Amphenol Q3 2022 Earnings Call Transcript

Participants

Corporate Executives

• Craig A. Lampo, Senior Vice President and Chief Financial Officer
• Adam Norwitt, President and Chief Executive Officer

Analysts

• Mark Delaney, The Goldman Sachs Group, Inc.
• Samik Chatterjee, J.P. Morgan Securities
• Chris Snyder, UBS Group AG
• Gavin Kennedy, Jefferies Financial Group Inc.
• Amit Daryanani, Evercore ISI
• Steven Fox, Fox Advisors
• Luke Junk, Robert W. Baird & Co
• Wamsi Mohan, Bank of America Co.
• Jim Suva, Smith Barney Citigroup
• Joseph Spak, RBC Capital Markets
• William Stein, Truist Securities
• Joseph Giordano, Cowen and Company
• Matt Sheerin, Stifel Nicolaus

Presentation

[Operator]

Hello, and welcome to the Third Quarter Earnings Conference Call for Amphenol Corporation. [Operator Instructions]

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

[Craig A. Lampo, Senior Vice President and Chief Financial Officer at Amphenol]

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 third quarter 2022 conference call. Our third quarter 2022 results were released this morning. I will provide some financial commentary and then Adam will give an overview of the business and current trends, then we will take questions.

As a reminder, during the call, we may refer to certain non-GAAP financial measures and make certain forward-looking statements, so please refer to the relevant disclosures in our press release for further information. In addition, all prior year comparative data discussed during this year -- during this call is on a continuing operations basis.

The company closed the third quarter with record sales of $3,295 million and record GAAP and adjusted diluted EPS of $0.80. Third quarter sales were up 17% in U.S. dollars, 21% in local currencies and 18% organically compared to the third quarter of 2021. Sequentially, sales were up by 5% in U.S. dollars, 7% in local currencies and 6% organically. Adam will comment further on trends by market in a few minutes.

Orders in the quarter were $3,151 million, resulting in a book-to-bill ratio of 0.96 to 1 and year-to-date, our book-to-bill remained strong at 1.07 to 1 and the company continues to have a robust order backlog.

GAAP and adjusted operating income were $681 million and $693 million respectively in the third quarter of 2022. GAAP and adjusted operating margin were 20.7% and 21% respectively in the third quarter. On a GAAP basis, operating margin increased by 40 basis points compared to the third quarter of '21 and was flat sequentially. GAAP operating margin for the third quarter included $12 million of acquisition-related costs. On an adjusted basis, operating margin increased by 70 basis points compared to the third quarter of '21 and 30 basis points sequentially. The year-over-year increase in adjusted operating margin was driven by strong operating leverage on the significantly higher sales volumes as well as the benefit of ongoing pricing actions. On a sequential basis, the increase in operating margin reflected strong operating leverage on the higher sales volumes.

Given the continuing dynamic overall cost and supply chain environment, we are very proud of the company's operating performance. Our team's ability to effectively manage through the myriad of challenges around the world is a direct result of the company's entrepreneurial culture, which continues to foster a high-performance action-oriented management team.

Breaking down third quarter results by segment relative to the third quarter of '21, sales in the Harsh Environment Solutions segment were $794 million and increased by 12% in U.S. dollars and 14% organically and segment operating margin was 26.1%. Sales in the Communications Solutions segment were $1,518 million and increased by 19% in U.S. dollars and 17% organically. Segment operating margin was 22.5%. Sales in the Interconnect and Sensor Systems segment were $983 million and increased by 17% in U.S. dollars and 23% organically. Segment operating margin was 18.8%.

The company's GAAP effective tax rate for the third quarter was 23.1% and the adjusted effective tax rate was 24.5%, which compared to 22.2% and 24.5% in the third quarter of '21 respectively. GAAP diluted EPS from continuing operations was a record $0.80 in the third quarter, an increase of 19% compared to $0.67 in the prior year period. Adjusted diluted EPS was a record $0.80, an increase of 23% compared to $0.65 in the third quarter of 2021. This was an excellent result especially considering the variety of challenges that the company continues to face during the quarter.

Operating cash flow in the third quarter was a record $576 million or 117 -- 116% of adjusted net income and net of capital spending, our free cash flow was a record $457 million or 92% of adjusted net income. Given our continued strong top line growth, we are pleased to see cash flow yield remain at these strong levels in the third quarter.

From a working capital standpoint, days sales outstanding and payable days were 71 and 56 days respectively, both within our normal range and despite the continued challenging supply chain environment, our inventory days were 83 days, which came down in the third quarter and were also within our normal range. We are very pleased with our organization's strong management of working capital. As mentioned in today's earnings release, the company's Board of Directors has approved a 5% increase in the company's quarterly dividend to $0.21 from the previous $0.20 per share, effective for payments beginning in January 2023.

During the quarter, the company repurchased 2.4 million shares of common stock at an average price of approximately $72. When combined with our normal quarterly dividend, total capital return to shareholders in the third quarter of 2022 was $289 million.

Total debt at September 30th was $4.8 billion and net debt was $3.5 billion. Total liquidity at the end of the quarter was $3.6 billion, which included a cash, cash and short-term investments on hand of $1.3 billion, plus availability under our existing credit facilities. Third quarter 2022 EBITDA was $806 million and at the end of the third quarter of '22, our net leverage ratio is 1.1 times.

I also wanted to make a few comments on interest expense and currency impacts. Due to the rising interest rate environment, our interest expense has increased primarily as a result of our floating rate commercial paper, which had a balance of $904 million and represented approximately 19% of our total debt outstanding at the end of the quarter. Due to the significant increase in interest rates over the last several months, we expect fourth quarter interest expense to be approximately $38 million, which is reflected in our fourth quarter guidance. Based on current debt balances as well as current and near-term projected rate increases, we expect quarterly 2023 interest expense to be approximately $40 million.

Regarding currency and the significant continued appreciation of the U.S. dollar in the fourth quarter, we expect currency to have a negative sequential sales impact of approximately 1 percentage point and a year-over-year negative impact of 5 percentage points assuming current rates.

I will now turn the call over to Adam, who will provide some commentary on current market trends.

