ADI - Earnings call transcript Q4 2019

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Operator

Good morning, and welcome to the Analog Devices Fourth Quarter and Fiscal Year 2019 Earnings Conference Call, which is being audio webcast via telephone and over the web. I'd now like to introduce your host for today's call, Mr. Michael Lucarelli, Director of Investor Relations. Sir, the floor is yours.

Michael Lucarelli

Thank you, Cheryl, and good morning, everybody. fourth fiscal our conference joining for quarter XXXX and call. Thanks are on Mahendra-Rajah. Vincent the me ADI call Prashanth With CFO, today CEO, ADI Roche; and who and find investor.analog.com. you the financial schedules at Anyone it missed release, relating can

our those on as these including objectives reflect results a various as discuss, may recent result undertake new XX-Q. Now about in our date materially events. from These this of statements. including light earnings includes our the of future information release and disclosures. we're our of discussed to these to forward-looking differ outlook in statements Actual the The forward-looking and no most forward-looking obligation forward-looking of factors, opinion call. We or to information update statements statements

quarter exclude prior special performance, Comparing our today XXXX will special also ADI's fiscal items outlook short-term to from comments financial items. which include periods. and about non-GAAP measures, are historical also fourth and our results financial results Our excluded

measures non-GAAP directly non-GAAP in release. earnings these information comparable today's measures are of our additional and to about Reconciliations measures included GAAP most their

was year, XXXX comments annual remarks, our a compares. accurate we growth XXXX make normalized year a included an and reminder, our extra In week have a As fiscal to for more result today's so thus that of XX-week operations. XX-week rates on

And with that, Vince? I'll turn it over Roche. to ADI CEO, Vincent

Vincent Roche

backdrop what uncertainty. a Well, all. trade fourth Thanks, was full challenging and you results good we delivered solid Mike, against to morning and quarter and macroeconomic year ongoing of conditions

continued Importantly, more which shortly. I we success, will long-term in for detail made positioning discuss ADI progress

was per billion $X.XX In $X.XX. revenue and the was quarter, earnings share adjusted fourth

growth as offset market demand was other by our $X For billion, the approximately communications revenue full down in markets. slightly across slower year-over-year year, double-digit was

to our from strong led by communication compared across XXXX, collective communications Specifically, slightly sector. BXB the markets wireless automotive demand industrial, increased and of revenue

generated continue year to in approximately our EPS was conditions, operating business, flow. We full told, actively $X.XX. adjusted operating free expenses. cash Given All the manage $X current we reducing billion

we this diverse be the While the is that macro XX% margin in model, products top business continue to cash succeed a long-term operating ADI to environment. in customers, us across free XX% applications in and is companies year's positions flow any S&P XXX. below our of

customer in both to portfolio even economic any is XXXX while The turn closer one standing we're our Priority And by end, XXXX. and added expertise for possess performance outperforming high the in and we that strategic model fiscal resiliency broadest evidenced XXXX, investments, technology portfolio, product To XXXX. is our not centricity. our still. through deepening And revenue processing. cutting-edge fiscal industry our with capabilities our signal in We priorities let's to business partnering in the BXB of manufacturing applications customers. environment

intersection digital at toughest more ever in the are a enables the us our to customers communications challenges worlds. This are: of they're solve information scarcity becoming systems integrity customers' factors the this analog rely us for is real-world available our and world, increasingly driving the face mission-critical on information third engineering make of technology turning In to thus, The information increasingly And complex. talent, our customer facing design of and challenges more and the wave are important. and customers accuracy decisions. demand that this physical becoming expertise; the of second, digital to first,

the with our to and our inventions more benefit us As product get capabilities full technology deeply innovations. partnering are a customers result, of and

is we portfolio year-over-year. than levels with opportunity solutions technologies. to value our performance enter XX% more that We signal, To and at are enabling provide our uniquely pipeline comprehensive the RF mixed management high as microwave and and of positioned record power XXXX, increased end,

