Texas Instruments (TXN) 23 Apr 242024 Q1 Earnings call transcript

Welcome to the Texas Instruments First Quarter 2024 Earnings Conference Call. I'm Dave Pahl, Head of Investor Relations, and I'm joined by our Chief Financial Officer, Rafael Lizardi.

For any of you who missed the release, you can find it on our website at ti.com/ir. This call is being broadcast live over the web and can be accessed through our website.

In addition, today's call is being recorded and will be available via replay on our website.

forward-looking TI's involve from results expectations. include that and management's will cause could to call statements risks that uncertainties current This differ materially encourage description. as TI's forward-looking recent SEC notice earnings We a published most review more for in complete release well contained the regarding as today filings to you statements the

Today, we'll updates. following provide the

quarter. I'll with start a First, quick overview of the

what our first Next, revenue results of insight end details to respect into quarter we're provide with I'll some seeing markets. with

the give quarter guidance an cover capital financial as well the on will share management for Rafael Lastly, results, of update as second the XXXX.

a declined as quarter. Revenue expected XX% Processing declined year-over-year, with XX% of in about billion, overview $X.X and in decrease and a Embedded came Starting of at XX% XX%. quick revenue the Analog the sequentially quarter year-over-year.

Our from declined year quarter. XX% ago Other segment the

I'll revenue quarter all our our end provide markets. sequentially by end into some across Now Revenue declined of first insight market.

reduce environment Our levels. current results reflect the continue as their inventory to customers

to this time. focus Similar at more on as it's last sequential informative performance I'll quarter,

First, upper The down market was electronics single digits. mid-teens. down the Personal market automotive mid-single was digits. down industrial was

Next, communications enterprise was lastly, XX%. equipment about mid-teens. was And down systems down

management review now outlook. Rafael will and our profitability, capital Rafael?

everyone. afternoon, good and Dave, Thanks,

higher due Dave primarily the XXX to As Gross gross profit lower From costs margin revenue. basis expansions. our Gross quarter and, billion with manufacturing $X.X or planned of associated loadings decreased profit and decreased was revenue quarter a billion. first mentioned, revenue in XX% $X.X reduced ago, extent, capacity lesser was a points. profit factory to year

XX-month year or On ago revenue and were were $XXX quarter expected. flat of our not was $X.XX $X.X quarter. per that revenue. basis, of the XX% or property. sale was and trailing included profit or the from XX% Operating to $X.X due of was operating a share year as about billion was billion expenses guidance, the benefit quarter quarter primarily in share. original billion a from $X.X a Net expenses the in the Operating per down in ago a in first income million, $X.XX Earnings XX%

results, in on comment Let Cash billion XX expenditures cash and our me with $X.X the $X flow over capital in our trailing generation. billion a XX-month trailing quarter was operations were last from starting XX-month basis. Free was the the billion now $XXX and cash billion a $X.X quarter million. months. flow on Capital $X.X basis on management

$X.X paid quarter, in to our dividends. $X.X owners. In past billion in the And we the months, billion returned we XX

with the with strong and $XX.X issued the of billion investments $X quarter. now a coupon is remains sheet X.X%. average in weighted $XX.X first billion short-term outstanding balance of Total at we first cash debt. Our In billion debt end quarter, of

billion, prior was up the $X.X the and XX were Inventory up XXX, quarter quarter, million of the from at days end $XX days sequentially.

quarter, $X.XX revenue to TI be second billion range expect earnings the $X.XX in the the we For $X.XX. to share billion $X.XX and in of per range of to

tax our We rate continue XX%. to about expect effective be to

add value that the will In in areas closing, term. focused stay we long the in

We continue product long-lived technology, are advantages, our reach to portfolio, and which our and positions. and invest competitive manufacturing in diverse channels a of broad

per the term. strengthen best focusing the to allocation advantages by disciplined share to deliver us believe and over these continue will continue through free long to growth will We which capital on enable opportunities, flow we cash

to let it Dave. me back that, turn With

follow-up. for an the you you additional an for Operator, can Operator? [Operator we'll Rafael. After questions. Thanks, now response, opportunity lines our Instructions] provide open

first [Operator Instructions] Arcuri Timothy question from Our with UBS. is

mature still that the Rafael, been like and I been may but the for you CHIPS know announced, allocated nodes. I'm update wondering has any you all gotten. if basically outstanding has advanced can us on an for there's money money give nodes $X have billion Act

