10-QPeriod: Q1 FY2017

TEXAS INSTRUMENTS INC Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 3, 2017For Securities:TXN

Summary

Texas Instruments Inc. (TXN) reported strong first-quarter 2017 results, showcasing a significant year-over-year increase in revenue and net income. Revenue grew 13% to $3.40 billion, driven by robust performance in both the Analog and Embedded Processing segments. Analog revenue saw a notable 20% increase, while Embedded Processing grew by 10%, indicating strong demand in key product areas. Profitability also improved, with operating profit rising to $1.25 billion and net income reaching $997 million, translating to a diluted EPS of $0.97, up from $0.69 in the prior year. The company highlighted its efficient manufacturing strategy, including the benefit of 300-millimeter Analog production, contributing to a gross margin of 63.0%. Furthermore, Texas Instruments demonstrated its strong cash-generating capabilities with operating cash flow of $795 million and free cash flow of $4.2 billion for the trailing twelve months, underscoring its ability to return capital to shareholders through dividends and share repurchases.

Financial Highlights

51 data points
Beta

Revenue

$3.40B

63.0% Gross Margin

Net Income

$997.00M

29.3% Net Margin

EPS (Diluted)

$0.97

Total Assets

$15.98B

Cash & Equivalents

$1.07B

Free Cash Flow

$668.00M

Financial Statements
Beta
Revenue$3.40B
Cost of Revenue$1.26B
Gross Profit$2.14B
R&D Expenses$369.00M
SG&A Expenses$439.00M
Operating Income$1.25B
Net Income$997.00M
EPS (Basic)$0.99
EPS (Diluted)$0.97
Shares Outstanding (Basic)998.00M
Shares Outstanding (Diluted)1.02B

Key Highlights

  • 1Revenue increased by 13% year-over-year to $3.40 billion.
  • 2Net income rose significantly to $997 million, with diluted EPS of $0.97 compared to $0.69 in the prior year.
  • 3Analog segment revenue grew by 20%, and Embedded Processing segment revenue increased by 10%.
  • 4Gross margin improved to 63.0% due to higher revenue and manufacturing efficiencies.
  • 5Operating profit was $1.25 billion, representing 36.8% of revenue, an increase from 32.7% in the prior year.
  • 6Cash flow from operations was $795 million for the quarter, and free cash flow for the trailing twelve months was $4.2 billion.
  • 7The company returned $3.8 billion to shareholders through stock repurchases and dividends in the past 12 months.

Frequently Asked Questions

The primary drivers of Texas Instruments' revenue growth were strong demand in the automotive and industrial markets, leading to a 20% increase in Analog segment revenue and a 10% increase in Embedded Processing segment revenue. Higher shipment volumes and a favorable product mix contributed to this growth.

Profitability saw significant improvement. Gross profit increased by 17% to $2.14 billion, and gross margin expanded to 63.0% from 60.8%. Operating profit grew to $1.25 billion from $984 million, and net income increased to $997 million, resulting in a higher diluted EPS of $0.97 compared to $0.69 in the same period last year.

Texas Instruments demonstrated strong cash flow generation, with $795 million in cash flow from operations in the first quarter and $4.2 billion in free cash flow for the trailing twelve months. The company continues to prioritize returning capital to shareholders, having returned $3.8 billion through stock repurchases and dividends in the past year.

Yes, Texas Instruments adopted ASU 2017-07 regarding the presentation of net periodic pension cost, which impacted the presentation of certain benefit costs. The company also reorganized its product lines within the Analog and Embedded Processing segments, effective January 2017, to better align with customer purchasing behavior. Additionally, as of January 1, 2017, royalties are no longer recognized as revenue but as Other Income (Expense), net.