10-QPeriod: Q1 FY2020

NXP Semiconductors N.V. Quarterly Report for Q1 Ended Mar 29, 2020

Filed April 28, 2020For Securities:NXPI

Summary

NXP Semiconductors N.V. reported a revenue of $2,021 million for the first quarter of 2020, a decrease of 3.5% compared to the prior year period, largely attributed to the impact of the COVID-19 pandemic on key end markets like Automotive and Communications & Infrastructure. The company experienced a net loss of $13 million, or $(0.08) per diluted share, compared to a net loss of $16 million, or $(0.07) per diluted share, in the first quarter of 2019. Despite the revenue decline and net loss, NXP generated strong operating cash flows of $512 million, demonstrating robust financial discipline. The company highlighted the impact of COVID-19, leading to a decrease in customer demand and a reduction in gross profit margin to 49.3% due to lower revenue and a less favorable product mix. NXP emphasized its proactive response to the pandemic, prioritizing employee safety while maintaining business continuity. The company also completed the sale of its Voice and Audio Solutions (VAS) assets for $161 million, resulting in a gain of $110 million. NXP's liquidity remains strong with $1,079 million in cash and cash equivalents and access to an additional $1,500 million under its revolving credit facility.

Financial Highlights

54 data points
Beta

Revenue

$2.02B

49.3% Gross Margin

Net Income

-$21.00M

-1.0% Net Margin

EPS (Diluted)

$-0.08

Total Assets

$19.51B

Cash & Equivalents

$1.08B

Free Cash Flow

$369.00M

Financial Statements
Beta
Revenue$2.02B
Cost of Revenue$1.02B
Gross Profit$997.00M
R&D Expenses$425.00M
SG&A Expenses$233.00M
Operating Expenses$1.04B
Operating Income$68.00M
Interest Expense$82.00M
Net Income-$21.00M
EPS (Basic)$-0.08
EPS (Diluted)$-0.08
Shares Outstanding (Basic)279.93M
Shares Outstanding (Diluted)279.93M

Key Highlights

  • 1Revenue for Q1 2020 was $2,021 million, down 3.5% year-over-year, primarily due to COVID-19 impacts.
  • 2Net loss attributable to stockholders was $21 million ($0.08 per diluted share) in Q1 2020, compared to $21 million ($0.07 per diluted share) in Q1 2019.
  • 3Strong operating cash flow generation of $512 million in Q1 2020.
  • 4Gross profit margin decreased to 49.3% in Q1 2020 from 51.2% in Q1 2019, impacted by lower revenue and purchase accounting effects.
  • 5Completed the sale of Voice and Audio Solutions (VAS) assets for $161 million, recognizing a $110 million gain.
  • 6Cash and cash equivalents stood at $1,079 million as of March 29, 2020, with ample liquidity available through a revolving credit facility.
  • 7The company is actively managing the impact of COVID-19, prioritizing employee safety and business continuity.

Frequently Asked Questions

The primary driver of the revenue decline in the first quarter of 2020 was the impact of the COVID-19 pandemic, which affected key end markets like Automotive and Communications & Infrastructure. This led to reduced customer demand and factory shutdowns for some of NXP's customers.

Despite lower revenue, NXP managed its operating expenses effectively. Research and Development costs saw a slight increase due to the Marvell acquisition, while Selling, General, and Administrative expenses decreased, partly due to lower professional service costs and variable compensation. Amortization of acquisition-related intangible assets increased due to the Marvell acquisition.

NXP maintains a strong liquidity position with $1,079 million in cash and cash equivalents and an additional $1,500 million available under its revolving credit facility. The company believes it has sufficient liquidity to satisfy its needs for at least the next twelve months, though it is monitoring the situation and taking steps to preserve liquidity, such as limiting discretionary spending and re-prioritizing capital projects.

The sale of the Voice and Audio Solutions (VAS) assets to Shenzhen Goodix Technology Co., Ltd. for $161 million was a significant event in the quarter, generating a gain of $110 million which contributed positively to 'Other income (expense)'. This divestiture aligns with NXP's strategy to focus on its core semiconductor markets.