobile device market as customers launch a range of new products. While mobile devices remain the most volatile of Amphenol’s end markets, our outstanding and agile team is poised, as always, to capture any opportunities for incremental sales that may arise in the second half of 2021 and beyond. Our leading array of antennas, interconnect products and mechanisms continues to enable a broad range of next-generation mobile devices, thereby positioning us well for the long-term in this exciting market. The mobile networks market represented 5% of our sales in the quarter. Sales were flat to the prior year and down 4% organically. The sales to both OEMs and the wireless service providers moderated. On a sequential basis, however, our sales increased by 5% compared to the first quarter, which was in line with our expectations coming into the second quarter. As we look towards the third quarter, we expect a further increase in sales as mobile networks customers ramp up their investments in next-generation networks. Our team around the world continues to work aggressively to realize the benefits of our efforts at expanding our position in such next-generation networks and the equipment that populates them around the world. As customers ramp up these investments in such advanced systems, we look forward to benefiting from the increased potential that comes from our unique position with both equipment manufacturers and mobile service providers. The information technology and data communications market increased by 21% in the second quarter. Sales in the second quarter rose by 5% in U.S. dollars and 3% organically from the very significant levels in last year’s second quarter. Our strength this quarter was driven in particular by robust sales to web service providers, which was partially offset by some weakness in sales to network equipment OEMs. Sequentially, our sales grew by a very strong 20% from the first quarter, which significantly outperformed our original expectations. Looking now into the third quarter, we expect sales to increase modestly from these very high levels. We remain very encouraged by the company’s outstanding position in the global IT data comm market. Our OEM and web service provider customers around the world continue to drive their equipment and networks to ever-higher levels of performance in order to manage the continued dramatic increases in demand for bandwidth and processor power. In turn, our team is singularly focused on enabling this continuing revolution in IT data comm, with industry-leading high-speed, power, and fiber-optic interconnect products. We look forward to realizing the benefits of our leading position for many years to come. Turning finally to the broadband market, this market represented 4% of our sales in the quarter, and sales increased by 12% from the prior year and were flat organically as we benefited from our recent acquisition of Cabelcon. On a sequential basis, sales increased by 7% from the first quarter, which was a bit lower than we had anticipated coming into the quarter. For the third quarter, we expect sales to moderate from current levels, as operators digest the really high levels of spending that they have exhibited over the recent quarters. Regardless of this more muted outlook, we continue to look forward to supporting our broadband service operator customers around the world, all of whom are working to increase their bandwidth to support the expansion of high-speed data applications to homes and businesses. Now, turning to our outlook, and I would just note that given the current dynamic market environment, and of course, assuming no new material disruptions from the COVID-19 pandemic, as well as constant exchange rates. In the third quarter, we expect sales in the range of $2.640 billion to $2.700 billion, and adjusted diluted EPS in the range of $0.60 to $0.62. This would represent sales growth of 14% to 16%, and adjusted diluted EPS growth of 9% to 13% compared to the third quarter of last year. I remain confident in the ability of our outstanding entrepreneurial management team to adapt to the continued challenges in the marketplace and to capitalize on the many opportunities to grow our market position and expand our profitability. I can just say that our entire organization remains committed to delivering long-term and sustainable value, all while prioritizing the continued safety and health of each of our employees around the world. Most importantly, I’d like to take this opportunity to once again thank the entire global Amphenol team for their truly outstanding efforts here in the second quarter. With that, operator, we’ll be very happy to take any questions that there may be.

Thank you. And, participants, we will now begin our questions. Please be reminded that questioners are only allowed to ask one question. Now, our first question is from Wamsi Mohan of Bank of America. Sir, your line is now open.

Yes, thank you. Adam, can you talk about what you’re seeing as far as inventory levels go, particularly in the channel in industrial where you expect that low-teens growth quarter on quarter? You grew almost double that. If you could give us some sense of where things stand, that’d be great. Thank you.

