ADI - Earnings call transcript Q4 2018

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Operator

Good morning. And welcome to the Analog Devices Fourth Quarter and Fiscal Year 2018 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. Michael Lucarelli, Director of Investor Relations. Sir, the floor is yours.

Michael Lucarelli

good and Jennifer, you, morning, everybody. Thank joining call. for our fourth conference XXXX fiscal and quarter Thanks on call me ADI’s With the CFO, Roche; CEO, Prashanth and Vincent Mahendra-Rajah. today are ADI’s

it missed you the For financial anyone, investor.analog.com. can who find at schedules and release, relating

earnings The disclosures. as of date discussed includes to or discuss, fiscal file forward-looking further outlook These results will in of we are light statements. our expect ADI’s events. statements call. and from various in these Actual opinion statements those to ‘XX financial results release as the including to our about our most information new about the and objectives result future We our factors obligation undertake quarter detailed our on no including recent in statements information we of forward-looking forward-looking next Now materially a be and forward-looking Today’s to this in may which differ XX-Q. these XX-K update week. commentary of reflect fourth

about are prior commentary results short-term fiscal financial and XXXX Quarterly under the non-GAAP our include special these quarter ADI’s from of excluded posted special our which release at non-GAAP in web and typically Reconciliations year-over-year have about results. and measures exclude section schedules we also will performance, items the measures historical most on additional included investor.analog.com. When GAAP measures, earnings comparing today’s information to outlook to items. quarter which financial and comparable non-GAAP our and Results are also the results fourth Our measures

Vince? to over it CEO, turn Roche. I’ll Vincent that, With Okay. ADI’s

Vincent Roche

watermark ADI another company. quarter. an year very cap quarter fourth $X.X and pleased excellent high again Mike, by good the Well, off you, morning, achieving record what to of report the billion once for revenue a I’m in that had hit Thank was We exceptional to everyone.

share. earnings In delivered and $X.XX addition, diluted margins operating expanded of we per to XX%

billion year-over-year. double $X and than we Growth future investing business, cash revenue our $X.X our full share that This our the more enabled per flow. rapidly Looking of the most our led by earnings at debt continue markets now, for BXB year in digits us was time. Diluted to the generation year-over-year, notably, into the billion surpassed year XX% $X increased first well over to of by and generated reduce robust the billion shareholders. during returned cash free increased over cash

of the last plan free As forward call, XXX% return cash to on we debt after outlined our we repayments. going flow

billion through $XX shareholders repurchases. dividends XXXX share returned have our to we since fact, and In

financially, being of ADI a it exceptional for business Beyond year strong year was also. also progress

to our I’d like spend little and it indeed progress show ADI beyond. for and in how a continued time strength describing specifically XXXX in So XXXX positions

LTC, approach, integration towards growth. goal a using in profitable of made across unified entire Firstly, are organization the employees common best of long-term progress both of we the tremendous our and working delivering

and analog, customers. Our teams the sensors impactful have development and of extending roadmaps power cutting edge to synergized solutions to deliver and are activities, mixed R&D busily signal, product our

building in strides converting great and really made has opportunity force sales our combined Our pipeline.

value has market. broad our fact, in also since doubled revenue cross-selling and Day the in opportunity customers large Analyst In across our

our successfully initial million During synergies. of $XXX achieved we cost the year,

watts new LTC’s indeed complementarity to exit next operation We million, to to analog, optimizing In portfolio in XXX footprint, and cloud our that portfolio cost share and capabilities range over objective from revenue with to created industry-leading RF short, our grow while that an position and to DC XXXX capture announced, $XXX by from nano sensor engineers kilowatts. and as product we take bases are positioned our and growth previously relationships, team said, of combined from have and of years. gigahertz In another power a are we strategically double is market in stronger enabling the addition, XXXX upside. and in operationally we internal ever have manufacturing extremely are than All agile beyond. given a that well-prepared customer confident growth been increasingly reducing we the more to and few our product

physical benefit innovation our XXXX, demands us to domains XXXX ourselves solutions to preparedness, In progress the for these strong our trends customers’ uncertainty ever transcend technology customers. is externalities business addition secular more very past becomes tailwinds potential been making are customers between of critical our to with few and for well-aligned our product and any own macro the ADI. grounded position analog to with capabilities get enable during are of our them and year in And expertise in their short-term deeply to that more a and technology partnering confidence externalities creating beyond. the have that full are meet success and we [immutable][ph] the digital to success simultaneously, in ADI’s namely,

