Everyone, thank you for standing by, and welcome to the TE Connectivity Q4 and Final Year Results Call. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session. If you would like to ask a question during this time, simply press the star key, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. As a reminder, today's call is being recorded. I would now like to turn the conference over to our host, Vice President of Investor Relations, Sujal Shah. Please go ahead. Good morning, and thank you for joining our conference call to discuss TE Connectivity's Q4 and full year results for fiscal 2023, and outlook for our Q1 of fiscal 2024. With me today are Chief Executive Officer, Terrence Curtin, and Chief Financial Officer, Heath Mitts. During 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, and 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. I also want to remind you that our Q4 results in fiscal 2022 included an extra week. In this call, year-over-year income statement and orders comparisons for Q4 and fiscal 2023 are made excluding this extra week. You will find related reconciliations in the press release and presentation tables. Finally, during the Q&A portion of today's call, we are asking everyone to limit themselves to one question, and you may rejoin the queue if you have a second question. Now, let me turn the call over to Terrence for opening comments. Thank you, Sujal, and we appreciate everyone joining us today. You know, and to start off, I am pleased with that we delivered revenue in line with our guidance and earnings per share that was ahead of guidance, driven by strong execution by our teams across our segments in what continues to be a dynamic market environment. Before we get into the slides, I do want to take a moment to discuss our performance for the full year, along with what we're seeing in the markets versus our last call. When we look back on fiscal 2023, we set out to accomplish three key initiatives that we shared with you. First, was to continue to demonstrate the strategic positioning of our portfolio through alignment to secular growth trends. Second, was to deliver strong free cash flow with a focus to drive down inventory levels. And lastly, to improve our margin performance through both cost reduction and pricing actions to offset inflation. As Heath and I will discuss on today's call, our teams executed successfully on all of these initiatives during the year, and it sets up for a good jumping-off point as we enter 2024. When we think about the performance of the portfolio, our results demonstrated continued growth in the transportation and industrial solution segments, which offset market weakness in communications and headwinds from a stronger dollar. We generated growth above the market in a number of our businesses as we continue to benefit from secular trends, including increased global production of electric vehicles, adoption of renewable energy, and applications for cloud, as well as artificial intelligence. We delivered record free cash flow of $2.4 billion for the year, which represents over 110% conversion, and we also returned $1.7 billion to shareholders for the year. We drove down our inventory levels in response to improvements in our supply chain, and at the same time, we improved our service levels to our customers. Our cash generation model gives us both confidence as well as opportunities to return capital to shareholders and support bolt-on M&A activities, which is aligned with our use of capital strategy. We also worked to drive margin expansion in the second half of 2023, and we delivered on this commitment. We improved our exit rate on adjusted operating margins to above 17% as we closed the year, despite our communication segment being in the bottom of a cycle. Now, let me share what we're seeing in our market since our last call 90 days ago. On an overall basis, markets are playing out as we expected. We have most of our key end markets on a growth or recovery trajectory, with a few markets continuing to cycle, as we previously discussed with you. Our view of transportation end markets remains consistent with our prior view, with global auto production remaining stable. Our growth will continue to be driven in transportation by content outperformance that leverages our leading global position in this market. In our industrial segment, three out of our four businesses continue to have growth momentum. You see our strong positioning in renewable energy, with growth from both wind and solar applications. Commercial air sales continue to grow as this market recovers, and our medical business is benefiting from increases in interventional procedures. In our communication segment, while sales are down significantly versus last year's cyclical peak, we saw a sequential growth in orders in our fiscal Q4 due to early ramps of artificial intelligence programs, and we continue to expect volume growth from AI applications as we move through 2024. Finally, I do want to reinforce that the way that we think about long-term value creation remains unchanged. It is built on the pillars of secular growth trends that will drive increased content in the markets where we position TE, strong free cash flow generation with discipline around how we deploy capital, and certainly levers that to enable margin expansion as we move forward. So with that as an overview, I'd ask that you turn to slide 3, and I'll get into the presentation, and I'll discuss some additional highlights for the fiscal Q4 as well as the full year, and Heath will get into more details during his section. Our Q4 sales were $4 billion, which was in line with our guidance. Transportation segment, organic growth of 5% was offset by declines in communications due to the ongoing market weakness that we've been discussing. Adjusted earnings per share was ahead of our guidance and up 2% versus the prior year at $1.78, with adjusted operating margins of 17.3%. Cash flow from operations was a very strong $1.1 billion, and free cash flow was $945 million in the Q4, and both of these were quarterly records for the company. I think this just reinforces a strong execution by our teams that I already highlighted. For the full year, sales of $16 billion were flat on a reported basis, and we had organic sales that were up 3%, and this 3% organic growth was driven by our transportation and industrial segments. Adjusted operating margins were 16.7% for the full year. On the margin side, the real highlight was that we