TI(TXN) - 2024 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents Texas Instruments' unaudited consolidated financial statements, showing year-over-year declines in revenue and net income, with detailed accompanying notes Consolidated Financial Statements Consolidated financial statements show revenue and net income declines for both Q2 and six-month periods, with increased total assets and stable operating cash flow | Metric | Q2 2024 (Millions) | Q2 2023 (Millions) | Six Months 2024 (Millions) | Six Months 2023 (Millions) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $3,822 | $4,531 | $7,483 | $8,910 | | Gross Profit | $2,211 | $2,910 | $4,306 | $5,773 | | Operating Profit | $1,248 | $1,972 | $2,534 | $3,906 | | Net Income | $1,127 | $1,722 | $2,232 | $3,430 | | Diluted EPS | $1.22 | $1.87 | $2.42 | $3.72 | | Account | June 30, 2024 (Millions) | Dec 31, 2023 (Millions) | | :--- | :--- | :--- | | Total Current Assets | $16,789 | $15,122 | | Total Assets | $35,048 | $32,348 | | Total Current Liabilities | $3,637 | $3,320 | | Long-Term Debt | $12,842 | $10,624 | | Total Liabilities | $17,834 | $15,451 | | Total Stockholders' Equity | $17,214 | $16,897 | | Cash Flow Activity (Six Months Ended June 30) | 2024 (Millions) | 2023 (Millions) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $2,588 | $2,559 | | Net Cash from Investing Activities | $(3,329) | $(2,357) | | Net Cash from Financing Activities | $517 | $187 | | Net Change in Cash | $(224) | $389 | Notes to Financial Statements Notes detail segment performance, geographic revenue trends, accounting policies, debt, equity, and a significant property sale gain - The company operates through two primary segments: Analog and Embedded Processing, with other activities reported under 'Other'[12][13][14] | Segment Revenue (Six Months Ended June 30) | 2024 (Millions) | 2023 (Millions) | Change | | :--- | :--- | :--- | :--- | | Analog | $5,764 | $6,567 | (12.2)% | | Embedded Processing | $1,267 | $1,726 | (26.6)% | | Other | $452 | $617 | (26.7)% | | Total Revenue | $7,483 | $8,910 | (16.0)% | | Revenue by Geography (Six Months Ended June 30) | 2024 (%) | 2023 (%) | | :--- | :--- | :--- | | United States | 36% | 32% | | China | 18% | 20% | | Rest of Asia | 11% | 9% | | Europe, Middle East and Africa | 25% | 28% | | Japan | 8% | 10% | | Rest of world | 2% | 1% | - In February 2024, the company issued $3.00 billion in senior unsecured notes and retired $300 million of debt in May 2024[39] - A $124 million credit was recorded under 'restructuring charges/other' in the first six months of 2024, primarily from a property sale gain[49] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management attributes the Q2 2024 revenue decline to decreased customer demand, particularly in industrial and automotive markets, while maintaining long-term free cash flow strategy and investment - The company's strategy is centered on maximizing long-term free cash flow per share growth through a business model focused on analog and embedded processing, disciplined capital allocation, and operational efficiency[54][55] - Q2 2024 revenue decreased 16% year-over-year, with industrial and automotive markets continuing to decline sequentially while other end markets grew[58][59] | Trailing 12-Month Financials (as of June 30, 2024) | Amount (Billions) | | :--- | :--- | | Cash Flow from Operations | $6.4 | | Free Cash Flow (Non-GAAP) | $1.5 | | R&D and SG&A Investment | $3.7 | | Capital Expenditures | $5.0 | | Cash Returned to Shareholders | $4.9 | - The company expects capital expenditures to remain elevated due to manufacturing and technology investments, benefiting from the U.S. CHIPS and Science Act's 25% investment tax credit starting in Q2 2024[76] | Free Cash Flow Reconciliation (Trailing 12 Months Ended June 30) | 2024 (Millions) | 2023 (Millions) | Change | | :--- | :--- | :--- | :--- | | Cash flow from operations (GAAP) | $6,449 | $7,367 | (12)% | | Capital expenditures | $(4,955) | $(4,185) | - | | Free cash flow (non-GAAP) | $1,494 | $3,182 | (53)% | Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of June 30, 2024, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[82] PART II – OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 8 for legal proceedings, which are not expected to have a material adverse effect on financial statements - Information regarding legal proceedings is detailed in Note 8 to the financial statements, and the company does not expect these matters to have a material adverse effect[84][47] Item 1A. Risk Factors The report incorporates by reference the risk factors detailed in the company's Form 10-K for the year ended December 31, 2023, with no new risk factors presented - Risk factors are not updated in this 10-Q and are incorporated by reference from the Form 10-K for the year ended December 31, 2023[85] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2024, Texas Instruments repurchased 382,729 shares at an average price of $189.60, with approximately $21.12 billion remaining under repurchase authorizations | Period (2024) | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April | 20,776 | $176.46 | | May | 215,795 | $187.21 | | June | 146,158 | $194.98 | | Total Q2 | 382,729 | $189.60 | - As of June 30, 2024, approximately $21.12 billion remained available for future share repurchases under existing board authorizations from 2018 and 2022, which have no expiration date[86][87] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, compensation plans, CEO/CFO certifications, and XBRL data files - The exhibits filed with this report include the CEO and CFO certifications pursuant to SEC rules (Exhibits 31a, 31b, 32a, 32b) and Interactive Data Files (XBRL)[89] Notice Regarding Forward-Looking Statements The report contains forward-looking statements subject to risks and uncertainties, including market demand, competition, manufacturing, cybersecurity, and global conditions, with no obligation to update - The report includes a safe harbor statement for forward-looking statements, cautioning that actual results could differ materially due to various risks[91] - Key risks highlighted include market demand for semiconductors (especially in industrial and automotive), ability to compete, manufacturing capacity investments, and changes in tax laws or global trade policies[91]