given the contain massive Wireless recent These sector, the ADI may channels, and over have global indeed press in example, coming for in more software beginning, is a and potentially transceivers for us carriers in radio expected massive power increase are times enabling is opportunity just portfolio thus for tailwinds systems beginning. ADI’s generations. cost radios in RF, efficiency, microwave compared in of future growth signal, stone Much around the when far Communication for wins deploy based in And and provide are in capture our customers design mixed deployments to XXXX are enabled massive enable to management MIMO demands XG place will those leads space is I defined, just innovation taking other the compelling software Many the that and times this even XG seen increasing solutions area massive to to XG spectral subsystem, in MIMO continue create of believe power technologies our this us years. to the stepping management defined content For MIMO ADI deployments Korea. of up opportunity the you the that beginning just current of progress thermal also X a the will comprehensive our XG’s ahead. should wave communications and significant attached to representing in years an millimeter addition, note in but to further MIMO years. eight portfolio power solutions. radio to

channels to well immense Here our count the to very radio carriers will XXX channel are these to with radio we radio and look again edge increase once solve positioned portfolio. challenges up cutting comprehensive per

particular the multiyear a are we in stages growth space. of believe early I really So in cycle this

here and customer’s by Industry a for precision and factory and to to technologies lower envisioned most is robustness set of increase heritage, need. expected deliver has of required industrial and sector, the So, ADI digital the the capabilities moment to comprehensive expertise the cost. turning domain our level the X.X now productivity the

return engagements B our C foundation in at have Kevin growth are transport progress we our rate than Ethernet this of growth in expands are a FYXX strength depth, control to vectors these the example, isolation this solid long-term to of and we such media our was A areas, motion our in like business such content annually. adding Growth beyond building for mainly year, industrial by grid For high-single power are by to past and is least in year and rate traditional we really and audio and our our growth and market. path new electronics strength bright us In precision of audio conviction sector. here, driven on in deterministic has B to processing products increased continued that to triples well, to I processing, power right vibration, we technologies, more future addressable and double-digit particular as automotive, our target our as digits sensors opportunity and our as sub communications positioning are accelerated attaching management portfolio strong equally adding technologies, which

technology On of levels high-speed in side processing deliver increasing business, X required ever vehicles. the plus to precision autonomous of active Level is safety signal the

fully in power strengthening case management position are Here ADI’s and programs. across our solutions as nearly coupled And is IMU self all -- the achieve radar, the LIDAR solutions driving case we in as progress application of the FYXX. on with electrification area, BMS our to customers with strengthening vehicles. are stellar in vision our relying In Baidu, ADI made have their autonomous

to more per up XX% to and charge extends miles delivers generation competition useful current battery’s compared the Our life. the

sampling our next-generation while which now are performance We adding and another safety efficiency additional leap, solution, features. provides

will such our started. expertise high-performance multi-generational includes digital I’d in customers. And and the roadmap and in the over innovations rate really problems that like growth business few Revenue double-digit monitoring and this progress. the remote to BMS as a about believe subsequent and architectural control patient critical getting density, more in signal five words at increased accuracy of power of areas it’s way ADI’s systems just that finally, a the future. our power I Healthcare has and solved weight the change are is market ever past processing say our years In sensing, to X-Ray generation Beyond

digital several difficult to domain customer’s a inspired pivot a in solve example, For ago, approach our to X-Ray the problems. area most imaging, of years made we

customer’s intensely These We simplified integrated for have radiation challenges, design to to by tenuous our curve blocks dosage complex pushed similar subsystems levels highly reducing strong photons and high leveraged from to example. building fidelity. heritage end increasing our create component innovation problem have of new the and and bits image solutions

