01—Abstract
Summary
Summary of the 10-K filed February 4, 2022. Cited figures are marked; the original filing is the authoritative source.
Texas Instruments Inc. (TXN) reported strong financial performance for the fiscal year ended December 30, 2021.
The company generated $18.34 billiona in revenue, a significant increase of 27% compared to the previous year, driven primarily by its Analog segment, which accounted for 77% of total revenue. The Embedded Processing segment also showed robust growth. Profitability improved substantially, with gross profit increasing by 34% and operating profit rising to 48.8% of revenue.
This performance underscores the strength of TI's business model, which is focused on analog and embedded processing products and leverages four key competitive advantages: manufacturing and technology, a broad product portfolio, extensive market channels, and diverse, long-lived products and markets. The company is strategically investing in expanding its 300-millimeter manufacturing capacity to support anticipated long-term demand, particularly in the industrial and automotive sectors. TI's strategy to maximize free cash flow per share growth remains centered on its strong business model, disciplined capital allocation, and continuous pursuit of efficiency.
In 2021, the company generated $6.29 billionb in free cash flow and returned $4.41 billion to shareholders through dividends and share repurchases, indicating a commitment to shareholder value. Despite facing global economic uncertainties, supply chain challenges, and intense competition, Texas Instruments demonstrates a resilient business and a clear strategy for sustained long-term value creation.
02—Key points
Key Highlights
- Revenue grew 27% to $18.34 billion in 2021, driven by strong demand in both Analog and Embedded Processing segments.
- Analog segment remains the primary revenue driver, accounting for 77% of total revenue ($14.05 billion) and showing significant operating profit growth.
- Operating profit margin improved to 48.8% in 2021, up from 40.8% in 2020, reflecting higher revenue and improved gross margins.
- Free cash flow generation was robust at $6.29 billion, allowing the company to return $4.41 billion to shareholders via dividends and share repurchases.
- Significant investments are being made in expanding manufacturing capacity, particularly in 300-millimeter wafer fabrication facilities, to support long-term growth in industrial and automotive markets.
- The company continues to emphasize its strategy of maximizing free cash flow per share growth through a strong business model, disciplined capital allocation, and operational efficiency.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Texas Instruments kept $0.42.
- Revenue$18.34B100.0%
- Cost of revenue−$5.97B32.5%
- Gross profit$12.38B67.5%
- Operating costs−$3.42B18.6%
- Operating income$8.96B48.8%
- Interest, other & tax−$1.19B6.5%
- Net income$7.77B42.4%
Where FY2021 revenue went
$18.34B- Net income: $7.77B, 42% of revenue
- Cost of revenue: $5.97B, 33% of revenue
- R&D: $1.55B, 8.5% of revenue
- SG&A: $1.67B, 9.1% of revenue
- Other operating costs: $196.0M, 1.1% of revenue
- Interest, other & tax: $1.19B, 6.5% of revenue
Kept 42% as net incomeOther operating costs $196.0M · 1.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 4, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $18.34B$14.46B | +26.9% |
| Cost of Revenue | $5.97B$5.19B | +14.9% |
| Gross Profit | $12.38B$9.27B | +33.5% |
| R&D Expenses | $1.55B$1.53B | +1.6% |
| SG&A Expenses | $1.67B$1.62B | +2.6% |
| Operating Income | $8.96B$5.89B | +52.0% |
| Net Income | $7.77B$5.59B | +38.9% |
| EPS (Basic) | $8.38$6.05 | +38.5% |
| EPS (Diluted) | $8.26$5.97 | +38.4% |
| Shares Outstanding (Basic) | 923.00M921.00M | +0.2% |
| Shares Outstanding (Diluted) | 936.00M933.00M | +0.3% |
05—Questions
Frequently Asked Questions
What are Texas Instruments' core business segments and their performance in 2021?
Texas Instruments operates with two primary reportable segments: Analog and Embedded Processing. In 2021, the Analog segment generated $14.05 billion in revenue, accounting for approximately 77% of total revenue. The Embedded Processing segment generated $3.05 billion in revenue, representing about 17% of total revenue. Both segments experienced significant revenue growth, with Analog revenue increasing by 29% and Embedded Processing revenue increasing by 19% compared to 2020.
How is Texas Instruments investing in its manufacturing capabilities for future growth?
Texas Instruments is making substantial investments to strengthen its manufacturing and technology competitive advantage. Key initiatives include the construction of new 300-millimeter wafer fabrication facilities in Sherman, Texas, continuing construction of RFAB2 in Richardson, Texas, and the purchase of a 300-millimeter wafer fabrication facility in Lehi, Utah. These investments are designed to support expected long-term semiconductor growth, particularly in the industrial and automotive markets, and are anticipated to contribute to lower costs and greater supply chain control over the next 10-15 years.
What is Texas Instruments' strategy for returning value to shareholders?
Texas Instruments' primary objective is to maximize free cash flow per share growth. To achieve this, the company focuses on its core business model, disciplined capital allocation, and efficiency. In terms of shareholder returns, TI returned $4.41 billion in 2021 through dividends and share repurchases. Dividends are designed to appeal to a broad investor base, while share repurchases are aimed at accretively capturing future free cash flow for long-term investors. The company also highlights the sustainability of its dividend, noting it represented 62% of free cash flow in 2021.
What are the key risks facing Texas Instruments as outlined in the filing?
Texas Instruments faces several risks, including the potential impact of macroeconomic weakness and global economic conditions. The semiconductor market's cyclical nature, with its inherent supply and demand fluctuations, poses a risk. The company also faces intense competition, rapid technological change requiring continuous innovation, and potential disruptions to its global supply chain. Geopolitical factors, trade tensions, cybersecurity threats, and changes in regulatory environments are also identified as significant risks that could adversely affect its operations and financial results.
06—Continue