ADI
$112.29
Analog Devices
($.97)
(.86%)
Earnings Details
3rd Quarter July 2019
Wednesday, August 21, 2019 8:00:00 AM
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Summary

Analog Devices Reports In-line

Analog Devices (ADI) reported 3rd Quarter July 2019 earnings of $1.26 per share on revenue of $1.5 billion. The consensus earnings estimate was $1.22 per share on revenue of $1.5 billion. The Earnings Whisper number was $1.26 per share. Revenue fell 5.9% compared to the same quarter a year ago.

The company said it expects fourth quarter earnings of $1.15 to $1.29 per share on revenue of $1.40 billion to $1.50 billion. The current consensus earnings estimate is $1.29 per share on revenue of $1.49 billion for the quarter ending October 31, 2019.

Analog Devices Inc is engaged in the design, manufacture and marketing of a portfolio of high-performance analog, mixed-signal and digital signal processing integrated circuits used in all types of electronic equipment.

Results
Reported Earnings
$1.26
Earnings Whisper
$1.26
Consensus Estimate
$1.22
Reported Revenue
$1.48 Bil
Revenue Estimate
$1.45 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Analog Devices Reports Third Quarter Fiscal 2019 Results with Revenue and EPS above the Midpoint of Guidance

  • Revenue of $1.48 billion with B2B markets down 3% year-over-year
  • Operating Cash Flow of $2.3 billion and Free Cash Flow of $2.0 billion on a trailing twelve months basis
  • Returned over $300 million to shareholders in the third quarter through dividends and share repurchases

NORWOOD, Mass.--(BUSINESS WIRE)--Analog Devices, Inc. (Nasdaq: ADI), a leading global high-performance analog technology company, today announced financial results for its third quarter of fiscal 2019, which ended August 3, 2019.

“In what continues to be a challenging macroeconomic environment, we once again executed soundly and delivered strong financial results,” said Vincent Roche, President and CEO. “Revenue and operating margins came in above the midpoint of guidance as ongoing broad-based weakness compared to the year ago quarter was balanced by growth in new areas such as 5G and electric vehicles. Further, we returned more than $300 million of cash to our shareholders in the third quarter through share repurchases and dividends.”

“While these uncertain times do not seem to be abating in the near term, ADI has successfully navigated macroeconomic challenges many times before. The key to our resilience is maintaining our long-term focus while remaining agile in response to market dynamics. Our focus on cutting edge innovation and diversity across products, customers and applications has allowed us to continue to generate strong revenue growth, profitability, and cash flow for more than five decades.”

Performance for the Third Quarter of Fiscal 2019

Results Summary

 

 

 

 

 

(in millions, except per-share amounts and percentages)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Aug. 3, 2019

 

Aug. 4, 2018 (1)

 

Change

Revenue

$

1,480

 

 

$

1,558

 

 

(5

)%

Gross margin

$

998

 

 

$

1,061

 

 

(6

)%

Gross margin percentage

67.4

%

 

68.1

%

 

(70 bps)

Operating income

$

447

 

 

$

489

 

 

(9

)%

Operating margin

30.2

%

 

31.4

%

 

(120 bps)

Diluted earnings per share

$

0.97

 

 

$

1.08

 

 

(10

)%

 

 

 

 

 

 

Adjusted Results

 

 

 

 

 

Adjusted gross margin

$

1,042

 

 

$

1,109

 

 

(6

)%

Adjusted gross margin percentage

70.4

%

 

71.2

%

 

(80 bps)

Adjusted operating income

$

604

 

 

$

661

 

 

(9

)%

Adjusted operating margin

40.8

%

 

42.4

%

 

(160 bps)

Adjusted diluted earnings per share

$

1.26

 

 

$

1.51

 

 

(17

)%

 

 

 

 

 

 

 

 

 

Three Months
Ended

 

Trailing Twelve
Months

Cash Generation

 

 

Aug. 3, 2019

 

