What were the key drivers of revenue growth in the second quarter of 2016?

Revenue growth was primarily driven by the Embedded Processing segment, which saw a 9% increase year-over-year. While the Analog segment remained stable, demand in the automotive and industrial markets was strong, while the personal electronics market saw a decline compared to the prior year.

How did Texas Instruments improve its profitability in this quarter?

Profitability improved significantly due to a higher gross margin, which rose to 61.2% from 58.2% a year ago. This was achieved through lower manufacturing costs, efficiencies from 300-millimeter wafer production, and a favorable product mix in key segments. Operating expenses were managed effectively, with R&D increasing as planned for future growth and SG&A seeing a slight decrease.

What is the company's approach to returning capital to shareholders?

Texas Instruments demonstrated a strong commitment to returning capital to shareholders. Over the trailing twelve months, the company returned $4.1 billion through stock repurchases and dividends. Their strategy aims to return 100% of free cash flow plus proceeds from equity compensation, minus net debt retirement, reflecting confidence in their business model's sustainability.

How is the company positioned financially in terms of liquidity and debt?

The company maintains a strong financial position with robust liquidity. As of June 30, 2016, Texas Instruments had $2.54 billion in cash and short-term investments. They also have an undrawn $2 billion revolving credit facility. Long-term debt stands at $2.975 billion, and the company is actively managing its debt obligations, including issuing new debt and retiring maturing debt.

TXN 10-Q Quarterly Report Q2 FY2016 — Revenue, Net Income, EPS

Summary

Texas Instruments (TXN) reported solid results for the second quarter of 2016, demonstrating resilience in a challenging market. Revenue saw a modest increase of 1.3% year-over-year to $3.27 billion, driven by strong performance in the Embedded Processing segment, which grew 9%. The Analog segment remained stable year-over-year, highlighting the company's diversified product portfolio. Profitability improved significantly, with operating profit increasing by 10.6% to $1.12 billion and gross margin expanding to 61.2% from 58.2% in the prior year, attributed to lower manufacturing costs and efficient operations, including the benefits of 300-millimeter wafer production. Financially, TXN continues to generate substantial free cash flow, which increased 7% year-over-year to $3.9 billion for the trailing twelve months. This robust cash generation enabled the company to return $4.1 billion to shareholders through dividends and share repurchases, underscoring their commitment to capital return. The balance sheet remains strong, with $2.5 billion in cash and short-term investments, providing ample liquidity. The company is also strategically investing in R&D, with plans for continued increases, signaling a focus on innovation and long-term growth.

Financial Highlights

52 data points

Beta

Revenue

$3.27B

0.6% Gross Margin

Net Income

$819.00M

0.3% Net Margin

EPS (Diluted)

$0.79

Total Assets

$15.69B

Cash & Equivalents

$1.24B

Free Cash Flow

$951.00M

Financial Statements

Beta

Revenue	$3.27B
Cost of Revenue	$1.27B
Gross Profit	$2.01B
R&D Expenses	$341.00M
SG&A Expenses	$454.00M
Operating Income	$1.13B
Net Income	$819.00M
EPS (Basic)	$0.81
EPS (Diluted)	$0.79
Shares Outstanding (Basic)	1.00B
Shares Outstanding (Diluted)	1.02B

Key Highlights

1Revenue for Q2 2016 increased by 1.3% to $3.27 billion compared to Q2 2015, driven by a 9% growth in Embedded Processing.
2Gross profit margin improved to 61.2% in Q2 2016 from 58.2% in Q2 2015, due to lower manufacturing costs and efficient 300mm wafer production.
3Operating profit grew by 10.6% to $1.12 billion, with operating margin increasing to 34.1% from 31.3% year-over-year.
4Net income for Q2 2016 was $779 million, or $0.76 per diluted share, up from $696 million, or $0.65 per diluted share, in Q2 2015.
5Free cash flow for the trailing twelve months increased by 7% to $3.9 billion, representing 30.0% of revenue.
6The company returned $4.1 billion to shareholders through stock repurchases and dividends over the past twelve months.
7Cash and short-term investments totaled $2.54 billion at the end of Q2 2016, indicating strong liquidity.

TEXAS INSTRUMENTS INC Quarterly Report for Q2 Ended Jun 30, 2016

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions