NXP Investor Presentation First Quarter 2025 April 2025 | Public | NXP and the NXP logo are trademarks of NXP B.V. All other product or service names are the property of their respective owners. © 2024 NXP B.V. Forward Looking Statements This document includes forward-looking statements which include statements regarding NXP's business strategy, financial condition, results of operations, market data, as well as any other statements which are not historical facts. By their nature, forward-looking statements ...

Financial Data and Key Metrics Changes - NXP reported Q1 revenue of $2,840 million, a decrease of 9% year on year, but slightly above the midpoint of guidance [6][20] - Non-GAAP operating margin for Q1 was 31.9%, down 260 basis points year on year, but 40 basis points above the midpoint of guidance [7][21] - Non-GAAP earnings per share for Q1 was $2.64, which was $0.05 better than the midpoint of guidance [20] - Total debt at the end of Q1 was $11,730 million, up $871 million sequentially, while cash balance was $3,990 million, up $696 million sequentially [22] Business Line Data and Key Metrics Changes - Revenue trends in mobile and communication infrastructure markets were slightly above expectations, while automotive and industrial IoT markets were slightly below expectations [6][7] - Automotive revenue is expected to be flat year on year in Q2, while industrial and IoT is expected to decline in the mid-teens percentage range year on year [11][12] - Mobile is expected to decline in the mid-single digit percentage range on both a year-on-year and sequential basis [12] Market Data and Key Metrics Changes - Distribution inventory was in line with guidance at nine weeks, below the long-term target of eleven weeks [7] - The automotive market is showing signs of stabilization, with a flat year-on-year performance expected in Q2, marking the first time after five quarters of declines [38] Company Strategy and Development Direction - NXP announced the intention to acquire Kinara for $37 million, aiming to enhance its position in AI-powered edge-based systems [12][13] - The company is focusing on managing its direct control areas to drive profitability and earnings amidst uncertain macroeconomic conditions influenced by tariffs [15][27] - The upcoming CEO transition is not expected to change the long-term financial model and capital allocation strategy [27] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about navigating through challenging market conditions, influenced by tariffs and uncertain demand [15][27] - The company is not seeing abnormal customer order pull-ins or push-outs related to tariffs, indicating a stable order environment [8][47] - Management highlighted the importance of customer engagement and the need for a clear understanding of customer plans amidst tariff uncertainties [48] Other Important Information - NXP's cash conversion cycle was 141 days, with cash flow from operations at $565 million and non-GAAP free cash flow at $427 million [23] - The company repurchased $3 million of its shares and paid $258 million in cash dividends during Q1 [22] Q&A Session Summary Question: How do recent acquisitions relate to competition from China in the MCU world? - Management indicated that the acquisitions are primarily offensive to differentiate NXP's offerings in the automotive and industrial sectors, while also addressing competition from China [31][35] Question: What is the current status of automotive inventory digestion? - Management noted that the automotive market is stabilizing, with flat year-on-year performance expected in Q2, and some Tier 1 customers are still digesting excess inventory [38][39] Question: How is NXP viewed by customers and governments regarding tariffs? - Management clarified that NXP is seen as a European company with a strong local manufacturing network in China, which positions it favorably amidst tariff uncertainties [48][50] Question: What is the outlook for the industrial business? - Management stated that the industrial IoT segment is performing well, particularly in China, but cautioned that NXP's performance may not be indicative of the broader industry [53] Question: Can you elaborate on the China for China strategy? - Management explained that the strategy includes a focus on local manufacturing and product development tailored for Chinese customers, with 30% of China revenue currently sourced domestically [60][62] Question: What are the expectations for operating expenses in the second half of the year? - Management indicated confidence in reaching the target of 23% operating expenses as a percentage of revenue in the second half, driven by restructuring efforts and acquisitions [63][65]

