Revenue in the first quarter totaled $769 million, ADI
repurchases $132 million of its stock and reduces share count by
1%
Analog Devices, Inc. (NASDAQ: ADI), a global leader in
high-performance semiconductors for signal processing applications
today announced financial results for its first quarter of fiscal
year 2016, which ended January 30, 2016.
“Despite an uneven macroeconomic backdrop and significant
weakness in the consumer market, our business to business (B2B)
markets of industrial, automotive, and communications
infrastructure were resilient in the first quarter,” said Vincent
Roche, President and CEO. “In addition, we returned $257 million,
or 131% of free cash flow, to shareholders through dividends and
share repurchases.”
“With order flows in the B2B markets trending largely in-line
with seasonal patterns, we are planning for combined revenue in
these markets to grow at a mid-to-high single digit rate
sequentially in the second quarter, offsetting expected weakness in
the portable consumer market. In total, we expect revenue in the
second quarter to be in the range of -2% to +4% sequentially.”
Results for the First Quarter of Fiscal
Year 2016
- Revenue totaled $769 million, down 21%
sequentially, and stable year-over-year
- Revenue in ADI’s B2B markets of
industrial, automotive, and communications infrastructure totaled
$644 million, down 3% sequentially, and down 5% year-over-year
- GAAP gross margin of 62.0% of revenue;
Non-GAAP gross margin of 62.2% of revenue
- GAAP operating margin of 25.3% of
revenue; Non-GAAP operating margin of 27.8% of revenue
- GAAP diluted EPS of $0.52; Non-GAAP
diluted EPS of $0.56
Please refer to the schedules provided for a summary of revenue
and earnings, selected balance sheet information, and the cash flow
statement for the first quarter of fiscal year 2016, as well as the
immediately prior and year-ago quarters. Additional information on
revenue by end market is provided on Schedule D.
ADI Increases Dividend by 2 cents and
Share Repurchase Program to $1 BillionADI also announced
on February 16, 2016 that its Board of Directors has approved a 2
cent increase in its quarterly dividend,
from $0.40 to $0.42 per outstanding share of
common stock. The dividend will be paid on March 8,
2016 to all shareholders of record at the close of business
on February 26, 2016.
In addition, the Board of Directors approved an increase to the
Company’s share repurchase authorization to $1 billion.
For additional information please visit ADI’s financial press
release page.
Outlook for the Second Quarter of
Fiscal Year 2016The following statements are based on
current expectations, and as indicated, are presented on a GAAP and
non-GAAP basis. These statements are forward-looking 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.
GAAP
Non-GAAPAdjustments
Non-GAAP Revenue
-2% to +4%sequentially
-
-2% to +4%sequentially
Gross Margin approx. 65.3% $1.9 million (1)
approx. 65.5% Operating Expenses
Slightly upsequentially
$17.5 million (1)
Slightly upsequentially
Interest & OtherExpense
$15.0 million - $15.0 million Tax Rate
approx. 14% - approx. 13%
Earnings per Share
$0.52 to $0.60
$0.06 (2)
$0.58 to $0.66
1. Reflects estimated adjustments for amortization of purchased
intangible assets and depreciation of step up value on purchased
fixed assets.
2. Represents estimated impact of expenses associated with
non-GAAP adjustments on a per share basis.
Conference Call Scheduled for Today, Wednesday, February 17,
2016 at 10:00 am ETADI will host a conference call to discuss
first quarter fiscal 2016 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:
95215509, or by visiting investor.analog.com.
Non-GAAP Financial
InformationThis release includes non-GAAP financial
measures that are not in accordance with, nor an alternative to,
generally accepted accounting principles and may be different from
non-GAAP measures used by other companies. In addition, these
non-GAAP measures are not based on any comprehensive set of
accounting rules or principles.
Schedule E of this press release provides the reconciliation of
the Company’s historical non-GAAP revenue and earnings measures to
its GAAP measures.
Management uses non-GAAP measures 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 believes that
the presentation of these non-GAAP items 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.
The following items are excluded from our non-GAAP gross
margin, non-GAAP operating expenses, non-GAAP operating income,
non-GAAP operating margin, and non-GAAP diluted earnings per
share:
Acquisition-Related Expenses: Expenses incurred in the first
quarter of fiscal 2016 and the fourth and first quarters of fiscal
2015 as a result of the Hittite acquisition primarily include:
severance payments, expense associated with the fair value
adjustments to inventory and property, plant and equipment; and
amortization of acquisition related intangibles, which include
acquired intangibles such as purchased technology and customer
relationships. 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.
