Good day, and welcome to the Texas Instruments 3Q 'twenty Earnings Release Conference Call. Today's conference is not being recorded. At this time, I would like to turn the conference over to Dave Paul. Please go ahead, sir.
Good afternoon and thank you for joining our Q3 2020 earnings conference call. For any of you 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. A replay will be available through the web. 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. Our Chief Financial Officer, Rafael Lizardi is with me today and will provide the following updates. First, I'll start with a quick overview of the quarter. Next, I'll provide insight into the 3rd quarter revenue results with more details than usual by end market, including some sequential performance since it's more informative at this time. And then lastly, Rafael will cover the financial results, capital management and our guidance for the Q4 of 2020.
Let me start with a quick overview with 3 key points. Revenue was higher than expected and grew 18% sequentially with notable strength from the rebound of automotive and growing demand from personal electronics. Revenue increased 1% from the same quarter a year ago. In April and again in July, we explained we would maintain high optionality with our operating plan so we could support customers particularly during a time when their ability to forecast will be limited. This approach has served us and our customers well and will continue this posture in the Q4.
Finally, while visibility for the near term demand has improved, we remain cautious as the broader economic impact of the global pandemic could continue for several years. Our approach in an environment like this is to maintain high optionality with our operating plan in the short term, to continue critical investments in R and D and in new capabilities like those for ti.com and finally, to invest to ensure long term manufacturing capacity, particularly for the 2022 to 2025 timeframe. We've made these decisions with our overall ambitions in mind, which include running the company with the mindset of a long term owner. These decisions have continued to serve us well. Looking at our segments, analog grew 18% and embedded processing grew 19% sequentially.
On a year over year basis, analog grew 7% and embedded processing declined 10%. Our other segment declined 19% from a year ago, primarily due to lower calculator sales where COVID-nineteen impacted back to school sales. Moving on, I'll now provide some insight into our 3rd quarter revenue by end market. First, the automotive market rebounded with about 75% sequential growth and returned to levels similar to a year ago. Revenue has grown from the bottom we saw in May as North American and European automotive assembly plants resumed operations.
Next, the industrial market was down low single digits sequentially, roughly a sequential decline and about even from a year ago. Not surprisingly, there were areas of strength and there were areas of weakness. The diversity within industrial results in relative stability reinforcing the attractiveness of this highly diverse market. Personal Electronics was up more than 20% sequentially and up about 15% compared to a year ago. The strength was broad based across personal electronics combined with TI being in a position to support unforecasted demand in the 3rd quarter.
Next, comms equipment was down about mid single digits sequentially and up mid single digits from a year ago and Enterprise Systems was down on both comparisons. Lastly, I'll note a housekeeping item. We've simplified our analog business structure into our power business and our signal chain business. Starting this quarter, our reporting will reflect these changes. Rafael will now review profitability, capital management and our outlook.
Thanks, Dave, and good afternoon, everyone. 3rd quarter revenue was $3,800,000,000 up 1% from a year ago. Gross profit in the quarter was $2,500,000,000 or 64 percent of revenue. From a year ago, gross profit margin decreased 60 basis points. Operating expenses in the quarter were $793,000,000 up 2% from a year ago and about as expected.
On a trailing 12 month basis, operating expenses were 23 percent of revenue. Over the last 12 months, we have invested $1,500,000,000 in R and D. Operating profit was $1,600,000,000 in the quarter or 42 percent of revenue. Operating profit was up 1% from the year ago quarter. Net income in the 3rd quarter was $1,400,000,000 or $1.45 per share.
Let me now comment on our capital management results, starting with our cash generation. Cash flow from operations was $1,400,000,000 in the quarter. Capital expenditures were $146,000,000 in the quarter. Free cash flow on a trailing 12 month basis was $5,200,000,000 In September, we announced we would increase our dividend by 13%, marking our 17th consecutive year of dividend increases. In the quarter, we paid $825,000,000 in dividends and repurchased $15,000,000 of our stock.
In total, we have returned $6,400,000,000 in the past 12 months or 123 percent of free cash flow. Over the same period, our dividends represented 64% of free cash flow underscoring their sustainability. Our balance sheet remains strong with $5,500,000,000 of cash and short term investments at the end of the 3rd quarter. Regarding inventory, TI inventory dollars were down $64,000,000 from the prior quarter and dates were 137. Distribution owned inventory declined in 3rd quarter by about $100,000,000 the 8th consecutive quarter of planned reductions as we have continued the transition to have fewer distributors and bring more customers direct.
