Q3 2024 Analog Devices Inc Earnings Call Transcript
Key Points
- Analog Devices Inc (ADI) reported third-quarter revenue of over $2.3 billion, operating margin above 41%, and EPS of $1.58, all surpassing the midpoint of their outlook.
- The company saw improved customer inventory levels and order momentum across most markets, indicating a potential cyclical bottom.
- ADI's industrial end market, its largest and most profitable segment, is showing signs of recovery with long-term growth opportunities.
- The company's innovations in automated test equipment and AI infrastructure are expected to drive growth into 2025 and beyond.
- ADI's financial position remains solid with over $2.5 billion in cash and short-term investments, and a net leverage ratio of 1.2.
- Challenging economic and geopolitical conditions are limiting a sharper recovery, making the outlook cautious.
- Automotive revenue remained flat sequentially and down 8% year over year, with ongoing inventory digestion impacting legacy automotive and electrification businesses.
- Communications revenue, while up 10% sequentially, was down 26% year over year, indicating a slower recovery in this segment.
- Operating expenses increased modestly due to higher variable compensation, impacting overall profitability.
- The company expects a modest margin contraction in the fourth quarter due to merit increases and other operational costs.
(Audio in Progress)
our expectations only as a date of this call. We undertake no obligation to update the statements except as required by law. Revenue, adjusted gross margin, operating and non-operating expenses, operating margin, tax rate, EPS and free cash flow in our comment today will be on non-GAAP basis, which excludes special items. When comparing our results to historic performance. Special items are also excluded from prior periods. Reconciliation of these non-GAAP measures to most directly comparable GAAP measures and additional information about our non-GAAP measures are included in today's release.
And with that, I'll turn it over to ADI's CEO and Chair, Vincent Roche.
Thanks very much, Mike, and a very good morning to you all. A stronger demand for high-performance product portfolio and skillful execution resulted in third quarter revenue of more
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