expanded adjusted operating margins by 120 basis points from the first half to the second half of the year due to our team's execution. As we look forward into the Q1 of fiscal 2024, we are expecting that Q1 sales will be $3.85 billion and adjusted earnings per share to be around $1.70. On a year-over-year basis, we expect sales to be flat, with organic growth in our transportation and industrial segments. We do expect adjusted EPS expansion of over 10% in the Q1 and strong margin expansion as well year over year. So if you could turn to slide 4, let me discuss order trends and what we've seen. We continue to benefit from markets with strong secular growth trends, and this is offsetting weakness in markets that are cycling or being impacted by inventory destocking. At the total company level, we continue to see stability in our order levels. Orders of $3.9 billion in the Q4 were consistent with order levels for the past several quarters, and our backlog remains near record levels. Transportation orders grew both year-over-year and sequentially, reflecting ongoing stable global auto production. Industrial order patterns reflect some seasonality across the segment, as well as ongoing destocking in the industrial equipment end markets. I ask you to keep in mind that 50% of our industrial equipment business does go through the distribution channel, and we expect that destocking here to continue for the next couple of quarters. In the communication segment, while we continue to see our customers work down inventory in their supply chain, we had our second consecutive quarter of sequential order growth, which is being driven by new orders for artificial intelligence applications. With that as an overview of orders, let me now get into year-over-year segment results in the quarter that are shown on slides 5 through 7, and you can see the details on each one of those slides. Starting with transportation, our sales growth remains strong. It was up 5% organically year-over-year, and it was driven by our automotive business. In our automotive business, we grew 9% organically with growth in all regions. Our performance continues to be driven by our leading global position in electric vehicles, electronification trends within the vehicle, as well as positive impacts from pricing. In fiscal 2023, electric vehicle and hybrid electric vehicle production grew globally by approximately 40%. Most of this growth was driven by Asia, and we expect this region to continue to be the growth driver for electric vehicles. As you know, we generate approximately 2x the content in electric vehicle platforms versus combustion engine vehicles, so we expect our content per vehicle to continue to expand as we move forward. Overall, we expect auto production next year to be about 21 million units per quarter, with continued growth in hybrid and electric vehicle production. In our commercial transportation business, we did experience a 7% sales decline, which was in line with what we expected and was driven by market weakness in both North America as well as China. And in our sensors business, we saw growth in automotive applications that was offset by weakness in industrial applications. At the margin level for the transportation segment, adjusted operating margins were 18.4%, as we expected, and up 170 basis points year-over-year as our teams executed on the cost and price actions that we've been highlighting to you. Now let me discuss the Industrial Solutions segment. While sales were flat in the Q4, I think what's really nice, as you look at the slide, is that we have three businesses that are continuing on a very good growth trajectory. Our aerospace, defense, and marine sales were up 14% organically, with ongoing improvement in the commercial air market. In medical, sales in the quarter were up 19% organically, driven by ongoing increases in interventional procedures. In our Energy business, as you know, we position this business around renewables, and you're seeing the benefit of this again this quarter with 6% organic growth. Finally, in the Industrial Equipment business, our sales were down 21% organically, driven by the continued inventory digestion in the distribution channel, a trend that is similar to what you're hearing from other companies. Adjusted operating margins were 15.9% in the quarter, reflecting the impact of expected volume declines in the Industrial Equipment business. Let's turn to Communications. While our organic sales were down 27% year-over-year, they were up 9% sequentially to $463 million. We are seeing the benefits from the early ramps of artificial intelligence programs, which will strengthen as we move through 2024 and beyond. Adjusted operating margins were 15.3% for the segment and an increase of over 100 basis points sequentially. As we see the stocking and AI increases in volume, you'll see margins expand in this segment as we move through 2024. With that, let me turn it over to Heath, who'll get into more details on the financials as well as our expectations going forward. Well, thank you, Terrence, and good morning, everyone. Please turn to slide 8, where I will provide more details on the Q4 and fiscal 2023 financials. Sales of $4 billion were flat on a reported basis year-over-year. Adjusted operating income was $699 million, with an adjusted operating margin of 17.3%. GAAP operating income was $635 million and included $57 million of restructuring and other charges, and $7 million of acquisition-related charges. For the full year, restructuring charges were approximately $260 million, which were in line with expectations. Our restructuring efforts over the last several years have enabled a more efficient operating footprint while continuing to localize to support our customers in the regions of the world where they operate. I expect restructuring charges to decline significantly in fiscal 2024 and to be approximately $100 million for the year. Adjusted EPS was $1.78, and GAAP EPS was $1.75 for the quarter, and included a non-cash, tax-related benefit of $0.16 related to a decrease in the valuation allowance. Additionally, we had restructuring, acquisition, and other charges of $0.19. The adjusted effective tax rate was approximately 19% in both Q4 and fiscal 2023, which was as expected. For Q1 and for fiscal 2024, we expect our adjusted effective tax rate to be roughly 20%. And as always, importantly, we continue to expect our cash tax rate to stay well below our adjusted ETR for the full year. Turning to slide 