EINDHOVEN,
“NXP delivered quarterly revenue of
Key Highlights for the Second Quarter 2023:
Summary of Reported Second Quarter 2023 ($ millions, unaudited) (1)
Q2 2023 | Q1 2023 | Q2 2022 | Q - Q | Y - Y | ||||||||
Total Revenue | $ | 3,299 | $ | 3,121 | $ | 3,312 | 6% | —% | ||||
GAAP Gross Profit | $ | 1,881 | $ | 1,770 | $ | 1,882 | 6% | —% | ||||
Gross Profit Adjustments (i) | $ | (45 | ) | $ | (46 | ) | $ | (33 | ) | |||
Non-GAAP Gross Profit | $ | 1,926 | $ | 1,816 | $ | 1,915 | 6% | 1% | ||||
GAAP Gross Margin | 57.0 | % | 56.7 | % | 56.8 | % | ||||||
Non-GAAP Gross Margin | 58.4 | % | 58.2 | % | 57.8 | % | ||||||
GAAP Operating Income (Loss) | $ | 937 | $ | 825 | $ | 943 | 14% | -1% | ||||
Operating Income Adjustments (i) | $ | (218 | ) | $ | (260 | ) | $ | (250 | ) | |||
Non-GAAP Operating Income | $ | 1,155 | $ | 1,085 | $ | 1,193 | 6% | -3% | ||||
GAAP Operating Margin | 28.4 | % | 26.4 | % | 28.5 | % | ||||||
Non-GAAP Operating Margin | 35.0 | % | 34.8 | % | 36.0 | % | ||||||
GAAP Net Income (Loss) attributable to Stockholders | $ | 698 | $ | 615 | ||||||||
Net Income Adjustments (i) | $ | (198 | ) | $ | (219 | ) | ||||||
Non-GAAP Net Income (Loss) Attributable to Stockholders | $ | 896 | $ | 834 | ||||||||
GAAP diluted Net Income (Loss) per Share | $ | 2.67 | $ | 2.35 | ||||||||
Non-GAAP diluted Net Income (Loss) per Share | $ | 3.43 | $ | 3.19 |
Additional information | ||||||||
Q2 2023 | Q1 2023 | Q2 2022 | Q - Q | Y - Y | ||||
Automotive | $ | 1,866 | $ | 1,828 | $ | 1,713 | 2% | 9% |
Industrial & IoT | $ | 578 | $ | 504 | $ | 713 | 15% | -19% |
Mobile | $ | 284 | $ | 260 | $ | 388 | 9% | -27% |
Comm. Infra. & Other | $ | 571 | $ | 529 | $ | 498 | 8% | 15% |
DIO | 137 | 135 | 94 | |||||
DPO (ii) | 63 | 68 | 77 | |||||
DSO | 29 | 31 | 27 | |||||
Cash Conversion Cycle | 103 | 98 | 44 | |||||
Channel Inventory (months) | 1.6 | 1.6 | 1.6 | |||||
Gross Financial Leverage (iii) | 2.1x | 2.0x | 2.2x | |||||
Net Financial Leverage (iv) | 1.3x | 1.3x | 1.5x | |||||
Guidance for the Third Quarter 2023: ($ millions, except Per Share data) (1)
GAAP | Reconciliation | non-GAAP | ||||||||||||
Low | Mid | High | Low | Mid | High | |||||||||
Total Revenue | $3,300 | $3,400 | $3,500 | $3,300 | $3,400 | $3,500 | ||||||||
Q-Q | 0% | 3% | 6% | 0% | 3% | 6% | ||||||||
Y-Y | -4% | -1% | 2% | -4% | -1% | 2% | ||||||||
Gross Profit | $1,861 | $1,936 | $2,013 | $1,910 | $1,985 | $2,062 | ||||||||
Gross Margin | 56.4% | 56.9% | 57.5% | 57.9% | 58.4% | 58.9% | ||||||||
Operating Income (loss) | $921 | $986 | $1,053 | $1,135 | $1,200 | $1,267 | ||||||||
Operating Margin | 27.9% | 29.0% | 30.1% | 34.4% | 35.3% | 36.2% | ||||||||
Financial Income (expense) | ||||||||||||||
Tax rate | 16.5%-17.5% | 16.0%-17.0% | ||||||||||||
NCI & Other | ||||||||||||||
Shares - diluted | 261.3 | 261.3 | 261.3 | 261.3 | 261.3 | 261.3 | ||||||||
Earnings Per Share - diluted | $2.68 | $2.89 | $3.10 | $3.39 | $3.60 | $3.82 | ||||||||
Note (1) Additional Information:
NXP has based the guidance included in this release 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. 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 included in this release should not be regarded as representations by NXP that the estimated results will be achieved. Actual results may vary materially from the guidance we provide today. In relation to the use of non-GAAP financial information see the note regarding “Non-GAAP Financial Measures” below. For the factors, risks, and uncertainties to which judgments, estimates and forward-looking statements generally are subject see the note regarding “Forward-looking Statements.” We undertake no obligation to publicly update or revise any forward-looking statements, including the guidance set forth herein, to reflect future events or circumstances.
