TI reports third quarter 2022 financial results and shareholder returns
Conference call on TI website at 3:30 p.m. Central time today
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DALLAS , Oct. 25, 2022 /PRNewswire/ -- Texas Instruments Incorporated (TI) (Nasdaq: TXN) today reported third quarter revenue of $5.24 billion, net income of $2.30 billion and earnings per share of $2.47. Earnings per share included a 2-cent benefit for items that were 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 1% sequentially and increased 13% from the same quarter a year ago, about as expected. During the quarter we experienced expected weakness in personal electronics and expanding weakness across industrial.
  • "Our cash flow from operations of $9.0 billion for the trailing 12 months again underscored the strength of our business model. Free cash flow for the same period was $5.9 billion and 29% of revenue. This reflects the quality of our product portfolio, as well as the efficiency of our manufacturing strategy, including the benefit of 300-mm production.
  • "Over the past 12 months we invested $3.3 billion in R&D and SG&A, invested $3.1 billion in capital expenditures and returned $7.1 billion to owners.
  • "TI's fourth quarter outlook is for revenue in the range of $4.40 billion to $4.80 billion and earnings per share between $1.83 and $2.11. We continue to expect our 2022 effective tax rate to be about 14%."

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

Earnings summary

(In millions, except per-share amounts)

 

Q3 2022

 

Q3 2021

 

Change  

 

Revenue

 

$

5,241

 

$

4,643

 

13 %

 

Operating profit

 

$

2,678

 

$

2,305

 

16 %

 

Net income

 

$

2,295

 

$

1,947

 

18 %

 

Earnings per share

 

$

2.47

 

$

2.07

 

19 %

 

 

Cash generation

       

Trailing 12 Months

 

(In millions)

 

Q3 2022

 

Q3 2022

 

Q3 2021

 

Change  

 

Cash flow from operations

 

$

2,766

 

$

9,035

 

$

8,524

 

6 %

 

Capital expenditures

 

$

790

 

$

3,112

 

$

1,392

 

124 %

 

Free cash flow

 

$

1,976

 

$

5,923

 

$

7,132

 

(17) %

 

Free cash flow % of revenue

     

29.3 %

 

40.6 %

     

 

Cash return

       

Trailing 12 Months

 

(In millions)

 

Q3 2022

 

Q3 2022

 

Q3 2021

 

Change  

 

Dividends paid

 

$

1,051

 

$

4,236

 

$

3,761

 

13 %

 

Stock repurchases

 

$

996

 

$

2,909

 

$

400

 

627 %

 

Total cash returned

 

$

2,047

 

$

7,145

 

$

4,161

 

72 %

 

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

 
   

Consolidated Statements of Income

 

For Three Months Ended

September 30,

 

(In millions, except per-share amounts)

 

2022

 

2021

 

Revenue

 

$

5,241

 

$

4,643

 

Cost of revenue (COR)

 

1,624

 

1,491

 

Gross profit

 

3,617

 

3,152

 

Research and development (R&D)

 

431

 

388

 

Selling, general and administrative (SG&A)

 

431

 

412

 

Acquisition charges

 

 

47

 

Restructuring charges/other

 

77

 

 

Operating profit

 

2,678

 

2,305

 

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

 

33

 

15

 

Interest and debt expense

 

53

 

45

 

Income before income taxes

 

2,658

 

2,275

 

Provision for income taxes

 

363

 

328

 

Net income

 

$

2,295

 

$

1,947

 
               

Diluted earnings per common share

 

$

2.47

 

$

2.07

 
               

Average shares outstanding:

         

     Basic

 

913

 

923

 

     Diluted

 

923

 

936

 
           

Cash dividends declared per common share

 

$

1.15

 

$

1.02

 
               

Supplemental Information

(Quarterly, except as noted)

           

Provision for income taxes is based on the following:

     

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

 

$

391

 

$

337

 

Discrete tax items

 

(28)

 

(9)

 

Provision for income taxes (effective taxes)

 

$

363

 

$

328

 
               

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

 

$

2,295

 

$

1,947

 

Income allocated to RSUs

 

(11)

 

(9)

 

Income allocated to common stock for diluted EPS

 

$

2,284

 

$

1,938

 

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

 

Consolidated Balance Sheets

 

September 30,

(In millions, except par value)

 

2022

 

2021

Assets

       

Current assets:

       

     Cash and cash equivalents

 

$

3,169

 

$

5,663

     Short-term investments

 

5,921

 

4,119

     Accounts receivable, net of allowances of ($10) and ($9)

 

2,040

 

1,653

     Raw materials

 

333

 

224

     Work in process

 

1,347

 

1,034

     Finished goods

 

724

 

605

     Inventories

 

2,404

 

1,863

     Prepaid expenses and other current assets

 

238

 

287

     Total current assets

 

13,772

 

13,585

Property, plant and equipment at cost

 

9,491

 

6,661

     Accumulated depreciation

 

(3,006)

 

(2,640)

     Property, plant and equipment

 

6,485

 

4,021

Goodwill

 

