Hello and welcome to the Fourth 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 on the listen-only mode. At the request of the company, today’s conference is being recorded. If anyone has objections, you may disconnect at this time. I would now like to introduce today’s conference host, Ms. Diana Reardon. Ma’am, you may begin.

Thank you. My name is Diana Reardon and I am Amphenol’s CFO. I am here together with Adam Norwitt, our CEO and we would like to welcome everyone to our fourth quarter earnings call. Q4 results were released this morning. I will provide some financial commentary on the quarter and Adam will give an overview of the business and current trends. We will then have a question-and-answer session. The company closed the fourth quarter with sales of $1.427 million and EPS excluding one-time items of $0.63 beating the high-end of the company’s guidance and achieving new records of performance in both sales and earnings per share. Sales were up 15% in U.S. dollars and 17% in local currencies compared to Q4 of 2013. From an organic standpoint, excluding both acquisitions and currency effects, sales in Q4 were up 7%. From a sequential standpoint, sales were up 5% in U.S. dollars and 3% organically from Q3. Breaking down sales into our two major components: our cable business, which comprised 6% of our sales was up 3% from last year; our interconnect business, which comprised 94% of our sales was up 15% from last year, reflecting the benefits of both good organic growth and the company’s acquisition program. Adam will comment further on trends by market in a few minutes. For the full year, sales were $5.346 billion, up 16% in U.S. dollars and 8% organically over 2013, a very strong performance. Operating income, excluding one-time items, increased to $288 million in the quarter. Operating margin also excluding one-time items increased to 20.2% in Q4 compared to 19.7% last year and 19.9% last quarter. This represents the third consecutive quarter of ROS improvement in 2014. The sequential increase of 30 basis points in operating margin over the third quarter and the achievement…

Well, thank you very much, Diana and I’d like to offer my welcome to all of you on the phone and hopefully it’s not too late to wish you as well a Happy New Year here in January. As Diana mentioned, I am going to highlight some of our achievements during the fourth quarter and the full year and then I will spend some time to discuss the trends and our progress across our various served markets. Finally, I will make some comments on our outlook for the first quarter as well as for the full year of 2015. Turning to the fourth quarter, I think as Diana just reviewed, the fourth quarter was an excellent quarter for the company in virtually all respects. As we exceeded the high-end of our guidance while setting new records in sales and earnings, our revenue increased a very strong 15% from prior year and 5% sequentially reaching the record level of $1.427 billion. And the company similarly booked a record $1.427 billion in orders, which represented a book-to-bill of exactly 1-to-1. Diana also highlighted that we reached in the quarter the highest levels of profitability in the company’s history with our operating margins expanding 50 basis points from prior year to 20.2%, a great achievement by any benchmark. We are also very pleased that our Board of Directors has approved the 10 million share stock buyback program that we announced today, which follows the completion of our January 2013 program. What I can just say with respect to the fourth quarter and for the year, I am extremely proud of our team. Our results this quarter confirm once again the true value of the discipline as well as the agility of Amphenol’s entrepreneurial organization. We continue to capitalize on the many available opportunities…

Thank you. And the question-and-answer period will now begin. Our first question comes from Amit Daryanani with RBC Capital Markets. You may ask your question.

Thanks a lot. Good afternoon guys. Two questions for me. I guess one I think you guys spent a fair bit of time talking about just some of the FX impact in Q1 and in 2015. Is there a way to think about what is the FX impact on your EPS and potentially even free cash flow for the year?

Sure. I think if you think about what the potential FX impacts on income are I think you have got two components. One is translation component, which is just the mathematics of converting foreign currency sales into U.S. dollars. And I think we have disclosed what the sales impact of that is. I would tell you that if you wanted to compute that impact, you could probably use an average ROS on those sales. So, it would be about the same percentage on income than it is on sales. Yes, the second potential impact is for a mismatch between selling price and cost structure. And I think that’s one where we have a very active program to manage that risk. And I think we have done a very good job historically of being able to manage that down to a level that has never been material for the business and we don’t expect to see anything different in the current environment with respect to that. So, I think the translation impact is the only one that you would have.

