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 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. I would now like to introduce today's conference host, Mr. Craig Lampo. Sir, you may begin.

Thank you. 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 fourth quarter 2017 conference call. Our fourth quarter 2017 results were released this morning. I will provide some financial commentary on the quarter and then Adam will give an overview of the business, as well as current trends. Then we will take questions. As a reminder, we may refer in this call to certain non-GAAP financial measures and may make certain forward-looking statements. So please refer to the relevant disclosures in our press release for further information. The Company closed the fourth quarter with record sales of $1.944 billion exceeding the high end of the Company’s guidance for sales by approximately $145 million and achieving new records of performance. Sales were up 18% in U.S. dollars and up 16% in local currencies compared to the fourth quarter of 2016. From an organic standpoint, excluding both acquisitions and currency, sales in the fourth quarter increased a very strong 13%. Sequentially, sales were up 6% in U.S. dollars and local currencies and organically. Breaking down sales into our two segments. Our Cable business, which comprises 5% of our sales, was down 5% from the fourth quarter of last year. The Interconnect business, which comprised 95% of our sales, was up 19% in U.S. dollars from last year, driven primarily by organic growth, as well as the impact of acquisitions. For the full year of 2017, sales were a record $7.011 billion, up 12% in US dollars and in local currencies and up a very strong 8% organically compared to 2016, an excellent performance. Adam will comment further on trends by market in a few minutes. Operating income was $399 million for the fourth quarter,…

Well, thank you very much Craig and thank you all for taking the time to listen in on our conference call today. And hope it's not too late to wish everybody a Happy New Year. As Craig mentioned, I am going to highlight some of our achievements here in the year both in fourth quarter and 2017. I'll discuss the trends and progress across our served market and then I'll make a few comments on our outlook for the first quarter and the full year of 2018. With respect to the fourth quarter, I mean Craig went over many of these details but just to reiterate, our results in the fourth quarter was a substantially stronger than expected as we exceeded the high end of our guidance in sales and adjusted earnings, and reached new records in order sales and adjusted EPS. Sales grew by a very strong 18% in U.S. dollars and 16% in local currency reaching another new record of $1.944 billion. I'll just say that we are pleased in particular that we grew organically in the quarter by very strong 13%. Craig alluded to the company booked a new record $2 billion in orders and that not only represented an excellent book-to-bill of 1.03 to 1 but represent a 20% growth to prior year orders, a very, very strong finish from our booking. Operating margins were again strong in the quarter equaling our highest ever level of 20.5% and cash flow in the quarter reached a new record $428 million which is just another a great confirmation of the company's financial strength. Just once again as I come out of the fourth quarter, I am just so proud of our team, our results this quarter once again reflects the true value of the discipline and agility of…

[Operator Instructions] Our first question comes from the line of Shawn Harrison of Longbow Research. Your line is now open.

Hi, good afternoon, everyone. Congrats on the strong finish to 2017. The mobile devices business obviously it looks like you gained significant shares, you are able to out execute your peers during the latter half of this year. Are you seeing any expectation that you would see back some of that market share in 2018 or is your expectation that you would more follow kind of market growth of smartphones?

Well, I think to answer a little bit in reverse. I mean market growth for smartphones is not always a great predictor of our performance, as you know there are lots of different factors that go into that market growth. But in terms of our position with our customers, I think we really confirmed to our customers that Amphenol is a very important partner to have and customers are not going to forget that very easily. So I believe that we have really created for ourselves a very resilient position but resilient with the caveat that you are in a market where everything can change all the time. And so I think we've done ourselves a great service. Our customers have recognized that. I believe that we'll continue to have a very strong position but what volumes ultimately will be and how new platforms ultimately gets designed that's always very difficult to predict in this market.

And then as a follow up. I don't know maybe the word dour is too negative but your view on the mobile networks business seems that way to me. Is there any geographic region that is more negative in 2018 versus 2017? Are you just seeing all global regions challenged?

