Maxim Integrated Products, Inc.

Good morning and welcome to the Analog Devices fourth quarter fiscal year 2024 earnings conference call, which is being audio webcast here at telephone and over the web. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I'd like to now introduce your host for today's call. Mr. Michael Luccarelli, Vice President of Investor Relations and FP&A. Sarah, the floor is yours.

Thank you, Len, and good morning, everybody. Thank you for joining our fourth quarter fiscal 2021 conference call. We've had a holiday with ADICL and Sarah Vincent-Roche, and ADICL Rich Buccio. For anyone who missed the release, you can find it and related financial schedules at investor.analog.com. On to the disclosures. The major problems discussed include four looking statements, which are subject to certain risks and uncertainties, as further described in our angelese and our periodic reports and other materials following the SEC. As a result of the different material from the information that these statements reflect our expectations only as of this call. We undertake no obligation to update these statements, except if required by law. Reference to gross margin, operating and non-operating expenses, operating margin, tax rate, EPS, and free cash flow in our comments today will be on a non-GAAP basis, which excludes special items. When comparing results and 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 earnings release. Please note, references to EPS are on a fully diluted basis.

And with that, I'll turn it over to ADIC's own chair, Mr. Roche. Thanks very much, Mike, and a very good morning to you all. So, our first quarter results reflected the continued steady recovery from our second quarter cyclical bottom with revenue operating margin and earnings per share all finishing above the midpoint of our outlook. For the full fiscal year, 24 revenue finished at $9.4 billion with earnings per share of $6.38. The headwinds we faced in fiscal 24 most notably pronounced post-pandemic inventory digestion and the challenging macro backdrop muted demand recovery. Despite the external challenges, however, our business model and disciplined execution delivered an impressive 41% operating margin for the year and a free cash flow margin of 33%, up from 29% in fiscal 23. Importantly, we continued investing in key value generation and capture initiatives to better position ABI to solve our customers' most difficult challenges at the intelligence edge. In R&D, which is our first call on capital, we continue to strengthen our world-class analog foundation while extending the scope of our innovation capabilities with investments in digital, software, and AI. Those investments resulted in, for example, last month's launch of ADI's new CodeFusion Studio software development platform, creating a resource-rich hub and intuitive programming environment for embedded code development in support of our analog mixed signal power and digital franchise. To better secure the increasingly connected Intelligent Edge, we also launched the ADI Assure Trusted Edge security architecture, which will enable cybersecurity capabilities on ADI products. The addition of new tech stack capabilities to our tremendous analog foundation enables us to deliver ever more sophisticated innovations for our customers. Our intense focus on R&D is reflected in the double digit growth of our design wind pipeline during fiscal 24. That growth was enhanced by momentum in our maximum revenue synergies pipeline. Across such areas as GMSL, healthcare, and data center power, putting us firmly on a path to achieving our goal of a billion dollars in revenue synergies by 2027. Now, to accelerate pipeline growth and conversion, we continue to evolve our digital customer engagement platforms to support a greater range of technical expertise and customer needs. We also expanded our cadre of field engineering experts to provide world-class support and service to our global customer base. Our customers value our thought leadership, the breadth and depth of our cutting-edge technology stack, the strength and resilience of our supply chain, and our service and support integrity. And let me share a few examples with you now. In Industry 4.0, semiconductor content as a percentage of CapEx investments continues to expand rapidly as factories integrate IT and OT to connect and software-define the factory floor. This is creating tremendous growth for ABI sensor-to-cloud automation solutions, with a large number of customers leveraging our sensing, power control, and deterministic Ethernet technologies. On the factory floor, Our intelligent motion and positioning solutions are being designed into robotic systems by several large customers, expanding our content per robot by three times. In our instrumentation and test business, ABI's cutting-edge analog, mixed signal, and power capabilities are the foundation for the leadership position we've established in the AI-related SOC and high-bandwidth memory test market. where our content per tester stretches into the hundreds of thousands of dollars. Now, looking ahead, we're developing additional mixed signal and digital capabilities to further reduce test time and power requirements, which we believe will result in more than 20% additional ADI content per tester. Within the healthcare sector, our precision signal processing and real-time connectivity solutions are critical to the rapidly expanding surgical robotics market. And in the fast-growing continuous glucose monitoring space, we have won multiple opportunities across several customers. Our unique digitally-enabled analog front-end solutions increase the accuracy and power efficiency of sensors, and enable a better patient experience by extending battery life from days to weeks. Aerospace and defense has remained our most resilient industrial segment during this downturn with stellar design wind pipeline growth. We expect revenue growth to accelerate to a double-digit level next year due to increasing global defense budgets and the proliferation of space communication systems. that rely on our higher value integrated RF modules and subsystems. Within automotive, the performance advantages of our battery management systems are driving substantial pipeline growth among OEMs. In addition, we're also seeing momentum for these solutions in electrical grid storage systems. These trends combined with recent wins, give us confidence that our BMS revenues should return to growth in fiscal 25 with meaningful contributions from our higher value wired solution. The proliferation of higher content vehicles that use more power management, connectivity, and an increasing number of sensor platforms is expanding our content across all vehicle types, combustion engines, hybrids, and indeed full EVs. This trend drove our GMSL and A2B connectivity and functionally-safe car franchises to new high-water marks in fiscal 24, and with a record design wind pipeline, we expect this growth to persist. Notably, we added to our portfolio of connectivity solutions by launching our Ethernet-to-the-Edge Buff solution, or E2B, which is an enabler of the software-defined physical vision. And out of the gate, we have design wins with several major OEMs, including E&W. In communications, we've seen a positive inflection in the wireline market and expect that growth to continue in FY25 and beyond. Our confidence is based on significant new wins, including a high-precision controller for the optical module and a high-performance compute leader's AI systems. and our next gen power solutions, which will begin shipping later in 25. We're also experiencing tremendous demand across leading data center customers for our new innovative hot swap solution, which significantly extends power and control capabilities for AI-based servers. In consumer, new wins coming to market are driving strong growth. We expect this momentum to continue in the years ahead, given new wins across power, audio, optical, and touch in portable applications at multiple key customers. We've also seen growth in wearables. For example, our VSM platform's superior accuracy at lower power is becoming ever more critical for customers seeking to differentiate by capturing and processing more biomarkers. We've seen design momentum accelerate and content opportunities expand at wearable market leaders, as well as in disruptors bringing miniaturized form factors to market. In wearable acoustic systems, our combination of ultra-low power and neural processing with application-specific audio processing algorithms is enabling next-generation noise cancellation and hearing augmentation. We're leveraging these technology innovations in several B2B markets in addition. Turning now to manufacturing, we've invested $2.7 billion in CapEx since acquiring Maxim to increase our capacity and enhance resiliency. We also expanded our foundry partnership with TSNC earlier this year to secure additional 300-millimeter fine-pitched technology capacity at their Japan fab. These investments enable a more flexible hybrid manufacturing model, further insulating our supply from regional shocks and increasing our swing capacity to around 70% of revenue in the coming years. This unique ability helps us to capture the upside in strong demand backdrops and better protect our gross margins during more challenging times. So in closing, I'm very proud of how ADI has managed through one of the worst inventory digestion cycles our industry has ever seen. While the macro backdrop presents challenges, I'm confident in our continued recovery in fiscal 25. And with that, now I'll pass it over to Rich.