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DALLAS, Jan. 25, 2022 /PRNewswire/ -- Texas Instruments Incorporated (TI) (Nasdaq: TXN) today reported fourth quarter revenue of $4.83 billion, net income of $2.14 billion and earnings per share of $2.27. Earnings per share included a 4-cent net cost that was not in the company’s original guidance.

Regarding the company’s performance and returns to shareholders, Rich Templeton, TI’s chairman, president and CEO, made the following comments:

  • "Revenue increased 19% from the same quarter a year ago driven by strong demand in industrial and automotive markets. Analog revenue grew 20% and Embedded Processing grew 6% from the year-ago quarter.
  • "Our cash flow from operations of $8.8 billion for the year again underscored the strength of our business model. Free cash flow for the year was $6.3 billion and 34% of revenue. This reflects the quality of our product portfolio, as well as the efficiency of our manufacturing strategy, including the benefit of 300-millimeter production.
  • "We returned $4.4 billion to owners in 2021 through dividends and stock repurchases. For the year, our dividend represented 62% of free cash flow, underscoring its sustainability. Together, our dividends and stock repurchases reflect our continued commitment to return all free cash flow to our owners.
  • "TI’s first quarter outlook is for revenue in the range of $4.50 billion to $4.90 billion and earnings per share between $2.01 and $2.29. We expect our 2022 annual operating tax rate to be about 14%."

Free cash flow, a non-GAAP financial measure, is cash flow from operations less capital expenditures.

Earnings summary

Amounts are in millions of dollars, except per-share amounts.


Q4 2021


Q4 2020


Change

Revenue

$       4,832


$       4,076


19%

Operating profit

$       2,503


$       1,813


38%

Net income

$       2,138


$       1,688


27%

Earnings per share

$         2.27


$         1.80


26%

 

Cash generation

Amounts are in millions of dollars.




Trailing 12 Months


Q4 2021


Q4 2021


Q4 2020


Change

Cash flow from operations

$       2,357


$        8,756


$        6,139


43%

Capital expenditures

$       1,282


$        2,462


$           649


279%

Free cash flow

$       1,075


$        6,294


$        5,490


15%

Free cash flow % of revenue



34.3%


38.0%



 

Cash return

Amounts are in millions of dollars.




Trailing 12 Months


Q4 2021


Q4 2021


Q4 2020


Change

Dividends paid

$       1,062


$       3,886


$       3,426


13%

Stock repurchases

$          142


$          527


$       2,553


(79)%

Total cash returned

$       1,204


$       4,413


$       5,979


(26)%

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


Consolidated Statements of Income


For Three Months Ended

December 31,


For Years Ended

December 31,

(In millions, except per-share amounts)


2021


2020


2021


2020

Revenue


$          4,832


$           4,076


$        18,344


$         14,461

Cost of revenue (COR)


1,482


1,430


5,968


5,192

Gross profit


3,350


2,646


12,376


9,269

Research and development (R&D)


389


388


1,554


1,530

Selling, general and administrative (SG&A)


404


398


1,666


1,623

Acquisition charges



47


142


198

Restructuring charges/other


54



54


24

Operating profit


2,503


1,813


8,960


5,894

Other income (expense), net (OI&E)


9


162


143


313

Interest and debt expense


49


48


184


190

Income before income taxes


2,463


1,927


8,919


6,017

Provision for income taxes


325


239


1,150


422

Net income


$          2,138


$           1,688


$          7,769


$           5,595










Diluted earnings per common share


$            2.27


$             1.80


$            8.26


$             5.97










Average shares outstanding:









Basic


924


919


923


921

Diluted


936


932


936


933










Cash dividends declared per common share


$            1.15


$             1.02


$            4.21


$             3.72











Supplemental Information






Our annual operating tax rate, which does not include discrete tax items, was 14% in both periods.










Provision for income taxes is based on the following:














Operating taxes (calculated using the estimated annual effective tax rate)


$             346


$              272


$          1,280


$              833

Discrete tax items


(21)


(33)


(130)


(411)

Provision for income taxes (effective taxes)


$             325


$              239


$          1,150


$              422










A portion of net income is allocated to unvested restricted stock units (RSUs) on which we pay dividend equivalents. Diluted EPS is calculated using the following:










Net income


$          2,138


$           1,688


$          7,769


$           5,595

Income allocated to RSUs


(9)


(8)


(33)


(27)

Income allocated to common stock for diluted EPS


$          2,129


$           1,680


$          7,736


$           5,568

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


Consolidated Balance Sheets


December 31,

(In millions, except par value)


2021


2020

Assets





Current assets:





Cash and cash equivalents


$             4,631


$             3,107

Short-term investments


5,108


3,461

Accounts receivable, net of allowances of ($8) and ($11)


