01—Abstract
Summary
Summary of the 10-K filed November 26, 2019. Cited figures are marked; the original filing is the authoritative source.
Analog Devices, Inc. (ADI) reported revenues of $5.99 billiona for the fiscal year ended November 2, 2019, a decrease of 4% compared to the prior year.
This revenue decline was primarily driven by weaker demand across most end markets, particularly consumer and automotive, and the impact of having one less operational week in fiscal 2019 compared to fiscal 2018. Net income also saw a decrease of 10% to $1.36 billionb, resulting in diluted earnings per share of $3.65. Despite the revenue dip, ADI maintained a strong gross margin of 67.0%.
The company continued to invest in research and development, with R&D expenses representing 18.9%c of revenue, reflecting its commitment to innovation in high-performance analog and digital signal processing technologies. ADI's diversified end-market exposure, with Industrial accounting for 50% of revenue, continues to be a core strength, although all segments experienced some decline in fiscal 2019.
02—Key points
Key Highlights
- Revenue decreased by 4% to $5.99 billion in fiscal 2019, primarily due to decreased demand in the consumer and automotive sectors and one less operational week compared to fiscal 2018.
- Net income decreased by 10% to $1.36 billion, with diluted EPS falling to $3.65 from $4.00 in the prior year.
- Gross margin remained strong at 67.0%, although slightly down from 68.3% in fiscal 2018, impacted by lower factory utilization and an inventory write-down.
- The Industrial sector remained the largest revenue contributor at 50%, despite a 4% year-over-year decline.
- The company continued significant investment in R&D, accounting for 18.9% of revenue, underscoring its focus on technological innovation.
- Stock repurchases continued, with $1.56 billion worth of shares bought back in the last quarter of fiscal 2019.
- The company reported $648.3 million in cash and cash equivalents at the end of fiscal 2019.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Analog Devices kept $0.23.
- Revenue$5.99B100.0%
- Cost of revenue−$1.98B33.0%
- Gross profit$4.01B67.0%
- Operating costs−$2.30B38.4%
- Operating income$1.71B28.6%
- Interest, other & tax−$347.6M5.8%
- Net income$1.36B22.8%
Where FY2019 revenue went
$5.99B- Cost of revenue: $1.98B, 33% of revenue
- Net income: $1.36B, 23% of revenue
- R&D: $1.13B, 19% of revenue
- SG&A: $648.1M, 11% of revenue
- Other operating costs: $524.7M, 8.8% of revenue
- Interest, other & tax: $347.6M, 5.8% of revenue
Kept 23% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed November 26, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $5.99B$6.22B | −3.8% |
| Cost of Revenue | $1.98B$1.97B | +0.2% |
| Gross Profit | $4.01B$4.25B | −5.6% |
| R&D Expenses | $1.13B$1.17B | −3.0% |
| SG&A Expenses | $648.09M$695.54M | −6.8% |
| Operating Expenses | $2.30B$2.35B | −2.0% |
| Operating Income | $1.71B$1.90B | −9.9% |
| Interest Expense | $229.07M$253.59M | −9.7% |
| Net Income | $1.36B$1.51B | −9.6% |
| EPS (Basic) | $3.68$4.05 | −9.1% |
| EPS (Diluted) | $3.65$4.00 | −8.8% |
| Shares Outstanding (Basic) | 369.13M370.43M | −0.4% |
| Shares Outstanding (Diluted) | 372.87M374.94M | −0.6% |
05—Questions
Frequently Asked Questions
What were the main drivers for the revenue decrease in fiscal 2019?
The revenue decrease of 4% to $5.99 billion in fiscal 2019 was primarily attributed to a broad-based decline in demand across key end markets, particularly in the consumer and automotive sectors. Additionally, fiscal 2019 had one less operational week compared to fiscal 2018, which also impacted the overall revenue.
How did the acquisition of Linear Technology Corporation impact the company's performance in fiscal 2019?
The acquisition of Linear Technology Corporation, completed in March 2017, continues to contribute to ADI's product portfolio and market presence. While the text does not isolate the specific impact of Linear in fiscal 2019, the acquisition significantly boosted revenue in fiscal 2018 compared to 2017. The integration of Linear's high-performance analog capabilities remains a strategic pillar for ADI.
What is the company's financial health and liquidity position?
As of November 2, 2019, Analog Devices had $648.3 million in cash and cash equivalents. The company also had $5.5 billion in outstanding debt. Management expressed confidence that existing liquidity and cash generated from operations would be sufficient to fund operations, capital expenditures, R&D, and dividends for at least the next twelve months.
How does the company manage its R&D investments?
Analog Devices views R&D as critical for future growth and maintaining product leadership. In fiscal 2019, R&D expenses were $1.13 billion, representing 18.9% of revenue. The company indicated it expects to continue making significant R&D investments to develop innovative technologies and processes for new products.
06—Continue