GlobeNewswire Inc | Apr 26, 2021 04:01PM EDT

April 26, 2021

EINDHOVEN, The Netherlands, April 26, 2021 (GLOBE NEWSWIRE) -- NXP Semiconductors N.V. (NASDAQ: NXPI) today reported financial results for the first quarter 2021, ended April 4, 2021.

NXP delivered first quarter revenue of $2.6 billion, an increase of 27 percent versus the year-ago period, and better than the mid-point of our guidance. Positive product mix and increased revenue helped deliver excellent operating profit in excess of our guidance. We continue to be encouraged by the long-term demand trends across all our end markets, which underpin our continued confidence of very robust growth throughout 2021, said Kurt Sievers, NXP President and Chief Executive Officer.

Key Highlights

-- First-quarter revenue was $2.6 billion, up 27.0 percent year-on-year; -- First-quarter GAAP gross margin was 52.8 percent, and GAAP operating margin was 19.2 percent; -- First-quarter non-GAAP gross margin was 54.2 percent, and non-GAAP operating margin was 30.9 percent; -- First-quarter cash flow from operations was $732 million, with net capex investments of $150 million, resulting in non-GAAP free cash flow of $582 million; -- On March 4, 2021, the NXP Board of Directors approved the payment of an interim dividend for the first quarter 2021 of $0.5625 per ordinary share, reflecting an increase of 50 percent from the prior quarterly dividend; -- In the first quarter of 2021 NXP returned $1.0 billion to shareholders through previously announced share repurchases and dividend payments; -- On March 22, 2021, NXP was added to the S&P 500 index.

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

Q1 2021 Q4 2020 Q1 2020 Q - Y - Y QTotal Revenue $ 2,567 $ 2,507 $ 2,021 2 % 27 %GAAP Gross Profit $ 1,355 $ 1,288 $ 997 5 % 36 %Gross Profit Adjustments ^ $ (37 ) $ (38 ) $ (50 ) (i)Non-GAAP Gross Profit $ 1,392 $ 1,326 $ 1,047 5 % 33 %GAAP Gross Margin 52.8 % 51.4 % 49.3 % Non-GAAP Gross Margin 54.2 % 52.9 % 51.8 % GAAP Operating Income / $ 492 $ 463 $ 68 6 % 624 %(Loss)Operating Income Adjustments $ (300 ) $ (301 ) $ (434 ) ^(i)Non-GAAP Operating Income $ 792 $ 764 $ 502 4 % 58 %GAAP Operating Margin 19.2 % 18.5 % 3.4 % Non-GAAP Operating Margin 30.9 % 30.5 % 24.8 %

Additional information Automotive $ 1,229 $ 1,193 $ 994 3 % 24 %Industrial & IoT $ 571 $ 511 $ 376 12 % 52 %Mobile $ 346 $ 409 $ 247 -15 % 40 %Comm. Infra. & Other $ 421 $ 394 $ 404 7 % 4 %DIO 81 78 113 DPO 79 75 83 DSO 30 28 28 Cash Conversion Cycle 32 31 58 Channel Inventory (months) 1.6 1.6 2.4 Financial Leverage ^(ii) 1.9x 1.9x 2.1x

-- Additional Information for the First Quarter 2021:For an explanation of GAAP to non-GAAP adjustments, please see Non-GAAP Financial Measures.Financial leverage is defined as net debt divided by trailing twelve months adjusted EBITDA.

-- During the first quarter of 2021, NXP repurchased 5.1 million shares for a total cost of $905 million and paid cash dividends of $105 million. -- Weighted average number of diluted shares for the three-month period ended April 4, 2021 was 283.3 million. -- Net cash paid for income taxes related to on-going operations was $40 million.

