10-QPeriod: Q2 FY2019

TEXAS INSTRUMENTS INC Quarterly Report for Q2 Ended Jun 30, 2019

Filed July 31, 2019For Securities:TXN

Summary

Texas Instruments (TXN) reported its second-quarter 2019 financial results on July 30, 2019, showing a decrease in revenue and net income compared to the prior year. Revenue for the quarter was $3.67 billion, down 9% year-over-year, primarily driven by declines in both the Analog and Embedded Processing segments. Net income also fell to $1.31 billion, resulting in diluted Earnings Per Share (EPS) of $1.36, compared to $1.40 in the same period last year. Despite the revenue decline, the company highlighted the strength of its business model, emphasizing strong free cash flow generation. For the trailing twelve months, free cash flow was $5.9 billion, representing 39% of revenue, underscoring the efficiency of its manufacturing strategy and product portfolio. TXN continued its commitment to returning capital to shareholders, having returned $8.0 billion over the past 12 months through dividends and stock repurchases. The company maintains a stable outlook for its annual operating tax rate at approximately 16% for 2019.

Financial Highlights

53 data points
Beta

Revenue

$3.67B

64.3% Gross Margin

Net Income

$1.30B

35.6% Net Margin

EPS (Diluted)

$1.36

Total Assets

$17.38B

Cash & Equivalents

$3.81B

Free Cash Flow

$1.51B

Financial Statements
Beta
Revenue$3.67B
Cost of Revenue$1.31B
Gross Profit$2.36B
R&D Expenses$390.00M
SG&A Expenses$420.00M
Operating Income$1.51B
Net Income$1.30B
EPS (Basic)$1.38
EPS (Diluted)$1.36
Shares Outstanding (Basic)937.00M
Shares Outstanding (Diluted)953.00M

Key Highlights

  • 1Revenue for the second quarter of 2019 was $3.67 billion, a 9% decrease compared to $4.02 billion in the second quarter of 2018, attributed to broad-based weakness across segments.
  • 2Net income for the quarter decreased to $1.31 billion from $1.41 billion in the prior year's second quarter.
  • 3Diluted EPS was $1.36, down from $1.40 in the second quarter of 2018.
  • 4Analog segment revenue declined 6% year-over-year, and Embedded Processing segment revenue decreased by 16%.
  • 5The company generated $5.9 billion in free cash flow for the trailing twelve months, representing 39% of revenue, highlighting operational efficiency and a strong business model.
  • 6Texas Instruments returned $8.0 billion to shareholders through stock repurchases and dividends over the past 12 months.
  • 7The company's cash and cash equivalents, along with short-term investments, totaled $4.22 billion as of June 30, 2019.

Frequently Asked Questions

The primary reason for the decrease in revenue was broad-based weakness, with both the Analog and Embedded Processing segments experiencing declines. Analog revenue was down 6% and Embedded Processing revenue was down 16% compared to the same period in the previous year.

Texas Instruments demonstrated strong free cash flow generation, with $5.9 billion for the trailing twelve months ended June 30, 2019. This represents 39% of revenue, indicating efficient operations and a robust business model.

Texas Instruments' strategy is to return all its free cash flow to shareholders. Over the past 12 months, the company returned $8.0 billion through dividends and stock repurchases, with dividends representing 47% of free cash flow, suggesting their sustainability.

Yes, Texas Instruments adopted ASU No. 2016-02, Leases (ASC 842), effective January 1, 2019. This adoption resulted in the recognition of $229 million of lease liabilities with corresponding lease assets but did not materially impact the results of operations or cash flows.