Non-GAAP Financial Measures
In managing NXP’s business on a consolidated basis, management develops an annual operating plan, which is approved by our Board of Directors, using non-GAAP financial measures, that are not in accordance with, nor an alternative to,
These non-GAAP financial measures are provided in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The presentation of these and other similar items in NXP’s non-GAAP financial results should not be interpreted as implying that 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 in a schedule entitled “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 the benefit (provision) for income taxes between our GAAP and non-GAAP results relates to the income tax effects of the GAAP to non-GAAP adjustments that we make and the income tax effect of any discrete items that occur in the interim period. Discrete items primarily relate to unexpected tax events that may occur as these amounts cannot be forecasted (e.g., the impact of changes in tax law and/or rates, changes in estimates or resolved tax audits relating to prior year tax provisions, the excess or deficit tax effects on share-based compensation, etc.).
Conference Call and Webcast Information
The company will host a conference call with the financial community on
Interested parties may preregister to obtain a user-specific access code for the call here.
The call will be webcast and can be accessed from the NXP Investor Relations website at www.nxp.com. A replay of the call will be available on the NXP Investor Relations website within 24 hours of the actual call.
About
Forward-looking Statements
This document includes forward-looking statements which include statements regarding NXP’s business strategy, financial condition, results of operations, the expected material weakness in our internal control over financial reporting, including the timeline to remediate the expected material weakness, market data, as well as any other statements which are not historical facts. By their nature, forward-looking statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These factors, risks and uncertainties include the following: market demand and semiconductor industry conditions; our ability to successfully introduce new technologies and products; the demand for the goods into which NXP’s products are incorporated; potential impacts of the COVID-19 pandemic; trade disputes between the
For further information, please contact: | |
Investors: | Media: |
jeff.palmer@nxp.com | jacey.zuniga@nxp.com |
+1 408 518 5411 | +1 512 895 7398 |
Table 1: Condensed consolidated statement of operations (unaudited)
($ in millions except share data) | Three months ended | ||||||||||
Revenue | $ | 3,299 | $ | 3,121 | $ | 3,312 | |||||
Cost of revenue | (1,418 | ) | (1,351 | ) | (1,430 | ) | |||||
Gross profit | 1,881 | 1,770 | 1,882 | ||||||||
Research and development | (589 | ) | (577 | ) | (542 | ) | |||||
Selling, general and administrative | (274 | ) | (280 | ) | (265 | ) | |||||
Amortization of acquisition-related intangible assets | (81 | ) | (85 | ) | (134 | ) | |||||
Total operating expenses | (944 | ) | (942 | ) | (941 | ) | |||||
Other income (expense) | — | (3 | ) | 2 | |||||||
Operating income (loss) | 937 | 825 | 943 | ||||||||
Financial income (expense): | |||||||||||
Extinguishment of debt | — | — | (18 | ) | |||||||
Other financial income (expense) | (74 | ) | (82 | ) | (110 | ) | |||||
Income (loss) before income taxes | 863 | 743 | 815 | ||||||||
Benefit (provision) for income taxes | (158 | ) | (118 | ) | (129 | ) | |||||
Results relating to equity-accounted investees | (1 | ) | (2 | ) | (3 | ) | |||||