1,701


1,414

Raw materials


245


180

Work in process


1,067


964

Finished goods


598


811

Inventories


1,910


1,955

Prepaid expenses and other current assets


335


302

Total current assets


13,685


10,239

Property, plant and equipment at cost


7,858


5,781

Accumulated depreciation


(2,717)


(2,512)

Property, plant and equipment


5,141


3,269

Goodwill


4,362


4,362

Deferred tax assets


263


343

Capitalized software licenses


85


122

Overfunded retirement plans


392


246

Other long-term assets


748


770

Total assets


$           24,676


$           19,351






Liabilities and stockholders’ equity





Current liabilities:





Current portion of long-term debt


$                500


$                550

Accounts payable


653


415

Accrued compensation


775


767

Income taxes payable


121


134

Accrued expenses and other liabilities


520


524

Total current liabilities


2,569


2,390

Long-term debt


7,241


6,248

Underfunded retirement plans


79


131

Deferred tax liabilities


87


90

Other long-term liabilities


1,367


1,305

Total liabilities


11,343


10,164

Stockholders’ equity:





Preferred stock, $25 par value. Shares authorized – 10; none issued



Common stock, $1 par value. Shares authorized – 2,400; shares issued – 1,741


1,741


1,741

Paid-in capital


2,630


2,333

Retained earnings


45,919


42,051

Treasury common stock at cost





Shares: 2021 – 817; 2020 – 821


(36,800)


(36,578)

Accumulated other comprehensive income (loss), net of taxes (AOCI)


(157)


(360)

Total stockholders’ equity


13,333


9,187

Total liabilities and stockholders’ equity


$           24,676


$           19,351

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


Consolidated Statements of Cash Flows


For Three Months Ended

December 31,


For Years Ended

December 31,

(In millions)


2021


2020


2021


2020

Cash flows from operating activities









Net income


$             2,138


$             1,688


$             7,769


$             5,595

Adjustments to net income:









Depreciation


200


180


755


733

Amortization of acquisition-related intangibles



47


142


198

Amortization of capitalized software


13


16


57


61

Stock compensation


50


42


230


224

Gains on sales of assets


(50)


(1)


(57)


(4)

Deferred taxes


(4)


(22)


15


(137)

Increase (decrease) from changes in:









Accounts receivable


(48)


(22)


(287)


(340)

Inventories


(47)


117


45


46

Prepaid expenses and other current assets


(42)


(79)


57


(79)

Accounts payable and accrued expenses


(54)


3


33


63

Accrued compensation


110


111


7


63

Income taxes payable


34


135


(20)


(181)

Changes in funded status of retirement plans


14


(25)


62


(9)

Other


43


(65)


(52)


(94)

Cash flows from operating activities


2,357


2,125


8,756


6,139










Cash flows from investing activities









Capital expenditures


(1,282)


(212)


(2,462)


(649)

Proceeds from asset sales


68


1


75


4

Purchases of short-term investments


(3,697)


(2,351)


(10,124)


(5,786)

Proceeds from short-term investments


2,708


1,587


8,478


5,545

Other


(26)


(21)


(62)


(36)

Cash flows from investing activities


(2,229)


(996)


(4,095)


(922)










Cash flows from financing activities









Proceeds from issuance of long-term debt




1,495


1,498

Repayment of debt




(550)


(500)

Dividends paid


(1,062)


(937)


(3,886)


(3,426)

Stock repurchases


(142)


(15)


(527)


(2,553)

Proceeds from common stock transactions


52


114


377


470

Other


(8)


(6)


(46)


(36)

Cash flows from financing activities


(1,160)


(844)


(3,137)


(4,547)










Net change in cash and cash equivalents


(1,032)


285


1,524


670

Cash and cash equivalents at beginning of period


5,663


2,822


3,107


2,437

Cash and cash equivalents at end of period


$             4,631


$             3,107


$             4,631


$             3,107

 

Quarterly segment results

Amounts are in millions of dollars.


Q4 2021


Q4 2020


Change

Analog:






Revenue

$       3,758


$       3,127


20%

Operating profit

$       2,098


$       1,514


39%

Embedded Processing:






Revenue

$          764


$          720


6%

Operating profit

$          293


$          249


18%

Other:






Revenue

$          310


$          229


35%

Operating profit*

$          112


$            50


124%


* Includes acquisition charges and restructuring charges/other.

 

Annual segment results

Amounts are in millions of dollars.


2021


2020


Change

Analog:






Revenue

$     14,050


$     10,886


29%

Operating profit

$       7,393


$       4,912


51%

Embedded Processing:






Revenue

$       3,049


$       2,570


19%

Operating profit

$       1,174


$          743


58%

Other:






Revenue

$       1,245


$       1,005


24%

Operating profit*

$          393


$          239


64%


* Includes acquisition charges and restructuring charges/other.

 

Non-GAAP financial information

This release includes references to free cash flow and ratios based on that measure. These are financial measures that were not prepared in accordance with GAAP. Free cash flow was calculated by subtracting capital expenditures from the most directly comparable GAAP measure, cash flows from operating activities (also referred to as cash flow from operations).

