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Texas Instruments (TXN) Q4 Earnings Beat, Revenues Fall Y/Y
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Texas Instruments (TXN - Free Report) reported fourth-quarter 2023 earnings of $1.49 per share, surpassing the Zacks Consensus Estimate by 2.05%. Also, the figure was within the guided range of $1.35-$1.57.
However, the figure declined 30% year over year and 19.5% sequentially.
TXN reported revenues of $4.08 billion, which lagged the Zacks Consensus Estimate of $4.11 billion. The figure came within management’s guidance of $3.93-$4.27 billion.
Revenues decreased 13% from the year-ago quarter’s level and 10% sequentially.
The year-over-year decline was attributed to weakness across various end markets. The company witnessed sluggishness in its Analog, Embedded Processing and Other segments.
On a sequential basis, Texas Instruments suffered from widespread weakness in the industrial and communication equipment markets.
A sequential decline by mid-single digits in the automotive market was a major concern.
Meanwhile, personal electronics remained flat while enterprise systems grew by low-single digits.
Shares of Texas Instruments have lost 2% over the past year against the industry’s growth of 133.9%.
TXN’s investments in growth avenues and competitive advantages, including manufacturing, technology, product portfolio expansion and consistent returns to shareholders, are likely to instill investors’ optimism in the stock in the days ahead.
Texas Instruments Incorporated Price, Consensus and EPS Surprise
Analog: Revenues of $3.12 billion were generated from the segment (77% of total revenues), down 12% from the year-ago quarter’s level. The figure came above the Zacks Consensus Estimate of $3.05 billion.
Embedded Processing: Revenues amounted to $752 million (18% of total revenues), down 10% year over year. The figure lagged the Zacks Consensus Estimate of $826 million.
Other: Revenues totaled $205 million (5% of total revenues). The figure was down 25% from the prior-year quarter’s level and missed the consensus mark of $228 million.
Operating Details
Texas Instruments’ gross margin of 59.6% contracted 650 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses expanded 150 bps year over year to $438 million in the reported quarter.
Research and development expenses of $460 million expanded by 200 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 37.6%, which contracted 900 bps from the prior-year quarter’s number.
Balance Sheet & Cash Flow
As of Dec 31, 2023, the cash and short-term investment balance was $8.58 billion compared with $8.95 billion as of Sep 30, 2023.
At the end of the reported quarter, TXN had a long-term debt of $10.624 billion compared with $10.922 billion in the prior quarter.
The current debt was $599 million, up from $300 million at the end of third-quarter 2023.
Texas Instruments generated $1.92 billion of cash from operations, down from $1.94 billion in the previous quarter.
Capex was $1.15 billion in the reported quarter and free cash flow was $776 million.
Texas Instruments paid out dividends worth $1.18 billion in the reported quarter. It repurchased shares worth 65 million.
Guidance
For first-quarter 2024, TXN expects revenues between $3.45 billion and $3.75 billion.
The company expects earnings within 96 cents-$1.16 per share.
Zacks Rank and Stocks to Consider
Currently, Texas Instruments carries a Zacks Rank #4 (Sell).
Image: Bigstock
Texas Instruments (TXN) Q4 Earnings Beat, Revenues Fall Y/Y
Texas Instruments (TXN - Free Report) reported fourth-quarter 2023 earnings of $1.49 per share, surpassing the Zacks Consensus Estimate by 2.05%. Also, the figure was within the guided range of $1.35-$1.57.
However, the figure declined 30% year over year and 19.5% sequentially.
TXN reported revenues of $4.08 billion, which lagged the Zacks Consensus Estimate of $4.11 billion. The figure came within management’s guidance of $3.93-$4.27 billion.
Revenues decreased 13% from the year-ago quarter’s level and 10% sequentially.
The year-over-year decline was attributed to weakness across various end markets. The company witnessed sluggishness in its Analog, Embedded Processing and Other segments.
On a sequential basis, Texas Instruments suffered from widespread weakness in the industrial and communication equipment markets.
A sequential decline by mid-single digits in the automotive market was a major concern.
Meanwhile, personal electronics remained flat while enterprise systems grew by low-single digits.
Shares of Texas Instruments have lost 2% over the past year against the industry’s growth of 133.9%.
TXN’s investments in growth avenues and competitive advantages, including manufacturing, technology, product portfolio expansion and consistent returns to shareholders, are likely to instill investors’ optimism in the stock in the days ahead.
Texas Instruments Incorporated Price, Consensus and EPS Surprise
Texas Instruments Incorporated price-consensus-eps-surprise-chart | Texas Instruments Incorporated Quote
Segments in Detail
Analog: Revenues of $3.12 billion were generated from the segment (77% of total revenues), down 12% from the year-ago quarter’s level. The figure came above the Zacks Consensus Estimate of $3.05 billion.
Embedded Processing: Revenues amounted to $752 million (18% of total revenues), down 10% year over year. The figure lagged the Zacks Consensus Estimate of $826 million.
Other: Revenues totaled $205 million (5% of total revenues). The figure was down 25% from the prior-year quarter’s level and missed the consensus mark of $228 million.
Operating Details
Texas Instruments’ gross margin of 59.6% contracted 650 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses expanded 150 bps year over year to $438 million in the reported quarter.
Research and development expenses of $460 million expanded by 200 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 37.6%, which contracted 900 bps from the prior-year quarter’s number.
Balance Sheet & Cash Flow
As of Dec 31, 2023, the cash and short-term investment balance was $8.58 billion compared with $8.95 billion as of Sep 30, 2023.
At the end of the reported quarter, TXN had a long-term debt of $10.624 billion compared with $10.922 billion in the prior quarter.
The current debt was $599 million, up from $300 million at the end of third-quarter 2023.
Texas Instruments generated $1.92 billion of cash from operations, down from $1.94 billion in the previous quarter.
Capex was $1.15 billion in the reported quarter and free cash flow was $776 million.
Texas Instruments paid out dividends worth $1.18 billion in the reported quarter. It repurchased shares worth 65 million.
Guidance
For first-quarter 2024, TXN expects revenues between $3.45 billion and $3.75 billion.
The company expects earnings within 96 cents-$1.16 per share.
Zacks Rank and Stocks to Consider
Currently, Texas Instruments carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector are Arista Networks (ANET - Free Report) , Logitech International (LOGI - Free Report) and Itron (ITRI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arista Networks shares have returned 116.5% over the past year. The long-term earnings growth rate for ANET is pegged at 19.77%.
Shares of Logitech International have returned 23.2% over the past year. The long-term earnings growth rate for LOGI is currently projected at 15.75%.
Shares of Itron have gained 22.3% over the past year. The long-term earnings growth rate for ITRI is currently projected at 23%.