- Revenue of $1.56 billion with double digit year-over-year
growth across all B2B markets
- Operating cash flow of $2.1 billion and free cash flow of $1.9
billion, or 33% of revenue, on a trailing twelve months basis
- Returned over $380 million to shareholders in the first quarter
through dividends and share repurchases
- Increased quarterly dividend by 11%, marking the Company's 18th
increase over the last 17 years
Analog Devices, Inc. (Nasdaq: ADI), a leading global
high-performance semiconductor company, today announced financial
results for its first quarter of fiscal 2021, which ended January
30, 2021.
“ADI delivered strong first quarter results at the high end of
our outlook, reflecting the diversity of our business and our
alignment to the most important secular growth trends,” said
Vincent Roche, President and CEO. “Revenue increased 20%
year-over-year with growth across all market segments, including a
record quarter for our Industrial business. While the economic
backdrop remains uncertain, we are confident that a broad-based
recovery is underway given continued momentum in ADI’s bookings and
lean inventories across the industry.”
Roche continued, “ADI remains focused on addressing our
customers’ toughest challenges and providing breakthrough
solutions, pushing the edge of what is possible. At the same time,
we are passionately driven to deliver a positive impact on the
world around us, enabling a more connected, safer and sustainable
future, while creating value for all stakeholders.”
Performance for the First Quarter of
Fiscal 2021
Results Summary(1)
(in millions, except per-share amounts and
percentages)
Three Months Ended
Jan. 30, 2021
Feb. 1, 2020
Change
Revenue
$
1,558
$
1,304
20
%
Gross margin
$
1,045
$
848
23
%
Gross margin percentage
67.1
%
65.1
%
200 bps
Operating income
$
464
$
273
70
%
Operating margin
29.8
%
21.0
%
880 bps
Diluted earnings per share
$
1.04
$
0.55
89
%
Adjusted Results
Adjusted gross margin
$
1,090
$
893
22
%
Adjusted gross margin percentage
70.0
%
68.5
%
150 bps
Adjusted operating income
$
635
$
481
32
%
Adjusted operating margin
40.7
%
36.9
%
380 bps
Adjusted diluted earnings per share
$
1.44
$
1.03
40
%
Three Months
Ended
Trailing Twelve
Months
Cash Generation
Jan. 30, 2021
Jan. 30, 2021
Net cash provided by operating
activities
$
428
$
2,087
% of revenue
27
%
36
%
Capital expenditures
$
(67
)
$
(178
)
Free cash flow
$
361
$
1,909
% of revenue
23
%
33
%
Three Months
Ended
Trailing Twelve
Months
Cash Return
Jan. 30, 2021
Jan. 30, 2021
Dividend paid
$
(229
)
$
(916
)
Stock repurchases
(157
)
(296
)
Total cash returned
$
(386
)
$
(1,212
)
(1) The sum and/or computation of the
individual amounts may not equal the total due to rounding.
Outlook for the Second Quarter of
Fiscal Year 2021
For the second quarter of fiscal 2021, we are forecasting
revenue of $1.60 billion, +/- $50 million. At the midpoint of this
revenue outlook, we expect reported operating margin of
approximately 30.6%, +/-110 bps, and adjusted operating margin of
approximately 41.0%, +/-70 bps. We are planning for reported EPS to
be $1.06, +/-$0.08, and adjusted EPS to be $1.44, +/-$0.08.
Our second quarter fiscal 2021 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 $0.69 per outstanding share of common stock. The
dividend will be paid on March 9, 2021 to all shareholders of
record at the close of business on February 26, 2021.
Conference Call Scheduled for Today,
Wednesday, February 17, 2021 at 10:00 am ET
ADI will host a conference call to discuss our first quarter
fiscal 2021 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:
3567727, 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; acquisition related transaction costs2;
restructuring related expense3; and charitable foundation
contribution4 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; acquisition related transaction costs2; restructuring
related expense3; and charitable foundation contribution4 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; acquisition related transaction
costs2; restructuring related expense3; and charitable foundation
contribution4 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 items5 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;
acquisition related transaction costs2; restructuring related
expense3; charitable foundation contribution4; and tax related
items5 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 Corporation (Linear) 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.
2Acquisition Related Transaction Costs: Costs
directly related to the proposed Maxim Integrated Products, Inc.
acquisition, including legal, accounting and other professional
fees as well as integration-related costs. 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.
3Restructuring 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 or
reorganizational initiatives. 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.
4Charitable 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.
