Revenue in the April quarter increases 1% sequentially to
$779 million; ADI returns $344 million to shareholders
Analog Devices, Inc. (NASDAQ: ADI), today announced financial
results for its second quarter of fiscal year 2016 which ended
April 30, 2016.
“The breadth and diversity of ADI’s business model was evident
in our results this quarter, with broad-based strength across our
business to business (B2B) markets of industrial, automotive, and
communications infrastructure more-than-offsetting a weak consumer
market,” said Vincent Roche, President and CEO. “In addition, we
repurchased $214 million of our shares in response to stock price
volatility, which enabled a third consecutive quarter of share
count reduction.”
“Looking ahead, stable order flows in the B2B markets lead us to
plan for a largely seasonal third quarter in these markets, and for
sequential revenue growth to resume in the consumer market.
Importantly for ADI, we expect our B2B markets, in the aggregate,
to grow in the mid-to-high single digits on a year-over-year basis
in the third quarter.”
ADI also announced that the Board of Directors has declared a
cash dividend of $0.42 per outstanding share of common
stock. The dividend will be paid on June 7, 2016 to all
shareholders of record at the close of business on May 27,
2016.
Results for the Second Quarter of
Fiscal Year 2016
- Revenue totaled $779 million, up 1%
sequentially, and down 5% year-over-year
- Revenue in ADI’s B2B markets of
industrial, automotive, and communications infrastructure totaled
$699 million, up 9% sequentially, and down 2% year-over-year
- GAAP gross margin of 65.6% of revenue;
Non-GAAP gross margin of 65.8% of revenue
- GAAP operating margin of 26.6% of
revenue; Non-GAAP operating margin of 30.8% of revenue
- GAAP diluted EPS of $0.55; Non-GAAP
diluted EPS of $0.64
Please refer to the schedules provided for a summary of revenue
and earnings, selected balance sheet information, and the cash flow
statement for the second 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.
Outlook for the Third 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-GAAP
Adjustments Non-GAAP Revenue
$800 million to $840 million -
$800 million to $840 million Gross Margin
stable sequentially $1.5 million (1)
stable sequentially Operating Expenses
slightly up sequentially $17.5 million (1)
slightly up sequentially Interest & Other Expense
$13.0 million - $13.0 million
Tax Rate approx. 13.5% -
approx. 12.5%
Earnings per Share $0.60 to
$0.68 $0.06 (2)
$0.66 to
$0.74
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, May 18, 2016
at 10:00 am ET
ADI will host a conference call to discuss second 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:
80870358, 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 and
second quarters of fiscal 2016 as well as the second quarter of
fiscal 2015 as a result of the Hittite acquisition primarily
include: 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.
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:
Acquisition-Related Transaction Costs: Costs incurred as a
result of the Hittite acquisition in the second 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.
Restructuring-Related Expenses: These expenses are 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 and the related tax effects have no direct correlation to
the operation of our business in the future.
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 and
second quarters of fiscal 2016 as well as the second quarter of
fiscal 2015 associated with the Hittite acquisition-related
expenses and transaction costs. 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.
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, Second Quarter, Fiscal
2016
Schedule
A
Revenue and Earnings Summary
(Unaudited)
(In thousands, except per-share
amounts)
Three Months Ended 2Q 16
1Q 16 2Q 15
April 30,2016 Jan.
