Texas Instruments Incorporated Net Income jumped on 11.5% and EBITDA Margin showed almost no change
01/26/2021 • About Texas Instruments Incorporated (
$TXN) • By InTwits
Texas Instruments Incorporated reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Texas Instruments Incorporated has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.2%. At the same time it's in pair with industry average of 7.3%
- CAPEX is quite volatile: $463m in FY2020, $432m in FY2019, $635m in FY2018, $1,069m in FY2017, $723m in FY2016
- The company has highly profitable business model: ROIC is 38.2%
- It operates with high leverage: Net Debt/EBITDA is 0.5x while industry average is 0.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Texas Instruments Incorporated's Revenue increased slightly on 0.54%. Revenue growth showed acceleration in FY20Q4 - it increased 21.7% YoY. EBITDA Margin showed almost no change in FY2020.
Gross Margin showed almost no change in FY2020. SG&A as a % of Revenue showed almost no change in FY2020.
Net Income margin increased on 3.8 pp from 34.9% to 38.7% in FY2020. Net Income margin grew at 3.4 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
In FY2020 Texas Instruments Incorporated had CAPEX/Revenue of 4.5%. CAPEX/Revenue showed almost no change from FY2017 to FY2020. For the last three years the average CAPEX/Revenue was 5.8%. During the last 5 years CAPEX as a % of Revenue topped in FY2018 at 7.2% and was declining since that time.
Return on investment
The company operates at high and attractive ROIC (38.2%) and ROE (61.5%). ROIC decreased slightly on 1.5 pp from 39.7% to 38.2% in FY2020. ROE increased on 5.8 pp from 55.7% to 61.5% in FY2020. During the last 5 years ROIC topped in FY2018 at 47.5% and was declining since that time. ROE stuck to a growing trend at 7.4 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.5x and Debt / EBITDA is 1.0x. Net Debt / EBITDA showed almost no change in FY2020. Debt jumped on 10.8% while cash surged on 27.5%.
Texas Instruments Incorporated has no short term refinancing risk: cash is higher than short term debt (564.9%).
Valuation and dividends
Texas Instruments Incorporated's trades at EV/EBITDA 23.4x and P/E 28.1x.
Management team
Texas Instruments Incorporated's CEO Richard K Templeton "Rich" has spent 2 years with the company. Rafael R Lizardi is a Texas Instruments Incorporated's CFO. Rafael R Lizardi has spent 4 years at the company.
Financial and operational results
Texas Instruments Incorporated ($TXN) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 13,370 | 14,961 | 15,784 | 14,383 | 14,461 | 0.5% |
| Gross Profit | 8,257 | 9,614 | 10,277 | 9,164 | 9,269 | 1.1% |
| SG&A | 1,742 | 1,694 | 1,684 | 1,645 | 1,623 | -1.3% |
| EBITDA | 5,810 | 6,987 | 7,667 | 6,839 | 6,886 | 0.7% |
| EBIT | 4,855 | 6,083 | 6,713 | | | |
| Interest expence | 80 | 78 | 125 | | | |
| Tax | 1,335 | 2,398 | 1,106 | | | |
