NXP Semiconductors Reports First Quarter 2017 Results

NXP Semiconductors N.V. reported financial results for the first quarter ended April 2, 2017.
 
“NXP delivered good seasonal results for the first quarter of 2017, with revenue of $2.21 billion, a decline of 1% year on year, and a decline of 9% versus the prior quarter, with period comparisons impacted by the successful divestment of our Standard Products business in early February,” said NXP CEO Richard Clemmer.
 
“Our first quarter performance reflects a confirmation of a return to our annual growth trajectory. HPMS segment revenue was $2.01 billion, an increase of 5% year on year and a decline of two% sequentially. Standard Products segment revenue was $118 million, representing approximately one month of revenue contribution prior to the close of the divestment.
 
“Within the Automotive group, our first quarter revenue was a historical record at $906 million, up 13% year on year due to strong demand across the entire product portfolio, with our automotive microcontroller and advanced analog products continuing to experience exceptional traction,” Clemmer added. “Within the Secure Connected Devices group, our first quarter revenue was $541 million, up 15% year on year as all major product lines contributed to a solid quarter, especially demand for our i.MX application processor products. In the Secure Interface and Infrastructure group, our first quarter revenue was $450 million, up 6% year on year, with very strong growth in our Interface group, offset by flattish trends in RF Power and continued headwinds in the Digital Networking group which was restructured late last year. Lastly, in our Secure Identification Solutions group, our first quarter revenue was $114 million, down 46% versus the same period a year ago, due to a combination of lower overall market demand and aggressive ASP compression. While we are disappointed with the revenue deceleration, we believe Secure Identification Solutions has reached a revenue trough.
 
“In summary, our first quarter results are another solid step towards the successful integration of Freescale and NXP,” he noted. “With the divestment of our Standard Products group, our overall product portfolio has a sharpened focus on the higher growth, desirable margins, and stickier market segments. long-term requirements.
 
“Due to the disciplined focus by the entire NXP team, we were able to deliver better than anticipated financial results during the first quarter,” said Dan Durn, NXP CFO. “In the first quarter, our GAAP operating margin was 75.9% due to the one-time gain associated with the divestment of Standard Products. Our first quarter non-GAAP operating margin was 27.1%, representing a 380-basis point improvement compared to the first quarter of 2016 and a 220-basis point decline sequentially due to stranded costs and annual fringe benefit accruals.
 
“With cash on hand and the net proceeds from the successful completion of the Standard Products business divestment, we reduced our gross debt by $2.7 billion,” Durn noted. “Due to significantly lower gross debt and solid cash generation, our overall financial leverage was reduced to 1.4x, a full quarter earlier than anticipated, and a level not achieved since the third quarter of 2015, prior to close of the Freescale transaction. In total, NXP has turned the corner in terms of annual revenue growth and continues to deliver non-GAAP operating margin improvement far in-excess of the original targets we communicated in past periods.”