TI reports first quarter 2024 financial results and shareholder returns

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Texas Instruments (TXN) reported first quarter 2024 financial results with revenue of $3.66 billion, net income of $1.11 billion, and earnings per share of $1.20. Despite a 16% revenue decline from the same quarter last year and 10% sequentially, the company's cash flow from operations was $6.3 billion for the trailing 12 months. TI invested $3.7 billion in R&D and SG&A, $5.3 billion in capital expenditures, and returned $4.8 billion to owners. The second quarter outlook includes revenue between $3.65 billion to $3.95 billion and earnings per share from $1.05 to $1.25.

Positive

• TI reported a revenue of $3.66 billion for the first quarter of 2024.
• Net income stood at $1.11 billion with earnings per share of $1.20.
• The company experienced a 16% revenue decline from the same quarter last year and a 10% sequential decline.
• Cash flow from operations for the trailing 12 months was $6.3 billion.
• TI invested $3.7 billion in R&D and SG&A, $5.3 billion in capital expenditures, and returned $4.8 billion to owners.
• The second quarter outlook forecasts revenue in the range of $3.65 billion to $3.95 billion and earnings per share between $1.05 and $1.25.

Negative

• Revenue decreased 16% from the same quarter a year ago and 10% sequentially.
• Despite the strong cash flow, the company faced revenue declines across all end markets.
• The significant investments in R&D, SG&A, and capital expenditures might impact short-term profitability.

Financial Analyst

Texas Instruments Incorporated has presented a financial snapshot that warrants attention from various investor angles. A 16% year-over-year revenue decline and a 10% sequential decrease are significant indicators of the company's current market challenges. The disclosed earnings per share of $1.20, inclusive of a 10-cent benefit not forecasted in initial guidance, suggests an operational performance that beat internal expectations.

From a cash flow perspective, the trailing twelve-month operations figure of $6.3 billion reflects a solid business model resilience and effective capital management, particularly in leveraging 300mm production efficiencies. However, the free cash flow of $940 million juxtaposed against the substantial reinvestment into research and development as well as capital expenditures totaling $9 billion raises a question on the sustainability of their high investment rate, especially in the face of declining revenues.

Investor remuneration through returns of $4.8 billion indicates a commitment to shareholder value but also must be balanced against the need for sustaining long-term growth through reinvestments. The projected Q2 revenue and earnings per share provide a range that should be analyzed in the context of the industry's trajectory and the company's ability to navigate market softness.

Market Research Analyst

Exploring the semiconductor industry landscape where TI operates, we notice an overarching trend of fluctuating demand influenced by global economic factors. The revenue downturn across all end markets might mirror broader industry pressures such as supply chain disruptions and a potential cooldown in consumer electronics demand.

An investor should consider the company's long-term strategic positioning, especially in light of its focus on 300mm production. This strategy could be a double-edged sword; while it may lead to cost savings and economies of scale in a favorable market, it could also pose risks if demand continues to shrink. The significant R&D expenditure positions TI for potential future market share capture through innovation, but this will only bear fruit if aligned with market demands and consumption patterns.

As a market observer, one should consider how the cyclical nature of the semiconductor industry could affect TI's future quarters and how the company's outlook aligns with these cycles. The earnings guidance for Q2 suggests a cautious but steady approach, reflecting an ongoing effort to navigate amidst a potentially challenging economic climate.

Investment Advisor

When dissecting TI's financial results from an investment standpoint, the decline in revenue presents both a point of concern and a reflection of the semiconductor industry's volatility. A savvy investor will weigh the earning per share surprise against the broader backdrop of a potential slowdown in tech spending.

TI's robust cash flow underpins a resilient operational framework but should be watched closely alongside the company's aggressive reinvestment in R&D and capital expenditures. This strategy could indicate a potent ground for future value creation, or conversely, a misalignment with immediate revenue generation opportunities.

TI’s shareholder return strategy, particularly in the form of dividends and buybacks, attests to a shareholder-friendly policy. However, this needs to be balanced with the reality that returning capital to shareholders may also reflect a lack of attractive reinvestment opportunities internally, especially when considering the company's cautious revenue outlook for the next quarter.

DALLAS, April 23, 2024 /PRNewswire/ -- Texas Instruments Incorporated (TI) (Nasdaq: TXN) today reported first quarter revenue of $3.66 billion, net income of $1.11 billion and earnings per share of $1.20.  Earnings per share included a 10-cent benefit for items that were not in the company's original guidance.