So of us? about talk for can kind you that

Yes. No, do to it. happy

First, what late Program have our give. that, don't details with update you're is Office. the frankly, I working are We're to. to CHIPS On address last let year, the think we submitted which that an application process, referring through me still grant, the going through

investments we the As before, manufacturing Program both the in with well Office. Utah said are in and objectives we believe our positioned of Texas CHIPS

be billion let on credit. billion $X.X And in receiving give XXXX. an we the $X starting beyond. we so the second you and a we Now about the And tax all recently million credit. total date, in accrued to ITC ITC, investment released and me that based about year, update cash benefit quarter, of XXXX $XXX throughout next the on on expect regulations, for the To have will of quarter, receive

you have a Do follow-up? Okay.

ask wanted think of yes. depreciation. to the do, I If where factory at about sort your implied loadings look June. inventory guidance, margins I and goes I for pretty ex gross flat you

do like expect you sort have like off seems in It in seems kind maybe it start come And So right? to June. it inventory loadings for down of tick Is leveled in should June. what a June? of that

sure. Yes,

as for on future neared And Of we'll a a more adjust or you the those that to tell quarter, desired We about inventory then from for revenue. we guidance. during discuss that range course, range as depending remarks, gave XX loadings on second now, now, factory gave demand. inventory we I'll days grew going EPS. We in first gave said a we're And less. prepared And then our quarter, we adjusted we But loadings million. $XX-some we levels. on

Our from next Stacy with Bernstein question Rasgon is Research.

long additions? revenue capacity gives naturally your start recover, utilizations inventories think given I how position need as sort factory you just would your how Like wanted to of you for that anyways? utilization downward bias to coming which online, your what guess taking up? If I follow a utilizations to on and imply would need Or take much to growth guess given current would I on positioning up and inventory how we utilization begin well that. capacity as additional up about revenues when do to

Yes.

and depend question, And capacity place thing factors, company, having just even potential a I going in the can the much is good tell downside inventory you don't complex a of the question. is that revenue number lead a any of it's business a just profile longer the on our higher to we times so we to risk. going really significant but drain have want depend. on and expect Maybe X in this the and it's quarters horizon. the a we're Stacy, upside -- given X how or or it's run with not than but kind best because -- faced and the inventory short it's It's with over at end also you keeping So of to model what day,

you insight a Do into gives that follow-up? So good how thinking. hopefully, you we're some have

I do. was could a I if wondering bit about you talk pricing. little

you're do as suggested things on of Is to still -- environment? that last resuming which historical what that seeing suggests where better? think we're think you'd that we in? pricing see worse? of in mid-single the I there Like pricing trends, I any going digits. -- quarter, go was Are it it was I things terms you down forward? it update that Is Are environment the low was sort So think

comment I'll on that. Stacy, Yes.

in things those open quarter, back out in following windows those to for last discussions would years year as whenever really and what pre-pandemic. are their said seen time, last year year, really, with in we XX, the I last mid customers seeing back just of And XX we of began pricing demand up. in last began we've As going change half the the kind

declines single-digit it say I'd roughly very just to time. describe So in low low that's we're over see. what to generally the continuing And

Let more me bonus thing, I you Stacy. a add to one answer. give want

OpEx. ask always You about

not has give of Remember a quarter X you to that X months going had you're asking, full of quarter I'm raises, OpEx. only whereas but So months raises. first second

modeling. your for something it's So

of Our next Securities. with is Arya from question Bank Vivek America

the think in you said sequentially. guiding be prepared up customers also you're I X% levels, continue reduce to inventory sales to but QX remarks,

is, you're Any market should time. semblance perspective? seeing give or from industry past back Just think on color Are So other we we as demand normalcy real you quarter? more a Are of from of geo inventory -- color of on an getting my of kind QX any could to what normal end question a we seasonal correction? perspective. kind the some

Just you market. are the largest, the right, most vendor influential in

would very to cycle. your be we the understand inventory useful perspectives I in broader think the where are So demand and

let me in helpful. quarter with Vivek, the happen saw because Yes. think start I last what it's we

the the out as describe was market few first into was behaving went -- It the that to First, come the really it personal I'd quarters. first last is correction. we seasonal. in more electronics saw

some And time. we the we've spectrum, has been to that how quarters, from talking end behavior have which sectors the of some That few over XX sequentially other the If inside been inside you asynchronous the of go about there's the there. had quarter. we've declining continued industrial, last of XX,

we've decline So later-cycle some couple and there declines are that beginning sectors slow double-digit that declining in are of begin to even some to are and continuing that the the got rates. But at a grew to sequentially.