As a reminder, as we build closer direct relationships with our customers, we further strengthen one of our competitive advantages, the reach of our market channels. Practically and strategically, we're pleased with the progress of the transition and the impact for our customers. For the Q4, we expect TIER revenue in the range of $3,410,000,000 to $3,690,000,000 and earnings per share in the range of $1.20 to $1.40 Our annual operating tax rate has not changed much, but now ramps up to 14% from the year, and that's what you should use for your models in the Q4. For next year, we expect our annual operating tax rate to remain at about 14%. In closing, we continue to invest to strengthen our competitive advantages and
in making our business stronger. With that, let me turn it back to Dave. Thanks, Rafael. Operator, you can now open the lines for questions. In order to provide you as many as possible the opportunity to ask a question, please limit yourself to a single question.
After our response, we'll provide you an opportunity for an additional follow-up. Operator?
And we'll go ahead and take our first question from Sushya Yakhari with Goldman Sachs.
Hi, guys. Good afternoon and thanks for taking the question. Rafael, Dave, my first question is on automotive. You guys saw very strong results in the September quarter. I think you spoke to a 75% sequential increase in revenue in the automotive end market.
What's your view on December as it relates to automotive? And how are you thinking about sustainability into the early part of 2021? And then I've got a quick follow-up. Thanks.
Sure, Toshiya. Yes, I think that 75% sequential obviously was very strong, but it's probably best explained looking at the previous quarter. And as we talked about last quarter, the majority of the automotive revenue is on consignment. So as the North American and European manufacturers had closed plants, that revenue reacted very quickly and we were down 40% sequentially and year on year. And so as those factories opened up, we saw the bottom in May and we expected revenue to grow and as they opened up, obviously that revenue reacted very quickly in the other direction.
So that's really the story that we saw in Q3. Again, as we've given color last quarter on the automotive market and talked about how that was moving pretty significantly. In the Q4, we're not breaking out any particular end market or specific color on that front. So there's not a reason to as we look into the Q4. So you have a follow on?
I do. Thanks, Dave. My follow-up question is on gross margins in Q3. Rafael, you mentioned that gross margins were down 60 basis points on a year over year basis. And I was just trying to better understand what the puts and takes were.
Overall revenue, I think, was up 1%. Your mix of businesses improved with analog up 7% year over year, embedded processing down 10, and 12 inches versus 8 inches I'm guessing 12 inches was up year over year. So I'm just trying to understand what the negatives were on a year over year basis that drove gross margins down a little bit. I appreciate you guys don't run your business for gross margin, but just curious. Thank you.
[SPEAKER
JOSE RAFAEL FERNANDEZ:] Yes. No, happy to answer that. So yes, on a year on year basis, revenue was up 1%, gross margin dollars were up, but a little less than that, maybe 0.5% or so. But when you're looking at such big numbers that then the delta is so small, it's difficult to look at the fall through like we normally look at it, right? So in the big scheme of things, revenue was up a little bit and gross margin dollars were up a little bit.
But having said that, I would also point out that the mix of personal electronics revenue was higher in Q3 than it's been whether it was the Q3 last year or even Q2.
Great. Thank you, Toshiya. And we'll go to the next caller, please.
We'll take our next question from Craig Hettenbach with Morgan Stanley.
Yes, thank you. Maybe just follow-up on the last point on the strength in personal electronics. Really as you look out to Q4, Dave, how you feel about kind of inventory versus end demand sell through? And then as part of that and perhaps other segments as well, how you think about Huawei in terms of perhaps kind of last shipments there and how you're seeing that as you go forward?
Let me go ahead and start and then Dave can address the Huawei question or anything else. But at the highest level, we are very well positioned to handle whatever comes at us, whether it's personal electronics or any other market. But personal electronics is one that by having the inventory strategy that we have followed, having that optionality that we have talked about for now 180 days or so the last 2 quarterly releases has put us in a really, really good position. Now that is not just having that kind of tactical strategy, it's also or tactical position, it's also having the strategic position of being the supplier of catalog parts that are highly diversified, that sell to many, many customers. We have over 100,000 different customers, sell 80,000 different parts.
So it put us in a position where we can build the inventory, have the asymmetric bet, so that if revenue is strong, we can support it. If it's not, then we hold inventory a little longer than usual, but that's okay. Just a little working capital. With that, I also want to make the point that inventory, we think very is a strategic asset as we have talked about earlier. We're comfortable holding high levels of inventory.
