- Revenue of $3.25 billion with double-digit year-over-year
growth across all B2B markets and record Industrial and Automotive
revenue
- Operating cash flow of $5.0 billion and free cash flow of $4.3
billion on a trailing twelve-month basis
- Returned over $1 billion to shareholders through dividends and
repurchases in the first quarter
- Raised quarterly dividend by 13%, marking our fifth consecutive
double-digit increase
Analog Devices, Inc. (Nasdaq: ADI), a global semiconductor
leader, today announced financial results for its first quarter
fiscal year 2023, which ended January 28, 2023.
“ADI continues to execute exceptionally well with revenue growth
of 21% year-over-year and record earnings per share,” said Vincent
Roche, CEO and Chair. “Encouragingly, despite the macro
uncertainty, demand remains resilient in our Industrial and
Automotive markets, driven by continued momentum across secular
growth areas, such as automation and electrification.”
Roche continued, “Looking ahead, pervasive sensing, AI-driven
edge computing, and ubiquitous connectivity are enabling new
capabilities, applications, and markets at the Intelligent Edge.
ADI, the bridge between the physical and digital worlds, is
well-positioned to deliver breakthrough innovations that positively
impact society and unlock long-term value for all
stakeholders.”
Performance for
the First Quarter of Fiscal 2023
Results Summary(1)
(in millions, except per-share amounts and
percentages)
Three Months Ended
Jan. 28, 2023
Jan. 29, 2022
Change
Revenue
$
3,250
$
2,684
21
%
Gross margin
$
2,124
$
1,402
51
%
Gross margin percentage
65.4
%
52.2
%
1,320 bps
Operating income
$
1,131
$
365
210
%
Operating margin
34.8
%
13.6
%
2,120 bps
Diluted earnings per share
$
1.88
$
0.53
255
%
Adjusted Results
Adjusted gross margin
$
2,392
$
1,931
24
%
Adjusted gross margin percentage
73.6
%
71.9
%
170 bps
Adjusted operating income
$
1,659
$
1,228
35
%
Adjusted operating margin
51.1
%
45.8
%
530 bps
Adjusted diluted earnings per share
$
2.75
$
1.94
42
%
Three Months Ended
Trailing Twelve Months
Cash Generation
Jan. 28, 2023
Jan. 28, 2023
Net cash provided by operating
activities
$
1,406
$
5,025
% of revenue
43
%
40
%
Capital expenditures
$
(176
)
$
(764
)
Free cash flow
$
1,230
$
4,261
% of revenue
38
%
34
%
Three Months Ended
Trailing Twelve Months
Cash Return
Jan. 28, 2023
Jan. 28, 2023
Dividend paid
$
(385
)
$
(1,567
)
Stock repurchases
(655
)
(3,156
)
Total cash returned
$
(1,040
)
$
(4,723
)
(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 2023
For the second quarter of fiscal 2023, we are forecasting
revenue of $3.20 billion, +/- $100 million. At the midpoint of this
revenue outlook, we expect reported operating margin of
approximately 34.7%, +/-130 bps, and adjusted operating margin of
approximately 51.0%, +/-70 bps. We are planning for reported EPS to
be $1.85, +/-$0.10, and adjusted EPS to be $2.75, +/-$0.10.
Our second quarter fiscal 2023 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 $0.86 per outstanding share of common stock. The
dividend will be paid on March 8, 2023 to all shareholders of
record at the close of business on February 27, 2023.
Conference Call Scheduled for Today,
Wednesday, February 15, 2023 at 10:00 am ET
ADI will host a conference call to discuss our first quarter
fiscal 2023 results and short-term outlook today, beginning at
10:00 am ET. Investors may join via webcast, accessible at
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 nonoperating expense (income), 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 revenue 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, and
special charges, net3, 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, and special
charges, net3, which are described further below. Adjusted
operating margin represents adjusted operating income divided by
revenue.
Adjusted nonoperating expense (income) is defined as
nonoperating expense (income), determined in accordance with GAAP,
excluding: certain acquisition related expenses1, which is
described further below.
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, and special charges, net3, 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 items4 , 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, special charges, net3, and
tax related items4, 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 revenue
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 debt, 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 fair value adjustments
associated with the replacement of share-based awards related to
the Maxim Integrated Products, Inc. (Maxim) 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 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.
3Special Charges, net: Expenses, net,
incurred as part of the integration of the Acquisition, 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.
4Tax Related Items: Income tax effect of the
non-GAAP items discussed above and certain other income tax
benefits associated with prior periods. We excluded the income tax
effect of these tax related items from our non-GAAP measures
because they are not associated with the tax expense on our current
operating results.
About Analog Devices
Analog Devices, Inc. (NASDAQ: ADI) is a global semiconductor
leader that bridges the physical and digital worlds to enable
breakthroughs at the Intelligent Edge. ADI combines analog,
digital, and software technologies into solutions that help drive
advancements in digitized factories, mobility, and digital
healthcare, combat climate change, and reliably connect humans and
the world. With revenue of more than $12 billion in FY22 and
approximately 25,000 people globally working alongside 125,000
global customers, ADI ensures today’s innovators stay Ahead of
What’s Possible. Learn more at www.analog.com and on LinkedIn and
Twitter.