Thank you very much, Wamsi. I mean, we’ve talked about this in the past that we don’t have necessarily perfect visibility into the inventory, in particular of our OEM and service provider customers. But as far as the channel is concerned, we have not seen any real changes in the inventory levels. In fact, it appears that for the vast majority of our distributors, in particular, with respect to the industrial market, they want to ship it out as soon as we can get it to them. There’s clearly a very significant end-demand across really many segments of the industrial market. I mentioned earlier that we saw growth across virtually every segment of the industrial market, whether that was in marine applications, in industrial batteries, in electrification of industrial vehicles, in transportation, heavy equipment, factory automation. I mean, we saw even growth in areas like oil and gas, where we haven’t seen so much growth in the past. Instrumentation, where we continued to see very robust performance over a long time period. So I wouldn’t say that across the industrial market we’ve seen necessarily any worrisome inventory trends. I think that more broadly across the whole company, again, maybe the only area where you hear talk of inventory issues acutely is that there is not a lot of inventory of cars on lots right now. So, I don’t know what that means through the whole chain. But for sure, dealer inventories of vehicles are extremely low by any measure. I think there are a lot of supply chain issues that are going on around the automotive industry that I’m sure others will ask about and many have spoken about and reported about. But by and large, we see inventory as relatively healthy.

Thank you. Now, our next question is from Amit Daryanani of Evercore. Sir, line is now open.

Perfect. Thanks a lot and good afternoon. I guess, my question is around the supply chain dynamics, as well I’d love to understand, Adam, how is it on to – how is it playing out for Amphenol from operations, from a P&L basis, what’s the impact on your revenue and margin that’s coming from the supply chain issues? And then, beyond the operational challenges, I’d love to understand, does this create an opportunity for you over time to win new customers, to have new share gain? And if so, which segment of those opportunities is bigger?

Yeah, well, thank you very much, Amit. Look, I mean, the current supply chain environment is certainly not for the faint of heart. I think our agility as an organization, that unique entrepreneurship of what we call Amphenoleans around the world, in many ways, is an ideal approach to deal with a supply chain environment that is so broadly disrupted, and where new challenges pop up every day. Could we have shipped a little bit more in certain cases? I’m sure we probably could have. Did it cost us money? In many cases, I’m sure it did. To put a number on that is not easy for us to do. But I can tell you that it’s more than zero. For sure, the cost of the supply chain, whether that’s freight and logistics, whether that’s the cost of commodities, the availability of certain things, a lot of stuff went on over the course of this quarter. There were floods in Germany. There were challenges with various countries. There were some COVID-related things that were happening in particular in places like Southeast Asia. So our general managers, all 125 of them, each of them had to deal with a unique set of challenges. They had to tailor-make their approach to exactly what they were facing. It wasn’t that we had to sort of process all of this in this sort of corporate wayback machine, and then issue a bunch of edicts to say, this is what we should do. It was really dealt with on an individual case-by-case basis in the moment. And that kind of moment-by-moment management is a real premium in a time like this. As it relates to your second question or the second part of your question, for sure, if we are satisfying the needs of our customers better than our competitors are doing in a time when they need us the most, when they have robust demand from their customers, while facing a much broader array of supply chain challenges. We don’t buy a ton of semiconductors. We buy a little bit here and there. But we have many customers who are facing really existential shortages in certain semiconductors. When we can help them, for example, they’re redesigning a system to change a chip that they can’t get support for. They’re redesigning that. All of a sudden, that redesign requires them to completely redesign an interconnect system. Our team does it. In one case, we did this in 5 days. A customer came to us, said they had to totally change the design of their system. Otherwise, they wouldn’t have a chip for a year. They redesigned it. Our team went, completely redesigned the system, and 5 days later, sent them samples. They then came to us with big orders thereafter. These are the kind of situations that are popping up more and more. I think long-term customers don’t forget if you were there for them when they needed you the most.

Thank you. Now, our next question is from Jim Suva of Citigroup Investment Research. Sir, your line is now open.

Thank you, and congratulations to you and your team for all the hard work during the challenging times. I wanted to ask a question kind of on raw material and input costs. And, of course, we’ve seen them all kind of skyrocket. Does that mean your salespeople need to be more active or change terms, or do you have like indexing into your contracts when raw materials go up a lot? I assume some of your contracts are very long-term in nature. Or do you hedge it out with some financial instruments? I’m just kind of curious, because it’s pretty unprecedented that copper, steel or aluminum, resins and costs have recently been moving a lot. Thank you so much.