Regarding the company's performance and returns to shareholders, Haviv Ilan, TI's president and CEO, made the following comments:

• "Revenue decreased 16% from the same quarter a year ago and 10% sequentially, as revenue declined across all end markets.
• "Our cash flow from operations of $6.3 billion for the trailing 12 months again underscored the strength of our business model, the quality of our product portfolio and the benefit of 300mm production. Free cash flow for the same period was $940 million.
• "Over the past 12 months we invested $3.7 billion in R&D and SG&A, invested $5.3 billion in capital expenditures and returned $4.8 billion to owners.
• "TI's second quarter outlook is for revenue in the range of $3.65 billion to $3.95 billion and earnings per share between $1.05 and $1.25. We continue to expect our effective tax rate to be about 13%."

Free cash flow, a non-GAAP financial measure, is cash flow from operations less capital expenditures.

Earnings summary

(In millions, except per-share amounts)		Q1 2024			Q1 2023			Change
Revenue		$	3,661		$	4,379		(16) %
Operating profit		$	1,286		$	1,934		(34) %
Net income		$	1,105		$	1,708		(35) %
Earnings per share		$	1.20		$	1.85		(35) %

 

Cash generation

					Trailing 12 Months
(In millions)		Q1 2024			Q1 2024			Q1 2023			Change
Cash flow from operations		$	1,017		$	6,277		$	7,736		(19) %
Capital expenditures		$	1,248		$	5,337		$	3,336		60 %
Free cash flow		$	(231)		$	940		$	4,400		(79) %
Free cash flow % of revenue						5.6 %			22.6 %

 

Cash return

					Trailing 12 Months
(In millions)		Q1 2024			Q1 2024			Q1 2023			Change
Dividends paid		$	1,183		$	4,615		$	4,359		6 %
Stock repurchases		$	3		$	193		$	3,129		(94) %
Total cash returned		$	1,186		$	4,808		$	7,488		(36) %

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Income		For Three Months Ended March 31,
(In millions, except per-share amounts)		2024			2023
Revenue		$	3,661		$	4,379
Cost of revenue (COR)			1,566			1,516
Gross profit			2,095			2,863
Research and development (R&D)			478			455
Selling, general and administrative (SG&A)			455			474
Restructuring charges/other			(124)			—
Operating profit			1,286			1,934
Other income (expense), net (OI&E)			123			80
Interest and debt expense			116			68
Income before income taxes			1,293			1,946
Provision for income taxes			188			238
Net income		$	1,105		$	1,708
Diluted earnings per common share		$	1.20		$	1.85
Average shares outstanding:
Basic			910			907
Diluted			917			916
Cash dividends declared per common share		$	1.30		$	1.24
Supplemental Information (Quarterly, except as noted)
Provision for income taxes is based on the following:
Operating taxes (calculated using the estimated annual effective tax rate)		$	176		$	276
Discrete tax items			12			(38)
Provision for income taxes (effective taxes)		$	188		$	238
A portion of net income is allocated to unvested restricted stock units (RSUs) on which we pay dividend equivalents. Diluted EPS is calculated using the following:
Net income		$	1,105		$	1,708
Income allocated to RSUs			(5)			(9)
Income allocated to common stock for diluted EPS		$	1,100		$	1,699

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets		March 31,
(In millions, except par value)		2024			2023
Assets
Current assets:
Cash and cash equivalents		$	2,483		$	4,477
Short-term investments			7,910			5,068
Accounts receivable, net of allowances of ($20) and ($13)			1,671			1,877
Raw materials			417			378
Work in process			2,129			1,850
Finished goods			1,537			1,060
Inventories			4,083			3,288
Prepaid expenses and other current assets			1,301			313
Total current assets			17,448			15,023
Property, plant and equipment at cost			13,739			10,791
Accumulated depreciation			(3,297)			(3,126)
Property, plant and equipment			10,442			7,665
Goodwill			4,362			4,362
Deferred tax assets			821			486
Capitalized software licenses			231			140
Overfunded retirement plans			169			189
Other long-term assets			1,412			1,355
Total assets		$	34,885		$	29,220
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt		$	1,349		$	500
Accounts payable			551			952
Accrued compensation			399			394
Income taxes payable			378			372
Accrued expenses and other liabilities			876			686
Total current liabilities			3,553			2,904
Long-term debt			12,840			9,626
Underfunded retirement plans			111			123
Deferred tax liabilities			55			73
Other long-term liabilities			1,343			1,251
Total liabilities			17,902			13,977
Stockholders' equity:
Preferred stock, $25 par value. Shares authorized – 10; none issued			—			—
Common stock, $1 par value. Shares authorized – 2,400; shares issued – 1,741			1,741			1,741
Paid-in capital			3,439			3,016
Retained earnings			52,199			50,930
Treasury common stock at cost
Shares: March 31, 2024 – 831; March 31, 2023 – 833			(40,193)			(40,192)
Accumulated other comprehensive income (loss), net of taxes (AOCI)			(203)			(252)
Total stockholders' equity			16,983			15,243
Total liabilities and stockholders' equity		$	34,885		$	29,220

