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TI reports third quarter 2024 financial results and shareholder returns

TXN

DALLAS, Oct. 22, 2024 /PRNewswire/ -- Texas Instruments Incorporated (TI) (Nasdaq: TXN) today reported third quarter revenue of $4.15 billion, net income of $1.36 billion and earnings per share of $1.47. Earnings per share included a 3-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 8% from the same quarter a year ago and increased 9% sequentially. Industrial continued to decline sequentially, while all other end markets grew.
  • "Our cash flow from operations of $6.2 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 $1.5 billion.
  • "Over the past 12 months we invested $3.7 billion in R&D and SG&A, invested $4.8 billion in capital expenditures and returned $5.2 billion to owners.
  • "TI's fourth quarter outlook is for revenue in the range of $3.70 billion to $4.00 billion and earnings per share between $1.07 and $1.29. We continue to expect our fourth quarter 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)


Q3 2024


Q3 2023


Change

Revenue


$

4,151


$

4,532


(8) %

Operating profit


$

1,554


$

1,892


(18) %

Net income


$

1,362


$

1,709


(20) %

Earnings per share


$

1.47


$

1.85


(21) %

Cash generation





Trailing 12 Months

(In millions)


Q3 2024


Q3 2024


Q3 2023


Change

Cash flow from operations


$

1,732


$

6,244


$

6,538


(4) %

Capital expenditures


$

1,316


$

4,776


$

4,890


(2) %

Free cash flow


$

416


$

1,468


$

1,648


(11) %

Free cash flow % of revenue






9.3 %



9.1 %



Cash return





Trailing 12 Months

(In millions)


Q3 2024


Q3 2024


Q3 2023


Change

Dividends paid


$

1,187


$

4,736


$

4,499


5 %

Stock repurchases


$

318


$

457


$

1,076


(58) %

Total cash returned


$

1,505


$

5,193


$

5,575


(7) %

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


Consolidated Statements of Income


For Three Months Ended

September 30,

(In millions, except per-share amounts)


2024


2023

Revenue


$

4,151


$

4,532

Cost of revenue (COR)



1,677



1,717

Gross profit



2,474



2,815

Research and development (R&D)



492



471

Selling, general and administrative (SG&A)



428



452

Operating profit



1,554



1,892

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



131



128

Interest and debt expense



131



98

Income before income taxes



1,554



1,922

Provision for income taxes



192



213

Net income


$

1,362


$

1,709








Diluted earnings per common share


$

1.47


$

1.85








Average shares outstanding:







Basic



913



908

Diluted



920



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)


$

227


$

229

Discrete tax items



(35)



(16)

Provision for income taxes (effective taxes)


$

192


$

213








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


$

1,362


$

1,709

Income allocated to RSUs



(7)



(10)

Income allocated to common stock for diluted EPS


$

1,355


$

1,699

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


Consolidated Balance Sheets


September 30,

(In millions, except par value)


2024


2023

Assets







Current assets:







Cash and cash equivalents


$

2,589


$

2,566

Short-term investments



6,163



6,382

Accounts receivable, net of allowances of ($23) and ($15)



1,862



1,976

Raw materials



393



401

Work in process



2,081



2,147

Finished goods



1,822



1,360

Inventories



4,296



3,908

Prepaid expenses and other current assets



962



265

Total current assets



15,872



15,097

Property, plant and equipment at cost



15,464



12,528

Accumulated depreciation



(3,662)



(3,208)

Property, plant and equipment



11,802



9,320

Goodwill



4,362



4,362

Deferred tax assets



941



632

Capitalized software licenses



229



138

Overfunded retirement plans



184



166

Other long-term assets



1,931



1,923

Total assets


$

35,321


$

31,638








Liabilities and stockholders' equity







Current liabilities:







Current portion of long-term debt


$

1,049


$

300

Accounts payable



794



713

Accrued compensation



721



707

Income taxes payable



108



108

Accrued expenses and other liabilities



1,014



824

Total current liabilities



3,686



2,652

Long-term debt



12,844



10,922

Underfunded retirement plans



117



141

Deferred tax liabilities



54



66

Other long-term liabilities



1,352



1,226

Total liabilities



18,053



15,007

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



3,813



3,280

Retained earnings



52,304



52,098

Treasury common stock at cost







Shares: September 30, 2024 – 829; September 30, 2023 – 833



(40,395)



(40,253)

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



(195)



(235)

Total stockholders' equity



17,268



16,631

Total liabilities and stockholders' equity


$

35,321


$

31,638

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


Consolidated Statements of Cash Flows


For Three Months Ended

September 30,

(In millions)


2024


2023

Cash flows from operating activities







Net income


$

1,362


$

1,709

Adjustments to net income:







Depreciation



383



303

Amortization of capitalized software



19



17

Stock compensation



87



79

Deferred taxes



(33)



(99)

Increase (decrease) from changes in:







Accounts receivable



(151)



(20)

Inventories



(190)



(179)

Prepaid expenses and other current assets



(23)



28

Accounts payable and accrued expenses



13



27

Accrued compensation



149



145

Income taxes payable



155



(7)

Changes in funded status of retirement plans



(24)



26

Other



(15)



(92)

Cash flows from operating activities



1,732



1,937








Cash flows from investing activities







Capital expenditures



(1,316)



(1,495)

Proceeds from asset sales





1

Purchases of short-term investments



(1,845)



(3,080)

Proceeds from short-term investments



2,700



2,885

Other



(26)



(5)

Cash flows from investing activities



(487)



(1,694)








Cash flows from financing activities







Dividends paid



(1,187)



(1,126)

Stock repurchases



(318)



(46)

Proceeds from common stock transactions



117



68

Other



(8)



(12)

Cash flows from financing activities



(1,396)



(1,116)








Net change in cash and cash equivalents



(151)



(873)

Cash and cash equivalents at beginning of period



2,740



3,439

Cash and cash equivalents at end of period


$

2,589


$

2,566








Supplemental cash flow information







Investment tax credit (ITC) used to reduce income taxes payable


$

220


$

Total cash benefit related to the U.S. CHIPS and Science Act


$

220


$

Segment results

(In millions)


Q3 2024


Q3 2023


Change

Analog:









Revenue


$

3,223


$

3,353


(4) %

Operating profit


$

1,316


$

1,504


(13) %

Embedded Processing:









Revenue


$

653


$

890


(27) %

Operating profit


$

109


$

258


(58) %

Other:









Revenue


$

275


$

289


(5) %

Operating profit*


$

129


$

130


(1) %


* 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

September 30,



(In millions)


2024


2023


Change

Cash flow from operations (GAAP)*


$

6,244


$

6,538


(4) %

Capital expenditures



(4,776)



(4,890)



Free cash flow (non-GAAP)


$

1,468


$

1,648


(11) %










Revenue


$

15,711


$

18,112












Cash flow from operations as a percentage of revenue (GAAP)



39.7 %



36.1 %



Free cash flow as a percentage of revenue (non-GAAP)



9.3 %



9.1 %




* Includes a cash benefit of $532 million from the U.S. CHIPS and Science Act ITC used to reduce income taxes

payable for the twelve months ended September 30, 2024.

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 and sells analog and embedded processing chips for markets such as industrial, automotive, personal electronics, communications equipment and enterprise systems. At our core, we have a passion to create a better world by making electronics more affordable through semiconductors. This passion is alive today as each generation of innovation builds upon the last to make our technology more reliable, more affordable and lower power, making it possible for semiconductors to go into electronics everywhere. Learn more at TI.com.

TXN-G

Texas Instruments Logo. (PRNewsFoto/Texas Instruments Incorporated) (PRNewsfoto/Texas Instruments Incorporated)

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/ti-reports-third-quarter-2024-financial-results-and-shareholder-returns-302283608.html

SOURCE Texas Instruments Incorporated



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