DALLAS, Oct. 26, 2021 /PRNewswire/ -- Texas Instruments
Incorporated (TI) (Nasdaq: TXN) today reported third quarter
revenue of $4.64 billion, net income
of $1.95 billion and earnings per
share of $2.07.
Regarding the company's performance and returns to shareholders,
Rich Templeton, TI's chairman,
president and CEO, made the following comments:
- "Revenue increased 22% from the same quarter a year ago due to
strong demand in industrial, automotive and personal electronics.
Analog revenue grew 24% and Embedded Processing grew 13% from the
same quarter a year ago.
- "Our cash flow from operations of $8.5
billion for the trailing 12 months again underscored the
strength of our business model. Free cash flow for the same period
was $7.1 billion and 41% 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 $4.2 billion to
owners in the past 12 months through dividends and stock
repurchases. Over the same period, our dividend represented 53% of
free cash flow, underscoring its sustainability. In September, we
announced we would increase our dividend by 13%.
- "TI's fourth quarter outlook is for revenue in the range of
$4.22 billion to $4.58 billion and earnings per share between
$1.83 and $2.07. We continue to expect our 2021 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.
|
Q3 2021
|
|
Q3 2020
|
|
Change
|
Revenue
|
$
|
4,643
|
|
$
|
3,817
|
|
22%
|
Operating
profit
|
$
|
2,305
|
|
$
|
1,609
|
|
43%
|
Net income
|
$
|
1,947
|
|
$
|
1,353
|
|
44%
|
Earnings per
share
|
$
|
2.07
|
|
$
|
1.45
|
|
43%
|
Cash generation
Amounts are in millions of dollars.
|
|
|
Trailing 12
Months
|
|
Q3 2021
|
|
Q3 2021
|
|
Q3 2020
|
|
Change
|
Cash flow from
operations
|
$
|
2,428
|
|
$
|
8,524
|
|
$
|
5,768
|
|
48%
|
Capital
expenditures
|
$
|
486
|
|
$
|
1,392
|
|
$
|
600
|
|
132%
|
Free cash
flow
|
$
|
1,942
|
|
$
|
7,132
|
|
$
|
5,168
|
|
38%
|
Free cash flow % of
revenue
|
|
|
40.6%
|
|
37.6%
|
|
|
Cash return
Amounts are in millions of dollars.
|
|
|
Trailing 12
Months
|
|
Q3 2021
|
|
Q3 2021
|
|
Q3 2020
|
|
Change
|
Dividends
paid
|
$
|
942
|
|
$
|
3,761
|
|
$
|
3,330
|
|
13%
|
Stock
repurchases
|
$
|
139
|
|
$
|
400
|
|
$
|
3,027
|
|
(87)%
|
Total cash
returned
|
$
|
1,081
|
|
$
|
4,161
|
|
$
|
6,357
|
|
(35)%
|
|
|
TEXAS INSTRUMENTS
INCORPORATED AND SUBSIDIARIES
|
|
|
|
Consolidated
Statements of Income
|
|
For Three Months
Ended
September
30,
|
(Millions of
dollars, except share and per-share amounts)
|
|
2021
|
|
2020
|
Revenue
|
|
$
|
4,643
|
|
$
|
3,817
|
Cost of revenue
(COR)
|
|
1,491
|
|
1,364
|
Gross
profit
|
|
3,152
|
|
2,453
|
Research and
development (R&D)
|
|
388
|
|
386
|
Selling, general and
administrative (SG&A)
|
|
412
|
|
407
|
Acquisition
charges
|
|
47
|
|
51
|
Restructuring
charges/other
|
|
—
|
|
—
|
Operating
profit
|
|
2,305
|
|
1,609
|
Other income
(expense), net (OI&E)
|
|
15
|
|
27
|
Interest and debt
expense
|
|
45
|
|
49
|
Income before income
taxes
|
|
2,275
|
|
1,587
|
Provision for income
taxes
|
|
328
|
|