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows		For Three Months Ended March 31,
(In millions)		2024			2023
Cash flows from operating activities
Net income		$	1,105		$	1,708
Adjustments to net income:
Depreciation			346			265
Amortization of capitalized software			16			16
Stock compensation			106			104
Gains on sales of assets			(129)			—
Deferred taxes			(71)			(8)
Increase (decrease) from changes in:
Accounts receivable			116			18
Inventories			(84)			(531)
Prepaid expenses and other current assets			(24)			(4)
Accounts payable and accrued expenses			(77)			(124)
Accrued compensation			(444)			(407)
Income taxes payable			212			185
Changes in funded status of retirement plans			17			6
Other			(72)			(68)
Cash flows from operating activities			1,017			1,160
Cash flows from investing activities
Capital expenditures			(1,248)			(982)
Proceeds from asset sales			192			1
Purchases of short-term investments			(4,864)			(3,013)
Proceeds from short-term investments			2,631			4,026
Other			(40)			(4)
Cash flows from investing activities			(3,329)			28
Cash flows from financing activities
Proceeds from issuance of long-term debt			2,980			1,397
Dividends paid			(1,183)			(1,125)
Stock repurchases			(3)			(103)
Proceeds from common stock transactions			65			85
Other			(28)			(15)
Cash flows from financing activities			1,831			239
Net change in cash and cash equivalents			(481)			1,427
Cash and cash equivalents at beginning of period			2,964			3,050
Cash and cash equivalents at end of period		$	2,483		$	4,477

 

Segment results 

(In millions)		Q1 2024			Q1 2023			Change
Analog:
Revenue		$	2,836		$	3,289		(14) %
Operating profit		$	1,008		$	1,574		(36) %
Embedded Processing:
Revenue		$	652		$	832		(22) %
Operating profit		$	105		$	237		(56) %
Other:
Revenue		$	173		$	258		(33) %
Operating profit*		$	173		$	123		41 %
* Includes restructuring charges/other.

 

Non-GAAP financial information

This release includes references to free cash flow and ratios based on that measure. These are financial measures that were not prepared in accordance with GAAP. Free cash flow was calculated by subtracting capital expenditures from the most directly comparable GAAP measure, cash flows from operating activities (also referred to as cash flow from operations).

We believe that free cash flow and the associated ratios provide insight into our liquidity, our cash-generating capability and the amount of cash potentially available to return to shareholders, as well as insight into our financial performance. These non-GAAP measures are supplemental to the comparable GAAP measures.

Reconciliation to the most directly comparable GAAP measures is provided in the table below.

		For 12 Months Ended March 31,
(In millions)		2024			2023			Change
Cash flow from operations (GAAP)		$	6,277		$	7,736		(19) %
Capital expenditures			(5,337)			(3,336)
Free cash flow (non-GAAP)		$	940		$	4,400		(79) %
Revenue		$	16,801		$	19,502
Cash flow from operations as a percentage of revenue (GAAP)			37.4 %			39.7 %
Free cash flow as a percentage of revenue (non-GAAP)			5.6 %			22.6 %

This release also includes references to operating taxes, a non-GAAP term we use to describe taxes calculated using the estimated annual effective tax rate, a GAAP measure that by definition does not include discrete tax items. We believe the term operating taxes helps to differentiate from effective taxes, which include discrete tax items.

