Analog Devices (ADI) 21 Aug 192019 Q3 Earnings call transcript

Good morning, and welcome to Analog Devices Third Quarter Fiscal Year 2019 Earnings Conference Call, which is being audio webcast via telephone and over the web. I’d like to now introduce your host for today’s call, Mr. Michael Lucarelli, Director of Investor Relations. Sir, the floor is yours.

Thank you, Sheryl, and good morning, everybody. third XXXX our call. joining for quarter conference fiscal Thanks ADI’s call Roche; With the are CEO, Mahendra-Rajah. me on Prashanth today Vincent CFO, and ADI’s

and missed can at who release, the it, investor.analog.com. anyone, schedules relating For financial the find you

These obligation forward-looking in factors, on forward-looking of about discuss, in and are result statements our includes these or statements. as including XX-Q. information information differ opinion may various outlook to Actual and a this most to release results future forward-looking new reflect earnings as statements recent the including the call. our objectives our materially We to statements of Now in date of The forward-looking we events. those undertake disclosures. discussed our light no from of these update

about results fiscal exclude special measures, historical financial results Our XXXX include these will measures our third year-over-year comparable GAAP which quarter from items outlook comments earnings directly quarter additional about comparing financial information also to and and also When included most of non-GAAP in today short-term and non-GAAP the results. these are measures performance, special release. items. today’s the measures excluded prior are non-GAAP to Reconciliations ADI’s

some not out but point changes also breakdown, want EPS. to third total estimate improved quarter from we method revenue during I to historical our market did to end classifications modest that This revenue for opened distributors. has the market our end the accurate more changed or shipments to

based investor method our a posted website. on look quarterly this have end improved back We market to

CEO, ADI’s over I’ll Vince? that, With Okay. it Roche. to turn Vincent

the in soundly solid quarter be challenging good came guidance. above third quarter in and midpoint macroeconomic of in much, environment, the in third delivered Well, very Mike, to to executed our morning a Revenue billion and you of our fiscal $X.XX we results. continues Thanks what all.

testament ongoing gains to decreased investing secular to market. franchise our the and conditions expansion. is and markets to some This performed diversity the ahead given share X% drive the and BXB well relative performance of Our year-over-year, of weaker macro trends

of given margins weakness. the guidance our above EPS $X.XX. a we reduce market expenses to All Operating were moved told, was approximately quickly adjusted XX%, ongoing as

approximately cash XX% XX And period in repayments. past we've our months, flow the billion more of flow $X or same free during shareholders of free debt we've to the generated returned after revenue. than XXX% cash Over time

has quarterly influencing into detail, before to a future financial long-term. I'm capitalize Now while our markets. clearly on there going continue number deeper level long-term always and results its practice we're our of are The focused our of over delivering we are profitable remains trends positioned insight to how Prashanth more external ADI covers navigating of in end, near-term that To these trends a challenges sustainable on and through, providing the been growth. one of

emerging So today transition way ecosystem industries, electrification of manufacturing supporting and to beyond, the I'd like to sources. is to from discuss for energy energy that automotive transportation number the paving cleaner the indeed to and underlying a

use efficient an in element. electric approach of in the of wave new proud and that is this and playing vehicle am ADI operations, energy We I are on one electrification most role say say perspective important is focused our also we the automotive an electrification. both to from that is making products to ecosystem just

to For in supporting powering of extends then battery. formation management they of ADI, power starts ongoing excels. the vehicles capabilities to battery system common It fuel processing, with and require, the origin the electrical then of infrastructure installed the electric needed journey the an EVs. our to indeed which signal woven all and management the of through thread these is precision The ADI applications capabilities control

more. bit So let a explain me

complex and starts lithium-ion batteries extremely process the difference vehicles the The and journey value one. where time-consuming third of between low-quality a entire that of nearly chemical test, a electric battery high precise vehicle. formation the safe, Our with quality means power battery the cost measurement represent and a

place quality battery and a reliability. high premium OEMs So on

processing, fully of customers levels to battery and power reliability and portfolio accuracy, offer integrated control Our precision products ADI for process. signal test of highest allows their and formation safety the

