TEXAS INSTRUMENTS INC Q4 FY2024 earnings call

• Haviv started with a quick overview of the fourth quarter, noting revenue details and end market performance. He highlighted sequential declines in industrial and automotive, growth in personal electronics, enterprise systems, and communications equipment. He also provided the annual revenue breakout by end market.
• Rafael discussed gross profit ($2.3 billion, 58% of revenue), operating expenses ($937 million, up 4% year-over-year), cash flow from operations ($2 billion), capital expenditures ($1.2 billion), dividends paid ($1.2 billion), stock repurchased ($537 million), and dividend increase. He also covered capital management, cash generation, balance sheet strength, inventory levels, and outlook for first quarter 2025, including revenue and EPS guidance.

Revenue for the fourth quarter was $4 billion, a 3% sequential decrease and 2% year-over-year decrease. Analog revenue grew 2% year-over-year after eight quarters of decline. Embedded Processing declined 18%, and the Other segment grew from the year-ago quarter. In 2024, by end market as a percentage of revenue: Industrial was 34%, Automotive 35%, Personal Electronics 20%, Enterprise Systems 5%, Communications Equipment 4%, and Other 2%. Industrial and Automotive combined made up about 70% of TI's revenue in 2024.

• Fourth quarter revenue was $4 billion.
• First quarter 2025 revenue expected in the range of $3.74 billion to $4.06 billion.
• Earnings per share for first quarter 2025 expected in the range of $0.94 to $1.16.
• Effective tax rate for 2025 expected to be about 12%.

• Factors affecting gross margin such as lower revenue, higher depreciation, and reduced factory loadings.
• Interest income decrease due to lower short-term interest rates, resulting from lower cash levels on the balance sheet.

Q: Toshiya Hari from Goldman Sachs asked about color by end market for Q1 revenue decline.

A: Haviv Ilan mentioned seasonal decline, with personal electronics typically showing significant decline in Q1, and industrial and automotive declines less pronounced. Rafael Lizardi added on gross margin, OpEx, and interest income decrease.

Q: Chris Caso from Wolfe Research asked about Embedded business margin divergence.

A: Haviv Ilan noted asynchronous behavior between Analog and Embedded, with Embedded in transition. Rafael Lizardi explained impact of LFAB underutilization on Embedded margins.

Q: Chris Danely from Citi asked about Embedded margins.

A: Haviv Ilan said Embedded is in transition, and Rafael Lizardi discussed revenue impact and LFAB transition's effect on margins.

Q: Harlan Sur from JPMorgan asked about CHIPS Act grants.

A: Rafael Lizardi and Haviv Ilan discussed CHIPS Act funding, milestones, and impact on depreciation.

Q: CJ Muse from Cantor Fitzgerald asked about gross margins beyond Q1.

A: Rafael Lizardi and Haviv Ilan talked about revenue impact, factory loadings, and LFAB execution's effect on margins.

Q: Joshua Buchalter from TD Cowen asked about inventory levels.

A: Rafael Lizardi discussed inventory management and target levels.

Q: Thomas O'Malley from Barclays asked about depreciation and CapEx.

A: Rafael Lizardi and Haviv Ilan discussed depreciation related to CHIPS Act grants and CapEx plans.

Q: Thomas O'Malley asked about China market dynamics.

A: Haviv Ilan discussed TI's position in China, competitive landscape, and business as usual with customers.