Well, thank you so much, Jim. No doubt about it. I mean, there are certain dynamics, which one could call unprecedented. Amidst that unprecedented inflationary environment on certain commodities, we were able to deliver exactly 20% adjusted operating margins here in the quarter, which I think is a testament to the hard work of our team around the world. Each of whom is facing a different set of challenges. But no doubt about it, if you’re a general manager in Amphenol, we don’t tie their hands and say you’re only in charge of this or you’re only in charge of that. They have every lever to pull in order to ultimately meet their obligations to reach their performance objective. That means when all your input prices have gone up, you’re going to figure a way out of that. Sometimes when they go up very quickly, that makes it hard, and no doubt about it. We’ve seen relatively quick increases in a lot of different input costs. Again, not just commodities, but also the cost of freight and other logistics. Sometimes there can be a little bit of a delay if that comes in so fast. By and large, our interactions with customers, the sort of contracts or programs that we have with them, generally, they’re not indexed. We generally don’t hedge either. The reason we don’t hedge is because we want to be connected to the reality of the moment for discussions with customers. Those discussions with customers, for sure, are ongoing, because when you have significant increases in input costs, we’re going to do everything in our power to offset those costs with our own management, redesigning the products, changing suppliers, pitting our suppliers against each other, reducing overhead, reducing every aspect. Sometimes, though, there is only the option to pass that price, that cost increase onto your customer. We do that very thoughtfully. Every market is a little bit different, but our customers know that we don’t do this lightly. We don’t take that initiative lightly, but ultimately, sometimes you do have to pass the price on. I can tell you that our sales teams around the world, together with our operating teams, are working hand in hand to ensure that we’ve done everything possible before we go to a customer and ask them to share in the pain of these increases. It’s hard work. There’s no doubt about it. But I think our team is making good progress on that front. Again, it’s very market-dependent. It’s very region-dependent. But there’s no one I would want more than a general manager who knows her business front to back to sit in front of a customer and decide if this now is the right moment to ask that customer to share in the challenges we’re facing.

Thank you. Now, our next question is from Mark Delaney from Goldman Sachs. Sir, your line is now open.

Yes, good afternoon, and thanks for taking the question. I was hoping to talk about MTS and perhaps you can share some of your early impressions of the company and what opportunities you may be seeing to not only sell the MTS sensors on a standalone basis, but combine it into full solutions or other product lines. On a related note with MTS, Craig, I think you said the margins are still below corporate average. Maybe talk about when you see that getting back in line with the Amphenol average. Thank you.

Well, thanks so much, Mark. I’ll let Craig talk about the margins in a second. But I can just tell you, our early impressions of the company are very, very positive. I mean, we said and I think I mentioned last quarter that MTS, the Sensors business is run by a team that we know well. In particular, the person leading that organization is just a phenomenal leader who has an extraordinary organization beneath him. The way they have embraced being part of Amphenol is rewarding for all of us in the company. We’ve known them for a long time. This was not a new acquaintance we made through this process, but rather we’ve known them all the way back to when they were part of a family-owned company that ultimately MTS acquired. Our customers have received this extremely well. We’ve become more important to customers across the markets, whether that be industrial, military, commercial air, and automotive. I continue to be amazed by the uniqueness and depth of the technology that we acquired in this business, force, vibration, pressure sensors, position, just a variety of products that really operate in the harshest environments and with the highest performance. In terms of being able to sell more complete solutions, I can tell you there's already early collaborative activities ongoing across the company. People within our interconnect businesses are working together, getting to know the MTS Sensors organization, creating the relationships that can ultimately lead to collaborative success in the various markets we serve. All early returns for MTS, including their absolute performance, which is coming out a little better than we had thought in the quarter. All early returns are favorable. I’ll let Craig maybe comment specifically on the margin.