Net income (loss) | 704 | 623 | 683 | ||||||||
Less: Net income (loss) attributable to non-controlling interests | 6 | 8 | 13 | ||||||||
Net income (loss) attributable to stockholders | 698 | 615 | 670 | ||||||||
Earnings per share data: | |||||||||||
Net income (loss) per common share attributable to stockholders in $ | |||||||||||
Basic | $ | 2.69 | $ | 2.37 | $ | 2.55 | |||||
Diluted | $ | 2.67 | $ | 2.35 | $ | 2.53 | |||||
Weighted average number of shares of common stock outstanding during the period (in thousands): | |||||||||||
Basic | 259,160 | 259,576 | 262,579 | ||||||||
Diluted | 261,303 | 261,210 | 264,692 | ||||||||
Table 2: Condensed consolidated balance sheet (unaudited)
($ in millions) | As of | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 3,863 | $ | 3,930 | $ | 3,545 | |||
Accounts receivable, net | 1,061 | 1,063 | 996 | ||||||
Inventories, net | 2,107 | 1,977 | 1,462 | ||||||
Other current assets | 416 | 387 | 317 | ||||||
Total current assets | 7,447 | 7,357 | 6,320 | ||||||
Non-current assets: | |||||||||
Other non-current assets | 2,136 | 2,095 | 1,848 | ||||||
Property, plant and equipment, net | 3,152 | 3,123 | 2,914 | ||||||
Identified intangible assets, net | 1,110 | 1,208 | 1,527 | ||||||
9,950 | 9,949 | 9,930 | |||||||
Total non-current assets | 16,348 | 16,375 | 16,219 | ||||||
Total assets | 23,795 | 23,732 | 22,539 | ||||||
LIABILITIES AND EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable 1) | 967 | 1,002 | 1,191 | ||||||
Restructuring liabilities-current | 23 | 27 | 12 | ||||||
Other current liabilities 1) | 2,096 | 2,186 | 1,738 | ||||||
Short-term debt | 999 | 998 | — | ||||||
Total current liabilities | 4,085 | 4,213 | 2,941 | ||||||
Non-current liabilities: | |||||||||
Long-term debt | 10,171 | 10,169 | 11,160 | ||||||
Restructuring liabilities | 8 | 7 | 12 | ||||||
Deferred tax liabilities | 40 | 38 | 41 | ||||||
Other non-current liabilities | 1,014 | 1,057 | 1,159 | ||||||
Total non-current liabilities | 11,233 | 11,271 | 12,372 | ||||||
Non-controlling interests | 305 | 299 | 264 | ||||||
Stockholders’ equity | 8,172 | 7,949 | 6,962 | ||||||
Total equity | 8,477 | 8,248 | 7,226 | ||||||
Total liabilities and equity | 23,795 | 23,732 | 22,539 | ||||||
1) | We have reclassified |
||||||||
Table 3: Condensed consolidated statement of cash flows (unaudited)
($ in millions) | Three months ended | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income (loss) | $ | 704 | $ | 623 | $ | 683 | |||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||||||
Depreciation and amortization | 281 | 283 | 317 | ||||||||
Share-based compensation | 102 | 99 | 89 | ||||||||
Amortization of discount (premium) on debt, net | — | 1 | — | ||||||||
Amortization of debt issuance costs | 2 | 2 | 1 | ||||||||
Net (gain) loss on sale of assets | (1 | ) | — | — | |||||||
(Gain) loss on extinguishment of debt | — | — | 18 | ||||||||
Results relating to equity-accounted investees | 1 | 2 | 3 | ||||||||
(Gain) loss on equity securities, net | (6 | ) | 1 | 8 | |||||||
Deferred tax expense (benefit) | (75 | ) | (62 | ) | (65 | ) | |||||
Changes in operating assets and liabilities: | |||||||||||
(Increase) decrease in receivables and other current assets | (20 | ) | (138 | ) | (50 | ) | |||||
(Increase) decrease in inventories | (129 | ) | (196 | ) | (151 | ) | |||||
Increase (decrease) in accounts payable and other liabilities | (144 | ) | 52 | 4 | |||||||
(Increase) decrease in other non-current assets | 33 | (33 | ) | (41 | ) | ||||||
Exchange differences | 5 | 5 | (3 | ) | |||||||
Other items | 3 | (7 | ) | 6 | |||||||
