EINDHOVEN,
“Consistent with our preannouncement on
Key Highlights
Summary of Reported First Quarter 2020 ($ millions, unaudited) (1)
Q1 2020 | Q4 2019 | Q1 2019 | Q - Q | Y - Y | |||||||||
Total Revenue | $ | 2,021 | $ | 2,301 | $ | 2,094 | -12 | % | -3 | % | |||
GAAP Gross Profit | $ | 997 | $ | 1,209 | $ | 1,072 | -18 | % | -7 | % | |||
Gross Profit Adjustments (i) | $ | (50 | ) | $ | (39 | ) | $ | (32 | ) | ||||
Non-GAAP Gross Profit | $ | 1,047 | $ | 1,248 | $ | 1,104 | -16 | % | -5 | % | |||
GAAP Gross Margin | 49.3 | % | 52.5 | % | 51.2 | % | |||||||
Non-GAAP Gross Margin | 51.8 | % | 54.2 | % | 52.7 | % | |||||||
GAAP Operating Income / (Loss) | $ | 68 | $ | 197 | $ | 54 | -65 | % | 26 | % | |||
Operating Income Adjustments (i) | $ | (434 | ) | $ | (490 | ) | $ | (505 | ) | ||||
Non-GAAP Operating Income | $ | 502 | $ | 687 | $ | 559 | -27 | % | -10 | % | |||
GAAP Operating Margin | 3.4 | % | 8.6 | % | 2.6 | % | |||||||
Non-GAAP Operating Margin | 24.8 | % | 29.9 | % | 26.7 | % |
Additional information | |||||||||||||
Automotive | $ | 994 | $ | 1,097 | $ | 1,036 | -9 | % | -4 | % | |||
Industrial & IoT | $ | 376 | $ | 415 | $ | 368 | -9 | % | 2 | % | |||
Mobile | $ | 247 | $ | 332 | $ | 241 | -26 | % | 2 | % | |||
Comm. Infra. & Other | $ | 404 | $ | 457 | $ | 449 | -12 | % | -10 | % | |||
DIO | 113 | 102 | 113 | ||||||||||
DPO | 83 | 81 | 74 | ||||||||||
DSO | 28 | 26 | 35 | ||||||||||
Cash Conversion Cycle | 58 | 47 | 74 | ||||||||||
Channel Inventory (months) | 2.4 | 2.3 | 2.4 | ||||||||||
Financial Leverage (ii) | 2.1x | 2.0x | 1.7x |
1. Additional Information for the First Quarter 2020:
Guidance for the Second Quarter 2020: ($ millions) (1)
GAAP | Reconciliation | non-GAAP | |||||||||||||||||||||||||||||||||
Low | Mid | High | Low | Mid | High | ||||||||||||||||||||||||||||||
Total Revenue | $ | 1,700 | $ | 1,800 | $ | 1,900 | $ | 1,700 | $ | 1,800 | $ | 1,900 | |||||||||||||||||||||||
Q-Q | -16 | % | -11 | % | -6 | % | -16 | % | -11 | % | -6 | % | |||||||||||||||||||||||
Y-Y | -23 | % | -19 | % | -14 | % | -23 | % | -19 | % | -14 | % | |||||||||||||||||||||||
Gross Profit | $ | 768 | $ | 833 | $ | 900 | $ | (31 | ) | $ | 799 | $ | 864 | $ | 931 | ||||||||||||||||||||
Gross Margin | 45.2 | % | 46.3 | % | 47.4 | % | 47.0 | % | 48.0 | % | 49.0 | % | |||||||||||||||||||||||
Operating Income (loss) | $ | (237 | ) | $ | (177 | ) | $ | (115 | ) | $ | (519 | ) | $ | 282 | $ | 342 | $ | 404 | |||||||||||||||||
Operating Margin | -13.9 | % | -9.8 | % | -6.1 | % | 16.6 | % | 19.0 | % | 21.3 | % | |||||||||||||||||||||||
Financial Income (expense) | $ | (84 | ) | $ | (84 | ) | $ | (84 | ) | $ | (2 | ) | $ | (82 | ) | $ | (82 | ) | $ | (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. In measuring performance against this plan, management considers the actual or potential impacts on these
non-GAAP financial measures from actions taken to reduce costs with the goal of increasing our gross margin and operating margin and when assessing appropriate levels of research and development efforts. In addition, management relies upon these non-GAAP financial measures when making decisions about product spending, administrative budgets, and other operating expenses. We believe that these non-GAAP financial measures, when coupled with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the Company’s results of operations and the factors and trends affecting NXP’s business. We believe that they enable investors to perform additional comparisons of our operating results, to assess our liquidity and capital position and to analyze financial performance excluding the effect of expenses unrelated to operations, certain non-cash expenses and share-based compensation expense, which may obscure trends in NXP's underlying performance. This information also enables investors to compare financial results between periods where certain items may vary independent of business performance,and allow for greater transparency with respect to key metrics used by management.