is describe So than quarter, last this certainly that being just different more would I quarter. which mixed as

historically, look, quarter second quarter seasonally and -- a us. for is So strong

for unusual have Do to sequentially. follow-on? growth see not it's us So a sequential you

little on Maybe if press that. a bit I

that below work will your For worked have they think automotive, to down of -- inventory specifically industrial think is and down Or are the what QX, back customers do and looks you are actually for inventory? you we something assumption does we do that Or QX? like your TI most continue we seasonal? imply, getting different? normal in semblance are some we Are seasonal? guidance to what demand of that Like

by looked -- inside cycle. of practice not were quarter, it that Well, of inventory there of are the And again, the in end but obviously depletion as industrial, some end nearing market. customers even last that we inside guidance of giving at we're

types don't try try predict cautious know, So bottoms or of and not what we very as and facts. stick we you report to those to and to to -- see the tops or just be just things we

is Barclays. O'Malley from Thomas question with next Our

and competition. regards didn't like came -- the increased edge really been lose some you American trailing share Can Mine you is China would North players has any talk the out in concerns of to months? XXXX China on that data recently, that despite looks China. And last there larger of about have didn't super some it Are you color of in some on you way has you before? environment? can there? talk players over useful. customer more seeing Any just players change the competitive be Are seeing the see that would you kind behavior couple that trended

well as Tom, think, things many there's And certainly, that say years there's subsidized capacity years. no very or competitors last couple got ago, place. it not yes. to question. certainly that describe as China. But is. the Thanks, harder is months. again, would as changing And talked for to few changing XX X over competitive are for of competent compare going that It I We've local years, over last in that there when change Sure, And I a would that landscape overnight. the some I that's But there? you we've about in compete

So to support our market we growing it That us. And China be will for an can customers. -- to a there market. is and important continues compete

whether So markets, advantages, China. our all the a in breadth have portfolio, technology, serve well that's our the very, reach follow-on? us manufacturing Do the of you and competitive very of the

Yes.

those you're customers. particularly. since auto the conversations on Just had know that out-quarter, you with you've guiding but that just updated last not us I

customers are but was have think really ordering last patterns Or to months. coming back I auto of environment, to want of which inventory inventories Obviously, you think there supply on that see of sheet? Do just you just-in-case. through stated moving change through you just-in-time any you persisting? do on mentioned just lower unique just kind kind the of their But the much particularly situation we're down. a that chain, to thoughts have balance that a in the several a pandemic,

many actually, were is Sure, again, and that in the supply they in out both that things they many coming dealt what yes. think differently and looking had on through Taiwan. significant customers, I carrying as just that disruptions Tom. wafers Thanks well automotive, very went those with pretty their of found that where inventory. And dependence supply thoughtful they I at from, in went and coming they especially when that a extra would China chains can do beyond say of have they days through analysis,

seeing after. to that we capacity that's again, about We It what described us is sought what seeking. that our -- today. And is capital geopolitically to before dependable And that talked they going we've management highly is in believe are they're be updates. that

And come so I that. be customers think will we're and in growth from a to able support that position to that

Ross Seymore question is Bank. next with Deutsche from Our

for one, quarter, the please? you of us Dave, end a don't I going the you quarter-over-quarters. first by I the guess I'm ask know segments, you by to give questions. couple year-over-years the but were to Could market the guide what want first in gave

I can do that, yes.

down up was XX%, the digits. XX% equipment was single So ago. down a a have you actually Ross? lower was about Do Automotive industrial system about market year single mid-teens. was down down and Personal electronics Comms was enterprise digits. from follow-on,