Got it. That’s really helpful. And I guess I get $0.07 to $0.08 impact to EPS based on the return on sales math. I guess, Adam, maybe you could just touch on the M&A environment, your capital allocation in 2015 as you go forward, maybe just touch on your ability or desire to do deals, how big of a deal would you like to do? And this maybe a little naïve, but do you think a declining euro the way it has makes it increase the probability of you guys doing deals in Europe given you have a better currency today than 6 months ago?

Yes, Amit, well, thank you very much for the question. I think what I would just say relative to the overall M&A environment, we continue to feel that we have a very strong position as what we term the acquirer of choice in the industry. We are very pleased with the acquisition that we made here in the fourth quarter of Goldstar just an outstanding company, not located in Europe, but certainly an outstanding company where it is in China. And we continue to see in terms of capital allocation that M&A remains the best return for us on our capital together with new product expansion and then we have obviously the buyback as well as the dividend program that Diana has talked about very often. But relative to M&A, we continued to be very aggressive. We continued to have a very robust pipeline of deals. And I think what we are very pleased with is as we have expanded the company and expanded the kind of scope of the interconnect solution that we are approaching, including everything from connectors to cable assemblies to flex assemblies to antennas as well as now sensors, the universe of opportunities for acquisitions if anything has grown over the last half of a decade for us and that opens up many, many opportunities for us to pursue interesting companies. Relative to size there is no question that we have the wherewithal from the capital standpoint and the financial strength to do deals of quite significant size and we would not shy away from that. At the same time we have a very simple, but also pretty strict criteria for acquisitions and that has not changed. It starts with management and us looking to find companies that are run by strong managers who want to…

Thank you. Your next question comes from Craig Hettenbach with Morgan Stanley. You may ask your question.

Yes. Thank you. Adam a question on the sensor market and as you bring that business into the fold, just curious kind of the opportunity set that you are seeing from a product development and design standpoint with your customers, if you can give us any insight into that?

Yes. Well, thank you very much Craig. It’s just really exciting I mean here we are in a roughly 13 months after having acquired the Advanced Sensors business, 13 months and 3 days to be exact and we continue to just have positive surprises, I would say every month, every quarter almost every week in terms of validating our original intention to get into the sensors market. How would I describe that, I mean I said early on that we were very excited by the sensor market in particular because we saw a great combination of the technology of interconnect and sensors that the value of a sensor comes not just from that sensor element but rather from that total package that you are selling to customers and very frequently that is an interconnect package. That was obviously we said that at the day when we bought the company and I can tell you that now 13 months later knowing a lot more than we knew 13 months ago, no question that that has been validated. When we go to customers, there is no doubt about it. There is a positive reception to – by the customers to the idea that we can bring to those meetings an engineer who gets the sensor, who gets the underlying technology of the sensing element together with an engineer who gets how to connect that into the system, because at the end of the day you can have the best element in the world, but if it doesn’t connect into the system, it doesn’t matter. It just won’t work. And I think that is a challenge that our customers have wrestled with for many, many years. And again that has just been validated time and again as I visited customers and as I have talked to our team and those in and out of our team met customers and otherwise that combination of the interconnect together with the sensor is a very, very compelling proposition for our customers. So I think as it relates to the product development, we have seen lot of activities between our organization pre-acquisition the interconnect engineering teams together with the sensing engineering teams that came with Advanced Sensors and then later Casco. Does that mean that you flip a switch and the sales go up by a precipitous amount in a moment, of course that doesn’t mean that, because there is the lead time to designing those products. You are working in many cases on very long cycle, harsh environment programs in either the automotive or the industrial market, medical, heavy equipment and places like that. So these aren’t just immediate kind of switches that you can flip, but at the end of the day, there is no doubt that there is a positive momentum behind that and that we see great opportunities in the future to leverage the sensors together with the connectors.

Got it. Thanks. And as my follow-up for Diana, appreciate the color and context around FX, any commentary on metal prices, particularly copper with the decline if that’s a little bit of help or above and beyond that any kind of puts and takes to below the line-out margins as you think through 2015?

