NXP Delivers Strong Results for the Third Quarter of 2018
NXP Semiconductors N.V. reported financial results for the third quarter 2018 ended September 30, 2018. “NXP delivered strong results for the third quarter of 2018, with revenue at $2.45 billion, an increase of 2 percent year-on-year, an increase of 7 percent versus the prior quarter and $20 million above the mid-point of our guidance,” said Richard Clemmer, NXP Chief Executive Officer
“High-performance mixed-signal (HPMS) segment revenue was $2.35 billion, an increase of 3 percent year-on-year, and an increase of 7 percent from the prior quarter.
“Within Automotive, third quarter revenue was $990 million, up 4 percent year-on-year, with advanced analog and infotainment primarily contributing to the year-on-year growth, while reduced pulls of automotive MCUs from tier-one customers impacted the overall year-on-year growth. Within Secure Connected Devices, third quarter revenue was $717 million, up 1 percent year-on-year driven by the continued demand for general purpose, multi-market MCUs, which were up high single digits, offset by a significant decline in demand for mobile transaction solutions after a strong new customer ramp during 2017.
“In Secure Interface and Infrastructure, third quarter revenue was $511 million, up 5 percent year-on-year due to early 5G network trials with North American carriers. Lastly, in Secure Identification Solutions, third quarter revenue was $133 million, down 4 percent year-on-year due to lower demand for bank card products.
“During the third quarter, we announced that we are in the process of simplifying our organizational structure, and promoted Kurt Sievers to President. Over Kurt’s tenure with NXP, he has successfully driven the NXP automotive business to become the industry leading automotive semiconductor supplier. These changes will enable us to drive improved cross business line collaboration, deliver holistic platform solutions to our customers and to strengthen our decision-making focus, speed, and efficiency.
“Additionally, during the quarter, we held a very well attended investor day, where we reiterated our strategic and financial goals. Given our strong balance sheet and the confidence of our strategic product development, we believe we are well positioned to drive significant value for our owners and to materially improve shareholder value. The NXP team is fully energized, focused, and motivated to outperform the market,” Clemmer concluded.
“In the third quarter, our GAAP operating margin was 90.4 percent, as result of the receipt of the $2 billion termination fee associated with the failed Qualcomm transaction, and continued operational performance” said Peter Kelly, NXP Chief Financial Officer.
“Our third quarter non-GAAP operating margin was 30.0 percent, a decline of 80 basis points as compared to 30.8 percent reported in the third quarter of 2017, as result of product mix and increased R&D investments between the year-on-year periods. On a sequential basis, our non-GAAP operating margin increased 300-basis points due to higher revenue, lower than anticipated incentive accruals and improved operating expense control during the third quarter.
“During the quarter, we returned approximately $4.6 billion to shareholders via our previously announced $5 billion share repurchase program, and we announced a $0.25 per share quarterly cash dividend program. Leverage increased to 1.39x, below our long-term target of 2x as we executed on our previously announced buyback and added $1 billion of debt in the form of a bridge loan,” said Kelly.