Ladies and gentlemen, thank you for standing by and welcome to the Q2 2017 TE Connectivity Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, today's conference is being recorded. And I would now like to turn the conference over to the Vice President of Investor Relations, Sujal Shah. Please go ahead, sir.

Good morning and thank you for joining our conference call to discuss TE Connectivity's second-quarter 2017 results. With me today are Chief Executive Officer, Terrence Curtin; and Chief Financial Officer, Heath Mitts. During the course of this call, we will be providing certain forward-looking information and we ask you to review the forward-looking cautionary statements included in today's press release. In addition, we will use certain non-GAAP measures in our discussion this morning. We ask you to review the sections of our press release and the accompanying slide presentation that address the use of these items. The press release and related tables, along with the slide presentation, can be found on the Investor Relations portion of our website at te.com. Now, let me turn the call over to Terrence for opening comments.

Thanks, Sujal, and thank you, everyone, for joining us today for the earnings call. While many of you know me well, it's very exciting to me holding my first earnings call as CEO and sharing our strong results for the second quarter as well as an improved growth and earnings outlook for the year. In the second quarter, we delivered sales of $3.2 billion, representing 8% organic growth year-over-year, and we experienced growth across all regions. We delivered record quarter two profitability, with 170 basis points of adjusted operating margin expansion year-over-year and adjusted earnings per share of $1.19, which was up 32% over the prior year. Now, this second-quarter performance was ahead of our prior guidance due to the higher organic growth as well as strong execution by our teams. All of our segments contributed to our sales growth and margin expansion was driven by our Industrial and Communications segments. Based upon these strong results and our view of market conditions for the second half, we are raising the midpoint of our revenue and adjusted earnings per share guidance to $12.7 billion and $4.62, representing 6% organic revenue growth and 17% earnings per share growth, respectively. I do want to take a moment to reiterate the key pillars of our strategy that we've had discussed within the past. First is our focus on harsh environment applications, which demand high levels of engineering and manufacturing in excellence and provide competitive differentiation. Second is our TEOA operating system that drives the customer service enhancements and productivity that reduces our fixed cost footprint. And third is our consistent execution of our balanced capital allocation strategy, which enabled us to make strategic acquisitions that have expanded our portfolio, while consistently increasing dividends and repurchasing our shares. Also in addition to these three, we…

Thank you, Terrence, and good morning, everyone. Please turn to slide 8, where I will provide more details on the Q2 financials. Adjusted operating income was $535 million with an adjusted operating margin of 16.6%, driven by strong organic growth of 8% and productivity benefits. GAAP operating income was $473 million and included $59 million of restructuring charges and $3 million of acquisition-related charges. For the full year, we continue to expect restructuring charges of approximately $150 million, driven by footprint consolidations from acquisitions and structural improvements. We aim to strike a healthy balance between investing for future growth while capturing SG&A efficiencies. GAAP EPS was $1.13 for the quarter. Adjusted EPS was a new record for the second quarter at $1.19, up 32% year-on-year. This was above our prior guidance range driven by revenue growth and the benefit from a lower tax rate. The growth above the prior year is a result of our strategy in action with harsh applications driving growth, TEOA driving efficiency and balanced capital deployment enabling acquisitions and share buyback. We also benefited from a lower adjusted effective tax rate of 15.4% driven by the expirations of statutes in certain jurisdictions and additional benefits from Accounting Standards Update 2016-09 related to stock compensation. For the full year, I now expect an adjusted effective tax rate around 18%, which is similar to last year. However, as discussed last quarter, please keep in mind that the year-over-year dynamics. We get an EPS benefit in the first half of 2017 and have an EPS headwind in the second half of 2017 given that our Q3 2016 and Q4 2016 adjusted effective tax rates were 17% and 13%, respectively. While the first half benefit is $0.10, you have a negative impact of $0.10 in the second half, resulting in…

