01—Abstract
Summary
Summary of the 8-K filed January 23, 2024. Cited figures are marked; the original filing is the authoritative source.
Texas Instruments reported fourth-quarter 2023 revenue of $4.08 billiona, down 13% year over year and 10% sequentially, with net income of $1.37 billion and diluted EPS of $1.49 (down 30% from $2.13).
Management cited increasing weakness across industrial markets and a sequential decline in automotive. Operating profit fell 30% to $1.53 billionb, and EPS included a 3-cent benefit not in the original guidance. Full-year 2023 revenue was $17.52 billion (down 13%), with net income of $6.51 billion and diluted EPS of $7.07, versus $9.41 in 2022.
The most notable concern for investors is cash generation. Trailing-twelve-month cash flow from operations fell 26% to $6.42 billionc, while capital expenditures more than tripled to $5.07 billion as TI built out its 300mm manufacturing capacity. Free cash flow dropped 77% to $1.35 billion, or 7.7% of revenue versus 29.6% a year earlier.
Total cash returned to shareholders was $4.85 billiond, including $4.56 billion in dividends, and debt rose to about $11.2 billion after $3 billion of new issuance. Looking ahead, TI guided first-quarter 2024 revenue to $3.45–$3.75 billion and EPS to $0.96–$1.16, and expects a 2024 effective tax rate of about 13%. The filing furnishes the earnings release under Item 2.02 and includes non-GAAP free cash flow measures reconciled to GAAP operating cash flow.
02—Key points
Key Highlights
- Q4 2023 revenue of $4.08B (down 13% YoY); net income of $1.37B; diluted EPS of $1.49 (down 30% YoY), including a 3-cent unplanned benefit
- FY2023 revenue of $17.52B (down 13%) and diluted EPS of $7.07, versus $9.41 in FY2022
- Free cash flow fell 77% to $1.35B (7.7% of revenue) as capex rose 81% to $5.07B to support 300mm fab expansion
- Analog segment revenue fell 12% in Q4 and 15% for the year; Embedded Processing revenue grew 3% for the full year but declined 10% in Q4
- Total shareholder returns of $4.85B for 2023 (dividends $4.56B, buybacks $293M, down 92% from 2022)
- Q1 2024 guidance: revenue $3.45–$3.75B and EPS $0.96–$1.16; 2024 effective tax rate expected near 13%
- Long-term debt increased to $10.6B from $8.2B after $3B of new issuance, with cash and short-term investments of about $8.6B
03—Questions
Frequently Asked Questions
Why did free cash flow decline so sharply in 2023?
Operating cash flow fell 26% to $6.42B while capital expenditures rose 81% to $5.07B. Management is investing heavily in 300mm manufacturing capacity, so free cash flow fell 77% to $1.35B. Capex is expected to moderate over time, which would support free cash flow recovery, but the timing is not specified in this filing.
Is the dividend still covered by cash flow?
Not comfortably in 2023. Dividends paid were $4.56B against $1.35B of free cash flow, so the gap was funded by existing cash and new debt. Dividend growth continued (declared per-share dividends rose to $5.02 from $4.69), which investors should watch closely if free cash flow does not recover.
What is driving the weakness in demand?
Management cited increasing weakness across industrial end markets and a sequential decline in automotive during the quarter. Revenue fell 10% sequentially. The forward-looking statements also flag customer inventory adjustments and macroeconomic conditions as risks.
How does the Q1 2024 outlook compare with Q4 2023?
Q1 2024 revenue guidance of $3.45–$3.75B is below Q4 2023's $4.08B, implying a further sequential decline at the midpoint of roughly 13%. EPS guidance of $0.96–$1.16 is also well below Q4's $1.49, indicating continued pressure on margins and profitability in the near term.
04—Continue