TXN
$186.85
Texas Instruments
$1.72
.93%
Earnings Details
2nd Quarter June 2021
Wednesday, July 21, 2021 4:01:00 PM
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Summary

Texas Instruments Beats

Texas Instruments (TXN) reported 2nd Quarter June 2021 earnings of $2.05 per share on revenue of $4.6 billion. The consensus earnings estimate was $1.82 per share on revenue of $4.3 billion. The Earnings Whisper number was $1.98 per share. Revenue grew 41.4% on a year-over-year basis.

The company said it expects third quarter earnings of $1.87 to $2.13 per share on revenue of $4.40 billion to $4.76 billion. The current consensus earnings estimate is $1.96 per share on revenue of $4.58 billion for the quarter ending September 30, 2021.

Texas Instruments Inc designs and makes semiconductors that it sells to electronics designers and manufacturers. It has two segments: Analog and Embedded Processing.

Results
Reported Earnings
$2.05
Earnings Whisper
$1.98
Consensus Estimate
$1.82
Reported Revenue
$4.58 Bil
Revenue Estimate
$4.34 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

TI reports second quarter 2021 financial results and shareholder returns

DALLAS, July 21, 2021 /PRNewswire/ -- Texas Instruments Incorporated (TI) (Nasdaq: TXN) today reported second quarter revenue of $4.58 billion, net income of $1.93 billion and earnings per share of $2.05. Earnings per share included a 6-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:

  • "Revenue increased 7% sequentially and increased 41% from the same quarter a year ago due to strong demand in industrial, automotive and personal electronics.
  • "In our core businesses, Analog revenue grew 6% and Embedded Processing grew 2% sequentially. From a year ago, Analog revenue grew 42% and Embedded Processing grew 43%.
  • "Our cash flow from operations of $7.5 billion for the trailing 12 months again underscored the strength of our business model. Free cash flow for the same period was $6.5 billion and 39% 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 Analog production.
  • "We returned $3.9 billion to owners in the past 12 months through dividends and stock repurchases. Over the same period, our dividend represented 56% of free cash flow, underscoring its sustainability.
  • "TI's third quarter outlook is for revenue in the range of $4.40 billion to $4.76 billion and earnings per share between $1.87 and $2.13. 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.


Q2 2021


Q2 2020


Change

Revenue

$

4,580


$

3,239


41%

Operating profit

$

2,213


$

1,228


80%

Net income

$

1,931


$

1,380


40%

Earnings per share

$

2.05


$

1.48


39%

 

Cash generation

Amounts are in millions of dollars.




Trailing 12 Months


Q2 2021


Q2 2021


Q2 2020


Change

Cash flow from operations

$

2,121


$

7,539


$

6,317


19%

Capital expenditures

$

386


$

1,052


$

603


74%

Free cash flow

$

1,735


$

6,487


$

5,714


14%

Free cash flow % of revenue



38.7%


41.7%



 

Cash return

Amounts are in millions of dollars.




Trailing 12 Months


Q2 2021


Q2 2021


Q2 2020


Change

Dividends paid

$

942


$

3,644


$

3,226


13%

Stock repurchases

$

146


$

276


$

3,468


(92)%

Total cash returned

$

1,088


$

3,920


$

6,694


(41)%

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


Consolidated Statements of Income


For Three Months Ended

June 30,


(Millions of dollars, except share and per-share amounts)


2021


2020


Revenue


$

4,580


$

3,239


Cost of revenue (COR)


1,503


1,157


Gross profit


3,077


2,082


Research and development (R&D)


391


379


Selling, general and administrative (SG&A)


425


401


Acquisition charges


48


50


Restructuring charges/other



24


Operating profit


2,213


1,228


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


73


99


Interest and debt expense


44


48


Income before income taxes


2,242


1,279


Provision for income taxes


311


(101)


Net income


$

1,931


$

1,380







Diluted earnings per common share


$

2.05


$

1.48







Average shares outstanding (millions):





Basic


923


916


Diluted


937


927







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% for the current period and 13% for the year-ago period.