Priority capital. of use efficient X the is

pivot there. billion the against success. approach particularly any company's to our a across invested necessary, economic opportunities, we backdrop. continue $X.X R&D virtuous cycle continue choose markets. position long-term To our allows and our This BXB First, most R&D to when to wisely innovation-driven critical investments is in attractive innovate our quickly, and this fortifies And success, of targeting us we to XXXX,

we're acquisitions complement long-term Second, our drive value R&D our and extracting creation. value from to

Hittite became to portfolio the With acquisition, high the spanes market with in leader RF that DC gigahertz. we a performance XXX

ago, more signal XX%, the the And RF last processing years LTC, high doubled acquisition X we're more added revenue. provide over industrial in franchise deliver up us wireless additional to pipeline, the LTC revenue past to our which acquisition communications and power capture value. performance and to year, the nearly Due new portfolio, management and over to growth. our beginning led than Since XX% building streams. fully precision integrated our Hittite's revenue year solutions by with positioning we've and The increased combination power is

low more growth power, a of This For LTC in in are in path volume the in example, the to XG data ahead rates we've center across meaningful on that ahead. XXXX, won moving infrastructure, and revenue puts historical XXXX. us years production automotive double a designs to ramp

In next addition, phase will while. synergies, we're Prashanth a making on elaborate steady LTC cost which of progress our just on the

Third, shareholder delivering we're returns. to committed strong

of secular flow, XXX% form in more drive debt XXXX, on in Our diversified our target and expand XXX% addressable cash is the capitalizing shareholders than growth. debt markets X flow And trends cash repayments, free shareholders return to to and our of dividends is our repayments. after Priority to returned buybacks. after of we free to

and digital transceiver include, XG in capabilities, by some curve market-leading algorithms And for examples we're pushing innovation solutions. wireless, the example, on optimized power adding our integrated

XG channel the of point-to-point just high a to will solutions. opening network vision and require a And to while managing This the also thermals. by require upgrade microwave optical Xx This the opportunity of gigabit will low revenue for complete enables about ADI's scale reliability demanded a isn't of mission-critical backhaul wireline and by latency expansion and speeds, significant and re-architecting it XG network wireless, size count core customers meet applications. system, new

electric vehicles, XX% BMS we than the highest have miles performance customers more our charge with solution, per up providing For to competition.

solved, monitoring This reliable implementation, how creates battery the necessary map to reuse. controlling for and entire to road our life and accurate, be wirelessly. measurement will and batteries revolutionizing formation from approach more a to is in is that Next

Industry the floors With this into of in our areas. signal as more creates actuating X.X, are extensions franchise activities. this new as additional turn, chain becoming sensing, rise to and franchise well factory greater precision measuring digital, with demand for with In --

software level. is dissipation information as For the the across solution flexibility high factory and increases enables at to equipment managing example, our essential power heat innovative greater performance IO floor, density

glucose our build factories solutions. also connectivity are component TAM And we're new new digital high-end and with as areas hardware such chronic our for modules, and algorithms applications growth trajectory, processing just in surgical our not extending not manage our suite digital increasing about integrated our core disease. but franchise creating health signal it's and of health strong to upon last that into technologies, We're instruments least, care, our However, BOM. extending meters, and sensor also predict

So boats business with low tide the test strategy during that this a in true you start that model I all and tide. and age the shared [indiscernible] year, company's of closing, the lifts a its rising of is at performance the

turmoil, industry with margins, and our we model. in the gross almost full semiconductor external Despite line the the year, XX% XX% operating long-term margins, posted across operating approximately for best-in-class

showing will on every market facet opportunities, demonstrating hopeful as in creating early we're seizing across world, And focused in and to we in investments ahead, driving look second that an improvement our dynamics, we as agile and quarter. As our demand courage additional while responsive improve continuous business. ever-changing our of remain being market prudence

term, portfolio favorable believe ADI's believe trends data for years is across to aligned with as creating Longer come. secular that industry. prospects I our product is that extremely provide an are compelling our the will era tailwinds inflection many I

I'll And to it so that, with over turn Prashanth.

