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 2015, which ended January 31, 2015.
“We executed well in the first quarter, with results that were
near the high end of our guidance range and year-over-year revenue
growth of 23%,” said Vincent Roche, President and CEO. “As
typically happens, order rates improved in January, particularly in
the industrial and automotive end markets, and have remained strong
thus far. Accordingly, we are planning for strong growth in our
second quarter, with significant operating leverage. We are also
increasing our quarterly cash dividend, reflecting our long term
confidence in our business.”
ADI announced that its Board of Directors has approved an 8%
increase in its quarterly cash dividend, from $0.37 to $0.40 per
outstanding share of common stock. The quarterly dividend that was
declared by the Board of Directors will be paid on March 10, 2015
to all shareholders of record at the close of business on February
27, 2015.
For additional information please visit ADI’s financial press
release page.
Results for the First Quarter of Fiscal
Year 2015
- Revenue totaled $772 million, down 5%
sequentially, and up 23% year-over-year
- GAAP gross margin of 65.2% of revenue;
Non-GAAP gross margin of 65.6% of revenue
- GAAP operating margin of 26.9% of
revenue; Non-GAAP operating margin of 31.4% of revenue
- GAAP diluted EPS of $0.57; Non-GAAP
diluted EPS of $0.63
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 2015, as well as the
immediately prior and year-ago quarters. Additional information on
revenue by end market is provided on Schedule D. A more complete
table covering prior periods is available at
investor.analog.com.
Outlook for the Second Quarter of
Fiscal Year 2015
The 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
$810 to $830 million -
$810 to $830 million Gross Margin
approx. 66.5% $0.9 million (1)
approx. 66.5% Operating Expenses
approximately flat to 1Q 2015 $24.5
million (1) Up 2% to 3% sequentially Interest
& Other Expense $5.0 million
- $5.0 million Tax Rate
approx. 16.5%
approx. 15%
Earnings per Share
$0.62 to $0.66 $0.08 (2)
$0.70 to $0.74
1. Reflects estimated adjustments for amortization of purchased
intangible assets.2. Represents impact of the amortization of
purchased intangible assets on a per share basis.
Conference Call Scheduled for 5:00 pm ET
ADI will host a conference call to discuss the first quarter
results and short-term outlook today, beginning at 5:00 pm 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:
70828827, 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 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 measures to its GAAP
measures.
Management uses non-GAAP gross margin, non-GAAP operating
expenses, non-GAAP operating income, non-GAAP operating margins,
non-GAAP other expense, and non-GAAP diluted earnings per share 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 understanding and evaluating the Company’s operating
results and trends in the Company’s 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 2015 and fourth quarter of fiscal 2014 as a
result of the Hittite acquisition primarily include: severance
payments; expense associated with the fair value adjustments to
inventory, property, plant and equipment, and distributor deferred
costs; 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. In the fourth quarter of fiscal
2014, the Company canceled certain stock awards in conjunction with
the restructuring charge which resulted in the recognition of
income for stock-based compensation expense recorded in prior
periods for these awards. These stock-based compensation expenses
and income 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:
The exclusion of these items allows management to evaluate the
Company’s core business and trends across different reporting
periods on a consistent basis. Management presents these
Non-GAAP items to enable investors and analysts to evaluate our
core business.
Acquisition-Related Transaction Costs: Costs incurred as a
result of the Hittite acquisition in the first quarter of fiscal
2015 and fourth quarter of fiscal 2014 include 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.
Restructuring-Related Expenses: These expenses are incurred in
connection with facility closures, consolidation of manufacturing
facilities, severance, and other cost reduction efforts. Apart from
ongoing expense savings as a result of such items, these expenses
and the related tax effects have no direct correlation to the
operation of our business in the future.
The following items are excluded from our non-GAAP other
expense and non-GAAP diluted earnings per share:
Acquisition-Related Debt Costs: The Company incurred debt
financing costs during the fourth quarter of fiscal 2014 on its
90-day term loan facility used to finance the Hittite acquisition.