Forward Looking
Statements
This press release contains forward-looking statements, which
address a variety of subjects including, for example, our
statements regarding sustained performance; demand and supply;
expected revenue, operating margin, earnings per share, and other
financial results; expected market trends and acceleration of those
trends, market share gains, long-term growth; expected customer
demand for our products; expected product offerings, capabilities,
and applications and the importance of our product offerings and
technologies to our customers; and market 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: 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 or cancellations of orders for our products;
unavailability of raw materials, services, supplies or
manufacturing capacity; disruptions to our manufacturing operations
or our ability to execute our business strategy; changes in
geographic, product or customer mix; changes in export
classifications, import and export regulations or duties and
tariffs; changes in our estimates of our expected tax rates based
on current tax law; adverse results in litigation matters,
including the potential for litigation related to the Maxim
acquisition; the risk that we will be unable to retain and hire key
personnel including as a result of labor shortages; changes in
demand for semiconductors; the uncertainly as to the extent of the
duration, scope, and impacts of the COVID-19 pandemic; attempted or
actual security breaches and other cybersecurity incidents that
disrupt our operations; unanticipated difficulties or expenditures
relating to integrating Maxim; uncertainty as to the long-term
value of our common stock; the discretion of our Board of Directors
to declare dividends and our ability to pay dividends in the
future; factors impacting our ability to repurchase shares; the
diversion of management time on integrating Maxim's business and
operations; our ability to successfully integrate acquired
businesses and technologies, including Maxim; and the risk that
expected benefits, synergies and growth prospects of acquisitions,
including our acquisition of Maxim, 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 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. 28, 2023
Jan. 29, 2022
Revenue
$
3,249,630
$
2,684,293
Cost of sales
1,125,289
1,282,296
Gross margin
2,124,341
1,401,997
Operating expenses:
Research and development
414,095
426,780
Selling, marketing, general and
administrative
326,284
297,365
Amortization of intangibles
253,142
253,367
Special charges, net
—
59,728
Total operating expenses
993,521
1,037,240
Operating income
1,130,820
364,757
Nonoperating expense (income):
Interest expense
60,453
51,964
Interest income
(10,829
)
(218
)
Other, net
7,723
(10,544
)
Total nonoperating expense (income)
57,347
41,202
Income before income taxes
1,073,473
323,555
Provision for income taxes
111,999
43,478
Net income
$
961,474
$
280,077
Shares used to compute earnings per common
share - basic
507,121
525,291
Shares used to compute earnings per common
share - diluted
511,184
530,142
Basic earnings per common share
$
1.90
$
0.53
Diluted earnings per common share
$
1.88
$
0.53
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In thousands)
Jan. 28, 2023
Oct. 29, 2022
Cash & cash equivalents
$
1,670,462
$
1,470,572
Accounts receivable
1,629,870
1,800,462
Inventories
1,522,942
1,399,914
Other current assets
338,226
267,044
Total current assets
5,161,500
4,937,992
Net property, plant and equipment
2,524,655
2,401,304
Goodwill
26,913,134
26,913,134
Intangible assets, net
12,763,229
13,265,406
Deferred tax assets
2,267,178
2,264,888
Other assets
604,824
519,626
Total assets
$
50,234,520
$
50,302,350
Current liabilities
$
2,433,677
$
2,442,655
Long-term debt
6,543,250
6,548,625
Deferred income taxes
3,477,044
3,622,538
Other non-current liabilities
1,249,064
1,223,209
Shareholders' equity
36,531,485
36,465,323
Total liabilities & shareholders'
equity
$
50,234,520
$
50,302,350
ANALOG DEVICES, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended
Jan. 28, 2023
Jan. 29, 2022
Cash flows from operating activities:
Net income
$
961,474
$
280,077
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation
85,321
65,165
Amortization of intangibles
502,177
504,645
Stock-based compensation expense
75,041
86,939
Cost of goods sold for inventory
acquired
—
271,396
Deferred income taxes
(146,354
)
(34,651
)
Non-cash operating lease costs
(2,646
)
7,823
Other
12,378
(9,571
)
Changes in operating assets and
liabilities
(81,086
)
(315,410
)
Total adjustments
444,831
576,336
Net cash provided by operating
activities
1,406,305
856,413
Cash flows from investing activities:
Additions to property, plant and
equipment
(176,158
)
(111,133
)
Other
102
7,824
Net cash used for investing activities
(176,056
)
(103,309
)
Cash flows from financing activities:
Early termination of debt
—
(519,116
)
Dividend payments to shareholders
(385,452
)
(362,645
)
Repurchase of common stock
(654,557
)
(76,019
)
Proceeds from employee stock plans
41,238
8,471
Other
(31,588
)
12,041
Net cash used for financing activities
(1,030,359
)
(937,268
)
Effect of exchange rate changes on
cash
—
(3,401
)
Net increase (decrease) in cash and cash
equivalents
199,890
(187,565
)
Cash and cash equivalents at beginning of
period
1,470,572
1,977,964
Cash and cash equivalents at end of
period
$
1,670,462
$
1,790,399
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
revenue within, each end market.