Yes. I mean I think dour is maybe a little strong word for the guidance. I think we expect it to be for the year kind of flattish for the year which is not quite dour but certainly our performance in 2017 was not what we would have want to come into the year. I wouldn't say that there is in particular one or another geography that sticks out, I think what we see in the mobile networks market is that -- is the dynamic that we have seen many times before when you have both generational changes as well as various corporate goings and coming across the industry which is that -- there is a little bit of a pause and that is the pause that we saw this year. And you'll recall 2016 was a very strong year for us in mobile network, Shawn. And I think this year we saw a pull back in that and we expect that kind of a pause to continue into 2018 in particular as the 5G network as the planning goes on for those. If there is ever an acceleration overall in the plans about various operators or pulling forward in the plans of when to ultimately install next generation network. Well, I can assure you is our team has just done fabulous job of making sure that we are broadly positioned in all geographies. And that's how we've always dealt with this. We've always think about this market as a market where you get sometimes this kind of pent-up demand that materializes over a certain time period, obviously data traffic is not changing, it continues to grow unabated but ultimately when operators choose to make the investments in those next generation network, number one depends on the availability of the actual hardware to enable those networks. Number two, it depends on what's happening with the various corporate ownership of those operators. And number three, it depends on their ability to monetize the increase in the data traffic. I think over the years the operators have gotten better at that last piece which is the monetization of the data traffic but still there is much work still to be done on finalizing these next generation network. Regardless of how it comes out, we've always been there and been ready as to waiting to capitalize on that pent-up demand when it eventually does get satisfied. And I believe long term it will.

Our next question comes from the line of Amit Daryanani from RBC Capital Markets.

Thanks a lot. Good afternoon, guys. Two questions for me as well I guess. Maybe to start off on the tax rate. Craig, you're talking about I think 25.5% tax rate right now but doesn't sound like it's all finalized. So what are the factors that you’re waiting for to get more clarity if you could just maybe call out a couple of those? And then do you think 25.5% is the right tax rate or does it go down from there as you go into calendar 2019 as some of these things get sorted out?

Sure. Thanks, Amit. As I mentioned in my prepared remarks Amit and with the current information and guidance available to us, create our best estimate and kind of what we have today. There is a lot of moving part as it relate to the Tax Act. It was just passed 30 days ago, a little over 30 days ago. So there is still a significant amount of interpretations and guidance coming out. I mean there is guidance that came out just Friday of last week that we had to process. So that's kind of what we are referring to in terms of we are still evaluating. I wouldn't point out any one particular thing. There are certain provisions in that that are certainly have some impact on us and other multinational companies. But the one point that's kind of our best guess today based on what we know and we did say at least one point I wouldn't expect less than that. So let's see what happens in going forward as we have more clarity on all of these things that we are expecting hopefully will come out from guidance interpretation perspective. So I'd tell you that I think 25.5% is the right rate to use as kind of we look forward here and I am certainly not going to guess in 2019 and beyond with what might happen there.

Got it. And I guess Adam just on mobile devices, I think last year maybe prior to that as well when you start off the year and give annual guide, you always kind of start off with a flat expectations for that segment, saying it's volatile to be kind of predictive, which makes sense. What do you see better today that, again, you're not dramatically more positive in that, but you're talking about low single digit growth. So I guess versus the last few years, what do you see sort of different in mobile devices that makes you take a more positive stance and more sort of flat number you typically talked about?

