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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Analog Devices Inc | NASDAQ:ADI | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 237.72 | 232.34 | 250.34 | 98 | 12:06:12 |
Analog Devices, Inc. (Nasdaq: ADI), a leading global high-performance analog technology company, today announced financial results for its second quarter of fiscal 2020, which ended May 2, 2020.
“During this unprecedented time, ADI has moved with speed and agility to pivot our supply chain and meet customer demand, expediting production and shipments of essential products, including solutions used in medical equipment in the fight against COVID-19. I’m proud of the way our team has adapted, demonstrating determination, resilience and unity in the face of this pandemic,” said Vincent Roche, President and CEO of Analog Devices. “Our diversification across customers, applications, and markets is mitigating weaker global business activity. This enabled us to deliver second quarter results within our original guidance range and generate solid free cash flow, underscoring the strength and flexibility of our business model in any economic backdrop.”
Roche continued, “Looking forward, we remain focused on pushing the limits of innovation to develop leading edge solutions that deliver maximum impact for our customers. I am confident that ADI is well positioned to accelerate in the recovery phase and deliver value for all stakeholders as we continue to solve the toughest engineering challenges of today and tomorrow.”
Performance for the Second Quarter of Fiscal 2020
Results Summary(1)
(in millions, except per-share amounts and percentages)
Three Months Ended
May 2, 2020
May 4, 2019
Change
Revenue
$
1,317
$
1,527
(14)%
Gross margin
$
847
$
1,034
(18)%
Gross margin percentage
64.3
%
67.7
%
(340 bps)
Operating income
$
344
$
470
(27)%
Operating margin
26.1
%
30.8
%
(470 bps)
Diluted earnings per share
$
0.72
$
0.98
(27)%
Adjusted Results
Adjusted gross margin
$
891
$
1,077
(17)%
Adjusted gross margin percentage
67.7
%
70.6
%
(290 bps)
Adjusted operating income
$
501
$
634
(21)%
Adjusted operating margin
38.0
%
41.5
%
(350 bps)
Adjusted diluted earnings per share
$
1.08
$
1.36
(21)%
Three Months Ended
Trailing Twelve Months
Cash Generation
May 2, 2020
May 2, 2020
Net cash provided by operating activities
$
429
$
1,989
% of revenue
33
%
36
%
Capital expenditures
$
(60
)
$
(224
)
Free cash flow
$
369
$
1,765
% of revenue
28
%
32
%
Three Months Ended
Trailing Twelve Months
Cash Return
May 2, 2020
May 2, 2020
Dividend paid
$
(229
)
$
(828
)
Stock repurchases
(114
)
(504
)
Total cash returned
$
(343
)
$
(1,332
)
(1) The sum and/or computation of the individual amounts may not equal the total due to rounding.
Outlook for the Third Quarter of Fiscal Year 2020
For the third quarter of fiscal 2020, we are forecasting revenue of $1.32 billion, +/- $70 million. At the midpoint of this revenue outlook, we expect reported operating margins of approximately 26.4%, +/-200 bps, and adjusted operating margins of approximately 38.3%, +/-150 bps. We are planning for reported EPS to be $0.72, +/-$0.11, and adjusted EPS to be $1.08, +/-$0.11.
Our third quarter fiscal 2020 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 $0.62 per outstanding share of common stock. The dividend will be paid on June 9, 2020 to all shareholders of record at the close of business on May 29, 2020.
Conference Call Scheduled for Today, Wednesday, May 20, 2020 at 10:00 am ET
ADI will host a conference call to discuss our second quarter fiscal 2020 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 800-859-9560, or 706-634-7193 for international calls, 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: 4990445, 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 percentage.
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; restructuring related expense2; and charitable foundation contribution3 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; restructuring related expense2; and charitable foundation contribution3 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; restructuring related expense2; and charitable foundation contribution3 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 which are 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; restructuring related expense2; charitable foundation contribution3; 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.
2Restructuring-Related Expense: Expenses incurred in connection with facility closures, consolidation of manufacturing facilities, severance, other accelerated stock-based compensation expense 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.
3Charitable Foundation Contribution: Expenses incurred in connection with a one time contribution of registered shares of common stock to the Analog Devices Foundation. We excluded this expense from our non-GAAP measures because this expense has no direct correlation to the operation of our business in the future.
4Tax-Related Items: Income tax effect of the non-GAAP items discussed above and income tax from certain discrete tax items related to the impact of the Tax Cuts and Jobs Act of 2017 or prior periods. 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: the uncertainty as to the extent of the duration, scope and impacts of the COVID-19 pandemic, political and economic uncertainty, including 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.
