Texas Instruments Inc (TXN) — Q1 2025 Earnings Call Transcript

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 Texas Instruments Incorporated'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 Texas Instruments Incorporated'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 quarter, including insight into first-quarter revenue results, and some details of what we're seeing with respect to our end markets. Next, he'll share how we are approaching the overall market environment and provide guidance for the second quarter of 2025. Lastly, Rafael will cover the financial results and give an update on capital management. With that, let me turn it over to Haviv.

Thanks, Mike. Let me start with a quick overview of the first quarter. Revenue came in at $4.1 billion, an increase of 2% sequentially and an increase of 11% year over year. In Analog, revenue grew 13% year over year, and embedded processing was about flat. Both segments grew sequentially. Our other segment grew 23% from the year-ago quarter. Now I'll provide some insight into our first-quarter revenue by end market. We continue to see recovery across our end markets, with industrial showing broad recovery across sectors and geographies. We believe customer inventories are at low levels across all end markets. Similar to last quarter, I'll focus on sequential performance as it is more informative at this time. First, the industrial market increased upper single digits after seven consecutive quarters of sequential decline. The automotive market increased low single digits. Personal electronics declined mid-teens in line with typical seasonal trends. Enterprise Systems grew mid-single digits, and communications equipment was up about 10%. Before I go to our second-quarter guidance, let me take a minute to frame how we are approaching the current environment. It is a time of high uncertainty in the world, as tariffs and geopolitics are disrupting global supply chains and creating unpredictable economic conditions. Adding to that, semiconductors are highly visible, and it is broadly understood that people and economies are increasingly dependent on chips. To navigate in this environment, we will continue to rely on our three key ambitions. We will act like owners who will own the company for decades, we will adapt and succeed in a world that is ever-changing, and we will be a company that we are proud to be part of and would be proud to have as our neighbor. These guiding ambitions are not new. They have served us well for decades, and they are enormously valuable in times like these. We look at the current environment in two important categories. One, where we are in the phase of the semiconductor cycle, and two, providing geopolitically dependable capacity and navigating in a world that is changing. To help understand where we are in the cycle, we spent some time looking at previous events, including Y2K, the global financial crisis, and the COVID-19 pandemic. While no two scenarios are identical, these recent examples help inform our decisions as we prepare for a range of market scenarios. What may be unique right now is that we are at the bottom of the semiconductor cycle, and customer inventories are at low levels across all end markets. So relative to where we are, history says it is important to have capacity and inventory in times like these. And we are well-positioned. In addition, geopolitically dependable capacity will matter more, and it is increasingly critical and valuable to our customers. We have flexibility and are prepared to navigate the evolving supply chain dynamics. Translating all these to second-quarter guidance, I would like to make three points. First, we remain cautious as there are many things still changing, and we are working with our customers to understand and support their needs. As such, potential impact on our customers, suppliers, and Texas Instruments Incorporated is unclear and will likely evolve. Second, at this time, we don't see near-term impact in the second quarter. We expect Texas Instruments Incorporated's revenue in the range of $4.17 billion to $4.53 billion and earnings per share to be in the range of $1.21 to $1.47. Finally, we will have to see what happens in the second half of 2025 and going into 2026, and we are prepared for a range of scenarios. We are, and will remain, flexible to navigate, especially in the immediate term.

Thanks, Haviv, and good afternoon, everyone. As Haviv mentioned, first-quarter revenue was $4.1 billion. Gross profit in the quarter was $2.3 billion or 57% of revenue. Sequentially, gross profit margin decreased 90 basis points. Operating expenses in the quarter were $989 million, up 6% from a year ago and about as expected. On a trailing twelve-month basis, operating expenses were $3.8 billion or 24% of revenue. Operating profit was $1.3 billion in the quarter, or 33% of revenue, and was up 3% from the year-ago quarter. Net income in the quarter was $1.2 billion or $1.28 per share. Earnings per share include a $0.05 benefit not in our original guidance. Let me now comment on our capital management results. Starting with our cash generation. Cash flow from operations was $849 million in the quarter and $6.2 billion on a trailing twelve-month basis. Capital expenditures were $1.1 billion in the quarter and $4.7 billion over the last twelve months. Free cash flow on a trailing twelve-month basis was $1.7 billion. In the quarter, we paid $1.2 billion in dividends and repurchased $653 million of our stock. In total, we returned $6.4 billion to our owners in the past twelve months. Our balance sheet remains strong with $5 billion of cash and short-term investments at the end of the first quarter. In the quarter, we repaid $750 million of debt. Total debt outstanding is $12.95 billion with a weighted average coupon of 3.93%. Inventory at the end of the quarter was $4.7 billion, up $160 million from the prior quarter. And days were 240, down one day sequentially. For the second quarter, we now expect our effective tax rate to be about 12% to 13%. 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 and technology, broad product portfolio, reach of our channels, and diverse and long-lived positions. We will continue to strengthen these advantages through disciplined capital allocation and by focusing on the best opportunities. We believe this 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. Thanks, Rafael. Operator, you can now open the line for questions. In order to provide as many of you as possible an opportunity to ask your questions, please limit yourself to a single question. After our response, we'll provide you an opportunity for an additional follow-up.

