Analog Devices Inc (NASDAQ:ADI) Q3 2017 Earnings Conference Call - Final Transcript

Aug 30, 2017 • 10:00 am ET


Analog Devices Inc (NASDAQ:ADI) Q3 2017 Earnings Conference Call - Final Transcript


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Good morning, and welcome to the Analog Devices' Third Quarter Fiscal Year 2017 Earnings Conference Call, which is being audio webcast via telephone and over the web.

I'd like to now introduce your host for today's call, Mr. Ali Husain, Treasurer and Head of Investor Relations. Sir, the floor is yours.

Ali Husain

All right, great. Thank you, Jennifer. Good morning, everybody on the line here. Thanks for joining the Analog Devices' third quarter 2017 earnings conference call. First, I'd like to get through our disclosures. Note that the information we're about to discuss, including our objectives and outlook, includes forward-looking statements.

Actual results may differ materially from these forward-looking statements as a result of various factors, including those discussed in our earnings release and our most recent 10-Q. These forward-looking statements reflect our opinion as of the date of this call and we undertake no obligation to update these forward-looking statements in light of new information or future events.

Today's commentary about ADI's third quarter financial results will include non-GAAP financial measures when comparing our third quarter results to our historical performance, special items are also excluded from the prior quarter and year-over-year results. Available reconciliations of these non-GAAP measures to their most directly comparable GAAP measures and additional information about our non-GAAP measures are included in today's earnings release and in our web schedules, which we've posted under the quarterly results section at

Our web schedules also include a historical view of what the combined ADI and Linear Tech would have look like by end markets, by quarter for the last three years. And lastly, please note that ADI's first quarter of fiscal 2018 will be a 14-week quarter. So you should adjust your models for an additional week of revenue and additional week of expenses for that quarter.

And so with that, I'll turn it over to ADI's CEO, Vincent Roche. Vince's comments are on a non-GAAP basis and excludes special items outlined in today's release. So with that Vince, it's all yours.

Vincent Roche

Thanks very much Ali, and good morning, everyone. Well, this is another very successful quarter for ADI. And I'm pleased to share our results with you this morning. Not only were our third quarter financial results stellar, we're also making excellent progress in integrating Linear Tech from an organization and a synergy capture perspective.

So let's start with our financial results for the third quarter. Total revenue was above the high-end of guidance at $1.46 billion, primarily on broad-based strength in the highly diverse industrial market. And this strong revenue growth coupled with disciplined operational execution delivered gross margins of 70.5% and operating margins of 40.5%.

Importantly, the combined company has generated $1.9 billion of adjusted free cash flow over the past 12 months with associated margins of 34%, which are among the highest in the S&P 500. Now I'd like to give you some details on our performance by end market during the quarter. The industrial market represented 49% of sales and demand across all