Aug. 3, 2019

Net cash provided by operating activities

 

 

$

553

 

 

$

2,310

 

% of revenue (1)

 

 

37

%

 

38

%

Capital expenditures

 

 

$

(58

)

 

$

(310

)

Free cash flow (2)

 

 

$

494

 

 

$

1,999

 

% of revenue (1)

 

 

33

%

 

33

%

 

 

 

 

 

 

 

 

 

Three Months
Ended

 

Trailing Twelve
Months

Cash Return

 

 

Aug. 3, 2019

 

Aug. 3, 2019

Dividend paid

 

 

$

(200

)

 

$

(757

)

Stock repurchases

 

 

(112

)

 

(625

)

Total cash returned (2)

 

 

$

(312

)

 

$

(1,381

)

 

 

 

 

 

 

(1) Prior year balances have been restated to reflect the adoption of the new revenue recognition standard in the first quarter of fiscal 2019.

(2) The sum of the individual amounts may not equal the total due to rounding.

Outlook for the Fourth Quarter of Fiscal Year 2019

For the fourth quarter of fiscal 2019, we are forecasting revenue of $1.45 billion, +/- $50 million. At the midpoint of this revenue outlook, we expect reported operating margins of approximately 29.2%, and adjusted operating margins of approximately 40.0%. We are planning for reported EPS to be $0.86, +/- $0.07, and adjusted EPS to be $1.22, +/- $0.07.

Our fourth quarter fiscal 2019 outlook is based on current expectations and actual results may differ materially, as a result of, among other things, the important factors discussed at the end of this release. These statements supersede all prior statements regarding our business outlook set forth in prior ADI news releases, and ADI disclaims any obligation to update these forward-looking statements.

The adjusted results and adjusted anticipated results above are financial measures presented on a non-GAAP basis. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures are provided in the financial tables included in this press release. See also “Non-GAAP Financial Information” section for additional information.

Dividend Payment

The ADI Board of Directors has declared a quarterly cash dividend of $0.54 per outstanding share of common stock. The dividend will be paid on September 11, 2019 to all shareholders of record at the close of business on August 30, 2019.

Conference Call Scheduled for Today, Wednesday, August 21, 2019 at 10:00 am ET

ADI will host a conference call to discuss our third quarter fiscal 2019 results and short-term outlook today, beginning at 10:00 am ET. Investors may join via webcast, accessible at investor.analog.com, or by telephone (call 706-634-7193 ten minutes before the call begins and provide the password "ADI").

A replay will be available two hours after the completion of the call. The replay may be accessed for up to two weeks by dialing 855-859-2056 (replay only) and providing the conference ID: 5459156, or by visiting investor.analog.com.

Non-GAAP Financial Information

This release includes non-GAAP financial measures that are not in accordance with, nor an alternative to, generally accepted accounting principles (GAAP) and may be different from non-GAAP measures presented by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. These non-GAAP measures have material limitations in that they do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP and should not be considered in isolation from, or as a substitute for, the Company’s financial results presented in accordance with GAAP. The Company’s use of non-GAAP measures, and the underlying methodology when including or excluding certain items, is not necessarily an indication of the results of operations that may be expected in the future, or that the Company will not, in fact, record such items in future periods. You are cautioned not to place undue reliance on these non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are provided in the financial tables included in this release.

Management uses non-GAAP measures internally to evaluate the Company’s operating performance from continuing operations against past periods and to budget and allocate resources in future periods. These non-GAAP measures also assist management in evaluating the Company’s core business and trends across different reporting periods on a consistent basis. Management also uses these non-GAAP measures as the primary performance measurement when communicating with analysts and investors regarding the Company’s earnings results and outlook and believes that the presentation of these non-GAAP measures is useful to investors because it provides investors with the operating results that management uses to manage the Company and enables investors and analysts to evaluate the Company’s core business. Management also believes that the non-GAAP liquidity measure free cash flow is useful both internally and to investors because it provides information about the amount of cash generated after capital expenditures that is then available to repay debt obligations, make investments and fund acquisitions, and for certain other activities.

