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NXP Semiconductors Reports First Quarter 2021 Results

/EIN News/ -- EINDHOVEN, The Netherlands, April 26, 2021 (GLOBE NEWSWIRE) -- NXP Semiconductors N.V. (NASDAQ: NXPI) today reported financial results for the first quarter 2021, ended April 4, 2021.

“NXP delivered first quarter revenue of $2.6 billion, an increase of 27 percent versus the year-ago period, and better than the mid-point of our guidance. Positive product mix and increased revenue helped deliver excellent operating profit in excess of our guidance. We continue to be encouraged by the long-term demand trends across all our end markets, which underpin our continued confidence of very robust growth throughout 2021,” said Kurt Sievers, NXP President and Chief Executive Officer.

Key Highlights

  • First-quarter revenue was $2.6 billion, up 27.0 percent year-on-year;
  • First-quarter GAAP gross margin was 52.8 percent, and GAAP operating margin was 19.2 percent;
  • First-quarter non-GAAP gross margin was 54.2 percent, and non-GAAP operating margin was 30.9 percent;
  • First-quarter cash flow from operations was $732 million, with net capex investments of $150 million, resulting in non-GAAP free cash flow of $582 million;
  • On March 4, 2021, the NXP Board of Directors approved the payment of an interim dividend for the first quarter 2021 of $0.5625 per ordinary share, reflecting an increase of 50 percent from the prior quarterly dividend;
  • In the first quarter of 2021 NXP returned $1.0 billion to shareholders through previously announced share repurchases and dividend payments;
  • On March 22, 2021, NXP was added to the S&P 500 index.

Summary of Reported First Quarter 2021 ($ millions, unaudited) (1)

  Q1 2021 Q4 2020 Q1 2020 Q - Q Y - Y
Total Revenue $ 2,567     $ 2,507     $ 2,021     2 % 27 %
GAAP Gross Profit $ 1,355     $ 1,288     $ 997     5 % 36 %
Gross Profit Adjustments (i) $ (37 )   $ (38 )   $ (50 )      
Non-GAAP Gross Profit $ 1,392     $ 1,326     $ 1,047     5 % 33 %
GAAP Gross Margin 52.8 %   51.4 %   49.3 %      
Non-GAAP Gross Margin 54.2 %   52.9 %   51.8 %      
GAAP Operating Income / (Loss) $ 492     $ 463     $ 68     6 % 624 %
Operating Income Adjustments (i) $ (300 )   $ (301 )   $ (434 )      
Non-GAAP Operating Income $ 792     $ 764     $ 502     4 % 58 %
GAAP Operating Margin 19.2 %   18.5 %   3.4 %      
Non-GAAP Operating Margin 30.9 %   30.5 %   24.8 %      


Additional information          
Automotive $ 1,229   $ 1,193   $ 994   3 % 24 %
Industrial & IoT $ 571   $ 511   $ 376   12 % 52 %
Mobile $ 346   $ 409   $ 247   -15 % 40 %
Comm. Infra. & Other $ 421   $ 394   $ 404   7 % 4 %
DIO 81 78 113    
DPO 79 75 83    
DSO 30 28 28    
Cash Conversion Cycle 32 31 58    
Channel Inventory (months) 1.6 1.6 2.4    
Financial Leverage (ii) 1.9x 1.9x 2.1x    
  1. Additional Information for the First Quarter 2021:
    1. For an explanation of GAAP to non-GAAP adjustments, please see “Non-GAAP Financial Measures”.
    2. Financial leverage is defined as net debt divided by trailing twelve months adjusted EBITDA.
  • During the first quarter of 2021, NXP repurchased 5.1 million shares for a total cost of $905 million and paid cash dividends of $105 million.
  • Weighted average number of diluted shares for the three-month period ended April 4, 2021 was 283.3 million.
  • Net cash paid for income taxes related to on-going operations was $40 million.

