Successful Completion of the Standard Products Divestment
Gross Debt Reduced to $6.5 billion from $9.2 billion
Dramatic Reduction of Financial Leverage
|GAAP Gross margin||48.8%|
|GAAP Operating margin||75.9%|
|Non-GAAP Gross margin||51.7%|
|Non-GAAP Operating margin
EINDHOVEN, The Netherlands, May 03, 2017 (GLOBE NEWSWIRE) -- NXP Semiconductors N.V. (NASDAQ:NXPI) today reported financial results for the first quarter ended April 2, 2017.
“NXP delivered good seasonal results for the first quarter of 2017, with revenue of $2.21 billion, a decline of 1 percent year on year, and a decline of 9 percent versus the prior quarter, with period comparisons impacted by the successful divestment of our Standard Products business in early February,” said Richard Clemmer, NXP Chief Executive Officer.
“Our first quarter performance reflects a confirmation of a return to our annual growth trajectory. HPMS segment revenue was $2.01 billion, an increase of 5 percent year on year and a decline of two percent sequentially. Standard Products segment revenue was $118 million, representing approximately one month of revenue contribution prior to the close of the divestment.
“Within the Automotive group, our first quarter revenue was a historical record at $906 million, up 13 percent year on year due to strong demand across the entire product portfolio, with our automotive microcontroller and advanced analog products continuing to experience exceptional traction. Within the Secure Connected Devices group, our first quarter revenue was $541 million, up 15 percent year on year as all major product lines contributed to a solid quarter, especially demand for our i.MX application processor products. In the Secure Interface and Infrastructure group, our first quarter revenue was $450 million, up 6 percent year on year, with very strong growth in our Interface group, offset by flattish trends in RF Power and continued headwinds in the Digital Networking group which was restructured late last year. Lastly, in our Secure Identification Solutions group, our first quarter revenue was $114 million, down 46 percent versus the same period a year ago, due to a combination of lower overall market demand and aggressive ASP compression. While we are disappointed with the revenue deceleration, we believe Secure Identification Solutions has reached a revenue trough.
“In summary, our first quarter results are another solid step towards the successful integration of Freescale and NXP. With the divestment of our Standard Products group, our overall product portfolio has a sharpened focus on the higher growth, desirable margins, and stickier market segments. The revenue performance of our Auto, Application Processor, General Purpose MCU and Interface groups is especially encouraging as design win trends indicate our go-to-market and portfolio decisions are well aligned with our customer’s long-term requirements,” said Clemmer.
“Due to the disciplined focus by the entire NXP team, we were able to deliver better than anticipated financial results during the first quarter. Our results reflect strong execution notwithstanding normal seasonal operating expense headwinds, in addition to the stranded costs associated with the divestment of our Standard Products group, which we discussed when we announcement the action in June of 2016. In the first quarter, our GAAP operating margin was 75.9 percent due to the one-time gain associated with the divestment of Standard Products. Our first quarter non-GAAP operating margin was 27.1 percent, representing a 380-basis point improvement compared to the first quarter of 2016 and a 220-basis point decline sequentially due to stranded costs and annual fringe benefit accruals. With cash on hand and the net proceeds from the successful completion of the Standard Products business divestment, we reduced our gross debt by $2.7 billion. Due to significantly lower gross debt and solid cash generation, our overall financial leverage was reduced to 1.4x, a full quarter earlier than anticipated, and a level not achieved since the third quarter of 2015, prior to close of the Freescale transaction. In total, NXP has turned the corner in terms of annual revenue growth and continues to deliver non-GAAP operating margin improvement far in-excess of the original targets we communicated in past periods,” said Dan Durn, NXP Chief Financial Officer.
Summary of Reported First Quarter 2017 Results ($ millions, unaudited)
|Q1 2017||Q4 2016||Q1 2016||Q - Q||Y - Y|
|Corporate & Other||$||82||$||55||$||39||49%||110%|
|GAAP Gross Profit||$||1,079||$||1,189||$||597||-9%||81 %|
|Gross Profit Adjustments (1)||$||(65||)||$||(59||)||$||(515||)|
|Non-GAAP Gross Profit||$||1,144||$||1,248||$||1,112||-8||3 %|
|GAAP Gross Margin||48.8||%||48.7||%||26.8||%|
|Non-GAAP Gross Margin||51.7||%||51.1||%||50.0||%|
|GAAP Operating Income / (Loss)||$||1,679||$||173||$||(471||)||871 %||NM|
|Operating Income Adjustments (1)||1,080||(542||)||(990||)|
|Non-GAAP Operating Income||$||599||$||715||$||519||-16%||15 %|
|GAAP Operating Margin||75.9||%||7.1||%||-21.2||%|
|Non-GAAP Operating Margin||27.1||%||29.3||%||23.3||%|