Analog Devices Reports First Quarter Fiscal Year 2014 Results, Increases Dividend by 9 Percent, and Increases Share Repurchase Authorization to $1 Billion
"Our first quarter unfolded as we had expected," said
"In January, order rates began to improve. We ended the quarter with a book to bill that was above one and we expect this momentum to continue in the second quarter. We are planning for revenue growth and solid operating leverage in the second quarter on improving factory utilization and a good mix of business."
ADI Increases Dividend by 9 Percent and Share
Repurchase Program to
ADI also announced that
its Board of Directors has approved a 9 percent increase in its regular
quarterly dividend, from $0.34 to $0.37 per outstanding share of common
stock. The dividend will be paid on March 11, 2014 to all shareholders
of record at the close of business on February 28, 2014.
In addition, the Board of Directors has approved an increase to the
Company's share repurchase authorization to
For additional information please visit ADI's financial press release page.
Results for the First Quarter of Fiscal Year 2014
-
Revenue totaled
$628 million - Gross margin was 65.1% of revenue
- Operating margin was 29% of revenue, excluding special items, and was 28.6% on a GAAP basis
-
Diluted EPS was
$0.49 , excluding special items, and was$0.48 on a GAAP basis -
Cash flow from operations was
$157 million , or 25% of revenue
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 2014, as well as the immediately prior and year-ago quarters. Additional information on revenue by end market and revenue by product type is provided on Schedules D and E. A more complete table covering prior periods is available at investor.analog.com.
Outlook for the Second Quarter of Fiscal Year
2014
The following statements are based on current
expectations. 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.
-
Revenue estimated to be in the range of
$660 to$680 million - Gross margin estimated to increase 50 to 100 bps
- Operating expenses estimated to increase by approximately 2%
- Tax rate estimated to be approximately 13%
-
Diluted EPS estimated at
$0.54 to$0.58
Conference Call Scheduled for
ADI will host a
conference call to discuss the first quarter results and short-term
outlook today, beginning at
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: 41217783, 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 F of this press release provides the reconciliation of the Company's non-GAAP measures to its GAAP measures.
Manner in Which Management Uses the Non-GAAP
Financial Measures
Management uses non-GAAP operating
expenses, non-GAAP operating income, non-GAAP operating margins,
non-GAAP other (income) 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.
Economic Substance Behind Management's Decision
to Use Non-GAAP Financial Measures
The items excluded
from the non-GAAP measures were excluded because they are of a
non-recurring or non-cash nature.
The following item is excluded from our non-GAAP operating expenses,
non-GAAP operating income, non-GAAP operating margin, and non-GAAP
diluted earnings per share:
Restructuring-Related Expenses.
These expenses are incurred in connection with facility closures,
consolidation of manufacturing facilities, 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 item is excluded from our non-GAAP other (income)
expense and non-GAAP diluted earnings per share:
Gain on
Sale of Product Line. In the fourth quarter of fiscal 2013, the
Company completed the sale of its microphone product line and recorded a
gain of
The following items are excluded from our non-GAAP diluted earnings
per share:
Tax-Related Items. In the first quarter of
fiscal year 2013, the Company recorded a $6.3 million tax benefit
related to the reinstatement of the R&D tax credit in January 2013,
retroactive to January 1, 2012. In the fourth quarter of fiscal 2013, as
a result of a ruling by the U.S. Tax Court in a matter not involving the
Company, the Company recorded a potential liability for
Why Management Believes the Non-GAAP Financial
Measures Provide Useful Information to Investors
Management
believes that the presentation of non-GAAP operating expenses, non-GAAP
operating income, non-GAAP operating margins, non-GAAP other (income)
expense, and non-GAAP diluted EPS is useful to investors because it
provides investors with the operating results that management uses to
manage the Company.
Material Limitations Associated with Use of the
Non-GAAP Financial Measures
Management's Compensation for Limitations of
Non-GAAP Financial Measures
Management compensates for
these material limitations in non-GAAP operating expenses, non-GAAP
operating income, non-GAAP operating margins, non-GAAP other (income)
expense, and non-GAAP diluted EPS by also evaluating our GAAP results
and the reconciliations of our non-GAAP measures to the most directly
comparable GAAP measures. Investors should consider our non-GAAP
financial measures in conjunction with the corresponding GAAP measures.