Net cash provided by (used for) operating activities | 756 | 632 | 819 | ||||||||
Cash flows from investing activities: | |||||||||||
Purchase of identified intangible assets | (51 | ) | (42 | ) | (29 | ) | |||||
Capital expenditures on property, plant and equipment | (201 | ) | (251 | ) | (268 | ) | |||||
Proceeds from the disposals of property, plant and equipment | 1 | — | — | ||||||||
Purchase of interests in businesses, net of cash acquired | — | — | (1 | ) | |||||||
Purchase of investments | (4 | ) | (58 | ) | (2 | ) | |||||
Proceeds from the sale of investments | — | — | 12 | ||||||||
Net cash provided by (used for) investing activities | (255 | ) | (351 | ) | (288 | ) | |||||
Cash flows from financing activities: | |||||||||||
Repurchase of long-term debt | — | — | (917 | ) | |||||||
Proceeds from the issuance of long-term debt | — | — | 1,496 | ||||||||
Cash paid for debt issuance costs | — | — | (12 | ) | |||||||
Dividends paid to common stockholders | (264 | ) | (219 | ) | (222 | ) | |||||
Proceeds from issuance of common stock through stock plans | 1 | 33 | — | ||||||||
Purchase of treasury shares and restricted stock unit withholdings |
(302 | ) | (11 | ) | (2 | ) | |||||
Other, net | — | (1 | ) | (1 | ) | ||||||
Net cash provided by (used for) financing activities | (565 | ) | (198 | ) | 342 | ||||||
Effect of changes in exchange rates on cash positions | (3 | ) | 2 | (11 | ) | ||||||
Increase (decrease) in cash and cash equivalents | (67 | ) | 85 | 862 | |||||||
Cash and cash equivalents at beginning of period | 3,930 | 3,845 | 2,683 | ||||||||
Cash and cash equivalents at end of period | 3,863 | 3,930 | 3,545 | ||||||||
Net cash paid during the period for: | |||||||||||
Interest | 86 | 54 | 133 | ||||||||
Income taxes, net of refunds | 239 | 294 | 150 | ||||||||
Net gain (loss) on sale of assets: | |||||||||||
Cash proceeds from the sale of assets | 1 | — | — | ||||||||
Non-cash investing activities: | |||||||||||
Non-cash capital expenditures | 165 | 176 | 243 | ||||||||
Table 4: Financial Reconciliation of GAAP to non-GAAP Results (unaudited)
($ in millions) | Three months ended | ||||||||||
Revenue | $ | 3,299 | $ | 3,121 | $ | 3,312 | |||||
GAAP Gross Profit | $ | 1,881 | $ | 1,770 | $ | 1,882 | |||||
PPA Effects | (14 | ) | (13 | ) | (14 | ) | |||||
Restructuring | — | 2 | 3 | ||||||||
Share-based compensation | (13 | ) | (13 | ) | (12 | ) | |||||
Other incidentals | (18 | ) | (22 | ) | (10 | ) | |||||
Non-GAAP Gross Profit | $ | 1,926 | $ | 1,816 | $ | 1,915 | |||||
GAAP Gross margin | 57.0 | % | 56.7 | % | 56.8 | % | |||||
Non-GAAP Gross margin | 58.4 | % | 58.2 | % | 57.8 | % | |||||
$ | (589 | ) | $ | (577 | ) | $ | (542 | ) | |||
Restructuring | — | (14 | ) | 1 | |||||||
Share-based compensation | (51 | ) | (52 | ) | (45 | ) | |||||
Other incidentals | (1 | ) | (1 | ) | (3 | ) | |||||
$ | (537 | ) | $ | (510 | ) | $ | (495 | ) | |||
GAAP Selling, general and administrative | $ | (274 | ) | $ | (280 | ) | $ | (265 | ) | ||
PPA effects | — | (1 | ) | (1 | ) | ||||||
Restructuring | — | (6 | ) | — | |||||||
Share-based compensation | (38 | ) | (34 | ) | (32 | ) | |||||
Other incidentals | (2 | ) | (21 | ) | (3 | ) | |||||
Non-GAAP Selling, general and administrative | $ | (234 | ) | $ | (218 | ) | $ | (229 | ) | ||
GAAP amortization of acquisition-related intangible assets | $ | (81 | ) | $ | (85 | ) | $ | (134 | ) | ||
PPA effects | (81 | ) | (85 | ) | (134 | ) | |||||
Non-GAAP amortization of acquisition-related intangible assets | $ | — | $ | — | $ | — | |||||
GAAP Other income (expense) | $ | — | $ | (3 | ) | $ | 2 | ||||