Prashanth Mahendra-Rajah

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

As usual, adjusted exception today's P&L a outlined or our will with be expenses, press comments excludes revenue, special of release. on the non-GAAP which in outlook basis, and and on my nonop the items

was which XXXX, for billion, a solid and was macro at Revenue finished a trade revenue uncertainty. So year X%, slightly continued with modest let's BXB up ADI. start down our while fiscal $X despite

cash continue shareholders. cash stock. debt, paid of margins flow and EPS XX.X%. approximately our Adjusted $X.XX. in were operating were million our $XXX XXX% XX% As after million we All flow Vince Gross was of of Free debt approximately repurchased margins and million be paid to $XXX strong. shared, $XXX $X free was margins to payments, dividends returned We billion. over told,

So now other year-over-year across X% as billion fourth end of weakness industrial by the $X.XX let's look offset our was quarter. broad-based flat down was Revenue markets. at

was where markets. and aerospace flat Trends Industrial, fourth strength So some and and automation quarter saw commentary for and the electronic test in trends I'm defense, revenue memory industrial across And of care health year, revenue on test, throughout going XX% the quarter, weakness Offset through decreased XXXX. consistent go in similar represented previous these were quarter the were X%. which the fourth individual to full measurement. application by year-over-year. we to

highlight of customers product diverse benefits industrial and portfolio the Our of applications. many results a across tens having thousands of

XX% double digits. revenue of in was quarter, fourth represented wired which year-over-year, both Communications, wireless down the XX% down and with

in double a year, up the pickup revenue. full by For comms XG-related driven notable was revenue digits,

we believe largely comms have is we lumpy, the As inherently mentioned, and market is this timing-based. softness

confident remain grow the our opportunity market-leading the stages in and that will early revenue content higher XXXX our at XG. and position we expectation beyond, rollout, in global We are and comms given our of XG in

the down Automotive, in XX% which of represented X%. fourth was revenue quarter,

did to application continues be While which face impacted BMS bright headwinds, spot, other we double growing sour digits, a our areas.

year, And fourth year-over-year. in in our decline full sales. markets in line auto revenue X% BXB the from decreased the quarter X%, total, For revenue with declined vehicle

year XX%, As XX% in Vince of line performance for X%. down which revenue Consumer, represented quarter, year revenue And BXB outlook. the down our full was was increased full the mentioned, with our in slightly.

was And decrease comp. discipline points communications OpEx variable a of for quarter. the Gross a Moving sequentially. was sequentially, inventory fourth related X% decline lower quarter was the on XX.X%, discretionary to the was the this spend a consecutive on million, P&L onetime decrease basis Approximately declines a to to rest our due year-over-year. charge $XXX fourth our XXX within of of than XXX basis points of down more and customer with marking of market. associated X%, OpEx, OpEx margin

margins approximately Operating were XX%.

were on onetime charge, $X million above reducing were we year-over-year Interest continue to down debt. other and as XX%. margins the operating expenses Excluding focus

of Our $X.XX adjusted tax the in which our fourth the at or rate end all told, the charge. $X.XX, was excluding came And inventory onetime quarter guide. XX%, for lower was EPS

ADI past, declined for target as inventory million, our currently a on days the sheet. dollars closing by have legacy moving reminder, XXX communicated facilities. in X we balance to the XXX. X and days $XX LTC inventory Sequentially, is to is But Now decreased XXX As to in of process the

During to our transition, this above to weeks to plan XX customers. bridge at week quarter inventory we additional the X Channel support days X.X carry range. X ended X to our inventory of an

quarter, the year fourth was sell-in sell-through. our Fourth quarter was the of approximately $XXX was $XX for For X% a revenue. CapEx and or revenue million below million

