NXP Semiconductors has reported financial results for the second quarter of 2019, ended June 30, 2019. NXP will host a conference call on July 30, 2019 at 8:00 a.m. U.S. Eastern Time (2:00 p.m. Central European Time) to discuss its second quarter 2019 results and provide an outlook for the third quarter of 2019.
NXP delivered revenue of $2.2 billion during the second quarter. With sales slightly better than the midpoint of guidance, and good expense control, NXP has successfully delivered improved operating profitability. Additionally, during the quarter, the company has returned $716 million to the shareholders consistent with its long-term capital return policy.
Key Highlights:
- Revenue was $2.2 billion, down 3 percent year-on-year;
- GAAP gross margin was 51.9 percent, and GAAP operating margin was 7.1 percent;
- Non-GAAP gross margin was 53.3 percent, and non-GAAP operating margin was 28.9 percent;
- Cash flow from operations was $517 million, with net capex investments of $106 million, resulting in non-GAAP free cash flow of $411 million;
- On May 29, 2019, NXP announced it had entered into a definitive agreement to acquire Marvell’s Wireless Connectivity portfolio in an all-cash asset transaction valued at $1.76 billion.
Additional Information for the Second Quarter 2019:
- For an explanation of GAAP to non-GAAP adjustments, please see “Non-GAAP Financial Measures” on page 2 of this release.
- Financial leverage is defined as net debt divided by trailing twelve months adjusted EBITDA.
During the second quarter of 2019 NXP repurchased 6.6 million shares for a total cost of $645 million; and paid cash dividends of $71 million. Weighted average number of diluted shares for the three-month period ended June 30, 2019, was 285.1 million. Cash paid for income taxes related to on-going operations was $30 million. Items not related to on-going operations resulted in additional cash payments of $36 million, which was mainly due to the divestment of the Standard Products business.
- GAAP Gross Profit is expected to include Purchase Price Accounting (“PPA”) effects, ($19 million); Stock-Based Compensation, ($10 million);
- GAAP Operating Income (loss) is expected to include PPA effects, ($378 million); Stock-Based Compensation, ($87 million); Merger related costs ($10 million); Restructuring and Other Incidentals, ($10 million);
- GAAP Financial Income (expense) is expected to include Other financial expense ($15 million);
- Net cash paid for income taxes related to on-going operations is expected to be approximately ($41 million);
- Non-controlling interest is expected to be approximately ($10 million);
- Weighted average diluted share count is expected to be approximately 284 million.
Non-GAAP Financial Measures:
In managing NXP's business on a consolidated basis, management develops an annual operating plan, which is approved by the 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.
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. According to the company, 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.