Thanks, Heath. And let me cover our guidance for both the third quarter and full year. So let's start with the third quarter. And if you could look at slide 10, please. We expect third quarter revenue of $3.2 billion to $3.3 billion and adjusted earnings per share of $1.14 to $1.18 per share. This represents reported sales growth of 4% and organic sales growth of 5%, with 7% adjusted EPS growth at the midpoint. I do want to highlight that our outlook includes the negative impact of the stronger dollar, which we expect will be a headwind of $70 million to sales and $0.04 to EPS on a year-over-year basis. And in addition, as Heath mentioned, there is a unfavorable tax impact of 3 years (sic) [$0.03] when you compare it to the prior year. Without these two headwinds, we would expect solid double-digit earnings per share growth year-over-year on 5% organic revenue growth, which is in line with our business model. Looking by segment, we expect Transportation Solutions to grow low single digits on a reported basis and mid single digits organically. This is above the expected auto production growth levels of 1% that we expect in the third quarter, with our outperformance being driven by content growth. We also expect continued growth in our commercial transportation segment across all regions. In Industrial Solutions, we continue to expect to grow low single digits on both a reported and organic basis, with growth expected across all three of our business units. And in Communications, we expect high single-digit growth on both a reported and on an organic basis, with growth in each of our three businesses. We do expect SubCom to be particularly strong in the third quarter due to the timing of program executions. Now let's move to…

Okay, Brad, could you give the instructions for the Q&A session?

Sure. And our first question today comes from the line of Shawn Harrison with Longbow Research. Please go ahead.

Hi. Morning, everyone, and congrats on the good first half of the year.

Thanks, Shawn.

This is the obvious question on Auto, but you have had some other players into the markets raise some red flags, be it excess inventory in North America, China production declining. And I know your fiscal year doesn't align with the other calendar year-ends of many companies. But are you seeing any weakness in auto production out there right now, be a kind of flattish second half that would lead you worried into the next fiscal year?

Hey, Shawn, it's Terrence. So let me take that question. When you look at Auto this year and we go back to the beginning of the year, we expected North America to be flat to slightly down in production and it's sort of playing out as we expected. I think when you look at Europe, we've actually seen a Europe that has constructively gotten better throughout the year, incrementally. So not major movement, I would say, continued strength and it has been a positive trend. And the same holds true in Asia, outside of China. When we guided in the beginning of the year and we guided to 1% growth overall, it was really the big wildcard was around the China incentive and what would be the impact once that incentive tailed off. And we always assumed that auto production was going to be pretty much flat in the second half and it looks like it's playing out that way. And so while we had a strong first half in production and a lot of it was driven by China, as we're looking at order rates, we view the year is playing out as we sort of said all year, with the only real change being China production was a little stronger in the first half, which really has driven the increase from our original 1% production growth up to the 2% to 3%. The other thing, I said on the call, we always also view the – even in that low production growth environment we were going to get into in the second half, we felt very good with our content wins that we were going to drive mid single-digit growth and that hasn't changed at all. So when you think through our guidance and the changes we're making in the guidance, our Auto has been pretty consistent with the picture that we said, and we expect the China auto to slow and we expected a tough North American market, it's been tough in North America now almost for two years when you sort of look at the production environment, it's been sort of flat to slightly down. So I don't think there is incremental red flag. I think it's playing out as we thought.

That's very helpful. And then secondly, just following up on the SubCom business now being up high single digits for the year, maybe you could talk about what visibility you have into fiscal 2018? Does the business decline, can you hold it flattish into fiscal 2018 based upon the backlog you have right now?

Shawn, thanks for that question. Well, SubCom, we always talk to you about SubCom and we have a pretty good 18-month window based upon the projects in the pipeline, and what was nice during the quarter, our backlog is still pretty steady at around $850 million is what we have booked, and we're also working on a number of opportunities that we're quoting. So I think when you look at where we are right now, the strength of the backlog, I would sort of assume as you model next year, keep SubCom pretty much flat with where we guided for this year. And like we normally do, we get more projects and we'll update as confidence increases, but I think the confidence we have is the amount of activity that we're quoting and working on, and I think modeling sort of a flat off this number we're giving you for this year is probably the most prudent thing to do right now.

Thanks so much.

Thank you.

Thank you, Shawn. Could we have the next question please?

And our next question comes from the line of Amit Daryanani with RBC Capital Markets. Please go ahead.