30,2016 May 2,2015
Revenue $ 778,766 $ 769,429 $ 821,019 Year-to-year change (5 )% — %
18 % Quarter-to-quarter change 1 % (21 )% 6 % Cost of sales (1)
267,863 292,136
276,197 Gross margin 510,903 477,293
544,822 Gross margin percentage 65.6 % 62.0 % 66.4 % Year-to-year
change (basis points) (80 ) (320 ) 30 Quarter-to-quarter change
(basis points) 360 (360 )
120 Operating expenses: R&D (1)
160,235 157,428 154,233 Selling, marketing and G&A (1) 112,186
107,462 117,371 Amortization of intangibles 17,419 17,358 24,210
Special charges 13,684 —
— Total operating expenses
303,524 282,248 295,814 Total operating expenses percentage 39.0 %
36.7 % 36.0 % Year-to-year change (basis points) 300 (160 ) 170
Quarter-to-quarter change (basis points) 230
(1,780 ) (230 ) Operating
income 207,379 195,045 249,008 Operating income percentage 26.6 %
25.3 % 30.3 % Year-to-year change (basis points) (370 ) (160 ) (140
) Quarter-to-quarter change (basis points) 130
1,420 340
Other expense 12,469
12,868 3,819 Income before
income tax 194,910 182,177 245,189 Provision for income taxes
24,337 17,673 39,851 Tax rate percentage 12.5 %
9.7 % 16.3 % Net income
$ 170,573 $ 164,504
$ 205,338 Shares used for
EPS - basic 308,790 311,166 312,660 Shares used for EPS - diluted
312,250 314,793 317,047 Earnings per share - basic $ 0.55 $
0.53 $ 0.66 Earnings per share - diluted $ 0.55 $ 0.52 $ 0.65
Dividends paid per share $ 0.42
$ 0.40 $ 0.40
(1) Includes stock-based compensation expense as follows:
Cost of sales $ 1,986 $ 2,092 $ 2,207 R&D $ 6,646 $ 6,704 $
6,416 Selling, marketing and G&A $ 7,327 $ 6,813 $ 7,478
Analog Devices, Second Quarter, Fiscal
2016
Schedule
B
Selected Balance Sheet Information
(Unaudited)
(In thousands)
2Q 16 1Q 16 2Q 15
April 30,2016 Jan.
30,2016 May 2,2015
Cash & short-term investments $ 3,754,081 $ 3,789,468 $
3,074,778 Accounts receivable, net 398,979 375,087 408,510
Inventories (1) 399,459 404,852 394,494 Other current assets
75,355 74,727
167,979 Total current assets 4,627,874
4,644,134 4,045,761 PP&E, net 626,162 633,362 629,665
Investments 50,680 46,321 39,687 Goodwill 1,639,165 1,631,233
1,643,614 Intangible assets, net 548,374 564,839 621,277 Other
78,037 78,192
64,591 Total assets
$ 7,570,292 $ 7,598,081
$ 7,044,595 Deferred income on
shipments to distributors, net $ 317,290 $ 298,272 $ 295,428 Other
current liabilities 367,310 295,833 398,127 Debt, current — —
374,147 Long-term debt 1,731,336 1,730,948 495,036 Non-current
liabilities 280,655 278,166 517,649 Shareholders' equity
4,873,701 4,994,862
4,964,208 Total liabilities &
equity $ 7,570,292
$ 7,598,081 $ 7,044,595
(1) Includes $2,719, $2,853, and $3,066 related to stock-based
compensation in 2Q16, 1Q16, and 2Q15, respectively.
Analog Devices, Second Quarter, Fiscal
2016
Schedule
C
Cash Flow Statement (Unaudited)
(In thousands)
Three Months Ended 2Q 16
1Q 16 2Q 15 April
30,2016 Jan. 30,2016
May 2,2015 Cash flows from
operating activities: Net Income $ 170,573 $ 164,504 $ 205,338
Adjustments to reconcile net income to net cash provided by
operations: Depreciation 33,483 33,209 32,036 Amortization of
intangibles 18,440 18,347 25,154 Stock-based compensation expense
15,959 15,609 16,101 Loss on extinguishment of debt — 3,290 — Other
non-cash activity 500 744 1,832 Excess tax benefit - stock options
(3,212 ) (986 ) (11,142 ) Deferred income taxes 539 (7,717 ) (6,481
) Changes in operating assets and liabilities
83,921 (7,295 )
81,193 Total adjustments 149,630
55,201 138,693
Net cash provided by operating activities
320,203 219,705
344,031 Percent of revenue
41.1 % 28.6 % 41.9
% Cash flows from investing activities: Purchases of
short-term available-for-sale investments (1,939,750 ) (1,632,014 )
(1,661,176 ) Maturities of short-term available-for-sale