And addressable levels the new We growth capture ADI. new vein new I market the area, our enable value. extended in and to economic in a needs have converging of Healthcare adoption thereby to future believe for technology our that general of in

today uncertainty may fears the in our the geopolitical forth constructive our skeptical, is put some I’ve well So, founded. be world, present present confidence and very while I a given believe macro bit here that scenario and closing,

that succeed excel diverse climate. to a macro applications, position products across and have any us in business We customers, and

deepened to have the technology year cutting-edge we during portfolio than have our We our enormously other engagements. customer and

for weather marketplace. agile in And asset, push leverage customers amidst greatest learn our an we So we to who to are for position drives our edge, and each returns our any create every of the to the enough and innovative shareholders. our being in continuously the more capture solutions adapt which perturbations change continue day, complexity, to upside, ever increasing environment ultimately while a and people,

it Prashanth. over to that, I’d to with hand so, like And

Prashanth Mahendra-Rajah

Thank ‘XX morning, me everyone. you, QX let And earnings add welcome to my call. Vince. Good our

expenses, the P&L let record As exclude release. wrapped XXXX outlined on or be quarter, this non-GAAP on a up in me billion of revenue usual, cover into on $X.X another $X with markets. But special generating statement, the and of and I exception comments will of revenue over $X.XX, items press growth at which end trailing we a billion adjusted into basis, get and We with the converted the EPS the setting today’s cash XX. non-op flow, line details my items strong income before

in led the fourth year Our quarter quarter sectors growth communications increased diverse strength to highly revenue represented increased defense. XX% year-over-year. year-over-year, quarter, by The by BXB the instrumentation, of and healthcare, XX% markets. in compared in the industrial industrial led aerospace sales increased XX% ago Most end-market and double-digit and

As market, expected, and massive comps was was and continued XG strong The factory XX% early slower both moderated of in in year-over-year, China. wireless our sales mainly was by demand as by MIMO. markets. driven rate a growth wireless automation, once wired business double-digit our augmented fourth again in of which deployments accelerated quarter in this business at increased by Growth in the represented momentum based the broad related to performance

carry expect this XG beyond and ADI. opportunity an into represents We to for as XXXX enormous

quarter Our year-over-year. business the in Growth of sales led XX% XX% fourth sales increased the business by represented And rate and a Auto in single-digit BMS our quarter. Consumer at application. cabin the low electronics was lastly, and represented of

As revenues year-over-year. expected, declined

less than declined portables However, expected.

And P&L. Revenue billion, Gross XX%. were high in of million and and was OpEx revenue, for guidance the at margins the XX% op sequentially. fourth a at $XXX approximately our of of was Now target within of quarter X% flat the our well finally, at XX%. sub increased approximately XX margin bps increasing $X.X at year-over-year moving the record on quarter year-over-year. to end XX.X% were

to quarter was X%. diluted declined true As above the continue with quarter at our fourth full per rate our million year $X.XX. to expenses fourth tax earnings and share in we delever, non-op Non-GAAP the for the a approximately midpoint came in up QX $XX

billion Inventory $X.X declined flow months, weeks. our flow increased of eight sheet. free target line to the as weeks We relatively XXX the Now the cash of six moving closing cash were the XX balance days right onto our quarter. sequentially XX% from third free yesterday’s quarter, of is yield sequentially exited and or flat trailing with the Disty X% price and year approximately in over of X.X%. generated sales in and inventory

million repurchase program, leverage paid outlined is we in as $XXX in and During our we have we $XXX the call, quarter, our repaid share earnings of last we now million debt, sub-X. that our resumed dividends

As CapEx model continue we quarter have million expect purchased we X% to of $XXX run approximately of was and worth and shares. $XX yesterday, XXXX. for sales to nearly fourth in our the of of million

Before I I the ASC adopt move year. January the with want will on we XXX our a January to fiscal you in rev coincide XXXX new that to rec start guidance, remind to quarter -- in standard of

our year. of few the among to registrants last timing are do We due the so SEC fiscal to

distributor. out. be shipments they pretty revenue for will as inventory inventory But as distributors the XXX, standard provide end shipping will back customers. revenue year our while adoption distributors costs deferred changes annual half shipping of with channel plus have recognize growth in revenue Meaning We in We will have new historical variances see into over a the X% reflect been could in we release. from and was change products related sell year. historical the context, three XXXX our by reduced minimal, for to we average versus to inventory channel XXXX years, the look quarterly earnings the you to the larger. plan first market during their rates, certain quarter to under distribution On their in was our the ASC half past and first upon shipment increased second quarterly revenue for historically channel until and minus the the of or impacts revenue Upon

which on the non-op guidance, in of exclude with non-GAAP are basis, release. items also a onto and outlined revenue today’s exception Now the and expenses

