25.07.2023 22:01:00

TI reports second quarter 2023 financial results and shareholder returns

DALLAS, July 25, 2023 /PRNewswire/ -- Texas Instruments Incorporated (TI) (Nasdaq: TXN) today reported second quarter revenue of $4.53 billion, net income of $1.72 billion and earnings per share of $1.87.

Regarding the company's performance and returns to shareholders, Haviv Ilan, TI's president and CEO, made the following comments:

  • "Revenue increased 3% sequentially and decreased 13% from the same quarter a year ago. Similar to last quarter, we experienced weakness across our end markets with the exception of automotive.
  • "Our cash flow from operations of $7.4 billion for the trailing 12 months again underscored the strength of our business model, the quality of our product portfolio and the benefit of 300-mm production. Free cash flow for the same period was $3.2 billion and 17% of revenue.
  • "Over the past 12 months we invested $3.6 billion in R&D and SG&A, invested $4.2 billion in capital expenditures and returned $6.5 billion to owners.
  • "TI's third quarter outlook is for revenue in the range of $4.36 billion to $4.74 billion and earnings per share between $1.68 and $1.92. We continue to expect our 2023 effective tax rate to be about 13% to 14%."

Free cash flow, a non-GAAP financial measure, is cash flow from operations less capital expenditures.

Earnings summary

(In millions, except per-share amounts)


Q2 2023


Q2 2022


Change 

Revenue


$    4,531


$    5,212


(13) %

Operating profit


$    1,972


$    2,723


(28) %

Net income


$    1,722


$    2,291


(25) %

Earnings per share


$      1.87


$      2.45


(24) %

 

Cash generation





Trailing 12 Months

(In millions)


Q2 2023


Q2 2023


Q2 2022


Change 

Cash flow from operations


$    1,399


$    7,367


$    8,697


(15) %

Capital expenditures


$    1,446


$    4,185


$    2,808


49 %

Free cash flow


$        (47)


$    3,182


$    5,889


(46) %

Free cash flow % of revenue




16.9 %


30.1 %



 

Cash return





Trailing 12 Months

(In millions)


Q2 2023


Q2 2023


Q2 2022


Change 

Dividends paid


$    1,125


$    4,424


$    4,127


7 %

Stock repurchases


$         79


$    2,026


$    2,052


(1) %

Total cash returned


$    1,204


$    6,450


$    6,179


4 %

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


Consolidated Statements of Income


For Three Months Ended

June 30,

(In millions, except per-share amounts)


2023


2022

Revenue


$    4,531


$    5,212

Cost of revenue (COR)


1,621


1,587

Gross profit


2,910


3,625

Research and development (R&D)


477


414

Selling, general and administrative (SG&A)


461


422

Restructuring charges/other



66

Operating profit


1,972


2,723

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


119


7

Interest and debt expense


89


49

Income before income taxes


2,002


2,681

Provision for income taxes


280


390

Net income


$    1,722


$    2,291






Diluted earnings per common share


$      1.87


$      2.45






Average shares outstanding:





   Basic


908


920

   Diluted


916


930






Cash dividends declared per common share


$      1.24


$      1.15






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)


$       289


$       395

Discrete tax items


(9)


(5)

Provision for income taxes (effective taxes)


$       280


$       390






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


$    1,722


$    2,291

Income allocated to RSUs


(8)


(10)

Income allocated to common stock for diluted EPS


$    1,714


$    2,281

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


Consolidated Balance Sheets


June 30,

(In millions, except par value)


2023


2022

Assets





Current assets:





   Cash and cash equivalents


$     3,439


$     3,802

   Short-term investments


6,113


4,585

   Accounts receivable, net of allowances of ($16) and ($12)


1,956


2,190

   Raw materials


388


305

   Work in process


2,110


1,258

   Finished goods


1,231


636

   Inventories


3,729


2,199

   Prepaid expenses and other current assets


277


267

   Total current assets


15,514


13,043

Property, plant and equipment at cost


11,664


8,825

   Accumulated depreciation


(3,139)