XXXX, we to to below be CapEx forecasting are Looking X%. slightly

first the And outlook first are expected into quarter aggregate In to items BXB year-over-year, for a few mid-teens minus $X.X decrease expect is quarter, there revenue be outlook. and on we of this to revenue the now guidance, At in the weaker factored plus or $XX million. midpoint XXXX. to our billion seasonally

our first X the to First, the X reduce in are quarter. end inventory to we the quarter second and by range of to return planning meaningfully weeks target channel of

quarter expect to Next, global with end the XG XXXX, the in through of in Chinese Year New rollout as occur And in year calendar the inflection demand demand modest XG last first of lastly, quarter. our the to a falls positive in second fiscal remain week fiscal the we ramps. this

Chinese minimal is our distributors. there time this during So across activity

lower the turning the margin quarter. lower the the for of to mainly revenue P&L be rest is approximately So utilization. XX.X% expected and to Op midpoint, first at to due

XX% tax inputs, quarter long-term $XX expenses And these plus minus is adjusted are million. first approximately XXXX, and expected are to nonop XX%. guiding fiscal low we on $X, Based to end the or of expected EPS reducing to rate be for our $X.XX. be Our

use the effort to efficient environment. the As I Vince want to the in taking we are highlight capital, stated, is related and one of our current this priorities actions of

with reduced factory both The sheet first In fourth in To current plan inventory, and troughs. in to the the by on managing is our capital the factory first put our consistent we and cycle action quarter. this so again is levels working channel. prior in balance utilization quarter, context, at preserving utilization do

line in restructuring LTC our of our executed the the with restructuring, a realignment result total disciplined X quarter, combined and and facility This business. previously savings with action fourth cost second efficiency. In cost approach years. will operational restructuring, of The is in million to we managing closures, the next over $XXX announced

after long-term $XX remaining savings the of the to action these shareholders exit to goods of the and return Together, sold. payments. savings, from are we expect to the debt in we begin As third million facilities And cost balance over position reductions free of around $XX model of of expect realize we And closed, cash million OpEx XXXX, cost XXXX, realize approximately coming cost of These us time. XX% XXX% continuing with operating sold. towards drive the half. our operating will in to goods first to after margins from high-end in the flow is

$XXX In XXXX, of million to debt. paying million between we $XXX down plan on

remaining shareholders buybacks. through to flow and cash dividends expect We to return all free

the near in in continue present summary, will least to So environment at external headwinds term. the

our Vince as conditions improving noted, to back to turn are early it indications we lead Mike Q&A. over beginning However, seeing me the that, quarter. with of And let second in

Michael Lucarelli

Prashanth. Thanks,

Okay.

Q&A to question, our we can session. (Operator our get Operator have Instructions). please? Let's first

Operator

question first Bank from our Arya from And of Instructions]. Vivek comes [Operator America.

Jamie Zakalik

But of on for is impact we This Jamie know gross that you inventory mentioned Zakalik and mix? sales onetime something is is gross going margins on I think question could And charge. there My Vivek. sensitivity that those? about should how else to forward, first margins.

Prashanth Mahendra-Rajah

Jamie. for Thank Great. question, the you

model. XXs. our -- in to plus. So quarter last the first, in saw reiterating current And times, high these XX% with in X above in the quarter by quarters revenue operating compression our were is model. the long-term we start were you XX% as the me that, let or some -- last good or of closer And

Mix be of I above think see is factors, and So industrial kind and through utilization a to But is is we're going you the guide way XX%. where it mix. still to cycle, X outlook change, to given of kind are XX%. about the there going doesn't

We have to quarter, going the lower this bring sub-XX%. margins utilization per and the that us to is quarter and in first down impact

but the headwind, it does The the have quarter first have not reserve utilization. does lower

happens what to macro-dependent. basis, go-forward a on is going really So be

of As kind have taking, $XXX cost we additional of that, of will of Jamie? question, from that volume this where XXXX just are. significant mentioned the comes on have exiting come I reduction we leverage cost that $XX Do pretty in back, synergies then a roughly actions million you we're in And follow-up top end and million will by the year.