And in fact, we're going to update we're going to give you an update on our range on inventory at the next capital management call in February. Dave? Sure.
Yes, I'll make the comment on Huawei. So Huawei was about 2% of our revenue in the 3rd quarter. That was a little higher than what they were in the first half of twenty twenty. So certainly we're in compliance with U. S.
Export restrictions and stopped shipping to them on September 14th and they are not 4th quarter revenue guidance. So do you have a follow on, Craig?
Sure. No, thanks for all the color there. I guess just how you think about as the business rebounds just from an OpEx perspective, any puts and takes there for Q4 and into next year?
Nothing significant that I would point to. In OpEx, of course, R and D is a big part of that. About $1,500,000,000 a year. That's a big component of our competitive advantage of having the broader portfolio in the industry. We continue to put out some of the best products, catalog products that go into automotive, industrial person electronics, communication market.
So we'll continue to strengthen that advantage. Another one that goes into OpEx in the G and A portion, the SG and A portion is the investments that we're making in ti.com to strengthen the reach of our channels. So we continue to strengthen that tool, that ability to reach channels, reach customers better and keeping them engaged longer and selling more and more products to those customers. So at the highest level, OpEx has been running $3,100,000,000 $3,200,000,000 a year on a trailing 12 month basis. I would expect for that to run at above that level, maybe over time up 1% or 2% year on year, but in that neighborhood.
Great. Thank you. And we'll go to the next caller, please.
We'll take our next question from Stacy Baskin with Bernstein Research.
Hi, guys. Thanks for taking my questions. So the first one, I wanted to touch on the strength from PE. I wanted to know if can give us a little more color on how much of that would be PCs versus smartphones. I know that you had talked about some of that strength coming from your ability to satisfy unexpected demand.
I assume that was maybe more a PC statement, but any color you could give us on sort of the relative mix and growth of those 2 sub end markets would be helpful.
Yes, Stacy. I'd say that as the pandemic first started back in March and even in last quarter, a lot of the strength was initially driven by PCs and tablets, but we have seen that strength broaden. So even to TVs and smart speakers and other things that are used in the home. So our best estimate of or guesstimate of what's going on is that as people are spending more time at home, they're upgrading the things that they're using more. So that spend is broadening beyond just the PC.
And as Rafael was talking about, our portfolio of products serves us well and puts us in a position to be able to support that demand. Do you have a follow on?
I do. Thank you. So I know you talked about continuing to hold high inventory levels and maintaining high service into Q4 and beyond, and I get that. I just wanted to know if you could give us any color on what that implies for your utilization and loading going forward? I'm assuming your utilization was up sequentially in Q2 in Q3, I mean.
Please let us know if that was the case. And what are your plans for utilization, factory loadings as we go into Q4 and the end of the year?
Sure. So, Stacy, as you know, we only talk about utilization when there's a big inflection point or something unusual. So we did talk about it in April going to Q2 because most people most of their competitors decreased their loadings and instead we kept them flat at that point to Q1 to maintain that optionality, to have that optionality that frankly has served us tremendously well during this last 6 months. Since Q2, we have biased up our loadings. So we did that from 2nd to 3rd a little higher.
And 3rd and going forward, we'll probably bias that up. We are bias that up higher. It's nothing significant, but it is bias up so that we maintain that optionality and we can maximize revenue and support our customers with any potential off size that they have that are that would be unsupported otherwise.
Okay. Thank you, Stacy. We'll go to the next caller, please.
We'll take our next question from Timothy Arcuri with UBS.
Thanks a lot. I guess my first question is on the share buyback. It was quite small, even lower than in the depths of the financial crisis back in 'eight, yet your business has already snapped back a lot. What's the thinking there? You've always been pretty astute about the intrinsic value of your stock.
So how should investors sort of read that? Thanks.
Yes. No, first, let me step back and remind everybody how we think about cash returns. We talk about this during Capital Management every year in February and when we meet with investors. But when we think about cash returns, the objective there is to return all free cash flow to the owners of the company via buybacks and dividends. We use both.
And if you look at in the last on a trailing 12 month basis, which is the best way to look at that, we have generated $5,200,000,000 of free cash flow and have returned $6,400,000,000 So $1,200,000,000 more than the generation. So well ahead of the generation the return has been. Do you have a follow-up?