[Adam Norwitt, President and Chief Executive Officer at Amphenol]

Well, thank you very much, Craig and allow me to extend my welcome to all of you on the phone here today and I certainly hope that all of you are having an enjoyable fall here, we are in beautiful Wallingford, Connecticut with a leaves turning a wonderful Autumn hue. I'm going to highlight our third quarter achievements, I'll then spend a little time to discuss the trends and our progress across our served markets. And then finally I'll comment on our outlook for the fourth quarter and the full-year of 2022, and of course, we'll have time for some questions at the end.

Turning to the third quarter, our results in the third quarter were much stronger than expected and exceeded the high end of our guidance in sales and adjusted diluted earnings per share. Sales grew a very strong 17% in U.S. dollars and 21% in local currencies, reaching a new record of just under $3.3 billion. On an organic basis, sales increased by 18% with broad-based growth across most of our served markets, as well as contributions from the company's acquisition program.

The company booked orders of $3,151 million, representing a book-to-bill as Craig mentioned of 0.96 to 1. I would say that despite this slightly negative book-to-bill, the company's order backlog remains very robust. We were pleased to deliver strong profitability in the quarter with adjusted operating margins reaching 21.0%, a 70 basis point increase from prior year and a 30 basis point increase from prior quarter. We achieved these results despite the continued wide range of the operational, inflationary and supply chain challenges around the world. Adjusted diluted EPS grew strongly from prior year, increasing by 23% to a new record of $0.80. And it's just really an excellent reflection of our organization's continued strong execution here in 2022.

Finally, the company generated record operating and free cash flow of $576 million and $457 million respectively here in the third quarter. I just want to say how proud I am of our entire organization around the world. Our results this quarter once again reflect the discipline and agility of Amphenol's entrepreneurial team as we continued to perform well amidst what is no doubt a very dynamic and challenging environment.

We're also pleased to announce that we closed the acquisition of Integrated Cable Assembly Holdings or ICA in September based in North America and with annual sales of approximately $90 million, ICA manufacturers a broad array of cable assemblies for a diverse -- diversified range of applications, particularly in the industrial market. This acquisition further expands our offering of high-technology, value-added interconnect products in the industrial market. As we welcome this outstanding new team to the company, we remain confident that our acquisition program will continue to create great value for Amphenol. In fact, our ability to identify and execute upon acquisitions and successfully bring these new companies into the Amphenol family remains a core competitive advantage for the company.

Now turning to the trends and our progress across our served markets, I would just comment that we're very pleased that the company's broad and balanced end-market diversification continues to create value for Amphenol. Importantly, and I've mentioned this many times before, our diversification mitigates the impact of the volatility of individual end-markets, while also exposing us to leading technologies wherever they may arise across the electronics industry and these are both very important benefits, in particular, in today's dynamic market environment.

I would also just mention that in the third quarter, each of our eight end-markets grew organically and seven of them in double-digits organically. So starting with the military market, that market represented 9% of our sales in the third quarter. Sales in this market grew 1% in U.S. dollars and 3% organically, which was a bit lower than our expectation heading into the quarter. On an organic basis, growth in space-related ground vehicles and avionics applications was offset by moderations of sales of products used in communications, rotorcraft and engine applications. Sequentially sales declined by just about 1%.

As we look into the fourth quarter, we expect a high-single digit sequential sales increase in the military market and for the full-year 2022, we now expect a low-single digit increase in sales from last year's levels. We continue to be very pleased with the strength of the company's broad position in the defense electronics market. As militaries around the world increased their adoption of a wide array of next-generation technologies in the face of what is no question an increasingly volatile geopolitical landscape. Our team managing our leading range of interconnect and sensor products continues to position the company strongly for the future.

The Commercial Aerospace market represented 2% of our sales in the quarter. Sales grew a very strong 36% versus prior year and 42% organically driven by broad-based strength across all aircraft applications. Compared to the second quarter, our sales just -- declined just a slight 1%, which was actually better than our expectation coming into the quarter. As we look to the fourth quarter, we expect a modest decline in sales versus the third quarter levels, but for the full-year 2022, we expect sales to increase a very strong 30% compared to prior year.

Our team has justifiably proud to have now realized four consecutive quarters of strong growth in the commercial air market, a clear sign of their resilience and of the continued recovery in the global air travel industry. Going forward, we look forward to benefiting from the company's strong interconnect and sensor technology positions across a wide array of aircraft platforms and next-generation systems being integrated into those airplanes.

The industrial market represented 25% of our sales in the third quarter. Sales increased by 11% in U.S. dollars and 13% organically. Our growth was broad-based across most segments of the worldwide industrial market including battery and heavy electric vehicle, factory automation, alternative energy, heavy equipment, medical, oil and gas and building automation. Sequentially, our sales actually increased by 2% from the second quarter which was a bit better than our expectations coming into the quarter.

Looking to the fourth quarter, we expect a modest sequential sales decline and for the full-year 2022, we expect a mid-teens increase in sales from prior year. Our results in the industrial market this quarter confirm once again that our outstanding global team working in this important market continues to find new opportunities for growth across the many segments of the exciting industrial electronics market. I remain confident that our long-term strategy to expand our high-technology interconnect, antenna and sensor offering both organically and through complementary acquisitions has positioned us well to capitalize on the many technology revolutions happening across the industrial market. To that end, the addition of ICA further strengthens our position across a number of exciting segments within this important end-market and we look forward to realizing the benefits of the strategy for many years to come.

The Automotive market represented 20% of our sales in the quarter and sales in the third quarter grew by a very strong 27% in U.S. dollars and 37% organically, driven by broad-based strength across most automotive applications and particularly strong growth once again in sales to electric and hybrid electric vehicle applications. Sequentially, our sales increased by 4% from the second quarter, which was much better than our expectations. For the fourth quarter, we expect sales to remain roughly at these levels and for the full-year 2022, we expect sales to increase by approximately 20% compared to last year, driven by expanded position in next-generation electronics and electrical systems being integrated into cars. I remain extremely proud of our team working in the automotive market. They continue to manage well through a challenging overall environment, all while remaining focused on driving new design wins with customers who are implementing a wide array of new technologies into their vehicles. Our continued outperformance is a direct result of their excellent efforts.

The Mobile Devices market represented 12% of our sales in the quarter and our sales to customers in this market increased by 13% in U.S. dollars and 15% organically, and this was driven by strong growth in sales of products incorporated into smartphones, wearables and laptops. Sequentially, our sales increased by much stronger-than-expected 43% driven by higher sales across virtually all product categories that we serve. As we've seen periodically in the past, we do believe that some small portion of this robust demand in the third quarter may have been pulled forward from the fourth quarter. Accordingly, we expect a low-double digit sequential decline in sales from the strong third quarter levels.