Tim, thanks for the question. So first, before I talk about our approach to the second quarter, just as I said in my prepared remarks, we are looking at two different categories of change in front of us. One is related to the cycle. And the cycle we saw in Q1 a continued recovery, I think we mentioned before, I think it was in the last previous call, we have three markets now growing year over year and recovering. It was the consumer electronics market, enterprise, and communications. It's very obvious to us now that industrial is really joining the pack, and it's a large market for us. We've seen some evidence in Q4, but based on what we've seen in Q1, I think this is a real recovery rather than, you know, the way I see it right now. Related to tariffs, at least not for the first quarter. Right? And the cycle has hit a bottom because we are seeing more and more evidence from customers that they are really, really short on their inventory. They have sometimes a few days of inventory. We've seen that age in phenomena or orders within the quarter turns as we call it. Strengthening in Q4. It continued to do the same in 1Q. So more and more evidence and signals that across all channels, all geographies, a recovery of the industrial market is here. But the automotive market was always correcting in a very shallow manner. So you can kind of say that the markets are now pointing pre the trade challenges all up into the right. Now when you look at the second quarter, I think we have to stay very cautious as we said about the forecast. So we are seeing that many things are still changing. It's a very, very dynamic environment. And I say sometimes by the day. And there is a potential impact on our customers and on suppliers and also on our revenues. So it could be unclear and it will evolve, but as I need to call and we said spend a lot of time on it, looking at past examples, understanding where the site is, and looking at the data we have in front of us we don't see an immediate near-term impact because the customers wouldn't tell us why we see the orders come again. But I would guess that, you know, a time like this when there is a little bit of anxiety, do you want to have a little bit more inventory on your shelf or less? So my guess is more, and that's what maybe why we are seeing kind of, I would call it a seasonal maybe a little bit typical seasonal second quarter forecast.

And then, Mike, you’ve looked at some more data on the second quarter. Maybe you can add a little bit more information on what we're seeing specifically for the second quarter.

I do. Yeah. Is there a way to handicap sort of what your exposure is in China to these retaliatory tariffs? I know you report 19% as companies into China. But there's probably some added exposure from other companies that are domiciled beyond China that are building products in China. And I guess can you offset some of that by having products on consignment? Do you have a lot of inventory to sort of offset some of that? Thanks.

Yeah. And again, Tim, as I said in my prepared remarks, we are providing geopolitically dependable capacity to our customers and we are working every hour with them right now to navigate the changing goals. So as you said, we have a lot of capabilities. I think it is important to start and focus first on our China headquartered customers. As you said, it's a little bit maybe we were 19% of our revenue last year. I think it was 20% in Q1. Aligned with the GDP shows. So nothing very special here. And I think we said many times it's an important market. Our customers, we have long-term relationships with them. Right? The value they value our product breadth, they value our quality. They also value our scale and service. To your point, sir, part of the service we provide is having inventory on hand, some of it consigned, very close to their manufacturing plants. So all of that is part of the way we serve our customers and have been serving them for years, especially in the last several years where we've taken more direct, in China and worldwide. Now you also remember saying that these guys, they want to be and want to continue to be an even further grow their global play. You know, they are making end equipment that are sold into China, but they're also making end equipments that are sold worldwide. And again, this is where our geopolitically dependable capacity is very, very important and valuable. This is where our immediate focus is right now. And this is where I'm sure we’ll have some follow-up questions on that. I'll just say at a high level, we do have flexibility. And it's a case-by-case basis, but we are working with the customers. Everyone has different requirements of how we can support them on an immediate basis and alleviate some of their concerns on what's going to happen in the second half of 2025 or even into 2026.