| Net Income | 3,595 | 3,682 | 5,580 | 5,017 | 5,595 | 11.5% |
| Stock Based Compensation | 252 | 242 | 232 | | | |
Balance Sheet
|
|---|
| Cash | 1,154 | 1,656 | 2,438 | 2,437 | 3,107 | 27.5% |
| Accounts Receivable | 1,267 | 1,278 | 1,207 | | | |
| Inventory | 1,790 | 1,957 | 2,217 | | | |
| Accounts Payable | 396 | 466 | 478 | | | |
| Short Term Debt | 631 | 500 | 749 | 573 | 550 | -4.0% |
| Long Term Debt | 2,978 | 3,577 | 4,319 | 5,562 | 6,248 | 12.3% |
Cash flow
|
|---|
| Capex | 531 | 695 | 1,131 | 847 | 649 | -23.4% |
| Dividends | 1,646 | 2,104 | 2,555 | | | |
Ratios
|
|---|
| Revenue growth | 2.8% | 11.9% | 5.5% | -8.9% | 0.5% | |
| EBITDA growth | 6.5% | 20.3% | 9.7% | -10.8% | 0.7% | |
|
|---|
| Gross Margin | 61.8% | 64.3% | 65.1% | 63.7% | 64.1% | 0.4% |
| EBITDA Margin | 43.5% | 46.7% | 48.6% | 47.5% | 47.6% | 0.1% |
| EBIT Margin | 36.3% | 40.7% | 42.5% | | |
| SG&A, % of revenue | 13.0% | 11.3% | 10.7% | 11.4% | 11.2% | -0.2% |
| SBC, % of revenue | 1.9% | 1.6% | 1.5% | | |
| Net Income Margin | 26.9% | 24.6% | 35.4% | 34.9% | 38.7% | 3.8% |
| CAPEX, % of revenue | 4.0% | 4.6% | 7.2% | 5.9% | 4.5% | -1.4% |
|
|---|
| ROIC | 34.9% | 43.1% | 47.5% | 39.7% | 38.2% | -1.5% |
| ROE | 34.8% | 35.1% | 57.3% | 55.7% | 61.5% | 5.8% |
| Net Debt/EBITDA | 0.4x | 0.3x | 0.3x | 0.5x | 0.5x | -0.0x |
| Interest expence / Average debt | 2.2% | 2.0% | 2.7% | | | |
People
|
|---|
| Insider ownership | 0.2% | 0.2% | 0.2% | | | |
| Employees | 29,865 | 29,714 | 29,888 | | | |
| Revenue/Employee, th. $ | 448 | 504 | 528 | | | |
Texas Instruments Incorporated ($TXN) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 3,329 | 3,239 | 3,817 | 4,076 | | -7.4% | -11.7% | 1.2% | 21.7% |
| EBITDA | 1,494 | 1,477 | 1,859 | 2,056 | | -9.7% | -17.4% | -1.1% | 35.7% |
| Net Income | 1,174 | 1,380 | 1,353 | 1,688 | | -3.5% | 5.7% | -5.1% | 57.8% |
Balance Sheet
|
|---|
| Cash | 2,518 | 4,294 | 2,822 | 3,107 | | -32.3% | 12.6% | -27.5% | 27.5% |
| Short Term Debt | 1,051 | 551 | 550 | 550 | | 28.2% | -58.3% | -4.0% | -4.0% |
| Long Term Debt | 5,499 | 6,245 | 6,247 | 6,248 | | 3.1% | 29.1% | 12.1% | 12.3% |
Ratios
|
|---|
| Gross Margin | 62.7% | 64.3% | 64.3% | 64.9% | | -0.2% | -0.1% | -0.6% | 2.3% |
| EBITDA Margin | 44.9% | 45.6% | 48.7% | 50.4% | | -1.2% | -3.2% | -1.2% | 5.2% |
| Net Income Margin | 35.3% | 42.6% | 35.4% | 41.4% | | 1.4% | 7.0% | -2.3% | 9.5% |
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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inphi Corporation ($IPHI) | - | 30.8% | -15.4% | 24.2% | 86.8% |
| Sequans Communications S.A. ($SQNS) | - | 5.9% | -16.6% | -23.3% | 65.0% |
| MaxLinear, Inc ($MXL) | - | 8.4% | -8.4% | -17.6% | 50.9% |
| Advanced Micro Devices, Inc. ($AMD) | - | 21.6% | 23.3% | 4.0% | 45.0% |
| Kopin Corporation ($KOPN) | - | 23.0% | -12.1% | 20.7% | 35.9% |
| |
|---|
| Median (43 companies) | 1.2% | 10.9% | 4.4% | -3.0% | 2.8% |
