Texas Instruments Incorporated Q3 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Q3 revenue was $4.5B, flat sequentially and down 14% year-over-year.
  • Segment performance year-over-year:
    • Analog: down 16%
    • Embedded Processing: up 8%
    • Other: down 32%
  • End‑market trends (sequential):
    • Industrial: down mid‑single digits with broadening weakness.
    • Automotive: up mid‑single digits; still strongest end market.
    • Personal Electronics: up ~20% from a low base.
    • Communications Equipment: down upper‑teens.
    • Enterprise Systems: up upper‑single digits.

Financial Performance

  • Gross profit: $2.8B (62% margin), down 690 bps year-over-year due to:
    • Lower revenue
    • Higher manufacturing costs tied to capacity expansion
    • Reduced factory loadings (underutilization charges)
  • Operating expenses: $923M, up 7% year-over-year.
  • Operating profit: $1.9B (42% margin), down 29% year-over-year.
  • Net income: $1.7B; EPS: $1.85 (includes $0.05 benefit from items not in original guidance).
  • Free cash flow (TTM): $1.6B.
  • Capital return (last 12 months):
    • Dividends: $1.1B in Q3; dividend increased 5% (20th straight year).

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Dave Pahl: Welcome to the Texas Instruments Third 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 third quarter revenue results, with some details of what we are seeing with respect to our end markets. Lastly, Rafael will cover the financial results, give an update on capital management, as well as share the guidance for our fourth quarter 2023. Starting with a quick overview of the third quarter: Revenue in the quarter came in about as expected at $4.5 billion, flat sequentially and a decrease of 14% year-over-year. Analog revenue declined 16%, Embedded Processing grew 8%, and our Other segment declined 32% from the year

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