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TI reports second quarter 2022 financial results and shareholder returns

TXN

DALLAS, July 26, 2022 /PRNewswire/ -- Texas Instruments Incorporated (TI) (Nasdaq: TXN) today reported second quarter revenue of $5.21 billion, net income of $2.29 billion and earnings per share of $2.45.

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 due to growth across markets.
  • "Our cash flow from operations of $8.7 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 30% 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 $2.8 billion in capital expenditures and returned $6.2 billion to owners.
  • "TI's third quarter outlook is for revenue in the range of $4.90 billion to $5.30 billion and earnings per share between $2.23 and $2.51. We 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

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



Q2 2022


Q2 2021


Change


Revenue


$

5,212


$

4,580


14 %


Operating profit


$

2,723


$

2,213


23 %


Net income


$

2,291


$

1,931


19 %


Earnings per share


$

2.45


$

2.05


20 %


Cash generation

Amounts are in millions of dollars.





Trailing 12 Months




Q2 2022


Q2 2022


Q2 2021


Change


Cash flow from operations


$

1,768


$

8,697


$

7,539


15 %


Capital expenditures


$

597


$

2,808


$

1,052


167 %


Free cash flow


$

1,171


$

5,889


$

6,487


(9) %


Free cash flow % of revenue




30.1 %


38.7 %




Cash return

Amounts are in millions of dollars.





Trailing 12 Months




Q2 2022


Q2 2022


Q2 2021


Change


Dividends paid


$

1,060


$

4,127


$

3,644


13 %


Stock repurchases


$

1,182


$

2,052


$

276


643 %


Total cash returned


$

2,242


$

6,179


$

3,920


58 %


TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES




Consolidated Statements of Income


For Three Months Ended

June 30,


(In millions, except per-share amounts)


2022


2021


Revenue


$

5,212


$

4,580


Cost of revenue (COR)


1,587


1,503


Gross profit


3,625


3,077


Research and development (R&D)


414


391


Selling, general and administrative (SG&A)


422


425


Acquisition charges



48


Restructuring charges/other


66



Operating profit


2,723


2,213


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


7


73


Interest and debt expense


49


44


Income before income taxes


2,681


2,242


Provision for income taxes


390


311


Net income


$

2,291


$

1,931








Diluted earnings per common share


$

2.45


$

2.05








Average shares outstanding:






Basic


920


923


Diluted


930


937








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)


$

395


$

322


Discrete tax items


(5)


(11)


Provision for income taxes (effective taxes)


$

390


$

311








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


$

2,291


$

1,931


Income allocated to RSUs


(10)


(7)


Income allocated to common stock for diluted EPS


$

2,281


$

1,924


TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


Consolidated Balance Sheets


June 30,

(In millions, except par value)


2022


2021

Assets





Current assets:





Cash and cash equivalents


$

3,802


$

3,649

Short-term investments


4,585


3,741

Accounts receivable, net of allowances of ($12) and ($9)


2,190


1,591

Raw materials


305


201

Work in process


1,258


996

Finished goods


636


659

Inventories


2,199


1,856

Prepaid expenses and other current assets


267


340

Total current assets


13,043


11,177

Property, plant and equipment at cost


8,825


6,235

Accumulated depreciation


(2,894)


(2,557)

Property, plant and equipment


5,931


3,678

Goodwill


4,362


4,362

Deferred tax assets


293


326

Capitalized software licenses


82


99

Overfunded retirement plans


296


254

Other long-term assets


716


707

Total assets


$

24,723


$

20,603






Liabilities and stockholders' equity





Current liabilities:





Current portion of long-term debt


$

499


$

499

Accounts payable


712


577

Accrued compensation


520


531

Income taxes payable


115


107

Accrued expenses and other liabilities


714


487

Total current liabilities


2,560


2,201

Long-term debt


6,745


5,752

Underfunded retirement plans


71


131

Deferred tax liabilities


90


87

Other long-term liabilities


1,165


1,279

Total liabilities


10,631


9,450

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


2,783


2,485

Retained earnings


48,280


43,846

Treasury common stock at cost





Shares: June 30, 2022 – 826; June 30, 2021 – 818


(38,532)


(36,596)

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


(180)


(323)

Total stockholders' equity


14,092


11,153

Total liabilities and stockholders' equity


$

24,723


$

20,603


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

June 30,

(In millions)


2022


2021

Cash flows from operating activities





Net income


$

2,291


$

1,931

Adjustments to net income:





Depreciation


227


184

Amortization of acquisition-related intangibles



48

Amortization of capitalized software


13


15

Stock compensation


85


69

Gains on sales of assets


(1)


(3)

Deferred taxes


(14)


(1)

Increase (decrease) from changes in:





Accounts receivable


(395)


(7)

Inventories


(139)


40

Prepaid expenses and other current assets


(1)


(50)

Accounts payable and accrued expenses


19


(17)

Accrued compensation


134


141

Income taxes payable


(279)


(175)

Changes in funded status of retirement plans


49


7

Other


(221)


(61)

Cash flows from operating activities


1,768


2,121






Cash flows from investing activities





Capital expenditures


(597)


(386)

Proceeds from asset sales


1


3

Purchases of short-term investments


(2,461)


(1,952)

Proceeds from short-term investments


4,200


2,455

Other


82


7

Cash flows from investing activities


1,225


127






Cash flows from financing activities





Repayment of debt


(500)


Dividends paid


(1,060)


(942)

Stock repurchases


(1,182)


(146)

Proceeds from common stock transactions


56


54

Other


(10)


(7)

Cash flows from financing activities


(2,696)


(1,041)






Net change in cash and cash equivalents


297


1,207

Cash and cash equivalents at beginning of period


3,505


2,442

Cash and cash equivalents at end of period


$

3,802


$

3,649

Segment results

Amounts are in millions of dollars.



Q2 2022


Q2 2021


Change

Analog:







Revenue


$

3,992


$

3,464


15 %

Operating profit


$

2,226


$

1,778


25 %

Embedded Processing:







Revenue


$

821


$

780


5 %

Operating profit


$

324


$

312


4 %

Other:







Revenue


$

399


$

336


19 %

Operating profit*


$

173


$

123


41 %

* 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

June 30,







2022


2021


Change

Cash flow from operations (GAAP)


$

8,697



$

7,539



15 %

Capital expenditures


(2,808)



(1,052)





Free cash flow (non-GAAP)


$

5,889



$

6,487



(9) %











Revenue


$

19,592



$

16,762















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


44.4 %



45.0 %





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


30.1 %



38.7 %





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

Texas Instruments Logo. (PRNewsFoto/Texas Instruments Incorporated) (PRNewsfoto/Texas Instruments Incorporated)

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SOURCE Texas Instruments Incorporated