Three Months Ended
January 28, 2023
January 29, 2022
Revenue
% of Revenue1
Y/Y%
Revenue
% of Revenue1
Industrial
$
1,690,202
52%
26%
$
1,340,284
50%
Automotive
718,165
22%
29%
557,634
21%
Communications
487,986
15%
18%
412,754
15%
Consumer
353,277
11%
(5)%
373,621
14%
Total revenue
$
3,249,630
100%
21%
$
2,684,293
100%
1) 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. 28, 2023
Jan. 29, 2022
Gross margin
$
2,124,341
$
1,401,997
Gross margin percentage
65.4
%
52.2
%
Acquisition related expenses
267,514
528,614
Adjusted gross margin
$
2,391,855
$
1,930,611
Adjusted gross margin percentage
73.6
%
71.9
%
Operating expenses
$
993,521
$
1,037,240
Percent of revenue
30.6
%
38.6
%
Acquisition related expenses
(258,059
)
(262,200
)
Acquisition related transaction costs
(2,563
)
(12,891
)
Special charges, net
—
(59,728
)
Adjusted operating expenses
$
732,899
$
702,421
Adjusted operating expenses percentage
22.6
%
26.2
%
Operating income
$
1,130,820
$
364,757
Operating margin
34.8
%
13.6
%
Acquisition related expenses
525,573
790,814
Acquisition related transaction costs
2,563
12,891
Special charges, net
—
59,728
Adjusted operating income
$
1,658,956
$
1,228,190
Adjusted operating margin
51.1
%
45.8
%
Nonoperating expense (income)
$
57,347
$
41,202
Acquisition related expenses
2,288
2,299
Adjusted nonoperating expense (income)
$
59,635
$
43,501
Income before income taxes
$
1,073,473
$
323,555
Acquisition related expenses
523,285
788,515
Acquisition related transaction costs
2,563
12,891
Special charges, net
—
59,728
Adjusted income before income taxes
$
1,599,321
$
1,184,689
Provision for income taxes
$
111,999
$
43,478
Effective tax rate
10.4
%
13.4
%
Tax related items
81,843
114,389
Adjusted provision for income taxes
$
193,842
$
157,867
Adjusted tax rate
12.1
%
13.3
%
Diluted EPS
$
1.88
$
0.53
Acquisition related expenses
1.02
1.49
Acquisition related transaction costs
0.01
0.02
Special charges, net
—
0.11
Tax related items
(0.16
)
(0.22
)
Adjusted diluted EPS*
$
2.75
$
1.94
* 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. 28, 2023
Jan. 28, 2023
Oct. 29, 2022
Jul. 30, 2022
Apr. 30, 2022
Revenue
$
12,579,290
$
3,249,630
$
3,247,716
$
3,109,880
$
2,972,064
Net cash provided by operating
activities
$
5,025,293
$
1,406,305
$
1,149,336
$
1,247,846
$
1,221,806
% of Revenue
40
%
43
%
35
%
40
%
41
%
Capital expenditures
$
(764,333
)
$
(176,158
)
$
(304,512
)
$
(164,884
)
$
(118,779
)
Free cash flow
$
4,260,960
$
1,230,147
$
844,824
$
1,082,962
$
1,103,027
% of Revenue
34
%
38
%
26
%
35
%
37
%
ANALOG DEVICES, INC.
RECONCILIATION OF PROJECTED
GAAP TO NON-GAAP RESULTS
(Unaudited)
Three Months Ending April 29,
2023
Reported
Adjusted
Revenue
$3.2 Billion
$3.2 Billion
(+/- $100 Million)
(+/- $100 Million)
Operating margin
34.7%
51.0% (1)
(+/-130 bps)
(+/-70 bps)
Nonoperating expense
~ $50 Million
~ $50 Million
Tax rate
10% - 12%
11% - 13% (2)
Earnings per share
$1.85
$2.75 (3)
(+/- $0.10)
(+/- $0.10)
(1) Includes $519 million of adjustments related to acquisition
related expenses and $4 million of adjustments related to
acquisition related transaction costs as previously defined in the
Non-GAAP Financial Information section of this press release. (2)
Includes $71 million of tax effects associated with the adjustments
for acquisition related expenses and acquisition related
transaction costs noted above. (3) Includes $0.90 of adjustments
related to the net impact of acquisition related expenses and
acquisition related transaction costs, as well as the tax effects
on those items.
(ADI-WEB)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230215005261/en/
Investor Contact: Analog Devices, Inc. Mr. Michael Lucarelli
Vice President of Investor Relations and FP&A 781-461-3282
investor.relations@analog.com Media Contacts: Analog Devices, Inc.
Ms. Ferda Millan Global PR & External Communications
Ferda.Millan@analog.com
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