We excluded these costs from our non-GAAP measures because they are
not reflective of our ongoing financial performance.
The following item is excluded from our non-GAAP diluted
earnings per share:
Tax-Related Items: In the first quarter of fiscal 2015, the
Company recorded $3.8 million of tax adjustments related to the
Hittite acquisition. In addition, 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. In the
fourth quarter of fiscal 2014, the Company recorded $5.5 million of
tax adjustments related to the Hittite acquisition. 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.
Management believes that the presentation of non-GAAP gross
margin, non-GAAP operating expenses, non-GAAP operating income,
non-GAAP operating margins, non-GAAP other expenses and non-GAAP
diluted EPS is useful to investors because it provides investors
with the operating results that management uses to manage the
Company.
Analog Devices believes that non-GAAP gross margin, non-GAAP
operating expenses, non-GAAP operating income, non-GAAP operating
margins, non-GAAP other expenses and non-GAAP diluted EPS 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 Devices
Innovation, performance, and excellence are the cultural pillars
on which Analog Devices has built one of the longest standing,
highest growth companies within the technology sector. Acknowledged
industry-wide as the world leader in data conversion and signal
conditioning technology, Analog Devices serves over 100,000
customers, representing virtually all types of electronic
equipment. Analog Devices is headquartered in Norwood,
Massachusetts, with design and manufacturing facilities throughout
the world. Analog Devices' common stock is included in the S&P
500 Index.
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 2015
Schedule
A
Revenue and Earnings Summary (Unaudited) (In thousands,
except per-share amounts)
Three Months Ended 1Q
15 4Q 14 1Q 14
Jan. 31,2015
Nov. 1,2014
Feb. 1,2014
Revenue $ 771,986 $ 814,247 $ 628,238 Year-to-year change 23 % 20 %
1 % Quarter-to-quarter change -5 % 12 % -7 % Cost of sales (1)
268,379
328,210 219,120
Gross margin 503,607 486,037 409,118 Gross margin percentage
65.2 % 59.7 % 65.1 % Year-to-year change (basis points) 10 -590 240
Quarter-to-quarter change (basis points)
550 -570
-50 Operating expenses: R&D
(1) 151,706 154,797 128,591 Selling, marketing and G&A (1)
120,171 121,424 98,178 Amortization of intangibles 23,796 25,250 55
Special charges -
34,637
2,685 Total operating expenses 295,673 336,108 229,509 Total
operating expenses percentage 38.3 % 41.3 % 36.5 % Year-to-year
change (basis points) 180 520 -160 Quarter-to-quarter change (basis
points) -300
370 40
Operating income 207,934 149,929 179,609 Operating income
percentage 26.9 % 18.4 % 28.6 % Year-to-year change (basis points)
-170 -1,110 390 Quarter-to-quarter change (basis points)
850
-940 -90 Other expense
7,164
11,231 3,718
Income before income tax 200,770 138,698 175,891 Provision
for income taxes 22,013 30,003 23,305 Tax rate percentage
11.0 % 21.6
% 13.2 % Net income
$ 178,757 $ 108,695
$ 152,586 Shares used for
EPS - basic 311,274 312,815 312,286 Shares used for EPS - diluted
315,684 316,868 318,017 Earnings per share - basic $ 0.57 $
0.35 $ 0.49 Earnings per share - diluted $ 0.57 $ 0.34 $ 0.48
Dividends paid per share $ 0.37
$ 0.37 $
0.34 (1) Includes stock-based compensation expense as
follows: Cost of sales $ 2,392 $ 2,371 $ 1,557 R&D $ 6,874 $
6,155 $ 4,859 Selling, marketing and G&A $ 11,105 $ 6,867 $
4,991
