Analog Devices (ADI) 19 May 212021 Q2 Earnings call transcript

Good morning, and welcome to the Analog Devices Second Quarter Fiscal Year 2021 Earnings Conference Call, which is being audio webcast via telephone and over the Web. I'd now like to introduce your host for today's call, Mr. Mike Lucarelli, Senior Director of Investor Relations. Sir, the floor is yours.

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

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

includes forward-looking could Now onto date information described required results and which other update The these differ recent the in We Actual risks reports information our subject certain materials as and periodic SEC. the forward-looking only our the as except by reflect from of undertake XX-Q to the of expectations to our most as with these statements, we're are to statements uncertainties, statements, about materially disclosures. call. discuss filed further law. no earnings and release and as obligation this

will directly prior financial to and earnings special release. these GAAP historical most Vince? Reconciliations today's our exclude comments that, turn I'll to measures, results comparing from also measures with performance, non-GAAP CEO, When Our in about non-GAAP excluded over which periods. Vincent it additional our also our include items. special measures Roche. to included measures of items And are their comparable ADI's today non-GAAP are information

to morning good and all. Mike, you, you Thank

this than materialized the capture become our has demand dynamics been in strength Broadly to well recovery faster on agility, half making our So navigate driven we second have anticipated, modern and supply moved and supply the positioning a and and speed This are customers. balance That earnings with of industry, like this capital by vital and last investments others economic value with positioned globally. XXXX. will Despite with we're quarter, better many constrained supply end and execution we, our I'm in ADI said, face us our as our backdrop, operational robust of The ability capital exceeding to second the you digital presented investments proactively environment to capacity, our the pleased disruption solutions was serve share delivered chains placing in very as speaking, outlook. economy. strong our the Late add to disciplined continued through the year, a that more initially record demand. revenue stress the high unprecedented aligned industry for stronger in publicized.

a to operating industrial for based, results. to broad quarters EPS Revenue increasing margin $X.XX and year-over-year. record highlighted markets. increased our summary of approximately nearly was and XX% billion, XX%. $X.XX to our XX% strength The year-over-year. by expanded margin Adjusted automotive Moving Gross was XX% of

cash Over XXX. generated $X.X This the of S&P free free top trailing a flow XX% margin, the months, of we record the maintaining to our flow. billion XX% in position XX equates cash

us deliver the how of proud to root commitment to quarter very diversity of generate I'm more in business team overall, across impressive positions profitable of So and products executed with innovation than we maintain customers, how to billion our coupled deliver success, invest results. $X innovation virtuous ADI cycle these R&D At This annually. the our ADI, And this applications, the we is value. long-term growth. driven

developing storage across ADI few me and embedded digital distribution the you. the a Now the highlights and to solutions ecosystem electrification with battery are share across let vehicle from the customer grid. managing

manufacturing seeing we're new capacity. EVs, in increasing to shift rapid battery and investments the With

world's the This with producers. a design quarter, battery the one win supplier secured of we of top

grow functions. range control BMS solution as to portfolio and wired reduces integrating diversify and deliver by BMS And diagnostics all our vehicle market innovative measurement, system and half wireless business. cost accuracy Our provides we our of by unmatched leading

two leading as manufacturers, a in including auto as prominent Europe large in Volvo luxury added brand well we additional and quarter, Asia. This three brands

to on energy infrastructure. Moving

a energy renewable make infrastructure to required are support to proliferation. reality systems build the to charging and storage EV energy Here,

BMS supply digital Our to Chain delivered level of management accuracy a ensure the the necessary and grid. across portfolios precision Power consistent Signal

and We to companies entrants. wins customers, have new design of more energy from of the XX% industrial than top traditional

ADI’s industries, increasing course which pervasive more for is area opportunities Another of across us. new demographics presenting connectivity, becoming of importance for and

For example, radio position the integrated business, the our communications in XG the we platform digital complete expanding O-RAN on market radio platform leading into announced ecosystem. This frontend. our transceiver for builds by

new Our vector size communications support connected by entrance improvements, applications, while and in design the factories. O-RAN represents and full significant performance reducing solution market enabling of networks as enables system new customers’ cycles. that growth such private a

