NXP Semiconductors N.V. (NASDAQ: NXPI) today updated its
performance expectations for third quarter 2020.
“Today, based on preliminary financial information, we are
pleased to announce a significant improvement in our outlook for
the third quarter of 2020. Relative to the mid-point of our
guidance, we experienced material improvement in demand across all
end markets, but particularly in the Automotive and Mobile end
markets. Additionally, demand improved in both our direct and
distribution channels. The business environment has improved at a
faster than anticipated pace, driving a broad-based increase in
revenue, which also enabled higher gross margin. Given the improved
outlook, we increased operating expenses in relation to
non-executive variable incentive compensation, which taken
together, resulted in operating profit margin substantially above
guidance,” said Kurt Sievers, NXP President and Chief Executive
Officer.
Preliminary Results:
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Mid-Point Guidance 3Q 2020 |
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Preliminary Results 3Q 2020 |
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$ millions |
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GAAP |
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non-GAAP |
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GAAP |
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non-GAAP |
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Revenue |
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$ |
2,000 |
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$ |
2,000 |
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$ |
2,267 |
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$ |
2,267 |
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Q-Q |
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10 |
% |
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10 |
% |
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25 |
% |
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25 |
% |
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Y-Y |
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-12 |
% |
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-12 |
% |
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0 |
% |
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0 |
% |
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Gross profit |
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$ |
950 |
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$ |
980 |
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$ |
1,090 |
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$ |
1,135 |
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Gross margin |
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47.5 |
% |
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49.0 |
% |
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48.1 |
% |
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50.1 |
% |
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Operating expense |
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$ |
(995 |
) |
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$ |
(535 |
) |
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$ |
(1,059 |
) |
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$ |
(550 |
) |
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Other income (expense) |
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$ |
(2 |
) |
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$ |
(1 |
) |
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$ |
1 |
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$ |
1 |
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Operating income (loss) |
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$ |
(47 |
) |
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$ |
444 |
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$ |
32 |
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$ |
586 |
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Operating margin |
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-2.4 |
% |
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22.2 |
% |
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1.4 |
% |
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25.8 |
% |
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Financial income (expense) |
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$ |
(100 |
) |
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$ |
(98 |
) |
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$ |
(106 |
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$ |
(100 |
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Additional Information:
- Non-GAAP Gross profit excludes Purchase Price Accounting
effects (“PPA”), $(22) million; Stock Based Compensation, $(11)
million; Restructuring and Other Incidentals, $(12) million;
- Non-GAAP Operating income excludes PPA effects, $(441) million;
Stock Based Compensation, $(83) million; Merger related costs, $(1)
million; Restructuring and Other Incidentals, $(29) million;
- Non-GAAP Financial Income (expense) excludes Other financial
expense $(3) million; Foreign exchange loss $(3) million;
- Cash paid for income taxes related to on-going operations was
$29 million. Items not related to on-going operations resulted in
additional cash payments of $10 million;
- Non-controlling interest is expected to be approximately $(4)
million.
The preliminary results above are unaudited, are based on
management’s initial review of NXP’s operating results for the
three-month period ended September 27, 2020 and are subject to
revision based upon the quarter-end closing procedures and the
completion of the financial statements for the three-month period
ended September 27, 2020. Actual results may differ materially from
these preliminary results because of the completion of quarter-end
closing procedures, final adjustments and other developments
arising between now and the time that the company’s financial
results are finalized. In addition, these preliminary unaudited
results are not a comprehensive statement of the financial results
for the quarter ended September 27, 2020, and should not be viewed
as a substitute for full financial statements prepared in
accordance with generally accepted accounting principles (“GAAP”),
and are not necessarily indicative of the results for any future
period.
Earnings Conference Call DetailsNXP is
currently in its quiet period ahead of its third quarter 2020
earnings call, and will not host a call to provide additional
commentary regarding this preannouncement.
The company will release the final financial results for the
third quarter 2020 and its guidance for the fourth quarter of 2020
after the close of normal trading on the NASDAQ Global Select
Market on Monday, October 26, 2020.
The company will host a conference call with the financial
community on Tuesday, October 27, 2020 at 8:00 a.m. U.S. Eastern
Daylight Time (EDT) to review the third quarter 2020 results in
detail. Interested parties may join the scheduled conference call
by dialing the following numbers:
Within the U.S.: 1 - 888 - 603 - 7644Outside the U.S.: 1 - 484 -
747 - 6631Participant Passcode: 6084337
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.
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 the
Preliminary Results 3Q 2020 non-GAAP measures to the most
comparable measures calculated in accordance with GAAP are provided
in the footnotes above entitled “Additional Information”.
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
About NXP SemiconductorsNXP 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 $8.88 billion in 2019. Find
out more at www.nxp.com.
Forward-looking StatementsThis 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: market demand and
semiconductor industry conditions; the ability to successfully
introduce new technologies and products; the end-market demand for
the goods into which NXP’s products are incorporated; the ability
to generate sufficient cash, raise sufficient capital or refinance
corporate debt at or before maturity; the ability to meet the
combination of corporate debt service, 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 access to
production capacity from third-party outsourcing partners; any
events that might affect third-party business partners 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 to develop products for use
in customers’ equipment and products; the ability to achieve
targeted efficiencies and cost savings; the ability to successfully
hire and retain key management and senior product architects; and,
the ability to maintain good relationships with our suppliers. In
addition, this document contains information concerning the
semiconductor industry and NXP’s business generally, which is
forward-looking in nature and is based on a variety of assumptions
regarding the ways in which the semiconductor industry, NXP’s
markets and product areas 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 |
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