TI reports Q4 2023 and 2023 financial results and shareholder returns

Conference call on TI website at 3:30 p.m. Central time today
www.ti.com/ir

DALLAS, Jan. 23, 2024 /PRNewswire/ -- Texas Instruments Incorporated (TI) (Nasdaq: TXN) today reported fourth quarter revenue of $4.08 billion, net income of $1.37 billion and earnings per share of $1.49. Earnings per share included a 3-cent benefit that was not in the company's original guidance.

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

  • "Revenue decreased 10% sequentially and 13% from the same quarter a year ago. During the quarter we experienced increasing weakness across industrial and a sequential decline in automotive.
  • "Our cash flow from operations of $6.4 billion for the trailing 12 months again underscored the strength of our business model, the quality of our product portfolio and the benefit of 300mm production. Free cash flow for the same period was $1.3 billion.
  • "Over the past 12 months we invested $3.7 billion in R&D and SG&A, invested $5.1 billion in capital expenditures and returned $4.9 billion to owners.
  • "TI's first quarter outlook is for revenue in the range of $3.45 billion to $3.75 billion and earnings per share between $0.96 and $1.16. We now expect our 2024 effective tax rate to be about 13%."

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

Earnings summary

(In millions, except per-share amounts)

 

Q4 2023

 

Q4 2022

 

Change 

Revenue

 

$

4,077

 

$

4,670

 

(13) %

Operating profit

 

$

1,533

 

$

2,176

 

(30) %

Net income

 

$

1,371

 

$

1,962

 

(30) %

Earnings per share

 

$

1.49

 

$

2.13

 

(30) %

 

Cash generation

         

Trailing 12 Months

(In millions)

 

Q4 2023

 

Q4 2023

 

Q4 2022

 

Change 

Cash flow from operations

 

$

1,924

 

$

6,420

 

$

8,720

 

(26) %

Capital expenditures

 

$

1,148

 

$

5,071

 

$

2,797

 

81 %

Free cash flow

 

$

776

 

$

1,349

 

$

5,923

 

(77) %

Free cash flow % of revenue

         

7.7 %

   

29.6 %

   

 

Cash return

         

Trailing 12 Months

(In millions)

 

Q4 2023

 

Q4 2023

 

Q4 2022

 

Change 

Dividends paid

 

$

1,181

 

$

4,557

 

$

4,297

 

6 %

Stock repurchases

 

$

65

 

$

293

 

$

3,615

 

(92) %

Total cash returned

 

$

1,246

 

$

4,850

 

$

7,912

 

(39) %

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

 

Consolidated Statements of Income

 

For Three Months Ended

December 31,

 

For Years Ended

December 31,

(In millions, except per-share amounts)

 

2023

 

2022

 

2023

 

2022

Revenue

 

$

4,077

 

$

4,670

 

$

17,519

 

$

20,028

Cost of revenue (COR)

   

1,646

   

1,583

   

6,500

   

6,257

Gross profit

   

2,431

   

3,087

   

11,019

   

13,771

Research and development (R&D)

   

460

   

434

   

1,863

   

1,670

Selling, general and administrative (SG&A)

   

438

   

429

   

1,825

   

1,704

Restructuring charges/other

   

   

48

   

   

257

Operating profit

   

1,533

   

2,176

   

7,331

   

10,140

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

   

113

   

51

   

440

   

106

Interest and debt expense

   

98

   

60

   

353

   

214

Income before income taxes

   

1,548

   

2,167

   

7,418

   

10,032

Provision for income taxes

   

177

   

205

   

908

   

1,283

Net income

 

$

1,371

 

$

1,962

 

$

6,510

 

$

8,749

                         

Diluted earnings per common share

 

$

1.49

 

$

2.13

 

$

7.07

 

$

9.41

                         

Average shares outstanding:

                       

   Basic

   

908

   

906

   

908

   

916

   Diluted

   

915

   

916

   

916

   

926

                         

