Cash Flow from Operations Underscored the Strength of TI’s Business Model in Q1

April 24, 2019 by Scott McMahan

Texas Instruments Incorporated (TI) reported first quarter results for the period ending March 31. The company posted first-quarter revenue  of $3.59 billion, down 5% from the same period of the previous year.

Net income of $1.22 billion and earnings per share of $1.26. Earnings per share included a 4-cent discrete tax benefit that was not in the company's original guidance.

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

Revenue for the Analog segment decreased due to the High Volume and Power segments, which were partially offset by an increase in Signal Chain revenue. Operating profit decreased as a result of lower revenue and reduced factory loadings.

Embedded Processing (Includes Connected Microcontrollers and Processors)

Revenue for the Embedded Processing segment decreased in both connected microcontroller and processor product lines. Operating profit for this business segment decreased due to lower revenue and associated gross profit.

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

For the Other business segment, which includes DLP® products, calculators and custom ASIC products, revenue declined by $17 million, and operating profit decreased by $12 million.

Rich Templeton, TI's chairman, president and CEO, commented, "Revenue decreased 5% from the same quarter a year ago as demand for our products continued to slow across most markets.

"In our core businesses, Analog revenue declined 2% and Embedded Processing declined 14% from the same quarter a year ago.

"Our cash flow from operations of $7.2 billion for the trailing 12 months again underscored the strength of our business model. Free cash flow for the trailing 12 months was $6.0 billion and represents 38.4% of revenue. This reflects the quality of our product portfolio, as well as the efficiency of our manufacturing strategy, including the benefit of 300-millimeter Analog production.

A combination of stock repurchases and dividends gave the company's stock owners $8 billion over the past 12 months, according to Templeton.

"We have returned $8.0 billion to owners in the past 12 months through stock repurchases and dividends. Our strategy is to return all our free cash flow to owners, Over the last 12 months, our dividends represented 45% of free cash flow, underscoring their sustainability," he said.

"TI's second-quarter outlook is for revenue in the range of $3.46 billion to $3.74 billion, and earnings per share between $1.12 and $1.32, which includes an estimated $10 million discrete tax benefit. We continue to expect our annual operating tax rate to be about 16% in 2019."