The non-GAAP financial measures referenced by ADI in this release include: adjusted gross margin, adjusted gross margin percentage, adjusted operating expenses, adjusted operating expenses percentage, adjusted operating income, adjusted operating margin, adjusted income before income taxes, adjusted provision for income taxes, adjusted tax rate, adjusted diluted earnings per share (EPS), free cash flow, and free cash flow margin.

Adjusted gross margin is defined as gross margin, determined in accordance with GAAP, excluding certain acquisition-related expenses1 which are described further below. Adjusted gross margin percentage represents adjusted gross margin divided by revenue.

Adjusted operating expenses is defined as operating expenses, determined in accordance with GAAP, excluding: certain acquisition-related expenses1; acquisition-related transaction costs2; and restructuring related expense3 which are described further below. Adjusted operating expenses percentage represents adjusted operating expenses divided by revenue.

Adjusted operating income is defined as operating income, determined in accordance with GAAP, excluding: acquisition-related expenses1; acquisition-related transaction costs2; and restructuring related expense3 which are described further below. Adjusted operating margin represents adjusted operating income divided by revenue.

Adjusted income before income taxes is defined as income before income taxes, determined in accordance with GAAP, excluding: acquisition-related expenses1; acquisition-related transaction costs2; and restructuring related expense3 which are described further below.

Adjusted provision for income taxes is defined as provision for income taxes, determined in accordance with GAAP, excluding tax related items4 described further below. Adjusted tax rate represents adjusted provision for income taxes divided by adjusted income before income taxes.

Adjusted diluted EPS is defined as diluted EPS, determined in accordance with GAAP, excluding: acquisition-related expenses1; acquisition-related transaction costs2, restructuring related expense3 and tax related items4 which are described further below.

Free cash flow is defined as net cash provided by operating activities, determined in accordance with GAAP, less additions to property, plant and equipment, net. Free cash flow margin percentage represents free cash flow divided by revenue.

1Acquisition-Related Expenses: Expenses incurred as a result of current and prior period acquisitions and primarily include expenses associated with the fair value adjustments to inventory, property, plant and equipment and amortization of acquisition related intangibles, which include acquired intangibles such as purchased technology and customer relationships. Expenses also include severance payments, equity award accelerations and the fair value adjustment associated with the replacement of share-based awards related to the Linear Technology acquisition. We excluded these costs from our non-GAAP measures because they relate to specific transactions and are not reflective of our ongoing financial performance.

2Acquisition-Related Transaction Costs: Costs directly related to the Linear Technology acquisition, including legal, accounting and other professional fees, as well as integration-related costs. We excluded these costs from our non-GAAP measures because they relate to a specific transaction and are not reflective of our ongoing financial performance.

3Restructuring-Related Expense: Expenses incurred in connection with facility closures, consolidation of manufacturing facilities, severance, and other cost reduction efforts. We excluded these expenses from our non-GAAP measures because apart from ongoing expense savings as a result of such items, these expenses have no direct correlation to the operation of our business in the future.

4Tax-Related Items: Tax adjustments associated with the non-GAAP items discussed above, discrete tax items including tax expense or benefit related to prior periods, income tax from prior period tax credits, tax expense or benefit related to the impact of the Tax Cuts and Jobs Act of 2017, uncertain tax positions, and the impact of a voluntary accounting policy change. We excluded these tax-related items from our non-GAAP measures because they are not associated with the tax expense on our current operating results.

About Analog Devices

Analog Devices (Nasdaq: ADI) is a leading global high-performance analog technology company dedicated to solving the toughest engineering challenges. We enable our customers to interpret the world around us by intelligently bridging the physical and digital with unmatched technologies that sense, measure, power, connect and interpret. Visit http://www.analog.com.

