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NXP (NXPI) Q3 Earnings Surpass Estimates, Revenues Miss

Zacks Equity Research
·3 min read

NXP Semiconductors N.V. NXPI reported third-quarter 2020 non-GAAP earnings of $1.70 per share, which outpaced the Zacks Consensus Estimate of $1.59. The figure decreased 29.7% year over year but increased 142.9% sequentially.

Net sales of $2.27 billion missed the Zacks Consensus Estimate by 0.01%. The figure was up 0.1% from the year-ago period and 25% on a sequential basis.

Let’s delve deeper into the numbers.

NXP Semiconductors N.V. Price, Consensus and EPS Surprise

NXP Semiconductors N.V. Price, Consensus and EPS Surprise
NXP Semiconductors N.V. Price, Consensus and EPS Surprise

NXP Semiconductors N.V. price-consensus-eps-surprise-chart | NXP Semiconductors N.V. Quote

Segments in Detail

Automotive generated $964 million sales (contributing 43% to its net sales), which reflects an increase of 43% sequentially but 8% year-over-year decrease.

Sales from Industrial & IoT came in at $514 million (23% of net sales), up 18% sequentially and 21% from the prior-year quarter.

Sales from Mobile came in at $337 million (15% of net sales), up 32% sequentially and 5% from the year-ago level.

Communication Infrastructure & Others generated $452 million sales (which contributed 19% to its net sales), flat year over year but down 4% sequentially.

Operating Results

Non-GAAP gross margin was 50.1%, down 360 basis points (bps) from the year-ago quarter but up 100 bps sequentially.

Operating expenses were $641 million, 2.7% higher than the year-ago quarter.

Non-GAAP operating margin of 25.8% for the reported quarter contracted 450 bps from the prior-year period but expanded 510 bps sequentially.

Balance Sheet & Cash Flow

At third quarter-end, cash and cash equivalent balance were $3.6 billion compared with $3.3 billion in the prior quarter.

Inventories were $1.1 billion versus $1.2 billion in the prior quarter. Accounts receivables increased to $755 million from $481 million in the prior quarter.

During the third quarter, NXP returned $117 million to shareholders, primarily through previously announced dividend payments.

NXP generated cash flow of $527 million, up from $414 million in the second quarter.

Guidance

For fourth quarter, NXP projects revenues to be $2.45 billion, reflecting an increase of 8% sequentially and 6% year over year. The Zacks Consensus Estimate for the same is pegged at $2.26 billion.

Non-GAAP gross margin is projected at 52.7% and non-GAAP operating margin is expected to be 29.7%.

Zacks Rank & Other Stocks to Consider

Currently, NXP has a Zacks Rank #2 (Buy). Other top-ranked stocks in the broader technology sector include ON Semiconductor Corporation ON, Silicon Laboratories, Inc. SLAB and Alibaba Group Holding Limited BABA, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for ON Semiconductor, Silicon Laboratories, and Alibaba is currently projected at 1.3%, 15% and 19.4%, respectively.

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