For the full-year, we anticipate sales to grow modestly from our strong 2021. I'm very proud of our team working in the mobile devices market, as they continue to execute strongly in the face of an ever dynamic demand for our leading array of antennas, interconnect products and mechanisms that are integrated into a wide range of next-generation mobile devices. And no question that this team remains poised as always to capture any opportunities for incremental sales that may arise here in 2022 or beyond.

The Mobile Networks market represented 5% of our sales in the quarter and sales increased by a strong 19% versus prior year and 15% organically, as growth in our sales to mobile service providers was only partially offset by a moderation of sales to equipment manufacturers. On a sequential basis, our sales increased by 9%, which was better than our expectations. For the fourth quarter, we expect a low-double digit sequential sales reduction after a very strong third quarter. And for the full-year 2022, sales are expected to grow in the high-single digits. We're encouraged by our strengthening performance in the mobile networks market. As operators continue to ramp up their investments in next-generation systems, our team remains focused on realizing the benefits of our long-term efforts to expand our position in next-generation 5G equipment and networks around the world.

The Information Technology and Data Communications market represented 22% of our sales in the quarter. Sales in the third quarter rose from prior year by 16% in U.S. dollars and a 11% organically. This was driven by increased demand for products in servers and networking applications and that was only partially offset by some declines in storage-related products. Sequentially, our sales did decline by 3%, albeit, better than our expectation coming into the quarter. We believe that this begins to reflect some of the expected inventory corrections that we've discussed in the past by our IT datacom customers.

As we look towards the fourth quarter, we expect a low-double digit decline in sales from these third quarter levels, as customers continue to moderate their demand and adjust their inventory levels. For the full-year 2022, however, we expect very strong high-teens sales growth compared to prior year. We remain encouraged by the company's outstanding position in the global IT datacom market. Our team has done just an outstanding job developing leading high-speed, power and fiber-optic interconnect products that are enabling our OEM and web service provider customers, who continue to drive their equipment and networks towards ever higher levels of performance. We look forward to realizing the benefits of that leading position in this important market for many years to come.

And finally the Broadband market represented 5% of our sales in the third quarter. Sales in this market increased by a very robust 65% in U.S. dollars and 46% organic, as we experienced strong demand from cable operators for a wide range of our products. On a sequential basis, sales increased by 2%, which was better than our expectation coming into the third quarter. Looking towards the fourth quarter, we expect sales to increase moderately from these strong third quarter levels. And for the full-year 2022, we expect sales to increase by more than 50% from prior year and that includes both robust organic growth as well as the benefit of acquisitions.

We look forward to continuing to support our broadband service provider customers around the world with our expanded range of high-technology products. These products have become even more critical as our customers increase the bandwidth and capacity of their networks to support the expansion of high-speed data applications to homes and businesses. And this is in certain cases, in furtherance of government-funded programs to expand broadband.

Now, turning to our outlook, there's no doubt that the current economic environment remains highly uncertain and increasingly dynamic, assuming market conditions do not meaningfully worse and then also assuming constant exchange rates. For the fourth quarter, we expect sales in the range of $3,090 million to $3,150 million and adjusted diluted earnings per share in the range of $0.73 to $0.75. This would represent sales growth of 2% to 4% and adjusted diluted EPS growth of 4% to 7% versus the fourth quarter of 2021.

Our fourth quarter guidance represents also an expectation for full-year sales of $12,474 million to $12,534 million and full-year adjusted diluted EPS of $2.95 to $2.97. This outlook would represent full-year sales and adjusted EPS growth of 15% and 19% to 20% respectively. I remain confident in the ability of our outstanding management team to adapt to the many opportunities and challenges in the current dynamic environment and to continue to grow our market position, while driving strong profitability.

In addition, I just have to say that the entire Amphenol team around the world remains committed to delivering long-term sustainable value. And I'd be remiss if I did not take this opportunity here to thank each and every one of our Amphenolian team members around the world for their truly outstanding efforts here in the third quarter.

And with that operator, we'd be very happy to take any questions.

Questions and Answers

[Operator]

Thank you. [Operator Instructions] Our first question is from Mark Delaney with Goldman Sachs. You may go ahead.

[Mark Delaney, Analyst at The Goldman Sachs Group]

Yes, good afternoon and thank you very much for taking the question. In terms of the comments about a more challenging and dynamic environment that the company is expecting, is that more observing that there is the potential for business conditions to deteriorate given macroeconomic factors or is that consistent with a recent moderation in incoming orders that Amphenol has already seen in the third quarter and perhaps has continued or even accelerated in the fourth quarter to date? Thank you.

[Adam Norwitt, President and Chief Executive Officer at Amphenol]

Yeah, thanks very much, Mark. Look, I think that we've talked before first about orders that positive book-to-bill don't always go to the sky and so it was not surprising, it wasn't certainly surprising to us that our orders moderated a bit in the quarter and we had a slightly negative book-to-bill. We still have built tremendous backlog over the recent quarters. At the same time, I think it's fairly -- it's fairly clear that we are in a world where economically, there are more cross-currents. And those cross-currents can always have an impact on markets that we serve. And I think some of our customers in particular in places like IT datacom who are a little bit reacting to as I talked about the inventory position, that would be an example of a place where maybe customers have put a little more conservatism in their balance sheet.

I think we saw also in industrial with our guidance, we've had very, very strong performance in industrial and maybe there's a little bit, a few signs of some hesitation across a few customers in that area. But it's not like we're seeing anything that anybody else isn't seeing here, we're not projecting anything, but I think the world is volatile, just look how it's reflected in the interest rate environment, the currency markets that Craig discussed earlier. And as always in a market like that, it's not our job at Amphenol to try to guess whether there is going to be a recession one day or otherwise, but it is our job and it's our track record to always be prepared regardless.

And I've talked about this in the past, you've heard me say the term that we drive with one foot on the gas and one foot on the brake and I can tell you, we're driving hard in both respects, doing everything we can to make sure that we're there for our customers satisfying their demand and we did that in a big way here in the third quarter shipping nearly $3.3 billion in sales. But for those areas where we have seen real-time feedback from customers that they may need a little bit less of our product. You can bet that those 130 Amphenol General Managers, the ones who may see some some softening of demand that they're rapidly adjusting their resources. They're rapidly taking all the steps that an Amphenolian General Manager does take to be prepared to preserve the company's financial strength in that environment. So we're never going to try to guess when that recession is coming, we'll let lots of people who are much more experts at that than we are to do that but we will always be prepared and there's no question that we are in today.

