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TI reports first quarter 2022 financial results and shareholder returns

TI reports first quarter 2022 financial results and shareholder returns

TI reports first quarter 2022 financial results and shareholder returns

Conference call on TI website at 3:30 p.m. Central time today

www.ti.com/ir

PR Newswire

DALLAS, April 26, 2022

DALLAS, April 26, 2022 /PRNewswire/ -- Texas Instruments Incorporated (TI) (Nasdaq: TXN) today reported first quarter revenue of $4.91 billion, net income of $2.20 billion and earnings per share of $2.35. 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 14% from the same quarter a year ago primarily due to growth in industrial and automotive.
  • "Our cash flow from operations of $9.1 billion for the trailing 12 months again underscored the strength of our business model. Free cash flow for the same period was $6.5 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.
  • "Over the past 12 months we invested $3.2 billion in R&D and SG&A, invested $2.6 billion in capital expenditures and returned $5.0 billion to owners.
  • "TI's second quarter outlook is for revenue in the range of $4.20 billion to $4.80 billion and earnings per share between $1.84 and $2.26. This outlook comprehends an impact due to reduced demand from COVID-19 restrictions in China. We continue to 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.



Q1 2022


Q1 2021


Change


Revenue


$

4,905


$

4,289


14%


Operating profit


$

2,563


$

1,939


32%


Net income


$

2,201


$

1,753


26%


Earnings per share


$

2.35


$

1.87


26%


 

Cash generation

Amounts are in millions of dollars.






Trailing 12 Months



Q1 2022


Q1 2022


Q1 2021


Change


Cash flow from operations


$

2,144


$

9,050


$

7,138


27%


Capital expenditures


$

443


$

2,597


$

796


226%


Free cash flow


$

1,701


$

6,453


$

6,342


2%


Free cash flow % of revenue






34.0%



41.1%




 

Cash return

Amounts are in millions of dollars.






Trailing 12 Months




Q1 2022


Q1 2022


Q1 2021


Change


Dividends paid


$

1,063


$

4,009


$

3,525


14%


Stock repurchases


$

589


$

1,016


$

1,012


0%


Total cash returned


$

1,652


$

5,025


$

4,537


11%


 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES




Consolidated Statements of Income


 

For Three Months Ended

March 31,


(In millions, except per-share amounts)


2022


2021


Revenue


$

4,905


$

4,289


Cost of revenue (COR)



1,463



1,492


Gross profit



3,442



2,797


Research and development (R&D)



391



386


Selling, general and administrative (SG&A)



422



425


Acquisition charges





47


Restructuring charges/other



66




Operating profit



2,563



1,939


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



15



46


Interest and debt expense



52



46


Income before income taxes



2,526



1,939


Provision for income taxes



325



186


Net income


$

2,201


$

1,753










Diluted earnings per common share


$

2.35


$

1.87










Average shares outstanding:








     Basic



923



922


     Diluted



934



935










Cash dividends declared per common share


$

1.15


$

1.02












Supplemental Information

(Quarterly, except as noted)











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)


$

361


$

275


Discrete tax items



(36)



(89)


Provision for income taxes (effective taxes)


$

325


$

186










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


$

2,201


$

1,753


Income allocated to RSUs



(9)



(8)


Income allocated to common stock for diluted EPS


$

2,192


$

1,745


 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES




Consolidated Balance Sheets



March 31,   


(In millions, except par value)


2022


2021


Assets








Current assets:








     Cash and cash equivalents


$

3,505


$

2,442


     Short-term investments



6,320



4,244


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



1,795



1,584


         Raw materials



265



183


         Work in process



1,151



980


         Finished goods



644



727


     Inventories



2,060



1,890


     Prepaid expenses and other current assets



330



245


     Total current assets



14,010



10,405


Property, plant and equipment at cost



8,236



5,967


     Accumulated depreciation



(2,797)



(2,536)


     Property, plant and equipment



5,439



3,431


Goodwill



4,362



4,362


Deferred tax assets



273



331


Capitalized software licenses



91



113


Overfunded retirement plans



383



235


Other long-term assets



718



762


Total assets


$

25,276


$

19,639










Liabilities and stockholders' equity








Current liabilities:








     Current portion of long-term debt


$

500


$


     Accounts payable



641



554


     Accrued compensation



386



388


     Income taxes payable



405



278


     Accrued expenses and other liabilities



596



480


     Total current liabilities



2,528



1,700


Long-term debt



7,242



6,250


Underfunded retirement plans



81



130


Deferred tax liabilities



94



88


Other long-term liabilities



1,314



1,305


Total liabilities



11,259



9,473


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



2,667



2,391


     Retained earnings



47,053



42,860


     Treasury common stock at cost








          Shares: March 31, 2022 – 819; March 31, 2021 – 818



(37,291)



(36,479)


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



(153)



(347)


Total stockholders' equity



14,017



10,166


Total liabilities and stockholders' equity


$

25,276


$

19,639



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

March 31,


(In millions)



2022


2021


Cash flows from operating activities









     Net income



$

2,201


$

1,753


     Adjustments to net income:









         Depreciation




200



179


         Amortization of acquisition-related intangibles






47


         Amortization of capitalized software




14



15


         Stock compensation




74



61


         Gains on sales of assets




(2)



(1)


         Deferred taxes




(1)



8


     Increase (decrease) from changes in:









         Accounts receivable




(94)



(170)


         Inventories




(150)



65


         Prepaid expenses and other current assets




21



73


         Accounts payable and accrued expenses




11



69


         Accrued compensation




(388)



(379)


         Income taxes payable




284



131


     Changes in funded status of retirement plans




21



28


     Other




(47)



(29)


Cash flows from operating activities




2,144



1,850











Cash flows from investing activities









     Capital expenditures




(443)



(308)


     Proceeds from asset sales




2



1


     Purchases of short-term investments




(3,988)



(2,782)


     Proceeds from short-term investments




2,774



2,000


     Other




(13)



(20)


Cash flows from investing activities




(1,668)



(1,109)











Cash flows from financing activities









     Repayment of debt






(550)


     Dividends paid




(1,063)



(940)


     Stock repurchases




(589)



(100)


     Proceeds from common stock transactions




57



196


     Other




(7)



(12)


Cash flows from financing activities




(1,602)



(1,406)











Net change in cash and cash equivalents




(1,126)



(665)


Cash and cash equivalents at beginning of period




4,631



3,107


Cash and cash equivalents at end of period



$

3,505


$

2,442


 

Segment results

Amounts are in millions of dollars.



Q1 2022


Q1 2021


Change 

Analog:










     Revenue


$

3,816


$

3,280


16%


     Operating profit


$

2,150


$

1,646


31%


Embedded Processing:










     Revenue


$

782


$

767


2%


     Operating profit


$

315


$

287


10%


Other:










     Revenue


$

307


$

242


27%


     Operating profit*


$

98


$

6


1,533%



* 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 12 Months Ended

March 31,








2022


2021


Change


Cash flow from operations (GAAP)



$

9,050



$

7,138



27%


Capital expenditures




(2,597)




(796)





Free cash flow (non-GAAP)



$

6,453



$

6,342



2%















Revenue



$

18,960



$

15,421


















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




47.7%




46.3%





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




34.0%




41.1%





 

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, 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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