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TI reports second quarter 2020 financial results and shareholder returns

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DALLAS, July 21, 2020 /PRNewswire/ -- Texas Instruments Incorporated (TI) (Nasdaq: TXN) today reported second quarter revenue of $3.24 billion, net income of $1.38 billion and earnings per share of $1.48. Earnings per share include a 33-cent benefit for items that were not in the company's original guidance.

Regarding the company's performance and returns to shareholders, Rich Templeton, TI's chairman, president and CEO, made the following comments:

  • "Revenue decreased 12% from the same quarter a year ago, driven primarily by weakness in the automotive market.
  • "In our core businesses, Analog revenue declined 4% and Embedded Processing declined 31% from the same quarter a year ago. Analog and Embedded Processing both had positive sequential growth in the second quarter excluding the automotive market.
  • "Our cash flow from operations of $6.3 billion for the trailing 12 months again underscored the strength of our business model. Free cash flow for the same period was $5.7 billion and 42% of revenue. This reflects the quality of our product portfolio, as well as the efficiency of our manufacturing strategy, including the benefit of 300-millimeter Analog production.
  • "We have returned $6.7 billion to owners in the past 12 months through stock repurchases and dividends. Over the same period, our dividends represented 56% of free cash flow, underscoring their sustainability. Together, our stock repurchases and dividends reflect our continued commitment to return all free cash flow to our owners.
  • "TI's third quarter outlook is for revenue in the range of $3.26 billion to $3.54 billion, and earnings per share between $1.14 and $1.34."

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

Earnings summary

Amounts are in millions of dollars, except per-share amounts.


Q2 2020


Q2 2019


Change

Revenue

$

3,239


$

3,668


(12)%

Operating profit

$

1,228


$

1,506


(18)%

Net income

$

1,380


$

1,305


6%

Earnings per share

$

1.48


$

1.36


9%

 

Cash generation

Amounts are in millions of dollars.




Trailing 12 Months


Q2 2020


Q2 2020


Q2 2019


Change

Cash flow from operations

$

1,720


$

6,317


$

7,154


(12)%

Capital expenditures

$

130


$

603


$

1,228


(51)%

Free cash flow

$

1,590


$

5,714


$

5,926


(4)%

Free cash flow % of revenue



41.7%


38.9%



 

Cash return

Amounts are in millions of dollars.




Trailing 12 Months


Q2 2020


Q2 2020


Q2 2019


Change

Dividends paid

$

823


$

3,226


$

2,784


16%

Stock repurchases

$

882


$

3,468


$

5,224


(34)%

Total cash returned

$

1,705


$

6,694


$

8,008


(16)%

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Income

(Millions of dollars, except share and per-share amounts)




For Three Months Ended
June 30,



2020


2019

Revenue


$

3,239


$

3,668

Cost of revenue (COR)


1,157


1,308

Gross profit


2,082


2,360

Research and development (R&D)


379


390

Selling, general and administrative (SG&A)


401


420

Acquisition charges


50


80

Restructuring charges/other


24


(36)

Operating profit


1,228


1,506

Other income (expense), net (OI&E)


99


52

Interest and debt expense


48


44

Income before income taxes


1,279


1,514

Provision for income taxes


(101)


209

Net income


$

1,380


$

1,305







Diluted earnings per common share


$

1.48


$

1.36







Average shares outstanding (millions):






Basic


916



937

Diluted


927



953







Cash dividends declared per common share


$

.90


$

.77








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)


$

164


$

238

Discrete tax items



(265)


(29)

Provision for income taxes (effective taxes)


$

(101)


$

209







Annual operating tax rate


13%


16%

Effective tax rate


(8)%


14%






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


$

1,380


$

1,305

Income allocated to RSUs


(7)


(8)

Income allocated to common stock for diluted EPS


$

1,373


$

1,297


 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Balance Sheets

(Millions of dollars, except share amounts)



June 30,


2020


2019

Assets




Current assets:




Cash and cash equivalents

$

4,294


$

3,813

Short-term investments

666


405

Accounts receivable, net of allowances of ($9) and ($15)

1,176


1,419

Raw materials

182


176

Work in process

977


958

Finished goods

977


945

Inventories

2,136


2,079

Prepaid expenses and other current assets

216


240

Total current assets

8,488


7,956

Property, plant and equipment at cost

5,741


5,706

Accumulated depreciation

(2,540)


(2,341)

Property, plant and equipment

3,201


3,365

Long-term investments

36


300

Goodwill

4,362


4,362

Acquisition-related intangibles

240


469

Deferred tax assets

236


261

Capitalized software licenses

141


88

Overfunded retirement plans

223


104

Other long-term assets

518


479

Total assets

$

17,445


$

17,384





Liabilities and stockholders' equity




Current liabilities:




Current portion of long-term debt

$

551


$

1,249

Accounts payable

409


412

Accrued compensation

505


476

Income taxes payable

179


87

Accrued expenses and other liabilities

519


422

Total current liabilities

2,163


2,646

Long-term debt

6,245


4,558

Underfunded retirement plans

99


121

Deferred tax liabilities

60


49

Other long-term liabilities

1,234


1,524

Total liabilities

9,801


8,898

Stockholders' equity:




Preferred stock, $25 par value. Authorized – 10,000,000 shares




Participating cumulative preferred – None issued

—


—

Common stock, $1 par value. Authorized – 2,400,000,000 shares




Shares issued – 1,740,815,939

1,741


1,741

Paid-in capital

2,182


2,003

Retained earnings

40,780


38,974

Treasury common stock at cost




Shares: June 30, 2020 – 825,225,307; June 30, 2019 – 806,251,136

(36,725)


(33,775)

Accumulated other comprehensive income (loss), net of taxes (AOCI)

(334)


(457)

Total stockholders' equity

7,644


8,486

Total liabilities and stockholders' equity

$

17,445


$

17,384


 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Millions of dollars)


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Texas Instruments Incorporated

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Semiconductor and Related Device Manufacturing
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Texas Instruments Incorporated is an American technology company headquartered in Dallas, Texas, that designs and manufactures semiconductors and various integrated circuits, which it sells to electronics designers and manufacturers globally.