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TI reports third quarter 2022 financial results and shareholder returns

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

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:

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:

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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