234
|
Net income
|
|
$
|
1,947
|
|
$
|
1,353
|
|
|
|
|
|
Diluted earnings per
common share
|
|
$
|
2.07
|
|
$
|
1.45
|
|
|
|
|
|
Average shares
outstanding (millions):
|
|
|
|
|
Basic
|
|
923
|
|
917
|
Diluted
|
|
936
|
|
929
|
|
|
|
|
|
Cash dividends
declared per common share
|
|
$
|
1.02
|
|
$
|
.90
|
|
|
|
|
|
|
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)
|
|
$
|
337
|
|
$
|
231
|
Discrete tax
items
|
|
(9)
|
|
3
|
Provision for income
taxes (effective taxes)
|
|
$
|
328
|
|
$
|
234
|
|
|
|
|
|
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
|
|
$
|
1,947
|
|
$
|
1,353
|
Income allocated to
RSUs
|
|
(9)
|
|
(6)
|
Income allocated to
common stock for diluted EPS
|
|
$
|
1,938
|
|
$
|
1,347
|
TEXAS INSTRUMENTS
INCORPORATED AND SUBSIDIARIES
|
|
Consolidated
Balance Sheets
|
|
September
30,
|
(Millions of
dollars, except share amounts)
|
|
2021
|
|
2020
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
5,663
|
|
$
|
2,822
|
Short-term
investments
|
|
4,119
|
|
2,696
|
Accounts receivable,
net of allowances of ($9) and ($12)
|
|
1,653
|
|
1,392
|
Raw
materials
|
|
224
|
|
192
|
Work in
process
|
|
1,034
|
|
959
|
Finished
goods
|
|
605
|
|
921
|
Inventories
|
|
1,863
|
|
2,072
|
Prepaid expenses and
other current assets
|
|
287
|
|
277
|
Total current
assets
|
|
13,585
|
|
9,259
|
Property, plant and
equipment at cost
|
|
6,661
|
|
5,698
|
Accumulated
depreciation
|
|
(2,640)
|
|
(2,508)
|
Property, plant and
equipment
|
|
4,021
|
|
3,190
|
Goodwill
|
|
4,362
|
|
4,362
|
Acquisition-related
intangibles
|
|
9
|
|
189
|
Deferred tax
assets
|
|
309
|
|
299
|
Capitalized software
licenses
|
|
88
|
|
133
|
Overfunded retirement
plans
|
|
252
|
|
227
|
Other long-term
assets
|
|
647
|
|
548
|
Total
assets
|
|
$
|
23,273
|
|
$
|
18,207
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
500
|
|
$
|
550
|
Accounts
payable
|
|
596
|
|
411
|
Accrued
compensation
|
|
665
|
|
656
|
Income taxes
payable
|
|
101
|
|
44
|
Accrued expenses and
other liabilities
|
|
551
|
|
524
|
Total current
liabilities
|
|
2,413
|
|
2,185
|
Long-term
debt
|
|
7,239
|
|
6,247
|
Underfunded
retirement plans
|
|
129
|
|
103
|
Deferred tax
liabilities
|
|
86
|
|
69
|
Other long-term
liabilities
|
|
1,255
|
|
1,278
|
Total
liabilities
|
|
11,122
|
|
9,882
|
Stockholders'
equity:
|
|
|
|
|
Preferred stock, $25
par value. Authorized – 10,000,000 shares; none
issued
|
|
—
|
|
—
|
Common stock, $1 par
value. Authorized – 2,400,000,000 shares
|
|
|
|
|
Shares issued –
1,740,815,939
|
|
1,741
|
|
1,741
|
Paid-in
capital
|
|
2,563
|
|
2,257
|
Retained
earnings
|
|
44,847
|
|
41,305
|
Treasury common stock
at cost
|
|
|
|
|
Shares: September 30,
2021 – 817,400,928; September 30, 2020 – 823,174,578
|
|
(36,687)
|
|
(36,643)
|
Accumulated other
comprehensive income (loss), net of taxes (AOCI)
|
|
(313)
|
|
(335)
|
Total stockholders'
equity
|
|
12,151
|
|
8,325
|
Total liabilities and
stockholders' equity
|
|
$
|
23,273
|
|
$
|
18,207
|
|
|
TEXAS INSTRUMENTS