Intel launch satellite our depth portfolio to ADI, broadly supporting with scheduled system the with in the carriers space working late This and used partnerships solution XXXX. be constellation business, Telesat the will Lightspeed to our breadth RF In key are win enable In beamforming this addition and ecosystem. Marvell, communication and satellites. in LEO expertise speaks LEO we to is to integrators our adoption domain which and of of at

have industrial design to across our market, continue we at the strong profitable diversified most and stickiest Additionally, largest, ADI. momentum business

ultra-high robust, most an recently are key a processing, of make sensing, at looking wireless solutions more and add we've won point in at efficient tipping the believe as providing to a a connectivity We Over established supply required precise edge customers. and frequency by more customers we're company. solution to efficient automation years, I our and the heritage factory chains Industrial automation flexible. X.X

being costs. in downtime is and advanced systems reduce solution robotic to used Our

wired to are deterministic constantly beginning Ethernet to On are upgrade and monitored. ensure to connected customers machines the side,

European manufacturers. our truly and solutions, is on secured quarter, for hosted dive test portfolios. and the most ADI’s recently machine including technology a advanced design our deep high-performance fit it Signal solution, a that Chain RF and business. requires This great performance-driven market Ethernet This instrumentation numerous we a a wins precision making Power We for largest robust of two industrial

our Our industry. more with scientific the applications across equipment, for trends The test technology electronic advanced instruments of these test is driving measurement need secular complexity capabilities. business instrumentation comprised all with of increasing broad solutions diverse growth and aligned automated is and

we result, in our years. to XX% increase a by five As SEM next over expect the

across incredible a work Now of examples fraction ADI. these represent the only

customers everyday I share update is partnering with Institution. that we and that to To April, create we're but Good. successful lives a on accelerator our innovation people's team only Oceanographic with an of In exciting wanted leveraging business Our innovative an outcomes, Hole greater how our to increasingly world. innovation not technologies leave end, advance to impact also Engineering develop mission enrich our the Woods launched on

agenda, of commitments neutrality to continuously conditions. overall by oceanographic by XXXX. and monitor we'll net As includes achieving engineers platforms and program, zero to and combining This which ADI’s XXXX technology our part carbon with critical supports our this climate science be WHOI’s technologies emissions effort

how on technologies published play will role our Corporate planetary also our to in which while our standard improving continue XXXX We a health. Report provides additional last major week, protecting of Responsibility our information living,

last encouraged continued the modern the all our has this digitalization age semiconductors growth as profitable how our by important quarter, of So years in year to economy in underscored and digital industries. accelerating information and closing, sets ahead. stage bedrock the for pipeline the the in across results We're the are increasingly momentum

I'll that, take through financial will over you hand with who So details. to Prashanth the you

My today in adjusted today's a basis, add on items our quarter delivered me and margin the let call. revenue and my non-op excludes of release. outlined exception of earnings expenses record will revenue, the EPS welcome which special second with an finished end morning, press Good Vince. and you, comments to operating ADI quarter second our Thank be above as high outlook.

well ability on upside capacity, by As outlook our second as predicated would team, did early quarter manufacturing thanks to just in be that. quarter, I execution our to strategic strong mentioned as to production. our And operations last increase we investments

XX% XX% and year-over-year. at Now of by and look represented performance XX% sequentially, market. let's Industrial end revenue increased

Communications the fell all-time across high and flat sequentially represented sub-segments which in digits and saw We sequentially Wireline marks balanced year-over-year, double double geographies, consecutive and quarter with This XX% second revenue, of wireless. increased was digits industrial. growing softness for slightly applications year-over-year. all all strength year-over-year.

call, builds outlined muted have we year-to-date. XG last in As the been

application of every has year saw momentum decreased North the and than XX% Again, However, to X% auction from complete. this and we America, XX% in up sequentially globally in Automotive C-band the industry seasonally as we that of fastest, ago. in sequentially, especially quarter double and revenue. now represented broadened year, is lastly, growth production XX% a year-over-year. deployments BMS more revenue anticipate picked digit the up second notably grew major XG weaker doubling consumer represented across the second year-over-year. as of half X% increased And pick

