Analog Devices (ADI)
Q3 2013 Earnings Call
August 20, 2013 5:00 pm ET
Vincent T. Roche - Chief Executive Officer, President and Director
David A. Zinsner - Chief Financial Officer and Vice President of Finance
Jonathan Steven Smigie - Raymond James & Associates, Inc., Research Division
David M. Wong - Wells Fargo Securities, LLC, Research Division
Ross Seymore - Deutsche Bank AG, Research Division
Aashish Rao - BofA Merrill Lynch, Research Division
Craig Hettenbach - Morgan Stanley, Research Division
Christopher B. Danely - JP Morgan Chase & Co, Research Division
Terence R. Whalen - Citigroup Inc, Research Division
Blayne Curtis - Barclays Capital, Research Division
John W. Pitzer - Crédit Suisse AG, Research Division
Stephen Chin - UBS Investment Bank, Research Division
Mark Lipacis - Jefferies LLC, Research Division
James Covello - Goldman Sachs Group Inc., Research Division
Doug Freedman - RBC Capital Markets, LLC, Research Division
Craig A. Ellis - B. Riley Caris, Research Division
William Stein - SunTrust Robinson Humphrey, Inc., Research Division
Previous Statements by ADI
» Analog Devices Inc. Discusses Q3 2013 Results (Webcast)
» Analog Devices' Management Presents at Barclays Global Technology, Media and Telecommunications Conference (Transcript)
» Analog Devices Management Discusses Q2 2013 Results - Earnings Call Transcript
Great. Thanks, Rachel. Good afternoon, everyone. This is Ali Husain, Director of Investor Relations. If listeners haven't yet seen our third quarter FY '13 press release or our Form 10-Q, they can be found on ADI's Investor Relations website at investor.analog.com, and this conference call can also be accessed from the same page.
A recording of this conference call will be available within 2 hours of this call's completion. It will remain available via telephone playback for 2 weeks and will also be archived in our Investor Relations website. We've also updated the financial schedules on the IR website, which include the historical quarterly and annual summary P&Ls for continuing operations, as well as for revenue from continuing operations by end market and product type.
Participating with me in today's call are Vincent Roche, ADI's President and CEO; Dave Zinsner, Vice President of Finance and CFO; and Maria Tagliaferro, Director of Corporate Communications. During the first part of the call, Vince and Dave will present our third quarter FY '13 results as well as our short-term outlook. The second part of our call will be devoted to answering questions from our analysts and investor participants.
During today's call, we may refer to non-GAAP financial measures that have been adjusted for certain nonrecurring items in order to provide investors with useful information regarding our results. We have included reconciliations of these non-GAAP measures to their most directly comparable GAAP measures in today's earnings release, which is posted on our Investor Relations website.
I'd ask you to please note that the information we're about to discuss includes forward-looking statements intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include risks and uncertainties, and our actual results could differ materially from those we will be discussing. Factors that could contribute to such differences include, but are not limited to, those described in our SEC filings, including our most recent quarterly report on Form 10-Q that we filed earlier today.
The forward-looking information that's provided on this call represents our outlook as of today, and we do not undertake any obligation to update the forward-looking statements made by us. Subsequent events and developments may cause our outlook to change. Therefore, this conference call will include time-sensitive information that may be accurate only as of the date of the live broadcast, which is today, August 20, 2013.
And so with that, I'll turn the call over to Vincent Roche, ADI's President and CEO, for his opening remarks.
Vincent T. Roche
Thanks very much, Ali, and hello, everyone. Thank you for joining our call today. As you've seen from our press release, our revenue totaled $674 million, which was up 2% from the prior quarter. This sequential revenue growth, coupled with strong gross margins at relatively low levels of factory utilization and disciplined OpEx control resulted in diluted EPS of $0.57 per share excluding special items. This represents a 10% sequential growth in diluted earnings per share. These are solid overall results with our sales performance above the midpoint of our guidance and our earnings results above the high end of the range we have provided last quarter.
Order rates strengthened through the quarter across all of our end markets, which was a welcome result, especially when considering that our third quarter includes the month of July, which is traditionally the time for summer vacations and plant shutdowns, particularly in North America and Europe. By end market, both industrial and communications infrastructure revenue grew sequentially in the third quarter, led by the communications sector, which turned in a significantly better performance than we had planned.
Now I'll go into some more detail on our performance by market segment. Firstly, communications infrastructure grew 12% sequentially and represented 21% of total sales. Sales to our wireless infrastructure customers drove most of the upside as China launched the last phase of its 3G TD-SCDMA network buildout and carriers in the U.S. gradually began to move towards densification of the 4G LTE networks while continuing to increase their coverage footprint. Sales to all of our major OEM customers for wireless infrastructure were up in the third quarter.
As you know, 3G systems are highly penetrated in the wireless infrastructure network, and in order to meet the steep demand for mobile data, operators in most geographies are in the transition phase to 4G systems. Operators in China and the U.S. have declared their intent to step up 4G LTE deployments in 2014 following examples of LTE deployments in Korea and Japan. ADI is well positioned to capitalize on our wide range of high performance radio transceiver products and solutions, given our penetration levels at key customers, particularly in the densification phase.