Jamie Zakalik

timing. broad-based? Yes. And I if wondering some the side specific XG Or Great. was That color things, more was helpful. of on geography weaker area a or was guys on comm follow-up gave side? was the quick then XG But just there great you that any was comms it if just on

Vincent Roche

customers. regions It Yes. downturn Jamie, all and XG all the here short-term the broad-based. was in -- downturn was

Michael Lucarelli

next look -- call We'll our question.

Operator

Tore Our Stifel. next from question Sonberg comes from

Tore Svanberg

managing through environment. this on Congratulations

year-over-year end trying down the will inventory; -- January lowering How question, a the first we down to revenue's those channel Just driving at if three, b, for between; demand? that XX%. what's XX% you look quarter? qualify understand c, and seasonality; weaker between So

Michael Lucarelli

Thanks for Yes. question. the

as say, say, XX% first, down than That's year-over-year, on or So worse year-over-year, a I implies on I down BXB. mid-teens seasonal better about would the math of XX% mid-teens, is in also year-over-year bit in percent and well. year-over-year. down demand, that outlook mid-teens sequentially on consumer, bunch the about, sequential sense, growth. a and down comms the so the that industrial. of And implies, a channel. that right is say maybe mid-teens part that basis, reducing or it's so that Part around is Automotive, would it In than down more

Prashanth Mahendra-Rajah

$XX-ish on if of Tory to of you as impact plus the like the doing how what the a roughly New rough impact million estimate, we're revenue that, guiding Chinese a channel, kind in I'd impact Year, say outlook. a combination the of -- took we're

Michael Lucarelli

have you a Do follow-up, Tore?

Tore Svanberg

helpful. was That Yes. really

including a assume for elaborate is that, little you a you Vince, I heart about proprietary please? on maybe technology? follow-up wireless If talked a could based and So that for BMS not, wireless. now connectivity Vince. on bit

Vincent Roche

question, beginning the and the measurement we sample portfolio. sensing highest wireless technology. for And that, battery Tore. got Thanks management, rugged, technology. to now to Yes. We've the proprietary a radio precision are self-healing It's robust

And so on stack. as yes, it well is proprietary proprietary based software ADI as hardware

Michael Lucarelli

question? have we our Can next

Operator

Capital from BMO comes question next Our from Markets. Ambrish Srivastava

Ambrish Srivastava

guys as your inventory, well down work the up Analog distribution question just I'm in versus last workdown, the the confused channel quarter. your the a the inventory had between diversified broader as on that I have went -- and disty why channel difference seen

you're to understand why action in now. taking Vince? the so But the And difference just timing, wanted

Prashanth Mahendra-Rajah

Yes.

We're of But So later over just revenue levels business X. the was manage sell-in And that on X of towards seen XXXX, in come basis. of down we've sell-through. range of the roughly a sell-in the the preferred gotten as sell-through basis. part remember on a XXXX, we course to our revenue have equivalent reporting to channel the our outside

less earlier the at Year plus out. quarter first $XX-ish include And is gave earlier, of So rough million will of we're The kind by in is kind I X-week -- of a is fiscal a at the We in which of that in estimate, you of channel into impact, that is that Chinese than if is revenue that we'll New our we with to Jamie the action. end to Tore answer selling impact. roughly, that the worth range. result the we're goal X- specific that taking QX, back going began the inventory is QX get end QX, channel be continue putting channel

Michael Lucarelli

their I'll said industrial very that last the our about down business -- well. add X% year, one performed which and was Vince was versus in Ambrish, thing only think I just Prashanth script, very market And

things. So 'XX we a you outperformed have there's and in always But basis, again different performance timing a and all on 'XX. follow-up, Ambrish? Do the in

Ambrish Srivastava

Yes, then I world, assumption something results in be I'm typically it this it this the respect Analog seeing assuming a a down write-down in to wondering, the here? that to And different we Huawei. the did. with usually was inventory could are was wrong related write-down, But is tailwind And road.

think I'm at come that developing at are does that go able inventory? with we that a are But infrastructure? sure do. you that deep So looking which companies are we always you seeing also moats, into back? sell Analog And to we as -- Or they're Huawei of their analog change parts

