Texas Instruments Incorporated

Welcome to the Texas Instruments Third Quarter 2026 Earnings Conference Call. I'm Mike Beckman, Head of Investor Relations, and I'm joined by our Chief Executive Officer, Haviv Ilan, and our Chief Financial Officer, Julie Kinnett. For any of you who missed the release, you can find it on our website at ti.com. 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, Haviv will start with a quick overview of the corridor. Thanks, Mike. Let me start with a quick overview of the third quarter. Revenue was $6.1 billion, an increase of 11% sequentially, and an increase of 28%

Thank you for watching. Secular growth of semiconductor content is continuing alongside a strong cyclical recovery. We are working closely with our customers to support them during this time of increased demand. We are executing to our long-term manufacturing plan and our investments have positioned us to ramp our factories to support revenue growth. Now I'll share some additional insights into third quarter revenue by end market. First, industrial increased more than 40% year-on-year and was up about 10% sequentially. Automotive increased mid-teens year-on-year and increased about 10% sequentially. Data center was up about 95% year-on-year and grew about 20% sequentially. Personal electronics was about flat year-on-year and grew upper single digits sequentially. and lastly, communications equipment grew both year on year and sequentially. With that, let me turn it over to Julie to review profitability and capital management.

Thanks, Haviv, and good afternoon, everyone. As Haviv mentioned, third quarter revenue was $6.1 billion. Gross profit in the quarter was $3.9 billion, or 64% of revenue. Sequentially, gross profit margin increased 280 basis points. Operating expenses in the quarter were $1 billion. On a trailing 12-month basis, operating expenses were $4 billion or 19% of revenue. Operating profit was $2.9 billion in the quarter or 47% of revenue, and it was up 73% from the year-ago quarter. Net income in the quarter was $2.4 billion or $2.62 per share. Earnings per share included a one cent reduction not in our original guidance due to discrete tax items. Let me now comment on our capital management results, starting with our cash generation. Cash flow from operations was $3.4 billion in the quarter and $9.9 billion on a trailing 12-month basis. Capital expenditures were $463 million in the quarter and $2.6 billion over the last 12 months. Free cash flow on a trailing 12-month basis was $8.4 billion, up from $2.4 billion in the third quarter of 2025. Free cash flow in the trailing 12 months includes $1.6 billion of CHIPS Act incentives, which includes both the investment tax credit and direct funding. In the quarter, we paid $1.3 billion in dividends. In September, we announced we would increase our dividend by 7% to $1.52 per share, marking our 23rd consecutive year of dividend increases. This reflects our continued commitment to return all free cash flow to owners over time. In total, we returned $5.8 billion to our owners in the past 12 months. Our balance sheet remains strong with $8.1 billion of cash and short-term investments at the end of the third quarter. In the quarter, we repaid $500 million of debt Total debt outstanding is $13.65 billion, with a weighted average coupon of 4.11%. Inventory at the end of the quarter was $4.7 billion, up $67 million from the prior quarter, and days were 194, down two days sequentially. Turning to our outlook for the fourth quarter, we expect TI's revenue in the range of $5.8 billion to $6.3 billion, and earnings per share to be in the range of $2.45 to $2.79. We expect our effective tax rate to be about 13% in the fourth quarter, and for 2027, we expect it to be about 13% to 14%. In closing, we will stay focused in the areas that add value in the long term. We continue to invest in our competitive advantages, which are manufacturing technology, a broad product portfolio, We will continue to strengthen these advantages through disciplined capital allocation and by focusing on the best opportunities, which we believe will enable us to continue to deliver free cash flow per share growth over the long term. With that, let me turn it back to Mike.