Sep 8 2021 -Wilmington, MA
Analog Devices, Inc. (NASDAQ: ADI), a leading global high-performance semiconductor company, today detailed its updated capital allocation priorities and accelerated the accretion timeline following the completion of its acquisition of Maxim Integrated on August 26, 2021.
“ADI has demonstrated a track record of operational excellence, strong cash flow generation and disciplined capital investments, including our recent acquisition of Maxim Integrated, that provides the foundation for an attractive capital allocation framework,” said Vincent Roche, President and CEO. “Our financial strength positions us to substantially invest in our business, while returning 100% of free cash flow to shareholders through dividends and share repurchases. The decision to approve our accelerated share repurchase program and increase our total share repurchase authorization reflects our confidence in our future business performance and commitment to provide meaningful return to shareholders.”
Updated Capital Allocation Priorities
The company detailed the following capital allocation priorities in alignment with its commitment to return 100% of free cash flow to shareholders through dividends and share repurchases on an investor webcast today:
- Authorized a $2.5 billion accelerated share repurchase (ASR) program to be completed by the second quarter of 2022. After completion of this program, ADI expects to have a net leverage ratio of ~1x;
- Plan to repurchase an additional $2.5 billion bringing total repurchases to approximately $5 billion by the end of calendar 2022, or around half of ADI’s current share repurchase authorization of about $10 billion; and
- Continue to consistently grow its annual dividend with a target payout ratio of 40%-60% of free cash flow.
The regular quarterly dividend and share repurchases will be funded through available cash and future cash flow generation. The share repurchases will be executed in the open market or through privately negotiated transactions at times and amounts determined by the company based on its evaluation of market conditions and other factors and may be suspended, discontinued or resumed at any time.
Maxim Integrated Acquisition Earnings Accretion and Cost Savings
The acquisition of Maxim Integrated is now expected to be accretive to adjusted earnings in 12 months subsequent to closing, six months ahead of the initial timeline, and is expected to be neutral to adjusted earnings in fiscal 2022.
This accelerated timing relates to stronger business fundamentals, the company’s commitment to repurchase shares through an ASR and consistent buybacks, as well as the realization of more than 40% of phase I cost synergies during this time.
Additional efficiencies from infrastructure optimization begins in fiscal 2024 with revenue cross-selling opportunities in fiscal 2025 and beyond.
Special Investor Conference Call Replay
ADI hosted a webcast to discuss ADI’s updated capital allocation priorities and updated accretion timeline on September 8, 2021. A replay of the conference call may be accessed for up to two weeks, by dialing 855-859-2056 and entering the conference ID: 7115409.