[Operator]

Thank you. The next question is from Samik Chatterjee with JPMorgan. You may go ahead.

[Samik Chatterjee, Analyst at J.P. Morgan Securities]

Great. Thank you. Thanks for taking my question. I guess, Adam, I had a sort of a similar question but more related to your sort of performance here. When I go back and look at the last four quarters or so, every time you've reported a revenue number, you've guided sequentially the next quarter to be slightly slower -- slightly lower in terms of revenue. Nevertheless, you've sort of execute -- executed about that number and particularly through this year, you continue to sort of ramp revenues sequentially as well. What's changing now when we look into December, we're seeing a similar trend in terms of you trying to probably bake in some of the macro in terms of the guidance for the December quarter again being sequentially lower in terms of revenue than September. But, what's changing probably relative to the first three quarters of the year when we've seen sort of the execution being very different or maybe the industry conservatism that you baked in hasn't really come through, maybe help me understand that?

[Adam Norwitt, President and Chief Executive Officer at Amphenol]

Yeah, no, thank you very much, Samik. Listen, we always come out of the quarter and we try to give our best estimate of what the next quarter is going to be on behalf of everybody here. And it's a credit to our team that we've been able to outperform that and you can bet that we're always going to try to outperform that. But it's not -- I mean, we do our best job here of doing that and we shouldn't -- you shouldn't just say, well, Amphenol is conservative and they're naturally going to beat it. I mean, there's no doubt that the world, as we see it from a macro and market standpoint, it is more dynamic. There are pockets -- more pockets of uncertainty. There are macro dynamics that are going on now. But all that being said, the underlying electronics revolution that has for us always been a great platform for our outperformance. This continues to go unabated. Our position -- our technology position continues to be broader than ever before. We've made 20 acquisitions since the beginning of 2019, each of which have added to our company in new capabilities, in new breadth, new access to customers in new geographies.

So our company is well positioned to capitalize if there are opportunities for upside. And we'll certainly seek to take advantage of any of those that do come, but in the context that it is a world today that is clearly more uncertain than it was before. And I don't have to, I think, tell everybody here on the phone that you can get that by looking just at the front page of the Wall Street Journal on a daily basis. Are we always going to try to outperform what we are, but I'm not going to tell you that this quarter is the same as every other quarter that we're always going to outperform and we're going to beat our guidance by as much as we did last quarter. We're going to work really hard to do that all the time and we're going to navigate whatever environment comes our way.

[Operator]

Thank you. The next question is from Chris Snyder with UBS. You may go ahead.

[Chris Snyder, Analyst at UBS Group]

Thank you. So margins have realized a pretty nice sequential improvement both over the last two quarters. I know at least part of that is price/cost catch-up. What is the expectation on price/cost into Q4 and early 2023 to the extent you have visibility on price in the backlog and where inventory costs are running at? And kind of with that, does the guided drop in Q4 operating margins really just reflect the volume deleverage into the fourth quarter? Thank you.

[Craig A. Lampo, Senior Vice President and Chief Financial Officer at Amphenol]

Thanks, Chris. Appreciate the question. No, we're really proud actually of the performance, both obviously here in the second quarter from a profitability, but certainly in the third quarter here, reaching 21%, matching our previous record that we had in the fourth quarter of 2018 and clearly a very different cost environment. I mean, since the fourth quarter of '18, we've had a pandemic, we've had supply chain challenges, we had a lot of inflation, we had energy costs, I mean, you name it. And regardless of all that, I think we've been able to navigate that very well and just capitalize also on the strong demand environment and ultimately be able to get our margins back up to kind of this level, I think, is just a testament to the overall management team.

I would say that as we finished the third quarter and I kind of said that similar to last quarter, I think we have offset a meaningful amount of kind of this inflation and supply chain-related cost pressures. We certainly -- the management team has done a great job with that in managing kind of all elements of costs while continuing to kind of adjust price commensurate to the cost inflation. When we can't offset these with other actions, clearly, that's our priority to be able to do that within the bounds and the walls of the -- of our facilities, but we can't always do that. So you have to raise prices sometimes to your customers and I think we've done a good job of all of that.

In addition, I would tell you that I'm really proud that our team has continued to manage our cost structure even in these periods of robust growth. As you can see in our operating expenses and others that we've been able to really leverage that as we continue to grow and not necessarily just add resources and add costs with that robust growth. And I think that also puts us in a very strong position regardless of what the demand environment might be, whether it'd be robust or not robust.

As we look into the fourth quarter, I would say that the incremental or the decrementals that we see kind of coming into the fourth quarter is based on our guidance is generally normal, I'd say, it's within the range of our decrementals. It isn't anything more than that. So I wouldn't read anything into kind of those decrementals at all. I think there's -- we still expect strong profitability given the revenue levels here in the fourth quarter, which is reflected in our guidance. Obviously, interest expense is having a little bit of pressure from an EPS perspective into the fourth quarter sequentially, but ultimately, operating margins I think continue to be very strong.

I'm not going to necessarily kind of guide here to '23 in terms of operating margins, but what I could tell you is, I do feel good about, again, as I said before, the overall performance of the team in being able to ultimately drive our incrementals at that 25% plus kind of operating leverage that we talk about and then ultimately, also being able to protect the bottom line, if the case may be that demand does drop in certain areas. And -- but ultimately, I feel pretty good about the profitability and certainly very proud of the team and their ability to achieve these record levels again.

[Operator]

Thank you. The next question is from David Kelley with Jefferies. You may go ahead.

[Gavin Kennedy, Analyst at Jefferies Financial Group]

Hi, team. This is Gavin Kennedy on for David Kelley. Your growth in the auto end market continues to be robust. Can you tell us how you're thinking about auto demand in the next 12 months? And are you seeing any signs of customers changing their buying habits? And then any insight into the inventory dynamics here would be great. Thank you.

