Texas Instruments Incorporated CAPEX jumped on 62.7% and Revenue increased on 5.5%
01/23/2019 • About Texas Instruments Incorporated (
$TXN) • By InTwits
Texas Instruments Incorporated reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 48.6% in 2018 vs. 46.7% in 2017 vs. 39.7% in 2014
- Texas Instruments Incorporated has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.6%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $1,131m in 2018, $695m in 2017, $531m in 2016, $551m in 2015, $385m in 2014
- In the last 5 years the company invested considerably less than D&A: $3,293m vs. $5,176m
- The company has highly profitable business model: ROIC is 47.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 5.5%. Revenue growth showed slowdown in 18Q4 - it was -0.9% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.9 pp from 46.7% to 48.6% in 2018. EBITDA Margin followed a growing trend at 2.3 pp per annum in 2014-2018.
Gross Margin increased slightly on 0.85 pp from 64.3% to 65.1% in 2018. Gross Margin followed a growing trend at 2.2 pp per annum in the last 5 years. SG&A as a % of Revenue decreased slightly on 0.65 pp from 11.3% to 10.7% in 2018. SG&A as a % of Revenue declined at -0.89 pp per annum in the last 5 years. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in 2018. SBC as a % of Revenue stuck to a declining trend at -0.19 pp per annum in the last 5 years.
Net Income margin jumped on 10.7 pp from 24.6% to 35.4% in 2018. The efficient tax rate was 16.5% in 2018 while the average for the last five years was 27.6%.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 7.2% in 2018. The company showed CAPEX/Revenue growth of 2.9 pp from 4.2% in 2015 to 7.2% in 2018. It's average level of CAPEX/Revenue for the last three years was 5.3%. CAPEX as a % of Revenue grew at 0.88 pp per annum in the last 5 years.
Accounts receivable as a % of Revenue decreased slightly on 0.90 pp from 8.5% to 7.6% in 2018. Inventories as a % of Revenue increased slightly on 0.97 pp from 13.1% to 14.0% in 2018. Accounts payable as a % of Revenue showed almost no change in 2018.
Return on investment
The company operates at high and attractive ROIC (47.5%) and ROE (57.3%). ROIC increased on 4.3 pp from 43.1% to 47.5% in 2018. ROE surged on 22.2 pp from 35.1% to 57.3% in 2018. ROIC grew at 5.8 pp per annum in 2014-2018. ROE stuck to a growing trend at 6.8 pp per annum in 2014-2018.
Leverage (Debt)
Debt level is 0.3x Net Debt / EBITDA and 0.7x Debt / EBITDA. Net Debt / EBITDA showed almost no change in 2018. Debt jumped on 24.3% while cash surged on 47.2%. Net Debt/EBITDA followed a declining trend at -0.1x per annum in the last 5 years.
Texas Instruments Incorporated has good short term financial stability: Interest coverage ratio (ICR) is 53.7x. Texas Instruments Incorporated has no short term refinancing risk: cash is higher than short term debt (325.5%).
Average interest expence charged on company's debt was 2.5% in 2018.
Valuation and dividends
The company's trades at EV/EBITDA 13.1x and P/E 17.6x.
The company paid 45.8% of Net Income as dividends in 2018. Dividends grew on average at 14.1% per annum in the last 5 years).
Management team
Texas Instruments Incorporated's CEO Richard K Templeton "Rich" is a founder and has spent 11 years with the company. CEO total compensation was
$28,302,823 in 2018 which included
$1,637,780 salary. Texas Instruments Incorporated's CFO Rafael Lizardi has spent 2 years with the company.
At the end of financial year the company had 0.24% shares owned by insiders. Insider ownership didn't change in 2018.
The company has 29,888 employees. The number of employees increased slightly on 0.59%. Average revenue per employee in 2018 was
$528,105 and it increased on 4.9%.