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
Six Months Ended
May 2, 2020
May 4, 2019
May 2, 2020
May 4, 2019
Revenue
$
1,317,060
$
1,526,602
$
2,620,625
$
3,067,703
Cost of sales
470,386
492,510
925,809
993,955
Gross margin
846,674
1,034,092
1,694,816
2,073,748
Operating expenses:
Research & development
252,413
285,846
509,486
573,228
Selling, marketing, general and administrative
141,775
163,128
341,055
330,470
Amortization of intangibles
107,146
107,261
214,371
214,585
Special charges
1,320
8,162
12,456
29,944
Total operating expenses
502,654
564,397
1,077,368
1,148,227
Operating income
344,020
469,695
617,448
925,521
Nonoperating expense (income):
Interest expense
49,985
59,701
98,798
118,429
Interest income
(1,334
)
(2,928
)
(3,274
)
(5,616
)
Other, net
308
4,525
646
4,365
48,959
61,298
96,170
117,178
Income before income tax
295,061
408,397
521,278
808,343
Provision for income taxes
27,365
40,460
49,708
85,400
Net income
$
267,696
$
367,937
$
471,570
$
722,943
Shares used to compute earnings per common share - basic
368,217
369,246
368,229
368,974
Shares used to compute earnings per common share - diluted
371,305
373,342
371,784
372,912
Basic earnings per common share
$
0.73
$
0.99
$
1.28
$
1.95
Diluted earnings per common share
$
0.72
$
0.98
$
1.27
$
1.93
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
May 2, 2020
Nov. 2, 2019
Cash & cash equivalents
$
784,937
$
648,322
Accounts receivable
588,244
635,136
Inventories
590,268
609,886
Other current assets
87,844
91,782
Total current assets
2,051,293
1,985,126
Net property, plant and equipment
1,189,332
1,219,989
Other investments
76,025
77,324
Goodwill
12,253,670
12,256,880
Intangible assets, net
3,928,902
4,217,224
Deferred tax assets
1,553,902
1,582,382
Other assets
297,814
53,716
Total assets
$
21,350,938
$
21,392,641
Other current liabilities
$
1,133,057
$
1,208,965
Debt, current
448,945
299,667
Long-term debt
5,142,223
5,192,252
Deferred income taxes
2,000,644
2,088,212
Other non-current liabilities
1,035,211
894,357
Shareholders' equity
11,590,858
11,709,188
Total liabilities & equity
$
21,350,938
$
21,392,641
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended
Six Months Ended
May 2, 2020
May 4, 2019
May 2, 2020
May 4, 2019
Cash flows from operating activities:
Net income
$
267,696
$
367,937
$
471,570
$
722,943
Adjustments to reconcile net income to net cash provided by operations:
Depreciation
59,261
59,142
119,124
117,435
Amortization of intangibles
144,051
142,233
288,120
284,525
Stock-based compensation expense
35,900
40,229
73,401
76,622
Non-cash portion of special charge
—
—
—
4,367
Deferred income taxes
(21,408
)
(37,495
)
(35,390
)
(21,843
)
Non-cash contribution to charitable foundation
—
—
40,000
—
Other non-cash activity
1,469
11,736
3,801
18,429
Changes in operating assets and liabilities
(57,928
)
87,100
(181,937
)
(159,829
)
Total adjustments
161,345
302,945
307,119
319,706
Net cash provided by operating activities
429,041
670,882
778,689
1,042,649
Percent of revenue
32.6
%
43.9
%
29.7
%
34.0
%
Cash flows from investing activities:
Additions to property, plant and equipment
(60,161
)
(75,209
)
(115,000
)
(166,202
)
Changes in other assets
(1,391
)
637
(1,284
)
(4,585
)
Net cash used for investing activities
(61,552
)
(74,572
)
(116,284
)
(170,787
)
Cash flows from financing activities:
Proceeds from debt
395,646
—
395,646
—
Payments on revolver
(350,000
)
—
(350,000
)
(75,000
)
Proceeds from revolver
350,000
—
350,000
75,000
Debt repayments
(300,000
)
(250,000
)
(300,000
)
(350,000
)
Dividend payments to shareholders
(228,600
)
(199,501
)
(427,760
)
(377,217
)
Repurchase of common stock
(113,584
)
(101,522
)
(219,614
)
(328,615
)
Proceeds from employee stock plans
14,784
67,678
30,897
86,907
Changes in other financing activities
(3,956
)
(5,575
)
(4,451
)
(6,144
)
Net cash used for financing activities
(235,710
)
(488,920
)
(525,282
)
(975,069
)
Effect of exchange rate changes on cash
(1,250
)
347
(508
)
217
Net increase (decrease) in cash and cash equivalents
130,529
107,737
136,615
(102,990
)
Cash and cash equivalents at beginning of period
654,408
605,864
648,322
816,591
Cash and cash equivalents at end of period
$
784,937
$
713,601
$
784,937
$
713,601
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