4,362

 

4,362

Deferred tax assets

 

291

 

309

Capitalized software licenses

 

75

 

88

Overfunded retirement plans

 

273

 

252

Other long-term assets

 

799

 

656

Total assets

 

$

26,057

 

$

23,273

         

Liabilities and stockholders' equity

       

Current liabilities:

       

     Current portion of long-term debt

 

$

499

 

$

500

     Accounts payable

 

780

 

534

     Accrued compensation

 

662

 

665

     Income taxes payable

 

123

 

101

     Accrued expenses and other liabilities

 

734

 

613

     Total current liabilities

 

2,798

 

2,413

Long-term debt

 

7,438

 

7,239

Underfunded retirement plans

 

69

 

129

Deferred tax liabilities

 

92

 

86

Other long-term liabilities

 

1,153

 

1,255

Total liabilities

 

11,550

 

11,122

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

 

2,877

 

2,563

     Retained earnings

 

49,519

 

44,847

     Treasury common stock at cost

       

     Shares: September 30, 2022 – 831; September 30, 2021 – 817

 

(39,476)

 

(36,687)

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

 

(154)

 

(313)

Total stockholders' equity

 

14,507

 

12,151

Total liabilities and stockholders' equity

 

$

26,057

 

$

23,273

 

Certain amounts in the prior period's balance sheet have been reclassified to conform to the current presentation.

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

 

Consolidated Statements of Cash Flows

 

For Three Months Ended

September 30,

(In millions)

 

2022

 

2021

Cash flows from operating activities

       

     Net income

 

$

2,295

 

$

1,947

     Adjustments to net income:

       

     Depreciation

 

249

 

192

     Amortization of acquisition-related intangibles

 

 

47

     Amortization of capitalized software

 

13

 

14

     Stock compensation

 

68

 

50

     Gains on sales of assets

 

 

(3)

     Deferred taxes

 

(3)

 

12

     Increase (decrease) from changes in:

       

     Accounts receivable

 

150

 

(62)

     Inventories

 

(205)

 

(13)

     Prepaid expenses and other current assets

 

25

 

76

     Accounts payable and accrued expenses

 

42

 

35

     Accrued compensation

 

140

 

135

     Income taxes payable

 

21

 

(10)

     Changes in funded status of retirement plans

 

56

 

13

     Other

 

(85)

 

(5)

Cash flows from operating activities

 

2,766

 

2,428

         

Cash flows from investing activities

       

     Capital expenditures

 

(790)

 

(486)

     Proceeds from asset sales

 

 

3

     Purchases of short-term investments

 

(4,346)

 

(1,693)

     Proceeds from short-term investments

 

3,033

 

1,315

     Other

 

(10)

 

(23)

Cash flows from investing activities

 

(2,113)

 

(884)

         

Cash flows from financing activities

       

     Proceeds from issuance of long-term debt

 

695

 

1,495

     Dividends paid

 

(1,051)

 

(942)

     Stock repurchases

 

(996)

 

(139)

     Proceeds from common stock transactions

 

78

 

75

     Other

 

(12)

 

(19)

Cash flows from financing activities

 

(1,286)

 

470

         

Net change in cash and cash equivalents

 

(633)

 

2,014

Cash and cash equivalents at beginning of period

 

3,802

 

3,649

Cash and cash equivalents at end of period

 

$

3,169

 

$

5,663

 

Segment results

(In millions)

 

Q3 2022

 

Q3 2021

 

Change  

 

Analog:

             

     Revenue

 

$

3,993

 

$

3,548

 

13 %

 

     Operating profit

 

$

2,185

 

$

1,871

 

17 %

 

Embedded Processing:

             

     Revenue

 

$

821

 

$

738

 

11 %

 

     Operating profit

 

$

321

 

$

282

 

14 %

 

Other:

             

     Revenue

 

$

427

 

$

357

 

20 %

 

     Operating profit*

 

$

172

 

$

152

 

13 %

 
   

* 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.

   

For 12 Months Ended

September 30,

   

(In millions)

 

2022

 

2021

 

Change  

 

Cash flow from operations (GAAP)

 

$

9,035

 

$

8,524

 

6 %

 

Capital expenditures

 

(3,112)

 

(1,392)

     

Free cash flow (non-GAAP)

 

$

5,923

 

$

7,132

 

(17) %

 
               

Revenue

 

$

20,190

 

$

17,588

     
                   

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

 

44.7 %

 

48.5 %

     

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

 

29.3 %

 

40.6 %

     

This release also includes references to operating taxes, a non-GAAP term we use to describe taxes calculated using the estimated annual effective tax rate, a GAAP measure that by definition does not include discrete tax items. We believe the term operating taxes helps to differentiate from effective taxes, which include 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, vendors and other third parties;
  • 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, our timely implementation of new manufacturing technologies and installation of manufacturing equipment, and our ability to realize expected returns on significant investments in manufacturing capacity;
  • 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, software, 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;
  • 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 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;
  • 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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SOURCE Texas Instruments Incorporated

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