Forward Looking Statements

This press release contains forward-looking statements, which address a variety of subjects including, for example, our statements regarding expected revenue, operating margin, tax rate, earnings per share, and other financial results, expected market trends, market share gains, operating leverage, production and inventory levels, and expected customer demand and order rates for our products, expected product offerings, product development and marketing position. Statements that are not historical facts, including statements about our beliefs, plans and expectations, are forward-looking statements. Such statements are based on our current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements: any faltering in global economic conditions or the stability of credit and financial markets, erosion of consumer confidence and declines in customer spending, unavailability of raw materials, services, supplies or manufacturing capacity, changes in geographic, product or customer mix; changes in export classifications, import and export regulations or duties and tariffs; changes in our estimates of our expected tax rate based on current tax law; our ability to successfully integrate acquired businesses and technologies; the risk that expected benefits, synergies and growth prospects of acquisitions may not be fully achieved in a timely manner, or at all; adverse results in litigation matters; and the risk that we will be unable to retain and hire key personnel. For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to our filings with the Securities and Exchange Commission (“SEC”), including the risk factors contained in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K. Forward-looking statements represent management’s current expectations and are inherently uncertain. Except as required by law, we do not undertake any obligation to update forward-looking statements made by us to reflect subsequent events or circumstances.

Analog Devices and the Analog Devices logo are registered trademarks or trademarks of Analog Devices, Inc. All other trademarks mentioned in this document are the property of their respective owners.

(ADI-WEB)

For more information, please contact: Mr. Michael Lucarelli, Director of Investor Relations, Analog Devices, Inc. 781-461-3282 (phone); investor.relations@analog.com (email).

 

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)

 

 

Three Months Ended

 

Nine Months Ended

 

Aug. 3, 2019

 

Aug. 4, 2018
(2)

 

Aug. 3, 2019

 

Aug. 4, 2018
(2)

Revenue

$

1,480,143

 

 

$

1,558,189

 

 

$

4,547,846

 

 

$

4,688,561

 

Cost of sales (1)

482,332

 

 

497,631

 

 

1,476,287

 

 

1,483,930

 

Gross margin

997,811

 

 

1,060,558

 

 

3,071,559

 

 

3,204,631

 

Operating expenses:

 

 

 

 

 

 

 

Research & development (1)

280,102

 

 

291,642

 

 

853,330

 

 

869,711

 

Selling, marketing, general and administrative (1)

162,825

 

 

171,487

 

 

493,295

 

 

520,541

 

Amortization of intangibles

107,231

 

 

107,409

 

 

321,816

 

 

321,557

 

Special charges

927

 

 

1,069

 

 

30,871

 

 

59,476

 

Total operating expenses

551,085

 

 

571,607

 

 

1,699,312

 

 

1,771,285

 

Operating income

446,726

 

 

488,951

 

 

1,372,247

 

 

1,433,346

 

Nonoperating expense (income):

 

 

 

 

 

 

 

Interest expense

59,871

 

 

61,665

 

 

178,300

 

 

194,487

 

Interest income

(2,625

)

 

(2,588

)

 

(8,241

)

 

(6,592

)

Other, net

(78

)

 

(632

)

 

4,287

 

 

(527

)

 

57,168

 

 

58,445

 

 

174,346

 

 

187,368

 

Income before income tax

389,558

 

 

430,506

 

 

1,197,901

 

 

1,245,978

 

Provision for income taxes

27,184

 

 

21,949

 

 

112,584

 

 

143,853

 

Net income

$

362,374

 

 

$

408,557

 

 

$

1,085,317

 

 

$

1,102,125

 

 

 

 

 

 

 

 

 

Shares used to compute earnings per share - basic

369,533

 

 

371,315

 

 

369,160

 

 

370,211

 

Shares used to compute earnings per share - diluted

373,077

 

 

375,815

 

 

372,967

 

 

374,880

 

Basic earnings per common share

$

0.98

 