9 for additional information on our full year performance. Fiscal 2023 sales were $16 billion. While sales were flat year-over-year, we had 9% organic growth in transportation segment, and the industrial segment grew 5% organically, despite the softening in the industrial equipment business. However, the growth in these two segments was offset by roughly $1 billion of headwinds from the cyclical weakness in the communication segment that we've discussed, combined with the impacts from the stronger dollar. The stronger dollar negatively impacted sales by approximately $430 million versus prior year. Due to the further strengthening of the dollar against other currencies, we expect year-over-year currency exchange headwinds of approximately $250 million in fiscal 2024. Adjusted operating margins were 16.7% for the full year, with margin expansion of 120 basis points from the second half of the year. I'm sorry, 120 basis points from the first half to the second half of the year, driven by both cost reduction initiatives and price increases. This was most evident in our transportation segment, where margins expanded over 200 basis points from the first half to the second half, exiting the year in the mid-18% range. At the company level, we exited the year with adjusted operating margins of 17.3%, and we expect to expand from this level in fiscal 2024. Adjusted EPS was $6.74 and included a $0.45 headwind from currency exchange rates. Turning to cash, we generated record free cash flow of approximately $2.4 billion in fiscal 2023, with roughly $1.7 billion returned to shareholders through share buybacks and dividends. Free cash flow was up 35% year-over-year, with over 100% conversion to adjusted net income, and we expect to generate approximately 100% free cash flow conversion going forward. I am pleased with the progress our team's made in reducing inventory levels through the year, which contributed to our strong free cash flow. Our cash generation model, coupled with our strong balance sheet, will enable us to continue to be aggressive with capital return shareholders while pursuing bolt-on acquisitions, including the Schaffner acquisition that we expect to close at the end of this quarter. Before I turn it over to questions, let me reinforce some of the key points that we discussed today. While markets remain dynamic, we are continuing to take action on the things we can control to improve our financial performance. We worked hard to get to a better exit rate on margins at the end of the year, but we still have work to do to get to our business model op margin targets. We do expect to make progress on further margin expansion and EPS expansion this year. Most of our end markets have a growth or recovery trajectory, and we expect the destocking that we have seen to improve as we go forward. Our balance sheet is solid, we are demonstrating our strong cash generation model, and we remain excited about the opportunities we have ahead of us to drive value creation for all stakeholders. With that, let's open it up for questions. Audra, can you please give the instructions for the Q&A session? Thank you. At this time, I would like to remind everyone, to ask a question, press star one on your telephone keypad. In order to have time for all questions, each participant is limited to one question. If you would like to ask a follow-up question, please press star one again. We'll take our first question from Mark Delaney at Goldman Sachs. Yes, good morning, and thanks for taking my question. There's been so many crosscurrents in various end markets, including the UAW strike, inventory destocking in industrial, and content opportunities like AI and electrification. So I'm hoping you could help us better understand in a bit more detail, key trends by end market and what you expect going forward, including your assumptions by end market and when view that ends. Sure. Thanks, Mark. So let's talk about quarter four first a little bit because we went through a lot there. I think when you look at, you know, on the top line, it came in exactly as we expected. What was a little bit better than we would have expected? Certainly automotive, where we had growth in all three regions of the world, as well as in our D3, and our communication segment was a little bit stronger due to the ramps of artificial intelligence that I mentioned in my comments. The area that was a little bit weaker was industrial equipment. You know, we highlighted for you last quarter, we were seeing some inventory destocking around channel partners. I would say that was a little bit worse, and we think that's gonna be with us for a little bit. And then certainly, we were ahead on EPS, and that was really driven on the conversion side and all operational. When you look at quarter one, and our guide, in many ways, it's gonna look a lot like quarter four. You know, we're gonna continue to have growth in transportation, three strong markets in industrial with the inventory destocking in industrial equipment. And then you still have some tough compares that we have in the communication segment, but net net, it's gonna be flat on the top line year-over-year. And you're gonna see margin that looks like the Q4, and you're gonna see really nice EPS growth year-over-year. That's 10%. So, you know, orders have been coming in as we expected. You know, this quarter to 3 9 have been stable. Even with some of the destocking we're seeing, orders are staying stable, and I think that just shows the trends that you highlighted, as we go into 2024. So thanks for the question, Mark. Okay. Thank you, Mark. May we have the next question, please? Yes. We'll go to Wamsi Mohan at Bank of America. Yes, thank you. Good morning. Terrence, can you sort out some of the puts and takes in autos, given all the recent news around the D3 companies paring back on EV ambitions and potentially slower adoption rates of EVs? And also, you didn't explicitly call out the UAW strike. Did you not see any impact, or is it yet to come in terms of any impact from that? Thank you so much. Now, thanks, Wamsi, for the question. You really had two very different questions there. So let me take the latter part first around the UAW. UAW impact on TE is negligible, both in the Q4 as well as the Q1. You know, just to remind everybody, our global position is what's special about our automotive business. 