Financials

NXP reports $3.13B Q1 revenue

EINDHOVEN, The Netherlands, April 29, 2024 (GLOBE NEWSWIRE) — NXP Semiconductors reported financial results for the first quarter, which ended March 31, 2024.

NXP delivered quarterly revenue of $3.13 billion, in-line with the midpoint of guidance with all our focus end-markets performing as expected. Our first-quarter results, guidance for the second quarter, and our early views into the second half of the year underpin a cautious optimism that NXP is successfully navigating through this industry-wide cyclical downturn. We continue to manage what is in our control enabling NXP to drive solid profitability and earnings in a challenging demand environment,” said Kurt Sievers, NXP President and Chief Executive Officer.

Key Highlights for the First Quarter 2024:

  • Revenue was $3.13 billion, up 0.2 percent year-on-year;
  • GAAP gross margin was 57.0 percent, GAAP operating margin was 27.4 percent and GAAP diluted Net Income per Share was $2.47;
  • Non-GAAP gross margin was 58.2 percent, non-GAAP operating margin was 34.5 percent, and non-GAAP diluted Net Income per Share was $3.24;
  • Cash flow from operations was $851 million, with net capex investments of $224 million, resulting in non-GAAP free cash flow of $627 million;
  • During the first quarter of 2024, NXP continued to execute its capital return policy with the payment of $261 million in cash dividends, and the repurchase of $303 million of its common shares. The total capital return of $564 million in the quarter represented 90 percent of first quarter non-GAAP free cash flow. On a trailing twelve month basis, capital return to shareholders represented $2.39 billion or 82 percent of non-GAAP free cash flow. The company paid the interim dividend for the first quarter of 2024 in cash to shareholders of record as of March 21, 2024, on April 10, 2024. Subsequent to the end of the first quarter, between April 1, 2024 and April 26, 2024, NXP executed via a 10b5-1 program additional share repurchases totaling $97 million;
  • On March 1, 2024, NXP fully retired at maturity the $1 billion aggregate principal amount of outstanding 4.875% Senior Unsecured Notes due 2024;
  • On January 9, 2024, NXP announced the extension of its automotive radar one-chip family. The new SAF86xx integrates a high-performance radar transceiver, a multi-core radar processor and a hardware engine for state-of-the-art secure data communication over Automotive Ethernet;
  • On January 11, 2024, NXP announced it has signed a memorandum of understanding with Honeywell to help optimize the way commercial buildings sense and securely control energy consumption. Moreover, the collaboration aims to help make buildings operate more intelligently by integrating NXP Semiconductors’ neural network-enabled, industrial-grade applications processors into Honeywell’s building management systems (BMS);
  • On March 19, 2024, NXP published its 2023 Corporate Sustainability Report (CSR), reinforcing its commitment toward transparency and sustainable business practices. Detailing NXP’s overall Environmental, Social and Governance (ESG) strategy and guiding principles, the report highlights the company’s year-on-year progress in reaching its mid-term and long-term ESG goals; and
  • On March 28, 2024, NXP announced the S32 CoreRide platform, the industry-first platform to combine processing, vehicle networking and system power management with integrated software to address the complexity, scalability, cost-efficiency and development efforts required for next-generation Software Defined Vehicles (“SDV”). Moreover, coincident with the CoreRide announcement, NXP introduced the S32N family of vehicle super-integration processors offering best-in-class real-time performance that enables S32 CoreRide central compute solutions, empowering OEMs with efficient and flexible processing choices. The 5nm S32N family greatly simplifies complex vehicle architecture development and cuts costs for automakers and tier-1 suppliers.

Summary of Reported First Quarter 2024 ($ millions, unaudited) 