X% grew fiscal 'XX. consumer us growth in year-over-year, Importantly, deliver to positioning

mix. gross basis the XX points under and utilization P&L, and covering finished points better on higher year-over-year rest margin the XX%, product XXX sequentially up Now basis just of

consolidation also variable the million, nearly higher quarter million, manufacturing and increases interest of we gross comp were savings second year-over-year. additional half and strong to expense. XX.X%, OpEx the quarter XX% recorded expect XX second realize due margin sequentially margin in We was we This the by from operating lower as into expenses from results. year in went operations. expansion netted XXX effect during up Merit the down non-op of driven prior the our the

exceeded outlook was end EPS high. of of and XX%. the Our tax adjusted high approximately an And our $X.XX all-in, marks rate all-time

meet to by our the as than sheet. for wrap to anticipate our record sequentially compared the million through moving our This second was we again. work-in channel XX raw strong once bringing total finished and inventory unchanged of customer million, of quarter lower year-to-date increase quarter, better And below inventory to XXX utilization the million of the a of at dollars balance inventory the million. more to to the remaining half process, sell-through distys, or XXX eight-week Relative strong Days were year. Weeks we seven XX CapEx target XXXX. double entirely XXX. to driven at to the end Now increased the relatively to on due first was demand. material

for continue this expect capital long-term X% increase to to to investment our year. above trend and CapEx of model We

our a Turning flow to margin. And free over is leverage we cash equates a paused over via our trailing the quarter as the we and same with below repayments XX% long-term XX% billion we of approximately cash net our cash on free after dividends repos. is sheet We ended debt Maxim which equivalents flow, and months, to and record target X.X returned deal. second X.X billion our the XX This flow the trailing period, the cash generated pending program, given uncertainty on pandemic now XX. buyback of balance X.X and

plan with comfortable not do reduce leverage the debt. We’re and to

return As remain to flow cash such, committed free to we shareholders. XXX% of

low of each our be in line to is So X.X with as BXB up we At outlook. to our XXX of to QX. rate Revenue the inputs, Based billion sequentially, digits. consumer is our additional margin very or quarter up finish on be million, to after online. be bps. or and double is minus or seasonality fall $X.XX tax up these plus with minus the is XX.X This strong midpoint, plus third expected is sequentially And expect let Based be XX expected midpoint expected minus guide, slightly comes markets to me XX% on between EPS increase expected to capacity and XX%. adjusted $X.XX. plus op a

quarter a by strong cash revenue, earnings conversion. So very in summary, flow ADI free and delivered record highlighted

a Importantly, second we backlog of to progress update than stronger our return that also strong invest the are closes, giving Maxim first. our call meaningful plans. towards the very to confidence be conference increase production acquisition. us continuing closing provide year, made great hold an will regarding deal and for after the bookings we're Shortly going capital to to our and We've remain half the balance

a X. we than leverage having As combined, more cash a ratio below anticipate and billion $X well once reminder, of

Let now Mike the back me it pass Q&A. for to

Thanks, Prashanth.

limit one to this for the Let's go call you order that We yourself to additional on ask participants Q&A in question the session. allow to morning.

follow-up question, have please? if allows. we'll please that, questions Cheryl, take a and first With have our we can requeue you question If time

you. [Operator Instructions]. Thank

Our first question comes Please from John Suisse. go ahead. Pitzer from Credit

open. is Your line

key to the CapEx you your supply are foundry July guys. Prashanth, And as XX a Congratulations sort your on still quarter I'm you at about when your supply spending factor curious, Yes. the ability ability July with Vince, ago work more guidance? sort your constrained you’re I we for you results. the guided April the Good of internal gating and think days in supply. quarter, of environment? was the grow to solid look given how the morning, do partners, grow beyond guess importantly, quarter,

Yes.