Well, I think if you with Shawn's question I think there is something related to that which is we clearly had a very significant over achievement here in the second half. When we think about our mobile devices business, in the mobile devices market for us second half to first half was up by nearly 90%, I mean that was very, very strong performance by our team and I cannot just emphasize enough how much hard work goes in for that. And through that demonstration of being there for our customers and really supporting them when they needed that support, I think that does create some little bit more favorable view going into the year in terms of where we will be with those customers going forward. Again, with the caveat that I always make that you never know in the mobile devices market. We just felt that coming into this year on the basis of all that we know from our customers that it's a little bit obviously a little bit more favorable outlook than what we've seen over the prior three years. Now, I am not going to tell you I am any more dependable on our outlook on mobile devices. I have been for three years running very undependable in those same three years that you correctly point out, we guided it flat. I was wrong all three years. Fortunately, I was wrong to the upside two out of the three years. And I was wrong to the downside one or other. But-- and we've always tried to guide on the basis of what we see at the beginning of the year, that's the best that we can do here. And I think just this time what we see today sitting here in January is a little bit more favorable than what we've seen in the prior three January.

Speakers our next question comes from Mark Delaney from Goldman Sachs. Your line is now open.

Yes, it's Mark Delaney from Goldman. Thanks very much for taking the question. Congratulations on the strong fourth quarter. As a follow up on mobile devices if I could and certainly understanding there is lot of volatility in that market but generally normal seasonality has sales rise in 2Q and again in 3Q off of a lower March quarter and as you guys are thinking about planning in the year, is your expectation that the build is different than normal seasonality this year?

Yes. I mean it's hard for us to guide for the full year and to guide for our first quarter let alone to give any kind of intelligent and helpful guidance in terms of cadence over the course of those quarters. As you know, we are not very good at that. It's a very difficult market to forecast. I wouldn't say that there is anything terribly abnormal from what we see today but I would be hard pressed to try to paint for you a good picture of what each quarter is going to be sitting where we sit today.

Okay, got it. And then a follow up question on the military segment which I know you did well in the fourth quarter. Given some uncertainty around the US budget and government funding, when you talk to your customers how important is it to get a full year budget in order to achieve that outlook for the full year military revenue growth that the company guided to and is it something that can turn into any of your customer?

Yes. I mean I think it's really important to have a government that operate effectively and has budget, that's the time that those governments need budget. I remember there was lot of pain that everybody in the military industry went through a time when we were dealing with this bad word, sequestration which you all remember very well. I wouldn’t' say that the current environment is anything like that sequestration. We've been very favorable overall demand in the military market. I think we've done even a little bit better than that when you look at our performance. I think for a full year performance growing 13% organically and not forgetting that the prior year we grew 4% organically and that was including the DLA issue which is year and half ago. Does not having a budget is jumping from CR to CR to CR in the budgeting process; put a damper on the demand for our products. I don't know that we have seen that. I have certainly heard some of our customers in the media talking about how for them it is concerning that there is not a real permanent budget and we would applaud any effort to get a budget done and little back as the military -- military certainly does not like to operate in time of uncertainty. So what is very clear and I think if we look at the change over the recent several years is there is clearly the shift towards the strategic posturing of the military which has more of -- towards building of next generation electronic system to enable our military hardware, both in the US and around the world. And we've seen that just very broadly next generation system new product, a lot of new innovation, upgrades to existing products. I mentioned that we've seen growth in the military market this year really very broadly. If I look at all the little segment that we track in the military market essentially all but maybe one or two of them are up and are up in double digit on a full year basis. And that's everything from communication to ordinance application to vehicles to airframe to naval to space. So we are really pleased that it appears that sort of tilting of the balance maybe away from supporting day to day operating expenses in military and more towards the advanced electronics and advance capabilities that ultimately can be enabled by electronics. I think that's the real favorable environment that our team has been able to capitalize upon. And we are able to capitalize upon that because we've got such a breadth of product and a depth of technologies across the company and across the region in which we operate. So regardless of whether the US kind of hopscotches between these continue resolution, I think we have a good outlook and I don't think that our outlook for the military market is anyway really based on those political soap opera in Washington.

And our next question comes from the line of Sherri Scribner from Deutsche Bank. Your line is now open.

Hi, thank you. It seems like the outlook in industrial and auto sort of those industrial focused market continues to be very strong. You guys have seen excellent growth in those two end markets. And you are guiding to mid-teen to high teens growth in those two segments in 2018. I was hoping if you could give us a little more detail on what you are seeing from an end market perspective? And is that driven by a better economic outlook across the different geographies? And how much of that is coming from organic growth versus non organic growth?