XX-week comments As the quarter, and Q&A so this a our of of first all reminder, during the quarter growth commentary my was revenue exclude will week. XXXX a session on extra

our normalizing rates you So growth comparison. give are we to a like-for-like

and we And would Communications double-digit basis. for double-digit in low to in of the a growth our markets quarter billion BXB expected forecasting by on our are First midpoint a the methodology. This rec new be $X.XX revenue company billion At inventory total be led revenue sell-through X% our BXB To new expect quarter. standard, on consecutive XXX year-over-year is market we and in both rev sell-through old for of quarter clear, we level in revenue of the the the BXB method market. high at be would and a the market. year-over-year, midpoint first rev as sell-in both to the at Auto or $X.XX the rec we basis as midpoint on ASC growth well year-over-year change eighth Comps Industrial, during fixed guidance, increase Under channel year-over-year increase aggregate because approximately expect expect single-digit quarter. rate minimal X% the at of first new represent to

to planning be shutdowns are due holidays, to around normal sequentially XX.X business margins We gross lower well approximately as for mix. the as the

operating be expecting around $XXX down at and include are some This to million one-time sequentially the We midpoint. was items. does slightly expenses

So you QX. the going usual will see lift into not

to $X.XX tax is and earnings excluding of million inputs, IRS op be or minus to our and outlook This approximately diluted expect approximately higher special XX% guidance Based per our previous share, XX% items the expenses released first to expect rate expected plus $X.XX. in September. on be in slightly is non-op than due new these margins our $XX to be quarter XX%. will We rate we in the be range tax to

that moving you the to Q&A last to Before This session, our XX%. that OpEx the will guidance. provide the want to we continue change we I we quarter, other discussed this are as inform be going the margins to and does margins the margin be outlook be of gross op operating on model only will will in for providing XX% at of our operating and items range including not to XX% plus This Day long-term margin. Analyst gross change

making is, profitable the this on We to way we focus growth we operating manage margin aligns driving as are that transition expansion. business, it and the

to me a uncertainty was over ADI, Mike our year and the to us, session. while that, for off I will it we of very terrific to lead all-in, successful that equally around turn are mindful So, ahead. the quarter cap optimism Q&A Vince’s XXXX a economic enter echo with let excited about we And it opportunities

Michael Lucarelli

Prashanth. Thanks,

Okay.

Before we remind of everyone couple move of want to a points. Q&A, I to

XXXX second, sell-in first moving are starting of was And first the quarter quarter. we a to First, quarter accounting XX-week XXXX.

around commentary will factors. XXXX be quarter exclude our short, these our such XX-week in a in sell-through As will first the In commentary growth basis. expected two growth

one have an let’s will Q&A and to follow-up yourself initial we to opportunity question response, first after we question. our a our limit please session, Okay, our get you can please. Jennifer, question give for

Operator

Instructions] from Stifel. Svanberg with first Tore question [Operator Our comes

Tore Svanberg

Yes.

Vincent Roche

morning, Good Tore.

Tore Svanberg

morning results thank environment. good in And congratulations the a tough you, on and

Industrial The first on question business. is the

very ‘XX. it’s bit a sort are in they you they, if a little wait obviously, your are customers see just on this political macro as I’m based So, bit what or little could is a wondering perhaps, what diversified Are comment situation far of seeing the more as on slowdown. optimistic and about there and

trying how right base to Just gauge Industrial is your feeling now?

Vincent Roche

optimistic, with well, two and the The say, internationally dampening Yeah. I’d generally think, both of quite enthusiasm down concern, I’ve uncertainty a kind trade few impacts maybe on there view speaking, the -- half, forth, demand. macro to laying and last customers so the a rhetoric taking and driven and and the a for so long-term here the the obviously, is America quarter, domestically tariffs. CapEx remaining are Thanks, is, war over atmosphere though of of by quarter talked in customers which I Tore. in quarters, and

in we are though I and part lead is, normal. kind cancellations time, So, would seeing of are point times at say, this normal are for the rates pretty what a most

good in would market the China the side continued has and for example, we think acceleration strong business, aerospace two. strength, we an seeing for seeing there the measurement area also in in and So of over I of electronic defense business, I are say test and remained the in and of healthcare our softness. are of or the and itself, softening largely Industrial our some obviously, part company is pockets it’s last Automation quarter growth

think And color. you I we So Tore, the have, that standpoints from some provides obviously, past been customer investing view, past decade. R&D an engagement our -- really the from of over and point heavily

thousands So are say, I ADI in it’s one thousands products, think our many we we many been customers broad, than and ever I deep, for associated of focus, It positioned number it. got market. of have would is with better that it’s it’s

So and continue content gain we capacity to we beyond. to to ‘XX as are been about optimistic doing have grow and in our share

Michael Lucarelli

a Tore. Do have follow-up? you you, Thank

Tore Svanberg

Thank Vince. That Yes. helpful. very you, was

I clarification question, synergies ADI. the Linear between with now mentioned, So a and had you

that you have is the to word or clarify used mean $X you wondering synergies now that the could think just up I it, statement? double. Thanks. just if are does I’m revenue billion

Vincent Roche

Yeah.