Guidance for the Second Quarter 2021: ($ millions) (1)

                                Guidance Range
                           
  GAAP   Reconciliation   non-GAAP
  Low   Mid   High       Low   Mid   High
Total Revenue $ 2,500       $ 2,570       $ 2,640           $ 2,500       $ 2,570       $ 2,640  
Q-Q -3 %     0 %     3 %         -3 %     0 %     3 %
Y-Y 38 %     41 %     45 %         38 %     41 %     45 %
Gross Profit $ 1,346       $ 1,392       $ 1,439       $ (35 )     $ 1,381       $ 1,427       $ 1,474  
Gross Margin 53.8 %     54.2 %     54.5 %         55.2 %     55.5 %     55.8 %
Operating Income (loss) $ 506       $ 542       $ 579       $ (262 )     $ 768       $ 804       $ 841  
Operating Margin 20.2 %     21.1 %     21.9 %         30.7 %     31.3 %     31.9 %
Financial Income (expense) $ (90 )     $ (90 )     $ (90 )     $ (3 )     $ (87 )     $ (87 )     $ (87 )

Note (1) Additional Information:

  1. GAAP Gross Profit is expected to include Purchase Price Accounting (“PPA”) effects, $(18) million; Stock Based Compensation, $(12) million; Other Incidentals, $(5) million;
  2. GAAP Operating Income (loss) is expected to include PPA effects, $(159) million; Stock Based Compensation, $(92) million; Restructuring and Other Incidentals, $(11) million;
  3. GAAP Financial Income (expense) is expected to include Other financial expense $(3) million;
  4. Net cash paid for income taxes related to on-going operations is expected to be approximately $(55) million;
  5. Non-controlling interest is expected to be approximately $(9) million;
  6. Weighted average diluted share count is expected to be approximately 283 million.

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 U.S. generally accepted accounting principles (“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) adjusted net income, adjusted EBITDA and trailing 12 month adjusted EBITDA, and (xi) free cash flow and free cash flow as a percent of Revenue. The non-GAAP information excludes 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, non-cash interest expense on convertible notes, extinguishment of debt, and foreign exchange gains and losses.

Conference Call and Webcast Information
The company will host a conference call with the financial community on Tuesday, April 27, 2021 at 8:00 a.m. U.S. Eastern Daylight Time (EDT) to review the first quarter 2021 results in detail. Interested parties may join the scheduled conference call by dialing the following numbers:

Within the U.S.: 1 - 888 - 603 - 7644
Outside the U.S.:  1 - 484 - 747 - 6631
Participant Passcode: 9565176

The call will be webcast and can be accessed from the NXP Investor Relations website https://investors.nxp.com. A replay of the call will be available on the NXP Investor Relations website within 24 hours of the actual call.

About NXP Semiconductors

NXP Semiconductors N.V. (NASDAQ: NXPI) enables secure connections for a smarter world, advancing solutions that make lives easier, better, and safer. As the world leader in secure connectivity solutions for embedded applications, NXP is driving innovation in the automotive, industrial & IoT, mobile, and communication infrastructure markets. Built on more than 60 years of combined experience and expertise, the company has approximately 29,000 employees in more than 30 countries and posted revenue of $8.61 billion in 2020. Find out more at www.nxp.com.