Our impact equipment XX% to reduces solutions Xx as our two-thirds, reduce customers which well. by enabling by battery formation shrinking environmental reuse, up cost by power footprint and

with the system within Once vehicle manufactured, the the electrification battery itself. grows our been has opportunity applications

is our combustion worldwide over decade grow from more the engines X% technology to which vehicle XX% to projected electric current sales enabler to next transition a so. the Here from than are or in cleaner key vehicles, the

EV that environmental factor of the it miles the the to the over XX the interference are precise be to also BMS complex management of charge safety safely per battery lifecycle harsh performance control conditions monitoring vehicle critical, system needs an overcharging in vehicle, BMS of add BMS the system. battery's to and accuracy cycles through discharge provide Accuracy and as accuracy In the the the car. determining or the major to The and of affects and maintained the battery undercharging it and is the lead challenge a And charge in useless. or plus can electric render can year of directly since deliver. extreme destruction

leverage right perfect measurement electric We’ve IC management. a broadest ADI we volts covering of full all fit the got deep to the our optimized to vehicles XX application XXX battery entry-level. range for accurate provide where Such to premium again battery portfolio supporting down once is industry's and from challenge volts, heritage voltages solutions an precision the for

We to easy another miles functional the per up diagnostics also specifically us than integrate safety deliver charge our automotive level environments for harsh and to enabling products of competition. deliver XX% full are powerful automotive that highest of to designed more are use. suite Our safety,

a us and and rate, that to can we these we position at grow across have innovation confidence giving double-digit curve. continue advantages, U.S., we push in annual key Asia, to continue thanks the to So now leadership the a BMS revenue customers Europe

generations challenges energy the include are robustly weight our improve density, will And to Future car station including accuracy powers electric the ability extends architectural roadmap and the stores and BMS sources our transfer and to innovations infrastructure communicate. the wirelessly solved, finally charging opportunity the on power that that that beyond way vehicles.

their Charging charging the must fast and due cost stations represent unique consumer efficiently And electric effectively peaks. meet demand for to intermittent it their and grids challenge demand the substantial for EVs. requirements also

result, storage charging to a powered battery stations charge and quickly on systems As accurately a vehicle. rely energy

by life Xx by by solution cost and maintenance total can costs. Here up the the the ownership energy a of extending lowering BMS battery to third, of of the reduce precision storage our system

a beginning second market demand see and towards As for for the battery’s by and as extending begin We push increasingly batteries second to applications. rises important to infrastructure believe life batteries become best-in-class this EV life scale. useful life a deployments measurement matures ADI's will we’re a capabilities enabling

the and technologies presents conversion, difficult us opportunities opportunities every solutions the day. ecosystem growth are well electrification for connectivity battery today the in number into capture that to we’re So represents and innovative challenges delivering challenges throughout our closing, future. Through revenue management, our of ADI position that portfolio electrification customers, isolation a our power long-term. highly into transforming for It people market a for valuable and

who take And details. financial will you through so the with that, to over let Prashanth, me hand

release. everyone. our welcome items quarter the non-op morning, of let you, Vince. comments call. which today my earnings be press third revenue expenses special And exception an in adjusted My today's Good me outlined and basis, will to Thank with add on exclude

this situation the for to added them get the review weeks the entity of ongoing wanted export list I that immediately Before into administration a details After resume results we customer. shipping some thorough quarter, few we selected ADI the could all to of Huawei. to restrictions, BIS the quarter, our Commerce regulations third entity products. products with provide A related the list. ADI the lawfully to determined suspended I shipments and Department to

closely and difficult financial But and to for The to export situation step evolve. our as scope, near-term, down level. a least circumstances predict. taken the restrictions well-positioned We're from remain at we demand this monitoring are the feel has adapt and duration unclear Huawei that of impact long-term previous the dynamic

to are discussed is release. mid reflected with in single-digit sales our in we range, customer This quarter. is we guidance our earnings below last result, which meaningfully you our planning percentage for previous a to published this As be which

