Analog Devices, Inc. (Nasdaq: ADI), a leading global
high-performance analog technology company, today provided updated
financial guidance for the third quarter of fiscal 2020.
ADI narrowed and raised its financial guidance for the third
quarter of fiscal 2020. ADI currently anticipates revenue of
approximately $1.45 billion, +/- $30 million. This compares to
previous guidance of $1.32 billion, +/- $70 million, provided on
May 20, 2020. At the midpoint of this revenue outlook, ADI expects
reported EPS to be $0.91, +/- $0.07, and adjusted EPS to be $1.33,
+/- $0.05. This compares to previous guidance for reported EPS of
$0.72, +/- $0.11, and adjusted EPS of $1.08, +/- $0.11.
The guidance increase is driven by better than expected demand
across ADI’s end markets with particular strength in Communications
and Industrial. This upside in demand has resulted in less
cancellations and higher than anticipated backlog conversion.
While ADI is encouraged by the continued resiliency of its
business model, the shape of the economic recovery remains
uncertain and near-term visibility is limited. ADI will provide
financial guidance for its fourth quarter of fiscal 2020 on its
third quarter earnings call on Wednesday, August 19.
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 income before income taxes, adjusted
provision for income taxes, adjusted tax rate, and adjusted diluted
earnings per share (EPS).
Adjusted income before income taxes is defined as income before
income taxes, determined in accordance with GAAP, excluding:
acquisition-related expenses1; restructuring related expense2; and
acquisition-related transaction costs3 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;
restructuring related expense2; acquisition-related transaction
costs3; and tax related items4 which are described further
below.
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 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.
2Restructuring-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. 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.
3Acquisition-Related Transaction Costs: Costs directly related
to certain acquisitions, 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.
4Tax-Related Items: Income tax effect of the non-GAAP items
discussed above and income tax from certain discrete tax items. 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.
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 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, and expected customer demand and order rates for
our products, 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 estimates
of our expected tax rate based on current tax law; our ability to
successfully integrate acquired businesses and technologies; the
risk that expected benefits, synergies and growth prospects of
acquisitions may not be fully achieved in a timely manner, or at
all; adverse results in litigation matters; and the risk that we
will be unable to retain and hire key personnel. 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, INC. RECONCILIATION OF
PROJECTED GAAP TO NON-GAAP RESULTS (Unaudited)
Three Months Ending August 1,
2020
Reported
Adjusted
Revenue
$1.45 Billion
$1.45 Billion
(+/- $30 Million)
(+/- $30 Million)
Tax rate
6% to 8%
10% to 12% (1)
Earnings per share
$0.91
$1.33 (2)
(+/- $0.07)
(+/- $0.05)
(1) At the midpoint, includes $26 million of
tax provision associated with the adjustments for acquisition
related expenses, restructuring related expenses, and acquisition
related transaction costs excluded from our Adjusted income before
tax and approximately $10 million of income tax benefit from
certain discrete tax items.
(2) At the midpoint, includes $0.42 of
adjustments related to the net impact of $0.42 of acquisition
related expenses, $0.10 of restructuring related expenses and
acquisition related transaction costs, $0.07 of tax effects on
those items as well as $0.03 of income tax benefit from certain
discrete tax items.
(ADI-WEB)
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version on businesswire.com: https://www.businesswire.com/news/home/20200713005171/en/
Investor Contact: Analog Devices, Inc. Mr. Michael
Lucarelli Sr. Director of Investor Relations 781-461-3282
investor.relations@analog.com
Media Contact: Teneo Ms. Andrea Calise 917-826-3804
andrea.calise@teneo.com
Ms. Andrea Duffy 646-984-0240 andrea.duffy@teneo.com
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