Group 1: Earnings Performance - NXP Semiconductors reported quarterly earnings of $2.64 per share, exceeding the Zacks Consensus Estimate of $2.59 per share, but down from $3.24 per share a year ago, representing an earnings surprise of 1.93% [1] - The company posted revenues of $2.84 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.30%, compared to $3.13 billion in revenues a year ago [2] - Over the last four quarters, NXP has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - NXP shares have declined approximately 6.9% since the beginning of the year, while the S&P 500 has seen a decline of 6.1% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $2.67 on revenues of $2.86 billion, and for the current fiscal year, it is $11.64 on revenues of $11.93 billion [7] Group 3: Industry Context - The Semiconductor - Analog and Mixed industry, to which NXP belongs, is currently ranked in the top 29% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that tracking these revisions can be beneficial for investors [5] - The favorable estimate revisions trend for NXP has resulted in a Zacks Rank 2 (Buy) for the stock, indicating expectations of outperforming the market in the near future [6]

Financial Performance - NXP reported Q1 2025 revenue of $2.84 billion, down 9% year-on-year, aligning with the midpoint of guidance[2][5]. - NXP Semiconductors reported revenue of $2.835 billion for the three months ended March 30, 2025, a decrease of 8.8% compared to $3.111 billion in the previous quarter and a decrease of 9.3% from $3.126 billion in the same quarter last year[22]. - The automotive segment generated $1.67 billion in revenue, down 7% year-on-year[7]. - Non-GAAP diluted EPS for Q1 2025 was $2.64, a decrease of 19% compared to Q1 2024[5][6]. - NXP reported a net income of $497 million for the three months ended March 30, 2025, a decrease of 29% compared to $705 million for the same period in 2024[24]. - The company reported a GAAP net income of $497 million for the three months ended March 30, 2025, compared to $505 million in the previous quarter and $644 million in the same quarter last year[30]. - Non-GAAP net income attributable to stockholders was $673 million, compared to $817 million in the same quarter last year, reflecting a decline of 17.6%[25]. - NXP's diluted GAAP net income per share was $1.92, down from $2.47 in the same quarter last year[26]. Margins and Profitability - GAAP gross margin was 55.0%, while non-GAAP gross margin was 56.1%[5][6]. - Gross profit for the same period was $1.560 billion, resulting in a gross margin of approximately 55.1%, down from 54% in the previous quarter and 57% in the same quarter last year[22]. - Operating income for the quarter was $723 million, reflecting an operating margin of 25.5%, compared to $675 million and 21.7% in the previous quarter[22]. - The company reported a non-GAAP operating income of $904 million, with a non-GAAP operating margin of 31.9%[25]. - The adjusted EBITDA (Non-GAAP) for the latest quarter was $1,073 million, down from $1,240 million in the previous quarter and $1,252 million a year ago[30]. - The trailing twelve-month adjusted EBITDA (Non-GAAP) totaled $4,885 million, a decrease from $5,064 million in the previous period and $5,395 million a year ago[30]. Cash Flow and Capital Management - Cash flow from operations was $565 million, resulting in non-GAAP free cash flow of $427 million, with capital return of $561 million[5][8]. - Non-GAAP free cash flow for the three months ended March 30, 2025, was $427 million, an increase from $292 million in the previous quarter but a decrease from $627 million in the same quarter last year[31]. - The trailing twelve-month non-GAAP free cash flow was $1,889 million, down from $2,089 million in the previous period and $2,933 million a year ago[31]. - The company's non-GAAP free cash flow as a percentage of revenue was 15% for the latest quarter, down from 17% in the previous quarter and 22% a year ago[31]. - Net cash provided by operating activities was $565 million for the latest quarter, compared to $391 million in the previous quarter and $851 million a year ago[31]. Assets and Liabilities - Total current assets increased to $8.025 billion as of March 30, 2025, up from $7.305 billion at the end of the previous quarter[23]. - Cash and cash equivalents rose to $3.988 billion, compared to $3.292 billion at the end of the previous quarter[23]. - Total liabilities increased to $15.503 billion, up from $14.854 billion at the end of the previous quarter[23]. - NXP's total equity stood at $9.677 billion, an increase from $9.531 billion at the end of the previous quarter[23]. Strategic Initiatives - NXP announced the acquisition of Kinara Inc. for $307 million to enhance edge intelligence solutions[8]. - The company secured a €1 billion loan from the European Investment Bank to support R&D investments[8]. - NXP introduced the S32K5 family of automotive microcontrollers, the first 16nm FinFET MCU with embedded MRAM[8]. - The company plans to execute additional share repurchases totaling $90 million post-Q1 2025[5]. Future Outlook and Risks - NXP's guidance for Q2 2025 projects total revenue between $2.8 billion and $3.0 billion, reflecting a year-on-year decline of 4% to 10%[10][12]. - NXP's forward-looking statements highlight potential risks including market demand fluctuations and supply chain disruptions due to geopolitical tensions[20]. Conference Call - The company plans to host a conference call on April 29, 2025, to discuss the first quarter 2025 results in detail[17].

