TI(TXN) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited consolidated financial statements for Q2 and H1 2025 vs 2024, including income, balance sheet, and cash flow details Consolidated Statements of Income (Q2 & H1 2025 vs 2024) | (In millions, except per-share amounts) | For Three Months Ended June 30, | | For Six Months Ended June 30, | | | :--- | :--- | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Revenue | $4,448 | $3,822 | $8,517 | $7,483 | | Gross profit | $2,575 | $2,211 | $4,888 | $4,306 | | Operating profit | $1,563 | $1,248 | $2,887 | $2,534 | | Net income | $1,295 | $1,127 | $2,474 | $2,232 | | Diluted EPS | $1.41 | $1.22 | $2.69 | $2.42 | Consolidated Balance Sheet Highlights (June 30, 2025 vs Dec 31, 2024) | (In millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $3,044 | $3,200 | | Short-term investments | $2,315 | $4,380 | | Inventories | $4,812 | $4,527 | | Total assets | $34,933 | $35,509 | | Long-term debt | $14,043 | $12,846 | | Total stockholders' equity | $16,403 | $16,903 | Consolidated Statements of Cash Flows (First Six Months) | (In millions) | For Six Months Ended June 30, | | | :--- | :--- | :--- | | | 2025 | 2024 | | Cash flows from operating activities | $2,709 | $2,588 | | Capital expenditures | ($2,428) | ($2,312) | | Proceeds from CHIPS Act incentives | $260 | $— | | Dividends paid | ($2,473) | ($2,368) | | Stock repurchases | ($955) | ($74) | | Net change in cash and cash equivalents | ($156) | ($224) | - The company operates through two main reportable segments: Analog and Embedded Processing, with Q2 2025 Analog revenue at $3.45 billion (78% of total) and Embedded Processing revenue at $679 million (15% of total)[11][15] - Geographically, the United States (38%) and China (22%) were the largest markets based on end-customer headquarters for Q2 2025 revenue[19] - In May 2025, the company issued $1.20 billion in new senior unsecured notes and retired $750 million of maturing debt, with total long-term debt at $14.04 billion as of June 30, 2025[44][45] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's performance, strategic focus, and financial condition, highlighting Q2 2025 revenue growth and future tax law impacts Overview and Strategy The company's strategy focuses on long-term free cash flow per share growth through a business model, disciplined capital allocation, and efficiency - The company's ultimate objective and key metric for progress is the growth of free cash flow per share over the long term[55] - The corporate strategy is built on three core elements: a business model focused on analog and embedded processing, disciplined capital allocation, and a continuous pursuit of operational efficiency[55][61] Results of Operations Q2 2025 revenue increased 16% YoY to $4.45 billion, driven by segment growth, with a new tax law impacting future rates Q2 2025 vs Q2 2024 Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $4.45 B | $3.82 B | +16% | | Gross Profit | $2.58 B | $2.21 B | +16% | | Operating Profit | $1.56 B | $1.25 B | +25% | | Diluted EPS | $1.41 | $1.22 | +15.6% | H1 2025 vs H1 2024 Performance | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $8.52 B | $7.48 B | +14% | | Gross Profit | $4.89 B | $4.31 B | +14% | | Diluted EPS | $2.69 | $2.42 | +11.2% | - The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, is expected to cause a higher effective tax rate in Q3 and full-year 2025, but a lower rate and reduced cash tax payments from 2026 onward[70] Segment Results Analog segment revenue grew 18% YoY in Q2, while Embedded Processing operating profit declined due to higher manufacturing costs Q2 2025 vs Q2 2024 Segment Revenue | Segment | Q2 2025 Revenue | Q2 2024 Revenue | YoY Change | | :--- | :--- | :--- | :--- | | Analog | $3,452 M | $2,928 M | +18% | | Embedded Processing | $679 M | $615 M | +10% | | Other | $317 M | $279 M | +14% | - Analog segment operating profit increased 27% YoY in Q2 2025, driven by higher revenue and gross profit[75] - Embedded Processing year-to-date operating profit decreased 32% YoY, primarily due to higher manufacturing costs and R&D expenses, partly related to the capacity expansion at the Lehi, Utah facility[64][85] Financial Condition, Liquidity and Capital Resources The company maintains strong liquidity and operating cash flow, with significant capital expenditures and shareholder returns, while managing inventory levels - As of June 30, 2025, total cash (cash and cash equivalents plus short-term investments) was $5.36 billion[87] - Inventory increased to $4.81 billion, but days of inventory improved, decreasing to 231 from 241 at the end of 2024, reflecting the execution of the company's inventory strategy[88] H1 2025 Cash Uses | Activity | Cash Flow (H1 2025) | | :--- | :--- | | Capital Expenditures | ($2.43 B) | | Dividends Paid | ($2.47 B) | | Stock Repurchases | ($955 M) | - The company is nearing the end of a six-year elevated capital expenditure cycle and expects to benefit from CHIPS Act incentives, including an increased Investment Tax Credit (ITC) from 25% to 35% for investments placed in service after December 31, 2025, under the new OBBBA legislation[91] Non-GAAP Financial Information Provides reconciliation of non-GAAP free cash flow, which was $1.76 billion for the trailing twelve months, representing 10.6% of revenue Free Cash Flow (Trailing 12 Months) | Metric | TTM ended June 30, 2025 | TTM ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash flow from operations (GAAP) | $6,439 M | $6,449 M | 0% | | Free cash flow (non-GAAP) | $1,763 M | $1,494 M | +18% | | FCF as % of Revenue | 10.6% | 9.3% | | - Free cash flow is defined as cash flows from operating activities less capital expenditures, plus proceeds from CHIPS Act incentives[95] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - Based on an evaluation as of the end of the reporting period, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[100] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[100] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company believes outcomes of various legal proceedings will not materially adversely affect its consolidated financial statements - The company believes that the results of various legal and administrative proceedings will not have a material adverse effect on its consolidated financial statements[51][103] Item 1A. Risk Factors Incorporates risk factors by reference from the Form 10-K for the year ended December 31, 2024, with no new risks presented - Information concerning risk factors is incorporated by reference from the Form 10-K for the year ended December 31, 2024[104] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Details common stock repurchases in Q2 2025, with approximately 1.85 million shares purchased and $19.31 billion remaining for future repurchases Q2 2025 Stock Repurchases | Period | Total Number of Shares Purchased | | :--- | :--- | | April 1 - 30, 2025 | 1,645,087 | | May 1 - 31, 2025 | 202,679 | | June 1 - 30, 2025 | — | | Total | 1,847,766 | - As of June 30, 2025, the approximate dollar value of shares that may yet be purchased under the company's publicly announced plans was $19.31 billion[107][109] Item 6. Exhibits Lists exhibits filed with the Form 10-Q, including corporate documents, CEO and CFO certifications, and XBRL data files - Filed exhibits include CEO and CFO certifications and Inline XBRL documents[110] Other Information Notice Regarding Forward-Looking Statements Provides a standard safe harbor warning for forward-looking statements, listing key risk factors that could cause actual results to differ materially - The report includes forward-looking statements that are subject to risks and uncertainties which could cause actual results to differ materially[112] - Key risk factors mentioned include economic conditions, market demand for semiconductors, competition, cybersecurity threats, manufacturing challenges, changes in tax law, and customer inventory adjustments[113] Signature The report is signed by Rafael Lizardi, Senior Vice President and Chief Financial Officer, on July 29, 2025 - The report was signed by Rafael Lizardi, Senior Vice President and Chief Financial Officer, on July 29, 2025[117]