01—Abstract
Summary
Summary of the 10-K filed February 20, 2020. Cited figures are marked; the original filing is the authoritative source.
Texas Instruments (TXN) reported its 2019 performance, highlighting its core strengths in Analog and Embedded Processing segments, which are strategically focused on the industrial and automotive markets.
The company generated $14.38 billiona in revenue, with the Analog segment contributing approximately 71% and the Embedded Processing segment contributing about 20%. TXN emphasizes its sustainable competitive advantages, including manufacturing and technology, a broad product portfolio, market channel reach, and the diversity/longevity of its offerings. The company's capital management strategy is centered on growing free cash flow per share and returning all free cash flow to shareholders through dividends and stock repurchases.
While revenue saw a decrease of 9% year-over-year to $14.38 billionb, primarily due to lower demand in the Embedded Processing and Analog segments, TXN maintained a strong gross margin of 63.7% and generated $5.80 billion in free cash flow. The company returned $5.97 billion to shareholders in 2019 via dividends and repurchases, demonstrating its commitment to shareholder value. Looking ahead, TXN continues to invest in 300mm manufacturing capacity to support analog growth and remains focused on innovation and expanding direct customer relationships to navigate the cyclical semiconductor market.
02—Key points
Key Highlights
- Total revenue for 2019 was $14.38 billion, a decrease of 9% from 2018, largely attributed to lower revenue in the Analog and Embedded Processing segments.
- The company maintained a strong gross margin of 63.7% in 2019, reflecting its product portfolio and manufacturing efficiency, including benefits from 300mm Analog production.
- Free cash flow (FCF) was $5.80 billion, representing 40.3% of revenue, underscoring the strength of TXN's business model and capital generation capabilities.
- Texas Instruments returned $5.97 billion to shareholders in 2019 through $3.01 billion in dividends and $2.96 billion in stock repurchases, aligning with its strategy to return all free cash flow.
- The strategic focus remains on the Analog and Embedded Processing segments, with a particular emphasis on growth in the industrial and automotive markets due to increasing semiconductor content and long product life cycles.
- The company is investing in advanced 300mm manufacturing capacity, including a new fabrication facility in Richardson, Texas, to support future Analog growth and maintain a cost advantage.
- Despite a decrease in revenue, TXN ended 2019 with a strong cash position of $5.39 billion, indicating solid liquidity.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Texas Instruments kept $0.35.
- Revenue$14.38B100.0%
- Cost of revenue−$5.22B36.3%
- Gross profit$9.16B63.7%
- Operating costs−$3.44B23.9%
- Operating income$5.72B39.8%
- Interest, other & tax−$706.0M4.9%
- Net income$5.02B34.9%
Where FY2019 revenue went
$14.38B- Cost of revenue: $5.22B, 36% of revenue
- Net income: $5.02B, 35% of revenue
- R&D: $1.54B, 11% of revenue
- SG&A: $1.65B, 11% of revenue
- Other operating costs: $252.0M, 1.8% of revenue
- Interest, other & tax: $706.0M, 4.9% of revenue
Kept 35% as net incomeOther operating costs $252.0M · 1.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 20, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $14.38B$15.78B | −8.9% |
| Cost of Revenue | $5.22B$5.51B | −5.2% |
| Gross Profit | $9.16B$10.28B | −10.8% |
| R&D Expenses | $1.54B$1.56B | −1.0% |
| SG&A Expenses | $1.65B$1.68B | −2.3% |
| Operating Income | $5.72B$6.71B | −14.7% |
| Net Income | $5.02B$5.58B | −10.1% |
| EPS (Basic) | $5.33$5.71 | −6.7% |
| EPS (Diluted) | $5.24$5.59 | −6.3% |
| Shares Outstanding (Basic) | 936.00M970.00M | −3.5% |
| Shares Outstanding (Diluted) | 952.00M990.00M | −3.8% |
05—Questions
Frequently Asked Questions
What was Texas Instruments' revenue performance in 2019, and what were the main drivers?
In 2019, Texas Instruments reported revenue of $14.38 billion, a decrease of 9% compared to 2018. This decline was primarily driven by lower revenue from both the Analog and Embedded Processing segments, reflecting a general slowdown in demand across these areas.
How did Texas Instruments manage its cash flow and shareholder returns in 2019?
Texas Instruments generated $5.80 billion in free cash flow (FCF) in 2019, demonstrating strong cash generation capabilities relative to its revenue. The company continued its commitment to returning capital to shareholders, returning a total of $5.97 billion through dividends ($3.01 billion) and stock repurchases ($2.96 billion), adhering to its strategy of returning all free cash flow.
What are Texas Instruments' key strategic focuses for growth?
TXN's primary strategic focus is on its Analog and Embedded Processing segments. It is particularly emphasizing growth in the industrial and automotive markets, which it believes offer significant long-term potential due to increasing semiconductor content and long product life cycles. The company is also investing in advanced 300mm manufacturing capacity to support its analog business and enhance its cost advantages.
What is the company's approach to managing risks associated with the cyclical semiconductor market?
Texas Instruments mitigates the impact of the semiconductor cycle by focusing on analog and embedded processing products and the industrial and automotive markets, which offer greater diversity and longer product life cycles. It also employs strategies such as planning manufacturing capacity ahead of demand and utilizing inventory consignment programs to better manage factory loadings and gain insight into customer demand.
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