Core Insights - NXP Semiconductors reported first-quarter revenue of $2.84 billion, aligning with guidance, but down 9% year-on-year, indicating challenges in the current market environment [1][4][6] - CEO Kurt Sievers announced his retirement at the end of 2025, with Rafael Sotomayor appointed as his successor, ensuring a smooth transition [2][3] - The company is focusing on managing controllable factors to maintain profitability amid external uncertainties, including tariffs [1][4] Financial Performance - Revenue for Q1 2025 was $2.84 billion, a decrease of 9% compared to both Q4 2024 and Q1 2024 [4][6] - GAAP gross margin was reported at 55.0%, while non-GAAP gross margin was 56.1% [4][6] - GAAP diluted net income per share was $1.92, down 22% year-on-year, while non-GAAP diluted net income per share was $2.64, down 19% year-on-year [4][6] Cash Flow and Capital Return - Cash flow from operations was $565 million, with net capital expenditures of $138 million, resulting in non-GAAP free cash flow of $427 million [4][6] - The company returned $561 million to shareholders, representing 131% of non-GAAP free cash flow, through share buybacks and dividends [4][6] Strategic Developments - NXP announced the acquisition of Kinara Inc. for $307 million to enhance its capabilities in energy-efficient neural processing units [5] - A €1 billion loan from the European Investment Bank was secured to support R&D investments across its semiconductor solutions portfolio [4][5] - The company expanded its partnership with Honeywell to accelerate aviation product development, leveraging NXP's technology for improved operational efficiency [4][5] Market Segmentation - Revenue breakdown for Q1 2025 included $1.67 billion from Automotive, $508 million from Industrial & IoT, $338 million from Mobile, and $315 million from Communications Infrastructure & Other [7][6] - Year-on-year declines were noted across all segments, with Automotive down 7%, Industrial & IoT down 11%, Mobile down 3%, and Communications Infrastructure down 21% [7][6] Guidance - For Q2 2025, NXP expects total revenue between $2.80 billion and $3.00 billion, reflecting a year-on-year decline of 4% to 10% [10]

Group 1 - NXP Semiconductors is well-positioned to maintain its earnings-beat streak in the upcoming report, with a history of topping earnings estimates [1][5] - The company reported earnings of $3.18 per share, exceeding the Zacks Consensus Estimate of $3.14 per share, resulting in a surprise of 1.27% [2] - NXP's average surprise for the past two quarters is 0.93%, indicating consistent performance [1] Group 2 - Estimates for NXP have been trending higher due to its earnings surprise history, and it has a positive Zacks Earnings ESP of +0.71% [5][8] - The combination of a positive Earnings ESP and a Zacks Rank 3 (Hold) suggests a high probability of another earnings beat, with nearly 70% success rate for stocks with this combination [6][8] - The next earnings report for NXP is expected to be released on April 28, 2025 [8]