Yeah, Mark, thanks for the question on the margin. As you mentioned, I did mention in the past that their profit is ultimately in the mid-teens profitability when we acquired them. As Adam mentioned, we were just really happy with the progress they’ve made, and kind of all aspects honestly of the business. From a profitability perspective, we always say that profit ultimately is really just the byproduct of the value that you bring to your customers, and there’s no doubt that this company brings a lot of value to all their customers. We believe that there’s plenty of opportunity throughout the business to increase that profitability. I will tell you that even in the second quarter, I say, we have seen green shoots, I guess of progress in that area. The time it will take ultimately to get them to that company average or beyond is something that will unfold in the future, and we’re not necessarily going to try to estimate that at this time. Every acquisition is different. The task that needs to happen varies in the amount of time. I would tell you that we’ve certainly seen some progress in that area in the second quarter, and there are certainly areas of opportunity in the future. I would say that we’re even more optimistic than we were early on that they will ultimately get to that target of the company average and hopefully beyond it in the future.

Thank you. Now, our next question is from William Stein from Truist.

Hi. This is Elliot Smith on for Will. I wanted to ask about the mobile devices end market. I know it can be quite volatile quarter-to-quarter. But can you speak to what you are seeing now and potentially over the next several quarters in terms of the end market content trajectory and potential growth?

So thanks very much, Elliot. I think you correctly termed that it is a very volatile market on a quarter-to-quarter basis. As I mentioned in my prepared remarks, the year-over-year performance in the market was significantly impacted by the strength that we had a year ago in the second quarter, which was really a catch-up from the significant COVID impacts from the first quarter of 2020. This is not a market I’d like to get out ahead of my skis on in terms of several quarters out and giving a prognosis. But what I can say is that our position in the mobile market is an extremely strong position, and we continue to have a unique ability to react quickly to customers when they need us the most. That includes sometimes when our competitors aren’t able to support the customers, particularly when they’re launching new products. Our guidance for the third quarter being up about 25% or so on a quarter-to-quarter basis is a strong outlook. I think it’s not inconsistent, over a long time period, with the kind of second quarter to third quarter trajectory. What it will be in the quarters thereafter, again, I’m not going to get ahead of my skis and give a prognosis on mobile devices over the long term. But the content opportunity, as you say, there’s no reason to think that the content opportunity with these devices as they become more complicated, with different feature sets, and as they support different types of communication standards, will change in the future.

Thank you. Now our next question is from Joe Giordano from Cowen. Sir, your line is now open.

Can you guys hear me?

Yes. Hi, Joe.

Hey, good afternoon, guys. Just curious on IT-Datacom, I mean, you guys came in so much stronger than your initial view last quarter. Just curious, how would you categorize that from like within market dynamics, just the overall spending in the industry was significantly better, where you guys picking up specific share anywhere? How would you categorize that outperformance relative to your initial view?

Joe, I guess, it’s a combination of sort of all the above, and our team continues to do a phenomenal job in IT-Datacom, in particular, enabling web service providers whose spending we can call them web service providers or cloud providers. The fact is the service providers are making meaningful investments in high-speed data processing in order to enable the explosion of traffic that all of them are seeing. Our team has just done an amazing job of reacting to that increase in demand. We did that over the course of the last year, when it was even more critical. I think our growth in IT-Datacom over the course of 2020 was significant. We made a lot of good friends in that market by stepping up and enabling our customers when they needed us the most. If anything, we’ve seen an acceleration in new product development as our customers look to push the limits of their systems’ bandwidth. That involves new interconnect solutions that ultimately enable high-speed, and it involves new power solutions that can help the efficiency. There are so many dynamics across IT-Datacom, all converging on the need for higher performance interconnect products. Whether that’s web service providers, video over the internet, or cryptocurrency and the processor power that’s being used in support of the crypto market, these are all driving extraordinary demand for high-speed and high-efficiency, high-speed interconnect and high-efficiency power interconnect. I can just tell you, our team working in both of those areas has done a phenomenal job of reacting to this to scale our capacity quickly in the face of really unexpected levels of demand. This quarter was another example of that; we did not expect a 20% sequential growth. We came into the quarter thinking kind of mid-single digits. That requires you to perform on that, to have enough people and machines and automation and tooling. Our team just did a great job of reacting here.

Thank you. Now, our next question is from Chris Snyder of UBS. Sir, your line is now open.

Thank you. So industrial and auto have seen a pretty massive inflection in end market outgrowth over the last year or so. It sounds like there’s not been much or if any supply chain challenges here. So is this outgrowth and collection driven by share gains or just an acceleration in the electronics revolution, so to speak? If so, would we expect a structurally higher level of end market outgrowth relative to what we were seeing in the years leading up to COVID?