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 U.S. and China, potential increase of barriers to international trade and resulting disruptions to NXP's established supply chains; the ability to generate sufficient cash, raise sufficient capital or refinance corporate debt at or before maturity to meet both NXP's debt service and research and development and capital investment requirements; the ability to accurately estimate demand and match manufacturing production capacity accordingly or obtain supplies from third-party producers; the potential impact of the outbreak of COVID-19 on NXP's business, operations, results of operations, financial condition, workforce or the operations or decisions of customers, suppliers or business customers; the access to production capacity from third-party outsourcing partners and any events that might affect their business or NXP’s relationship with them including the outbreak of COVID-19 or the requirements to suspend activities with customers or suppliers because of changing import and export regulations; the ability to secure adequate and timely supply of equipment and materials from suppliers; the ability to avoid operational problems and product defects and, if such issues were to arise, to correct them quickly; the ability to form strategic partnerships and joint ventures and to successfully cooperate with alliance partners; the ability to win competitive bid selection processes; the ability to develop products for use in customers’ equipment and products; the ability to successfully hire and retain key management and senior product engineers; and, the ability to maintain good relationships with NXP's suppliers. In addition, this document contains information concerning the semiconductor industry and NXP’s market and business segments generally, which is forward-looking in nature and is based on a variety of assumptions regarding the ways in which the semiconductor industry and NXP's market and business segments may develop. NXP has based these assumptions on information currently available, if any one or more of these assumptions turn out to be incorrect, actual results may differ from those predicted. While NXP does not know what impact any such differences may have on its business, if there are such differences, its future results of operations and its financial condition could be materially adversely affected. There can be no assurances that a pandemic, epidemic or outbreak of a contagious diseases, such as COVID-19, will not have a material and adverse impact on our business, operating results and financial condition in the future. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak to results only as of the date the statements were made. Except for any ongoing obligation to disclose material information as required by the United States federal securities laws, NXP does not have any intention or obligation to publicly update or revise any forward-looking statements after we distribute this document, whether to reflect any future events or circumstances or otherwise. For a discussion of potential risks and uncertainties, please refer to the risk factors listed in our SEC filings. Copies of our SEC filings are available on our Investor Relations website, www.nxp.com/investor or from the SEC website, www.sec.gov.

For further information, please contact:

Investors:  Media:
Jeff Palmer Jacey Zuniga
jeff.palmer@nxp.com  jacey.zuniga@nxp.com
+1 408 518 5411 +1 512 895 7398

NXP-CORP


NXP Semiconductors
Table 1: Condensed consolidated statement of operations (unaudited)

($ in millions except share data) Three months ended
  April 4, 2021   December 31, 2020   March 29, 2020
           
Revenue $ 2,567     $ 2,507     $ 2,021  
Cost of revenue (1,212 )   (1,219 )   (1,024 )
Gross profit 1,355     1,288     997  
Research and development (461 )   (460 )   (425 )
Selling, general and administrative (222 )   (221 )   (233 )
Amortization of acquisition-related intangible assets (180 )   (148 )   (381 )
Total operating expenses (863 )   (829 )   (1,039 )
Other income (expense)     4     110  
Operating income (loss) 492     463     68  
Financial income (expense):          
Extinguishment of debt     (60 )    
Other financial income (expense) (87 )   (77 )   (78 )
Income (loss) before income taxes 405     326     (10 )
Benefit (provision) for income taxes (40 )   (5 )   (2 )
Results relating to equity-accounted investees (1 )   (1 )   (1 )
Net income (loss) 364     320     (13 )
Less: Net income (loss) attributable to non-controlling interests 11     11     8  
Net income (loss) attributable to stockholders 353     309     (21 )
           
Earnings per share data:          
Net income (loss) per common share attributable to stockholders in $
Basic $ 1.27     $ 1.10     $ (0.08 )
Diluted $ 1.25     $ 1.08     $ (0.08 )
           
Weighted average number of shares of common stock outstanding during the period (in thousands):
Basic 277,526     280,484     279,933  
Diluted 283,263     285,258     279,933  
           


NXP Semiconductors
Table 2: Condensed consolidated balance sheet (unaudited)

  ($ in millions) As of
    April 4, 2021   December 31, 2020   March 29, 2020
ASSETS          
Current assets:          
  Cash and cash equivalents $ 1,842   $ 2,275   $ 1,079
  Accounts receivable, net 833   765   616
  Inventories, net 1,056   1,030   1,227
  Other current assets 293   254   327
Total current assets 4,024   4,324   3,249
             
Non-current assets:          
  Other non-current assets 1,039   1,013   712
  Property, plant and equipment, net 2,304   2,284   2,397
  Identified intangible assets, net 2,057   2,242   3,218
  Goodwill 9,968   9,984   9,935
Total non-current assets 15,368   15,523   16,262
             
