Texas Instruments (TI)'s latest financial results for the fourth quarter show a nuanced performance, with overall revenue slightly declining yet exceeding market forecasts, indicating the weak automotive and industrial markets.
On January 23, TI reported its financial results for the fourth quarter. Although overall revenue slightly dipped, the company outperformed market expectations. Total revenue was US$4.01 billion, a decrease of 1.7% compared to the previous year. However, this figure surpassed the estimated US$3.86 billion for the quarter.
The operating profit for TI also declined, reaching US$1.38 billion, a 10% drop from the previous year. Despite the decrease, the operating profit exceeded the forecasted US$1.3 billion, showcasing the company's ability to maintain a robust performance amidst challenging economic conditions.
Breaking down revenue by segment, the Analog division generated US$3.17 billion, a 1.7% increase year-over-year. On the other hand, the Embedded Processing division experienced a significant decrease in revenue, recording US$613 million, an 18% decline from the prior year. Meanwhile, the 'Other' revenue category, encompassing various smaller business segments, reported earnings of US$220 million, an increase of 7.3% from the previous year.
Haviv Ilan, president and CEO of TI, stated that the cash flow from operations amounting to US$6.3 billion over the trailing 12 months once again highlighted the strength of their business model, the quality of their product portfolio, and the advantages of their 12-inch production. The free cash flow for this period was US$1.5 billion. Over the past year, the company invested US$3.8 billion in R&D and SG&A and US$4.8 billion in capexs while returning US$5.7 billion to its owners.
He also provided an outlook for TI's first quarter, expecting revenue in the range of US$3.74 billion to US$4.06 billion, with earnings per share projecting between US$0.94 and US$1.16. Additionally, he announced an expected effective tax rate of about 12% for 2025.
Bloomberg Intelligence released a research note saying that TI's fourth-quarter results and first-quarter guidance indicate a recovery in sectors such as personal electronics, communications, and enterprise. However, this improvement is insufficient to counteract the continued weakness in industrial and automotive markets, which make up 70% of the company's sales.
The recovery in the industrial sector is slower than anticipated, and there are sharper declines in the automotive sector in the US and Europe, accompanied by subdued growth in China. These factors suggest that TI will face ongoing challenges in these areas.
TI income statement (US$m) | ||||||
Financial | 4Q23 | 1Q24 | 2Q24 | 3Q24 | 4Q24 | Y/Y %) |
Sales | 4,077 | 3,661 | 3,822 | 4,151 | 4,007 | -1.72 |
Gross profit | 2,431 | 2,095 | 2,211 | 2,474 | 2,314 | -4.81 |
Operating income | 1,533 | 1,286 | 1,248 | 1,554 | 1,377 | -10.18 |
Profit | 1,371 | 1,105 | 1,127 | 1,362 | 1,205 | -12.11 |
Source: TI, January 2025
TI sales by business (US$m) | ||||||
Business | 4Q23 | 1Q24 | 2Q24 | 3Q24 | 4Q24 | Y/Y %) |
Analog | 3,120 | 2,836 | 2,928 | 3,223 | 3,174 | 1.73 |
Embedded Processing | 752 | 652 | 615 | 653 | 613 | -18.48 |
Other Business Activities | 205 | 173 | 279 | 275 | 220 | 7.32 |
Source: TI, January 2025