of quarter supply thanks for factors test. as forecast what backend all the elements in operations, very assembly a internally, and So, as July constrained. positive externally we question. the across the We've Yes, John, to book build. very, are the we both for got silicon have But supply, all well

opportunity number. out we there very in quarter, forecast. with more. the least we what But confident to is But feel beyond So July in demand ship comfortable that, very at have There feel more there. is that we

And supply growth July? proxy you do how and moderate going are particularly should July do July we the for what sequentially next think a things to be forward? strong quarters, beyond good couple about of Is able getting in a you uplift to or

ultimately, Well, And I inside the remarks, everything we in expand We're getting company said our his wafer supply in think capital Prashanth we've -- depend to in investing capacity. demand. been will our on equipment We're are, operations. general. increasing as backend more

in improvements ADI’s over see the output you'll So coming months. sequential

second our first given as better supply, Prashanth the half second have confidence we in than So said, will of a half. the year, half

That’s helpful. Thanks.

Thanks, John.

question? Next

you. Thank

from comes from Svanberg next ahead. go Stifel. Our question Please Tore

open. is line Your

you kind where Yes. this you the Could us channel norm in talked sort like do to is is back of right being new to some seven way you disty results. inventory below running to the point seven just tell what be to the the Thank going about you exactly sort and at get below expect Prashanth, And eight-week of also, record has eight numbers or of to it historically? congratulations at are now? the now where on target. a

the is Thanks, below very and entered Yes. again decreased it seven We Tore. weeks Inventory quarter the lean. in quarter.

Whatever happen. their get on hands that like to would through sells that's to immediately. we inventory It's going they backup. unlikely So build

to So channel. do is view balance the don't that inventory gets we us seven weeks improved to I you'll quarters, in right of supply channel. coming to until maintain the think the sort normal us the return But I the in over eight say see that for levels the that have would

Great. Thank you.

Thanks, Tore.

Thank you.

Please Arya Bank Vivek of Our next from America question ahead. from comes Securities. go

Your line is open.

lead I the peers Any perspective Prashanth, be do was some stretched Are quantify markets assurance times the price, word times you supply/demand how end to comes are hoping guess for peacefully And I in firm double quantify could non-cancelable Thank of Thanks book where and are? this possible, taking doing prevent my you various lead extent the Vince question. implementing build or any you most? and ordering? to what importantly, to resolved one I think programs that helpful? like get your on be we is to how do of very some state imbalance that will we you. will mind, are that

is just Maybe demand with on from. start Vivek. you, to Thank some comments where coming

that's entered fiscal in So we're compute rewind style with government industrial, experiencing And both pandemic both the they of We markets. lean where you and and our when it's and by we companies driving of had pandemic customers they very Then think driving out cloud in got pandemic significant very consumer use We're inventories. rethink the how pretty manufacture synchronized had broad growth which based strong now upgrading during we coming stimulus, our growth the and manufacture. the of this high and the GDP with with here, connectivity. electronics monetary. to of demand all

QX. guide So been up better increasing. really mentioned, on we XXXX. revenue us supply capacity, capacity, as and additional what a the forecast about for late our QX summer planning that's is good deliver And since side, QX Vince helped as feel we've And add of for

supply demand So away. will I I don't think but see demand, going really eventually match

markets. -- and Book be past for the all the it going drivers for it, feels quarter build was to to was secular above this with us it So given same end X, a this feels behind while. that the is for

based. reflection just very ADI’s think again, a I of incredible really manufacturing And play products the it's across the it's, that broad ecosystem. role So

And in any like pricing programs peers? place put that your you might have

a guess make I there. few comments to

demand. supply our the POA managing customers, our understand markets efficiently allocate demand and across we working to timing are based We both a all POS. the basis, small, on actually and on with while business report We're we to on orders. that the run Remember large

in we what non-returnable We've and up of helps the days understand So non-cancelable, give happening to manage sort into us to help better what's from they us. get can expect that backlog to put look for distribution also visibility to a customer. at through XX customers

really I get I get been requirements. And they're feedback customers at communicating and the that's going to point, So to focus to they think the important this would that has so say going downstream communication. has what production from heard their is well they're respective it, when is on Vince can plan as what's them