Yes, thanks. Good morning, guys. I guess two questions from me as well, on the Transportation side, could you maybe talk about the operating margin dynamics you saw on a sequential basis. I think it was down about 300 basis points. Could you just touch on what kind of happened over there and how do you think of margins as you go through fiscal 2017 broadly and when do you see the center headwind, which I think it is a big issue for you guys right now, abating?

Amit, this is Heath. I'll take that. I think if you go back and look at our comments from 90 days ago, we were pretty clear that the Transportation segment margins were running very hot and are not really sustainable. So I think internally, when we looked at the 19% it was right in line with where we thought it would come in and consistent with where we've guided in terms of 20% plus or minus. There is some investment activity going on in the segment, as we're ramping up, because our revenue pipeline is very strong in Transportation globally. So we're going to continue to make those investments, and I think modeling plus or minus 20% is probably a good number for that. Sensors is improving, you see the organic growth in terms of their – it still continues to be a bit of a headwind relative to the overall segment margins, but it is progressing on track with where we thought it would be this year at this point, and the outlook going forward will continue to be less of a headwind as we progress through the next couple of years.

Got it. And I guess, Heath, you talked about, I think the $150 million researching plan for the year. How much of that is just M&A integration versus implementing structural improvements within TE Connectivity's portfolio? And how should we think about the payback period for the cost take-out that you guys are doing?

Thanks, Amit. That's a good question. There is some acquisition-related integration, some of those tied to more recent acquisitions that have been done, even including Sensors and into the medical space. There is some of that included in there. And then quite honestly, there is some broader footprint consolidation that we're doing as well, we'll continue to move forward on as we optimize the footprint. But there is a balance there between those. And I think in general, if you want to calculate, most of our restructuring has somewhere between a 18-month, two-year payback in terms of the cash-on-cash returns. Some of the restructuring that you see in the $150 million, there's a chunk of that that's non-cash-related, that are write-offs. So if I think about it on a cash-on-cash return, I think two years is probably a good number.

Perfect. Thank you and congrats on the quarter, guys.

Thank you, Amit.

Thanks, Amit.

Could we have the next question please?

And we do have a question from the line of Joe Giordano with Cowen & Co. Please go ahead. Joseph Giordano - Cowen & Co. LLC: Congrats on the quarter. I've seen several news releases highlighting some of your products and it looks like you have a pretty big booth at the upcoming LIGHTFAIR trade show. Are you trying to accelerate your penetration in the whole connected home market?

Thanks, Joe. When you look at it – LIGHTFAIR is coming up. And when you think about what we do there, around the home, I talked a little bit about our Appliance business, which we have a lot in the home. And over the past five years, we have increased investment around lighting; that would be part of our Industrial business. So it's areas where as lighting goes that we need, you get into sockets, it comes into a natural opportunity for us. I think it's just one of those applications that sort of shows where we bring our engineering to and also how it is finally engineered as we have the switch over there. So it is a product area we've gotten into. I don't know the revenue we have off the top of my head. But from that standpoint, I think it's pretty typical of the type of applications throughout our business we try to go after to really make sure how do we continue to outgrowth for the market. So certainly around that space, we have made investments into it. Joseph Giordano - Cowen & Co. LLC: Thank you. And then could you give us some details on what you're seeing in Data and Devices, particularly in China?

Yeah, no, on Data and Devices, our performance was extremely strong and even slightly ahead of what we thought because, as you know, we very much repositioned the portfolio around high speed. And I think you really start to see the benefit both on the growth side as well as the margins that we felt we could the business up to. It certainly came truly in there. When we look in Asia in Data and Devices, we have a very strong performance in Asia. We grew double digits organically in China and we basically grew greater than that outside of China, which would include Japan and Southeast Asia. So really the traction when you look at that business has always been and continues to shift towards Asia. And the sales performance that you saw as well as the operating performance really have been driven by those wins that we have, while you still get infrastructure investments being made around China as well as how do they service the rest of the world. So a lot of that growth will be driven out of Asia as we go forward as well. Joseph Giordano - Cowen & Co. LLC: Thanks for the color.

All right. Thank you, Terrence. Could we have the next question, please?

Next question comes from the line of Craig Hettenbach with Morgan Stanley. Please go ahead. Craig M. Hettenbach - Morgan Stanley & Co. LLC: Yes. Thanks. Can you expand a bit just on the theme of increasing automotive content, so any particular applications that are driving the content increase in fiscal 2017? And then even as you go out to 2018 maybe some of the applications you guys are excited about?