So get EPS, third and quarter. a let's strong all above delivered guidance. now the of operating onto revenue, ADI quarter margin midpoint the with

balanced industrial was revenue growth X% communications weakness markets. in and a year-over-year by in was Our ongoing BXB down modest as automotive

test quarter businesses. industrial continued of applications strength which we defense, XX% healthcare sales electronic decreased down in and aerospace, our X% And The represented measurement in saw year-over-year, most market and while were the year-over-year.

year-over-year. X% grew represented of XX% quarter and sales the during Communications

record While year-over-year were market customers, by radio our in in both increased the sales leading still wireless systems and and advanced wired by balanced revenue across Huawei, impacted infrastructure. testament used a results double-digit position multiple wireless XG to our driven

outperforming XX% strength revenue has represented [technical auto the ongoing year-over-year, is Year-to-date, digits franchise. was down vehicle decline in double X% of SAAR increased and momentum over Automotive declining time and of the to digits sales. our which reflective the down due a sales in global power difficulty] in ongoing our year-over-year, BMS,

consumer XX% And made increased and XX% up lastly of sales year-over-year.

basis margins $X.XX to sequentially let's year-over-year. came reduced quarter at merit points utilization billion, we at P&L. of was approximately sequentially down go million. the normally due back XX higher now increases, a the by our lower the to $X is to X% midpoint for above Revenue So OpEx $XXX guidance XX.X%, due quarter in Gross down what in and to OpEx million

we on look keep nonessential continue us tight as to you for challenging times, rein and spending. to a And navigate these discretionary can

XX.X% in OpEx Our of and margins slightly offset midpoint above lower margins prudent the op gross of guidance. resulted spend

Non-op $X rate reduce the of tax the with adjusted $X.XX. told share above diluted quarter per we million line the and driven quarter our for earnings expense XX% down a outlook. were quarter interest the by debt. lower the midpoint guidance sequentially, continue as expenses in All came the in third for And was in to

demand initial closure days bridge of inventory the and quality to our me XXXX. you above the build related earnings as on in first to XXX the to facilities We XXX. with the primarily in target at of discussed early the manufacturing call of high-end quarter the of Let This weaker quarter sheet. comment inventory range balance our two increase of exited XXX support we planned

inventory reminder, support expect to level a much synergies transitional as an this additional million of of And million days of of we inventory exited and CapEx complete. customers. over just are a quarter Channel to co-location were X% our was return weeks now $XX third sales the our XXX eight expect normal as of carry of to closures. we these activities to during phase XX to facility we cost goods related to As generate X

approximately $X repayments. to dividends generated flow that and free We cash cash buybacks after through XX debt more we’ve the months XXX% of trailing during our than and time over flow billion of returned free shareholders

Specifically dividends third we the million of $XXX in and of paid our quarter in $XXX stock. XXX repurchased over million repaid debt, million

which exception And now to and be decrease the guidance, automotive BXB of discussed our communications an year-over-year. aggregate million. low will So billion, adjusted with we market and of to the or expenses basis. digits to also midpoint, in is $X.XX move industrial mid-single revenue be on $XX let's at expected the expect to non-op plus minus Revenue

be $X.XX. decline the of Huawei midpoint adjusted $X.XX to to to range. BXB by XX% be the approximately is Based a expenses out the is will plus are reference, of to a on point flat. approximately $X non-op in Operating is margin as QX rate remain expected inputs, our compares, and we at XX% XX% million back EPS roughly minus year-over-year expected expected way And tax these or and if sequentially

will are we uncertain pleased geopolitical current continue investing position these strategically closing, while in manage over climate. and quarter the also us long-term. our given we our And results expenses, to growth that carefully in So to macro deliver areas during the with times, profitable

hand can start it back So to we Q&A. so let our Mike, me

Prashanth. Thanks,

an response, we Let’s question session. one get initial have give to you After the opportunity can our limit Sheryl, will we Q&A for question. follow-up question. yourself to Please please. our first

comes Thank you. Our from [Operator Pitzer go from Instructions] first Credit John Suisse. question Please ahead.