 

$

1.10

 

 

$

2.93

 

 

$

2.97

 

Diluted earnings per common share

$

0.97

 

 

$

1.08

 

 

$

2.90

 

 

$

2.93

 

 

 

 

 

 

 

 

 

(1) Includes stock-based compensation expense as follows:

Cost of sales

$

5,247

 

 

$

5,734

 

 

$

15,720

 

 

$

13,775

 

R&D

$

18,802

 

 

$

18,018

 

 

$

57,294

 

 

$

59,764

 

Selling, marketing and G&A

$

12,049

 

 

$

13,143

 

 

$

39,706

 

 

$

40,172

 

(2) Balances have been restated to reflect the full retrospective adoption of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers.

 

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

 

August 3, 2019

 

November 3, 2018 (1)

Cash & cash equivalents

$

612,164

 

 

$

816,591

 

Accounts receivable

689,976

 

 

639,717

 

Inventories

638,305

 

 

586,760

 

Other current assets

66,613

 

 

69,058

 

Total current assets

2,007,058

 

 

2,112,126

 

Net property, plant and equipment

1,221,192

 

 

1,154,328

 

Investments

78,068

 

 

68,583

 

Goodwill

12,247,888

 

 

12,252,604

 

Intangible assets, net

4,346,377

 

 

4,778,192

 

Deferred tax assets

1,606,267

 

 

9,665

 

Other

59,800

 

 

62,868

 

Total assets

$

21,566,650

 

 

$

20,438,366

 

 

 

 

 

Other current liabilities

$

1,072,246

 

 

$

984,748

 

Debt, current

411,434

 

 

67,000

 

Long-term debt

5,278,643

 

 

6,265,674

 

Deferred income taxes

2,171,029

 

 

990,409

 

Other non-current liabilities

843,061

 

 

862,362

 

Shareholders' equity

11,790,237

 

 

11,268,173

 

Total liabilities & equity

$

21,566,650

 

 

$

20,438,366

 

 

 

 

 

(1) Balances have been restated to reflect the full retrospective adoption of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers.

 

ANALOG DEVICES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

Three Months Ended

 

Nine Months Ended

 

Aug. 3, 2019

 

Aug. 4, 2018
(1)

 

Aug. 3, 2019

 

Aug. 4, 2018
(1)

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

362,374

 

 

$

408,557

 

 

$

1,085,317

 

 

$

1,102,125

 

Adjustments to reconcile net income to net cash provided by operations:

 

 

 

 

 

 

 

Depreciation

61,606

 

 

56,647

 

 

179,041

 

 

169,651

 

Amortization of intangibles

142,521

 

 

143,218

 

 

427,046

 

 

428,222

 

Stock-based compensation expense

36,098

 

 

36,895

 

 

112,720

 

 

113,711

 

Non-cash portion of special charge

 

 

 

 

4,367

 

 

 

Deferred income taxes

(33,601

)

 

(5,844

)

 

(55,444

)

 

(711,484

)

Other non-cash activity

8,272

 

 

7,103

 

 

26,701

 

 

22,019

 

Changes in operating assets and liabilities

(24,724

)

 

(25,838

)

 

(184,552

)

 

603,676

 

Total adjustments

190,172

 

 

212,181

 

 

509,879

 

 

625,795

 

Net cash provided by operating activities

552,546

 

 

620,738

 

 

1,595,196

 

 

1,727,920

 

Percent of revenue

37.3

%

 

39.8

%

 

35.1

%

 

36.9

%

Cash flows from investing activities:

 

 

 

 

 

 

 

Additions to property, plant and equipment

(58,094

)

 

(51,750

)

 

(224,297

)

 

(168,872

)

Payments for acquisitions, net of cash acquired

 

 

(500

)

 

 

 

(52,839

)

Change in other assets

(547

)

 

(2,239

)

 

(5,132

)

 

(3,268

)

