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NXP Semiconductors Reports Fourth Quarter and Full-year 2021 Results; Announces Increase of Quarterly Dividend and New 2022 Share Repurchase Program

EINDHOVEN, The Netherlands, Jan. 31, 2022 (GLOBE NEWSWIRE) -- NXP Semiconductors N.V. (NASDAQ: NXPI) today reported financial results for the fourth quarter and full year ended December 31, 2021.

“NXP delivered full-year record revenue of $11.06 billion, an increase of 28 percent year-on-year, with demand accelerating across all of our focus end-markets throughout the year. In the fourth quarter, revenue was $3.04 billion, an increase of 21 percent year-on-year, above the mid-point of our guidance range. In review, 2021 was an excellent year for NXP. We experienced significant design win traction across the entire portfolio and especially within the areas of our strategic growth drivers. The engagement and performance of our employees has been truly outstanding, we are extremely proud of their adaptability, dedication and hard work in the face of adversity. We continue to see growing customer demand, outstripping supply, as inventory across all end markets remains very lean. Taken together, this underpins our continued confidence of robust growth throughout 2022,” said Kurt Sievers, NXP President and Chief Executive Officer.

Key Highlights:

Summary of Reported Fourth Quarter 2021 ($ millions, unaudited) (1)

 Q4 2021Q3 2021Q4 2020Q - QY - Y 2021  2020 Y - Y
Total Revenue$        3,039 $        2,861 $        2,507 6% 21% $        11,063 $        8,612 28% 
GAAP Gross Profit$        1,707 $        1,583 $        1,288 8% 33% $        6,067 $        4,235 43% 
Gross Profit Adjustments (i)$        (33)$        (34)$        (38)  $        (138)$        (165) 
Non-GAAP Gross Profit$        1,740 $        1,617 $        1,326 8% 31% $        6,205 $        4,400 41% 
GAAP Gross Margin         56.2%         55.3%         51.4%           54.8%         49.2% 
Non-GAAP Gross Margin         57.3%         56.5%         52.9%           56.1%         51.1% 
GAAP Operating Income / (Loss)$        807 $        711 $        463 14% 74% $        2,583 $        418 518% 
Operating Income Adjustments (i)$        (253)$        (248)$        (301)  $        (1,058)$        (1,810) 
Non-GAAP Operating Income$        1,060 $        959 $        764 11% 39% $        3,641 $        2,228 63% 
GAAP Operating Margin         26.6%         24.9%         18.5%           23.3%         4.9% 
Non-GAAP Operating Margin         34.9%         33.5%         30.5%           32.9%         25.9% 


Additional information        
 Q4 2021Q3 2021Q4 2020Q - QY - Y 2021 2020Y - Y
Automotive$        1,547$        1,455$        1,1936% 30% $        5,493$        3,82544% 
Industrial & IoT$        661$        607$        511 9% 29% $        2,410$        1,83631% 
Mobile$        374$        345$        4098% -9%$        1,412$        1,24813% 
Comm. Infra. & Other$        457$        454$        3941% 16% $        1,748$        1,7033% 
DIO 83 85 78     
DPO 87 83 75     
DSO 28 31 28     
Cash Conversion Cycle 24 33 31     
Channel Inventory (months) 1.5 1.6 1.6     
Financial Leverage (ii)1.8x1.9x1.9x     
  1. Additional Information for the Fourth Quarter and Full-year 2021:
    1. For an explanation of GAAP to non-GAAP adjustments, please see “Non-GAAP Financial Measures”.
    2. Financial leverage is defined as net debt divided by trailing twelve months adjusted EBITDA.