Thank you.

next to Vivek. question please. the go Thanks, We’ll

Please next from BMO. go Srivastava Our from ahead. comes question Ambrish

open. line is Your

much, to the comments very that you wanted I unpack and margin Thank you Prashanth Hi. gross made, Vince. Prashanth. just

are incrementally impact cost, about way are the it? factory model that be as building be factor across You versus about plus going which go XX% a gross And at to and the you getting that, to referred half? margin is to the input to second And -- board be related you savings pricing? seem related the an you better, the how consolidation. had the from you'll margin? talk kind You right then Thank sorry, you in managing And also gross inventory and you. cost of from playing to the there Is think is what's would when that that through pricing? up getting

start pricing. Thanks, let's to -- have add-ons that? a on Ambrish. one with do Do quick more So you a let's on, few

margin. impact changes of are net to pricing immaterial gross So

those our that lift that we're really productivity driving. The seeing you're out standpoint. increases margin net is gross the we're cost managing to price So from a

year bottom the did sequential of that we call first say the margins in be gross I earnings expect the for would So that and would improvement. quarter

the in printed. results You're QX seeing that

from That consolidation for guide closure, and is that coming manufacturing in in which the utilization. linear we of see about, some the the we've that have talked You factory QX. step-up also given

evolved how balance of kind of that's way gross with about think the this a tactical over year. margins So to

Our model gross remains you want about long Vince, to on we if term? XX%. margins And give some I how don't think guide know,

seen innovation. really customer pandemic well we here. Yes. Look, And also and application the through performing have a there for. protect creation margins, spending root to the we've like of is us We're products the the highest I diversity we $X got think of value out product that our helps over And as billion domains our paid year.

So XX% less products sales of than revenue, contribute our XX% XXX,XXX individually of even customers X.X% -- our comes and that from we've got or less.

model company. that's the So of the

lot resilience So and there's lot optionality of a built it. -- resilience a of into

Thanks, Ambrish.

you. Thank

Thank you.

next question Our ahead. comes Blayne from from Barclays. Curtis go Please

Your open. line is

question. Hi. morning. Thanks Good afternoon. Good taking my for

Just industrial on of segment. kind curious the

quarter I think being last about peak. of you two talked at six segments

up all in the talked You quarter. about being April

just are of at any if color be and that more record segment by revenue, So Thanks. any them would helpful? there

business. seen all saw Yes. this Well, very We the a diversified growth -- we've individual highly broad very, sectors. is across

of information connected already more of just the a think we're growth the been technology growth I in multiyear cetera. that's If I secular year- double And the I importance and for cycle a upside for pandemic kind driven applications market -- et managing would In has robust more underscored in and as driven by need multiyear our sector. flexibility acceleration supply in Industry healthcare such fact, and all it say trends, to systems. more grew I And we've And the automation come, over-year sequentially. ADI. really by X.X, digits lot because believe strong healthcare, pick a there's things the chains. seen onshoring,

migrate move remarks solutions equipment, would underpins seeing and to been as energy and care that we digital I an business, industrial in in as analytics Also, support And within broad results prepared so these healthcare this the strongest it. with renewables So to charging and test clinic hospital I of that's we're equipment, mentality. the laid we're sector home acceleration anywhere of some I've to the or the are our we've the the as vehicles, very say, and those in with the through the I pleased well, infrastructure seen being mentioned the in electric begin environment getting healthcare with bench, scientific very area. think areas the that But automation on. growth point

very, been broad. it's So very

touch record point on last Blayne, applications. And to the about your just

You're right.

had our I quarter, or that. We increased at of six records. think last applications record. two Four three are

think with our applications some of to we early So stages what yes, record this can to question I next And is of go that, cycle. at echo please? we we're I our said expect And or year all Vince probably next point, be that at so.