Net cash used for investing activities

(58,641

)

 

(54,489

)

 

(229,429

)

 

(224,979

)

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from debt

1,250,000

 

 

 

 

1,250,000

 

 

743,778

 

Early termination of debt

(1,250,000

)

 

 

 

(1,250,000

)

 

 

Proceeds from revolver

 

 

 

 

75,000

 

 

 

Payments on revolver

 

 

 

 

(75,000

)

 

 

Debt repayments

(300,000

)

 

(430,000

)

 

(650,000

)

 

(2,050,000

)

Dividend payments to shareholders

(200,068

)

 

(178,890

)

 

(577,285

)

 

(523,891

)

Repurchase of common stock

(112,001

)

 

(11,953

)

 

(440,616

)

 

(41,861

)

Proceeds from employee stock plans

19,228

 

 

22,801

 

 

106,135

 

 

88,358

 

Change in other financing activities

(1,774

)

 

(1,083

)

 

(7,918

)

 

6,320

 

Net cash used for financing activities

(594,615

)

 

(599,125

)

 

(1,569,684

)

 

(1,777,296

)

Effect of exchange rate changes on cash

(727

)

 

(1,066

)

 

(510

)

 

(908

)

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

(101,437

)

 

(33,942

)

 

(204,427

)

 

(275,263

)

Cash and cash equivalents at beginning of period

713,601

 

 

806,517

 

 

816,591

 

 

1,047,838

 

Cash and cash equivalents at end of period

$

612,164

 

 

$

772,575

 

 

$

612,164

 

 

$

772,575

 

 

 

 

 

 

 

 

 

(1) Balances have been restated to reflect the full retrospective adoption of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers.

ANALOG DEVICES, INC.

REVENUE TRENDS BY END MARKET

(Unaudited)

(In thousands)

 

 

The categorization of revenue by end market is determined using a variety of data points including the technical characteristics of the product, the “sold to” customer information, the "ship to" customer information and the end customer product or application into which our product will be incorporated. As data systems for capturing and tracking this data and our methodology evolve and improve, the categorization of products by end market can vary over time. When this occurs we reclassify revenue by end market for prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each end market.

 

 

Three Months Ended

 

Aug. 3, 2019

 

Aug. 4, 2018 (1)

 

Revenue

 

% of revenue*

 

Y/Y %

 

Revenue

 

% of revenue*

Industrial

$

752,529

 

 

51%

 

(4)%

 

$

786,618

 

 

50%

Automotive

227,760

 

 

15%

 

(9)%

 

251,396

 

 

16%

Consumer

183,399

 

 

12%

 

(18)%

 

224,549

 

 

14%

Communications

316,455

 

 

21%

 

7%

 

295,626

 

 

19%

Total revenue

$

1,480,143

 

 

100%

 

(5)%

 

$

1,558,189

 

 

100%

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

Aug. 3, 2019

 

Aug. 4, 2018 (1)

 

Revenue

 

% of revenue*

 

Y/Y %

 

Revenue

 

% of revenue*

Industrial

$

2,260,907

 

 

50%

 

(5)%

 

$

2,386,708

 

 

51%

Automotive

706,531

 

 

16%

 

(8)%

 

765,385

 

 

16%

Consumer

557,097

 

 

12%

 

(21)%

 

705,690

 

 

15%

Communications

1,023,311

 

 

23%

 

23%

 

830,778

 

 

18%

Total revenue

$

4,547,846

 

 

100%

 

(3)%

 

$

4,688,561

 

 

100%

 

 

 

 

 

 

 

 

 

 

(1) Balances have been restated to reflect the full retrospective adoption of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers.

*The sum of the individual percentages may not equal the total due to rounding.

