TI Reports 2Q14 Financial Results

Texas Instruments Incorporated (TI) reported second-quarter revenue of $3.29 billion, net income of $683 million and earnings per share of 62 cents.

“Revenue for the quarter came in just above the middle of our expected range and earnings were near the top of the range, marking another quarter of solid execution,” said Rich Templeton, TI’s chairman, president and CEO. “We delivered 8% year-over-year revenue growth, or 13% when legacy wireless revenue is excluded. Analog and Embedded Processing comprised 82% of second-quarter revenue, 4 points higher than a year ago.

“Gross margin of 57.1 percent, a new record, reflects the quality of our Analog and Embedded Processing portfolio and the efficiency of our manufacturing strategy,” Templeton added. ““The strength of our business model is reflected in our generation of cash flow from operations. Free cash flow for the trailing 12-month period was up 10% from a year ago to $3.2 billion, or 25% of revenue. This is consistent with our target of 20%-30%.

“We returned $4.2 billion to shareholders in the past 12 months through dividends paid and stock repurchases,” Templeton reported. “Our strategy to return to shareholders all free cash flow not needed for net debt retirement, and to return proceeds from exercises of equity compensation, reflects our confidence in the long-term sustainability of our business model. Our balance sheet remains strong, with $2.8 billion of cash and short-term investments at the end of the quarter, 82% of which was owned by the company’s U.S. entities. Inventory days were 111, consistent with our model of 105-115 days.

“TI’s outlook for the third quarter of 2014 is for revenue in the range of $3.31 billion to $3.59 billion and earnings per share between $0.66 and $0.76,” Templeton concluded. “ The annual effective tax rate for 2014 is expected to be about 28%, unchanged from our previous guidance.”