Does $X the of is getting when little said $XXX money I side I where that that and Or excuse of Act matter the cash Rafael, as grant of a bit of differing opposed timing do. time. you impact side just of CHIPS you it same, million ITC -- any the just and have the over a talked it's or getting the you're inflows me, a billion about to, before? trajectory in the you're think, income statement? on the

direct no statement. on our depreciation. No, played expectations as in flowing and Right. depreciation impact and already P&L the on are the the in That's through lower already income

have impact Of operating kind course, having But line. of below does or have have to the more more profit profit income. cash the cash, you're that's in going line you aside, interest of more terms that put an

continue me So in to to $X We've for expect expect that to about XXXX, speaking -- let for billion more the we you been at And of $X.X update but likely depreciation, in billion. that, year, on this That of bottom we're that. $X.X is to billion half continue come depreciation we $X.X talking give range. an to depreciation. billion

with Our next question Citibank. Chris Danely is from

sheet on question balance cash. another and just Rafael, the

you're have cash, So changed? sort X cash, here slowly long-term et your what's X kind guys of down of then count and increasing last but debt. building Any the steadily. guess quarters, for seen Traditionally, and on the the changes in cash you the or count cetera? of of share taken there I flatten sort share you've thinking usage out

times to you've When Yes. it can it flow cash the the increase it to that all there circumstances. capital depends, our to the it you And up cash liquidity or cash. of return flow We all while. -- -- comes over do and known company, -- and comes to objective depends and at we us moment, owners a build time. But are to management, when on for

have balance steadily you We over the the seen couple last So do quarter. last of billion years us at sheet. that increase and cash the $XX.X on finished

important be very And particularly CapEx will per that to of next we've been to the done right, protect because most the in the that that year for manufacturing has and few investments the last X continue $X consciously, investments allocation years for capital, is the years. billion we're making,

made overall we've mind, on in we that decisions, decisions have the including as repurchases. with in So capital had that mind allocation

follow-on, a have you Do Chris?

Dave. Yes,

the, I more China on but guess, on insourcing Just another question side.

competitors impact about any TI? growth this Do or an very will your of this impacting So helpful. on thoughts I some long-term, China talked or this business? on you guess, there guys be have them. see expectations alter color of Would would your Just your

Yes.

there, market. So and -- it's win do I'll a the that But important there's call, if alluded to to you incentive Dave, We design there. very we China compete semiconductor want chime compete local and, to suppliers. China, to is there. need start clear an on earlier We there to compete as in. pretty Dave

my is the think local of sourced today, content what referring to insourcing. XX% guess, by suppliers. that you're And sense is local as my semiconductor I share, that's to XX%

XX%, I is think the exact one I the saw. number

now fight is European is that continue and our and And U.S. goal suppliers. shared XX% that U.S. between maintain competing another there's that but and means gain European suppliers also and local suppliers. that semiconductor share, to with with So competing

that, when Yes. competitors, that China we support, any And performance, And on we've in maybe just that's have best got have be of add. to -- whether parts. In to the cost. and we've ahead on I'll means availability got market, just

to where So that sourcing have about in we customers products beginning they're -- region are think every and from.

geopolitically that And customers they capacity. China revenue. at are aren't XX% looking about So our, dependable it, that's our describe as of in

we customers of global Taiwan And they're China coming capacity. and We're markets. in wanting it are XX% China and ones dependable to scale our The describing China, support that that's have it unique. because in access outside at have have capacity very geopolitical and the only to and building is that

it understand that. China in well as understand as customers They So outside. both

Our next Joe Morgan question is Stanley. from with Moore

XXX-millimeter pricing having up. strategically of but about I've asked different? pricing more change of might contemplate question you more of about talk more how there before, capacity, decent if paradigm at wouldn't you you capacity, were Can the as think kind keeps markets coming any that subsidization? more Does where be, amount this you than it Are a that price-aggressive all? you be

Yes.

So with on it the be will we strategy pricing. our how consistent before. changed answer haven't But you've amazingly asked

our You quickly reason choose the industry, doesn't know pricing why in it customers isn't and that move products overall. our primary

monitor we've end the regularly And great we've be to access got we've That of can it markets great all and got on for And our do because and includes we our and got products. markets we competitive we portfolio, all to that So product price through a product because all products competitive. pricing build regions. we XXX-millimeter. categories And channels. all

consistent. follow-on? you amazingly that's a have hopefully, So Do

-- vertical with more and Yes, sort a number just kind track core how that would think you that your you've had you broader the happening microcontroller that? strategy there? you of on that Where I that would in terms of transitions that the deemphasized things do the are of of catalog that business Or business. focus about of a of are kind in you a markets know kind business? of Yes. in you Do embedded business, like expect embedded

Yes.

embedded we to that I is invest. there our time. free business to make business have a continue continue great it's think think to growing The that overall cash in our long and over goal contributing a We to flow progress business. and

we're happy very progress. So with strategic that

the on So that to bit put foundry future I constraints in investing are to the to to have corrections. gain we control really there. embedded supply. position a in you we're later due know, in share relying place. have we're in going cycle-related of because think course, and And And to It's of that near we'll be as the capacity a little immune not good of term,

Svanberg Our question Tore is from next with Stifel.