Thanks, Tim. Let's move on to the next caller, please.

Thanks so much. First, just wanted to say thanks and best wishes to Dave in his next adventures, and also good wishes to Mike. For my first question, maybe for Rafael. So inventory was up again, and I think on the last call you suggested that factory loading would go down. So it seemed like maybe they did not. So how much was the gross margin benefit from that? And then how are you thinking about the direction of loadings and the pace of gross margins from there?

Yeah. No. Sure. Let me give you a few pieces of information on that. Gross margin did better than expected. Most of that was due to higher revenue and the greater mix of industrial in the quarter. But also, our loadings that were down versus fourth quarter, but they were higher than originally expected, the base case that we originally had. And that was, of course, revenue did better than the midpoint. And what we're seeing as Saviv described the current environment with customers running pretty lean on inventory and demand being pretty strong and agents, etcetera. On a forward-looking basis, our base case right now at the midpoint we expect factory loadings to increase slightly into second quarter and gross margin to be up versus first quarter.

Yes. Thank you. So maybe, we for Q2, I think you mentioned that it is perhaps right in the range of seasonality or perhaps at the upper end. I know it tends to be a stronger quarter for your calculator business. But when you look at your core segment, could you help us get a feel for what is going to be better or lower than the 7% or so sequential rate, whether it is by industrial or automotive or consumer markets or whether it's by Analog or Embedded. Just so we get a better feel for what is driving Q2 to be at kind of the upper end of seasonality despite all these macro and tariff-related headwinds.

Sure, Vivek. And any first, I would say, Ben, when we are in a normal environment and we are in an up cycle, you know, just to go back to trend line, you need to have some of these quarters running a little bit above seasonality. Right? That's the only way to get back to trend line. So I think we've started to switch some of it in terms of the demand signals we're seeing. And I think there is nothing I would call specifically versus Q1 other than the continued strength in industrial. I think the industrial signal is now, I would say, probably five months or so. We’ve seen some above the industrial seasonality in Q4. Typically, it goes, like, mid single digits down in Q4. I think it went down low single, I think, but we had above seasonality in that 1Q, close to that 10% mark. And I don't see right now at least any slowdown there. And that's also very I think it's also very intuitive. As I said, when there is a little bit of anxiety and unknown, I think customers want to have a little bit more inventory than less. So if I have to call the second quarter, I would like to Q1. Remember, the automotive cycle was the last one to join the pack, just kind of a late cover of both on the way up, spring COVID and the down. Okay? So I do expect it to come in last, but it was always very, very shallow. Even in Q1, I think we've seen automotive growing sequentially, and I think it was even growing year over year. So the automotive cycle has been very, very shallow, kind of a mid to high single digit. That was what we've seen on a trailing twelve-month basis. So overall, that would be my read into the second quarter.

Thanks, Vivek. Let's move on to the next caller.

Hi, guys. Thanks for taking my questions. You know, Haviv, you said at first that you didn't see any pull forward, but then you talked about customers wanting to hold more, which sort of seems like the definition of pull forward. And you seem concerned about the second half. I mean, I guess, my question is, if there was pull forward going on, would you care? Or would you just is would you just ship? Like, is your typical plan I always thought it was if you can ship it, you ship it, and it doesn't really matter more than that. Is that how we should be thinking about how you're living in this environment right now given the upside that you are seeing or clearly seeing?