I did. I did. So I wanted to double click just a little bit on the drop through in analog. It seemed like the drop through in embedded was fine, but you're still a little below where the op margin was back in sort of the late 2018 timeframe at sort of similar levels. Is there something going on with mix?
Is that maybe the PE mix that you were talking about before within analog? Thanks.
There's nothing unusual there to comment. Clearly, analog is the biggest segment that we have. So anything that we comment at the company level applies likely came from analog. So and they have a fair amount of PE, in fact, a disproportionate amount of personal electronics given that embedded doesn't have much personal electronics. That's right.
Yes. And embedded is essentially industrial and automotive for the most part by 90% of those 2. So that's where that growth would come from. So thank you, Tim. And we'll go to the next caller, please.
We'll take our next question from Harlan Sur with JPMorgan.
Good afternoon. Great job on the quarterly execution. Can you guys just give us the quarter on quarter year over year trajectories by geography? I know they're just shipped to locations, but I think it's still useful as a proxy for demand and overall economic activity just depending on the breadth of
sequentially, all of the regions were up and Japan was down.
Do you
have a follow on?
Great. Yes. So you guys mentioned last quarter that there may have been some industrial customers that were building some inventory to potentially buffer against future supply chain disruptions and just prudent business continuity planning. Did you guys continue to see that in Q3? Or are these customers starting to work down these inventories or just sustaining the higher levels as we head into the winter months and flu season?
Yes. And Harlan, I think our comments last quarter were 1, just more of an observation of history in our industry that basically it's taught us that whenever we've seen supply constraints that customers react by building some inventory. So it's just our belief that it would be naive that this would be the first time that that wouldn't happen, right? So I think that those supply constraints in our industry still exist. So to that extent that could still be the case.
And now our lead times have remained stable. Our product availability is still very high. I think today you can go to ti.com and get immediate availability of over 40,000 different devices. And that doesn't mean that we don't have pockets of delivery problems. We'll always have that at any time.
But overall, our lead times are very solid and availability is high. But that's not true for the industry. So yes, I think it just would be naive to believe that that wouldn't be the case. So thank you, Harlan. We'll go to the next caller, please.
Our next question comes from John Pitzer with Credit Suisse.
Yes, good afternoon, guys. Thanks for letting me ask the questions. Congratulations on the solid results. David, if you look at kind of your guidance over the last two quarters, it looks like you sort of rightfully discounted kind of what the bottoms up bookings was telling us. You said as much when you guided for the June quarter and just given the magnitude of beat in September, it kind of feels the same way.
And that to me seems to make sense in the midst of a global pandemic. I'm just kind of curious, you're guiding the December quarter to plus or minus about seasonal inclusive of what sounds like a 200 basis point headwind from Huawei. But I guess I could argue maybe phone build started a little bit later this year that should help December. I guess as you forecast the December quarter, was seasonal kind of the metric you were going for? And are you discounting kind of your bottoms up in the December quarter as much in hindsight as you did in June September?
Yes. No, I think you've covered a lot of good points, John. And like you point out in any quarter, there's puts and takes. You've got the headwind of Huawei. We've got the unwind of the distributor program, which in fact, we've actually wound that up this past quarter.
And just with the growing demand and the inventory needs and positions that we've essentially completed that. So we depleted about, as Rafael I think mentioned, about $100,000,000 worth of inventory in that quarter. So you've always got puts and takes. But I'll tell you that the most important thing that we see and the most important input that we get is the demand that our customers tell us they want. And we get that from the orders and the backlog that our customers provide us as well as demand fees that we get through consignment.
And so that is really what drives and informs the outlook that we provide. So you have a follow on, John?
Yes. Dave, it's fair to say that there's been nothing typical this year, but you and I have talked about in the past. If you look at the year over year growth discrepancy between analog and embedded, it's fairly wide. I'm wondering now that we're 90 days more into this kind of difference in year over year growth, is there a good explanation in your mind? And importantly, as we look forward, when do you expect the embedded business to kind of catch up to analog on a year over year basis?
Yes, sure. I think that certainly the embedded business isn't performing the way that we would want it to over the last multiple quarters. And I think that if you look over the most recent quarter here, certainly we're encouraged by the progress or the numbers that would show. But we've been working very hard on turning that business around and getting it performing like we would like it to be performing. And we're making investments there because we believe that it will be a great contributor in the coming years.
