Maxim Integrated Products, Inc.

Good morning and welcome to the Analog Devices first quarter fiscal year 2023 earnings conference call, which is being audio webcast via telephone and over the web. I'd like to now introduce your host for today's call, Mr. Michael Luccarelli, Vice President of Investor Relations and FP&A. Sir, the floor is yours.

Thank you, Gigi, and good morning, everybody. Thanks for joining our first quarter fiscal 23 conference call. With me on the call today are ADI CEO and Chair, Vincent Roche, and ADI CFO, Prashant Mahendra Rajat. For anyone who missed the release, you can find it and related financial schedules at investor.analog.com. On to the disclosures. Information we're about to discuss includes forward-looking statements, which are subject to certain risks and uncertainties as further described in earnings release and our peer-reviewed reports and other materials following the SEC. After the results, click different material from the forward-looking information. and these statements reflect our expectations only of the date of this call. We undertake no obligation to update these statements except as required by law. Our comments today will also include non-GAAP financial measures, which exclude special items. When comparing our results to our historical performance, special items are also excluded from prior periods. Reconciliation of these non-GAAP measures to the most directly comparable GAAP measures and additional information about our non-GAAP measures are included in today's release. And with that, I'll turn it over to ADI's CEO and Chair, Vincent Rose.

Thanks very much, Mike, and good morning to everyone. Well, I'm very pleased to share that ADI continued to execute exceptionally well in the first quarter of fiscal 23, despite continued macroeconomic uncertainty. Revenue is $3.25 billion, up 21% year over year. Strength was broad-based, with all B2B markets up single digits. Gross and operating margins were 74% and 51% respectively, and adjusted EPS achieved another record at $2.75. Our continued success is driven by a relentless focus on customer collaboration, a growing demand for our innovative technologies, and strong operational execution. We play a long game and are excited about what the future holds for us. To ensure that we capture the opportunity ahead, we've been steadily increasing investments in R&D, manufacturing capabilities, and in partnerships that deepen our value to our customers now and over the long term. For example, in R&D, we've invested $1.7 billion over the trailing 12 months to strengthen our core franchises, and capture market opportunities presented by secular growth drivers. Over the same period, we've invested $760 million in CAPEX to enhance the resiliency of our internal semiconductor manufacturing operations. These investments not only increase our operational resiliency, but also modernize our fabs to better address our sustainability ambitions. As mentioned in our press release, our industrial and automotive businesses remain strong as we gain market share. So this morning, I want to focus specifically on our industrial business, which continues to grow significantly despite the macroeconomic backdrop. Now, from a big picture perspective, the industrial market is the bedrock of ADI, representing more than half of our total revenues. It's also our most diverse and profitable business segment, with tens of thousands of customers and products that sustain revenue streams for decades. Additionally, ADI's industrial revenue is derived from high-performance technology and mission-critical CapEx-intensive equipment across a myriad of applications. Our leadership position has been strengthened over the last decade as we intensified our focus in this market and invested over $5 billion in R&D activities to capture the opportunity across the hundreds of applications that characterize the industrial sector. This space is inherently fragmented, and the unmatched breadth and depth of ADI's portfolio uniquely allows us to address our customers' needs across the full spectrum of applications with core component building blocks to application-specific solutions that encompass analog, digital, and algorithms. Today, we're seeing the rise of new industrial applications that require more sophisticated and more complex architectures as machines become more intelligent and more sustainable. This is driving more semiconductor content per dollar of CapEx, unlocking new opportunities for our portfolio. While this transformation is benefiting all of our industrial applications, including healthcare and aerospace, let me share how we're winning in industrial automation and instrumentation more specifically, and discuss the burgeoning opportunity across the electrification ecosystem. So starting first with industrial automation, here our customers are upgrading their factories with more automation and connectivity to increase output with greater energy efficiency. ADI's broad portfolio helps customers create these more resilient and flexible footprints while lowering their carbon emissions on the journey to net zero. As an example, At a leading U.S. robotics manufacturer, we've won additional content across power, sensing, and GMSL connectivity. Our systems approach reduced our customers' design time and increased our content per cobot by four times. Also in the last quarter, our IO-Link solution was designed in at multiple leading industrial automation customers. These solutions are critical for delivering robust connectivity to the edge of the factory floor. Turning our attention now to our instrumentation and test business, this subsector is highly aligned to sector growth trends from connectivity to AI-assisted compute to electrification to drug discovery and gene therapies. The consistent thread across this diverse set of applications is the growing complexity that requires more advanced metrology and test. The results, our average content per system is now two to three times higher. Further, the localization of semiconductor supply is providing additional tailwinds for our test business. We've secured multiple design winds in North America as well as Asia for memory and high-performance compute. And finally, onto one of our fastest growing areas, the electrification ecosystem. The collective need for a more sustainable future is driving massive growth in electrical grid infrastructure. Now, let me share two examples with you. First, industrial and automotive companies have announced more than $300 billion of investments in Greenfield Gigafactories, essential to the production of batteries to proliferate the electrification ecosystem. These gigafactories will drive additional demand for our formation and test solutions, critical to producing higher density batteries. Further, given the inherent safety hazards of using higher cell voltages, these factories will also provide new growth vectors for ADI. In our sustainable energy franchise, we're leveraging our industry-leading automotive BMS solutions into energy storage systems for electrical grids and fast charging infrastructure. We've won designs at leading EV infrastructure manufacturers in North America, Europe, and Asia, putting us on a path to more than tripling this business in the coming years. Of course, while no market is fully immune to adverse economic cycles, our industrial business is highly diversified and aligned with secular trends. This has translated to more durable revenue streams, with sales in this sector increasing more than 25% over the trailing 12 months, despite a weakening economic backdrop. But looking ahead, we see continued strength in this franchise, as the breadth and depth of our portfolio, our deep customer collaborations, and design wind pipeline momentum underpin our new phase of profitable growth. So in closing, ADI's business model is diverse, resilient, and rich with opportunity. I'm very optimistic about what our future holds as we drive enhanced value for our customers, employees, and shareholders, as well as society at large. And so with that, I'll hand you over to Prashant.