May 2, 2020
May 4, 2019
Revenue
% of revenue*
Y/Y %
Revenue
% of revenue*
Industrial
$
710,760
54%
(8)%
$
771,359
51%
Communications
276,420
21%
(24)%
363,457
24%
Automotive
182,383
14%
(23)%
236,011
15%
Consumer
147,497
11%
(5)%
155,775
10%
Total revenue
$
1,317,060
100%
(14)%
$
1,526,602
100%
Six Months Ended
May 2, 2020
May 4, 2019
Revenue
% of revenue*
Y/Y %
Revenue
% of revenue*
Industrial
$
1,395,113
53%
(7)%
$
1,503,331
49%
Communications
517,253
20%
(27)%
712,014
23%
Automotive
388,630
15%
(19)%
480,268
16%
Consumer
319,629
12%
(14)%
372,090
12%
Total revenue
$
2,620,625
100%
(15)%
$
3,067,703
100%
*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
Six Months Ended
May 2, 2020
May 4, 2019
May 2, 2020
May 4, 2019
Gross margin
$
846,674
$
1,034,092
$
1,694,816
$
2,073,748
Gross margin percentage
64.3
%
67.7
%
64.7
%
67.6
%
Acquisition related expenses
44,395
43,255
89,411
88,750
Adjusted gross margin
$
891,069
$
1,077,347
$
1,784,227
$
2,162,498
Adjusted gross margin percentage
67.7
%
70.6
%
68.1
%
70.5
%
Operating expenses
$
502,654
$
564,397
$
1,077,368
$
1,148,227
Percent of revenue
38.2
%
37.0
%
41.1
%
37.4
%
Acquisition related expenses
(111,057
)
(112,824
)
(222,838
)
(222,656
)
Charitable foundation contribution
—
—
(40,000
)
—
Restructuring related expense
(1,320
)
(8,162
)
(12,456
)
(29,944
)
Adjusted operating expenses
$
390,277
$
443,411
$
802,074
$
895,627
Adjusted operating expenses percentage
29.6
%
29.0
%
30.6
%
29.2
%
Operating income
$
344,020
$
469,695
$
617,448
$
925,521
Operating margin
26.1
%
30.8
%
23.6
%
30.2
%
Acquisition related expenses
155,452
156,079
312,249
311,406
Charitable foundation contribution
—
—
40,000
—
Restructuring related expense
1,320
8,162
12,456
29,944
Adjusted operating income
$
500,792
$
633,936
$
982,153
$
1,266,871
Adjusted operating margin
38.0
%
41.5
%
37.5
%
41.3
%
Provision for income taxes
$
27,365
$
40,460
$
49,708
$
85,400
Income tax effect of adjustments above
21,867
22,740
50,147
47,640
Income tax from certain discrete tax items
—
—
—
12,560
Adjusted provision for income taxes
$
49,232
$
63,200
$
99,855
$
145,600
Income before income taxes
295,061
408,397
521,278
808,343
Effective tax rate
9.3
%
9.9
%
9.5
%
10.6
%
Acquisition related expenses
155,452
156,079
312,249
311,406
Charitable foundation contribution
—
—
40,000
—
Restructuring related expense
1,320
8,162
12,456
29,944
Adjusted income before income taxes
$
451,833
$
572,638
$
885,983
$
1,149,693
Adjusted tax rate
10.9
%
11.0
%
11.3
%
12.7
%
Diluted EPS
$
0.72
$
0.98
$
1.27
$
1.93
Acquisition related expenses
0.42
0.42
0.84
0.84
Charitable foundation contribution
—
—
0.11
—
Restructuring related expense
0.00
0.02
0.03
0.08
Income tax effect of adjustments above
(0.06
)
(0.06
)
(0.13
)
(0.13
)
Income tax from certain discrete tax items
—
—
—
(0.03
)
Adjusted diluted EPS (1)
$
1.08
$
1.36
$
2.11
$
2.69
(1) 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
May 2, 2020
May 2, 2020
Feb. 1, 2020
Nov. 2, 2019
Aug. 3, 2019
Revenue
$
5,543,987
$
1,317,060
$
1,303,565
$
1,443,219
$
1,480,143
Net cash provided by operating activities
$
1,989,140
$
429,041
$
349,648
$
657,905
$
552,546
% of Revenue
36
%
33
%
27
%
46
%
37
%
Capital expenditures
$
(224,170
)
$
(60,161
)
$
(54,839
)
$
(51,076
)
$
(58,094
)
Free cash flow
$
1,764,970
$
368,880
$
294,809
$
606,829
$
494,452
% of Revenue
32
%
28
%
23
%
42
%
33
%
ANALOG DEVICES, INC.
RECONCILIATION OF PROJECTED GAAP TO NON-GAAP RESULTS
(Unaudited)
Three Months Ending August 1, 2020
Reported
Adjusted
Revenue
$1.32 Billion
$1.32 Billion
(+/- $70 Million)
(+/- $70 Million)
Operating margin
26.4%
38.3% (1)
(+/-200 bps)
(+/-150 bps)
Nonoperating expense
~ $47 Million
~ $47 Million
Tax rate
11% to 12%
12% to 13% (2)
Earnings per share
$0.72
$1.08 (3)
(+/- $0.11)
(+/- $0.11)
(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.
(ADI-WEB)
View source version on businesswire.com: https://www.businesswire.com/news/home/20200520005128/en/
Investor Contact: Analog Devices, Inc. Mr. Michael Lucarelli Sr. Director of Investor Relations 781-461-3282 investor.relations@analog.com Media Contacts: Teneo Ms. Andrea Calise 917-826-3804 andrea.calise@teneo.com Teneo Ms. Megan Fenton 917-860-0356 megan.fenton@teneo.com
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