 Q1 2024Q4 2023Q1 2023Q – QY – Y
Total Revenue$3,126 $3,422 $3,121 -9%%
GAAP Gross Profit$1,783 $1,937 $1,770 -8%1%
Gross Profit Adjustments(i)$(35)$(73)$(46)  
Non-GAAP Gross Profit$1,818 $2,010 $1,816 -10%%
GAAP Gross Margin 57.0% 56.6% 56.7%  
Non-GAAP Gross Margin 58.2% 58.7% 58.2%  
GAAP Operating Income (Loss)$856 $907 $825 -6%4%
Operating Income Adjustments(i)$(224)$(312)$(260)  
Non-GAAP Operating Income$1,080 $1,219 $1,085 -11%%
GAAP Operating Margin 27.4% 26.5% 26.4%  
Non-GAAP Operating Margin 34.5% 35.6% 34.8%  
GAAP Net Income (Loss) attributable to Stockholders$639 $697 $615   
Net Income Adjustments(i)$(201)$(269)$(219)  
Non-GAAP Net Income (Loss) Attributable to Stockholders$840 $966 $834   
GAAP diluted Net Income (Loss) per Share(ii)$2.47 $2.68 $2.35   
Non-GAAP diluted Net Income (Loss) per Share(ii)$3.24 $3.71 $3.19   
            
Additional information     
 Q1 2024Q4 2023Q1 2023Q – QY – Y
Automotive$1,804 $1,899 $1,828 -5%-1%
Industrial & IoT$574 $662 $504 -13%14%
Mobile$349 $406 $260 -14%34%
Comm. Infra. & Other$399 $455 $529 -12%-25%
DIO 144  132  135   
DPO 65  72  68   
DSO 26  24  31   
Cash Conversion Cycle 105  84  98   
Channel Inventory (months) 1.6  1.5  1.6   
Gross Financial Leverage(iii) 1.9x  2.1x  2.0x   
Net Financial Leverage(iv) 1.3x  1.3x  1.3x   
      
  1. Additional Information for the First Quarter 2024:
    1. For an explanation of GAAP to non-GAAP adjustments, please see “Non-GAAP Financial Measures”.
    2. Refer to Table 1 below for the weighted average number of diluted shares for the presented periods.
    3. Define gross financial leverage as the ratio of gross debt to adjusted EBITDA over the trailing twelve months.
    4. One defines net financial leverage as the division of net debt by trailing twelve months adjusted EBITDA.

Guidance for the Second Quarter 2024: ($ millions, except Per Share data) 

 Guidance Range
 GAAP Reconciliation non-GAAP
 Low Mid High   Low Mid High
Total Revenue$3,025 $3,125 $3,225   $3,025 $3,125 $3,225
Q-Q-3% 0% 3%   -3% 0% 3%
Y-Y-8% -5% -2%   -8% -5% -2%
Gross Profit$1,715 $1,788 $1,863 $(40) $1,755 $1,828 $1,903
Gross Margin56.7% 57.2% 57.8%   58.0% 58.5% 59.0%
Operating Income (loss)$821 $884 $949 $(179) $1,000 $1,063 $1,128
Operating Margin27.1% 28.3% 29.4%   33.1% 34.0% 35.0%
Financial Income (expense)$(69) $(69) $(69) $(6) $(63) $(63) $(63)
Tax rate17.2%-18.2%   16.3%-17.3%
NCI & Other$(9) $(9) $(9) $(4) $(5) $(5) $(5)
Shares – diluted258.5 258.5 258.5   258.5 258.5 258.5
Earnings Per Share – diluted$2.36 $2.56 $2.77   $3.00 $3.20 $3.41
              

Note (1) Additional Information:

  1. GAAP Gross Profit is expected to include Purchase Price Accounting (“PPA”) effects, $(12) million; Share-based Compensation, $(15) million; Other Incidentals, $(13) million;
  2. GAAP Operating Income (loss) is expected to include PPA effects, $(42) million; Share-based Compensation, $(115) million; Restructuring and Other Incidentals, $(22) million;
  3. GAAP Financial Income (expense) is expected to include Other financial expense $(6) million;
  4. GAAP Non-Controlling Interest (NCI) and Other includes non-controlling interest $(5) million and Other $(4) million;
  5. GAAP diluted EPS is expected to include the adjustments noted above for PPA effects, Share-based Compensation, Restructuring and Other Incidentals in GAAP Operating Income (loss), the adjustment for Other financial expense, the adjustment for Non-controlling interest & Other and the adjustment on Tax due to the earlier mentioned adjustments.

NXP has relied on judgments and estimates that management believes are reasonable, given its assessment of historical trends and other information reasonably available as of the date of this release, to provide the guidance included in this release. Furthermore, please note, the guidance included in this release consists of predictions only, and is subject to a wide range of known and unknown risks and uncertainties, many of which are beyond NXP’s control.