Guidance for the First Quarter 2022: ($ millions) (1)

 Guidance Range
 GAAP Reconciliation non-GAAP
 Low Mid High   Low Mid High
Total Revenue$3,025  $3,100  $3,175    $3,025  $3,100  $3,175 
Q-Q 0%  2%  4%    0%  2%  4%
Y-Y 18%  21%  24%    18%  21%  24%
Gross Profit$1,687  $1,746  $1,805  $(31)  $1,718  $1,777  $1,836 
Gross Margin 55.8%  56.3%  56.9%    56.8%  57.3%  57.8%
Operating Income (loss)$785  $834  $883  $(250)  $1,035  $1,084  $1,133 
Operating Margin 26.0%  26.9%  27.8%    34.2%  35.0%  35.7%
Financial Income (expense)$(108) $(108) $(108) $(3)  $(105) $(105) $(105)

Note (1) Additional Information:

  1. GAAP Gross Profit is expected to include Purchase Price Accounting (“PPA”) effects, $(14) million; Stock Based Compensation, $(12) million; Other Incidentals, $(5) million;
  2. GAAP Operating Income (loss) is expected to include PPA effects, $(151) million; Stock Based Compensation, $(89) million; Restructuring and Other Incidentals, $(10) million;
  3. GAAP Financial Income (expense) is expected to include Other financial expense $(3) million;
  4. Net cash paid for income taxes related to on-going operations is expected to be approximately $(125) million;
  5. Non-controlling interest is expected to be approximately $(9) million;
  6. Weighted average diluted share count is expected to be approximately 266 million.

NXP has based the guidance included in this release on judgments and estimates that management believes are reasonable given its assessment of historical trends and other information reasonably available as of the date of this release. Please note, the guidance included in this release consists of predictions only, and is subject to a wide range of known and unknown risks and uncertainties, many of which are beyond NXP's control. The guidance included in this release should not be regarded as representations by NXP that the estimated results will be achieved. Actual results may vary materially from the guidance we provide today. In relation to the use of non-GAAP financial information see the note regarding "Non-GAAP Financial Measures" below. For the factors, risks, and uncertainties to which judgments, estimates and forward-looking statements generally are subject see the note regarding "Forward-looking Statements." We undertake no obligation to publicly update or revise any forward-looking statements, including the guidance set forth herein, to reflect future events or circumstances.

Non-GAAP Financial Measures

In managing NXP's business on a consolidated basis, management develops an annual operating plan, which is approved by our 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. We believe that 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. We believe that 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.

These non-GAAP financial measures are provided in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The presentation of these and other similar items in NXP’s non-GAAP financial results should not be interpreted as implying that these items are non-recurring, infrequent, or unusual. Reconciliations of these non-GAAP measures to the most comparable measures calculated in accordance with GAAP are provided in the financial statements portion of this release in a schedule entitled “Financial Reconciliation of GAAP to non-GAAP Results (unaudited).” Please refer to the NXP Historic Financial Model file found on the Financial Information page of the Investor Relations section of our website at https://investors.nxp.com for additional information related to our rationale for using these non-GAAP financial measures, as well as the impact of these measures on the presentation of NXP's operations.

In addition to providing financial information on a basis consistent with U.S. generally accepted accounting principles (“GAAP”), NXP also provides the following selected financial measures on a non-GAAP basis: (i) Gross profit, (ii) Gross margin, (iii) Research and development, (iv) Selling, general and administrative, (v) Amortization of acquisition-related intangible assets, (vi) Other income, (vii) Operating income (loss), (viii) Operating margin, (ix) Financial Income (expense), (x) adjusted net income, adjusted EBITDA and trailing 12 month adjusted EBITDA, and (xi) free cash flow and free cash flow as a percent of Revenue. The non-GAAP information excludes the amortization of acquisition related intangible assets, the purchase accounting effect on inventory and property, plant and equipment, merger related costs (including integration costs), certain items related to divestitures, share-based compensation expense, restructuring and asset impairment charges, non-cash interest expense on convertible notes, extinguishment of debt, and foreign exchange gains and losses.

Conference Call and Webcast Information
The company will host a conference call with the financial community on Tuesday, February 1, 2022 at 8:00 a.m. U.S. Eastern Daylight Time (EDT) to review the fourth quarter 2021 results in detail. Interested parties may join the scheduled conference call by dialing the following numbers:

Within the U.S.:         1 - 888 - 603 - 7644
Outside the U.S.:          1 - 484 - 747 - 6631
Participant Passcode:  7297353

The call will be webcast and can be accessed from the NXP Investor Relations website https://investors.nxp.com. A replay of the call will be available on the NXP Investor Relations website within 24 hours of the actual call.