investments 1,522,688 1,409,538 1,154,412 Sales of short-term
available-for-sale investments 102,316 47,950 291,900 Additions to
property, plant and equipment (25,517 ) (23,128 ) (49,229 )
Payments for acquisitions, net of cash acquired (2,203 ) — — Change
in other assets (2,746 )
(6,711 ) (4,468 ) Net cash used for investing
activities (345,212 )
(204,365 ) (268,561 ) 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 (129,925 )
(124,658 ) (124,882 ) Repurchase of common stock (213,650 )
(131,977 ) (24,275 ) Proceeds from employee stock plans 16,480
6,229 52,090 Excess tax benefit - stock options 3,212 986 11,142
Change in other financing activities (2,786 )
(2,544 ) (3,563 ) Net
cash (used for) provided by financing activities
(326,669 ) 571,781
(89,488 ) Effect of exchange rate changes on cash
898 (1,032 )
32 Net (decrease) increase in cash and
cash equivalents (350,780 ) 586,089 (13,986 ) Cash and cash
equivalents at beginning of period 1,470,442
884,353
650,202 Cash and cash equivalents at end of period
$ 1,119,662 $ 1,470,442
$ 636,216
Analog Devices, Second 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 April 30,2016
Jan. 30,2016 May
2,2015 Revenue %
Q/Q % Y/Y %
Revenue Revenue Industrial $ 385,287
49% 11% (1)% $
348,347 $ 390,051 Automotive 138,031 18% 9% (1)% 126,516 139,757
Consumer 80,038 10% (37)% (27)% 126,428 110,059 Communications
175,410 23% 4% (3)% 168,138
181,152
Total Revenue $ 778,766
100% 1% (5)% $
769,429 $ 821,019
Analog Devices, Second 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 2Q 16 1Q
16 2Q 15 April
30,2016 Jan. 30,2016 May
2,2015 GAAP Gross Margin $
510,903 $ 477,293 $ 544,822
Gross Margin Percentage 65.6 % 62.0
% 66.4 % Acquisition-Related Expenses 1,476
1,445 1,520
Non-GAAP Gross Margin $ 512,379
$ 478,738
$ 546,342 Gross Margin
Percentage 65.8 % 62.2 %
66.5 % GAAP Operating Expenses $
303,524 $ 282,248 $ 295,814
Percent of Revenue 39.0 % 36.7 %
36.0 % Acquisition-Related Expenses (17,517 ) (17,457
) (24,435 ) Acquisition-Related Transaction Costs — — (1,820 )
Restructuring-Related Expense (13,684 ) —
—
Non-GAAP Operating
Expenses $ 272,323
$ 264,791 $
269,559 Percent of Revenue 35.0
% 34.4 % 32.8 % GAAP
Operating Income/Margin $ 207,379 $
195,045 $ 249,008 Percent of Revenue
26.6 % 25.3 % 30.3 %
Acquisition-Related Expenses 18,993 18,902 25,955
Acquisition-Related Transaction Costs — — 1,820
Restructuring-Related Expense 13,684 —
—
Non-GAAP Operating
Income/Margin $ 240,056
$ 213,947 $
276,783 Percent of Revenue 30.8
% 27.8 % 33.7 % GAAP
Other Expense (Income) $ 12,469 $
12,868 $ 3,819 Percent of Revenue
1.6 % 1.7 % 0.5 % Loss on
Extinguishment of Debt — (3,289 )
—
Non-GAAP Other Expense
$ 12,469 $
9,579 $ 3,819
Percent of Revenue 1.6 % 1.2
% 0.5 % GAAP Diluted EPS
$ 0.55 $ 0.52 $ 0.65
Acquisition-Related Expenses 0.06 0.06 0.08 Acquisition-Related
Transaction Costs — — 0.01 Acquisition-Related Tax Impact — — (0.01
) Restructuring-Related Expense 0.04 — — Loss on Extinguishment of
Debt — 0.01 — Impact of the Reinstatement of the R&D Tax Credit
— (0.02 ) —
Non-GAAP Diluted EPS (1) $ 0.64
$ 0.56
$ 0.73
(1) The sum of the individual per share amounts may not equal
the total due to rounding
Analog Devices, Second Quarter, Fiscal
2016
Schedule
F
SUPPLEMENTAL CASH
FLOW MEASURES (Unaudited)
(In thousands)
Three Months Ended 2Q 16
1Q 16 2Q 15 April
30,2016 Jan. 30,2016
May 2,2015 Net cash provided by
operating activities $ 320,203 $ 219,705 $ 344,031 Capital
expenditures (25,517 ) (23,128 )
(49,229 ) Free cash flow $ 294,686
$ 196,577 $ 294,802
% of revenue 37.8 % 25.5 % 35.9 %
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version on businesswire.com: http://www.businesswire.com/news/home/20160518005283/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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