Day ‘XX when $X billion. I point talking, had think our were in in time about we confidence our that towards back and visibility we at Analyst

number to at certainly past that above have well we a year that doubled grow are looking over we now have yeah, continuing confidence the synergy and and bit. So, that and we

Michael Lucarelli

I add… Yeah. will just

Tore Svanberg

you. Thank Okay.

Michael Lucarelli

pipeline A as so our can confident bit Linear at growth we why are double the expands. we

please. take Thank our We question, Okay. next you.

Operator

comes Suisse. with next from Credit Our John question Pitzer

Vincent Roche

morning, John. Good

John Pitzer

letting hear the Thanks guys. guys you me Can me? morning, Good ask Yeah. for question.

Vincent Roche

you Yeah. Yes. We hear fine.

John Pitzer

Vince ask year-over-year comp Thanks had growth just questions. sector, the XX% quarter. Vince. up last mid-XX% Perfect, you put me letting on results. on almost growth you strong Congratulations quarter, this just for

potentially backlog Hittite bit. of that positive concerned there. drive might You pull had long it China parts drivers control this I’m little now you M&A you extent escalates To be are to at under that is growth? guess trying you designs. Hittite the to that that sort get your was did to I highlight being growth I some you these helping really product war this at some if able parts. dissect could of the wondering about to And growth of these trade that not were from ins know get all from what before cycle the a

XG concerns lay can how help Maybe those a and just bit give given MIMO and are. some little massive detail more Just important us you of there?

Vincent Roche

question. Yeah. Thanks, John. Good

with accelerated a no customers I start Remember any enhanced Chinese early to question seeing any that’s the concerns. of are any get build by now, is me tariffs there’s panic war form as into process get tension of, of don’t I let that XG, of buying ahead your sense or would our an out say matter and part So we the latter or multiyear what moving trade what. stages well, XG of anyway first.

I’m what demands. would the is carriers, we looking thing supply we seeing carriers from the put the of another being are So look growth. ‘XX I the you demand a between our at and increasing good customers together, year whole the, double-digit meet see to what at from When say, balance is the

in parts company. are it instrumentation and $XXX revenue in the aerospace we just defense, point here. I’d have Hittite to of of say. time give industrial Hittite of XX-month communications, used at the we $XXX that’s just We last have years, roughly three When a over it Hittite little content benchmark acquired said, by bit trailing well frequency billion gains have, million as and its we incidentally, other was portion radio and a you been market. where got over this those XG making driven tailwinds technologies is The isn’t I a microwave and our and business

a the value improvement that as in XG, call prepared I the my tremendously it when people X said, got early up MIMO here. XG opportunity begins the is that as as to XG addition So ADI put ramp think to times sense content XG gives of we you stages have in or increased massive remarks, XG. I over some a And

way, include, a and that but cross-selling -- targets number, the opportunity. by specific for it’s are that not including any in huge a So we LTE doesn’t there’s

to with go to at power point production in beginning are designs this time. We

I the been has never portfolio ADI’s content has are strong tailwinds stronger. grown, think So and our

what that’s So seeing. we are

a for it’s gain think I share ADI. story

Michael Lucarelli

Thanks, John. Do you follow-up? a have

John Pitzer

Yeah.

it such guys, the percentage should because to of given a about we drivers. have it’s bring and growth be just flagship on hate small we the do consumer consumer especially I and given handsets, Just the think up, times revenue about historically thinking you going of some January the into quickly that, us segment how color But quarter? the different launch how

Vincent Roche

we portable into our company. on content for we somewhere the perform business, in in which the XX% the looking Well, have well a sector to older we and size the, consumer stronger, All say, like platforms. continuing that some the decline part while ‘XX, which looks is of BXB XX% that are expecting a should ‘XX, between started still off -- more of prosumer will lot year bit said, the given that a

So we I the essentially after always, selective to playing as continue we consumer about and be we in seeking target what of But John, are either where this, always application and I what diversity increase lose, in we we ‘XX. and optimistic that that happens think year’s customer. growth, areas are at we look the growth are to be this what will after determined we new by sockets determine win ultimately will think or way to

of at this point. that’s think consumer snapshot I the So

Prashanth Mahendra-Rajah

the increase a XX% on BXB, the so sell-through looking we’re for for you a and consumer. to be X% basis for consolidated should numbers impute you able to John, for company need

Michael Lucarelli

Thanks, John.

next will We question. our go to

John Pitzer

guys. you, Thank Yeah.

