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Analog Devices Reports Strong Start to FY 2017

February 16, 2017

Analog Devices, Inc. today announced financial results for its first quarter of fiscal year 2017, which ended January 28, 2017. Revenue totaled $984 million, down 2% sequentially, and up 28% year-over-year. Revenue in ADI's B2B markets of industrial, automotive, and communications infrastructure totaled $714 million, up 1% sequentially, and up 11% year-over-year; GAAP gross margin of 65.9% of revenue; GAAP operating margin of 27% of revenue; and GAAP diluted EPS of $0.69.

“We have started 2017 with strong and broad-based momentum in our business,” said Vincent Roche, President and CEO. “Our strategy to focus on sustainable and differentiated innovation helped drive 28% year-on-year revenue growth, and our laser focus on operational execution drove strong year-on-year margin expansion and cash generation in the first quarter.”

"In addition, we are pleased with the progress we are making to close the acquisition of Linear Technology, and expect the deal to close by the end of our second fiscal quarter. The combination with Linear Technology, we believe, will create an analog industry powerhouse, capable of creating tremendous value for our customers, employees, and shareholders.”

“Looking ahead to the April quarter, we are planning for revenue to be in the range of $870 million to $950 million, with sequential aggregate strength in our Business to Business (B2B) markets of industrial, automotive, and communications infrastructure being offset by seasonal patterns in the portable consumer market. At the mid-point of this range, we expect revenue to grow 17% over the prior year, which would represent the 4th consecutive quarter of year-over-year revenue growth for ADI.”

ADI also announced that its Board of Directors has approved a 7% increase in its quarterly cash dividend to $0.45 from $0.42 per outstanding share of common stock, representing an annual dividend per share of $1.80. The quarterly dividend that was declared by the Board of Directors will be paid on March 7, 2017 to all shareholders of record at the close of business on February 24, 2017.

Looking forward to the second quarter: Revenue estimated to be in the range of $870 million to $950 million; Non-GAAP gross margin expected to increase to between approximately 66.5% and approximately 67%; Non-GAAP operating expenses expected to be down approximately 3% to up approximately 1% sequentially; Non-GAAP interest and other expense expected to be approximately $30 million; Non-GAAP tax rate expected to be approximately 8%; and Non-GAAP diluted EPS estimated to be $0.74 to $0.86 per share.

With respect to the forward-looking information presented on a non-GAAP basis, the Company is unable to provide a quantitative reconciliation to GAAP because the items that would be included or excluded, other than those described below, are difficult to predict and estimate and are primarily dependent on future events, including costs relating to the consummation and planned integration of the Company’s pending acquisition of Linear Technology Corporation, which is expected to close by the end of the Company’s second fiscal 2017 quarter.

Known reconciling items are: Non-GAAP gross margin excludes $2.7 million of amortization of purchased intangible assets and depreciation of step up value on purchased fixed assets; Non-GAAP operating expenses exclude $18.2 million of amortization of purchased intangible assets and depreciation of step up value on purchased fixed assets; Non-GAAP tax rate excludes $1.0 million provision for income taxes which represents the tax effects of the reconciling items noted in the two bullets above; and Non-GAAP earnings per share excludes $0.06, which represents the estimated impact of the amortization of purchased intangible assets and depreciation of step up value on purchased fixed assets, net of tax, associated with the non-GAAP adjustments noted above on a per share basis.

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