10-QPeriod: Q3 FY2014

TEXAS INSTRUMENTS INC Quarterly Report for Q3 Ended Sep 30, 2014

Filed October 31, 2014For Securities:TXN

Summary

Texas Instruments Inc. (TXN) reported a strong third quarter for 2014, showcasing significant year-over-year growth in revenue and profitability. Revenue increased by 8% to $3.50 billion, driven primarily by robust performance in the Analog and Embedded Processing segments, which now account for 82% of total revenue. The company achieved a record gross margin of 58.4%, reflecting a favorable product mix and manufacturing efficiencies. Net income rose substantially to $826 million, translating to diluted earnings per share (EPS) of $0.76, up from $0.56 in the prior year. Financially, TI demonstrated strong operational cash flow, with free cash flow for the trailing twelve months reaching $3.5 billion, representing 27% of revenue and an improvement from the previous year. The company actively returned capital to shareholders, with $4.2 billion distributed through stock repurchases and dividends over the past twelve months, including a 13% increase in the quarterly dividend. The balance sheet remains solid, with $3.19 billion in cash and short-term investments, indicating continued financial strength and operational execution.

Financial Highlights

52 data points
Beta

Revenue

$3.50B

58.4% Gross Margin

Net Income

$826.00M

23.6% Net Margin

EPS (Diluted)

$0.76

Total Assets

$17.90B

Cash & Equivalents

$1.31B

Free Cash Flow

$1.28B

Financial Statements
Beta
Revenue$3.50B
Cost of Revenue$1.46B
Gross Profit$2.04B
R&D Expenses$332.00M
SG&A Expenses$463.00M
Operating Income$1.18B
Net Income$826.00M
EPS (Basic)$0.77
EPS (Diluted)$0.76
Shares Outstanding (Basic)1.06B
Shares Outstanding (Diluted)1.07B

Key Highlights

  • 1Revenue increased 8% year-over-year to $3.50 billion for Q3 2014.
  • 2Achieved a record gross margin of 58.4% in Q3 2014.
  • 3Net income rose to $826 million ($0.76 diluted EPS) in Q3 2014, compared to $629 million ($0.56 diluted EPS) in Q3 2013.
  • 4Analog and Embedded Processing segments combined accounted for 82% of Q3 2014 revenue, indicating a strong focus on these growth areas.
  • 5Free cash flow for the trailing twelve months was $3.5 billion (27% of revenue), up 20% year-over-year.
  • 6Returned $4.2 billion to shareholders in the past twelve months via stock repurchases and dividends, including a 13% increase in quarterly dividend.
  • 7Maintained a strong balance sheet with $3.19 billion in cash and short-term investments as of September 30, 2014.

Frequently Asked Questions

The primary drivers of Texas Instruments' 8% year-over-year revenue growth in Q3 2014 were strong performance in the Analog and Embedded Processing segments. These two segments collectively represented 82% of the company's revenue for the quarter.

Texas Instruments is actively returning value to shareholders through stock repurchases and dividends. Over the past twelve months, the company returned $4.2 billion to shareholders. In the third quarter of 2014, they announced a 13% increase in their quarterly cash dividend, raising the annualized rate to $1.36 per share.

Texas Instruments maintained a strong financial position with $3.19 billion in cash and short-term investments at the end of the third quarter of 2014. Free cash flow for the trailing twelve months was $3.5 billion, and the company indicated it has sufficient financial resources to meet its obligations for at least the next 12 months.

While the company has undertaken restructuring actions aimed at cost savings and aligning investments with growth opportunities, these charges were a net credit in Q3 2014 ($9 million) and for the nine months of 2014 ($24 million credit). Gains from asset sales also contributed to these figures, offsetting remaining restructuring charges. The company expects these actions to be largely completed by mid-2015.