And so we're busy building that business stronger and but it will take time and success in that business will be not measured over this quarter or even over a couple of quarters, but will be measured over time. So thank you for that, John. And with that, we'll go to the next caller, please.
Our next question comes from Ross Seymore with Deutsche Bank.
Hi, guys. I want to follow-up on that same last question of John's on the embedded side of things. Dave, last quarter where embedded was sequentially weak and year over year weak. You talked about the over indexing to automotive and industrial. But given that automotive was up 75% sequentially, I'm a little surprised embedded was basically the same as analog from a sequential perspective.
Were there some offsets in that business? I know you said industrial was down a little bit, but it doesn't seem like it would be enough to offset that over indexing on the industrial excuse me, on the automotive side?
Yes. Well, embedded grew a little faster analog. And essentially, just as last quarter, as you pointed out, Ross, that it didn't have any offsets to the business. Essentially, all you have left is industrial. So it's those two end markets.
And so with the return of revenue, it's performing about the same as analog is. So those are the 2 those are really the 2 components driving this.
Yes. So it doesn't have nearly as much PEO. In fact, hardly any PEO, Personal Electronics and Personal Electronics was a big contributor to growth in Q3 sequential growth.
That's right. That's right.
I guess for my follow-up, yes, if I can pivot over to the industrial side, just a higher level question. You guys seem to be flat to up year to date in your Industrial segment. How do you explain the actual growth in that segment versus the global GDP and the general economic activity dropping? It doesn't seem like the inventory concerns are as high as what you had last quarter where you first said it would be naive to think otherwise. It seems like some of those concerns have gone by the wayside, but you're still nonetheless outperforming the global economy.
If it's not inventory, I guess, what is it?
Well, the longer term thesis of course is the content is expanding inside of those markets. And I think if you look below, we talked about there's areas of strength and there's areas of weakness. So, if you look at certain markets like aerospace and defense that is obviously weak, people aren't taking deliveries of planes as an example. There's other areas of strength like appliances. If anyone that's listening on the call that is doing any home renovations like my wife is, you have to wait multiple months to get home appliances.
And so we're seeing very, very strong strength in those types of areas. So, but I think the diversity of that market coupled with the content expansion, I think just proves out why it's such an attractive market for us. And our products are really tailor made and well positioned to take advantage of that market.
Right. And the other thing I would add is, listen, we have 100,000 different customers, 80,000 different products. The vast majority of those sell into industrial. That is the most diverse end market. So it's impossible for us to know what those customers are doing and what that adds up to.
The important part is the way we run the company to give ourselves the highest possible optionality, so that if it is driven by secular trends or as it is driven by the secular trends over the long haul. Maybe any 1 quarter it could or 2 quarters it could oscillate and it could be inventory building. But over the long term, those secular trends are there and we put ourselves in a good position tactically to have that inventory available to support our customers. And if we have a correction, inventory correction or something of that sort, we'll go through that and that inventory will not go back. We'll have it in storage for years and then we'll sell it at the other end of
that of whatever correction we may have. Okay. Thank you, Ross. Now we'll go to the next caller, please.
Our next question comes from Tore Svanberg with Stifel.
Yes. Thank you. I wanted to ask John's question a bit differently. Does it feel like bookings are not kind of back to reflecting true end demand? Obviously, this year, everything's been abnormal, right?
But I think about your Q4 guidance, is it safe to say that bookings are now running very much aligned with end demand?
Well, Tore, that's always a question that we don't have precise insight to, right? We don't have a system that tells us that. I think you have to even go back to Q3 2018 where 2018 where the market had turned. We're going through a classic inventory cycle. We worked our way through that through 2019.
And just as we bottomed out and saw signs of inflection, COVID-nineteen hit. So that kind of changed things. But certainly, we started this year with inventories at lower levels. And so that certainly that's where we started the year, right? So but inventories and demand are certainly tied together.
And so I don't believe that they were ever largely disconnected over time.
And so much of our business on consignment or just in time demand that the bookings versus revenue trend is really not that meaningful.
That's right. Yes. So it's almost what inventory our customers have that's downstream. And so that's why I think that we from an optionality standpoint try to ensure that we've got product available that if things want to continue to strengthen from here, we're in a position to support it. And that's the posture that we're taking.
If it doesn't, we certainly know what to do in the other direction as well. You have a follow on, Tore?