Stock-Based Compensation Expense: In the first quarter of fiscal
2015, the Company recorded $3.0 million of stock-based compensation
expense for one of its former executive officers due to the
accelerated vesting of restricted stock units and a reduction in
the requisite service period for stock options in accordance with
the terms of the applicable agreements. In addition, in the first
quarter of fiscal 2015, the Company recorded $1.3 million of
stock-based compensation expense due to the accelerated vesting of
restricted stock units and stock options in conjunction with the
restructuring charge recorded in the fourth quarter of fiscal 2014.
These stock-based compensation expenses and the related tax effect
have no direct correlation to the operation of our business in the
future.
The following items are excluded from our non-GAAP operating
expenses, non-GAAP operating income, non-GAAP operating margin, and
non-GAAP diluted earnings per share:
Other Operating Expense: Costs incurred in the fourth quarter of
fiscal 2015 as a result of the conversion of the benefits provided
to participants in the Company’s Irish defined benefit pension plan
to benefits provided under the Company’s Irish defined contribution
plan including settlement charges, legal, accounting and other
professional fees. 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.
Acquisition-Related Transaction Costs: Costs incurred as a
result of the Hittite acquisition in the first quarter of fiscal
2015 including legal, accounting and other professional fees
directly related to the Hittite acquisition. 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.
The following item is excluded from our non-GAAP other
expense and non-GAAP diluted earnings per share:
Loss on Extinguishment of Debt: In the first quarter of fiscal
2016, the Company redeemed its outstanding 3.0% senior unsecured
notes due April 15, 2016. The Company recognized a net loss on debt
extinguishment of approximately $3.3 million, which was comprised
of a make-whole premium and the write off of unamortized debt
issuance and discount costs. We excluded these costs from our
non-GAAP measures because they are not reflective of our ongoing
financial performance.
The following items are excluded from our non-GAAP diluted
earnings per share:
Tax-Related Items: In the first quarter of 2016, the Company
recorded a $7.5 million tax benefit related to the reinstatement of
the R&D tax credit in December 2015, retroactive to January 1,
2015. The Company also recorded tax adjustments in the first
quarter of fiscal 2016, and the first and fourth quarters of fiscal
2015 associated with the Hittite acquisition-related expenses and
transaction costs. In addition, in the fourth quarter of 2015, the
Company recorded a $13.0 million tax benefit as a result of the
reversal of prior period tax liabilities. Also, in the first
quarter of 2015, the Company recorded a $7.0 million tax benefit
related to the reinstatement of the R&D tax credit in December
2014, retroactive to January 1, 2014. 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.
Schedule F of this press release provides the reconciliation of
the Company’s historical adjusted cash flow measures to its cash
flow measures.
Management uses adjusted free cash flow to measure the liquidity
of its continuing operations and evaluate the Company’s operating
cash performance against past periods. Free cash flow is defined as
cash provided by (used in) operating activities less capital
expenditures. Adjusted free cash flow is defined by the Company as
free cash flow adjusted for payments (refunds) that are not
reflective of our ongoing operating cash performance. Management
believes that the presentation of this adjusted financial measure
is useful to investors because it provides investors with the
operating cash flow results that management uses to manage the
Company and enables investors and analysts to evaluate the
Company’s liquidity from continuing operations.
The following item is excluded from our fourth quarter fiscal
2015 adjusted free cash flow and adjusted free cash flow
margin:
Pension Conversion Payments: Costs incurred as a result of the
conversion of the benefits provided to participants in the
Company’s Irish defined benefit pension plan to benefits provided
under the Company’s Irish defined contribution plan including
settlement charges, legal, accounting, tax and other professional
fees. We excluded these costs from our adjusted financial measures
because they relate to a specific transaction and are not
reflective of our ongoing financial performance.
Analog Devices believes that these non-GAAP measures have
material limitations in that they do not reflect all of the amounts
associated with our results of operations as determined in
accordance with GAAP and that these measures should only be used to
evaluate our results of operations in conjunction with the
corresponding GAAP measures. In addition, our non-GAAP measures may
not be comparable to the non-GAAP measures reported by other
companies. The Company’s use of non-GAAP measures, and the
underlying methodology when 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.
Investors should consider our non-GAAP financial measures in
conjunction with the corresponding GAAP measures.
