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During 4Q17, $ADI said its has doubled its revenue base to $5.2Bil over the last five years. The company expanded its operating margin by over 900Bps to approx. 40% and nearly tripled free cash flow generation on a combined basis to $1.9Bil or 34% of sales.
$ADI reported a 17% rise in its 4Q17 earnings driven by higher revenue in the industrial segment. Net income rose to $347.6MM from $296.1MM during 4Q16. EPS slipped 2% to $0.93 from $0.95 during the prior year period. Adj. EPS was $1.45. Revenue rose 54% YoY to $1.54Bil.
Among the factors that drive growth in future, $ADI considers its penetration into new business areas and the innovative product line to be the main contributors. In Q417, growth will be led by the automotive and consumer segments, which tend to carry strong gross margins.
$ADI said the mass automation initiatives taking place in China and Japan are having a positive impact on its business in those countries. The company anticipates the new products from its automotive division, such as the radar solution, would nearly double the available market for those solutions in the coming years.
$ADI said it is well positioned to leverage the 5G deployments, which is expected to begin next year. Analog Devices expects its non-operating expenses to stay about $65MM in 4Q17 and 1Q18, and then to drop to the $55-$60MM range in the remaining quarters of 2018. Looking ahead, the company expects to pay down its debt at the rate of $1Bil a year.
$ADI said strong demand across all industrial sectors and regions was the main driver of revenue growth in 3Q17. The company sees numerous opportunities to drive additional dollar content and revenue growth in the coming months. In the automotive sector, the current rate of semiconductor content per vehicle is expected to more than double by 2025.
Driving the overall revenue growth in 3Q17, $ADI’s industrial segment revenues surged 87% YoY to $700MM. Revenues from the automotive and consumer divisions grew 69% and 36%, respectively, compared to 3Q16. There was a 45% increase in communications revenues.
$ADI is looking for GAAP earnings per share in the range of $0.84 to $0.98 for Q417. Non-GAAP EPS is forecast between $1.29 and $1.43. Analog Devices expects to record revenues in the range of $1.45Bil to $1.55Bil next quarter. Gross margin for the quarter, on a GAAP basis, is estimated to be about 66%, and operating margins in the $28-30% range.
Semiconductor company $ADI reported a marked decline in 3Q17 profit, due to higher expenses. Though income dropped to $0.18 per share from $0.74 per share last year it beat the company’s estimates, continuing the recent trend. Non-GAAP earnings for the quarter were $1.26 per share. Revenues, meanwhile, jumped 65% annually to $1.43Bil.
$ADI stated that Prashanth Mahendra-Rajah will join it as SVP, Finance and CFO on Sept 28, 2017. Mahendra-Rajah will report to CEO Vincent Roche and oversee ADI's global finance organization, with responsibility for financial management, reporting, planning, and strategy. He currently serves as CFO of $WBC, a position he has held since June 2014.
Rick Hess, EVP of $ADI, has been named a Strategic Advisor reporting to CEO Vincent Roche. Greg Henderson was promoted to SVP - Automotive, Communications, and Aerospace & Defense. Yusuf Jamal was promoted to SVP - Industrial, Healthcare, Consumer, and IoT Solutions and Security. Steve Pietkiewicz has been promoted to SVP - Power Products.
On the integration of Linear Technology, $ADI stated that the company is focused on leveraging the combined strengths of both companies. Additionally, the company added that culturally it is in good shape and value around technology, business and customer are similar.