About NXP Semiconductors

NXP Semiconductors N.V. (NASDAQ: NXPI) enables a smarter, safer and more sustainable world through innovation. As the world leader in secure connectivity solutions for embedded applications, NXP is pushing boundaries in the automotive, industrial & IoT, mobile, and communication infrastructure markets. Built on more than 60 years of combined experience and expertise, the company has approximately 31,000 employees in more than 30 countries and posted revenue of $11.06 billion in 2021. Find out more at www.nxp.com.

Forward-looking Statements

This document includes forward-looking statements which include statements regarding NXP’s business strategy, financial condition, results of operations, the expected material weakness in our internal control over financial reporting, including the timeline to remediate the expected material weakness, market data, as well as any other statements which are not historical facts. By their nature, forward-looking statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These factors, risks and uncertainties include the following: the duration and spread of the COVID-19 outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume; market demand and semiconductor industry conditions; the ability to successfully introduce new technologies and products; the demand for the goods into which NXP’s products are incorporated; trade disputes between the U.S. and China, potential increase of barriers to international trade and resulting disruptions to NXP's established supply chains; the ability to generate sufficient cash, raise sufficient capital or refinance corporate debt at or before maturity to meet both NXP's debt service and research and development and capital investment requirements; the ability to accurately estimate demand and match manufacturing production capacity accordingly or obtain supplies from third-party producers; the potential impact of the outbreak of COVID-19 on NXP's business, operations, results of operations, financial condition, workforce or the operations or decisions of customers, suppliers or business customers; the access to production capacity from third-party outsourcing partners and any events that might affect their business or NXP’s relationship with them including the outbreak of COVID-19 or the requirements to suspend activities with customers or suppliers because of changing import and export regulations; the ability to secure adequate and timely supply of equipment and materials from suppliers; the ability to avoid operational problems and product defects and, if such issues were to arise, to correct them quickly; the ability to form strategic partnerships and joint ventures and to successfully cooperate with alliance partners; the ability to win competitive bid selection processes; the ability to develop products for use in customers’ equipment and products; the ability to successfully hire and retain key management and senior product engineers; and, the ability to maintain good relationships with NXP's suppliers. In addition, this document contains information concerning the semiconductor industry and NXP’s market and business segments generally, which is forward-looking in nature and is based on a variety of assumptions regarding the ways in which the semiconductor industry and NXP's market and business segments may develop. NXP has based these assumptions on information currently available, if any one or more of these assumptions turn out to be incorrect, actual results may differ from those predicted. While NXP does not know what impact any such differences may have on its business, if there are such differences, its future results of operations and its financial condition could be materially adversely affected. There can be no assurances that a pandemic, epidemic or outbreak of a contagious diseases, such as COVID-19, will not have a material and adverse impact on our business, operating results and financial condition in the future. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak to results only as of the date the statements were made. Except for any ongoing obligation to disclose material information as required by the United States federal securities laws, NXP does not have any intention or obligation to publicly update or revise any forward-looking statements after we distribute this document, whether to reflect any future events or circumstances or otherwise. For a discussion of potential risks and uncertainties, please refer to the risk factors listed in our SEC filings. Copies of our SEC filings are available on our Investor Relations website, www.nxp.com/investor or from the SEC website, www.sec.gov.