Guidance for the Second Quarter 2021: ($ millions) (1)

Guidance Range GAAP Reconciliation non-GAAP Low Mid High Low Mid HighTotal Revenue $ 2,500 $ 2,570 $ 2,640 $ 2,500 $ 2,570 $ 2,640 Q-Q -3 % 0 % 3 % -3 % 0 % 3 %Y-Y 38 % 41 % 45 % 38 % 41 % 45 %Gross Profit $ 1,346 $ 1,392 $ 1,439 $ (35 ) $ 1,381 $ 1,427 $ 1,474 Gross Margin 53.8 % 54.2 % 54.5 % 55.2 % 55.5 % 55.8 %Operating Income $ 506 $ 542 $ 579 $ (262 ) $ 768 $ 804 $ 841 (loss)Operating Margin 20.2 % 21.1 % 21.9 % 30.7 % 31.3 % 31.9 %Financial Income $ (90 ) $ (90 ) $ (90 ) $ (3 ) $ (87 ) $ (87 ) $ (87 )(expense)

Note (1) Additional Information:

-- GAAP Gross Profit is expected to include Purchase Price Accounting (PPA) effects, $(18) million; Stock Based Compensation, $(12) million; Other Incidentals, $(5) million; -- GAAP Operating Income (loss) is expected to include PPA effects, $(159) million; Stock Based Compensation, $(92) million; Restructuring and Other Incidentals, $(11) million; -- GAAP Financial Income (expense) is expected to include Other financial expense $(3) million; -- Net cash paid for income taxes related to on-going operations is expected to be approximately $(55) million; -- Non-controlling interest is expected to be approximately $(9) million; -- Weighted average diluted share count is expected to be approximately 283 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 Companys results of operations and the factors and trends affecting NXPs 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 NXPs 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 InformationThe company will host a conference call with the financial community on Tuesday, April 27, 2021 at 8:00 a.m. U.S. Eastern Daylight Time (EDT) to review the first 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 - 7644Outside the U.S.: 1 - 484 - 747 - 6631Participant Passcode: 9565176

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 secure connections for a smarter world, advancing solutions that make lives easier, better, and safer. As the world leader in secure connectivity solutions for embedded applications, NXP is driving innovation 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 29,000 employees in more than 30 countries and posted revenue of $8.61 billion in 2020. Find out more at www.nxp.com.

Forward-looking Statements

This document includes forward-looking statements which include statements regarding NXPs business strategy, financial condition, results of operations, and 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 NXPs 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 NXPs 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 NXPs 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 Zunigajeff.palmer@nxp.com jacey.zuniga@nxp.com+1 408 518 5411 +1 512 895 7398

NXP-CORP

NXP SemiconductorsTable 1: Condensed consolidated statement of operations (unaudited)

($ in millions except share data) Three months ended April 4, December March 29, 2021 31, 2020 2020 Revenue $ 2,567 $ 2,507 $ 2,021 Cost of revenue (1,212 ) (1,219 ) (1,024 )Gross profit 1,355 1,288 997 Research and development (461 ) (460 ) (425 )Selling, general and administrative (222 ) (221 ) (233 )Amortization of acquisition-related (180 ) (148 ) (381 )intangible assetsTotal operating expenses (863 ) (829 ) (1,039 )Other income (expense) ? 4 110 Operating income (loss) 492 463 68 Financial income (expense): Extinguishment of debt ? (60 ) ? Other financial income (expense) (87 ) (77 ) (78 )Income (loss) before income taxes 405 326 (10 )Benefit (provision) for income taxes (40 ) (5 ) (2 )Results relating to equity-accounted (1 ) (1 ) (1 )investeesNet income (loss) 364 320 (13 )Less: Net income (loss) attributable to 11 11 8 non-controlling interestsNet income (loss) attributable to 353 309 (21 )stockholders Earnings per share data: Net income (loss) per common share attributable to stockholders in $Basic $ 1.27 $ 1.10 $ (0.08 )Diluted $ 1.25 $ 1.08 $ (0.08 ) Weighted averagenumber of shares of common stock outstandingduring theperiod (in thousands):Basic 277,526 280,484 279,933 Diluted 283,263 285,258 279,933

NXP SemiconductorsTable 2: Condensed consolidated balance sheet (unaudited)

