Guy Hardwick • Freedom Capital Markets

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Chief Executive Officer Stephan Von Schuckmann stated it was too early in his tenure to provide a long-term margin target but confirmed they are working on many levers to drive improvement. Chief Financial Officer Brian Roberts reported that the ransomware attack is not expected to have a material impact on the quarter's financial results.

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Chief Executive Officer Stephan Von Schuckmann highlighted opportunities in industrial solutions around thermal management and electrical protection, specifically mentioning heat pumps and the new A2L leak detection sensor, and noted he is exploring the data center market. Chief Financial Officer Brian Roberts responded that while he is pushing to get conversion to 80% in 2025, reaching 100% is challenging due to the company's strategic but less inventory-efficient redundant global manufacturing footprint.

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Chair and CEO Mike Baur stated that ScanSource typically avoids competitive auctions, preferring to build relationships with targets, which facilitates reasonable valuations. CFO Stephen Jones confirmed that while large deals carry lower margins, their impact is offset by higher-margin recurring revenues from recent acquisitions. Regarding free cash flow, Jones explained the guidance wasn't raised because a high volume of sales late in the quarter could increase accounts receivable and temporarily impact period-end cash flow.

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CFO Carol Hibbard explained that they do not guide on specific system numbers, but the lower Q3 revenue forecast reflects the smaller number of systems signed a year ago that are now in a heavy installation phase. CEO Rick Cohen described GreenBox as being in an early stage, currently building out its sales force with hires from the 3PL space and actively prospecting for tenants for its new sites, with about a year before they need to be filled.

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CFO Carol Hibbard updated the guidance, stating that the company now expects to deliver 11% of its remaining performance obligation in the next 12 months, with revenue back-half loaded. CEO Rick Cohen confirmed that discussions are progressing with non-grocery customers in verticals such as general merchandise, medical supplies, and auto parts.

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CFO Carol Hibbard explained that the revenue reduction in the backlog was partially offset by final pricing adjustments and configuration changes on existing contracts. She attributed the Q1 guidance to the specific timing of milestones across the large number of systems in deployment, noting Q4 was a uniquely strong quarter for milestone achievement and was not a new baseline.

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CEO William Burns attributed the strong performance to a broad-based recovery across all product categories, regions, and verticals. He specifically highlighted that the retail and e-commerce vertical continued to outperform, driven by ongoing needs for inventory visibility and omnichannel fulfillment, with other verticals also showing strong double-digit growth, except for manufacturing.

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CEO William Burns outlined that the Zebra Companion business model is still developing but aims to monetize through premium hardware sales, market share gains, and recurring revenue from AI agents and software suites. He also stated there was no significant customer pre-buy activity related to tariffs.

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CFO Nathan Winters confirmed the balance sheet provides flexibility for both M&A and buybacks. CEO William Burns added that while the M&A philosophy is unchanged, the bar is higher due to market conditions. Regarding AI, Burns confirmed they are getting closer to commercialization and expect to have a commercial offering in 2025, with an advanced demo planned for NRF.

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CEO Chris Diorio stated that Impinj continues to support the customer, sees them continuing to deploy, and expects growth this year over last, with no further pushouts seen. CFO Cary Baker added that while good progress has been made on channel inventory with that customer, the overall dynamic has changed, with some partners now strategically increasing inventory for other reasons.

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COO Hussein Mecklai reported that two major inlay partners have achieved M800 certification and are designing products, with more partners on the verge of certification. He described the M800 ramp as healthy and promising. CFO Cary Baker declined to give a specific percentage for systems growth, instead instructing analysts to model endpoint ICs down seasonally and then back into the systems figure using the overall revenue guidance.

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CEO Adam Norwitt described the entrepreneurial culture as the core reason for Amphenol's success. He explained that the 140 general managers have full authority and accountability, allowing for highly specific, fine-tuned responses to issues like tariffs, rather than a blunt, company-wide approach. He stated this structure has been preserved and scaled, making the company "purpose-built" for dynamic environments.

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CEO R. Norwitt explained that the 9% organic growth in defense was very broad-based. While certain areas like space showed particularly strong growth, he also cited strength in ground vehicles (especially in Europe), airframes, and communications. He emphasized that the primary driver is the redirection of military spending towards next-generation electronics, where Amphenol has a premium market position.

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CEO R. Norwitt clarified that the company never anticipated substantive antitrust issues. The updated Q1 2025 closing timeline reflects good progress on the necessary global regulatory filing processes, which were always expected to be time-consuming but were not viewed as a material obstacle.

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CFO Heath Mitts stated he is not concerned by the single-quarter dip to 19.3%, noting other quarters have been above 20% and that Q4 included some heightened investments. He explained that while a recovery in the high-margin commercial transportation business would provide support, the segment's ability to hold the 20% level is not dependent on it. He affirmed that natural growth should support incremental margin expansion but was not ready to call a specific number for upside beyond 20%.

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