For further information, please contact:

Investors: Media:
Jeff Palmer Jacey Zuniga 
jeff.palmer@nxp.com jacey.zuniga@nxp.com
+1 408 518 5411 +1 512 895 7398

NXP-CORP

NXP Semiconductors
Table 1: Condensed consolidated statement of operations (unaudited)

($ in millions except share data)Three months ended Full-year
 December 31,
2021
 October 3, 2
021
 December 31, 2
020
  2021   2020 
          
Revenue$        3,039  $        2,861  $        2,507  $        11,063  $        8,612 
Cost of revenue         (1,332)          (1,278)          (1,219)          (4,996)          (4,377)
Gross profit         1,707           1,583           1,288           6,067           4,235 
Research and development         (507)          (492)          (460)          (1,936)          (1,725)
Selling, general and administrative         (257)          (243)          (221)          (956)          (879)
Amortization of acquisition-related intangible assets         (136)          (137)          (148)          (592)          (1,327)
Total operating expenses         (900)          (872)          (829)          (3,484)          (3,931)
Other income (expense)         —           —           4           —           114 
Operating income (loss)         807           711            463           2,583           418 
Financial income (expense):         
Extinguishment of debt         (22)          —                   (60)          (22)          (60)
Other financial income (expense)         (101)          (93)          (77)          (381)          (357)
Income (loss) before income taxes         684           618           326           2,180           1 
Benefit (provision) for income taxes         (72)          (95)          (5)          (272)          83 
Results relating to equity-accounted investees         (2)          3           (1)          (2)          (4)
Net income (loss)         610           526           320           1,906           80 
Less: Net income (loss) attributable to non-controlling interests         8           7           11           35           28 
Net income (loss) attributable to stockholders         602           519           309           1,871           52 
          
Earnings per share data:         
Net income (loss) per common share attributable to stockholders in $    
Basic$        2.27  $        1.95  $        1.10  $        6.91  $        0.19 
Diluted$        2.24  $        1.91  $        1.08  $        6.79  $        0.18 
          
Weighted average number of shares of common stock outstanding during the period (in thousands):    
Basic         265,642           266,557           280,484           270,687           279,763 
Diluted         268,545           271,359           285,258           275,646           283,809 
          

NXP Semiconductors
Table 2: Condensed consolidated balance sheet (unaudited)

 ($ in millions)As of
  December 31,
2021
 October 3,
2021
 December 31,
2020
ASSETS     
Current assets:     
 Cash and cash equivalents$        2,830 $        2,303 $        2,275
 Accounts receivable, net         923          979          765
 Inventories, net         1,189          1,173          1,030
 Other current assets         286          266          254
Total current assets         5,228          4,721          4,324
       
Non-current assets:     
 Other non-current assets         1,346          1,070          1,013
 Property, plant and equipment, net         2,635          2,510          2,284
 Identified intangible assets, net         1,694          1,741          2,242
 Goodwill         9,961          9,968          9,984
Total non-current assets         15,636          15,289          15,523
       
Total assets         20,864          20,010          19,847
       
LIABILITIES AND EQUITY     
Current liabilities:     
 Accounts payable         1,252          1,140          991
 Restructuring liabilities-current         25          30          60
 Other current liabilities         1,175          1,269          966
 Short-term debt         —          999          —
Total current liabilities         2,452          3,438          2,017
       
Non-current liabilities:     
 Long-term debt         10,572          8,594          7,609
 Restructuring liabilities         12          13          14
 Deferred tax liabilities         57          84          85
 Other non-current liabilities         1,001          909          971
Total non-current liabilities         11,642          9,600          8,679
       
 Non-controlling interests         242          234          207
 Stockholders’ equity         6,528          6,738          8,944
Total equity         6,770          6,972          9,151
      
Total liabilities and equity         20,864          20,010          19,847
       

NXP Semiconductors
Table 3: Condensed consolidated statement of cash flows (unaudited)