[Adam Norwitt, President and Chief Executive Officer at Amphenol]

Thanks very much, Gavin. Look, we're really proud of the automotive performance here. I mean, if you just look over several quarters, we've had real strong double-digit organic growth in automotive now for eight quarters in a row, which is just really excellent and clearly outperforming. I think that, as I mentioned in my prepared remarks, we've seen strong growth being driven by, in particular, everything related to electrification, but not exclusively that. We've also seen robust growth and everything related to passenger connectivity, to safety, new electronic systems in cars, all this sort of extraordinary array of content that's being put into this generation and next-generation of cars that's created a great opportunity for Amphenol. Both together with our interconnect products, our sensors, our antennas and that entire array of what we broadly refer to as interconnect products.

In terms of the behavior of the customers and the outlook over the next 12 months, I mean, it's hard for me to give kind of an outlook for the next 12 months. I think others have a better sense of what -- whatever the industry outlooks will be, what inventories are both at dealerships and in the supply chain. But -- and for us, what's more important is the content that we see with customers, which continues to grow.

In terms of inventories, I couldn't tell you that we have a perfect sense of what the inventories are with our customers, either at the end customers or at the OEM or in the supply chain. But we haven't seen real indications of abnormalities. And so orders continue to be at a good level. We continue to have strong performance and customers seem to want really a lot of our products as we saw in the third quarter. And as would be implied in our guidance also in the fourth quarter, which would make the full year of 2022 just a really exceptional year in automotive on the back of a year in 2021, which was itself also quite strong.

[Operator]

Thank you. The next question is from Amit Daryanani with Evercore. You may go ahead.

[Amit Daryanani, Analyst at Evercore ISI]

Good afternoon. Thanks for taking my question. I guess, my question is really around the calendar '22 performance, the midpoint achieved in December. You would end up being about 15% top line growth, give or take organically. And I think one of the peers, Adam, everyone has a lot of this growth is driven by inventory build that looks like to reverse in a more pronounced manner into '23. I know you don't track this quantitatively, but maybe qualitatively, if you can talk about, when you think about the growth you've achieved in '23, how does that you think in end market and share gain driven versus inventory build that might start to reverse and if you've seen any of that happen? Thank you.

[Adam Norwitt, President and Chief Executive Officer at Amphenol]

Yes. Thanks very much, Amit. Listen, I think we've talked about inventory in the IT datacom market and that's already having some impact here in the third and the fourth quarter. If I look at the overall interconnect market, taking really broadly our position, I mean, it's clear that we are outperforming and not just outperforming the sort of GDP or end market, but outperforming our peers. And so when you think about the question of inventory, unless you are giving your customers a specific reason, a specific reason to build more inventory of your products then your outperformance should certainly not be a reflection of that inventory.

And so, I don't know what inventories we have in our -- amongst our customers. We have a sense of it in distribution. And there, I will tell you that it's relatively healthy. Nobody is ringing alarm bells in our distribution channel about inventory level. But if you look at our outperformance, unless we had created specifically problems that customers were trying to remedy by building buffer stock over problems, that would certainly not be a result of inventory. And I would tell you that over the course of the last four quarters, if not more, we have been solving problems for customers, not creating them.

And so I personally think, in a qualitative fashion, as you said as the question qualitatively, that it doesn't fit with me that our outperformance would be at all related to an inventory build. Now is the overall market having some piece of inventory build, that may very well be, but I think that when you look at our overall performance at roughly 15%, as you say, organic growth expectation for the year compared to an industry and industry peers, who are quite a bit below that, you would probably come away thinking to quite a bit of that to share gains. But that's not a scientific assessment, because you didn't ask for one, I couldn't give you one. But I think qualitatively, I feel like we've made a lot of progress as a company.

[Operator]

Thank you. The next question is from Steven Fox with Fox Advisors. You may go ahead.

[Steven Fox, Analyst at Fox Advisors]

Hi, good afternoon. I had a question on the RFQ, but I'll save that for off-line. I was wondering if you could talk about the acquisition a little bit more in terms of how it fits in with all the other cable assembly acquisitions you've done. And specifically, this one, how you expect to grow it and where the margins are versus where you would like to see them? Thank you.

[Adam Norwitt, President and Chief Executive Officer at Amphenol]

Thanks so much, Steve. I'm glad you asked about ICA. It's really a great company. And you mentioned all the cables, some of the acquisitions we've done. I mean, if I think back since 2019, we've done 20 acquisitions since that time, about five of those acquisitions were kind of diversified cable assembly acquisitions. I think we've made like three center acquisitions, we've made four fiber optics acquisitions, we've made six acquisitions of just connector companies. We've had one MilAero, a value-add company, one automotive, and that sort of makes up the 20.

And each of those really helps us to broaden our position with customers, expanding our capability and making sure that we can cover every corner of the electronics industry on a worldwide basis. And ICA really goes towards all of those. ICA is a North America-based company, which I think is a very opportune thing right now. They have factories across the U.S. as well as in Mexico, servicing a real diversified range of applications across primarily the industrial market. Everything from electrified industrial vehicles to types of things that are used in factories, factory automation, to instrumentation and I could go on and on and on because it's a very fragmented and diversified customer base.

And what they bring us really is a real local presence close to customers where sometimes value-add interconnect proximity can be a real asset actually. Because if you're in an area where there's a lot of companies building things, designing things, and you can be their sort of neighbor and supporter and partner, that allows you to get in very early in the design cycle. And then if you have the breadth of Amphenol, if you have the access to low-cost manufacturing, low-cost sourcing of Amphenol, all of a sudden, you can turn that early involvement into a perpetuity and a strong long-term partnership. And that's something that we at Amphenol have been very successful in, in the past whenever we bought companies that maybe have a really nice proximity to a certain customer base, but a customer base who themselves is also globalizing.

Not to mention the last thing, I'll say about ICA is, it's just great people. I mean, our company is made up of individuals, general managers around the world, who are entrepreneurs. And every time we bring in a company like an ICA, I'm just really amazed by the strength and the character and the entrepreneurship of the individuals that have joined as part of Amphenol. And I think at ICA, that's certainly the case. And we look forward to growing with customers where they're a little stronger than we were, to bring them into new customers, to helping them on connector technology, where we have a lot more to offer to give them a more total solution to customers and on and on. I mean there's so many levers of value that you have in these acquisitions and we fully intend to take advantage of as many of them as possible with the team at ICA.

[Operator]

Thank you. The next question is from Luke Junk with Baird. You may go ahead.

