Luke Junk • Robert W. Baird & Co.

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CEO Joseph Fadool explained that the company's portfolio is now in a stronger position, so the M&A criteria are tighter, prioritizing near-term earnings accretion and strong industrial logic over purely strategic, money-losing pivots. CFO Craig Aaron stated the goal for PDS is to convert growth at mid-teens margins, which they achieved in H1. Fadool added that China's fast cycles can lower R&D costs and allow for capital reuse, supporting profitability.

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CEO Joseph Fadool stated the company would not break out tariff impacts by segment, emphasizing a unified approach of clarifying, mitigating, and recovering costs across all businesses. He confirmed the battery business is subject to the same process. Executive Craig Aaron added that for the battery business, a major component consideration is the cells imported from Korea.

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CFO Craig Aaron pointed to the new four-segment reporting structure as the best way to track performance transparency going forward. CEO Joseph Fadool added that the increase in foundational awards, often program extensions, demonstrates the strength of their portfolio and their ability to support customers as they adjust their vehicle cycle plans.

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Executive Frederic Lissalde highlighted that the company's portfolio is 'fully fungible' for hybrids, as combustion components are carried over and key e-products like inverters are the same for BEVs and hybrids. Executive Craig Aaron added that the company is focused on all areas of cost control, including restructuring and productivity, and this focus will continue given market volatility.

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President & CEO Greg Henderson attributed the margin gains to strategic initiatives, including scaling operational excellence in the Transportation segment and focusing on high-growth markets like energy storage and data centers in the Industrial segment. EVP & CFO Abhi Khandelwal clarified the tariff impact was a $0.15 timing benefit in Q2 that will reverse in Q3. Henderson noted that data center exposure is materially important and growing, with the company leveraging its full portfolio to capture new design wins.

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CEO Greg Henderson and CFO Meenal Sethna explained that the company's "tariff playbook," which includes flexing its global footprint, sourcing adjustments, and pricing actions, is expected to prevent a material impact on Q2 earnings. Sethna noted that about 15% of U.S. sales are sourced from China, primarily impacting the Electronics segment. She attributed the strong Electronics margin performance to significant operating leverage on volume growth in passive and protection products, with no unusual items. Henderson highlighted the growing data center opportunity, driven by the shift to higher voltage architectures similar to automotive, which increases demand for Littelfuse's protection, power semiconductor, and switching solutions.

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President and CEO Dave Heinzmann confirmed that the electronics inventory correction is largely over, with the overall electronics book-to-bill above 1 for the first time since Q2 2022. He noted Passives are firmly above 1, while power semi is improving but still below 1, with momentum in North America and Asia. CFO Meenal Sethna addressed transportation margins, expressing confidence in continued expansion in 2025 due to pricing and cost actions. She also indicated that the Q2 incentive comp impact would be more of a run rate and less of a spike than in prior years.

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President and CEO Dave Heinzmann explained that the passives and protection semiconductor businesses are seeing normal seasonality with healthy channel inventories, while the power semiconductor business is facing a more significant pullback due to slowing industrial demand, particularly in Europe. He noted visibility into 2025 is low, but they feel they are nearing a bottom. EVP and CFO Meenal Sethna addressed the margin question, stating that while they are confident in their margin initiatives, Q3 benefited from one-time factors, including a 200 basis point tailwind from foreign exchange in both segments. She affirmed they expect continued margin expansion in 2025 from cost actions and eventual volume recovery.

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CFO Andrew Lynch confirmed that diversifying end market exposure is part of the strategy. He noted that while the near-term focus is on expanding the successful A2L leak detection product, longer-term secular opportunities in areas like grid hardening and broader electrification are being evaluated for their electrical protection content.

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Chief Executive Officer Stephan Von Schuckmann emphasized the need to be highly selective with OEM partners in China, focusing on those positioned for success both domestically and in their expansion into Southeast Asia and Europe. Chief Financial Officer Brian Roberts added that about 90% of the former megatrend spending will be allocated to Performance Sensing. He expects Sensing Solutions margins to remain strong or improve, while Performance Sensing margins will likely stay in a similar range.

