01—Abstract
Summary
Summary of the 8-K filed November 26, 2024. Cited figures are marked; the original filing is the authoritative source.
Analog Devices (ADI) reported fourth-quarter and fiscal 2024 results on November 26, 2024 for the period ended November 2, 2024.
Q4 revenue was $2.44 billiona, down 10% year over year but up sequentially from $2.31 billion in Q3 and above the midpoint of guidance, with growth across all end markets. Full-year revenue fell 23% to $9.43 billion, the company's sharpest decline in this cycle, driven by customer inventory correction. Despite the revenue drop, adjusted operating margin remained above 40% (40.9% for the year, 41.1% in Q4), and GAAP diluted EPS was $3.28 for the year, down 50%.
Q4 GAAP diluted EPS was $0.96b versus $1.00 a year earlier, and adjusted EPS was $1.67. Cash generation remained strong. Operating cash flow for fiscal 2024 was $3.9 billion and free cash flow was $3.1 billion, or 33% of revenue.
ADI returned $2.4 billionc to shareholders, including $1.8 billion in dividends and $0.6 billion in buybacks, and the board declared a $0.92 quarterly dividend. Management noted that orders improved steadily through Q4, particularly in Automotive, and expressed cautious optimism for a strong fiscal 2025 while flagging macro uncertainty.
Guidance for Q1 fiscal 2025 calls for revenue of $2.35 billiond (+/- $100 million), slightly below Q4 levels, with reported EPS of $0.80 and adjusted EPS of $1.53, both +/- $0.10. Investors should weigh the recovery in orders against the sequential revenue dip implied by guidance, the large acquisition-related amortization burden from the Maxim Integrated deal that separates GAAP and adjusted earnings, and the company's elevated debt load of roughly $7.6 billion total.
02—Key points
Key Highlights
- Q4 FY2024 revenue of $2.44B, down 10% YoY but up 6% sequentially and above guidance midpoint; growth across all end markets sequentially
- FY2024 revenue fell 23% to $9.43B, with Industrial down 35% and Communications down 33%, while Automotive was nearly flat (-2%) and Consumer declined only 1%
- Adjusted operating margin held at 40.9% for FY2024 (41.1% in Q4), though GAAP operating margin fell to 21.6% from 31.1% due largely to acquisition-related amortization
- GAAP diluted EPS of $3.28 for FY2024 (down 50%) versus adjusted EPS of $6.38 (down 37%); Q4 GAAP EPS $0.96 vs. adjusted $1.67
- Free cash flow of $3.1B for FY2024 (33% of revenue) and operating cash flow of $3.9B; cash and equivalents rose to $2.0B by year-end
- Returned $2.4B to shareholders in FY2024 ($1.8B dividends, $0.6B buybacks); declared quarterly dividend of $0.92 payable December 20, 2024
- Q1 FY2025 guidance: revenue of $2.35B (+/- $100M), reported EPS $0.80 and adjusted EPS $1.53 (+/- $0.10), implying a sequential revenue decline from Q4
03—Questions
Frequently Asked Questions
Why did ADI's revenue decline so sharply in fiscal 2024?
Management attributed the 23% decline primarily to unprecedented customer inventory headwinds, as customers worked down excess stock accumulated in prior periods. Industrial (down 35%) and Communications (down 33%) bore the brunt, while Automotive was relatively resilient at a 2% decline.
Is ADI's margin profile still healthy despite lower revenue?
Yes, on an adjusted basis. Adjusted operating margin was 40.9% for the year, versus 48.9% in fiscal 2023, so it compressed but remained above 40%. GAAP operating margin of 21.6% was lower, mainly because of roughly $1.8 billion of acquisition-related expenses, largely amortization from the Maxim Integrated acquisition.
What does the Q1 fiscal 2025 guidance imply for investors?
Guidance calls for revenue of $2.35B at the midpoint, a modest sequential decline from Q4's $2.44B. Reported EPS is guided to $0.80 and adjusted EPS to $1.53. Management said orders picked up through Q4, especially in Automotive, and was cautiously optimistic about a strong fiscal 2025, though macro uncertainty could slow the recovery.
How strong is ADI's cash flow and capital return program?
Cash generation was solid, with fiscal 2024 operating cash flow of $3.85B and free cash flow of $3.12B (33% of revenue). The company returned $2.4B to shareholders through $1.8B in dividends and $0.6B in buybacks, and the $0.92 quarterly dividend signals continued commitment to shareholder payouts.
What is ADI's balance sheet and debt position?
At fiscal year-end, total debt was roughly $7.6B, including $6.6B of long-term debt, $0.4B of current debt, and $0.5B of commercial paper. Cash and short-term investments totaled about $2.4B. The company issued $1.1B of new debt during the year and repaid $0.5B, so leverage increased modestly versus the prior year.
04—Continue