About Analog DevicesAnalog Devices designs and
manufactures semiconductor products and solutions. We enable our
customers to interpret the world around us by intelligently
bridging the physical and digital with unmatched technologies that
sense, measure and connect. Visit http://www.analog.com.
This release may be deemed to contain forward-looking statements
intended to qualify for the safe harbor from liability established
by the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, among other things, our
statements regarding expected revenue, earnings per share, gross
margin, operating expenses, interest and other expense, tax rate,
and other financial results, expected operating leverage,
production and inventory levels, expected market trends, and
expected customer demand and order rates for our products, that are
based on our current expectations, beliefs, assumptions, estimates,
forecasts, and projections about our business and the industry and
markets in which Analog Devices operates. The statements contained
in this release are not guarantees of future performance, are
inherently uncertain, involve certain risks, uncertainties, and
assumptions that are difficult to predict, and do not give effect
to the potential impact of any mergers, acquisitions, divestitures,
or business combinations that may be announced or closed after the
date hereof. Therefore, actual outcomes and results may differ
materially from what is expressed in such forward-looking
statements, and such statements should not be relied upon as
representing Analog Devices’ expectations or beliefs as of any date
subsequent to the date of this press release. We do not undertake
any obligation to update forward-looking statements made by us.
Important factors that may affect future operating results include:
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, our ability to successfully
integrate acquired businesses and technologies, adverse results in
litigation matters, and other risk factors described in our most
recent filings with the Securities and Exchange Commission. Our
results of operations for the periods presented in this release are
not necessarily indicative of our operating results for any future
periods. Any projections in this release are based on limited
information currently available to Analog Devices, which is subject
to change. Although any such projections and the factors
influencing them will likely change, we will not necessarily update
the information, as we will only provide guidance at certain points
during the year. Such information speaks only as of the original
issuance date of this release.
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, First Quarter, Fiscal 2016
Schedule
A
Revenue and Earnings Summary (Unaudited) (In thousands,
except per-share amounts)
Three Months Ended 1Q 16 4Q
15 1Q 15
Jan. 30,2016
Oct. 31,2015
Jan. 31,2015
Revenue $ 769,429 $ 978,722 $ 771,986 Year-to-year change (0 )% 20
% 23 % Quarter-to-quarter change (21 )% 13 % (5 )% Cost of sales
(1) 292,136
336,926 268,379 Gross margin
477,293 641,796 503,607 Gross margin percentage 62.0 % 65.6 % 65.2
% Year-to-year change (basis points) (320 ) 590 10
Quarter-to-quarter change (basis points) (360
) (30 ) 550
Operating expenses: R&D (1) 157,428 170,736 151,706 Selling,
marketing and G&A (1) 107,462 121,400 120,171 Amortization of
intangibles 17,358 17,358 23,796 Other operating expense
— 223,672
— Total operating expenses 282,248 533,166
295,673 Total operating expenses percentage 36.7 % 54.5 % 38.3 %
Year-to-year change (basis points) (160 ) 1,320 180
Quarter-to-quarter change (basis points)
(1,780 ) 1,930
(300 ) Operating income 195,045 108,630 207,934 Operating income
percentage 25.3 % 11.1 % 26.9 % Year-to-year change (basis points)
(160 ) (730 ) (170 ) Quarter-to-quarter change (basis points)
1,420 (1,960 )
850 Other expense
12,868 3,953
7,164 Income before income tax 182,177 104,677
200,770 Provision for income taxes 17,673 8,372 22,013 Tax rate
percentage 9.7 % 8.0 %
11.0 % Net income $ 164,504
$ 96,305 $ 178,757
Shares used for EPS - basic 311,166 312,829 311,274 Shares
used for EPS - diluted 314,793 316,571 315,684 Earnings per
share - basic $ 0.53 $ 0.31 $ 0.57 Earnings per share - diluted $