($ in millions) As of April 4, December 31, March 29, 2021 2020 2020ASSETS Current assets: Cash and cash equivalents $ 1,842 $ 2,275 $ 1,079 Accounts receivable, net 833 765 616 Inventories, net 1,056 1,030 1,227 Other current assets 293 254 327Total current assets 4,024 4,324 3,249 Non-current assets: Other non-current assets 1,039 1,013 712 Property, plant and equipment, 2,304 2,284 2,397 net Identified intangible assets, 2,057 2,242 3,218 net Goodwill 9,968 9,984 9,935Total non-current assets 15,368 15,523 16,262 Total assets 19,392 19,847 19,511 LIABILITIES AND EQUITY Current liabilities: Accounts payable 1,033 991 895 Restructuring 42 60 26 liabilities-current Other current liabilities 1,190 966 910Total current liabilities 2,265 2,017 1,831 Non-current liabilities: Long-term debt 7,611 7,609 7,366 Restructuring liabilities 14 14 ? Deferred tax liabilities 85 85 199 Other non-current liabilities 896 971 857Total non-current liabilities 8,606 8,679 8,422 Non-controlling interests 218 207 222 Stockholders? equity 8,303 8,944 9,036Total equity 8,521 9,151 9,258 Total liabilities and equity 19,392 19,847 19,511

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

($ in millions) Three months ended April December March 29, 4, 2021 31, 2020 2020Cash flows from operating activities: Net income (loss) $ 364 $ 320 $ (13 )Adjustments to reconcile net income (loss) tonet cash provided by (used for) operating activities:Depreciation and amortization 341 316 540 Stock-based compensation 91 89 107 Amortization of debt issuance costs 2 2 1 Net (gain) loss on sale of assets ? (4 ) (110 )(Gain) loss on extinguishment of debt ? 60 ? Results relating to equity-accounted investees 1 1 1 (Gain) loss on equity securities, net (3 ) (21 ) ? Deferred tax expense (benefit) 12 (75 ) (75 )Changes in operating assets and liabilities: (Increase) decrease in receivables and other (95 ) (50 ) 27 current assets(Increase) decrease in inventories (26 ) 34 (35 )Increase (decrease) in accounts payable and 51 333 64 other liabilities(Increase) decrease in other non-current assets (8 ) 23 4 Exchange differences (1 ) 10 (4 )Other items 3 (9 ) 5 Net cash provided by (used for) operating 732 1,029 512 activities Cash flows from investing activities: Purchase of identified intangible assets (37 ) (35 ) (45 )Capital expenditures on property, plant and (150 ) (104 ) (143 )equipmentProceeds from the disposals of property, plant ? 1 ? and equipmentPurchase of interests in businesses, net of cash ? (13 ) (10 )acquiredProceeds from sale of interests in businesses, ? ? 161 net of cash divestedPurchase of investments (2 ) (15 ) ? Proceeds from the sale of investments 8 2 ? Proceeds from return of equity investments ? 1 ? Net cash provided by (used for) investing (181 ) (163 ) (37 )activities Cash flows from financing activities: Repurchase of long-term debt ? (1,809 ) ? Dividends paid to non-controlling interests ? (1 ) ? Dividends paid to common stockholders (105 ) (105 ) (105 )Proceeds from issuance of common stock through 31 8 29 stock plansPurchase of treasury shares and restricted stock (905 ) (257 ) (355 )unit withholdingsOther, net ? (1 ) ? Net cash provided by (used for) financing (979 ) (2,165 ) (431 )activities Effect of changes in exchange rates on cash (5 ) 8 (10 )positionsIncrease (decrease) in cash and cash equivalents (433 ) (1,291 ) 34 Cash and cash equivalents at beginning of period 2,275 3,566 1,045 Cash and cash equivalents at end of period 1,842 2,275 1,079 Net cash paid during the period for: Interest 56 125 53 Income taxes, net of refunds 40 45 39 Net gain (loss) on sale of assets: Cash proceeds from the sale of assets ? 2 161 Book value of these assets ? 2 (51 )Non-cash investing activities: Non-cash capital expenditures 121 119 78

