Analog Devices (ADI) Q2 Earnings & Revenues Beat Estimates

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Analog Devices Inc. ADI reported second-quarter fiscal 2019 adjusted earnings of $1.36 per share, beating the Zacks Consensus Estimate of $1.30. The bottom line decreased 9.3% year over year but increased 2.3% sequentially.” data-reactid=”11″>Analog Devices Inc. ADI reported second-quarter fiscal 2019 adjusted earnings of $1.36 per share, beating the Zacks Consensus Estimate of $1.30. The bottom line decreased 9.3% year over year but increased 2.3% sequentially.

Revenues of $1.53 billion topped the consensus mark of $1.51 billion. However, the top line declined 2% year over year and 0.94% from the fiscal first quarter.

This downside can be attributed to weak performance of the company in consumer and industrial end markets during the reported quarter. Moreover, macroeconomic headwinds negatively impacted the top line.

Nevertheless, Analog Devices’ solid momentum in the communications market remained a positive in the quarter under review. Its strengthening relationships with customers and expanding addressable market size are expected to continue aiding business growth.

Coming to share price performance, shares of Analog Devices have returned 4.3% over a year against the industry’s 11.1% decline.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Revenues by End Markets” data-reactid=”24″>Revenues by End Markets

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Industrial: The company generated revenues of $763.5 million (accounting for 50% of the total revenues), which declined 6% year over year.” data-reactid=”25″>Industrial: The company generated revenues of $763.5 million (accounting for 50% of the total revenues), which declined 6% year over year.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Communications: Revenues from this market came in at $359.6 million (24% of revenues), increasing 3% year over year. This can be primarily attributed to rising 5G deployments and 4G technology upgrades.” data-reactid=”26″>Communications: Revenues from this market came in at $359.6 million (24% of revenues), increasing 3% year over year. This can be primarily attributed to rising 5G deployments and 4G technology upgrades.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Automotive: Revenues from this market came in at $249.8 million (16% of revenues), flat with the year-ago quarter.” data-reactid=”27″>Automotive: Revenues from this market came in at $249.8 million (16% of revenues), flat with the year-ago quarter.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Consumer: This market generated revenues of $153.7 million (10% of revenues), reflecting a 32% significant decline on a year-over-year basis.” data-reactid=”28″>Consumer: This market generated revenues of $153.7 million (10% of revenues), reflecting a 32% significant decline on a year-over-year basis.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Operating Details” data-reactid=”29″>Operating Details

Non-GAAP gross margin contracted 90 basis points (bps) on a year-over-year basis to 70.6%.

As a percentage of revenues, adjusted operating expenses were 29%,expanding 80 bps from the year-ago quarter.

Non-GAAP operating margin contracted 170 bps on a year-over-year basis to 41.5% during the reported quarter.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Balance Sheet &amp; Cash Flow” data-reactid=”33″>Balance Sheet & Cash Flow

At the end of the fiscal second quarter, cash and cash equivalents were $713.6 million, up from $605.9 million in the comparable year-ago period.

Long-term debt was approximately $5.61 billion, decreasing from $6.23 billion at fiscal first quarter-end.

Net cash provided by operations was $670.9 million, up from $371.8 million in the fiscal first quarter.

The company generated $596 million of free cash flow during the second quarter.

In addition, Analog Devices returned $302 million to its shareholders through dividends and share repurchases.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Guidance” data-reactid=”39″>Guidance

For the third quarter of fiscal 2019, Analog Devices expects revenues to be $1.45 billion (+/- $50 million). The Zacks Consensus Estimate for the same is pegged at $1.56 billion.

Non-GAAP earnings are expected to be $1.22 (+/- $0.07) per share. The consensus mark for the same is pegged at $1.38 per share.

The company anticipates non-GAAP operating margins to be approximately 40.5%.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Analog Devices, Inc. Price, Consensus and EPS Surprise” data-reactid=”43″>Analog Devices, Inc. Price, Consensus and EPS Surprise

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