Financial and operational results
FY ended 12/31/2018
Texas Instruments Incorporated ($TXN) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 13,045 | 13,000 | 13,370 | 14,961 | 15,784 | 5.5% |
| Gross Profit | 7,427 | 7,575 | 8,257 | 9,614 | 10,277 | 6.9% |
| SG&A | 1,843 | 1,728 | 1,742 | 1,694 | 1,684 | -0.6% |
| EBITDA | 5,177 | 5,455 | 5,810 | 6,987 | 7,667 | 9.7% |
| EBIT | 3,947 | 4,322 | 4,855 | 6,083 | 6,713 | 10.4% |
| Interest expence | 94 | 90 | 80 | 78 | 125 | 60.3% |
| Tax | 1,053 | 1,230 | 1,335 | 2,398 | 1,106 | -53.9% |
| Net Income | 2,821 | 2,986 | 3,595 | 3,682 | 5,580 | 51.5% |
| Stock Based Compensation | 277 | 286 | 252 | 242 | 232 | -4.1% |
Balance Sheet
|
|---|
| Cash | 1,199 | 1,000 | 1,154 | 1,656 | 2,438 | 47.2% |
| Accounts Receivable | 1,246 | 1,165 | 1,267 | 1,278 | 1,207 | -5.6% |
| Inventory | 1,784 | 1,691 | 1,790 | 1,957 | 2,217 | 13.3% |
| Accounts Payable | 437 | 386 | 396 | 466 | 478 | 2.6% |
| Short Term Debt | 1,001 | 1,000 | 631 | 500 | 749 | 49.8% |
| Long Term Debt | 3,630 | 3,120 | 2,978 | 3,577 | 4,319 | 20.7% |
Cash flow
|
|---|
| Capex | 385 | 551 | 531 | 695 | 1,131 | 62.7% |
| Dividends | 1,323 | 1,444 | 1,646 | 2,104 | 2,555 | 21.4% |
Ratios
|
|---|
| Revenue growth | 6.9% | -0.3% | 2.8% | 11.9% | 5.5% | |
| EBITDA growth | 25.4% | 5.4% | 6.5% | 20.3% | 9.7% | |
|
|---|
| Gross Margin | 56.9% | 58.3% | 61.8% | 64.3% | 65.1% | 0.8% |
| EBITDA Margin | 39.7% | 42.0% | 43.5% | 46.7% | 48.6% | 1.9% |
| EBIT Margin | 30.3% | 33.2% | 36.3% | 40.7% | 42.5% | 1.9% |
| SG&A, % of revenue | 14.1% | 13.3% | 13.0% | 11.3% | 10.7% | -0.7% |
| SBC, % of revenue | 2.1% | 2.2% | 1.9% | 1.6% | 1.5% | -0.1% |
| Net Income Margin | 21.6% | 23.0% | 26.9% | 24.6% | 35.4% | 10.7% |
| CAPEX, % of revenue | 3.0% | 4.2% | 4.0% | 4.6% | 7.2% | 2.5% |
|
|---|
| ROIC | 25.1% | 29.8% | 34.9% | 43.1% | 47.5% | 4.3% |
| ROE | 26.2% | 29.0% | 34.8% | 35.1% | 57.3% | 22.2% |
| Net Debt/EBITDA | 0.7x | 0.6x | 0.4x | 0.3x | 0.3x | -0.0x |
| Interest expence / Average debt | 2.0% | 2.1% | 2.1% | 2.0% | 2.5% | 0.4% |
People
|
|---|
| Insider ownership | 0.2% | 0.2% | 0.2% | 0.2% | 0.2% | 0.0% |
| Employees | 31,003 | 29,977 | 29,865 | 29,714 | 29,888 | 0.6% |
| Revenue/Employee, th. $ | 421 | 434 | 448 | 504 | 528 | 4.9% |
Texas Instruments Incorporated ($TXN) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 3,789 | 4,017 | 4,261 | 3,717 | | 11.4% | 8.8% | 3.5% | -0.9% |
| EBITDA | 1,777 | 1,945 | 2,180 | 1,765 | | 19.9% | 14.1% | 8.3% | -1.2% |
| Net Income | 1,366 | 1,405 | 1,570 | 1,239 | | 37.0% | 33.0% | 22.2% | 260.2% |
Balance Sheet
|
|---|
| Cash | 1,717 | 2,919 | 1,502 | 2,438 | | 60.0% | 156.1% | 15.9% | 47.2% |
| Short Term Debt | 500 | 0 | 749 | 749 | | 32.3% | -100.0% | 50.1% | 49.8% |
| Long Term Debt | 3,578 | 5,066 | 4,318 | 4,319 | | 20.1% | 64.3% | 40.0% | 20.7% |
Ratios
|
|---|
| Gross Margin | 64.6% | 65.2% | 65.8% | 64.8% | | 1.6% | 0.9% | 1.3% | -0.3% |
| EBITDA Margin | 46.9% | 48.4% | 51.2% | 47.5% | | 3.3% | 2.3% | 2.3% | -0.2% |
| Net Income Margin | 36.1% | 35.0% | 36.8% | 33.3% | | 6.7% | 6.4% | 5.6% | 24.2% |
Peers in Semiconductors
Below you can find Texas Instruments Incorporated benchmarking vs. other companies in Semiconductors industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NanoFlex Power Corp ($OPVS) | | | | 72.5% | 354.8% |