Yes. So I think just on your -- reverse the question a little bit, both markets we would expect to be kind of high single digit organic growth for the year. And it's very, very strong outlook. I would separate the two in terms of the dynamic in the industrial and the automotive market. I think the industrial market certainly does not have some broad economic tailwind behind it. Even if some of our performance in areas of that market are clearly are outperforming any trends that you see overall. Our strength in areas like heavy equipment and oil and gas, we are happy to have kind of rebounding at this point and things like instrumentation and medical, factory automation. I think not all of those trends are just pure rising tide of GOP lift all the industrial boats kind of trend and if you look at something like factory automation I think here you have a trend that is beyond GDP which is really a shift in places like China and other low cost countries towards automation in order to deal with either lack of availability of labor which we see in many places or increasing cost of that same laboring. Our products are used on a wide array of everything from robots to automation machine that go into this new factories and that's been a real favorable segment for us. I would say that automotive is much more a content growth story of electronics applications continuing to expand in the car. And not necessarily so much just an overall economic trend of automotive. I mean you all know better than I do the general automotive number whether that flat or low single digit or whatever forecast would come. I think for us is less important than the fact that we continue to see just a great proliferation of electronics across car line .And the includes everything from hybrids and electric drive train to next generation emission control to onboard electronics to even kind of autonomous liked application that are going into cars and again creating just great new functionality into demand for new electronic systems which ultimately create a really nice opportunity for our team to work with customers to design in our next generation product. So I'd say that less of a broad GDP economy trend and maybe industrial has a bit more of component of that.

Okay. That's really helpful. Thanks Adam. And then just looking at the IT and datacom, it seems like your growth outlook for the year is relatively strong considering people's general view of that market low to mid single digit. What's driving that? Is that again from the service side where you commented in some of the cloud business? Do you still see the storage market and the networking market as challenge maybe some more detail on that I think would be helpful? Thank you.

Well, thank you, Sherri. No, I think we've just established ourselves in the IT market as really the leader in the high technology product for this market and so I think our team with their combination of truly advanced technologies whether that's in high speed and power and fiber optics or the other relevant technologies, together with the dynamics that I have described now here for several years of that quick ability to pivot towards where the new opportunities will be, I think that has given us a really great platform from which we can have this favorable view for the future. It's more of that growth coming from servers or storage or networking or cloud service, I don't know that I would break it down so specifically but I think the trends that we've seen over the recent two years, and we don't see a big change in those trends. Whether is a bit more growth coming out of some of these next generation cloud companies and maybe a little bit less coming out of the more traditional OEMs that building the boxes.

And our next question comes from the line of Craig Hettenbach from Morgan Stanley. Your line is now open.

Thanks. Adam, just question on mobile networks and just the transition to 5G. Just curious kind of what typically your visibility would be into that transition and then once that happened even if it later this year early next year, is there anything to keep in mind from a content perspective or opportunity set for Amphenol?

Yes. I mean I don't know that we would necessarily have dramatically better visibility than what get publicly announced about who is going to build what network when. I think you've started to hear some prognosis about when certain networks are going to be built. Some of them around Olympic Games, some of them around other events and timing. The question is not when the first network gets build. The real question is when they really start to get build in true volume. And I mean you will remember certainly Craig when 3G, there were plenty of 3G trial network built or certain cities that were built, before you really started to see material levels of demand that were representing significant network build out for that equipment. And so when-- sometime you will see announcement, you will see announcements about certain things being built but that won't necessarily be the real volume increases that could ultimately satisfy this pent-up demand that I spoke off earlier. With respect to the content on 5G, every generation has different architectures, has different content, every vendor who makes this equipment has slightly different approaches to how they design things. I wouldn't characterize 5G is having necessarily different content and what we've seen in 4G or 3G. what I would characterize though very clearly is that the performance requirement of what goes into 5G cell site whatever that is either in the base station or across the site, those performance requirements are clearly going to be higher than what we've seen in 4G. Whether that's the speed or late fee or power consumption and those all areas where we have a really great track record of helping our customers to tackle the thorny problems that come as they are trying to break beyond prior levels of performance. And so does it end up having more or less connectors on one or more or less cable or bigger or smaller antennas that is for us a little bit less important than the degree of technology that's getting embedded into next generation system. And we have no reason to believe that won't be a very advanced technology going into these side pieces.

