Texas Instruments FY2024 Financial Report: Net Income $4.8B, Decreased 26.4%

Executive Summary

Texas Instruments (TXN) reported a net income of $4.8 billion for FY2024, representing a 26.4% decrease compared to the previous year’s $6.5 billion. Revenue declined by 10.7% from $17.5 billion in FY2023 to $15.6 billion in FY2024, primarily due to softer demand across key markets. The company’s gross margin compressed slightly from 63.0% to 58.2%, reflecting increased cost pressures. Despite challenging macroeconomic conditions, TI maintains a solid balance sheet with total assets of $35.5 billion and a strong liquidity position, supported by $3.2 billion in cash and cash equivalents. Management continues to focus on operational efficiency, strategic investments in manufacturing capabilities, and disciplined capital allocation to sustain long-term growth.

Key Metrics (Comparison to Prior Year)

Management Discussion and Analysis

For FY2024, Texas Instruments experienced a significant revenue decline driven by reduced end-market demand, especially in consumer electronics and industrial segments. The gross margin compression was influenced by increased raw material costs and supply chain disruptions. Operating expenses remained relatively stable, allowing for efficient cost management amidst revenue headwinds. Capital expenditures increased slightly to support expansion of manufacturing capacity, aligning with strategic long-term growth initiatives. Cash flow from operations remained robust, enabling the company to continue returning value to shareholders through dividends and share repurchases. The focus remains on innovation, optimizing manufacturing efficiency, and disciplined financial management to navigate macroeconomic uncertainties and position for future growth.

Income Statement Analysis

Revenue decreased by 10.7% YoY from $17.5 billion to $15.6 billion, reflecting weaker demand across key segments. Gross profit declined by 17.4% from $11.0 billion to $9.1 billion, with gross margin narrowing from 63.0% to 58.2%. Operating profit fell by 25.4% from $7.33 billion to $5.47 billion. Net income decreased by 26.4% from $6.51 billion to $4.80 billion. Earnings per share (diluted) declined from $7.07 in FY2023 to $5.20 in FY2024, consistent with lower net income and share count adjustments. These results highlight the impact of macroeconomic headwinds, but TI’s resilient operational model supports ongoing profitability.

Balance Sheet Analysis

As of December 31, 2024, TI’s total assets stood at $35.5 billion, up 9.9% from $32.3 billion in FY2023, driven by increased property, plant, and equipment investments. Cash and cash equivalents totaled $3.2 billion, providing ample liquidity. Accounts receivable declined marginally to $1.7 billion, and inventories increased to $4.5 billion to support future capacity expansion. Long-term debt increased to $12.8 billion, reflecting recent bond issuances for strategic funding. Shareholders’ equity remained stable at around $16.9 billion, with a debt-to-equity ratio of approximately 0.76, indicating manageable leverage. The company’s liquidity and asset base position it well to sustain operations and invest in growth initiatives.

Cash Flow Analysis

Operating cash flow remained strong at $6.32 billion, slightly below FY2023 but still indicative of robust cash generation. Capital expenditures increased to $4.82 billion, supporting capacity expansion and technology upgrades. Free cash flow was approximately $1.5 billion after capex. During FY2024, TI paid dividends of $4.80 billion and repurchased $929 million worth of shares, reflecting disciplined capital return policies. The company also issued $2.98 billion in long-term debt to fund strategic investments and refinance maturing obligations, maintaining a flexible capital structure.

Ratios & DuPont Analysis

TI’s net profit margin for FY2024 was 30.7%, down from 37.3% the previous year, primarily due to lower revenue and margin compression. Return on assets (ROA) declined from 20.2% to 13.5%, while return on equity (ROE) decreased from 38.6% to 28.4%. Asset turnover ratio was stable at 0.44, indicating efficient utilization of assets despite revenue decline. The equity multiplier remained around 2.1, reflecting manageable leverage. These ratios demonstrate resilience but suggest pressure on profitability amid cyclical downturns, with long-term outlook supported by TI’s innovation pipeline and strategic investments.

Risk Factors

Key risks include macroeconomic uncertainties, supply chain disruptions, technological obsolescence, geopolitical tensions affecting global markets, and regulatory changes in key jurisdictions. Competitive pressures from both established players and new entrants pose ongoing challenges. Operational risks related to manufacturing and quality control, as well as financial risks from currency fluctuations and interest rate increases, require vigilant management. The macroeconomic environment, including inflation and potential recessionary pressures, remains a concern for sustained growth.

Notes & Additional Commentary

FY2024 results include a gain of $124 million from property sale restructuring charges, and no material impairments of goodwill or long-lived assets. The company’s strategic focus on expanding manufacturing capacity and investing in R&D is expected to underpin future growth. Unusual items include asset disposal gains and restructuring costs, which are non-recurring. The company’s disciplined capital allocation and strong cash position provide flexibility to navigate uncertainties and pursue long-term value creation.

Investment Implications

Despite short-term revenue and earnings pressures, TI’s solid balance sheet, strong cash flow generation, and strategic investments position it well for long-term growth. Investors should consider the cyclical nature of the semiconductor industry, but TI’s diversified product portfolio and leadership in analog and embedded processing technologies offer resilience. Short-term opportunities include capitalizing on digital transformation trends, while long-term risks involve macroeconomic volatility and technological shifts. A balanced outlook suggests maintaining exposure with attention to industry cycles and macroeconomic developments.