I Dave, -- I the outlook. QX QX had question the a about mean

So are I you perspective, the that. like would a know, broad-based sort from quite it's obviously, selective and you you're still can't we by see all in that applications different But in guide market starting bookings? to say bookings a Or things of recovery targeting?

Yes.

month me don't very jump speak a on, in would see saw very That us. would level. top If out the let of we at that unusual at going So each quarter. bookings there's first have market. the something end quarter. course, by bookings to bookings increase is of typical We that I

Tore? other we So would we not I would something and me. as And are course, have to. guidance. customers a it that's I just those front our bookings as from have our But demand obviously behaving signals here of you into follow-on, imbued that in get it Do describe expect of

very Yes. That's helpful.

segments the segments found there's a grow that are? from few starting category talk are As bottom Can you have inventory you industrial within correction which an perspective. about or perhaps mentioned those follow-up, the my to

markets of shorter-cycle were that are just that last roll about quarters Yes. to rolling sectors asynchronously, we -- into sectors were there began talked behaving investment the over that that was couple investment earlier, or cycles really last it. longer-term Again, quarters now later the were that as there behaving several so

out, -- them it's to if really you kind So they that's look had what would of divide like.

with Our Chris last Wolfe question Caso is from Research.

for does a previously? of kind return related realize to is, question flow. industry guess what and of degree the First of question. is buybacks, is cash trigger resume the conditions in I you in what been to to being doing addressed think the prior some allow But intention and that be sheet the I come you've But free excess point buybacks? what kind balance We to question cash the the would able XXX% you back at of this to

things. Yes. Well, couple a of

the -- was flow million. free For cash that XX XX for also example, $X.X you returned the months point our data in give And trailing billion. we I'll months $XXX in is trailing

be So investment one consuming that once catalyst good this of free phase flow. that for would a cash past a is chunk there change we're

Another obviously when we that number puts that years. are a capital. revenue and of behaves But -- so catalyst some about these allocating how takes just is of we're think over the and

follow-on, Do Chris? you a have

going year, revenue, comm I and segments I allocating lot been is such is But more. about do. forward And as like last a where changing. know may Over of some that I guess industrial R&D and about the auto looks question be equipment is it design. your that have got XX% how TI the by you've down investment that's

out look Or think that the R&D the or changes the think we revenue of you right it you years substantially? As of on segments making, that stays percentage so, is investments do now? where about do kind on you're based next X over

great a Chris. it's question, And Yes.

backdrop a XX shows about an our our R&D we're And those management capital our slide let what at for spend. by end revenue use as market. talks percentage there just middle directionally hadn't column looked that And So from the Slide of me deck. doing

some in talked trends been our for that, there's and about as we industrial up taking be have that we've And secular time and there. So automotive. result and going investments that of -- belief semiconductors to a -- increasing

investments our and to markets. steady have look markets, And can find and great be continue inside personal though, those because we been opportunities very electronics equipment, of you the other there if at communications

continue we'll investments. those And so

us. we It of that likely grower plus. there's above-average systems, enterprise and an believe, investments industrial enterprise the there doesn't grower up make we've inside dynamics a be as decade automotive the over as sit But that for certainly, And opportunities, will the enterprise, next things well. systems same then have And slightly. taken and just will good quite

turn with up. that, to Rafael I'll to wrap So over it

Okay. Thanks, Dave.

At Let the and what have our me best is progress the ultimately, But our growth of owners flow technology we our we're and to share. value previously. long-term measure engineers metric free core, wrap foundation of up our is objective said by cash and for the per generate emphasizing company.

While strive pursue ambitions. our continue achieve our we to X will objective, we to

We will own who owners act decades. like will for company the

We will part our would be adapt that's evening. ever all benefit. a neighbor. changing. and owners When you personally in that and we and good we're customers, succeed company we're will a And our as world a employees, and a proud to of communities successful, Thank be have want

today's concludes This conference.

for disconnect your you lines your You Thank this at participation. may time.