Yes, that's fair. Thank you. So I know communications is smaller for you and it may even be less of a strategic end market for you, but it did take a sequential breather. It was still up year over year. Directionally, do you have any views on where that market is headed?
Well, it's I think that our longer term thesis is that it's not a structural grower, just there's not new subscribers being added to the network overall. We've made investments in 5 gs and we'll benefit from it. But as you say, it's just not a very large portion of our revenues. Certainly, there is noise in this quarter's numbers with Huawei, but growth will resume and as it always does, I think everyone in the industry describes it as a choppy market and it doesn't make it a bad market, it just makes it choppy. So we'll continue investments there.
It's a good market for us and we'll continue to make investments in it. And we continue to like it. So and thank you, Torrey. And I think we've got time for one last caller, please.
We'll take our last question from Ambrish Srivastava with BMO.
Hi. Thanks for squeezing me in. Dave and Rafael, I had a question on the industrials business as well. So clearly, it's seemingly very resilient if I look back at the past cycles. But is it also because, and I know you guys look at it very long term as well, 2019 for 4 consecutive quarters and for the full year, it was down.
So is it because as we and I think Dave, you mentioned that in an answer to an earlier question, is that when we entered the year, really it was the supply chain was drained out of any excesses because of what you had seen. And so now we are despite all the problems we've seen and the demand collapsing in certain end markets and industrials, it's held in also because of that factor that the supply chain inventory was pretty lean?
Yes. I think we've just completed 7 quarters of year on year declines. This is the Q1 of year on year growth that we've had. So industrial has been a piece of that. I think those year on year declines, a good part of that was just our industry cyclicality as you pointed out.
But structurally, industrial with its breadth and if you look, we've got 13 secondtors that we're investing in. All of them are have content that's growing. And so I think we're very positioned very well to be able to support that growth. So what we can't call and what we don't know is in the short term how the economy is going to behave. And even in a weak environment, that market has done reasonably well compared to some of the other markets.
You have
a follow on?
Yes. Just a quick one on the embedded side. I think last earnings call also you mentioned that you're encouraged by the science of stabilization. I just wanted to just help us understand what are some of the steps you have taken to write the business? And as you've said, it doesn't happen overnight.
And you talked about investments. And I know several years ago, you said that you were going to deemphasize comps, infrastructure because that's longer term. You didn't see growth there, at least on the comps on the embedded side. So is the investment profile in this business looking a little bit different as you look forward? And what are some of the other steps that you guys have taken to write the business and get it back on track?
Yes. So you've highlighted a couple of steps that we have taken in the past. I think none of those have been secrets. The decisions on the comp side was something that we had talked about, I think going back 6, 7 years ago now, as we didn't believe that Tom's equipment was going to be a structural grower. And specifically on the embedded side, we did believe that there were some opportunities on the analog side.
So we took up investments there and we're enjoying the benefits of those investments on the analog side today. But that did provide a headwind. We talked about, I think was a couple of quarters ago now, some of the restructuring that you mentioned inside of the embedded business and we've got, I think, 8 different product groups and we took down some of the resources in some and uptick up some of the resources in others and really just getting resources on to the best opportunities overall and making sure that we have resources into the places that we believe will be the best growth opportunities. And I'd just say in general, what we're trying to do is leverage our competitive advantages, ensure that the products that we are investing in have a broad based appeal and a customer base standpoint, and there'll be products that will generate cash flow for a long time to come. And just taking a step back, again, I'd say that we're investing in that business because we believe it'll be a great contributor when we look at the years ahead.
So again, there's a lot of effort going into building that business stronger, but it will take time so that success will be measured over years, not just in a quarter or 2. So with that, I'll turn it over to Rafael to wrap this up the night.
Thanks, Dave. Let me wrap up by emphasizing what we have said previously, that our core were engineers and technology is the foundation of our company. But ultimately, our objective and the best metric to measure progress and generate long term value for owners is the growth of free cash flow per share. Our strategy to maximize free cash flow per share growth has 3 elements: a great business model focused on analog and embedded products and built around 4 sustainable competitive advantages 2, discipline in allocating capital to the best opportunities and lastly, efficiency, which means constantly striving for more output for every dollar spent. While we strive to achieve our objectives, we will continue to pursue our 3 ambitions.
We will act like owners who will own the company for decades. We will adapt and succeed in a world that's ever changing. And we will be a company that we are personally proud to be a part of and would want as our neighbor. When we're successful, our employees, customers and communities and owners all benefit. Thank you and have a good evening.