TI reports 3Q13 financial results and shareholder returns

Conference call on TI website at 4:30 p.m. Central time today

(PRNewswire) —  Texas Instruments Incorporated (TI) (NASDAQ: TXN) today reported third-quarter revenue of $3.24 billion, net income of $629 million and earnings per share of 56 cents

Regarding the company's performance and returns to shareholders, Rich Templeton, TI's chairman, president and CEO, made the following comments:

  • "Our third-quarter performance reflects the positive structural changes we've made at TI over the past few years as we've focused on Analog and Embedded Processing.
  • "Our revenue in the quarter was up 6 percent sequentially. Excluding the legacy wireless products, revenue grew 10 percent sequentially. Our book-to-bill ratio was 0.97, consistent with an expected seasonal revenue decline in the fourth quarter.
  • "Analog and Embedded Processing are now 80 percent of TI's revenue, eight points higher than a year ago. The combined revenue from these two businesses grew 10 percent sequentially and 7 percent from a year ago. Our legacy wireless products declined to less than 2 percent of revenue.
  • "Earnings per share were higher than expected due to better revenue and gross profit, tight expense control and discrete tax items. Gross margin of 54.8 percent was an all-time high for TI, exceeding the prior record set in the third quarter of 2010, even though both revenue and factory utilization were lower. We believe this reflects the increased quality of revenue that comes from our focus on Analog and Embedded Processing and the efficiency of our manufacturing strategy.
  • "Our business model continues to generate strong cash flow from operations. Free cash flow for the trailing 12 months was almost $3 billion, up 4 percent compared with a year ago. Free cash flow was 24 percent of revenue, consistent with our target of 20-25 percent.
  • "We returned $1.0 billion to shareholders through dividends and stock repurchases in the third quarter. For the trailing 12 months, the return to shareholders totaled $3.8 billion or 133 percent of free cash flow. In the quarter, we announced a dividend increase, our second in 2013. In total, we have increased our dividend by 43 percent this year, resulting in an annualized rate of $1.20 per share. Our strategy to return to shareholders all of our free cash flow not needed for debt repayment reflects our confidence in the long-term sustainability of our Analog and Embedded Processing business model.
  • "Our balance sheet remains strong, with $3.6 billion of cash and short-term investments at the end of the quarter, 82 percent owned by the company's U.S. entities. Inventory days were 106, up from 101 a year ago, and consistent with our model of 105-115 days.
  • "At the mid-point of our fourth-quarter guidance range, revenue would decline 8 percent sequentially and be about even with the fourth quarter of 2012. Excluding legacy wireless revenue, which should decline to about $50 million in the fourth quarter, the mid-point of our outlook would deliver 8 percent growth from a year ago."

Free cash flow and revenue excluding legacy wireless are non-GAAP financial measures.  Free cash flow is Cash flow from operations less Capital expenditures.

Earnings summary

Amounts are in millions of dollars, except per-share amounts.






3Q13

3Q12

Change

Revenue

$ 3,244

$ 3,390

-4%

Operating profit

$    844

$    840

0%

Net income

$    629

$    784

-20%

Earnings per share

$     .56

$     .67

-16%

 

Cash generation

Amounts are in millions of dollars.




Trailing 12 Months



3Q13


3Q13

3Q12

Change

Cash flow from operations

$ 1,151


$ 3,270

$ 3,298

-1%

Capital expenditures

$    124


$    402

$    551

-27%

Free cash flow

$ 1,027


$ 2,868

$ 2,747

4%

Free cash flow % of revenue

32%


24%

21%



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