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

($ in millions) Three months ended April 4, December March 29, 2021 31, 2020 2020Revenue $ 2,567 $ 2,507 $ 2,021 GAAP Gross Profit $ 1,355 $ 1,288 $ 997 PPA Effects (18 ) (21 ) (36 )Restructuring ? ? (3 )Stock Based Compensation (12 ) (12 ) (11 )Other incidentals (7 ) (5 ) ? Non-GAAP Gross Profit $ 1,392 $ 1,326 $ 1,047 GAAP Gross margin 52.8 % 51.4 % 49.3 %Non-GAAP Gross margin 54.2 % 52.9 % 51.8 %GAAP Research and development $ (461 ) $ (460 ) $ (425 )Restructuring ? (22 ) (4 )Stock based compensation (40 ) (41 ) (40 )Merger-related costs ? ? (1 )Other incidentals (1 ) (1 ) ? Non-GAAP Research and development $ (420 ) $ (396 ) $ (380 )GAAP Selling, general and administrative $ (222 ) $ (221 ) $ (233 )PPA effects ? (2 ) (2 )Restructuring ? (16 ) (4 )Stock based compensation (39 ) (36 ) (56 )Merger-related costs ? ? (3 )Other incidentals (3 ) ? (3 )Non-GAAP Selling, general and $ (180 ) $ (167 ) $ (165 )administrativeGAAP amortization of acquisition-related $ (180 ) $ (148 ) $ (381 )intangible assetsPPA effects (180 ) (148 ) (381 )Non-GAAP amortization of $ ? $ ? $ ? acquisition-related intangible assetsGAAP Other income (expense) $ ? $ 4 $ 110 Other incidentals ? 3 110 Non-GAAP Other income (expense) $ ? $ 1 $ ? GAAP Operating income (loss) $ 492 $ 463 $ 68 PPA effects (198 ) (171 ) (419 )Restructuring ? (38 ) (11 )Stock based compensation (91 ) (89 ) (107 )Merger-related costs ? ? (4 )Other incidentals (11 ) (3 ) 107 Non-GAAP Operating income (loss) $ 792 $ 764 $ 502 GAAP Operating margin 19.2 % 18.5 % 3.4 %Non-GAAP Operating margin 30.9 % 30.5 % 24.8 %GAAP Financial income (expense) $ (87 ) $ (137 ) $ (78 )Foreign exchange gain (loss) ? (6 ) (1 )Gain (loss) on extinguishment of ? (60 ) ? long-term debtOther financial income (expense) ? 19 (2 )Non-GAAP Financial income (expense) $ (87 ) $ (90 ) $ (75 )

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

($ in millions) Three months ended April 4, December 31, March 29, 2021 2020 2020Net income (loss) $ 364 $ 320 $ (13 )Reconciling items to adjusted net income Financial (income) expense 87 137 78 (Benefit) provision for income taxes 40 5 2 Depreciation 132 139 133 Amortization 209 177 407 Adjusted net income $ 832 $ 778 $ 607 Reconciling items to adjusted EBITDA Results of equity-accounted investees 1 1 1 Purchase accounting effect on inventory ? ? 17 Restructuring ? 38 11 Stock based costs 91 89 107 Merger-related costs ? ? 4 Other incidental items ^1) 11 1 (107 )Adjusted EBITDA $ 935 $ 907 $ 640 Trailing twelve month adjusted EBITDA $ 3,087 $ 2,792 $ 3,054 ^1) Excluding amortization related to: - other incidental items $ ? $ 2 $ ? ($ in millions) Three months ended April 4, December 31, March 29, 2021 2020 2020Net cash provided by (used for) $ 732 $ 1,029 $ 512 operating activitiesNet capital expenditures on property, (150 ) (103 ) (143 )plant and equipmentNon-GAAP free cash flow $ 582 $ 926 $ 369 Non-GAAP free cash flow as percent of 23 % 37 % 18 %Revenue