Yes. Relative I mean to the contributors to margin and commodity prices and oil and this kind of thing, I mean, I think as we have said before, there are many contributors to margin and it’s never easy to single out specific items, but certainly in addition to strong sales growth and good operational execution, a more supportive commodity environment normally is a positive certainly in product areas, where metals or certain plastics or even transportation costs can be particularly important. But the way that we look at this really the ultimate impact on margin depends largely on the balance between input cost and pricing and that balance tends really to be dependent upon the perceptions of demand levels. And I would say that right now given the current extreme market volatility whether you talk about currencies or commodities or oil economic growth, I mean, it really prevents a bit of a challenge in terms of – for some markets in terms of establishing what that direction and what that demand is. And so we really right now wouldn’t say that we see any particular abnormal advantage or tailwind from a margin perspective on a consolidated basis relative to any of these trends from a commodity standpoint. But I think also as we have said in response to this question in the past, you can be certainly assured that our management team is going to do the best to capture and keep any advantage that does present itself in the marketplace from commodities, oil or anything else that comes along.

Your next question comes from Amitabh Passi with UBS. You may ask your question.

Hi, thank you guys. I had a question and a follow-up. Maybe this is a bit of a finer point and a subtle point, Adam, but I was curious if I look at your first quarter 2015 guidance, it seems like much of the impact is seasonal in some of your markets like mobile devices, concerns around FX. I am just curious are you sensing maybe an increasing level of caution across the Board in terms of order patterns or maybe lead times or are orders being pushed out? I am just wondering if there is a sense of caution in terms of the overall demand environment or do you think again it’s around FX and just maybe seasonality?

Yes, thank you very much, Amitabh. I think that as we look into the first quarter, one thing I will say is the whole world there is a sense of uncertainty. I think that has not been a change. I mean, every quarter there seems to be something new about which the TVs can speak and the newspapers can write, but there is no doubt that there is a lot of uncertainty in the world today. I think as we look at our guidance, I think you correctly characterized that there are some seasonal effects. There is obviously the impact of currency, which is a very dramatic volatility. And as Diana mentioned, you can’t even look at that currency in a vacuum. It is reflective of some overall dynamic going on in the worldwide market. I think there are also some specific markets, things, a market like, for example, a mobile infrastructure, whereas I mentioned we don’t expect that market to grow this year after having a fabulous growth in 2014, a little bit because operators are digesting that which they built over the course of the recent quarters here. So, I think it is largely seasonality. At the same time, there is no doubt about it, a general sense of uncertainty. I would not point though that there has been any significant pullbacks of orders. There have not been any cancellations or pullouts or some of those more sort of short-term things that one would look at as the sign of a kind of an immediate impending doom. There is certainly none of that that we have seen.

Excellent. And then just as a follow-up, I guess more specifically on the IT datacom segment, you spoke about returning to growth this year. It looks like in 2014 storage might have been a bit better than networking. So, just wanted to understand what drives growth this year? Are all your end markets storage servers, networking performing better? Are you getting greater traction with some of the web scale players? Just any help you can give in terms of the growth drivers?

Sure. I mean, I think I mentioned in my early remarks that this has been a very challenging market, in particular, because of the significant structural changes that have happened in that market. And you have really what you know very well and better than I through your coverage of that space, a true disruption that has happened and a shifting of the balance of power in that and you see that as the OEMs release their results some of which have come out just in the 24 hours or 48 hours. And what we have done in that time and thank goodness we have the agility and the nimble organization to do so. It’s a very rapidly redeploy our resources towards those web centric and cloud computing type companies towards the ODM manufacturers, towards the direct datacenter market. And that’s – those are efforts that we have really been accelerating over the course of the last year and which we would expect to pay more significant dividends going ahead. As I look at those groups servers, storage and networking, I don’t think that we see a kind of a different shape to those going into this year. There is no doubt that in 2014 networking was the real drag on the performance, I mean that networking business was down significantly compared to a server and storage business that we are actually up on a full year basis. I think going into this year, we wouldn’t expect that to be so much of a differential between those spaces. But again who knows to be honest, because that is the space where there is more change to come, no question you will see new players arrives and old players disappear and you will see further shift in the balance of who is spending what money. But what will not change and that’s very clear is that data will continue to grow exponentially and the desire to process that data and in fact the need to process that data. This is not going to abate. It’s a question of hunting down who is ultimately doing it. And in that case, I bet on a nimble organization like ours more than any other to go in and ferret that out and establish where those new buying patterns are happening.