Provision for income taxes is based on the following:








Operating taxes (calculated using the estimated annual effective tax rate)


$

322


$

164


Discrete tax items


(11)


(265)


Provision for income taxes (effective taxes)


$

311


$

(101)







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


$

1,931


$

1,380


Income allocated to RSUs


(7)


(7)


Income allocated to common stock for diluted EPS


$

1,924


$

1,373


 

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


Consolidated Balance Sheets


June 30,


(Millions of dollars, except share amounts)


2021


2020


Assets






Current assets:






Cash and cash equivalents


$

3,649


$

4,294


Short-term investments


3,741


666


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


1,591


1,176


Raw materials


201


182


Work in process


996


977


Finished goods


659


977


Inventories


1,856


2,136


Prepaid expenses and other current assets


340


216


Total current assets


11,177


8,488


Property, plant and equipment at cost


6,235


5,741


Accumulated depreciation


(2,557)


(2,540)


Property, plant and equipment


3,678


3,201


Goodwill


4,362


4,362


Acquisition-related intangibles


57


240


Deferred tax assets


326


236


Capitalized software licenses


99


141


Overfunded retirement plans


254


223


Other long-term assets


650


554


Total assets


$

20,603


$

17,445








Liabilities and stockholders' equity




Current liabilities:




Current portion of long-term debt


$

499


$

551


Accounts payable


587


409


Accrued compensation


531


505


Income taxes payable


107


179


Accrued expenses and other liabilities


477


519


Total current liabilities


2,201


2,163


Long-term debt


5,752


6,245


Underfunded retirement plans


131


99


Deferred tax liabilities


87


60


Other long-term liabilities


1,279


1,234


Total liabilities


9,450


9,801


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


2,485


2,182


Retained earnings


43,846


40,780


Treasury common stock at cost






Shares: June 30, 2021 – 817,729,258; June 30, 2020 – 825,225,307


(36,596)


(36,725)


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


(323)


(334)


Total stockholders' equity


11,153


7,644


Total liabilities and stockholders' equity


$

20,603


$

17,445


 

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


Consolidated Statements of Cash Flows


For Three Months Ended

June 30,


(Millions of dollars)


2021


2020


Cash flows from operating activities






Net income


$

1,931


$

1,380


Adjustments to net income:





Depreciation


184


184


Amortization of acquisition-related intangibles


48


50


Amortization of capitalized software


15


15


Stock compensation


69


69


Gains on sales of assets


(3)


(1)


Deferred taxes


(1)


(30)


Increase (decrease) from changes in:





Accounts receivable


(7)


140


Inventories


40


(133)


Prepaid expenses and other current assets


(50)


63


Accounts payable and accrued expenses


(17)


73


Accrued compensation


141


148


Income taxes payable


(175)


(255)


Changes in funded status of retirement plans


7


(10)


Other


(61)


27


Cash flows from operating activities


2,121


1,720







Cash flows from investing activities





Capital expenditures


(386)


(130)


Proceeds from asset sales


3


1


Purchases of short-term investments


(1,952)


(249)


Proceeds from short-term investments


2,455


1,810


Other


7


5


Cash flows from investing activities


127


1,437







Cash flows from financing activities





Proceeds from issuance of long-term debt



749


Repayment of debt



(500)


Dividends paid


(942)


(823)


Stock repurchases


(146)


(882)


Proceeds from common stock transactions


54


87


Other


(7)


(12)


Cash flows from financing activities


(1,041)


(1,381)








Net change in cash and cash equivalents


1,207


1,776


Cash and cash equivalents at beginning of period


2,442


2,518


Cash and cash equivalents at end of period


$

3,649


$

4,294


 

 

Segment results

Amounts are in millions of dollars.


Q2 2021


Q2 2020


Change

Analog:






Revenue

$

3,464


$

2,434


42%

Operating profit

$

1,778


$

1,053


69%

Embedded Processing:






Revenue

$

780


$

546


43%

Operating profit

$

312


$

125


150%

Other:






Revenue

$

336


$

259


30%

Operating profit*

$

123


$

50


146%


* 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,




2021


2020


Change

Cash flow from operations (GAAP)

$

7,539


$

6,317


19%

Capital expenditures

(1,052)


(603)



Free cash flow (non-GAAP)

$

6,487


$

5,714


14%






Revenue

$

16,762


$

13,689









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

45.0%


46.1%



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

38.7%


41.7%



 

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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