Got it. And then just a quick follow up for Craig. Gross margins down slightly year-on-year, I know you mentioned kind of the cable weakness and that's an element. Anything to keep in mind for a full year 2018 in terms of commodity input cost and how you are thinking about gross margin?

Yes, sure. Thanks, Craig. I think that's right in regard to the full year 2018 in the first quarter. I think that certainly commodities do have some level of impact specifically regarding to the cable segment. We've talked about this when I talked about the reason for the reduction in the profitability in that segment. I mean another thing that actually does have a little bit of impact in the short term but over time we would expect to improve upon it is the impact of our acquisitions that have been done recently over the course of the year. And the acquisitions while they are accretive from an EPS perspective do sometimes have some operating profitability level that are a little bit less than or in some cases some significantly less than our corporate average. And one this is usually happens before we've been able to have them adopt kind of Amphenol operating principle and then get them up to a level. And we saw this in 2016 in a magnified effect when we looked at the full year piece of FCI which we were able to get much quicker than we expected. And that's a little bit what you are seeing in 2018 as you compared to 2017. And over time we would expect to get those acquisitions up to the average of the company and but from a long-term perspective at this 25% conversion margin that we talked about consistently I think that some years could be a little up, sometimes little bit down from that but I think that's still a long -term target that we believe is very achievable.

Speakers our next question comes from Will Stein from SunTrust. Your line is now open.

Great. Thanks for taking my question. Congrats on the good quarter and outlook. I'd like to ask about capital allocation in particular the buyback slowed a little bit in the quarter relative to where it's been recently. Is that related more to the acquisitions that you did in the quarter or is there anything else going on there? Thank you.

Sure. Thanks for the question. As it relate to the buyback, I mean every quarter is a little different in terms of how we allocate capital and I wouldn't say that. I think we actually had a lot of buybacks happening in the first half of the year and first three quarters of the year. And but every single -- 8.4 million shares for the year so I think that and if you look at the whole year I think that's kind of the context I would put it in. I don't think any one particular quarter. I would really focus on from a buyback perspective or nor I would focus on from an M&A perspective piece. That also has certainly its puts and takes from a quarter perspectives. So overall from a capital allocation perspective I wouldn't take that I guess used amount in the first quarter as any change. I think as it relates to the new Tax Act, we really truly believe that the new territorial regime that is now in place under the new Tax Act really provides us with or further enhances our flexibility that we really think is a cornerstone, one of the cornerstones of our capital deployment strategy. We really think balance flexibility and consistency are really the cornerstone of our strategy and we do think the Tax Act really helps with that and supporting that and the ability to more freely move cash as myself and Adam mentioned in our prepared remarks really additionally supports that as well. So in the short term from a capital deployment perspective I think that the flexibility introduced by act will ultimately help us in the long term. It really isn’t going to have so much of an impact I think on our overall deployment strategy giving 50% of our return of capital for M&A with the other 50% going to return of capital to shareholders and any one quarter maybe different.

Thanks for that. One follow up if I can. It relates to supply chain let say performance or a constraints on the other hand this affects you both I think from a sourcing perspective and also potential from the perspective of your customers and their inventory management. We've heard so much about tightness in the supply chain as it relate mostly to passes but also discrete and then to a lesser degree but more sort of concentrated basis in some ICs. I am wondering what you are seeing in this regard? Any sort of characterization of our current environment would help. Thank you.