Craig, thanks for the question. I mean it is so broad-based. It's not just applications, it's everywhere in the world. So we talk about growth being greater than production. I mean, this year every region is going to have pretty substantial growth greater than production, whether it's China, whether it's Japan, whether it's Korea, even in places like North America where production is light, we're doing better than production. So it's very broad-based around the world, and it comes back to those trends we talked to you about not only on the connected side where you have infotainment wins, but also were you see powertrain and emission programs that does call into where our teams can help solve the problems in the harshest environments on emission and then you continue that on the safety side. So it's not one application. We're very fortunate, we cover all applications in what we do, being the global leader what we are, so we're benefiting from the secular trends all around Automotive and you're seeing it with the strong performance we have that's greater than production. I mean, when you look at the guidance I talked about as we expect production to moderate, production being relatively flat in the second half, we're going to grow mid-single-digit, which just proves the content growth assumption we talked to you about, about 4% to 6% (35:56) price off of it. It's all across the trends; it's not just one. And it's really very good execution of how we cover our customers and enable their technology to make sure they can bring it to market. Craig M. Hettenbach - Morgan Stanley & Co. LLC: Got it. And then as my follow-up, I wanted to focus on one of the three things you highlight in terms of focal points for the company on capital allocation. And there has been I think some discussions around maybe some increased discipline around OpEx and M&A. Just wanted to get your sense of how the approach is changing if it is, and what the implications are for that as you approach M&A versus cash returns.

Craig, this is Heath. I'll take that. By no means would I suggest there's been a pivot in terms of our approach. We're going to continue to be disciplined with our deployment. The dividend strategy stays on tack; the share repurchase strategy is consistent. And we have been active in the M&A market, but it's been a tough market right now with where evaluations are. And so we'll continue to be active and push that lever. But we're going to also be disciplined about where the returns are relative to those M&A investments and make sure there are deals for our shareholders. Craig M. Hettenbach - Morgan Stanley & Co. LLC: Got it. Thanks.

Okay. Thank you, Craig. Could we have the question, please?

And we do have a question from the line of Wamsi Mohan from Bank of America Merrill Lynch. Please go ahead.

Hi. Yes. Thank you. Hey, Terrence, clearly, the market's worried about deceleration and auto production trends and you guys are clearly outperforming based on the content growth commentary that's implied both in your guidance and in your comments here. But can you remind us maybe what levers you might lean on, if the deceleration continues to be stronger? Say in 2018, where trough Transport margins might be. I know we're firing on all cylinders right now, but just from a risk mitigation standpoint, how should investors think about the levers that you might have at your disposal if things do end up getting a little tougher? And maybe calibrate in an environment of flat to 1%; you're growing 4%, 5%; if production were to be, say, a couple of points more negative, how that might influence your Auto growth? And I have a follow-up.

Yeah, so I think let's talk a little bit about trough, and I think if production was flat next year we would expect that we're going to grow mid-single digit. And if it would be down a little bit from that, we would be growing low-single-digit, but I think with what we've done with our content wins we realize, these are platforms that we won, they're in the backlog. This is not stuff to go get when you think about next year. So I think even in a slightly negative production environment we're going to post growth. So I don't really view that as a trough by any means, I really view – we would tighten up like we always do around where do we invest capital and make those trade-off decisions, but I don't view that as a free-for-all from a financial performance. We would just have to manage that. I think it shows where the business has come from and I think it's the expansion around content, and everywhere in the world. So I think similar to this year where early in the year we told you we thought production was going to be 1%, we could grow mid-single digits. We're doing that in second half, certainly got some benefit. But I think the way that we're positioned as well as where we see the trends, we do expect that global auto production long term should mirror GDP. So certainly we get into elements that maybe there are, somebody has a peak in the country or a region and adjust. But I think the content trend that we have and I'll go back to what I said, again, with Craig, the trends that happen around connecting the car from an infotainment perspective, the continued safety applications and probably the bigger one always has to be around the powertrain, what happens on from emissions and what happens in those environments, whether it be electrification of the vehicle, but when there's need, that's content benefit for us. Or even if you're adding turbochargers to get better fuel economy on a smaller engine. That is where we thrive and that drives our engineers to create the most value, the toughest engineering challenges. And I feel very strong that we're going to continue to drive that content growth. And I think this year truly demonstrates that. So I think when you think through is production a little worse, I think you're still going to have, even in a slight production decline, we're going to be growing due to our content position that we have established that over the past five years.