Yes, Stacy. Thanks for the question. Let me first clarify the first one. That you've made. Maybe I was a little bit not clear enough. I would guess that what we've seen in the first quarter, the only signal I’ve seen in the first quarter and we've seen it across China, across geography, it's very consistent. It's just a return of industrial. We've seen that in the broadway across the channels, on our online business. It's just been a very, very broad. Nothing that looked anxious or nothing that looks like huge orders or whatever. Just, you know, an acceleration of the aging trend we saw in Q4. So very consistent with what we've seen in Q4, but accelerated. Right? So that's my comment on the first quarter. For the second quarter, we have data only for I mean, it's not even been a month yet. Right? So you know, our lead times are very short. And the signals we see right now are nothing that signals anxiety or or something very, very weird, but kind of a continuation of the cycle. My guess is, again, that's when I think about industrial customers running low volumes, you know, exposed to all these, you know, news. I think it you'd want to have a little bit more than less, and that's also my anecdotal discussion with customers. They do have, you know, a wish to replenish some of their empty shelves. So I think we are seeing now maybe end demand in industrial that's a little bit. And that's what I would say is a typical cycle behavior. Now when I say we have to prepare to any scenario, that thing can develop both ways. The second half could turn into, I don't know, slowdown and just no end demand and we will see that in our orders at a certain point of time. We haven't seen it yet. But you know, if anxiety builds and we've seen sometimes situations like that. Think about COVID, and COVID and we looked at that cycle very, very carefully. The economy stopped. I mean, people have were not building end equipment because we're not showing up to factories. So everything stopped, but then this was that was the period after that that anxiety has built and we've seen orders, you know, three years' worth of orders on our books. And we are not right now there. But we do have to think about what happens if customers get into this action mode anxious mode? Then we need to support them. And to your question specific one, we are not going to just flood them with stuff that we don't think they need. We have a playbook that we have written over the last several years of what happened in an up cycle. And we'll manage customers according to that demand in a very structured and organized way.

I do. Thank you. Maybe maybe the follow-up and then again, I know it's only been less than a month in the quarter. I know we're twenty-three days in. I think we're, what, about two weeks or so since the liberation day. Just what have you seen on, I guess, any acceleration in the order rate you know, during those, you know, kind of two weeks post tariff versus, say, what you saw exiting Q1? Like, have orders, like, materially accelerated, the pace of orders accelerated over the last couple of weeks? Or is it consistent?

I'll say a very high level comment, and, Mike, you can give some more color. In general, safety of forecast represents what we're seeing right now. I mean, we, of course, want to give you the best data when we come to this call and that's our best estimate of what the quarter will do according to what we see right now.

Yeah. I think it's difficult to roll out any specific reason you know, for a given order. But again, as we mentioned before, we've seen since the beginning of the quarter, you know, the linearity so far is about what you'd expect to see from a versus second transition and also in an environment where you're having end markets that are in recovery. So not unusual what we've seen so far.

Thank you.

Yes. Thank you, and congratulations to Dave on his retirement. Tremendous career, and you'll be sorely missed. My first question is on some of the activity that you've seen here the last few weeks. Is there any regional disparity here? I mean, I'm asking the question because, obviously, you know, there's variances on the potential tariffs by region. So is that also very consistent with what you typically would see?

Yeah. I'll take that and maybe provide a little bit more color. I think Tim went there, and I can provide a little bit more color on what's happening. As we said in the prepared remarks and also in my response to Tim, we are working very closely with our customers because, of course, they are reading the situation. They are studying the supply chains, and we are a large supplier of them, a very broad supplier. And, of course, they want to have flexibility. And by the way, the rules are changing every day and they could continue to change. They are attacking and thinking about what can they do right now. And, of course, if you think about I'm sorry about the way our market works, the way cycle times are built for semiconductors, nothing can be fixed immediately. Right? Everybody is kind of preparing for what the second half of the year could be and, you know, they want to have very robust and what we like to call a geopolitically dependable capacity supplier on their side. So if you go on the I'll go a little bit of more specificity why we think and why we can say that our discussions are going well because we do have flexibility. If you think about the let's just take, for example, our main focus is our China-headquartered customers, for the majority of our portfolio, we have already an internal dual flow capability. Right? This was put together back in the actually, in the Japan earthquake, more than a decade ago. Have a disaster recovery framework when supply chains get shuttered, you know, what customers can do, and that's also a very big requirement for customers who buy high volume from TI. So that is something that we now have to work immediately on some logistics because now to optimize potential cost for customers, we have to adapt our manufacturing flow and our logistics in order to get the right parts to the right customers. And we have inventory. Sometimes we have inventory from both flavors on our shelves right now, but we just have to make sure that the machine because we have more than a hundred thousand customers and they are buying, you know, sometimes hundreds of different parts per customer, have to make sure that they logistically, our machine has to adapt and optimize the right path for the customer.

Thanks, Tore. Let's move on to the next caller, please.

Hey, guys. Thanks for letting me ask a question. And, again, I want to pass along the thanks to Dave. You will be missed. My first is just on the China for China strategy. So if you look into the global footprint and versus your peers, clearly, you guys are really well-positioned from the ability to serve different geographies. With different capacity. But maybe just on your China facility. If you were to look at demand that is coming from China specifically, can you meet all of that demand with your China facility in country? Or could you help me just understand how much of that demand you can meet with that facility? Is that something that you could entirely support with your footprint there?