The guidance provided in the release should not be considered as representations by NXP that the estimated results will be attained. Actual outcomes may significantly differ from the guidance offered presently. Reference to the usage of non-GAAP financial information can be found in the section titled “Non-GAAP Financial Measures” below. For factors, risks, and uncertainties influencing judgments, estimates, and forward-looking statements, please refer to the section titled “Forward-looking Statements.” Moreover, NXP commits to no obligation to publicly update or modify any forward-looking statements, including the guidance outlined herein, to mirror future events or circumstances.

Non-GAAP Financial Measures

In managing NXP’s business on a consolidated basis, the company’s management develops an annual operating plan approved by the Board of Directors. They use non-GAAP financial measures, which do not comply with U.S. generally accepted accounting principles (“GAAP”). When measuring performance against this plan, management takes into account the actual or potential impacts on these non-GAAP financial measures resulting from actions aimed at reducing costs to increase gross margin and operating margin, as well as when assessing appropriate levels of research and development efforts. Additionally, management relies on these non-GAAP financial measures when making decisions regarding product spending, administrative budgets, and other operating expenses.

These non-GAAP financial measures, along with GAAP results and corresponding reconciliations, are believed to enhance understanding of the company’s operational results comprehensively. They also shed light on the factors and trends influencing NXP’s business. Moreover, they enable investors to conduct additional comparisons of operating results, assess liquidity and capital position, and analyze financial performance by excluding the effects of expenses unrelated to core operating performance, certain non-cash expenses, and share-based compensation expenses, which may obscure trends in NXP’s underlying performance. Moreover, this information also facilitates comparisons of financial results between periods. Certain items may vary independently of business performance and enhance transparency regarding key metrics utilized by management.

These non-GAAP financial measures are provided in addition to measures of financial performance prepared in accordance with GAAP. Moreover, they are not a substitute for, or superior to, GAAP measures. NXP’s presentation of these and other similar items in its non-GAAP financial results should not imply. Furthermore, these items are non-recurring, infrequent, or unusual. Reconciliations of these non-GAAP measures to the most comparable measures calculated in accordance with GAAP are provided in the financial statements portion of this release. This schedule presents ‘Financial Reconciliation of GAAP to non-GAAP Results (unaudited)’. Please refer to the NXP Historic Financial Model file found on the Financial Information page of the Investor Relations section of our website at https://investors.nxp.com for additional information related to our rationale for using these non-GAAP financial measures, as well as the impact of these measures on the presentation of NXP’s operations.

In addition to providing financial information on a basis consistent with GAAP, NXP also provides the following selected financial measures on a non-GAAP basis: (i) Gross profit, (ii) Gross margin, (iii) Research and development, (iv) Selling, general and administrative, (v) Amortization of acquisition-related intangible assets, (vi) Other income, (vii) Operating income (loss), (viii) Operating margin, (ix) Financial Income (expense), (x) Income tax benefit (provision), (xi) Results relating to equity-accounted investees, (xii) Net income (loss) attributable to stockholders, (xiii) Earnings per Share – Diluted, (xiv) EBITDA, adjusted EBITDA and trailing 12 month adjusted EBITDA, and (xv) free cash flow, trailing 12 month free cash flow and trailing 12 month free cash flow as a percent of Revenue.

The non-GAAP information excludes, where applicable, the amortization of acquisition related intangible assets, the purchase accounting effect on inventory and property, plant and equipment, merger related costs (including integration costs), certain items related to divestitures, share-based compensation expense, restructuring and asset impairment charges, extinguishment of debt, foreign exchange gains and losses, income tax effect on adjustments described above and results from equity-accounted investments.

The difference in benefit provision for income taxes between GAAP and non-GAAP outcomes stems from the income tax implications resulting from adjustments made from GAAP to non-GAAP. During the interim period, any discrete items also influence this difference. Moreover, these discrete items primarily encompass unforeseen tax events. These events are challenging to predict, such as changes in tax laws or rates, adjustments to prior year tax provisions due to resolved tax audits or revised estimates, and the surplus or deficit tax effects associated with share-based compensation, among others.

Conference Call and Webcast Information
The company will host a conference call with the financial community on Tuesday, April 30, 2024 at 8:00 a.m. U.S. Eastern Standard Time (EST) to review the first quarter 2024 results in detail.

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