No, that's very clear, Terrence. Thanks for that color. And as a follow-up can I just ask, we've heard of a pickup in restock activity in the channel, any comment on inventory levels, sort of non-auto inventory levels that you might have seen and could you address the discrepancy between sort of what you are including SubCom order pattern versus the guide? Thank you.

Yes. So it's a great question. So let me take the first half of your question without Automotive and without SubCom, because we have seen a couple things, we have seen our channel partners increase their ordering levels. I would tell you from inventory that are in the indirect channels, it's actually, has not moved. So it isn't like inventory is building. But what we have seen through our channel partners is that they have seen some shortages in certain other electronic components in sort of the semi side. You see them getting a little bit more aggressive in their ordering patterns. And we experienced that in our second quarter. In some cases those orders were placed out. We've discounted that in the guidance that we've given you in the third and fourth quarter. But certainly, we did see an acceleration of orders through our channel partners in the second quarter, which is typically a good indicator. It isn't like their inventory is getting ahead of themselves. But I think it does sort of show, just positive momentum, where they are starting to pulls. And so I think in some parts of the electronic supply chain there are some shortages that they're also trying to be cautious on. So we're monitoring that, and we'll continue to update you on that.

Thanks, Terrence.

Thanks, Wamsi. Good question.

Thanks, Wamsi, could we have the next question please?

We do have a question from the line of William Stein from SunTrust. Please go ahead.

Actually, on the content side, when you actually look at it – I presume, Will, your question is around Auto?

Actually, where we see the content gain, it is traditionally outside of Intercontec. So when you actually look at it, it's really around the integrated solutions where we're providing new technologies is really where we're seeing the content wins as well as Sensors. So I think those combinations where you look at it and really where we've invested in the part what we call our adjacent technologies, they would be things like in EV, where we provide contact. Contactor is not an interconnect, it's actually something that is very important to an electric vehicle. We have a very strong position on it globally. So those are the types of areas we're seeing it and when we look at the terminal connector side, it's growing very nicely, but from a content perspective it's much more outside of Intercontec.

Hey, Will, could you maybe come up a few more bars on what you define as carrier? I mean, do you mean like the AT&Ts and the British Telecoms?

We do not serve anywhere directly to a carrier anymore. That was part of our BNS business we sold. Certainly, we would sell to the people, our high-speed applications into the carrier network to those people that make the gear, but we do not sell to the carrier.

Thanks, Will. Thanks for the question.

Thanks, Will. Could we have the next question please?

And our next question comes from the line of Steven Fox with Cross Research. Please go ahead.

Thanks. Good morning. Just a couple questions, please. First of all, I was wondering, Terrence, you gave a lot of good color around orders. I was curious if you think about everything you talked about, what it says about sort of the business cycle that we're currently in. Are you more encouraged that we're seeing an uptick in economic activity as some may argue or is it sort of similar trends overall, given what you're seeing at distribution versus the easier comparisons, et cetera. Just wondering about your thoughts there, and then I have a follow-up.

Yeah, Steve, thanks for asking that question. It's a good question. Where we would say it is, one of the things that's nice, I would say markets overall have a little bit of an upward tilt, and it's actually pretty consistent between regions. So I would say, when we started the year, we gave out our guidance for the year, which are around 3% growth. I do think Industrial markets are getting a little better. The auto market is sort of as we called it, Communications is better, but then also regionally when you sit there, we had very strong Asia performance, we talked about it for this quarter, but also it's been very broad based, it's just not the auto discussion we've had. Europe continually and incrementally get better and in the Americas, where I would say, it's been sort of sideways for a while, we have seen a little bit of tilt up, really driven around the industrial markets. So, I would say it's incrementally better, I would say it's less choppy than it's been would be phrases I would use, but I would also certainly say that there's still some political ping-pong around the world that I still think, while constructive, we're still ready to move quickly. I don't know, if anything changes that could impact any of the markets. So, overall, I could say it is stronger. I think the orders reflect it, I think the broad base of the growth reflects it and a little bit more confidence in the greater economy, but what I get excited about is that in every region of the world right now, we're seeing some of the upward tilt, which we haven't seen in certain markets recently.