Cash dividends declared per common share

 

$

1.30

 

$

1.24

 

$

5.02

 

$

4.69

                         

Supplemental Information

             

Provision for income taxes is based on the following:

           

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

 

$

180

 

$

237

 

$

974

 

$

1,384

Discrete tax items

   

(3)

   

(32)

   

(66)

   

(101)

Provision for income taxes (effective taxes)

 

$

177

 

$

205

 

$

908

 

$

1,283

                         

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

 

$

1,371

 

$

1,962

 

$

6,510

 

$

8,749

Income allocated to RSUs

   

(7)

   

(9)

   

(33)

   

(39)

Income allocated to common stock for diluted EPS

 

$

1,364

 

$

1,953

 

$

6,477

 

$

8,710

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

 

Consolidated Balance Sheets

 

December 31,

(In millions, except par value)

 

2023

 

2022

Assets

           

Current assets:

           

   Cash and cash equivalents

 

$

2,964

 

$

3,050

   Short-term investments

   

5,611

   

6,017

   Accounts receivable, net of allowances of ($16) and ($13)

   

1,787

   

1,895

   Raw materials

   

420

   

353

   Work in process

   

2,109

   

1,546

   Finished goods

   

1,470

   

858

   Inventories

   

3,999

   

2,757

   Prepaid expenses and other current assets

   

761

   

302

   Total current assets

   

15,122

   

14,021

Property, plant and equipment at cost

   

13,268

   

9,950

   Accumulated depreciation

   

(3,269)

   

(3,074)

   Property, plant and equipment

   

9,999

   

6,876

Goodwill

   

4,362

   

4,362

Deferred tax assets

   

757

   

473

Capitalized software licenses

   

223

   

152

Overfunded retirement plans

   

173

   

188

Other long-term assets

   

1,712

   

1,135

Total assets

 

$

32,348

 

$

27,207

             

Liabilities and stockholders' equity

           

Current liabilities:

           

   Current portion of long-term debt

 

$

599

 

$

500

   Accounts payable

   

802

   

851

   Accrued compensation

   

836

   

799

   Income taxes payable

   

172

   

189

   Accrued expenses and other liabilities

   

911

   

646

   Total current liabilities

   

3,320

   

2,985

Long-term debt

   

10,624

   

8,235

Underfunded retirement plans

   

108

   

118

Deferred tax liabilities

   

63

   

66

Other long-term liabilities

   

1,336

   

1,226

Total liabilities

   

15,451

   

12,630

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

   

3,362

   

2,951

   Retained earnings

   

52,283

   

50,353

   Treasury common stock at cost

           

   Shares: 2023 – 832; 2022 – 835

   

(40,284)

   

(40,214)

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

   

(205)

   

(254)

Total stockholders' equity

   

16,897

   

14,577

Total liabilities and stockholders' equity

 

$

32,348

 

$

27,207

 

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

 

Consolidated Statements of Cash Flows

 

For Three Months Ended

December 31,

 

For Years Ended

December 31,

(In millions)

 

2023

 

2022

 

2023

 

2022

Cash flows from operating activities

                       

   Net income

 

$

1,371

 

$

1,962

 

$

6,510

 

$

8,749

   Adjustments to net income:

                       

   Depreciation

   

322

   

249

   

1,175

   

925

   Amortization of capitalized software

   

15

   

14

   

63

   

54

   Stock compensation

   

68

   

62

   

362

   

289

   (Gains) losses on sales of assets

   

1

   

   

   

(3)

   Deferred taxes

   

(140)

   

(173)

   

(299)

   

(191)

   Increase (decrease) from changes in:

                       

   Accounts receivable

   

189

   

145

   

108

   

(194)

   Inventories

   

(91)

   

(353)

   

(1,242)

   

(847)

   Prepaid expenses and other current assets

   

8

   

(39)

   

46

   

6

   Accounts payable and accrued expenses

   

(10)

   

34

   

(33)

   

106

   Accrued compensation

   