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
share-based compensation expense, restructuring and asset impairment charges, non-cash interest expense on convertible notes, extinguishment of debt, and foreign exchange gains and losses.
Conference Call and Webcast Information
NXP will host a conference call on
Interested parties may join the conference call by dialing 1 – 888 – 603 – 7644 (within the
https://investors.nxp.com. The webcast will be recorded and available for replay shortly after the call concludes.
About
Forward-looking Statements
This document includes forward-looking statements which include statements regarding NXP’s business strategy, financial condition, results of operations, and 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: the duration and spread of the COVID-19 outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume; market demand and semiconductor industry conditions; the ability to successfully introduce new technologies and products; the demand for the goods into which NXP’s products are incorporated; trade disputes between the
For further information, please contact:
Investors: | Media: |
Jeff Palmer | |
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 | ||||||||||
2020 |
2019 |
2019 |
|||||||||
Revenue | $ | 2,021 | $ | 2,301 | $ | 2,094 | |||||
Cost of revenue | (1,024 | ) | (1,092 | ) | (1,022 | ) | |||||
Gross profit | 997 | 1,209 | 1,072 | ||||||||
Research and development | (425 | ) | (424 | ) | (415 | ) | |||||
Selling, general and administrative | (233 | ) | (225 | ) | (248 | ) | |||||
Amortization of acquisition-related intangible assets | (381 | ) | (365 | ) | (357 | ) | |||||
Total operating expenses | (1,039 | ) | (1,014 | ) | (1,020 | ) | |||||
Other income (expense) | 110 | 2 | 2 | ||||||||
Operating income (loss) | 68 | 197 | 54 | ||||||||
Financial income (expense): | |||||||||||
Other financial income (expense) | (78 | ) | (93 | ) | (83 | ) | |||||
Income (loss) before income taxes | (10 | ) | 104 | (29 | ) | ||||||
Benefit (provision) for income taxes | (2 | ) | 20 | 9 | |||||||
Results relating to equity-accounted investees | (1 | ) | (1 | ) | 4 | ||||||
Net income (loss) | (13 | ) | 123 | (16 | ) | ||||||
Less: Net income (loss) attributable to non-controlling interests | 8 | 9 | 5 | ||||||||
Net income (loss) attributable to stockholders | (21 | ) | 114 | (21 | ) | ||||||
Earnings per share data: | |||||||||||
Net income (loss) per common share attributable to stockholders in $ | |||||||||||
Basic | $ | (0.08 | ) | $ | 0.41 | $ | (0.07 | ) | |||
Diluted | $ | (0.08 | ) | $ | 0.40 | $ | (0.07 | ) | |||
Weighted average number of shares of common stock outstanding during the period (in thousands): | |||||||||||
Basic | 279,933 | 280,766 | 287,227 | ||||||||
Diluted | 279,933 | 285,518 | 287,227 | ||||||||
Table 2: Condensed consolidated balance sheet (unaudited)
($ in millions) | As of | ||||||||||
2020 |
2019 |
2019 |
|||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 1,079 | $ | 1,045 | 2,192 | ||||||