Yeah. Let me you know, I think I said before that I think customers they don't ask for domestic manufacturing plans. They ask us for, you know, dependable capacity footprint. And that's what we have. Look. The tariff could change three more times in the next two weeks. Okay? And that's something that we can't forecast and also know our customers. But I will say that when we look at our footprint of manufacturing between the US and between Asia and Europe, and also look at the work we do with our external partners and foundries, we are well-positioned. The issue is not on the capacity size. The issue is how quickly you can get your logistics and also the cycle time of starting new wafers, landing at customers to optimize, you know, the cost of the supply. I think TI is very, very well-preferred for that. So when you have a part that is already running on the board and it's already qualified and all you need to do is right now ship it, you know, instead of from Dallas from Japan, that's not a big deal. Okay? It works in the system. It is dual qualified. It's just a matter of cycle time of starting wafers and getting these supplies in front of our customers. So that's the kind of challenges we deal with. It is going well. Our team is working twenty-four seven on it, and I'm very pleased with our reaction time and the urgency that the team is showing. I will say on the China supply in general, you know, we have a decent pub in it's a decent pub in China. We also have a large AT facility over there. And in general, I think the footprint that TI has is very, very good answer to what our customers in China is, but beyond that, you know, what our customers need worldwide.

Yes. Super helpful. This may be a silly question, but I just want to understand too because in your filings, you talk about front end and back end manufacturing at your different facilities. You're doing production, of a certain chip in a geography, is the back end always associated with that same foundry? Or are you shipping that to different places before it meets the end customer? Where is the back end done? Is it pretty much aligned with your foundry footprint just because they're listed similarly in the filing? Just want to understand a little better.

The short answer is no, but I'll let Rafael. We have full flexibility, but Rafael, maybe you can comment.

Yeah. No. So there's almost an unlimited number of permutations of how this the fabs and the ATs and in between bump and probe, if you will. That happens. So a fab can be a wafer can be fabbed in the United States and then be assembled and tested in Malaysia and then tested in Taiwan, for example. So it's not all in one geography. And some of that, by the way, can be changed immediately. Some of that can take time, but a lot of that is actually can be moved pretty quickly.

I think the most important point is there are things that can happen immediately, and the things that take a little bit of a longer time. So if you think about them in order of the easiest thing to do is just to route and that's the logistic comment I have. I had to route the right path to the right part. That's an IT thing. Again, we are a massive supplier. Okay? We run well above ten billion units a year, sorry, a quarter to our customers. So that's not something you could do manually in an Excel sheet. Right? So logistics and IT have to be put together, and we are. The second thing that you are doing is just on the AT. You know, AT is a very easy permutation to Rafael's point, and it's very simple to take a wafer from a certain fab and run it in quickly on a new assembly and test factory just because the cycle time is lower. And, of course, there is a when we go to the base layer of the chip, the chip just has longer cycle time, and this is where we are gathering information from our customers we can solve their problems as soon as possible.

Next time. Let's move on to the next caller, please.

Great. Thanks for taking my question. I wonder if you could talk to us about the breakup between growth between pricing and volume, specifically as it relates to tariffs. Was there anything that helped, for example, this new tariff, you're passing the price along, and so you see some price benefit either in the Q1 results or in the Q2 guidance? Anything that we can quantify?

No. I can that's an easy answer. It's based on just shipping more volume to customers. That's what we're seeing, the recovery of the cycle.

I wonder if you could give us an update on the competition in China. I think that some people have observed greater competition there. One of your somewhat smaller competitors in analog and embedded for similar product profile, perhaps a bit more narrow, but similar product profile talked about no longer competing in standard products in China and instead through selling dice and having customers you know, assemble, test, support, etcetera, which seems like a strange approach, but they said that the Chinese are becoming more intense or more capable competitors now. And I wonder if you could update that update us relative to what you see.