Operator

Craig Our Morgan from Hettenbach Stanley. comes with next question

Vincent Roche

Craig. Good morning,

Craig Hettenbach

comment as in that Vince, you well help can then around years, AXB returning to of kind on to kind Yes. know I but additional some just digits? Okay. you automotive it, in any just may of would able And there’s the confidence BMS, details help? you. the if programs Thank coming the expand high-single are frame as

Vincent Roche

of electronics, our done during has foremost, we first well Craig. Yeah. for business the part in cabin and very more Thanks, positioned and are Well, ‘XX. well ‘XX growth that

for that space area in growing digits the is in And application AXB ‘XX. growth yes, the double So company. was the

have Technology as transport that modality as sockets LTCs we CXB. well well. new some this adding Switcher into media of We the now benefit getting we are And added are Silent of also these call

So early ramp we are power our there. in an up at business stages of

well a was also second troubles well, Technology, the but to we double-digit had I we publicized the of think, corner during In have we growth as growth that our I year in really ‘XX and with second expect Management some the Battery we half achieved the performer ADI. it half, Solution double-digit think, particularly turned ‘XX. be for

well So, the as activity. very got I as and systems on architectural as our designed the remarks electrification way interesting implemented mentioned of coming in in have these that and well, BMS we sampling the innovations are next-generation the prepared back we are some that, will change

I’ve sensing talked this got our radar. cross prepared are quality sampling again, we in have our remarks, radar, some the side, gigahertz XX the we image about of On --

the in driving autonomous mixed are kind a starting areas. LIDAR many and plus ADI and inertial use LTE IMU, -- growing both We customers technologies our management LX the units interesting very have pipeline that combines in and signal diversified to of sector

‘XX So I think on going growth accelerate terms have and in to and well. us a starting we continued things to a in of exciting to vehicles lot autonomous of get during BMS as trajectory back stabilizing

frames hopefully, Craig up for it that you. that So,

Michael Lucarelli

Thanks, Craig.

going We time. given follow to no of interest move one are up question, to

Jennifer? question, next over Moving

Operator

Muse from is question with next Evercore. Our C.J.

C.J. Muse

cyclical my more guess for question. you a taking Thank of morning. Good I macro question. Yeah.

about demand. some think the you else, if where potential of in you market particularly You if might Curious all? anywhere about strong love pockets to to impact cyclically China. emerging as talked U.S. seeing other seeing softness thoughts your softness dollar hear you are be weakness, seeing in at and We’d

Vincent Roche

Yeah. the Thanks question, for C.J.

going I’m is, here based is -- perspective, I’m revenue. design on geographic what a about in talk to from yeah, So, going

looking what’s an a have increased were there. moves Automotive was macro a from the I’d down led quarter or and being no markets China, come happening adopted trends as report was growth have to we China. year, So effects or SAAR, up new in primarily most that this say, year-over-year, in one way each region at was year-on-year, weaker year-on-year, geographically, a it big another of slightly related standpoint. markets again up up the sequential say, by out was Europe. little I’d little believe Industrial little all was quarter-on-quarter. modality to innovation there design we that’s weaker little testing quarter-on-quarter. But -- And

come back all but Communications expect the a in the were big we’re in very, sequentially. which first also and Board target. So, basis And to it we strong primary the across very on our Communications geographies year-on-year to up quarter

So strength EU China, as and the as was the led Communications that broad-based well in area. by particularly

a gives hopefully, atmosphere want the the add you to So, for geographic do anything. Prashanth, that on you basis. sense

Prashanth Mahendra-Rajah

geographic based I designed. we our would that. Remember, just think C.J., is where add about revenue on activity

one mode. think has some we area factory but market softness, the was are softness, about staying to been we have we rest I mentioned of outside other a from standpoint, the seeing when test Industrial in that, was auto, that equipment really automation some So effect seen automated growth

of forming outlook. what’s that’s the sort confident are QX for So

C.J. Muse

you. Thank Very helpful.