($ in millions)Three months ended Full-year
 December 31,
2021
 October 3,
2021
 December 31,
2020
  2021   2020 
Cash flows from operating activities:         
Net income (loss)$        610  $        526  $        320    $        1,906  $        80 
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:         
Depreciation and amortization         310           306            316           1,262           1,988 
Stock-based compensation         88           81           89           353           384 
Amortization of discount (premium) on debt, net         —           —           —            1           (1)
Amortization of debt issuance costs         2           2           2             7           9 
Net (gain) loss on sale of assets         (1)          —           (4)          (1)          (115)
(Gain) loss on extinguishment of debt         22           —            60           22           60 
Results relating to equity-accounted investees         2           (3)          1           2           4 
(Gain) loss on equity securities, net         4           (4)          (21)          2           (21)
Deferred tax expense (benefit)         (26)          (6)          (75)          (20)          (349)
Changes in operating assets and liabilities:         
(Increase) decrease in receivables and other current assets         38           16           (50)          (176)          (51)
(Increase) decrease in inventories         (16)          (57)          34           (159)          163 
Increase (decrease) in accounts payable and other liabilities         6           118           333           248           319 
(Increase) decrease in other non-current assets         (244)          (46)          23           (350)          7 
Exchange differences         (2)          (3)          10           (5)          16 
Other items         (8)          (6)          (9)          (15)          (11)
Net cash provided by (used for) operating activities         785           924           1,029           3,077           2,482 
          
Cash flows from investing activities:         
Purchase of identified intangible assets         (33)          (27)          (35)          (132)          (130)
Capital expenditures on property, plant and equipment         (266)          (201)          (104)          (767)          (392)
Purchase of equipment leased to others         (19)          (14)          —           (33)          —  
Insurance recoveries received for equipment damage         3           7           —           10           — 
Proceeds from the disposals of property, plant and equipment         —           1           1           1           4 
Purchase of interests in businesses, net of cash acquired         (6)          (16)          (13)          (23)          (34)
Proceeds from sale of interests in businesses, net of cash divested         —           —           —           —           161 
Purchase of investments         (2)          —           (15)          (8)          (30)
Proceeds from the sale of investments         —           —           2           8           2 
Proceeds from return of equity investments         7           2           1           10           1 
Net cash provided by (used for) investing activities         (316)          (248)          (163)          (934)          (418)
          
Cash flows from financing activities:         
Repurchase of long-term debt         (1,021)          —           (1,809)          (1,021)          (1,809)
Proceeds from the issuance of long-term debt         2,000           —           —           4,000           2,000  
Cash paid for debt issuance costs         (25)          —           —           (47)          (15)
Dividends paid to non-controlling interests         —           —           (1)          —           (35)
Dividends paid to common stockholders         (150)          (152)          (105)          (562)          (420)
Proceeds from issuance of common stock through stock plans         2           29           8           62           72 
Purchase of treasury shares and restricted stock unit withholdings         (750)          (1,157)          (257)          (4,015)          (627)
Other, net         (1)          —           (1)          (2)          (1)
Net cash provided by (used for) financing activities         55           (1,280)          (2,165)          (1,585)          (835)
          
Effect of changes in exchange rates on cash positions         3           (3)          8           (3)          1 
Increase (decrease) in cash and cash equivalents         527           (607)          (1,291)          555           1,230 
Cash and cash equivalents at beginning of period         2,303           2,910           3,566           2,275           1,045 
Cash and cash equivalents at end of period         2,830           2,303           2,275           2,830           2,275 
          
Net cash paid during the period for:         
Interest         140           56           125           356           336 
Income taxes, net of refunds         103           89           45           353           148 
Net gain (loss) on sale of assets:         
Cash proceeds from the sale of assets         1           —            2           1           165 
Book value of these assets         —           —           2           —           (50)
Non-cash investing activities:         
Non-cash capital expenditures         243           224            119           243           119 

NXP Semiconductors
Table 4: Financial Reconciliation of GAAP to non-GAAP Results (unaudited)

