Analog Devices Inc (NASDAQ:ADI) Q4 2016 Earnings Conference Call - Final Transcript

Nov 22, 2016 • 10:00 am ET


Analog Devices Inc (NASDAQ:ADI) Q4 2016 Earnings Conference Call - Final Transcript


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Good morning and welcome to the Analog Devices Fourth Quarter and Fiscal Year 2016 Earnings Conference Call, which is being audio webcast via telephone and over the web. I would like to now introduce your host for today's call, Mr. Ali Husain, Treasurer and Director of IR. Sir, the floor is yours.

Ali Husain

Good morning, everybody. Thank you for joining ADI's fourth quarter and fiscal '16 earnings conference call. You can find our press release, relating financial schedules and the investor tool kit at their usual spot at Specifically about the investor tool kit, it's something we post on our website two hours before the earnings call and it's actually a pretty good summary of our prepared remarks. For those that are interested in kind of getting the early scoop, that's probably a good place to go as we file our press release.

With me on today's call are ADI's CEO, Vincent Roche, and ADI's CFO, Dave Zinsner. (Forward-Looking Cautionary Statements)

Our comments today will also include non-GAAP financial measures, which we have reconciled to their most directly comparable GAAP financial measures in today's earnings release, which we have posted at

And so with all that behind us, let's get started. And I'd like to turn the call over to Vincent Roche, our CEO.

Vincent Roche

Thank you, Ali, and good morning, everyone. By almost any measure, ADI had an excellent fourth quarter. To put it in perspective, we achieved record revenue of $1 billion, expanded operating margins to a record 38% of sales, and we generated record free cash flow margins of 44%.

Throughout fiscal 2016, as you know, caution and uncertainty were the norm across the world. Nevertheless we executed well in a tough business environment, investing and positioning ourselves for future growth, while remaining disciplined and making smart investment trade-offs.

All told, the actions we took during the year drove free cash flow margins to 33.7%, a 520-basis point improvement over the prior year, and I am very proud of the stellar execution by our entire team.

For ADI it starts with an obsession for our customers' success and I personally spend, as you know, a lot of time talking to and listening to their needs. It's obvious to me from these conversations that ADI is an exceptional company and we are more relevant to our customers than ever before. What is also clear is that our customers are seeking true innovation partners as they grow and evolve their businesses in the midst of unprecedented levels of complexity.

At the same time, our customers' hardware engineering talent is stretched thin. As a result, they are increasingly focusing their design efforts on systems and software, while turning the analog design challenge to ADI, where we have economies of scale and of scope.

With the analog design challenges set to become even more complicated and critical in the area of IoT and industry 4.0, for example, helping our customers bridge the physical and digital domains in mission critical applications will, we