| MoSys, Inc. ($MOSY) | | -18.4% | 37.2% | 46.8% | 87.7% |
| SMART Global Holdings, Inc. ($SGH) | | | -16.9% | 42.5% | 69.3% |
| Micron Technology, Inc. ($MU) | | -1.0% | -23.4% | 63.9% | 49.5% |
| Adesto Technologies Corporation ($IOTS) | | 4.3% | 1.6% | 27.6% | 48.8% |
| |
|---|
| Median (67 companies) | 54.6% | 9.7% | 5.2% | 10.9% | 4.7% |
|---|
| Texas Instruments Incorporated ($TXN) | | -0.3% | 2.8% | 11.9% | 5.5% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| CEVA, Inc. ($CEVA) | 90.2% | 90.9% | 91.6% | 92.1% | 89.8% |
| NVE Corporation ($NVEC) | 77.9% | 80.3% | 76.1% | 78.5% | 79.0% |
| Rambus, Inc. ($RMBS) | 85.9% | 84.7% | 80.1% | 79.9% | 76.8% |
| Universal Display Corporation ($OLED) | 76.0% | 64.2% | 83.9% | 80.8% | 75.5% |
| Intermolecular, Inc. ($IMI) | 48.3% | 57.4% | 66.5% | 67.5% | 70.3% |
| |
|---|
| Median (65 companies) | 45.3% | 47.0% | 47.2% | 48.6% | 50.4% |
|---|
| Texas Instruments Incorporated ($TXN) | 56.9% | 58.3% | 61.8% | 64.3% | 65.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NVE Corporation ($NVEC) | 58.8% | 66.0% | 61.8% | 65.6% | 65.1% |
| Micron Technology, Inc. ($MU) | 31.7% | 35.0% | 25.4% | 47.9% | 65.0% |
| NXP Semiconductors N.V. ($NXPI) | 25.7% | 41.5% | 21.6% | 46.2% | 49.9% |
| Intel Corp ($INTC) | 42.8% | 41.0% | 35.2% | 41.7% | 45.7% |
| Broadcom Inc. ($AVGO) | 24.9% | 38.0% | 19.9% | 40.4% | 44.2% |
| |
|---|
| Median (66 companies) | 9.6% | 11.3% | 9.2% | 10.7% | 9.8% |
|---|
| Texas Instruments Incorporated ($TXN) | 39.7% | 42.0% | 43.5% | 46.7% | 48.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Alpha and Omega Semiconductor Limited ($AOSL) | 3.0% | 6.6% | 6.5% | 12.2% | 42.2% |
| Renesola Ltd. ($SOL) | 3.5% | 0.0% | 0.0% | 78.0% | 41.7% |
| First Solar, Inc. ($FSLR) | 7.6% | 4.0% | 7.9% | 17.5% | 33.0% |
| Sigma Designs Inc ($SIGM) | 11.0% | 6.5% | 6.2% | 14.1% | 29.3% |
| Micron Technology, Inc. ($MU) | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% |
| |
|---|
| Median (66 companies) | 3.6% | 4.0% | 3.6% | 4.7% | 4.4% |
|---|
| Texas Instruments Incorporated ($TXN) | 3.0% | 4.2% | 4.0% | 4.6% | 7.2% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| SMART Global Holdings, Inc. ($SGH) | | | 2.5% | 21.5% | 51.7% |
| Micron Technology, Inc. ($MU) | 18.8% | 15.8% | 0.8% | 21.5% | 42.9% |
| Applied Materials Inc ($AMAT) | 15.8% | 15.2% | 19.0% | 31.2% | 36.4% |
| NVIDIA Corporation ($NVDA) | 9.2% | 13.3% | 13.1% | 27.3% | 35.3% |
| Skyworks Solutions, Inc. ($SWKS) | 24.8% | 36.4% | 33.7% | 33.1% | 32.3% |
| |
|---|
| Median (73 companies) | 5.0% | 3.8% | 1.4% | 3.2% | 3.0% |
|---|
| Texas Instruments Incorporated ($TXN) | 25.1% | 29.8% | 34.9% | 43.1% | 47.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| MACOM Technology Solutions Holdings, Inc. ($MTSI) | 25.4x | 3.3x | 3.0x | 7.2x | 98.6x |
| Inphi Corporation ($IPHI) | | -6.4x | 4.5x | 33.7x | 32.2x |
| JinkoSolar Holding Company Limited ($JKS) | 4.2x | 3.3x | 4.1x | 11.0x | 8.2x |
| Lattice Semiconductor Corporation ($LSCC) | -1.8x | | 6.5x | 19.0x | 3.9x |
| Renesola Ltd. ($SOL) | 7.0x | 35.0x | 123.6x | 2.3x | 3.3x |
| |
|---|
| Median (45 companies) | -0.6x | -0.3x | -0.0x | 0.4x | 0.3x |
|---|
| Texas Instruments Incorporated ($TXN) | 0.7x | 0.6x | 0.4x | 0.3x | 0.3x |
