10-QPeriod: Q3 FY2017

TEXAS INSTRUMENTS INC Quarterly Report for Q3 Ended Sep 30, 2017

Filed November 2, 2017For Securities:TXN

Summary

Texas Instruments (TXN) reported strong third-quarter 2017 results, demonstrating robust revenue growth and profitability. The company saw a significant 12% increase in revenue year-over-year, driven by solid demand in its core Analog and Embedded Processing segments, which both experienced double-digit growth. This top-line expansion, coupled with operational efficiencies and strong gross margins of 64.5%, translated into a substantial increase in operating profit and net income. Financially, TXN showcased its strong operational cash flow generation, with $4.8 billion generated over the trailing twelve months, resulting in a free cash flow of $4.2 billion (29% of revenue). The company also continued its commitment to shareholder returns, announcing a 24% dividend increase and a significant $6 billion share repurchase authorization. This positions TXN favorably with a healthy financial profile and a continued focus on returning value to its shareholders.

Financial Highlights

52 data points
Beta

Revenue

$4.12B

64.5% Gross Margin

Net Income

$1.28B

31.2% Net Margin

EPS (Diluted)

$1.26

Total Assets

$16.93B

Cash & Equivalents

$1.30B

Free Cash Flow

$1.54B

Financial Statements
Beta
Revenue$4.12B
Cost of Revenue$1.46B
Gross Profit$2.66B
R&D Expenses$375.00M
SG&A Expenses$412.00M
Operating Income$1.79B
Net Income$1.28B
EPS (Basic)$1.29
EPS (Diluted)$1.26
Shares Outstanding (Basic)988.00M
Shares Outstanding (Diluted)1.01B

Key Highlights

  • 1Total revenue for the three months ended September 30, 2017, was $4,116 million, a 12% increase from $3,675 million in the same period last year.
  • 2Net income for the quarter rose to $1,285 million, or $1.26 per diluted share, compared to $1,018 million, or $0.98 per diluted share, in the prior year.
  • 3Gross profit margin improved to 64.5% in Q3 2017 from 62.1% in Q3 2016, indicating enhanced operational efficiency and product mix.
  • 4The Analog segment revenue grew 16% and Embedded Processing revenue grew 17% year-over-year for the third quarter.
  • 5Cash flow from operations for the nine months ended September 30, 2017, was $3,434 million, up from $3,227 million in the prior year.
  • 6The company returned $4.3 billion to shareholders through dividends and stock repurchases in the trailing 12 months, highlighting a strong commitment to capital return.
  • 7TXN announced a 24% dividend increase and a $6 billion increase in share repurchase authorization, signaling confidence in future performance and cash generation.

Frequently Asked Questions

The primary drivers for revenue growth were strong demand in the industrial and automotive markets, leading to a 16% increase in Analog segment revenue and a 17% increase in Embedded Processing segment revenue compared to the prior year's third quarter.

Operating expenses (R&D and SG&A) remained relatively stable year-over-year, with an increase in R&D spending due to ongoing resource allocation, offset by a decrease in SG&A expenses attributed to a product line realignment announced in January 2017.

Texas Instruments is committed to returning free cash flow to shareholders. This is demonstrated by a recently announced 24% dividend increase and an additional $6 billion authorized for share repurchases, indicating management's confidence in the company's financial health and future prospects.

The strong Q3 2017 results, combined with a focus on core business growth, operational efficiency, and a robust capital return program, suggest a positive outlook. The company expects to fund its working capital needs, capital expenditures, and debt obligations for at least the next 12 months.