80% of our business is outside the United States, and let's face it, that has no impact from the UAW. So when you sit there, We did not talk about it because it did not have a significant impact, and we don't expect it to have a significant impact in the Q1. Now, let's move on to your EV question, and probably similarly, I, I'm gonna remind everybody that we, we need to make sure when we think about EVs, EVs, you know, got up to 20 million units produced globally this year, with two-thirds of those EVs made in Asia, and once again, reinforcing our global position. And EV adoption is never gonna be a complete straight line up to the, to the right. But what's really nice is, you see with 20 million units made and on the road, the technology is working. It is being adopted. And the other thing you have is you certainly have consumers have choices, and, you know, some EVs, consumers are gonna like, some EVs, they're not gonna like. I think when you think about our opportunity, it is to build upon how the content opportunity that goes up, that you saw this year, and, you know, when, as EVs grow next year, we're gonna continue to get that. And in a full electric vehicle, we get 2x the content of a combustion engine. If it's a hybrid vehicle, it's about 1.5, and we expect you're gonna continue to see electric vehicles grow globally again next year. Maybe it won't be a 40% clip like this year, but it will increase next year. And let's face it, in Asia, the biggest market is China. And, you know, China EV sales this year are up over 30%. On top of that, I'll remind you that China local OEMs have over 50% market share. They've continued to gain share versus Western OEMs. And what's really nice for TE, our content on a local EV by China OEM is strong, and our market share is strong. So we don't have the phenomenon of we only are with the multinationals and not the local OEMs. So feel very good about our position, feel that EV trend is gonna continue to have production growth globally, as well as you're gonna see that benefit like you saw this year and for the past couple of years, it's gonna drive top-line growth opportunity for TE as well. Okay, thank you. Wamsi. Thanks, Wamsi. Can we have the next question, please? We'll go to Steven Fox at Fox Advisors. Hi, good morning. I was just wondering if you could dig in a little bit more into free cash flows. Obviously, you guys overperformed, you know, the conversion, 110%. Can you talk about some of the dynamics that went into that? And then, you know, the expectations for cash flow this year, any of the dynamics, and maybe, you know, talk a little bit about use of excess cash. It seems like it's, you know, the strategy is, the capital allocation is consistent, but you did do an acquisition during the quarter, so maybe, you know, that was a use of cash. Thanks. Well, Steve, thanks for the question. This is Heath. I'll take it. So, you know, we talked a fair amount about free cash flow during the year, and it was during our fiscal 2023, and it was a focal point for us internally as well as, you know, what we've talked to you about. You know, we know that we had to deal with some supply chain issues in the prior couple of years, and we had to buffer some inventory as part of that. As we went into this year, and as demand flow and so forth began to stabilize, and then our supply chain with our vendors began to stabilize some, it allowed us the opportunity to get really focused on driving working capital down in spite of this, in spite of some of the market conditions. So I'm pleased with how we did, how we finished the year. It also provides some confidence as we go into FY 2024, which we're in right now, starting here in October, that we're gonna be able to maintain that momentum. The hundred and twelve percent conversion that we did in FY 2023 was a little rich. If I'm being honest, it's a little bit richer than I would have thought we would have finished, but I'm proud of our performance. As we think about 2024, I'm confident we can hover around that hundred percent mark in terms of cash conversion, which is a bit of a step up from where we historically have trended. And it does avail a lot of optionality for us. You know, you, you mentioned, Steve, that our, our capital allocation strategy is unchanged, and that is absolutely true. Now, you should expect that, you know, we will continue to be diligent with the cash flow that's available to us. We will, you know, get back to our shareholders as, as appropriate and, and, you know, step up repurchase activity, where it makes sense and, and when there's dislocations in the market relative to the valuations. And, and so I don't think there's anything there that's different. You mentioned the acquisition we have coming up at the end of December. That's about a $300 million use of cash that will, will come off the balance sheet, but we also expect, you know, to be generating cash as we go along here in the Q1 as well. So, yeah, it's very, very positive momentum along those lines. Hopefully, I answered your question. Okay, thank you, Steve. Can we have the next question, please? We'll move next to Chris Snyder at UBS. Thank you. I wanted to ask on supply chain inventory levels. You guys have been pretty consistent around destock headwinds for data, appliance, and industrial equipment. So I guess maybe for those three subverticals, can you just talk about where are we in the respective destock cycles? And beyond those three, is there anywhere else maybe where you're starting to see more risk around destock relative to three or six months ago? Thank you. No, thanks for the question, Chris, and I think let's talk about the stocking a little bit. So first off is, as you all know, being a tier two, this is not a phenomenon that isn't uncommon. And, you know, after you get strong cycles, you will have this. But I do think there's... When you think about these three, there is one thing they have in common, which is, you know, close to 50% of their sales go through our distribution partners. And let's face it, you know, some of these are fragmented markets that they help us cover. So when you think about the three, you know, that's about, while it's big for their business units, total TE is only about 20% goes through the channel. The one thing I want to highlight, maybe the last part of your question, is where else are we seeing it? Actually, for the 80% of our business that we touch customers directly, it's very stable, and we're growing. So, you know, when you think about the 80% that we aren't highlighting, it's really, that's where we touch the customers most