(2,894)

   Property, plant and equipment


8,525


5,931

Goodwill


4,362


4,362

Deferred tax assets


537


293

Capitalized software licenses


143


82

Overfunded retirement plans


183


296

Other long-term assets


1,675


716

Total assets


$    30,939


$    24,723






Liabilities and stockholders' equity





Current liabilities:





   Current portion of long-term debt


$         299


$         499

   Accounts payable


923


712

   Accrued compensation


561


520

   Income taxes payable


121


115

   Accrued expenses and other liabilities


807


714

   Total current liabilities


2,711


2,560

Long-term debt


10,920


6,745

Underfunded retirement plans


127


71

Deferred tax liabilities


69


90

Other long-term liabilities


1,172


1,165

Total liabilities


14,999


10,631

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


3,163


2,783

   Retained earnings


51,522


48,280

   Treasury common stock at cost





   Shares: June 30, 2023 – 833; June 30, 2022 – 826


(40,240)


(38,532)

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


(246)


(180)

Total stockholders' equity


15,940


14,092

Total liabilities and stockholders' equity


$    30,939


$    24,723

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


Consolidated Statements of Cash Flows


For Three Months Ended

June 30,

(In millions)


2023


2022

Cash flows from operating activities





   Net income


$    1,722


$    2,291

   Adjustments to net income:





   Depreciation


285


227

   Amortization of capitalized software


15


13

   Stock compensation


111


85

   Gains on sales of assets


(1)


(1)

   Deferred taxes


(52)


(14)

   Increase (decrease) from changes in:





   Accounts receivable


(79)


(395)

   Inventories


(441)


(139)

   Prepaid expenses and other current assets


14


(1)

   Accounts payable and accrued expenses


74


19

   Accrued compensation


165


134

   Income taxes payable


(243)


(279)

   Changes in funded status of retirement plans


17


49

   Other


(188)


(221)

Cash flows from operating activities


1,399


1,768






Cash flows from investing activities





   Capital expenditures


(1,446)


(597)

   Proceeds from asset sales


1


1

   Purchases of short-term investments


(4,047)


(2,461)

   Proceeds from short-term investments


3,065


4,200

   Other


42


82

Cash flows from investing activities


(2,385)


1,225






Cash flows from financing activities





   Proceeds from issuance of long-term debt


1,603


   Repayment of debt


(500)


(500)

   Dividends paid


(1,125)


(1,060)

   Stock repurchases


(79)


(1,182)

   Proceeds from common stock transactions


65


56

   Other


(16)


(10)

Cash flows from financing activities


(52)


(2,696)






Net change in cash and cash equivalents


(1,038)


297

Cash and cash equivalents at beginning of period


4,477


3,505

Cash and cash equivalents at end of period


$    3,439


$    3,802

 

Segment results

(In millions)

Q2 2023


Q2 2022


Change 

Analog:






   Revenue

$    3,278


$    3,992


(18) %

   Operating profit

$    1,463


$    2,226


(34) %

Embedded Processing:






   Revenue

$       894


$       821


9 %

   Operating profit

$       318


$       324


(2) %

Other:






   Revenue

$       359


$       399


(10) %

   Operating profit*

$       191


$       173


10 %


  * Includes 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

June 30,



(In millions)

2023


2022


Change 

Cash flow from operations (GAAP)

$      7,367


$      8,697


(15) %

Capital expenditures

(4,185)


(2,808)



Free cash flow (non-GAAP)

$      3,182


$      5,889


(46) %







Revenue

$    18,821


$    19,592









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

39.1 %


44.4 %



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

16.9 %


30.1 %



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:

  • 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, suppliers 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;
  • 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;
  • Availability and cost of key materials, utilities, manufacturing equipment, third-party manufacturing services and manufacturing technology;
  • Our ability to recruit and retain skilled personnel and effectively manage key employee succession;
  • 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; 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

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