0.52 $ 0.30 $ 0.57 Dividends paid per share $
0.40 $ 0.40 $ 0.37
(1) Includes stock-based compensation expense as follows:
Cost of sales $ 2,092 $ 2,188 $ 2,392 R&D $ 6,704 $ 6,487 $
6,874 Selling, marketing and G&A $ 6,813 $ 7,408 $ 11,105
Analog Devices, First Quarter, Fiscal 2016
Schedule
B
Selected Balance Sheet Information (Unaudited) (In
thousands) 1Q 16 4Q 15 1Q 15
Jan. 30,2016
Oct. 31,2015
Jan. 31,2015
Cash & short-term investments $ 3,789,468 $ 3,028,928 $
2,873,281 Accounts receivable, net 375,087 466,527 402,350
Inventories (1) 404,852 412,314 367,238 Other current assets
74,727 171,779
160,168 Total current assets 4,644,134 4,079,548 3,803,037
PP&E, net 633,362 644,110 612,472 Investments 46,321 41,235
34,989 Goodwill 1,631,233 1,636,526 1,641,793 Intangible assets,
net 564,839 583,517 646,400 Other 78,192
73,841 78,346 Total
assets $ 7,598,081 $ 7,058,777
$ 6,817,037 Deferred income on shipments to
distributors, net $ 298,272 $ 300,087 $ 278,228 Other current
liabilities 295,833 438,904 354,681 Debt, current — 374,594 —
Long-term debt 1,730,948 495,341 868,807 Non-current liabilities
278,166 376,892 509,111 Shareholders' equity
4,994,862 5,072,959
4,806,210 Total liabilities & equity $ 7,598,081
$ 7,058,777 $ 6,817,037 (1)
Includes $2,853, $2,923, and $3,176 related to stock-based
compensation in 1Q16, 4Q15, and 1Q15, respectively.
Analog Devices, First Quarter, Fiscal 2016
Schedule
C
Cash Flow Statement (Unaudited) (In thousands)
Three Months
Ended 1Q 16 4Q 15 1Q 15
Jan. 30,2016
Oct. 31,2015
Jan. 31,2015
Cash flows from operating activities: Net Income $ 164,504 $ 96,305
$ 178,757 Adjustments to reconcile net income to net cash provided
by operations: Depreciation 33,209 32,688 31,773 Amortization of
intangibles 18,347 18,302 24,739 Stock-based compensation expense
15,609 16,083 20,371 Loss on extinguishment of debt 3,290 — — Other
non-cash activity 744 (2,428 ) 3,743 Excess tax benefit - stock
options (986 ) (2,895 ) (4,635 ) Deferred income taxes (7,717 )
(25,650 ) (2,915 ) Changes in operating assets and liabilities
(7,295 ) 65,570
(83,180 ) Total adjustments
55,201 101,670
(10,104 ) Net cash provided by operating activities
219,705 197,975
168,653 Percent of revenue
28.6 % 20.2 %
21.8 % Cash flows from investing activities:
Purchases of short-term available-for-sale investments (1,632,014 )
(1,808,202 ) (1,211,021 ) Maturities of short-term
available-for-sale investments 1,409,538 2,045,945 701,149 Sales of
short-term available-for-sale investments 47,950 159,546 583,750
Additions to property, plant and equipment (23,128 ) (45,807 )
(23,760 ) Payments for acquisitions, net of cash acquired — — (118
) Change in other assets (6,711 )
1,102 (3,729 ) Net cash
(used for) provided by investing activities
(204,365 ) 352,584
46,271 Cash flows from financing activities: Payments
of senior unsecured notes (378,156 ) — — Payments of derivative
instruments (33,430 ) — — Proceeds from debt 1,235,331 — — Dividend
payments to shareholders (124,658 ) (125,582 ) (115,084 )
Repurchase of common stock (131,977 ) (111,702 ) (59,636 ) Proceeds
from employee stock plans 6,229 7,760 42,793 Excess tax benefit -
stock options 986 2,895 4,635 Change in other financing activities
(2,544 ) 3,724
(3,988 ) Net cash provided by (used for)
financing activities 571,781
(222,905 ) (131,280 ) Effect of
exchange rate changes on cash (1,032 )
(798 ) (2,675 ) Net
increase in cash and cash equivalents 586,089 326,856 80,969 Cash
and cash equivalents at beginning of period
884,353 557,497
569,233 Cash and cash equivalents at end of period
$ 1,470,442 $ 884,353
$ 650,202
Analog Devices, First Quarter, Fiscal
2016
Schedule
D
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 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
Jan. 30,2016
Oct. 31,2015
Jan. 31,2015
Revenue % * Q/Q %
Y/Y % Revenue Revenue Industrial
$ 349,134 45 % (5)% (1)% $ 368,068 $ 352,779 Automotive 126,631 16
% (4)% 2 % 132,323 123,938 Consumer 125,702 16 % (60)% 32 % 317,016
95,546 Communications 167,962 22 % 4 % (16)% 161,315
199,723
Total Revenue $ 769,429 100
% (21)% (0)% $ 978,722 $ 771,986
* The sum of the individual percentages does not equal the
total due to rounding.
