01—Abstract
Summary
Summary of the 10-Q filed October 23, 2024. Cited figures are marked; the original filing is the authoritative source.
Texas Instruments Inc. (TXN) reported its third-quarter and year-to-date results for the period ending September 29, 2024.
For the third quarter, revenue stood at $4.15 billiona, a decrease of 8% year-over-year, while net income was $1.36 billion, translating to diluted EPS of $1.47. This marks a decline from the prior year's comparable period, primarily driven by lower revenues in the Embedded Processing segment, which saw a 27% decrease year-over-year, and a 4% decrease in the Analog segment. For the nine-month period, revenue declined 13% to $11.63 billion, with net income falling to $3.59 billion and diluted EPS at $3.89.
The company highlights a strong cash flow from operations, demonstrating the resilience of its business model and manufacturing capabilities. Despite revenue headwinds, TXN continues to invest in its long-term competitive advantages, including significant capital expenditures for manufacturing capacity expansion and a commitment to returning capital to shareholders through dividends and share repurchases. The company also noted a positive impact from the U.S. CHIPS and Science Act, contributing to its financial position.
02—Key points
Key Highlights
- Third-quarter revenue was $4.15 billion, down 8% year-over-year, primarily due to declines in Embedded Processing (-27%) and Analog (-4%) segments.
- Net income for the third quarter was $1.36 billion, resulting in diluted EPS of $1.47, compared to $1.85 in the prior year's quarter.
- For the first nine months of 2024, revenue decreased by 13% to $11.63 billion, with net income falling to $3.59 billion.
- The company reported strong cash flow from operations of $6.2 billion for the trailing twelve months, underscoring the strength of its business model.
- Free cash flow for the trailing twelve months was $1.5 billion.
- TXN continues significant capital expenditures, investing $3.63 billion in the first nine months of 2024, primarily for manufacturing capacity expansion.
- The company announced a 5% dividend increase, marking 21 consecutive years of dividend increases, and continued its share repurchase program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Texas Instruments kept $0.33.
- Revenue$4.15B100.0%
- Cost of revenue−$1.68B40.4%
- Gross profit$2.47B59.6%
- Operating costs−$920.0M22.2%
- Operating income$1.55B37.4%
- Interest, other & tax−$192.0M4.6%
- Net income$1.36B32.8%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 23, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $4.15B$4.53B | −8.4% |
| Cost of Revenue | $1.68B$1.72B | −2.3% |
| Gross Profit | $2.47B$2.81B | −12.1% |
| R&D Expenses | $492.00M$471.00M | +4.5% |
| SG&A Expenses | $428.00M$452.00M | −5.3% |
| Operating Income | $1.55B$1.89B | −17.9% |
| Net Income | $1.36B$1.71B | −20.3% |
| EPS (Basic) | $1.48$1.87 | −20.9% |
| EPS (Diluted) | $1.47$1.85 | −20.5% |
| Shares Outstanding (Basic) | 913.00M908.00M | +0.6% |
| Shares Outstanding (Diluted) | 920.00M916.00M | +0.4% |
05—Questions
Frequently Asked Questions
What are the primary drivers behind the revenue decline in the third quarter?
The revenue decline in the third quarter was primarily driven by lower revenues in the Embedded Processing segment, which decreased by 27% year-over-year, and a 4% decrease in the Analog segment. Management attributes these declines to changes in customer demand and product mix.
How is Texas Instruments managing its capital expenditures and investments?
Texas Instruments continues to make substantial investments in capital expenditures, totaling $3.63 billion in the first nine months of 2024, largely for expanding its semiconductor manufacturing capacity. The company also expects significant benefits from the U.S. CHIPS and Science Act, including direct funding and investment tax credits.
What is the company's approach to returning capital to shareholders?
Texas Instruments remains committed to returning capital to shareholders. This includes a consistent increase in dividends, with a 5% increase announced for the current year, marking 21 consecutive years of dividend increases. The company also actively engages in share repurchases, having spent $392 million in the first nine months of 2024.
What is the impact of the U.S. CHIPS and Science Act on Texas Instruments?
The U.S. CHIPS and Science Act is providing financial benefits to Texas Instruments. For the first nine months of 2024, the company received a cash benefit of $532 million from the investment tax credit and has signed a preliminary memorandum of terms for up to $1.6 billion in direct funding. These benefits support the company's investment in U.S. manufacturing.
06—Continue