[Luke Junk, Analyst at Robert W. Baird & Co]

Good afternoon. Thanks for taking the question. Maybe a bit of a bigger picture structural question. Adam, just wondering, is there anything inherent in the new segment structure of the company that could help with the margin? I'm thinking versus past cycles. If we do, in fact, go into a broader macro downturn, especially anything anecdotally, I think it would be helpful to illustrate the dynamic. I'm thinking enabling shared resources, identifying growth opportunities or things similar to that. Thank you.

[Adam Norwitt, President and Chief Executive Officer at Amphenol]

Well, thanks so much, Luke. Look, I talked about this early in the year when we announced the evolution of our organization into the three divisions, and which are now our reportable segments with three division presidents. And for us, it's all about the scalability of that unique entrepreneurial culture of Amphenol, whereby today, we have 130 general managers around the world.

And what's really important in times of crisis, and also in good times, by the way, is those 130, they don't just operate in a vacuum. They don't -- yes, every day, you have a general manager, who's running his or her business, reacting in real time to what customers are telling them, reacting in real time to what's happening in the environment, whether it'd be the supply chain or how technology is evolving or whatever. But also, they're working closely with our group general managers, who -- now we have 12 of those group general managers, who then work today with those division presidents to make sure that we're stimulating collaboration in real time to make sure that we're sharing best practices and information in real time, to make sure that we're cooperating with customers in real time, to bring to those customers the full suite of products.

So in a time like this, the fact that now instead of just having one CEO doing that last year, that today, we have three division presidents, who are doing that on a much more active basis. They have 3x as much time in their day by definition as I have in my day, it means that we can have an even richer real-time reactivity to changes and dynamics that come in the marketplace. And that means opportunities, our ability to capitalize on them, our ability to migrate resources quickly towards those opportunities, it also means when there are challenges, how do we quickly react? How do we give support to those who sometimes have to do really tough things. Cutting cost is not a hard thing. It requires an enormous amount of moral support and time and discussion.

And that kind of iteration and that interaction is just much more rich today with our three divisions than it was when it was just me with the seven groups that we had going into the end of this year. And so it's part of scaling the company, which has always been, as you know, one of my greatest priorities is to preserve the culture of Amphenol and then to ensure its scalability. Well, part of that scalability is making sure that when the next downturn comes along, we're just as prepared for it and we have just the same ability to react positively as we've done in the past.

And I think we've demonstrated for more than two decades that in difficult times, Amphenolians rise to the occasion immediately and deliver superior results. Whether that was in the bursting of the Internet bubble 20 years ago plus, whether that was in the global financial crisis, whether that was during the pandemic. In each of those times, the fact that our margins were down by just 300 basis points was a distinct and clear reflection of that culture, manifesting itself in that reactivity. And so the perpetuation of that culture, the scaling of that culture is really what this is all about. And so no doubt about it. I think in the big picture, that new divisions that -- those segments, as we talk about them publicly, that will clearly support the company to continue to do what we've always been known for.

[Operator]

Thank you. Our next question is from Wamsi Mohan with Bank of America. You may go ahead.

[Wamsi Mohan, Analyst at Bank of America]

Yes, thank you so much. I was wondering, Adam, if you could elaborate maybe a little bit on the pull forward comment you made on mobile devices. You had expected, obviously, to grow sequentially at a much slower rate. You did report very strong sequential growth. Maybe talk about the cadence of orders and why do you think that happened in the quarter? And if I could, if you could just maybe give us some sense of what you're seeing in China since you have such a good view into the region? If you'd characterize it maybe as things being stable or getting worse or getting better, that'd be great. Thank you.

[Adam Norwitt, President and Chief Executive Officer at Amphenol]

Sure. Thanks so much, Wamsi. Well, it's two questions, but I will say they're a little bit related, and let me say why. Look, if you look at our mobile devices market, it's been, as always, one of our most volatile markets. And I think if you go back over the last decade, we've had at least two fourth quarters, which were down in the kind of mid to high teens on a sequential basis. So our outlook for this quarter being down sequentially low-double digits, it's not a foreign concept to us that once in a while, you'll have a fourth quarter that will be down. I mean, what we always think about in mobile devices is the one sure thing, and that's in a market where there are very few sure things is that the second half typically is quite significantly above the first half. And here, our guidance would imply that in the second half, we're still up north of 30% in the second half compared to the first half. So very robust and relatively normal kind of feel between the first and the second semester of 2022.

I did mention that the -- we saw -- at the end of the quarter, really, a very strong demand in mobile devices pulls from customers. And why was that? You could come up with a number of different theories. I mean, my own theory is that if you think about mobile devices, which are still today primarily manufactured in China, there was not only just holidays in China, but there were some other events going on over the last -- over the first few weeks of October in China. And it wouldn't surprise me if maybe some customers were preparing for both those holidays as well as the various political meetings that happened in the country and that may have led to a little bit of pull forward, as I alluded to, and that is also reflected in this guidance.

I mean, look, relative to China, I think it's a tale of two cities here. One is, if you read the papers and if you watch everything, obviously, at the highest levels of the government, there's a lot of tension. And you would be blind not to recognize that there's a lot of political tension. There's various policies being enacted by the U.S. and there's various things that are happening in China that are all interpreted in that way, that there is some tension. At the same time, on the street, on the ground, it is pretty stable and kind of business as usual. We haven't seen funny things happening that one would sort of fear over the last few years. Our operations are running really great and we continue to make great progress with local customers who need our technologies.

And I think it comes back to something I've talked about in the past, which is that we operate globally as a local company everywhere that we operate. If you think about it, we're in 40 or more countries around the world. And each of our operations of those countries is run by general managers, who are from that place. And they run their business as if it was a local business, albeit with the backdrop of support, the resources and the capabilities and the breadth of a global Amphenol. And nowhere is that more true than in China, where our entrepreneurial management team there has just done a phenomenal, phenomenal job of making sure that customers know that they get local support, from local teams, local engineers, local quality engineers. This is not ex patriots. This is not us taking American technology and porting it over there to support. It is all locally developed and locally supported.

And thus, in their times of need, our customers come to us when we can solve their problems and that's what they do in the world over. And so while the headlines in the papers are what they are, I can tell you that on the ground, our team continues to operate very effectively and successfully across China.

The one last thing I'll say, I'm sure in your question about China is embedded a question maybe about how COVID is going there. I'm just so proud of how our team has navigated the restrictions that were associated with zero COVID over the course of this year. Those were much more acute towards the end of the first quarter and into the second quarter, in particular in Shanghai, where our team just did a fabulous job. But there are still occasionally some little restrictions that are popping up and our team has a fabulous playbook for it. And we don't have all our eggs in one basket anywhere in the world and that includes in China. And so we have a very diversified and broad set of facilities around the country, such that we're not susceptible to a total impact if one place has a shutdown or another.