Yes. Well, I think relative to supply chain, number one is our team just done a fabulous job and are there certain constraint, we certainly hear about the passes and discrete and some ICs, I wouldn't say that in our company and our universe and our industry we have seen those broad based constraints. There have been some discussions about certain materials like copper and other things like that but obviously our team was able to drive just outstanding results here regardless of any minor constraints that maybe there. Craig mentioned that we have seen some increased cost of certain commodities, and that was reflected most prominently in the margin that we saw in our cable business this quarter. But broadly I would not point to any supply chain constraints and I think certainly none that we are causing and again go back to the ramp up that we were able to drive in our mobile devices market. You look at some of the sequential growth that we are able to achieve also in over the course of this year in our industrial market in mil-aero. So no question that our team was able to deal in that environment regardless whether there were constraints or not. And so I don't think it's impacting Amphenol and it's certainly not impacting our outlook for 2018.

Our next question comes from line of Jim Suva from Citi. Your line is now open.

Thank you very much and congratulations to you and your team at Amphenol. I have two questions are little bit related so I just asked about the same time. Adam on your outlook for 2018, if you look at it percent basis about the growth of 2018 versus 2017 and you consider that some of the acquisitions were recently announced today so they will help boost the growth rate as well as some of the acquisitions announced previously during 2017 haven't had the full year. It just seems like the growth rate is kind of down shifted from what it has been in the past few years organically. Am I right on that or off on that? Maybe you correct me or help me find logic. And then underscoring that I think Adam you had mentioned mobile devices for Q1 is typically down about 20% and that's what you are guiding too, it looks like in the past was down much more or maybe just kind of close to rounding numbers. Thanks very much.

Thank you very much, Jim and thanks for your kind word. I mean relative to the outlook and I think specifically you are getting to the organic outlook for the year. I mean we are coming -- our outlook here represents organic growth of 2% to 4% for the year and an overall growth of 6% to 8% for the year. If I just go back in time last January, I think our outlook was 0% to 2% organic growth for the year. And if I look at our organic over last three years and in fact in 2017 we accelerated our organic growth. We had 8% organic growth and in the prior two years our organic growth was a bit more muted but we complimented that with outstanding acquisitions in the year. So I would actually say that our guidance here for 2018 is a very, very robust guidance and it's a great blend in fact of both organic and acquisition contributions and represents a more favorable outlook than we've had really organically for the last three years. So I think that's -- we feel very good about the guidance and about how we are looking into 2018. And relative to mobile, I think, you know that mobile some years Q4 is very strong relative to Q3, other years it's more balanced across the quarter. And so we've seen reductions sometimes of more than 30% in the first quarter for mobile and we've seen other quarter's growth more like this 20%. Is this 20% a little bit on the lower end? It's certainly lower than the 30% we've seen in some other years but it's not uniquely low. I think we've had other years where mobile is down roughly about 20%. But we talked earlier with one of your peer's questions I think we do have a slightly more favorable view of the mobile market sitting where we sit today and maybe part of that is associated with that little bit lower sequentially we find the first quarter.

Our next question comes from the line of Deepa Raghavan from Wells Fargo Securities. Your line is now open.

Good afternoon. Hope you are doing well. Adam, question for you on M&A within the industry. Can you comment on how the tax windfall for some US based companies can or cannot change the M&A landscape within the connector space? Also within your M&A pipeline could you talk about a larger -- a potential for larger acquisitions not that FCI is completed integrated?