We believe that free cash flow and the associated ratios provide insight into our liquidity, our cash-generating capability and the amount of cash potentially available to return to shareholders, as well as insight into our financial performance. These non-GAAP measures are supplemental to the comparable GAAP measures.

Reconciliation to the most directly comparable GAAP measures is provided in the table below.

Amounts are in millions of dollars.


For Years Ended

December 31,




2021


2020


Change

Cash flow from operations (GAAP)

$

8,756


$

6,139


43%

Capital expenditures


(2,462)



(649)



Free cash flow (non-GAAP)

$

6,294


$

5,490


15%









Revenue

$

18,344


$

14,461











Cash flow from operations as a percentage of revenue (GAAP)


47.7%



42.5%



Free cash flow as a percentage of revenue (non-GAAP)


34.3%



38.0%



 

This release also includes references to an annual operating tax rate, a non-GAAP term we use to describe the estimated annual effective tax rate, a GAAP measure that by definition does not include discrete tax items. We believe the term annual operating tax rate helps differentiate from the effective tax rate, which includes discrete tax items.

Notice regarding forward-looking statements

This release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as TI or its management "believes," "expects," "anticipates," "foresees," "forecasts," "estimates" or other words or phrases of similar import. Similarly, statements herein that describe TI’s business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements.

We urge you to carefully consider the following important factors that could cause actual results to differ materially from the expectations of TI or our management:

  • The duration and scope of the COVID-19 pandemic, government and other third-party responses to it and the consequences for the global economy, including to our business and the businesses of our suppliers, customers and distributors;
  • Economic, social and political conditions, and natural events in the countries in which we, our customers or our suppliers operate, including global trade policies;
  • Market demand for semiconductors, particularly in the industrial and automotive markets, and customer demand that differs from forecasts;
  • Our ability to compete in products and prices in an intensely competitive industry;
  • Evolving cybersecurity and other threats relating to our information technology systems or those of our customers or suppliers;
  • Our ability to successfully implement and realize opportunities from strategic, business and organizational changes, or our ability to realize our expectations regarding the amount and timing of associated restructuring charges and cost savings;
  • Our ability to develop, manufacture and market innovative products in a rapidly changing technological environment, and our timely implementation of new manufacturing technologies and installation of manufacturing equipment;
  • Availability and cost of raw materials, utilities, manufacturing equipment, third-party manufacturing services and manufacturing technology;
  • Product liability, warranty or other claims relating to our products, manufacturing, delivery, services, design or communications, or recalls by our customers for a product containing one of our parts;
  • Compliance with or changes in the complex laws, rules and regulations to which we are or may become subject, or actions of enforcement authorities, that restrict our ability to operate our business or subject us to fines, penalties or other legal liability;
  • Changes in tax law and accounting standards that impact the tax rate applicable to us, the jurisdictions in which profits are determined to be earned and taxed, adverse resolution of tax audits, increases in tariff rates, and the ability to realize deferred tax assets;
  • A loss suffered by one of our customers or distributors with respect to TI-consigned inventory;
  • Financial difficulties of our distributors or semiconductor distributors’ promotion of competing product lines to our detriment; or disputes with current or former distributors;
  • Losses or curtailments of purchases from key customers or the timing and amount of distributor and other customer inventory adjustments;
  • Our ability to maintain or improve profit margins, including our ability to utilize our manufacturing facilities at sufficient levels to cover our fixed operating costs, in an intensely competitive and cyclical industry and changing regulatory environment;
  • Our ability to maintain and enforce a strong intellectual property portfolio and maintain freedom of operation in all jurisdictions where we conduct business; or our exposure to infringement claims;
  • Instability in the global credit and financial markets;
  • Increases in health care and pension benefit costs;
  • Our ability to recruit and retain skilled personnel, and effectively manage key employee succession; and
  • Impairments of our non-financial assets.

For a more detailed discussion of these factors, see the Risk factors discussion in Item 1A of TI’s most recent Form 10-K. The forward-looking statements included in this release are made only as of the date of this release, and we undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances. If we do update any forward-looking statement, you should not infer that we will make additional updates with respect to that statement or any other forward-looking statement.

About Texas Instruments

Texas Instruments Incorporated (Nasdaq: TXN) is a global semiconductor company that designs, manufactures, tests and sells analog and embedded processing chips for markets such as industrial, automotive, personal electronics, communications equipment and enterprise systems. Our passion to create a better world by making electronics more affordable through semiconductors is alive today, as each generation of innovation builds upon the last to make our technology smaller, more efficient, more reliable and more affordable – making it possible for semiconductors to go into electronics everywhere. We think of this as Engineering Progress. It’s what we do and have been doing for decades. Learn more at TI.com.

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SOURCE Texas Instruments Incorporated