Thanks for that. And then, just as a follow-up, on the auto content story, I mean the company has, historically, been known for being a powerhouse around powertrain applications, et cetera. How much of the content is driven by those core historical strength versus maybe new areas like infotainment maybe driving a little bit more of it or is it still mainly going to be a powertrain sort of going forward? Thanks.

No, it's actually in all three, Steve. So, if you take it, and I know we show a slide when we see investors, if you start to think about our $60 today of content, approximately half of our content today in an auto is around, we call it grain, but to your point, you use the right phrase powertrain. About half of our content is in powertrain. About 40% of our content is around safety applications, and I would put anti-lock brakes, traction control and airbags into those. And then, about the remainder is really around the connected. That would be your convenience, your lighting, the things that happen within the cabin around infotainment, but less mission-critical type items I guess I would say. So, that's really our mix and what's nice is, all of them have opportunities. We talked to you all about, five years from now, we think can get that content up $80 above it. We really feel it's across all three of those categories. So, it isn't just in powertrain. Certainly, powertrain, I think, has the biggest toggle of greater growth, especially as you get to EV adoption, that content is really driven in the powertrain and the infrastructure of the car side. So, I think that's one that has more upside than probably the others, but we're well positioned in all of them regardless. So, I appreciate your compliment about us being a power in the powertrain, I like that. But we do think we've rounded ourselves out and, it gets into some of the questions today, is across Auto and that's really – it's a credit to our focus in getting ahead and leveraging the technology we can bring to these customers that we serve anywhere they are, both from an engineering site or where they manufacture. It's a real strength that we have.

Great. Thank you very much.

Thanks Steve.

Thanks, Steve. Can we have the next question, please?

We do have a question from the line of Jim Suva with Citi. Please go ahead.

Thank you very much. I have two questions and I'll ask them both at the same time. Probably one CEO-type question and one CFO question. The first one would be, you had mentioned your auto forecast for this year remained unchanged, kind of strength right now and then a deceleration going forward. That's good to hear. The main concern or question we have is are we facing a situation like last year, maybe a different region or whatever, inventory being built up or your forecast of flattish actually being too aggressive as many of the others have kind of talked about a big deceleration coming in? So, how come we're not facing inventory lot buildup and things like that and why you think your forecast were different than others? Then, for the CFO, I think you mentioned restructuring of about $150 million. Your operating margins are now performing well in every segment. Should we expect $150 million going forward? Because it is noteworthy that for the past several years, it was coming down. I think now it's kind of come up a little bit. Because you're making so much more profitability, is $150 million the good rate? Is this kind of a peak year and we should expect restructuring to decline or how should we think about those charges? Thank you very much.

Hey, Jim, let me start with your first question. Then, I'll let Heath cover your second one. So, thanks for asking the question. First of all, on the auto production, and I know other people have talked about different outlooks for the year, I think one thing that's very important as you all compare these outlooks is, we're in a fiscal period that's (51:50) June and September and our outlook is really from talking to our customers. So, we feel actually very good about where our outlook is, where their production builds are as well as where we plan the supply chain. So, I don't think we're aggressive. I don't think we're conservative. I think we're in line with what our customers are telling us right now. And it's sort of a flattish for the rest of the year. I know I think some others have come out with calendar year guidance. I don't think on a calendar year basis. So, I think, there is an element there that I would ask to just be as reasonable as you compare everybody's opinion about auto production. We do see it moderating like what we've said from day one, mainly driven around China. And we did not have much expectation from North America this year. We expect it to be flat to slightly down and it looks like it's playing out (52:44). So I guess I'll let Heath speak on the restructuring question. Go ahead.