Thank you.

comes Sachs. ahead. question from next go from Our Please Toshiya Goldman Hari

Your open. line is

congrats a had question for the on BMS results. question you and the Vince, multipart strong Thank on taking your I business.

design is should Thank how expect in time to combination BMS and lastly, you. quarter. on to your to your or the guess more pertains as on the about basis. than post past profile about the of the it based beyond? to position I could we your win pipeline, BMS how in you with speak projects 'XX importantly, guys this some And quarter breadth fiscal you've revenue You on 'XX I evolves was think over doubling Maxim, some as these more of more the should talked hoping And of the made on relates also fiscal a comments of it combination? it in year-over-year we call there kind ramp wireless that customer and calls

first two Yes. And share market management off, Thanks, have vehicle the know, leader systems. in portfolios. as the Well, Toshi. you battery really electric we're we

call wireless introduced more battery portfolio, wireless version, robust to wired system system. of We a from the it the cognitive like radio-based have existing, way moving the we we've traditional data the a and

into 'XX next wired. the wireless the So see XX we’ll will And will of think the technology. the that be battery wired upsurge in battery technology months after by to XXXX, that begin the driven I late traditional complement

seven, to got? move today, least -- happen will XXx we year X years. eight next produced being somewhere I over what That's going million, cars million So per believe what is, to at the X we have electric produced. vehicles believe being

mentioned today used EV over our areas. in is cycle. selling And top So and being XX this getting and of we're well as chips in position best real in Korea. share tracks Where beginning prepared we're half the I China. Japan multiyear the remarks, cars and our of those each BMS Today, as as to in in a make are globally, is America North Europe

manufacturer miles a per the if they're wants ADI. most to ultimately, charge, going to So, turn

So we're on. that's what working

Toshiya. take Thanks, please. next Cheryl? Cheryl, We’ll question. go our we'll to our next question

Cheryl, can you hear us?

go Seymore Bank, ahead Ross Please Deutsche is from open. line your

guys. you Hi, hear Can me?

can, Ross. Yes, we

great. Cheryl Okay, came Glad back.

what a in it of questions Was it half Just wireless or with color had growth, the you expectations was to we forward, you that wired side? with the couple Obviously, on what year-over-year the your more do it returning looking in had that just tactical the better about little happened think And bit a more difficult can the coming April about than for and communications we was the your business. in given how like then supply some on talked importantly, to quarter, that guess America some expected sense, second Huawei the are or commentary comps I year-over-year, give side, beyond? quarter. ramps wireless with on? you looked but specific North

Thanks. Yes.

said communications really business the second the I for wired. prepared very driven the that by the in growth strong quarter So in remarks was

of customer see in the of growth the in transceiver and remains good product build let Wireless But C-band some second bottomed lumpy. auction, the half, good starting and was see the jump certainly it with to going as up out digits. going to the both you're in with second with which double for conversations that he's that that feel largest participant has U.S. in the we the feel comms we Europe to very the for the Vince pretty and of quarter I well. see But having. we been I'll completion we're think XG are now

Yes.

what is time point rest I Ross, mention than that China ADI. larger Xx in the want So to of is world for this at

pick XG seeing accelerate up to to expect global America, we a very lethargy the XG certainly is there's during North in And make been of communication in real significant orders their we're Europe, of India reality on signs today there. auction in deployment upgrading see and that's several see also we're And -- beginning recently has think general is Even a to -- we're beginning basis. I government over the will where years, XXXX funded that life C-band momentum last program obviously, XG. beyond. very, remember. the systems a we've complete. India important to

think We’re revenue beginning well with And shopping online a already least stream in but have company revenue, what We we're machines. given ecosystem Japan participate and not in deployed last Rakuten, company trials. private I positioned a potential to new our as the of is unlock position very to it in is as particularly O-RAN. gets there brand into networks for

or year-over-year quick comment? the was a you. a sequential wired, in clarification. Thank that one Double Prashanth, just digits Great.

year-over-year. a was That

you. Thank

Thanks, Ross.

you. Thank

Our Please ahead. comes Research. next from Stacy Bernstein Rasgon question go from

is line open. Your

Thanks taking guys. my follow for wanted up Hi, actually question. to question. on that comm I

trajectory last kind and quarter, go you'd of I comm to if China it a was down So back a the bit statement. talked

-- just sound play dynamics then today? doesn't changed. ago from want outside see And is given that's on How XX it So all seeing you're right is Europe, of China, does It U.S., uptick sound didn't that like India. I I clarify. guess that uptick you Is the to like does guess now XX why that the are for rest I of expectations here? out broad versus there? are going happening that forward rollout in your days -- that XG China that the ago what correct? uptick thoughts days

Yes.