Thank you. Your next question comes from Matt Sheerin with Stifel. You may ask your question.

Yes. Thanks. Good afternoon and happy New Year.

Happy New Year.

Thanks. A question to Adam regarding the GE sensor business, you talked about the cross-selling opportunities and obviously the opportunities within sensors, from an operating perspective, I know the margins there were below Amphenol’s margins, what kind of progress have you made and how much is left?

Yes. I think we would say that we have made very good progress there. If you look I mean that’s not the only factor. We have had a lot of great execution in driving our margins up quarter-to-quarter over the course of this year. But very clearly we did talk about it in the first quarter last year that the kind of dilutive effect of the lower than average margins of the Advanced Sensors business did pull down our margins in the first quarter. I think the fact that we have brought those margins back up and now in the last quarter 50 basis points higher than before we acquired the Advanced Sensors business is a reflection of the great execution of our total team as well as some impact from improvement in Advanced Sensors. No one has ever done in Amphenol though. So there will be much room to go.

Got it. And regarding your commentary on oil and gas market being softer, which obviously makes sense, how big a business is that for you relative to your industrial exposure and are you just seeing backlog or bookings start to fall going into the year?

Look I mean the beauty of our industrial business and very much like total Amphenol is we have a very, very broad industrial business and there is not any segment across our industrial business which dominates that space. And while it’s true that oil and gas has been one of the helpful drivers and that it won’t be a help going into this year, it is still a market that we continued to believe will have strong performance as I mentioned in my early remarks. So look, there is no question when the price of oil drops by more than half people are going to drill less, they are going hunt less and they are going to explore less and they are going to ultimately use less equipment and those equipment makers are going to use less connectors in making that smaller amount of equipment, so that is what it is. Our team will react very well. We have a very broad presence again in many areas of the energy market and that’s not even just confined to oil and gas, it includes alternative energy. But you can rest assured that those individuals in the company who are in that space who have seen no doubt about it some pullbacks in order volumes, they are taking the appropriate Amphenol like reactions in terms of measuring their resources and adjusting their resources accordingly. While we reallocate resources to the high growth opportunities that still remain across the industrial market.

Thank you. Your next question comes from Mark Delaney with Goldman Sachs. You may ask your question.

Good afternoon and thanks very much for letting me ask a question. I was hoping if you could talk first on the M&A situation and have you see any change in the valuations and the level of competitive activity for any of your competitors are trying to bid for some of the same customers that you are and is that impacting the valuations that you are able to get?

Yes. I commented earlier that we still feel very positive about the M&A environment and there is no doubt about that. I mean, look multiples go up and multiples go down. We tend not to sort of chase market multiples. We tend to develop long-term relationships with companies. And then ultimately if we develop mutually a trust between us, we are usually able to find a fair price that satisfies both sides. And I think that’s been our approach in acquisitions. We are not a kind of tactical deal-based acquisition company. We are very much a long-term view towards acquisitions. There are certainly lots of companies in our space and in other spaces related to our space. We want to make lots of acquisitions. And they are going to buy some companies and we are not going to buy some companies, but that’s no change. I mean, that has been the case for a decade and a half across this industry. But over the course of that time period, we have managed to buy somewhere around 70 companies and we have acquired 12 companies just in the last 3 years as the equity markets have expanded and multiples have expanded. And we have continued to still be able to find good companies for fair prices. I don’t say it’s cheap. We are not trying to get cheap prices, but we are getting fair prices and excellent companies. And I think we will continue to find good opportunities to continue on that path.

Understood. And then you also mentioned the expansion of the buyback program in your prepared remarks, if you could just help us understand how you plan on implementing the buyback?

Sure. I mean, we implement the buyback program as we always have done in the past really each quarter we take a look at a very balanced look at what our acquisition program looks like and we then make the decision on that basis as to how much additional capital it makes sense to deploy. If you go back and look at last year, if you look at the last 5 years, you know what, the results of that has been that about half of the free cash flow of the company has gone back to shareholders in the form either of dividends or stock buybacks. And so if one wanted some sort of proxy, one could use that historical pattern, I would just say that, that we will and we do I think as Adam said before, we prioritized the acquisition program in terms of use of the company’s financial strength, because we really believe that, that provides the best long-term return for the company and for the shareholders, but other than that, if you wanted to use an historical pattern for a proxy of what the company would do with a stock buyback program, I would think that will be fine.