Yeah, I mean, look I don’t know how it’s going to look in the future, but for sure, over the course of the last year, we shouldn’t forget Q2 of last year was almost the nuclear winter for the automotive industry. Our team working in industrial and automotive has clearly done an outstanding job of supporting customers when they needed us the most, in certain cases doing that because some competitors could not rise to the occasion. So I think there has been for us some outperformance relative to the industry. We’ve clearly seen an acceleration of the adoption of electronics across the automotive industry, across many segments of the industrial market, this kind of electronification of everything, if you will. It’s not just EVs and batteries for those EVs; we’re really seeing so many examples of traditionally mechanical, fuel-based, and hydraulic systems converting to an electronic control, electronic functionality. Each time that happens, it’s a new inflection point whereby, if we can step in with the right types of interconnect products, we can have it available for the customers when they need it. All of these factors that you mentioned have combined in a very positive fashion to ultimately lead to us having the growth that we realized this quarter, as well as the positive outlook we see in the third quarter and I would hope also beyond. What does that mean for the long term? Typically, the adoption of electronics is a one-way ratchet. It’s not that people adopt a new electronic system and then one day go back to a mechanical system. That’s not really how the evolution of electronics operates. I think long-term, it gives me encouragement to see there has been an acceleration in that kind of step function of the adoption of electronics, which should create opportunities for the long-term.

Thank you. Now our next question is from David Kelley from Jefferies. Sir, your line is now open.

Hi, good afternoon, Adam and Craig. I always ask the automotive question, but the organic growth really stands out. So you referenced electrification as a driver; we’re seeing EV auto sales really start to inflect and actually reach some scale now. Is there any way to quantify the contribution for you? Then even taken a step back, just more broadly in autos, just curious if you’re seeing any customers start to build some inventories? You reference the below dealer inventory levels. So with some planning for the medium-term, just curious if you’re seeing that in the market?

Yeah, I mean, look, I think the organic growth was pretty special, David. So I don’t blame you for asking another automotive question. Our automotive team is very proud and justifiably proud of what they were able to achieve. Relative to the contribution of EV, I can tell you that the growth of EV was substantially higher than the growth that I just mentioned of that 117%. Without giving a specific amount of our EV business, it’s bigger than it used to be, and it’s meaningful. It’s a meaningful business and one that we look forward to realizing the benefits from for many years to come. Relative to inventory, I would say that more of what we’ve seen in the automotive market than stockpiling of inventory is customers not wanting to take our product because they suddenly can’t get the appropriate semiconductor to finish the vehicle. We’ve seen more push-outs of deliveries rather than customers just putting stuff in their warehouses. We’ve had to react quickly to that, which has meant that for us, we ended up with a little more of our own finished goods, a little more of our own work in progress than we would have liked in the course of the quarter. Still, with that, we were able to achieve the 117% organic growth, so I don’t believe there’s a big build-up, though there could be pockets of it. The more obvious thing we saw was these push-outs from customers, who couldn’t get matching components to make the car.

Thank you. Next question is from Joseph Spak from RBC Capital Markets. Sir, your line is now open.

Thank you. I too am going to follow up on automotive, sorry. So it doesn’t sound like you think inventory is a big issue; it sounded like you maybe took a little bit of share, and obviously it is helping. I know even when compared to global production, your geographic exposure probably helped you a little bit because of the larger recovery in North America and Europe. I guess, what I’m – the other factor I’m wondering about is, is there a material content per vehicle difference between, let’s call it, high-value vehicles like a full-size truck and the lower-value vehicle? Because that can obviously also help, and as we started thinking about next year maybe some of the volume recoveries more in those lower-volume vehicles?

Yeah, well, Joe, again, no problem to get another auto question. I should say you and David could probably co-teach the masterclass together on this topic. One thing I would mention is that we saw really strong performance across all of the regions where we operate. I would tell you that our business now regionally is more balanced than ever before; it’s roughly equal size among Asia, Europe, and just a tick lower in North America, which is quite a transformation. Relative to your question, do luxury cars have more content than lower-end cars? The answer is absolutely, yes. That’s always been the case, and I think will always be the case. However, we have seen that more and more automakers are equipping their lower-end cars with a greater degree of electronic functionality than before. Traditionally, automakers would stop their high-end cars with every possible feature to test out electronics and then trickle it down to low-end fleet-type cars. Now, just getting any car of any size, it will have features that would surprise you, even in the smallest types of vehicles. The trend is bringing electronic opportunities across all these car types.