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Executive Martha Sullivan reiterated that the board is seeking a leader with the ability to drive technology roadmaps, enhance innovation, and who possesses automotive experience. She emphasized that any changes to the company's strategy will be determined and laid out by the new CEO once they are in place.

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President & CEO R. Adam Norwitt described the achievement as the team 'moving mountains,' which involved hiring, automation, new facility setups, and geographic diversification. He credited the 'Amphenolian culture' of maximizing resource efficiency, rather than just spending money, as the key to converting such massive growth into strong profitability.

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CEO Adam Norwitt affirmed his commitment to a balanced market exposure but stated the company will never shy away from a major organic growth opportunity. He compared the current AI revolution to the scale of the internet's initial build-out and emphasized that the growth is organic, not from a single large acquisition. He also noted that recent major acquisitions like CIT and Andrew have actually increased diversification in other markets.

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CEO R. Norwitt highlighted the convergence of technologies like robotics, next-generation vehicles, IoT, and accelerated computing (AI) as a major source of future opportunity. Drawing from his experience at the Consumer Electronics Show (CES), he expressed excitement about the new, unforeseen industries that will emerge from this technological convergence, which Amphenol is positioned to enable across all its end markets.

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CEO R. Norwitt stated that while the European auto market has moderated, robust growth in Asia and North America provided an offset. He expressed confidence in the company's ability to continue outperforming the market by gaining content across all vehicle types—EV, hybrid, and combustion engine—due to the ongoing proliferation of electronics.

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CEO Terrence Curtin clarified that the improvement in Industrial orders was broad-based across all businesses, not just from a single large AI order. Regarding AI awards, he stated the momentum is a continuation of traction with existing customers across the ecosystem, including chipmakers and hyperscalers, rather than a new incremental platform or customer.

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CEO Terrence Curtin confirmed that the appliance business has been growing, but the key positive development was an inflection in the automation business, with orders picking up in Europe and Asia. Despite this momentum, TE is maintaining a conservative flat sequential sales outlook for the overall ACL business due to broader tariff-related uncertainty.

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CEO Terrence Curtin highlighted that 'electronification' is a critical content driver, with Asian OEMs leading the adoption of software-defined architectures. He revealed that TE's product set for this area is already a $600 million business and cited a recent $1 billion design win with a single Chinese OEM as evidence of the accelerating momentum and significant positive impact on CPV.

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CEO Terrence Curtin emphasized China's importance, noting it accounts for about $2 billion in auto revenue. He stated that TE's strong growth outperformance in Asia is mirrored in China, driven by success with local Chinese OEMs, which now represent two-thirds of the market. To support this growth, TE is opening its sixth automotive factory in China. He described the competitive landscape as stable, comprising primarily Western and Japanese competitors alongside some traditional Chinese players.

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Nicholas Pinchuk, Chairman & CEO, attributed the Tools Group's Q2 improvement to the company's 'pivot' to faster-payback items gaining traction as technician uncertainty stabilized. He noted that credit originations improved but remained down, with a full recovery dependent on customer confidence. Aldo Pagliari, SVP - Finance & CFO, added that within C&I, April was the slowest month, with momentum improving in aviation, military, and general industry as the quarter progressed.

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CEO Nicholas Pinchuk attributed the Tools Group's Q2 rebound to stabilizing technician uncertainty and a successful pivot to faster-payback items. He noted that credit originations improved from Q1 but remained down. CFO Aldo Pagliari added that within C&I's critical industries, demand was slow in April but improved through the quarter, especially in aviation and military sectors.

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CEO Nicholas Pinchuk stated that the company will focus its 'offense' by shifting development and promotion to the lower end of big-ticket categories, like the SOLUS diagnostic tool and tool carts, where they have seen success. Regarding franchisees, he noted their financial health is down but not at threatening levels, and while franchisee exits are stable, recruiting new ones is more challenging in the current environment.

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CEO Nicholas Pinchuk identified specialty torque as a key area for investment, both organically through combining technologies from units like Norbar and Mounts, and potentially through further acquisitions. Regarding big-ticket sales, he explained that while the company can continue to grow by pivoting to smaller items, a reduction in macro uncertainty would be necessary to 'fire on all cylinders' and accelerate growth by re-engaging customers in larger purchases.