directly, and, you know, we have growth. Now, we have these destocking pockets that certainly very much with our distribution partners, that, hey, they fill the need when maybe we weren't delivering as consistently as we should have during the supply chain challenges Heath talked about. So when you look at those three, what I would tell you, where we are, what inning we're in, and, you know, hey, this is best guess stuff. You know, what's nice is in both D&D and Appliances, usual orders have increased sequentially, so it feels like, you know, we're stable at the bottom. And what's nice in D&D, you see the driver of AI as those move up. In regard to industrial equipment, you know, that started later. We started to highlight that to you over the past couple of quarters. I would say we're more in the middle of innings of that, and I think both of them will be around in the first part of next year. But then I also view they'll, they'll turn into a tailwind once they get behind us, and we don't expect major destocking elsewhere just due to how we have our direct relationship with our customers. Thank you. Okay, thank you. Thank you, Chris. Can we have the next question, please? We'll move next to William Stein at Truist Securities. Great. Thanks for taking my question. I understand you're only guiding for a quarter, but I'd like to sort of give you an opportunity to help us sensitize our models as we consider, you know, what the trajectory will be in 2024 in terms of revenue growth and margin expansion. Thank you. Yeah, thanks. Thanks, Will, and I guess one part of it, let me talk about is maybe how we think about some of the trends we position ourselves out, knowing that we aren't guiding beyond the first quarter, and I'll let Heath maybe talk about margin. So, you know, the first one is similar to this year, you know, where we have the secular growth trends, they really were the things that helped us cover some of the destocking things that we dealt with. And, you know, I think they'll be evident again next year. So first off, if you start with our largest segment, transportation, we're sort of viewing auto production is gonna be around 21 million units a quarter, is that, you know, so mid-80 million production. And I think what you're gonna see is, you know, our business model that we've shared with you, and once again, demonstrated this year, you know, we continue to expect 4-6 points of outgrowth versus the market due to the content we're gonna get, and that's gonna be driven by our leading position in AV, also ongoing electronification trends in the vehicle that will benefit from. And, you know, so that's where we sort of see transportation. In our industrial segment, and I know I mentioned it on the call, we have three markets that have really good growth momentum. Now, we expect them to continue. You know, you get places like commercial, we're still in recovery mode. And, you know, dual aisles as they grow, we have more content on that, so that's good. And then in communications, I would tell you, the growth will really be driven by these AI ramps, that we've highlighted to you. And, you know, we think they'll build up as we go through the year, and they can be well over $100 million of incremental revenue contribution through the year. Now, one thing I just talked about, you know, back to Chris's question on destocking. You know, destocking is affecting three of our businesses. That's gonna be with us in the early part of the year. That will come to an end. I mean, you can probably make as good of a judgment as I can of when that will end. So, you know, that's certainly there. And then only last two pieces that probably I would highlight. First one being, and Heath talked about it, you know, the dollar strengthening is gonna be a headwind into next year. You know, we had a big headwind this year, probably gonna be about $250 million next year. And then the last thing I would just say is right now, with where input costs are in the world, we would expect pricing at total TE to be net neutral next year. You know, there are elements where metals and things like that are still elevated. There are some places where you have the deflationary impacts, and no different than what inflation drove us to do in pricing, you know, input costs will be the driver of price going forward. So with that, I guess that's some of the ways that you can think about it. Okay, thank you. Thank you, Will. Can we get to the next question, please? We'll go next to Amit Daryanani at Evercore. Amit, good morning. Thanks for taking my question. I guess I have one and, you know, Terrence and Heath, either one of you. You folks have made some really good progress in terms of expanding your operating margins in the back half of fiscal 2023. But I'm curious, as you think about the exit rate of operating margins across the three segments in September quarter, can you maybe talk about what does it take for TE to get to your target margins across those three segments? You know, the delta from where you are to the target, if you may. Is it volume? Is it cost optimization? Would love to get a sense on, you know, the path from here towards those target margins. Thank you. Okay, Amit, this is Heath, and I'll certainly take this. You know, we highlighted on the call, and you just referenced it as well, that we exited the year in a better position over the second half of fiscal 2023 than our first half performance. And you know, just candidly, we were not pleased with our margin performance in the first half of the year, and there was a lot of work involved to get those up as we exited. However, we are still well below our target operating margins at the company and at the segment level. Transportation made good strides in this past year, and we feel good about the momentum there. But the business model target for transportation is still 20%, so we're still trending below that, and we know there's some things that we still need to do. There's still a little bit of self-help left there, but you know, some volume support coming out of auto production would be healthy. And then the other thing that's a drag on transportation margins is our commercial transportation business is in the downside of a cycle, and that's obviously a very profitable business for us. So as we think about that, you know, I think we're gonna make good progress in transportation margins in FY 2024 as we move forward, but we've got some work to do. Industrial segments, you know, the business