Texas Instruments Incorporated Q2 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Q2 revenue was $4.5 billion, up 3% sequentially but down 13% year-over-year compared to Q2 2022.
  • Analog revenue decreased 18% year-over-year, Embedded Processing grew 9%, and the Other segment declined 10%.
  • Market demand remained weak across all end markets except Automotive.

Market Performance (Sequential Comparison vs. Q1 2023)

  • Industrial: Flat.
  • Automotive: Up low single digits; remains the strongest market with >20% year-over-year growth.
  • Personal Electronics: Up low single digits after several quarters of declines.
  • Communications Equipment: Down mid-teens.
  • Enterprise Systems: Down mid-single digits.

Financial Results

  • Gross profit: $2.9 billion (64% margin), down 540 bps year-over-year due to lower revenue, increased CapEx, and LFAB cost transitions.
  • Operating expenses: $938 million, up 12% year-over-year.
  • Operating profit: $2 billion (44% margin), down 28% year-over-year.
  • Net income: $1.7 billion; EPS: $1.87.
  • Cash flow from operations: $1.4 billion; $7.4 billion over the last 12 months.
  • CapEx: $1.4 billion in Q2; $4.2 billion over the last 12 months.
  • Free cash flow: $3.2 billion trailing 12 months.
  • Shareholder returns: $1.1 billion dividends and $80 million buybacks in Q2; $6.5 billion returned over the past 12 months.

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Dave Pahl: Welcome to the Texas Instruments' Second Quarter 2023 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. This call will include forward-looking statements that involve risks and uncertainties that could cause TI's results to differ materially from management's current expectations. We encourage you to review the notice regarding forward-looking statements contained in the earnings release published today, as well as TI's most recent SEC filings for a more complete description. Today, we'll provide the following updates. First, I'll start with a quick overview of the quarter. Next, I'll provide insight into second quarter revenue results with some details of what we're seeing with respect to our end markets. And lastly, Rafael will cover the financial results and our guidance for the third quarter of 2023. Starting with a quick overview of the quarter. Revenue in the quarter came in about as expected at $4.5 billion, an increase of 3% sequentially and a decrease of 13% year-over-year. Analog revenue declined 18%, Embedded Processing grew 9%, and our other segment declined 10% from the year ago quarter. Now, I'll provide some i

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