is line open. Your

good play China if I could clearly I base -- U.S., backdrop. Thanks given trade to or kind letting some in, a you understand, solid just from real understand the I’m U.S. and better company, ask is wonder suppliers? Huawei consequences more view the transitory with for could the there sockets the the me me issue tries question. help morning, build Congratulations as of the me intent can of dependence is Huawei of one easily afternoon Do wondering the you its do loss how lessen good station do you results be to be can share between socket Yes, non-U.S for the dispute that? your suppliers. component a you if think able think Huawei Vince, to guys. you perspective on help that long-term on and Huawei

when these as and and density us through Yes. We’ve There put that’s in more competes players are to stations, systems all level. years ever the OEMs as that’s XG general, globe trying areas and position been European, will complex, the in to with performance more information perhaps in our players different spaces. from game. matters and Thanks, we’re every business, now, that’s highest more all become more And where I Korean, John. Chinese taken the play business that company competing our and we’ve over of that And is, say been radio with products, solve base absorbing XX at in But problem. are you're almost radio, we in a really more more whether performance we’ve whatever, the what ways different different systems. nobody our in

you're its OEMs the looking XG performance, You coming that can are sacrifice if to. performance, perhaps. the But for best-in-class ADI, radio

well want the ongoing the Huawei, of corporation know, are whatever thoughts to to with with I you situation regard a the all as OEMs. whatever is across happens one with, John globe we happens And you -- leave that the penetrated very

what happens, matter grow expectation. we no in That’s the XXXX. will So

have business So, doing competition portfolio we're the more we and is coming. already prepared with products we a facet than and have, of just products well of the that

around to regard it and experiencing restriction as well is shipping make with XG. Huawei the specifically into to -- want So that clear I that we're

and will Our products as ship. to have shipping been continue understand far legacy I XG as

needs evolving So we customers. short to process specifically, be the able -- to also And the support in medium-term our it's the an our can in that the we licenses to China, are seeking products here. doing in satisfy to are and situation everything we all of of we need

question, So hope that answers your John.

do you have a follow-up? John, Hey,

is that drivers investors, is you a one [indiscernible] in or be It believe mentioned year-over-year peers. mainly your prepared talk about comms that meaningfully better and the still Yes, does. business industrial quick the I which your helpful. just phenomenon, that Is That’s of just your quarter, kind in which than that would comments, on can Huawei flat you well excluding BXB growth? in be understood Prashanth auto up bottoms outperformance by might helping guys drive October year-on-year

think -- than I more is it is comms. industrial Yes, much

year-over-year about our have you me we a Mike with I of strong how kind it on business think how very pleased industrial are but let think to breakdown Huawei. out basis, is, back if

Yes.

question. good John, So,

I would if So flattish you kind our of look it assumes, industrial. much in year-over-year say, at outlook, pretty

is also is [raise once of across XX% a automotive, it have down and why said out about back on our better you there don’t the in move seeing year-over-year, comms want its mark XXth and away we’ve of up strength -- Vince I I Huawei, the year and talk double-digits and and industrial peers. to portfolio our comms, customers. of you comms XX%. been for Vince, consumer line] than kind down the breadth what BXB about we and the kind think we’re again but kind to about if down And you from XXth as about of know, of our of if kind [ph] in If row goes by that and quarter year-over-year that is to down growth move with its XX%,

Yes.

to I of industrial point automation. right its the will think that I at we're defense. one be it we’ve just all real in don't about of has the almost pockets, much point test across memory business and are business just specifically great aerospace has we tell aggressively weaker, within driving you and increasing look the with would right year-on-year, well. our is as from what's a sub budget now And ADI of and fragmented base where lot growth defense. more more kind been I record passed technologies and if that's fact of I to So the for tepid. year Hittite areas And remains time. at the products from given growth are that U.S. weak And at this in that and broader for is that strength microwave starting are now But now we most ADI spaces XX% and good two mixed-signal CapEx defense strength surprise across needs all the of bring in in space think high-intensity aerospace the the seeing business, that pretty a geographic think RF least given say combination been seeing into the the applications persist LTC a you

dimension to So defense in the continues nicely. future that aerospace Health and growth care that’s business. grow

