Texas Instruments Inc. (NASDAQ:TXN) Q4 2019 Earnings Conference Call - Final Transcript

Jan 22, 2020 • 04:30 pm ET

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Texas Instruments Inc. (NASDAQ:TXN) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day and welcome to the Texas Instruments' Fourth Quarter 2019 and 2019 Year-End Earnings Release Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Dave Pahl. Please go ahead, sir.

Executive
Dave Pahl

Good afternoon, and thank you for joining our fourth quarter and 2019 earnings conference call.

Rafael Lizardi, TI's Chief Financial Officer, is with me today. For any of you who missed the release, you can find it on our website at ti.com/ir. This call is being broadcast live over the web and can be accessed through our website. A replay will be available through the web.

This call will include forward-looking statements that involve risks and uncertainties that could cause TI's results to differ materially from management's current expectations. We encourage you to review the notice regarding forward-looking statements contained in the earnings release published today as well as TI's most recent SEC filings for a more complete description.

First, let me provide some information that's important for your calendars. We plan to hold a call to review our capital management strategy on February 4 at 10:00 AM Central Time. Similar to what we've done in the past, Rafael and I will provide insight into our strategy.

For today's call, let me start by summarizing what Rafael and I will be reviewing. I'll be covering the following topics: first, a high-level summary of the financial results for the fourth quarter; second, I'll provide some comments about what we're seeing with added insight by segment and end market and explain why we would characterize the market as showing signs of stabilizing; and finally, since this is the end of the calendar year, I'll provide a summary of our performance by end market for 2019. Rafael will then review profitability, capital management results and then the outlook, after which we'll open the call for Q&A.

Starting with a high level summary of the fourth quarter financial results.

Revenue was $3.35 billion, a decrease of 10% from a year ago, and EPS was $1.12 per share, including a $0.01 benefit not in our original guidance. Revenue came in above the midpoint of our guidance, with the relative strength across all markets. At the Company level, our year-on-year decline abated slightly from 11% in the third quarter to 10% in the fourth quarter. While this is only a marginal improvement, all end markets reduced their rate of decline substantially with the exception of communications equipment where the year-over-year decline increased about as expected given the strength in this end market in the year ago quarter.

In fourth quarter 2019 Analog revenue declined 5% and Embedded Processing revenue declined 20% compared with the same quarter a year ago. Analog's year-on-year rate of decline went from 8% in the third quarter to 5% in the fourth quarter, and Embedded's decline slightly increased from 19% to 20% over the same period.

When we look at the market since 90 days ago, we moved from the third quarter