model target is high teens operating margin. Obviously, we're trending right now in the mid-teens. There's some reasons for that, the biggest of which is our industrial equipment business, which is our highest margin business, is obviously at the bottom of a cycle, and Terrence just talked about that. We do believe, as we work our way through FY 2024, that we'll see those segment margins improve as some of this destocking gets behind us, assuming most of that's over through the first half of our year. Communications. Listen, we've all ridden the rollercoaster of communications here the last several years, and when the business was growing outsized volume and outsized margins. We're on the other side of that now, and this is a very volume-dependent business. But when we're running kind of in this, you know, $450 million-ish quarterly run rate of revenue for the segment, we're gonna be hovering in the, in the mid-teens. When you start to see that begin to normalize, and some of the destocking gets behind us, you will see this business get up into the high teens with a 20% type of target margin there. There's not as much activity here in terms of right-sizing our footprint within communications. That has been largely behind us, but there is some volume dependency within that. And then the other thing to keep in mind, and this just builds off of what Terrence just talked about, the three businesses that are hitting the destocking, which is our data and devices and appliances, which are within the communication segment, as well as our industrial equipment business. You know, where that destocking is happening is not with our direct customers, it's with our distribution channel partners. That's also some of our most profitable business. And so as you start to see, and you're modeling out the year, as you start to see some of those things normalize and some of the destocking go away, you would expect that mixed profitability to help us as we work our way through the second half of the year as well. Okay, thank you, Amit. Can we have the next question, please? We'll move next to Sameet Chatterjee at JP Morgan. Hey, good morning, and thanks for the question. This is Joe Cardoso on for Sameet Chatterjee. You know, as it relates to your AI opportunity, and maybe this is more of a medium-term question in nature, but there has been increasing discussions or debates around the various architectures these cloud providers can take beyond just GPUs or underlying switch fabrics. So I guess as it relates to TE's business and where you participate in these AI deployments, I was hoping if you could just touch on that topic and discuss the breadth of the company's portfolio, and whether you see yourself agnostic to whatever route your customers decide to take on their future architectural decisions there, and if there's any areas of the portfolio that you think you could bolster or are you looking to bolster going forward? Thank you. No, thanks for the question, and, you know, one of the things that's great about the space we play in is when somebody makes an architectural decision as they're building an AI cluster, you know, that's where connectivity comes in and is very important depending upon what is that architectural decision. And that creates a lot of customization. So as everybody's trying to figure out how to get the compute power, also the thermal elements, and maximize the design, really, the things you just highlighted are things we really get excited about. And it's where companies like ourselves, we really need to be playing with both the semi players as well as the cloud architects as well, to really say as they make these happen, and certainly bring them to market at pace. When you think about all the accelerators that you hear on every semiconductor call, really, they're the things that we get excited about. And even in our quarter we just had, you saw, you know, earlier ramps than even we expected, and I think if anything, we're probably gonna be more pleasantly surprised than negatively surprised as we go forward. The other thing that's nice, like even that we see on that, you know, I know last quarter we talked about $1 billion of pipeline wins; even in just where we've gone to, we're up to $1.003 billion in just 3 months. And, you know, their programs are gonna be out over 3-4 years, and that'll ramp. But everything, when you think about how are you moving in these clusters data around, that has a need for connectivity, and that connectivity and what we do is very high speed, because if you have latency around that connectivity, that is a problem for an AI cluster. So I feel really good with the traction of where our teams are playing to get these wins, and I think it's gonna be one of the drivers as we move off from the stocking, as we get CS back on the growth here, will be something that we're gonna continue to talk to you about. Okay. Thank you, Joe. Can we have the next question, please? We'll go next to Joe Giordano at TD Cowen. Hey, good morning, guys. Hey, good morning, Joe. Hey. Hey, okay, good. Yeah, I just want to follow up on the AI discussion there. One, can you just let us know how revenue in this quarter and AI specifically looked relative to last quarter? And then just more broadly, how do you think about AI cannibalization of business you otherwise would have had, you know, on a more standard offering? Like, I'm guessing this is mixed positive for you, like, on a content standpoint, but if your customers have a finite dollar spend available to them, how much is this, like, a transition of spending rather than, like, an increase in total spending? Well, certainly, you know, you're gonna have, you know, there's only so many dollars when you look at CapEx budget. It's pointed here, and what's really nice is the content element's incremental. You still need a lot of servers and stuff to make an AI cluster work from a compute side. So yes, there is some cannibalization, but it is a net-net positive, Joe, when you look at it, and you really, when you look at, you know, I know when we got it, we probably said we would have thought the segment and communication would have been flat with the quarter before. All the upside in the quarter was due to AI application and ramps.... So when you look at that build is very important. Probably as we start the new year, you know, we'll have a little bit of lumpiness just due to how the calendar works. But I think through 2024, you're gonna continue to see that AI number