About
Innovation, performance, and excellence
are the cultural pillars on which
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, operating
expenses, gross margin, tax rate, and other financial results, expected
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
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Schedule A |
||||||||||||
Revenue and Earnings Summary (GAAP) | ||||||||||||
(In thousands, except per-share amounts) | ||||||||||||
Three Months Ended | ||||||||||||
1Q 14 | 4Q 13 | 1Q 13 | ||||||||||
|
|
|
||||||||||
Revenue | $ | 628,238 | $ | 678,133 | $ | 622,134 | ||||||
Year-to-year change | 1 | % | -2 | % | -4 | % | ||||||
Quarter-to-quarter change | -7 | % | 1 | % | -10 | % | ||||||
Cost of sales (1) | 219,120 | 233,263 | 231,850 | |||||||||
Gross margin | 409,118 | 444,870 | 390,284 | |||||||||
Gross margin percentage | 65.1 | % | 65.6 | % | 62.7 | % | ||||||
Year-to-year change (basis points) | 240 | 180 | -50 | |||||||||
Quarter-to-quarter change (basis points) | -50 | 110 | -110 | |||||||||
Operating expenses: | ||||||||||||
R&D (1) | 128,646 | 131,034 | 125,164 | |||||||||
Selling, marketing and G&A (1) | 98,178 | 98,197 | 97,560 | |||||||||
Special charges | 2,685 | 15,777 | 14,071 | |||||||||
Total operating expenses | 229,509 | 245,008 | 236,795 | |||||||||
Total operating expenses percentage | 36.5 | % | 36.1 | % | 38.1 | % | ||||||
Year-to-year change (basis points) | -160 | 330 | 320 | |||||||||
Quarter-to-quarter change (basis points) | 40 | 250 | 530 | |||||||||
Operating income | 179,609 | 199,862 | 153,489 | |||||||||
Operating income percentage | 28.6 | % | 29.5 | % | 24.7 | % | ||||||
Year-to-year change (basis points) | 390 | -150 | -360 | |||||||||
Quarter-to-quarter change (basis points) | -90 | -140 | -630 | |||||||||
Other expense (income) | 3,718 | (82,650 | ) | 3,380 | ||||||||
Income before income tax | 175,891 | 282,512 | 150,109 | |||||||||
Provision for income taxes | 23,305 | 80,958 | 18,887 | |||||||||
Tax rate percentage | 13.2 | % | 28.7 | % | 12.6 | % | ||||||
Net income | $ | 152,586 | $ | 201,554 | $ | 131,222 | ||||||
Shares used for EPS - basic | 312,286 | 311,009 | 303,484 | |||||||||
Shares used for EPS - diluted | 318,017 | 317,216 | 310,275 | |||||||||
Earnings per share - basic | $ | 0.49 | $ | 0.65 | $ | 0.43 | ||||||
Earnings per share - diluted | $ | 0.48 | $ | 0.64 | $ | 0.42 | ||||||
Dividends paid per share | $ | 0.34 | $ | 0.34 | $ | 0.30 | ||||||
(1) Includes stock-based compensation expense as follows: | ||||||||||||
Cost of sales | $ | 1,557 | $ | 1,737 | $ | 1,667 | ||||||
R&D | $ | 4,859 | $ | 5,721 | $ | 5,600 | ||||||
Selling, marketing and G&A | $ | 4,991 | $ | 5,664 | $ | 5,794 | ||||||
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Schedule B |
|||||||||
Selected Balance Sheet Information (GAAP) | |||||||||
(In thousands) | |||||||||
1Q 14 | 4Q 13 | 1Q 13 | |||||||
|
|
|
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Cash & short-term investments | $ | 4,701,109 | $ | 4,682,912 | $ | 3,986,979 | |||
Accounts receivable, net | 328,787 | 325,144 | 329,578 | ||||||
Inventories (1) | 289,935 | 283,337 | 307,263 | ||||||
Other current assets | 151,128 | 181,032 | 190,115 | ||||||
Total current assets | 5,470,959 | 5,472,425 | 4,813,935 | ||||||
PP&E, net | 529,010 | 508,171 | 491,431 | ||||||
Investments | 23,363 | 21,180 | 32,720 | ||||||
Goodwill and intangible assets | 311,664 | 312,664 | 313,084 | ||||||
Other | 64,472 | 67,310 | 65,638 | ||||||
Total assets | $ | 6,399,468 | $ | 6,381,750 | $ | 5,716,808 | |||
Deferred income on shipments to distributors, net | $ | 245,236 | $ | 247,428 | $ | 243,396 | |||
Other current liabilities | 274,258 | 323,084 | 265,139 | ||||||
Long-term debt, non-current | 872,378 | 872,241 | 759,672 | ||||||
Non-current liabilities | 211,961 | 199,421 | 124,804 | ||||||
