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TI reports 1Q19 financial results and shareholder returns

Conference call on TI website at 3:30 p.m. Central time today

DALLAS, April 23, 2019 — (PRNewswire) — Texas Instruments Incorporated (TI) (NASDAQ: TXN) today reported first-quarter revenue of $3.59 billion, net income of $1.22 billion and earnings per share of $1.26. Earnings per share include a 4-cent discrete tax benefit not in the company's original guidance.

Regarding the company's performance and returns to shareholders, Rich Templeton, TI's chairman, president and CEO, made the following comments:

Free cash flow, a non-GAAP financial measure, is cash flow from operations less capital expenditures.

Earnings summary

Amounts are in millions of dollars, except per-share amounts.



1Q19


1Q18


Change

Revenue

$

3,594

$

3,789


(5)%

Operating profit

$

1,379

$

1,548


(11)%

Net income

$

1,217

$

1,366


(11)%

Earnings per share

$

1.26

$

1.35


(7)%

 

Cash generation

Amounts are in millions of dollars.






Trailing 12 Months




1Q19



1Q19



1Q18


Change

Cash flow from operations


$

1,107


$

7,184


$

5,680


26%

Capital expenditures


$

251


$

1,193


$

757


58%

Free cash flow


$

856


$

5,991


$

4,923


22%

Free cash flow % of revenue






38.4%



32.1%



 

Cash return

Amounts are in millions of dollars.






Trailing 12 Months




1Q19



1Q19



1Q18


Change

Dividends paid


$

724


$

2,668


$

2,215


20%

Stock repurchases


$

1,152


$

5,379


$

2,879


87%

Total cash returned


$

1,876


$

8,047


$

5,094


58%


TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Income

(Millions of dollars, except share and per-share amounts)




For Three Months Ended



March 31,



2019


2018

Revenue


$

3,594


$

3,789

Cost of revenue (COR)



1,333



1,342

Gross profit



2,261



2,447

Research and development (R&D)



389



385

Selling, general and administrative (SG&A)



414



433

Acquisition charges



79



80

Restructuring charges/other





1

Operating profit



1,379



1,548

Other income (expense), net (OI&E)



36



28

Interest and debt expense



38



23

Income before income taxes



1,377



1,553

Provision for income taxes



160



187

Net income


$

1,217


$

1,366








Diluted earnings per common share


$

1.26


$

1.35








Average shares outstanding (millions):







Basic



939



983

Diluted



956



1,005








Cash dividends declared per common share


$

.77


$

.62









Supplemental Information

(Quarterly, except as noted)


Provision for income taxes is based on the following:


Operating taxes (calculated using the estimated annual effective tax rate)


$

220


$

316

Discrete tax items



(60)



(129)

Provision for income taxes (effective taxes)


$

160


$

187


Annual operating tax rate



16%



20%

Effective tax rate



12%



12%


A portion of net income is allocated to unvested restricted stock units (RSUs) on which we pay dividend equivalents. Diluted
EPS is calculated using the following:


Net income


$

1,217


$

1,366

Income allocated to RSUs



(8)



(11)

Income allocated to common stock for diluted EPS


$

1,209


$

1,355


 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Balance Sheets

(Millions of dollars, except share amounts)




March 31,



2019


2018

Assets







Current assets:







Cash and cash equivalents


$

3,720


$

1,717

Short-term investments



366



2,362

Accounts receivable, net of allowances of ($17) and ($8)



1,440



1,454

Raw materials



191



144

Work in process



1,016



1,076

Finished goods



924



812

Inventories



2,131



2,032

Prepaid expenses and other current assets



294



1,025

Total current assets



7,951



8,590

Property, plant and equipment at cost



5,642



4,907

Accumulated depreciation



(2,324)



(2,171)

Property, plant and equipment



3,318



2,736

Long-term investments



281



271

Goodwill



4,362



4,362

Acquisition-related intangibles



549



866

Deferred tax assets



290



218

Capitalized software licenses



98



102

Overfunded retirement plans



96



215

Other long-term assets



498



147

Total assets


$

17,443


$

17,507








Liabilities and stockholders' equity







Current liabilities:







Current portion of long-term debt


$

750


$

500

Accounts payable



477



488

Accrued compensation



342



344

Income taxes payable



113



133

Accrued expenses and other liabilities



477



395

Total current liabilities



2,159



1,860

Long-term debt



5,057



3,578

Underfunded retirement plans



120



92

Deferred tax liabilities



43



53

Other long-term liabilities



1,545



1,282

Total liabilities



8,924



6,865

Stockholders' equity:







Preferred stock, $25 par value. Authorized – 10,000,000 shares







Participating cumulative preferred – None issued





Common stock, $1 par value. Authorized – 2,400,000,000 shares







Shares issued – 1,740,815,939



1,741



1,741

Paid-in capital



1,927



1,770

Retained earnings



38,396



35,619

Treasury common stock at cost







Shares: March 31, 2019 – 802,016,668; March 31, 2018 – 759,098,020



(33,080)