INCORPORATED AND SUBSIDIARIES
|
|
Consolidated
Statements of Cash Flows
|
|
For Three Months
Ended
September
30,
|
(Millions of
dollars)
|
|
2021
|
|
2020
|
Cash flows from
operating activities
|
|
|
|
|
Net income
|
|
$
|
1,947
|
|
$
|
1,353
|
Adjustments to net
income:
|
|
|
|
|
Depreciation
|
|
192
|
|
183
|
Amortization of
acquisition-related intangibles
|
|
47
|
|
51
|
Amortization of
capitalized software
|
|
14
|
|
16
|
Stock
compensation
|
|
50
|
|
50
|
Gains on sales of
assets
|
|
(3)
|
|
(2)
|
Deferred
taxes
|
|
12
|
|
(51)
|
Increase (decrease)
from changes in:
|
|
|
|
|
Accounts
receivable
|
|
(62)
|
|
(216)
|
Inventories
|
|
(13)
|
|
64
|
Prepaid expenses and
other current assets
|
|
76
|
|
25
|
Accounts payable and
accrued expenses
|
|
35
|
|
(13)
|
Accrued
compensation
|
|
135
|
|
157
|
Income taxes
payable
|
|
(10)
|
|
(208)
|
Changes in funded
status of retirement plans
|
|
13
|
|
(1)
|
Other
|
|
(5)
|
|
35
|
Cash flows from
operating activities
|
|
2,428
|
|
1,443
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
Capital
expenditures
|
|
(486)
|
|
(146)
|
Proceeds from asset
sales
|
|
3
|
|
2
|
Purchases of
short-term investments
|
|
(1,693)
|
|
(2,540)
|
Proceeds from
short-term investments
|
|
1,315
|
|
510
|
Other
|
|
(23)
|
|
(15)
|
Cash flows from
investing activities
|
|
(884)
|
|
(2,189)
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
Proceeds from issuance
of long-term debt
|
|
1,495
|
|
—
|
Dividends
paid
|
|
(942)
|
|
(825)
|
Stock
repurchases
|
|
(139)
|
|
(15)
|
Proceeds from common
stock transactions
|
|
75
|
|
123
|
Other
|
|
(19)
|
|
(9)
|
Cash flows from
financing activities
|
|
470
|
|
(726)
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
2,014
|
|
(1,472)
|
Cash and cash
equivalents at beginning of period
|
|
3,649
|
|
4,294
|
Cash and cash
equivalents at end of period
|
|
$
|
5,663
|
|
$
|
2,822
|
Segment results
Amounts are in millions of dollars.
|
Q3 2021
|
|
Q3 2020
|
|
Change
|
Analog:
|
|
|
|
|
|
Revenue
|
$
|
3,548
|
|
$
|
2,865
|
|
24%
|
Operating
profit
|
$
|
1,871
|
|
$
|
1,320
|
|
42%
|
Embedded
Processing:
|
|
|
|
|
|
Revenue
|
$
|
738
|
|
$
|
651
|
|
13%
|
Operating
profit
|
$
|
282
|
|
$
|
187
|
|
51%
|
Other:
|
|
|
|
|
|
Revenue
|
$
|
357
|
|
$
|
301
|
|
19%
|
Operating
profit*
|
$
|
152
|
|
$
|
102
|
|
49%
|
|
* 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
September
30,
|
|
|
|
2021
|
|
2020
|
|
Change
|
Cash flow from
operations (GAAP)
|
$
|
8,524
|
|
$
|
5,768
|
|
48%
|
Capital
expenditures
|
(1,392)
|
|
(600)
|
|
|
Free cash flow
(non-GAAP)
|
$
|
7,132
|
|
$
|
5,168
|
|
38%
|
|
|
|
|
|
|
Revenue
|
$
|
17,588
|
|
$
|
13,735
|
|
|
|
|
|
|
|
|
Cash flow from
operations as a percentage of revenue (GAAP)
|
48.5%
|
|
42.0%
|
|
|
Free cash flow as a
percentage of revenue (non-GAAP)
|
40.6%
|
|
37.6%
|
|
|
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.
TXN-G
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SOURCE Texas Instruments Incorporated