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CEO Nicholas Pinchuk credited the Tools Group's success to a combination of pivoting product development, improved factory capacity from recent expansions, and company-wide RCI initiatives. On diagnostics, he noted relative year-over-year strength fueled by the successful launch of the Apollo Plus platform and highlighted that rising software subscriptions are a significant positive profitability driver for the corporation.

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CEO John Giamatteo confirmed SDP 8.0 is a high-demand product but did not provide a specific dollar size for the pipeline. CFO Tim Foote affirmed the share buyback approach will be opportunistic, not linear, based on factors like cash flow, share price, and alternative capital uses to maximize shareholder value.

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CEO John Giamatteo explained the vehicle OS initiative is driven by OEM demand for BlackBerry to handle more of the software stack, which expands both the number of addressable models and the content per vehicle. CFO Tim Foote added this could be a significant transformation in content value by including middleware and partner components. Regarding government contracts, Giamatteo emphasized their long-term, sticky, and mission-critical nature, suggesting it's unlikely they would be ripped out and that there may even be opportunities for consolidation.

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CFO Tim Foote described the full-year EBITDA guidance as prudent, stating that while the Q2 beat was positive, sequential improvements are still needed to achieve a positive result for the full year. CEO John Giamatteo added that integrating the IVY team into the core QNX organization was a move to gain operational efficiencies now that the IVY platform has reached a baseline level of maturity.

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CEO John Giamatteo attributed the strong IoT royalties to both new implementations and existing design wins from the $815 million backlog. Regarding OEM partnerships, Giamatteo emphasized that customers view BlackBerry as a trusted software advisor, and these deals reinforce their collaborative role. CFO Steve Rai added that the competitive moat for QNX remains deep and that such industry moves do not create headwinds for BlackBerry.

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COO G. Bohley clarified there were no specific one-time issues. He attributed the softness to general weakness in global service parts after two very strong years and a cyclical effect where lower-volume vehicle years (e.g., 2020) are now entering the post-warranty service period. This dynamic was consistent with their initial full-year guidance for the segment.

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G. Bohley, COO, CFO & Treasurer, attributed the flat guidance to a challenging global market backdrop. He detailed regional dynamics, including success in wide-body mining dumps, a tough comparison in Japan/Australia due to a prior pull-ahead, soft European truck markets offset by defense wins, and new penetration in Brazil's school bus market. The overall outlook for commercial vehicle builds in 2025 is weak.

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CEO David Graziosi explained that capacity initiatives involve investments in both Allison's operations and its suppliers. He emphasized that the industry is running at challenging, high rates and is not motivated to add inefficient capacity. The India investment is crucial for relieving system-wide pressure, enabling a return to more efficient 'lean capacity rate operations' and generating cost savings, rather than just adding raw output.

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CEO Amnon Shashua and CFO Moran Rojansky noted that China volumes are outperforming expectations, with a stable 20-30% market share and demand running ahead of their conservative initial forecast. Regarding the radar, Shashua clarified that the imminent award is for the sensor itself, separate from other opportunities that bundle it with the Chauffeur system.

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CEO William Presley explained that core Climate and Comfort Solutions (CCS), pneumatics, and steering wheel heaters are all growing, but overall revenue is weighed down by the intentional pruning of non-core businesses like battery performance systems. He characterized the need for process standardization as a normal outcome for a company with Gentherm's history of M&A and rapid growth. CFO Jon Douyard added that 'Fit for Growth' will be institutionalized as a cultural continuous improvement mechanism rather than a discrete program with specific targets.

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Phillip Eyler, President and CEO, clarified that CCS performance was mainly impacted by production declines from global OEMs in China and specific Hyundai models in Korea. He affirmed that the growth in lumbar and massage is in its early stages, with many new awards yet to launch with customers like GM and Stellantis. For future technology wins, Eyler highlighted strong customer activity around the Pulse A massage system, the new CompactVent solution, and continued discussions for ClimateSense and WellSense.

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