Thank you. Our next question comes from Steven Fox with Cross Research. You may ask your question.

Thanks. Good afternoon. Two questions for me. Adam, first off on the auto market outlook you discussed for 2015 you mentioned strong double-digit growth. I wasn’t sure what that meant from an organic standpoint versus say how fast you are going to grow over global vehicle production? And then you did mention a bunch of market extensions there, I don’t know if you could highlight one or two that are driving that? And then just real quick on tablets declining this year, is that a function of unit demand for tablets, market share shifts that your customers or with your products or just any design changes that is impacting you? A little color there would help? Thanks.

Sure. Well, thanks very much, Steve. I think with your first part on the auto market, we do have still a very positive outlook for that market and we have just made outstanding progress. Our whole organization who works in that space, I just can’t applaud them enough for what they have achieved here over the course of the last 5 years in terms of expanding our product offering and getting really positioned on high technology complex interconnect systems that are enabling next-generation electronics in cars. And so as we look going into next year and I mentioned we have strong double-digit outlook, we have also a very strong outlook organically in that space. And I don’t know what the latest numbers are for car expectations, I know you wrote that in the report, but I am sorry, but I forget exactly the number you said, but I know maybe that’s a low single-digit or so outlook for car volumes and we would certainly expect our business to perform significantly above those levels on an organic basis as a result of these excellent design-ins we have on really long-term next-generation systems. Relative to the mobile devices market, I did mention that we expect growth in smartphones and related accessories together with our laptops being offset by some reduction in tablets. I think that reduction in tablets is a combination what is predominantly driven by just unit volume expectations in the tablet space, where I think there has been – that’s been widely reported of some of the unit volumes that go. We talked I think a number of quarters ago about some content reductions in the tablet space. And while there maybe some impact from that I think the broader impact comes really from the reduction in units of tablets.

Thank you. Your next question comes from Shawn Harrison with Longbow Research. You may ask your question.

Hi. Good afternoon. Two questions…

Good afternoon. Happy New Year, Shawn.

Thanks Adam. Two questions, but the first on mobile networks is there anyway with the weakness you are anticipating for 2015 if you can maybe give some geographic insights and maybe if you are seeing are region up versus other regions down. And then the second Diana I just wanted to confirm I think last time on the call you said you are targeting CapEx for this year around 3% to 3.5% of sales, just wondering if that number holds true?

Well, thanks very much Shawn. I think it’s a little too early to say what region is going to perform at what level in the mobile networks market going forward. I think what we are very pleased with here in 2014 is that all the regions Asia, North America and Europe all grew in double digits. I think that growth was strongest in Asia, there is no question. But we had also very, very strong growth in Europe and excellent growth in North America as well. So looking at this year on the basis of our expectations that some of these operators are going to be taking a little time to digest their investments, I don’t know that that would be so much differential across the regions, but it’s early to say in that market.

And from a CapEx standpoint that still would hold true Shawn. It would be about 3%, 3.5% of sales that would be down from 2014 levels where we were funding some new buildings and so forth that won’t repeat in 2015.

Thanks a lot.

Thank you.

Thank you. Your next question comes from Jim Suva with Citi. You may ask your question.

Thank you and Adam and Diana congratulations to you and your team there at Amphenol for great results and outlook.

Thank you, Jim.