So I would say it's very stable. I certainly hope that the world's governments can all get along. That's something that I personally hope for all of our sakes, but for Amphenol's position in China, we remain very robust and we're very confident of the future.

[Operator]

Thank you. The next question is from Jim Suva with Citigroup. You may go ahead.

[Jim Suva, Analyst at Smith Barney Citigroup]

Thank you. I have a question about strategy for either Adam or Craig. With interest rates higher and Craig gave some good details about interest expense that we should model for Q4 and going forward. I didn't know if that included any additional Fed raise next month or not. But the bigger strategy question is, does this make it, so your use of capital you are looking to pay down debt a little bit more or higher returns on capital versus how you look at M&A or stock buybacks a little more, you start to balance things a little bit differently with higher interest rates, but just let us know about strategically if it impacts things at all in your decision tree? Thank you.

[Adam Norwitt, President and Chief Executive Officer at Amphenol]

Thanks, Jim. Yes, I would say that our overall kind of capital deployment strategy, we certainly have talked about many times in the past. And certainly, over the last number of years, it's been in the lower interest rate environment, but we've had a similar capital deployment strategy over many different interest rate environments over the years. And it really has been consistent and it's really resulted in what we believe to be a great return of investment to our shareholders. And in the strategy, kind of [Indecipherable] before has been flexible and how it's executed over time depending on the economic and market conditions is in balance in regards to ensuring that we're deploying capital towards our M&A strategy, which really we believe provides the best return in our return of capital to shareholders and that's both our dividend program and the return of repurchase program -- share repurchase program.

And I would say, given that kind of strong free cash flow generation that we've had over the years that I can say with confidence that really the rising interest rate environment really won't impact our overall capital deployment strategy. And I would say in any real meaningful way. I mean we continue to look to deploy that half of our free cash flow towards M&A over time, in that other half towards that return of capital to shareholders. And if opportunities that are more significant in acquisitions, we're certainly going to adjust that towards those acquisitions in a fast and flexible manner.

And I think that we do generate a lot of free cash flow and we certainly expect to continue to do so. So I wouldn't say that really the interest rate environment is going to change that. I think debt paydown is certainly something that we would do if some of those other levers just certainly M&A and otherwise, just isn't available to us. And we have been able to kind of maintain and in certain cases, pay down debt over time anyways, even giving all those different actions that we take. So I wouldn't say that the current environment has really changed the way we think about that.

[Operator]

Our next question is from Joseph Spak with RBC Capital Markets. You may go ahead.

[Joseph Spak, Analyst at RBC Capital Markets]

Thanks so much. Adam, I was wondering if you could comment just broadly given the macro and all this uncertainty, whether you're seeing any widening of the acquisition funnel or maybe any loosening of evaluations as sellers might get more skittish or it doesn't remain to, I guess, the world it was or valuation that was. And if I could sneak in just a quick housekeeping, would the book-to-bill have still been negative without FX movements?

[Adam Norwitt, President and Chief Executive Officer at Amphenol]

Yes. Joe, I think just your little housekeeping question, I think [Speech Overlap] I don't think it would have changed the book-to-bill with FX. Look, relative to M&A and the funnel, and we have a great pipeline of acquisitions. As I mentioned, over -- since the beginning of 2019, we've closed 20 deals through quite a cycle, I will say. I mean if you think about the cycle in which we've done that, this has been quite a cycle. And I think the compelling story of joining the Amphenol organization being part of something that is really special.

It's something that we continue to tell to companies around the world, and we continue to find good reception to that. Does it become a kind of a buyer's market, for example, are sellers a little more skittish and were willing to sell. I'd be a little careful about in kind of overestimating the impact of the macro on the decision-making of sellers, many of whom are making the one decision in their life to do this.

So in my experience, sellers are not kind of looking at what the S&P 500 is doing. They are looking at what the 10-year treasury is doing or looking at what FX rates are doing in that moment. When they think about selling, should they sell, should they not sell, and at what value. Can it impact on the margin, the current environment, what others are willing to pay for deals, and we're a very financially strong company. Maybe that could -- I would hope that there's good reason among the universe of buyers around valuations.

But we don't normally see just because macro shifts, a dramatic change in the M&A landscape. We have a fabulous funnel. We have a fabulous track record. We have a fabulous organizational culture that's really attractive to companies. I think all of those things will serve us well and will ensure that over the long term, we'll continue to find great companies become part of Amphenol. And I'll continue to be completely unable to predict when that's going to happen. But we're happy to have gotten one deal done here this quarter, and I'm confident over the long term we'll have some more.

[Operator]

Thank you. Our next question is from William Stein with Truist. You may go ahead.

[William Stein, Analyst at Truist Securities]

Great. Thanks for taking my question. Adam, I don't normally ask about -- I guess it doesn't normally get a ton of attention, the broadband end market, but the growth has been very strong and for a while now. I wonder if you can comment as to longer-term trends here. We've heard some other component suppliers talk about this end market looking strong for more than just a couple quarters. We hear about cable MSOs and carriers making pretty significant spending commitments. And I wonder if you're seeing that dynamic and whether that's reflected in really substantial backlog there or if that might be overstating things. Thank you.

[Adam Norwitt, President and Chief Executive Officer at Amphenol]

Yes. Well, thanks for the question. And, look, I'm really happy to talk about the broadband market. It's always been a core for Amphenol even if there's been a few challenging years as the sort of operators in broadband were merging and buying each other and waiting for certain technologies to come. And with all that consolidation and that kind of waiting period, there was a relatively flat kind of investment in the broadband market. And what I think we've seen this year with the real spike up of our performance in this space and can only be termed out. If you look at where we are today on a run rate basis, we're more than 50% higher than we were a year ago. And over the last kind of three, four years, it was running at a relatively stable pace on a quarterly basis, broadband, and now it's at quite a higher level.

And I think it's a reflection of really one thing, the extraordinary expansion of data traffic in the world and the necessity of operators to work to support that. I mean, think about all the things that we do on a given day. And there's rarely a minute that goes by where you're not somehow using some data somewhere and creating traffic. I'm going to give a little shout out, because I have a new baby niece, who my little brother had his first child just a few days ago, and I have spent more time on face time, looking at this beautiful young thing, whose name is Chloe. I have spent more time looking at this beautiful thing on real-time video over the last six days, then I think I have face timed ever in my life. I mean, it's extraordinary.