Michael Lucarelli

C.J. Thanks,

to move next will our question? We

Operator

Mark with Our next question from is Jefferies. Lipacis

Mark Lipacis

out you taking if guys of my any if your wondering and Thank other into impacting business? for that Hi. noticed question. own of Thanks manufacturing chain shifting the was supply have you. is China I areas,

Vincent Roche

note. anything there’s of I don’t really think

signs but impacted off, cost to that are customers our the the tariffs. First are the work impact of some are by not so there around tariffs, trying we

a manufacturing by comes and affected time. But, are of from of a there it’s point very by the mitigation amount passing end very, the very our areas think, customers at our very on cost de moving at some small I’d products. minimis I amount, it when this perspective, say, also least small their I in to think, to tariff, customers by not to

Prashanth Mahendra-Rajah

Mark, we I think, are…

Mark Lipacis

Thank you.

Prashanth Mahendra-Rajah

then thereby to the we in supply more we familiar and allow countries them are to directly customers … our further is them seeing those that assemble products the specific the looking have where what are probably happens assembly staging go U.S. chain avoiding avoid other production that maybe would and with get changes and tariffs. at

Michael Lucarelli

Thanks, Mark.

Mark Lipacis

you. Thank

Michael Lucarelli

question. next our to on -- to move will We

Operator

is with BMO. question Ambrish Srivastava from next Our

Ambrish Srivastava

very comments sounds characterizing understood make Hi. It you Vince, the as about Thank sure I uncertainty. you I your near-term like it wanted much. a slowdown. are just to

rates are in just And then You you did at current company doing importantly, to the Could at the past ADI like loadings than the the profitable and order were were what help factory going talk more understand the more lot as about look you what cycles. a entry quarter? us structurally cancellations.

us downturn? to Thank the deeper help were a we if you. go Just playbook, into understand

Prashanth Mahendra-Rajah

of some and take can I’ll pieces. add you some Sure. those Vince,

Vincent Roche

Yeah.

Prashanth Mahendra-Rajah

season. are take factory me let the holiday Certainly, So into utilization. we headed

unwind normally are those New period. utilizations and Christmas, then, again, for factory Thanksgiving, bit our for by Year’s that a impacted So the

So necessarily utilizations areas. environment planning original are coming demand our beyond down, but to in the linked not changes

activity it our booking test we of has equipment. while automation that. seen was. since from activities. yeah, that Certainly, I been and book-to-bill Order we business stabilized have seeing parity factory Industrial is But where a most of as weighted it’s heavily In from two automated that, terms see, below segments and being we mentioned the see

that Now, the to I what in the the we versus just But facts call saw, September. October an we we certainly have think giving we here. bottom saw you saw the I’m improvement have don’t in wherewithal

Vincent Roche

Yeah.

color. little So, think, another Ambrish, of bit I

for say, not we cancellations cautious. are I cancellations causing we macro normal more are would a as pause I said, a would is it’s customers And than little color you what say, just most such, on think, times that’s a to seeing company level, I little a rather for it’s So, to be really the a Lead it’s normal. pause, of just are the that. part, and I’ve really depth seeing uncertainty the are any, of give

supply within In report. metrics. legacy shipping of portfolio than greater LTE ADI mixed. range our normal plan words, more XX% of within well is six-week chain So four-week we little other window the a that to normal is the the to

putting say, has shortfalls, support growth have in support tightening about. have just increasingly a we fact, aggressively and are the new capacity strong supply, couple we some, had today to supply not tight. We also But expecting in to and quarters of has I over that of but been demand place last been been would and the investing optimistic little future

the side, said, a just, driven So, parity by as largely on book-to-bill below Prashanth just little the Industrial. BXB is

that given there. very So, is we or but we the I the that have book-to-bill put we that guidance out think, seeing are of supportive

Michael Lucarelli

Ambrish. you, right. Thank All

Next caller please?

Operator

next Ross Bank. is Our from Deutsche with question Seymore

Ross Seymore

Hi, on ask the Congrats question. for guys. results. Thanks let me strong the

Vincent Roche

Ross. you, Thank

Ross Seymore

picture you your year-over-year in double-digit business? I Vince of bigger would guidance is, imply that BXB question for A the think, you said eighth quarter the growth consecutive

Vincent Roche

Yeah.