|---|
| Texas Instruments Incorporated ($TXN) | - | 11.9% | 5.5% | -8.9% | 0.5% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| CEVA, Inc. ($CEVA) | 91.6% | 92.1% | 89.8% | 88.4% | 89.3% |
| Universal Display Corporation ($OLED) | 83.9% | 80.8% | 75.5% | 78.5% | 80.1% |
| Rambus, Inc. ($RMBS) | 80.1% | 79.9% | 76.8% | 77.1% | 75.0% |
| Analog Devices, Inc. ($ADI) | 65.1% | 59.9% | 68.3% | 67.0% | 65.9% |
| MoSys, Inc. ($MOSY) | 49.0% | 46.9% | 61.8% | 61.0% | 65.7% |
| |
|---|
| Median (43 companies) | 47.2% | 48.6% | 50.2% | 50.4% | 49.2% |
|---|
| Texas Instruments Incorporated ($TXN) | 61.8% | 64.3% | 65.1% | 63.7% | 64.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Intel Corp ($INTC) | 35.2% | 41.7% | 45.7% | 45.9% | 46.7% |
| Broadcom Inc. ($AVGO) | 19.9% | 40.4% | 44.2% | 40.9% | 46.2% |
| Universal Display Corporation ($OLED) | 44.8% | 51.6% | 35.3% | 48.0% | 45.9% |
| Analog Devices, Inc. ($ADI) | 36.2% | 32.1% | 43.2% | 42.1% | 42.0% |
| Micron Technology, Inc. ($MU) | 25.4% | 47.9% | 65.0% | 54.7% | 40.4% |
| |
|---|
| Median (41 companies) | 9.2% | 10.7% | 9.3% | 12.9% | 17.3% |
|---|
| Texas Instruments Incorporated ($TXN) | 43.5% | 46.7% | 48.6% | 47.5% | 47.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Micron Technology, Inc. ($MU) | 46.9% | 23.3% | 29.2% | 41.8% | 38.4% |
| Sequans Communications S.A. ($SQNS) | 11.8% | 13.3% | 22.9% | 29.6% | 27.1% |
| Intel Corp ($INTC) | 16.2% | 18.8% | 21.4% | 22.5% | 18.6% |
| First Solar, Inc. ($FSLR) | 7.9% | 17.5% | 33.0% | 21.8% | 15.4% |
| Power Integrations, Inc. ($POWI) | 3.1% | 7.5% | 5.9% | 5.7% | 14.5% |
| |
|---|
| Median (40 companies) | 3.6% | 4.7% | 4.2% | 3.7% | 3.6% |
|---|
| Texas Instruments Incorporated ($TXN) | 4.0% | 4.6% | 7.2% | 5.9% | 4.5% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Applied Materials Inc ($AMAT) | 19.0% | 31.2% | 36.4% | 27.7% | 32.1% |
| Advanced Micro Devices, Inc. ($AMD) | -21.7% | 7.3% | 21.6% | 21.5% | 31.8% |
| QUALCOMM Incorporated ($QCOM) | 15.8% | 5.7% | 2.2% | 38.0% | 28.1% |
| NVIDIA Corporation ($NVDA) | 13.1% | 27.3% | 35.3% | 36.9% | 22.7% |
| Skyworks Solutions, Inc. ($SWKS) | 33.7% | 33.1% | 32.3% | 23.2% | 21.2% |
| |
|---|
| Median (45 companies) | 1.4% | 3.2% | 2.2% | 2.2% | 5.3% |
|---|
| Texas Instruments Incorporated ($TXN) | 34.9% | 43.1% | 47.5% | 39.7% | 38.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| SunPower Corporation ($SPWR) | - | - | - | - | 8.2x |
| MACOM Technology Solutions Holdings, Inc. ($MTSI) | 3.0x | 7.2x | 98.6x | - | 6.6x |
| Rambus, Inc. ($RMBS) | -0.1x | -0.1x | - | - | 5.9x |
| Inphi Corporation ($IPHI) | 4.5x | 33.7x | 32.2x | 4.5x | 3.4x |
| Canadian Solar Inc. ($CSIQ) | 11.3x | 6.8x | 2.7x | 3.4x | 3.3x |
| |
|---|
| Median (31 companies) | -0.0x | 0.4x | 0.3x | 0.5x | 0.1x |
|---|
| Texas Instruments Incorporated ($TXN) | 0.4x | 0.3x | 0.3x | 0.5x | 0.5x |