I pretty to a an is that’s whose speak. this the general so point. time has think in curve, think, knee It's of and come been in I the inflection health really just digital public at I’ve I just area that general, space think

test also. very type like XG, doing or across big given for board, the of systems. is clinical well performing the And it's whether us in side things So patient BMS, and growth electronic systems, well safety that’s automotive radar measurement iron again monitoring high-frequency grade very, areas the

hopefully you. industrial I So the think that unpack helps for story

John. Thanks,

John. Thanks,

Thank you.

Svanberg comes Stifel. question next Tore from Our from

Your open. line is

Tore. morning, Good

morning Yes. environment. on Yes, this the execution and in congratulations good

First question is Vince. on communications,

could kind now until obviously calendar in, is really on been 'XX. X.XG. I in what’s I mean, kicks because that? when a to said up of XG of You expect has a hoping nicely was lot you bit the growth driving that more you little pretty elaborate grow just

So if could on please. elaborate you that

Yes.

to Tore. most communications one thanks, years. is several for introduced in of exciting the The -- technology look, So, new about think the the way of XG I be world to and information think platforms

in pervasive. I very at and it's will very -- looking It's the multiyear So here. a be of believe, it cycle deployment stages early we're

of connection with users really healthcare, their that's enable their it's important. their that, designed is whether modify industrial, to really to models and business in XG important I to offerings an is where customers, the remember system critical BXB to things One whether think it's to the it's

it's Data is time. more so So about continue And doubling consumer, of more for only its about less spectral couple very or the to by over know you that bandwidth intensify delivering and every is need real the and that latency BXB. I that and necessary, years, to will –won’t efficiency. abate, the spatial, think way is low solve

X, I and very early think So, we’re critical these deployment the and one is years is seeing development will virtualization most next more deployment the of next introduction in of very, of of I aggressive what to the stage microwave And X well over generation systems. start the technologies the the be will that a network XG we new XG. element as the and of think the radio see

technologically. as base -- tougher as So are know, getting comment in we're station performance very a well-positioned an in I earlier tougher the I from the The and you standpoint. there, think in problems said

across depth portfolio nicely of board And of ahead will that well. LT we're the in very needs is breadth also I and in point So penetrated our our the the portfolio. well customers' well terms power the portfolio fitting of portfolio there. as very of from the out our lines gets

wave of another during we materialize that XXXX. will XXXX, to growth see begin So that's

do you Tore, Hey, follow-up? have

Vince. for Yes. that, Thank you

customers given environment, just to designs follow-up, wondering now SAAR the a automotive talked for and you’re sort an EV? you electrification and you and about right seeing especially I’m are in the challenging your BMS acceleration As talking of when the BMS.

definitely, Very Tore.

or electrification pervasive I there's U.S., powertrain. think a it's the towards -- Japanese whether it's move of European, Asian OEMs,

of can portfolio an having urgency we And quarter given have, confident the represents that the vehicles so. we incidentally. increase X% these too, there's of and we're the that tell to you -- And level a more magnitude order several decade move BMS Xth last very intensity electrical the OEMs over generation that today over I of that BMS are our towards powertrains. likely electric powertrain by met to of the on all around built, or or next So that’s

another advantage confidence to it's in I we're think of. see, and intense very to the growing this the the as something with our mentioned that on seeing in 'XX, prepared which is of changing accrue in that new kind moving to way remarks we the we're becoming I the yet information in the of trends real. think is introduced rendered more we’re and start that significant well-positioned BMS connectivity very the -- architecture, certainly market will car we're So, take it's generation, well 'XX I we’ve timeframe. wireless that to revenue there I

Tore. you, Thank

Very helpful. Thank you.

Sheryl, our next caller, please.