Ross Seymore

the I -- very growth, point longest at in find of A my model, double-digit time. stretch That’s I any that’s if for back go record impressive can in track sure.

of cyclical think two do do target guess, for the specific a growth rate company How or rate you segment? BXB on cetera is view et I the you and sustainability gains investments, So, versus target of share the your growth even much points that. that uplift how

Vincent Roche

Yeah. good questions there, of There’s a very lot Ross.

company on company, is we it’s entire hard ADI. Clearly, So, I very, what very what precisely eight of years, I’d as have years market, we BXB nine to say, ago heavily the very mean, the parcel -- retool the is a to area. XX strategy focus years,

In fact, R&D the most are today, BXB to our course, activities -- of the space in XX% and in customer spaces for well, as we area. BXB are spending our of engagement

legacy in ADI of addition and focus LTC on -- LTC, addition portfolio the focused R&D BXB BXB. was the on now the So area, added Hittite the the largely of where the

I think positions the company well.

were course, to I’m we of for last speaking, has macro We positive sure trends, the continue by we and favorable GDP generally share. I believe share And have been been have taking been that PMIs gain strong. quarters of several think, and will aided

think way executing opportunity. more is and But ADI environment intense is the in more the as capturing I obviously, focused, a So, strong. well

within will our growth a So increase again, BXB -- more I we moderated think believe, range. that

said the kind see kind BXB that what are basis we have macro content the cataclysm grow to sense going see -- if of for well, we that, my year. to our business can that times GDP the any in an we that’s coming going that’s again ‘XX and on as for X to we We that are times barring ongoing will be of long-term growth in rate X

Ross Seymore

you. Thank

Michael Lucarelli

Thank our And we last move will Jennifer, please. question to you.

Operator

Vivek from of question our Lynch. Arya America comes Bank with Merrill And final

Vivek Arya

results. for Thanks question the and on congratulations good taking my

Vincent Roche

Thank you.

Vivek Arya

their question area XG? Xilink about and strong how is has competitive the shaping also landscape, wondering you then the on you. wins what’s a landscape XG mentioned and RF MIMO next-gen up and your design do been just for competitive on I’m talking Vince visibility product. you SoC of massive growth see the

Vincent Roche

Yeah.

antenna bitstream, variance when there areas. between there first of the so solution many, So, right think, strongest to And out there from the portfolio the bitstream into -- off, speak. have I are the and we many is from technologies down the antenna

years. we can five customer needs. times years, as at as over we way side here, into portfolio, broadest X I various very XG when and the again, the XG, of the -- of said earlier, been stages into seven millimeter we have looking we last there XG flexible a things, the to the And have get content classical we to compared availability the wave So early potentially the have, got of all part are move that the we we architect

potential which or by of the way, innovation virtualize channel of given So in, plus the terms these early X, the transceivers, the gains XX in until where of count place comes the wave they systems in so. we taking as potential in on XG just least at XG ‘XXs most are radio content, millimeter is is looking at

amount our kind that these we in So, bear can just there massive major then we in we There as as on not also pushing building conversion ebb the that customers they for innovating, floor boundaries all these or and the shift, they the space, they our transceivers, MIMO front-end. and generations. boundaries There of we those capabilities to interface and digital content our are addition. cut with is significant over under and base-end, digital down classical digital example, these of bring well days. digital three technology for transceiver. And combine But the the are well. power is now dramatically blur, taken reduce multiple and blocks in the analog radio incidentally technologies power the the our levels and side is the there’s stations is of defined -- they footprint There a software four radio have are the base there

very are to those our all important So critical problems answers customers that have. very,

X content times but are next, say, five are architectural is, till question years sense looking we potential increase X to and it’s over we radios deploy of coverage and wave, the many millimeter then at content very we my of very, So the a from a well-positioned got and standpoint. into how times

Michael Lucarelli

Credit BMO Have And of available We seeing website and great Conference reconciliations you section joining be in look all us. weeks and joining to the transcript morning. Thanksgiving. can Conference this forward thank the the you, available Quarterly at on and for us a Results Thank and this at will our of website. Vivek. you quarter information Okay. Suisse thanks everyone also coming for be the our copy additional found A

Operator

call. conference today’s Analog concludes Devices This

disconnect. now may You

Analog Devices (ADI) 20 Nov 182018 Q4 Earnings call transcript