work up and ramp, as we continue to ramp for our customers. Okay. Thank you, Joe. Can we have the next question, please? We'll move next to Luke Junk at Baird. Good morning. Thanks for taking the question. Terrence, just wondering if you could put a finer point on how you're thinking about outgrowth potential in auto in 2024. I guess I'm especially thinking about EV-related impacts amid maybe some flattening overall in adoption, but set against what has been generally rising content for you, maybe even a little upside versus that 2x multiple, and maybe more importantly, just your overall breadth in auto and EV that could limit your impact to any one customer. Thank you. Yeah, so you have a lot of questions in that question. So I'm gonna try to do my best there. So thanks for the question. I think the first thing is, let's talk about 2023 outgrowth. I think that's important that we all get aligned about it. You know, our auto business grew over 12% in 2023 versus auto production of 3%. So you saw nine hundred basis points of outperformance, and I think you got to take that into two buckets. Two-thirds of that 9% were content, one-third was the pricing that we did. So I do wanna make sure we're all just baselined on that. As we look forward, we feel very good about the 4%-6% overproduction. And I think to the point you said, you never hear us talk about one OEM or one platform other over another. That is something, when you look at what we do, our view is, you know, hey, EVs are always something that needs to scale. Automotive is a scale business. There is a lot of customization going on right now, but we really sit there as the agnostic supplier, being a tier two, of how do we bring the best connectivity solution for the globe to really make sure this technology gets adopted. And I think you continue to see that with the outgrowths we've had. So I don't think that's gonna change by any means, and it's why you see the growth, and that's something we work very hard on to make sure we're everywhere in the world. And it's why we always like to say, you know, other than a few exceptions where we're not allowed to play by governments, we're essentially on every car in the planet. That's a special position that where our engineers design with the customers, where their design centers are, and we're bringing solutions to really make sure we continue to help bring EVs to further penetration globally. Okay, thank you, Luke. Can we have the next question, please? Next, we'll go to Scott Davis at Melius Research. Hey, Scott. I wanted to dig a little bit more into the cost structure. I mean, you guys have done a fair amount of heavy lifting on, I would imagine fixed costs are kinda lower than they were just a couple of years ago. But when you think about the ebbs and flow of your cost structure going into 2024, apples to apples, kinda fixed cost, plus you got, you know, some labor inflation, is your cost position similar in 2024 as it was in 2023, or is it actually lower? Well, it's a good question, Scott. And there's a lot of buckets there that I can think about. You know, no different than everybody else on the globe. You know, you mentioned labor inflation, which is real and, you know, is always gonna be part of our equation. So that, you know, has a little bit of variability to it. But when I think about kind of our fixed cost base, we're obviously going in with a little bit lower based on some of the restructuring that we have done, and that's around rooftop consolidations, particularly in Europe, as we've continued to move more of our operating activities out of Western Europe and into places where the supply chain has migrated for our customers. That could be Eastern Europe, that could be Northern Africa and Morocco, certainly some more activity in parts of Asia, and then within North America, that's a bit more focused on Mexico. So that has that element and gives us more confidence as we jump into it. And then you kinda get into the inflationary pressures for everything else. And I would say, you know, not getting worse, but not dramatically coming down. There's buckets of areas like freight spend that have come back in line as certain capacity and certain types of freight have allowed for some pricing competition. So that's been healthy. But when I think about the input cost around metals and resins, it really depends on where in the world it is and what we're buying. We're still dealing with a fairly inflated environment there for a lot of the things that we have to buy. So when I think about it versus 2023, I'd say it's stable, but I wouldn't say that that's our biggest driver in 2024 in terms of margin expansion. We've got a lot of material productivity activity underway that we have a lot of confidence about, but that's not pricing coming down. That's just the efforts of our team to, you know, source different ways in different parts of the world. So there's a lot of buckets there, Scott. I, you know, net-net, if I just try to sum it up, I'd say we're in a better position in 2024 than we were this time last year, staring at our overall cost structure. But we've got work to do, and we still need to offset the inflation around labor and so forth. Okay, thank you, Scott. Can we have the next question, please? We'll go next to Christopher Glynn at Oppenheimer. Thanks. Thanks. Good morning. Was curious about the non-auto parts of transportation, commercial. What, what are you seeing in terms of cycle there? What do you expect for next year, maybe first half, second half splits? I know you're very broadly based across platforms, customers, and applications, and commercial. And then just sensors. I think you have a little bit of attrition, SKU rationalization. State of play on that, please. Thank you. So let me break those into two pieces there. So let's talk about what we've seen this year in industrial transportation, and really and then I'll talk about probably how we're thinking into next year. First off, in commercial transportation this year, you know, both in North America and Europe, and commercial transportation is just. I want to remind everybody, it's heavy truck, construction equipment, ag equipment. For TE globally, it's in all those applications which, you know, we have a leading share. And we saw Europe and North America actually have nice production growth this past year, and certainly drove our growth. But China was very weak, and China was very weak in 2023, especially around construction equipment. So