Analog Devices, First Quarter, Fiscal
2015
Schedule
B
Selected Balance Sheet Information (Unaudited) (In
thousands) 1Q 15 4Q 14 1Q 14
Jan. 31,2015
Nov. 1,2014
Feb. 1,2014
Cash & short-term investments $ 2,873,281 $ 2,866,468 $
4,701,109 Accounts receivable, net 402,350 396,605 328,787
Inventories (1) 367,238 367,927 289,935 Other current assets
160,168
180,886 151,128 Total current assets
3,803,037 3,811,886 5,470,959 PP&E, net 612,472 622,422 529,010
Investments 34,989 34,507 23,363 Goodwill 1,641,793 1,642,438
283,167 Intangible assets, net 646,400 671,402 28,497 Other
82,465
77,035 64,472 Total assets
$ 6,821,156 $ 6,859,690
$ 6,399,468 Deferred income on
shipments to distributors, net $ 278,228 $ 278,435 $ 245,236 Other
current liabilities 354,681 430,621 274,258 Long-term debt,
non-current 872,926 872,789 872,378 Non-current liabilities 509,111
519,948 211,961 Shareholders' equity
4,806,210 4,757,897
4,795,635 Total liabilities & equity
$ 6,821,156 $
6,859,690 $ 6,399,468
(1) Includes $3,176, $3,291, and $2,196
related to stock-based compensation
in 1Q15, 4Q14, and 1Q14,
respectively.
Analog Devices, First Quarter, Fiscal 2015
Schedule
C
Cash Flow Statement (Unaudited) (In thousands)
Three Months Ended 1Q 15 4Q 14 1Q 14
Jan. 31,2015
Nov. 1,2014
Feb. 1,2014
Cash flows from operating activities: Net Income $ 178,757 $
108,695 $ 152,586 Adjustments to reconcile net income to net cash
provided by operations: Depreciation 31,773 30,917 27,335
Amortization of intangibles 24,739 26,186 55 Stock-based
compensation expense 20,371 15,393 11,407 Other non-cash activity
3,743 600 1,417 Excess tax benefit - stock options (4,635 ) (882 )
(7,604 ) Deferred income taxes (2,915 ) (56,812 ) (2,993 ) Changes
in operating assets and liabilities
(83,180 ) 138,166
(24,730 ) Total adjustments
(10,104 ) 153,568
4,887 Net cash provided
by operating activities 168,653
262,263
157,473 Percent of total revenue
21.8 % 32.2 %
25.1 % Cash flows from investing
activities: Purchases of short-term available-for-sale investments
(1,211,021 ) (1,946,144 ) (2,234,996 ) Maturities of short-term
available-for-sale investments 701,149 1,507,940 2,029,319 Sales of
short-term available-for-sale investments 583,750 487,259 212,819
Additions to property, plant and equipment (23,760 ) (43,417 )
(48,123 ) Payments for acquisitions, net of cash acquired (118 )
(2,183 ) - Change in other assets
(3,729 ) (2,633 )
(3,342 ) Net cash provided by (used for) investing
activities 46,271
822 (44,323
) Cash flows from financing activities: Term loan repayments
- (1,995,398 ) - Dividend payments to shareholders (115,084 )
(116,308 ) (106,024 ) Repurchase of common stock (59,636 ) (187,375
) (88,963 ) Proceeds from employee stock plans 42,793 21,533 79,600
Excess tax benefit - stock options 4,635 882 7,604 Contingent
consideration payment - - (1,773 ) Change in other financing
activities (3,988 )
(1,178 ) 22,248
Net cash used for financing activities
(131,280 ) (2,277,844 )
(87,308 ) Effect of exchange rate
changes on cash (2,675 )
(1,449 ) (704 )
Net increase (decrease) in cash and cash equivalents 80,969
(2,016,208 ) 25,138 Cash and cash equivalents at beginning of
period 569,233
2,585,441
392,089 Cash and cash equivalents at end of period
$ 650,202 $
569,233 $ 417,227
Analog Devices, First Quarter, Fiscal 2015
Schedule
D
Revenue Trends by
End Market (Unaudited)
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. The results below are inclusive of the Hittite acquisition
from the acquisition date, July 22, 2014.