Look, Jim, I think, the restructuring question is certainly a valid comment. I don't know that $150 million would be a number I'd hang my hat on in terms of that. Certainly, there was an opportunity in fiscal 2017 to do some things to optimize our footprint and to make sure that we are aligning where we do business closer to our customers. And opportunities will avail themselves as we go forward. There's no doubt. There's a handful of things that we continue to contemplate as we go into 2018, but each opportunity has to have its own merits to stand on its own from a cash-on-cash return perspective. So we'll provide more color for that as we go forward, but I think there'll be some element of restructuring as we go into 2018 as we continue to finetune the operating model. But I don't know if it's $150 million or something less than that at this point.

Great. Thank you so much for the details. Greatly appreciated.

Thanks.

Thanks, Jim. Can we have the next question, please?

And we do have a question from the line of Matt Sheerin with Stifel. Please go ahead. Matthew Sheerin - Stifel, Nicolaus & Co., Inc.: Yeah. Thanks and good morning, guys. So, just a question regarding the strong operating margin in the Communications Solution. I think that's the highest margin since you've kind of changed the reporting segments. And I know a lot of that was driven by the portfolio mix, deselecting products, but trying to figure out how much of that strength was due to Subsea Communications versus the mix and versus the change of the portfolio and how sustainable is that going forward?

Matt, it's Heath. That's a fair question, but the year-over-year improvement of nearly 700 basis points in this segment was pretty well balanced across the three business units in the segment, Data and Devices, Appliances and SubCom. They all contributed roughly equal in terms of that margin improvement year-over-year. Matthew Sheerin - Stifel, Nicolaus & Co., Inc.: Okay. In terms of targets, particularly, you've given that, it looks like Subsea will be or SubCom will be sort of flattish over the next few quarters into the next fiscal year. I imagine that you're still looking at growth within Appliances and Data and Devices. Is there still an incremental margin that you expect to generate where you can see even better margins there?

Well, certainly, productivity plans will be in place, but the heavy lifting around the footprint consolidation in this segment related to the walk-away revenue that transpired over the last several years, that's behind us. And then, we are largely to, I'll say more of a footprint within the segment. Just a few tweaks left to go in that. So, I would not want to foreshadow that you are going to continue to see 700 basis points year-over-year improvement for the quarter-on-quarter going forward, but certainly we feel good about where the number is today. Knowing that SubCom is probably going to be flattish year-over-year, you would expect more of the incremental operating income improvement to come from Appliances and from D&D, but they are both running pretty hot right now. Matthew Sheerin - Stifel, Nicolaus & Co., Inc.: Got it. That's helpful. And just back to Transportation and specifically, the commercial segment, where you've seen a very strong organic growth in an underlying market that is basically even flat to down and weak, but we're starting to see signs of some stabilization from competitors. But, Terrence, what are you seeing in those markets in terms of underlying growth, both in heavy trucks and off-road vehicles?

Matt, it's a good question. I guess to maybe frame a little bit our performance, because I think our performance, this is just not one quarter, it's really been the past couple of years as the overall market was very negative, especially North America. Our over-performance is really driven by our strong position in China, not only North America. We really weathered the storm well. And the growth that we saw this quarter was really driven by emission standards in China as well as content gains with Chinese companies. So, when we look at from a market perspective and we look forward, we do actually see construction starting to pick up after a very tough period, and I think you saw that in some of the results that have come out. Ag still continues to be challenge, a challenge globally. So that's still a market we're waiting to pick up. And on the truck and bus side, we've really benefited from our strong position globally. So, when we look at it, it does feel like we're starting to get more forward lean in those overall markets, where I would say the last two years has really been between our position and our content gains driving the growth, and it'll be nice as the market starts to click and getting stronger growth in that market. And as I said during the comments, part of our guidance uptick in the second half is really driven by Commercial Transportation as well as our Communications segment. So, we are seeing upward momentum there as we go through the year. Matthew Sheerin - Stifel, Nicolaus & Co., Inc.: Okay. Thanks a lot.

Thank you, Matt. Can we have the next question, please?

And we do have a question from the line of Mark Delaney with Goldman Sachs. Please go ahead. Mark Delaney - Goldman Sachs & Co.: Yes. Good morning and thanks very much for taking the questions. First question is a follow-up on Matt's question about Commercial Transportation. Can you help us understand a little bit more on the regional exposure that you have within Commercial Transportation, maybe how much is North America versus international markets? And then, I know the company mentioned some regulations that were helping the Commercial Transportation business. Can you just elaborate a bit on what sort of benefits you've been seeing from some of those regulations in commercial transport?