Accounts receivable, net | 616 | 667 | 800 | ||||||||
Assets held for sale | — | 50 | — | ||||||||
Inventories, net | 1,227 | 1,192 | 1,241 | ||||||||
Other current assets | 327 | 313 | 387 | ||||||||
Total current assets | 3,249 | 3,267 | 4,620 | ||||||||
Non-current assets: | |||||||||||
Other non-current assets | 712 | 732 | 699 | ||||||||
Property, plant and equipment, net | 2,397 | 2,448 | 2,407 | ||||||||
Identified intangible assets, net | 3,218 | 3,620 | 4,094 | ||||||||
9,935 | 9,949 | 8,852 | |||||||||
Total non-current assets | 16,262 | 16,749 | 16,052 | ||||||||
Total assets | 19,511 | 20,016 | 20,672 | ||||||||
LIABILITIES AND EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | 895 | 944 | 815 | ||||||||
Restructuring liabilities-current | 26 | 32 | 66 | ||||||||
Other current liabilities | 910 | 815 | 1,264 | ||||||||
Short-term debt | — | — | 1,117 | ||||||||
Total current liabilities | 1,831 | 1,791 | 3,262 | ||||||||
Non-current liabilities: | |||||||||||
Long-term debt | 7,366 | 7,365 | 6,223 | ||||||||
Restructuring liabilities | — | — | 4 | ||||||||
Deferred tax liabilities | 199 | 282 | 390 | ||||||||
Other non-current liabilities | 857 | 923 | 862 | ||||||||
Total non-current liabilities | 8,422 | 8,570 | 7,479 | ||||||||
Non-controlling interests | 222 | 214 | 190 | ||||||||
Stockholders’ equity | 9,036 | 9,441 | 9,741 | ||||||||
Total equity | 9,258 | 9,655 | 9,931 | ||||||||
Total liabilities and equity | 19,511 | 20,016 | 20,672 | ||||||||
Table 3: Condensed consolidated statement of cash flows (unaudited)
($ in millions) | Three months ended | ||||||||||
2020 |
2019 |
2019 |
|||||||||
Cash flows from operating activities: | |||||||||||
Net income (loss) | $ | (13 | ) | $ | 123 | $ | (16 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||||||||||
Depreciation and amortization | 540 | 522 | 502 | ||||||||
Stock-based compensation | 107 | 89 | 86 | ||||||||
Amortization of discount on debt | — | 8 | 11 | ||||||||
Amortization of debt issuance costs | 1 | 3 | 3 | ||||||||
Net (gain) loss on sale of assets | (110 | ) | — | — | |||||||
Results relating to equity-accounted investees | 1 | 1 | (4 | ) | |||||||
Deferred tax expense (benefit) | (75 | ) | (49 | ) | (63 | ) | |||||
Changes in operating assets and liabilities: | |||||||||||
(Increase) decrease in receivables and other current assets | 27 | 144 | (42 | ) | |||||||
(Increase) decrease in inventories | (35 | ) | (7 | ) | 38 | ||||||
Increase (decrease) in accounts payable and other liabilities | 64 | (35 | ) | (250 | ) | ||||||
(Increase) decrease in other non-current assets | 4 | 7 | 20 | ||||||||
Exchange differences | (4 | ) | 9 | 6 | |||||||
Other items | 5 | (1 | ) | 5 | |||||||
Net cash provided by (used for) operating activities | 512 | 814 | 296 | ||||||||
Cash flows from investing activities: | |||||||||||
Purchase of identified intangible assets | (45 | ) | (30 | ) | (28 | ) | |||||
Capital expenditures on property, plant and equipment | (143 | ) | (138 | ) | (144 | ) | |||||