Analog Devices, First Quarter, Fiscal 2016
Schedule
E
Reconciliation from GAAP to Non-GAAP Revenue and Earnings
Measures (In thousands, except per-share amounts) (Unaudited)
See "Non-GAAP Financial Information" in this press release for a
description of the items excluded from our non-GAAP measures.
Three Months
Ended 1Q 16 4Q 15 1Q 15
Jan. 30,2016
Oct. 31,2015
Jan. 31,2015
GAAP Gross Margin $ 477,293
$ 641,796 $ 503,607 Gross Margin
Percentage 62.0 % 65.6 %
65.2 % Acquisition-Related Expenses 1,445 1,399 2,973
Stock-Based Compensation Expense —
— 113
Non-GAAP Gross
Margin $ 478,738 $
643,195 $ 506,693
Gross Margin Percentage 62.2 % 65.7
% 65.6 % GAAP Operating Expenses
$ 282,248 $ 533,166 $
295,673 Percent of Revenue 36.7 %
54.5 % 38.3 % Other Operating Expense —
(223,672 ) — Acquisition-Related Expenses (17,457 ) (17,682 )
(24,132 ) Acquisition-Related Transaction Costs — — (3,057 )
Stock-Based Compensation Expense —
— (4,164 )
Non-GAAP Operating
Expenses $ 264,791 $
291,812 $ 264,320
Percent of Revenue 34.4 % 29.8 %
34.2 % GAAP Operating Income/Margin
$ 195,045 $ 108,630 $
207,934 Percent of Revenue 25.3 %
11.1 % 26.9 % Other Operating Expense —
223,672 — Acquisition-Related Expenses 18,902 19,081 27,105
Acquisition-Related Transaction Costs — — 3,057 Stock-Based
Compensation Expense — —
4,277
Non-GAAP Operating
Income/Margin $ 213,947
$ 351,383 $
242,373 Percent of Revenue 27.8
% 35.9 % 31.4 % GAAP
Other Expense (Income) $ 12,868 $
3,953 $ 7,164 Percent of Revenue
1.7 % 0.4 % 0.9 % Loss on
Extinguishment of Debt (3,289 ) —
—
Non-GAAP Other Expense
$ 9,579 $ 3,953
$ 7,164 Percent of
Revenue 1.2 % 0.4 % 0.9
% GAAP Diluted EPS $ 0.52
$ 0.30 $ 0.57 Other Operating Expense —
0.71 — Acquisition-Related Expenses 0.06 0.06 0.08
Acquisition-Related Transaction Costs — — 0.01 Acquisition-Related
Tax Impact — — (0.01 ) Stock-Based Compensation Expense — — 0.01
Loss on Extinguishment of Debt 0.01 — — Impact of Reversal of Prior
Period Tax Liabilities — (0.04 ) — Impact of the Reinstatement of
the R&D Tax Credit (0.02 ) —
(0.02 )
Non-GAAP Diluted EPS (1)
$ 0.56 $ 1.03
$ 0.63 (1) The sum
of the individual per share amounts may not equal the total due to
rounding
Analog Devices,
First Quarter, Fiscal 2016
Schedule
F
SUPPLEMENTAL CASH FLOW MEASURES (Unaudited) See
"Non-GAAP Financial Information" in this press release for a
description of the items excluded from our supplemental cash flow
measures. (In thousands)
Three Months Ended 1Q 16 4Q
15 1Q 15
Jan. 30,2016
Oct. 31,2015
Jan. 31,2015
Net cash provided by operating activities $ 219,705 $ 197,975 $
168,653 Non-GAAP adjustments: Pension conversion payments —
223,672 —
Adjusted cash flows from operations $ 219,705
$ 421,647 $ 168,653 Capital
expenditures (23,128 ) (45,807 )
(23,760 ) Adjusted free cash flow $ 196,577
$ 375,840
$
144,893
% of revenue 25.5 % 38.4 % 18.8 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160217005319/en/
Analog Devices, Inc.Mr. Ali Husain, 781-461-3282
(phone)781-461-3491 (fax)Treasurer and Director of Investor
Relationsinvestor.relations@analog.com
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