 

ANALOG DEVICES, INC.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(Unaudited)

(In thousands, except per share amounts)

 

 

Three Months Ended

 

Nine Months Ended

 

Aug. 3, 2019

 

Aug. 4, 2018 (1)

 

Aug. 3, 2019

 

Aug. 4, 2018 (1)

 

Gross margin

$

997,811

 

 

$

1,060,558

 

 

$

3,071,559

 

 

$

3,204,631

 

Gross margin percentage

67.4

%

 

68.1

%

 

67.5

%

 

68.3

%

Acquisition related expenses

43,694

 

 

48,488

 

 

130,444

 

 

137,007

 

Adjusted gross margin

$

1,041,505

 

 

$

1,109,046

 

 

$

3,202,003

 

 

$

3,341,638

 

Adjusted gross margin percentage

70.4

%

 

71.2

%

 

70.4

%

 

71.3

%

 

 

 

 

 

 

 

 

Operating expenses

$

551,085

 

 

$

571,607

 

 

$

1,699,312

 

 

$

1,771,285

 

Percent of revenue

37.2

%

 

36.7

%

 

37.4

%

 

37.8

%

Acquisition related expenses

(112,636

)

 

(118,308

)

 

(339,293

)

 

(359,482

)

Acquisition related transaction costs

 

 

(3,962

)

 

 

 

(16,569

)

Restructuring related expense

(927

)

 

(1,069

)

 

(30,871

)

 

(59,476

)

Adjusted operating expenses

$

437,522

 

 

$

448,268

 

 

$

1,329,148

 

 

$

1,335,758

 

Adjusted operating expenses percentage

29.6

%

 

28.8

%

 

29.2

%

 

28.5

%

 

 

 

 

 

 

 

 

Operating income

$

446,726

 

 

$

488,951

 

 

$

1,372,247

 

 

$

1,433,346

 

Operating margin

30.2

%

 

31.4

%

 

30.2

%

 

30.6

%

Acquisition related expenses

156,330

 

 

166,796

 

 

469,737

 

 

496,489

 

Acquisition related transaction costs

 

 

3,962

 

 

 

 

16,569

 

Restructuring related expense

927

 

 

1,069

 

 

30,871

 

 

59,476

 

Adjusted operating income

$

603,983

 

 

$

660,778

 

 

$

1,872,855

 

 

$

2,005,880

 

Adjusted operating margin

40.8

%

 

42.4

%

 

41.2

%

 

42.8

%

 

 

 

 

 

 

 

 

Provision for income taxes

$

27,184

 

 

$

21,949

 

 

$

112,584

 

 

$

143,853

 

Income tax on non discrete tax items above

20,927

 

 

6,673

 

 

68,567

 

 

23,817

 

Income tax on prior period tax liabilities

 

 

(961

)

 

 

 

(1,585

)

Income tax from prior period tax credits

11,210

 

 

 

 

11,210

 

 

 

Income tax on voluntary accounting policy change

17,155

 

 

 

 

17,155

 

 

 

Income tax of uncertain tax positions

 

 

4,195

 

 

 

 

7,945

 

Income tax one time transitional tax

 

 

 

 

7,500

 

 

(687,061

)

Income tax on deferred tax recalibration

 

 

 

 

5,060

 

 

639,698

 

Adjusted provision for income taxes

$

76,476

 

 

$

31,856

 

 

$

222,076

 

 

$

126,667

 

 

 

 

 

 

 

 

 

Income before income taxes

389,558

 

 

430,506

 

 

1,197,901

 

 

1,245,978

 

Effective tax rate

7.0

%

 

5.1

%

 

9.4

%

 

11.5

%

Acquisition related expenses

156,330

 

 

166,796

 

 

469,737

 

 

496,489

 

Acquisition related transaction costs

 

 

3,962

 

 

 

 

16,569

 

Restructuring related expense

927

 

 

1,069

 

 

30,871

 

 

59,476

 

Adjusted income before income taxes

$

546,815

 

 

$

602,333

 

 

$

1,698,509

 

 

$

1,818,512

 

Adjusted tax rate

14.0

%

 

5.3

%

 