ADI this foremost, opportunistic and China's think for at point. I So first

opportunistic. about Prashanth, it will more therefore components, We think I is the sell can specifics. lots and of talk you

Yes.

mentioned, always for the into North by But commentary orders XG in pause they what are second on I the to leaning being When are in about that were the much and we China. America for deployments quarter, followed expected to said starting auctions in the next think, you we have -- to come public have particularly now focused come that. XG and Stacy, the we Vince space, be intend we more seen gave do we complete, Europe. as Verizon that in the

wireless be half. up So is for the trajectory communications for the second in going or specifically to

Stacy. Thanks,

Thank you.

Can our last to we go question please?

Thank question Please from you. from And go ahead. our last Securities. Truist Stein William comes

open. Your line is

the squeezing Thanks ask to in. Great. Guys, function. much for cost I'd about like so me

two looming have We potential problems.

things is then can spending on wonder work as you. not comment the face-to-face start Thank if the return we operations think you to these like materials, broadly, and suggest might as just And maybe factors? I sort potentially models sensitize labor to inflation I side, well. OpEx travel of one that. on our to how we And

inflation So piece the let me first. take

So I base, that are from we basis pushing but cost it where are increases be and to price asked neutral on was are a because that Ambrish guiding feel that, net think for we going margins seeing we're supply through. we question who we a our can

I'm about not inflation as So concerned side. the

labor longer fill We And have it's I than at week would mindful been to the us the about of normal side. that taking factory we're very is the say jobs seeing that data level. a

time there return then return for spend jobs. of of what factories to that we're not but jobs, as that a manufacturing be are a longer we bit as filling no anywhere And facing office, lot media There travel. hearing So little dramatic in is the some it's to in our terms U.S. fill time something is doubt paying these high on. to will

we're be Vince thinking how to thinking about I'll let specifically talk across to return all how universal to about that. I think But companies. is office, maybe ADI going that's more about

Yes.

working those probably capita So instituted with back sense and But we of on on to see to for the per will start week policy here my there. at go will and things who so side not been a spend, and is we from get OpEx where we've three-day remotely, travel entertainment spend have things, forth. ADI per so

other is costs Will, that at The I'll we business. the taking of on the thing remind out work you, relentlessly company

on So the hard on goods we making goods, of work the below we cost as hard well. work cost efficient line of business

take. to then over is nothing we we'll moves see the in it next what figure out see -- new. inflation So actions acceleration how We'll an inflation, if

be cost some to know OpEx I bonuses travel function shouldn't guided but some you've and increase for step-up and such for such, modeling to I there's related think no? activities? we already in So travel

expenses that's of you And think moderate. and is will moderate bonus because business the is OpEx -- today, look the will true. payouts, also expect that over I our growth some very, terms very the bonuses doing very well. in the rich But time, laden profitability I at when with will and growth Well, we

deploy see that to I which have into we're out. second expecting a is to there available indicated we'll margins half of you revenue maybe by incredible in saying to half to are strong. continue doing no shareholders. up going going to give won't translate which rolls going wrap is therefore as you cash to is Will, to And that's further all meaningful since reduction, and not op each we're that lift second debt margins leverage quarter more coming flow, any back gross increase, can We reason be

much. so Thanks Great.

thanks copy be and of morning. A will the Web Will, everyone Thanks, our transcript us site. on available joining for this

reconciliations Our there. also be will

in script You joining that your our new his thanks Relations Investor support outlined ADI. our Analog can of Vince homepage. And on that, continued CSR for and find also with us report

conference Devices call. Analog today's concludes This

disconnect. now may You