Shareholders' equity | 4,795,635 | 4,739,576 | 4,323,797 | ||||||
Total liabilities & equity | $ | 6,399,468 | $ | 6,381,750 | $ | 5,716,808 | |||
(1) Includes |
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Schedule C |
||||||||||||
Cash Flow Statement (GAAP) | ||||||||||||
(In thousands) | ||||||||||||
Three Months Ended | ||||||||||||
1Q 14 | 4Q 13 | 1Q 13 | ||||||||||
|
|
|
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Cash flows from operating activities: | ||||||||||||
Net Income | $ | 152,586 | $ | 201,554 | $ | 131,222 | ||||||
Adjustments to reconcile net income to net cash provided by operations: |
||||||||||||
Depreciation | 27,335 | 27,515 | 27,755 | |||||||||
Amortization of intangibles | 55 | 55 | 55 | |||||||||
Stock-based compensation expense | 11,407 | 13,122 | 13,061 | |||||||||
Gain on sale of product line | - | (85,444 | ) | - | ||||||||
Other non-cash activity | 1,417 | 887 | (1,362 | ) | ||||||||
Excess tax benefit - stock options | (7,604 | ) | (1,098 | ) | (5,975 | ) | ||||||
Deferred income taxes | (2,993 | ) | (6,558 | ) | (9,635 | ) | ||||||
Changes in operating assets and liabilities | (24,730 | ) | 132,132 | 2,848 | ||||||||
Total adjustments | 4,887 | 80,611 | 26,747 | |||||||||
Net cash provided by operating activities | 157,473 | 282,165 | 157,969 | |||||||||
Percent of total revenue | 25.1 | % | 41.6 | % | 25.4 | % | ||||||
Cash flows from investing activities: | ||||||||||||
Purchases of short-term available-for-sale investments | (2,234,996 | ) | (2,559,600 | ) | (1,653,593 | ) | ||||||
Maturities of short-term available-for-sale investments | 2,029,319 | 2,199,444 | 1,551,147 | |||||||||
Sales of short-term available-for-sale investments | 212,819 | 59,903 | 283,164 | |||||||||
Additions to property, plant and equipment | (48,123 | ) | (48,558 | ) | (18,269 | ) | ||||||
Proceeds from sale of product line | - | 100,000 | - | |||||||||
Increase in other assets | (3,342 | ) | (1,591 | ) | (2,048 | ) | ||||||
Net cash (used for) provided by investing activities | (44,323 | ) | (250,402 | ) | 160,401 | |||||||
Cash flows from financing activities: | ||||||||||||
Term loan repayments | - | - | (60,108 | ) | ||||||||
Dividend payments to shareholders | (106,024 | ) | (105,938 | ) | (90,679 | ) | ||||||
Repurchase of common stock | (88,963 | ) | (42,809 | ) | (17,001 | ) | ||||||
Proceeds from employee stock plans | 79,600 | 44,399 | 113,770 | |||||||||
Excess tax benefit - stock options | 7,604 | 1,098 | 5,975 | |||||||||
Contingent consideration payment | (1,773 | ) | (1,913 | ) | (3,752 | ) | ||||||
Increase (decrease) in other financing activities | 22,248 | 4,696 | (1,027 | ) | ||||||||
Net cash used for financing activities | (87,308 | ) | (100,467 | ) | (52,822 | ) | ||||||
Effect of exchange rate changes on cash | (704 | ) | 725 | 1,416 | ||||||||
Net increase (decrease) in cash and cash equivalents | 25,138 | (67,979 | ) | 266,964 | ||||||||
Cash and cash equivalents at beginning of period | 392,089 | 460,068 | 528,833 | |||||||||
Cash and cash equivalents at end of period | $ | 417,227 | $ | 392,089 | $ | 795,797 | ||||||
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Schedule D |
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Revenue Trends by End Market |
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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 | |||||||||||||||||||
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Revenue | % | Q/Q % | Y/Y % | Revenue | Revenue | ||||||||||||||
Industrial | $ | 290,365 | 46 | % | -7 | % | 3 | % | $ | 312,451 | $ | 281,209 | |||||||
Automotive | 124,157 | 20 | % | -5 | % | 15 | % | 131,105 | 107,760 | ||||||||||
Consumer | 74,119 | 12 | % | -22 | % | -31 | % | 94,545 | 107,356 | ||||||||||