Prashanth Mahendra-Rajah

Yes.

they me prepared Let for the were part to changed then charge inventory take to reserve $XX I the in the comms what that. restriction. forecast a list demand first comments. entity BIS And a We market. one rapidly to building recap to after of going We a took the were customer in said added onetime I'm pretty the million related and

do, believe to to Is not no given going that our have another prudent more probable sell So minimal it possible, customer we It's the exposure forward. law did absent was was that it change, determination take some this possible for reserve. the that it thing we inventory obviously, and we inventory? to but of

Vincent Roche

Yes.

there question the think there competition part I potential of second So regarding your in China. was

deep said, not alternate we're has nothing the very losing supplier well the that life those to technology, very, sources. they're that's wide for Chinese And I market the suggest look as long-term as into cycles designs So going security of it's the and course, moats, competitive are to complexity to surprise markets. But a supply, going of there's customers required anywhere. stable, long. given Analog you are naturally to And be look diversity the that a for of think

are more to the between is beyond the very sophisticated, analog of lot new. product. facets per we China, just have guess, The very that from supplier and asymmetry So look it anything the in that of local really there's anybody require isn't at else, to set pushing is way talents I it -- no, But threat an in levels quality well, players -- asymmetry skill I we support a The more other towards billion. ship that the compared very, think required the complex. ADI. parts as and And the

skills that the growing. and we the gap gap have others So many between that is

just It's the So decades. finish be important I business thriving doing and here we think many, has years China. many, continue a an my a commentary on -- been in up there many to And market. to ahead expect to will for it be

Michael Lucarelli

Go to our next question, please.

Operator

Toshiya from Hari Sachs. Our next question Goldman comes from

Toshiya Hari

both comment gives macro more starting a was second about specific I was make a Vince And Prashanth, to confidence and to it comments, importantly, you given uncertainty, -- that fiscal Is Or the and think both talked recovery that quarter. comms? a in demand guess in what the the trade potential standpoint? from more broad-based? those I you

Prashanth Mahendra-Rajah

Why I Vince, that, add. start anything there's want if and Okay. to you don't -- any on

there's to macro So and some specific ADI. some of kind

a with putting So is bottom. level, of but than war year uncertainty are it's customers It there's at be to ago, ongoing on level. seems macro from pause the our certainly, impacting it we're take bouncing overall a stabilizing weaker spend. this and kind demand that CapEx that's a the Because along trade

is For a there comms and lull between deployment. XG,

as days soft expecting demand this it's As the is of couple impacting stay for we're XXXX. lumpy year, the kind in XG, on the in nicely our XXXX. And remarks, calendar I got said remarks, through and comms that year-over-year ADI, to mentioned prepared are end very first we're of comms Specific of grow in inherently expecting early things up but the to to a quarter. pick I we've

I mentioned, on of we've had couple had questions now. as this I So a think

our a normally quarter, end the reducing a Chinese in of if proactively in quarter. falling Year, of that, which the the We top channel are middle this fiscal time then and the first falls of is it nonevent New on is inventory at

Vincent Roche

Yes.

demand our Particularly add the industrial that weaker the time. things really up said to and that's that I'd Prashanth And second. of only seasonality see at quarter. second in There confidence to is our beginning is to other think thing what businesses. is a point in than has this that. shaping is typically, our XG Prashanth the I quarter said, poised And at as automotive ramp we we're the how first

I that's of for summary the think you. So here demand

Michael Lucarelli

Toshiya, you Thanks, a follow-up? do have

Toshiya Hari

And about that think years. How reinvest we $XXX kind some we two cost sticking should in about you we next, the margins? then should expect do. in priority percentage your areas? Prashanth, P&L? talked through should expect In words, I drop number over guys suppose, to you reductions of pretty million the to a high Or to I other of the savings

Prashanth Mahendra-Rajah

Thanks, Toshiya.

down Let me break that again.