($ in millions)Three months ended Full-year
 December 31,
2021
 October 3,
2021
 December 31,
2020
  2021   2020 
Revenue$3,039  $2,861  $2,507  $11,063  $8,612 
GAAP Gross Profit$1,707  $1,583  $1,288  $6,067  $4,235 
PPA Effects (18)  (20)  (21)  (74)  (99)
Restructuring             (15)
Stock Based Compensation (11)  (10)  (12)  (45)  (45)
Merger-related costs             (1)
Other incidentals (4)  (4)  (5)  (19)  (5)
Non-GAAP Gross Profit$1,740  $1,617  $1,326  $6,205  $4,400 
GAAP Gross margin 56.2%  55.3%  51.4%  54.8%  49.2%
Non-GAAP Gross margin 57.3%  56.5%  52.9%  56.1%  51.1%
GAAP Research and development$(507) $(492) $(460) $(1,936) $(1,725)
Restructuring       (22)  (1)  (39)
Stock based compensation (44)  (40)  (41)  (165)  (159)
Merger-related costs             (1)
Other incidentals    (2)  (1)  (2)  (6)
Non-GAAP Research and development$(463) $(450) $(396) $(1,768) $(1,520)
GAAP Selling, general and administrative$(257) $(243) $(221) $(956) $(879)
PPA effects (1)  (2)  (2)  (5)  (7)
Restructuring       (16)     (24)
Stock based compensation (33)  (31)  (36)  (143)  (180)
Merger-related costs             (6)
Other incidentals (5)  (3)     (12)  (8)
Non-GAAP Selling, general and administrative$(218) $(207) $(167) $(796) $(654)
GAAP amortization of acquisition-related intangible assets$(136) $(137) $(148) $(592) $(1,327)
PPA effects (136)  (137)  (148)  (592)  (1,327)
Non-GAAP amortization of acquisition-related intangible assets$  $  $  $  $ 
GAAP Other income (expense)$  $  $4  $  $114 
Other incidentals (1)  1   3      112 
Non-GAAP Other income (expense)$1  $(1) $1  $  $2 
GAAP Operating income (loss)$807  $711  $463  $2,583  $418 
PPA effects (155)  (159)  (171)  (671)  (1,433)
Restructuring    0   (38)  (1)  (78)
Stock based compensation (88)  (81)  (89)  (353)  (384)
Merger-related costs             (8)
Other incidentals (10)  (8)  (3)  (33)  93 
Non-GAAP Operating income (loss)$1,060  $959  $764  $3,641  $2,228 
GAAP Operating margin 26.6%  24.9%  18.5%  23.3%  4.9%
Non-GAAP Operating margin 34.9%  33.5%  30.5%  32.9%  25.9%
GAAP Financial income (expense)$(123) $(93) $(137) $(403) $(417)
Foreign exchange gain (loss) (1)  1   (6)  (1)  (12)
Gain (loss) on extinguishment of long-term debt (22)     (60)  (22)  (60)
Other financial income (expense) (7)     19   (15)  12 
Non-GAAP Financial income (expense)$(93) $(94) $(90) $(365) $(357)
          

NXP Semiconductors
Table 5: Adjusted EBITDA and Free Cash Flow (unaudited)

($ in millions)Three months ended Full-year
 December 31,
2021
 October 3,
2021
 December 31,
2020
  2021   2020 
Net income (loss)$610  $526  $320  $1,906  $80 
Reconciling items to adjusted net income         
Financial (income) expense 123   93   137   403   417 
(Benefit) provision for income taxes 72   95   5   272   (83)
Depreciation 145   139   139   551   547 
Amortization 165   167   177   711   1,441 
Adjusted net income$1,115  $1,020  $778  $3,843  $2,402 
Reconciling items to adjusted EBITDA         
Results of equity-accounted investees 2   (3)  1   2   4 
Restructuring       38   1   78 
Stock based costs 88   81   89   353   384 
Merger-related costs             8 
Other incidental items 1) 10   8   1   33   (101)
Adjusted EBITDA$1,215  $1,106  $907  $4,232  $2,792 
Trailing twelve month adjusted EBITDA$4,232  $3,924  $2,792  $4,232  $2,792 
          
1) Excluding amortization related to:         
 —   other incidental items$  $  $2  $  $8 
          
          
          
          
          
($ in millions)Three months ended Full-year
 December 31,
2021
 October 3,
2021
 December 31,
2020
  2021   2020 
Net cash provided by (used for) operating activities$785  $924  $1,029  $3,077  $2,482 
Net capital expenditures on property, plant and equipment (266)  (200)  (103)  (766)  (388)
Non-GAAP free cash flow$519  $724  $926  $2,311  $2,094 
Non-GAAP free cash flow as percent of Revenue 17%  25%  37%  21%  24%
          

 


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