Revenue increases to a record $821 million, non-GAAP diluted
earnings per share increases to $0.73
Analog Devices, Inc. (NASDAQ: ADI), a global leader in
high-performance semiconductors for signal processing applications,
today announced financial results for its second quarter of fiscal
year 2015, which ended May 2, 2015.
“We had a very successful second quarter driven by the quality
of our innovation, the diversity of our business, and our strong
execution,” said Vincent Roche, President and CEO. “Revenue
increased to a record $821 million, and our operating model
generated strong cash flows and diluted earnings per share growth
that was well ahead of revenue growth.”
“Looking ahead, our book to bill ratio was positive in the
second quarter and we are seeing stable order rates across all our
end markets. As a result, we are planning for sequential growth in
the third quarter and for revenue to be in the range of $825
million to $865 million.”
ADI also announced that the Board of Directors has declared a
cash dividend of $0.40 per outstanding share of common stock. The
dividend will be paid on June 9, 2015 to all shareholders of record
at the close of business on May 29, 2015.
For additional information please visit ADI’s financial press
release page.
Results for the Second Quarter of
Fiscal Year 2015
- Revenue totaled $821 million, up 6%
sequentially, and up 18% year-over-year
- GAAP gross margin of 66.4% of revenue;
Non-GAAP gross margin of 66.5% of revenue
- GAAP operating margin of 30.3% of
revenue; Non-GAAP operating margin of 33.7% of revenue
- GAAP diluted EPS of $0.65; Non-GAAP
diluted EPS of $0.73
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 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 Third 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
$825 to $865 million -
$825 to $865 million Gross Margin
approx. 65.9% $0.9 million (1)
approx. 66.0% Operating Expenses up 1% to 3%
$24.5 million (1) up 2%
to 3% Interest & Other Expense $5.0 million
- $5.0 million Tax Rate
approx. 16.5% -
approx. 15%
Earnings per Share $0.63
to $0.69 $0.08 (2)
$0.71 to $0.77
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 second 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:
28570593, 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,
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 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 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.
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 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:
Acquisition-Related Transaction Costs: Costs incurred as a
result of the Hittite acquisition in the first and second quarters
of fiscal 2015 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.
The following item is excluded from our non-GAAP diluted
earnings per share:
Tax-Related Items: In the second quarter of fiscal 2015, the
Company recorded $1.5 million of tax adjustments related to the
Hittite acquisition. 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. 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 non-GAAP gross margin, non-GAAP
operating expenses, non-GAAP operating income, non-GAAP operating
margins, 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
Analog 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 2015
Schedule
A
Revenue and Earnings Summary (Unaudited) (In thousands,
except per-share amounts)
Three Months Ended 2Q 15 1Q 15 2Q 14
May 2,
2015
Jan. 31,
2015
May 3,
2014
Revenue $ 821,019 $ 771,986 $ 694,536 Year-to-year change 18% 23%
5% Quarter-to-quarter change 6% -5% 11% Cost of sales (1)
276,197 268,379
235,793 Gross margin 544,822 503,607 458,743 Gross
margin percentage 66.4% 65.2% 66.1% Year-to-year change (basis
points) 30 10 210 Quarter-to-quarter change (basis points)
120 550
100 Operating expenses: R&D (1) 154,233 151,706 136,203
Selling, marketing and G&A (1) 117,371 120,171 102,085
Amortization of intangibles 24,210
23,796 55 Total operating
expenses 295,814 295,673 238,343 Total operating expenses
percentage 36.0% 38.3% 34.3% Year-to-year change (basis points) 170
180 -70 Quarter-to-quarter change (basis points)
-230 -300
-220 Operating income 249,008 207,934 220,400 Operating income
percentage 30.3% 26.9% 31.7% Year-to-year change (basis points)
-140 -170 270 Quarter-to-quarter change (basis points)
340 850
310 Other expense 3,819
7,164 3,032 Income before income
tax 245,189 200,770 217,368 Provision for income taxes 39,851
22,013 29,935 Tax rate percentage 16.3%
11.0% 13.8% Net income
$ 205,338 $ 178,757
$ 187,433 Shares used for EPS - basic 312,660 311,274
313,488 Shares used for EPS - diluted 317,047 315,684 318,347
Earnings per share - basic $ 0.66 $ 0.57 $ 0.60 Earnings per
share - diluted $ 0.65 $ 0.57 $ 0.59 Dividends paid per
share $ 0.40 $ 0.37
$ 0.37 (1) Includes stock-based compensation expense
as follows: Cost of sales $ 2,207 $ 2,392 $ 1,417 R&D $ 6,416 $
6,874 $ 4,278 Selling, marketing and G&A $ 7,478 $ 11,105 $
4,847
Analog Devices, Second Quarter, Fiscal
2015
Schedule
B
Selected Balance Sheet Information (Unaudited) (In
thousands)
2Q 15 1Q 15 2Q 14
May 2,2015
Jan. 31,2015
May 3,
2014
Cash & short-term investments $ 3,074,778 $ 2,873,281 $
4,807,225 Accounts receivable, net 408,510 402,350 360,847
Inventories (1) 394,494 367,238 298,432 Other current assets
167,979 160,168
171,528 Total current assets 4,045,761 3,803,037
5,638,032 PP&E, net 629,665 612,472 545,485 Investments 39,687
34,989 30,080 Goodwill 1,643,614 1,641,793 287,341 Intangible
assets, net 621,277 646,400 28,442 Other
68,471 82,465
65,571 Total assets $ 7,048,475
$ 6,821,156 $ 6,594,951 Deferred income on
shipments to distributors, net $ 295,428 $ 278,228 $ 267,933 Other
current liabilities 398,127 354,681 303,269 Long-term debt, current
374,664 - - Long-term debt, non-current 498,399 872,926 872,515
Non-current liabilities 517,649 509,111 219,711 Shareholders'
equity 4,964,208
4,806,210 4,931,523 Total liabilities &
equity $ 7,048,475 $ 6,821,156
$ 6,594,951
(1) Includes $3,066, $3,176, and $1,982
related to stock-based compensation in 2Q15, 1Q15, and 2Q14,
respectively.
