TI reports Q4 2021 and 2021 financial results and shareholder returns
Conference call on TI website at 3:15 p.m. Central time today
www.ti.com/ir

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 .

TXN-G

 

 

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