NXP(NXPI) - 2024 Q2 - Quarterly Results

Performance Summary NXP reported Q2 2024 revenue of $3.13 billion, consistent with guidance and down 5% year-over-year, indicating the company has navigated the cyclical trough and expects to resume sequential growth - CEO Kurt Sievers stated that NXP has successfully navigated the cyclical trough in its businesses and expects to resume sequential growth, while driving resilient profitability[1] Q2 2024 Key Financial Metrics | Metric | GAAP | Non-GAAP | | :--- | :--- | :--- | | Revenue | $3.13 billion (-5% YoY) | $3.13 billion (-5% YoY) | | Gross Margin | 57.3% | 58.6% | | Operating Margin | 28.7% | 34.3% | | Diluted EPS | $2.54 | $3.20 | Q2 2024 Cash Flow & Leverage | Metric | Value | | :--- | :--- | | Cash Flow from Operations | $761 million | | Non-GAAP Free Cash Flow | $577 million | | Gross Financial Leverage | 1.9x | | Net Financial Leverage | 1.3x | End-Market Revenue Breakdown The Automotive segment remains the largest revenue contributor at $1.73 billion, despite a 7% year-over-year decline, while Mobile demonstrated strong performance with a 21% YoY increase Revenue by End-Market (Q2 2024) | End-Market | Revenue (Millions USD) | QoQ Change (%) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Automotive | 1,728 | -4% | -7% | | Industrial & IoT | 616 | +7% | +7% | | Mobile | 345 | -1% | +21% | | Comm. Infra. & Other | 438 | +10% | -23% | - Channel inventory remained stable at 1.7 months, a slight increase from 1.6 months in the prior quarter and year-ago quarter[3] Capital Return In Q2 2024, NXP returned a total of $570 million to shareholders, accounting for 99% of its non-GAAP free cash flow through dividends and share repurchases Q2 2024 Capital Return Summary | Item | Amount (Millions USD) | | :--- | :--- | | Cash Dividends Paid | 260 | | Share Repurchases | 310 | | Total Capital Return | 570 | - The total capital return of $570 million represented 99% of the second quarter's non-GAAP free cash flow[2] - On a trailing twelve-month basis, capital return to shareholders was $2.4 billion, or 81% of non-GAAP free cash flow[2] Business & Strategic Developments NXP announced several key strategic initiatives, including a new 5nm processor for vehicle central compute, a collaboration for SiC-based EV traction inverters, and a joint venture for a new 300mm wafer manufacturing facility - Announced the 5nm S32N55 processor, the first in the S32N family of vehicle super-integration processors, to address automakers' central compute needs[2] - Collaborated with ZF Friedrichshafen AG to adopt NXP's GD316x high-voltage isolated gate drivers for next-generation SiC-based traction inverter solutions in electric vehicles[2] - Announced a plan to create a manufacturing joint-venture, VisionPower Semiconductor Manufacturing Company (VSMC), with Vanguard International Semiconductor Corp (VIS) to build a new 300mm semiconductor wafer fab in Singapore[2] Third Quarter 2024 Outlook For the third quarter of 2024, NXP anticipates revenue to be in the range of $3.15 billion to $3.35 billion, with a midpoint of $3.25 billion, indicating a sequential growth of 4% Q3 2024 Guidance (Midpoint) | Metric | Midpoint Guidance | | :--- | :--- | | Total Revenue | $3.25 billion (+4% QoQ) | | Non-GAAP Gross Margin | 58.5% | | Non-GAAP Operating Margin | 35.1% | | Non-GAAP Diluted EPS | $3.42 | - GAAP Gross Margin is expected to be 57.5% at the midpoint, with adjustments for PPA effects, share-based compensation, and other incidentals[5][6] - GAAP Operating Margin is projected to be 29.8% at the midpoint, with expected adjustments for PPA effects, share-based compensation, and restructuring[5][6] Financial Statements The detailed financial statements provide a comprehensive view of NXP's financial position, including a GAAP net income of $658 million, total assets of $23.2 billion, and $761 million in cash from operations Condensed Consolidated Statement of Operations This section presents the unaudited condensed consolidated statement of operations, detailing revenue, gross profit, operating income, net income, and diluted EPS for Q2 2024 and comparative periods Q2 2024 Income Statement Highlights | Item (Millions USD) | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Revenue | 3,127 | 3,126 | 3,299 | | Gross Profit | 1,792 | 1,783 | 1,881 | | Operating Income | 896 | 856 | 937 | | Net Income Attributable to Stockholders | 658 | 639 | 698 | | Diluted EPS (USD) | 2.54 | 2.47 | 2.67 | Condensed Consolidated Balance Sheet This section provides the unaudited condensed consolidated balance sheet, outlining assets, liabilities, and equity as of June 30, 2024, and March 31, 2024 Balance Sheet Highlights (As of June 30, 2024) | Item (Millions USD) | June 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | 2,859 | 2,908 | | Total current assets | 6,880 | 6,894 | | Total assets | 23,196 | 23,320 | | Long-term debt | 9,681 | 10,178 | | Total stockholders' equity | 9,018 | 8,829 | | Total liabilities and equity | 23,196 | 23,320 | Condensed Consolidated Statement of Cash Flows This section details the unaudited condensed consolidated statement of cash flows, presenting cash generated from operating, investing, and financing activities for Q2 2024 and prior periods Q2 2024 Cash Flow Highlights | Item (Millions USD) | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Net cash from operating activities | 761 | 851 | 756 | | Net cash used for investing activities | (239) | (274) | (255) | | Net cash used for financing activities | (567) | (1,528) | (565) | | (Decrease) in cash and cash equivalents | (49) | (954) | (67) | GAAP to Non-GAAP Reconciliation NXP provides non-GAAP figures to offer a clearer view of its core operating performance, with key reconciling items for Q2 2024 including share-based compensation and PPA effects Q2 2024 GAAP to Non-GAAP Operating Income Reconciliation (Millions USD) | Description | Amount | | :--- | :--- | | GAAP Operating income | 896 | | PPA effects | (41) | | Restructuring | (6) | | Share-based compensation | (114) | | Other incidentals | (14) | | Non-GAAP Operating income | 1,071 | Q2 2024 GAAP to Non-GAAP Diluted EPS Reconciliation (USD) | Description | Amount | | :--- | :--- | | GAAP diluted EPS | 2.54 | | PPA Effects | (0.16) | | Restructuring | (0.02) | | Share-based compensation | (0.44) | | Other incidentals & adjustments | (0.10) | | Income tax effect | 0.06 | | Non-GAAP diluted EPS | 3.20 | Adjusted EBITDA and Free Cash Flow (Q2 2024) | Metric (Millions USD) | Amount | | :--- | :--- | | Adjusted EBITDA (Non-GAAP) | 1,243 | | Non-GAAP free cash flow | 577 |