I have one question for Adam and one question for Diana and they are pretty unrelated, but Adam when we talked about the integration of your acquisitions such as the GE sensor market and things like that and great progress there. But I have to wonder about on the cross-selling opportunity, is that still more to come in the future and the reason why I ask it a lot of designs for connectors and interconnect with sensors are designed in from a product inception and necessarily don’t rule out immediately to say hey stop using this competitor’s connector and start using Amphenol’s connectors. So I guess the question Adam is that still more in the future to come and if so does that typically take and I guess this is your first real sensor company acquisition, do you envision that kind of more like a 2 to 3 year down the road of being able to designing more Amphenol content or when do you expect that to happen, is there still more upside. And one for Diana on the question a little follow-up on the raw materials, if I remember correctly I think the at the coaxial business has a significantly more percent wise of say copper and plastic/petroleum-based products and if so can you walk us through about the timing of when raw materials could potentially help your company such as I believe you would have to buy the materials, procure it and put it together then sell it, so maybe there is a little bit of a lagging impact to raw materials going lower to your margins, so maybe a couple of quarters down the road. And do you typically give back like half and keep half the savings in general or how should we think about that? Thank you.

Jim maybe I will go first. I don’t know that I would give a very different answer on the cable business than I gave on the interconnect business. I think that the going way, way back in the cable business when we had no sort of ancillary products and we had a lot of hard-line cable there was one commodity in particular that was certainly a dominant piece of the puzzle there. I would say now the business is a little more diverse from a product standpoint to start with and I think you have that same relationship that I talked about between pricing and cost structure. And so I wouldn’t say that in that business we necessarily see a significant tailwind at this point. I would reiterate though that if we certainly get the opportunity for significant savings that – and get the opportunity from a demand standpoint to keep those we certainly are quite good at doing that. We have a very good profitability track record and then we will certainly make every effort to get the most bang for the buck there. But we really just don’t see in either segment at this point a significant benefit coming through purely because of commodity prices.

Yes. And Jim relative to your first question on the integration and the various opportunities for cross-selling, I mean, I would just say once again that we have – there is tremendous activity across the company of getting engineers together with engineers, getting salespeople together with salespeople and working with customers. But you correctly point out that there is a time cycle. There is a cycle to program development. It is not always that you have to be there on the first day of conception of something, because in fact, it’s not always at that time when the connectors or the sensors are designed in. And I think there is one additional thing. As you look in industrial and in particular in automotive, there is an advent now of more what I would call mid-cycle upgrades and that comes from a very simple dynamic. It is the fact that all of us are used now to upgrading our personal technology on a very frequent basis. I mean, we are getting a new phone every 6 months. My kids would prefer to have one every 3 months I think, but they are getting it every year or two and very unhappy because of it, but we have a human need to upgrade technology, because there is such a rapid pace of improvement of the functionality of that technology. The automakers, the industrial equipment makers, they have not been blind to this dynamic. And thus you are starting to see more and more potential for what I would call non-mission critical mid-cycle upgrades. We saw that very clearly in things like the lighting. We made a wonderful acquisition several years ago of a company in automotive lighting. And immediately, what we saw was changing the lights much more frequently than they are…

Thank you. Our next question comes from William Stein with SunTrust. You may ask your question.

Thanks. I’d like to dig into the very good operating margin performance for a second. You have long had 20% aggregate operating margin sort of bogey, I think this is the second time you have exceeded it and you have had 25% fall through target and you had very good fall through in the quarter. I am wondering if either owing to your growing revenue in sensors and more integrated products, Adam, that you discussed you talked about flex circuits and other sort of more integrated products, I am wondering if that’s potentially resulting in the ability to deliver higher still either fall through or aggregate operating margins?

No, I mean, maybe I will make some comment briefly and then let Diana also address this. I think that is not really the main driver. I mean, we believe that there is good product – there is good profit opportunities across all of the spaces that we participate in. And I think those areas that you point out really open up great opportunities for profitable growth for the company and expansion.

Sure. I mean, I think that we have done a great job in 2014 in terms of expansion and you referred to that. I think we have also guided in 2015 on a year-over-year basis to strong margin expansion. And I think that the keys to that really are the same as they have always been. It’s a focus on technology and it’s a culture of accountability, attention to detail from a cost standpoint and the company’s entrepreneurial structure. I think as Adam said that applies across the board to everything that we do that doesn’t apply more or less to one technology or the other. I think that if you look at the 2015 guidance and you look at the earnings per share growth know that we have guided. If you just take the high end as an example, we have got a 6% sales growth from the high end and we have got in 11% earnings per share growth. And so if you look at the diversified group of EPS growth drivers that are really contributing to that performance I think this is extremely strong guidance for the year. And you have got organic sales growth in multiple markets that drives that. You have got margin expansion that I talked about with our margins going from about 19.6% to 20% next year. We have got the contribution from our acquisitions program that Adam talked about at length. We have got the contribution from the stock buyback program and we have got a lower effective interest rate from the refinancing actions that we took in 2014. So I think that when we look at the guidance we have given in 2015, we don’t see any need to set any other goals and I think these are great goals. This is a very strong performance both from an operating margin perspective and from a total EPS growth standpoint. And I think as a team we certainly will feel very, very good about the achievements of those goals as we lay them out for 2015.