Our Steves next Mitch Capital from question Markets. from comes RBC

line Your open. is

Thanks Hey, question. my for taking guys.

in one kind XG. So think that the I on of guys content the is interesting the ADI ramp seeing by of are more things you just

So you guess, XXXX? guys see, that guys still within banned, to clarify assume want for if you I about what notable is Huawei is communications, we a So, to believe you are talking growth I do fair? going that are entirely just

also gigahertz, that bringing so Xx really goes well. you those ADI content there that our is the Linear Yes, that it of ecosystem, as that's share And good content top -- two, frequency an systems. opportunity one, in ADI. That's and Yes, the see additional is wave, millimeter also across additional traditional then Hittite two portfolio higher about systems, content we Xx, as XG. of to the really and Mitch, a for on is move to, flavors Yes. the the silicon and There's in have subset XG these absolutely. we out very of

Got it.

I'm gaining I guys is if overall and kind you in continue will real sustain to So share saying Okay. what more can of industrial think terms market And as doing turn you share next to but able the you again, gain within there. few the is over I'm looks it quarters something industrial, to guys that want curious are well? think segment. just being TI? the you guys guys secondly, to I of against then not the quickly like grow, Industrial companies this mean, segment like you

years area core go-to-market is industrial About the and Yes. in ago, we -- portfolio of an retooled many half I perspective, eight, company's company the where about this area a intensely total mean, investment there. been entire ways it nine an the from of Well, seven, this and focused the the more represents just from is revenue. R&D and on BXB has applications priority of

We’ve what into that think lot pipeline, been now I revenue. So that are in cusp exciting we able are new materializing the seeing crop the there. of the that are new coming things product of in the to is introduce we've benefit of a

-- say, provider. So are nine a years component evolve to continuing customer our also we engagements largely were seven, from, ago, I would eight,

of more different components, providing collections solutions, integrated products different applications. -- of forms types highly are we for of Now

many, ways, the become stronger what in industrial. think many, years very culmination many to now activity is targeted I we in of So many of are seeing

I this is sticky. Mitch, add might remember just market particular very that,

that to of would continued see play to it, over coming years. momentum the roll as out and kind I build taken has market about, we’ve, talked several it, broader have strength versus you once So the expect Vince that you years with and the

Okay, very much. you perfect. Thank

please? Sheryl, caller, next Go to

Muse, question comes C.J. from Our Evercore. next

is line open. Your

in I the morning. you to was the side. deal Thanks question. taking BMS Vince, hoping talked on good follow-up great Yes, there. for just

increasing are of within two portfolio about from competitive the technology and how today, landscape here? be think there, vehicles do questions. two, proceeding electric investing changes where it's how you're could hybrid you both your revenues the we in As seeing And five years and think as proceed guess, One, think that now? I about requirements you then I you X% and from

Thanks, C.J. Yes.

First playing and we on foremost, are high-end. the

for really been at is our able of mid-to-high expect of processing. last would kind precision has in you [ph] the for be and decades. of growth focused leverage in signal terms the growth, end the five sense in strength will area problems mainstay company can to years portfolio this I double-digit come. terms That of to what targeted is my applications a Our where are we're say, the several

what opposed as Great. and you to Prashanth, a follow-up would terms paying outstanding down And as your on buybacks I cash point focus XXX% at for flow debt in debt? guess, free dividend of of

I but Yes. question, I C.J. a say us a business position, a lock of into flow. want couple this One, specific that to amount don't Good cash generates a will comments. is of tremendous