Total assets 19,392   19,847   19,511
             
LIABILITIES AND EQUITY          
Current liabilities:          
  Accounts payable 1,033   991   895
  Restructuring liabilities-current 42   60   26
  Other current liabilities 1,190   966   910
Total current liabilities 2,265   2,017   1,831
             
Non-current liabilities:          
  Long-term debt 7,611   7,609   7,366
  Restructuring liabilities 14   14  
  Deferred tax liabilities 85   85   199
  Other non-current liabilities 896   971   857
Total non-current liabilities 8,606   8,679   8,422
             
  Non-controlling interests 218   207   222
  Stockholders’ equity 8,303   8,944   9,036
Total equity 8,521   9,151   9,258
           
Total liabilities and equity 19,392   19,847   19,511
             


NXP Semiconductors
Table 3: Condensed consolidated statement of cash flows (unaudited)

($ in millions) Three months ended
  April 4, 2021   December 31, 2020   March 29, 2020
Cash flows from operating activities:          
Net income (loss) $ 364     $ 320     $ (13 )
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:          
Depreciation and amortization 341     316     540  
Stock-based compensation 91     89     107  
Amortization of debt issuance costs 2     2     1  
Net (gain) loss on sale of assets     (4 )   (110 )
(Gain) loss on extinguishment of debt     60      
Results relating to equity-accounted investees 1     1     1  
(Gain) loss on equity securities, net (3 )   (21 )    
Deferred tax expense (benefit) 12     (75 )   (75 )
Changes in operating assets and liabilities:          
(Increase) decrease in receivables and other current assets (95 )   (50 )   27  
(Increase) decrease in inventories (26 )   34     (35 )
Increase (decrease) in accounts payable and other liabilities 51     333     64  
(Increase) decrease in other non-current assets (8 )   23     4  
Exchange differences (1 )   10     (4 )
Other items 3     (9 )   5  
Net cash provided by (used for) operating activities 732     1,029     512  
           
Cash flows from investing activities:          
Purchase of identified intangible assets (37 )   (35 )   (45 )
Capital expenditures on property, plant and equipment (150 )   (104 )   (143 )
Proceeds from the disposals of property, plant and equipment     1      
Purchase of interests in businesses, net of cash acquired     (13 )   (10 )
Proceeds from sale of interests in businesses, net of cash divested         161  
Purchase of investments (2 )   (15 )    
Proceeds from the sale of investments 8     2      
Proceeds from return of equity investments     1      
Net cash provided by (used for) investing activities (181 )   (163 )   (37 )
           
Cash flows from financing activities:          
Repurchase of long-term debt     (1,809 )    
Dividends paid to non-controlling interests     (1 )    
Dividends paid to common stockholders (105 )   (105 )   (105 )
Proceeds from issuance of common stock through stock plans 31     8     29  
Purchase of treasury shares and restricted stock unit withholdings (905 )   (257 )   (355 )
Other, net     (1 )    
Net cash provided by (used for) financing activities (979 )   (2,165 )   (431 )
           
Effect of changes in exchange rates on cash positions (5 )   8     (10 )
Increase (decrease) in cash and cash equivalents (433 )   (1,291 )   34  
Cash and cash equivalents at beginning of period 2,275     3,566     1,045  
Cash and cash equivalents at end of period 1,842     2,275     1,079  
           
Net cash paid during the period for:          
Interest 56     125     53  
Income taxes, net of refunds 40     45     39  
Net gain (loss) on sale of assets:          
Cash proceeds from the sale of assets     2     161  
Book value of these assets     2     (51 )
Non-cash investing activities:          
Non-cash capital expenditures 121     119     78  
                 


NXP Semiconductors
Table 4: Financial Reconciliation of GAAP to non-GAAP Results (unaudited)