Thank you. Now our next question is from Samik Chatterjee from JPMorgan. Sir, your line is now open.

Hi, thank you, and good afternoon, Adam and Craig. I guess, I have a more quick one, just trying to get a better handle on the difference between orders and your revenue guide for the next quarter. I mean, when I look at the difference now, it’s about $400 million; last quarter, I think when you guided, the difference was about $300 million. So, just kind of wondering, is that more of a supply concern and securing supply? Are you getting orders with longer lead times from your customers, just kind of trying to get a better handle of what you’re trying to bake in there, and if it’s conservative at all? In conjunction with that, I think one thing that I wanted to understand is broadly across your businesses, are you feeling that the supply constraints are getting tougher, or are they getting easier to navigate at this point? Thank you.

Thanks, Samik. First, I guess, we have a little bit different numbers in automotive than you mentioned; I think our automotive business at 20% of sales works out to more than $0.5 billion in the quarter. With the guidance I’ve given, it wouldn’t be dissimilar in the third quarter. Relative to supply constraints, are they getting better, worse, or staying the same? It feels about the same. I wouldn’t say it feels that much worse. There are a few things that may feel a little bit worse, like freight. The cost of freight is not great. The price of a container from Asia to the US has increased quite a bit. There have been some anomalies, like catastrophic floods in Germany, which have disrupted part of the electronics supply chain. There are also a few COVID-related restrictions happening a little in Southeast Asia. Overall, I wouldn’t say it’s getting easier, but it is somewhat manageable.

Thank you. Next question is from Luke Junk from Baird. Sir, your line is now open.

Good afternoon. Thanks for taking my question. I had a big-picture question this afternoon. It’s about the competitive landscape in your auto business. As we move into what’s increasingly an EV world, you’ve made, if we look over the last 10, 20 years, great inroads growing in auto in what has been a combustion world, of course, where there are a lot of incumbent players. In a world where there are no true incumbents with respect to EV powertrains, how has that changed the competitive landscape for Amphenol, both in terms of your view of the opportunity set and ultimately how aggressively you pursue that business?

The last part of your question I’ll answer first, which is I think we’ve pursued this business very aggressively over a long period. The whole concept of a high-voltage system in a car is not new. Our teams have been working on specific automotive-capable high-voltage interconnect systems for many years. I think this is not a new development to manufacture high-voltage products. The adoption of these vehicles is accelerating on a global basis, even if they still represent a relatively modest proportion of the overall vehicle market. To your point, we have a proposition in EVs, which we did not have in traditional automotive. We’ve been making high-voltage connectors for a long time. Early on, our teams were working to package our military and industrial high-voltage interconnect technologies into automotive-type interconnect interfaces. This gave us a strong position. It’s not new to us. The competition has increased, but we respect our competitors very much. Our outperformance in automotive over many years, particularly recently, has been due to our realization of the benefits of our position in high-voltage products.

Excuse me, participants. Thank you for holding and sorry about the technical issue. We now have Mr. Craig Lampo online.

Hello, operator, do we have any more questions, please?

Thank you for that, Mr. Lampo. As of now, we don’t have any questions on queue. I will turn it back on to Amphenol for any closing remarks.

Okay. Well, thank you very much. We apologize everybody. There appears to have been a communications issue with the provider here. We apologize if anybody did not have their questions answered. Of course, you can feel free to reach out to our Investor Relations team, to Craig and Sherri. Let me take this moment to thank all of you again for your time here in this summer. We’re very proud again of the company’s results over the course of this second quarter. We look forward to finishing the second half strongly as we go into 2021. I want to take this opportunity also to wish each of you a little bit of rest as the summer continues, and come back recharged when we talk to each other in 90 days. Thank you all so much, and we’ll talk to you soon.

Thank you.

Thank you. And, ladies and gentlemen, thank you for attending today’s conference call, and have a nice day.