Well, thank you very much, Deepa for the question. I mean relative to the overall M&A landscape and the cash that is maybe available to some companies, I personally would not expect that would have a significant change. And for one reason. It's not that we are now that we have availability and a flexibility that the Craig talked about so eloquently here from the tax reform, it's not that we are going just go change how we think about pricing on acquisition. I believe very much that one should pay reasonable prices for acquisition regardless of what the cost of capital of the moment is because when we make these acquisitions, we are acquiring them for life. At an Amphenol we are not -- we don't view ourselves as a portfolio or manager per se where we buy things and then some day we sell them and we try to market time to buying and the selling of them. We are buying companies on a permanent basis and we know that we are going to be living with the earnings of that company on a permanent basis when the rate environment or the various cost of capital may have changed. And so we are going to remain very disciplined on price. We are very happy to pay good prices for great companies and we are going to continue to take that same approach. And I think as really the acquire of choice in our industry we would maybe set a little bit the trend there as it were. As it relates to our overall M&A pipeline, we continue to have a very robust pipeline. And we are very pleased to have closed on the two deals that we announced yesterday. We have still many more companies that we pursue…

Thank you. That's helpful. Craig, I have one for you. Is it fair to assume SPC-related tax doesn't impact 2018 or going forward? And the reason I asked is your EPS growth guidance is pretty strong at 9% to 11% compared to your historical guide.

Yes. So, Deepa, I think it is fair to assume that we don't have that included in our guidance. We haven't guided to any of this excess tax benefit on our stock based compensation. And the reason for that I mentioned in my prepared remarks and we do really believe that the availability to be able to compare our results especially since the tax benefit is going to be significantly reduced under this new Tax Act is important. There will certainly be some benefit in 2018 based on some level of stock option exercises but the same level of stock option exercise will create significantly reduced benefit because of the new tax regime. So we are certainly not guiding to that and we are not included that in our adjusted guidance, adjusted EPS guidance for specifically that reason.

And our next question is from Steven Fox from Cross Research. Your line is now open.

Hi, good afternoon. Two questions for me please. First just circling back to the acquisition. Adam you highlighted a bunch of attributes for why you bought these two businesses. I was curious from a technology standpoint if there is anything specific you would highlight that brings to portfolio or is this more customer supply chain related? And then I had a follow up.

Yes. I think with the two acquisitions, they are obviously very different. One is value add interconnect assembly company, cable assemblies is the CTI and we obviously know how to do cable assemblies. We have plenty of them across Amphenol. And often times with the cable assembly business you are really looking for different customer channels, different markets, and different presence but at the same time they have fantastic manufacturing technology and really great high value component. And so that's with CTI. I think with Sunpool, we are just really pleased that we get here not only in automotive antenna company, it's very, very important arguably the most important automotive market where the most cars are sold, sold and made. But also a truly vertically integrated automotive antenna capability and that is additive to what we have had in the past. You know that we've been developing organically our own automotive antenna business and we've been very successful with that. But I'd say this really give us a turbo boost in terms of our overall capabilities on automotive antennas from a design perspective of validation, assessing and all the kind of component of making those products, some of which we were able to do before and some of which we are only now able to do with the additional of Sunpool.

Great, that's really helpful. And then just on the operating margin. So as you highlighted you create the 20% threshold pretty consistently recently. And given the volume outlook you providing, I was curious like how you would sort of quantify that chances of continuing to produce that type of level of margin if you are hitting those volumes. Like what else would hold you back? Whether it's acquisition or raw materials or just seasonality as we think about modeling efforts here. Thanks.

Sure, thanks. As I mentioned before I mean 2018 is certainly there is some impact from commodities and the cable segment as I mentioned. There is certainly an impact as it relates to the acquisitions that we've done 2017 and we don't project in 2018 for them to be quite up to the level of Amphenol yet. But over time I don't think there is anything that's holding us back since we are at 20% that wasn't holding us back or helping us before we are at 20% level. There is nothing from a leverage perspective that changes anything right now. I think we continue to have a great management team that does a really great job of making sure that their cost in the business are as low as possible given and as flexible as possible in regard to their everyday operation. And these general managers do a fantastic job as they have done before the company was overall at 20% in regards to maximizing the profitability and whether or not they do it out of SG&A or whether or not they do it in the factory or whatever else. We are not really so concerned about that. I think this is an area that we believe that long term we should be able to continue to have that leverage. But in any one year there will be things that will impact it such as the commodities that have had some impact in 2017 in the cable segment and into 2019. And in the shorter term the acquisition that are having some impact which we would expect as we acquire companies that are at lower profitability will have some impact in the future and until we are able to get them up to the Amphenol operating level which we do believe as the management team is clearly possible and certainly targeted.