5Tax Related Items: Income tax effect of the
non-GAAP items discussed above. We excluded the income tax
benefit/provision effect of these tax related items from our
non-GAAP measures because they are not associated with the tax
expense on our ongoing 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 our proposed acquisition of Maxim Integrated
Products, Inc. (“Maxim”); the impact of the COVID-19 pandemic on
our business, financial condition and results of operations;
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;
expected customer demand and order rates for our products and
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 or Maxim’s
estimates of our respective expected tax rates based on current tax
law; our ability to successfully integrate Maxim’s businesses and
technologies; the risk that the expected benefits and synergies of
the proposed transaction and growth prospects of the combined
company may not be fully achieved in a timely manner, or at all;
adverse results in litigation matters, including the potential for
litigation related to the proposed transaction; the risk that we or
Maxim will be unable to retain and hire key personnel; the risk
associated with the timing of the closing of the proposed
transaction, including the risk that the conditions to the
transaction are not satisfied on a timely basis or at all or the
failure of the transaction to close for any other reason or to
close on the anticipated terms, including the anticipated tax
treatment; the risk that any regulatory approval, consent or
authorization that may be required for the proposed transaction is
not obtained or is obtained subject to conditions that are not
anticipated; unanticipated difficulties or expenditures relating to
the transaction, the response of business partners and retention as
a result of the announcement and pendency of the transaction;
uncertainty as to the long-term value of our common stock; the
diversion of management time on transaction-related matters; our
ability to successfully integrate acquired businesses and
technologies; and the risk that expected benefits, synergies and
growth prospects of acquisitions may not be fully achieved in a
timely manner, or at all. 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
Jan. 30, 2021
Feb. 1, 2020
Revenue
$
1,558,458
$
1,303,565
Cost of sales
513,087
455,423
Gross margin
1,045,371
848,142
Operating expenses:
Research and development
288,150
257,073
Selling, marketing, general and
administrative
185,275
199,280
Amortization of intangibles
107,648
107,225
Special charges
438
11,136
Total operating expenses
581,511
574,714
Operating income
463,860
273,428
Nonoperating expense (income):
Interest expense
42,479
48,813
Interest income
(209
)
(1,940
)
Other, net
(15,028
)
338
27,242
47,211
Income before income taxes
436,618
226,217
Provision for income taxes
48,099
22,343
Net income
$
388,519
$
203,874
Shares used to compute earnings per common
share - basic
369,203
368,241
Shares used to compute earnings per common
share - diluted
373,106
372,264
Basic earnings per common share
$
1.05
$
0.55
Diluted earnings per common share
$
1.04
$
0.55
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In thousands)
Jan. 30, 2021
Oct. 31, 2020
Cash & cash equivalents
$
1,048,063
$
1,055,860
Accounts receivable
826,964
737,536
Inventories
618,640
608,260
Other current assets
131,074
116,032
Total current assets
2,624,741
2,517,688
Net property, plant and equipment
1,129,214
1,120,561
Other investments
91,720
86,729
Goodwill
12,282,751
12,278,425
Intangible assets, net
3,535,475
3,650,280
Deferred tax assets
1,466,489
1,503,064
Other assets
309,720
311,856
Total assets
$
21,440,110
$
21,468,603
Other current liabilities
$
1,277,537
$
1,364,986
Debt, current
399,220
—
Long-term debt
4,747,347
5,145,102
Deferred income taxes
1,862,068
1,919,595
Other non-current liabilities
1,066,192
1,040,975
Shareholders' equity
12,087,746
11,997,945
Total liabilities & equity
$
21,440,110
$
21,468,603
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended
Jan. 30, 2021
Feb. 1, 2020
Cash flows from operating activities:
Net income
$
388,519
$
203,874
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation
56,309
59,863
Amortization of intangibles
145,044
144,069
Stock-based compensation expense
36,638
37,501
Deferred income taxes
(27,275
)
(13,982
)
Non-cash contribution to charitable
foundation
—
40,000
Other non-cash activity
(14,553
)
2,332
Changes in operating assets and
liabilities
(156,741
)
(124,009
)
Total adjustments
39,422
145,774
Net cash provided by operating
activities
427,941
349,648
Percent of revenue
27
%
27
%
Cash flows from investing activities:
Proceeds from other investments
18,566
—
Additions to property, plant and
equipment
(67,388
)
(54,839
)
Cash paid for asset acquisition
(22,522
)
—
Payments for acquisitions, net of cash
acquired
(2,428
)
—
Changes in other assets
(1,299
)
107
Net cash used for investing activities
(75,071
)
(54,732
)
Cash flows from financing activities:
Dividend payments to shareholders
(229,179
)
(199,160
)
Repurchase of common stock
(157,057
)
(106,030
)
Proceeds from employee stock plans
19,920
16,113
Changes in other financing activities
2,493
(495
)
Net cash used for financing activities
(363,823
)
(289,572
)
Effect of exchange rate changes on
cash
3,156
742
Net (decrease) increase in cash and cash
equivalents
(7,797
)
6,086
Cash and cash equivalents at beginning of
period
1,055,860
648,322
Cash and cash equivalents at end of
period
$
1,048,063
$
654,408
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 evolves and
improves, 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, 2021
Feb. 1, 2020
Revenue
% of revenue*
Y/Y %
Revenue
% of revenue*
Industrial
$
855,454
55
%
24
%
$
687,685
53
%
Communications
281,049
18
%
16
%
241,804
19
%
Automotive
245,250
16
%
19
%
205,712
16
%
Consumer
176,705
11
%
5
%
168,364
13
%
Total revenue
$
1,558,458
100
%
20
%
$
1,303,565
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
Jan. 30, 2021
Feb. 1, 2020
Gross margin
$
1,045,371
$
848,142
Gross margin percentage
67.1
%
65.1
%
Acquisition related expenses
44,997
45,016
Adjusted gross margin
$
1,090,368
$
893,158
Adjusted gross margin percentage
70.0
%
68.5
%
Operating expenses
$
581,511
$
574,714
Percent of revenue
37.3
%
44.1
%
Acquisition related expenses
(110,300)
(111,782)
Acquisition related transaction costs
(15,236)
—
Charitable foundation contribution
—
(40,000)
Restructuring related expense
(438)
(11,136)
Adjusted operating expenses
$
455,537
$
411,796
Adjusted operating expenses percentage
29.2
%
31.6
%
Operating income
$
463,860
$
273,428
Operating margin
29.8
%
21.0
%
Acquisition related expenses
155,297
156,798
Acquisition related transaction costs
15,236
—
Charitable foundation contribution
—
40,000
Restructuring related expense
438
11,136
Adjusted operating income
$
634,831
$
481,362
Adjusted operating margin
40.7
%
36.9
%
Provision for income taxes
$
48,099
$
22,343
Income tax effect of adjustments above
22,796
28,280
Adjusted provision for income taxes
$
70,895
$
50,623
Income before income taxes
436,618
226,217
Effective tax rate
11.0
%
9.9
%
Acquisition related expenses
155,297
156,798
Acquisition related transaction costs
15,236
—
Charitable foundation contribution
—
40,000
Restructuring related expense
438
11,136
Adjusted income before income taxes
$
607,589
$
434,151
Adjusted tax rate
11.7
%
11.7
%
Diluted EPS
$
1.04
$
0.55
Acquisition related expenses
0.42
0.42
Acquisition related transaction costs
0.04
—
Charitable foundation contribution
—
0.11
Restructuring related expense
0.00
0.03
Income tax effect of adjustments above
(0.06)
(0.08)
Adjusted diluted EPS*
$
1.44
$
1.03
* 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
Jan. 30, 2021
Jan. 30, 2021
Oct. 31, 2020
Aug. 1, 2020
May 2, 2020
Revenue
$
5,857,949
$
1,558,458
$
1,526,295
$
1,456,136
$
1,317,060
Net cash provided by operating
activities
$
2,086,780
$
427,941
$
672,598
$
557,200
$
429,041
% of Revenue
36
%
27
%
44
%
38
%
33
%
Capital expenditures
$
(178,241
)
$
(67,388
)
$
(29,888
)
$
(20,804
)
$
(60,161
)
Free cash flow
$
1,908,539
$
360,553
$
642,710
$
536,396
$
368,880
% of Revenue
33
%
23
%
42
%
37
%
28
%
ANALOG DEVICES, INC.
RECONCILIATION OF PROJECTED
GAAP TO NON-GAAP RESULTS
(Unaudited)
Three Months Ending May 1,
2021
Reported
Adjusted
Revenue
$1.60 Billion
$1.60 Billion
(+/- $50 Million)
(+/- $50 Million)
Operating margin
30.6%
41% (1)
(+/-110 bps)
(+/-70 bps)
Nonoperating expense
~ $44 Million
~ $44 Million
Tax rate
11% to 13%
11% to 13% (2)
Earnings per share
$1.06
$1.44 (3)
(+/- $0.08)
(+/- $0.08)
(1) Includes $166 million of adjustments related to acquisition
related expenses and acquisition related transaction costs as
previously defined in the Non-GAAP Financial Information section of
this press release. (2) Includes $23 million of tax effects
associated with the adjustments for acquisition related expenses
and acquisition related transaction costs noted above. (3) Includes
$0.38 of adjustments related to the net impact of $0.44 of
acquisition related expenses and acquisition related transaction
costs, as well as $0.06 of tax effects on those items.
(ADI-WEB)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210217005157/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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