Non-GAAP Other income (expense) | $ | — | $ | (3 | ) | $ | 2 | ||||
GAAP Operating income (loss) | $ | 937 | $ | 825 | $ | 943 | |||||
PPA effects | (95 | ) | (99 | ) | (149 | ) | |||||
Restructuring | — | (18 | ) | 4 | |||||||
Share-based compensation | (102 | ) | (99 | ) | (89 | ) | |||||
Other incidentals | (21 | ) | (44 | ) | (16 | ) | |||||
Non-GAAP Operating income (loss) | $ | 1,155 | $ | 1,085 | $ | 1,193 | |||||
GAAP Operating margin | 28.4 | % | 26.4 | % | 28.5 | % | |||||
Non-GAAP Operating margin | 35.0 | % | 34.8 | % | 36.0 | % | |||||
GAAP Financial income (expense) | $ | (74 | ) | $ | (82 | ) | $ | (128 | ) | ||
Foreign exchange gain (loss) | (3 | ) | (3 | ) | (2 | ) | |||||
Gain (loss) on extinguishment of long-term debt | — | — | (18 | ) | |||||||
Other financial income (expense) | 2 | (3 | ) | (11 | ) | ||||||
Non-GAAP Financial income (expense) | $ | (73 | ) | $ | (76 | ) | $ | (97 | ) | ||
GAAP Income tax benefit (provision) | $ | (158 | ) | $ | (118 | ) | |||||
Income tax effect | 22 | 49 | |||||||||
Non-GAAP Income tax benefit (provision) | $ | (180 | ) | $ | (167 | ) | |||||
GAAP Results relating to equity-accounted investees | $ | (1 | ) | $ | (2 | ) | |||||
Results relating to equity-accounted investees | (1 | ) | (2 | ) | |||||||
Non-GAAP Results relating to equity-accounted investees | $ | — | $ | — | |||||||
GAAP Net income (loss) | $ | 704 | $ | 623 | |||||||
Less: Net income (loss) attributable to non-controlling interests | 6 | 8 | |||||||||
GAAP Net income (loss) attributable to stockholders | $ | 698 | $ | 615 | |||||||
GAAP Net income (loss) attributable to stockholders | $ | 698 | $ | 615 | |||||||
PPA Effects | (95 | ) | (99 | ) | |||||||
Restructuring | — | (18 | ) | ||||||||
Share-based compensation | (102 | ) | (99 | ) | |||||||
Other incidentals | (21 | ) | (44 | ) | |||||||
Other adjustments | 20 | 41 | |||||||||
Non-GAAP Net income (loss) attributable to stockholders | $ | 896 | $ | 834 | |||||||
GAAP Diluted earnings per share | $ | 2.67 | $ | 2.35 | |||||||
Non-GAAP Diluted earnings per share | $ | 3.43 | $ | 3.19 | |||||||
Table 5: Adjusted EBITDA and Free Cash Flow (unaudited)
($ in millions) | Three months ended | ||||||||||
GAAP Net income (loss) | $ | 704 | $ | 623 | $ | 683 | |||||
Reconciling items to EBITDA (Non-GAAP) | |||||||||||
Financial (income) expense | 74 | 82 | 128 | ||||||||
(Benefit) provision for income taxes | 158 | 118 | 129 | ||||||||
Depreciation | 162 | 160 | 149 | ||||||||
Amortization | 119 | 123 | 168 | ||||||||
EBITDA (Non-GAAP) | $ | 1,217 | $ | 1,106 | $ | 1,257 | |||||
Reconciling items to adjusted EBITDA (Non-GAAP) | |||||||||||
Results of equity-accounted investees | 1 | 2 | 3 | ||||||||
Restructuring | — | 18 | (4 | ) | |||||||
Share-based compensation | 102 | 99 | 89 | ||||||||
Other incidental items 1) | 21 | 42 | 16 | ||||||||
Adjusted EBITDA (Non-GAAP) | $ | 1,341 | $ | 1,267 | $ | 1,361 | |||||
Trailing twelve month adjusted EBITDA (Non-GAAP) | $ | 5,437 | $ | 5,457 | $ | 4,961 | |||||
1) Excluding depreciation/amortization within: | |||||||||||
– other incidental items | $ | — | $ | 2 | $ | — | |||||
($ in millions) | Three months ended | ||||||||||
Net cash provided by (used for) operating activities | $ | 756 | $ | 632 | $ | 819 | |||||
Net capital expenditures on property, plant and equipment | (200 | ) | (251 | ) | (268 | ) | |||||
Non-GAAP free cash flow | $ | 556 | $ | 381 | $ | 551 | |||||
Trailing twelve month non-GAAP free cash flow | $ | 2,643 | $ | 2,638 | $ | 2,371 | |||||
Trailing twelve month non-GAAP free cash flow as percent of Revenue |
20 | % | 20 | % | 19 | % | |||||
Source: NXP USA, Inc.