Core Viewpoint - NXP Semiconductors is expected to report a decline in both revenues and earnings for the first quarter of 2025, primarily due to challenges in the automobile and communication infrastructure markets, alongside macroeconomic pressures [1][2][3]. Revenue Expectations - NXP anticipates first-quarter revenues between $2.725 billion and $2.925 billion, with a consensus estimate of $2.83 billion, reflecting a 9.6% year-over-year decline [1]. - The estimated revenues for the Industrial & IoT segment are $498.8 million, indicating a 13.1% year-over-year decline, while the Mobile end market is expected to see a slight increase of 0.5% to $350.9 million [4]. - Automotive revenues are projected at $1.62 billion, representing a 10% decline from the previous year, and revenues from the Communications Infrastructure & Others segment are estimated at $351.3 million, down 12% year-over-year [6]. Earnings Projections - NXP expects non-GAAP earnings per share between $2.39 and $2.79, with a consensus estimate of $2.59 per share, indicating a 20% year-over-year decline [2]. - The company has historically beaten earnings estimates three out of the last four quarters, with an average surprise of 0.94% [2]. Market Challenges - The performance is likely to be negatively impacted by ongoing inventory corrections in the automotive sector and a slowdown in demand from European car manufacturers [3]. - The communications infrastructure sector is facing challenges due to a shift towards gallium nitride products and reduced base station deployments, compounded by macroeconomic headwinds and geopolitical tensions [5]. Positive Factors - Despite the challenges, NXP's performance may benefit from an expanding portfolio and positive momentum in the Industrial & IoT sectors, particularly driven by demand in China and the Asia Pacific region [7]. - The company secured a €1 billion loan from the European Investment Bank to support research, development, and innovation, which is expected to positively influence the upcoming quarter's performance [7]. Earnings Prediction Model - The current model does not predict an earnings beat for NXP, as it has an Earnings ESP of 0.00% and a Zacks Rank of 3 (Hold) [8][9].

Core Viewpoint - Analysts project that NXP Semiconductors will report a quarterly earnings of $2.59 per share, reflecting a year-over-year decline of 20.1%, with revenues expected to be $2.83 billion, down 9.6% from the same quarter last year [1] Earnings Estimates - The consensus EPS estimate for the quarter has not changed over the past 30 days, indicating that analysts have not revised their initial projections [2] - Changes in earnings estimates are crucial for predicting investor reactions, as empirical research shows a strong correlation between earnings estimate revisions and short-term stock performance [3] Revenue Projections - Analysts estimate 'Revenue- Automotive' to be $1.69 billion, a decrease of 6.5% from the prior-year quarter [5] - 'Revenue- Communications Infrastructure & Other' is projected to reach $302.16 million, indicating a decline of 24.3% year over year [5] - 'Revenue- Industrial & IoT' is expected to be $512.51 million, reflecting a 10.7% decrease from the previous year [6] - 'Revenue- Mobile' is forecasted to be $325.45 million, suggesting a decline of 6.8% year over year [6] Stock Performance - Over the past month, NXP shares have decreased by 17.4%, compared to a 6.6% decline in the Zacks S&P 500 composite [7] - NXP holds a Zacks Rank 3 (Hold), indicating that its performance is likely to align with the overall market in the near term [7]

Company Performance - NXP Semiconductors closed at $174.66, with a daily increase of +1.84%, underperforming the S&P 500's gain of 2.51% [1] - The stock has decreased by 18.77% over the past month, compared to a 12.18% loss in the Computer and Technology sector and an 8.86% loss in the S&P 500 [1] Upcoming Earnings Report - The company is set to release its earnings on April 28, 2025, with an expected EPS of $2.59, reflecting a 20.06% decline year-over-year [2] - Revenue is projected to be $2.83 billion, down 9.58% from the same quarter last year [2] Fiscal Year Projections - For the entire fiscal year, earnings are estimated at $11.64 per share and revenue at $11.93 billion, indicating declines of -11.08% and -5.44% respectively from the previous year [3] Analyst Forecast Revisions - Recent revisions to analyst forecasts for NXP Semiconductors are important as they reflect short-term business trends, with positive revisions indicating optimism about the company's outlook [4] Zacks Rank and Valuation - NXP Semiconductors currently holds a Zacks Rank of 4 (Sell), with no changes in the consensus EPS estimate over the past month [6] - The company has a Forward P/E ratio of 14.74, which is lower than the industry average of 24.6, and a PEG ratio of 1.86 compared to the industry average of 1.68 [7] Industry Context - The Semiconductor - Analog and Mixed industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 89, placing it in the top 36% of over 250 industries [8]

Core Viewpoint - NXP Semiconductors N.V. will announce its financial results for Q1 2025 on April 28, 2025, and will host a conference call on April 29, 2025, at 8:00 a.m. EDT [1][2] Company Overview - NXP Semiconductors N.V. is a key player in providing innovative solutions across automotive, industrial & IoT, mobile, and communications infrastructure markets [3] - The company reported a revenue of $12.61 billion in 2024, indicating its significant market presence and operational scale [3]