Texas Instruments Q3 profit jumps 22%, beats estimates

Texas Instruments (TXN) reported a 22% jump in earnings for the third quarter helped by the management of costs and expenses, lower income taxes provision and a rise in revenue. The bottom line came in ahead of analysts’ expectations, while the top line missed consensus estimates. Following this, the stock inched down over 5% in the after-market session.

Net income for the quarter climbed 22% to $1.57 billion and earnings jumped 25% to $1.58 per share. Revenue rose 4% to $4.26 billion. However, demand for the company’s products slowed across most markets.

Looking ahead into the fourth quarter, the company expects revenue in the range of $3.60 billion to $3.90 billion and earnings in the range of $1.14 to $1.34 per share. The company still sees its ongoing annual operating tax rate to be about 20% in 2018 and 16% starting in 2019.

In core businesses, Analog revenue for the third quarter grew 8% year-over-year helped by Power and Signal Chain despite a decline in High Volume. Embedded Processing revenue declined 4% from the same quarter a year ago due to lower demand for Processors.

In September, Texas Instruments said it would lift dividend by 24% and also increased its share repurchase authorizations by $12 billion, which together reflect its commitment to return all free cash flow to owners.

In the past twelve months, the company has returned $6.2 billion to owners through stock repurchases and dividends. Over the last 12 months, dividends represented 41% of free cash flow, emphasizing their sustainability. The company remained consistent in returning to owners all of its free cash flow.

Cash flow from operations of $7 billion for the trailing 12 months underscored the strength of the business model. Free cash flow for the trailing 12 months was $5.9 billion, or 37.5% of revenue. This reflects the quality of the product portfolio, as well as the efficiency of the manufacturing strategy, including the benefit of 300-millimeter Analog production.

Shares of Texas Instruments ended Tuesday’s regular session up 0.53% at $100.25 on the Nasdaq. The stock has fallen over 4% in the year so far, while it has risen over 4% in the past year.

Listen to publicly listed companies’ earnings conference calls along with the edited closed caption text.