Communications | 139,597 | 22 | % | 0 | % | 11 | % | 140,032 | 125,809 | ||||||||||
Total Revenue | $ | 628,238 | 100 | % | -7 | % | 1 | % | $ | 678,133 | $ | 622,134 | |||||||
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Schedule E |
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Revenue Trends by Product Type |
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The categorization of our products into broad categories is based on the characteristics of the individual products, the specification of the products and in some cases the specific uses that certain products have within applications. The categorization of products into categories is therefore subject to judgment in some cases and can vary over time. In instances where products move between product categories we reclassify the amounts in the product categories for all prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each product category. | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
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Revenue | % | Q/Q % | Y/Y % | Revenue | Revenue | ||||||||||||||
Converters | $ | 290,551 | 46 | % | -5 | % | 5 | % | $ | 306,187 | $ | 277,940 | |||||||
Amplifiers / Radio Frequency | 164,714 | 26 | % | -7 | % | 4 | % | 176,538 | 157,978 | ||||||||||
Other analog | 79,419 | 13 | % | -14 | % | -17 | % | 92,405 | 95,158 | ||||||||||
Subtotal Analog Signal Processing | 534,684 | 85 | % | -7 | % | 1 | % | 575,130 | 531,076 | ||||||||||
Power management & reference | 38,710 | 6 | % | -12 | % | -2 | % | 44,226 | 39,382 | ||||||||||
Total Analog Products | $ | 573,394 | 91 | % | -7 | % | 1 | % | $ | 619,356 | $ | 570,458 | |||||||
Digital Signal Processing | 54,844 | 9 | % | -7 | % | 6 | % | 58,777 | 51,676 | ||||||||||
Total Revenue | $ | 628,238 | 100 | % | -7 | % | 1 | % | $ | 678,133 | $ | 622,134 | |||||||
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Schedule F |
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Reconciliation from Non-GAAP to GAAP Data (In thousands, except per-share amounts) | ||||||||||||
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 14 | 4Q 13 | 1Q 13 | ||||||||||
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GAAP Operating Expenses | $ | 229,509 | $ | 245,008 | $ | 236,795 | ||||||
Percent of Revenue | 36.5 | % | 36.1 | % | 38.1 | % | ||||||
Restructuring-Related Expense | (2,685 | ) | (15,777 | ) | (14,071 | ) | ||||||
Non-GAAP Operating Expenses | $ | 226,824 | $ | 229,231 | $ | 222,724 | ||||||
Percent of Revenue | 36.1 | % | 33.8 | % | 35.8 | % | ||||||
GAAP Operating Income/Margin | $ | 179,609 | $ | 199,862 | $ | 153,489 | ||||||
Percent of Revenue | 28.6 | % | 29.5 | % | 24.7 | % | ||||||
Restructuring-Related Expense | 2,685 | 15,777 | 14,071 | |||||||||
Non-GAAP Operating Income/Margin | $ | 182,294 | $ | 215,639 | $ | 167,560 | ||||||
Percent of Revenue | 29.0 | % | 31.8 | % | 26.9 | % | ||||||
GAAP Other (Income) Expense | $ | 3,718 | $ | (82,650 | ) | $ | 3,380 | |||||
Percent of Revenue | 0.6 | % | -12.2 | % | 0.5 | % | ||||||
Gain on Sale of Product Line | - | 85,444 | - | |||||||||
Non-GAAP Other (Income) Expense | $ | 3,718 | $ | 2,794 | $ | 3,380 | ||||||
Percent of Revenue | 0.6 | % | 0.4 | % | 0.5 | % | ||||||
GAAP Diluted EPS | $ | 0.48 | $ | 0.64 | $ | 0.42 | ||||||
Impact of Gain on Sale of Product Line | - | (0.19 | ) | - | ||||||||
Restructuring-Related Expense | 0.01 | 0.05 | 0.04 | |||||||||
Impact of the Reversal of Prior Period Tax Liabilities | - | (0.01 | ) | - | ||||||||
Impact of Tax Reserve | - | 0.13 | - | |||||||||
Impact of the Reinstatement of the R&D Tax Credit | - | - | (0.02 | ) | ||||||||
Non-GAAP Diluted EPS | $ | 0.49 | $ | 0.62 | $ | 0.44 |
Mr.
Director of
Investor Relations
781-461-3491 (fax)
investor.relations@analog.com
Source:
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