Texas Instruments Incorporated (NASDAQ:TXN) Q4 2022 Earnings Call Transcript

Rafael Lizardi: Yes. In fact, let me take a second and kind of walk through how it flows through the financial. So you can actually look at our balance sheet on the Page 4 of our release. The other long-term assets that is up to 1.1 billion. You can see the increase year-on-year, that’s the 400 €“ that’s what a 400 million receivable is for that ITC. If we had not taken the ITC, that $400 million would have gone to property, plant and equipment. So you can see property, plant and equipment $6.9 billion that would have been $7.3 billion. So instead on a long-term asset, a receivable therefore it’s not going to depreciate that $400 million doesn’t appreciate because it’s not part of PP&E, and eventually, we’ll get the cash. Now to your question right now, based on our interpretation of the law, we’re not going to get that cash until late 2024.

And then every year, it will be like one-year in areas, right? You get a kind of one-year late, but that could change. Clearly, that’s something that companies are advocating forward to get that cash early. But right now, we’re not planning to get that until 2024. So again, that’s how you see it on the balance sheet, lower PP&E. You see a receivable instead. Then because of lower PP&E, you have lower depreciation over the life of the asset and then the receivable because the receivable venture, you get the cash, so it goes from a receivable to the cash line, right? And then eventually, we return it to the owners of the company or use it for other €“ for the corporate core business. Hopefully, that answers your question.

Ambrish Srivastava: Thank you very much.

Dave Pahl: Yes. Maybe just quickly there 2024 timing is tied to when we file our taxes for 2023, right?

Rafael Lizardi: Yes. So yes, so not to add more confusion, but we get the cash through filing the taxes. However, this will not affect the tax rate because the accounting will put that, as I just described, through lower PP&E and you actually see the cash in the cash flow statement in the investing section. But the actual receiving of the cash happens at tax filing time in October or so of September of every year, and we just paid less taxes to that. But again, not to confuse you, the tax rate will not change.

Ambrish Srivastava: It’s an more-than accounting. Thank you, guys.

Rafael Lizardi: Okay. Operator, we have time for one more caller, please.

Operator: Thank you. And our final question for today will come from Joshua Buchalter of Cowen.

Joshua Buchalter: Hey guys. Thanks for squeezing me in. You mentioned customers getting inventory lower in the quarter. You’re more direct than many of your peers that you have a better, I guess, view into end demand theoretically. And so €“ can you help us understand are we close to bottoming? Do you think we’re getting to healthy levels? And were there particular end markets that saw more acute inventory correction in the short-term? Thank you.