Notice regarding forward-looking statements

This release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as TI or its management "believes," "expects," "anticipates," "foresees," "forecasts," "estimates" or other words or phrases of similar import. Similarly, statements herein that describe TI's business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements.

We urge you to carefully consider the following important factors that could cause actual results to differ materially from the expectations of TI or our management:

• Economic, social and political conditions, and natural events in the countries in which we, our customers or our suppliers operate, including global trade policies;
• Market demand for semiconductors, particularly in the industrial and automotive markets, and customer demand that differs from forecasts;
• Our ability to compete in products and prices in an intensely competitive industry;
• Evolving cybersecurity and other threats relating to our information technology systems or those of our customers, suppliers and other third parties;
• Our ability to successfully implement and realize opportunities from strategic, business and organizational changes, or our ability to realize our expectations regarding the amount and timing of associated restructuring charges and cost savings;
• Our ability to develop, manufacture and market innovative products in a rapidly changing technological environment, our timely implementation of new manufacturing technologies and installation of manufacturing equipment, and our ability to realize expected returns on significant investments in manufacturing capacity;
• Availability and cost of key materials, utilities, manufacturing equipment, third-party manufacturing services and manufacturing technology;
• Our ability to recruit and retain skilled personnel and effectively manage key employee succession;
• Product liability, warranty or other claims relating to our products, software, manufacturing, delivery, services, design or communications, or recalls by our customers for a product containing one of our parts;
• Compliance with or changes in the complex laws, rules and regulations to which we are or may become subject, or actions of enforcement authorities, that restrict our ability to operate our business or subject us to fines, penalties or other legal liability;
• Changes in tax law and accounting standards that impact the tax rate applicable to us, the jurisdictions in which profits are determined to be earned and taxed, adverse resolution of tax audits, increases in tariff rates, and the ability to realize deferred tax assets;
• Financial difficulties of our distributors or semiconductor distributors' promotion of competing product lines to our detriment; or disputes with current or former distributors;
• Losses or curtailments of purchases from key customers or the timing and amount of customer inventory adjustments;
• Our ability to maintain or improve profit margins, including our ability to utilize our manufacturing facilities at sufficient levels to cover our fixed operating costs, in an intensely competitive and cyclical industry and changing regulatory environment;
• Our ability to maintain and enforce a strong intellectual property portfolio and maintain freedom of operation in all jurisdictions where we conduct business; or our exposure to infringement claims;
• Instability in the global credit and financial markets; and
• Impairments of our non-financial assets.

For a more detailed discussion of these factors, see the Risk factors discussion in Item 1A of TI's most recent Form 10-K. The forward-looking statements included in this release are made only as of the date of this release, and we undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances. If we do update any forward-looking statement, you should not infer that we will make additional updates with respect to that statement or any other forward-looking statement.

About Texas Instruments

Texas Instruments Incorporated (Nasdaq: TXN) is a global semiconductor company that designs, manufactures, tests and sells analog and embedded processing chips for markets such as industrial, automotive, personal electronics, communications equipment and enterprise systems. Our passion to create a better world by making electronics more affordable through semiconductors is alive today, as each generation of innovation builds upon the last to make our technology smaller, more efficient, more reliable and more affordable – making it possible for semiconductors to go into electronics everywhere. We think of this as Engineering Progress. It's what we do and have been doing for decades. Learn more at TI.com.

TXN-G

 

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SOURCE Texas Instruments Incorporated

FAQ

What was TI's revenue for the first quarter of 2024?

TI reported a revenue of $3.66 billion for the first quarter of 2024.

What was TI's net income in the first quarter of 2024?

TI's net income stood at $1.11 billion for the first quarter of 2024.

What was TI's earnings per share for the first quarter of 2024?

TI's earnings per share was $1.20 for the first quarter of 2024.

What was the percentage decline in revenue compared to the same quarter last year?

TI experienced a 16% revenue decline from the same quarter last year.

What was the cash flow from operations for the trailing 12 months?

TI's cash flow from operations for the trailing 12 months was $6.3 billion.

How much did TI invest in R&D and SG&A over the past 12 months?

TI invested $3.7 billion in R&D and SG&A over the past 12 months.

What is TI's second quarter revenue outlook?

TI's second quarter revenue is expected to be in the range of $3.65 billion to $3.95 billion.

What is TI's second quarter earnings per share outlook?

TI's second quarter earnings per share is expected to be between $1.05 and $1.25.