Analog Devices, Second Quarter, Fiscal 2015
Schedule
C
Cash Flow Statement (Unaudited) (In thousands)
Three Months Ended 2Q 15 1Q 15
2Q 14 May 2,
2015
Jan. 31,
2015
May 3,
2014
Cash flows from operating activities: Net Income $ 205,338 $
178,757 $ 187,433 Adjustments to reconcile net income to net cash
provided by operations: Depreciation 32,036 31,773 27,459
Amortization of intangibles 25,154 24,739 55 Stock-based
compensation expense 16,101 20,371 10,542 Other non-cash activity
1,832 3,743 1,400 Excess tax benefit - stock options (11,142 )
(4,635 ) (4,423 ) Deferred income taxes (6,481 ) (2,915 ) 1,068
Changes in operating assets and liabilities
81,193 (83,180 )
14,824 Total adjustments
138,693 (10,104 )
50,925 Net cash provided by operating activities
344,031 168,653
238,358 Percent of total revenue
41.9 % 21.8 %
34.3 % Cash flows from investing
activities: Purchases of short-term available-for-sale investments
(1,661,176 ) (1,211,021 ) (2,275,241 ) Maturities of short-term
available-for-sale investments 1,154,412 701,149 1,966,158 Sales of
short-term available-for-sale investments 291,900 583,750 189,267
Additions to property, plant and equipment (49,229 ) (23,760 )
(44,058 ) Payments for acquisitions, net of cash acquired - (118 )
- Change in other assets (4,468 )
(3,729 ) (6,076 ) Net
cash (used for) provided by investing activities
(268,561 ) 46,271
(169,950 ) Cash flows from financing
activities: Dividend payments to shareholders (124,882 ) (115,084 )
(115,795 ) Repurchase of common stock (24,275 ) (59,636 ) (22,614 )
Proceeds from employee stock plans 52,090 42,793 62,936 Excess tax
benefit - stock options 11,142 4,635 4,423 Change in other
financing activities (3,563 )
(3,988 ) (11,284 ) Net cash used
for financing activities (89,488 )
(131,280 ) (82,334 )
Effect of exchange rate changes on cash
32 (2,675 ) (511 )
Net (decrease) increase in cash and cash equivalents (13,986
) 80,969 (14,437 ) Cash and cash equivalents at beginning of period
650,202
569,233 417,227 Cash and cash
equivalents at end of period $ 636,216
$ 650,202 $ 402,790
Analog Devices, Second 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 May 2,
2015
Jan. 31,
2015
May 3,
2014
Revenue % Q/Q %
Y/Y % Revenue Revenue Industrial
$ 390,712 48% 11% 20% $
351,703 $ 325,950 Automotive 139,707 17% 13% 3% 124,040 135,998
Consumer 109,032 13% 15% 40% 95,109 77,644 Communications
181,568 22% -10% 17% 201,134 154,944
Total Revenue $ 821,019
100% 6% 18% $ 771,986 $
694,536 Analog Devices, Second 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
2Q 15 1Q 15
2Q 14 May 2,
2015
Jan. 31,
2015
May 3,
2014
GAAP Gross Margin $ 544,822
$ 503,607 $ 458,743 Gross Margin
Percentage 66.4 % 65.2 %
66.1 % Acquisition-Related Expenses 1,520 2,973 -
Stock-Based Compensation Expense -
113 -
Non-GAAP Gross Margin $ 546,342
$ 506,693
$ 458,743 Gross Margin Percentage
66.5 % 65.6 % 66.1 %
GAAP Operating Expenses $ 295,814
$ 295,673 $ 238,343 Percent of
Revenue 36.0 % 38.3 % 34.3
% Acquisition-Related Expenses (24,435 ) (24,132 ) -
Acquisition-Related Transaction Costs (1,820 ) (3,057 ) -
Stock-Based Compensation Expense -
(4,164 ) -
Non-GAAP Operating Expenses $ 269,559
$ 264,320
$ 238,343 Percent of Revenue
32.8 % 34.2 % 34.3 %
GAAP Operating Income/Margin $ 249,008
$ 207,934 $ 220,400 Percent of
Revenue 30.3 % 26.9 % 31.7
% Acquisition-Related Expenses 25,955 27,105 -
Acquisition-Related Transaction Costs 1,820 3,057 - Stock-Based
Compensation Expense -
4,277 -
Non-GAAP
Operating Income/Margin $ 276,783
$ 242,373
$ 220,400 Percent of Revenue
33.7 % 31.4 % 31.7 %
GAAP Diluted EPS $ 0.65 $
0.57 $ 0.59 Acquisition-Related Expenses 0.08
0.08 - Acquisition-Related Transaction Costs 0.01 0.01 -
Acquisition-Related Tax Impact (0.01 ) (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) $ 0.73
$ 0.63 $
0.59 (1) The sum of the individual per share
amounts may not equal the total due to rounding
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150519006983/en/
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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