Great, that’s helpful. Thank you.

Thank you.

Thank you. Your next question comes from Wamsi Mohan with Bank of America/Merrill Lynch. You may ask your question.

Yes. Thanks a lot. Adam could you comment a little bit about the diversification within mobile devices given the flat guidance for the year particularly if you are participating with some of the newer players that seem to be gaining share rapidly in the emerging smartphone market? Thanks.

Sure. I think I discussed earlier about the product diversification. And I think I will just remind you that we have a strong position really across the board with customers and in every space in the mobile devices markets. I think that the – our position is not totally different from the various market share positions of the various customers that are out there and has always been the case. And I think what we have been very successful over the years is regardless of who the winners are and who the losers are we have managed over very long-term to build our business successfully. And we remain committed to continuing that trend going forward. There is no question that there have been some very nice new companies who have come about and we have participated with many if not all of those companies in a variety of fashions both with our interconnect as well as our antenna products. And we will continue to do so. And I think as you look into this coming year, it remains a market that is very hard market to predict. It remains the market where the winners of yesterday are not the winners of today. And the winners of today may not be the winners of tomorrow. But regardless we will remain committed to staying present with all of those. The whole underlying success that we have had is really based on a cultural difference of our organization who works in mobile devices, who play – who effectively works across these many different customers in these many different products in a way that reflects just a tremendous agility ducking and dodging as things come your way. I mean it is not an easy market for them, but they do a fabulous, fabulous job by remaining quick, by getting quickly on to the right programs and effectively all the programs. But ultimately the outlook that we have given is one that is reflective of the fact that it is a difficult market to predict and one where if as I said there are further opportunities for growth, I am sure our organization will be the first to really pounce upon those and execute well.

Thanks Adam. And a quick one for Diana if I could just a follow-up on your comments from the previous question, your 2015 guidance the midpoint incremental margins are well north of 30%. And when you look at the realized sort of incremental margins across the last several quarters they have very strong north of 20% and 22.5% range for most of the time and if you look over the last several years that’s being true too, so what do you think is really changing within sort of that is driving the incremental almost 10 points more of incremental margin within the guidance range?

We don’t see 10 points more of incremental margin when we look at the guidance we see conversion margins as we call them that are a little above 25, but certainly not 30. So, I guess I don’t have exactly the same math that you have. It is true that we had some quarters in 2014 to your point that we are in excess of 30. And I think that when we talk through those quarters and those really were Q2 and Q3. We had a certainly strong operating execution with some contribution from some of the acquisitions coming up to speed. And I think as I said before, it’s hard to pinpoint so precisely every single element that contributes to enhanced operating income margins. But I think that we feel certainly very comfortable with the guidance that we have given, it does include as I said before an expansion in ROS for the year and does have conversion margins that are I would say slightly higher than our 25% goal, but not materially different. And we continue to go along and think that, that is the appropriate goal for the company. We always try to do more, try to do better if we can, but I think we will feel quite good at the end of the day when we achieve these 2015 goals.

Thank you. Our next question comes from Brian White with Cantor Fitzgerald. You may ask your question.

Great. Just on the March quarter outlook at the midpoint, it looks like sales fall 8% sequentially, I know historically the last I think 5 years it’s been flat on average. So, what is really driving the seasonality that seems a little more magnified in this March quarter?

