Texas Instruments Incorporated : Q4 2024 and 2024 Financial Results - Earnings Call Prepared Remarks
TXN
Q4 2024 and 2024 Financial Results
Texas Instruments Incorporated
Conference Call Prepared Remarks
Thursday, January 23, 2025
3:30 p.m. Central time
Dave Pahl, vice president and head of Investor Relations
Welcome to the Texas Instruments fourth quarter 2024 earnings conference call. I'm Dave Pahl, head of Investor Relations, and I'm joined by our Chief Executive Officer Haviv Ilan and our Chief Financial Officer Rafael Lizardi.
For any of you who missed the release, you can find it on our website at ti.com/ir. This call is being broadcast live over the web and can be accessed through our website. In addition, today's call is being recorded and will be available via replay on our website.
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. We encourage you to review the "Notice regarding forward-looking statements" contained in the earnings release published today, as well as TI's most recent SEC filings, for a more complete description.
I would like to provide some information that's important for your calendars. On Tuesday, February 4, at 10 a.m. Central time, we will have our capital management call. Similar to what we've done in the past, Haviv, Rafael and I will share our approach to capital allocation and summarize our progress as we prepare for the opportunity ahead.
Moving on, today, we'll provide the following updates:
With that, let me turn it over to Haviv.
Haviv Ilan, president and chief executive officer
Thanks, Dave. Let me start with a quick overview of the fourth quarter:
Revenue was $4.0 billion, a decrease of 3% sequentially and 2% from the same quarter a year ago. Analog revenue grew 2% year over year, after eight quarters of decline. Embedded Processing declined 18% and our "Other" segment grew from the year-ago quarter.
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Now I'll provide some insight into our fourth quarter revenue by end market. Our overall results reflect the performance from our two largest markets, industrial and automotive, which saw modest sequential declines.
Similar to last quarter, I'll focus on sequential performance, as it is more informative at this time.
In addition, as we do at the end of each calendar year, I'll describe our revenue by end market. As a percentage of revenue for 2024, industrial was 34%, automotive 35%, personal electronics 20%, enterprise systems 5%, communications equipment 4%, and other was 2%.
In 2024, industrial and automotive combined made up about 70% of TI's revenue, up from 42% in 2013. We see good opportunities in all of our markets, but we place additional strategic emphasis on industrial and automotive. Our customers across all regions are increasingly turning to analog and embedded technology to make their end products more reliable, more affordable and lower in power. This drives growing chip content per application, or secular content growth, which will likely continue to drive faster growth in industrial and automotive.
Rafael will now review profitability, capital management and our outlook.
Rafael Lizardi, senior vice president and chief financial officer
Thanks, Haviv, and good afternoon everyone.
As Haviv mentioned, fourth quarter revenue was $4.0 billion.
Gross profit in the quarter was $2.3 billion, or 58% of revenue. Sequentially, gross profit decreased primarily due to lower revenue, higher depreciation and reduced factory loadings. Gross profit margin decreased 190 basis points.
Operating expenses in the quarter were $937 million, up 4% from a year ago and about as expected. On a trailing 12-month basis, operating expenses were $3.8 billion, or 24% of revenue.
Operating profit was $1.4 billion in the quarter, or 34% of revenue, and profit was down 10% from the year-ago quarter.
Net income in the fourth quarter was $1.2 billion, or $1.30 per share. Earnings per share included a 2-cent benefit for items that were not in our original guidance.
Let me now comment on our capital management results, starting with our cash generation.
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Cash flow from operations was $2.0 billion in the quarter. Capital expenditures were $1.2 billion in the quarter.
In the quarter, we paid $1.2 billion in dividends and repurchased $537 million of our stock. We also increased our dividend per share by 5% in the fourth quarter, marking our 21st consecutive year of dividend increases. In total, we have returned $5.7 billion in the past 12 months to owners.
Our balance sheet remains strong with $7.6 billion of cash and short-term investments at the end of the fourth quarter. Total debt outstanding was $13.7 billion with a weighted average coupon of 3.79%.
Inventory at the end of the quarter was $4.5 billion, up $231 million from the prior quarter, and days were 241, up 10 days sequentially.
Now let's look at some of these results for the year.
In 2024, cash flow from operations was $6.3 billion, and capital expenditures were $4.8 billion, as expected. We are nearly 70% through a six-year elevated CapEx cycle that, once complete, will uniquely position TI to deliver dependable, low-cost 300mm capacity at scale to meet customer demand.
Free cash flow for 2024 was $1.5 billion, or 10% of revenue. Our free cash flow reflects the strength of our business model as well as our decisions to invest in 300mm manufacturing assets and inventory to support our overall objective to maximize long- term free cash flow per share, which we believe is the primary driver of long-term value.
Turning to our outlook for the first quarter, we expect TI revenue in the range of $3.74 billion to $4.06 billion and earnings per share to be in the range of $0.94 to $1.16.
Based on current tax law, we now expect our effective tax rate for 2025 to be about 12%.
In closing, we will stay focused in the areas that add value in the long term. We continue to invest in our competitive advantages, which are manufacturing and technology, a broad product portfolio, reach of our channels, and diverse and long-lived positions.
We will continue to strengthen these advantages through disciplined capital allocation and by focusing on the best opportunities, which we believe will enable us to continue to deliver free cash flow per share growth over the long term.
With that, let me turn it back to Dave.
Dave Pahl, vice president and head of Investor Relations
Thanks, Rafael. Operator, you can now open the lines for questions. In order to provide as many of you as possible an opportunity to ask your questions, please limit yourself to a single question. After our response, we will provide you an opportunity for an additional follow-up. Operator...
[Q&A]
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Disclaimer
Texas Instruments Incorporated published this content on January 23, 2025, and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on January 23, 2025 at 22:16:03.601.