PR Newswire | Jan 25, 2022 04:01PM EST

01/25 15:01 CST

TI reports Q4 2021 and 2021 financial results and shareholder returnsConference call on TI website at 3:15 p.m. Central time todaywww.ti.com/ir DALLAS, Jan. 25, 2022

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

For Three Months Ended For Years EndedConsolidated Statements of Income December 31, 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, was14% 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 thefollowing:

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

For Three Months Ended For Years EndedConsolidated Statements of Cash Flows December 31, 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.

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SOURCE Texas Instruments Incorporated