And the fact that you can sit in Connecticut and you can look on an iPad and you can be looking at a baby that was born not very few minutes before that. And you can be experiencing that with the richness. Sure, you're not there, you don't smell the baby. You don't see everything around it. But you can actually see the thing that is there in all of her beauty. I mean, that is a sign to me of a world that demands a lot of broadband.

And so what is that going to be in the future? Is there some momentum in the spending? I think there is some momentum here. There's also a lot of government funding. Let's not forget, I mean, a lot of this infrastructure bill here in the U.S. and there are other countries doing the same, has focused on the fact that there's a whole subset of the world who doesn't get to do what I just described, because they live in areas that don't have access to rural broadband.

I mean, broadband is a utility. It's a necessity. It's in many ways a human right. And I think governments of the world have woken up to the fact that if you don't provide that access to people regardless of if they live 10 miles from the nearest paved road in the middle of Kansas or if they live in Manhattan, then you're not really enabling people to live a full life. And that -- we're really proud of what we do in the broadband space. And we've always stuck it out even when the spending wasn't growing. And I'm just so happy for our team and proud of our team that they are there today to enable the growth and the investments that are happening with our customers.

[Operator]

Thank you. Our next question is from Joe Giordano with Cowen. You may go ahead.

[Joseph Giordano, Analyst at Cowen and Company]

Hey, thanks for getting me in here. Good afternoon, everyone. I know we all appreciate like the beauty of Amphenol is like when one part of your business is doing well, one part is doing weaker, one is doing stronger and it kind of balances the other out. But if we were to like normalize for the size of the relative end markets you have, is there -- can you kind of like which parts are the -- have the most impact on your margins if you were to normalize for size? Like, if there was something to be down, which would be the last one you'd want to be down, if you were to kind of think about it that way?

[Craig A. Lampo, Senior Vice President and Chief Financial Officer at Amphenol]

Yes. Joe, thanks for the question. I actually wouldn't really call out any market that really has significantly lower margins. I mean, some have lower gross margins, but then lower SG&A, and we talked about the structure being a little bit different depending on the market. But from an operating margin perspective, honestly, I wouldn't say that there's much of a significant difference. I mean, you see that there's some differences in our operations. Our segments have a little bit of a difference. But from a market perspective, I really wouldn't call that out. I mean, broadband, which is really some -- it used to be more the cable business and it really isn't only the cable business anymore, because some of the acquisitions we've done in that space that's really broadened our portfolio out in that market.

And it's actually somewhat of the reason why we've seen some of this big growth historically was lower margin, but I wouldn't even call that out as some of this big growth having the -- having lower margins associated with it. So long-winded answer to your question is, I really wouldn't call out any particular markets.

[Operator]

Thank you. And our last question comes from Matt Sheerin with Stifel. You may go ahead.

[Matt Sheerin, Analyst at Stifel Nicolaus]

Yes, thank you. And thanks, Adam and Craig for all the details so far. My final question here is just on the aerospace market, where you've had some nice momentum over the last few quarters, still below where you were pre-pandemic, but it looks like you've got really strong backlog. So could you talk about the momentum you're seeing there, Adam, and the content opportunity going forward?

[Mark Delaney, Analyst at The Goldman Sachs Group]

For sure, Matt, and thanks so much. It's a great last question. Look, I mentioned in my prepared remarks, just how proud I am of our team working in this market. It is not easy. Let me tell you, it is not easy to be servicing a space, an end market and to have that end market drop by as much as it did in the case of broadband. And let alone to do it well, some of your fellow colleagues are in spaces that aren't dropping by that much. So you don't even have the misery less company kind of dynamic.

And what is the playbook for Amphenol in times like that. It's not to run and hide, it's not to just cower and sort of drown your sorrows, you take quick action, you make sure that your resources that you have deployed are befitting the demand that you have from your customers. And then you go out and you build new basis of business and you take the opportunity of the crisis. And that's really important that you take the opportunity from that crisis to diversify your business even further, to support the customers who still need you in those difficult times. Because then when it comes back, you have a much broader, more stable, more robust and high potential business to run.

And that's what our team, who works in commercial air has done. And so yes, we're not quite back to the kind of pre-pandemic levels, but the world is also not quite back to pre-pandemic levels. I mean, certainly, there's more travel and airports are more crowded here. But Craig and I went to Asia recently and I can tell you, there's a lot less flights crossing the Pacific than they ever were before. So the sort of widebody, long-haul kind of part of the business travel that was a real big driver of aircraft demand, that is still yet to be fully recovered.

But our team has just done a fabulous job of being there for our customers, making sure that we have the right resources and using the opportunity of the crisis such that when things do normalize and they're on the path to doing that, we'll be in a better position today than we were prior to the crisis. What we also see in aerospace and 1 of the areas where I'll tell you our team spends quite a bit of time because they had a little bit of extra time given the downturn with the major traditional jetliner manufacturers, is this whole world of kind of new aviation, electrified aviation, different kinds of small startups all over the place doing really innovative and exciting things.

And our team is working on just dozens and dozens of programs with countless of these companies, large and small, who are trying to really change the face of aviation in a world where everybody wants to reduce the amount of carbon that's being put in the atmosphere. And we have so much going on around Amphenol that's in support of this decarbonization. And I'll tell you that our team in Comair has really stepped up there and has just a really pervasive presence designing new products that really suit the unique applications of some of these next-generation systems that may eventually make it such that we can get on a plane, and we won't be just belching carbon in the atmosphere as we're moving across the country. And I personally am really hopeful for that for me and for our next-generation. And I'm really proud of what the company is doing in that respect.

[Operator]

Thank you. And I'll now turn the call back over to Mr. Norwitt for any closing remarks.

[Adam Norwitt, President and Chief Executive Officer at Amphenol]

Well, operator, thank you so much. And in particular, thank you to everybody who is on the call here today. Thanks for your great questions. And I wish that everybody enjoys a wonderful fall and we will be back together with you here in 90 days. And by then, amazingly, it will be 2023. So have a wonderful rest of the year and we look forward to seeing you all soon. Thanks so much.

[Operator]

[Operator Closing Remarks]