Three Months Ended
Jan. 31, 2015
Nov. 1,2014
Feb. 1,2014
Revenue % * Q/Q %
Y/Y % Revenue
Revenue Industrial $ 349,766 45 %
-6 % 21 % $ 373,938 $ 288,795 Automotive
123,675 16 % -8 % -1 % 134,771 124,607 Consumer 94,835 12 % 1 % 27
% 94,215 74,429 Communications 203,710 26 % -4
% 45 % 211,323 140,407
Total Revenue $
771,986 100 % -5 %
23 % $ 814,247 $ 628,238
* The sum of the individual percentages does not equal the
total due to rounding.
Analog Devices, First
Quarter, Fiscal 2015
Schedule
E
Reconciliation from GAAP to Non-GAAP Data (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 15 4Q 14 1Q 14
Jan. 31,2015
Nov. 1,2014
Feb. 1,2014
GAAP Gross Margin $ 503,607
$ 486,037 $ 409,118 Gross Margin
Percentage 65.2 % 59.7 %
65.1 % Acquisition-Related Expenses 2,973 54,388 -
Stock-Based Compensation Expense 113 (113 )
-
Non-GAAP Gross Margin $
506,693 $ 540,312
$ 409,118 Gross Margin Percentage
65.6 % 66.4 % 65.1 %
GAAP Operating Expenses $ 295,673
$ 336,108 $ 229,509 Percent of
Revenue 38.3 % 41.3 % 36.5
% Acquisition-Related Expenses (24,132 ) (27,166 ) -
Acquisition-Related Transaction Costs (3,057 ) (5,987 ) -
Restructuring-Related Expense - (34,637 ) (2,685 ) Stock-Based
Compensation Expense (4,164 ) 1,302
-
Non-GAAP Operating Expenses $
264,320 $ 269,620
$ 226,824 Percent of Revenue
34.2 % 33.1 % 36.1 %
GAAP Operating Income/Margin $ 207,934
$ 149,929 $ 179,609 Percent of
Revenue 26.9 % 18.4 % 28.6
% Acquisition-Related Expenses 27,105 81,554 -
Acquisition-Related Transaction Costs 3,057 5,987 -
Restructuring-Related Expense - 34,637 2,685 Stock-Based
Compensation Expense 4,277 (1,415 )
-
Non-GAAP Operating Income/Margin $
242,373 $ 270,692
$ 182,294 Percent of Revenue
31.4 % 33.2 % 29.0 %
GAAP Other Expense (Income) $ 7,164
$ 11,231 $ 3,718 Percent of
Revenue 0.9 % 1.4 % 0.6
% Acquisition-Related Debt Costs -
(4,823 ) -
Non-GAAP Other Expense
$ 7,164 $ 6,408
$ 3,718 Percent of Revenue 0.9
% 0.8 % 0.6 % GAAP
Diluted EPS $ 0.57 $ 0.34 $
0.48 Acquisition-Related Expenses 0.08 0.25 -
Acquisition-Related Transaction Costs 0.01 0.01 -
Acquisition-Related Debt Costs - 0.01 - Acquisition-Related Tax
Impact (0.01 ) (0.02 ) - Restructuring-Related Expense - 0.09 0.01
Stock-Based Compensation Expense 0.01 - - Impact of the
Reinstatement of the R&D Tax Credit (0.02 ) - -
Non-GAAP Diluted EPS (1) $ 0.63
$ 0.69 $ 0.49
(1) The sum of the individual per share amounts may
not equal the total due to rounding
For more information, please contact:Analog Devices,
Inc.Mr. Ali Husain, 781-461-3282 (phone)781-461-3491 (fax)Director
of Investor Relationsinvestor.relations@analog.com
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