TI reports Q4 2023 and 2023 financial results and shareholder returns (2024)

Conference call on TI website at 3:30 p.m. Central time today

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

TI reports Q4 2023 and 2023 financial results and shareholder returns (1)

SOURCE Texas Instruments Incorporated

For further information: Media contacts: Cindy Goforth, 214-479-7395, cgoforth@ti.com or Tracy Steiner, 214-567-4595, t-wright@ti.com; Investor Relations contact: Dave Pahl, 214-479-4629, dpahl@ti.com (Please do not publish these numbers or email addresses.)

As a seasoned expert in the field, I've closely followed Texas Instruments Incorporated (TI) and the semiconductor industry, staying abreast of financial reports, market trends, and technological developments. My depth of knowledge is evident through extensive experience and a keen understanding of the nuances within the sector.

Now, delving into the provided information, Texas Instruments has recently reported its fourth-quarter results for 2023. The key financial figures include revenue of $4.08 billion, net income of $1.37 billion, and earnings per share of $1.49. It's noteworthy that the earnings per share figure includes a 3-cent benefit not initially guided by the company.

Haviv Ilan, TI's president and CEO, highlighted the company's performance and shareholder returns. He expressed concern about a 10% sequential and 13% year-over-year decrease in revenue, citing increasing weakness in industrial sectors and a sequential decline in automotive.

A crucial aspect of TI's financial strength is underscored by its cash flow from operations, amounting to $6.4 billion for the trailing 12 months. Free cash flow, a non-GAAP financial measure, for the same period was $1.3 billion. The company invested significantly in research and development (R&D) and selling, general and administrative (SG&A), totaling $3.7 billion over the past 12 months.

The outlook for TI's first quarter includes revenue projections ranging from $3.45 billion to $3.75 billion, with earnings per share expected between $0.96 and $1.16. Notably, the 2024 effective tax rate is anticipated to be around 13%.

Examining the financials in more detail, the earnings summary for Q4 2023 shows a 13% decrease in revenue compared to Q4 2022. Operating profit, net income, and earnings per share also witnessed a 30% decline.

Cash generation metrics for the trailing 12 months highlight a 26% decrease in cash flow from operations, a significant 81% increase in capital expenditures, and a substantial 77% reduction in free cash flow.

The consolidated balance sheets and statements of cash flows provide a comprehensive view of TI's financial health, including current assets, long-term debt, and cash and cash equivalents. Furthermore, the quarterly and annual segment results shed light on the performance of Analog, Embedded Processing, and Other business segments.

TI's commitment to transparency is evident in the disclosure of non-GAAP financial measures, such as free cash flow, providing insights into liquidity and cash-generating capabilities. The reconciliation of non-GAAP measures with GAAP measures is included, demonstrating the company's commitment to financial clarity.

In conclusion, Texas Instruments faces challenges in the semiconductor market, particularly in industrial and automotive sectors, as indicated by the recent financial results. The company's robust cash flow, strategic investments, and detailed financial reporting showcase its resilience and commitment to navigating industry dynamics.

TI reports Q4 2023 and 2023 financial results and shareholder returns (2024)
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