Purchase of interests in businesses, net of cash acquired | (10 | ) | (1,698 | ) | — | ||||||
Proceeds from sale of interests in businesses | 161 | — | 37 | ||||||||
Purchase of investments | — | — | (2 | ) | |||||||
Proceeds from sale of investments | — | — | 1 | ||||||||
Net cash provided by (used for) investing activities | (37 | ) | (1,866 | ) | (136 | ) | |||||
Cash flows from financing activities: | |||||||||||
Payment of cash convertible note | — | (1,150 | ) | — | |||||||
Proceeds from settlement of cash convertible note hedge | — | 144 | — | ||||||||
Payment of bond hedge derivatives - convertible option | — | (144 | ) | — | |||||||
Dividends paid to common stockholders | (105 | ) | (105 | ) | (73 | ) | |||||
Proceeds from issuance of common stock through stock plans | 29 | 14 | 32 | ||||||||
Purchase of treasury shares and restricted stock unit withholdings | (355 | ) | (74 | ) | (715 | ) | |||||
Cash paid on behalf of shareholders for tax on repurchased shares | — | (128 | ) | — | |||||||
Net cash provided by (used for) financing activities | (431 | ) | (1,443 | ) | (756 | ) | |||||
Effect of changes in exchange rates on cash positions | (10 | ) | 3 | (1 | ) | ||||||
Increase (decrease) in cash and cash equivalents | 34 | (2,492 | ) | (597 | ) | ||||||
Cash and cash equivalents at beginning of period | 1,045 | 3,537 | 2,789 | ||||||||
Cash and cash equivalents at end of period | 1,079 | 1,045 | 2,192 | ||||||||
Net cash paid during the period for: | |||||||||||
Interest | 53 | 95 | 25 | ||||||||
Income tax | 39 | 34 | 209 | ||||||||
Net gain (loss) on sale of assets: | |||||||||||
Cash proceeds from the sale of assets | 161 | — | 37 | ||||||||
Book value of these assets | (51 | ) | — | (34 | ) | ||||||
Non-cash investing activities: | |||||||||||
Non-cash capital expenditures | 78 | 133 | 89 |
Table 4: Financial Reconciliation of GAAP to non-GAAP Results (unaudited)
($ in millions) | Three months ended | ||||||||||
2020 |
2019 |
2019 |
|||||||||
Revenue | $ | 2,021 | $ | 2,301 | $ | 2,094 | |||||
GAAP Gross Profit | $ | 997 | $ | 1,209 | $ | 1,072 | |||||
PPA Effects | (36 | ) | (28 | ) | (17 | ) | |||||
Restructuring | (3 | ) | — | (4 | ) | ||||||
Stock Based Compensation | (11 | ) | (11 | ) | (10 | ) | |||||
Merger-related costs | — | — | (1 | ) | |||||||
Non-GAAP Gross Profit | $ | 1,047 | $ | 1,248 | $ | 1,104 | |||||
GAAP Gross margin | 49.3 | % | 52.5 | % | 51.2 | % | |||||
Non-GAAP Gross margin | 51.8 | % | 54.2 | % | 52.7 | % | |||||
$ | (425 | ) | $ | (424 | ) | $ | (415 | ) | |||
Restructuring | (4 | ) | — | (11 | ) | ||||||
Stock based compensation | (40 | ) | (38 | ) | (35 | ) | |||||
Merger-related costs | (1 | ) | (1 | ) | (3 | ) | |||||
$ | (380 | ) | $ | (385 | ) | $ | (366 | ) | |||
GAAP Selling, general and administrative | $ | (233 | ) | $ | (225 | ) | $ | (248 | ) | ||
PPA effects | (2 | ) | (1 | ) | (1 | ) | |||||
Restructuring | (4 | ) | 1 | (10 | ) | ||||||
Stock based compensation | (56 | ) | (40 | ) | (41 | ) | |||||