talked quarter $XXX million of we actions we And had down X in cost we closed the $XX generate we facilities. some savings to took So in then million. additional the about fourth made addition an that, to some when --

are feather those the expect sort the would of point, $XX have year rate, and those and goods We'll process. of cost of exit In net that this OpEx those course year. number. to of savings about we in So of savings is, actions the kind a be XXXX, run That over in roughly with sold. split million in between the will at

drive to So the the that that of expectation through is we're number. going the into EPS able P&L down is -- be and to most

Michael Lucarelli

our question? have Can next we

Operator

question comes SunTrust. Stein from William next Our from

William Stein

I'm up if posting up wondering into it do better And we seem any an in my end you comments up think year-over-year normal any normal in would recovering is April optimistic insight think wind that end there's any address up meaningfully helpful. X%, be than math, it commentary. about if sounds April's that? could real quarter, possibility -- like I outside would markets? be the we And seasonality want that And to but the And XG. seasonality to market other I comms is X%. infrastructure-related By

Michael Lucarelli

Thanks, outside Will. don't start seasonality. basis quarter, of giving guide say. We I I'll you some a of would

sequentially. for XX% you me to X% despite comms is X% up, it call XQ some XX% the context start. Seasonally call probably it, speaking, growth XXXX Let market a to around slow Automotive, and industrial I'll maybe sequentially. us in being give

those in are We into they seasonally today. So about a both that those helped don't big which But tailwinds XXXX. follow-up? we're have some orders drive to there businesses. communications, Do uptick seasonally you visibility up. business do those pretty talking And to is have a -- standpoint, grow for QX,

William Stein

of outlook where Any declined end sort and be you've as the force touch we the was fading design from comms, core market. win We charismatic helpful, know coming then Sure. sort there would -- that's the year as and and pardon in this market comment Maybe design to in the year. are the model to me, maybe consumer an both win one this netted business. that of been

Vincent Roche

Yes.

report is actually the years. bottom business. overall, and to applications products, a that will the we believe, portable products, it during than our will sense seen so little It's our in -- And what XXXX my for But several we But to is we business. The this So is diversity range the that to in ongoing have thought. continuing down to stronger headwind. I I XXXX, of for really across like initially XX% longer lasting you that than I'd issue XXXX a bit be think mark across expect XX%. customers mix to relates of we've it

diversity period. beyond the optimism XXXX that the on growth think, our a into our based diversity so gives of And and that pipeline me I solid strength to pipeline, and that in trajectory, of the get we're and pretty going back

Michael Lucarelli

We'll our please. next question, go to

Operator

Our from next James. question Raymond comes from Chris Caso

Christopher Caso

you're gaining market. some with content the down were presume X% year-on-year I line in looking My there. still year I think it's units. automotive question's your industry this that on comments And

that's inventory that as we normalizes? So into is perhaps of the you the could down? difference go XXXX what's inventory the And as come there perhaps setup -- case, if that's some

Prashanth Mahendra-Rajah

question, the for Yes. Thanks Chris.

Let's of about do then our more this thinking XXXX let about drivers. in kind we're auto lay bit X growth Vince out talk the on parts. performance I'll a and how

for recap, year double-digit the was with that our the which BMS, down full -- and applications X% saw SAAR. we strong X% except quarter our a down And across sorry, was was as in the fourth fourth quarter growth. all year-over-year for line very -- to year-over-year to show on So down decline, continues X%, full year

about let for As we beyond. outlook I'll Vince talk to XXXX look auto kind of and XXXX, the

Vincent Roche

Yes.

during the we've vision And our key customers. globe platform. radar for designs power application about So signal you the pleased the past I'll is a DSP I'm Tier management areas to camera able all We've as infotainment pipeline an the portfolio We're areas which power automotive at of about various our grown sub in of we've AXB from solution -- with given power automotive. cuts the solutions, And a at our that business won couple AXB -- think supplier. before processing audio OTC portfolio, a X the suite our bring examples. and year, applications management pleased give all one integrated across that key of market-leading well. across the most in We've I the particular reference solution. strength market-leading of and design of well as more our into -- been in talked