126

   

136

   

29

   

22

   Income taxes payable

   

58

   

68

   

(7)

   

94

   Changes in funded status of retirement plans

   

(4)

   

(12)

   

45

   

114

   Other

   

11

   

(51)

   

(337)

   

(404)

Cash flows from operating activities

   

1,924

   

2,042

   

6,420

   

8,720

                         

Cash flows from investing activities

                       

   Capital expenditures

   

(1,148)

   

(967)

   

(5,071)

   

(2,797)

   Proceeds from asset sales

   

   

   

3

   

3

   Purchases of short-term investments

   

(2,565)

   

(3,688)

   

(12,705)

   

(14,483)

   Proceeds from short-term investments

   

3,411

   

3,650

   

13,387

   

13,657

   Other

   

(9)

   

(22)

   

24

   

37

Cash flows from investing activities

   

(311)

   

(1,027)

   

(4,362)

   

(3,583)

                         

Cash flows from financing activities

                       

   Proceeds from issuance of long-term debt

   

   

799

   

3,000

   

1,494

   Repayment of debt

   

   

   

(500)

   

(500)

   Dividends paid

   

(1,181)

   

(1,123)

   

(4,557)

   

(4,297)

   Stock repurchases

   

(65)

   

(848)

   

(293)

   

(3,615)

   Proceeds from common stock transactions

   

45

   

50

   

263

   

241

   Other

   

(14)

   

(12)

   

(57)

   

(41)

Cash flows from financing activities

   

(1,215)

   

(1,134)

   

(2,144)

   

(6,718)

                         

Net change in cash and cash equivalents

   

398

   

(119)

   

(86)

   

(1,581)

Cash and cash equivalents at beginning of period

   

2,566

   

3,169

   

3,050

   

4,631

Cash and cash equivalents at end of period

 

$

2,964

 

$

3,050

 

$

2,964

 

$

3,050

 

Quarterly segment results 

(In millions)

 

Q4 2023

 

Q4 2022

 

Change 

Analog:

               

   Revenue

 

$

3,120

 

$

3,558

 

(12) %

   Operating profit

 

$

1,280

 

$

1,798

 

(29) %

Embedded Processing:

               

   Revenue

 

$

752

 

$

837

 

(10) %

   Operating profit

 

$

195

 

$

293

 

(33) %

Other:

               

   Revenue

 

$

205

 

$

275

 

(25) %

   Operating profit*

 

$

58

 

$

85

 

(32) %

 

* Includes restructuring charges/other.

 

Annual segment results 

(In millions)

 

2023

 

2022

 

Change 

Analog:

               

   Revenue

 

$

13,040

 

$

15,359

 

(15) %

   Operating profit

 

$

5,821

 

$

8,359

 

(30) %

Embedded Processing:

               

   Revenue

 

$

3,368

 

$

3,261

 

3 %

   Operating profit

 

$

1,008

 

$

1,253

 

(20) %

Other:

               

   Revenue

 

$

1,111

 

$

1,408

 

(21) %

   Operating profit*

 

$

502

 

$

528

 

(5) %

 

* 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 Years Ended

December 31,

   

(In millions)

 

2023

 

2022

 

Change 

Cash flow from operations (GAAP)

 

$

6,420

 

$

8,720

 

(26) %

Capital expenditures

   

(5,071)

   

(2,797)

   

Free cash flow (non-GAAP)

 

$

1,349

 

$

5,923

 

(77) %

                 

Revenue

 

$

17,519

 

$

20,028

   
                 

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

   

36.6 %

   

43.5 %

   

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

   

7.7 %

   

29.6 %

   

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:

  • 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

Texas Instruments Logo. (PRNewsFoto/Texas Instruments Incorporated) (PRNewsfoto/Texas Instruments Incorporated)

 

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/ti-reports-q4-2023-and-2023-financial-results-and-shareholder-returns-302042464.html

SOURCE Texas Instruments Incorporated