Yes. Sure. So, (58:59) commercial transportation business is roughly – I'm trying to get that up – about 40% of our business is in the Americas, 60% outside the Americas, split evenly between Asia and Europe and really in Asia, when you think about the regulations, it's probably the bigger area, specifically China, we'll be getting the benefit from the emissions regulations that are happening there and a very strong position that we have at increased content wins, providing more to the customer than just what we historically did. So, it's a really good (59:40), but also pretty major content wins we've gotten and the other technologies we're bringing to the customer. Mark Delaney - Goldman Sachs & Co.: Yeah, that's helpful. And then, my follow-up question is trying to understand a bit more the order patterns that the company is seeing in the Automotive business. I think guidance for Transportation in the June quarter is about $1.7 billion of revenue and then if you hit the full-year guidance, the kind of the midpoint implies about $1.6 billion. So, if you're seeing growth in Commercial Transport and Sensors, it seems like the implied auto sales for both June and September are down, low to mid-single digits both quarters, normally June is up sequentially. So, are you guys seeing some sequential declines on a quarter-to-quarter basis in the light vehicle business, in line with what your expectations are? I just want to kind of confirm that or is that just some conservatism about you had such strong first half and you're just not sure how the year goes from here?

When you look at the second half, we're going to be up pretty much mid-single digits year-over-year, Mark. Clearly, we do expect production to step down. Our first quarter was very strong. As we said, some of that was due to the China stocking. So, we will have sequential changes and limited reduction, but we're going to be up year-over-year and we typically also always step down quarter three to quarter four primarily due to Europe. Just from how the holiday and production seasons work. So, not sure I'm completely following how you're looking at it, but second half year-over-year, we're going to grow mid-single digit on that flattish production. And the shape is a little different this year due to the strong first quarter, but when you get to the rest of the year, Q3 going down to Q4, we would expect the step-down as pretty normal seasonality (01:01:24) European position. Mark Delaney - Goldman Sachs & Co.: Thank you very much.

Thank you, Mark.

Thank you, Mark. Can we have the next question, please?

We do have a question from the line of Sherri Scribner with Deutsche Bank. Please go ahead.

Hi. It's Adrienne Colby for Sherri. Thanks for taking the question. Within Industrial, can you talk about what drove the declines in aerospace and defense and also wondering if you could comment from a margin perspective what was driving some of the upside, is it mainly the moderation in the drag from oil and gas, if you're seeing contributions from other pieces of business?

Thanks for the question. In aerospace and defense, we still are confident with our outlook for the year. In the quarter, we saw in the commercial aerospace side, just slower pickups from one of the large airplane manufacturers in the quarter. (01:02:13) we expect that will happen in the quarter three, but that was offset by defense picking up and I think that's real positive. When you look at year-over-year, oil and gas really did not have an impact year-over-year, I mean. So, the tailwind – with the headwind from oil and gas is behind us, the oil and gas business was pretty constant in the quarter. So, it didn't help our margin. Really, the margin improvement was around the cost actions that we talked to you about, that we were taking in Industrial to continue to improve the margin to get it up into the higher-teens. And I think you should start to see the benefit of that and we expect to continue to see the benefit in the second half. And clearly, that's part of our guidance. Our guidance is that Communications and the Industrial will be the margin drivers in the second half, but we're pleased with the performance that the Industrial team did on the margin improvement side in the second quarter.

Great. And as a quick follow-up, it looks like SG&A ticked up a little bit this quarter. Just wondering if you could comment on that going forward?

Sure. It ticked up, generally pretty seasonal if you think about going back to prior years, generally from from first quarter to second quarter, you'll see that normal tick up and I think if we looked at as a percentage of sales, it's pretty consistent with what we see in the past So, that's the one market we're waiting to pick up. There're some very specific drivers that, the timeliness of investments that we do each year, but pretty consistent and on track with our internal expectations.

Thank you.

Thank you very much. I want to thank everybody for joining us this morning. And if you have further questions, please contact Investor Relations at TE. Thank you and have a great day.

Thank you, everyone.