So pipeline robustness. that represents the portfolio. -- kind low is design of low digits But today, only very auto our gaining single of

At in them are at point in OEMs, XX around production. time, this wins and currently design we've got of half

other of AXB participate is BMS has X the next cancellation that and AXB sense touched it of size to noise for being on over delivery. my side the business. things. can is we that facet also the into the power our of double So the TAM years, active is Prashanth able expanding in And

we to solution XXXX. our things, else probably around be, range in a dynamic we're that's digits autonomous vehicle there on that double continue from for the of And growth the So believe, competitors. anything that CMOS-based the radar sampling a driver up doubles out side strong will against company,

innovation very, some we portfolio we I bringing the as in the have new OTC into new many, good well in the are as drivers So very fact business that geographies. think many accounts

So hopefully, a for that on the sector. sense auto gives you going in what's

Michael Lucarelli

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

Christopher Caso

follow-up be I The question will on do. production.

you're going the that utilization increasing through second the inventory how going And closures? about going these manage forward would next talked point? of to at that be the you you are rates, as bridge plan that an some in what see indications being the with keeping fab You plan year cycle at of would looking production improvement some trough start to if understanding quarter, generally, did to for inventory be go of you

Prashanth Mahendra-Rajah

Chris. Thanks, Yes. Great.

-- So our so utilizations see at think trough is, it -- of so utilizations as comfortable I way guess, to levels, you the and impact the -- are the that about margins. on can where yes, are gross

demand addition an mentioned as internal taking from manufacturing the we demand So then manufacturing. comes with And have leverage down. and revenue able then on capture that we're great we'll to to in being back channel the new that, improves,

opportunity to some channel meet will also there into product be provide growth. to So the that likely

So and is ourselves trough we're what good we'll a up believe for from here. we setting then grow in QX,

Michael Lucarelli

Cheryl, move please. our question, And last we'll to

Operator

from Harsh Piper from Jaffray. Our comes question last Kumar

Harsh Kumar

one extremely managing get the for business actually had better profitability. Thanks well and I on actions to gross taking margin.

it way and based together, on gross to think XXX things XX take basis charge all So quarter, about maybe for that had. the that we what should January bps about is points? down good said, think Prashanth, a you XX, you've the margins

Prashanth Mahendra-Rajah

saying inventory the thing, maybe with going the charge we're the going essentially Harsh, we're think but underutilization. to I to you're -- swap same

have quarter. you how headwind we we levels should don't bottom probably recurring quarter out think inventory do about first gross in that's trough from but the first as kind factory of margin So the the kind for charge, we utilization of have the is

Michael Lucarelli

you follow-up, have Harsh? a Do

Harsh Kumar

real year mid- X% then to basis? and production a please. that grow the basically with next all point Do say year year-over-year for in next will ADI auto just at think where we with being we're on high down automotive business of think the quickly, you do a happened to that's can flushing you And of X%. year, this SAAR Yes,

Vincent Roche

several in very, environment what a hard the over automotive has been it's in to very Very, uncertain last very hard quarters. Well, very call.

I year. And for my SAAR is think outgrowing X if SAAR. normal that stabilizes, been we'll we've the last years, have sense a

we is length well have, business that life behave new we designs business the SAAR have So as my if of given should stabilizers, cycles the the normally, product that should expectation SAAR. as growth our of the legacy

we've the mentioned that the meaningful remarks course is poised think show the in we and as year we've that we've given during to So got revenue safety here the across that our systems, start as the the particular, and expect to XXXX things in got design well, gain power that of momentum infotainment one wins -- of in well prepared I business is period.

Michael Lucarelli

transcript our of happy everyone, and again. us a Thanksgiving, the of And can you, on available thank for thank morning. you, all website, Copy also and and information joining there. this will be available reconciliation Have be found

Operator

This today's concludes Devices conference Analog call.

disconnect. now may You

Analog Devices (ADI) 26 Nov 192019 Q4 Earnings call transcript