(28,096)

Accumulated other comprehensive income (loss), net of taxes (AOCI)



(465)



(392)

Total stockholders' equity



8,519



10,642

Total liabilities and stockholders' equity


$

17,443


$

17,507


 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Millions of dollars)




For Three Months Ended



March 31,



2019


2018

Cash flows from operating activities







Net income


$

1,217


$

1,366

Adjustments to net income:







Depreciation



166



137

Amortization of acquisition-related intangibles



79



80

Amortization of capitalized software



13



12

Stock compensation



61



70

Gains on sales of assets



(2)



Deferred taxes



4



(31)

Increase (decrease) from changes in:







Accounts receivable



(233)



(176)

Inventories



86



(97)

Prepaid expenses and other current assets



223



356

Accounts payable and accrued expenses



(67)



(51)

Accrued compensation



(373)



(372)

Income taxes payable



(94)



(131)

Changes in funded status of retirement plans



7



(15)

Other



20



(36)

Cash flows from operating activities



1,107



1,112








Cash flows from investing activities







Capital expenditures



(251)



(189)

Proceeds from asset sales



2



Purchases of short-term investments



(149)



(996)

Proceeds from short-term investments



1,584



1,455

Other



(13)



(4)

Cash flows from investing activities



1,173



266








Cash flows from financing activities







Proceeds from issuance of long-term debt



743



Dividends paid



(724)



(611)

Stock repurchases



(1,152)



(873)

Proceeds from common stock transactions



151



178

Other



(16)



(11)

Cash flows from financing activities



(998)



(1,317)








Net change in cash and cash equivalents



1,282



61

Cash and cash equivalents at beginning of period



2,438



1,656

Cash and cash equivalents at end of period


$

3,720


$

1,717


 

Segment results

Amounts are in millions of dollars.




1Q19



1Q18


Change

Analog:









Revenue


$

2,518


$

2,566


(2)%

Operating profit


$

1,088


$

1,166


(7)%

Embedded Processing:









Revenue


$

796


$

926


(14)%

Operating profit


$

249


$

328


(24)%

Other:









Revenue


$

280


$

297


(6)%

Operating profit*


$

42


$

54


(22)%


* Includes acquisition charges and restructuring charges/other.

 

Compared with the year-ago quarter:

Analog: (includes Power, Signal Chain and High Volume)

Embedded Processing: (includes Connected Microcontrollers and Processors) 

Other: (includes DLP® products, calculators and custom ASIC products)


Non-GAAP financial information 

This release includes references to free cash flow and ratios based on that measure. These are financial measures that were not prepared in accordance with GAAP. Free cash flow was calculated by subtracting capital expenditures from the most directly comparable GAAP measure, cash flows from operating activities (also referred to as cash flow from operations).

We believe that free cash flow and the associated ratios provide insight into our liquidity, our cash-generating capability and the amount of cash potentially available to return to shareholders, as well as insight into our financial performance. These non-GAAP measures are supplemental to the comparable GAAP measures.

Reconciliation to the most directly comparable GAAP measures is provided in the table below.

Amounts are in millions of dollars.    












For 12 Months Ended





March 31,





2019


2018


Change

Cash flow from operations (GAAP)


$

7,184


$

5,680


26%

Capital expenditures



(1,193)



(757)



Free cash flow (non-GAAP)


$

5,991


$

4,923


22%










Revenue


$

15,589


$

15,348












Cash flow from operations as a percent of revenue (GAAP)



46.1%



37.0%



Free cash flow as a percent of revenue (non-GAAP)



38.4%



32.1%



 

This release also includes references to an annual operating tax rate, a non-GAAP term we use to describe the estimated annual effective tax rate, a GAAP measure that by definition does not include discrete tax items. We believe the term annual operating tax rate helps differentiate from the effective tax rate, which includes discrete tax items.

Notice regarding forward-looking statements

This release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as TI or its management "believes," "expects," "anticipates," "foresees," "forecasts," "estimates" or other words or phrases of similar import. Similarly, statements herein that describe TI's business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements. 

We urge you to carefully consider the following important factors that could cause actual results to differ materially from the expectations of TI or our management:

For a more detailed discussion of these factors, see the Risk Factors discussion in Item 1A of TI's most recent Form 10-K. The forward-looking statements included in this release are made only as of the date of this release, and we undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances. If we do update any forward-looking statement, you should not infer that we will make additional updates with respect to that statement or any other forward-looking statement.

About Texas Instruments

Texas Instruments Incorporated (TI) is a global semiconductor design and manufacturing company that develops analog integrated circuits and embedded processors. By employing the world's brightest minds, TI creates innovations that shape the future of technology. TI is helping approximately 100,000 customers transform the future, today. Learn more at www.ti.com.

TI trademarks:
            DLP

Other trademarks are the property of their respective owners.

TXN-G

 

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SOURCE Texas Instruments Incorporated

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Financial data for Texas Instruments Incorporated