Speakers our last question from the line of Joe Giordano from Cowen. Your line is now open.

Hey, guys. Thanks for taking my questions here. Most of -- what I want to ask has been asked but I just wanted to square some of the guides on like mobile network kind of what some of the news flow that you are seeing about post merger kind of just illusion, better CapEx estimate or something, is your guide kind of like what's actually been like were there actual actively procuring right now or is this kind of very short focused on what you are seeing right now or just kind of taking into consideration kind of longer term plans and maybe you are not seeing active in the market quite yet.

Yes. I mean the way that we build our guidance is really through our internal forecasting process which is based ultimately and what we hear from our customers talking to our sales people. And what we don't do is we don't read the paper and say, well, we think there is a certain trends that maybe coming and we should adjust our guidance accordingly. And if the overall market changes then we would be very happy to be there to enable that higher level of spending. It's not something that we've seen from customers and so our guide in corporate executive what we hear from the customers. We are as helpful as anybody and things like US tax reform or stimuli or overall economic growth around the world can ultimately drive things like infrastructure spending or investments in network or whatever that maybe that can ultimately have a favorable effect on demand for our product. But today what we see and what we hear from our customers is embedded here and what we guided to.

Okay. And then similar on data and devices, I think the plans out of like the hyper scale like the Web 2.0 Company seems to be pretty good as far as datacenter into next year. And how big of a piece of the business is that portion of the market for you guys now?

Well, I am not going to quantify it but what I said consistently is we've seen just outstanding performance from that. And I think ultimately if you think about the driver of why this demand is increasing. I mean you see just so many opportunities coming the demand for video and the internet, the demand for consumers consuming things in the mobility that they won't otherwise consuming, I mean crazy things I mean now that it appears that there is video game league that are popular than natural sports leagues and people are watching these on their mobile devices, they are streaming them, they are doing all of these. These are all the kinds of drivers that are ultimately create, putting, forcing the data through the network. And as we've seen that shift towards these new web service providers, a lot of the backbone for these new consumption of video is happening through this web service providers, and so we've just -- that has been a real driver of growth and we would anticipate it to continue to be. I will say that as you migrate towards a service provider in terms of their proportion of the market, service providers buy in a very different cadence than do equipment manufacture. And so ultimately that can lead sometime to more volatility. And we saw this quarter in our IT datacom market where in fact in the fourth quarter our sales were slightly down and that's despite having an excellent year going 9% for the full year. But we had had a year before an outstanding finish to the year where we've seen really significant investment in particular in web service providers. So I wouldn't be surprised if there is a little bit more of that kind of operator type service provider type volatility in the IT market for some portion of it. Is it today the dominant part of our IT datacom market? No, it's not. But has it been a real significant driver of growth for that? Yes, no question about it, it has and we would anticipate that going forward.

Just so I understand is the difference in the procurement is one more just like are the cloud guys more willing to do just more in time and hold us inventory than the equipment guys that would lead to that volatility?

Well, I mean ultimately you are talking about someone who is worrying about running a factory versus someone who is just building thing, building datacenters, getting work crews in the field. And anybody who is involved in actually building network, so whether that's mobile service providers, whether that's broadband service providers, whether that's a internet service providers, the cadence of when you build things is very different than if you are operating factories and you are paying for factory overhead and you want to kind of level low those factories over a certain time period. I mean workers and construction project happen at a very different type of timing than do just factory consumption. Very good. Well, I think that is our final question and again we very much appreciate everybody's attention to us here. And look forward to talking to you all here in three months and again Happy New Year and great continuation here in the first quarter. Thank you very much.

Thank you for attending today's conference. Have a nice day.