Texas Instruments Incorporated (TI) reported first-quarter revenue of $3.15 billion, net income of $656 million and earnings per share of 61 cents. Regarding the company's performance and returns to shareholders, Rich Templeton, TI's chairman, president and CEO, made the following comments:
"Revenue growth of 6 percent was the sixth consecutive quarter of year-over-year growth and within the range of our expectations. Automotive and industrial markets were strong, as we expected they would be. Revenue, however, was in the bottom half of our range for two reasons. First was weak demand in the last month of the quarter in our personal electronics market, particularly PCs, and in our communications equipment market, particularly wireless infrastructure equipment. Second was a steep decline in the currency exchange rate for the euro relative to the U.S. dollar.
"Even so, our core businesses of Analog and Embedded Processing delivered their seventh and tenth consecutive quarters of year-over-year growth, respectively. Combined, Analog and Embedded Processing comprised 86 percent of first-quarter revenue. Gross margin of 57.7 percent was up almost 4 percentage points from a year ago, reflecting the diversity and longevity of our product portfolio, as well as the efficiency of our manufacturing strategy.
"Our cash flow from operations once again underscored the strength of our business model. Free cash flow for the trailing 12 months was up 17 percent from a year ago to $3.6 billion, or 27 percent of revenue. This represents an increase of 2 percentage points from a year ago and is consistent with our targeted range of 20-30 percent of revenue.
"We returned $4.1 billion to shareholders in the past 12 months through stock repurchases and dividends. Our strategy to return to shareholders 100 percent of free cash flow plus proceeds from exercises of equity compensation minus net debt retirement reflects our confidence in the long-term sustainability of our business model.
"Our balance sheet remains strong, with $3.3 billion of cash and short-term investments at the end of the quarter, 82 percent of which was owned by the company's U.S. entities. Inventory ended the quarter at 124 days.
"TI's outlook for the second quarter is for revenue in the range of $3.12 billion to $3.38 billion and earnings per share between 60 and 70 cents. Our estimates assume continuing weakness in our communications equipment and personal electronics markets, particularly for wireless infrastructure equipment and PCs, respectively. We also do not expect a near-term rebound in foreign currency exchange rates. The annual effective tax rate for 2015 is expected to be about 30 percent,â€ Templeton concluded.