Merger-related costs | (3 | ) | (3 | ) | (9 | ) | |||||
Other incidentals | (3 | ) | (4 | ) | (6 | ) | |||||
Non-GAAP Selling, general and administrative | $ | (165 | ) | $ | (178 | ) | $ | (181 | ) | ||
GAAP amortization of acquisition-related intangible assets | $ | (381 | ) | $ | (365 | ) | $ | (357 | ) | ||
PPA effects | (381 | ) | (365 | ) | (357 | ) | |||||
Non-GAAP amortization of acquisition-related intangible assets | $ | — | $ | — | $ | — | |||||
GAAP Other income (expense) | $ | 110 | $ | 2 | $ | 2 | |||||
Other incidentals | 110 | — | — | ||||||||
Non-GAAP Other income (expense) | $ | — | $ | 2 | $ | 2 | |||||
GAAP Operating income (loss) | $ | 68 | $ | 197 | $ | 54 | |||||
PPA effects | (419 | ) | (394 | ) | (375 | ) | |||||
Restructuring | (11 | ) | 1 | (25 | ) | ||||||
Stock based compensation | (107 | ) | (89 | ) | (86 | ) | |||||
Merger-related costs | (4 | ) | (4 | ) | (13 | ) | |||||
Other incidentals | 107 | (4 | ) | (6 | ) | ||||||
Non-GAAP Operating income (loss) | $ | 502 | $ | 687 | $ | 559 | |||||
GAAP Operating margin | 3.4 | % | 8.6 | % | 2.6 | % | |||||
Non-GAAP Operating margin | 24.8 | % | 29.9 | % | 26.7 | % | |||||
GAAP Financial Income (expense) | $ | (78 | ) | $ | (93 | ) | $ | (83 | ) | ||
Non-cash interest expense on convertible notes | — | (8 | ) | (11 | ) | ||||||
Foreign exchange gain (loss) | (1 | ) | (4 | ) | (7 | ) | |||||
Other financial expense | (2 | ) | (4 | ) | (4 | ) | |||||
Non-GAAP Financial income (expense) | $ | (75 | ) | $ | (77 | ) | $ | (61 | ) | ||
Table 5: Adjusted EBITDA and Free Cash Flow (unaudited)
($ in millions) | Three months ended | ||||||||||
2020 |
2019 |
2019 |
|||||||||
Net income (loss) | $ | (13 | ) | $ | 123 | $ | (16 | ) | |||
Reconciling items to adjusted net income | |||||||||||
Financial (income) expense | 78 | 93 | 83 | ||||||||
(Benefit) provision for income taxes | 2 | (20 | ) | (9 | ) | ||||||
Depreciation | 133 | 131 | 124 | ||||||||
Amortization | 407 | 391 | 378 | ||||||||
Adjusted net income | $ | 607 | $ | 718 | $ | 560 | |||||
Reconciling items to adjusted EBITDA | |||||||||||
Results of equity-accounted investees | 1 | 1 | (4 | ) | |||||||
Purchase accounting effect on inventory | 17 | 8 | — | ||||||||
Restructuring | 11 | (1 | ) | 25 | |||||||
Stock based costs | 107 | 89 | 86 | ||||||||
Merger-related costs | 4 | 4 | 13 | ||||||||
Other incidental items | (107 | ) | 4 | 6 | |||||||
Adjusted EBITDA | $ | 640 | $ | 823 | $ | 686 | |||||
Trailing twelve month adjusted EBITDA | $ | 3,054 | $ | 3,100 | $ | 3,111 | |||||
($ in millions) | Three months ended | ||||||||||
2020 |
2019 |
2019 |
|||||||||
Net cash provided by (used for) operating activities | $ | 512 | $ | 814 | $ | 296 | |||||
Net capital expenditures on property, plant and equipment | (143 | ) | (138 | ) | (144 | ) | |||||
Non-GAAP free cash flow | $ | 369 | $ | 676 | $ | 152 | |||||
Non-GAAP free cash flow as percent of Revenue | 18 | % | 29 | % | 7 | % | |||||
Source: NXP USA, Inc.