($ in millions) Three months ended
  April 4, 2021   December 31, 2020   March 29, 2020
Revenue $ 2,567     $ 2,507     $ 2,021  
GAAP Gross Profit $ 1,355     $ 1,288     $ 997  
PPA Effects (18 )   (21 )   (36 )
Restructuring         (3 )
Stock Based Compensation (12 )   (12 )   (11 )
Other incidentals (7 )   (5 )    
Non-GAAP Gross Profit $ 1,392     $ 1,326     $ 1,047  
GAAP Gross margin 52.8 %   51.4 %   49.3 %
Non-GAAP Gross margin 54.2 %   52.9 %   51.8 %
GAAP Research and development $ (461 )   $ (460 )   $ (425 )
Restructuring     (22 )   (4 )
Stock based compensation (40 )   (41 )   (40 )
Merger-related costs         (1 )
Other incidentals (1 )   (1 )    
Non-GAAP Research and development $ (420 )   $ (396 )   $ (380 )
GAAP Selling, general and administrative $ (222 )   $ (221 )   $ (233 )
PPA effects     (2 )   (2 )
Restructuring     (16 )   (4 )
Stock based compensation (39 )   (36 )   (56 )
Merger-related costs         (3 )
Other incidentals (3 )       (3 )
Non-GAAP Selling, general and administrative $ (180 )   $ (167 )   $ (165 )
GAAP amortization of acquisition-related intangible assets $ (180 )   $ (148 )   $ (381 )
PPA effects (180 )   (148 )   (381 )
Non-GAAP amortization of acquisition-related intangible assets $     $     $  
GAAP Other income (expense) $     $ 4     $ 110  
Other incidentals     3     110  
Non-GAAP Other income (expense) $     $ 1     $  
GAAP Operating income (loss) $ 492     $ 463     $ 68  
PPA effects (198 )   (171 )   (419 )
Restructuring     (38 )   (11 )
Stock based compensation (91 )   (89 )   (107 )
Merger-related costs         (4 )
Other incidentals (11 )   (3 )   107  
Non-GAAP Operating income (loss) $ 792     $ 764     $ 502  
GAAP Operating margin 19.2 %   18.5 %   3.4 %
Non-GAAP Operating margin 30.9 %   30.5 %   24.8 %
GAAP Financial income (expense) $ (87 )   $ (137 )   $ (78 )
Foreign exchange gain (loss)     (6 )   (1 )
Gain (loss) on extinguishment of long-term debt     (60 )    
Other financial income (expense)     19     (2 )
Non-GAAP Financial income (expense) $ (87 )   $ (90 )   $ (75 )
           


NXP Semiconductors
Table 5: Adjusted EBITDA and Free Cash Flow (unaudited)

($ in millions) Three months ended
  April 4, 2021   December 31, 2020   March 29, 2020
Net income (loss) $ 364     $ 320     $ (13 )
Reconciling items to adjusted net income          
Financial (income) expense 87     137     78  
(Benefit) provision for income taxes 40     5     2  
Depreciation 132     139     133  
Amortization 209     177     407  
Adjusted net income $ 832     $ 778     $ 607  
Reconciling items to adjusted EBITDA          
Results of equity-accounted investees 1     1     1  
Purchase accounting effect on inventory         17  
Restructuring     38     11  
Stock based costs 91     89     107  
Merger-related costs         4  
Other incidental items 1) 11     1     (107 )
Adjusted EBITDA $ 935     $ 907     $ 640  
Trailing twelve month adjusted EBITDA $ 3,087     $ 2,792     $ 3,054  
           
1) Excluding amortization related to:          
- other incidental items $     $ 2     $  
           
           
           
           
           
($ in millions) Three months ended
  April 4, 2021   December 31, 2020   March 29, 2020
Net cash provided by (used for) operating activities $ 732     $ 1,029     $ 512  
Net capital expenditures on property, plant and equipment (150 )   (103 )   (143 )
Non-GAAP free cash flow $ 582     $ 926     $ 369  
Non-GAAP free cash flow as percent of Revenue 23 %   37 %   18 %
           


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