Yeah. Thanks for the question. This is something that we've been watching, as you know, for years. This is not a 2025 phenomenon. And as I said before and we said many times, the competition in China is intensifying. And by the way, I was in China just last quarter. Okay? No discussion on trade. It was all about supply and, you know, expanding positions on board and designing. So just a regular visit across more than twenty customers. And in general, the competition is intensifying across the board. It's in general purpose, but it's also in a more application-specific way. I'll tell you our largest competitor on a 77 gigahertz chip in China is a Chinese competitor. That's where we fight, and I won't call that a general-purpose part. Okay? That's a very, very unique large die size for chains of transmit and receive running at very high frequency. This is not a general purpose, but very application-specific, very complex. And we are not surprised. We've seen those folks working for more than five years and just very, very good companies and very aggressive, very urgent, moving fast. And I like to call it our conditioning room because that's where you can strengthen your muscle. Your muscle of competitiveness, urgency, China is the best landscape to do that. I think we can compete on both. Even now, and especially now when we show the scale and power of TI, we have a lot of options for our customers, not only the breadth of the product, the high level quality. The number one discussion point I had in a quarter ago is about supply. And the fact that we had inventory and we have capacity is super important for our customers. They are feeling they they are always the Chinese or the China market is always a little bit ahead in the phase of any cycle, any recovery. We saw it on the way up in COVID and the way down, and now we see it on the way up. They always, like, almost the early indicator. And that was the discussion. It was all about how can we get more quicker and also a lot of thanks to the level of support of TI simply having inventory for them ready to go with very short lead time. So that would be my high-level comment on the competition. I think we need to assume that the competition will continue to intensify. I will say that our competitive advantages, especially on the breadth of the portfolio, expect that we can solve many problems on the board. You can solve it with one company rather than with twenty. And the fact that we have this diverse supply chain or diverse manufacturing plan, which is geopolitically dependable for their China business, but also for their export business, is super important. I think it will continue to stay important. At this time.

Okay. We'll move on to our last caller.

Great. Thank you. I wonder if you could talk about the share repurchases in the quarter. I saw that the six hundred million plus number. You know, you've got a billion seven of trailing free cash, five billion dollar dividend. I know the free cash is getting better, but can you just talk about know, what drives the timing of your buybacks and how much are you willing to take on more debt to buy back more? Thank you.

Yeah. You know, our objective when it comes to buybacks and in general, just cash return is to return all free cash flow via dividends and repurchases. But you got to recognize that there's times to build and drain cash. So if you look at our cash balance, for example, we're at a very comfortable five billion dollars and our balance sheet is really strong with that. But a year ago, it was at ten billion dollars, and that's because we had so much more of our capital expenditures ahead of us. Right now, we're at seventy percent through the elevated investment. So we felt more comfortable operating at lower levels of cash. But, you know, having five billion dollars of cash will still give you supply in the room. And on your question on debt, we've taken that before. We still have plenty of room on our balance sheet to take on more debt as it makes sense. When it makes sense.

Yeah. I do. And thank you for that. I guess with regards to the Chinese tariffs, you know, I've talked to some of the customers and people don't seem to have clarity on what exactly the tariff rate is, and yet I think the tariff is already being charged. Like, do you have clarity on that? Are people immediately paying those tariffs? You know, is there just any way to sort of tell how much impact there is, or is that something where the actual tariff is kind of calculated later? Just what are the mechanics of this being implemented so rapidly?

Yeah. Thanks for the question. And I'd first start with, you know, and reiterate that there's a lot changing, it's a dynamic environment. And our customers are looking at their supply chains and they're working and we're working with them to understand and help support their needs. And as you've mentioned, we have the flexibility to navigate those evolving dynamics. And in terms of how that who pays that or really the question is are you able to be competitive? And with our competitive advantages, the flexibility that we have, our geopolitically dependable footprint, we do have the ability to be competitive and to support our customers where they are.

Just a last point on this, Joe. And if you will, we need we just need to let the quarter play out and so many things can change in the next few weeks. And I actually expect an to change. Right? So it's very hard to answer the question. I will just say that the way we learn about what our customers need is through their orders, through their backlog, and of course, if we see a change, we will if we would see a change, we will let you know. But that's the only way for us to gauge demand is what our customers are asking us to do. And our objective is to serve them, sell them well at high quality, and deliver the product want, not only right now in second quarter, but also towards the second half of the year and also next year. Okay. So with that, let me wrap up with what we've said previously at our call. We are engineers. And technology is the foundation of our company. But ultimately our objective and best metric to measure progress and generate value for our owners is the long-term growth of free cash flow per share. Thank you, everyone, for joining the call. Congratulations to Dave, and have a great evening.