So looks sheet, I run broader on that investment -- debt to used large interest be kind that was ago, surplus cash several compared are what so we focused maintaining really What is the grade to like the we to of what's some how just shorter on where the to of very rating, with said going -- We at. how we see to are are a did going be our we mindful doing we're we of maintain that comfortable of Company environment into the balance investment quarter duration. throw are and term I view years ensure ever ratings moved off a lot necessary don't of refi cash. we us moving that, to would ago us that a kind agencies and X-year grade. say, rate the Having a to to

drive I'd down in taking moving we’ve to us XXXX. to of meaningfully count share highlight And kind continue down. our expect that been that So

us I XXXX. continue in to you expect can think do that to

C.J. Thanks

you. Thank helpful. Very

next to move question Let's please. the

Morgan Craig Stanley. from Hettenbach, comes question next Our

open. Your line is

Craig. morning, Good

Craig. Okay,

you a On in just of perspective your color Any what from growth in number subsidy long-term near-term market a and of just terms have of drivers, weakness uncertainty the that auto in positioning electrification, a and China suppliers basis? on near-term in seeing demand. terms around have China you're noted

digits geos. I What is in China say will Hey, -- grow our last did the than position China. XQ look we and yes, I we is, us. for grow what's And up a year-over-year, base cross in in deployment still it market, Craig. we was Yes, again if grow. we quarter double on big we’ve with a mean, it's you over quarter even year-to-date, lumpy the but market did business. less going market-leading in fourth year-over-year, BMS, to But expect we're

it. Got

I reiterate maybe do the that want And Craig, to Vince prepared remarks mentioned.

us, as than the the We enjoyed possible. efficiently For more as who much about form batteries. managing processors just it is with and test growth the battery

capabilities that the the drive have we helped help We station. of to the range are that use LTC charging extend also and efficient in power

just the for on us out as build So continues it's the to batteries. to electric vehicles, support a play focusing ecosystem bigger than whole much

Do a you follow-up have Craig?

I Understood. incremental when doing with on update gross of things in a of color. some expect some manufacturing that? you you're Any consolidation. and Yes, Thanks see synergies margin the the footprint from would impact guess Prashanth, terms just of to for that the follow-up,

the Thanks Craig. for Yes. question,

So, be higher mentioned starting bit is to I facilities the bridge to inventory inventory quarter, in remarks, Singapore a our able that’s this prepared necessary because to put are for the California. and the as little us we in close

continue we facilities serve customers, so that we take while need that can down. inventory So to will those we bridge

incremental of several coming as We on that and been flowing a XXXX through run basis, the all calls, in those $XXX we’ve are be start cost targeting public P&L -- in sold. rate savings XXXX about that an through should to that's -- million goods early

Thank you. Great.

Thanks, Craig. Sheryl, next please? question,

you. Thank

comes question America. next of Our from from Bank Arya Vivek

open. is line Your

Vivek? Good Vivek. morning.

to the Okay. next are Vivek, caller. going we to go

you. Thank

Rasgon next comes Our Bernstein from from Stacy Research. question

open. is line Your

morning. Good Stacey.

OpEx. with start Let's

the QX? a OpEx OpEx, a still where Can about are is the implications given Are little see that continued take seen? OpEx variable on the trajectory more environment being bit bottomed at weak concerned into given little environment. to the there you for sort you’ve guess, of So obviously, expenses that on comp talk how or point you this you mentioned you metrics, is I down? given room what going

Yes. question, for Thanks the Stacy.

So way think I If the guidance. as answer I I gross to you first, implicitly reminder, don't we a -- margins that OpEx question, guide giving anymore. am

qualitatively. But

we Yes, made it our the think to are have in OpEx versus is, way we a about reduction -- QX. our meaningful

had a going QX. improvement we sequential So into

kind carry for roughly that We fourth for to are quarter. looking the of flattish

discipline. OpEx and that control cost we We continue will exercise on focus the can to variable

said levers act businesses do element the up down be As as of will which before, a and QX. go as compensation one certainly is that the meant we’ve have to and an we is system, flywheel of our

Got it.

you. Thank

you. I do. Thank

had getting prepared you mentioned your where your the is challenging, Have Vince that still near-term. expectations where your isn't say them were guess, where of be they better expectations that and of to the in Would go just kind you than year-end I worse So ago? months similar from are to versus things worse the versus gotten environment things perspective been? into the had obviously to remarks, sort things expect been months expecting in three macro ago? three where have you that are prior

between and Yes, would and Well, have tensions China I obviously Thanks, say trade the the America up. uncertainty Stacy. ratcheted