net-net, while we would say if you took the number of units made on the planet of all those different types of vehicles, it was flat. China was very weak, and really, Western world offset that. Let's face it, when we think about China into next year, we expect construction to be flat again or weak next year. Maybe some recovery in the truck and bus side. We do expect, you know, in the early half of this year, we do expect Europe and North America to slow, and we've seen that. You see that in our organic growth here. So we do expect, you know, at least for the first half, that's gonna be a market that is slower going into next year. And we will have content outperformance that will buffer some of that, but it's also nice that China, you know, we probably have the weakness of China is more behind us than in front of us. Okay. Thank you, Chris. We have the next question- Oh, I'm sorry. You also asked about sensors. I apologize. On sensors, you know, there is pruning that we're doing. I know when I made my prepared comments, we talked about growth and automotive and declines in industrial. Next year, there will be about a $50 million exit rate of where we're really getting that focus as we improve the margin there, and make sure that the wins that we get in automotive and industrial applications really are where we're positioning that business longer term, as we've been talking about. So sorry I didn't touch the sensors piece in my first comments. Okay. Thank you, Chris. Can we have the next question, please? We'll go next to Shreyas Patel at Wolfe Research. Hey, thanks a lot, for taking the question. So, looking at the industrial equipment business, I mean, you know, you talked about the destocking trends. So curious what you're seeing in terms of CapEx deployments. We have heard from some automakers deferring EV investments, and I believe that has been an important driver, supporting the business. And then also if you can talk about the payback on restructuring investments. I believe you had sizable restructuring in this business in 2021 and 2022. So, should we start to see the payback from that into 2024? Yeah. So let me take the industrial equipment piece, 'cause, you know, as supply chains improve, I do think you see throughout the industrial equipment, and that's a very broad and fragmented space as we've always talked about. You see everybody tightening up their buffer stocks, and, you know, we're in the middle of that. You also see areas where you see CapEx continuing to roll. You see EV battery plants. You just saw Toyota did their expansion to their North Carolina campus, so you see pockets like that. But certainly you see warehousing, certainly around consumer electronics, remains weak in Asia. You know, there is a lot of automation that goes in there. So I do think it's a very mixed picture, depending upon where you're focused on in industrial equipment. I do think you see strong backlogs by our customers, and, you know, I do think we have to work through the destocking and see what the CapEx levels are running once we get through the destocking. Heath, why don't you talk about the restructuring? Sure. On the restructuring front, I think a good rule of thumb is about a two-year payback on the restructuring charges that we take, in terms of when you see those, you know, pay for themselves in the P&L. So, you know, it's a little bit longer in Europe, a little bit shorter in other parts of the world, but it averages out to about two years on average in terms of the payback. And certainly layering that in to the P&L as we move forward into 2024 and 2025 for the charges that we took in 2023 would, you know, is one of the things that gives us some confidence here. Okay. Thank you, Shreyas. Can we have the next question, please? We'll take a follow-up from Wamsi Mohan at Bank of America. Hi, yeah. Thanks, take the follow-up. I think you mentioned in your remarks you're expecting $250 million headwind for revenues for fiscal 2024 from FX movement. What should we think about the EPS impact commensurate with that? And Terrence, I think you mentioned a very strong 10% EPS growth in the Q1. Your price actions will lap year-over-year in the second half. So just curious how you're thinking about profitability growth first half versus second half next year. Thank you so much. You broke up on that, Wamsi, a little bit. Can you repeat the key questions that you had there? I'm sorry, you broke up on our end. Oh, I'm sorry. So first question was around the headwind from FX on revenue. Okay. It was $250 million for the year. Wondering what the EPS impact is, and then just the first half versus second half profit growth for next year. You noted 10% in 1Q, but you wrap on some- Okay. of your price initiatives in the second half. Yeah, thank you for... Sorry about that. Thank you for repeating yourself. Yeah. Heath will take those. Yeah. And Wamsi, the $250 million of FX, the way we're looking at it, it's about $0.20 of EPS headwind that we have, in from an earnings per share perspective related to that foreign exchange. And of course, that's us snapping the line in the sand where rates are more or less today. And as rates change throughout the year, we'll continue to update you on those assumptions. In terms of first half to second half, the second half of, and we're gonna, I'm referring to fiscal 2023. The second half certainly did benefit from some of the pricing catch-up that we needed to do, particularly in the transportation business, and the team did execute on that well. As we pivot into the first half versus second half of 2024, I think, you know, we're not guiding out that far, but you should expect our margin performance to as we've implied in our guidance for the Q1, to be, you know, somewhere in the mid-17%, similar to the last quarter, the Q4 quarter. You should expect us to continue to grow from there from the first half to the second half, some of that related to some of the destocking, normalizing, as I mentioned earlier on the call, and then some of the other initiatives, otherwise. Okay, thank you, Wamsi. We don't have any further questions, so please contact Investor Relations at TE if you do have additional questions. Thank you for joining us this morning, and have a nice day. Today's conference call will be available for replay beginning at 11:30 A.M. Eastern Time today, November 1, on the Investor Relations portion of TE Connectivity's website. That will conclude the conference for today. You may now disconnect.