10-QPeriod: Q1 FY2020

TEXAS INSTRUMENTS INC Quarterly Report for Q1 Ended Mar 31, 2020

Filed April 22, 2020For Securities:TXN

Summary

Texas Instruments (TXN) reported its first-quarter 2020 results, showing a year-over-year decline in revenue and net income. Revenue decreased by 7% to $3.33 billion, while net income fell to $1.17 billion, or $1.24 per diluted share, down from $1.22 billion, or $1.26 per diluted share, in the prior year. The company experienced a revenue decline across its core segments, with Embedded Processing down 18% and Analog down 2%. This was partially offset by strong free cash flow generation of $5.6 billion over the trailing twelve months, representing 40% of revenue. TXN continued its commitment to shareholder returns, distributing $6.6 billion through dividends and stock repurchases in the same period. Management highlighted the evolving impact of the COVID-19 pandemic, noting potential constraints on order fulfillment due to manufacturing restrictions in Malaysia and the Philippines. Despite these challenges, TXN emphasized its business continuity plans, inventory levels, and diversified manufacturing footprint as strengths to navigate the uncertain economic environment.

Financial Highlights

53 data points
Beta

Revenue

$3.33B

62.7% Gross Margin

Net Income

$1.17B

35.3% Net Margin

EPS (Diluted)

$1.24

Total Assets

$17.28B

Cash & Equivalents

$2.52B

Free Cash Flow

$690.00M

Financial Statements
Beta
Revenue$3.33B
Cost of Revenue$1.24B
Gross Profit$2.09B
R&D Expenses$377.00M
SG&A Expenses$417.00M
Operating Income$1.24B
Net Income$1.17B
EPS (Basic)$1.25
EPS (Diluted)$1.24
Shares Outstanding (Basic)931.00M
Shares Outstanding (Diluted)943.00M

Key Highlights

  • 1Revenue for Q1 2020 was $3.33 billion, a decrease of 7% compared to $3.59 billion in Q1 2019.
  • 2Diluted Earnings Per Share (EPS) was $1.24, a slight decrease from $1.26 in the prior year's comparable quarter.
  • 3Net income for the quarter was $1.17 billion, down from $1.22 billion in Q1 2019.
  • 4Analog segment revenue decreased by 2% to $2.46 billion, while Embedded Processing segment revenue declined by 18% to $653 million.
  • 5The company generated $851 million in cash flow from operating activities in Q1 2020, compared to $1.107 billion in Q1 2019.
  • 6Total cash and short-term investments stood at $4.74 billion as of March 31, 2020.
  • 7Texas Instruments highlighted the ongoing uncertainty and potential impacts of the COVID-19 pandemic on future operations and customer demand.

Frequently Asked Questions

The primary driver for the revenue decline was a significant decrease in the Embedded Processing segment, which fell by 18%, and a smaller decline of 2% in the Analog segment. This was compounded by broader economic uncertainties.

Despite lower revenue, Texas Instruments generated strong free cash flow of $5.6 billion over the trailing twelve months. The company returned $6.6 billion to shareholders through dividends and stock repurchases in the same period, demonstrating a commitment to capital return.

Texas Instruments anticipates potential future constraints in fulfilling customer orders due to pandemic-related manufacturing restrictions, particularly in Malaysia and the Philippines. The company is actively monitoring the situation and has business continuity plans in place.

Operating expenses, comprising Research and Development (R&D) and Selling, General & Administrative (SG&A), remained relatively stable, decreasing slightly from $803 million in Q1 2019 to $794 million in Q1 2020. Acquisition charges, which are non-cash, also decreased.