PMI as I think the happen in actually short-to-medium somewhat. GDPs it's there, indeterminate. term, falling indices What as will well are

So increased I has quarter. think last that I the headwind somewhat, since think,

more when very, There's innovation, up. globe of try the how to think more the across all the very R&D customers the world and the gearing are I are technology about is in sectors. strong classify I budgets thinking world,

say about at I the but probably optimistic the the CapEx, right would customers say, little in optimistic than ago. future the who people quarter point less commit about this I the a So time, are were, they a remain commit future, investments, think

commentary pretty give that’s much So can Stacy. the best you I

our potentially there sounded doesn't pretty had end And at of a you getting about conference May, Okay. the I positive like sound Vince, it deal, guess, were anymore? trade in

Well, who really knows.

it. sides both think on working are I

on it I deal, think at domain their I And point. heels think what’s in both but are digging conditions. in sides incidentally, that the public this both there sides want the is out the depends

a the which likely I of yes, here, quickly I to your summer, is by end is May. sense spoke looming deal the would less when than directly, trade very say and in of was So, the answer question Stacy, back you it

Thank to All questions you Operator, Stacy. today. go can. the right, to in we we there. try our are to be back that if will last [indiscernible] three Vivek, going question for And

Okay.

from Arya Bank of America. Vivek is from question Your next

is line Your open.

Can you. Thank hear you now? me

Vivek. can, We

Okay.

for Sorry before. up screw the

your it's trade but know positive had January Huawei So the this war a there's volatility think volatility. also and question, quarter? seasonality how going quarter, first should about and we into time, I consumer Historically, you've

one is curious, right your just of quarter now? kind visibility I’m out how So

lesser for I typically Industrial caveat quarter typical Typically tell you, will and down quarter talked back will BXB. But here can 'XX. quarter the market, typical think you almost think -- in there again and not will is update the on quick typically our giving a a guidance a out. quarter XXXX. a in to we I think fourth this we next see with first be kind would weaker about say being I I I a time. volatile than was for to seasonality. -- expect first it in it's that weaker do not of us are you and is but acceleration the I down. and comms soon outlook degree It you XXXX, very in for consumer call, quarter. down

All right.

a follow-up, Vivek? you Do have

the you. other thank then yes, And --

industrial last lot The when other know kind Vince, but a automotive guidance -- I were October, down quarters. look you uncertainty seen X% your are down which year-on-year of last be of I businesses, actually right in the giving better it's what for the look at now, thing, can you're is macro of and at couple than think I we’ve year-on-year, about flat there's few quarters. year-on-year about industrial X% the and so I saying If they much for

That quarter, somewhat just it. trying outlook. environment So I’m look the uncertainty of, versus at in positive industrial to seems October I all the macro when kind reconcile more the

aerospace of and strength, couple where a the we’ve there. being specific defense kind areas of Yes, top seeing we’re list of

And an increased earlier also continues the a aerospace bring. of combination defense, the of For company. that and and of portfolio for of a the being It's we the in to mentioned budgets healthcare that I on grow range area it's technology strength reasons, where again, years many be be come. think company optimistic to of many, for years, continue an over for area, it I we've and very very and growth X area that will been increasing source last investments X, the about good to a the that's

So are now meaningfully industrial relative the most right there to are to market. the we're two side the areas, on seeing that the strength contributing Vivek,

I know you but than numbers a substantially would remind change asked year-to-date kind want Vivek, about basis, in those you better that QX, on I to have specifically trajectory market. in been quoted the And the broader of you

although the year-to-date on outperformed, down We've broader has a basis outperformed market we’ve for the market. industrial us. generally been So

Yes, absolutely.

Okay.

Thank you.

forward will Thank for there. the joining you, on Vivek. XX days. Thanks talking everyone copy found for of reconciliations joining website be transcript us us information A this and in you can Thanks be to all our also again and available and our to look of morning.

This concludes conference today’s call. Analog Devices

may You now disconnect.