Yes. The 5 years, I am not sure what acquisition impacts you have in there. I think if you look from an organic standpoint, the first quarter tends to be down unless you have a particular market that is doing something unusual. I mean, if you would look at last year’s first quarter as an example, we did still have a sequential decline, but in that particular quarter as an example, the mobile network market had a big sequential upswing. So, you do have some markets that from time-to-time behave unusually in the first quarter, but I think as far as we are concerned, our normal range is down 4%, 5% kind of range. Maybe this is a percent more. At the high end of guidance, it’s a couple of percent more. At the low end of guidance, I guess, it depends upon which you want to look at, but I don’t think we feel that this is an unusual first quarter from a seasonality perspective.

Okay. Because the only first quarter I see that’s weaker was first quarter of ‘09, which was down 13%. In the history, I never see a quarter go down more than that.

Yes. I mean, sometimes we have acquisitions, Brian, that come in, in the first quarter that muck up the comparisons. I mean, you kind of need to look at the organic numbers. And I would just off the top of my head, I don’t know all the stats in front of me, but our sales tend to be down a few percent in the first quarter on an organic basis.

Okay. And then Adam, when we think about this sensor market, do you feel like you have all the tools in that market that you would like, you can service all the verticals that you would like or what percent of the way through are you? It sounds like at a big opportunity it’s exciting and it’s new?

Yes. I know it is a big opportunity, it’s exciting and it’s new, though it is all very true, but do we have all the kind of tools? I mean, I would say, do we have all of the products to offer all the attractive markets? And the answer is absolutely not. I think when we acquired the GE Advanced Sensors business, we are very excited by one thing in particular which was it was a very diversified company, but it was very diversified, but it was certainly not everything. And so it was a great place to start the Advanced Sensors, because it gave us the presence across the automotive and industrial market. Within the industrial market, it gave us the presence in a variety of areas, heavy equipment, medical, HVAC, in smart buildings and things like that. It gave us also an access into pressure and temperature, gas and moisture. And then the addition of Casco added to our automotive sensor offering with rain sensing and light as well as additional temperature sensing, but no question. I mean, we are far, far from having what I would call a comprehensive sensor portfolio. And that’s the great opportunity. Because the opportunity comes both in our organic developments of new products which our teams are certainly doing and are being driven and supported to do much more than they were under the umbrella of a big industrial conglomerate. And at the same time, we have a robust pipeline of sensor acquisitions, which over the coming years and half decades and decades ahead, we will pursue with the same level of aggression and effectiveness that we have done in the interconnect market. And we don’t today have every connector either. It’s a big beautiful diversified market where we still see great opportunities for expansion. And I think that’s doubly true with the sensors.

Thank you. Our final question comes from Mike Wood with Macquarie Securities Group. You may ask your question.

This is actually Ryan Hunter on for Mike. And I just have a few quick questions. First in regards to the Goldstar acquisition, is this more opportunistic due to declines in China heavy equipment market over the past few years or a technology acquisition and the synergies between – with your auto and current industrial business?

Yes. I think this was not opportunistic, I mean we have known the company for a very long time. We have a great sense of understanding and also optimism relative to the China industrial market and its totality. And I think we see great opportunities for continued expansion with that company. It’s a fabulous, fabulous company I mean really you walk into their factory you don’t feel like you are out in the middle of nowhere China which is kind of where their operations are. You feel like you are in really a world class manufacturing operation and thus the customers who want to have that same world class support they really flock to Goldstar. And I think the great – there is a great opportunity domestically in China, but there is an equal and attractive opportunity servicing customers around the world with their low cost base and so those are – it’s a are very, very exciting company and certainly far from opportunistic in our case.

Cool and we have seen obviously a recent drop in input costs like gold and copper and can you guys discuss what tailwinds that you have embedded in your fiscal year ’15 guidance from price costs and what end market would be the biggest beneficiaries?

I think Diana already mentioned a lot about the fact that we see that what’s important is not necessarily the input costs but the balance of input costs in the end market environment. And I think as she mentioned very well, we will no doubt seize on whatever opportunity comes from those input costs, but it is not just an automatic, there is not just an automatic flow through and if the market environment – if those input costs are reflective of an overall market environment which is not as robust then you don’t tend to be able to just put everything into one’s pocket.

Very good. Well, I think this was the last question and we truly appreciate all of your attention and support and look forward to seeing you or hearing from you at least in three months from now. Happy New Year again and we will talk to you soon.

Thank you.

Thank you for attending today’s conference. And have a nice day.