EPS of $1.47 decreased by 20.9% from previous year
Gross margin of 59.6%
Net income of 1.36B
"Dave Pahl, Head of Investor Relations: "This call will include forward-looking statements that involve risks and uncertainties that could cause TI's results to differ materially from management's current expectations."" - Dave Pahl
In Q3 2024, Texas Instruments (TXN) reported revenues of $4.15 billion, reflecting a sequential increase of 9% but an 8% decline year-over-year. Despite a challenging year due to market corrections, management indicated a optimistic outlook for selected segments such as personal electronics, automotive (especially in China), and enterprise systems. Management emphasized its commitment to returning value to shareholders and maintaining a strong balance sheet, even as it navigates a mixed demand environment. The future outlook is cautiously optimistic as TI anticipates revenue between $3.7 billion to $4 billion for Q4 2024, highlighting resilience amid market fluctuations.
### Cash Flow Metrics
- Cash Flow from Operations: $1.73 billion
- Free Cash Flow: $416 million
- Dividend Paid: $1.2 billion (21st consecutive year of increases)
### Balance Sheet Metrics
- Total Assets: $35.32 billion
- Total Liabilities: $18.05 billion
- Total Equity: $17.27 billion
The rise in revenues sequentially points to a recovery trajectory, albeit with ongoing pressures on metrics compared to last year's stronger performance.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
4.15B
-8.41%
8.61%
Gross Profit
2.47B
-12.11%
11.90%
Operating Income
1.55B
-17.86%
24.52%
Net Income
1.36B
-20.30%
20.85%
EPS
1.48
-20.86%
20.33%
Key Financial Ratios
currentRatio
4.31
grossProfitMargin
59.6%
operatingProfitMargin
37.4%
netProfitMargin
32.8%
returnOnAssets
3.86%
returnOnEquity
7.89%
debtEquityRatio
0.84
operatingCashFlowPerShare
$1.9
freeCashFlowPerShare
$0.46
dividendPayoutRatio
87.2%
priceToBookRatio
10.92
priceEarningsRatio
34.62
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Management Commentary Highlights:
- Haviv Ilan (CEO): "Revenue in the quarter came in about as expected... The automotive market increased upper single digit, primarily due to strength in China... Personal Electronics grew about 30%."
- Rafael Lizardi (CFO): "Our balance sheet remains strong with $8.8 billion of cash and short-term investments at the end of the third quarter. We returned $5.2 billion to our owners in the past 12 months."
Management focused on the sequential performance of crucial markets while navigating the challenges posed by decreasing demand overall.
Dave Pahl, Head of Investor Relations: "This call will include forward-looking statements that involve risks and uncertainties that could cause TI's results to differ materially from management's current expectations."
— Dave Pahl
Haviv Ilan, CEO: "Our content is growing in China. I don’t think that goes down in the near future."
— Haviv Ilan
Forward Guidance
Looking ahead, management anticipates revenue between $3.7 billion and $4 billion for Q4 2024, with an EPS range of $1.07 to $1.29. The expected effective tax rate remains steady at around 13%. TI emphasizes long-term growth potential tied to the strengthening position in key markets despite cyclical downturns, particularly in industrial and automotive segments. Investors should closely monitor the anticipated recovery trajectory as forecasts for 2025 reflect cautious optimism across end markets, particularly following significant inventory corrections.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
TXN Focus
59.60%
37.40%
7.89%
34.62%
MCHP
54.70%
3.01%
-0.89%
-143.75%
MPWR
55.40%
26.50%
6.14%
78.02%
NXPI
56.50%
30.50%
7.63%
21.26%
ON
45.40%
25.30%
4.68%
19.77%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
With Texas Instruments positioned strategically within vital technology sectors, the company presents a compelling investment opportunity, particularly in a recovering automotive market and growing personal electronics sector. The essential nature and growing demand for semiconductors position TI favorably despite prevailing market uncertainties. Investors should watch for trends in revenue recovery post-inventory correction, the success of strategic investments in R&D, and the overall health of key segments driving growth.
Key Investment Factors
Growth Potential
Texas Instruments holds a strong position in essential semiconductor segments, including analog and embedded processing, where it is well-placed to capture growing automotive and industrial markets. Management's investments in technology and manufacturing capabilities demonstrate potential growth opportunities moving forward.
Profitability Risk
Significant risks stem from ongoing market corrections, particularly in industrial and automotive segments beyond China, where demand is uncertain. Additionally, exposure to geopolitical tensions could affect supply chains and market dynamics overall.
Financial Position
Texas Instruments maintains a strong financial position characterized by robust cash flow generation, a solid balance sheet with $8.8 billion in liquid assets, and a healthy dividend policy that underscores its commitment to returning value to shareholders.
SWOT Analysis
Strengths
Strong liquidity with $8.8 billion in cash and short-term investments
Diverse and broad product portfolio across multiple sectors
Consistent return of capital to shareholders through dividends and stock buybacks
Weaknesses
Declining revenues in key segments compared to previous peaks
Dependence on the automotive market, particularly the cyclical recovery in China
Opportunities
Potential growth in personal electronics and automotive markets as inventory corrections stabilize
Increased demand for semiconductors driven by trends in automation, EVs, and consumer electronics
Threats
Ongoing supply chain disruptions and geopolitical tensions impacting semiconductor supply
Market volatility and cyclical behavior affecting revenue predictability