01—Abstract
Summary
Summary of the 8-K filed April 23, 2024. Cited figures are marked; the original filing is the authoritative source.
Texas Instruments reported first-quarter 2024 revenue of $3.66 billiona, down 16% year over year and 10% sequentially, with net income of $1.11 billion and diluted EPS of $1.20 (down 35%).
EPS included a 10-cent benefit from items not in the original guidance. Revenue declined across all end markets, and operating profit fell 34% to $1.29 billionb. Analog revenue fell 14% and Embedded Processing fell 22%.
Cash generation weakened sharply. Trailing-twelve-month cash flow from operations fell 19% to $6.28 billionc, while capital expenditures rose 60% to $5.34 billion as TI continued its 300mm manufacturing buildout. Free cash flow dropped 79% to $940 million, a 5.6% of revenue margin versus 22.6% a year earlier.
Quarterly free cash flow was negative at $(231) million. Long-term debt rose to about $12.8 billiond, and total debt including the current portion reached roughly $14.2 billion, up from about $10.1 billion a year earlier. Shareholder returns remained substantial but were cut back.
Trailing-twelve-month dividends paid rose 6% to $4.6 billion, while stock repurchases fell 94% to $193 million, and total cash returned fell 36% to $4.8 billion. Management guided Q2 2024 revenue to $3.65–$3.95 billion and EPS to $1.05–$1.25, with an effective tax rate of about 13%.
02—Key points
Key Highlights
- Q1 2024 revenue of $3.66B fell 16% YoY and 10% QoQ, with declines across all end markets
- Diluted EPS of $1.20 fell 35% YoY; included a $0.10 benefit from items outside original guidance
- Trailing-12-month free cash flow fell 79% to $940M (5.6% of revenue) as capex rose 60% to $5.3B
- Quarterly free cash flow was negative at $(231)M in Q1 2024 as capex of $1.25B exceeded operating cash flow of $1.02B
- Total cash returned fell 36% to $4.8B; buybacks dropped 94% to $193M while dividends rose 6% to $4.6B
- Total debt rose to roughly $14.2B, up from about $10.1B a year earlier, funding the capex buildout
- Q2 2024 guidance: revenue of $3.65–$3.95B and EPS of $1.05–$1.25, with an effective tax rate near 13%
03—Questions
Frequently Asked Questions
Is Texas Instruments still generating enough cash to fund its dividend?
On a trailing-twelve-month basis, cash flow from operations of $6.28B covered dividends paid of $4.62B, but free cash flow of $940M did not. The dividend was funded in part by new debt issuance, with $2.98B of long-term debt proceeds in Q1 2024 alone. Investors should watch whether cash flow recovers as capex normalizes.
Why did free cash flow decline so sharply?
Capital expenditures rose 60% over the trailing twelve months to $5.34B, as TI built out 300mm manufacturing capacity, while operating cash flow fell 19% to $6.28B amid lower revenue. The gap between the two produced the 79% drop in free cash flow.
Why did stock buybacks fall so much?
Stock repurchases were only $3M in Q1 2024 versus $103M a year earlier, and trailing-twelve-month repurchases fell 94% to $193M from $3.13B. The filing does not state the reason, but the sharp reduction coincides with weaker cash generation and higher capex and debt levels.
What drove the earnings decline and what is the outlook?
Revenue fell across all end markets, reducing operating profit 34% to $1.29B. Analog revenue dropped 14% and Embedded Processing dropped 22%. Management guided Q2 2024 revenue to $3.65–$3.95B and EPS to $1.05–$1.25, implying continued pressure in the near term.
04—Continue