13.1

%

 

7.0

%

 

 

 

 

 

 

 

 

Diluted EPS

$

0.97

 

 

$

1.08

 

 

$

2.90

 

 

$

2.93

 

Acquisition related expenses

0.42

 

 

0.44

 

 

1.26

 

 

1.32

 

Acquisition related transaction costs

 

 

0.01

 

 

 

 

0.04

 

Restructuring related expense

 

 

 

 

0.08

 

 

0.16

 

Income tax on non discrete tax items above

(0.06

)

 

(0.02

)

 

(0.18

)

 

(0.06

)

Income on prior period tax liabilities

 

 

 

 

 

 

 

Income tax from prior period tax credits

(0.03

)

 

 

 

(0.03

)

 

 

Income tax on voluntary accounting policy change

(0.05

)

 

 

 

(0.05

)

 

 

Income of uncertain tax positions

 

 

(0.01

)

 

 

 

(0.02

)

Income tax one time transitional tax

 

 

 

 

(0.02

)

 

1.83

 

Income tax on deferred tax recalibration

 

 

 

 

(0.01

)

 

(1.71

)

Adjusted diluted EPS (2)

$

1.26

 

 

$

1.51

 

 

$

3.96

 

 

$

4.50

 

 

(1) Balances have been restated to reflect the full retrospective adoption of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers.

(2) The sum of the individual per share amounts may not equal the total due to rounding.

 

ANALOG DEVICES, INC.

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW

(Unaudited)

(In thousands)

 

 

Trailing
Twelve
Months

 

Three Months Ended

 

Aug. 3, 2019

 

Aug. 3, 2019

 

May 4, 2019

 

Feb. 2, 2019

 

Nov. 3, 2018

Revenue (1)

$

6,083,974

 

 

$

1,480,143

 

 

$

1,526,602

 

 

$

1,541,101

 

 

$

1,536,128

 

Net cash provided by operating activities

$

2,309,636

 

 

$

552,546

 

 

$

670,882

 

 

$

371,767

 

 

$

714,441

 

% of Revenue

38

%

 

37

%

 

44

%

 

24

%

 

47

%

Capital expenditures

$

(310,300

)

 

$

(58,094

)

 

$

(75,209

)

 

$

(90,993

)

 

$

(86,004

)

Free cash flow

$

1,999,336

 

 

$

494,452

 

 

$

595,673

 

 

$

280,774

 

 

$

628,437

 

% of Revenue

33

%

 

33

%

 

39

%

 

18

%

 

41

%

 

 

 

 

 

 

 

 

 

 

(1) Balances have been restated to reflect the full retrospective adoption of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers.

 

ANALOG DEVICES, INC.

RECONCILIATION OF PROJECTED GAAP TO NON-GAAP RESULTS

(Unaudited)

 

 

Three Months Ending Nov. 2, 2019

 

Reported

 

Adjusted

Revenue

$1.45 Billion

 

$1.45 Billion

 

(+/- $50 Million)

 

(+/- $50 Million)

Operating margin

29.2%

 

40.0% (1)

 

(+/-110 bps)

 

(+/-70 bps)

Nonoperating expense

~ $52 Million

 

~ $52 Million

Tax rate

13% to 15%

 

13% to 15% (2)

Earnings per share

$0.86

 

$1.22 (3)

 

(+/- $0.07)

 

(+/- $0.07)

(1) Includes $157 million of adjustments related to acquisition related expenses as previously defined in the Non-GAAP Financial Information section of this press release.

(2) Includes $22 million of tax effects associated with the adjustment for acquisition related expenses above.

(3) Includes $0.36 of adjustments related to the net impact of $0.42 of acquisition related expenses and $0.06 of tax effects on those acquisition related expenses.

 

Analog Devices, Inc.
Mr. Michael Lucarelli, 781-461-3282
Director of Investor Relations
investor.relations@analog.com

Source: Analog Devices, Inc.